Food security minister Daniel Zeichner has defended the government’s controversial reforms of agricultural property relief in parliament, as the policy came in for heavy criticism from MPs.
Speaking during a debate on the implications of the budget for farmers, Mr Zeichner insisted the policy was ‘fair and balanced’ and reiterated the disputed claim, based on Treasury figures, that 73% of agricultural property relief claims are for less than £1 million, the new APR threshold. highlighting government concerns that ‘wealthy landowners’ were using APR as a means of avoiding inheritance tax.
He said the government has had to take tough decisions on tax, welfare and spending to fix the foundations and deliver change, after the previous government left a ‘£22bn black hole in our nation’s finances’.
“That is possible only by making changes to other taxes, such as agricultural property relief, which was previously available to all agricultural property at a rate of 100%,” he said.
“Currently, small farms can find themselves facing the same levels of tax bills as much larger farms, despite having a much smaller asset. Twenty per cent of agricultural property relief is claimed by the top 2%; 40% is claimed by the top 7%.
“That is not fair, it is not sustainable, and sadly, it has been used in some cases by wealthy landowners to avoid inheritance tax. That is why the Government have announced plans to reform agricultural property relief.”
Speaking after a meeting with NFU president Tom Bradshaw, he said the government ‘completely understands farmers’ anxieties about the changes, but rural communities need a better NHS, affordable housing and public transport, and we can provide that if we make the system fairer’.
He added that the rules mean individuals can pass up to £2 million, and a couple up to £3 million between them, to a direct descendant, inheritance tax-free, meaning ‘the vast majority of farmers will not be affected’.
“It is a fair and balanced approach that protects family farms while also fixing the public services that those same families rely on,” he said.
‘Not a loophole’
MPs were unconvinced. Liberal Democrat MP Alistair Carmichael, the new chair of the Environment, Food and Rural Affairs Committee, said his comments ‘illustrates rather well some of the lack of understanding that has brought us to this point’.
“More than any other industry, farming relies on stability and long-term planning. Every farming business is capital-rich but revenue-poor. Those businesses also trade in a market that has been more heavily influenced by government intervention than any other,” he said. “Agricultural property relief is not a loophole; it has been a deliberate policy of successive Governments for the past 40 years, designed to avoid the sale and break-up of family farms.”
He stressed that the figures provided by Mr Zeichner have been ‘vigorously challenged’ over the past few days, particularly the assertion that only one in four British farms will be affected, and urged the government to publish the data behind them.
In response, Mr Zeichner said the ‘only thing we can go on’ is the figures coming from the Treasury on claims for the last year available, which he said ‘absolutely reflect that 73% figure’.
Shadow food security minister Robbie Moore quoted prime minister Sir Keir Starmer’s comments at last year’s NFU conference that ‘losing a farm is not like losing any other business—it can’t come back’.
“Over the weekend, we have heard gut-wrenching stories from farmers up and down the nation who feel completely and utterly betrayed by the measures in this Budget,” he said.
He asked Mr Zeichner why he says he is proud of ‘family farm tax’ and whether he was aware that the vast majority of farming families are not multimillionaires. “Most are cash poor and many are struggling to break even,” he said.
Devastating impact
Conservative MP Charlie Dewhirst, the former NPA senior policy adviser, strongly refuted suggestions from the minister that farmers in his constituency of Bridlington and The Wolds support this measure.
“I can categorically tell him that they do not; they are shattered by this announcement. The impact on my community will be devastating. I ask the Minister today to do the right thing and withdraw these plans,” he said.
Sir Geoffrey Clifton-Brown, a farmer and North Cotswolds MP, said a 75-year-old farmer emailed him last week and said farmres ‘work long hours, usually alone, and agriculture has ‘one of the highest suicide rates of any industry. He added that the Chancellor and the Secretary of State for agriculture have ‘destroyed everything I have ever worked for’.
SNP MP Seamus Logan said ‘there was deep anger in Scotland and in my constituency about these announcements’, which the policy director for the NFU in Scotland has stated will be ‘devastating’ for farmers and crofters
Asked by Reform MP Lee Anderson ‘how many farmers he has spoken to in the past few months who agree with this hare-brained scheme’, Mr Zeichner replied, to some scepticism within the chamber: “The last farmer I spoke to over the weekend congratulated me on what we were doing.”