Contribution
Following the initial decision to introduce new APR and BPR rates, farmers across the country rallied their tractors outside this place to get their voices heard. Other family-owned businesses have gone through the same agony over the last 14 months, but without the tractors and with perhaps less of a voice, fearing for the future of businesses that have been built up over generations—businesses that form the bedrock of local communities and economies, employing local people and supporting local suppliers. As one constituent business owner told me, even with the recent lifting of the threshold, the reforms to BPR could still lead to family businesses such as his having to break up their underlying assets just to survive. The resulting loss to the Treasury in economic activity will far outweigh the amount of tax raised.
This attack on family-run businesses is particularly damaging in a constituency such as South Devon, where the family-run hotels and holiday parks are the foundation stones of the local economy. Passed down from generation to generation, they are more than just businesses. They are woven into the fabric of our communities. The director of one popular holiday park has been left questioning the long-term viability of their business due to the inheritance tax that will be due. This family-run business was founded over 65 years ago and employs over 180 staff in the summer season, which is a large number in a constituency such as mine that has few large employers. It uses an abundance of local suppliers and makes a significant contribution to the local economy. But I am told that when the 81-year-old majority shareholder passes away, it is likely that the family will have to sell up completely, after at least five generations of ownership, to pay an inheritance tax liability of approximately £2.5 million. The business cannot just chop off a section of the holiday camp, sell it to pay the tax and be left with a viable business—it just does not work like that. That illustrates perfectly how this tax is not merely a financial burden; it threatens the very survival of these businesses, and the ripples will spread out across the pond with scores of people losing their jobs, which will have knock-on effects on the local economy, the community and the mental health of all those people left high and dry.
Examples such as that are why my Liberal Democrat colleagues and I support amendment 42, which would maintain 100% business relief where the property has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family. That is the least that this Government could do given the plethora of financial challenges these family-run businesses already face. Whatever loophole the Government were looking to close with this business property relief, they have gone way beyond that, and the implications will be an economic and personal tragedy for so many.
I could not speak today without again mentioning our family farms. I am pleased that the Government have finally listened and made the adjustment to the threshold, which will end the agony for many farmers. However, I am concerned that in areas where land prices are particularly high, such as the South Hams, the £2.5 million threshold will still be too low. There are also a significant number of farms owned by a single person rather than a couple, meaning they will not benefit from the spousal allowance. When APR was originally introduced, I surveyed all the farmers in the South Devon constituency, of which there are many hundreds: 85% of them said that they would be affected. Of those who responded, 44% said that they would have a bill of at least £300,000. The average bill was going to be £637,000 across my constituency, and the highest inheritance tax expected by one of my farms is £3 million.
I therefore support amendment 48, which would make the resulting inheritance tax liability chargeable only if agricultural land is sold or ceases to be used for farming within 10 years of the relevant transfer. I urge the Government to support new clause 7 to ensure the relief allowance is uprated annually according to the change in the value of agricultural land. I also urge the Government, as many of my colleagues have, to consider extending the spousal allowance to siblings who co-own a farm so that they too can benefit from this relief. Why should one family be penalised because a brother and sister own a farm compared with another family where it is a husband and wife? It is incredibly old fashioned to design a policy that benefits people who are married but not people who co-own within the same family.
I hope the Government will now provide meaningful support for farmers, who have been through so much over the last 14 months, starting with a £1 billion increase in the farming budget as promised by the Liberal Democrats if we were sitting on the Government Benches. If we undermine British farming, we undermine our ability to feed the nation and, in turn, compete in an increasingly uncertain world. Our farmers have been through an agonising 14 months. They should never have been subjected to this fear and stress. It is a disgrace that the Government took more seriously a prospective revolt from their own Back Benchers than the committed, desperate and passionate campaigning of farmers, countryside organisations and rural communities right across the country for the last 14 months. This policy still retains huge unfairness, as colleagues have explained so clearly, and I urge the Government to pause and think again while a proper impact assessment of even the new APR is carried out.