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My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I declare an interest as an executor who is currently trying to sell our family farm.
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My Lords, the Government keep all taxes under review, with decisions being for the Chancellor at fiscal events. We recognise the vital contribution of rural communities and businesses to the UK economy and the need for policies that actually work for rural areas. Support available includes rural rate relief, small business rates relief, a high VAT registration threshold and the small profits corporation tax rate. We are also supporting farmers through reduced red diesel duty rates until the end of this year, and through measures to promote sustainable farming and food production.
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My Lords, the family farm tax is both hated and feared. It taxes a business asset as if it is personal wealth. I know that the Minister was not consulted—nor was her department—before the tax was put in place. Will she reassure the House, which I know appreciates all that she does for us, that she will personally make representations to this Chancellor before this Budget, as those of us who care about the countryside and the NFU are currently doing, to make sure that this hated tax can be removed?
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I am sure that the noble and learned Baroness is aware that, absolutely, I support the importance of farming to the rural economy and the importance of the work that farmers do through food security to the wider economy of the country. She will also be aware that we have discussed this matter on a number of occasions and that the Treasury has made it quite clear that it is not intending to revisit the issue of inheritance tax. I am aware that the Prime Minister was asked about this during the by-election in Makerfield. However, as I said in my original Answer, the Government always keep taxes under review. I will ensure that the new Chancellor is aware of the strength of feeling on this matter.
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My Lords, does the Minister accept that rural businesses are hit disproportionately by the increases in petrol and diesel prices that we have seen over recent months? These add to their costs: of inputs, of getting goods to the market and of those working in rural areas travelling to work. Is there any way that the amount of taxation that is raised on petrol and diesel can somehow be frozen rather than added to every time there is an increase in international prices? This hits rural areas.
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As someone who lives in a rural area and has to travel long distances to get anywhere, I completely appreciate the noble Lord’s point. We have rural fuel duty relief and are looking at the costs of that. We need to look at how we can best support rural communities and rural businesses as a whole rather than just picking at little issues. It is the cost of the whole that makes the difference and there are other ways in which rural businesses and communities are being supported financially.
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Even before the summer drought, failures of agricultural businesses had risen by 450% under the pressures of the energy costs that we have just heard described, with higher taxes and subsidy changes also playing a major part. Do the Government recognise that many people will be very concerned that today’s announcements by the Chancellor had so little focus on action in the rural UK? Will the Government now put themselves behind the proposed good food Bill that is being demanded by the industry to support domestic producers and provide us with greater food security?
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In Defra we have been working an enormous amount with farmers and other relevant stakeholders around food security. That includes biosecurity. It looks at how farmers can be supported through veterinary services and how we manage drought and climate change going forward. It is about not just drought but flooding. We have potential heavy rainfalls coming this winter. If we are to continue to support good, sustainable food production in this country, it is important that we work cross-departmentally, including with the Treasury, to ensure that we have the best possible support for farmers.
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My Lords, has the Minister noticed that over the last few weeks the Opposition have been calling for more public spending at the same time as calling for lower taxes? Have they all joined the “Liz trust” of economics?
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My noble friend makes a good point about how you cannot have something for nothing. If we are to have the public services that people want in this country, we have to look very carefully at how we intend to pay for them.
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My Lords, I regret having to ask this question following the noble Lord, Lord Watts. One thing that needs to be taken extremely seriously with the inheritance tax issue is that it is stifling investment. I thought that the party opposite and the Government were supporters of growth. This is the perverse consequence of this imposition. I ask the Minister to act on behalf of Defra with the Treasury and the Government. This is acting as a contrary-to-growth tax.
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I hear very clearly what the noble Lord has said. As I said to the noble and learned Baroness, Lady Prentis, I will make sure that the new Chancellor understands the strength of feeling in this House about the inheritance tax.
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My Lords, I am very pleased to hear the Minister talk about the whole burden on rural dwellers and farmers. In that regard, can she say how her department is looking to minimise the burden on farmers, not just the tax burden but the regulatory burden, and in particular for those farmers in Northern Ireland, given the differential regulations that occur there?
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I am very aware of the kinds of regulations that the noble Baroness is talking about, which is also why, when I visit Northern Ireland, I always make sure to meet the Ulster Farmers Union, for example, because there are slightly different perspectives and it is important that we understand those differentials. For me, the most important thing is to listen to farmers and not make assumptions about what works and what does not. Tomorrow, for example, I am holding a meeting with farmers specifically on bluetongue, because I want to know what is causing their difficulties most of all, what will actually make the difference and what we need to do so that we do not end up with so many problems next year as well. I am keen to work in a very proactive way to provide the best support we can.
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My Lords, every day I become more convinced that it is business not government that creates growth. Farming and family businesses in rural areas are under tremendous pressure from a series of high taxes, including IHT. Will the Minister, or her colleague, the Chancellor, meet US economist Arthur Laffer during his visit this week to discuss how the perverse effect of such high taxation might be minimised and government revenues even increased by cutting taxes?
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I think the gentleman that the noble Baroness suggests I meet might be rather disappointed if he met me. I am not sure that I would fully comprehend all the very important points that I am sure he would be making, but I imagine that it would be an opportune moment for him to meet someone from the Treasury.
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The original Question from my noble and learned friend Lady Prentis concerned the selling of a farm, so that raises issues of probate as well. When the Minister is discussing these fiscal matters with the new Chancellor, will she also raise the blatant unfairness of the 7.75% charged by the Government on late payment during probate, compared with the 2.75% repayment ceiling when the Government owe the taxpayer money?
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If you are looking at issues to do with probate, that is not just to do with family farms. That is a much broader issue. I am sure that Treasury officials will be listening very carefully to this debate and will take that into account.
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My Lords, there is some speculation in the press that farmland might be included in the calculation of the value of a home when it comes to the mansion tax. Perhaps the Minister could confirm whether or not that is true because, clearly, if it is, an awful lot of modest farmhouses would then be included in the mansion tax, and that tax at the highest rate is quite a lot for a farm.
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I am not aware personally of any such speculation, I am afraid, so I am not able to provide any further information to the noble Earl.