Autumn Budget 2025

Lord de Clifford Excerpts

Thursday 4th December 2025 Lords Chamber

[Lord de Clifford (CB)]

My Lords, on behalf of the veterinary sector, I thank the Government for confirming in the Budget the commitment to a consultation on reform of the Veterinary Surgeons Act 1966. This is sorely needed, as the sector has seen significant structural change in the last 15 years. I was asked to note my registered interest as the operations director and a shareholder of a large, independent veterinary practice, which is an SME.

I speak today with SMEs and employees in mind. I think that many who own and work in SMEs would accept a tax rise if the extra funds could be used to reduce the national debt and encourage growth. We recognise the need to support people in need, but continued growth of spending on benefits will not support growth within our economy. I also welcome today’s announcement by the Health Minister of a review into mental health overdiagnosis to encourage those on benefits back to work, and SMEs would welcome them.

This Government came in on a manifesto promise of change to support and encourage growth in the economy. There was an opportunity for the Chancellor to make significant changes to simplify the tax system, but these were not taken in this Budget, which certainly did not encourage or support SMEs in investment and growth.

The Budget added further tax burdens to both employees and SMEs. I have three requests for the Minister to take to the Treasury for possible future adjustment to reduce those burdens. The first is to reconsider the student loan freeze on plan 2. Surely this is not a tax; it is simply a repayment process for students who invest in their future. For an economy to grow, we need aspiring individuals who want to work hard and get rewarded by higher salaries. Freezing this limit will reduce their take-home pay further, at a time when they desperately need funds for high housing costs and possibly to raise a family. Will the Chancellor please reconsider this change and remove the freeze? This would help our younger generation to aspire to a working life and not to feel that they are just paying down the country’s debt, from which they have not benefited.

The second request is to take out pension payments from the change to the salary sacrifice scheme. Businesses’ employees are encouraged to sign up to the auto-enrolment scheme, and most do, to help save for the future and to help fund retirement and not be a burden on the state. This change will take a small amount of money away from individuals’ savings and their disposable income, as NIC will be charged on auto-enrolment at 5%, which they and employers cannot avoid. The majority will be above the median salary in the UK. It will bring an additional cost to SMEs employing skilled workers whose salaries are over £40,000. It will also stop employers supporting their staff in saving for the future and increase costs. This does not help productivity or growth.

My final request is for further consideration of the IHT changes to APR and BPR in last year’s Budget. Family businesses and farms welcome the small change for the allowance of £1 million to be kept and transferred to spouses in the future, but it does not go far enough. Further relief is needed to protect family businesses with high asset values, such as land and buildings, that generate low income. Could the Government look again at increasing the limit further or even at a transitional relief—for example, for five years—to allow families to move assets to the next generation or distribute them among family members to reduce the IHT tax burden on assets that do not generate significant income, so that an unsustainable tax bill for these marginally profit-making farms and small businesses that are vital to our economy is not incurred?

Small Farms and Family Businesses

Lord de Clifford Excerpts

Thursday 12th December 2024 Lords Chamber

[Lord de Clifford (CB)]

My Lords, I congratulate the noble Earl, Lord Leicester, on securing this debate at such an appropriate time, with so many farmers feeling the need to demonstrate outside this House yesterday and a few weeks ago. The small farmers and family farmers of this country are feeling betrayed, unwanted and targeted. I compliment the noble Lord, Lord Cameron of Dillington, on his moving speech describing the farming community.

The recent Budget has sent shockwaves through the industry as lifelong plans for farming business have been turned upside down. The next three years see three added burdens. The unexpected announcement of the delinking of basic payment scheme payments was disappointing, as it was a direct subsidy to farmers. A family farm that received £19,000 this year would have expected £14,000 next year, but now that has been capped at £7,200.

In 2026 we will see the introduction of the of the APR and BPR capping. While the change is understandable to close an IHT loophole for large individual investor landowners, the new limit of £1 million is far too low and adds large IHT bills to many productive family farms.

I repeat the comment by the noble Earl, Lord Devon, that in 2027 another increase to the cost base of farms will be the interest reduction of the UK carbon border adjustment mechanism—or, as it is known to farmers, the fertiliser tax—which is anticipated to add £50 per tonne to nitrogen fertiliser, and a typical 400 acre or 500 acre farm uses about 60 tonnes a year.

There has been much debate on the figure that the Treasury has used for the number of farmers who will be affected. The Central Association of Agricultural Valuers has stated that 73 farmers was a perfectly accurate figure but was entirely uninformative. A farm is made up of not just agricultural land but machinery, livestock, deadstock, corn in the store and many other assets. Has the Treasury looked into the number of farming estates in the past few years that have claimed BPR as well as APR? That would be much more reflective of the working farms to be affected.

The CAAV issued a discussion paper in November, a detailed document taking into account the many different factors regarding the farming business. It acknowledges that it has made certain assumptions, but its conclusion was that the measure would affect 60,000 producing farms over the next 30 years, which is a generational change period. On average, that is 2,000 farms per year, which is 1,500 more than the Treasury thinks. That is why the farming community is fearful of this change.

I will not report the figures given by the noble Lord, Lord Northbrook, from the CLA, but they make stark reading for the rural community. For those farming business owners who can plan for the future, there is definitely mitigating action to be taken, which is welcome, but the risk from April 2026 is that, for those farms that have planned on the basis of APR relief and are relying on their farms to provide for their retirement, there is no time to change so they will suffer greatly. I again ask the Minister, as I did in the Budget debate: please could the Treasury do an impact assessment of these changes and engage with professional bodies within the agricultural sector, such as the CAAV and special agricultural accountancy firms, to provide a broader depth of the figures to the sector? I would also support the suggestion made in this debate by the noble Lord, Lord Londesborough, as a possible solution.

The farming industry welcomes the additional funding announcements this week, but accessing environmental support is complex, not easy, as other Peers have stated. Farmers want a decent price for the products they produce so they can make a living that is above the minimum wage and can have spare funds to invest in their long-term future.

Autumn Budget 2024

Lord de Clifford Excerpts

Monday 11th November 2024 Lords Chamber

[Lord de Clifford (CB)]

My Lords, I welcome a Budget with a notable change in direction for our nation’s finances. This Government’s ambition to improve the growth rate, productivity and public services and take control of the country’s debt is commendable. The need to raise taxes to fund these ambitions was clear, but it was not made clear in the election by either of the main parties. No one ever welcomes tax rises, but tax rises should be targeted at people who can afford to pay them. They should not force businesses to change fundamentally or individuals potentially to lose the way they earn a living and their way of life. I note my entry in the register; I work for a veterinary practice relying on the farming industry.

The change to the agricultural property relief rules is devastating news to the farming community and has created a lot of anger. The community felt let down by the Government’s assurances made in speeches in the past year that APR would not change. The Government stated that 73% of farming businesses will not be affected by this change. This statistic is challenged by farming professional bodies such as the NFU and the Central Association of Agricultural Valuers. Is the Treasury able to publish more detailed figures that support this statistic?

I understand why the Government wish to close a foreseeable inheritance tax loophole, but, when you do such a thing, there are always unintended consequences. That is why the farming community is so upset. Inheritance tax is something you can plan for, as my noble friend Lord Devon explained earlier, but these changes will leave many farmers who believed that APR would remain in place with no time to plan for a significant liability. Farmland is a unique asset. It differs from many other assets in that the value is high but the return is very low. It generates income only if farmed in some way. If we wish to protect our food security, environment, rural economy and the countryside that most of us love, we need to think again about this policy.

In 2023 the average agricultural land value, according to Savills, was between £5,000 and just over £9,000 per acre, depending on land type. If you take a typical 450-acre farm—which is not a large farm—with mixed land types, the value alone could be over £3 million, without even considering the farm machinery, animals, farm buildings and farmhouses. So, even allowing for a possible £3 million exemption when a couple own a farm, there could be a tax liability of at least £200,000 or more. Where are these family businesses meant to find this money, as such a business may have a turnover of only £1 million? A family could sell land, but the result could be that the farm becomes unviable as a stand-alone business. Some upland hill farmers in Wales and Scotland may not be able to sell part of their land.

Farmers cannot raise prices as they have extraordinarily little control over the sale price of the goods they produce; prices are set by supermarkets or food processers, based on a world food market. Farming is an industry that requires government subsidy to make business viable and to achieve food security and improve the environment. Therefore, why are we implementing a policy that will remove a possible £450 million from this industry in 2027-28?

On behalf of the farmers of the UK, I ask the Minster whether a full impact assessment of these changes can please be done within the next year to assess the effect on medium to large family farms.