Finance (No. 2) Bill

Alistair Carmichael Excerpts

2nd reading
Tuesday 16th December 2025 Commons Chamber

[Dan Tomlinson]

I, too, welcome that change in the Budget, and I commend my colleague the Economic Secretary to the Treasury for the work she has been doing on that—I am sure we will hear more about it in her closing remarks.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

Will the Exchequer Secretary give way?

[Dan Tomlinson]

I will give way, and then I will try to make some progress, so that other Members can get in.

--- Later in debate ---

[Mr Carmichael]

I am grateful to the Exchequer Secretary for giving way. On the point of growth, he should be aware that, since the Budget last year, 49% of farm businesses have paused or cancelled planned investment, 10% have already downsized operations, and 21% intend to do so before next April. What are the Government going to do to restore confidence in farming to invest? Without that, there is no growth in the rural community.

[Dan Tomlinson]

I thank the right hon. Member for his point. We do want to see farming businesses in rural communities and businesses up and down the country investing and growing for the future. On the changes to agricultural property relief and business property relief, it is worth noting that the statistics suggest that up to 375 estates a year will be affected—a small proportion of the overall number—and that number has come down from 520, as was forecast at the previous Budget.

--- Later in debate ---

[Daisy Cooper]

I am grateful to my hon. Friend for making that point. This will have unintended consequences, and we can see what those will be. We have spent a year warning the Government; they can no longer say that they have not been warned. I hope so much that, at this late stage, they make changes to the Bill.

[Mr Carmichael]

My hon. Friend may be a little over-generous in saying that there are unintended consequences. The anti-forestalling clause, which is intended to deny those over 65, or anyone who dies within seven years of making a transfer, the ability to manage their tax affairs in a sensible way, puts a massive burden on those who are over 75.

--- Later in debate ---

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I remind the House of my entry in the Register of Members’ Financial Interests.

I want to start with a comment that some may see as controversial—uncharacteristically so, I hope. I want this Government to succeed. I think it is in the national interest; everyone should want our Government to succeed. I worry that continued economic stagnation poses an increasing threat to social cohesion, and that is why I agree so strongly with their growth mission and why I think it is so important. If that growth is to be meaningful, though, it has to be available, felt and understood in every part of the United Kingdom. It should not just be growth in the cities and towns; it has to be felt and understood in rural communities, coastal communities and, of course, our island communities. It is for that reason that I feel so strongly about the dangers of what the Government are doing on the removal of agricultural property relief.

We have already seen the effect that the prospect of that has had on agricultural businesses, and of course agricultural businesses underpin so much of what happens in rural communities. Forty-nine per cent of farm businesses have already paused or cancelled planned investment, 10% have downsized the scale of their operations and a further 21% intend to do so before next April. The truth of the matter is that these changes to APR have absolutely killed the sense of growth in the rural community.

I welcome what the Minister said today about changes to the spousal transfer. I was inspired by the shadow Chancellor’s references to Shakespeare. I offer my own from A. A. Milne—maybe not quite so high-falutin’. As you well know, Madam Deputy Speaker, I am a bear of very little brain, but I am pretty sure that what we heard from the Dispatch Box is more or less what the Government were telling us last year was going to be the case any way. If that is a concession, it does not seem to be much of a concession to me.

It may have escaped the attention of the Treasury Front Bench that not every farmer is married and, indeed, a lot of farmers—like everybody else these days —get married and some then get divorced. Is the message from the Government to the farming community really, “If you want to hold on to the farm for the next generation, then get on to Tinder now, because that is your best chance of holding on”?

[Richard Foord (Honiton and Sidmouth) (LD)]

Will my right hon. Friend give way?

[Mr Carmichael]

In a second—this is my punchline: “You’d better understand that if you want to develop your relationship in the back of a double cab pick-up, then that is going to cost you as well.”

[Richard Foord]

I suppose some in the farming community will not be taking up my right hon. Friend’s dating tips, but is he aware that 46% of farms are owned by single farmers and that a single farmer with 200 acres of land would have to pay 136% of their yearly profits to cover this tax bill?

[Mr Carmichael]

I am indeed aware of the general point. The specific illustration is a new one on me, but I am pretty sure, knowing my hon. Friend, that it will be well founded.

The reason this is so dangerous is rooted in the exceptionally poor return on capital investment that we get from agriculture. I have sat down with many farmers in my constituency. The average family farm in Orkney will be something in the region of 250 to 300 acres, running perhaps 100 suckler beef cattle and some sheep. The value of that property will be something in the region of £3 million, including stock, buildings and machinery, but it will return a net profit most years of something in the region of £25,000 to £30,000. Do the maths here—that is an inheritance tax liability of £400,000, which, even over the 10 years that is allowed, farmers simply will not be able to pay. As a consequence, farms are going to be sold off in whole or in part, and they will not be bought by those who want to produce food. That comes to the nub of it. The Prime Minister tells us that food security is national security, but the changes to APR will in fact diminish our ability to look after our own food needs.

The Exchequer Secretary to the Treasury said that this would only affect 375 estates per year. That figure may or may not be correct—I have heard nobody outside Treasury say it is a credible figure—but it honestly misses the point. Whether it is one estate or 1,000 estates, an injustice is an injustice, and that is why I was so disappointed by the Minister’s attitude today. Let us consider who will be paying this tax and whose estates will be affected. The Treasury’s own figures tell us that 75% of those estates will belong to those who are 75 or over. That is why the anti-forestalling clause in this Bill is so pernicious and so obnoxious. The effect of the anti-forestalling clause is to trap especially those who have farmed into their 70s and 80s into the new rules unless they die before next April. I dislike the use of hyperbole, especially when we are talking about people and their lives, but the anti-forestalling clause in this Bill is downright cruel.

Those who have farmed into their 70s and 80s did it principally for two reasons. First, they were given good, sound professional advice that this was the best way to hold on to the farm and hand it on, and that was true until last October. We also have to understand—and again, this is rooted in the poor level of farm incomes—that many of them did it because they could not afford not to. In my own family, there are those who continued to farm into their 80s because if they did not, they would be left simply on the state pension and nothing else. That is why this Bill and these measures are wrong, they are dangerous, and they are a threat to our growth, our national security and our food security, and I, along with my colleagues, will be voting against them this evening.