Budget Resolutions

David Smith Excerpts

Thursday 27th November 2025 Commons Chamber

[David Smith (North Northumberland) (Lab)]

I am grateful to be speaking in support of a Government who have delivered a Labour Budget that has ended the child benefit cap. That benefits 1,150 children in my constituency. The Budget is tackling the cost of living by reducing household energy bills by £150 from next April. It is raising much-needed funds for our public services by increasing taxation on online gambling and on homes worth over £2 million—mansions—and it includes another rise in the national minimum wage. This is a Labour Budget with Labour values that will achieve so much. It will positively impact millions of lives, and I am proud to support it.

It is with a heavy heart that I have to tell the Minister—this will come as no surprise to him—that the one thing I remain concerned about in the Budget is the overarching changes to inheritance tax for farmers. I am grateful to the Chancellor for listening to my concerns and those of my colleagues on the Back Benches, and for making an adjustment. The expansion of the transferability of inheritance tax allowances to widows retrospectively is welcome. It is a compassionate change, and it will allow widows to add their deceased spouse’s allowance to their own to benefit their children on their death. It is an effective doubling of their allowance, which is to be welcomed. However, I remain concerned about the long-term impact of the policy.

In my constituency of North Northumberland, there are 710 farms, and over the past year I have met at least 90 farmers. I am not from a farming background, and this past year has been a steep learning curve for me, so I have been deeply moved by the generosity, respect and patience shown to me by farming constituents. They have opened their homes and lives to me, and they tell me that the inheritance tax status quo meant stability. Farm estates could transfer smoothly from one generation to another without their work being interrupted by lengthy processes. In addition to the allowance for transfers to widows, I urge the Government to consider an elderly farmer exemption, so that those surprised by this change in their old age can retire with dignity.

One farmer recently wrote to me saying,

“My father with his father and brothers worked to buy our farm. He wanted to pass that to me 10 years ago, the legal advice at that point was to do this on death. Now, at 80 years old, he has dementia, unable to make any decision on his own and his power of attorney (me) is unable to act on his behalf.”

Agriculture has faced headwinds for many years, not least under the last Conservative Government; energy prices rocketed, and dodgy trade deals with Australia and New Zealand undercut farmers. They have also had to contend with unusually difficult weather patterns, whether it has been too hot, too dry or too wet.

By 2029-30, the changes that we are talking about will have raised only £520 million. That sounds like a lot, but it is less than two days’ debt interest. In the light of widespread farming opposition to this policy, will the Government keep this policy under review in its first two years and, if the fears of farmers are established as facts, look to alter the policy accordingly?

There is a better way forward. If we raise the threshold at which IHT kicks in, cut the relief for those above the threshold and delink agricultural property relief and business property relief, we can protect those who need protecting and invite those who can pay more to pay more. The Minister knows that the minimum share rule is just one example of that, and he may observe that this change would draw more estates into the policy. Although the number of estates brought into the policy under the minimum share rule may grow, those estates would by definition have larger assets that were less likely to be involved in a working farm, and that would therefore be more disposable.

It is exceptionally hard out there for farmers, yet from the wee small hours to late at night, and without family holidays or long weekends, they put in the work to ensure that we all have food on the table. As one farmer said to me,

“My childhood included no Christmas, home-made clothes and food grown from the veg plot. It was a frugal upbringing…Even now there is no lavishness. Holidays are scarce, the house roof leaks, windows aren’t fit for purpose and damp and mould prevails in the house. A private landlord can’t allow his tenants to live like this, but we accept these conditions. That’s ok”.

They continued that the proposal

“will bring a tax bill of £400,000. We are a modest hill farm. We cannot make this kind of profit in 20 years, never mind 10.”

Most farmers farm not to become wealthy, but because it is a way of life. The Agriculture Act 1947, brought in by the Labour party, was the first great, sustained support for British farming. We have the opportunity to provide that support again. Farmers need us. They need stability, and they want a fairer system. There is still time to achieve that. In a £1.3 trillion budget, £520 million will not make a difference to our fiscal stability, but it would make all the difference in the world to the flourishing of British farming, including in North Northumberland.