Official Report 1049KB pdf
The next item of business is a debate on motion S6M-15400, in the name of Tim Eagle, on reversing the family farm tax. I invite those members who wish to speak in the debate to please press their request-to-speak buttons, and I call Tim Eagle to speak to and move the motion. You have up to seven minutes.
14:51
I refer members to my entry in the register of members’ interests, which states that I am a farmer and a former land agent. Those interests are particularly relevant today as we talk about farming and the very future of the industry—the survival of family farms.
On 30 October, Rachel Reeves, the Chancellor of the Exchequer, announced that, from April 2026, Labour will reduce the agricultural property relief and business property relief for farms with combined business and agricultural assets worth more than £1 million. Those long-standing reliefs have been in place since 1992. To put it simply, those reliefs protected working farm businesses following the death of a member of the family and allowed the land to be passed to another family member to carry on working the unit. The change matters because it risks the very future of family farming units across Scotland and the United Kingdom, and, in so doing, it poses a serious risk to the future of our rural communities and national food security.
Today, Labour will—I have no doubt about it—repeat the Treasury’s claim that the changes will impact only a very small number of farms. Labour’s calculations are wrong. The National Farmers Union, along with other organisations, disputes Labour’s calculations, claiming that the move will hit capital-rich, cash-poor family farms. It is a tax raid that has been described as “disastrous”.
I call myself a farmer and I am proud to do so. I love working the land. However, I have always been a small-scale farmer with a few sheep here and there, and sometimes a bit of arable. The change will not affect me personally, but it will affect many people I know in the industry, and it is evident that Labour simply does not understand how the majority of farms work.
In one of my previous roles, I was a Quality Meat Scotland and Scottish Quality Crops farm assurance assessor. I imagine that some members will know the role of farm assurance voluntary schemes, which cover the majority of farmers in Scotland and put in place the highest possible standards for animal welfare, hygiene, transport and so on. Every year, each member of the scheme is visited on their farm by an assessor. The first part of the visit is spent outside, walking around the unit, and the second part often happens inside, over a coffee, looking at record keeping. I never calculated how many farms I visited, but I am pretty sure that it was more than 1,000 across the north-east and the Highlands. I do not remember a single unit that was a large business entity—a branded corporation with legal departments and accounts teams. No, I met fathers, mothers, sons and daughters—proud people running small-time businesses and just trying to get by.
My trick when inspecting was to find a positive quickly, whether it was by pointing out a bonnie cow or a healthy sheep or by complimenting the farmer on how good the crops looked. It would relax the farmer, who would proudly tell me of the years it had taken to get the flock just right for the farm or how one of the cows had been with him for 30 years and a calf had come second in the Royal Highland Show. They would recount stories of their grandfather putting up the now-old cattle shed and the days spent sweeping the grain lofts as children.
Many of these families have served for generations, growing food for us all. They provide a service to their country and they are custodians of the countryside. Years of hard work have gone into making farms what they are, but farming families are not just farmers. When the snow falls heavily in winter, it is the farmers who clear country lanes so that local people can get out and about, and, when the delivery driver gets stuck in the ditch, it is often the farmers who help them to get out. Family members connected to farming can often be found working as care workers, doctors, teachers, shop assistants and more.
Farming families are not just in our rural communities—they are our rural communities. They are the lifeblood of those areas. That is the key point that I want to make. The key reason why the changes made by Labour are devastating is that they will impact those very families. They will force the sale of land, which will make family farms economically unviable and lead to more depopulation in our rural areas.
It is all very well for Labour ministers and civil servants to talk about farmers handing over the farm early or using the inheritance tax allowances, but those suggestions fundamentally miss the point of how these units work. Often, children go away to work in other areas to gain experience before returning home to work the farm. With little profit, farmers tend not to retire but are an active part of the unit for a long time.
Although I would always urge farmers to consider early succession planning, having been part of such discussions with farmers and having monitored the books for them, I know that it is not that simple. Jim Walker, a former president of NFU Scotland, has calculated that a medium-sized, 500-acre farm worth around £5 million that previously had no inheritance tax liability could incur an £800,000 bill, which, if amortised over 25 years at 8 per cent, would mean an annual repayment of £75,000. He asks:
“Who’s going to break the news to the children that want to farm it?”
Farming is already a difficult business, but the changes risk the very future of our family farms. They risk breaking up viable units across Scotland and land being purchased for investment such as carbon credits, and they risk the future of communities and food security. We can talk about land reform, new entrants to farming, succession planning and innovation in farming, and we can put in place plans that would help farming to thrive, but all of that is undone by Labour’s damaging changes. Trust is now broken, because, during the election, Labour gave farmers a cast-iron guarantee that, if it won, it would not tinker with agricultural property relief, and it has broken that promise.
The Scottish Conservatives have launched a petition at stopthefarmtax.com, calling on people to send Rachel Reeves and the Labour Government a clear message that the changes could spell the end of family farms being passed down to future generations. I want rural communities to thrive. I want top-quality food production in Scotland that we are not ashamed to shout about. I do not want our unique family farms to be destroyed. Labour has underestimated how many farms this will affect, and it has underestimated the anger that the changes have created. The Scottish Conservatives urgently call for the family farm tax to be reversed.
I move,
That the Parliament calls on the UK Government to reverse its decision to impose a so-called family farm tax on agricultural businesses.
14:58
I welcome the fact that we are having this debate, and I appreciate Tim Eagle’s contribution and his bringing his personal experience to the chamber.
I want to make it clear that this Government wants a tax system that supports rather than hinders orderly succession planning and the transfer of land to the next generation of custodians. However, that is not what the new UK Government has put in place. The UK budget is not just a disappointment; frankly, it is a disgrace. The unnecessary worry, stress and severe concern that it has caused, and is causing, farmers and crofters in Scotland is simply unacceptable.
The UK Government’s decision to change inheritance tax, which is a reserved matter, was taken without consultation with the farming community, its representatives or the Scottish Government. The changes were not included in the Labour manifesto, so we had no warning at any point that they were coming. As Tim Eagle outlined, not only were they not mentioned but Labour stated before the election that it had no plans to change inheritance tax or agricultural property relief. It is an entirely arbitrary decision, and we are left—as farmers and crofters in Scotland are—to try to work out the extent of the impact, as no assessments have been made or published.
And that is not the full extent of the indifference that has been shown to rural Scotland by the new UK Government in its budget. Although I welcome the fact that future funding allocations will be a Scottish Government decision, baselining and removing ring fencing from funding for agriculture—and, indeed, marine—add to the pressures that we are under. Unlike other farming nations, such as Denmark and Ireland, we no longer have any long-term funding certainty. What we have now can only be described as an inadequate settlement. Any move to break the link between the area of land farmed and funding increases for Scotland ignores our on-going commitment to active farming and direct payments, and it risks our efforts to transform our industry for the future.
I am slightly puzzled by the cabinet secretary’s concern about the ring fence being removed. Surely there is nothing to prevent her from putting that ring fence in place for Scottish farmers.
My point is that we should not be in this position because of decisions that have been taken by the UK Government. The Scottish Government will continue to do what it always has done—we will stand up for the rights of our farmers and crofters in Scotland and will protect their interests as much as we possibly can. However, the fact is that we have a baselined budget that has not increased in line with inflation during the past six years, so we are already being short changed.
The Barnett formula fails to recognise Scotland’s unique relationship with the land and the contribution that our farmers and crofters make to our nation and, especially, our rural economy. Since Brexit, many promises have been made on funding and they have been broken by successive Westminster Governments. As I have said, by contrast, the Scottish National Party Government is wholly committed to supporting Scottish agriculture and to working with our farmers and crofters to give them certainty and stability and to help them to plan for the future.
It is important to highlight what support is available, because it is vital that families who are reliant on farming can access professional support for business planning and decision making and that generational transition is enabled. That is critical for the next generation, as is increasing the number of women who are leading farming businesses as part of building a more innovative and resilient 21st century agriculture sector.
That is why the Scottish Government is supporting agribusinesses to plan for the future through succession planning. That support is provided by the Farm Advisory Service, which helps them to access up to £1,000-worth of Government funding for specialist succession planning advice. Such planning is critical for everyone, and, regardless of approaches that are taken elsewhere, we are continuing to increase fairness by modernising assignation and succession and by improving the legal framework for agricultural tenancies through the Land Reform (Scotland) Bill, which was introduced to the Parliament earlier this year.
My officials continue to work closely with all members of the tenant farming advisory forum and the tenant farming commissioner on the bill proposals and to explore solutions to any concerns that they have identified. Scottish tenant farmers are different from those in England, as more than half of our tenancies are secure, heritable tenancies that pass through the generations, unlike those south of the border. The tax changes could directly impact some of our tenant farmers, including those with larger farms on higher-quality land.
Although agriculture is a policy area that has long been devolved to Scotland, this tax change, which is a reserved matter, will have a clear impact on our farming industry. We believe that, as a priority, the Scottish Government must be engaged on reserved tax changes that will impact directly on devolved policy. It is vital that we, and our farmers and crofters, see the details of the proposed changes and that more engagement and consultation take place with affected Scottish rural businesses, to ensure that people are not inadvertently harmed—especially when, as a result of the changes, Scottish farmers will be paying more into Treasury coffers with no guarantee of getting any of that money back in future funding settlements.
Rachael Hamilton (Ettrick, Roxburgh and Berwickshire) (Con) rose—
I am drawing to a close.
The UK Government must acknowledge that its handling of the matter has been a boorach. It should recognise the need to review the changes, to engage with the agriculture sector and devolved Governments and to either fully assess the impacts or publish any information that it already has. Scotland’s farmers and crofters deserve and need nothing less.
I move amendment S6M-15400.2, to insert at end:
“and urgently commit to undertake and publish impact assessments on the cumulative impact of its budget proposals on farmers and crofters in Scotland.”
15:04
I cannot believe the brass neck of the Tories. They trash the economy and leave others to clean up the mess, and then they shamelessly complain. From Liz Truss’s budget to the Covid cronies’ handouts; they have no shame. I wonder what people who are struggling to feed their families, living day to day from food banks, which became a necessity under the Tories’ watch, think when they hear the Conservatives crying foul over policies that protect people from paying tax on assets worth up to £3 million in certain areas.
What would Rhoda Grant say to my constituent Kenny Campbell, who has just invested over £1 million in a new dairy but is a cancer survivor? If he were to die in the next seven years, he would leave his son with a tax bill of over £1 million, meaning that his son would have repayments of over £100,000 year on year. That would be a family business going down the drain. What would she say to Mr Campbell?
I can give you back your time, Ms Grant.
I would say to Mr Campbell that he needs to put his affairs in order to make sure—[Interruption.]
Members!
He needs to make sure that, if his son is investing time in the business, he is getting the fruits of his labour. [Interruption.] If the son is working in the business, and I will come to that, he should be paid, because we have heard way too often of situations where a member of the family who is working on a farm loses out at the time of succession to other members of the family who have done nothing if there has not been succession planning.
Let me be clear, Presiding Officer: very few family farms are worth in excess—[Interruption.]
Ms Grant, please resume your seat for a second.
I say to the members on the Conservative benches that, when a member has the floor, they have the floor and members who are in a sedentary position do not, unless they wish to seek to make an intervention.
Please resume, Ms Grant.
Thank you, Presiding Officer.
Let me be clear that very few family farms are worth in excess of several million pounds. Indeed, the latest figures show that, across the UK, the top 7 per cent—the largest 117 claims—account for 40 per cent of the total value of agricultural property relief. That shows that it is not all farms; it is the minority.
The Labour Party will put the public finances on a secure footing and that means tough decisions. The £22 billion black hole left in this year’s budget alone has had devastating consequences for the country.
We also need to recoup some of the billions of pounds given to the Tory cronies during Covid. [Interruption.] While citizens followed the rules, the Tories splurged, lining the pockets of their pals, and partied into the night. [Interruption.] Their arrogance is breathtaking.
Will the member take an intervention?
I have already taken an intervention.
Farming communities tell us of their concerns that good agricultural land is changing hands at excessive prices for tax avoidance and also to be used for carbon trading. Polluters are allowed to pollute and then to ease their conscience by planting trees in the wrong place, preventing new entrants from getting into farming at all. That increases the value of farms beyond the reach of the farming community—something that the last Conservative Government did nothing at all about. The Conservative Government also had an underspend for agriculture funding of £358 million over the last three years, withholding support from farmers in England. Things are not much better in Scotland, where the SNP is raiding agricultural funding.
Although the Conservative Party withheld money from all farmers, it is now picking up the cudgels to fight for the very few who have millions of pounds in assets. Those are often large estates, owned by the privileged few.
If this policy has an outcome of ensuring that land holdings are smaller, giving people access to farming, it will have a wider benefit for society as a whole. It will also ensure that those living and working on the land have their fair share of the investment.
Let us be honest—it is the Conservatives who are trying to stir up strife, trying to get those who have modest assets to fight for the privileged few—
Tim Eagle rose—
The member is bringing her remarks to a close.
What is very clear is that none of the tough decisions that have been taken in the budget would have been required at all had it not been for the Conservatives, who ran the country into the ground. They should be hanging their heads in shame rather than playing politics.
I move amendment S6M-15400.1, to leave out from “calls” to end and insert:
“agrees that the Conservative Party should apologise to the country for its fiscal recklessness, which left the public finances in a dire state and required the Autumn Budget to put the country back on a sound footing, and recognises that, despite this, the Chancellor of the Exchequer has continued to put in place inheritance tax reliefs for family farms potentially worth up to £3 million and increased the Scottish devolved budget by £3.4 billion in 2025-26.”
15:09
The agricultural property relief changes that were announced in the UK budget have created a lot of concern in rural areas and the farming community. There is a distinct lack of clarity over whom the UK Government’s plans will actually hit. The Scottish Greens support inheritance tax because it is pre-distributive, and we also believe that land in Scotland should not be in the hands of a small number of individuals, so we must hear more from Westminster about how its changes will impact farms.
As everyone in the chamber will agree, Whitehall must step in immediately if it becomes clear that small, regenerative food producers are being harmed. We must not become more reliant on food imports from countries that have lower environmental and welfare standards.
The UK Government must also intervene if the measure pushes Scotland in the wrong direction on its land reform journey. If, as my Conservative rural affairs counterpart claims, family farms will sell up en masse due to the new rate of inheritance tax, the big question will be who buys the land when it gets sold because people cannot afford the tax. It will not be new entrants or young farmers; instead, it will be agribusinesses. Greater consolidation is in the interests of a very small number of individuals and it is not in the interests of our nation. Half of all of Scotland’s land is owned by just 433 people. That is a shocking statistic—it is bad for climate, nature and communities. Scottish people deserve better.
New rules could also obscure exactly who owns what in Scotland. I have heard concerns that even more landholders will hide behind corporate or trust structures in order to get around inheritance tax. Although that practice is not illegal in our lax UK tax system, it prevents proper scrutiny and denies taxpayers what they are due. If that scenario comes to pass, it will do so at a time when public finances are in a dire state and an unacceptable number of people are in deprivation.
The motion and amendments that we have before us today do not address the actual issues that most of our food producers face. They completely fail to address why farmers and growers face such challenging circumstances. That says to me that other parties would rather play politics than use this platform to raise the problems that our constituents face.
I will remind members of some of the key issues that our growers face. As we discussed last week, Brexit is ravaging the rural economy; farmers and growers are quitting the industry because of labour shortages that have come about as a direct result of leaving the European Union; seed prices have rocketed since 2020, and fewer varieties are available; and the UK Government is choosing to export our carbon emissions by importing food from countries that have poor standards and light-touch regulation. Those are the problems that we need to talk about, because they all pose a greater threat to farming than changes to inheritance tax.
Beatrice Wishart, who is opening the debate on behalf of the Scottish Liberal Democrats, joins us remotely.
15:13
Scottish Liberal Democrats will support the motion that is before us today, as well as the Scottish Government’s amendment.
The UK Government’s announced changes to the agriculture and business property relief schemes during the autumn budget are a Treasury-driven tax hike with little regard for the affected families or the impact on farming in rural communities. What affects farmers will affect the wider supply chain—vets, agriculture merchants, hauliers, local shops and post offices—in some of the most economically fragile communities in the country. The food and drink sector is a significant contributor to Scotland’s export economy, and it, too, will feel the impact from those changes.
Although farming might be seen as a capital-rich sector, it is also revenue poor, and some farms barely break even. The new rules might force the next generation to sell land in order to retain some of the family farm. The change will certainly have an impact on members of the younger generation who hope to keep the family farm going but are struggling to hold on. The land that is sold might not be dedicated to farming or food production, or to protecting the environment, natural habitats or biodiversity.
We could see smaller plots of that sold-off land bought up by big businesses that have little incentive to be custodians. If we want to be serious about food security and tackling the climate and biodiversity crises, we should support those who are making a tangible difference every day. As the Scottish Government’s amendment presses for, we need to know the assessment of the cumulative impact of the proposals on crofters, farmers and growers in Scotland.
Last week, I met local members of NFU Scotland, who expressed their concerns about the announced changes in the autumn budget on family farms and about the lack of ring-fenced agricultural funds and the obvious impact that that will have on our Scottish agricultural community. With the loss of the ring-fence safety net, which has been part of agriculture funding for decades, there is real concern about how the lump sum from the UK Government will be used by the Scottish Government.
During the passage of the Agriculture and Rural Communities (Scotland) Act 2024, I raised the issue of multi-annual funding and the need for certainty for our crofters, farmers and growers. In Shetland, food production costs are already higher than they are on mainland Scotland as a consequence of our island location and the impact of transport costs through the supply chain, along with a shorter growing season. I have written to the cabinet secretary about that, as it would be useful to understand the Scottish Government’s intentions with regard to multi-annual and ring-fenced funding.
In the meantime, I note today’s press release from Martin Kennedy of NFU Scotland, which says:
“Scottish farmers and crofters are continually being asked to do more and more on a support budget that has only half the buying power it had 10 years ago. The blunt fact is that whatever funding now goes towards Scottish agriculture is 100% within the power of Scottish Government.”
During the general election campaign, the Liberal Democrats demanded an extra £1 billion to support farmers. Family farming has become increasingly difficult due to the impact from Brexit—as we debated last week—the impact of climate change and increased competition. That money would have supported our efforts in food security and in tackling the climate and biodiversity crises, and it would have provided investment in our rural economies and communities.
I recognise the tough economic inheritance of the new UK Government, but that should not be used as an excuse to punch down on farming communities. We need to change course.
We move to the open debate. There is virtually no time in hand, so any interventions should be absorbed in members’ allocated speaking times.
15:17
I am delighted to stand up this afternoon and speak about small family farms, which is a subject that is close to my heart. I remind members of my entry in the register of members’ interests. I own a small family farm.
I must say that, if I had made Ms Grant’s speech this afternoon, I would hang my head in shame. We should be under no illusions. I am a third-generation farmer. I farm 500 acres, which is not very much in the big scheme of things, and I have seen 25 generations of cows come through in my lifetime. There are 160 of them now, and I am extremely proud of them. I also grow 300 acres of barley and my farm is a winter home to 700 ewes. I let some houses that are part of the original farm, and I have three farm workers, whose wage bill is more than £100,000 a year.
My farm is not dissimilar to other family farms of that size. I am proud that such farms provide local employment and create local expenditure. The farmers have a huge amount of local knowledge through local management, and they take a long-term view of the countryside, their assets and the land that they manage.
My farm is like the hundreds of local farms that I visited across the Highlands when I was a rural surveyor. I absolutely assure you that they are like the farms that belong to the hundreds of farmers who have contacted me regarding the tax. I would like to think that I have prepared—I have had reason to prepare—for when I die. Let me be clear that, if I die tomorrow, the tax will hit me and my family, and it will mean that my family farm will no longer exist.
That is the case because figures indicate—I hope that you are paying attention to this, Ms Grant—that a 200-acre farm with a profit of about £27,000 a year and the normal assets that such a farm has would face an inheritance tax liability of about £400,000. I am happy to sit down in your office and explain the figures to you. That means that the family would have to commit 159 per cent of their profits to pay their tax, having sold about 20 per cent of their land. Those are the real figures that are involved. That is what you and your Government south of the border are going to be destroying, Ms Grant.
As has been made clear, there are other people who will suffer as a result of the situation. There is a massive supply chain. I could mention the hundreds of people who our farm deals with, including Harbro, to whom we pay massive bills for food, and Gleaner, which supplies the farm with oil on a daily basis. If farming and small family farms stop, that will go.
Let me be clear: farmers are asset rich—they have land—but, on the whole, they are cash poor, and this tax will cripple them, as it will cripple many crofters across the Highlands. Members should be under no illusion: crofters will be affected as well.
I have tried to work out in my mind what the reason is for introducing the tax, and I struggled to understand it. However, when I listened to the comments of John McTernan, it became clear that the motivation was spiteful, vindictive and unjustifiable.
Ms Grant, I remind you and your colleagues south of the border that, if you have no farmers, you will have no food. There will be no future for the environment if you destroy the family farms.
I take this opportunity to remind members that they must speak through the chair at all times. References to “you” are references to me, and I do not think that that is what the member intended.
15:21
I shall try hard to temper my words in order to obey that instruction, Deputy Presiding Officer.
I thank the Conservatives for bringing this debate to the chamber. I want to lay to rest the notion that the Scottish Parliament and the Scottish Government do not understand rural communities and, at worst, do not represent them. I represented the South of Scotland region for 12 years and I have represented Midlothian South, Tweeddale and Lauderdale for the past 13 years. Indeed, I lived in rural Galloway for more than a decade. Therefore, like many people here—because, across the chamber, many of us represent wholly or largely rural communities—I hope that I am sufficiently appraised of the varying requirements of rural areas. During those 25 years, I have visited many estates, such as Burncastle and Arniston, and farms in the Borders, such as Baddinsgill, Moorfoot and Eastside. Although I cannot begin to approach the knowledge of Tim Eagle, I am not completely a townie.
The party that appears to have little concept of rurality and, in particular, rural farming communities and landscapes in Scotland is the Labour Party. I do not think that I am being unfair when I say that, because the recent actions of Sir Keir Starmer in respect of inheritance tax and changes to agricultural property relief, on top of changes to farming payments following Brexit, are evidence of it. I add to those actions the additional national insurance obligations, which will also fall on those farmers who are employers, and the pressure on farmers from supermarkets to always keep prices down.
In December 2023, Steve Reed MP—who is now the Secretary of State for Environment, Food and Rural Affairs and was then the shadow secretary for the department—stated that Labour had no plans to change inheritance tax, including APR. Well, we know what happened there, and what happened with regard to the national insurance contributions of employers, including farmers, who are apparently not “working people.”
There are many farms across Midlothian South, Tweeddale and Lauderdale that will be affected, because it does not take much for a farm’s assets to cross the £1 million barrier when a high-end combine harvester can cost nearly £750,000. I am therefore grateful to the NFUS for its briefing, which includes working examples of the impact of inheritance tax and APR. It says:
“an IHT qualifying farm with a value of £4 million would mean £1 million will have 100 per cent relief. The remaining £3 million will receive 50 per cent relief, seeing £1.5 million subject to IHT at a 40 per cent rate. That would equate to a £600,000 IHT bill in this example. Although the payments can be spread over 10 years, the first £60,000 will require to be paid within six months. Many farm businesses would not have this amount available which will mean some land would need to be sold thereby bringing into question the future viability of the farm.”
Farming is a family matter for many, as others have said. It is personal, intergenerational and a vocation. It is literally—not to abuse that much-used word—under farmers’ fingernails. Farmers provide not only the quality food on our tables, high animal welfare standards and quality exports, but the landscape that we take for granted. I add in passing that there may well also be an additional punitive levy on exports to the USA.
The levies have been set with no impact assessment or engagement with the sector, and the UK Government has completely failed to respect devolution by engaging with the Scottish Government. There is no rural visa on the horizon, either. What more does the Labour UK Government intend to do to undermine our farming and rural communities, many of which, as Beatrice Wishart said, are reliant on local farms? Those things will affect not just the farms, but all the local businesses.
15:25
Much of the language in this debate has been intemperate, inaccurate and deliberately inflammatory. The new Tory rural affairs spokesperson stood up in Parliament last week and accused the UK Labour Government of “taking our land”. The Cabinet Secretary for the Constitution, External Affairs and Culture said in response that he was “sympathetic to the criticism”. The Minister for Agriculture and Connectivity went even further the day before. He said that ending 100 per cent relief on inheritance tax for farm assets of more than £1 million was
“catastrophic for the farming industry in Scotland”.—[Official Report, 6 November 2024; c 5.]
Omitting to draw our attention to his entry in the register of interests, he went on to read out in Parliament a 140-word statement on the subject by the NFU. He was supposed to be answering MSPs’ questions as a minister of the Government, but I am not sure whether, last Wednesday afternoon, he was setting out the Scottish Government’s position or that of the National Farmers Union.
On a point of order, Presiding Officer.
Mr Leonard, please resume your seat. There is a point of order from the minister, Jim Fairlie.
I would like to draw attention to what Mr Leonard said. He made the accusation against me that I did not declare my register of interests. I do not have an interest. I do not farm and I do not have stock or land. I have absolutely no interest and I have no membership of any organisation. I have been a farmer, and if that requires that I declare an interest, I would apologise to the Parliament. However, I am under the impression that that does not require a declaration of interest, and I ask Mr Leonard to withdraw that comment.
Thank you, minister. The matter has been put on the record. Mr Leonard, please resume.
Thank you, Deputy Presiding Officer.
I turn to the Tory rural affairs spokesperson. Writing in a Sunday newspaper at the weekend, he said that he had to admit that he would not be affected by the inheritance tax proposals. He must know that very few of the local farmers across the Highlands and Islands and the crofting counties that he represents in Parliament will be affected either. In fact, the NFU sent out a briefing just yesterday afternoon in which it claimed that the Treasury figures were skewed by the inclusion of smallholdings, so which is it? Are smaller farmers affected or not?
Big landowners will have to start paying inheritance tax. Absentee landlords and those who view farmland as a tax shelter will have to start paying inheritance tax, although I am not sure that the trusts, the limited companies and the offshore interests will not seek to avoid it.
The whole debate reminds us once again that there is no one so militant as the old nobility and the new establishment combining to defend their vested hereditary interests in order to ossify the distribution of wealth from one generation to the next, making absolutely sure that the meek do not inherit the earth. Private wealth has never been so great and private fortunes have never been higher, yet investment in public services—in the common good—has fallen behind. I am not surprised to see the Conservatives posing as arch-defenders of the status quo and backing this revolt, but how telling is it that the SNP is joining them in defence of this ugly inequality?
I finish with a reminder of the tax treatment of farmers as farmers. Under this proposal, there remains 100 per cent inheritance tax relief below £1 million. The inheritance tax threshold for everybody else who leaves property in their estate to children is £500,000. No capital gains tax will be paid. Agricultural land and buildings remain exempt from non-domestic rates. Farmers will still be consuming red diesel, paying a rebated duty that is more than five times lower than that for other users of diesel.
Will the member give way?
The member is bringing his remarks to a close.
There is a zero rating for VAT. Farm income from subsidies and grants is outside the scope of VAT altogether. So, the major tax advantages for farmers as farmers remain in place.
This is about how we equalise the taxation of inherited wealth. That is why this budget proposal should not be reversed. It should be embraced and it should be implemented in full.
15:30
There are three Labour MSPs in the chamber today. I can only assume that all the others are back in their offices, with their heads in their hands, in shame at what they have heard today. Farmers watching Richard Leonard will not be embracing the budget or the changes, and they will not be embracing the support from Scottish Labour. Instead, they will be looking on in dismay at what the Scottish Labour Party and the UK Labour Party are doing to them.
On 30 October, Labour delivered a budget of betrayal. Farmers and other people across Scotland and the United Kingdom had been promised a lot about what an incoming Labour Government would do. We have already heard that, less than a year ago, Steve Reed, when he was shadow rural affairs spokesman, said that Labour had no plans to change inheritance tax, including agricultural property relief. Less than a year later, that change is in the budget, and it is causing so much angst among our farmers and crofters.
It was not just Steve Reed. Sir Keir Starmer, now the Prime Minister, said to the NFU that he knows what losing a farm means. He said:
“Losing a farm is not like losing any other business, you can’t come back.”
Farmers watched that speech and believed and trusted that the leader of the Labour Party understood what they were going through and what they faced as custodians of the countryside. He lied to farmers and crofters across Scotland and the UK, and Labour should pay the price for that.
How would Douglas Ross fill the £22 billion black hole that was left by the previous UK Government?
I am happy to come on to that. The amendment from Labour today does not apologise for what it is doing to farmers, nor does it say sorry for lying and misleading people in the countryside. Labour just says, “Look at what the Tory party did and the £22 billion black hole.” In answer to Rhoda Grant, I go to the Office for Budget Responsibility document that was published on the same day as the budget. Not only could the OBR not substantiate the claims about a £22 billion black hole, but it could not even substantiate the figure of £9.5 billion that Rachel Reeves was talking about.
I will take no lectures from Rhoda Grant. She is someone whom I previously respected and who has represented the same region as me for some time. However, I have to say that hers was one of the most appalling speeches that I have ever listened to in this Parliament. Her response to Finlay Carson, who was speaking on behalf of a constituent suffering from cancer, was, quite frankly, disgusting. To say that that gentleman should get his affairs in order and not worry about the implications of these Labour policies is shameful and something that I hope Rhoda Grant will reflect on and regret.
I will quote from a farmer, Jennifer Struthers, who wrote to The Scottish Farmer this week. She has written to her Labour MP and is encouraging others to do the same. In her letter, Jennifer says:
“Farmers do not view themselves as owners of the land, but merely custodians for the next generation.”
In other words, they invest in their farms to pass on a business in a better condition for the future. She ends her letter by saying:
“I hope common sense can prevail to overturn this ridiculous tax on the food producers of our country.”
I whole-heartedly agree with Jennifer and the many other farmers who are saying the same. We need a U-turn from the UK Labour Government.
The front page of The Scottish Farmer this week is very clear—it says “Fight For Our Future”. That is what the Scottish Conservatives are doing today—fighting for the future of our farmers and crofters and our future farmers and crofters. Tonight, the Scottish Parliament can add its voice to that, unite behind the motion from Tim Eagle and the amendment from the SNP cabinet secretary, and send the strongest possible message to the Labour Government that it needs to listen to Scottish farmers and to people in the countryside here in Scotland and across the UK, and U-turn on this dangerous policy.
Elena Whitham joins us remotely.
15:34
I am extremely grateful to see this important issue raised in the chamber once again, as it affects many of my constituents across rural Carrick, Cumnock and Doon Valley.
These changes to inheritance tax and agricultural property relief, which have never been consulted on, will be devastating to the vast majority of farms in Scotland. It is not only Opposition politicians saying that; the National Farmers Union of Scotland, and many of my farming constituents, have confirmed the new reality that they are facing.
Before the election, Labour made lots of promises. It specifically promised that it would not change APR, but now it has announced that 100 per cent relief will apply only to the first £1 million, leaving farmers fearing that they will be unable to pass their farms on to the next generation. Despite what many in Labour seem to think, it does not take much to reach those thresholds, even if spouses join the relief. Farms can be asset rich and cash poor, meaning that we are at real risk of family farms being taxed into oblivion.
Before the election, there was a clear and united voice across the country that farming needed multi-annual ring-fenced funding to be increased from previous levels, along with collective engagement to agree the principles of future intra-UK allocations. That would have ensured the same certainty that we had while part of the EU. Instead, Labour’s approach to farming is worse than before. The removal of ring fencing and the Barnettising of funding were among the biggest fears the very first day after the Brexit vote, but sadly, they have now come to pass under the Labour Party.
We are only a few short months into this Labour Government, and what have we discovered so far? We have discovered that the chancellor, and potentially the rest of the UK Government, has a complete lack of understanding of how agriculture works in Scotland. The chancellor has claimed that the new approach should protect small farms. After meticulous analysis, Johnston Carmichael, tax adviser to the NFUS, has confirmed that, given the value of land, livestock and machinery, and the average size of a commercial farm being around 200 acres, the changes are likely to see a significant number of farm businesses brought within the scope of inheritance tax.
Family farms are being left in an unknown space, not knowing how best to manage succession of the business in an organised fashion while at the same time protecting against exposure to a punitive inheritance tax, charged upon death, that could lead to the breakup of their family farm, and to factory farming and further depopulation.
Scotland’s farmers have already suffered massively as a result of Brexit, with loss of access to the single market and higher supply chain costs, not to mention the impact of continuously rising energy costs. Our farmers need and deserve our support, not more uncertainty and a brutal hammering from a Government that either does not know or—worse still—does not care about the net effects of its budget decisions on farming communities here in Scotland.
I am sure that we were all dismayed to hear a leading Labour voice proclaiming that we do not need small farmers and that they can be done away with, akin to the miners. Whether it be mining or farming, we cannot continue to allow UK Governments, of any colour, to have the deciding say on Scotland’s most critical industries. Our farmers deserve better.
We must all collectively remember—indeed, we forget much to our peril—that the vast majority of farmers own land to feed the nation, not to dodge tax. They work, sometimes for less than minimum wage, to put food on our plates. How can we plan for food security with such folly coming from those who seem to know very little about the farming way of life?
15:38
I have listened closely this afternoon, and I am concerned that what we have heard is not shedding any further light on how the UK Government’s inheritance tax changes will affect our food producers.
I will pick up on a few points. Beatrice Wishart pointed out concerns about small farms being sold off. I appreciate her calling on the UK Government to come forward with more information so that we know about the cumulative impact of those measures.
Richard Leonard talked about the NFUS briefing and the confusion about the scale of farms that will be affected. Again, we need clarity about what will happen to our farmers.
Will the member take an intervention?
I also appreciate Elena Whitham’s point about the impact of Brexit and the need for farmers to have certainty. I mentioned Brexit in my opening speech, but Brexit is not the only problem that our rural economy faces; there are several other long-term issues that previous UK Governments have allowed to fester for decades, and I hope that that will not continue under the new Government.
One of the biggest of those issues is Westminster’s on-going policy of surrendering responsibility for food to the major supermarkets. Since the 1990s—
Will the member take an intervention?
I need to get on.
Since the 1990s, such an approach has led to a race to the bottom on pricing and standards. It has left farmers unable to invest properly in regenerative solutions that will safeguard their futures and bolster our national food security.
Food security has been further endangered by the lack of investment in science, and the UK and Scottish Governments have failed to provide enough resource for agricultural research and development. It means that we do not have the capacity to develop climate-resilient food varieties in the UK. In our increasingly unstable growing climate—
On a point of order, Presiding Officer.
Could Ariane Burgess please resume her seat for a second? Rachel Hamilton has a point of order.
Presiding Officer, I seek your advice. The motion was a very simple one-liner. I do not believe that Ariane Burgess, on behalf of the Green Party, is speaking to it.
I thank Rachael Hamilton for the point of order. It seems to me that a number of issues have been raised in the debate. When a member follows on from the debate, it is not unreasonable for them, in their closing speech, to reflect on the debate that has taken place.
Please resume, Ms Burgess.
Thank you, Presiding Officer.
In our increasingly unstable growing climate, the current approach is exposing our growers to the worst of the climate emergency. Meanwhile, our rural communities are facing depopulation after years of underinvestment.
The Scottish Greens have been working tirelessly to ensure that farmers and growers have the support that they need to keep going in the face of environmental challenges. In the recently passed Agriculture and Rural Communities (Scotland) Act 2024, we secured vital amendments that make it easier to secure direct payments, provide financial support for wool and boost soil health. We are also proud of our progressive reforms to income tax from our time in Government.
To see the SNP and the Conservatives siding with each other on the issues that we are discussing today suggests that they are more inclined to protect vested interests than to give the industry what it really needs. We get the real challenges that farmers face. We know how to help growers thrive and survive in a rapidly changing world. Those concerned farmers, growers, crofters and communities who are watching today can leave the Parliament knowing that the Scottish Greens understand their plight and are working towards a better future.
I call Colin Smyth to close the debate on behalf of Scottish Labour. You have up to four minutes, Mr Smyth.
15:42
After 14 years of chaos and decline, last month’s UK Government budget started to turn the page on those Tory years. It began to rebuild our broken public finances, jump-started economic growth and ended austerity. It delivered the largest budget settlement in the history of devolution—an extra £1.5 billion this financial year and £3.4 billion more next year—and the highest ever agricultural budget.
The biggest threat to agricultural support does not come from devolving that support in full to a Scottish budget that Labour is committed to growing year after year. The biggest threat comes from the Tories calling for that support to remain as part of a UK budget that they have said today they want to see cut by £40 billion over the next two years.
Speaker after speaker from the Tories and the SNP has said that they oppose changes to inheritance tax and national insurance, but every one of them has failed to say where the cuts will be made. It takes a Liz Truss-level of economic illiteracy to believe that there is only one side of a balance sheet and that we can cut taxes without reducing public spending.
I have seen at first hand the impact of Tory austerity and the SNP’s incompetence on the rural communities that I represent—closed cottage hospitals, dental deserts, mothballed primary schools, banks shut, post offices axed, bus routes dismantled, crumbling road infrastructure and record rural depopulation as young people leave because of a lack of jobs and a lack of affordable housing. Thank goodness that I do not have any Caledonian MacBrayne ferry routes in my region. Tory and SNP MSPs—
Mr Smyth, please resume your seat for a second. I always try to allow a lot of latitude in debates, but I think that getting on to ferries is perhaps not quite where we should be going.
Tory and SNP MSPs should be coming to the chamber to apologise to rural Scotland for the mess that they have left, not to propose cuts to those communities.
There is always a debate to be had about where the threshold should lie with any tax, including the level of agricultural property relief and, indeed, income tax thresholds, which the Tories and the SNP chose to freeze to absolutely hammer ordinary workers. However, there was no mention of thresholds today. At a time when tough decisions are needed to rebuild the country’s public finances, it is not credible to argue that agriculture should be completely exempt from inheritance tax, no matter whether the value of a farm be £1 million or £10 million, but that is what the Tories and the SNP have called for today. Frankly, it makes a mockery of their claim that the debate is about small family farms.
It is also not credible for the Tories and the SNP to pretend that there is not an issue with wealthy landowners buying agricultural land to dodge inheritance tax and, by doing so, driving up the price of land for locals. It is astonishing to hear SNP MSPs arguing in the chamber that an ordinary farm worker in Scotland on £29,000 a year should pay more income tax than their counterpart in England while at the same time being silent about Anders Holch Povlsen being able to buy 89,000 hectares of land in Scotland, thereby avoiding paying hundreds of millions of pounds of inheritance tax and driving up land prices for families in the Highlands.
Today, we could have had a serious debate about how we use the record agriculture budget to support our farmers and crofters, including by returning the millions of pounds that were cut from that budget by the SNP. We could have had a debate about how we back our food producers, who are drowning in the sea of red tape that has been caused by the Tories’ disastrous Brexit deal and sell-out trade deals.
Will the member take an intervention on that point?
The member is about to conclude.
We could have talked about the delays and dithering of the SNP Government, which still does not have a plan for future rural support. We could have debated how we use the record public sector investment from the UK Government’s budget to ensure that more of the food that is purchased across the public sector is locally produced.
Instead, the Tories and the SNP—two peas in a pod—have called for cuts to the agriculture budget. In doing so, they are calling for a return to austerity, which would be devastating for our rural communities.
15:47
I very much welcome the fact that Tim Eagle has brought this debate to the chamber. He attacked the Labour Party and disputed the calculations that it has made. Mr Eagle can correct me if I am wrong, but I think that the point that he was trying to make is that the policy takes no account of the high value of land against the income that can be derived from that land. For years, the value of capital that is tied up in land has been out of kilter with the income from that land.
As Mr Eagle said, family farms are the glue in many communities. That is the point that Labour has misunderstood; its decision clearly shows that it does not have a proper understanding. That is particularly true if we listen to the likes of Mr John McTernan. Edward Mountain has already mentioned him, but let me remind members that he said that we can do to farmers what
“Thatcher did to the miners ... It is an industry we could do without ... We don’t need the small farmers.”
That is a terrible thing for anyone to say about such a hugely valuable community, which we represent.
Colin Smyth talked about there being record funding for agriculture, but he got that wrong. Funding has flatlined—it is exactly the same as it has been for the past six years.
Will the minister take an intervention?
How are we for time, Presiding Officer?
You have the time that you have, minister. It is up to you whether you take the intervention.
I will not take the intervention, then.
This morning, I visited AgriScot with the First Minister. I assure members that the palpable anger in the community is very real. People are not only angry but fearful of what the policy will mean when they try to pass on their farms.
The First Minister has given assurances that the Scottish Government will continue to support agriculture as much as we can, but there are complications around the lack of ring fencing and Barnettising, not least the fact that the Scottish Government does not have multiyear certainty. Yet again, Westminster delivers a hammer blow to a sector and then expects the Scottish Government to clean up its mess.
The previous UK Government agreed to the Bew review, which would involve bringing together all four nations to discuss the way forward on funding, but that has been kicked out the door.
Rhoda Grant says that very few farms will be affected. What she clearly does not know is that there are no figures for Scottish farming. The UK Government is as frustrated as the Scottish Government is that there are no clear figures that enable us to do any kind of work. There was no consultation. There was no understanding of what was going to be delivered, because the UK Government did not ask anyone. It did not talk to the farmers. It did not talk to the farming unions. It did not talk to this Government. There is literally nothing.
Is the minister seriously saying that he does not know the value of farms in Scotland and that that is not something that his Government is interested in?
The point that the member is missing is that this is a reserved tax. We have no idea how it will affect the family farms that we are talking about.
Ariane Burgess said that she would like to see tax on the big landowners. I go back to the point that I made earlier. The value of the land does not reflect the income that is derived from it, and the UK Government has never tackled that. That is why the UK Government needs to reverse its decision. It needs to do a proper impact assessment on family farms and communities and come back with proposals that will ensure the smooth transition of productive family farms and that the bedrock of our food and drink sector and our rural communities is maintained.
Beatrice Wishart of the Lib Dems called for a £1 billion funding uplift before the election. She is absolutely correct. That was the call from NFU Scotland, and it was the call from the Scottish Government. It is, however, disappointing that she did not mention that, while we were in the EU, we had seven-year multi-annual budgets. That is now gone, as is the Bew review, which would have allowed us to have conversations about what that funding would look like for Scotland’s farmers, who carry a huge weight in terms of what we expect them to do. There was supposed to have been a fair settlement for Scotland’s farmers, but, as I said, that has been binned by the Labour Party.
Christine Grahame’s point about Labour not understanding rural Scotland is absolutely correct. When I recently attended a local NFUS meeting in my constituency, I was joined by Dave Doogan MP and Pete Wishart MP. Dave Doogan said that, when they were in the chamber when the budget was being discussed, when the reaction came—as it rightly did—as the announcements were made, the chancellor looked shocked. She did not understand what was being said. She then went through the same performance when she was on the Laura Kuenssberg show on Sunday. She does not understand what she has done.
Richard Leonard’s contribution absolutely confirmed that Labour does not know what it is talking about, but I will waste no more time trying to educate him, because he is absolutely beyond redemption. [Interruption.]
The minister is bringing his remarks to a close.
There are 21,000 crofts in Scotland and 33,000 people living in crofting households. It is impossible to gauge the impact of the policy on that sector, because we simply do not have the information. The Labour Government is simply wrong on this, and it needs to do something about it. It needs to reconsider its position in the light of the reaction from industry stakeholders and farmers across the UK.
The Scottish Government stands ready to work with the UK Government on these matters. However, the lack of engagement with Scotland on the changes highlights the need for inheritance tax powers to be devolved to the Scottish Parliament to allow them to be designed and tailored for a Scottish context.
15:53
I welcome the opportunity to close on behalf of my colleagues in the Scottish Conservatives. The role of the Scottish farming community is absolutely immeasurable; we have heard that today. We know that farmers are one of the hardest-working sectors in Scotland. They are the hardest-working people. They work 24/7 to put food on our plates. They are the custodians of our countryside. They protect the environment, they restore nature and they have to face all the challenges of climate change—they are expected to do so by our Governments.
Livelihoods are at risk from Labour’s shameful budget betrayal, which could see more than 12,000 farms affected. Rhoda Grant continues to shake her head. She should be absolutely ashamed of what she said. Douglas Ross was absolutely right. Labour’s mask has dropped over this—it is a terrible trio of high-taxing farmer bashers.
This is nothing short of a betrayal. Rachel Reeves promised not to raise taxes, as we heard from Douglas Ross. Anas Sarwar must be so embarrassed by the budget. When he spoke at the Scottish Land & Estates annual conference, he explained that Labour understood the vital importance of the rural sector and suggested that Labour was determined to do all that was in its power to ensure that vibrant community.
Will the member take an intervention?
Yes, if it is quick.
Rachael Hamilton says a lot about the taxes that she is opposed to. She is opposed to inheritance tax and to the change in national insurance. Will she say a bit more about the areas of the budget presented by the UK Government in which she would make cuts? We are talking about £40 billion over two years. Where would she make cuts?
The UK economy is the fastest-growing economy in the G7 and it has the highest employment.
Furthermore, Anas Sarwar has the gall to suggest that the valid concerns of farmers in Scotland are based on “misinformation”. In reality, it is Labour that is misinformed. It has misinformed the public, and it is now trying to pull the wool over farmers’ eyes. As my colleague Tim Eagle noted, Labour’s calculations are wrong and its figures are strongly disputed by various organisations, including the NFUS and the NFU. I find Labour’s botched calculations, coupled with its socialist ideologies, alarming. It was really alarming to listen to Richard Leonard.
Agriculture is one of the main economic drivers of the Scottish economy. Without our farmers, rural businesses would go to the wall, as would the supply chain, and there would be further rural depopulation. One farmer in my constituency told me:
“Labour have shown themselves to be ignorant and inept.”
He said that most farmers in the Borders are
“living in fear of their financial future”
and that
“future investment is simply not going to happen.”
The impact is deeply dark. There is a risk of depopulation, as I said. My colleague Edward Mountain has already noted that, without farmers, there is no food, and Labour’s policies threaten to put many farms out of business. That will further weaken the fragile national food security that has already been a challenge as a result of the war in Ukraine and the pandemic. Beatrice Wishart rightly asked for a rural impact assessment to be carried out on Labour’s policy.
What I find most alarming is Labour’s refusal to accept and acknowledge the impact that its cruel family farm tax will have. Labour is disconnected from reality. It continues to justify its actions and to blame the situation on Liz Truss, rather than accepting that it was wrong. Anas Sarwar called the tax “proportionate”. Steve Reed has said that farmers will simply have to
“learn to do more with less”.
In response to my colleague Finlay Carson, Rhoda Grant said that farmers should get their affairs in order. That is totally offensive. It speaks volumes about the lack of understanding of the intricacies of the challenges that family farms face. People do not decide when they are going to die, Ms Grant.
Jim Walker, former president of the NFUS, agrees and has stated that the tax increases
“show that agriculture and food production don’t matter to the UK government”.
We have the written comments of the commentariat, who believe that the family farm tax is absolutely wrong.
Labour needs to admit that it was wrong to introduce a family farm tax. It is not often that the SNP and the Conservatives agree on anything to do with rural affairs, but we both recognise that the family farm tax needs to be reversed immediately. We are calling for a U-turn. We are calling for this shameful tax to be ditched.
That concludes the debate on reversing the family farm tax. There will be a brief pause before we move on to the next item of business, to allow for a changeover of front-bench members.
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