Chancellor Rachel Reeves has faced Labour pressure to amend her inheritance tax changes for farmers as a backbencher made clear his opposition to the current proposals.
Markus Campbell-Savours, the Labour MP for Penrith and Solway, said he is “not prepared to break my word” given to farmers during the election that Labour had no plans to introduce changes to agricultural property relief (APR).
He said he will engage with the Treasury and Department for Environment, Food and Rural Affairs (Defra) over the coming months and “seek important amendments”, telling the Commons: “If today was the real vote I would vote against the Government’s plans.”
Mr Campbell-Savours went on to criticise the Conservatives for tabling a motion calling for the policy to be axed, saying it failed to acknowledge “how they failed to deliver for my farmers”.
Under measures announced at the Budget, farmers will pay a rate of 20% inheritance tax on agricultural property and land worth more than £1 million when they previously paid none.
There is a higher threshold of £3 million for couples passing on their farms.
The Treasury says around 500 estates a year are expected to pay inheritance tax under the changes, but shadow environment secretary Victoria Atkins cast doubt on the numbers and criticised the Chancellor’s “cock-eyed accounting” as she opened an Opposition Day Debate in the Commons.
The Conservative non-binding motion said figures from the National Farmers’ Union suggest that “some three-quarters of farms will be affected” while the Central Association of Agricultural Valuers anticipates the policy “will affect 75,000 owners of farming businesses over a generation”.
Mr Campbell-Savours told the debate: “I’ve spent the last few weeks speaking with farmers in Penrith and Solway, trying to understand the full impact of the inheritance tax proposals knowing that I have months left to engage Defra and the Treasury and seek important amendments.
“And, let me be clear, if today was the real vote I would vote against the Government’s plans.
“I’m no rebel, I’m a moderate. But during the election I read what I thought were assurances from my party that we had no plans to introduce changes to APR. On this basis I reassured farmers in my constituency that we would not. Now, I’m simply not prepared to break my word.
“I’m told that there is no Labour MP in the country with as many farms as I have in Penrith and Solway and I hope my colleagues will understand my feelings on this.
“Today, however, we’re debating a frankly irrelevant motion from the Conservative Party, a motion which fails to acknowledge how they failed to deliver for my farmers.”
Mr Campbell-Savours said the Conservatives failed in several areas, including on the need to reform inheritance tax rules that “farmers know were being abused by non-farmers at their expense”.
He said: “I simply won’t walk into a lobby with people who talk a good game on farming but don’t deliver.”
Ms Atkins earlier said the Conservatives had tabled the motion in a bid to give Labour MPs representing rural seats “time to reflect and consider whether they can continue to support this vindictive tax”.
They feed us and now they need us. Labour MPs need to join us and axe the family farm tax
She said: “Before ambitious backbenchers, or indeed (Treasury minister James Murray), get to their feet and accuse these farmers and us of scaremongering – something they’ve been happy to do in the past – think on, discover some humility and compassion and ask why tens of thousands of decent, hard-working and sensible people across the United Kingdom know that the Chancellor has got it so wrong.”
Ms Atkins added on farmers: “They feed us and now they need us. Labour MPs need to join us and axe the family farm tax.”
The Government tabled an amendment that stated the Government has to “make difficult decisions to protect farms and farmers in the context of the £22 billion fiscal black hole” left by the previous Conservative government.
It added: “Under the changes announced in the Budget around three quarters of claims for agricultural property relief, including those that also claim business property relief, are expected to not pay more inheritance tax.”
When we approach policies in Government, we thoroughly test them and consider the detail of that policy
Speaking in the debate, Treasury minister Mr Murray declined to be drawn on whether the Treasury would consider a U-turn on the policy in future if data shows the Government made a mistake.
On how many farmers might be affected by the agricultural property relief on inheritance tax, Mr Murray said: “It is not possible to accurately infer a future inheritance tax liability from data on farm asset values.
“Any inheritance tax liabilities that farming assets may face would be affected by who the owners are, the nature of ownership, how many owners there are, any borrowing they have, and how they’ve planned their affairs.”
Intervening, Reform UK deputy leader Richard Tice asked: “Will the minister agree, given the massive discrepancy in the impact of this policy, that if the data shows in 12 months, in 24 months that the Government had got this catastrophically wrong, that you will actually revisit this policy and do a U-turn?”
Mr Murray replied: “When we approach policies in Government, we thoroughly test them and consider the detail of that policy. We consider the data of that policy and we make sure that any conclusions we draw are based on the correct set of data.”
MPs rejected the Conservative motion by 339 votes to 181, majority 158.
The Government amendment was accepted without the need for a formal vote.
