Debate contribution: Farming Families: Autumn Budget 2024

Debate contribution by Miss Michelle McIlveen on 19 November 2024.

MLA

Miss Michelle McIlveen

Party at the time

Democratic Unionist Party

Date

19 November 2024

Type

Debate contribution

Business

Private Members' Business

Heading

Farming Families: Autumn Budget 2024

Assembly identifier

Official Report component 4666358

Read the official Assembly record

Text

I beg to move

The autumn Budget was a disaster for farming families and the rural community. The 6,000 people who attended the Eikon exhibition centre last night will attest to that. It was a Budget dreamt up by a socialist Government with no consideration for rural communities. While the new thresholds for inheritance tax and agricultural property relief have taken up the headlines, other announcements that the Chancellor made have negative implications. Cumulatively, taking into account the already precarious situation that local farmers face owing to policy inaction, the announcements will have a devastating impact on the viability of farming going forward. In turn, that will impact on farm prices in the UK, the brunt of which will be borne by the working person's pay packet, and on our food security when local food producers begin to drop out of the market. The context of the announcements is that there are about 26,000 active farm businesses in Northern Ireland, employing about 51,000 people. Inheritance tax is payable at a rate of 40% of the value of the deceased's estate. Certain reliefs and thresholds, however, can reduce that liability. Agricultural land attracts two types of relief: agricultural property relief (APR) and business property relief (BPR). APR applies to the agricultural value of the land, while BPR applies to any value above the agricultural value. In most cases, APR could be applied at 100% to agricultural land that was being inherited, meaning that it had a value of zero for inheritance tax purposes. BPR applied where the land had a development value, and, if the owner had an operating farm business, it could also be applied at a rate of 100%. Those reliefs meant that farms could pass from generation to generation without attracting inheritance tax liability. Families could avoid having to sell agricultural land to pay a large tax bill. The Chancellor has announced that full APR and BPR combined will be limited to £1 million and that relief for anything over that will reduce to 50%. As a result, farmers with assets of over £1 million will face inheritance tax of 20%. A lot of misguided comments have been made on social media about the change to inheritance tax relief on agricultural land. They come from people who clearly know nothing about farming or about agriculture in general. They see figures such as £1 million, £3 million or more and think, "Yes, that should be subject to inheritance tax". They do not, however, take into account the fact that, while they may be worth millions, the farms are not liquid assets. The value is not realisable until the farm is sold, and, once sold, it ceases to be a functioning farm or ends up in some corporate farm. A family facing a huge tax bill simply does not have the money sitting in a bank. Farming is a dangerous profession, accounting for 47% of workforce fatalities in 2023-24. Yet, the Government tell farmers to transfer land seven years before their death as a way around the change. An animal crush or an incident with machinery could cost a family farm more than just a family member. As someone pointed out last night, no sooner will the hearse have left the lane than the tax man will knock on the door. As the Minister has stated to the Chamber, a third of farms in Northern Ireland would be affected by the change. The impact is even more stark for the dairy sector: 77% of dairy farms could be impacted on. A farm need have only 27 hectares to reach the threshold; in fact, as agricultural land prices are higher in Northern Ireland than in other parts of the UK, the change in relief will hit us disproportionately harder. How are farmers meant to pay the tax other than by selling their assets, when, over the past 10 years, 60% to 80% of farming incomes has come from subsidies? Recently, we debated the weakening of the basic farm payment, and this announcement will heap further pressure on the future of family farms. It will inevitably accelerate the breaking up of farms, driving more young people away from farming when we need to encourage them to stay. It will affect our food security going forward. As we outlined in the previous debate, farm incomes have reduced by 46%. A £1 million cap sounds high to the layman, but few viable farms are worth under £1 million, and even those are not high-earning. A viable farm is not necessarily a wealthy farm. Farms in Northern Ireland are asset-rich but often cash-poor. Meanwhile, farmers, like other employers, have seen their National Insurance contributions rise from 13·8% to 15%, along with the threshold for payment dropping from £9,100 to £5,000. That means that employers will pay more for each employee. Farm businesses in Northern Ireland pay and employ around 51,000 people. The tax on farmers will increase while their incomes have fallen dramatically. Worse, it will directly impact on the security of thousands of farm jobs and the pay and conditions for employees. It goes hand in hand with the increase in the national living wage, which will rise by 16·7%, from £11.44 per hour to £12.21 for those aged 21 and over. For those aged between 18 and 20 years, there will be a rise from £8·60 to £10 per hour. That is an inflation-busting rise in those salaries. No one is against people being paid a decent wage, but I highlight it as an additional financial pressure that has been placed on farmers in a Budget that already heaped pressures on them. Bear in mind what else is being faced by local farmers: the ammonia regulations that choke development; being blamed for what we see in Lough Neagh; proposals to stop maedi-visna (MV) in sheep imports; failure to address bovine TB; the real-term reductions in the basic payment scheme over the past 10 years; the huge inflationary costs, including wages, that have accrued over recent years; the devastating impact of the winter storms on last year's potato crops; and the implications of what is in the Climate Change Act and the investment needed to address them. Is it any wonder that our farmers are responding to calls for action? We welcome the launch of the UFU's campaign to oppose the impacts of the Budget on family farms and the agri sector as a whole. I attended last night's rally and was delighted to see a unity of purpose across the political spectrum and the industry. The announcement that agriculture and fisheries funding will no longer be ring-fenced was slipped in almost as an afterthought. Instead, its funding will form part of the block grant. That means that our agri-food sector must compete with health and social care and education for funding. It has always been our position that direct agriculture support should be available outside the Barnett formula. Ring-fencing was a recognition that food security is a national strategic asset, but that principle seems to have been abandoned by the Labour Government. The review of agriculture funding that was led by Lord Bew following the UK's exit from the EU recommended the need to provide ring-fencing for farm support. However, no similar exercise was commissioned prior to the decision to remove it, and that seems rushed and foolhardy. As I indicated, farms in Northern Ireland have relied on having somewhere between 60% and 80% of their income subsidised. Removing ring-fencing has jeopardised that. That places an onus on the AERA Minister to press for an early and firm commitment from the Minister of Finance that future farm support budgets will be ring-fenced for the forthcoming financial year and ring-fenced and increased at least in line with inflation in future financial years. Northern Ireland produces enough food to feed 10 million people across the UK. The Government should stimulate growth and investment in the farm sector, but instead, with that suite of announcements, they will drive people away. Just last year, someone said:

"losing a farm is not like losing any other business – it can’t come back. It’s why the lack of urgency from the government, the lack of attention to detail and the lack of long-term planning is not on. You deserve better than that. You deserve a government that listens, that heeds early warnings, that shows the level of ambition needed to tackle the challenges you face."

That "someone" was the now Prime Minister speaking to the National Farmers' Union (NFU). He is the new existential threat to farming that he warned about in that speech. If he were leading a listening Government, he would address those problems instead of compounding them. Agriculture is worth £6 billion to Northern Ireland, and it is our largest manufacturing sector. The consequences of the announcements will be rising food prices, food production that is threatened by the changes to APR, job losses and poor terms and conditions for employees. The Minister heard the farmers last night. He heard their desperation. They need him to demonstrate his support to them, not by carefully scripted words but by his actions.

1,524 words. Text as published by the Northern Ireland Assembly.

Assessment

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Assessed 21 October 2026 at 11:38 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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