😕 Agricultural and Business Property Reliefs: OBR Costing

• Urgent Question on OBR Costing: Victoria Atkins asked the Chancellor about the Office for Budget Responsibility’s (OBR) assessment on changes to agricultural and business property reliefs.

• Government’s Position on Tax Reforms: The Treasury’s James Murray explained that recent budget decisions were made to restore economic stability and fix public finances, which included targeting agricultural and business property reliefs to make the tax system fairer.

• Reform Details: The reforms allow 100% relief on the first £1 million of combined business and agricultural assets, with 50% relief thereafter. This means a couple can pass on up to £3 million inheritance tax-free to direct descendants.

• Statistics on Relief Distribution: Murray highlighted that under the previous system, a significant portion of the reliefs benefited the wealthiest estates, with 40% of agricultural property relief going to the top 7% of estates and over 50% of business property relief to the top 4%.

• OBR’s Analysis: The OBR released additional information confirming the same costing as at the Budget. It noted high uncertainty and a 35% reduction in yield due to behavioural responses, with impacts unlikely to stabilise for 20 years.

• Opposition’s Critique: Victoria Atkins criticized the government’s economic policies, claiming they led to increased borrowing costs and economic stagnation. She questioned the impact on farms and tenant farmers, citing potential policy overestimations and the concerns of supermarkets.

• Further Discussion and Concerns: Opposition members raised issues about the policy’s impact on older farmers, food security, rural economies, and the lack of consultation with affected communities. They urged a review and potential delay of the policy.

• Government’s Defense and Commitments: Murray reiterated the policy’s aim to maintain stability and support public finances, while offering significant exemptions. He acknowledged the tough nature of the decisions but stood firm on the government’s commitment to implement the reforms as announced.

• Public and Business Reactions: There was mention of farmer protests and opposition from major supermarkets, reflecting significant public and business dissent against the policy.

• Final Remarks: Despite the criticisms and the OBR’s uncertainties, the government remained committed to the policy, with no immediate plans for a review or delay.

The session demonstrates significant disagreement, primarily along party lines, with strong opposition from Conservative, Liberal Democrat, and SNP members challenging the Labour government’s policy on agricultural and business property reliefs. Key points of contention include:

• Disputes over OBR analysis: Opposition members criticized the Treasury’s reliance on OBR costings, citing “high uncertainty” in revenue predictions and behavioral impacts reducing yields by 35%.
• Impact on farmers: Repeated claims that the policy disproportionately harms family farms, tenant farmers, and elderly landowners, with accusations of underestimating affected estates by a factor of five.
• Food security concerns: Multiple members linked the policy to risks for rural economies and UK food production.
• Calls for policy reversal: Opposition parties demanded delays, reviews, or complete abandonment of the measure, contrasting with the government’s insistence on fiscal necessity.
• Tax fairness debate: Conservatives accused Labour of targeting small businesses while protecting large estates, while Labour defended reforms as curbing reliefs skewed toward the wealthiest 4-7% of estates.

The minister faced sustained criticism across 15+ questions, with minimal support from government backbenchers, indicating a highly adversarial but not universally polarized debate (hence 4 rather than 5).