00:00Thank you very much indeed, Prime Minister.
00:01Kat Smith-NP.
00:02Thank you, Chair.
00:03Prime Minister, you've repeatedly said that the economic mission of this Government is to be on the side of working people.
00:09Is that still your position?
00:10Yes.
00:11Yes.
00:11And do you consider farmers, many of whom are getting up at 4am working 365 days a year feeding the nation, to be working people, yes or no?
00:19Yes, I do.
00:20Because last year, rural communities, including many farmers, put their trust in Labour for the very first time in a very long time and gave us a mandate for change in this country.
00:32However, and I hear this from many of the 950 farm holdings in my constituency, feel like they were misled around the changes to IHT and APR,
00:42which are going to pull the rug from underneath farming communities and obliterate the family farm for many farmers.
00:48We're in a situation now where elderly farmers or farmers with terminal diagnosis are in a position whereby if they die before April,
00:57their farm will pass to the next generation with no tax implications.
01:01But if they die after, the potential of their family farm being completely unviable.
01:06Can you see how farmers can feel like this Government hasn't necessarily treated them the way that they expect to be treated as working people?
01:13Well, look, I do understand the concern, and I met with the President of the NFU just last week, as I've met with him before,
01:21to run through the particular concerns they have.
01:24I do think on agricultural property relief, there had to be sensible reform, and I think this is sensible reform.
01:31We did make an amendment in the budget, obviously, in relation to the spousal transfer.
01:35And more generally, we are sustaining £11.8 billion in sustainable farming this Parliament.
01:44So there's a lot of money set aside in the budget.
01:46There's a roadmap that we're agreeing with farmers as to the way forward.
01:50And, of course, Minette Batters, the ex-president of the NFU, has just completed a report for us on profitability
01:56and how we drive up profitability year on year, which I think is vitally important,
02:01because, in a sense, that's the missing factor here, which is the amount of money that farmers can make year on year.
02:07And we need to drive that amount up.
02:09And the issue with the aluminum that was in the budget is I think it's been overshadowed,
02:14in the same way the Countryside Stewardship Fund has been overshadowed by the IHT issue.
02:18And I think that the political damage is that whilst the ambitions of government were, I think, quite right
02:24in terms of tackling tax avoidance that could go on in, let's say, large country estates,
02:29the collateral damage is that it's actually the small family farm which is feeling the hit of this.
02:34And the changes in the budget won't go any way to benefit one of my constituents who is 89 next month.
02:40He's already widowed, so he will not be able to benefit from the spousal transfer that has been announced.
02:45And given that you've been a Prime Minister who has, and I think quite admirably,
02:49changed courses in the past when issues have, you know, been exposed to the absolute reality of things,
02:56would you consider changing course on this issue?
03:00Well, I mean, firstly, let me just reassure.
03:02I mean, the vast majority of three quarters, I think, of farmers have been not affected at all.
03:07And of those that are affected, the rate that's paid is half the rate that's over a 10-year period.
03:15In relation to the particular example, if you're happy to give me further details, I'll certainly have my team look at that.
03:21I'd like to thank the Prime Minister for the details.
03:23One final question, Chair, if I may, and this won't have sunk in, I don't think,
03:27is that is the Prime Minister aware that some farmers who have terminal diagnosis now
03:31are actively planning to expedite their own deaths so they hit before April?
03:35Is he aware of that?
03:37I've had discussions with a number of individuals who've drawn all manner of things to my attention.
03:44Thank you very much.
03:45Alistair Carmichael, MP.
03:45And you understand, Prime Minister, that the basis for that actually sits in the finance bill itself.
03:53It's the provision called the Anti-Forestalling Clause.
03:56You're familiar with the Anti-Forestalling Clause, I think?
03:58Yeah.
03:59That means that anyone who transfers their property or their farm to a descendant
04:05but dies within seven years will be liable to pay inheritance tax under the new system.
04:10And if they don't live seven years after that, it could even trigger capital gains tax.
04:15If you do nothing, though, and you die before April next year, then the estate passes tax-free.
04:22Do we agree, Prime Minister, that nobody should be left feeling, as Kat Smith has just described,
04:30that they would be better off dying between now and next April?
04:36No, of course.
04:38But governments have to bring about sensible reform and take measures which...
04:42Sensible reform, absolutely.
04:43But things like Anti-Forestalling Clause, they are not unique to this situation.
04:50But on a human level, the answer to your question is, of course, not.
04:54Last year, you told me that this was a policy that was just aimed at revenue raising,
05:01that it wasn't targeted at anybody in particular.
05:05We've now seen the Anti-Forestalling Clause, and we know from Treasury's own figures
05:11that 75% of the half billion pounds that is expected to be raised from this
05:18will come from farmers who die over the age of 75.
05:25So, is it not the case that actually this is a targeted measure,
05:30and it is targeted at, and it will affect those who are elderly,
05:36suffering from terminal illnesses over 75,
05:40and it doesn't matter if it's one farmer or a thousand farmers.
05:44Surely, you cannot be comfortable with that.
05:47Let me just address the point that it's not targeted.
05:49It's not targeted at individuals.
05:51Well, it was what you said last year.
05:54It's not targeted, as I said last year.
05:56It's an economic reform which we took in the Budget before last.
06:00It's not targeted.
06:01It is to adjust the rate at which inheritance tax is,
06:06the fact that it's paid, the rate at which it's paid,
06:09and the period over which it is paid.
06:12But it's not targeted against individuals.
06:15I'm not arguing with you that there are therefore going to be individuals affected,
06:21as there are with any change in any tax regime.
06:23But there's a difference between changing the tax regime
06:26and targeting a group of individuals.
06:28This is about changing the tax regime.
06:31The anti-forstalling clause that we've spoken about traps farmers into the new rules.
06:38It doesn't allow them the same opportunities that other taxpayers will have
06:43to use tax planning to manage their affairs in a sensible way
06:47that will allow the succession of family farms in this country.
06:51That doesn't make it targeted.
06:53It is a necessary consequence of the decisions that we've taken.
06:58But I can assure you, as you would expect,
07:01the President of the NFU has raised this issue with me on more than one occasion.
07:06Not just the President of the NFU.
07:08Well, I appreciate that.
07:09You've heard it from Kat Smith, you've heard it from my select committee,
07:12you've heard it from the Welsh Affairs Select Committee,
07:14you've heard it from the Northern Ireland Affairs Committee.
07:18These are all select committees, incidentally,
07:20that have majorities from the Labour Party,
07:24and they have all produced unanimous reports
07:27calling for this to be paused and rethought.
07:29You don't have to listen to me.
07:31You don't even have to listen to the farmers out there.
07:34You don't have to listen to the President of the NFU.
07:36But why do you not listen to your own party colleagues?
07:39I do listen to party colleagues all the time.
07:42And then do what you're going to do anyway.
07:44Thank you very much, Mr Carmichael.
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