Agenda item

To consider the motion referred to the Scrutiny Committee from the Council meeting held on 4 December 2024.

The Director of Place introduced the scoping document which set out the motion from the Council meeting held on 4December 2024 regarding the Government’s reforms to agricultural property relief and business property relief for inheritance tax, announced in the Autumn Budget 2024.

There was a need to understand the issues fully and the impact of the reforms on inter-generational inheritance of farms in East Devon.  External expertise would be required with proposed consultees set out in the scoping document.

Members of the farming community present addressed the Committee and highlighted the following concerns regarding the Government reforms:

·        Farmers may have to sell a proportion of their farm in order to pay their inheritance tax bill.

·        Farms mostly make a modest living using the farm’s assets.

·        A farmhouse and paddock by themselves could amount to the £1million threshold for inheritance tax.

·        Labour was often the biggest cost, and it was difficult to find labour.

·        The supermarkets dictated the level of payment for produce which often does not reflect the cost of producing the food.

·        Reforms were being introduced too quickly and there had been no consultation with farmers.

·        East Devon mainly comprised small family farms which would become smaller still if land and assets had to be sold to pay inheritance tax.

·        There was no guarantee that agricultural land, if sold, would ever come back into agricultural production which threatened the country’s food security.

·        Many farmers’ children worked on family farms with little or no remuneration in the expectation that they would inherit the farm.

Discussion of the scoping document and responses to Members’ questions included the following points:

·        Support from Democratic Services would be provided for whichever route the Committee agreed to take following scoping.

·        The Committee needed to agree key questions to be included in the scoping document.

·        It was crucial to have input from the farming community who would be directly affected by the inheritance tax reforms.

·        Concern was expressed regarding the potential loss of land for food production and the resulting food insecurity and impact on climate change.

·        The view was expressed that the Council was not in a position to change Government legislation.  Therefore, the impact the Council could have on this issue was limited.

·        There was concern that the review could take a lot of officer time and resources.

·        It was noted that the motion to Council had been referred to the Committee to consider and it was important to understand the true effect of the reforms on East Devon farmers.

·        Land agents should also be included in evidence gathering.

·        There was concern that a Task and Finish Forum may not provide sufficient transparency if it did not meet in public session.

·        Planning issues related to the reforms were outside the remit of the Committee.

·        There was a need to complete the review, based on the information provided by the farming community, before the legislation was brought in, rather than conduct a lengthy, in-depth review.

The Director of Place advised that clarification from the Government was expected imminently regarding local government reorganisation, and that this would have an impact on Officer capacity going forward. 

External information and analysis by farm size was already available nationally regarding the likely impact of the inheritance tax reforms on farms.  This data would need to be contextualised to East Devon, with the support of the National Farmers Union, the farming community and other relevant partners, to fully understand the impact on local farms.  Due to the phased introduction of the reforms, there was a need to complete the review in a timely manner. 

A report using information already available and setting out the impact of the reforms on East Devon could be brought back to the Committee sooner than the timescale set out in the scoping document.

It was noted that a letter from the Chief Executive to the Chancellor of the Exchequer and the Minister of State for Food Security and Rural Affairs had already been drafted following the Council meeting.  As a result of the Scrutiny review, a further letter could be sent setting out the detailed impact of the reforms in the context of East Devon.

AGREED:

That a report would be brought back to the Committee using the nationally available analysis relating to the size of farms and the effect the reforms will have in the context of East Devon, with support and engagement from partners.

The Chair thanked the members of the farming community for attending.