Agenda item

To consider a Notice of Motion by Councillor Hugh Evans (copy attached).

 

 

Councillor Hugh Evans presented a motion previously circulated as follows:

 

‘Denbighshire council is calling on the Prime Minister and Chancellor of the Exchequer to reconsider and reverse the decision they have made recently on the Inheritance Tax threshold relating to the agricultural industry. This will have a detrimental impact on many farmers, their families, and the next generation of young farmers’.

 

Councillor Evans reported on the potential significant impacts to the agricultural industry and farmers locally and nationally and the wider economy of the inheritance tax threshold, including:

 

·       The tax needed to be fair and better linked to profit.

·       The value of land did not correspond to the income generated from it from farming and many farmers would struggle to pay the tax from the income they generated. The value of land was only realised upon the sale of the land.

·       Many farmers might have to sell land which could lead to ultimately going out of business.

·       Government figures indicated that 1 in 25 farms had stopped farming in the last 12 months owing to other circumstances. However, since the Chancellor’s statement, a study conducted by CBI Economics with 4,000 farmers found that 50% of family farms had stopped investing in their farms and 43% planned to stop by 2026 to avoid rising taxes from an increased value of the farms.

·       The UK Treasury had not undertaken an impact assessment of effect on our rural areas of the tax.

·       The Treasury believed that the tax would affect around 500 large estates, but the farming unions and the Country Land and Business Association estimated it would affect between 50% and 75% of farmers.

·       The relatively low level of income the tax would generate.

·       The proposed tax would not stop the takeover of farmland by large financial institutions for non-farming practices i.e. not for environmental or food production aims.

·       The liabilities faced by the next generation of farmers and the proliferation of non-farming usages on farmland would put food security at risk.

·       The farming community in Wales played a very important role in the survival of the Welsh language. Harming the farming community could also harm the Welsh language.

·       Many tenancies were now not being renewed because of landowner fears of the tax implications.

·       The proposals detrimentally impacted elderly farmers and mental health problems in the farming community.

·       For many farmers there were no realistic options for diversifying farm income or raising product prices, with beef and sheep being a mainstay of the local farming community.

 

In the absence of the Lead Member, Councillor Emrys Wynne, the Leader of the Council responded to the motion. Councillor McLellan noted that this is one issue where a response from Councillor Wynne might have differed to his own.

 

Councillor McLellan’s response included the following issues:

 

·       It would be useful to know how many farms in Denbighshire would be affected.

·       The new tax proposed a much higher threshold than ordinary inheritance tax and the payments were much lower too.

·       The changes included spousal exemptions, a 7-year tapering relief and an ability for those inheriting to pay off the tax over a ten-year interest free period.

·       Government’s reforms to agricultural and business property relief meant that one person with farmland could pass on up to £1 million and two people who jointly own a farm could pass on up to £3 million to a direct descendant without paying any inheritance tax.

·       The top 7% of potential estates accounted for 40% of the total value of agricultural property relief and that alone amounted to £220 million. Councillor McLellan asked members to consider the beneficial public service uses even small amounts of those sums could be put to.

 

Councillor Martyn Hogg referred to the stated absence of a government impact assessment of the changes and suggested that the wording of the motion could be amended from reconsidering and reversing the tax, to undertaking a proper evidence-based impact assessment before reconsidering.

 

In agreeing with Councillor Hogg’s comments, Councillor Eryl Williams stressed the importance (greater in Wales than in England) of family farms to the Welsh agricultural industry and to the local communities and local businesses. He censured the Leader’s defence of government policy and governmental handling of the issue and called on members to support the rural areas.

 

Councillor Huw Hilditch-Roberts stated that statistics from 2017 suggested that 2,000 farms in Denbighshire would be affected.

 

Councillor Delyth Jones underlined the importance of family farms in Wales to rural areas, food security and the Welsh language and identity. She reported that many farms survived on low incomes despite high land values and that a proper assessment of the impact on family farms should have been undertaken by the government.

 

Councillor Jones proposed an amendment to the motion, seconded by Councillor Huw Hilditch-Roberts, as follows:

 

Denbighshire Council is calling on the Prime Minister and Chancellor of the Exchequer to reconsider and commit to a full consultation with stakeholders on the impact of the changed inheritance tax threshold on the agricultural industry in Wales.

 

Councillor Merfyn Parry declared his support for the motion. Councillor Brian Jones added his support to the motion and praised the behaviour of the young farmers at recent protests.

 

Councillor Julie Matthews referred to the rationale and exemptions behind the changes which was to remove the tax shelter for millionaires and billionaires who were hovering up small farms and not paying tax on them which affected the tax income available for spending on public services. Councillor Matthews agreed that changes should be supported by impact assessments and be data driven.

 

Councillor McLellan believed that the amendment’s aim reflected the consultation that was already ongoing between the government and the agricultural industry.

 

Councillor Brian Jones requested a recorded vote on the amendment, and a recorded vote was duly agreed.

 

In favour of the amendment:

Councillors Chamberlain-Jones, Karen Edwards, Pauline Edwards, Ellis, Elson, Chris Evans, Hugh Evans, Justine Evans, Feeley, Hilditch-Roberts, Hogg, Hughes, Brian Jones, Delyth Jones, Keddie, Mendies, Parry, Price, Roberts, Sampson, Scott, Thomas, Tomlin, Eryl Williams, Huw Williams, and Young.

 

Against the amendment:

Councillors Chard, Clewett, Heaton, Holliday, James, King, Matthews, May, McLellan, Mellor, Sandilands and Cheryl Williams.

 

Abstaining:

None.

 

The amendment was therefore passed.

 

Councillor Brian Jones requested a recorded vote on the motion as amended, and a recorded vote was duly agreed.

 

In favour of the amended motion:

Councillors Chamberlain-Jones, Karen Edwards, Pauline Edwards, Ellis, Elson, Chris Evans, Hugh Evans, Justine Evans, Feeley, Hilditch-Roberts, Hogg, Hughes, Brian Jones, Delyth Jones, Keddie, Mendies, Parry, Price, Roberts, Sampson, Scott, Thomas, Tomlin, Eryl Williams, Huw Williams, and Young.

 

Against the amended amendment:

Councillors Chard, Clewett, Heaton, Holliday, James, King, Matthews, May, McLellan, Mellor, Sandilands and Cheryl Williams.

 

Abstaining:

None.

 

RESOLVED - Denbighshire County Council calls on the Prime Minister and Chancellor of the Exchequer to reconsider and commit to a full consultation with stakeholders on the impact of the changed inheritance tax threshold on the agricultural industry in Wales.