Gavin Lane is President of the Country Land and Business Association
In Dickens’s Christmas Carol, Ebenezer Scrooge is confronted by the Ghost of Christmas Yet to Come, who shows him a grim future that terrifies him into change. Those owning family businesses can only hope that a similar ghost approaches those in government this Christmas and shows them the consequences of successive Budgets.
I am a fourth-generation farmer from West Norfolk. As the new president of the Country Land and Business Association, representing 26,000 rural family businesses and I worry that we are seeing the avoidable dismantling of family firms built over generations.
Gavin Lane warns family firms may not survive an inheritance tax raid
For the 5.2million family-owned businesses, the consequences of changes to Business Property Relief coming into force in April could be existential. Given the cost of machinery, stock, and livestock, even family businesses and farms with modest turnovers could find themselves being valued—on paper at least—as being worth millions of pounds.
On that basis, when the owner dies, their children could easily face an inheritance tax bill of hundreds of thousands of pounds, even if their annual profit is a fraction of that. Put simply, many of these businesses will not survive—taking their productivity, jobs, and supply chains with them.
We are fed endless lines that this government’s fundamental aim is growth. But as any family business owner will explain, you cannot ask people to plant orchards they’ll never see mature, then tell their children they cannot pick the fruit.
Government says their reforms will bring in £500million. But this figure does not consider the reduction in investment, the jobs lost, and the collapse of supply chains. When these are accounted for, the Exchequer will actually lose £1.9billion.
The perverse consequence of making businesses plan for a future tax bill is that it takes money away from growth and investment. We see a political obsession about how to divide the economic pie but surely the primary aim must be to grow that pie through encouraging business investment?
It seems bizarre to think that Business Property Relief was actually introduced by a Labour government in 1976—because even Denis Healey and Jim Callaghan came to realise their high-tax policies were destroying family businesses. Why does the same party now believe that fostering stable family business investment is undesirable?
The consequences of the government’s lack of economic strategy are already visible. Business investment growth has slumped to less than 1 per cent. Unemployment is rising. A third of employers are planning redundancies. Talented young people are leaving for more attractive climes.
This Budget has compounded the problem, showing just how muddled the government’s thinking has become. Free apprenticeships but increased minimum wage. No tax on working people, but 780,000 low earners dragged into income tax and 920,000 pushed into the higher rate. A hike in business rates for warehousing with no clear plan beyond penalising Amazon. In truth, it was a Budget that failed to substantiate the government’s pro-growth rhetoric.
Consider what’s being squandered. Government’s own figures suggest Britain’s rural economy could grow by £43billion with the right policy support. Rural businesses could deliver housing, renewable energy, nature recovery, and thousands of jobs.
More than 275,000 people signed petitions against these changes. MPs across the political spectrum know they are a disaster, and Ministers should know that we won’t go away.
Family businesses produce 52 per cent of UK turnover— worth £2.8trillion. The owners live above the shop. They spend locally, they employ locally. They invest for the long term. They are the backbone of our economy and of our rural communities, and they deserve the chance to grow.
Ministers need to take a deep breath and ask themselves: is the loss of our family businesses really what they want? Scrooge saw the nightmare of the future he had created for himself, and he learned to change his ways. The Treasury should learn to do the same.
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