From taxes to pints: Conservatives accuse Labour of damaging family businesses

The motion, which was rejected by 108 votes to 313, read:

That this House regrets the Government’s decision to introduce a cap on Business Property Relief, meaning that some family businesses passed down upon death will face Inheritance Tax for the first time in 50 years; further regrets the Government’s other economic policies that will damage family businesses, namely raising employers’ National Insurance contributions, reductions to business rates relief, making employers potentially liable for third-party harassment, the powers in the Product Regulation and Metrology Bill [Lords] that would allow the Government to ban pubs from selling pints, and the provisions in the Employment Rights Bill for guaranteed hours which will make flexible working harder to achieve; and therefore calls on the Government to support family businesses which provide employment for almost 14 million people, and contribute more than £200 billion in taxes each year, by lifting the cap on Business Property Relief, not implementing the increases to employers’ National Insurance contributions and business rates, and powers to change units of measurement, and to stop the progress of the damaging Employment Rights Bill.

Mel Stride, Shadow Chancellor of the Exchequer, began the debate by saying that “business confidence is at virtually an all-time low”. He claimed that the national insurance increase is already ‘driving down’ employment and increasing inflation, and that changes to business property relief would force many family businesses to liquidate assets. Citing Confederation of British Industry (CBI) research he claimed that the latter policy may not even raise any money.

“Tax on tax… is the Labour party way,” said the shadow minister, who labelled the government inheritance tax policy “utterly atrocious”. He emphasised the important role small businesses and family businesses play in the economy and said: “They are the life and fire of our economy, but there is no life or fire in the Chancellor—just tragic mistakes and miscalculations”.

Daisy Cooper, Liberal Democrat Treasury Spokesperson, urged the government to conduct an impact assessment on the employer's NICs increase, while arguing that family businesses should not be seen merely as sources of “tax revenue”.

Bradley Thomas (Con) highlighted that family businesses provide employment for almost 14 million people across the UK and warned that increased taxation could threaten their survival. He cited the CBI and Family Business UK, which estimate that changes to business property relief could lead to up to 125,000 job losses and reduce economic output by £9.4 billion.

The message was echoed by Esther McVey (Con) who argued that every pound businesses must set aside for taxes is a pound not invested in growth. She believed the government’s measures are ‘killing’ growth.

A number of Labour MPs including Kanishka Narayan, Joe Morris and Becky Gittins were disappointed to read the Opposition motion. They argued that the government supports small businesses, and that, to fix the foundations of the economy, the government has had to make difficult decisions.

The Exchequer Secretary to the Treasury, James Murray, defended the government’s proposals, arguing that the policies are designed to create a ‘fairer’ system and are necessary to ensure sustainable public finances. Acknowledging the role of small businesses, he claimed that the changes to agricultural and business property reliefs would still allow significant exemptions for estates below £1 million; adding that about three quarters of estates will be unaffected and will not pay any more inheritance tax.

Conservative MPs, including Gregory Stafford and Rebecca Smith, and Carla Lockhart (DUP), challenged the minister’s claim that only a small percentage of farmers would be affected by the changes. Smith questioned how many of the 500 affected estates were small businesses rather than large landowners.

The minister responded: “If one were to consider assets owned by farmers or other business owners, the actual value of the asset does not give a guide to what claim might be made against inheritance tax because that will depend on the ownership structure, on debt that might be owned or on what inheritances have happened earlier in people’s lives and so on. The only data that can give an indication of what impact the changes will have from April 2026 is the claims data.”

Caroline Voaden (Lib Dem) shared survey results from her South Devon farmers, indicating that 85% will be affected by the tax changes due to the high cost of land. She criticised the government for underestimating the impact of the policy. Dr Caroline Johnson (Con) warned “there may be many, many more [farmers] who might die and might be affected”.

Damian Hinds (Con) put a question on business rates changes. The category of higher rateable value commercial premises includes distribution centres for online giants, but what proportion are they of the total, he asked.

The minister explained that data is being set out by the Valuation Office Agency and offered to write to him with the information.

Graham Leadbitter (SNP) emphasised the role of stewardship in family businesses and warned that increased tax burdens could force them to relocate abroad or be sold to multinational corporations, harming the UK economy. He explained: “If the business was a limited liability partnership and you got rid of the business management of the business, it would not have any kind of inheritance tax to pay. Yet the only choice for family businesses operating on that scale, given the likely tax bill they will be hit with, is to either put away millions of pounds to cover the tax bill, which means they are not investing, or sell off large parts of the business”.

Sir Ashley Fox (Con) and Llinos Medi (Plaid Cymru) accused the government of breaking an election promise by raising employers’ NI. Fox warned that this increase, coupled with reduced business rate relief, would hurt low-paid workers and small businesses.

Andrew Griffith, Shadow Secretary of State for Business and Trade, cited the Institute for Fiscal Studies, pointing to figures which indicate that the NI increase harms low-income workers the ‘hardest’. He also claimed that legislation is giving ministers “unchecked powers that could see the great British pint vanquished as part of their Trojan horse, EU surrender product regulation Bill”.

Daisy Cooper accused the Conservatives of scaremongering about the pint. James Murray said the pint “is part of our nation, and we do not need a new law to protect the pint any more than we need a new law to say that the sun must rise in the morning”.

Responding to the debate for the government, business minister Gareth Thomas defended the government’s measures, arguing that they prioritise small businesses. He cited increased employment allowances, frozen small business multipliers, and extended business rates relief as evidence that the government is supporting family enterprises. He also announced the creation of a new business growth service which over time will bring together under one national banner a whole array of business support services throughout the UK.

Full debate