HC Deb 02 March 1976 vol 906 cc1248-60
Mr. Wiliam Ross

I beg to move Amendment No. 4, in page 3, line 42, leave out 'effeiring' and insert 'attributable'.

This matter has caused me some heartburning. We are taking out of this legislation a word which is familiar to all crofters. However, it shows how generous and sensitive we are. We were pressed from both sides to make the language of the law more readily understood. I have consulted people, and after deep and earnest thought we came to the conclusion that the word "attributable" would be more readily understood than "effeiring", which I suggest will still be in the minds and memories of crofters. From the point of view of humble Members of Parliament and unlearned lawyers, we have made it easier by putting in the word "attributable" instead of "effeiring".

Amendment agreed to.

11.30 p.m.

Mr. Robert Hughes (Aberdeen, North)

I beg to move Amendment No. 5, in page 4, line 7, to leave out subsection (3) and insert: '(3) If the croft land acquired by virtue of Section 2(1) of this Act is disposed of by means other than by lease for crofting or agriculture purposes at any time within five years of its acquisition, then the landlord referred to in the said section 2(1) may apply to the Land Court for a share of the increase of market value of the relevant land. The Land Court shall not grant such an application if it would be substantially detrimental to the interests of the crofter concerned.'.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

With this it will be convenient to discuss Amendment No. 9, in page 4, line 16, leave out 'half and insert 'quarter'.

Mr. Hughes

Under the present terms of the clause, if a crofter disposes of land, which he had bought from a landlord, within five years for purposes other than crofting and there is as a result of that sale an accrued value on the land, the landlord is entitled automatically to half the increased value as long as he has had to sell his croft more or less by compulsion.

In Committee we discussed thoroughly the principle concerning the right of ex-landlords to what might fairly be called development value. Unfortunately my hon. Friend the Under-Secretary did not explain in any detail why this automatic entitlement to half the value had been included in the Bill except to say that we were, by compulsion, taking something away from a landlord who was not willing to sell and, therefore, a kind of quid pro quo was being inserted into the Bill. Why it was decided to write in "half" and not some other amount was never explained in any detail.

One is forced to the conclusion that there must have been a secret deal made by the last Government and the Scottish Landowners' Federation in order to get the policy of allowing the crofter to buy his land accepted. That is why the amendment lays down that the landlord may apply to the Land Court in order to get a share, if the circumstances should arise that such a share might be available. In my view we should say that the Land Court is the right body to decide what is a fair share.

The Land Court, in determining whether a crofter should be able to buy the land, is the body which decides under what terms and conditions the land should be sold. Clause 2 makes it perfectly clear that if in the view of the Land Court it would cause a substantial degree of hardship to the landlord to sell the croft to the existing crofter, the Court would not transfer the land. It goes further and states that if the transfer of the croft would be substantially detrimental to the interests of sound management of the estate of the landlord", again the Land Court would not make such a transfer.

Therefore, by the time we reach the stage where the croft has actually been transferred by compulsion, against the landlord's wishes—clearly, if he wished to sell voluntarily it would not come before the Land Court—it will have been demonstrated quite clearly to the Land Court that such action is not substantially to the detriment of the landlord or of the management of his estate. Therefore, I do not see any reason why we should carry forward the proposition that the landlord is entitled to a share of the improved value.

In effect, the amendment says that the landlord is entitled to apply to the Court for a share and that the Court, in determining what the share should be, should take into account the circumstances of the crofter. The amendment makes it clear that The Land Court shall not grant such an application if it would be substantially detrimental to the interests of the crofter concerned. In other words, the amendment seeks to change the emphasis. Instead of the ex-landlord, as I suppose he will be by that time, being automatically entitled to his share he has first to apply and secondly to demonstrate his need for such a share of the value. Moreover, the Court must be satisfied that it will not be detrimental to the interests of the crofter.

There is a subtle and important difference in the way the amendment is drafted. I hope that my right hon. Friend will feel able to accept it or, if he has difficulties of a technical nature concerning the drafting, that he will give an undertaking that an amendment to similar effect will be tabled by the Government in another place.

Mr. William Ross

I can appreciate what my hon. Friend the Member for Aberdeen, North (Mr. Hughes) is trying to do. He wants to remove the obligation on a person who has acquired land under Clause 2(1) to make a second payment to the landlord in the event of the disposal of the land within five years of acquisition other than by lease for crofting or agricultural purposes. We are talking, therefore, about virtually a temporary measure. I hope that in considering the amendment my hon. Friend will bear in mind that we are giving the crofter rights he has never before possessed. The justice of the provision is long overdue.

In substitution, the amendment would give the landlord the right in such circumstances to apply to the Land Court for a share in the market value of the land disposed of by a crofter. The Land Court would be precluded from granting such an application if it would be substantially detrimental to the interests of the crofter. The amendment would be effective for that purpose, but it is defective in the respect that it lays down no basis on which either the previous market value or the increase should be determined, or on what basis the Land Court should determine what share, if any, is to be allocated. My hon. Friend is seeking to leave a large measure of discretion to the Land Court, and whether that would always prove to be wise is something for the future.

The purpose of Amendment No. 9 is apparently to secure that, in the event of Amendment No. 5 being unsuccessful, the crofter's liability to the landlord would be reduced from one-half to one-quarter of the sum relating to market value of the land. The amendment does not disclose a basis of principle on which the Land Court is to exercise its discretion in allocating a share to the landlord, and that is a weakness.

The amendment is contrary to the principles of the Bill and I must resist it for that reason. When we fixed the purchase formula for croft land in Clause 3(2) at 15 times the current rent, we deliberately fixed the price at a level that would be within the reach of crofters who wanted to buy their land and continue to work it. In doing this we recognise that it would be unfair to landlords to give a crofter the right to buy his land for a modest sum and at the same time put him in a position of being able to sell out right away at a price which secured for him any development value in the land.

The concept embodied throughout the Bill is that the crofter and landlord have equal rights in any development value in the land other than for crofting purposes. This is recognised in Clause 9, under which a crofter is entitled to a share of the increased value of any land resumed by a landlord. There is, there- fore, a balance in respect of the rights that we take away from the landlord and give to the crofter and the obligations that we give to the former crofter, as he will be, and the landlord.

In the same way, we have made reciprocal provision in Clause 3(3) for the former crofter to share equally with the landlord any non-crofting development value which arises on a disposal within five years. Therefore, if I might deal here briefly with Amendment No. 9, it would be wrong to depart from the principle of sharing fifty-fifty and reduce the crofter's liability from one-half to one-quarter. Amendment No. 5 would also impose on the Land Court the onerous burden of determining the financial circumstances of each and every former crofter who sold land as a prerequisite to determining whether sharing the proceeds of disposal would be substantially detrimental to him.

It could be said that, in having to share any payment that would otherwise have come to him in full, the former crofter's interests would be detrimentally affected. On the other hand, he would not enter into the sale unless his interests, notwithstanding the need to share, were benefited. That is one of the difficulties that we shall place upon the Land Court. In our genuine attempt to change the crofter's position from having no rights to having rights, we believe that we have the position fairly correot. It is not the same as in the previous Bill. It is more helpful to the crofter.

With that explanation, I hope that my hon. Friend will seek leave to withdraw his amendment.

Mr. Norman Buchan (Renfrewshire, West)

I listened with interest to what my right hon. Friend the Secretary of State said, just as I listened with interest to what he said earlier—that is, that Bills are sometimes more important than speeches in this House. The point is well taken. My right hon. Friend always knows how to charm the House before he embarks on a sticky wicket.

I cannot accept my right hon. Friend's argument. I want to make two points. The first is that it is said that the amendment is defective because it does not outline a basis for an assessment. That can be done in another place if we accept the principle. Equally, it is true that there has been no basis for the assessment of a fifty-fifty deal in relation to the money involved. The basis was implied when my right hon. Friend said that we had to make it equal between landlord and crofter. With respect, we cannot make equal that which, by definition, is already unequal. We seek to introduce improved legislation on the crofting situation because we have recognised for a long time that there has not always been an equal situation between the crofter and the landlord.

The history of the Highlands has been bedevilled with moves in relation to the origins of the crofting legislation and since. Therefore, I cannot accept that an amendment that introduces a principle for securing such an assessment can be faulted because it does not set out, bit by bit, the nature of that assessment when an amount has already been stated in the Bill to determine the relative allocation—fifty-fifty—which is based not upon reality but upon some kind of mythical concept of being fair to landlords and crofters.

We have introduced the Bill basically because we believe that justice exists between landlords and crofters. Therefore, there is no logical argument for the rebuttal of the amendment. The same applies to the difficulty that will be posed for the Land Court in trying to assess whether the amendment would be substantially detrimental to the interests of the crofters concerned. I cannot accept that by the nature of the operation that argument can be rebutted. The Secretary of State said that the crofter would not put the land up for sale or to be disposed of unless it was in his interest so to do. Therefore, by definition, the Land Court would be debarred from coming to the view that it must be substantially detrimental to a crofter's interests because it was the crofter who in the first place brought the matter to the Land Court.

This is a kind of logic in the abstract which does not apply to the reality of the situation. A crofter may wish to dispose of his land because of his age, because of potential development or for other reasons. We do not want to introduce legislation which leads the crofter to believe that he is debarred from a fair share of the market value. Therefore. although the rebuttal has a logical ring about it, it does not accurately reflect the reality of the situation. I do not accept the logic of the rejection and I believe that the defectiveness—in other words, the non-spelling out of the circumstances which could be considered—can, if the princple is accepted, be put right in a Government amendment without the assistance of another place.

11.45 p.m.

I should like to comment briefly on the fraction of one-quarter. If we are right in saying that there was no basis for the fifty-fifty differentiation between crofter and landlord—indeed, there are good reasons for saying that that should not be the basis, because the landlord, by definition, is in a more powerful and better position than the crofters—the logical thing is to alter that assessment downwards. In other words, the assessment should be altered so that to the landlord goes one-quarter rather than three-quarters. However, I cannot make that assessment either. I believe that there is an unequal situation and that one can make that unequal situation more equal by balancing in the interests of the crofter, and one-quarter would at least let the crofter see that a move had been made in the right direction.

Having said that, I know that my right hon. Friend will accept completely the logic of the argument that I have put.

Mr. Robert Hughes

I do not want to question the technical expertise of my right hon. Friend the Secretary of State, which is much better than mine, but he said that it would be placing a very onerous task on the Land Court to require it to look at the individual circumstances of each crofter. However, under Clause 2(2)(a) of the Bill the Land Court is required to look at the needs of each landlord who does not voluntarily agree to sell his crofting. Therefore, I do not see how looking after the interests of the crofter is a less onerous task.

Mr. William Ross

It is just another task. One makes the Land Court's task more onerous by every additional duty one places upon it. My hon. Friend should also remember that if one gives the courts this sort of wide discretion one should never be surprised by the decisions of any court. Indeed, we once sought to give certain rights in relation to forestry development within a township. One of the decisions in respect of that came out so badly that the proposal just fell away, and what we hoped at one time would be an advance of the rights of crofters turned out to be something that we could not apply. Therefore, I am not saying this glibly and trying to put people off.

We have had consultations with the crofters' unions about both the formula and the 5-year period, and in respect of what happens after five years the rights are entirely with the former crofter. Let us remember, too, that this is all that we are talking about. I do not want to see a sort of bonanza situation arising in which people give up crofting as quickly as possible and cash in. This element is involved with all the others. I think I am right in saying that we have had no complaints from the crofters' unions about unfairness here. They have generally tended to welcome this provision. Meetings have been held with crofters throughout the Highland areas, so they know what is intended.

We must bear in mind that we are starting from a position that no one could justify. There is a history of tremendous injustice over the rights of crofters. However, we are moving from that position and we are making a tremendous leap forward. On balance this is right. I do not want to make promises, such as to say "We shall look at this matter again". We have looked at it, and we think that it is right as it is at present.

I am glad that my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) remembers what I used to tell him when he was a very loyal junior Minister serving under me—that the Bill was more important than the speech.

Amendment negatived.

Mr. William Ross

I beg to move Amendment No. 6, in page 4, line 8, leave out from 'Act' to first 'by' in line 11 and insert '("the former crofter") or a member of the former crofter's family who has obtained the title to that land either—

  1. (i) as the nominee of the former crofter, or
  2. (ii) from the former crofter or his nominee, disposes of that land or any part of it ("the relevant land") to anyone who is not a member of the former crofter's family,'.

Mr. Deputy Speaker

With this amendment, it will be convenient to take Gov- ernment Amendments Nos. 7, 8, 12, 33 and 34.

Mr. Ross

Amendment No. 6 is a drafting amendment. As hon. Members will recall, in Committee there was considerable discussion about the precise effect of the subsection. The right hon. Member for Orkney and Shetland (Mr. Grimond) was concerned that the crofters in his constituency might find the drafting of the subsection confusing.

Mr. Hamish Gray (Ross and Cromarty)

Where are the Liberals?

Mr. Ross

Be that as it may, we decided that we should do something about the subsection. I am bound to concede that its full implications as drafted might not be immediately apparent to everyone. I think that it will be agreed that the wording proposed in Amendment No. 6 achieves a certain measure of more positive clarity.

Perhaps it will be useful if I take this opportunity to explain once again the areas which were in doubt in relation to the crofter's liability to make a second payment to his former landlord on disposal of his land within five years of acquisition. I emphaise—the amendment makes this perfectly clear—that the person we are talking about in Clause 3(3), the only person who can acquire croft land by virtue of Clause 2(1), is the crofter himself. As was explained in Committee, it is not possible to refer to this person as "the crofter", because the person concerned is no longer the tenant but the owner of the land in question. Therefore, he no longer fits the statutory definition of "crofter". We are therefore introducing in the subsection, and subsequently where necessary, a reference to the "former crofter".

My second point is that a disposal by the former crofter to a sub-purchaser by means of a conveyance to a nominee who is not a member of his family is caught by the liability to a second payment. Subsection (3) imposes a liability to a second payment on the person who has acquired croft land under Clause 2(1)—the "former crofter"—or a member of the former crofter's family on disposal of the land within five years to anyone outside the former crofter's family, other than by a lease for crofting or agricultural purposes. I think that the subsection as redrafted makes this quite clear.

Amendments Nos. 7, 8 and 12 are consequential and clarify the various references in Clause 3 to "person". Amendments Nos. 33 and 34 are also consequential.

Amendment agreed to.

Amendment made: No. 7, in page 4, line 13 leave out "that person" and insert "the former crofter".

No. 8, in page 4, line 14 leave out "such person or member" and insert the person disposing of the relevant land".—[Mr. William Ross.]

Mr. Hugh D. Brown

I beg to move Amendment No. 10, in page 4, line 18 after "land", insert (on the date of such disposal)".

Mr. Deputy Speaker

With this it will be convenient to discuss Government Amendments Nos. 16 and 26.

Mr. Brown

The purpose of these amendments is to identify the time at which market value is to be assessed for the purposes of Clauses 3, 9 and 10.

The three amendments are concerned with the question of the date on which market value should be determined by the Land Court for the purposes of Clauses 3, 9 and 10, and are designed to remove possible ambiguity.

Amendment No. 10 secures that the crofter's liability to make a second payment to his former landlord will be assessed on the basis of the market value of the relevant land at the time of its disposal by the crofter. It is this disposal which triggers off the crofter's liability to make a second payment to his former landlord, so it is only fair to both crofter and landlord that the payment should be calculated on the basis of the market value of the relevant land at the actual time of the disposal.

Without the amendment, the Bill could be open to the interpretation that the market value of the relevant land might be the value at the time of the application to the Land Court, or of the Land Court's determination, which, of course, could be some time after the disposal. If land prices were rising, this could result in an injustice to the crofter—or to the landlord if prices were falling.

Amendment No. 16 covers the situation where the landlord resumes croft land under the crofting legislation. In this case it is appropriate that the crofter's share in value should be assessed on the basis of the market value of the land on the date of the Land Court order authorising resumption. The order may not be effective until a later date, but it would be unreasonable to require the Land Court to determine a future market value for the land.

Amendment No. 26 deals with the same point in relation to the case where the crofter's possession has been taken under compulsory acquisition powers by an acquiring authority possessing such powers. It secures that the crofter's share in value will be assessed on the basis of the market value of the land on the date that compulsory possession is taken.

Amendment agreed to.

Mr. Hugh D. Brown

I beg to move Amendment No. 11, in page 4, line 27, leave out paragraphs (a) and (b) and insert 'the amount which the land, if sold in the open market by a willing seller (not being an authority as defined in section 1(1)(b) of the Community Land Act 1975), might be expected to realise assuming that on the date of the disposal—

  1. (a) there were no improvements on the land which, if the land were let to a crofter, would be permanent improvements in respect of which the crofter would be entitled to compensation under section 14 of the Act of 1955 on renunciation of the tenancy of the croft of which the land formed part;
  2. (b) no other development had been carried out on the land (not being development carried out on the land, when it was subject to the tenancy of the former crofter or any of his predecessors in the tenancy, by a person other than that crofter or any of such predecessors); and
  3. (c) no development of the land which consisted of the making of such an improvement as is referred to in paragraph (a) above were or would be permitted in pursuance of the Town and Country Planning (Scotland) Act 1972.'
I think that I can say with confidence that this is the only significant amendment that requires clarification. It is a complex and technical matter.

The purpose of the amendment is to correct a defect in the drafting of the Bill in relation to the Land Court's determination of market value for the purpose of the crofter's second payment to his former landlord. Without this amendment, it is possible that some crofters would be seriously and unfairly out of pocket.

The reason for this is that the present drafting of Clause 3(4) does not exclude from the Land Court's determination of market value the value of any non-agricultural development that may have been carried out by the crofter and that could not be classed as a crofter's permanent improvement. Thus, a crofter could purchase his croft land and undertake the type of development—such as a caravan site or comprehensive chalet scheme—which we hope this Bill will encourage. If he then decided to dispose of the land within five years of initial acquisition, he would find himself liable to share with his landlord half the value of his own development. This is clearly unfair to the crofter and is rectified by the provisions of this amendment.

In the new formula as proposed in the amendment, paragraph (a) substantially reproduces sub-paragraphs (i) and (ii) of the original subsection (3(a). It takes out of the market value any improvements on the land for which the crofter-owner would have ben entitled to compensation under the Crofters Acts had he remained a tenant and renounced his croft. This ensures that the crofter will retain the full benefit of any crofting development he has undertaken.

Paragraph (b) takes out of the market value any other development undertaken on the land, which could not be classed as permanent improvements for which a crofter would have been entitled to compensation under the Crofters Acts—namely, the non-agricultural category of development towards which the amendment is directed. However, it leaves within the market value the value attributable to any development at all which may have been provided by the former landlord prior to the crofter's acquisition. This element was also left in under the previous drafting, but the change we suggest makes the position clear.

Paragraph (c) takes out of the market value the development value of the land for any crofting-type development. It does this for the same reasons as apply to paragraph (a). Both those elements of market value would have been realised by him as a crofter, and therefore he is not by this subsection to be required to account to the landlord for any share of the value of those elements. This is a complicated series of exclusions. It is complicated because it is necessary to identify with the concept of development recognised in the planning legislation and at the same time relate that concept to principles of the crofting legislation.

12 midnight

To put the matter positively, what the landlord will be entitled to receive as a second payment is a share in any open market value of the land which the crofter could not, as a crofter, have realised and which, as an owner, he can realise. In practical terms, he is to share with his ex-landlord value attributable to any vacant possession of the land which he is now able to give any effect of decrofting if that has occurred, and any hope value of the land for any non-crofting development. This is what the original drafting of the Bill was intended to achieve, and what is now effectively achieved by this amendment.

As I told the House, this is a technical matter, but hon. Members will appreciate that it is important for it to be clarified.

Amendment agreed to.

Amendment made: No. 12, in page 5, line 24, leave out person referred to in that subsection

and insert the person disposing of that land".—[Mr. Hugh D. Brown.]

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