HC Deb 05 May 1976 vol 910 cc1365-82 'A tenant of a holding provided by a county council on land purchased by the council, who has been in occupation thereof for a period of not less than six years, shall, on notice of his desire to purchase the holding being given to the council at any time before the tenant has received notice to quit the holding, be entitled to require the sale to him of the holding at the expiration of six months from the date of the notice at the then value of the holding, exclusive of any increase of the value thereof due to any improvement executed thereon by and at the expense of the tenant, and there-upon the council shall sell the holding to the tenant accordingly .—[Mr. Wiggin.]

Brought up, and read the First time.

7.0 p.m.

Mr. Wiggin

I beg to move, That the clause be read a Second time.

The purpose here is to deal with the old concept of county council smallholdings. It goes back to 1892. In the aftermath of the First World War the Government, in 1919, passed the Land Settlement Facilities Act and, starting from an initial investment in about 20,000 acres, built up a vast agricultural holding extending today to over 427,000 acres of land which is held by county councils and let to individual smallholders.

If my new clause is acceptable it should be further extended to include land held in the name of the Secretary of State, particularly land in parts of Lincolnshire and elsewhere where small-holdings are developed from estuarial deposits and then let in small blocks. The Government's decision to preclude them from their legislation drew my attention to the present state of county council smallholdings. The latest report available is that for the year ending 31st March 1974. I believe that the 1975 report will be available shortly. The 1974 report shows that at that time there were 10,319 holdings in England and Wales covering 427,650 acres, and that the total rental received was £4,012,612.

The working of the agricultural small-holdings Acts on the whole have been successful. I do not doubt that in those days considerable thought was given to the large sums of money used for the purchase of smallholdings at above market value, over-capitalised and costing more than their rents would bear. The concept was that an individual could go into a county council smallholding, learn about the responsibilities and problems of being a farmer, build up some capital and stock of his own, and progress to be a tenant of a private landlord on a larger and perhaps more commercially viable holding. That system worked reasonably satisfactorily between the wars and up to the middle 1950s and early 1960s.

In the three years ending 31st March 1974 only 526 new tenancies were granted—an average of 175 a year. By no stretch of the imagination can the scheme be now considered a first step on the ladder because new tenancies represent only 1.6 per cent. of the holdings. That means that tenants will be locked into the system, with the county council as their landlords for life. Their prospects of moving on are non-existent. The statistics prove that.

It is also accepted, and statistics prove it, that the number of farms to let, who- ever is the landlord, has now been reduced to such a trickle as to be virtually non-existent. We are talking here about the annual letting by public tender of less than 2 per cent. of all smallholdings. Even if the county councils were offering a flow of tenancies, perhaps by buying the land for letting, the next step would not be open to these small- holders. I ask the House to consider what must be the value of 427,000 acres in public ownership—by which I mean the county councils.

I have had a chance briefly to study some of the original debates on this matter. The then Minister, acting with the Board of Agriculture, emphasised the necessity for seeking above-average farms. He said that because of the size of those holdings and the public investment in them, they should be of good-quality land. Therefore, it is not unreasonable to suggest that the value of all county council smallholdings in England and Wales could exceed £200 million at today's prices. Perhaps if they are let to tenants the figure might be half that, but it is certainly an astonishing sum tied up for an annual return of £4,012,000, not taking into account the cost of administering those 427,000 acres and 10,300 holdings. I am told—perhaps the Minister can give me the exact facts —that the cost of administration in some counties is as much as 25 per cent. of the rental, simply because the holdings are small and numerous and the inevitable bureacracy of local government means that there is a rather top-heavy administration in many cases.

But that is not the main point of my argument. My objection is that under the 1919 and 1926 Acts, county councils are permitted to sell their smallholdings to the tenant, but that almost no county council has instituted that policy. We have heard the same arguments in other spheres. I think particularly of the sale of council houses to sitting tenants. The county councils have argued that it is easy to administer an estate that is a block and that to start breaking up estates would be bad estate management, and so on. But it is equally bad estate management to create an estate especially for the purpose of having tenants in a transitory stage of their careers and then circumstances so altering that they are tied into those holdings for the whole of their working lives. The Government partly recognised this problem in 1971, when in the Agriculture (Miscellaneous Provisions) Act of that year they allowed county councils certain special powers for the amalgamation of holdings, but that has had the effect of reducing the number available for letting.

There is an easy and logical approach —to return to the original provision in the 1919 Act. The clause is word for word most of a subsection of that Act. The only omission is the final words relating to the consent of the Board of Agriculture. In those days the Minister had to monitor county councils selling to smallholders because the market price was well below what the county councils paid for those holdings. The position is now totally reversed. Their value is many times in excess of their book cost. It would be good business for many county councils to sell their smallholdings. I should like to make it mandatory on them at least to offer their tenants of more than six years' standing the right to purchase their freeholds.

We should not be depriving people of any opportunities to farm but should be encouraging the possession of property. On 16th July 1926, the then Minister, Mr. Guinness, proposing an amendment on this matter, said: The Chaplin Act of 1892 showed that the Conservative Party at that time were already convinced of the truth of the old maxim,'The magic of ownership turns sand into gold', and this Bill seeks to encourage smallholdings on a freehold basis by new methods"—[Official Report, 16th July 1926; Vol. 198, c. 783.] It may be that the Minister who is to answer this debate does not accept that maxim, but many county council smallholders would, and would believe it right and proper that they should pay a little more and end up with freehold property.

I accept that there are complications. For example, how would the capital be found? That is a problem faced by all small farmers making the transition from tenancy to ownership. Some assistance with the initial mortgages might have to be provided, but there is nothing new in that. When we look back through the legislation we find that provisions were made in those days for helping in that way.

7.15 p.m.

I could also quote at some length from the speech of Sir Arthur Boscawen, I believe a relative of my hon. Friend the Member for Wells (Mr. Boscawen), who spoke in those days of the merits of the transition from tenancy to ownership. He said on Second Reading of the Land Settlement (Facilities) Bill: It is quite natural that many men should look not merely to getting a bit of land as tenants, but to own a bit of land, and we give them opportunity under Clause 15 with certain limitations … but we say if a man comes as a tenant at the reasonable rent 1 have suggested, he may have the option to buy after the seven years' period at the then value".—[Official Report, 14th April 1919; Vol. 114, c. 2587.] The problems then were quite different, but the principle remains the same.

When local authorities are crying out for resources and complaining that they do not have the capital for schools, roads and other facilities, it is reasonable to suggest that they might release the capital invested in good agricultural land by selling to the individual tenants of the present day.

Mr. Geraint Howells (Cardigan)

There is a great deal of merit in what the hon. Gentleman has just said, but if we pursued that type of policy what legislation would the hon. Gentleman introduce to help youngsters to start on the agricultural ladder?

Mr. Wiggin

That point is highly relevant. I am saying that the present system does not set them on the ladder and that we should therefore dismantle it. I entirely accept that in a country whose agricultural land is shrinking at the rate of 50,000 acres a year, when education has improved and it is the ambition of many more people to go into farming, there continues to be a problem, but it is different from that of the 1920s, when the county council smallholdings were set up.

However, when people wish to do many things today—such as manufacturing articles or entering retail trade—the sheer capital requirement and lack of opportunity makes many of them go into employment instead of starting on their own. I accept that to some extent farming is different, but as it becomes more modern it will inevitably be harder for people to enter it. The legislation with which we are dealing today will make it much harder still. The hon. Gentleman knows full well that there will be no more tenancies offered on the open market. In the interests of good estate management, there should be none. I can conceive of no professional adviser telling his clients, except for the handful of estates held by institutions, "Let your farm". I should be drawn into a whole new area that we shall be covering later if I pursued the matter, but in Committee the hon. Gentleman consistently supported legislation that has shut down the supply in a totally different area.

The case for the new clause, unlike some of those with which we have already dealt, is very simple. It is that the resources invested in land held in public ownership should be released to those who are now enjoying that land. This should be done at a fair price. I am not saying that it should not be at market value. It should be released to them so that they may become property owners and see something for the lifetime of labour which so many smallholders put into their holdings, thus releasing assests badly needed elsewhere for more useful purposes.

Mr. Strang

I assume, although it is not clear as the clause is drafted—I am not absolutely certain even after the speech of the hon. Member for Weston-super-Mare (Mr. Wiggin)—that he intends it to be restricted to statutory smallholdings let by county councils under Part III of the Agriculture Act 1970. That part of the Act gives effect to the policy on smallholdings following the report of the Wise Committee on statutory smallholdings. The committee advised that they should be used as a gateway for new entrants to farming, and Section 39(1) provides that, in the performance of their functions under Part III, smallholdings authorities shall make it their general aim to provide opportunities for persons with the necessary agricultural experience to be farmers on their own acount by letting holding to them.

The operative words are "by letting". To compel a local authority to sell a holding at the request of the tenant would strike at the heart of the national policy on holdings. The demand for holdings to let is keen, and there is no lack of suitable applicants. The standard is high, but they are persons of limited capital who would stand no chance of getting into farming if this traditional gateway were closed.

The hon. Member has made a pertinent point about the numbers of people who are moving through these smallholdings. It is fair to say that we originally spoke in terms of smallholdings being the bottom rung of the farming ladder. It is significant that we now use the phrase "gateway to farming". In practice, the movement is not on the scale which, I am sure, people envisaged when we started this scheme many years ago. Indeed, it is, perhaps, not on the scale that it was in its early stages. It is now much harder to enter farming this way.

Well-managed, intensively-farmed smallholdings can give a good living to people who are naturally content to increase the productivity and efficiency of their holding and thereby increase their income, rather than to move on to another holding, but one must accept that the holdings become available for letting and that if one took them away and made the tenants owner-occupiers one would close this gateway to farming. That statement is still valid.

The hon. Member talks about these people being "locked in". Presumably they are locked in either of their own choice or because they do not have sufficient capital to move on to buying another holding. Holdings are still coming on to the market. I take his point that the number of holdings to let has been falling sharply over the years. Indeed, it can be argued that some of the new clauses to the Bill might add to that process, although I believe that the effect would be marginal, on the basis of our experience in Scotland.

The hon. Member has partly acknowledged that, since smallholdings are comprised in estates, and each one has its place in securing the balanced structure of the estate, if some smallholdings were sold to the individual occupier management would be made much harder. The change would not provide for such sensible estate management of local authority smallholdings.

I was interested that the hon. Member should say that the cost of administration was 25 per cent. of the rental income. If he is right, that is a staggering and disturbing figure. I cannot confirm or deny the figure, but hon. Members might be interested to consider it in relation to their own local authorities.

Perhaps the heart of the matter is that, basically, the hon. Member is in principle against the idea of anything being owned by the community. I suppose that he wants to minimise the likelihood of anything being held collectively. He overstates the case, perhaps on the basis of his own political philosophy, for someone actually owning the holding he farms and the satisfaction to be derived from building up the capital value. To a large extent, the capital value built up has not been the product of the investment of these people but is the result of the rise in land values, which has occurred regardless of individual investment in holdings. The hon. Member exaggerates that point of view.

Partly because of my background in tenant farming, but also because of my political philosophy, I see nothing wrong or inferior about renting a farm and running it well on a well-managed estate on which the landlord invests adequately in the infrastructure and plays his part in investing in the holding.

It is a pertinent point that the Association of County Councils is opposed to the new clause. As I have explained, the new clause is unacceptable, for policy and practical reasons, and I hope that the House will reject it.

Mr. Nicholas Winterton (Macclesfield)

I want to take up the point with which the Minister ended—the position of the Association of County Councils. I do so because, for six years, I served as a member of a county council. Although I was not a member of the smallholdings committee, I took some interest in its activities and functions. I am very much in sympathy with the case so well put to the House by my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin). The Association of County Councils, as the Minister rightly said, is strongly against the new clause and has been consistently against this sort of clause since we began our deliberations on the Bill.

In a letter which the association has, no doubt, sent to selected Members of Parliament, dated 5th May, it says: One of the principal objectives of smallholdings is to provide an entry into farming for those with the required experience and qualifications The association, through the good offices of its secretary, Mr. A. C. Hetherington, adds: Unfortunately, the numbers of those wishing to take holdings are greater than the vacancies that arise That may be the case, Perhaps the Government should look at other ways of enabling the new generation to go into farming. It is true that the capital required by a young person to enter farm- ing today is very great, that that money cannot be found at this time from virtually any sources, and that, therefore, the county councils, through their smallholdings, at least offer an opportunity, however small, to new entrants. That is certainly good for the farming industry, but the association goes on to say that the shortage of smallholdings would be exacerbated if counties could be required to sell holdings, because the pool of holdings for letting would get smaller and smaller Mr. Hetherington goes further: …counties' smallholdings reorganisation plans under the Agriculture Act 1970 envisaged the amalgamation of many of the smallholdings over a period of years, in order to produce units that are more economically viable I think that he feels strongly what he says in the next sentence: The implementation of the new clause on enfranchisement would produce a patchwork of ownerships of county smallholdings estates which would prevent reasonable amalgamation The Minister did not mention that point. I should be glad if he would elaborate slightly on his remarks.

Very few tenancies of agricultural holdings are available each year, and therefore the philosophy behind the new clause is worthy of full consideration. The number of vacancies each year is minute. Therefore, is the whole infrastructure involved in smallholdings still really worth while?

I have tried to put both sides of the case. There is much more to the new clause than, perhaps, the short debate today would suggest. I believe that my hon. Friend has highlighted an important point. I have tried to tempt the Minister to rise again to deal with this matter, but it seems, without success.

Mr. Geraint Howells

The hon. Member has quoted Mr. Hetherington's letter, except for the last sentence. That says: We hope you will oppose the clause

7.30 p.m.

Mr. Winterton

The hon. Member has anticipated me. I was about to come to that point. I felt that I should present the case as I have because I did not feel that the Minister did justice to my hon. Friend's case.

I am very open-minded on this matter. In the near future the need for smallholdings as they are today is going to disappear. I think that they should be abolished because the cost of maintaining them is now a waste of resources and manpower, both of which could be put to better use. I am not sure whether my hon. Friend the Member for Weston-super-Mare is going to divide the House on this new clause. This has been an important debate, and I hope the Government will, in the future, give consideration to the case put forward by my hon. Friend.

Mr. Richard Body (Holland with Boston)

I thought that the Parliamentary Secretary in his speech a few minutes ago leaned too heavily on the Wise Report. I think that most people recognise that the report is now almost out of date. It was published seven or eight years ago when smallholdings were still spoken of as a step up the farming ladder, and that situation has now ceased to exist. No one can say that smallholdings are even a gateway to farming today—a phrase used in the Wise Report and adopted tonight by the Parliamentary Secretary.

Today there are so few holdings available, particularly to provide opportunities for young people, that once a tenant gets in, he stays in. That is not a gateway, but a cul-de-sac. Nothing is to be gained from having young farmers aged up to 30 beginning a farming career in one of these holdings, and ending it there. Many farmers remain there throughout their careers. That is the general pattern and we all should regret it. But in regretting it we must ask whether it is right to continue this system as it is.

One way out of this would be to vary the rent from year to year so that in the early days of tenancy a farmer would be able to pay less than the economic rent. This could continue for seven or eight years, and each year thereafter the rent could be increased until there came a time when it was not worth while for the farmer to stay in that holding. He would then have to make way for some other young man.

The hon. Member for Cardigan (Mr. Howells) is making sounds which indicate that he totally disapproves of what I am saying. But when middle-aged farmers become old-aged pensioners on smallholdings, that is not doing any good for agriculture or offering any opportunities for young men coming into farming. If we are `to have a true gateway—and these holdings should give young men opportunities to learn the skills of management and to acquire extra capital in order to advance—then there must be an incentive for older farmers to move on elsewhere, once they have had an opportunity to succeed. If they cannot make a success of it after 10 years or so, they should quit. It is utterly selfish for old, old men to continue on in these holdings long after the age of retirement.

I support the new clause wholeheartedly, and I am disappointed that the Parliamentary Secretary has not gone further. I think that eventually the Government will be driven to a more radical view about the future of these holdings. On this side of the House we believe that it is not for county councils to go into the business of being agricultural landlords. I hope that Members of the Liberal Party will agree with us that there should be a little more private endeavour. I know that this is anti-collectivist, but we on this side of the House are anti-collectivist.

Mr. Hooson

The hon. Member for Holland with Boston (Mr. Body) is a member of my chambers and I have a warm regard for him. However, I totally disagree with his sentiments.

I represent an agricultural county where there is a large area with a considerable number of smallholding estates. Virtually the only chance a young man has to get a tenancy of a farm in my county is to get one of these smallholdings. This is because there are relatively few agricultural estates. The farms tend to be on much larger sized estates, and they come on to the market for letting relatively rarely. Therefore smallholdings are the only rung on the ladder for most people who want to enter the agricultural industry as farmers.

The hon. Member for Weston-super-Mare (Mr. Wiggin) is proposing, in this new clause, to wipe out that gateway altogether. He has extolled the virtues of the landlord-tenant relationship— apparently that is all right if the landlord owns the property privately. From the Conservative Benches many tears have been shed over the fact that it is becoming more and more difficult for landlords to continue their estates and that there are fewer and fewer farms to be let. Yet in this new clause the hon. Member is proposing that in certain areas, such as mine, the only chance for a young man to get a farm which is being let is to be abolished.

I do not agree with him, obviously, but he has done a service to the House in that he has underlined the fact that we should consider anew the functions of the smallholdings and how land should be held in this country. I have no regrets that land is held by the community. I am a firm believer in private ownership, but this is not incompatible with having a wide area owned by the public as well. Have Conservative Members opposed the Forestry Commission, which owns so much land? In an area such as mine there have been Economic Forestry and Fountain Forestry which have bought great tracts of land. The Commission is taking land out of private ownership, in its strict sense into some form of public ownership. Whether the land is owned by a public corporation or a public company does not seem to matter in this context. Even now I would like to see the county councils competing with the Forestry Commission and public companies in buying marginal land and setting up holdings of considerably larger acreage than that available for small holdings, and making them available for letting to young farmers.

Mr. Wiggin

Much as I would like to debate the problems of forestry in Montgomery I will refrain from doing so and point out that the land which the hon. and learned Member talks about is today farmed by somebody. If it is taken into public ownership it will be farmed by someone else. I hope that no one would interpret my new clause as closing a gateway to farming. The gateway is already shut for other reasons.

Mr. Hooson

I do not accept that the gateway is shut. Because of policies introduced in 1970 I know of more people in the older age group who have moved from small to larger holdings than in the younger age group of tenants. It is more difficult today for other reasons. I accept that.

We have also been wrong in amalgamating smallholdings to such an extent that the smallholder does not want to move but is satisfied with his holding and regards it as the fulfilment of his economic desires. When a smallholding becomes available it is not unusual for there to be more than 100 applicants for it. Often the number is far in excess of that and the applicants are well qualified to run the holding successfully.

In Montgomery our policy is to charge an economic rent for smallholdings. The rents for smallholdings are often higher than would be charged by private landlords. The vast majority of such applicants do not otherwise have the chance to start in farming. If the hon. Member for Weston-super-Mare has his way he will close to future generations what is already a very narrow gateway, and I am dead against that.

The House should embark upon a much wider debate about how land should be held. It is difficult for a man to find money to buy his farm and to run it properly. He has to find both tenant's capital and landlord's capital. Inevitably we face the prospect, therefore, of greater public ownership of farm land. This has been the case with the Forestry Commission, and the social consequences of that are a matter for concern. In an area such as mine great tracts of land are taken over for forestry and are completely depopulated. It would be better if smaller areas were taken for forestry so that proper, well-equipped holdings could be set up in that kind of area. The correct relationship there would be of landlord and tenant.

The reality of economics today makes it impossible for a private landlord to do that. He would have neither the resources nor the incentive. The task could be taken on only by the county council. The county I represent went in for smallholdings in a big way and my only regret is that we did not go in for them on an even larger scale, but that would not have been allowed by the Government, who prohibited the purchase of land in marginal areas which we could have rehabilitated.

I can appreciate some of the fears expressed by the hon. Member for Weston-super-Mare. The reason for the clause is, I suspect, to underline the problems which surround the use to be made of smallholdings, to stress that smallholdings are a stepping stone and not an end in themselves, and that perhaps we should produce larger holdings. In my county we have tried to grade the holdings so that a man on a smallholding can apply to move on to a larger holding.

Mr. Winterton

Does the hon. and learned Gentleman know how many smallholdings in his constituency came up for re-letting in, say, the last 12 or 24 months?

Mr. Hooson

I do not know, but I have seen at least a dozen applicants who have told me of various holdings that they think will be coming on to the market. They have asked for my advice—

Mr. Jopling

Were they all referring to the same holding?

Mr. Hooson

No, they were not. I know the difference between one holding and another even if the hon. Member might not.

For these reasons the Government are right to oppose the clause. Everyone concerned with agriculture appreciates that we should have a much broader and deeper discussion of the whole strategy of land holding, of the functions which are to be performed by the farm to be let, and of who is to provide the farms to be let.

7.45 pm.

Mr. Buchan

I had not intended to take part in the debate because I thought that not many hon. Members would wish to buttress the case advanced by the hon. Member for Weston-uper-Mare (Mr. Wiggin). It is worth making clear that and some of my hon. Friends who may not have supported the Government throughout on the Bill do so on this subject, and share the views expressed by the hon. and learned Member for Montgomery (Mr. Hooson).

We would be blinding ourselves to reality to ignore that the new clause springs from the same source as opposition to the new clauses on security of tenancy. It is said by Conservative Members that since there is not a very wide gateway there is little point in con- tinuing its existence. That is an extraordinary argument. If the gate is not open wide enough it should be our job to open it wider, not close it.

I agree with the hon. and learned Member that we should take a much more detailed look at public ownership, not in a dogmatic sense, but upon the approach that he adopted, which was, that since private landlords are unable to create the situation in which tenants move on to marginal land in this way, it is the job of the State or the local authorities to do so. We should be encouraging that initiative. Of course, I would prefer to go even further, but I shall not tread that road tonight.

One of the problems is that the scheme has been too limited. Our task is surely to extend the scheme, and I would welcome a wider discussion of proposals to that end.

We face the situation in which private forestry can take over land, but where a local authority is unable to do so. That will prevent any proper development of existing holdings by local authorities, because one of the problems is that, in general, the holdings are small, sometimes too small. A few years ago we thought that the task should be to assist in improving small holdings by allowing for amalgamation, but if the holdings are to go into private hands, that will prevent proper development of a land holding policy.

My hon. Friend the Minister was, therefore, right to reject the proposal. We have learned from this debate that a fuller discussion of the question would be useful, but in the meantime we should assist local authorities to extend their activities in this sphere, and allow a policy of amalgamation to go forward in order to improve the structure of these holdings.

Mr. Wiggin

With the leave of the House, may I say how grateful I am to my hon. Friends for supporting me? My proposal received less criticism on political and dogmatic grounds than I had anticipated, but the Minister is a kind man and sometimes sees the other point of view and argues accordingly.

I strongly question the open door philosophy. The rate of letting of county council smallholdings is pretty much in line with the death rate of tenants, and, therefore, the new tenants move into dead men's shoes. If the farms were owned and not let they would go on to the market at almost the same rate.

I must pursue the point that has been made about the need for a complete review of the landlord and tenant relationship, whoever the landlord may be. I am glad to hear that said, and especially by the hon. Member for Renfrewshire, West (Mr. Buchan). That was the basis of the new clause moved by my hon. Friend the Member for Buckingham (Mr. Benyon) regarding the term of years letting. Such a review could go a long way to opening the door very much wider, making it possible for agriculture to be considered in a truly commercial light. I have in mind a situation in which a young man could go into agriculture, take a chance and, if he proved successful, make a career of it. However, I believe that the Bill will finally slam the door shut rather than open it wider.

Mr. Buchan

Will the hon. Gentleman explain why he fought throughout Committee to determine the right of the landlord to say who shall be the tenant, whereas in this clause he is seeking to prevent a socially responsible body, namely, the local authority, from doing so?

Mr. Wiggin

The hon. Gentleman twists my words. If he does not know by now why I was opposed to the new provisions, I am sorry; but it would be tedious to repeat my objections. I believe that my position is abundantly clear.

On many occasions I have been among 200 or 300 tenants tendering for farms at ridiculous rents in an attempt to expand my business. There is a decreasing amount of agricultural land, and the supply cannot be increased. As long as we have a reducing supply of land, the demand will inevitably increase. That is so simple an economic fact that it has probably not percolated through and been recognised by Labour Members. But perhaps I am altering the tone of what has been a friendly debate.

As the clause raises a major matter involving hundreds of millions of pounds, perhaps the Bill is not the appropriate vehicle. Therefore, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Forward to