§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Cope.]
11.57 pm§ Mr. Nicholas Winterton (Macclesfield)I welcome the opportunity to draw to the attention of the House matters that are of deep concern to my constituency of Macclesfield and Congleton and that will be of interest in all constituencies with a substantial rural element. I refer to the threat to our rural communities and to the need for change in agricultural tenancies. The agricultural landlord and tenant system, which has been the basis of our farming system for centuries, has since the beginning of this century declined quickly, to the great detriment of rural life. It will continue to do so unless legislation is introduced to reverse the trend.
Early in this century, about 80 per cent. of farm land was held under tenancy. By 1976, that figure was down to only 45 per cent. and now it is only 38 per cent. The Northfield committee predicted in 1979 that, if present trends continued, the size of the letting sector would be half that figure by the year 2020. That decline in tenanted land has happened because landowners are unwilling to let their land to tenants who, under the Agriculture (Miscellaneous Provisions) Act 1976, can hold that land for three generations. There are also fiscal disincentives to letting land.
What happens is that landowners take their farm in hand or, if they relet, it is usually—understandably in the circumstances—to an established farmer rather than to a first time tenant. As a result, young people, the seed corn of future fanning in the United Kingdom, who wish to go into farming, are unable to do so. The agriculture ladder which should provide, and I want to see provide, mobility within the industry, is irretrievably blocked. Rents, which are inevitably influenced by the scarcity of tenancies, are increased to unrealistic and unecomonic levels.
All that has greatly contributed to the trend whereby farmers or farmowners amalgamate neighbouring farms with their own, either buying up someone else's or taking in hand their own and selling off the second farmhouse. That is having an extremely detrimental effect on the local communities in Britain, as well as preventing young people from starting up in farming. The sold-off farmhouse—if I may describe it as such—is often bought by commuters with no personal interest in the local or rural community into which they move. Frequently such farms are run by a farm manager, especially, as is increasingly the case, when they are bought by a firm or pension fund, for example. The manager is only doing his job, perhaps in some cases not for very long, unlike the tenant fanner who is a permanent member of the local society with a real stake in the land that is fanned.
Thus increasingly land is owned by absentee landlords in many areas of Britain, particularly, I believe, that represented by my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins), whom I am delighted to see. Those in agriculture who have a deep interest in the land and in the stability and prosperity of rural communities are acutely aware of this problem.
Therefore, the National Farmers Union and the Country Landowners Association have produced a joint document calling on the Government urgently to implement legislation to stop this trend. They point out that there are 916 two main reasons for the refusal of many landowners to let land on traditional tenancies in recent years. First, there is the discriminatory treatment of agricultural landlords under fiscal legislation, and, secondly, the natural disinclination on the part of landowners to grant a tenancy when, under the Agriculture (Miscellaneous Provisions) Act 1976, it could last for three generations. I speak with some knowledge of that Act as I was a member of the Standing Committee which considered that measure when it was proceeding through the House.
When the Labour Government introduced the succession clauses in Committee they were warned what would happen and our warnings have come true with a vengeance. The CLA and the NFU have welcomed the Chancellor of the Exchequer's proposals on fiscal inhibition to letting which will bring some alleviation of the burden of capital taxation in respect of tenanted farms. They recognise that that is a positive step in the right direction.
With respect to the succession of tenancies, the NFU and CLA agreement suggests that, though the 1976 legislation should continue to apply to tenancies already in existence, the possibility of statutory succession should not apply to new lettings granted after the new legislation has passed through the House. But—and I emphasise this—such lettings should continue to be made with full security of tenure under agricultural holdings legislation for the life of the tenant. The NFU and the CLA warn—I emphasise that word for my hon. Friend the Minister—that if those measures are not taken urgently as a package
the further decline and demise of the landlord/tenant system in agriculture is inevitable.The president of the NFU, Sir Richard Butler, has also warned that failure to legislate on agricultural holdings in the present Parliament could well lead to nationalisation of all tenanted farm land under a future Labour Government. To that the farmers' union is totally opposed.
I seek from my hon. Friend the Parliamentary Secretary an assurance that legislation will be introduced early in the new Session of a new Parliament under a Conservative Government. I want a further assurance that a commitment to such legislation will be included in our election manifesto, but it may be necessary to spell this out clearly during the election campaign.
The Government ought immediately to heed these warnings from people who are farming the land throughout the United Kingdom. It may be necessary to do more to prevent the amalgamation of farms which does not result solely from an unwillingness to let, otherwise in a few generations there will be only a small number of very large farms. The answer to preventing this trend could lie in taxation. Such a suggestion does not come easily from a Conservative Member of Parliament. Tax incentives could be introduced which would make it financially advantageous for a landlord to let farms individually and provide disincentives to amalgamation.
Capital taxation could be introduced as a disincentive to buying second farms, selling off the second farmhouse and splitting up very large farms when passed on to the next generation.
These proposition are vital to the future of rural life and the success of farming. Such measures would not affect large traditional estates, where in many cases one farm is farmed by the owner and the rest by tenant farmers. Such estates—certainly in Macclesfield and Congleton, in my area of Cheshire—are usually beneficial to rural life. 917 Indeed, they have been threatened by the rise of owner-occupiers who have increasingly large, single farms of hundreds of acres in numerous cases and thousands of acres in a limited number of cases.
This is a vital issue that is of great importance to farming, to the NFU, to the Country Landowners Association and to all who have a deep interest in rural life. Action is necessary now, not tomorrow, to preserve the stability of our rural communities.
§ 12.7 am
§ The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner)I am most grateful to my hon. Friend the Member for Macclesfield (Mr. Winterton) for raising this topic and giving the House the opportunity to consider a most important matter. I know of the concerned care that my hon. Friend takes in the problems of rural communities, and I have listened with great interest to what he said about the effect of the present agricultural tenancy legislation on these communities.
I am sure that my hon. Friend will agree that the relationship between landlord and tenant defined in the agricultural holdings legislation has served British agriculture well over the years. However, he has rightly highlighted the fact that there has been a gradual decline in the tenanted sector over a large number of years. I can assure my hon. Friend that the Government share his concern over this decline, which has affected the hopes and aspirations of those, particularly the young, who have been trained by our excellent agriculture colleges and who have much to offer the nation and the rural communities in ability, enthusiasm and innovatory ideas.
Far too many of these people who, as my hon. Friend rightly said, represent the seedcorn for the future prosperity of the industry have found their opportunities to enter farming on their own account restricted through the shortage of new lettings. Many factors have contributed to the decline in the tenanted sector, and not all of them can be influenced by Government policy. Nevertheless, I and my colleagues have been carefully considering the possible ways of infusing new life into the sector. My hon. Friend referred to fiscal influences. Taxation is one factor that influences a landowner in his decision either to let his land or to take it in hand when the opportunity arises. My right hon. and learned Friend the Chancellor of the Exchequer took a significant step towards bringing the tax treatment of landowners and owner-occupiers into alignment in the 1981 Finance Act by introducing the capital transfer tax agricultural relief at 20 per cent. for tenanted agricultural land. The facility to pay tax on an interest-free instalment basis was also extended to tenanted land, and as a result the CTT burden on such land was broadly equated with that on owner-occupied land.
Those changes were warmly welcomed by all sectors of the farming community. In his latest Budget Statement, the Chancellor outlined his intention to increase the agricultural relief on tenanted land to 30 per cent. as a further measure to help reduce the decline of the tenanted sector. He also announced proposals that would allow those tenant farmers who are required to live on their farm to purchase a house off the farm with the benefit of tax relief on the mortgage. Finally, he proposed a facility that would allow farmers to pay CTT in interest-free instalments over 10 years, rather than eight as at present. 918 All those proposed changes were equally warmly welcomed by all sectors of the farming community. They are clear evidence of the Government's recognition of the need to tackle the problem of the decline in the tenanted sector, and they have provided a positive fiscal encouragement to the letting of agricultural land.
The implications of institutions purchasing large areas of land can be exaggerated. The Northfield committee found no evidence to substantiate claims that they were bad landlords, and its research suggests that the total holdings of the larger institutions amount to only some 2.5 per cent. of the area under crops and grass in Britain. Furthermore—this will please my hon. Friends—more than 70 per cent. of that land is let. The larger institutions are, in fact, seeking to increase tenancies.
§ Sir Paul Hawkins (Norfolk, South-West)That may be true in much of Great Britain, but in the eastern areas very large holdings have been taken in hand by pension funds. The Coal Board is farming 10,000 acres in Norfolk. The Hillcourt, Velcourt, and Hill Samuel estates run to 20,000, 30,000 or 40,000 acres. All that land is in hand, and there is not a head of livestock on it. There is the Vauxhall pension fund too. The Northfield report advised that pension funds should take farmland in hand only in exceptional circumstances, but the eastern counties are suffering greatly and I hope that something can be done.
§ Mrs. FennerWhen I said that the total holdings amounted to only 2.5 per cent. of agricultural land I realised that in my hon. Friend's area the proportion was rather higher, due to the nature of the land and the crops that can be grown there.
In addition to the fiscal encouragement, the other major factor influencing the decisions of landowners on whether to let their land is that raised by my hon. Friend the Member for Macclesfield today—the agricultural tenancy legislation. We have been considering what changes could be introduced to this legislation to provide greater incentives to landowners to let their land. Throughout our consideration we have had uppermost in our minds the need to achieve a consensus within the industry and to avoid introducing any changes which might prove to be short-lived.
As the House will know, my right hon. Friend the Minister of Agriculture, Fisheries and Food asked the NFU and CLA to turn their minds to possible ways of improving the tenancy legislation that would be acceptable to both sides of the industry. After what I know were long and difficult discussions they were able to put forward proposals, some of which my hon. Friend has commended today. I am sure that lasting and effective changes can be introduced only with the agreement and co-operation of all in the industry. Inevitably, the package proposed by the NFU and CLA represented a compromise between their varying interests. It was regrettable that the Opposition were unable to recognise that the compromise set out in the package was in the best interests of the farming industry as a whole.
Nevertheless, my right hon. Friend the Minister of Agriculture, Fisheries and Food has frequently made it clear that he welcomes the initiative taken by the NFU and the CLA. He regrets that it was not possible to find time for legislation on this topic in the current Session of Parliament and has said that it would be his wish to legislate on the basis of the NFU-CLA package at the 919 earliest opportunity. I hope that my hon. Friend will accept those statements by the Minister as an indication of the importance that the Government attach to the problem.
Inevitably, in discussions of a subject of such great importance, we have received a wide range of views from many different people and organisations. Many of these have echoed the concern expressed by my hon. Friend today about the effects that the reduction in the number of tenant farmers has on the rural community. They have stressed the vital part these farmers, many of whom are relatively small family farmers, play in the fabric and life of the countryside. I can assure the House that the Government are equally concerned about this matter. I hope that today's debate has shown how determined we are to find the right solutions to the difficulties faced by the rural communities.
§ Mr. Nicholas WintertonI am most encouraged by the remarks of my hon. Friend the Parliamentary Secretary, 920 who has clearly given considerable thought to this subject. Will she go as far as I requested, and give an assurance to those Conservative Members who take this matter extremely seriously, to the effect that there will be legislation at a very early stage of the next Parliament, when a Conservative Government will be in power, and that a commitment to such legislation will be written into the Conservative party manifesto?
§ Mrs. FennerI can but reiterate the commitment of my right hon. Friend the Minister that he wishes to legislate on the basis of the NFU-CLA package at the earliest opportunity. I can give no commitment on a manifesto that does not yet exist, but I hope that the expressed wish of my right hon. Friend to legislate at the earliest opportunity will be sufficient reassurance and commitment for my hon. Friend.
Question put and agreed to.
Adjourned accordingly at eighteen minutes past Twelve o' clock.