WAIVER OF CONTRACT

HC Deb 06 June 1984 vol 61 cc348-65

'Notwithstanding the provisions of any contract, agreement, covenant, lease or tenancy, a registered milk producer may apply to cease milk production and give up his milk quota, and if approved by the Minister cease milk production and give up his milk quota, pursuant to the compensation scheme announced by the Minister of Agriculture, Fisheries and Food on Friday 25th May 1984, without incurring any liability for damages in consequence of so doing, or being subject to any court action by way of injunction to restrain him from so doing.'. — [Mr. Maxwell-Hyslop.]

Brought up, and read the First time.

Mr. Robin Maxwell-Hyslop (Tiverton)

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

The purpose of the clause is both simple and clear. II is to enable tenant farmers to benefit directly from the compensation scheme announced by my right hon. Friend the Minister of Agriculture, Fisheries and Food on Friday 25 May for those who wish to give up milk production and surrender their quota for reallocation.

It goes without saying that a farm that gives up its quota is likely to be less valuable on the market after it has given up its quota than it was before. Therefore, it is not to be expected that landlords will welcome tenants exercising their right to apply to participate in the Minister's compensation scheme. The compensation will go to the person who gives up the quota—the milk-producing tenant—and the landlord will be left with an asset of reduced value. That is why so many tenancy agreements have in them a condition that the tenant will not take any action that will harm the value of the farm. That can be enforced by injuncion in the courts.

I do not doubt that the courts would hold that giving up a quota under the scheme so that the farm would not in the predictable future be used for milk production would be an action in breach of the tenancy, and would grant an injunction. If the owner of the farm did not go for an injuction, I would expect him to be able to recover damages—the damages being related to the reduction in the value of the farm as a result of the tenant surrendering his quota and his registration as a milk producer.

How, therefore, do we get out of the conundrum so that milk farmers who are tenants and wish to avail themselves of the compensation scheme can do so? It can be done only by a clause of this nature, which relieves them of any contract, agreement, convenant, lease or tenancy". I thought that those words probably covered the contingencies that were likely to be relevant. The new clause relieves the farmers statutorily of the legal consequences of that action in terms of injuction or damages.

If it be objected that that leaves the owner of the farm exposed to a diminution in the value of the farm without compensation, I must agree. However, it is wholly open to the Minister to bring in a compensation scheme which recognises that reality, and compensates the owner of the farm for the reduced value as well as compensating the milk producer who goes out of production and surrenders his quota, as the Minister is anxious that a certain proportion should do.

I am not suggesting for a moment that the majority of tenant milk producers will want to cease production. Clearly they will not, because it is not only their livelihood, but the roof over their heads. A large proportion of tenanted farms in my part of the world— and possibly in others that produce milk—are not suited to any other livelihood. They are used either for the production of milk, or for no viable agricultural purpose. This will not apply to the majority of milk-producing tenants, but only to those who wish to benefit fron the compensation scheme.

By the same token, the cost of a scheme to compensate the tenants' landlords for the corresponding loss in value of the farms would be a comparatively small financial burden on the Treasury. The two figures must of necessity correspond. I hope thereby to establish that the objective of the new clause is limited.

The House must ask whether it should be done, and, if the answer is yes, whether it should be done by a Bill or by statutory instrument. The compensation scheme is likely to be brought in by statutory instrument. There are reasons why the use of secondary legislation for a waiver of contract would be oppressive and an abuse of delegated legislation. Statutory instruments cannot be amended by either House. They may only be passed or rejected in the form in which they are presented or, under the negative resolution procedure, if a prayer negating them is passed in either House. That makes a statutory instrument an unsuitable way of legislating.

If there are shortcomings in my drafting of new clause 6—I accept responsibility for its drafting because I did it myself—it can be rectified when the Bill goes to another place.

Mr. Mark Hughes (City of Durham)

It does not go there.

Mr. Maxwell-Hyslop

Amendments and new clauses go to the other place. If no such clause is inserted, the Bill cannot be altered in another place. The Bill passes into law as it leaves the House except for any amendment that we make or new clauses that we add. Therefore, imperfections in drafting are not a reason to vote against the new clause. They can be rectified in another place. We are dealing with the principle.

Mr. Ivan Lawrence (Burton)

There are unlikely to be any imperfections in my hon. Friend's drafting.

Mr. Maxwell-Hyslop

I am grateful to my hon. and learned Friend for saying that. With his eagle eye he would spot imperfections, and with his generosity of spirit he would tell me of them, having spotted them. That gives me even greater confidence in recommending the new clause to the House.

There is no need to labour the argument. The manner in which my right hon. Friend announced the scheme on Friday 25 May did not suggest that he intended it to be taken by fanners as a scheme irapplicable to tenants, nor did milk producers receive it in that way, but without this provision the Bill will have that effect. I hope that I have satisfied the House that it would be inappropriate to include this provision in a statutory instrument.

6.45 pm

It is no argument against the new clause to say that most tenants who are milk producers will fall into the category that will benefit from the reallocation of quota. Many of them will be in the under-200,000 litres-a-year band and will have first priority in receiving the reallocation of quota to bring them up to calendar 1983 production. Calendar 1983 in Devon was a miserable year, and in many cases it was well below calendar 1981, which is why many milk producers wish that calendar 1981 had been our base year for quota, not calendar 1983. However, I understand the reasons why calendar 1983 was taken. That is an indirect benefit from the reallocation of quota, and other tenants, especially of institutions with larger holdings, such as the National Trust or the Church Commissioners, will not fall within the 200,000 litres-a-year cut-off point for priority in the reallocation of quota.

We must remember that many tenant milk producers have their bank loans secured on their herd because there is nothing else on which to secure them. In so far as some bank managers say — as they are doing — that the collateral has lost one third of its value, although the loan has lost none of its quantum, and that with that loan capital facilities have been purchased which now cannot be fully and economically used, there will be some tenants who will wish to leave milk production but will be able to do so only if they benefit from the compensation scheme. They cannot do that however, if their landlords refuse, in the representative case for tenancies and leases today. That is the case for giving new clause 6 a Second Reading and adding it to the Bill.

Mr. Mark Hughes

I have much sympathy with new clause 6. The House is faced with a technical difficulty. I accept what the hon. Member for Tiverton (Mr. Maxwell-Hyslop) said, that to introduce such a procedure under the regulations when they introduce the quota may have severe restrictions and may not do the job properly. It is clear that many farmers who entered into a tenancy agreement on the expectation of an expanding dairy industry and expanding dairy production now find themselves under pressure to quit dairy farming and may be at risk of breaking their contracts for their tenancies if they take up the scheme announced on 25 May.

I hope that the Government will give us an absolute assurance that the regulations, when they are laid, will go beyond the normal terms of such regulations in order to obviate the difficulty which the hon. Gentleman has shown the regulations will not do. If, however, the Government cannot give that absolute assurance, we must ask the House to divide on the new clause. It is unacceptable that dairy farmers who have undertaken contracts, tenancies and other agreements should be called upon to go to court because they have had to renege on those agreements for reasons outside their possible control.

Many of these problems were unexpected when the Bill was drafted and came before the House on Second Reading and in Committee. I hope that the Minister will now accept that what has happened since 31 March has completely changed certain parts of the Bill. It may well be necessary to change, not just the regulations for the implementation of the milk quota but the Bill itself.

The Opposition support the hon. Member for Tiverton in saying that the waiver of contracts forced upon farmers because of changes beyond their control and beyond anything for which they could have planned must be catered for in the Bill if it is not completely covered within the regulations. I am happy to support the hon. Gentleman's new clause.

Sir Peter Mills

I have listened to my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) with sympathy and studied his new clause. It stems from anxiety for those farmers who have a desperate problem. Surely tenant farmers should have the right to leave milk production and take advantage of the scheme. If they are denied that right——

Mr. Mark Hughes

It will be appalling.

Sir Peter Mills

It is appalling, yet the landlord's position is completely impossible. If one proceeds along the lines of the new clause it could set a precedent, and where would it end? The position is dreadful. There could be further quotas, but heaven forbid. The effect on the landlord would be serious if there were any further schemes to help tenants get out of certain types of production. What about cereals? I am worried for the tenant farmer and the landlord. It is not often that the hon. Member for Torridge and Devon, West is in a dilemma. I usually know my own mind, but in this case I do not.

There is another point. One must think of the landlord who has spent a great deal of money setting up a dairy outfit—perhaps £100,000 or more—to assist in having a viable dairy unit. He is suddenly told that his tenant is accepting the scheme and is getting out. The landlord is left with the baby on his hands and a sterilised farm for milk production. It shows the utter nonsense of the quota system.

Mr. Torney

At last the hon. Gentleman has been converted.

Sir Peter Mills

How stupid some people can get. It confirms my right hon. Friend's view when he fought so hard for an end-price reduction rather than a quota system. That is why, with respect, the hon. Member for Bradford, South (Mr. Torney) is talking a great deal of nonsense. This is a terrible dilemma. It highlights the need to ensure that we never return to a quota system if we have to reduce production of any other commodity. I do not know the way forward here. I hope that my hon. Friend the Minister will help and give some comfort and assistance to the tenant dairy farmer who wishes to take advantage of the scheme.

There are two sides to the problem, and one cannot leave out the landlord and the expense that could occur to him, or what might happen in the future if we deal with other products. The landlord may in the end be left with a farm which is not allowed to produce anything.

Mr. Edward Leigh (Gainsborough and Horncastle)

Does my hon. Friend agree that the dilemma shows the ludicrous position we would be in if quotas were to be introduced for cereals?

Sir Peter Mills

Absolutely. That is what I was trying to say and not saying very well. My hon. Friend is right. We look to the Minister to help us out of this dilemma and to see what can be done. There must be some way of getting together with the Country Landowners Association and the National Farmers Union to find some way to sort out the problem and to assist the tenant dairy farmer to get out, while not penalising the landlord.

Mr. Jackson

We all know how serious are the problems being faced by some dairy producers as a result of the introduction of quotas. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) has done the House a service by drawing attention to the problem, but our appreciation of the difficulties should not precipitate us into passing bad legislation. I consider my hon. Friend's new clause to be thoroughly bad legislation.

The new clause is bad for two reasons. The first lies in the technical inadequacy of the proposal. The new clause can relate only to England and Wales, because the Bill relates only to England and Wales. I stand to be corrected, but I have the gravest doubt about whether that is a deficiency that can be corrected in another place. If my hon. Friend's new clause were to be accepted it would introduce serious discrimination between dairy farmers in England and Wales and those in Scotland and Northern Ireland. It would be a serious distortion, and I cannot believe that my hon. Friend intends that. It could have come about only by way of a technical oversight.

Mr. Maxwell-Hyslop

Is my hon. Friend aware that the Minister has introduced the kind of distortion about which my hon. Friend is talking? There is a different percentage aimed at to be purchased in Northern Ireland from that in England and Wales. The whole system of law on tenure is different in Scotland from that in England, which is why the Bill is confined to England and Wales. The only decision that we can make today is on the Bill that is before the House, which is confined to England and Wales for that reason. It does not stop anyone from legislating separately for Scotland, as the Government would have to do anyway because the system of tenure is different in Scotland.

Mr. Jackson

I well understand that there are differences between different parts of the United Kingdom, but I do not believe that they justify the different legislative treatment that my hon. Friend is proposing in the new clause.

My objection goes deeper than technical deficiency. I believe that my hon. Friend's proposal is bad legislation for a more fundamental reason. It introduces the dangerous principle of expropriation without compensation. A quota for the production of milk is a form of property right which is attached to a piece of land. My hon. Friend's proposal amounts to an uncompensated transfer of the landlord's interest in the property to the tenant. It is ironic that that should be proposed in the context of a Bill whose prime purpose is to put right precisely an earlier such interference in established contractual arrangements in the matter of succession.

Mr. Mark Hughes

Will the hon. Gentleman accept that milk quotas are not a transferable asset at the moment? They revert without compensation to the Ministry of Agriculture, Fisheries and Food or the dairy, in this case the Milk Marketing Board, within the terms of the legislation. Therefore, the hon. Gentleman's argument is wrong.

7 pm

Mr. Jackson

The hon. Gentleman must accept that it has been admitted by my hon. Friend the hon. Member for Tiverton that a right which would be in the possession of the landlord is to be taken away. That is the difficulty that I am emphasising. I cannot see that there can be any justification for this dangerous and unprincipled step. I cannot see any argument for expropriation without compensation in this case, any more than I could see an argument for expropriation with inadequate compensation with regard to the shipbuilding industry on an earlier occasion, when my hon. Friend scored a great parliamentary triumph. At that time he followed a clear and well-justified line. He would do well to return to that line today by withdrawing the new clause.

Mr. W. Benyon (Milton Keynes)

I, too, appreciate very much the motives that have caused my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) to move the new clause. At this stage it introduces a new set of factors, some of which have been touched on in the debate. I do not want to deal with the other partner in the partnership, the landlord, as opposed to the tenant. Fixing the quota on the tenant would create an injustice, particularly where there had been substantial capital expenditure.

We have to consider the new clause as it stands. It is no good saying that compensation should be produced in some other way by the Government. Much more important is the fact that it would be an enormous disincentive to letting in the future. I can think of nothing more calculated to dissuade a landlord from letting than arbitrary legislation of this kind. People will say that what has been done in one case could be done elsewhere. Already there have been hints about cereals. We have spent much time on Second Reading, in Committee and now on Report discussing the legislation, the motive of which is to increase the number of farms for letting. If we accept the new clause, we will reverse the process.

I accept that there is a problem, but as the new clause stands it is arbitrarily taking away a right. Therefore, it should be resisted. Obviously the matter has to be considered, as my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) said, in conjunction with the various parties in the industry to see whether a solution can be reached.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Like the bulk of the Conservative party, I represent an urban constituency. My constituents are concerned most of all to have cheaper food and to keep monetary support to the farming industry within proper bounds. [Interruption.] I am a very small farmer. As a result of agricultural support, the land that I wish to buy is much more expensive than it would otherwise have been. As has been pointed out already, the principal beneficiaries of a high level of agricultural support have been the agricultural land owners, although they have had to obtain a good deal of tax relief, which they have been very fortunate to get, so as to be able to pass on assets of a high nominal value but a low yield.

The debate illustrates that my right hon. Friend was right in wanting a reduction in price. If we are not careful, I suspect that there will be a ready answer to my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills): extra compensation for landlords. There will be a grave injustice to landlords if tenants give up what is equivalent to a grant of planning permission. Then the land could not be used for Cairying. One can see that land without the benefit of that equivalent of planning permission might drop in value from £2,000 per acre to perhaps £1,000 per acre. One can see the injustice that would be done.

What are the Government likely to do? Will we have something similar to what happened in regard to the draining of marshy land of great amenity value? Will there be first an over-high price for corn, then subsidies for peope to take out hedges and then, if they do not respond to those price mechanisms, will the Government say, "We have a splendid Act under which we will compensate you for not doing that which the market encourages you to do."? I suppose that we may do the same thing for agricultural landlords.

Let us not go down that path. Let us recognise that the price mechanism signalling to people how they should act in their enlightened self-interest is the proper way to deal with farm surpluses. The surpluses must be dealt with quickly. We know already that the Commission expects that the budget of the EC will be overspent this year by £1.4 billion. That is after what are described as harsh reductions in the agricultural surpluses. We know the row that will occur if any serious attempt is made to reduce further agricultural production next year.

My constituents do not wish to see more money spent in the EC. They are not yet convinced that the agriculture industry is in dire penury. I hope that there will not be further demands from my hon. Friends for compensation for landlords, who, I agree, would be treated badly if my hon. Friend's new clause were accepted. It is far better for the problem to be dealt with by the price mechanism.

I leave my right hon. Friend with this thought. In this country it is always possible to give national aid to increase the receipts of farmers for their produce. Why can we not have a national policy which lowers the price of agricultural products? Why can we not say to the EC, "Thank you very much indeed. We will give our farmers 20 per cent. less for their milk. We would prefer to do that rather than introduce quotas."? The Government could say to people like myself who have suckler cows, "We think you are terribly hard up. We want to give you more and we will give you national aid." Why can there not be national reductions in price?

Mr. David Maclean (Penrith and the Border)

I can add nothing of greater wisdom to the debate than we have heard from my hon. Friends the Members for Tiverton (Mr. Maxwell-Hyslop) and for Torridge and Devon, West (Sir P. Mills). I completely agree with the principle of the new clause and I have great sympathy with the "Catch-22" situation in which tenant dairy farmers and landlords are being placed. It is an awful dilemma to which the Government will have to address themselves in the coming weeks and months.

However, I do not believe that the Bill is the right vehicle for a clause such as has been proposed. It is five years since the National Farmers Union approached us to do something about the landlord and tenant system. The Bill has been five years in the gestation process. My right hon. Friend the Minister has been criticised for apparently rushing in the quota system. We should not add to the problem that might be encountered in dairy farming by accepting the new clause that many of us have had a chance to study only during the last few days. The solution is to have exhaustive but rapid discussions with the NFU and the CLA on how the problem should be approached. Let us all also consult the Tenant Farmers Association and come up with some solution to the problem. Perhaps we need a new Bill or perhaps the regulations will solve the problem. I am not a constitutional lawyer so I cannot comment on that. Having spent so long putting together a Bill that has been agreed by the NFU and the CLA, we should not hurriedly accept a new clause which, as my hon. Friend the Member for Torridge and Devon, West said, could have repercussions for the cereal, beef and sheep sectors. I urge the Government rapidly to have discussions with the NFU and the CLA.

Mr Torney

Something must be done about the Bill. Whether we agree with it or not, the Bill is aimed at helping the tenant farmer. Since the Bill was introduced circumstances have changed. The new EEC quotas, approved by the Minister, create a new factor.

One could argue that the new system creates dangers for many tenant farmers. The new clause deals with liability for damages if a tenant farmer gives up milk production. The tenant farmer does not get out of milk production because he is fed up with it or does not like doing it any more, but because the EEC, with the agreement of the Minister, has decided that he cannot produce as much milk as he used to produce. To say that the Bill does much for tenant farmers is nonsense.

The Opposition support the new clause. Even if its wording is not perfect, its sentiments are right. If it is pressed to a vote we shall vote for it unless the Minister gives cast iron assurances that legislation will be introduced to give the tenant farmer protection.

Mr. Gerrard Neale (Cornwall, North)

I agree with my hon. Friends the Members for Tiverton (Mr. Maxwell-Hyslop) and for Torridge and Devon, West (Sir P. Mills). I see the dilemma particularly in relation to the landlords. Considerable discontent will be caused in my area if the large number of farmers who could be affected think that there is one law for owner-occupiers and another for tenant farmers. That could give rise to great anger.

In addition, since the announcement of the scheme fundamental doubts have arisen about how the scheme will affect a particular farm and what the hardship grounds will be. I am grateful to my hon. Friend the Member for Tiverton for bringing the problem to the attention of the House. Unless my right hon. Friend is able to give some assurance that discrimination between tenant farmers and owner-occupiers can be dealt with suitably, a barrage of major criticism will be levelled at him.

Mr. Budgen

Is my hon. Friend in favour of a system of compensation for landlords on the capital that they will lose?

Mr. Neale

I remind my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) of what my hon. Friend the Member for Torridge and Devon, West said. Many of us would not have gone down this road, any more than the Minister would, but we are set on a course that we cannot change. I worry about where we shall stop, but some people will want to avail themselves of the scheme. They will be justified in doing that, but they will be pre-empted. I do not know how we can justify that.

I urge my right hon. Friend to consider the arguments carefully and to give a sign that he is willing to look at the problems seriously. Many of us will be in the gravest difficulty if we have to justify the fairness of the proposal to those who are adversely affected.

7.15 pm

Mr. Ivan Lawrence (Burton)

I came into the Chamber shortly before the start of the debate having just written many letters—goodness knows how many—to the milk producers in my constituency saying that for some of them salvation was at hand because of my right hon. Friend's scheme to encourage those who wish to leave milk production by providing adequate compensation. Thanks to my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) highlighting the scheme, it now appears that that is not so for a large proportion of small milk producers in my constituency. I refer to tenant farmers who are bound by contract to their landlords and will not be able to avail themselves of the relief without breaking their contract.

Something, of course, must be done about it. I could be wrong, but I do not believe that it is financially possible to provide compensation for landlords for what amounts to a breach of contract along the lines suggested by my hon. Friend the Member for Tiverton. The sums involved would be substantial and beyond likely implementation.

Before the Council of Ministers agreed to the form of compensation, it must have considered the consequences to the different legal systems in Europe of breaking the contracts which bind landlords and tenants. Landlord and tenant law doubtless applies in different forms, but in substance is the same across the civilised countries of Europe.

I concede that the Minister is caught on the horns of a remarkable dilemma which is not of his making. Nobody could have tried harder to stop this happening. The Minister must have had some assurance during discussions with colleagues in the Community about how they proposed to deal with the same problem.

But it is no use pretending that we shall help the small milk producer in the way that my right hon. Friend promulgated on 25 May if the reality is different. My right hon. Friend must either devise some other way of helping the small milk producer, or find some way round this particular contractual dilemma, no doubt with the assistance of his colleagues in the Community.

As there is an element of doubt, I shall find it difficult to support my hon. Friend's well-timed and important new clause. However, the plight of the small milk producers in my constituency is very serious, and I am most anxious, as their representative, to see that they are treated with justice and fairness. I look to my right hon. Friend to achieve that justice and fairness in one way or another.

Sir Paul Hawkins

I entirely sympathise with the cases that my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) has brought to our notice. It is good that he has done so. Personally, however, I do not think that we should adopt the new clause. The Bill has been long in coming, and I have been longing for it to appear. Together with the Budget changes to capital transfer tax and other matters, the Bill will go some way towards creating more tenant farmers, and that is the only way in which a young man can enter farming today. No young man today can buy 200 acres at £2,000 or £2,500 an acre. The new clause would do serious damage to relations between landlord and tenant. The matter can best be dealt with by regulations, when the regulations are made.

As my hon. Friend the Member for Tiverton rightly said, only a small number of farmers would be affected. We are somewhat inclined to exaggerate the importance of this issue. I am sure that my hon. and learned Friend the Member for Burton (Mr. Lawrence) did not wish to exaggerate, but if he had been present for the whole of the debate he might have realised that the number of people who have such a clause in their agreements is not enormous, and nor is the number who will stop farming.

Finally, I do not agree with my hon. Friend the Member for Penrith and the Border (Mr. Maclean) that we should go back to the NFU and the CLA, and negotiate with them again. The NFU cannot make up its mind about anything at present. I have good friends in the NFU, and I am a member of that union, but I believe that the Minister must make up his own mind. I know the Minister, and I am convinced that he will do what is fair.

Mr. Nicholas Winterton (Macclesfield)

I apologise for being absent for part of the debate. I was detained by other duties in the House.

I remind my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins) that the aim of the House is to see that justice is done and seen to be done. The fact that the new clause may apply only to a few cases is not important. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) and other hon. Members have done a great service to the farmers, who in recent times have been dealt a devastating blow.

I believe that my view is shared by the NFU. I do not share the opinion of the NFU and held by my hon. Friend the Member for Norfolk, South-West. The NFU is, to use the words of my hon. and learned Friend the Member for Burton (Mr. Lawrence), faced with a dilemma. There have been different views within the NFU as to how the milk package should be handled. However, to say that the NFU is at sixes and sevens and does not know where it stands on any issue is to do a grave disservice to one of the finest organisations representing one of the most efficient industries in the country — [Interruption.] If my hon. Friends wish to laugh, they should keep an eye on their farmers at the next election. To the farmers, this is no laughing matter.

The new clause merits our support. It deals with a small number of farmers who will be adversely affected——

Mr. Budgen

Will my hon. Friend give way?

Mr. Winterton

No. I know precisely what my hon. Friend wants to say. I grew up with him.

Sir Peter Mills

Will my hon. Friend give way?

Mr. Winterton

I am happy to give way to my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills).

Sir Peter Mills

My hon. Friend rightly says that he wishes justice to be done in the House. However, there must be justice for the landlord as well as the tenant.

Mr. Winterton

I believe that if my hon. Friends analyse the problems facing farming at the moment they will probably be more concerned about the tenant farmer and the decrease in the number of tenant farmers which has occurred than about anything else. If my hon. Friend wishes to know about which group I am most concerned at present, I must say that, in the main, it is the tenant farmer and—allied with him—the small and medium-sized dairy farmer.

My hon. Friend the Member for Tiverton has taken a deep interest in this matter and has done much research. He has been consistent in his views, which is more than I can say for many of my hon. Friends. I say that with great sadness——

Mr. Budgen

No, he does not. My hon. Friend says it with great enjoyment.

Mr. Winterton

If my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) wishes to intervene now, I shall be happy to give way, but perhaps he wishes only to make glib remarks from a sedentary position.

Mr. Budgen

Is my hon. Friend in favour of a compensation scheme for landlords? How much would it cost, and how would he justify it to the taxpayers?

Mr. Winterton

I would justify a compensation scheme by reference to all that has happened to agriculture recently. Successive Governments have urged farmers to produce more. The farmers have reacted more efficiently and effectively than any other industry in the country. The Government then, almost retrospectively, expect them to change direction. Adequate compensation should be given to the appropriate farmer, whether he is a landlord or a tenant.

No doubt the drafting of the new clause can be criticised. That is what the Front Bench always says when such a new clause is introduced. Ministers make reassuring sounds in the hope that opposition on the Government side will evaporate because of lack of time. The Front Bench has the knowledge and the wherewithal to provide the answers, but its answers will not produce the result that my hon. Friend the Member for Tiverton wishes to achieve.

Not just in relation to this matter but on the wider question of milk quotas, the Government have bitten off more than they bargained for when they made the agreement in Brussels some weeks ago. We saw the result at the by-elections in Surrey, South-West and Stafford, and in the local government elections, and we shall see it in the European elections next week. People who traditionally, because of their jobs, have instinctively and inevitably voted Conservative will abstain on a massive scale.

Sir Paul Hawkins

Rubbish.

Mr. Winterton

My hon. Friend says "Rubbish". We shall await the result of the poll. What I have said will be proved to be right.

Sir Peter Mills

My hon. Friend is not helping our candidates.

Mr. Winterton

Should we be trying to help our candidates in an election, or should we be seeking to serve the best interests of this country?

I am supporting my hon. Friend the Member for Tiverton because he and a number of my hon. Friends have had the courage to put down a new clause that is directed towards helping a number of people who would be adversely affected as a result of the milk package. I have said much in the House and outside on this subject and shall continue to do so. I want to see injustices righted, and even if I am criticised almost unanimously by my hon. Friends I shall still say what I believe to be right.

7.30 pm

The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling)

We are all grateful to my hon. Friend the Member for Tiverton (Mr. Maxwell-Hislop) for tabling this new clause. A number of my hon. Friends have expressed a similar view. My hon. Friend the Member for Wantage (Mr. Jackson) said that my hon. Friend the Member for Tiverton had done the House a service, and he has.

I am grateful for the expressions of support from many hon. Friends, who have said how much better it would have been if we could have dealt with the massive over-production of milk throughout the EEC by the discipline of price. That would have been a good deal neater and simpler, and it is something, as the House knows, that I have always wanted. However, we found ourselves in a minority of one in Brussels, and I regret that we were not able to have our way on that. I hope that a lesson will be learnt and that if discussions take place on other commodities we shall find ourselves in a majority.

I understand and share the concern expressed by my hon. Friend the Member for Tiverton that the outgoers scheme for milk producers should be as fair as possible to all concerned and should achieve its essential objective of providing a reserve quota for allocation to other producers, particularly the small ones, to whom, as the House will know, I think it is right to give a first priority in the reallocation of quotas.

Mr. Robert Hughes

Will the right hon. Gentleman tell the House why he made the announcement about the £50 million outgoers scheme to a Conservative press conference for the European elections, and did not come to the House and explain what he has now explained?

Mr. Jopling

I am sorry, but the hon. Gentleman is uncharacteristically wrong in that. We answered a written question on the scheme before we ever embarked on a press conference outside.

The House will perhaps recall that some voices have urged me, with regard to the redistribution of quotas, to create a market for them and to say, "Let the people purchase them, if they can, at the highest price; let them be bought and sold." Apart from the fact that regulations for the milk scheme do not make provision for that, that would have been the wrong way. It was right to take a positive decision to handle these quotas ourselves, so that we could give first priority on redistribution to the smaller producer.

The scheme is for a minority of producers who want to give up to be encouraged to do so. The principal aim of the scheme is to restore to a far greater number of small producrs their 1983 production patterns. That is what we are about. The purpose of the scheme is not necessarily to encourage people to get out of milk production.

The outgoers scheme will encompass owner-occupiers and tenants. My hon. Friend the Member for Tiverton was right when he said that those who want to get out will be in a minority. The majority of milk producers will wish to stay in milk production, and it is that that we want to encourage, particularly at the smaller end. We hope that by making available something rather less than 1.5 per cent. of all the milk produced in the country we can bring 40 per cent. of producers who have fewer than 40 cows back to their 1983 position of production.

Owner-occupiers account for the majority of all milk producers. I have been looking at some figures—which may interest the House—of how many milk producers are owner-occupiers and how many rent the farms. Some farms are on a mixed tenure, and sometimes it is not possible to assess how many of these there are. However, in England and Wales, according to the latest figures that I have been able to get, there are 20,500 milk producers who own their farms, compared with 12,200 who rent their farms. There is a minority of milk producers who are tenants.

Mr. Budgen

When the owner-occupier comes to sell his farm, will he not find that its capital value is much diminished if it does not have any quota attached to it?

Mr. Jopling

That is so, but we have seen that before with quotas for other crops, which have had an effect on the value of farms. Owner-occupiers account for the majority of milk producers, and the decision whether or not to give up milk production and apply for compensation under the outgoers scheme will be a matter for the producer. With the tenant there is a need—which the House understands if one is to judge from the tenor of the speeches — to take into account the interest of the landlord as well. Who can argue but that both the landlord and the tenant have a clear and legitimate interest in the farming activities that are carried on on the holding?

My hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) drew attention to the unfair impact which the clause could have on landlords. As he said, in the case of a dairy holding the landlord may have invested substantial capital in the provision of specialist dairy buildings which would be of a much reduced value if, because of quota restrictions, continued milk production on the holding were no longer possible.

Another aspect to which no hon. Member has yet referred is where the tenant has provided the buildings himself, with the landlord's consent. I can see that my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins), who has dealt with many arrangements of compensation, knows exactly what I am going to say. Where such a tenant has decided, as a result of the outgoers scheme, that he wishes to give up milk production and quit the holding, the landlord could find himself facing a substantial bill for compensation to the tenant for the tenant's investment in those buildings. That would be even worse than the situation to which my hon. Friend the Member for Torridge and Devon, West referred.

It is because of the shared interest in the holding that we intend to provide in the outgoers scheme that the agreement of the landlord will be necessary before compensation is paid to a tenant who wishes to cease milk production. That is an entirely fair approach, which will ensure that an important decision affecting the future of farming activities on the holding can be arrived at with the agreement of the parties who have a legitimate interest in the holding.

Mr. Geraint Howells

Let us say that a small dairy farmer is keen to leave the dairy industry. If his landlord says, "No, you are not allowed to leave the dairy sector," what plans has the right hon. Gentleman to help the producer?

Mr. Jopling

That is one of the matters which the House will want to consider carefully. However, it is not relevant to the new clause.

The outgoers scheme will be non-statutory as a result of the way in which it will be brought in under Community regulations. The clause would cut right across current procedures and override any quota provisions which might already be incorporated in a tenancy agreement. The House will have taken careful note of the remarks of my hon. Friend the Member for Wantage (Mr. Jackson) on expropriation without compensation. The House should consider carefully and seriously the implications of adopting the approach that my hon. Friend the Member for Tiverton has placed before it.

My hon. Friend the Member for Milton Keynes (Mr. Benyon) brought a crucial issue to our attention when he said that one of the main purposes of the Bill was to encourage landlords to let more land. The Bill will do that in a number of ways. One factor which has undoubtedly contributed to the problems of the tenanted sector over the years is the fear among landlords that any provision which they have included in a tenancy agreement will subsequently be overridden by statute. That happened in 1976 when the then Labour Government introduced their succession provisions. It would be most unfortunate if something similar happened with the milk quota arrangements. The result would be a further damaging blow to the confidence of landlords and to their willingness to create more tenancies. That is a matter which was taken up by my hon. Friend the Member for Norfolk, South-West.

For those reasons I ask my hon. Friend the Member for Tiverton not to press the new clause to a Division. I understand fully the motives that lie behind it, and I am concerned about the dilemma in which we find ourselves. I am sure that we all want to ensure that the objectives of the outgoers scheme are achieved. As I have stressed, one of them is to bring the smaller producers back to their 1983 production patterns. However, the clause has far-reaching implications which, if it were to be adopted, could prove to be a further major disincentive to the letting of land.

I have been asked by a number of my hon. Friends to think carefully about the dilemma that faces us. I shall do that, of course. My hon. Friend the Member for Norfolk, South-West asked me not to consult the Country Landowners Association, the National Farmers Union and other organisations. Notwithstanding his request, I shall ask those bodies whether they can help the Government and the House in finding ways whereby, with consent, we can overcome the problem. I do not believe that the House should accept the new clause and I hope that my hon. Friend the Member for Tiverton will withdraw it. If he feels that he is not able to do so, I must ask my right hon. and hon. Friends to oppose it, but I hope that that will not be necessary.

7.45 pm

Mr. Neale

How soon does my right hon. Friend think he will be able to give this matter serious consideration and produce a solution? Any farmer who entered my right hon. Friend's Department would soon become aware of the grave complexities which he has to resolve. However, individual farmers are being swamped with the most hideous uncertainty. My right hon. Friend and the House have a grave responsibility to resolve the issue quickly on behalf of farmers.

Mr. Jopling

We are moving as fast as we can to clear our minds over special cases, direct sales and wholesale sellers who are still uncertain about their quota. We hope to provide the necessary information very soon. We shall move as fast as we can and I hope that my hon. Friend will not press me to announce a time. As I have said, I hope that my hon. Friend the Member for Tiverton will not press the clause to a Division. However, if he feels that he must do so, I must ask the House to oppose it.

Mr. Robert Hughes

I have no wish to prolong the debate. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) has given the House an opportunity to discuss some serious issues which have arisen as a result of the implementation of quotas.

I said earlier that the Minister had failed to make a statement in the House and that as a result proper questioning has not been possible. A proper debate should take place and it is unsatisfactory that we should discuss such an important issue under the terms of a new clause to a Bill which has wide implications.

The Minister accused me of being uncharacteristically wrong about the making of a statement to the House and the timing of a press conference. I seek to be a fair man and I understand that I may have been wrong in that an announcement was made to the House by means of a written answer about five minutes before a press conference took places. The Conservative press conference began at 9.35 am and 9.30 am is the earliest that a written answer can be given to the House. It seems that I was not so very wrong.

The outgoers scheme will provide £50 million over five years. That pales into insignificance when set against the provision that is being made by the Federal Republic of Germany. The problem of small farmers would have been dealt with in a much better way if the Minister had adopted a scheme akin to the one that I put to him when I met him about a fortnight ago. The smaller producer should have been allowed to produce his 1983 quota and only that, and where necessary the quota should have been adjusted upwards on a sliding scale towards the level of the larger producers. Such a scheme is to be implemented by the West Germans, so there is nothing impracticable about it. Indeed, it is a much better way of tackling the problem.

There are clear signs that the Minister has not followed through in detail all the ramifications of what is happening to milk producers as a result of the quota applications. The Minister tells us that the outgoers scheme is non-statutory because it is to be introduced under the EC agreements. None the less, I am concerned that we shall not have a proper opportunity fully to debate the scheme in Government time to ensure that we arrive at the best possible solution. I hope that the Minister will take this opportunity to give an assurance that he will consult his right hon. Friend the Leader of the House and that arrangements will be made for a proper debate. Some guarantees have been given, and I should like them to be reinforced. We must discuss this matter properly. I hope that no Minister will duck the issue.

7.50 pm

Mr. Maxwell-Hyslop

I seek leave of the House to respond briefly.

Mr. Deputy Speaker (Mr. Paul Dean)

The hon. Member does not need to seek leave, because he moved the motion.

Mr. Maxwell-Hyslop

The issue will not go away, because it is real rather than theoretical. Ministers and every other hon. Member agree that the quantum of the problem is small, for two reasons: first, my right hon. Friend the Minister is prepared to buy up only 2.25 per cent. of the quota; secondly, a large proportion of the milk producers involved will be owner-occupiers rather than tenants. The quantum is small; the principle is not.

The only possible resolution of the principle lies in the Minister's hands. He rightly said that two interests are involved — the interests of the tenant and of the landlord. It follows that in equity there is a compensation liability to both parties. A huge sum is not involved, and I hope that I have accurately and convincingly given the reasons for that.

We all know that the time span to legislate on this matter is relevant. Without the new clause, the tenant farmer will not be able to avail himself of the scheme's benefits. It is entirely in the hands of my right hon. Friend and the rest of Cabinet to remove any injustice which the new clause might involved by recognizing that there should, in equity, be compensation for the diminution in value which this measure brings to the landlord. The only way to give equity, if tenants compared with owner-occupiers are not to be penalised, is to include the new clause in the Bill. No further opportunity is available to include this measure later in the Bill.

Question put, That the clause be read a Second time:—

The House divided: Ayes 111, Noes 207.

Division No. 350]	[7.53 pm
AYES
Anderson, Donald	Hughes, Roy (Newport East)
Archer, Rt Hon Peter	Hughes, Sean (Knowsley S)
Ashton, Joe	Janner, Hon Greville
Banks, Tony (Newham NW)	Kaufman, Rt Hon Gerald
Barnett, Guy	Kirkwood, Archibald
Beckett, Mrs Margaret	Lambie, David
Beith, A. J.	Lamond, James
Bermingham, Gerald	Leighton, Ronald
Blair, Anthony	Lewis, Ron (Carlisle)
Brown, Hugh D. (Provan)	Lewis, Terence (Worsley)
Callaghan, Jim (Heyw'd & M)	Litherland, Robert
Campbell-Savours, Dale	Loyden, Edward
Clark, Dr David (S Shields)	McDonald, Dr Oonagh
Clay, Robert	McKay, Allen (Penistone)
Cocks, Rt Hon M. (Bristol S.)	McKelvey, William
Coleman, Donald	Maclennan, Robert
Concannon, Rt Hon J. D.	McWilliam, John
Cook, Robin F. (Livingston)	Madden, Max
Craigen, J. M.	Maxton, John
Crowther, Stan	Maynard, Miss Joan
Cunliffe, Lawrence	Meadowcroft, Michael
Dalyell, Tarn	Michie, William
Davis, Terry (B'ham, H'ge H'l)	Millan, Rt Hon Bruce
Deakins, Eric	Miller, Dr M. S. (E Kilbride)
Dixon, Donald	Morris, Rt Hon J. (Aberavon)
Dormand, Jack	Mudd, David
Douglas, Dick	O'Neill, Martin
Dubs, Alfred	Oppenheim, Philip
Dunwoody, Hon Mrs G.	Parry, Robert
Eadie, Alex	Pike, Peter
Eastham, Ken	Powell, Raymond (Ogmore)
Ewing, Harry	Prescott, John
Field, Frank (Birkenhead)	Radice, Giles
Fisher, Mark	Randall, Stuart
Flannery, Martin	Redmond, M.
Forrester, John	Richardson, Ms Jo
Foster, Derek	Robertson, George
Foulkes, George	Robinson, G. (Coventry NW)
Freud, Clement	Ross, Ernest (Dundee W)
Godman, Dr Norman	Ross, Stephen (Isle of Wight)
Gourlay, Harry	Rowlands, Ted
Hamilton, W. W. (Central Fife)	Sheerman, Barry
Harrison, Rt Hon Walter	Short, Ms Clare (Ladywood)
Haynes, Frank	Short, Mrs H.(W'hampt'n NE)
Hogg, N. (C'nauld & Kilsyth)	Skinner, Dennis
Holland, Stuart (Vauxhall)	Smith, Cyril (Rochdale)
Home Robertson, John	Spearing, Nigel
Howells, Geraint	Strang, Gavin
Hoyle, Douglas	Thomas, Dafydd (Merioneth)
Hughes, Dr. Mark (Durham)	Thompson, J. (Wansbeck)
Hughes, Robert (Aberdeen N)	Thome, Stan (Preston)

Tinn, James	Winterton, Mrs Ann
Wallace, James	Winterton, Nicholas
Wareing, Robert
Weetch, Ken	Tellers for the Ayes:
Welsh, Michael	Mr. Robin Maxwell-Hyslop and Mr. Thomas Tomey.
Wigley, Dafydd
Winnick, David

NOES
Aitken, Jonathan	Greenway, Harry
Amess, David	Ground, Patrick
Ancram, Michael	Hampson, Dr Keith
Arnold, Tom	Hanley, Jeremy
Ashby, David	Hargreaves, Kenneth
Aspinwall, Jack	Harvey, Robert
Atkins, Robert (South Ribble)	Hawkins, C. (High Peak)
Atkinson, David (B'm'th E)	Hawkins, Sir Paul (SW N'folk)
Baker, Nicholas (N Dorset)	Hayhoe, Barney
Baldry, Anthony	Hayward, Robert
Batiste, Spencer	Heddle, John
Beaumont-Dark, Anthony	Henderson, Barry
Bellingham, Henry	Hind, Kenneth
Benyon, William	Hirst, Michael
Berry, Sir Anthony	Hogg, Hon Douglas (Gr'th'm)
Bevan, David Gilroy	Howard, Michael
Biffen, Rt Hon John	Howarth, Gerald (Cannock)
Biggs-Davison, Sir John	Hunt, John (Ravensbourne)
Bottomley, Peter	Hunter, Andrew
Bottomley, Mrs Virginia	Jackson, Robert
Bowden, A. (Brighton K'to'n)	Johnson-Smith, Sir Geoffrey
Bowden, Gerald (Dulwich)	Jones, Gwilym (Cardiff N)
Braine, Sir Bernard	Jopling, Rt Hon Michael
Brinton, Tim	Knight, Gregory (Derby N)
Brooke, Hon Peter	Knox, David
Brown, M. (Brigg & Cl'thpes)	Latham, Michael
Bruinvels, Peter	Lawrence, Ivan
Buchanan-Smith, Rt Hon A.	Lawson, Rt Hon Nigel
Budgen, Nick	Lee, John (Pendle)
Bulmer, Esmond	Leigh, Edward (Gainsbor'gh)
Burt, Alistair	Lester, Jim
Carlisle, John (N Luton)	Lightbown, David
Carlisle, Kenneth (Lincoln)	Lilley, Peter
Carttiss, Michael	Lloyd, Peter, (Fareham)
Cash, William	Luce, Richard
Channon, Rt Hon Paul	Lyell, Nicholas
Chope, Christopher	McCrindle, Robert
Clark, Dr Michael (Rochford)	McCurley, Mrs Anna
Clark, Sir W. (Croydon S)	Macfarlane, Neil
Clarke, Rt Hon K. (Rushcliffe)	MacGregor, John
Conway, Derek	Maclean, David John
Coombs, Simon	McQuarrie, Albert
Cope, John	Major, John
Couchman, James	Malins, Humfrey
Currie, Mrs Edwina	Maione, Gerald
Dicks, Terry	Marlow, Antony
Douglas-Hamilton, Lord J.	Mates, Michael
Dunn, Robert	Maude, Hon Francis
Durant, Tony	Mawhinney, Dr Brian
Eggar, Tim	Mayhew, Sir Patrick
Emery, Sir Peter	Mellor, David
Evennett, David	Meyer, Sir Anthony
Eyre, Sir Reginald	Mills, Iain (Meriden)
Fallon, Michael	Mills, Sir Peter (West Devon)
Farr, John	Moate, Roger
Favell, Anthony	Moore, John
Fenner, Mrs Peggy	Moynihan, Hon C.
Forman, Nigel	Murphy, Christopher
Forth, Eric	Needham, Richard
Fowler, Rt Hon Norman	Nelson, Anthony
Franks, Cecil	Nicholls, Patrick
Freeman, Roger	Onslow, Cranley
Gale, Roger	Page, Richard (Herts SW)
Galley, Roy	Parris, Matthew
Garel-Jones, Tristan	Peacock, Mrs Elizabeth
Glyn, Dr Alan	Porter, Barry
Goodhart, Sir Philip	Powell, William (Corby)
Goodlad, Alastair	Powley, John
Gorst, John	Prentice, Rt Hon Reg
Gow, Ian	Price, Sir David
Gower, Sir Raymond	Proctor, K. Harvey

Pym, Rt Hon Francis	Temple-Morris, Peter
Raison, Rt Hon Timothy	Terlezki, Stefan
Rathbone, Tim	Thomas, Rt Hon Peter
Renton, Tim	Thompson, Donald (Calder V)
Rhodes James, Robert	Thompson, Patrick (N'ich N)
Rhys Williams, Sir Brandon	Thornton, Malcolm
Ridley, Rt Hon Nicholas	Thurnham, Peter
Ridsdale, Sir Julian	Townend, John (Bridlington)
Robinson, Mark (N'port W)	Tracey, Richard
Roe, Mrs Marion	Twinn, Dr Ian
Rowe, Andrew	van Straubenzee, Sir W.
Ryder, Richard	Viggers, Peter
Sainsbury, Hon Timothy	Waddington, David
Sayeed, Jonathan	Wakeham, Rt Hon John
Shaw, Sir Michael (Scarb')	Waldegrave, Hon William
Shelton, William (Streatham)	Walden, George
Shepherd, Colin (Hereford)	Walker, Bill (T'side N)
Shepherd, Richard (Aldridge)	Waller, Gary
Sims, Roger	Ward, John
Skeet, T. H. H.	Wardle, C. (Bexhill)
Smith, Sir Dudley (Warwick)	Watson, John
Soames, Hon Nicholas	Watts, John
Spencer, Derek	Wells, Bowen (Hertford)
Spicer, Jim (W Dorset)	Wells, John (Maidstone)
Spicer, Michael (S Worcs)	Wheeler, John
Stanbrook, Ivor	Whitfield, John
Stern, Michael	Wolfson, Mark
Stevens, Lewis (Nuneaton)	Wood, Timothy
Stevens, Martin (Fulham)	Woodcock, Michael
Stewart, Allan (Eastwood)	Young, Sir George (Acton)
Stewart, Andrew (Sherwood)
Stradling Thomas, J.	Tellers for the Noes:
Sumberg, David	Mr. Michael Neubert and Mr. Ian Lang.
Taylor, Teddy (S'end E)
Tebbit, Rt Hon Norman

Question accordingly negatived.