Agricultural Holdings Bill [Lords]

HC Deb 07 March 1984 vol 55 cc857-940

Order for Second Reading read.

3.45 pm

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

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

I am especially pleased to be moving the Bill's Second Reading because my first decision on taking up my present appointment was to give instructions to proceed with the preparation of this measure.

The principal purpose of the Bill is to do what is practicable, within the scope of the agricultural holdings legislation, to make more tenancies available by taking action to arrest the decline of the tenanted sector of agriculture. At the same time, the Bill introduces many important but detailed changes that are designed to improve the operation of the existing legislation.

Before the first world war, nearly 90 per cent. of all farmland in England and Wales was tenanted. Since then, that share has been steadily whittled away, and today we find that it is less than 40 per cent. As a result of this decline, the demand for farm tenancies has far exceeded supply. Opportunities have virtually dried up for those who do not have the great amounts of capital which now are necessary to buy farms. It is expensive enough nowadays for someone to set up as a tenant, but to have the added burden of having to buy a farm as well is outside the scope of all but a few. The young, highly skilled and qualified potential new entrants — I think of graduates from our agricultural colleges and universities—have been especially hard hit by this scarcity.

There are many reasons for the steady decline over the years in the tenanted sector. First, there have been the fiscal disincentives to the letting of land. Secondly, there have been the obvious attractions of owner-occupation. Thirdly, there has been the size of the vacant possession premium. Many landlords, having a farm in hand, have taken advantage of their premium rather than lower the value of the holding by letting it. Fourthly, there is the uncertainty over the future status of tenanted land. Fifthly, we have had the more recent effect of the succession provisions of the 1976 Act, which was introduced by the previous Labour Government.

Mr. Robin Corbett (Birmingham, Erdington)

Does the Minister accept that there is a sixth factor? He might even have been about to address himself to it. That factor is the Government's encouragement to county councils to sell off smallholdings.

Mr. Jopling

I believe that county councils should be able to take such decisions for themselves. If a county council decides that it will be best to dispose of a part or all of its smallholding stake, it should be prepared to confront its electors with that decision. The hon. Member for Birmingham, Erdington (Mr. Corbett) should ponder the fact that in recent years the smallholding properties throughout the country have largely failed to fulfil the function for which they were first set up—to provide a first step in the ladder for a young man wanting to start farming. During the past 10 years, an average of only 14 tenants a year have been giving up their tenancies to take up farms in private ownership. That seems to show that the smallholdings have largely failed to fulfil that function.

There is actually a sixth reason for the steady decline of the tenanted sector, but I shall come to that later. The hon. Member for Erdington will find that reason not so palatable.

Sir Paul Hawkins (Norfolk, South-West)

I agree with my right hon. Friend that there has not been a movement upward in county council tenants to larger farms, because there has not been the land available to let. He is introducing a Bill which he hopes will increase the tenanted land available to people so that their numbers will increase. Is it right that he should cut off the lower rungs of the ladder when he is again introducing the ladder?

Mr. Jopling

County councils should be able to decide those matters for themselves, without direction from the centre.

The Government have already taken major steps to reduce the fiscal deterrents to letting land. As a result of the 1981 and 1983 Budgets, capital tranfer tax on agricultural relief has been extended to tenanted land, and now stands at 30 per cent. Furthermore, the tax is now payable in interest-free instalments over 10 years, rather than eight years as previously. Those improvements have been warmly welcomed by the industry as a whole.

These measures and the Government's action in introducing this legislation are in strong contrast to the Opposition's attitude towards the tenanted sector. I shall examine that in more detail. If anything is more likely to encourage landlords to take land in hand it is the constant threat from the Labour party to nationlise tenanted land. I say to the hon. Member for Erdington that that is the crucial sixth factor which acts as a deterrent to landlords to let land. If the Labour party were interested in making more farms available to tenants, it should erase that nationalisation policy from its official policy and manifesto. I believe that that would mean important and quick action in the number of farms made available That is still the Labour party's clear policy as set out in its 1983 manifesto.

Mr. Robert Maclennan (Caithness and Sutherland)

rose——

Mr. Jopling

I am dealing with the Labour party. The hon. Gentleman has left it. Let him not poke his fingers into someone else's mourning.

That policy referred to the establishment of a rural land authority, which would begin to extend public ownership to tenanted land". In the face of those doctrinaire threats, it is hardly surprising that landlords think hard about granting new tenancies, and who can blame them? The Labour Administration's misguided Agriculture (Miscellaneous Provisions) Act 1976 legislation is another example of their wholly negative attitude towards the letting of agricultural land. At the time, my colleagues and I clearly pointed out the likely effects of the succession provisions of the 1976 Act. I warned that the proposed measures would cause the supply of farms to dry up. At the risk of being accused of quoting my own speeches, I should point out that I asked what landlord would be prepared to see farms pass out of his control for up to a century. The great danger, I said, was that those provisions would accelerate the present trend. Sadly, those warnings, which were reinforced by the National Federation of Young Farmers' Clubs, have proved only too accurate.

One would expect the 1976 legislation, temporarily at least, to have slowed down the decline in the tenanted sector because it conferred rights of succession. Despite that, the available information suggests that the decline has accelerated since 1976 even though the then Parliamentary Secretary, the hon. Member for Edinburgh, East (Mr. Strang), whom I see in his seat, plainly assured us that there was no need to be worried about the effects of the legislation on the supply of tenanted farms because he could not agree that such an outcome would be "significant". It does not surprise me to find that he was wrong and that the Labour party's curious attachment to the hereditary principle has had the effects that we predicted. In the seven years following 1976, the annual decline in the tenanted sector in England and Wales has been four times as rapid as during the seven years before the introduction of the succession legislation.

The one positive step that the Labour Government took was the setting up of the Northfield committee, which in its report in 1979 on the acquisition and occupancy of agricultural land, recognised the problems caused by the continuing decline in the tenanted sector. It recommended that the Government should open discussion with the industry with a view to identifying measures which might improve the opportunities for new entrants.

The then Minister of Agriculture, Fisheries and Food, my right hon. Friend the present Secretary of State for Energy, asked the National Farmers Union and the Country Landowners Association to come forward with jointly agreed proposals, in the knowledge that, to have any hope of success in that area of conflicting interests, any proposals had to be based on consensus within the industry.

After long and difficult negotiations, the presidents of the two organisations concluded their important 1981 agreement. At the time both presidents confirmed that, if implemented, the agreement should give encouragement to young people who want to enter farming. Further, they recognised that the 1981 Budget had opened the way to stimulate new lettings by lessening the tax disadvantages. However, they concluded: this action on the tax deterrent, without doing something about the succession deterrent, will not be enough to have a significant effect. The main provisions of the NFU-CLA agreement were, first, the repeal of the two-generation succession provisions of the 1976 Act in respect of new tenancies, and, secondly, the introduction of a new rent formula to give statutory backing to what are widely regarded as arbitrators' current practices in determining rents. These two provisions are linked and represent a balanced approach to dealing with the problems of the tenanted sector. The scarcity of tenancies has meant that no true open market exists and that therefore the present rent formula, which depends on the open market, has become virtually unworkable.

Sir Paul Hawkins

Hear, hear.

Mr. Jopling

I am grateful to my hon. Friend. [Interruption.] Opposition Members may cackle, but my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins) has been much involved in settlements and arbitrations. He is one of the very few hon. Members who understands arbitrations.

Mr. Kenneth Carlisle (Lincoln)

My right hon. Friend has referred to the supply of tenancies. Will he accept that one thing that has to be accomplished, if there are to be more tenancies, is a change in the fiscal regime? Unless landowning is accepted as a business, there will not be enough farms coming forward for future tenants.

Mr. Jopling

I understand what my hon. Friend says. I am in the difficult position of not knowing what my right hon. Friend has in store for us in his Budget on Tuesday. We must hope for the best, because that matter is in his hands and not in mine.

Mr. Peter Hardy (Wentworth)

The Minister seems to be implying that the agreement made between the CLA and the NFU is entirely and accurately reflected in the Bill. Can he say whether the proposals in the Bill for the manner of determination of rent are exactly in accord with that review?

Mr. Jopling

I think the hon. Gentleman would get very angry with me if I were to come to the House and say that any Bill must stick precisely to the letter of the agreement. Surely we all agreed that Parliament must decide these things. It is true that an amendment was made in another place which reflected the view of that House. Naturally, we shall listen with great care to the points made about the detail of the Bill as it progresses through this House.

The new formula in the Bill will provide a fairer and more realistic basis for the assessment of sitting tenant rents and thus restore confidence in the arbitration system.

Mr. Michael Brown (Brigg and Cleethorpes)

My right hon. Friend has made some interesting points, but I should like to press him further on that aspect. Clause 1 was changed somewhat in the House of Lords. My right hon. Friend said just now that he will listen to the views of the House during the passage of the Bill. Does that mean that he might consider restoring the original provision about earning capacity?

Mr. Jopling

I and my hon. Friends will listen carefully to all arguments put to us, from wherever they come. I do not think the House would expect any less of us. We shall naturally be anxious to hear what hon. Members have to say.

The new formula will provide a fairer and more realistic basis for the assessment of sitting tenant rents and thus restore confidence in the arbitration system. That is worth repeating, because it is at the core of what we are trying to do. On the other hand, the repeal of the disastrous succession provisions of the 1976 Act will encourage landlords, by freeing them from the prospect of succession tenancies which can last for more than 100 years, to let more land.

The changes in the Bill which are designed to improve the operation of the present legislation have been identified by a working party consisting of representatives of the agriculture Departments, the NFU, the CLA and the Royal Institution of Chartered Surveyors representing the professional bodies. In addition, new provisions have been added during the progress of the Bill in another place. Principal among these is a change to set up machinery for voluntary retirement at age 65 and to restrict the number of tenancies to which a successor tenant can succeed. These improvements reinforce the original objectives of the Bill and will, I am sure, increase the availability of tenancies, particularly for the young.

Clause 1 deals with arbitrations on rent and replaces the present section 8 of the Agricultural Holdings Act 1948, as amended by section 2 of the Agriculture Act 1958. The main change, for the reasons I have already described, is to move away from the present open market formula in the 1958 Act to one which more clearly reflects arbitrators' current practice.

The present formula differs in drafting—though not in intention — from the one contained in the Bill as originally presented, which has been the subject of such detailed debate in another place, as I have said. There was no dispute as to what was required—a formula to give legislative cover to what has become the current practice of arbitrators in the absence of a true open market—but opinions differed greatly as to the precise wording. Indeed, I understand that no fewer than eight different formulae were tabled. What we now have before us is, it has to be recognised, a compromise, but it is a compromise which successfully welds together the interests of landlords, tenants and those whose members are required to implement the legislation—the professional bodies. I have, moreover, a firm assurance from the professions that the formula is workable. It meets the current problem and I commend it to the House.

Clause 2 repeals the succession provisions of the 1976 Act in relation to all new tenancies entered into after the Bill becomes law. Tenancies already in existence will be unaffected but for the future, new tenancies, other than succession tenancies, will enjoy lifetime security of tenure only. So, after the Bill is enacted, new tenancies will be subject to the same provisions as those which applied before the 1976 Act. This will mean that landlords will know that in letting their land they will not be losing their right to enjoy vacant possession rights for up to 100 years or more.

Clause 3 makes changes to the law regarding statutory succession to agricultural holdings. Provision is made for a new definition of "commercial unit". Clause 3 also provides that the person who has obtained a direction from the agricultural land tribunal entitling him to succeed to a holding of commercial unit size will be deemed to be in occupation of that holding and thus debarred from succeeding to a further holding.

Clause 4 also amends the law on succession. At present a tenant may seek his landlord's agreement to retire in favour of a successor, but succession can take place only wth the landlord's agreement. Clause 4 and its accompanying schedule 2 provide that on reaching the age of 65, a tenant may nominate a successor, and in the event of a landlord's disagreement, for the matter to be determined by the agricultural land tribunal. I should perhaps emphasise that this provision relates only to voluntary retirement in favour of a nominated successor. The Government have considered whether some form of compulsory retirement should be introduced and have consulted the industry on this extremely sensitive issue. There does not, however, yet appear to be a broad consensus within the industry, and we have therefore concluded that the present provision is as far as it is reasonable to go, because there is still disagreement.

Sir Peter Mills (Torridge and Devon, West)

Will my right hon. Friend reconsider this? The Government ought to give a lead in this matter, particularly if it will release more land for young farmers to get into agriculture. I can see no reason why there should not be some form of retirement tenancy, particularly if it was coupled with an insurance policy which enabled the tenant to buy a house and so on. Will he consider this carefully?

Mr. Jopling

I shall consider the matter carefully, and I have no doubt that it will be discussed in detail in Committee. In approaching this legislation, I have tried to keep all the interests of the countryside together. I make no apology for trying to achieve a consensus in this matter, because I believe that a consensus is crucial to the rural community.

Mr. Charles Morrison (Devizes)

Although I applaud my right hon. Friend's continuing desire to maintain a consensus, does he accept that, although he rightly consulted farmers about voluntary retirement, this matter is more relevant to those who wish to go into farming but who are not yet in it? Their voices should be listened to above all others.

Mr. Jopling

We shall listen to what is said, and I have no doubt that bodies outside the House will hear what has been said.

Mr. Nicholas Budgen (Wolverhampton, South-West)

My right hon. Friend talks about a consensus among interested parties, but is there not a danger that there may be a conspiracy among those who are already engaged in farming to exclude those who wish to enter the industry? Although that may be satisfactory to the former, is there not a danger that it might exaggerate the growing gap between the farming community and the urban community?

Mr. Jopling

I am not aware of any conspiracy theory in these matters. I hear what my hon. Friend says, but it is not fair in the circumstances immediately to say that the consensus amounts to a conspiracy.

Clauses 5, 6 and 7 amend the law relating to notices to quit. Clause 5 provides two further exceptions to the rule that at least 12 months' notice to quit must be given. The first will enable a tenant who wishes to quit following an increase in rent to serve not less than six months notice to quit after the rent increase takes effect. The second will enable a landlord, at the discretion of the agricultural land tribunal, to gain early repossession where a certificate of bad husbandry has been granted.

Clauses 5 and 7 deal with several technicalities relating to notices to quit, including provision for the tenant to be warned in a notice demanding rent that he may be liable to a notice to quit in case of non-payment; or retirement by means of a notice to quite in relation to statutory smallholding tenancies created after the Bill comes into effect; and the circumstances to be taken into account by the agricultural land tribunal when considering failure to comply with a notice to do work.

I draw the House's attention especially to clause 6(7), which is designed to reinforce the conservation agreements freely entered into by both landlord and tenant. Its provisions are widely drawn to cover nature conservation in a broad sense—the protection or enhancement of the natural beauty and amenity of the countryside and the protection of archaeological features. They are designed to help landlords and tenants to manage areas of land for conservation purposes—an aim which the House will support.

Clause 8 changes the procedures for appointments of arbitrators where landlord and tenant fail to agree on an appointment. The Bill provides that this function be transferred from agriculture Ministers to the president of the Royal Institution of Chartered Surveyors, who will be able to charge a fee for the service. The fee will be prescribed by the Minister in regulations which will require the approval of both Houses of Parliament.

Those arrangements have been the subject of much correspondence and appear to be widely misunderstood, and I think it would help the House if I explained in some detail what lies behind the change. It is the policy of the Government to transfer to the private sector those functions which can be carried out equally effectively outside the public sector. Appointments of arbitrators fall squarely into this category. The procedure is purely executive, and consists of finding someone who is on the panel of arbitrators drawn up by the Lord Chancellor who is free and prepared to do the job, has no personal interest which would debar him from carrying out the work impartially and who is well placed geographically to do the work.

Whether the person concerned is appointed by the Minister or, as is proposed, by the president of the RICS, he is likely to be the same one. The president has given an undertaking that the present arrangements will be followed almost unchanged. For all those reasons, the Government think it right to transfer this function to the president of the RICS, but so that the industry is not confronted with too many changes at once, it is our intention to bring clause 8 into force by an appointed day order not earlier than one year after Royal Assent.

Clause 10 gives effect to many minor amendments and repeals designed to improve the working of this extremely complex collection of legislation. Those measures have been identified as necessary by the joint MAFF-NFU-CLA-RICS working party, which reviewed the legislation in its entirety. Its recommendations have been warmly welcomed by landlords, farmers and practitioners alike and are, I suggest, almost entirely non-controversial.

I will not pretend that the Bill is anything which it is not. It does not contain a radical set of proposals. It will not overnight change the whole character of agricultural tenancy legislation — as, unfortunately, was the case with the 1976 Act. If it were to do so, it would be unlikely to stand the test of time. But it is definitely a step in the right direction that clearly has the agreement and support of the industry as a whole. I hope that the House would think long and hard before introducing changes that do not have broadly based industry support; they would only be likely to lead to dissent and acrimony and would stand little chance of succeeding. I therefore commend the Bill to the House, in the belief that it represents the best means of halting and perhaps reversing the decline in the tenanted sector.

4.16 pm

Mr. Robert Hughes (Aberdeen, North)

At the beginning of this Parliament the Gracious Speech stated: Legislation will be introduced to make more farming tenancies available in England and Wales. If this is that legislation, all that I can say is that the Government are guilty of misrepresentation under the Trade Descriptions Act 1968. Hardly anyone believes that the Bill will do any good, and even the Minister, in his peroration, made modest claims for it.

In another place my noble friend Lord John-Mackie, Lord Walston, Lord Stanley of Alderley, the Earl of Caithness, Lord Hylton and the Earl of Radnor—who believes that succession should go in its entirety—opposed the Bill. Even among the Bill's supporters in the other place, severe reservations were expressed. Lord Howard of Henderskelfe doubted its effectiveness, as did Lord Nugent of Guildford. Lord Stodart of Leaston believed that the Bill would do almost nothing. Lord Northbourne believes that the landlord and tenant system is doomed to extinction. The Marquess of Salisbury believes that the Bill will have an opposite effect to that intended, and he believes in the free market as a solution.

Whatever one might think of their Lordships, one thing that is almost guaranteed to exercise their minds and to excite them is land, its ownership and uses and the returns that might be obtained from it. The Government cannot have expected such fierce criticism from their friends and allies in another place. I suspect that the Bill was introduced in the House of Lords in the fond belief that it would have an easy and quick passage through and would arrive here almost intact. The opposite is the case.

We must ask whether the Bill matches even the modest claim that it will stem the decline in tenancies. There is no dispute that tenancies are declining, although there may be disagreement about the reasons for and the rate of the decline. In 1908, 88 per cent. of all agricultural land was rented, but by 1976 that figure had dropped to 44 per cent. The statistics available for 1983 suggest that that figure might be as low as 31 per cent. It is clear that we are dealing with a long-term trend. As the Minister said in his opening remarks, the Northfield report considered that decline closely, as well as the different factors affecting land tenure.

Mr. Nicholas Baker (Dorset, North)

Does the hon. Gentleman accept that that decline has something to do with the legislation introduced by the Labour Administration, and does he accept the conclusions of the Northfield committee on the matter?

Mr. Hughes

It is hardly likely that I would make a speech on the Agricultural Holdings Bill without referring to the Agriculture (Miscellaneous Provisions) Act 1976. If the hon. Gentleman has patience, I shall deal with that important factor in Labour party thinking.

There are several factors to be considered. The Minister put forward five or six reasons for the decline. Other factors are involved, and the list that I am about to give is by no means exhaustive. The factors affecting the way in which land is used and its ownership and tenancy include changes in farming technology, the capital cost of increasingly sophisticated machinery, the high cost of servicing capital debt, and the desire, especially of smaller farmers, for an increased standard of living.

We should also consider the so-called economy of scale and changes in farming techniques. There is clearly a big change in cereal production. I notice, for example, that the amount of winter wheat sown this year is up by 15 per cent. That trend will accelerate unless we get satisfaction from the common agricultural policy. I do not wish, however, to be diverted to that matter today.

It is difficult to measure those factors or economies of scale. I shall refer to the figures available in the "Annual Review of Agriculture 1984", Cmnd. 9137, table 27, which gives net incomes after certain expenses have been taken off. The returns in pounds per hectare in the dairy industry suggest that the trend towards the economy of scale is not obvious. Small dairy farms in England showed a return of £183 per hectare, and large farms of £172 per hectare. In Wales the figure was £185 per hectare, with £214 for large ones. In the less-favoured areas, for which I shall not give figures, one does not expect the economies of scale to apply, because those areas are farmed under particular difficulties. The figure for lowland cattle and sheep show that the return for small farms in England is £21 per hectare, with £71 per hectare for medium-sized farms and £99 per hectare for large farms.

The figures for cropping, which are available only for England, show that on small farms the return is £54 per hectare, on medium-sized farms £115 per hectare and on large farms £145 per hectare. That is what we might expect, because the economy of scale is likely to assert itself in cropping, especially cereal production.

I hope that no one will draw detailed conclusions from the figures that I have quoted, because they are merely an indication based on net farm incomes. Nevertheless, those farms and others to which I shall refer later, including those affected by the 1976 legislation, have affected the amount of land taken into in-hand farming.

Farm workers' lives are often influenced by changes in land usage. Where land comes out of tenancy and is amalgamated into a larger unit or is merged with other land to form a larger unit, farm workers often lose their jobs. In 1972 and 1974 there were 181,000 whole-time hired workers. The provisional figures for 1983 show a reduction to 133,000, a drop of 48,000 in the past 10 years. To put it another way, one in four workers has come out of the industry in that time.

Many other factors, apart from changes in tenancy, have led to that massive loss of job opportunity. The Minister and the National Farmers Union should pay due regard to the contribution of farm workers to agriculture. We constantly hear about the efficiency of farming, and about how our industry is the most efficient in the EEC, but we hear lamentably little about the efficiency of farm workers. It is even more regrettable that their rewards in pay are so inadequate.

Farm workers earn an average of £35 per week less than the wages of comparable workers in the food, drink and tobacco industries, and they work longer hours. Indeed, a question on male manual workers was tabled by my hon. Friend the Member for Bolsover (Mr. Skinner). The Minister said: In the year ended 30 September 1983, 37.5 per cent. of regular whole-time adult male agricultural workers in England and Wales earned less than £100 a week." [Official Report, 26 January 1984; Vol. 52, c. 638.] Indeed, 20 per cent. of farm workers are eligible and apply for family income supplement, which is the largest percentage of any group of workers. That is scant reward for their services.

The Government should do much more to ensure that the many millions of pounds put into farm support are more equitably distributed than at present. One of our major complaints against the Minister is that he reads his brief on agriculture, fisheries and food far too narrowly. I understand that Departments cannot encompass the whole range of problems facing different sectors of the community, but their work is too often divided into watertight compartments. The Minister should play a much wider role when dealing with the problems of the rural economy and environment.

Everywhere we look, there is decay in rural life. It is not confined to the countryside, as the urban environment is also under severe attack. In rural areas, however, schools and local cottage hospitals are being closed, there is a lack of pharmacies and doctors' surgeries, and village shops struggle to stay in existence in the face of competition from city supermarkets. The disparity in prices leads to a reduction in the purchasing power of rural inhabitants. Rural transport services are being dismembered and leisure facilities are being reduced. There is a reduction of employment opportunity. Taken together, those factors cause severe diminution in the quality of rural life.

The Labour party intends to increase employment opportunities by encouraging light industry, improving rural transport services, encouraging the growth of mobile health clinics, and ensuring greater co-ordination of Ministers' responsibilities where they overlap. The Bill neglects those factors and in that respect demonstrates clearly where the Government's interests lie.

The Bill's most modest claim is that it will stem the seemingly inexorable decline of the tenanted sector, to the point of extinction. It is argued that clause 2 will do that by denying new tenants the right of succession granted by the 1976 legislation. Ministers and others have said that there has been a tremendous change since 1976, seriously affecting the amount of land available for tenancy. However, that contention cannot be proved and is not borne out by the facts. The 1976 legislation has had—I am sorry to make such modest claims for it—a marginal effect on the number of tenancies becoming available.

The Tenant Farmers Association claims that only one in six tenancies is passed on. If a graph were drawn to show tenancies from the beginning of the century to the present, it would show a straight, declining line. This is a curious fact, which the Minister did not mention.

The Central Association of Agricultural Valuers, in its 1983 survey, said that there has been a welcome increase in the proportion of fresh lettings of land previously let. The figure, which is relatively small, is about 5 per cent. That is all. It is interesting that that is happening, because it goes against the trend that the Minister described.

The Bill has had a long gestation period, and many people have expressed doubts about it. Therefore, we are entitled to ask who will benefit. Is the real intention connected with tenancies, or is there some other purpose? I saw an interesting editorial in the February issue of the Country Landowner. To some extent it gives the game away and lets the cat out of the bag. It states: The Bill has its critics, but two things are certain: The first is that without the agreement between the CLA and the NFU … the Government would have taken no action … The second is that if there had been no agreement, and therefore no Bill, the industry could have said good-bye to any hope of further tax relief for land farmed by tenants. The Treasury would have seen no reason to help those who were unwilling to put their own house in order. I shall mix my metaphors for once. The Bill is a sprat to catch a mackerel. The purpose is to soften up the Treasury for tax changes. The Government should come clean on the issue.

I accept—it would be a foolish man who denied it—that tax has an influence on how people regard a business. That must be so. I have said this elsewhere and have no hesitation in repeating it now. If there are tax changes, we shall have to look at the whole package of taxation, not just one part of it. That must include considering agricultural derating. Those who argue in favour of tax changes should not say that they will not consider agricultural derating. It will be within the memory of many hon. Members that the Layfield committee, which carefully scrutinised the rating system, recommended that agricultural derating should cease and that farming should be treated on all fours with any other business. Of course, the Layfield committee, with all the rest of its recommendations, has been consigned to limbo.

One of the merits claimed for tenant farming is that it provides a starting point for young farmers and is the first rung on the farming ladder. The hon. Member for Norfolk, South-West (Sir P. Hawkins) intervened in the Minster's speech on that matter. One of the areas that is under the most severe threat and particular pressure is that of county council smallholdings. Due to the pressure on local authority budgets and financial constraints, some county councils are disposing of their holdings, having decided that realising their assets is financially beneficial to them.

It is all very well for the Minister to say that it is up to local democracy to decide how best to run its affairs. That is not what his right hon. Friend the Secretary of State is saying. The Minister should be much more forthcoming. He should say in unequivocal terms whether he opposes those sales. He should discuss with his Cabinet colleagues the means of reducing the pressure that brings about such sales.

Mr. John Home Robertson (East Lothian)

The Government have a policy on the sale of smallholdings, which has been demonstrated in our part of the world, in Scotland, where the Secretary of State for Scotland is selling smallholdings that are under his control and not under the control of local authorities at a 70 per cent. discount.

Mr. Hughes

I would never wish on the people who live in England the policies of the Secretary of State for Scotland. We all have our problems, but heaven save us from the Secretary of State for Scotland. That prompts me to ask why, given the Government's policy to sell council houses at a discount, enthusiastically supported by all Conservative Back Benchers, they do not ask landlords to sell to their tenants at large discounts.

Viscount Cranborne (Dorset, South)

I wonder whether the hon. Gentleman noticed the letter in The Times on 6 March this year from a councillor in Norfolk, who said, in the context of smallholdings: Experience over the past 50 years suggests that this 'farming ladder' is virtually non-existent. The councillor drew attention to the undeniable fact that the proceeds of the sale of smallholdings could be applied to such important matters as die building of schools and other capital projects in county council budgets.

Mr. Hughes

When I hear about the farming ladder and the great merits that are claimed for it, I am a little sceptical. I confess to being a relative innocent in these matters. When they are pressed upon me by practitioner farmers from all over England and Wales, I am bound to take them into account.

It has been said that one of the reasons for the Bill is the reintroduction of the farming ladder. That matter should not be neglected. The hon. Gentleman mentioned selling county council smallholdings as a means of paying for schools and so on. He had better not tempt me down that road. If he imagines that we shall resolve the problems of the shortage of money for education and so on by selling those land holdings, he is far more naive than I thought.

It has been amply demonstrated that clause 1 is a direct result of long negotiations between the CLA and the NFU. A claim was made in The Times that the Bill could not be amended because a bargain had been struck, and it was immutable. The Minister properly said that no bargain struck anywhere can bind Parliament, and we have a responsibility to consider those matters. Clause 1 as it stands is not the same as it was when the Bill was first published. Many people dislike the changes. They believe that now the Bill leans far more than it should towards the landlords.

I accept that there is a need for clear guidelines for arbiters, but not the least of our fears is that the codification set out for the arbiters to follow is too long and complicated and will become an expert's paradise. At the end of the day, no one will be able to understand it. We believe that it is possible to find a much simpler formula that would provide better justice and more equity.

It is clear that something will have to be done, in view of the way in which rents have been moving. For example, between 1970 and 1983 rents in England and Wales rose by 498 per cent., which is 39.5 per cent. above the average rate of inflation. It is debatable whether the rent formula for arbitration will do anything to stem that rise. One of the reasons given for reforming the law was that that would lead to a reduction of rents. However, that has been denied by other people. If the Bill gets its Second Reading, we shall debate the matter fully in Committee, because we believe that the Government have not got it right.

Clause 8 deals with the arbitration provisions. The Minister sought to suggest that the changes from the existing system, under which the Minister's staff appoint the arbiter from a panel of about 200, are minor and nothing to get excited about. There is considerable resentment among tenant farmers at the changes. They tell me frankly that to pass that nomination to the president of the Royal Institution of Chartered Surveyors is unacceptable. That is not part of the package that was negotiated, or part of the deal. This suddenly came into the Bill, and some of their lordships complained about lack of consultation.

It has been put to me bluntly by farmers from different parts of the country, and I put it equally bluntly to the Minister, that they believe that the Royal Institution of Chartered Surveyors is regarded as the landlords' man. The system will not be seen as fair and equitable. For any arbitration system to succeed, there must be mutual trust. It cannot work in any other way. The trust has been severely damaged by the change in the Bill.

We have doubts about why this change has come about. The Minister told us that it is consistent with the Government's general philosophy that that which can be done by private enterprise outside Government should be done so, and not done within the Ministry. However, if we read the House of Lords Hansard, we see that the net effect will be the saving of four civil servants. This is taking the Prime Minister's pathological dislike of the Civil Service too far.

Mr. Jopling

The hon. Gentleman has said something that I cannot let pass. He claims that he was told by the farmers that the members of the Royal Institution of Chartered Surveyors are the landlords' men. Has he not considered the fact that the huge majority of provincial arbitrators who are on the Lord Chancellor's panel are members of the RICS? The people who are now appointed by the Minister will in the future be appointed by the president of the RICS, who has said that he does not intend to change the way that things are done.

Mr. Hughes

That is not accepted by the farmers union members that have come to me. I have a duty, as far as I can, to reflect the views of those who make representations to me. No other part of the Bill has attracted such attention and caused such concern as this clause, and the Minister could put it right. If the same people are doing it anyway, why change it and cause resentment simply to save four civil servants? Why not leave it as it is? If he cannot do that, why does the Bill not contain a right of appeal against the arbitrator's decision?

The Agricultural Holdings (Amendment) (Scotland) Act 1983 says in section 5(1): An appeal by way of application by any party to an arbitration under section 7(1) of this Act (variation of rent) shall on any question of law or fact (including the amount of the award) lie to the Land Court against the award of any arbiter appointed by the Secretary of State or the Land Court: Provided that any such appeal under this subsection must be brought within two months of the date of issue of the award. It is interesting to notice that between the Committee stage and Report the Scottish Office Minister extended the period of appeal from one to two months.

Mr. Home Robertson

I moved that amendment.

Mr. Hughes

My hon. Friend has paid his own tribute, and I do not need to pay mine.

This gives a wide right of appeal in the Scottish provisions, and the Minister must think seriously about accepting an amendment from us in Committee if the Bill gets a Second Reading. We shall have to discuss this in great detail.

The Minister will know that in the other place there was broad and cross-party support for this proposition on the right of appeal. I may be proved wrong, as I am speaking from memory, but I believe that the largest number of votes cast on any amendment was on this clause.

It may be argued, although I do not see why people argue this, that such a small number of people will use this right of appeal that it will not be necessary. However, we pride ourselves on the right of natural justice and our system of justice, which is there for the protection of the individual. It does not matter whether one person or hundreds of thousands of people are affected by the provisions.

Earlier I was asked where the Labour party stands in relation to the 1976 Act. I make it clear that I reaffirm the Labour party's commitment to the security of tenure for tenant farmers, and we shall restore this as soon as possible. Tenant farmers have as much interest in the land that they farm as have owner farmers. I have been told by tenants, with pride, of the investments that they have made in their farms with their labour and cash and the work that their families have put in.

They say that they would not have done that if they did not have the opportunity to pass the land on to their successors. It has never failed to amaze me, in the discussions that I have had with farmers over many years, long before I spoke on agriculture from the Dispatch Box, that those who own the land tell me that they do not like many of the things that the Labour party wants to do, but that they have some sympathy with its social provisions and with the idea of giving people a broader perspective. However, they are bitterly opposed to us because they say that we want to take away their right to own land. However, they cannot understand that tenant farmers have the same attachment to the land as they do. We know that the 1976 Act—the succession part of it—came into being only because of particularly bad cases of evictions. It was not because people suddenly decided that we should hand over succession of tenancy, but to remedy bad cases at a particular time. That is yet another reason why we should maintain rights of succession——

Mr. David Wigley (Caernarvon)

I am glad that the hon. Member mentioned that, because a number of the cases at the time were in Wales, and there is now widespread concern in Wales that we are turning the clock back. He may know that, whereas the Minister suggested that all interests in agriculture are in support of the Bill, the Farmers Union of Wales is not.

Mr. Hughes

I am grateful to the hon. Member for his intervention. I have no doubt that he could put the case for the Welsh farmers union far better than I, although I, too, have had given to me by my hon. Friend the Member for Caerphilly (Mr. Davies) a copy of the document, which is laid out beautifully in two languages and makes some pertinent points——

Mr. Patrick Cormack (Staffordshire, South)

Which one did the hon. Gentleman read?

Mr. Hughes

I did not read the Welsh. However, some valuable points have been made and I am sure that we shall listen to the speech of the hon. Member for Caernarfon (Mr. Wigley) with interest, if he catches your eye, Mr. Deputy Speaker.

I also make it clear beyond peradventure that I reaffirm the Labour party's commitment to the public ownership of rented land and to the establishment of a rural land authority. It has been put to me, I think by the Minister, that as long as that commitment by the Labour party remains, those landowners will accelerate their taking of land out of the tenanted sector into in-hand farming, or whatever it is called.

I have said to the owners, face to face, that if they set out deliberately to thwart the aims of what is generally accepted as a highly valuable tenanted sector because of the Labour party's policy, we shall have to take that into account in our future policy. Let no one think that he can escape by acting in that way. If there is any merit in tenant farming, either to give the new entrant a start or as a permanent way of life—both objectives which are often stated from many quarters—we should do much more to make land available for tenancy. I concede that simply to do these things—restore succession to privacy and take the existing tenanted land into public ownership—by themselves will not make any new land available.

To state the obvious, land cannot be manufactured.

Sir Peter Mills

The hon. Member made two interesting comments about tenancy and nationalisation. Is it still the Labour party's policy to introduce a wealth tax?

Mr. Hughes

Yes, of course it is. I have now stated the obvious twice — once in response to the hon. Member for Torridge and Devon, West (Sir Peter Mills).

The only land available is that which is currently in stock. The current stock of agricultural land is under threat from urban encroachment. Only two sources of land are available. The first is land owned by institutions, which is usually management farmed or involves a partnership. The second is land owned and farmed in hand or managed as part of an estate.

The Northfield report suggests that one way to deal with the problem is to reduce the size of holdings to provide more tenancies. There is a hint of that in the Bill in relation to succession. We shall have to examine closely the means of achieving our aims. We shall have to give attention to that and develop our policy in the coming months. One of the Opposition's duties is to make clear where they stand and how they intend to proceed. We should develop and publish our strategy in full.

The Bill falls far short of the action required to maintain the tenanted sector. It will do nothing to expand that sector. It neglects, and is irrelevant to, the basic needs of rural communities, the economy, the environment and rural populations. For those reasons, I invite my right hon. and hon. Friends to vote against it.

4.52 pm

Mr. David Maclean (Penrith and The Border)

Thank you for letting me catch your eye, Mr. Deputy Speaker. I rise to speak in the House for the first time, on a measure which has been long awaited in the country, in my constituency and by me personally, since I hoped that it would arrive more quickly from another place.

Before discussing the Bill's merits, I hope that the House will accord me the customary privilege of referring to my constituency, which I am proud to represent, and to my illustrious predecessor, Lord Whitelaw, whom I am honoured to follow.

My constituency is geographically immense and sparsely populated. It extends to over 1,200 square miles and has an electorate of almost 69,000. It was enlarged from the old Penrith and The Border to include the beautiful town of Appley-in-Westmoreland and surrounding area. The new seat forms the eastern half of the new administrative county of Cumbria, running from Westmoreland to the Solway firth and marching with County Durham, Northumberland and Scotland.

Physically, my constituency is focused on the relatively fertile Eden valley and the Solway plain, while running up the western slopes of the Pennines from the Scots border to Stainmore, including Crossfell, and eastward to Alston, the highest market town in England. In the south my constituency extends to the Shap and Crosby fells and includes the Ullswater and Caldbeck areas of the Lake District national park.

The major part of the present constituency was created in 1950 from two seats. Since 1955 it has been held by William Whitelaw, who continues to serve the country and the Government in another place. I pay tribute to my right hon. and noble Friend for his excellent service to the people of Penrith and The Border for the last 28 years. He diligently looked after his constituents' interests in a large area, even when he had the onerous burdens of Northern Ireland and the Home Office on his shoulders. The House will join me in wishing him well and all good fortune in his continuing parliamentary career. I hope that in the coming years I can attract a fraction of the deep and undoubted affection that my constituents have for my predecessor.

I also pay tribute to my right hon. Friend the Member for Westmoreland and Lonsdale (Mr. Jopling), from whom I have inherited the northern part of Westmoreland. I have no doubt that he is as dismayed at losing one of the most beautiful parts of his constituency as I am pleased at having it included in my constituency. I can assure my right hon. Friend that I shall endeavour to serve my constituents there as diligently as those in the Cumberland part of my constituency.

Indeed, I hope that by patient hard work my "landlords" in Penrith and The Border will renew my present "term tenancy" at successive elections, creating a type of one-generation leasehold. I am sure that many bidders will promise grossly inflated "rents" because of the scarcity value.

Agriculture is a dominant feature of my constituency's economy. Only 2.2 per cent. of the employed work force is engaged in farming, fishing and forestry nationally, but in my constituency the figure is 15.7 per cent., which makes it the most agricultural in the northern region.

When one takes into account the people employed in ancillary activities—the machinery dealers, engineers, vets, agents, feed merchants, shopkeepers, school teachers and others whose profit or employment is heavily dependent on the farming community, one can see that the employment of as many as one person in three in my constituency is significantly dependent on farming.

The other outstanding economic feature of my constituency is the high level of small business activity, which is way above the national average. I am delighted to have encountered every business activity imaginable, from high-quality casting to survival aids; from waterproof clothing to road haulage. The involvement of so many people in running their own small businesses is typical of the enterprise, ingenuity and entrepreneurial spirit of the people of Cumbria whom I am privileged to represent.

Their drive and initiative has resulted in Penrith and The Border having an unemployment rate of only about 8 per cent. Thanks to the excellent attitude of the workers and management, we also have some successful larger industries with productivity and industrial relations records which few sectors of British industry can emulate.

One particular industry has an excellent productivity record. Indeed, its productivity record has brought it to its present crisis. I refer to agriculture. Only six months ago this Bill was probably the most exciting feature on the farming horizon. Now the anxiety is not only about how to get more people into farming, but how to stop the bankruptcies that will occur in the next few years to people already engaged in farming unless there is a favourable common agricultural policy settlement. I do not wish to trespass into that area today, although I hope that we shall soon have a debate on that subject in the House.

I regret that the Bill is not attracting the attention that it deserves. It is modest—I believe, too modest—but it at least removes the fundamental injustices in the 1976 Act. I wish that the Bill had gone further. I am disappointed that the Government appear to have accepted the view that nothing too drastic should be done now, lest a future Government of a different political complexion change it. If we accepted that view generally, we would pass little legislation.

When I examine the rent formula, even after the amendments made in another place, I am not surprised that the Bill is long and convoluted. I shall not be surprised when it is criticised as attempts are made to try to implement its provisions. It is a sad truth that land is a finite resource. We cannot create more. An equally harsh reality is that the price of a commodity is set by its scarcity value.

When we get away from that reality and legislate to prevent tenants and landlords, of their own free will, offering and accepting rents that the holdings cannot support, we are led to invent this cumbersome formula. We do not protect contracting business men from the consequences of their own folly, nor should we attempt to do the same here. As the noble Lord, Lord Northfield, said during the Second Reading: it is indeed the case that the freedom in rents that there ought to be is one of the disciplines, one of the rigours, and indeed one of the dangers, that go with a private enterprise system, and it is often a spur to efficiency. We must never lose sight of that and pretend that you can have a free market system without some of the disciplines … Farms are scarce … But so are, for example, shops in prime sites; but we do not go around legislating and saying that we must eliminate scarcity value and stop people getting their fingers burned by offering too much rent, or having a had effect on their neighbours when their rent reviews come up." — [Official Report, House of Lords, 8 November 1983; Vol. 444, c. 732.] I hope that the Government will also see the wisdom of providing term tenancies for those landlords and tenants who freely want to enter into them.

Mr. Ken Weetch (Ipswich)

Will the hon. Gentleman give way?

Hon. Members

"No."

Mr. Maclean

Term tenancies are not the solution to all our ills. Very few may be created, but we should not prevent them on the grounds that a tenant might exhaust the land towards the end of his term. The danger is similar to that of an aged tenant abusing the land towards the end of his lifetime. It is a known risk, but if landlords are prepared to take it, we should let them.

In conclusion, I should like to widen the debate somewhat, if the House will also extend that courtesy to me. Many people in the countryside are hoping for great things from the Bill. Young farmers hope that it will be easier for them to find farms to let but, of course, unless my right hon. Friend the Chancellor of the Exchequer offers his assistance next week, they will be disappointed. Many others hope that it will keep people in the countryside and improve the quality of rural life by reversing the trend to larger units. I doubt that this modest measure will do that. I doubt that any Bill can do that. Nevertheless, we shall have to take some measure soon to tackle the problems of rural life before it is too late. We have continually heard the demands for help for the inner cities, but we will never solve our urban problems if we neglect the countryside and the small towns and villages that are being destroyed by rural depopulation.

The village is the macro-economic image of the family. It has an identity, a spirit and a concern for its members which, through the sheer size of the unit, cannot be easily manufactured in the large cities. It is my experience that cities can drain some of the independence and resourcefulness from individuals and create a psychosis of dependence. The countryside, on the other hand, creates an attitude of independence. The towns and villages in my constituency are proof that the small unit provides a recipe for success. Our low unemployment, our large number of small businesses, our excellent industrial relations record and our large number of active voluntary organisations are not a quirk of statistical coincidence. They are a direct result of the climate of enterprise that is created in a rural and small-town environment.

Because the land itself can no longer support the size of rural population that we have seen in the past, urban drift occurs, followed by a vicious cycle of decline. The village schools close because of falling numbers and new parents do not move in because there is no school. The bus service becomes uneconomic. The post office closes and, finally, so do the village church and the pub, though not necessarily in that order. We are left with an aged population or holiday homes.

The galling fact is that the infrastructure for success is already there. We have the houses, the shops, the schools, the churches and, of course, the pubs. We need not build new estates, create leisure centres and spend millions doing for people what they ought to be doing for themselves. What we lack is a strategy of commitment to the countryside. Just as, when my right hon. Friend the Minister goes to Brussels and asserts his belief in the hill and upland areas of Britain, says that he wants to see them continue and declares that they must, therefore, be paid for, so I hope that he will also tell his Cabinet colleagues that he believes in rural life and that, because it engenders the attitudes that many Government Members espouse, they must evolve a strategy to make use of what it has to offer.

The Bill could be the start of that strategy. I hope that it will be, because the countryside is far too precious an asset to be ruined by neglect. I look forward to the day when this Bill, suitably amended, is on the statute book, and I commend it to the House.

5.5 pm

Mr. Gordon Oakes (Halton)

It is always a privilege to follow a maiden speaker, as I have found in the 20 years that I have been a Member of the House. This is the third time in this Session that I have followed a maiden speaker, and it is a particular privilege to follow the hon. Member for Penrith and the Border (Mr. Maclean), a fellow northerner who represents a northern constituency. I know his constituency very well. It is some two hours' drive from my home along the M6. I have spent many holidays there in my own holiday home—my caravan—and have got to know many of his constituents as extremely friendly people. Although we often talk of rich, well-heeled farmers, that is certainly not the case in the hill farms of Cumbria. They have a very hard life. They do not receive the fat subsidies from the Common Market that some of their colleagues are given. They work very hard for their living, they live in a beautiful environment and they take care of it.

I was interested in the hon. Gentleman's remarks about a strategy for the countryside. It is something that we need. I regret that I cannot agree with him that the Bill is the start of it. It ought to be, but it is not. I congratulate the hon. Gentleman on his model maiden speech. It is the hardest that he will make. For his comfort, it gets easier all the time. I wish the hon. Gentleman every happiness in the House, which is a wonderful place in which to be.

I cannot agree with the hon. Gentleman that this Bill will be an enormous improvement on the present position. I agree with what was said by my hon. Friend the Member for Aberdeen, North, particularly as today is the 150th anniversary of the sending to Australia of the Tolpuddle martyrs. I could have hoped that a more propitious Bill on agriculture would be introduced by the Government—albeit the present Government—on such an anniversary. However, I do not want to approach the Bill in too carping a spirit.

I have the privilege of being the vice-president of the Association of County Councils. In case any hon. Member thinks that I am some sort of model Mark 2, I should add that I am unpaid. There are one or two points that I would like to put as a representative of that association. County councils are the main providers of agricultural education in this country. As smallholdings authorities, they are able to provide a wide range of farming opportunities. Land in use as county smallholdings exceeds 156,000 hectares, and the total rent roll exceeds £16 million. In the year ending 31 March 1983, just under 8,000 holdings in England and Wales produced a net surplus of £11 million. That is a sizeable section of the agricultural holdings in this country. The views of the association, therefore, should be made known.

It was music to my ears when the Minister, replying to the intervention from his hon. Friend the Member for Norfolk, South-West (Sir Paul Hawkins), told the House that there was no intention of there being direct Government involvement in the decisions of local authorities. I entirely agree, even though, under pressure from the financial constraints of the Government, some counties—Somerset, I believe, is one—are being forced to sell off some of their holdings. That is a profoundly mistaken view on the part of those counties, but I defend their right to take such decisions without hindrance from a Minister. I hope that the day will soon come when the Minister of Agriculture, Fisheries and Food will be translated from his present position to the Department of the Environment, where he will, unlike his right hon. Friend, hold similar views.

The main concern of the Association of County Councils is about starter tenancies. The association fully supported the Northfield committee in recognising the need to improve opportunities for those wishing to make a start in farming. The Northfield committee recommended that provision should be made for starter tenancies of 10 years, after which they would become terminable by notice to quit.

The association also welcomed the Northfield proposal for compulsory retirement after the 64th birthday of the tenant. I am glad to say that the other place inserted a provision that a notice to quit should be served following the 64th birthday of the tenant, the tenant's right to have suitable alternative housing accommodation being preserved.

While that leg of the Northfield report has been included in the Bill, the Government have not gone far enough on starter tenancies. The association has argued for a long time that there should be power for a statutory smallholdings authority to grant agricultural tenancies for starter holdings to provide a short-term opportunity for youngsters starting out to prove themselves in farming. The association, like Northfield, believes that the minimum period to allow a person to prove himself to be a suitable farmer is between seven and 10 years.

Mr. Jerry Wiggin (Weston-super-Mare)

The same argument was put forward for county council smallholdings. The Minister said that 14 tenants out of the 7,000 progressed to further farms under that scheme. If one were to split the value of the land involved between tenanted and freehold value, nearly £500 million would be involved. I cannot see how the Association of County Councils or the right hon. Gentleman could justify expenditure of that amount for such a small benefit.

Mr. Oakes

I justify it because it is vital that those who could be proficient farmers should be given the opportunity to come into the industry, and at present this is the only route open to them.

The Bill proposes a period of five years for a tenancy rather than the 10 years proposed by Northfield. The association believes that it is between the seventh and tenth years that a person proves whether he is suitable to move from his smallholding to a larger farm—one hopes—to become a successful and prosperous farmer, which is what the scheme is all about.

The person with a tenancy may be unlucky. Two or three periods of bad weather could badly affect his efforts. That would not be his fault. With only five years' tenancy, he would not have enough time in which to prove himself. Therefore, although the Bill does not go far enough in terms of what could be done for the countryside—the hon. Member for Penrith and The Border said that he hoped that it would proceed with amendments—I hope that in Committee the Government will seriously consider extending the period for starter tenancies from five to 10 years.

5.14 pm

Viscount Cranborne (Dorset, South)

I wish at the outset to associate myself with the remarks of the right hon. Member for Halton (Mr. Oakes) in congratulating my hon. Friend the Member for Penrith and The Border (Mr. Maclean) on his enviably fluent maiden speech.

It has been my privilege during a relatively short time in this place to listen to many maiden speeches. Never have I heard one that was so much in tune with the manners and habits of the House—so much so, that one of our more experienced colleagues the hon. Member for Ipswich (Mr. Weetch), was fooled by the expertise being shown into thinking that it was not a maiden speech but the remarks of an hon. Member of long standing.

Mr. Weetch

I endorse that. I apologise to the hon. Member for Penrith and The Border (Mr. Maclean). I found his speech so stimulating that I intervened at the wrong time.

Viscount Cranborne

I am grateful to the hon. Gentleman for that characteristic intervention. I know that for once I speak for hon. Members in all parts of the House when I say that we greatly look forward to my hon. Friend's future contributions to our debates. If I could aspire to half the skill and versatility that he showed on his first appearance, I should be more than content.

It would be remiss if I did not declare an interest in the subject matter of the Bill.

Mr. Cormack

Only a little one.

Viscount Cranborne

I am used to the ribald interventions of my hon. Friend, from our activities in the last Parliament. In spite of what he said, I should admit to a certain interest not only as a farmer in my own right but as the owner of some tenanted farms.

"Interest" is the key word in our consideration of the Bill because, to some of us, the measure is the result of the conjunction of only two of the interests which go towards the consideration and management of the countryside. The CLA and the NFU are important, and we have friends in both organisations, but they are only two of the interests. That raises at least a question mark over the way in which the Bill is being presented, for it is being put forward on condition of an agreement between those two interests, which, as I say, are only two of the bodies interested in the countryside.

Perhaps it would be going too far to quote the description of it by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) as a "constitutional outrage". I only say that the history of the presentation of the Bill at least raises a constitutional question mark in the minds of some Conservative Back Benchers.

The Bill has been a long time in gestation. As my hon. Friend the Member for Penrith and The Border aptly said, we have been waiting for it for more than a few months. The situation with which it is designed to deal, as the Minister pointed out, has been apparent, and increasingly so, for more than 70 years.

There has been heartening unanimity, in the discussion of the landlord and tenant system, about the desirability of the system and the need for it to continue. Despite the well-worn saw in this place that hon. Members should beware of unanimity—particularly when the occupants of both Front Benches support a view—I subscribe to the desirability, for the sake of the countryside, of fostering the growth of the landlord and tenant system. We can all, even the hon. Member for Aberdeen, North (Mr. Hughes), agree on that.

Mr. Robert Hughes

I was careful to say that I approved of the desirability of a tenanted sector. I did not go so far as the hon. Gentleman suggests I did and say that I approved of the landlord and tenant system.

Viscount Cranborne

I am always interested in hearing those who represent a party which as recently as 1976 extended the hereditary principle in so remarkable an area.

Those who support the health of the landlord and tenant system, both from the landlord's and tenant's point of view, do so for the social reasons advanced by my hon. Friend the Member for Penrith and The Border. My hon. Friend gave a graphic description of the vicious circle into which so much of our rural life has sunk over the past 20 or 30 years. I need not repeat what he so ably described, but I emphatically endorse what he said. It has happened not only in his part of the world but in the places where I live and which I represent.

There is another commercial reason why we should encourage the system to continue and revive. Contrary to the sentimental views of many of those who pronounce about agriculture—particularly in some of the pages of our weightier newspapers—modern agriculture requires a great deal of capital. One need only examine the pages of the 1983 edition of NIX—probably the bible for all who are interested in farming statistics—to see the truth of that. I see that the hon. Member for East Lothian (Mr. Home Robertson) agrees with me.

In 1982 tenants required, on average, a capital of about £445 per acre. The landlord requires a rather more variable amount of capital—it depends on the varying price of land, but it can be as much as £2,000, £3,000 or even £4,000 an acre. There can be no doubt that, all other things being equal, the demand for capital in order to prosecute a sensible and efficient farming policy can most easily be satisfied by spreading the load of raising it. All things being equal, it is only sensible that the landlord and the tenant should be encouraged to spread that load so that a commercial return can be made from the enterprise upon which they are both engaged. In this country, the remarkable degree of skill needed to manage capital—in farming as in any business enterprise—has only recently been realised to any great degree.

I have used the phrase "all things being equal". All things are not equal in farming, although the hon. Member for Aberdeen, North disagrees with me about the way in which they are unequal. In producing the Bill, my right hon. Friend has tried to produce a more equitable system that will ensure at least that the decline in the number of agricultural tenancies is halted. On what I have called a questionable constitutional precedent, he has waited for an agreement between the CLA and the NFU; and he has assumed that his objective can be achieved simply by varying the method upon which rents are calculated when they go to arbitration, and by reversing the succession provisions introduced by the Labour Government in 1976.

I should like to believe that my right hon. Friend's Bill will succeed in achieving his objective, but I fear that I cannot endorse his sanguine view.

Mr. John Maxton (Glasgow, Cathcart)

The hon. Gentleman is revolting.

Viscount Cranborne

No, I am not revolting—at least, not in the non-physical sense—and I will explain why.

Let us take as an example the assessment of rents when they go to arbitration. Lord Walston, speaking on Second Reading in another place, pointed out that the arbitration procedures do not apply to first lettings. We are all concerned—even the hon. Member for Aberdeen North—to increase the number of people entering farming. If the arbitration procedures do not apply to first lettings, surely those provisions are otiose to the objectives that my right hon. Friend wishes the Bill to achieve.

Equally, even if the provisions applied to first lettings, I question whether they would increase the number of new tenants coming into farming or, indeed, arrest the decline. The extraordinarily complicated provisions and formulae which the arbitrator has to take into account—again, my hon. Friend the Member for Penrith and The Border referred to this—suggest to me that, in the interests of a spurious fairness, we have sacrificed simplicity, which was the one great virtue of the 1948 and 1958 legislation. At least that legislation made it clear that the arbitrator had to refer to open market value. When we consider the new definition on page 2 of the Bill, do we not run into extraordinary difficulties? Even with the skills of such hon. Members as my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins), how can we sensibly define "an appreciable scarcity" in monetary terms?

Apart from anything else, we may find that—unlike the 1958 legislation—the Bill will make the arbitrators much busier than they have been hitherto. It was also said in another place that of the changes in rent between October 1981 and October 1982—there were roughly 9,000 of them—that were monitored by the Ministry of Agriculture, 99.5 per cent. did not even go to arbitration. That was thoroughly desirable. The new formula adumbrated in the Bill will, I suggest, reduce that proportion, and that must be a bad thing.

I suggest earnestly to my right hon. Friend that he should consider the question of open market value in Committee. I also suggest to my friends in the NFU that, with the present rather gloomy outlook for farming, market pressures could easily lead — simply for economic reasons — to more farms appearing on the market. In a less prosperous environment, open market value could become a more attractive proposition for the tenant than might be imagined at present.

I know that other hon. Members wish to speak, Mr. Deputy Speaker, but I hope that I may refer to the other principal provision in the Bill, which deals with succession. The 1976 legislation was foolish to a degree remarkable even for the Labour party. We know that it was introduced almost by accident, by means of an amendment which took even the Labour Front Bench by surprise.

Mr. Robert Hughes

indicated dissent.

Viscount Cranborne

The hon. Member for Aberdeen, North shakes his head, but that is the impression that I have received from the Official Report.

There is no doubt that it is sensible for my right hon. Friend to repeal the 1976 succession legislation, but I believe that he is going about it in rather a curious way. However, probably the only thing that would induce me to vote for the Bill is the fact that my right hon. Friend is repealing those provisions. For that reason, contrary to the expectant hopes of Opposition Members, I shall vote for Second Reading. Nevertheless, just as I strongly doubt whether the rent provisions of clause 1 will contribute much to the decline in the rented sector, so I fear that his expectations of the repeal of the 1976 succession legislation will be disappointed.

Mr. W. Benyon (Milton Keynes)

My right hon. Friend the Minister of Agriculture, Fisheries and Food is not repealing the 1976 Act but is simply altering it for new tenancies.

Viscount Cranborne

I am grateful to my hon. Friend. My right hon. Friend is repealing the effect of that legislation for new tenancies. My hon. Friend tempts me to refer to something to which, in the interests of brevity, I had not intended to refer. It was surely rather curious to create what are arguably two tiers of tenure. It has been argued in another place that there will be four tiers of tenure. That is yet another weakness in what my right hon. Friend proposes. Nevertheless, I return to whether the repeal of the 1976 legislation, as far as it goes, will increase the number of tenancies or halt the decline. I cannot see that happening for one overriding reason, which lies in the extraordinarily perverse and pig-headed statement of the hon. Member for Aberdeen, North. If I might speak from personal experience, one thing has prevented my letting farms, even though I might have wanted to do so—before 1976 there was the threat of Labour legislation and after 1976 there was the effect of that legislation. If the hon. Member for Aberdeen, North wants to encourage a proper market in tenanted land, his best course of action is to withdraw the extraordinary statement that he made today. If he does not, he will only ensure that what little hope the Bill has of success is not fulfilled. Failing that, the efforts of my right hon. Friend and others in Committee will be brought to naught. I am sure that he would not like that.

In spite of the pleas that Conservative Members make to the Labour party and in spite of the expectation that it will be a long time before the Labour party is returned to power, prudent farmers and landlords must take the long view. That is the nature of the countryside. That long view must take account of what the hon. Member for Aberdeen, North has told us today.

My right hon. Friend has alluded to the fiscal incentives that have already been given. My hon. Friend the Member for Penrith and The Border has alluded to the need for more fiscal incentives. It would be sensible for my right hon. Friend to use all the powers of persuasion that he showed to such effect when he was Patronage Secretary in the previous Parliament to prevail on my right hon. Friend the Chancellor of the Exchequer to introduce fiscal measures that reduce the difference in price between let and vacant possession land. That would be of enormous assistance in promoting the tenanted sector that we want to promote. However, even that will not work unless the threat that the hon. Member for Aberdeen, North has uttered today is removed. In the light of that threat——

Mr. Robert Hughes

Promise.

Viscount Cranborne

I know that the Opposition quite often undertake things which, in government, they find it impolitic to carry out. Because of that threat, however, the Bill will increasingly seem to be not just a lion without a roar but the mouse that many of us feel that it will turn out to be.

5.34 pm

Mr. Ken Weetch (Ipswich)

This is an interesting debate. We have just had two lively and unusual speeches from the Conservative Back Benches, and some of the matters raised in them deserve comment.

As I read it, the Bill is a classic case of two things. First, although the Government have taken their time in introducing it, we are still being asked to legislate on the basis of inadequate factual and statistical information about the state of the land market, especially the agricultural land market.

Secondly, I warmed to the disarming way in which the Minister said that it is the duty of Parliament to legislate, irrespective of what interest groups say. That is laudable, but I remind him that that is not the way in which the Bill started out. It started as an exercise in the Executive setting a mark of approval on a deal that had been struck by two interest groups—the National Farmers Union and the Country Landowners Association.

I have read the debates on the Bill that took place in another place. Those debates did signal service to the cause of parliamentary democracy as they took the original Bill apart at the seams in an undeferential way. Had that not happened, the Bill would have come to this House in its original form to be rubber stamped. In other words, we should be approving a deal that had been done by two interest groups. That would have been quite wrong.

The Bill does little, but what it attempts to do it does not do very well. It stems from what is essentially a piecemeal approach to a complex series of problems connected with agricultural landholding reform and the determination of fair rents. Those two matters are extremely complex. They were complex enough to start with, yet the Bill makes them even more so.

I agree that the decline in the availability of the number of farms to rent is a serious problem. Over the years, that has seriously reduced the opportunities for new entrants into farming. I also accept that one of the aims of agricultural policy should be to bring more tenant farmers into the agricultural framework. These issues are of serious public concern, but, as always when we make a political attempt at reform, what we do depends on an analysis and diagnosis of what is at fault and the cause of the decline.

Mr. Nicholas Baker

With regard to his analysis of this decline, will the hon. Gentleman tell us what statistical evidence was taken before the 1976 Act and, in the analysis which he is about to give us, whether he considers that Act had anything to do with the decline?

Mr. Weetch

First, the available statistical evidence does not throw any penetrating shafts of light one way or the other. The statistical evidence is inconclusive. I agree that it was inconclusive before the 1976 Act. However, the 1976 Act, which came into operation on 1 January 1977, was in response to a series of problems affecting tenant farmers. Before 1976, the tenancy for the family disappeared on death, and that threw up some very serious problems. I know that it did in Wales and it certainly did in East Anglia, of which I have direct experience. In my travels in East Anglia, many tenant farmers have had occasion to speak to me of the benefits brought about by the 1976 legislation. If the presumption is that amending the inheritance provisions through the Bill is going to make any substantial alteration one way or the other to the statistics of this problem, it is mistaken, because it will not.

If one tries to diagnose the major causes, one is seriously put to it to find the major factors. The plain fact is that the tenanted sector has been in substantial decline for a very long time. In 1908, 88 per cent. of agricultural land in England and Wales was rented. In 1983, the figure was 31 per cent. That is a remarkable decline. There must be long-term factors of a very fundamental nature to bring that about. It is totally misleading to point to the 1976 Act and say that there is the legislative cause of a marked accentuation of the decline. One can analyse all the statistical evidence and twist it any way one likes, but it does not reveal that as a conclusion at all.

Viscount Cranborne

Will the hon. Gentleman accept from me, from my personal experience, that the threat before 1976, and the fulfilment of that threat afterwards, was a major inhibiting factor for landlords throughout the country?

Mr. Weetch

I am not prepared to accept that proposition. It is always the experience of one person as against another. I am trying to make a general point. It may indeed be the case that in the hon. Gentleman's experience this was a substantial factor, but I am saying that it has not been a significant factor in the general run of tenancy statistics one way or the other.

It is easy to see one of the root causes of the difficulties. I was interested when the Minister referred to the Northfield committee report. That report said that we had insufficient information in this country about the structure of and personnel in landholding. There is still too much that we do not know about the structure of landholding. How much of the agricultural land in England and Wales is in institutional ownership? [HON. MEMBERS: "Too much."] I am very glad to hear that. Hon. Gentlemen may say that it is too much, but that answer does not give us any statistical precision for legislative action.

How much agricultural land is in foreign ownership? We cannot get that answer either. We simply do not know how much agricultural land is in multiple ownership. Again, perhaps too much.

I am not making any of those points specifically. The general case I am arguing is that this is an attempt to base legislation on a statistical vacuum. If we seek to bring to bear legislation to make social and economic changes, we must know the structure of the problem with which we are dealing. That is something that we do not know. Therefore, the effects of this legislation will, at best, be unpredictable.

My second broad point is that the Bill makes the situation more confusing than it is. After the legislation goes on to the statute book, I should not like to arbitrate on agricultural rents. Clause 1(3) provides: For the purposes of the foregoing subsection the rent properly payable in respect of a holding shall be the rent at which the holding might reasonably be expected to be let by a prudent and willing landlord to a prudent and willing tenant". It goes on in that vein to multiply the complications.

Subsection (5)(a), refers to: any element of the rents in question which is due to an appreciable scarcity of comparable holdings available for letting on such terms compared with the number of persons seeking to become tenants of such holdings on such terms". I suggest that any arbitrator of agricultural rents will have a short life if he takes his job all that seriously.

I have no excessive attachment to theoretical economics, but I was brought up on Ricardo on rent, and he says that the rent of agricultural land in the long run is a derived figure—derived from the revenue productivity of what the land produces. That is a simple free market statement of what agricultural land ought to be in a perfect free enterprise world. The Government were elected on a free enterprise platform, but as I read clause 1 I begin to doubt whether the Government quite know what they are doing. There is such an overriding degree of bureaucratise—if I may call it that—that we do not know where we are. I shall be pleased and interested to listen to the Minister winding up the debate to see if he can explain some of the mysteries of this clause to the House.

It is unlikely, I think, that the Bill will solve any of the: problems that now beset the market in agricultural land or the problems of landlord and tenant. It is likely to do quite the reverse, because it has made the situation more confusing than it was. It is also unlikely to be successful as a just formula for fixing rents. One thing this legislation certainly does is take away from the tenant the stability that the 1976 legislation gave to him. That is a very bad thing. It is for that reason that I shall not vote for the Bill tonight.

5.50 pm

Mr. Jerry Wiggin (Weston-super-Mare)

The Bill is like a condemned man's breakfast, a transient and cosmetic measure where the nourishment will do nothing to sustain life.

Mr. Corbett

They will have the hon. Gentleman on the Committee.

Mr. Wiggin

Even the worthy and well-intentioned people who devised the so-called package on which the Bill is based are mostly agreed that the landlord and tenant system is a good idea and one that should be perpetuated. I shall not argue with the hon. Member for Aberdeen, North (Mr. Hughes) about who should be the landlord, but Labour Governments, despite the opportunities that have been presented to them, have sought to do nothing but revile landlords, which has led to a reduced number of tenancies. The concept is so straightforward that I am extremely depressed by the way in which the hon. Gentleman perpetuates his ancient arguments.

The Queen's speech stated: Legislation will be introduced to make more farming tenancies available in England and Wales. I hope sincerely that that legislation is not represented by this Bill, since I cannot accept for one second that this measure will have that effect.

I may sound during my speech to be rather a landlord's man, but without a landlord there can be no tenant. It is because the landlord has had such a raw deal in both legislative and taxation terms that we are in our present troubles.

I was a tenant farmer for 25 years, until a couple of years ago. At one time I rented farms from two separate landlords. I believe that I have an intimate experience of the system at first hand. I was privileged to serve under my right hon. Friend the Secretary of State for Energy when he was Minister of Agriculture, Fisheries and Food. At that time I had some responsibility for certain aspects of this matter.

How do we find ourselves in the present position? The Country Landowners Association, in representing the landlords, wished to have the iniquities of the Agriculture (Miscellanneous Provisions) Act 1976 removed, and sought a balance in the law that would be more equitable. On the other hand, the National Farmers Union, conscious of the ever-increasing key money element in rents, saw arbitrators allowing awards to creep up and up, knowing all the time that it would not be long before one of them was taken to the High Court because he had arbitrated by a practice which had become accepted but which was not legal. The massive rent increases that would have stemmed from that would have been a severe blow to the industry across the board.

My right hon. Friend refused to have anything to do with legislation on this subject until both parties came to some agreement, but he did not say that if they came to an agreement he would legislate. However, it became clear that that was what the parties expected and they found that they could not negotiate unless they were to expect legislation.

Great pressure was put on the previous Administration and, in my view, most unwise commitments were set out in the Conservative party's manifesto. It cannot become an established practice that if two viewpoints are momentarily reconciled the Government should automatically legislate on any such agreement.

The most significant feature of the problem that faces us is that no one has consulted those who want to enter farming, which apparently is what it is all about. These people are not landlords, landowners or tenants. No one knows how many there are, but I have heard figures quoted from 6,000 to as low as 3,500. No one has consulted them on the Bill, yet they are the very people who, in theory, the Government should be trying to help.

There will be some landlords who, for cosmetic reasons, will state that they will let a farm or two as a result of this measure. I shall take that with a pinch of salt, because it will require more than one or two landlords to take that course to have any material effect upon the system. I have no doubt that some of the Oxford and Cambridge colleges, the Church, the Duchy of Cornwall and other institutional landlords which see themselves as having a timeless existence will continue to let land and will worry less about the present.

I am concerned that the Government have lost an opportunity to deal with the problem once and for all. Had they done so to the satisfaction of the entire farming community, even the Labour party would not have found it necessary to say that it will restore the iniquities of the 1976 Act every time a Labour Administration is returned to power.

The really important measure, the Agricultural Holdings Act 1948, has not yet been mentioned. That Act was subsequently improved and amended in 1958. That was followed by the 1976 Act, about which we have heard a great deal, and now we have the Bill. The 1948 Act gave security of tenure to the tenant and heavily weighted the contract that he had with his landlord against the landlord. I believe that my right hon. Friend is advancing a false argument in not acting retrospectively on security of tenure.

The factor uppermost in my right hon. Friend's mind should be the position at the time when the willing tenant signed his lease with the willing landlord. Every legislative change has altered that contract. A surprising number of pre-1948 leases still exist. Suddenly, the tenant farmer found that he had a lifetime of security, which he had not had before. Now every tenant has the benefit of the 1976 Act, which provides for three lifetimes of security. Again, that was something that he had not had before. It is easy come, easy go. It would have been legitimate to repeal the 1976 Act, and I am sorry that it will not be repealed in its full form by the Bill.

I hate to criticise my right hon. Friend, for I remember very well the many hours that we spent together opposing the 1976 measure in Committee. I note that one or two Labour Members who are now in the Chamber were also members of that Committee. However, in this instance I think that my right hon. Friend is wrong. I am unimpressed by the cries of those who state that they have been investing heavily because they have three generations of occupancy ahead of them. Even in the most prolific of families that cannot be guaranteed. Having somehow found themselves fortuitously in their present beneficial position, they should not cry too much if it is taken away from them.

Viscount Cranborne

Does my hon. Friend agree that many farming investments are made in the expectation of a return over 20 to 25 years, or a very much shorter term, and not over three generations?

Mr. Wiggin

Yes. That has always been reflected in the extraordinarily low return that agricultural land has brought to the investor. That precludes many pension funds and others from investing in agricultural land, and it always will.

A landlord is faced with a simple proposition. Does he keep his land freehold and know that it is worth—for example, £2,000 an acre—or does he let it, however beneficially, in the knowledge that the moment he does so the value will be halved and he will not regain occupation of the land for one lifetime, even after the Bill has been enacted, or three lifetimes at present?

If a commercial building is let, it becomes more valuable than one that remains empty. A good tenant paying a good rent should be adding to the value of the asset. If the commercial sector can make its system work, it is about time that we made the system work in agriculture.

The problem which has arisen in the letting of residential accommodation is very much the same, although there are minor differences. I am no fan of the Government's attitude to that either. If we give the tenant security of tenure and arbitrate on the rent in accordance with an artificial formula, it will not be long before landlords disappear, and with them the tenants. That has happened with flats in central London and with farms in the countryside.

All Members received a circular from Jones Lang Wootten in the beginning of November. Part of the document stated: This legislation has penalised all landlords; elevated all existing tenants to a special position and denied the majority of able and innovative young men the opportuity to be considered for a tenancy. To become a farmer today, in an industry best suited to family business units, one must either have access to enormous capital wealth or be one of those special 'qualifying successors' under the 1976 Act. I have worked with all levels of the CLA and NFU for many years, and I am concerned that on this occasion I should find myself so diametrically opposed to their joint proposition. I believe that there is a considerable element of face-saving about it and, except for the leaderships, there are many critics in both bodies. The Bill will unwittingly offer hope to those for whom there is no hope. Perhaps more importantly, I look upon it as a complete waste of parliamentary time. Surely we have a responsibility to ensure that when we legislate, which we do on the whole far too often, we have a serious and worthwhile purpose. We should not be here fiddling about with an antiquated system that is in terminal decline. The Government are the only body that can deal with this matter. There can be no solution agreeable to either the owner or the tenant without some giving way on both sides.

Mr. Corbett

What about public ownership?

Mr. Wiggin

I am sure the hon. Gentleman will be surprised to learn that some of my suggestions will not include public ownership. I must not be churlish and pretend that there is nothing good in the Bill, because the technical amendments are most useful. However, they are minor and involve lawyers and arbitrators. I shall not be especially excited about the debate on the formula for rent fixing. As it seems unlikely that I shall be on the Committee, I shall look forward to hearing how many sittings it takes the Committee to deal with clause 1.

An arbitration clause should be clear and fair, but I believe it to be neither. Some at the top of the profession believe that, in its present form, it is unacceptable. There is no doubt that the present system was beginning to deteriorate, and it would not have been long before an arbitrator was taken to court. Surely we can get over that matter of law by using a more pragmatic approach in clause 1.

I shall address myself to what should have been in the Bill, because without a package of legislative and fiscal reform, year by year we shall watch the demise of the present system. There cannot be anything else for it. The days of the private landlord are numbered.

We have heard already about the moans and groans of those who complain of the deterioration of the countryside, the closing of schools, the lack of buses, and no telephone or post office. For as long as I can remember we have been talking about those subjects in this House, and no one has done anything about them. This is not a simple problem; it is extremely difficult. We must think firmly and clearly about the occupation of the finite quantity of agricultural land—I am talking not about ownership, but about occupation.

I know it sounds a revolutionary suggestion, but is it reasonable that one man should farm 10,000, 15,000 or 20,000 acres? I do not believe it is. It is not a Socialist philosophy to say that one should tax him on some excessive notional figure. In 1982 there were 2,900 holdings between 500 and 750 acres, and 640 holdings of 1,750 acres and over in England alone. Given those figures, and if 3,000 or 4,000 people want to farm, can we not come to a balancing formula where an occupation beyond a certain figure is taxed and the money used to relieve the tax burden on the landlord? There would then no longer be a fiscal incentive to take land in hand above a certain acreage. We would not be the only country to do that. We must tackle this problem from its fundamentals.

I cannot for the life of me understand why we should dodge the issue of retirement. Every other industry arid business requires a retirement age, and I believe that the vast majority of people in this industry would be happy to accept a retirement age. If something were worked out along those lines, would we not have some movement in land? The first day there is one farm more than there are applicants for it we shall at last have a free market in rents, that problem will resolve itself and the progression, about which so Many people have talked, can be restored. There will be a need also for a new contract of 20 or 25 years. In this scientific day and age I cannot believe the old stories about working the farm out. What landlord impresses upon his tenant the model clauses concerning rotation? Years ago they were thrown away. The story that no tenant can survive without a lifetime on his farm should be examined.

I shall not pursue the point about county council smallholdings. Unless the system works better, the sooner the £400 million or £500 million of land involved is restored to the ratepayers from whom it came, the better for the country, the ratepayer and the farmers.

The Treasury has a part to play, as many hon. Members have said. I should be more confident in the outcome of the Budget were we to be having this debate after, rather than before, next Tuesday. In case there is time for the Chancellor to include one or two points because of today's debate, I give four brief points which a member of the Country Landowners Association in Somerset and Avon asked me to make. First, there is a strong case for the removal of the investment income surcharge, as most owners put a great deal of time and effort into the management of their land. I should like the investment income surcharge removed altogether, but many arguments would be put about why that should not happen. The fact is that it pays an owner to take a farm in hand and change his income to earned income. Secondly, there is a strong case for a capital gains tax rollover relief if we wish to encourage the existing landlord to invest and improve his tenanted farms. The lack of rollover relief means that any investment must be concentrated on the part of the estate in hand.

Thirdly, there is an excellent case for the higher rate of capital transfer tax relief. The hon. Member for Aberdeen, North fails to recognise that even the Labour party allowed CCT relief for let land, and rightly so. Fourthly, one of the greatest anomalies is the failure to allow landlords to recover the VAT they suffer on repairs and management expenses. The present rules are a grave discouragement to the landlord, who is responsible for repairs, despite the need to encourage landlords to accept that responsibility.

Mr. Edward Leigh (Gainsborough and Horncastle)

Is my hon. Friend worried about the abuse of the business expansion scheme? I am told that one bank has just been given no less than £30 million to buy land. Does my hon. Friend believe that that is an abuse of the scheme?

Mr. Wiggin

I must be honest and say that I would rather not go down that path, because it is not a subject on which I am at all expert.

Today we are burying Northfield and all his works. The best part of the report was the minority report, and I have no doubt that if Mr. Colburn had been allowed a hand in reorganising the system, we might have seen something more positive.

The hon. Member for Aberdeen, North, by stating his party's policy on returning to the succession of tenancies, has removed hundreds of farms from the market for letting. I cannot understand a motive, other than dogmatic spite, which moves the Labour party to that view. By removing the landlord, the tenant is removed as well.

I am sorry that I am unable to support the Bill, for what is does not contain rather than for what it contains. I shall vote in the No Lobby tonight, but I make it clear that I shall do so for reasons completely opposite to those of hon. Members who will be with me.

6.7 pm

Mr. Geraint Howells (Ceredigion and Pembroke, North)

I listened with great interest to the hon. Member for Weston-super-Mare (Mr. Wiggin). I agree with many of his sentiments, and I am sure that hon. Members on both sides of the House will wish him to serve on the Committee, so that he can express his views as forcefully as he did today. He made a valuable contribution in 1976.

As it is one of the traditions of the House that we declare our interests, with pleasure I declare that I am not a tenant farmer or even a landlord, but one of those fortunate people, an owner-occupier. It is generally agreed that a healthy landlord-tenant relationship is essential in a thriving agricultural industry and to the well-being of the rural community; that has been said often tonight.

During the past two years there has been growing dissatisfaction with the present arrangements; therefore, the system is in decline, with more and more landlords being dissuaded from letting. It will be a sad day if the landlord-tenant system disappears from the land. Many hon. Members have made a valuable contribution, but one aspect of farm letting has not yet been touched on. In Wales especially, the majority of landlords are letting their farms for summer and winter lets. Perhaps the Minister will give us the figures.

It is unbelievable but, during the past five or six years, the percentage of summer lets in Wales, England and Scotland has increased tremendously. The reason is simple. Landlords and farmers can obtain about £100 an acre during the summer months. They can let the same land again for keeping sheep in the winter, and they can also let the farmstead for about £20 or £30 a week. They are doing much better than those landlords who let their farms with a 10, 20 or 30-year agreement. When the Minister replies, I hope that he will comment on what is happening in the country at present.

In 1976 I was privileged to serve on the Committee dealing with tenants' rights. Although I voted then with the Labour Government, I did so because I wished to see some progress. However, I felt that the resulting legislation was not right, and so it has proved to be.

What worries me today is that, if matters are not sufficiently corrected this time, we will have lost a golden opportunity to set matters on their proper course and bring about a satisfactory arrangement between the landlord and his tenant. We will be no better off than before.

The purpose of the Bill should be to promote and increase the number of tenanted farms, and thus provide more opportunities for new entrants into farming, as well as to ensuring a fair deal for the landlord and tenant.

The present proposals have been based on the National Farmers Union and Country Landlords Association package. It should be remembered that it took those two bodies a long time to reach an agreement. On examination, however, one finds that they did not tackle all the essential problems. The package is not broadly based enough to bring about the results that we all desire. If the Bill becomes law in its present form, I believe that yet another generation of aspiring farmers can forget their dreams. However, if the Government are prepared to regard the Bill as drafted as merely the basis for improvements, and accept a number of constructive amendments, there is a chance that the structure of farming can be greatly improved.

Over the past few months, I have had the opportunity to discuss the Bill with a cross-section of the farming community, including representatives of farming unions. I gained the impression from all quarters that, although initially enthusiastic, they have now cooled off, believing, as I do, that there is a need for a more radical approach.

First, let us consider farm rents as introduced in the Bill. The NFU has a major objection to the disappearance of the phrase "earning capacity" from clause 1. The phrase was in the agreed formula when first presented. If the Government do not replace those words, they cannot object to other amendments on the grounds that they are not agreed by both sides.

The NFU is right when it says that "earning capacity" imports a different and additional meaning to productivity. The reason it gives for the inclusion of the words are, first: quotas do not affect the productivity of the land, but certainly the profitability. Secondly, it says: differential pricing should also be taken into account. It would accept a reference to the tenant's ability to profit from fanning the holding.

Under the 1958 formula, the wording was that the rent properly payable for this purpose is the rent at which, having regard to the terms of the tenancy the holding might reasonably be expected to be let in the open market. The words "might reasonably be expected" refer to the expectations of someone who has discovered the capability of the holding, the demand and potential tenants.

The "earning capacity" of the holding has been taken into account under the formula in any event, but the danger is that once a new set of criteria become rigid and defined by statute, other criteria are necessarily excluded. I support the views of the NFU about the wording, because of my experience of statutory interpretation by the courts. Although relatively few cases go to arbitration the levels set there influence free negotiations for agreed rents.

I come to the abolition of succession. From what I have gathered from the press, there is little dissent about this move, except from the Farmers Union of Wales. I agree with its sentiments. Something should be done to solve the problems faced by those who will succeed their fathers on small farms in various parts of Great Britain.

The decline in the percentage of agricultural land let after 1 January 1977 is clearly demonstrated in reference sheet No. 54/4. It is probable that the immediate impact on lettings will not be dratnatic. However, the death of the tenant will have a dramatic effect on widows and children. The problem might be alleviated if a joint tenancy were granted to the couple, but that solution is unlikely to appeal to landlords. An alternative method of periodically freeing the land is to have a notional death or the end of a generation every 30 years. The family unit could plan its future much better if there were a fixed-term tenancy, but that solution was considered by the interested parties and rejected by the NFU as being too rigid. I believe that the NFU and the Minister should think about that again. The NFU is opposed to term tenancy, as the tenant is in a difficult position without a home or livelihood.

The FUW makes the cogent point that the freeing of more land may mean more land for investment bodies and not necessarily more for new tenants. We are so keen to keep the old system for social reasons that it will need to be supported artificially because of the dual purpose of the land—agriculture and investment.

Let us consider the changes in current succession tenancies. Clause 3 appears to have met with general support except from the FUW. Widows will be in a better position on application to the agricultural land tribunal. Additional changes which would take into account young farmers' operations are the possibility of a transfer of the tenancy on ill health of the original tenant. I am sure that that could be considered.

If wives are thought to be at a disadvantage when they apply for a succession tenancy, daughters are probably in the same position and should have the deceased's agricultural work credited to them as well.

What about a compulsory retirement age? Clause 4 provides for the protected tenant to nominate a successor on his retirement, but retirement is dependent upon the tenant and not the successor.

Short-term lettings were originally part of the package to extend Minister's power under section 2 of the Agricultural Holdings Act 1948 to cover the grant of a short-term lease to a new entrant. The proposal was that the maximum period of the lease would rise from three years to five years. That proposal was supported by the NFU and the young farmers' clubs but not the FUW. New tenants, probably young, are our main interest. Old tenants kept the succession rights under the 1976 Act, or have been able to acquire new tenancies since. If the land is left to a farmer who is already occupying a commercial unit, that letting is outside the 1976 Act and therefore acceptable to landlords. We would still press for this provision on the basis of the package deal, but the FIJW has a cogent argument that increasing the length of lettings will mean that fewer lettings are available.

Clause 8 deals with the transfer of the appointment of arbitrators from the Minister to the president of the Royal Institution of Chartered Surveyors where there has not been agreement. According to the NFU, the old system worked well and no one doubted the impartiality of Ministers or of surveyors. The view may be unjustified among tenant farmers that surveyors allied themselves with the landownering cause. The RICS originally approved the wording of the rent review clause but now say that it is unworkable, too vague and contradictory. It asks that the impartiality of the present system should be maintained, or its members will be judges in their own cause. Little consultation has taken place since September 1983 with the National Farmers Union, the Central Association of Agricultural Valuers, the Incorporated Society of Valuers and Auctioneers, the Tenant Farmers Assocation and the Farmers Union of Wales.

A topic very dear to our hearts is the smallholding system that has served so many young farmers well in the past. There has been wholesale selling of smallholdings by some county councils. It is a great shame that they are forced to sell. These smallholdings were often the only hope new entrants had of getting a parcel of land and their loss is regretted by the YFC movement. Would the Minister be willing to veto these sales? Will he acknowledge that this is a serious matter? It may be shutting the stable door after the horse has bolted but a veto should be enforced and exercised.

Clause 6 has been amended to provide for a notice to quit to be given to a tenant of a smallholding at the age of 65 if there is suitable alternative accommodation. While having a smallholding should lead to something bigger for the new entrant, often it does not, and the provision to free land is welcomed by the YFC.

The establishment of a land bank would benefit young farmers. Two schemes are possible. First, tax benefits should be given to testators and benefactors so that gifts to the fund would not attract tax. The position would be the same as for any charity, except that gifts of land would be covered and could be valued at open market value at death for tax purposes. Secondly, there should be central funding of the trust by the Treasury, by joint stock banks or by other means, administered by a quango, local authorities or joint stock banks through the Bank of England. There should be power to buy on the open market. Then the land should be subdivided into minimum viable farming units and let to new entrants. Either proposal would be more equitable than giving tax advantages to landlords who are assumed to be already in an advantageous position.

I have seen a reference by the Tenant Farmers Association to a formula that would cater for the unexpected termination of a tenancy where the three-generation system does not apply, but I do not know what the proposal is. If it is early death of a tenant of one of the new unprotected lettings that causes concern, I see nothing in the Bill to deal with the difficulties of the family in that situation. Perhaps the Minister could say what their position would be vis-a-vis rehousing.

There is a challenge for the Government and the Minister. There is no basis in the views expressed by interested parties for voting against the Second Reading. Everyone recognises that the Bill does not reform agricultural holdings but merely alters existing legislation. For many reasons, it does not go far enough, but few organisations urge a vote against it at this stage. However, the Bill does not provide for the main policy decisions in the Liberal programme for agriculture and food—first, that succession tenancies should be continued, with protection lasting until the tenant is 65, and secondly, that the landlord should be able to take land in hand on the death or retirement of the tenant in certain circumstances.

If Labour Members vote against Second Reading, they will be showing an intention to repeal the Bill if they are the next Government — which I doubt very much, because I believe that the Alliance will govern the country next. If Labour Members vote against Second Reading, it will create great uncertainty and more temptation for landlords to let to institutions rather than to individuals. My hon. Friends and I will vote for the Second Reading on one condition: that radical amendments will be acceptable to the Government in Committee. If the Government will not accede to our request, we shall vote against the Bill on Third Reading. Therefore, the ball is entirely in your court.

Mr. Jopling

May I say that that last formula seems to be the classic way in which the Liberal party always gets the best of both worlds, by voting for a Bill on Second Reading so that they can vote against it on Third Reading.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

I am glad the Minister realised that the ball was in his court and not in mine.

6.27 pm

Mr. Andy Stewart (Sherwood)

Today we are debating the Agricultural Holdings Bill, which differs fundamentally from its famous predecessors—the repeal of the corn law legislation in 1846 and the Agricultural Holdings Act 1948 — which were introduced to guarantee the nation's food supply. The Bill reflects the package put together by both sides of the agriculture industry, represented by the Country Landowners Association and the National Farmers Union, whose great concern was that there were no new entrants to the industry through the tenanted sector. If one must declare an interest, I am a fully paid-up member of both organisations, as I hope to be still when I have finished my speech.

The seeds of the present situation of the tenanted sector were sown in the mid-1960s. Up to 1967, apart from the Inland Revenue, the only other main benefactors of estate disposal were tenants themselves. This came about with the security of tenure when they were almost the only prospective buyers. The formula used for tenants wishing to purchase was 22 times the yearly rental. As freeholders, their paper profit on assets doubled, and in some cases trebled, overnight. That was the result of rents during this period of prosperity being disproportionately low.

It was also accepted that when a tenant died his son would be granted the new tenancy. Then in 1967, with rising inflation and reducing dividends from the industrial scene, City financiers, to protect their clients' capital, started to buy tenanted land over the heads of the tenants. The repercussions soon appeared. As tenants died, on many occasions their families were denied succession. Unlike pre-war days, there were almost no farms to let. Those which were available were eagerly sought by existing farmers, using their now sound financial base to tender unrealistic rents that could then be spread across existing acreage.

The formula for the three-yearly rental review was simply the going rate for a new tenancy in the area. With the scarcity of land, distortions began to appear. Corrective measures should have been taken then, but unfortunately they were not.

So began another chapter. The maxim of the City institutions was to make money in cash or on paper. With increasing inflation and 100 per cent. capital appreciation on farms where the tenancy had ended, they hit the jackpot. To escape the criticism of asset stripping, a new phrase — key money — was used, which all aspiring tenants would pay. It was the cash value between vacant and rented land prices. No news spreads faster than quick profits, so by the mid-1970s, with raging inflation and still higher land prices, competition became reckless, resulting in some notable cash failures, running into millions of pounds. By then there was a deep, silent resentment among traditional tenants and the old adage, "biting the hand that feeds you", could be used to sum up their feelings.

In the Agricultural (Miscellaneous Provisions) Act 1976 the Labour Government granted security of tenure for three generations. Unlike the 1948 Act, that legislation was introduced without consulting the industry. Landlords, both City and traditional, declared that the law would prohibit them from letting further land, but that was already the reality. Let land was then only 42 per cent. of the total, compared with more than 90 per cent. at the turn of the century. It also meant that the useful source of income—key money—would be paid only by the first generation of tenants. The institutions decided to change policy again and to take farms in hand at the end of a tenancy, or to give the tenant a cash inducement to vacate his farm. That was possible since, after five incremental steps, British farming commodities had reached prices similar to those in the rest of the Common Market. Profitability from cereals and oil seed rape could sustain the managerial structure necessary for that change of policy.

The absence of opportunities for new tenants was causing concern. With that in mind, the Country Landowners Association and the National Farmers Union approached my right hon. Friend the Secretary of State for Energy, who was then the Minister of Agriculture, Fisheries and Food, and asked him to rectify matters. My right hon. Friend's response was that they should come back to him when they had reached an agreement. After initial disagreement and a period when, officially, they had stopped talking to each other, a package was agreed.

Promises are made to be kept; hence the Bill. The relevant clauses are a new formula for the determination of rent and the abolition of statutory succession to agricultural holdings in the case of new tenancies.

Mr. Gerald Bermingham (St. Helens, South)

If there was a sin before the 1976 Act—that on the death of the tenant the tenancy was ended and, therefore, institutions and others could buy land with that in mind—how, if the three-generation tenancy arrangements are to be destroyed, can more tenancies be provided and large institutions pevented from buying tenanted farms with a view to making a capital killing on the death of the tenant?

Mr. Stewart

If the hon. Gentleman will allow me to finish, I shall come to the part of my speech that deals with eliminating the possibility of that happening in future.

The alteration to the rent determination clause in the House of Lords causes great anger and resentment in the rank and file of the industry, and rightly so. It also reinforces their suspicions about why the Bill was introduced in the House of Lords. I hope that my right hon. Friend the Minister will assure the House that the original words "productivity and earning capacity" will be reinstated, and that he will honour the agreement reached by both sides of the industry. "Productive capacity" is normally taken to mean the inherent potential of the land. "Earning capacity" reflects marketing, price and production controls and economic factors, all of which affect a farm's profitability and, therefore, the rent properly payable.

However, if the Bill is to justify its parliamentary time and achieve its objective, it will need further fundamental changes in Committee. Farmers, both tenant and owner-occupier, have served Britain well. Therefore, to enable the many suitably qualified young people to farm on their own account, which is the wish of almost everyone entering the industry, a good starting point would be a limitation on farm size. We should prohibit the amalagamation of registered agricultural holdings, or the land being split into attractive lots with the house and buildings sold separately. Registered holdings should have an occupier or tenant who derives more than 50 per cent. of his income from that holding. Institutions should own only tenanted land and be subject to an annual tax, the total amount of which, after 30 years, should equal the liability of an individual to capital transfer tax for that land. Tenanted land which has been taken in hand by traditional landlords and which has been subject to a tax exemption since 1947 should be returned to the rented sector, or the landlord should be given the option to pay the tax and retain the freehold.

The farming ladder, like any other, is useless without the bottom and consecutive rungs. What sort of agriculture industry shall we have in 20 years if we allow the present trend to continue unabated? Unlike material empires, land was created by God. In the interests of the nation, the land should be cared for by as many individual farmers as possible, with production units that can be sustained at economic prices. Conservative party planning for a property-owning democracy is just as applicable to agriculture.

6.37 pm

Mr. Thomas Torney (Bradford, South)

I listened carefully to the hon. Member for Sherwood (Mr. Stewart), and on the basis of his speech I invite him to join us in the Opposition Lobby tonight.

Over the years, tenant farmers have made a considerable contribution to food production in the United Kingdom. Their confidence was built up by the Agricultural Holdings Act 1948, introduced by the then Labour Minister of Agriculture and Fisheries, Tom Williams, which gave them security of tenure. Tenant farmers increased the capital invested in their farms some tenfold in the knowledge that they could stay on the farm. The result was that food production was greatly increased throughout the 1940s, 1950s and 1960s, until the present day. That would be agreed by most hon. Members.

Mr. Leigh

Does the hon. Gentleman believe that there is room for reform of section 3 of the 1948 Act to enable the Minister to exclude the provisions of that section, which have been unduly burdensome?

Mr. Torney

There may be a case for reforming section 3 of the 1948 Act, but I have not studied that possibility closely and would have to consider the matter.

The 1976 Act gave security of tenure by succession over three generations. I believed that that was right, and I supported the measure. Incidentally, the National Farmers Union supported it, too. If I remember correctly, Conservative Members, who were in opposition at that time, did not all vote against it.

A farmer, knowing that his son could continue to farm the land after him, was prepared to pour his money into the farm, to improve it considerably. That made the farm more efficient. Many tenant farmers today pour in much more capital than the landlords. The Bill will eventually end succession, if passed in its present form, although it is estimated that that will take about 60 years. The reason advanced for ending succession is to give more opportunities to farmers to rent land. I am not a gambling man, but I would bet that in 60 years' time less tenanted land will be available. If the Bill goes through in its present form, tenant farmers will be a thing of the past.

I have tried hard to find the real reason why landlords wish to abolish succession. It appears that they wish to see possession occur more frequently. I cannot believe that that is solely to allow more, or new tenants on to the land. In any case, to stop the son of a tenant farmer taking over his father's farm and allow another person to rent it will not produce a net increase in the number of tenant farmers or in the land available for rent.

The landlord may wish to have the opportunity to make more money at more frequent intervals through the sale of his land. A farm with vacant possession, as Conservative Members have mentioned, will fetch much more than a tenanted farm. Perhaps the landlord wishes to use the farm when it comes into his possession to be able to argue with the tax man and get greater concessions. Whatever the reason, there will be greater profit for the landlord, without regard for tenants, who will often have spent large sums of money on improving the land, to make it more viable and efficient. The tenant farmer, therefore, will have no return from the land. All his efforts will line the pockets of the landlords, especially if they require earlier possession in order to sell the land.

The real reason for wiping out the succession clauses is to provide profit for the landlord. The Bill will create first and second-class tenancies, with third generation tenants on one hand and life tenants on the other. That will cause confusion and bad feeling in a vital sector of our food industry. Furthermore, it is certain to impede the viability and efficiency of that farming sector. Leaving aside profits from the sale of land, landlords have nothing to fear from succession so long as the successor pays proper rent, looks after the farm and the landlords in turn act responsibly.

Coming now to one of the other main clauses, I should like to consider the levels of rents payable by tenants. The 1976 legislation based them upon market values, with an element which tenant farmers regarded as "key money". That is an amount above the fair rent level that farmers would pay to secure the tenancy, in the hope of reducing the rent later. That rarely happened, because arbitration officers based the decisions on farms that had recently been let at a high rent, including key money. That is one of the major and basic reasons why so many farmers are dissatisfied with the existing system for working out rent levels at arbitration.

Sir Paul Hawkins

I assure the hon. Gentleman that the average arbitrator did not agree rents in the way that he suggests, taking key money into account. That is why the arbitrators were rather worried that they might be taken to court for not doing so.

Mr. Torney

I respect the hon. Gentleman's viewpoint, but farmers have told me that key money was taken into account. It is a difference of view, and arbitration may be carried out one way in one area and another way elsewhere.

Tenant farmers desired a change in the rent-fixing procedures, but they were misled by the agreement between the NFU and the CLA. Productive capacity was inserted in clause 1(3), instead of earning capacity, as the basis for fixing rents. I suggest to the Minister that that should be dealt with in Committee.

Both sides of the House agree that a farmer must earn money before he can pay it out, but it cannot follow that high production necessarily leads to high earnings. To put it another way, one can have high production, but no profit. After all, profits or surplus must pay the rent and the other overheads of the farm. Without them, the farm is not viable and cannot remain in business.

The Government must restore to the Bill the word "earning" in place of "productive". That change has been urged upon me by many tenant farmers. Not to do so would completely invalidate the farmers' hopes of securing fairer rents, and would inflict injustice and hardship upon tenant farmers and force some of them out of business.

The Bill turns arbitration into a farce, and tenant farmers know it. Arbitration will not exist if the Bill is passed unaltered. The Government should not appoint arbitrators and hand over the work to people who, as tenant farmers have said to me, are in the pay of the landlords. The Minister says that the same people may be doing the arbitrating. An old cliché, especially used in legal circles — I am not a lawyer, but a magistrate — that runs through all of our courts is that justice must not only be done, but must be seen to be done. Whatever excuse the Minister makes for this thoroughly bad change in the arbitration procedure, he cannot get away from the fact that the mass of tenant farmers will feel that they are not getting a fair crack of the whip from the new arbitration system.

The Minister talked about private enterprise. This is privatisation gone mad. It may be logical, according to Government or Tory party dogma, to privatise certain services, such as hospital, catering and laundry services, although I believe it to be ludicrous, but to privatise a service that has to decide whether a farmer is paying a fair rent is Tory dogma carried to the extent of lunacy, especially when the people to whom the Government are giving the job work for the landlords. At least they have commissions from the landlords.

In no way could members of the Royal Institution of Chartered Surveyors, who are much closer to the landlords than the farmers, and are employed by the landlords, make a proper and fair decision on rents. Even if, despite the possible risks to their commissions, they made some fair rent decisions, the farming community could hardly be expected to have confidence in such decisions and believe them to be fair in the light of such a close connection between landlords and the Royal Institution of Chartered Surveyors. It is similar to the police investigating complaints against themselves.

It is difficult to understand the reason for this change by the Government. We know well how the Government wish to cut everything. I believe that they will reduce Civil Service staff by four as a result of the change in the method of arbitration. The saving is negligible. Are we to understand that justice to the tenant farmer is worth the saving of only four jobs?

Mr. Wiggin

I have been listening carefully to what the hon. Gentleman has been saying. He has put forward the classic argument about arbitrators. Surely it is impossible to think of anyone other than a surveyor or a specialist lawyer who could do the job. Appointment is another argument, but who would do it, other than those who are handling these matters day by day? I do not believe that any sector of the farming industry would accept an outsider.

Mr. Torney

The point that I thought I had adequately made was that the farming community will consider the new system unjust and unfair. Justice may be done, but it will not be seen to be done. That is an important feature of British justice, whether one is dealing with a criminal in a court of law or with a fair rent for a farmer. This is a thoroughly bad and decrepit clause on arbitration. Let the Minister continue to be responsible for arbitration and not hand it over to private enterprise, the Royal Institution of Chartered Surveyors, which is so closely allied to the landlords in the farming industry.

The Minister has a very important and firm responsibility. Surely the Bill, with its extreme partiality on the subject of arbitration, will create a precedent if passed in its present form. That precedent will make it clear that the Government are showing favour to one side in a dispute. The establishment of a weighted system of so-called arbitration will show that the Government favour the landlords against the farmers.

The statute book is littered with legislation over the years on the problem of the landlord-tenant relationship. Since the war we have had the 1948 Act, the 1958 Act, the 1968 Act the 1976 Act and now, possibly, the 1984 Act. I ask the Minister to take back the Bill and return with one that deals with the anomalies to which I have referred. Such a Bill would be fairer to the farmer as well as the landlord, and all sides could agree to it.

6.55 pm

Sir Paul Hawkins (Norfolk, South-West)

I congratulate my hon. Friend the Member for Penrith and The Border (Mr. Maclean) on an excellent speech. I went through the same agonies of waiting for an agriculture Bill before I made my maiden speech. Unlike many hon. Members, I waited for five months, and I never thought that one would come up. I was taunted for never speaking. I also congratulate my hon. Friend on remaining in his seat while the rest of the debate continued, a practice that we seem to have forgotten these days

Although I did not agree with everything that my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin) said, I agreed with his idea of cutting down the size of larger holdings. I should have thought that 1,000 acres of grade A land would give anyone a good living for himself and his family. That would enable many more tenants or owner-occupiers to farm on their own.

I declare an interest as a former agricultural valuer, an arbitrator on the Lord Chancellor's panel, and a member of the despised Royal Institution of Chartered Surveyors. However, I was turned out to grass a long time ago. Even 20 years ago, before I came to the House, there were demands for changes in the laws that regulate relations between landlord and tenant. There were the Acts of 1948 and 1958. I was sent the bible of those times, the 1926 Act, when I was a prisoner of war. It was the only Act that I knew anything about when I came back from the war. Of course, the Government promptly introduced new legislation. The measures that were introduced were excellent for their time, but the massive changes in fanning, particularly machines replacing horses and horsemen, the use of fertilisers and pesticides and new strains of seeds, meant that the old regulations needed replacing.

Anyone who wants an insight into the great changes in East Anglia should read the wonderful little books by George Ewan Evans. He, more than anyone else I know, has captured the changing scene, for a whole rural culture was swept away with the horses and the village industries that were built around them. There was the terrible rural depression of the late 1920s and early 1930s, when my firm let an estate of 3,000 acres, with six or seven farms, for nil rent for five years. Men were paid 8s. 6d. a week. That, together with a massive increase in taxation on land, meant that estates had to be broken up. Some landlords sold and others took land in hand. Some brave tenants—it was brave of them at that time—bought their own holdings.

Since that time there has been a steady erosion of tenanted land, coupled with a most extraordinary leap in land prices. I give an illustration from my own knowledge. In the mid-1930s my former firm sold 3,500 acres of land in north Norfolk for £10,500 — approximately £3 an acre. By the mid-1950s the value was still only about £30 or £40 an acre, yet today that same land, which I know well, is worth more than £2,000 per acre. Thus, new entrants, trained men and women, coming from agricultural colleges, just cannot buy unless they have millionaire fathers, or fathers who already own land.

There were few farms to let even before the Labour Government introduced what I call the crazy idea of inherited tenancies. In passing, I should say that the National Farmers Union cannot be absolved from blame for that piece of legislation. Succession not only killed off the last chance of new entrants, but froze the position of certain fortunate families that were already tenants. From then on, the position became quite impossible. No land agent, however much he wanted tenants, would let his farm, except possibly to a childless man of 70—and even men of 70 have been known to work miracles. For a farmer to know that neither he nor his son is likely to get possession for perhaps 100 years, or, if he sells with a tenant in possession, he will lose £700 an acre — although my colleagues would say that it is more than that — naturally deters nearly everyone except the Crown, universities and the Church from renting. Those institutions have a good record, as opposed to that of the more recently introduced bodies that have come to buy land in the countryside. The motto was to take in hand or to sell with vacant possession, and that became the only policy, and a disastrous one.

Here I must be critical of some of my profession. The habit today is to sell off farm houses with five to 20 acres and the remainder, say, 500 acres, is split into two or three blocks aimed entirely at the neighbouring farms. Thus, some farms get bigger, there are fewer complete family farms for sale, and none for rent.

Finally, the pension funds and insurance companies, seeking a place for their money away from the galloping inflation that was created by the Labour party, started investing in East Anglia in a big way. Such a policy has mainly been confined to East Anglia and Lincolnshire. I have always welcomed City money into agriculture, but the price of land was driven up far too high. Then, being greedy, such companies wanted not only the landlord's rent but the tenant's fanning profit. Today, tens of thousands of acres are being farmed by City companies using managers or foremen. The end result has been less land for family farmers and a great deal of change in the everyday life of the countryside.

Mr. Bermingham

Does the hon. Gentleman agree that if one destroys the succession of tenancies and therefore creates more land available for sale, that will give the City institutions, with their pots of gold, even greater opportunities to acquire farms and to increase holdings, and thus, in turn, reduce the amount of land available for tenants to operate in future?

Sir Paul Hawkins

There must be more land made available for tenancy, as there was before the war. One has to open up the market. There are many ways in which this can be done, and I shall suggest some.

While I am on the subject—this has been mentioned before—I hope that the Chancellor will stamp on the business expansion scheme being used to buy up farms. It could not have been meant for that purpose, and it is another factor making less land available for genuine farmers.

The birth of the Bill came after considerable pressure was put on my right hon. Friend the former Minister of Agriculture, Fisheries and Food—now the Secretary of State for Energy—who decided that he would put the onus for producing agreement on the shoulders of the NFU and the CLA, and set a deadline. I have the greatest admiration for my right hon. Friend's energy and for the way in which he worked in Europe, but I always felt that he did not fully understand the way in which the countryside works. As a general rule, we do not go in for great disputes between landlord and tenant; they work hand in hand. My right hon. Friend set up the idea that we had to place two people who were opposed against each other. He also did not appreciate that the NFU does not, in the main, represent the views of either tenant farmers or younger, would-be farmers.

Be that as it may, the CLA produced suggestions by the deadline, but the NFU did not. Later, the two parties came together, but too late for the last Parliament. Finally, the Bill was thrown into the lap of my right hon. Friend, the present Minister, and we are all glad to see him in his office. He made worthwhile improvements to the Bill during its passage through the other place, but he will, I know, admit that it will not achieve the objective of substantially increasing the number of farm tenancies. This is a great missed opportunity and a disappointment to many, including myself.

I admit that it is a framework against which further improvements could be made, given the Chancellor's backing for fiscal reforms and my right hon Friend's determination—which I believe he has—to help family farmers. All those whose lives are bound up with agriculture, as mine has been all my life, know that, despite the enormous services that agriculture has rendered to the country in war and peace, it will enter a testing and trying time in the not-too-distant future. Out of this may come some good, because family farmers, and small farmers in particular, are usually thrifty and do not have a heavy burden of mortgage and other debts around their necks. They will survive, and I hope that they will increase in number.

I have spoken at some length on the history of the Bill and what has made it necessary. Now, I go on to deal with some of the main provisions. Clause 1 contains a rent formula, but I should have preferred the Scottish formula, as it is shorter and clearer. However, it is now as good as we can get it and most valuers and arbitrators in the countryside with whom I have spoken believe it to be workable and fair.

Mr. Maclennan

What has been eliminated from the Scottish formula? I think that many would share the hon. Gentleman's views.

Sir Paul Hawkins

I know that the Tenant Farmers Association, an excellent and practical body, which grew up only because the NFU did not represent tenant farmers' views, wanted the words, "earning capacity" added to productive capacity. I do not see any reason why that should not be in. I cannot believe that any arbitrator can ignore the likely profitability when fixing a rent. I should not have done so. One has to know whether the holding will be profitable, and there is no reason why an arbitrator should not take that into account, even if it is not set out in the Bill. I hope that the Minister will confirm that when winding up the debate.

Mr. Mark Hughes (City of Durham)

I am fascinated by what the hon. Gentleman is saying. Clearly, if what he is saying is that, whatever is in the Bill, the arbitrator will go his own sweet way, we can have everything that we like in the Bill. If that is what he is saying, he is saying there is no need to amend the Bill because, whatever happens, arbitrators will take this factor into account. That is a curious proposition.

Sir Paul Hawkins

No, I do not think so. Anybody who reads the rest of the clause knows that he has to take every piece of information into account, and profitability must be one of the factors. I was going on to say that I hope that the Minister when winding up the debate will confirm that there is nothing to prevent the arbitrator from taking account of profitability when arriving at rents. I should have thought that that was common sense.

That also reduces the likelihood of the arbitrator being taken to court, of which I was always fearful in the last few years when I was an arbitrator, under the old formula. I might have been taken to court for ignoring key money and payments to get into a farm, but it was not right to take those payments into account when assessing a proper rent.

Clause 2 concerns succession, and I think that we have got it right. New tenancies will have no right to succession, and this must be correct when trying to open up the market. Equally, everyone can see that it would be grossly unfair and politically impossible to justify taking away rights that are already there.

For once, "clause four" is not a dirty phrase. The provision for the nomination by a tenant of his possible successor is welcome but I hope that the Minister will re-examine the clause. Surely if a tenant is ill, or wishes to transfer his tenancy, he should be able to do that before he is 65. It is ridiculous that he should have to wait until he is 65 to begin the process of obtaining the landlord's permission and going to the lands tribunal. If a person wants to retire at 58, why should he not be able to start the process then?

The provisions dealing with notice to quit and other matters are widely welcomed because they tidy and update the law. The only unnecessary controversial matter involves the appointment of arbitrators. The Minister wishes to give up that not very arduous task and to hand it to the president of the Royal Institution of Chartered Surveyors. I am a member of that institution. I disagree with claims that it is biased or that it acts mainly for landlords. It does not. I think that it must act for more tenants than landlords because there are more tenants than landlords. I should prefer the Minister to retain his duty. If he has to get rid of it, I should prefer him to transfer it to another body — the Central Association of Agricultural Valuers—because it has the expertise.

Objections about the president of the RICS are nonsense and arise only because few people understand how the appointment of an arbitrator works in practice. An arbitrator is not often needed. A good agent of a landlord and the tenant will usually be able to reach agreement. The valuers representing the landlord and the tenant will agree on a fair rent in 90 per cent. of cases. They are practical people and know the job. Only when some frightful bitter clash occurs— perhaps about someone stamping on a nest of eggs—does trouble arise. If the valuers cannot agree, they ask someone to appoint an arbitrator, if they cannot do that themselves, but in 99 per cent. of the cases the arbitrator will be agreed between the two valuers.

Lack of agreement over figures and rent is rare, but valuers not agreeing on an arbitrator is even rarer. If the president of the RICS has to choose an arbitrator, he will have the same list as the Minister — the Lord Chancellor's panel.

I believe that the president will be impartial. No one would deny that. He would be thrown in boiling water by his members if he were not. It is strange that people should believe that chartered surveyors act only for landlords. It is nonsense, but it is a common feeling abroad. That is why I should like the Minister to reconsider and take the duty back into his own hands. If necessary, the parties should pay fees for the work done by four civil servants.

Although I cannot find much fault with what is in the Bill, I find fault with what is left out. I have a bee in my bonnet about smallholdings. I have served on a smallholdings committee for 21 years. Hundreds of fine tenants in the fens are farming and bringing up families in a right and thrifty way. They do a first-class job. But their land is being whittled away. Last week Norfolk county council sold 900 acres. What for? For a swimming pool and a school. It will get the school some time, but it will never be able to buy the land again.

The Bill tries to put a ladder into agriculture. Why cut off the lower rungs? We should have some control over land which has been acquired with foresight. I urge the Minister to take powers so that his permission has to be obtained before sales are made.

I am convinced that we should have provision for retirement before 65. How can I justify that at my age? I can do it only because a farmer, as a self-employed person, can collect a jolly good pension, whereas Members of Parliament have to stay on for a long time to earn a decent pension.

The Bill could have included a code to deal with the common practice of forming partnerships between landlords and tenants. A code is needed to set out the guidelines. Fixed-term tenancies with safeguards should be encouraged to help young entrants.

I am convinced that land owned by institutions such as pension funds and insurance companies should be let to real tenants, not to an offshoot of a company. In East Anglia and Lincolnshire—I know that Lincolnshire does not like to be included with East Anglia—that would make a difference and enlarge the tenanted sector significantly.

The National Coal Board and Vauxhall pension funds, Guardian Royal Exchange and Hill Samuel are farming tens of thousands of acres and are protected from some tax payments. Surely we should do something about that. There is evidence that on estates which, prior to sale to an institution, comprised many tenanted farms, none now exist. If the Minister did something about that, he would implement one of the major recommendations in the Northfield report.

I hope that the Minister will treat the Bill as the beginning, not the end, of measures designed, with the help of the Chancellor, to build up the tenanted sector. That is the only way that young entrants can be given a chance to farm on their own.

I hope that the Bill goes through quickly, with few amendments, so that we can join in pressing the Chancellor for more fiscal and other reforms to widen the tenanted sector and give hope to many hundreds of would-be tenants.

7.18 pm

Mr. Robin Corbett (Birmingham, Erdington)

The stated aim of the Bill is to increase the number of farms to let — at least, it was when the Bill was first unleashed. The Minister tonight put the brakes on that ambition and spoke in terms of slowing down the rate, or stabilising the number of tenanted farms available. Sir Richard Butler of the National Farmers Union, after the deal had been struck between the NFU and the Country Landowners Association, said that the measure would help to provide more land to rent. That flies in the face of the facts.

The percentage of tenanted land fell from just over half—51 per cent. —in 1960, to 43 per cent. in 1978, and it is now estimated to be about 33 per cent. If that trend continues, by the year 2020 under 25 per cent. of farm land will be tenanted.

The Government, who are so keen to tell councils how many dustbins they may empty each day, how many home helps they can employ and what money they can spend, can do something about the fall in the number of tenanted holdings if they want to.

The National Farmers Union has done no more than the Government. It has shed crocodile tears over the decline in the number of tenanted farms, but nothing else. The Government have the power to do something. They can tonight announce an immediate moratorium on the sale of county council smallholdings which they force councils to sell.

The Minister appears to be questioning my use of the word "force". What does he think is the effect of rate capping and cuts in local government spending? That is the real engine that is driving county councils. I very much take the point made by the hon. Member for Norfolk, South-West (Sir P. Hawkins), on the basis of his experience, about the strength of commitment and the genuine contribution to our rural areas of many of these county council smallholdings.

The Government can announce now, somewhat belatedly, that they will amend the Bill to put into effect the recommendation, in para 668 of the Northfield report, of a limited extension of publicly-owned agricultural land with the specific objective of making more farms available to let. No one could accuse the Lord Northfield of being anything but the most mild and moderate of men, in no way a militant, yet that was a unanimous recommendation in his report.

When, at meetings with the NFU and the CLA—this is going back to 1981—those bodies were asked to go along with this as the only real way in which to create more tenancies, both organisations shied away from it. Many of us on the Opposition Benches believe that even that proposal in the Northfield report was far too modest, against the background of our aim to end the system of private landlords in the countryside altogether by taking all tenanted land into public ownership. Let me make it clear immediately that by this we mean the state as responsible landlord and not in any sense as fanner. The National Farmers Union and the Country Landowners Association——

Mr. Richard Body (Holland with Boston)

Is the hon. Gentleman aware that at Sutton Bridge in my constituency there were 1,000 nationalised holdings, reduced eventually to 250 and later denationalised, and that not one tenant who can remember state ownership and the Ministry of Agriculture as landlord would go back to that system now?

Mr. Corbett

I did not know, and I am grateful to the hon. Member for telling me. I did say, however, that our policy envisages the Government as a responsible landlord. I do not want to go into this in any depth, but our case is that the Government will make a more responsible and better landlord than the private owner.

The NFU, the CLA and the Government claim that the Bill gives life to the agreement reached between the farmers and the landlords. In the form in which it comes to us it does no such thing, because amendments in another place have blown a hole in that agreement, rendering it next door to useless. In essence, the deal between the farmers and the landlords was that the succession rights for new tenancies would be done away with, in exchange for a rent formula that moved away from the open market formula. That is no longer in the Bill and we are left with the crazy phrases "prudent and willing landlord" and "prudent and willing tenant". Surely this yardstick is near enough the open market formula to make no difference.

Comment was made earlier on the other missing ingredient, supported by the Tenant Farmers Association set up by National Farmers Union members — any reference to earning capacity. If this is the best that the Government can do—to draft, in subsection (3) on page 2, a sentence of 112 words—and if this is to be the start of the matters that the arbitrators must take into account, we are going to get into all sorts of trouble.

The bogey of succession has been used to bolster the argument for this Bill, but it is worth reminding the House that it was the National Farmers Union itself, and others, which in 1967 asked for this right of succession. In Scotland a widow and her two sons were thrown off a marginal farm in the Highlands which they had worked with the father. The NFU of Scotland started a clamour for protection and succeeded in putting it into a Bill before Parliament at the time. Similar situations had arisen in Wales and the Farmers Union of Wales, which does not often see eye to eye with the NFU but which did this time, asked for and was given the same thing.

I must say to the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) that when it is realised in Wales tomorrow morning that the Liberal party has been in the Lobby tonight supporting the move to end the succession of tenancies, he will have some very crowded surgeries and a bulging postbag from angry farmers who will feel, rightly, that they have been let down by his party.

Why has the NFU changed its tune? If it thinks that by cutting out succession it is going to cut rents, it had better think again. No one, other than a handful in Agriculture house, would swallow that one. This is, in every sense of the phrase, a friendless Bill, as demonstrated by speeches from the Government Benches today. The distinguished farmer-commentator, John Cherrington, wrote in the now defunct British Farmer and Stockbreeder, the NFU house journal: I cannot see any reason at all for changing the present Act in favour of non-succession, term or other tenancies"— qualifying that with the words: unless a really worthwhile reform of rent-fixing could be evolved. By worthwhile I mean one that could relate rents to productivity. He added: Otherwise things are best left as they are unless the CLA can guarantee a fixed number of new tenancies annually. Of course, neither the CLA nor the Government can do that. Then comes the bit that I particularly like in Mr. Cherrington's trenchant piece: It is not the NFU's function to look after the landlords, who are a declining breed anyway. That is not the end of the matter. Ten distinguished agriculturists knocked another nail into the Bill's coffin in a letter to The Times on 25 October 1983: We should, however, be in no doubt whatsoever that the great majority of farmers, landowners and land agents do not believe that the NFU/CLA agreement is any more than a basis on which to build. Nothing has been built. Planning permission has not even been sought to make a start. Those who signed the letter explained that they would like much more done to create more tenancies and achieve more mobility. They mentioned tenancy transfer in readiness for retirement, fiscal inducements to retain small and medium-sized farms, a sound rent formula and taxation changes.

As often happens in debates on agriculture, the interests of farmworkers are scarcely mentioned. The Bill makes no proposals to close the scandalous gap between their earnings and those of industrial workers whose factories have not yet been closed. Not a word has been said from the Government Benches about the skills, the enterprise, the energy and the enthusiasm of farm workers which lie behind the impressive increase in output from fewer acres by fewer workers—and all for a pittance. Why is it that the Minister, when singing the praises of the industry that he keeps with our money, leaves out the contribution of farm workers? Nothing is said about taking tougher measures to control the use of pesticides and herbicides, or to pass responsibility for their control from the pussyfoot pesticides advisory committee to the Health and Safety Executive. Nothing has been said about an immediate ban on the killer 245-T or about action on the better control of additives. Nothing has been said about tying grants for farmers to environmental conditions.

Mr. Geraint Howells

What did the hon. Gentleman say on the subject in 1976? I do not think that the Labour spokesman said a word about farm workers when the 1976 measure was introduced.

Mr. Corbett

That is absolute tosh.

This friendless Bill was conceived in the equivalent of a one-night stand between the NFU and the CLA and was born an orphan. It will not live long because it will be repealed, the rights of succession will be restored and extra tenancies will be achieved through public ownership when we form the next Government.

7.30 pm

Mr. Henry Bellingham (Norfolk, North-West)

As the hon. Member for Birmingham, Erdington (Mr. Corbett) wants farm workers to receive more attention, he should accept that if we can get more people into farming and create more units, that will create more jobs on the land in the present difficult circumstances.

I join in the congratulations that have been paid to my hon. Friend the Member for Penrith and The Border (Mr. Maclean) on his splendid maiden speech.

Like my hon. Friend the Member for Sherwood (Mr. Stewart), I belong to those two organisations that put together the so-called package. My interest in the Bill also stems from the situation in my constituency of Norfolk, North-West, because there can be few constituencies with so many large private estates. As it was the cradle of the agricultural revolution, so it has been the cradle of the landlord and tenant system; a system which has played a crucial part in preserving the fabric and character of our rural economy. When it is allowed to work, the system works well. However, in recent years it has been under intense pressure, as hon. Members have pointed out, because no landlord in his right mind will relet a farm today.

There is an estate just outside my constituency which is now completely in hand, whereas 10 years ago it contained 10 let farms. I would not advocate the policy advocated by my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin), and endorsed by my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins), of imposing a form of levy on landlords. Indeed, if we can get the fiscal regime right and the Bill works, there will be no need for such tactics, which would be wholly interventionist.

About 90 per cent. of all tenanted land now falling vacant is not relet. An array of factors has caused that state of affairs. I shall come shortly to the fiscal regime. We cannot get away from the ill-conceived 1976 Act which, as my right hon. Friend the Minister pointed out, led to a sharp increase in the rate of loss of tenanted land. Many aspiring young farmers were disappointed and frustrated over what occurred, and I am glad that the NFU now realises the folly of its support for that Act. It is a pity that the hon. Member for Aberdeen, North (Mr. Hughes) does not also recognise the folly of those who supported that measure. Any attempt to reverse the trend is welcome. However, I believe, with many others, that the Bill should be wider ranging and cover many other aspects of agricultural holdings. In some respects it falls far short of that, but it is a move in the right direction and we must be grateful for small mercies.

Real benefits will flow from clauses 3 to 11. I welcome the extension of the Minister's discretionary power under section 2 of the 1948 Act. I also welcome the greater encouragement for voluntary retirement through the extension of the inter vivos succession arrangements. I applaud the widening of the rules of eligibility for succession to include the widows of tenants.

I do not necessarily welcome, but I do not object to, the transfer to the president of the RICS of ministerial responsibilities in connection with the appointment of arbitrators. There is much good in the later clauses of the Bill, but I shall concentrate first on the first two clauses of the measure.

As the Minister pointed out, a great deal of work was put into clause 1 in another place. Indeed, as he said, eight different rent formulae were put forward. The first part of the revised formula is workable and is a great improvement on the 1948 Act, as amended by the 1958 Act. The only hesitation that I have is over the removal of the words, could reasonably be expected to profit from farming the whole holding. That is the simple earnings capacity point. My local NFU and the tenant farmers association have expressed concern about the removal of those words, which could easily be reinstated in Committee. Perhaps that will happen.

Many farmers in my constituency have told me that they do not want undue protection from market forces. They accept that they cannot expect to reap the rewards and successes which accrue from having freedom in the market place without at the same time being subjected to the full rigours and disciplines of market forces, a point made eloquently by my hon. Friend the Member for Penrith and The Border. Is that not what we have been preaching since we came to office nearly five years ago?

Freedom in rents is one of those many disciplines, and that is why I have grave reservations about that part of clause 5 which orders arbitrators to disregard appreciable scarcity. In that part of the Bill we are trying to get the arbitrator to disregard those ridiculous, fancy and silly rents that are set in special situations. As Lord Belstead said in another place, we are talking about disregarding excessively high tender rents. That is laudable and I support it. My hon. Friend the Member for Norfolk, South-West said that that is what arbitrators do at present. While I support giving them discretionary powers, am concerned about giving them mandatory powers, because a mandatory disregard of scarcity would create a totally artificial set of tenants and artificial rents, and that would be contrary to Conservative thinking. If that part of the rent formula is not amended, we shall be in danger of discouraging landlords from letting farms.

In that connection, I will give the example of three farms at present let at £45 per acre. One of those farms comes up for reletting and goes out to tender, and tenders come in at between £65 and £85 per acre. The sensible landlord will compromise and pick a middle figure of £70 to £75 per acre. The arbitrator, on the other hand. cannot adopt those sensible tactics, which discount ridiculous tenders. He must discount all scarcity in the market. He may, therefore, pick a figure of £50 per acre.

There is even more to it than that, because there could have been an element of scarcity value in the original rent of £45. Such a mandatory disregard could lead to a special class of specially protected tenants, which would not be in the interests of the industry. Although I support the formula in general, I hope that we can improve on it in Committee.

Talk of two classes of tenants brings me to the important clause 2. I welcome it in general and the amendment that it makes to the succession provisions of the 1976 Act. I appreciate the reluctance of the Government to introduce an element of retrospection, but I hope that they have considered the consequences. Let us do that, going back into the sticks and examining a farm let in 1960 to a 40-year-old tenant who dies in 1985. His son takes over. He dies in the year 2020. His son, if he qualifies, will probably automatically succeed his father. Meanwhile, consider a neighbouring farm let to a 40-year-old in 1985—after the Bill becomes law-who dies in the year 2020. Unlike the first farmer, his son will not succeed.

We are storing up problems for the future and there could, in 30 or 40 years' time, be a serious outcry. Therefore, although I do not go so far as my hon. Friends the Members for Weston-super-Mare and for Dorset, South (Viscount Cranborne), there is a compelling need to restrict the existing succession rules to one succession only. The Minister may ask what would happen to the NFU-CLA package. I do not see the NFU going to the stake on this, and I have illustrated the injustices that could take place if we do not amend these provisions.

I said at the outset that the Bill was a step in the right direction. It would be wrong to give the impression that it will open the floodgates and let on to the market many new farms to let. To have any effect, the Bill must be combined with a move by the Chancellor of the Exchequer to reduce fiscal disincentives. The 1981 and 1983 Budgets were a move in the right direction, but—as my hon. Friend the Member for Weston-super-Mare pointed out — there is a long way to go on CCT, VAT and investment income surcharge. We do not want any special treatment for private landlords. We are asking for fairness and for the same treatment as institutions and public landlords enjoy. I hope that next week the Chancellor of the Exchequer will open up the argument and try to redress the balance. Unless he does, the effect of the Bill will be minimal.

Perhaps I was over-ambitious when I said that the Bill should be much more wide ranging. However, it is only once in a blue moon that we have a chance to restructure and overhaul the system of agricultural holdings. Why should the Bill not go further and include further measures on early retirement? That point was made by my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills). Why could the Bill not include clauses on term tenancies, as the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) suggested? Why should there not be measures about smallholdings? I would support a clause that dealt with that front in much more detail.

Hon. Members on both sides feel strongly about the landlord-tenant system. That has been made clear on the Liberal Benches today. That system is the fabric of the rural economy. Are we to let a golden opportunity slip through our fingers, or are we to take a grip of the Bill in Committee and turn what was destined to be a small and moderate measure into a far larger, more constructive and comprehensive Bill on which we can look back with pride?

7.43 pm

Mr. Gerald Bermingham (St. Helens, South)

My hon. Friend the Member for Birmingham, Erdington (Mr. Corbett) likened the Bill to a marriage. It must have been a fairly short marriage. The product of that marriage is a Bill which in no way seeks to serve the future. It may be argued that the object of the exercise is to free more land for tenancies and tenant farmers. I would welcome that, as would many other hon. Members. It may be argued that the Bill is designed to create more smallholdings. I would welcome that, as would many other hon. Members. However, it does little or naught to achieve those ends. Indeed, the Bill will destroy a number of smallholdings and, in time, a number of tenancies.

The reason is simple. In the 1977 Act, security was given to tenants for three generations. That security is to be removed, although as the hon. Member for Norfolk, North-West (Mr. Bellingham) mentioned, even in the present Bill an anomaly will be created in respect of the man who begins farming in 1960 and dies in 1984, as opposed to the man who dies in 1985. That is iniquitous and cannot be justified. The Bill will create two classes of tenant farmer—those who hold under the 1977 Act, and those who will hold under the Bill.

Some may ask, what is the advantage of the succession of tenancies? Many Government Members would argue ferociously for the retention of the right to pass on the fruits of one's labour by will or deed to one's sons and grandsons. Why should it not be argued that tenants have a right to pass on the benefits of their efforts and investment as tenants to their sons and grandsons? Why should the hereditary or succession principle not apply to the tenant as it does to the landlord?

The Bill seeks to remove from the tenants the right that they achieved for the first time in 1977—the right to pass on to one's family, unrestricted, the results of one's efforts. It was argued in 1977, and could be argued today, that if there is a family interest in a business—if the farm is to pass on to the next generation—there is an incentive to invest. The operation of that principle must be in the interests of agriculture. However, in the interests of the landlords, that small right is now to be clawed back.

The hon. Member for Norfolk, South-West (Sir P. Hawkins) gave the example of land costing £3 an acre in the 1930s which is now worth £2,000 or more an acre. That shows one the incentive for destroying the tenant's interest. It is in the landlord's interest to get vacant possession. It is in his interest for two reasons. First, he can let the land out. I will refer in a moment to the gobbledegook in new section 1, especially subsection (3). The landlord will be able to let out the land for the maximum amount of money. Alternatively, he can sell the land because the tenancy has lapsed. Whether one is selling land or houses, the situation is the same. In the days of Rachman, landlords used to clear out the tenants in order to get better prices. Property speculators used to buy up rows of tenanted houses in industrial cities with a view to removing the tenants and selling the houses with vacant possession. A farm with vacant possession is worth much more.

We have heard about four-way sales. Five hundred acres are sold. Twenty acres are sold with the house as a country retreat for some rich businessman and the remaining land is divided into two or three parcels and sold to adjoining landowners. We know the problem which has been caused. The effect of all those sales is to concentrate the land in fewer and fewer hands and to reduce the amount of land available for letting.

The City institutions and pension funds gobble up the land and buy up subject to tenancies. They know that they have only to wait. Now they will know that they have only to wait for one tenant to go, as opposed to three generations. Do not let us fool ourselves that reducing the number of stages of tenancies will be a disincentive to the institutions. It will provide a golden incentive to the institutions to buy. That will not enhance the chance of the young farmer or the young person who wishes to become a tenant farmer. When the institutions have acquired the land, they amalgamate estates and farm in larger units. They believe that there is money in farming in large units, and it may well be so. The incentive is there. They farm either directly or through their own management companies, or in large blocks, with perhaps a tenant for each large block. The number of farming opportunities is thus reduced, as are the opportunities for employment in the countryside.

The philosophy behind the Bill is a bad philosophy. It is not in the interests of the farming worker, the farming community, the young farmer or the person who wants to enter the world of farming. The world of farming has served this country well over the centuries. At one end of it there is the smallholding. At the other, there is the large-scale landowner. In between, for centuries, there has been the tenant farmer. Unless land is made available for them, the tenant farmers will rapidly become a dying breed, and the Bill is not the way to provide that land.

The case is similar for the smallholders. The Bill does nothing to protect smallholdings. It is a tragedy that county councils are being forced to sell their smallholdings. The hon. Member for Norfolk, South-West made a telling point when he talked of the importance of smallholdings in the structure of the farming community. It is not possible to preserve or expand that important sector if land is not made available for smallholdings. The Government's policy in forcing local authorities to dispose of land is not productive. Indeed, it is detrimental to the farming process.

There is nothing in the Bill to protect the future of horticulture. It is important to have tenancies in that sector as well. In clauses 2 and 4 and schedule 2 we see the complications and the gobbledegook, which are merely a recipe for disaster for tenants. It has been observed that there are 112 words in clause 1(3), but when one boils it down what does it say? It has the odd comma to enable the reader to pause for breath but it, too, is merely a recipe for the landlord getting as much as he can for the land. It is not a recipe for the controlled development of rents.

I would welcome the opportunity — perhaps in Committee—to see whether we can tear subsection (3) apart. It will not create economic rents that can be afforded by the young tenant farmer. Quite the contrary—it will create a market place in which the person who can afford to pay the most will get the land. That is not the way in which to get young entrants into the farming world.

The hon. Member for Norfolk, North-West said that we must be grateful for small mercies. The only small mercy that I can find in the Bill is in clause 8. I have never had a great love of Ministers appointing anyone, but I welcome the suggestion in clause 8 that the appointment should not be made by the Royal Institution of Chartered Surveyors. I can see the philosophical argument behind that, as the RICS is involved in management and representation of the tenant.

If the Minister wishes to shed that responsibility, some of us would be tempted to ask him to shed many more of his responsibilities, including his present job. If we must be content for him to shed just that one responsibility, perhaps it could be shed to the Central Association of Agricultural Valuers. The Bill is strongly like the curate's egg—I have found one good bit and the rest is bad. It does nothing to enhance the circumstances of the tenant farmer and I ask the House to reject it.

Several Hon. Members

rose——

Mr. Deputy Speaker (Mr. Paul Dean)

Order. It might help the House to know that the winding-up speeches are expected to begin at about 9.10 pm and that there are still eight hon. Members who hope to speak.

7.53 pm

Mr. W. Benyon (Milton Keynes)

It is a long time since I heard such a depressing speech as that made by the hon. Member for Aberdeen, North (Mr. Hughes). Like the Bourbons, he and his colleagues have learnt nothing and forgotten nothing. One would have thought that, in view of what has happened in the private rented housing sector, which occured without any threat of nationalisation, they would have learnt something. The hon. Gentleman should imagine that he had a farm to let and I came along to him and said, "If you let that farm, I shall take it away from you as soon as I get the chance to do so." Does he think that that is conducive to getting more owners to let?

I must declare an interest in the let agricultural sector. Of course this Bill is a modest measure. It must be modest, and I hope that it is the start of much more.

Mr. Maclennan

Why does the Bill have to be modest? The Government have been in office for five years. There is no inevitability about that.

Mr. Benyon

In this matter, on which there is much to be said on each side of the argument, it is necessary to progress slowly. If we go too dramatically and too quickly, we shall fail to take one or other side of the industry along.

Most of us can suggest additions to the Bill or changes that we would prefer. However, to describe it as a landlords' charter is to fly in the face of both history and the facts. We know that its main provisions stem from the 1976 Act which introduced two successions and thus almost completely dried up new lettings. We should remember that it was within two or three years of that measure coming into effect that the Northfield committee was set up by the then Socialist Government. The committee reported: Ministers should confer with the interests concerned. i.e. the CLA and the NFU, with the objective of agreeing and implementing amendments to legislation as soon as possible. The Country Landowners Association and the National Farmers Union did just that. No one should belittle their achievement in reaching an agreement. Of course the agreement does not satisfy everyone. It would be strange if it did. The fact that some landlords and some tenants object to it means that the formula is just about right. Moreover, it has received overwhelming support in the CLA, the NFU, the young farmers' clubs, the Tenant Farmers Association and, initially at any rate, the Royal Institution of Chartered Surveyors.

People say, "Why worry about present circumstances? We have heard that the number of tenanted farms has decreased steadily. Why not accept it and let the system wither away?" I argue strongly that the landlord-tenant system is needed more today than ever before. Several of my hon. Friends have already said that. The capital requirements in farming today are large and increasing, and it is a huge advantage to new entrants into the industry if land costs do not fall on them. The tenant's capital is enough in all conscience and to remove land cost is extremely good. Moreover, modern farming sorts out the men from the boys. Contrary to popular belief, Just as many people go to the wall in farming as in any other industry. All of us who are involved in the industry know that many owner-occupiers would like to let their land but dare not do so because of the conditions that now apply.

Tenure is only part of the problem. It is essential that the Bill, which I hope we shall pass into law, is reinforced by my right hon. Friend the Chancellor so that the imbalance between the owner-occupier and the owner of let land can be rectified. There is another factor — confidence. Farming is a long-term matter. Even with the Bill, landlords and, more importantly, their advisers will take a long-term view. If the industry becomes the type of political football pitch that has played such havoc with the private rented housing sector, that confidence will not be forthcoming. The sufferers will be not the landlords, butt the potential entrants into the industry.

Sir Peter Mills

On this question of confidence and therefore more land to be let, does my hon. Friend, as a landlord, believe that if some form of retirement scheme for farmers plus an insurance policy to cover them at the end were introduced, as suggested by the Tenant Farmers Association, more land could be let?

Mr. Benyon

The answer is yes, but, speaking as a landlord, I would have that only as an option. I think it must be an agreed option, if it comes in at all. That is very important.

As I was saying, the only sufferers if this matter becomes a political football will be those who are trying to get into the industry.

This measure has the overwhelming support of the rural community. It needs to be backed up in the ways that I have described; but if we get it, and if we are left alone, I believe that we can breathe new life into this very well-tried system which has brought so much benefit in the past and which I know can do so again in the future.

8.1 pm

Mr. Robert Maclennan (Caithness and Sutherland)

I owe it to the hon. Member for Milton Keynes (Mr. Benyon) having intervened in his speech, to say how profoundly I disagree with the theme that ran through it. It characterised a number of speeches, though happily not all, from the Government Back Benches, because it displayed the kind of complacency about what is happening to the structure of agriculture in this country that is deeply disturbing, not only to those who are established in the industry and to those who aspire to get into the industry, but to the young people who live in the country and are seeing a tendency develop which has to be arrested if our rural communities are not to wither away.

The speech of the hon. Member for Weston-super-Mare (Mr. Wiggin) injected a note of healthy scepticism about what the Government are doing. Although I do not propose to follow his example in voting tonight, I thought he talked more sense than all of his colleagues put together.

The hon. Member for Norfolk, North-West (Mr. Bellingham) said that it was only once in a blue moon that it was possible to legislate on agricultural holdings. Why is that so? There is no reason in the world why a Conservative or any other Administration should not review agricultural holdings legislation and bring forward measures to arrest the decline in the tenanted sector. We have sat in this House for too long waiting for this legislation.

Mr. Bellingham

The point I was making was that if we do not get the Bill right there probably will not be another chance in the next 10 years or so of Conservative Government to do so.

Mr. Maclennan

That may be the point that the hon. Gentleman was making, but it does not seem to me to be a very good one. If there is a need for legislation, that legislation must be brought forward. What the industry is absolutely clear about—no one who has spoken in this debate has denied it—is that the process of change is continuing apace. It has gone on almost interrupted since the first decade of this century. Agricultural tenure Bills have come and gone, and it has continued.

The Minister, in introducing the Bill, inflated its importance in the task of arresting that tendency. Although I accept the need for the Bill, or at least that part of it that deals with succession, I am highly doubtful whether it will arrest the trend. I want to say later in my remarks what I would have hoped to see included in an agricultural holdings Bill.

Those of us who are concerned about the future of the landlord and tenant system are concerned because we see its attractions. It offers an opportunity to those who are anxious to get into the industry, but do not have the capital resources to do so, to bring to farming the skills they have acquired, sometimes through education, sometimes through practical experience. It allows those who have the good fortune to own land to invest in it and to combine their capital with the tenants' skills. There are responsibilities upon both sides.

These avenues, however, are gradually being narrowed down and now perhaps a third of the agricultural land in this country is tenanted. I do not know whether the Minister would care to predict whether there will be any change in that proportion as a result of this measure. It would be an optimist who would believe that it would make a ha'porth of difference. That is not to say that it ought not to be done; plainly it should. Many on both sides of the industry see its necessity and have called for this legislation. Although I do not necessarily accept the unanimity of view of the Country Landowners Association and the National Farmers Union on this as being totally compelling, it is at least indicative and it is right that the Government should move on this issue.

There are other reasons why the tendency to take farms in hand has continued. The hon. Member for Aberdeen, North (Mr. Hughes) pointed out the economic advantages of concentration of production, the need in the low-profit industry of today to intensify production and to introduce capital in ever-greater quantities, and the difficulty of doing this in smallholdings, as well as the incentives to intensify. Of course that is correct, but it is also fair to say that the whole fiscal system is canted against encouraging the additional letting of land.

We have only to look at the different treatment of owner-occupiers and tenants under the tax system to see how very little the Government have done to rectify that. In dealing with income tax, in the owner-occupier sector the basic rates apply, whereas the tenanted sector is subject to a 15 per cent. surcharge on the basic rates. The Government have done nothing about that. Averaging is available to the owner-occupier, but not to the tenant.

As far as interest is concerned——

Mr. Robert Hughes

rose——

Mr. Maclennan

I shall not give way until I have finished my point, when I shall certainly do so.

Mr. Hughes

It concerns the point that the hon. Gentleman is making. It affects what he is saying.

Mr. Maclennan

It will affect it just as much when I have completed the point.

The owner-occupier gets full relief on interest, whereas the tenanted sector gets only limited relief. On capital transfer tax, the rate of relief for the owner-occupier is 50 per cent., but only 30 per cent. for the tenant. Ownership qualification for the owner-occupier is two years, while for the tenanted sector it is seven years.

Mr. Hughes

Will the hon. Gentleman now give way?

Mr. Maclennan

Yes.

Mr. Hughes

I am trying to follow with great care what the hon. Gentleman is saying. I think that what he should be saying is that the differentials he quoted apply, not to the tenant, but to the landlord, who gets a return from the tenant. He has not actually said that. He has said that the tenant suffers from these disadvantages, but not the actual owner.

Mr. Maclennan

I was speaking of the relief that is available to the landowner in respect of tenanted land and in respect of land in hand.

For capital gains tax purposes the roll-over relief is not available on tenanted land, but is fully available on land in hand. Retirement relief is not available in respect of tenanted land, but is available in respect of land in hand. VAT can be reclaimed by the owner for land in hand, but not for land in the tenanted sector. The Government have done nothing of importance about that.

The Government should not pose as the friend of the tenant, because there is no one in the tenanted sector, no one who would wish to let land to a tenant, who believes that the Government are the friend of the tenant. The truth of the matter is that the Government have done the minimal amount that they could do. They have shuffled off the responsibilities entirely on to the two organisations that I have mentioned.

The hon. Member for Weston-super-Mare said that he thought it was a bad thing when a Government sought only to enact what had been agreed by two such organisations. It is bad also when the Government move only when they are able to get such agreement. There are many matters on which it is necessary to move if that trend is to be stopped.

I do not propose to make a series of Committee points on the precise provisions of the Bill, as I hope that there will be an opportunity to do that in Committee. However, it must be said that the Government have not translated with any precision the agreement which was arrived at when drafting the rent provisions. There is still considerable concern in the National Farmers Union about the rent formula. The translation of that formula in another place seems curiously unnecessary if the Government are right in saying that references to the earning and productive capacity of the land are taken into account in the wider references in clause 1. If they are taken care of, I see no reason why they should not have been specifically spelt out, as the NFU wanted.

The impact of the 1976 Act on succession has been overstated. A good deal of hindsight has been employed. Conservative Members did not display similar foresight when the 1976 measure was passing through the House. The NFU has clearly changed its mind. That was a perfectly honourable thing to do, because one could not judge in advance the impact that the succession proposals would have. The hon. Member for Edinburgh, East (Mr. Strang) introduced the 1976 measure, especially the succession provisions, for honourable reasons and I have no doubt that he will have the opportunity to go over that ground again. It was a difficult balance of judgment.

I do not believe that the Bill will change very much the current succession provisions. That is not a partisan view, because it was stated in the leader that appeared in The Times. The leader writer thought that on balance it would make almost no difference. However, I think that it is probably right to move in the way that is wanted by the two farmers' organisations.

Mr. Gavin Strang (Edinburgh, East)

The hon. Gentleman will recall that we were both members of the Labour Government who enacted the 1976 measure. I am surprised that he and the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) will be voting for the Government, or will not be voting against the Bill. Is he against the qualified right of a tenant farmer's son to succeed to the tenancy of the farm? Would he like that state of affairs to apply to Scotland, or is he confining his remarks to England and Wales?

Mr. Maclennan

I am saying that the provisions that give security of tenure for three generations have not worked out as one would have hoped. Many issues must be tackled if the availability of land for tenanting is to be increased. One-generation tenancy tenure is fair and reasonable to both sides.

Mr. Robert Hughes

What about crofters?

Mr. Maclennan

Crofters are in a special position, because they do not occupy viable economic units. Without the security that they enjoy, which is security for individuals and the community, the holdings would be taken up by absentee landlords or by those who wish to establish holiday homes. The respective positions are not at all similar.

It is regrettable that the Bill does not tackle some of the issues to which several Conservative Members have alluded with, I think, justification. It would have been desirable for the Government to take a view about retirement and whether some form of statutory and obligatory retirement pension might be made available to farmers on a contributory basis, with the landlord contributing a proportion of the gross rent that he receives—for example 1 or 2 per cent. Many farmers believe that that should have been tackled by the Government. As far as I am aware, the Government have not discussed the matter with great thoroughness. They should now collect voices on that issue to ascertain where the balance of opinion lies. They should not continue to adopt their present quiescent position.

Similarly, voices have not been collected on fixed-term tenancies. There should be a mixture of different types of holding. It is sad that we are witnessing the growth of contract arrangements and partnership arrangements, which are being entered into as they offer a means of avoiding the responsibilities of the landlord and tenant arrangement. The development of a limited fixed-term tenancy sector would, given suitable safeguards, have some attractions.

I have spoken of the different treatments that are directed to in-hand land and to land that has been let out. There are specific reliefs that should be given, and given now. Rents should be treated as earned income and taxed as such, provided the proprietor properly invests in the fabric of the farm and maintains his responsibility for its capital structure. It is reasonable that the landlord should enjoy relief from VAT for repairs and new construction on the farm. It is time that the Government woke up to that.

Partial relief should be given from capital transfer tax for as long as the land remains unsold and tenanted. That relief is not currently enjoyed.

The measures in the Bill will not be sufficient to ensure a flow of land on to the market for tenanting. For that reason, I strongly support the proposal that has been made in a number of quarters for the establishment of a national land trust, which would be analogous to the National Trust. It would be empowered to borrow money from the Treasury for the purpose of buying land when it came on to the market. For example, there is a 16,000-acre estate at Belton in Lincolnshire which would be suitable for public acquisition in that way.

This would not be a move to nationalise the land—[Interruption] The Minister laughs. The right hon. Gentleman would like it to be thought that alliance Members are recommending land nationalisation. It would suit his doctrinaire book to put across that canard. This proposal would no more nationalise the land than it is nationalising the land to donate a home to the National Trust, or a picture within that home.

A national land trust would be prohibited from retaining the land and selling it later at a capital profit to private owners. It would let farm land only to tenants. It would not farm land itself, other than for short periods of non-tenancy. Its clear purpose would be to make available the bottom rung of the tenancy sector, which is not available at present and which the Government seem determined to remove by their attitude to county council tenancies.

The Minister says that it is for the county councils to decide what they do about these matters. That was not the Government's view when they recommended to county councils that they should consider that approach. I do not know why the Minister pretended that the Government were taking a hands-off attitude, when, in fact, they were strongly urging the disposal of county council holdings. The need for such a measure is patent. Tinkering with the problem, as the Bill does, will go nowhere towards making land available for those who want to get into the industry, set up family units and bring life back into under-developed or, in some cases, over-extensively capitalised units.

The hon. Member for Weston-super-Mare referred with favour to the view of Oscar Colburn, but he might have added Watson Peat in the Northfield committee's minority report on the possible limitation of the size of holdings. Those ideas merit urgent consideration if we are not to see the trend continue and more land taken out of tenancy and put into ever fewer hands. Agricultural land prices in Britain are getting out of line with prices in other continental countries, because British prices are as much as 30 per cent. higher than those in Europe.

The concentration process is continuing, with more and more farmers seeking to extend their holdings. That tendency is unhealthy. It means that the infrastructure will be based on fewer and fewer people living in the community. A number of Conservative Members will be whistling in the wind about rural deprivation if the people who support and are supported by these services disappear from these rural areas.

I hope that this is not the last Bill on agricultural holdings in the lifetime of this Government and that we shall see a more radical measure which takes true account of the problem.

8.23 pm

Mr. Nicholas Baker (Dorset, North)

I shall try to be brief, but I point out that we have heard extraordinary speeches from Opposition Members. The characteristic of the speeches by the hon. Member representing the rolling uplands of Birmingham — the hon. Member for Birmingham, Erdington (Mr. Corbett)—and the hon. Member for St. Helens, South (Mr. Bermingham) and others was about the decline in the tenanted sector in agriculture. They portrayed that in some detail, but said nothing about how the decline could be reversed. The hon. Member for St. Helens, South ignored the fact that only about 10 per cent. of agricultural land is in institutional hands. Therefore, if we wish to rejuvenate the tenanted sector, we must look more at the other 90 per cent.

I am pleased that the hon. Member for Caithness and Sutherland (Mr. Maclennan), who came to tell hon. Members from England and Wales how to rejuvenate their tenanted sector, has changed his mind about the 1976 legislation.

Mr. Maclennan

So has the NFU.

Mr. Baker

The NFU has done so also. I fear that the hon. Gentleman's scheme for a national land trust will end in the same way as the groundnuts scheme in east Africa—with a bulldozer stuck in the mud. That is not the way to achieve consensus in agriculture or to open up the tenanted sector to get, as most of us want, new owners or tenants into agriculture.

I and my constituents appreciate the work of my right hon. Friend the Minister of Agriculture, Fisheries and Food in Europe. I am not impressed by the way some people interested in farming are, in panic, not only criticising members of the NFU—that is not healthy or constructive — but encouraging others to criticise the Minister who is working extremely hard in difficult circumstances to get a good deal in this tough negotiation. I believe—as does the hon. Member for Caithness and Sutherland because in October last year he wrote to The Times on this matter—that the decline in the tenanted sector, about which so many Opposition Members said nothing, was caused by much hasty and ill-conceived legislation. I take issue with the hon. Member for St. Helens, South on this point, because that legislation took away rights from landowners. That is not a healthy basis for improving agriculture, and I am not surprised it has not worked. That is what happens with the building in of security of tenure through three generations. Rights are taken away and the supply of tenanted land is reduced.

I was upset to hear the repeated threat—I hope it was just a threat, and I know that the hon. Member for Aberdeen, North (Mr. Hughes) will, if I do not proceed quickly, say it was a promise — to introduce public ownership of tenanted land if the Labour party gets the chance. Agricultural land is in many ways similar to accommodation in the private rented sector. Many people nowadays argue that Rachmanism was largely a product of rent control legislation. There is something in that point. Governments must be very careful about what they do.

I was disappointed that the previous Conservative Government were reluctant to deal with the landlord-tenant sector, but I am pleased that this measure deals with it. The tenanted sector can be damaged in two ways. First, rents may somehow be imprisoned so that they are too low. Depressed rents in the long term do not help tenants. They reduce the amount of land available for letting. Tenant farmers can be helped by ensuring that the price they receive for their products is right. The Committee should closely investigate that part of the Bill which might hold prices down artificially.

Secondly, the tenanted sector can be damaged by a long succession. I share some of the anxieties expressed by other hon. Members about relying upon a deal between the Country Landowners Association and the NFU. The House cannot contract out of its responsibilities or powers, and I am glad that my right hon. Friend accepted that point. I should not wish to see that precedent followed in future. I feel, from talking to my constituents, that the NFU does not represent every farmer any more than the CLA represents every owner or landlord of agricultural land.

I have spoken to many of my constituents who are farmers and owners of large and small amounts of land, but few believe that the CLA-NFU formula, as enshrined in the Bill, will dramatically increase the amount of land available.

My answer to the hon. Member for Ipswich (Mr. Weetch) is that, not long after the 1976 Act, I recall a meeting with about a dozen members of the NFU, all of whom were tenants who could take advantage of the succession legislation and all of whom naturally said that they would. Not one of them thought that the legislation was right or defensible, even though they were, understandably and properly, prepared to take advantage of it, as they were entitled to. I say that because the Opposition suggest that all tenant farmers take a different view.

Three things can be done to bring new people into farming. One, contained in the Bill, is to consider fixed tenancies. I do not believe that they would have a dramatic effect any more than they have had in the private rented sector. They could be for a limited period and provide a way, in the short term, of bringing more people into farming.

The other two points that I wish to make lie outside the Bill. The first, about tax changes, has been made before. I believe that they are necessary to recognise the ownership of land as a business, which it is. It is a complex business. Tax changes to make the income earned would ease the owners' taxation position and encourage the

There is a general point to be made about reducing the pressure on agriculture and agricultural land. We are losing a great deal of agricultural land. The amount of development occurring outside urban areas puts pressure on farmers to take in land if they own it. In the end that restricts the amount of tenanted land. The restriction of development to urban, developed and waste land is important, just as I think the reform of the common agricultural policy is important. Making our inner cities places in which people wish to work and live will indirectly help the tenanted sector of agricultural land.

The Bill is an interim guinea pig of a measure. I hope that my right hon. Friend will undertake to consider the position two years after the Bill becomes an Act to see what increase in the tenanted sector has occurred. If there is little result, I hope that he will seriously consider another step to open the market to achieve what I believe every hon. Member wishes to achieve.

8.33 pm

Mr. Gavin Strang (Edinburgh, East)

The core of the Bill, as has been said frequently, is the agreement reached between the NFU and the CLA in England and Wales. When that agreement was reached, it was presented to agriculture and to us as a deal whereby the CLA had made some important concessions in relation to legislation governing rents and in return the NFU had made some important concessions in relation to the security of tenant farmers and their families.

The legislation, as it affects rent, will remove what I think most people would regard as a loophole in the existing legislation whereby, in theory, arbitrators should have taken into account key money and other factors inflating rents when fixing rents. In practice, the consensus is that that has not happened. The hon. Member for Norfolk, South-West (Sir P. Hawkins) said that he feared being taken to court on that issue. The legislation removes that risk.

The deal was also presented in terms of tackling the escalation in farm rents in recent years. The hon. Member for Dorset, North (Mr. Baker) said that he thought that depressed rents were bad for tenant farmers. I am certain that inflated and extortionate rents are atrocious for tenant farmers.

What is interesting about the legislation as it affects rents is that there is already a general acceptance that it will have virtually no effect on the average level of rents fixed by arbitrators, and that if the legislation had been In operation for the past five years, the rents now fixed by arbitrators would be approximately the same. It seems that tenant farmers have achieved nothing but the removal of that loophole—of which, fortunately, arbitrators (lid not take advantage to any great extent.

Some hon. Members argue that the legislation on rents is not good enough because it may restrict them. Conservative Members have argued repeatedly that they do not want rents restricted, that they want higher rents because higher farm rents are necessary to persuade landlords to let more land. It makes complete nonsense of the deal if the new legislation governing farm rents has a negligible impact on the level of rents or causes higher rents.

The most important aspect of the legislation is the removal of the security of tenant farmers and their families which was enacted in the 1976 Act. The qualified right of the son or other near relative to succeed to the holding was introduced by the Labour Government as an act of social justice, just as we enacted the Rent Act and abolished insecurity of the agricultural tied cottage system as it affected farm workers. I believe that that legislation has worked reasonably well. It removes from the farm worker the fear that if he loses his job he is automatically out of his house.

We believe that legislation is necessary to give the family of the tenant farmer some security. In England and Wales, before the 1976 legislation, when a tenant farmer dropped dead, his son, who might have invested in that holding the bulk of his working life and all the profits of his labour, might find himself under an incontestable notice to quit. That is monstrously unjust. Those farmers' sons could be in their fifties and have spent their whole lives working the holding, like their fathers and grandfathers. It is appalling, and a measure of the extent to which the centre of political gravity has moved, not just that the Government are enacting this measure but that the NFU agrees that we should return to those days and create new tenancies, under which the family and the son will have no right to follow the father.

The 1976 Act did not provide an automatic right to succeed. I remember a much-disputed case when I was a boy about an Indian tea planter who came back to try to take over the family farm when his father died. That was under the 1948 Act as it affected Scotland. That Act was repealed by the Conservative Government in the 1950s and security of tenure was reintroduced by the Labour Government in 1966. Security of tenure is much more part of the Scottish tradition than of the tradition in England and Wales, but that does not alter the injustice that prevailed in England and Wales in the past, to which we shall return, regrettably, in the new tenancies.

The 1976 Act sought to strike a balance. There was no question of automatic succession. The son, or other relatives, had to have a connection with the holding and to have worked on it; he had to have the ability to run the holding. Most important, from the point of view of the landowners and of Government Members is that we explicitly wrote into the 1966 Act a provision whereby it was not possible for a tenant who was better off than the landlord, and who might have another farm as well, to secure the succession of the tenancy. Where the tenant had another holding, there was no question of his being able to win the right to succeed.

Mr. Jopling

I have listened with great interest to the hon. Gentleman. He is making a good case about the justification for that legislation in terms of relieving the fears of the next generation. The legislation of which he was so much the father, if I may say so, certainly relieved the fears of the first and second generations, but it left the third generation exactly as the first had previously been. What was the justification for that? During the Committee stage, which went on endlessly, the hon. Gentleman refused to tell us. If it was right for the first and second generations, can he tell us now why it was not right to continue it for perpetuity?

Mr. Strang

After a decent interval of eight years, I think I may tell the right hon. Gentleman why I never gave an explanation. I did not agree with the provision, because I thought it was inconsistent. Either a right of succession was right or it was wrong. In my opinion, it was right to have a qualified right to succeed. Instead of going the whole way, as I felt we should, a balance was struck about the attitudes of the CLA. The right hon. Gentleman has made a fair point. There was some inconsistency, but it was inevitable that, long before that stage was reached, there would be pressure from the tenants for new legislation to give a continued, qualified, right to succeed.

This Bill will create first and second-class tenancies. That is not good law. We know that the NFU has agreed because it has not been preared to tamper with the rights of its existing members. It does not care about new members or those who will take over the new tenancies. That is not its function; its function is to defend the interests of existing members. Every hon. Member knows that that is why we have the botch-up of first and second-class tenancies.

It is one thing for the NFU to take that attitude, but it is different for Parliament to enact that sort of nonsense. It is sad that we are going back to the days when the son of a tenant farmer, no matter what his commitment to the holding, or how many years he has worked on it, may be evicted at the whim of the landlord, when his father dies, with no right to challenge that decision, should the landlord want vacant possession of the holding.

There is a strong case for trying to reduce the rate of decline in the tenanted sector. That is the most we can hope to achieve. It would be difficult to reverse the trend in the short term. I do not believe that the legislation will achieve that aim. Even if I did, I would still be against it, on grounds of social justice. If the Government are serious about tackling the decline in the tenanted sector, they should do something about public ownership. They may not be prepared to go all the way, as advocated by my hon. Friend the Member for Aberdeen, North (Mr. Hughes).

A majority on the Northfield committee—there was not a majority of Labour supporters on that committee—advocated a modest extension of public ownership as a means of avoiding the decline in the tenanted sector. We are against state farming and also, by the way, against direct farming by big institutions. It is just as objectionable for Barclays bank, big insurance companies or pension funds to farm directly as to have direct state farming. The Government could have done something about that.

The Northfield committee recommended guidelines and an annual report to Parliament about the role of the landlord and the need to see that the land was let. Could the Government not have gone down that road? I do not think guidelines would be enough, but at least the Government could have tackled the problem of large institutions which have no commitment to agriculture taking over land to farm directly rather than letting it. There has also been reference to the ridiculous situation of county council smallholdings, where land which was let in the past will be allowed to go out of tenure.

It must be understood that the real reason why we are concerned about the lack of opportunities for new entrants to farming is that there are not enough farms. In one sense it is a reflection of the prosperity which agriculture has enjoyed over the last few decades, and a good thing that is. However, if we are serious about getting new farmers, we must consider farm size and we must try to restrain the continuing amalgamation of units and the reduction in the number of farms.

The deal which has been reached between the NFU and the CLA does not provide an adequate basis for legislation. It will create more injustice in agriculture and will not even achieve the modest benefits which the Minister claimed would follow the legislation. That is why the Bill should be rejected by the House.

8.46 pm

Mr. Phillip Oppenheim (Amber Valley)

I should like to echo the congratulations to my hon. Friend the Member for Penrith and the Border (Mr. Maclean), who seems to have departed for some long-overdue sustenance.

I must take to task the hon. Member for Birmingham, Erdington (Mr. Corbett). While I echo his praise for the hard work, efficiency and dedication of the vast majority of farm workers, it is not correct to represent them as the downtrodden sons of toil, as he did. Nowadays not only do they in general get a decent wage and in many cases are involved in profit sharing, but they often get benefits in the form of free houses.

One thing on which we can all agree is that the number of tenants has fallen disastrously from about 90 per cent. of farmers at the turn of the century to about 30 per cent. Superficially this may seem a good thing. After all, the Conservative party is the party of owner-occupiers, but agriculture differs from housing. It is healthy to have a strong tenanted sector because tenants tend to be small or medium farmers, although their farms are not so absurdly small as farms on the continent. Small fanners tend to be better, more dedicated, more efficient, more skilled and, above all, better stewards of the land and of the environment.

There is in Amber Valley a small number of farmers, most of them tenants of the National Coal Board, farming ex-opencast land under extremely difficult conditions. They are among the best and most dedicated dairy farmers that I know.

Perhaps most important, the tenant farmer is an essential part of British rural life, comparable with the staunch yeomanry of yesteryear. Farm tenants are in decline. Few people would even suggest that the Bill will stop the decline in their numbers, for it is the lowest common denominator of agreement between two pressure groups, the CLA and the NFU. Government by the lowest common denominator of consensus is hardly a great Conservative principle.

What are the causes of the decline in the tenanted sector? Two things above all are responsible. First, as many hon. Members said, the creation of tenancies due to the excessive security of tenure radically devalues land once it is tenanted. Secondly, the penal tax structure is a disincentive to landlords to let land.

There are two clear answers to those problems. First, the creation of term tenancies would encourage the letting of land by creating a more flexible structure. It would also create a structure of stepping stones. People could start on a small farm and work their way up, possibly eventually being able to afford their own farms. It is often said that term tenancies would lead to extractive agriculture, but that has not happened in Australia and the United States where term tenancies have worked well. Bad husbandry would be discouraged by the need for the tenant to obtain another farm at the end of his term.

Secondly, the tax structure must be changed. How can it be argued that the Exchequer benefits from the present system when measures are so penal as to discourage almost any letting of land by private landlords? The system has killed the means of raising the revenue. Therefore, it is essential to make changes so that more tenancies become available.

Recently I advertised for a working farm manager. Sadly, I had hundreds of replies. The ultimate dream of most of those people was a farm tenancy. Some were representatives of the thousands of young people who are going through agricultural colleges in unprecedented numbers. Some were hard-working and skilled farm workers who were keen to get on. All were highly competent, but few will acquire tenancies. Indeed, few will get jobs as managers, or even foremen. Instead, they will become agricultural merchants' representatives, land agents or auctioneers, and many will end as tractor drivers on large farms which, if the law were different, they might be farming in their own right as tenants.

We are increasingly seeing the inexorable decline of the great farming middle classes. The Government have a unique opportunity to reverse the process and to brighten the prospects for thousands of young men and women. Instead, it looks as though we are saddled with government by pressure groups—groups that are out of touch with their members — from a Government supposedly committed to independence and objectivity. We have thrust upon us a Bill which denies freedom of contract from a party whose cornerstone is free enterprise and freedom of action. This legislation ignores a fiscal inequity, but it is introduced by a Government committed to reducing the burden of taxation.

The Bill, by gaining the agreement of the NFU and the CLA, attempts to be all things to all men, but it has ended by being nothing to anyone.

8.52 pm

Mr. Andrew Hunter (Basingstoke)

I am grateful to you, Mr. Deputy Speaker, for calling me in what, for Back-Bench Members, are the dying minutes of the debate — a debate on a Bill which touches on matters of concern, interest and importance to a small, but none the less significant, number of people in my Hampshire constituency. Since one hon. Member still wishes to speak, I shall make only a brief speech, and also make it as quickly as possible. I shall be ultra-selective and choose only three brief observations from the points that I wished to make.

My first observation is that I cautiously, and with some misgivings that I shall deal with shortly, welcome and support the Bill. I do so because I cannot quarrel with its objectives, which are praiseworthy. As my right hon. Friend the Minister said, seemingly many hours ago, the Bill's primary aim is to arrest the decline in the tenanted sector of agriculture. That is a laudable aim. The decline has taken place during a long period. No doubt there are several reasons for it, but I do not believe that a halt in the decline can be achieved under the unaltered provisions of the Agriculture (Miscellaneous Provisions) Act 1976.

Although what is now proposed as a rent formula is not faultless, I certainly accept the need for revision. The present system of rent assessment is full of imperfections and, as other hon. Members have said, the demand for tenanted farms which is greater than the industry's ability to supply, and inherent weaknesses in the principle of comparability with the open market, have distorted matters. Indeed, it can be argued that a true open market no long exists and that, therefore, the present rent formula, which is based on open-market values, carries with it serious problems for arbitrators, landlords and tenants alike.

I entirely accept that an arbitrator should take into account, among other factors, the terms of a tenancy, the character and situation of the holding — not just the productive capacity but also the earning capacity of the holding — as well as the current level of rents of comparable holdings. Moreover, without hesitation or qualification, I accept the need to halt the creation of three generation successions. Despite what Opposition Members may say, the 1976 Act has made it virtually impossible for anyone to acquire a tenancy unless he or she is the son or daughter of a tenant farmer. Quite frankly, if and when Opposition Members argue in favour of three-generation succession, they lose all credibility in their claim to be interested in restoring the tenanted sector to health. Such a claim is indeed hard to reconcile with the threats and promises, which were repeated today, of nationalisation, a wealth tax and the record of penal taxation of the days when they were in power.

My second observation is that, although I welcome arid support the Bill, I certainly do not think it is above criticism. I think it is wrong in at least one detail; and I am puzzled about another. This evening much has been said about clause 8. I believe it is wrong in its proposal to change the system of appointing arbitrators. For the life of me, I cannot see any need for change. I acknowledge that the person appointed as arbitrator will not change, whether he is appointed by the president of the Royal Institution of Chartered Surveyors or by the Minister. However, the proposed change touches an exposed nerve of great sensitivity for tenant farmers, who might well feel that the impartiality of a ministerial appointment has been lost.

Personally, I accept the argument put forward by Mr. Richard Whittle, chairman of the Tenant Farmers Association, who, in the Daily Telegraph of 14 February, said that tenant farmers "were very dismayed" and It is a question of impartiality. He further said: Can one possibly see the RICS in any other light than a body aiming to represent landlords? The detail about which I am puzzled is that of discounting scarcity value. Perhaps I am opening myself to a charge of naivety, but I do not believe that scarcity is as simple a concept as it is sometimes made out. There are surely different sorts of scarcity value and different reasons for them. Much though Opposition Members may disapprove of it, there is undoubtedly a scarcity value if a farm comes up for leasing in the middle of prime hunting country. Some people would pay a high premium for that farm. Again—dare I mention it—some people who wish to buy a tenancy in the heart of partridge-shooting country in Norfolk or Suffolk would be prepared to pay a high premium for it, as would those who want a tenancy within commuting distance of London. The list could be continued. These are all "scarcity values". How can they be distinguished from the simplistic, narrow understanding of land scarcity? How are they to be discounted in rent assessment?

I quarrel very little with what is in the Bill, but my third observation is one of deep and profound regret for what is not in the Bill.

I accept what the Bill sets out to do, but my overriding belief is that it is not just a "modest" Bill, as it has been described, but a disappointing one. It is disappointing because an opportunity to get to grips with the diversity of problems of the tenanted sector is in danger of being passed by and lost.

The Bill has had a long gestation period of four years since its insemination with the appearance of the Northfield report. On Second Reading in another place, Lord Northfield said that the verdict must be that the Bill was a modest measure. Some people, he said, would go so far as to say that it was mean and almost counter-productive. He spoke also of its over-praised provisions, raising quite unjustified hopes about the assistance that the Bill would give to prevent the decline of the tenanted sector. I understand those sentiments.

Many matters are not touched by the Bill, such as fixed-term tenancies, starter tenancies and tenancies that run to retirement age, not death. There are strong arguments to include all those matters. In any event, the Bill deals imperfectly with only one side of the problem. If the Government wish to restore health to the tenanted sector, there must be fiscal change. I acknowledge that the burden of capital transfer tax has been reduced significantly, but more must be done in that respect. There must be greater financial inducement to the landlord to offer tenancies on farms which, over the years, he has taken back. Above all, I firmly believe that fiscal change should include provisions treating rents as earned rather than unearned income.

I support what the Bill sets out to do and I regret what it fails to do; but, in bringing in these provisions, I fear that the Government have scarcely begun to revitalise the tenanted sector.

9.4 pm

Mr. Michael Colvin (Romsey and Waterside)

I am most grateful to my hon. Friend the Member for Basingstoke (Mr. Hunter) for hastening his remarks, and to other speakers who preceded him. This is not the first time that I have been tail-end Charlie, which is always a difficult position to fill.

Conservative Members agree with the Bill's main objectives as far as they go, as set out by my right hon. Friend the Minister. Most of us feel that the Government could have gone a darn sight further, but let us hope that, if the Bill is enacted, it will succeed in halting, if not reversing, the downward trend in farm tenancies.

The measure enjoys general support outside the House, too, from two important interested parties. It puts into legislative form a compact reached by the NFU and the. CLA, based on discussions that began as far back as 1978. about the problems of the landlord and tenant system. Those two organisations are not wholly representative, but they are as good a starting point as any.

It would be invidious for me to speak from the point of view of the CLA or the NFU, as I am a member of both organisations. I should like, instead, to speak on behalf of a sector of the population that we are pleased to include in the farming community, and which the legislation is intended to assist. For two years I was county president of the Hampshire Federation of Young Farmers Clubs, and I shall concentrate my remarks on the young farmers' views on the Bill.

I have been made well aware that the decline in the tenanted sector of agriculture industry in England and Wales since the turn of the century, from more than 90 per cent. tenanted holdings in 1913 to about 40 per cent. of all farmed land today, has virtually closed the market to young, aspiring entrants to farming. Existing farmers almost invariably outbid new entrants, who have limited capital and no track record with which to establish themselves on their own account.

The decline of the landlord and tenant system of farm occupancy is to be regretted. It has served British agriculture well for most of its recorded history, and promotes an efficient division between the two crucial inputs of capital and managerial skill in husbandry. It has contributed to the social solidity of rural England, and in days gone by extended a means of entry into farming to those with capability, allied to moderate resources. Alas, those times have changed.

The National Federation of Young Farmers Clubs has discussed the Bill in its present, amended, form with the NFU and the CLA. While strongly supporting the proposal for shorter tenure of agricultural land, the federation felt that it could not become involved in the party political battle that it thought might accompany the Bill's passage through Parliament, as that would endanger the non-party political stance of the young farmers movement, and damage its relationship with various sectors of the rural community on whose goodwill it depends.

It is a pity that Opposition Members have sought to drag party politics and dogma into the debate. That does not help the House in what we are trying to achieve. The hon. Member for Aberdeen, North (Mr. Hughes) confirmed the Labour party's commitment to nationalise tenanted land and went further, to confirm that the Labour party would bring in a wealth tax if returned to power. Those undertakings, coupled with the return to the House of the right hon. Member for Chesterfield (Mr. Benn), all in one week is too generous. What have we on the Conservative Benches done to deserve all this?

In principle, the National Federation of Young Farmers Clubs supports the NFU proposal to relate farm rent levels to their agricultural earning capacity. It also backs the CLA proposal to shorten the length of tenancies and thus provide for more flexibility and access to their land. Both those objectives will help the young farmer who at present is at a great disadvantage in competing for tenancies, although the federation believes that the only real aspect of the NFU-CLA agreement that will directly help the farming ladder for the younger generation is the increase in the Minister's licensing sector from three to five years, and the new conditions that will be recognised for such licences.

Clause 1 is the crucial clause on rents. The federation states that a young farmer in a new business can pay only the rent that the land can earn. It therefore supports the suggestion that the new rent formula should be based on "the productive capacity allied to the earning capacity of the land."

The federation was not at all happy about the suggestion that the concept of "prudent and willing" should be introduced in the rent formula, as it feels that that would be a source of too much argument. Many hon. Members have referred to the problems that will be faced by the arbitrators. Some call the Bill an arbitrator's bonanza and some call it an arbitrator's nightmare. We are waiting to see which it will be.

The federation's second reservation relates to lifetime tenancies, which it feels might be used only as lettings to older farmers to reduce the length of tenancy. Surely that would not be in the spirit of the Bill. However, that problem could be solved by fixed-term tenancies, to which several hon. Members referred. I should be grateful if my hon. Friend the Minister would explain why the Government are so wholly against them. It does not seem fair that the Bill should go against the greater freedom and flexibility for farming that fixed-term tenancies would provide.

My next point concerns a detail on the renting of county council smallholdings. There is a possibility that the authority given to county councils to recover possession of smallholdings, when the tenant reaches the age of 65, could be coupled with the county council's right to let seven to 10-year starter tenancies. Taken to its logical conclusion, that would effectively result in ingoing tenants being aged between 55 and 58. Surely that is not the Government's objective, which should be to encourage more mobility. It must be in the interests of young farmers to retain smallholdings as useful first rungs on the farming ladder.

The federation made three other points to me. First, it says that the definition of a commercial unit set out in the 1976 Act is one with net annual value not less than the aggregate of the average earnings of two full-time agricultural workers aged 20 or over. Surely that would only endanger the rights of the small one-man unit, particularly if that definition is also used as a criterion for grant aid. Second, the federation feels that the new system of arbitration, about which there has been considerable debate, should not only be impartial but be seen to be so. That will be up to the RICS. Third, various proposals have been made to encourage the retirement of tenants. The federation, with laudable concern, feels that care must be taken to ensure that any such schemes should operate by inducements and not by coercion.

I agree with the federation that there is little merit in improving the opportunities for occupation of agricultural land unless our economic policies enable the business to make a profit. The price squeeze at present being considered by some of those concerned with the debate on the future of the common agricultural policy would be most damaging to agriculture and to those at the lower end of the farming ladder—those whom we all hope the measure will succeed in helping.

As a farmer-cum-politician I should like to remind the House of the words of Jonathan Swift in "Gulliver's Travels": whoever could make two ears of corn, or two blades of grass to grow upon a spot of ground where only one grew before, would deserve better of mankind, and do more essential service to his country than the whole race of politicians put together". That is precisely what our farmers have succeeded in doing. I only wish that British industry had done as well as British agriculture. It follows that it is in the national interest that we should have more farmers, which is what the Bill should, but may not, encourage, and that we should have fewer politicians, but we may have to leave that until the next Boundary Commission review.

9.10 pm

Mr. Mark Hughes (City of Durham)

We have had a fascinating debate. I trust that when the Minister of State comes to reply he will acknowledge that this is not the occasion for a slap-happy party political jamboree, because everything that has been said in the House today shows that hon. Members representing every part of the country are deeply concerned to ensure the continuous prosperity of and support for an effective tenancy arrangement as an integral part of British agriculture for many years to come.

There is not one hon. Member who does not see a prosperous tenant sector as doing other than contributing a major element to that facility for a long time to come. I look behind me—[HON. MEMBERS: "At what?"] I am satisfied that the absence of my colleagues shows their complete support, because they remain certain that the debate is in good hands.

I congratulate the hon. Member for Penrith and The Border (Mr. Maclean) who, after his first excellent speech, has every good reason to celebrate, and I follow up his closing remarks. What is needed is a strategy to revitalise rural England and Wales. The hon. Gentleman regretted that the Bill does not appear, on the most charitable grounds, to provide that.

Had the Government come to the House with a far more radical Bill, that might have stirred more radical opposition, but it might have solved the problem. That is where I find myself, unusually, in some agreement with the hon. Member for Weston-super-Mare (Mr. Wiggin), who said that this is a fearsome missed opportunity. Opportunities were provided by the Bill, under the terms of the Gracious Speech, to do something radical and fundamental about the tenancy problems and farming relationship. Instead, we have a fairly paltry and sordid Bill that will neither increase the number of tenancies available nor do anything to enable young persons to enter a farming career.

It is interesting that the hon. Member for Norfolk, South-West (Sir P. Hawkins), with his long experience, looked carefully at this problem and felt that a rung had been taken off at the bottom while an attempt was made to rebuild the ladder further up. Other Conservative Members, such as the hon. Member for Basingstoke (Mr. Hunter), have shown their unease over whether the Bill will do its job. The hon. Member for Romsey and Waterside (Mr. Colvin) was also not satisfied. the hon. Member for Ceredigion and Pembroke, North (Mr. Howells), with classic Liberal skill, will not vote against the Bill. He is not happy and is not certain that it will do the job for the farmers in his area, but he will not vote against it. He will wait until it is too late; too late to secure adequate provision of tenancies in the countryside to maintain a rural population.

The hon. Member for Penrith and The Border in his excellent maiden speech, said that without an adequate supply of family farmed tenancies in the rural areas facilities such as schools, transport and shops would go down the drain. The Minister cannot be in any doubt that the consensus of the House tonight is that the Bill does not measure up to that problem. It does not achieve what was set out in the Gracious Speech; does not provide a secure basis for increasing the number of tenancies; does not provide an adequate arrangement for the settlement of arbitrated rents; and does not secure for the long term any guarantee that rural depopulation and deprivation will not accelerate. The Bill contains good bits of which we can approve and support, but we cannot vote for the Bill's Second Reading.

I do not wish to bore the House with my own doctoral thesis, but it will get a bit of it. I said: As an explanation of the fundamental cause of rent, Adam Smith's theory may have been inferior to that of Ricardo, but as a pragmatic description of 18th century conditions it is worth noting. I then quoted from the edition of the "Wealth of Nations" edited by M'Cullock in 1850, which states: Rent, considered as the price paid for the use of the land, is naturally the highest which the tenant can afford to pay in the actual circumstances of the land. In adjusting the terms of the lease, the landlord endeavours to leave him no greater share of the produce than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandry, together with the ordinary profits of farming stock in the neighbourhood. That has still to be beaten as a definition on which people such as the hon. Member for Norfolk, South-West and other arbitrators have to work.

In the north-east we had a number of clerics who were not allowed to grant long leases. Leases were granted for lives—for three lives. The clever men of the north-east worked out that a lease need not go to one's son or grandson, but to any other young lad one could light upon. In 1786, one John Erasmus Blackett, the chief agent of Sir Thomas Blackett of Maften, when discussing a lease in the constituency represented by the hon. Member for Penrith and The Border, advised that when putting a new lease into a life it should be as follows: A healthy boy of 10 or 12 years of age is thought to be the most eligible life and such a person may I imagine be met with in your neighbourhood, who is not likely to go into a gentleman's service. Mr. Wilson said his son William (who is eleven years of age and has had the smallpox etc.) is as good a life as he knew of. He is a healthy lad and is not intended to be sent abroad nor to go into the army or navy, and I do not think you can have a better. Occasionally it can go wrong, because a few years later Mr. Dew, on the same estate, the Bishop's secretary, had been in the neighbourhood of Wallington to call on Mr. Hepple and told me"— Mr. Hepple is one of the three tenancies that we are talking about— he found him so very ill and in so bad a way that it was his opinion he could not live a couple of months". We have it further. His is a very bad life. He is twenty four stones, lives full, drinks a great deal of Yorkshire ale, is very lethargic and has twice lately drop't off his chair. What I am illustrating is that throughout the 18th and 19th centuries and the first half of the 20th, landlords had to come to terms with the problem of how to turn into income their ownership of property. Throughout the 18th century, in a period of comparatively stable prices, they saw the desirability of a tenant system. What we are now faced with is that, in a period of high and rapid inflation, a tenant-landlord system creates massive pressures which both sides find intolerable, and where the landlord wishes to have as short a term as is available and the tenant as long a term as is available.

What we have become involved in, therefore, on succession of tenancies, is a very deep and long-term cyclical problem, not a short-term problem to do with what happened in the 1976 Act—that is ephemera. When prices are stable and the profitability of agriculture is in risk of declining, landlords want to tie their tenants into a rent in order to secure their income. When the opposite happens and we have high inflation and rising profitability, the landlord wants to make the tenant's security as short as may be.

In 1976 we were faced with clear examples of a certain number—not the majority, very few—of landlords who were exploiting the pressures under which they were placed to cause major mischief. I was one who said on Second Reading of the Agriculture (Miscellaneous Provision) Bill that I would withhold my support from the Government unless they undertook to introduce tenant succession. I think of a particular case in my own constituency, that of a family which had worked a farm for four generations. The father, aged 56, went out into the stockyard on boxing day and dropped dead. After 130 years of family ownership, his widow and two sons were turfed out without any application to anybody being considered.

That is and will remain unacceptable, and, so long as I am a member of the Labour party, I trust that my party will repeal any legislation that denies the chance to go to a tribunal for a fair hearing in respect of that sort of succession. That must be right. We cannot give a landlord a hereditary right in perpetuity to the point of denying it to the tenant.

As for the word "ownership," land ownership in this country is held on trust and cannot be otherwise. If that trust is betrayed, it can be removed. We are in no doubt about that; the right of conquest is not the basis of capital ownership in Britain, and it will not be. If landlords choose to restrict the land available for tenancy for no good reason, so be it. That is their freedom of action, but let them be in no doubt that the freedom of action of others, as time sees fit, to withdraw that right and faith is absolute.

Landlords do not have an absolute freehold. They have a freehold conditional on the good will of the rest of the community. If they abuse that good will, be it upon their own heads. That lies at the basis of the whole of property law in this country; it is not an unfettered freehold, but a limited freehold. It always has been and it always will be limited.

If landlords choose to continue a letting strike against tenancies, let them know that they will suffer. Let there be absolutely no doubt about that. If they choose not to let, their ability to hold that land in hand will be restricted. They do not have total freedom. They never have and never will have. That is what the law of this land ultimately is about. Read Locke, Hobbes and Burke, and go through the constitutional lawyers. The landlords of Britain own their land by benefit of peace from other persons. If other persons restrict it, so be it.

Mr. Nicholas Baker

The hon. Gentleman is quite wrong. Freehold is derived from the Crown. The more important point about which he is wrong, or which he seems to ignore, is that landlords are a class of people for whom it is easier than many others to provide punishments by law when they do wrong, or circumscribe their behaviour or attack their income. There are many ways in which we circumscribe what landlords do. The hon. Gentleman is saying that if landlords behave in a way that the Labour party does not like, that party will take away their right to let the land, and I understand that he was going on to talk about their right to own the land. Will he explain how that would help tenants and provide more tenanted land?

Mr. Hughes

Whereas, following the Conquest, the right of conquest vested land in the Crown, following the glorious revolution of 1688 the right to property was vested not in the Crown, but in the Crown in Parliament. Therefore the House is carrying out a proper function in concerning itself with the distribution of property within the state, and no landlord owns in total and unequivocal control. I am therefore not prepared to say that a tenant should be refused the right to inherit the land that his family has occupied and worked for 200 years, so that the owner may enjoy unfettered heritability.

Is that what the Bill is offering? I suspect that it is. The tenant is not to be allowed heritability, but the landlord is to inherit — not for one generation or three, but for umpteen generations. In future, the landlord—whether he has acquired his land by honourable or by nefarious means—will have that land in perpetuity, but not the tenant who has worked the land. That is unacceptable. The person who works the land has the first call upon heritability, not the distant landlord.

It was a Tory Government who first gave that right to Irish tenants, under the Irish (Landlord and Tenant (Ireland)) Act, 112 years ago. That was one of the great achievements of the Tory party in one of its more liberal phases. The situation is curious. The right is not to be allowed to English tenants. It was given to the Irish tenants in order to keep them down—to keep them quiet and peaceable — but to allow it to English tenants would upset the whole form and structure of English society. The right is also enjoyed by tenants in Scotland, and no change is contemplated there. What has the English tenant done to deserve such treatment?

On the question of tenants' succession, the Government have accepted a myth and blown it up into a shibboleth.

Mr. Wiggin

All we want are inflatable shibboleths.

Mr. Hughes

That is the only thing to do with a shibboleth. They say that it was the 1976 Act that caused the problem. This is palpable rubbish. The 1976 Act did not create the problems. The problems, as my hon. Friend the Member for Aberdeen, North (Mr. Hughes) said, are far wider, and it is not on this basis that one should seek a reform of the tenancy arrangements.

I return to the fundamental problem. Here was an opportunity to revitalise the rural economy and fix a strategy for rural England that would reverse rural depopulation and resusitate all the facilities available in the countryside. On the pretence of supporting an arrangement between the CLA and the NFU that purported to provide a trade-off for a rent formula—we all accept that the legal basis of the previous rent arbitration was erroneous and doubtful and has to be changed — the Government have produced a Bill that satisfies virtually none of their supporters, is defective in its details and fails utterly to reach the nature of the problem. Their utter failure to deal with the major problem of the tenant system is their deepest condemnation. I trust that my right hon. and hon. Friends will vote against the Bill.

9.35 pm

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor)

Like the hon. Member for City of Durham (Mr. Hughes), I should like to begin by congratulating my hon. Friend the Member for Penrith and The Border (Mr. Maclean) on his excellent maiden speech. Many tributes have rightly been. paid to the fluency and thoughtfulness of his speech. He said that he had had to wait rather longer than he expected to make it as he hoped that the Bill would come before the House rather earlier. From the House's point of view, it was worth waiting for—by which I mean the speech and the Bill. On a personal note, I should like to welcome another Scot to an English constituency.

My hon. Friend laid special emphasis on the role that small businesses can play in rural communities. As the Minister who had responsibility for small businesses in the previous Government, I should like to say how much I agree with him. I saw many examples in my constituency and in many rural areas throughout the country of the real contribution to the rural economy that new small businesses and expanding small businesses are making. Such businesses are at the heart of the issue about rural life on which my hon. Friend concentrated. Unless we attract the economic strength that comes from farming and other sources into our rural economies, everything else falls by the wayside. I therefore warmly welcome the way in which my hon. Friend emphasised small businesses.

It is often the case that those who support a measure and urge it on the Government tend to assume that once a Bill has been introduced and started its passage through the House, it will be a fait accompli. I should like to thank those of my hon. Friends, such as my hon. Friend the Member for Milton Keynes (Mr. Benyon), who reminded us why the Bill is important and why it was introduced. I should also like to thank the hon. Members for Ceredigion and Pembroke, North (Mr. Howells) and for Caithness and Sutherland (Mr. Maclennan) who, on behalf of their parties, said that they supported the Bill.

The principal refrain throughout the debate has been an examination of what the Bill does not contain, or, in the case of the Opposition, criticism. It is inevitable that in circumstances such as these the critics tend to predominate and that those who originally wanted the measure assume that we shall simply push ahead with it. It is therefore worth reminding the House of outside bodies' views about the Bill.

When the National Farmers Union-Country Landowners Association package was first put together, both bodies made several statements which are worth quoting again: The issue of the greatest gravity in any delay in amending the 1976 Act is its impact on new lettings … Now that consenus has been obtained the Government must play its part as soon as possible … The industry warns that if the major measures proposed are not now taken urgently as a package, the further decline and demise of the landlord/tenant system in agriculture is inevitable … The CLA and NFU believe that the combination of the measures proposed above would help to make more farms available for letting … It is in particular thought and hoped that these measures would result in increased opportunities for able young people to enter the farming industry. Right hon. and hon. Members will have received from both bodies their views of the Bill as it now stands. It is worth quoting those views. The NFU said that it attaches great importance to its implementation during this session of Parliament. The CLA said: The Bill is therefore very much favoured by the CLA … many amendments have been made to it making a good Bill better. It is worth reminding the House of those views, as they emphasise that, although the Bill is, as we have said all along, a modest measure that does some important things, it is regarded by the industry as extremely important. Many of my right hon. and hon. Friends will recall that in the previous Parliament we were frequently urged to get on with legislating. Therefore, I am delighted that my right hon. Friend was able to get it into this Session of Parliament in our legislative programme.

I cannot, of course, cover all the points made during the debate. I think it is clear from many of the contributions — not least that from the hon. Member for City of Durham — that we shall have a stimulating and interesting Committee. I say that because some fundamental issues have been raised in the debate. A number of detailed points that have been raised will have to wait for my response until the Committee stage. What I should like to do is to concentrate on the key issues that ran through many speeches.

The first was why the Government were legislating on the basis—I emphasise the word "basis", because they are not legislating in toto—on the CLA-NFU package. That point was raised by my hon. Friend the Member for Dorset, South (Viscount Cranborne) and others.

I should like to make three points on this issue. Before the hon. Member for City of Durham understandably has to move, may I say that I was going to quote what he said about the Bill being based on myth and total shibboleth. Let me just remind him of the origins. This is also relevant to the question of the CLA-NFU package.

The origin was the Northfield committee, which recommended that, in relation to problems of new lettings, the Government should engage in discussions with the bodies concerned with a view to seeing what could be done. That was not myth and total shibboleth. The NFU, the CLA and the professional bodies in the shape of the RICS, and ultimately, in the working party, my own Ministry, produced the measures that are before us in broad detail today. Now it is Parliament's opportunity, as so often in these matters when outside interests are consulted before the legislation comes before the House. I do not think that there is anything strange in the fact that we are acting on a recommendation of the Northfield committee and subsequent developments.

My second point is that, as my right hon. Friend made clear in his opening remarks, we do not expect the Bill to go through in toto on the basis of the CLA-NFU package. Of course, as in another place and in Committee here, we shall be listening extremely carefully to the arguments. Parliament, in Committee and on Report, will decide whether the measure is right as it is or changes should be made. Certainly the Government will be listening carefully throughout this process.

One critical reason why it was right to act in this way, and why no doubt the Northcliffe committee recommended it, is, as my right hon. Friend said and has constantly emphasised in all discussions of this measure, the desirability of stability and a reasonable permanency in these matters. Therefore, there was the need for a fair measure of agreement among those affected, so that, for a reasonably long period, the rural communities will benefit. That, of course, means getting the agreement as far as possible of all the interests affected. Therefore, the Government are following a perfectly normal constitutional process, and it is right to proceed in this way.

The second issue that I should like to discuss as a result of the debate concerns clause 8. The hon. Member for Bradford, South (Mr. Torney)—who I am sorry to say is not in his place — made great play with this and seemed to suggest that the very modest clause 8 was a quite outrageous demonstration of Government privatisation programmes. I thought that the hon. Gentleman went over the top. Therefore, it is important to set the measure in context.

Clause 8 is not about changing the arbitration system. After clause 8, it will be exactly the same as it was before. Clause 8 is not about changing the arbitrators, who were in the private sector before and will remain there. So there is nothing privatised about that. Clause 8, for the reasons that my right hon. Friend gave at the beginning of the debate, relates to the Government's feeling that the administrative task of allocating arbitrators, drawn from the panel which will still be drawn up by the Lord Chancellor, will be better done outside Government. That is a very modest measure.

There is one other point on clause 8 on which I should like to comment. A number of my hon. Friends have suggested that it would be better to look either to the Central Association of Agricultural Valuers or to the Chartered Institute of Arbitrators, as the NFU has been suggesting, to do this work of appointment, rather than to the RICS.

I do not wish to enter into a debate on the comparative merits of these three professional and respected bodies. However, the RICS has a wealth of experience in this area. It already carries out a similar function in respect of over 2,000 non-agricultural arbitrations each year. Under the 1948 Act, it is already designated to appoint arbitrators where Crown land is involved. I have no doubt that it is entirely qualified to carry out this function in a fair and unbiased manner. I was glad to hear the tributes paid to the RICS by some of my hon. Friends in that respect.

I shall now direct myself to some of the more critical issues in the Bill. First, clause 1 on the rent formula. I was glad to hear what the hon. Member for City of Durham said about this part of the Bill, as well as the comments of other Labour Members. The purpose of the new formula is to give statutory backing to what is widely regarded as arbitrators' current practice in determining rents. Some of my hon. Friends who have a great deal more knowledge and personal and professional experience than I have in this sphere, acknowledged that that is necessary and desirable. That is the purpose of clause 1. Therefore, it is important to get it on the statute book.

References have been made to the absence from the formula of the phrase "earnings capacity". That matter was debated at great length in another place. It seems to be an extremely complex issue, professionally as well as legally. The Government do not have a closed mind upon it. I shall listen carefully to the arguments that we shall have upon the matter in Committee.

The hon. Member for Ipswich (Mr. Weetch) said that he would not like to be an arbitrator, because he believes that, under the Bill, arbitrators will have a short life. I do not think that I can do better than quote what the agency division of the Royal Institution of Chartered Surveyors, which has been much involved in the technical and professional aspects of the formula, has said about the formula following its scrutiny in another place. It stated: The RICS accepts the concept that it now contains and sincerely hopes that the scope for legal argument has been cut to a minimum. As members of the land agency division, we believe that it can honestly be said that it will work in practice. I do not suppose that its members were willingly contemplating an early death in saying that. We shall be considering the formula in detail in Committee, but I believe that it is workable and that it makes sense.

Finally, I shall take up a number of comments that were made about the Scottish rent formula. Comments have also been made outside the House querying whether the Government should have gone for the Scottish formula rather than the one that is set out in the Bill. It is too early to say whether the Scottish formula will work, as it has been in operation only since August 1983. Obviously, I hope that it will work. The formula in the Bill is derived from the NFU-CLA agreement, and the Government believe that it is an equally workable and realistic formula.

The hon. Member for Caithness and Sutherland asked why we were arguing for the formula in the clause rather than the Scottish rent formula. There are two reasons. First, the formula in the Bill is closer to the current practice of arbitrators in England and Wales. Secondly, the NFU and the CLA have firmly rejected the Scottish formula. I commend the new formula to the House as reflecting the considered wish of the industry and being, in the view of the professional bodies, a workable proposition. That is probably the most important factor.

A major part of the debate has been devoted to new entrants. I never thought that I would hear exchanges in the House in which the hon. Member for City of Durham would espouse the proposals of my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin).

Mr. Robert Hughes

He did not mean to.

Mr. MacGregor

I thought that he came close to doing so.

I have great sympathy with the views put forward by many hon. Members, but most notably my hon. Friend the Member for Weston-super-Mare, on new entrants into agriculture. The Government have long been keen to encourage and help more new entrants in every way possible. Clause 2, on succession, helps new entrants. Other parts of the Bill make a modest contribution towards easing the path for new entrants. The amendments in the Bill mean that only one commercial unit can flow on succession. The Bill provides also for voluntary retirement. The Government are espousing as part of a general measure—this is not in the Bill—the extension to five years of the provisions in section 2 of the Agriculture Holdings Act 1948. Those are all modest measures to help.

Many hon. Members have gone further than that. The problem is how those aims are to be achieved. Marty committees, including the Northfield committee, have wrestled long and deeply with that problem and have been unable to produce radical solutions. In the debate inside and outside the House many controversial views have been expressed, with widely differing opinions about the proposals. In helping new entrants and new lettings in ways that are not wholly divisive, disruptive and even destructive, there is a danger, if we adopt controversial measures that have not been thought through, of plunging into a system that causes more harm than good.

Many of my hon. Friends have referred to one of the fundamental difficulties for new entrants—the cost of capital — but that is not an issue that I can go into tonight.

Mr. Wiggin

It is the land.

Mr. MacGregor

I meant the capital requirement to get land.

There have been four themes in the debate, and one needs only to touch on them to see some of the severe difficulties that arise. First, compulsory retirement at 65 was advocated by some hon. Members and opposed by others. I thought that my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins) had a most ingenious argument to show why this provision should apply to the compulsory retirement of farmers but not at present to Members of Parliament. I have a great deal of sympathy with his line of argument, but to take the step of introducing compulsory retirement when people have more than a simple, straightforward job in a company needs a great deal of thought. The retirement measure is widely disputed in the farming community.

A second theme related to tax measures, on which it would be unreasonable for me to comment, and which cannot feature in the Bill. Hon. Members referred also to a limitation on the size of farms and to fixed-term. tenancies. I suspect that we shall have a lengthy debate on some of these matters in Committee, so I shall be brief now.

The introduction of provisions for fixed-term tenancies will be a highly contentious change. Many would argue that it will discourage long-term planning and investment in a farm and will be detrimental to the best interests of the industry. Others would argue that it will encourage over-farming. It could mean fixed-term tenancies becoming the norm, resulting in lifetime tenancies disappearing.

A great deal needs to be debated, but, unfortunately, given the time factor, I cannot discuss them now. Even those who strenuously argue for those provisions — I understand why they wish to open up the debate — would admit that those matters are highly controversial within the farming industry. Similarly, there are many practical difficulties in limiting personal freedom and the total size of farms. The Bill is attempting to make practical and constructive changes, which will carry the support of the vast majority of the farming community. We must think carefully before we introduce other contentious and controversial issues into the Bill.

The final suggestion came from the right hon. Member for Halton (Mr. Oakes), who took up the Northfield committee's recommendations about starter tenancies for 10 years. I could say a number of things about that, but I do not see the point of starter tenancies if the Labour party destroys the opportunity to go on into other tenancies.

That brings me directly to clause 2, which is, perhaps, the most controversial part of the Bill. The reasons for it have already been well put. The first is that it is clear from the statistics—admittedly, we do not have a long period to go on — that there has already been a decline in tenancies four times greater than in the seven years before the Bill was introduced.

More important than that is the point made by my hon. Friends the Members for Norfolk, South-West and for Milton Keynes (Mr. Benyon) who said that the existence of the three-generation succession clause inhibits landlords from contemplating new tenancies. As my hon. Friend the Member for Milton Keynes said, no landlord would be advised to let while that three-generation succession clause remains. That is the importance of this measure, which will help to reverse the decline. We believe and hope that it will introduce a modest additional number of new tenancies for letting.

I come to the Labour party's position on this matter. I believe that what the hon. Member for Aberdeen. North (Mr. Hughes) said is the biggest threat to reviving the rented sector. He pledged to restore the 1976 three-generation succession position to the private rented sector. His second pledge was the renewal of the pledge contained in the 1983 Labour party manifesto to nationalise tenanted land. There are two questions that I should like to ask him, but I do not expect him to answer them this evening. I assure him that I shall ask him again in Committee, and no doubt we can return to the matter on the Floor of the House.

In relation to his pledge to restore the 1976 position, does the hon. Gentleman intend to make that retrospective, as was done by the previous Labour Government—it will be noticed, despite some of the criticisms of some of my hon. Friends, that we have not done that in the Bill, because we believe it to be a dangerous principle—or will his pledge relate only to new tenancies? My second question is: will he stick by his pledge and change the law even if the CLA and NFU urge him not to? I shall be interested to hear his answer. He seems to show that he would. We have almost got that on the record already.

The hon. Gentleman said that the Bill was inadequate to provide more tenanted land and more tenancies. The biggest criticism of his position is that he then produced a completely wrong-headed and illogical solution to his criticisms. His policies would freeze existing tenancies for up to 100 years—that is the 1976 position—and his pledge to nationalise tenanted land would savagely squeeze the prospects of new tenancies, because if landlords thought that there was a prospect of a return of the Labour Government, with their present policies, they would immediately accelerate the taking in hand of land.

Combining those two makes it clear that the Labour party's policies would greatly reduce the possibility for new entrants, unless they excluded those in public land, as all inevitably would become under their proposals, from the three-generation provision. I believe that the Labour party is producing a completely wrong answer to the questions to which we are addressing ourselves in the Bill. When I heard the hon. Gentleman developing his policies, I began to think that the influence of the right hon. Member for Chesterfield (Mr. Benn) was beginning to show in agricultural policies.

It is a difficult time for farmers as they face adjustments in the CAP. This is not the time to reintroduce the wealth tax and the rating of agricultural land. I urge the hon. Gentleman to think again about new entrants.

I urge my hon. Friends to recognise that although the Bill is not a panacea for all the long-standing problems that we have been addressing, it deals with the real issues facing the agricultural community, and I commend it to the House.

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

The House divided: Ayes 276, Noes 156.

Division No. 184]	[10 pm
AYES
Adley, Robert	Bruinvels, Peter
Aitken, Jonathan	Bryan, Sir Paul
Alexander, Richard	Buchanan-Smith, Rt Hon A.
Alison, Rt Hon Michael	Buck, Sir Antony
Alton, David	Bulmer, Esmond
Amess, David	Burt, Alistair
Ancram, Michael	Butterfill, John
Arnold, Tom	Carlisle, John (N Luton)
Ashby, David	Carlisle, Kenneth (Lincoln)
Aspinwall, Jack	Carttiss, Michael
Atkins, Robert (South Ribble)	Cartwright, John
Atkinson, David (B'm'th E)	Chalker, Mrs Lynda
Baker, Nicholas (N Dorset)	Chapman, Sydney
Baldry, Anthony	Chope, Christopher
Batiste, Spencer	Churchill, W. S.
Beaumont-Dark, Anthony	Clark, Dr Michael (Rochford)
Beith, A. J.	Clarke, Rt Hon K. (Rushcliffe)
Bellingham, Henry	Cockeram, Eric
Benyon, William	Colvin, Michael
Biffen, Rt Hon John	Conway, Derek
Biggs-Davison, Sir John	Coombs, Simon
Blaker, Rt Hon Sir Peter	Cope, John
Body, Richard	Couchman, James
Bonsor, Sir Nicholas	Cranborne, Viscount
Boscawen, Hon Robert	Critchley, Julian
Bowden, A. (Brighton K'to'n)	Currie, Mrs Edwina
Bowden, Gerald (Dulwich)	Dickens, Geoffrey
Boyson, Dr Rhodes	Dicks, Terry
Brandon-Bravo, Martin	Dorrell, Stephen
Bright, Graham	Douglas-Hamilton, Lord J.
Brinton, Tim	Dover, Den
Brittan, Rt Hon Leon	Dunn, Robert
Brown, M. (Brigg & Cl'thpes)	Durant, Tony
Browne, John	Dykes, Hugh
Bruce, Malcolm	Evennett, David

Eyre, Sir Reginald	Lee, John (Pendle)
Fairbairn, Nicholas	Leigh, Edward (Gainsbor'gh)
Fallon, Michael	Lennox-Boyd, Hon Mark
Favell, Anthony	Lester, Jim
Fookes, Miss Janet	Lilley, Peter
Forman, Nigel	Lloyd, Ian (Havant)
Forsyth, Michael (Stirling)	Lloyd, Peter, (Fareham)
Forth, Eric	Lord, Michael
Fowler, Rt Hon Norman	Lyell, Nicholas
Franks, Cecil	McCurley, Mrs Anna
Fraser, Peter (Angus East)	MacGregor, John
Freeman, Roger	MacKay, John (Argyll & Bute)
Freud, Clement	Maclean, David John.
Fry, Peter	Maclennan, Robert
Gale, Roger	Madel, David
Galley, Roy	Major, John
Gardner, Sir Edward (Fylde)	Marlow, Antony
Glyn, Dr Alan	Marshall, Michael (Arundel)
Goodhart, Sir Philip	Mather, Carol
Goodlad, Alastair	Maxwell-Hyslop, Robin
Gow, Ian	Mayhew, Sir Patrick
Gower, Sir Raymond	Meadowcroft, Michael
Gregory, Conal	Mills, Sir Peter (West Devon)
Griffiths, E. (B'y St Edm'ds)	Miscampbell, Norman
Griffiths, Peter (Portsm'th N)	Monro, Sir Hector
Grist, Ian	Morrison, Hon C. (Devizes)
Ground, Patrick	Morrison, Hon P. (Chester)
Grylls, Michael	Mudd, David
Hamilton, Hon A. (Epsom)	Murphy, Christopher
Hamilton, Neil (Tatton)	Neubert, Michael
Hampson, Dr Keith	Nicholls, Patrick
Hanley, Jeremy	Normanton, Tom
Hargreaves, Kenneth	Oppenheim, Philip
Harris, David	Oppenheim, Rt Hon Mrs S.
Haselhurst, Alan	Ottaway, Richard
Havers, Rt Hon Sir Michael	Page, Richard (Herts SW)
Hawkins, C. (High Peak)	Parris, Matthew
Hawkins, Sir Paul (SW N'folk)	Patten, John (Oxford)
Hawksley, Warren	Pawsey, James
Hayes, J.	Penhaligon, David
Hayward, Robert	Pollock, Alexander
Heathcoat-Amory, David	Porter, Barry
Heddle, John	Powley, John
Henderson, Barry	Prentice, Rt Hon Reg
Heseltine, Rt Hon Michael	Rathbone, Tim
Hickmet, Richard	Rees, Rt Hon Peter (Dover)
Higgins, Rt Hon Terence L.	Renton, Tim
Hind, Kenneth	Rhodes James, Robert
Hogg, Hon Douglas (Gr'th'm)	Ridley, Rt Hon Nicholas
Holland, Sir Philip (Gedling)	Ridsdale, Sir Julian
Holt, Richard	Rifkind, Malcolm
Hooson, Tom	Rippon, Rt Hon Geoffrey
Hordern, Peter	Roberts, Wyn (Conwy)
Howard, Michael	Robinson, Mark (N'port W)
Howarth, Alan (Stratf'd-on-A)	Roe, Mrs Marion
Howe, Rt Hon Sir Geoffrey	Rossi, Sir Hugh
Howell, Rt Hon D. (G'ldford)	Rowe, Andrew
Howells, Geraint	Ryder, Richard
Hubbard-Miles, Peter	Sackville, Hon Thomas
Hughes, Simon (Southwark)	Sayeed, Jonathan
Hunt, John (Ravensbourne)	Scott, Nicholas
Hunter, Andrew	Shaw, Giles (Pudsey)
Jenkins, Rt Hon Roy (Hillh'd)	Shaw, Sir Michael (Scarb')
Jones, Gwilym (Cardiff N)	Shelton, William (Streatham)
Jones, Robert (W Herts)	Shepherd, Richard (Aldridge)
Jopling, Rt Hon Michael	Shersby, Michael
Joseph, Rt Hon Sir Keith	Silvester, Fred
Kellett-Bowman, Mrs Elaine	Sims, Roger
Kennedy, Charles	Smith, Tim (Beaconsfield)
King, Roger (B'ham N'field)	Soames, Hon Nicholas
King, Rt Hon Tom	Speller, Tony
Kirkwood, Archibald	Spicer, Jim (W Dorset)
Knight, Gregory (Derby N)	Spicer, Michael (S Worcs)
Knight, Mrs Jill (Edgbaston)	Stanbrook, Ivor
Knox, David	Stanley, John
Lamont, Norman	Steel, Rt Hon David
Lang, Ian	Steen, Anthony
Latham, Michael	Stern, Michael
Lawler, Geoffrey	Stevens, Lewis (Nuneaton)
Lawrence, Ivan	Stevens, Martin (Fulham)

Stewart, Allan (Eastwood)	Wall, Sir Patrick
Stewart, Andrew (Sherwood)	Wallace, James
Stewart, Ian (N Hertf'dshire)	Waller, Gary
Stokes, John	Ward, John
Stradling Thomas, J.	Wardle, C. (Bexhill)
Sumberg, David	Warren, Kenneth
Tapsell, Peter	Watson, John
Taylor, John (Solihull)	Watts, John
Tebbit, Rt Hon Norman	Wells, Bowen (Hertford)
Terlezki, Stefan	Wells, John (Maidstone)
Thomas, Rt Hon Peter	Wheeler, John
Thompson, Donald (Calder V)	Whitfield, John
Thompson, Patrick (N'ich N)	Whitney, Raymond
Thorne, Neil (Ilford S)	Winterton, Mrs Ann
Thornton, Malcolm	Winterton, Nicholas
Thurnham, Peter	Wolfson, Mark
Townend, John (Bridlington)	Wood, Timothy
Townsend, Cyril D, (B'heath)	Woodcock, Michael
Tracey, Richard	Wrigglesworth, Ian
Trippier, David	Yeo, Tim
Trotter, Neville	Younger, Rt Hon George
Twinn, Dr Ian
Viggers, Peter	Tellers for the Ayes:
Wainwright, R.	Mr. Tristan Garel-Jones and
Wakeham, Rt Hon John	Mr. Tim Sainsbury.
Walker, Bill (T'side N)

NOES
Adams, Allen (Paisley N)	Fisher, Mark
Anderson, Donald	Foot, Rt Hon Michael
Archer, Rt Hon Peter	Forrester, John
Ashley, Rt Hon Jack	Foster, Derek
Atkinson, N. (Tottenham)	Foulkes, George
Bagier, Gordon A. T.	Fraser, J. (Norwood)
Banks, Tony (Newham NW)	Freeson, Rt Hon Reginald
Barron, Kevin	George, Bruce
Beckett, Mrs Margaret	Gilbert, Rt Hon Dr John
Benn, Tony	Golding, John
Bermingham, Gerald	Gould, Bryan
Bidwell, Sydney	Gourlay, Harry
Blair, Anthony	Hamilton, James (M'well N)
Boyes, Roland	Hamilton, W. W. (Central Fife)
Bray, Dr Jeremy	Harman, Ms Harriet
Brown, Hugh D. (Provan)	Haynes, Frank
Brown, Ron (E'burgh, Leith)	Healey, Rt Hon Denis
Callaghan, Rt Hon J.	Heffer, Eric S.
Campbell, Ian	Hogg, N. (C'nauld & Kilsyth)
Campbell-Savours, Dale	Holland, Stuart (Vauxhall)
Canavan, Dennis	Home Robertson, John
Carter-Jones, Lewis	Howell, Rt Hon D. (S'heath)
Clark, Dr David (S Shields)	Hoyle, Douglas
Clarke, Thomas	Hughes, Dr. Mark (Durham)
Clay, Robert	Hughes, Robert (Aberdeen N)
Cocks, Rt Hon M. (Bristol S.)	Hughes, Roy (Newport East)
Cohen, Harry	Hughes, Sean (Knowsley S)
Coleman, Donald	John, Brynmor
Concannon, Rt Hon J. D.	Jones, Barry (Alyn & Deeside)
Corbett, Robin	Kaufman, Rt Hon Gerald
Corbyn, Jeremy	Kilroy-Silk, Robert
Cowans, Harry	Kinnock, Rt Hon Neil
Craigen, J. M.	Lamond, James
Crowther, Stan	Leadbitter, Ted
Cunningham, Dr John	Leighton, Ronald
Davies, Rt Hon Denzil (L'lli)	Lloyd, Tony (Stretford)
Davies, Ronald (Caerphilly)	Lofthouse, Geoffrey
Davis, Terry (B'ham, H'ge H'l)	Loyden, Edward
Deakins, Eric	McCartney, Hugh
Dewar, Donald	McDonald, Dr Oonagh
Dixon, Donald	McKay, Allen (Penistone)
Dormand, Jack	McKelvey, William
Dubs, Alfred	Mackenzie, Rt Hon Gregor
Duffy, A. E. P.	McNamara, Kevin
Dunwoody, Hon Mrs G.	McTaggart, Robert
Eastham, Ken	Madden, Max
Edwards, Bob (Wh'mpt'n SE)	Marek, Dr John
Evans, John (St. Helens N)	Marshall, David (Shettleston)
Fatchett, Derek	Mason, Rt Hon Roy
Faulds, Andrew	Maxton, John
Field, Frank (Birkenhead)	Maynard, Miss Joan
Fields, T. (L'pool Broad Gn)	Meacher, Michael

Michie, William	Rees, Rt Hon M. (Leeds S)
Mikardo, Ian	Richardson, Ms Jo
Mitchell, Austin (G't Grimsby)	Roberts, Allan (Bootle)
Morris, Rt Hon A. (W'shawe)	Roberts, Ernest (Hackney N)
Morris, Rt Hon J. (Aberavon)	Robertson, George
Nellist, David	Robinson, G. (Coventry NW)
O'Brien, William	Rooker, J. W.
O'Neill, Martin	Ross, Ernest (Dundee W)
Park, George	Sedgemore, Brian
Parry, Robert	Sheerman, Barry
Patchett, Terry	Shore, Rt Hon Peter
Pavitt, Laurie	Short, Mrs R.(W'hampt'n NE)
Pendry, Tom	Skinner, Dennis
Pike, Peter	Smith, C.(Isl'ton S & F'bury)
Powell, Raymond (Ogmore)	Smith, Rt Hon J. (M'kl'ds E)
Prescott, John	Snape, Peter
Randall, Stuart	Soley, Clive
Redmond, M.	Spearing, Nigel

Stott, Roger	Wiggin, Jerry
Strang, Gavin	Wigley, Dafydd
Straw, Jack	Williams, Rt Hon A.
Thompson, J. (Wansbeck)	Winnick, David
Tinn, James	Woodall, Alec
Torney, Tom	Young, David (Bolton SE)
Wardell, Gareth (Gower)
Wareing, Robert	Tellers for the Noes:
Weetch, Ken	Mr. Lawrence Cunliffe and
Welsh, Michael	(Mr. John McWilliam.

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee pursuant to Standing Order No.42 (Committal of Bills)