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Interpretation
1. — (1) In this Schedule, except where the context otherwise requires or provision is made to the contrary—
allocated quota" has the meaning given in paragraph 2(1) below;
holding" has the same meaning as in the 1986 Regulations;
landlord" means—
milk quota" means—
registered", in relation to milk quota, means—
relevant quota" has the meaning given in paragraph 2(2) below;
standard quota" means standard quota as calculated under paragraph 6 below;
tenancy" means, as the case may be—
tenant" means—
tenant's fraction" has the meaning given in paragraph 7 below;
termination" means the resumption of possession of the whole or part of the tenancy by the landlord by virtue of any enactment, rule of law or term of the lease which makes provison for removal of or renunciation by a tenant, or resumption of possession by a landlord, and in particular includes resumption of possession following—
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transferred quota" has the meaning given in paragraph 2(2) below;
the 1886 Act" means the Crofters Holdings (Scotland) Act 1886;
the 1911 Act " means the Small Landholders (Scotland) Act 1911;
the 1949 Act" means the Agricultural Holdings (Scotland) Act 1949;
the 1955 Act" means the Crofters (Scotland) Act 1955; "the 1986 Regulations" means the Dairy Produce Quotas Regulations 1986.
(2) For the purposes of this Schedule, the designations of landlord and tenant shall continue to apply to the parties to any proceedings taken under or in pursuance of it until the conclusion of those proceedings.
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Tenant's right to compensation
2. — (1) Subject to this Schedule, where, on the termination of the lease, the tenant has milk quota registered as his in relation to a holding consisting of or including the tenancy, he shall be entitled, on quitting the tenancy, to obtain from his landlord a payment—
(2) In sub-paragraph (1) above—
the relevant quota" means—
transferred quota" means milk quota transferred to the tenant by virtue of the transfer to him of the whole or part of the holding.
(3) A tenant shall not be entitled to more than one payment under this paragraph in respect of the same tenancy.
(4) Nothing in this paragraph shall prejudice the right of a tenant to claim compensation to which he may be entitled under an agreement in writing, in lieu of any payment provided by this paragraph.
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Succession to lease of tenancy
3. — (1) This paragraph applies where a person (the successor has acquired right to the lease of the tenancy after 2nd April 1984
and the person whom he succeeded or, as the case may be, who assigned the lease to him is described in this paragraph as his "predecessor".(2) Where this paragraph applies—
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Sub-tenants
4. In the case of a tenancy which is sub-let, if the sub-tenant quits the tenancy—
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Calculation of payment
5.—(1) The amount of the payment to which a tenant is entitled under paragraph 2 above on the termination of the lease shall be determined in accordance with this paragraph.
(2) The amount of the payment in respect of allocated quota shall be equal to the value of—
(3) The amount of the payment in respect of transferred quota shall be equal to the value of—
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Standard quota
6.—(1) Subject to this paragraph, the "standard quota" for any tenancy for the purposes of this Schedule shall be calculated by multiplying the relevant number of hectares by the standard yield per hectare.
(2) Where by virtue of the quality of the land in question or of climatic conditions in the area the amount of milk which could reasonably be expected to have been produced from one hectare of the tenancy during the relevant period ("the reasonable amount") is greater or less than the average yield per hectare then sub-paragraph (1) above shall not apply and the standard quota shall be calculated by multiplying the relevant number of hectares by such proportion of the standard yield per hectare as the reasonable amount bears to the average yield per hectare; and the Secretary of State shall by order prescribe the amount of milk to be taken as the average yield per hectare for the purposes of this sub-paragraph.
(3) Where the relevant quota includes milk quota allocated in pursuance of an award of quota made by the Dairy Produce Quota Tribunal for Scotland which has not been allocated in full, the standard quota shall be reduced by the amount by which the milk quota allocated in pursuance of the award falls short of the amount awarded (or, in the case where only part of the milk quota allocated in pursuance of the award is included in the relevant quota, by the corresponding proportion of that shortfall).
(4) In sub-paragraph (3) above the references to milk quota allocated in pursuance of an award of quota include references to quota allocated by virtue of the amount awarded not originally having been allocated in full.
(5) for the purposes of this paragraph—
(6) In this and in paragraph 7 below—
(7) An order under this paragraph may make different provision for different cases.
(8) The powers to make an order under this paragraph shall be exercisable by statutory instrument and any statutory instrument containing such an order shall be subject to annulment in pursuance of a resolution of either House of Parliament.
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Tenant's .fraction
7.—(1) For the purposes of this Schedule "the tenant's fraction" means the fraction of which—
(2) For the purposes of sub-paragraph (1)(a) above, in the case of an agricultural holding within the meaning of the 1949 Act, the annual rental value of the tenant's dairy improvements and fixed equipment shall be taken to be the amount which would be disregarded, on a reference to arbitration made in respect of the tenancy under section 7 of the 1949 Act (variation of rent), as being—
so far as that amount is attributable to tenant's dairy improvements and fixed equipment which are relevant to the feeding, accommodation or milking of dairy cows kept on the tenancy.
(3) Where—
the average rent payable in respect of one month in the relevant period or, as the case may be, in that part shall be determined and the rent referred to in sub-paragraph (1)(b) above shall he taken to be the corresponding annual amount.(4) For the purposes of this paragraph—
so far as relevant to the feeding, accommodation or milking of dairy cows kept on the tenancy;(5) For the purposes of this paragraph—
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Relevant period
8. In this Schedule "the relevant period" means—
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Valuation of milk quota
9. The value of milk quota to be taken into account for the purposes of paragraph 5 above is the value of the milk quota at the time of the termination of the lease and in determining that value there shall be taken into account such evidence as is available, including evidence as to the sums being paid for interests in land—
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Determination of standard quota and tenant's fraction before end of lease
10.—(1) Where it appears that on the termination of a lease, the tenant may be entitled to a payment under paragraph 2 above, the landlord or tenant may at any time before the termination of the lease by notice in writing served on the other demand that the determination of the standard quota for the land or the tenant's fraction shall be referred—
and where (a) above applies, section 75 (or, where the circumstances require, sections 77 and 87) of the 1949 Act shall apply, as if the matters mentioned in sub-paragraph (1) above were required by that Act to be determined by arbitration.(2) On a reference under this paragraph the arbiter or, as the case my be, the Scottish Land Court shall determine the standard quota for the land or, as the case may he, the tenant's 'fraction (as nearly as is practicable at the end of the relevant period).
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Settlement of tenant's claim on termination of lease
11.—(1) Subject to this paragraph, any claim arising under paragraph 2 above shall be determined—
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and no such claim shall be enforceable unless before the expiry of the period of 2 months from the termination of the lease the tenant has served notice in writing on the landlord of his intention to make the claim, specifying the nature of the claim.(2) The landlord and tenant may within the period of 8 months from the termination of the lease by agreement in writing settle the claim, but where the claim has not been settled during that period it shall be determined as provided in sub-paragraph (1) above.
(3) Where a tenant lawfully remains in occupation of part of the tenancy after the termination of the lease, the references in sub-paragraphs (1) and (2) above to the termination of the lease shall be construed as references to the termination of the occupation.
(4) In the case of an arbitration under this paragraph, section 75 (or, where the circumstances require, sections 77 and 87) of the 1949 Act (arbitrations) shall apply as if the requirements of this paragraph were requirements of that Act, but paragraph 13 of the Sixth Schedule to that Act (arbitration awards to fix day for payment not later than one month after award) shall have effect for the purposes of this paragraph with the substitution for the words "one month" of the words "three months".
(5) In the case of an arbitration under this paragraph, section 61 of the 1949 Act (determination of claims for compensation where landlord's interest is divided) shall apply, where the circumstances require, as if compensation payable under paragraph 2 above were compensation payable under that Act.
(6) Where—
the arbiter or, as the case may be, the Scottish Land Court in determining the claim under this paragraph shall, subject to sub-paragraph (7) below, award payment in accordance with that agreement or determination.(7) Where it appears to the arbiter or, as the case may be, the Scottish Land Court that any circumstances relevant to the agreement or determination mentioned in sub-paragraph (6) above were materially different at the time of the termination of the lease from those at the time the agreement or determination was made, he shall disregard so much of the agreement or determination as appears to him to be affected by the change in circumstances.
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Enforcement
12. Section 69 of the 1949 Act (enforcement) and section 70 of that Act (power of tenant to obtain charge on holding) shall apply to any sum which becomes due to a tenant by virtue of this Schedule as they apply to the sums mentioned in those sections.
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Powers of limited owners
13. Whatever his interest in the tenancy, the landlord may, for the purposes of this Schedule, do or have done to him anything which might be so done if he were absolute owner of the tenancy.
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Notices
14. — (1) Any notice or other document required or authorised by this Schedule to be served on any person shall be duly served if it is delivered to him, or left at his proper address, or sent to him by post in a recorded delivery letter or a registered letter.
(2) In the case of an incorporated company or body, any such document shall be duly served if served on the secretary or clerk of the company or body.
(3) Any such document to be served by or on a landlord or tenant shall be duly served if served by or on any agent of the landlord or tenant.
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(4) For the purposes of this paragraph and of section 7 of the Interpretation Act 1978, the proper address of a person is—
(5) Unless and until the tenant receives notice of a change of landlord, any document served by him on the person previously known to him as landlord shall be deemed to be duly served on the landlord under the tenancy.
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Crown land
15.—(1) This Schedule shall apply to land belonging to Her Majesty in right of the Crown, subject to such modifications as may be prescribed; and for the purposes of this Schedule the Crown Estates Commissioners or other proper officer or body having charge of the land for the time being or, if there is no such officer or body, such person as Her Majesty may appoint in writing under the Royal Sign Manual, shall represent Her Majesty and shall be deemed to be the landlord.
(2) Without prejudice to sub-paragraph (1) above, subject to such modifications as may be prescribed, section (Scotland: Compensation to outgoing tenants for milk quota) of this Act and this Schedule shall apply to land where the interest of the landlord or of the tenant belongs to a government department or is held on behalf of Her Majesty for the purposes of a government department
Mr. MacKayThese amendments introduce a new clause and associated schedule to the Bill to provide in Scotland for compensation by landlords to tenants in respect of milk quotas on the termination of the tenant's lease. The clause and schedule are broadly comparable to the provisions for England and Wales at clause 11 and schedule 1, which were introduced as amendments to the Bill by my right hon. Friend the Minister of Agriculture, Fisheries and Food and agreed to by the House on Report on 17 April. I hope that the House will bear with me if I explain the position surrounding the Scottish amendments.
As was the case for England and Wales, the Scottish provisions represent the outcome of a great deal of discussion between the Government and the agriculture industry, in particular the bodies representing the interests of landlords and tenants. These discussions were difficult and protracted and conducted against a backdrop of highly charged public debate. We worked hard in Scotland to establish an acceptable agreement with the National Farmers Union and the Scottish Landowners Federation, and it is a matter of great disappointment to me that it was not possible to achieve a consensus view with these bodies as to how the matter should be resolved.
In these circumstances, and given the Government's commitment to provide waygoing dairy tenants with a measure of compensation in milk quota, we had to devise a statutory framework which balanced the interests concerned and which would allow the individual circumstances of each case to be taken into account. From our consultations it was clear that fairly detailed statutory guidelines were necessary to provide sufficient flexibility to take account of these individual circumstances and to ensure uniformity of approach at arbitration.
As the basic legislation governing milk quotas comprises European Community regulations, we had to be careful to avoid any undue discrimination between farmers in similar circumstances north and south of the border: a point mentioned by my hon. Friend the Member for Cunninghame, North (Mr. Corrie) on Report when we 527 debated the provisions for England and Wales. This has led us to adopt the same general framework for Scotland as is contained in clause 11 and schedule 1.
Despite the similarities in approach, separate provision in the Bill for Scotland is required to cater for the different and more complex body of Scottish land tenure legislation and this accounts for the main differences from the provisions for England and Wales. I must apologise to the House for the fact that the complexity of Scottish land tenure legislation and the need to give due consideration to the specific circumstances of Scottish tenant dairy farmers prevented these Scottish provisions being tabled in the House concurrently with those for England and Wales.
As I said a few moments ago, the Scottish provisions are broadly comparable to those accepted for England and Wales, and as the House has already agreed to the Government's overall approach I shall spare hon. Members a detailed exposition of the Scottish provisions, but it might be helpful if I were to summarise the main elements before highlighting the differences with the provisions for England and Wales.
The majority of qualifying tenants will be those to whom the original milk quota allocations were made—producers who were occupying their holdings on 2 April 1984. These producers will normally have had primary quota allocated to them based on their production in the base year, which is "the relevant period". In most cases it is 1983. In the case of successions and assignments, compensation is not payable at the end of the original tenancy but the right is passed to the successor or assignee.
Despite the apparent complexity of the provisions the principle of the system for calculating compensation is a simply one. The actual circumstances on the tenancy at the relevant period are assessed and compared with a standard based on figures to be prescribed by the Secretary of State. If the quota allocated to the farm exceeds the "standard quota" the tenant receives the full value of the excess plus a share of the standard quota, the "tenant's fraction", based on the relative contributions made by the tenant and the landlord to the quota level achieved. Under the formula, even if the quota earned by the tenant is not greater than the standard, he will still qualify for some compensation via the tenant's fraction calculation.
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As to the differences north and south of the border, the first and most significant is the need in Scotland to cater for four different land tenure systems and categories of tenant farmer—tenants of agricultural holdings, crofters, small landholders and statutory small tenants. Within those various systems there are differences in provision for arbitration, in certain circumstances involving the Scottish Land Court instead of, or as an alternative to, an agricultural arbiter, and in provision for succession.
The arbitration and succession provisions in the context of the amendment are also the main differences between the land tenure legislation north and south of the border. The succession provisions in particular are much more liberal in Scotland in their protection of the security of tenure enjoyed by the tenant farmer. The House may he interested to note that one result of that will be that we anticipate far fewer cases in Scotland than might be expected as a direct proportion of those likely to arise in England and Wales.
528 A further difference in paragraph 2(4) of the schedule is the inclusion of provision to override the schedule where a landlord and tenant agree in writing as to the amount of compensation to be paid. That reflects the situation which obtains for compensation available under existing legislation. In addition, we have made provision in paragraph 7(4)(c) of the schedule to ensure that certain private agreements between landlords and tenants in relation to waygoing compensation payable under existing legislation, which are a feature of the Scottish system, do not unfairly disadvantage the tenant in the calculation of the amount he is due in respect of quota compensation.
I refer now to the detailed operation of those arrangements in Scotland. Clearly, it is essential to ensure that recognition will be given to the particular circumstances of the Scottish dairy tenant where they differ from his counterpart south of the border. Those circumstances, such as a greater dependence on marginal land and bought-in feed, and the longer periods during which dairy cows must be kept indoors, are of greater significance in general terms in the case of dairy farmers in the original less favoured areas in Scotland and will be reflected in the standard yield per hectare figure, which will be prescribed by the Secretary of State by statutory instrument. The figure that we have in mind for the original LFAs in Scotland is 5,500 litres per hectare. That concession is particularly significant for Scottish dairy tenants since most are located in the original LFAs. The related average yield per hectare figure will be 6,200 litres. It is likely that the standard yield and average yield figures for the extended LFA and non-LFAs land in Scotland will be as for England and Wales. We also have it in mind to define different yield figures for different breeds — for example Ayrshire cows on average yield less than Friesians.
I associate myself with the remarks made by my right hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food during the debate on the previous amendment, in response to the requests by the hon. Member for Pontypridd (Mr. John).
All in all, I believe that the arrangements that we have devised for Scotland in the new clause and schedule provide a practical, balanced and fair solution to this difficult and emotive issue, which takes account not only of our complex body of existing legislation but of the practical circumstances, production patterns and farming practices of the Scottish dairy tenant.
§ Mr. Home RobertsonThe Minister of State said that there had been previous consideration of compensation for waygoing dairy farm tenants in England and Wales, but that is not the case for Scotland. This is the first sight that the House of Commons has had of this fairly substantial piece of legislation. We have a new clause and a new schedule, which fill 12 pages of legislative small print, dealing with compensation to outgoing tenants of Scottish dairy farms for the value of their milk quota. Therefore, I am grateful to the Minister for going into more detail than might be normal at this time of night. Indeed, I suspect that most dairy farmers in Scotland are not thinking about getting up and milking their cows rather than finishing off the previous day's work.
Anyone who has been reading the Scottish farming press or talking to the National Farmers Union of Scotland recently will know that the matter is arousing pretty strong feelings. There is little support for the 529 Government's proposals, although the concession that the Secretary of State appears to have obtained, affecting dairy farmers in the Scottish less-favoured areas, is welcome as far as it goes.
This debate, in these circumstances, at this hour, is a pretty sloppy way of legislating for an important group of people. The history of this affair goes back to the memorable day in the summer of 1984 when the Minister of Agriculture, Fisheries and Food was forced to accept a milk quota scheme at about two weeks' notice. At that stage he did not give the matter very much consideration, as he did not have much time to do that. He failed to comprehend the fact that he had chosen to create a new form of capital asset.
We would have preferred to avoid that pitfall by providing for the re-allocation of quota on a fairer basis than is ever likely to be achieved by buying and selling quota in a free market. That opportunity has been missed and we will have to make the best of the scheme as it is at present. We do not like the fact that the quota is now a capital commodity, but now that it is a capital commodity we are determined that tenant farmers should receive the benefit of the value of that quota where that is appropriate.
The quota market began to evolve throughout the country back in 1984, and nothing was done to protect tenants' rights. The Bill was introduced in November 1985, but nothing was done for the tenants. Nothing was done for them during the Committee stage, but on Report a dog's breakfast in relation to England and Wales was produced and at the last gasp we have a modified dog's breakfast in relation to Scottish farm tenants.
The Lords completed consideration of the Bill last night, so the first official knowledge that we had of the new clause and the schedule came this morning. That presents us with certain difficulties. We do not like the package, and Scottish farmers are not very keen on it. On 11 June the Scottish National Farmers Union wrote to Members of the House of Lords urging them
to reject the Government's recommendations and to call for their replacement by a simpler, more objective and commercial approach.The difficulty that we face tonight is that that is all that there appears to be on offer. Any delay might prevent some tenants from receiving even this limited compensation for the three months of the summer recess.The package is unbelievably complicated and there must obviously be simpler ways of achieving a fairer solution. We have standard quotas, tenant's fractions and relevant periods, all leading to evaluation and a settlement at the end of the lease provided that the tenant or his heir remembers to lodge his written notice within two months in order to beat a potentially very difficult time bar under paragraph 11. We have been advised by people who understand these matters that the formula is likely to mean that the most that any tenant can hope to obtain is about 70 per cent. of the value of his quota, unless we can get further guidance for arbiters and the Land Court on the lines suggested by the Minister of State.
We have been trying to encourage the Minister and the Government, by various means, to ensure that tenants can get the full value of their quota where such compensation is justified. I understood the Minister of State to say that he was giving the same undertaking as his right hon. 530 Friend gave some moments ago. This is important. There are tenanted dairy farms in Scotland where the tenant has made more than the normal tenant's contribution towards the value of the dairy unit. In addition to his contribution towards the dairy herd, his husbandry, management and machinery, he may also have invested heavily in the buildings and fixed equipment in the dairy enterprise. He may indeed have been entirely responsible for establishing the dairy unit.
In these circumstances, there can be no justification for giving a landlord, who may have contributed nothing towards the value of the quota, a windfall of 30 per cent. of the value of that quota. Paragraph 6(2) refers to certain physical factors to be taken into account in calculating the standard quota—the land, the climate and the average yield.
The full proportion of the tenant's investment in the value of the quota should also be considered. If he has contributed 100 per cent., he should be eligible to receive 100 per cent. in compensation for his investment under such circumstances.
The Government have a bit of a nerve to ask the House to deal with a matter of this nature as a Lords amendment at 24 hours' notice. We will probably not be too keen on facilitating the passage of the Bill this week unless we are given an assurance that the Government will take the necessary steps to ensure that tenants can be compensated in full.
I ask the Under-Secretary of State for Scotland to confirm that it is his intention that to ensure that arbiters and the Scottish Land Court will take into account a tenant's investment and contributions, and that there need be no ceiling on the proportion of the value of quota that will be subject to compensation at a tenant's waygoing.
§ Sir Hector Monro (Dumfries)I agree with the hon. Member for East Lothian (Mr. Home Robertson) that it is unfortunate that the consideration of the Scottish part of the Bill must start with this important passage at 2 30am, but I agree with my right hon. and hon. Friends that the Bill must pass into law as soon as possible. Therefore, we must accept the position. The matter is highly contentious, and I appreciate that Ministers in England and in Scotlad have consulted in great depth the National Farmers Union and the Scottish Landowners Federation, but have not, sadly, brought both together in a common solution, much as we would have wished them to do so.
To put the matter in context, we must accept that only a remarkably small number of tenant dairy farmers give up their business each year — perhaps 10 a year in Scotland, only half of whom will be the special cases mentioned by the hon. Member for East Lothian. I am glad to note that my hon. Friend the Under-Secretary of State for Scotland managed to achieve less-favoured area weighting in Scotland, which will be of great benefit.
The issue started in April 1984, when there were no quotas and, therefore, no right to compensation for a tenant farmer giving up his lease. He would have had to depart under the normal outgoing settlement made by an arbiter. But quotas were created in April 1984, under the jurisdiction of the EEC, and at the same time we created a new asset and a windfall for tenant farmers, although I appreciate that they have gone through a difficult period in mastering the quota system.
We must put on record, as did my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins), the 531 fact that whatever we do tonight will make it much more difficult for new entrants into dairy farming to obtain leases and to pay the large sum that will be necessary to gain occupation.
I agree with most farmers that it is difficult to understand why the legislation must be so complex. Why cannot we have a normal waygoing, with valuation by an arbiter, who is highly skilled and highly qualified? He would take into account everything that is covered by the lease, and the landlord and tenant would accept his decision. I realise that these are special cases, but they are not too far away from a parallel with the hill sheep farmer on waygoing. where the sheep stock is bound to the ground and must be taken over after arbitration. I do not understand why we do not have something similar for milk quotas.
If it is impossible to introduce such an amendment at this stage it is impossible — I hope that my hon. Friend will be as flexible as possible when he drafts the statutory instruments. This is a highly complicated matter, which few farmers will be able to understand, and which has failed to satisfy the NFU and the Scottish Landowners Federation. The statutory instruments, which of course will be debated in due course, must be carefully drafted.
I was not too happy about the English amendment, but I am much more happy about the Scottish one, provided that we can introduce greater flexibility, especially in regard to paragraph 6(2) of the proposed schedule. We must consider the quality of the land. Part of the formula means multiplying hectares by the standard yield. The production from a hectare of less-favoured area land or of low-quality land will be much lower than from high-quality land.
We must also consider the possibility of the tenant putting in a great deal of equipment—perhaps all of it—but still being eligible for only 70 per cent. of the arbitration. In exceptional circumstances, the tenant should be able to obtain more than 70 per cent. I hope that the statutory instrument will allow that.
I agree with the hon. Member for East Lothian that the tenant's fraction is difficult. This will be new ground for the arbiter and the Scottish Land Court. There is no history of dealing with tenants' improvements relative to annual rental value, and guidance to all concerned will be very important.
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The structure of land tenure in Scotland is important, and we must try to retain harmony between landlord and tenant if we are to develop the rural community as we want. I beg my hon. Friend the Minister to bear what I have said in mind when formulating the statutory instrument. We must make the legislation much more simple and understandable for the average farmer, and give good guidelines to the arbiters who are to implement it.
§ Mr. MaclennanI must express my censure of the Government for bringing forward this new clause at this stage of the Bill's passage through Parliament. It is impossible to do justice to important legislation such as this while having to compress Second Reading, Committee stage, Report and Third Reading into this short debate. This issue is central to the prosperity of the tenanted and landowning sector.
I acknowledge that the Government had the perfectly worthy objective of trying to obtain the agreement of all 532 those affected, but it became clear quite early on that such agreement would not be forthcoming. The Government are charged with the task of making decisions and recommending them to the House in such circumstances. The consequence of their delay is that the House has not been able to give its opinion of what would be the equitable solution. It is quite clear that the solution that the Government have advanced is not regarded as equitable by most of those who are principally engaged in dairy farming. It has been made quite clear by the National Farmers Union of Scotland, and it was repeated at a council meeting as recently as 9 July, that it regards the clause as most unsatisfactory and tilted in favour of the landowner, which is not entirely surprising.
§ Mr. David Harris (St. Ives)It would.
§ Mr. MaclennanIt would, naturally, because it is coming to realise that the Government are not all that interested in tenant farmers.
I do not propose to go over the ground that has been admirably covered by the hon. Members for Dumfries (Sir H. Monro) and for East Lothian (Mr. Home Robertson), but will the Minister take this opportunity to go further than the Minister of State, Ministry of Agriculture, Fisheries and Food did earlier about what the Government mean by the statement that an arbiter may allow a tenant the full value of his improvements in making the decision on compensation?
The Minister of State seemed to set at naught the provisions of the schedule, which are certainly complicated and hard to understand. I do not pretend to have been able wholly to follow the precise mathematical calculations. Even the most cursory examination of them suggests that the arbiters must follow these formulae in reaching their decisions and that they do not have discretion in the matter. If the Minister is saying that arbiters have discretion, like the hon. Member for Dumfries, I cannot see why it is necessary to insert all these complicated formulae in the schedule. This seems to fetter the discretion of the arbiters, not to give them the capacity to make an award to a tenant of 100 per cent. if that is thought appropriate. It is almost inconceivable that 100 per cent. would be appropriate, but a percentage considerably higher than the 70 per cent., which the National Farmers Union of Scotland perceives to he the maximum likely under the schedule's provisions could be appropriate.
It will assist the comprehension of the Scottish farming industry if the Minister can say whether this complex, 12-page provision, setting out the formula which the arbiters must apply, can be modified by the exercise of their judgment and discretion. If so, there will be general relief. We shall remain puzzled by the mysteries of draftsmanship which require this complex provision, but comforted in the knowledge that arbiters may be guided, but not bound, by it. I hope that the Minister can explain that mystery.
This is exactly the sort of matter that we would wish to probe in Committee. It is most unsatisfactory that we can have only one bite of the cherry and cannot come back to probe if the Minister's explanation is unclear. I regret that, and it is a mistake that flows from the Government's initial error of being unprepared to introduce quotas and of having quotas thrust on them without any preliminary thinking about how they would be applied. The 533 Government had been warned by me on many occasions — the Minister knows that perfectly well — that this would be discussed and was an important possibility. The Government's answer throughout was that they were not thinking of and were not in favour of, quotas. Therefore, no preliminary work was done, which is why we are in this mess today. I hope that the Minister will answer that simple point which is troubling many farmers in Scotland.
§ Sir Paul HawkinsAlthough I know nothing about the law of Scotland or the valuation of Scottish holdings, I ask a question and I hope that it will be answered. I believe that, in any valuation, discretion must be left to the valuer or arbiter. I hope that that will be the case. Sometimes we talk about the full value being paid in exceptional circumstances. If a tenant has put far too expensive and elaborate equipment on to a holding, he should not be paid the full cost of that. Those points should be made clear for the benefit of any future valuer or arbiter.
§ Mr. John MacKayArbiters are skilled in such matters. They take all the things that they see and that are put to them into account when they reach their conclusions and decisions. I am certain that the arbiter will be well able to make the kinds of judgments that my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins) mentioned.
The hon. Member for East Lothian (Mr. Home Robertson) rightly recognises that any delay could prevent some tenants from receiving compensation. I appreciate that he accepts that we must move on, so that a tenant moving out of his tenancy will be in a position to get some compensation for his quota.
We shall be giving guidance to the arbiters. I assure my hon. Friend the Member for Dumfries (Sir H. Monro) that when we draw up the statutory instruments we shall take great care to do that in as simple a way as possible. However, I think that the definition of the word "simple" may vary from one person to another.
The hon. Member for Caithness and Sutherland (Mr. Maclennan) and others raised the perception—I think that the hon. Gentleman expressed it in that way—of the National Farmers Union. It was precisely because of that perception that my right hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food made a statement earlier this evening. I echo what he said in conclusion. He said:
I hope this will provide reassurance that the Bill leaves arbitrators free to give full credit to the tenant who has effectively done everything except provide the land.Even in the best case of a tenant's investment, the landlord makes a contribution of the land. That must be reflected in the apportionment. A 100 per cent. share for the tenant would not be conceivable. I believe that the hon. Member for Caithness and Sutherland conceded that point. With those few remarks, I hope that the House will agree to the Lords amendment.
§ Question put and agreed to.