§ `Where a milk quota was registered in relation to land held on a tenancy under the Agricultural Holdings Act 1986, and that land is let immediately upon the expiry of that tenancy as a farm business tenancy, and where no claim was made for compensation in respect of that quota under the Agriculture Act 1986, that latter Act shall still apply to that milk quota which shall not be the subject of any' other claim for compensation.'.—[Mr. Martyn Jones.]
§ Brought up, and read the First time.
§ Mr. Martyn Jones
I beg to move, That the clause be read a Second time.
The new clause is a redraft of new clauses originally discussed in the other place. It is a minor new clause that protects farmers in tenancies covered by the 1986 Act when the new farm business tenancy comes into effect. Clause 16(3) does away with the 1986 Act's formula for assessing milk quota compensation. Any compensation under a farm business tenancy will be under the general wording of clause 17 on landlords' consent.
Where a tenancy under the 1986 Act has been surrendered or terminated and the outgoing tenant enters into a farm business tenancy in respect of an area including the same land, either as an individual or in a partnership, he may not press for his milk quota compensation at the date of the changeover. He will thus forgo his entitlement to milk quota compensation under the 1986 Act, and his previous period of occupation will not be carried forward into the assessment of improvements made at the end of his farm business tenancy. If a tenant does not insist on payment of compensation for quota at the end of a 1986 lease, he will lose all rights to payment at a later date. The new clause ensures that that will not happen.
The Government should not allow the Bill to be used as a cloak for false undertakings so that landlords can avoid responsibility to pay compensation under the 1986 Act. The new clause is narrow and will not result in a major prolongation of the life of the 1986 Act.
§ Mr. Tyler
I wish to endorse the purpose of the new clause. I hope that the Minister has taken seriously the 242 points that have been made, not just by the hon. Member for Clwyd, South-West (Mr. Jones) but by many individuals in the industry.
Clearly, the question of milk quotas currently features in the calculations that anybody in the dairy sector must make because of the extraordinary value that can now be attached to them. I know that the Minister and his right hon. Friends share my concern at how milk quotas seem increasingly to be getting out of hand. In those circumstances, I hope a way will be found to ensure that no opportunity is lost to compensate those who might otherwise be put at considerable financial disadvantage. I am not in a position to say whether the new clause is the only or best way to do that. There may be another more technically secure way, but I hope that the Minister can reassure the House and the industry that a belt-and-braces system will be put in place to ensure that compensation will not be lost in the circumstances described by the hon. Member for Clwyd, South-West.
§ Mr. Jack
The hon. Member for Clwyd, South-West (Mr. Jones) was right to alert the House in his opening remarks to the fact that this matter was dealt with extensively in another place. I thought that the matter had been settled then, but I understand the concerns which the hon. Members for Clwyd, South-West and for North Cornwall (Mr. Tyler) have expressed. I shall deal with those matters at length because they are important and must be put on the record.
Milk quota is an important, complicated and technical matter but I see no good reason to add to existing complications by accepting the new clause. We have been over all these issues before in considerable detail and have genuinely satisfied the industry's concerns on this matter to such an extent that it does not support the new clause.
Tenants who take up a farm business tenancy immediately after a tenancy under the Agricultural Holdings Act has ended and who are eligible to do so can agree to use the current milk quota compensation provision in the Agriculture Act 1986 to determine compensation payable in respect of the original tenancy. They will also be free to agree on the timing of such compensation. For example, it might suit parties to make the actual payment at the end of the farm business tenancy. Such an agreement might make sense where both parties want to secure the benefits of a farm business tenancy but where the landlord cannot immediately raise the money to settle compensation under the Agriculture Act before the new tenancy starts.
It is vital to remember that not everyone with a dairy farm tenancy under the Agricultural Holdings Act 1986 would be eligible for compensation under the Agriculture Act 1986 in respect of milk quota. The statutory compensation scheme ensures that the respective shares of landlord and tenant in the value of quota allocated to a producer in occupation of a holding on 2 April 1984 are taken into account when the tenancy ends or when the last of any statutory succession tenancies have ended. But if the original tenant took up occupancy after 2 April 1984, there is no right to compensation.
With respect, the hon. Member for Clwyd, South-West may not have appreciated the difficulties of providing legal certainty if two systems of statutory compensation for milk quota were in operation in relation to the same holding. The first problem would be to ensure that any Agriculture Act rights are respected where a farm 243 business tenancy has begun and the tenant has an entirely different statutory entitlement to compensation for additional quota brought on to his holding under clause 16. It would be even more difficult in cases where tenancies occupy some other land for milk production as well as their farm business holdings. Because of the operation of European Community rules, such additional quota would have to be aggregated with all the existing quota registered in the producer's name and might, over the life of the tenancy, become impossible to identify.
I reassure Opposition Members that clause 16(3) does not prevent parties from agreeing the most appropriate arrangements on milk quota compensation in respect of a 1986 Act tenancy that comes to an end in such a way as to meet their particular needs. It may also be an important factor in detailed negotiations for a subsequent business tenancy that might be on offer to existing tenants. I assure the hon. Member for Clwyd, South-West that we have gone into the issue in substantial detail, that no danger exists of tenants being deprived of their compensation rights by the Bill, and that the industry is satisfied that that is so. With those assurances and that explanation—I apologise for the complexity, but it is a detailed matter—I hope that I have persuaded the hon. Gentleman that he should, on reflection, withdraw his amendment.
§ Mr. Martyn Jones
I am grateful for the Minister's assurances, following which I beg to ask leave to withdraw the motion.
§ Motion and clause, by leave, withdrawn.