Transfer of Crofting Estates (Scotland) Bill [H.L.]

HL Deb 20 January 1997 vol 577 cc1-30GC

The Committee met at half-past four of the clock.

[The Deputy Chairman of Committees (Lord Skelmersdale) in the Chair.]

Title postponed.

Clause 1 [Disposal of crofting property]:

Lord Sewel moved Amendment No. 1:

Page 1, line 25. at end insert— ("( ) In any disposal of property under this Act no value shall he attributed to the land.").

The noble Lord said: May I just say a few things before addressing the particulars of Clause 1. First, the procedure that has been adopted on the Bill is wholly helpful and beneficial. We all—I believe that I speak for the whole Committee—found the visit to Inverness and Skye (those of us who survived Skye) added to our knowledge and understanding of the issues underlying the Bill. In this case, therefore, the procedure is wholly appropriate and it has worked well so far.

I also hope that in going through the amendments today we can adopt a general discursive approach to see the extent to which issues that may be shared across the Committee can be dealt with in a reasonable, consensual way.

Amendments Nos. 1 and 3 relate to the whole business of. the terms upon which the transfer will take place. They are designed to make clear that the transfer of the land would be on a virtually no price, no value basis. If the crofting trusts that follow upon the transfer are to have a fair wind behind them, it is vitally important that they do not start off by having to fund any transfer value given to the land itself.

Secondly, Amendment No. 3 deals with the assets and the mineral, sporting and perhaps fishing rights of the individual crofts. I appreciate the difficulty here, but it seems to me that these are perhaps the most valuable assets that will transfer, and to leave doubt that they may or may not transfer is opening a degree of uncertainty that is not beneficial to the whole scheme; again, they should transfer on the basis of no cost. In many of those cases the assets and rights on transfer will be the only basis upon which the crofts can achieve viability and succeed, and it would be penny-pinching to saddle the trusts with having to finance a transfer fee for the assets that transfer with the crofts,

We are all agreed that we want to see this concept succeed and this is a way of helping it to succeed. I commend the amendments to your Lordships. I beg to move.

The Earl of Mar and Kellie

I generally go along with these amendments. There is one thing I feel we need in order to understand how important is the principle of handing over the estates for free, or transferring at no cost to use the correct term. We need to have an inventory of each estate in order to understand whether the estates, generally speaking, have virtually no assets, because there may be a case for a fee in the event of an estate having an asset which is quite disproportionate to what the others have. Here I quote the corny example of the potential super-quarry. I see that as the greatest problem—that we do not have before us details of each estate.

It is easy for me to say that now, and I know now that the Minister cannot produce the inventory immediately. However, it would be helpful if we could have a sight of it at some time.

Lord Gray of Contin

I do not want to speak against the amendment, but I want to raise one or two points which the Minister may be able to help us with later.

Is it really right for the Secretary of State to give land away in this way? A charge could be made at a rate of £1 an acre. It is the principle of handing away land that concerns me. Although that land has perhaps been worked by the same crofter or the same family of crofters for a considerable period of time, the land has probably been nurtured and improved by feeding, which has been obtained by government grant. Is it right that that land should just be handed away? I would be appalled if the Secretary of State was to ask some prohibitive figure, which would undo all the good of this measure, but it worries me a little that public money has been used in order to assist the crofter to improve the land. That should be reflected by some means if that land is going to be disposed of. Perhaps the Minister has an answer to this. I would be most interested to hear what he has to say.

Secondly, who knows what may follow in the years ahead? Perhaps the time will come when a government will decide that a measure should be introduced affecting private landlords. I cannot see private landlords, however public spirited they might be, willingly handing over their land without any remuneration whatever, for the reasons which I have already explained.

Nobody knows more than I do how hard crofters work, and we all know the history of how they were wronged in the past, but the for the past 50 or 60 years they have really been treated rather well. Let us make no mistake about that. Indeed, there are many crofters who are the envy of farmers in the treatment that they have received. It is not a case of going into this with a very guilty conscience. The Government can go into this with a very clear conscience because governments of both persuasions have been very sympathetic to the cause of crofting. That should not be overlooked. This may be debated again at Report stage and there may be a vote on it. Before I can make my mind up how I would vote, I would like to hear what the Government feel about this.

Lord Macaulay of Bragar

I do not know how many noble Lords have seen the report. I believe in Scotland yesterday a Frenchman or a French group acquired a large part of Scotland for £2 million. I believe it was 50,000 acres, but it does not matter what acreage it was. It is not a question of giving land away on the part of the Secretary of State; it is giving land back to the people to whom it belongs. That is a principle which we should bear in mind during consideration of this Bill. There is no doubt that, during the time we were in Skye seeing people there, everybody regarded the Secretary of State as being the best landlord that they could have. We have to overcome any prejudice. The whole objective behind this Bill is to hand independence back to the people to whom the land belongs.

The noble Lord, Lord Gray of Contin, mentions landlords not giving things away. In fact, on our visit to Borve—no doubt the noble Earl the Minister will correct me if I am wrong in my figures—the local people there were "handed" the crofts back for a sum of £30,000. They readily acknowledged that they were dealing with an understanding landlord who wanted them to get on with their own lives in their own parish. If that is the spirit with which the Bill is presented and with which landlords can act within the Highlands, a lot of the rubbish that is talked about landholding in the Highlands can perhaps disappear. It is a spirit of co-operation, as my noble friend Lord Sewel has said. We are here to co-operate and to do the best we can for the crofting communities, and not to fight the landlords all over again.

Lord Mackie of Benshie

I wonder whether it does not depend rather upon what the buyers of the land can do with it. If they can flog it to the first Frenchman who comes along with £2 million, then, indeed, one should charge them a proper price. However, if it is restricted to social need and the continuance of the crofting system and its expansion, it is a different thing all together. But certainly, if the buyers can immediately take an enormous profit, which is the normal practice for people who benefit from privatisation of public utilities in this country under this Government, they should be charged.

Viscount Thurso

May I ask the Minister whether he can clarify that what is being proposed to be transferred or sold in this case is in fact the landlord's interest in the land, which is quite different to perhaps selling the land itself. I have an actual case myself, with which I am quite happy, where one of my crofters has bought a field because it is about to go into the local town plan, and he will sell it on and make a lot of money; and good luck to him as far as I am concerned. That is the individual crofter who is doing that, buying it from the estate, i.e. me. In this case, what is being sold is the estate interest, which really has very little, if any, value, and therefore the principle of transferring it from the Secretary of State to the body acquiring it at the very lowest price should be adhered to.

4.45 p.m.

The Parliamentary Under-Secretary of State, Scottish Office (The Earl of Lindsay)

May I echo the sentiments of the noble Lord, Lord Sewel, in anticipating a constructive Committee stage in the Moses Room, and the Moses Room is particularly well suited to a constructive dialogue on matters such as the Transfer of Crofting Estates (Scotland) Bill.

The effect of the amendments moved by the noble Lord, Lord Sewel, and spoken to with fairly broad support by the noble Earl, Lord Mar and Kellie, would be to make all transfers of land and transfers of rights associated with land free of charge.

On the question of transferring land, which is the focus of Amendment No. 1, my right honourable friend the Secretary of State has made clear that we would be willing to transfer this free of charge where this is necessary to ensure the viability of a trust.

It is likely that the vast majority of land on the Secretary of State's estates would benefit from free transfer. There are, however, some estates which consist of individual crofts without any common grazings and where the land is very much better quality than is the norm. These estates are largely to be found in the eastern Highlands. It is unlikely that free transfer would be necessary to ensure economic viability. We do not believe that free transfer of such properties would represent responsible management of publicly owned and publicly maintained assets, which is a point my noble friend Lord Gray touched on.

We need to bear in mind that where common grazings are not involved, crofters have had the right to buy all of their croft land since 1976, based on the statutory formula of 15 times the annual rental value. Free transfer to a trust consisting of individual crofts with no common grazing might be seen as a way of circumventing the existing statutory right to buy provisions. This would contrast unfavourably with the treatment given to neighbouring crofters who had already purchased their crofts on that formula. It would also contrast unfavourably with the treatment given to tenants of Scottish Office lowland estates, comprising similar smallholdings, who are required, under separate arrangements, to pay approximately 30 per cent. of the value of the land.

The Bill specifies that disposals of crofting estates by the Secretary of State should be on such terms as the Secretary of State, with the agreement of the Treasury, may agree with the body acquiring the property. This is a much more flexible approach which allows each case to be considered on its merits.

Amendment No. 3 seeks to ensure that any rights transferred with the land are also transferred free of charge. The noble Earl, Lord Mar and Kellie, sought perhaps a review of an inventory of the Secretary of State's estates in order to form a better view of them himself. The problem with an inventory, however, would be that we are talking about a land mass of some 105,000 hectares, with nearly 15,000 crofters, 150 townships and so forth. The point at which an inventory becomes relevant is the point at which a group of crofters proposes that land be transferred to them: it would be impractical for my officials to provide the sort of comprehensive inventory that the noble Earl requires.

There are, however, broad categories of rights attaching to those lands, on which I hope I can comment constructively. In relation to sporting rights, in most cases I envisage that the Secretary of State's interest in sporting rights such as deer stalking and trout fishing will indeed be transferred free of charge with the land itself. In some cases, of course, these rights have already been let and, where this is the case, trusts would benefit from this income for the period of the lease.

In law, salmon rights are dealt with separately from other sporting rights. Where these exist, and the decision is to transfer them, the question of any consideration would be considered on a case-by-case basis. The same logic would apply for mineral rights. In relation to the next amendment, we will be discussing the question of the transfer of these rights—here, we are just discussing whether, if they are transferred, there should be any charge.

In many cases it may be prudent to retain these in order that the returns from their exploitation can benefit not only the surface proprietor—that is, the crofting trust—but also where the returns are disproportionately high they could benefit the taxpayer who has for decades invested heavily in the maintenance and the well-being of these estates. I refer once again to the contribution of my noble friend Lord Gray of Contin in describing the general principle that lies behind our approach here.

However, where land is transferred, I reiterate to the entire Committee that each case will be considered on its merits. Although the arrangements would be specific to each case, I can reassure noble Lords that where the level of income from mineral rights is at current levels on each estate—and here I am talking about figures in thousands of pounds rather than, say, tens or hundreds of thousands of pounds—the Government will be content to ensure that crofting trusts benefit from this income in full and are free to exploit the minerals.

As I have already said, we envisage that the vast majority of the land will be transferred free of charge, but exceptions may be necessary to protect the public interest and on the grounds of equity.

Similarly in relation to rights associated with the land, our intention is to be as generous as the circumstances allow us to be and to ensure that the trusts get off to a good start. We have certainly not been penny-pinching, which is the allegation that the noble Lord, Lord Sewel, dared to aim at us.

However, because it is not possible at this stage to anticipate every set of circumstances across the 105,000 hectares, it is sensible to retain the flexibility which this Bill as drafted gives to the Secretary of State. It allows him to tailor individual solutions to individual circumstances, and that fact allows the concerns of other noble Lords who have spoken to be taken on board in each and every case.

I would therefore ask the noble Lord, Lord Sewel, to withdraw his amendment.

Lord Sewel

The Minister has a genuine point in seeking to distinguish between the west coast common grazing crops and the east coast crops, which many of us tend to see as smallholdings in any case, small farms. I wonder whether it might be possible for the sake of clarity to work that distinction into the Bill, and I would ask the Minister to see whether some form of distinction like that could be included.

On the mineral and other assets, the Minister is going as far as he is able at the moment, but we are all genuinely concerned that many of these crofts have very few assets. If they have the good fortune to enjoy mineral rights, it would be generous, fair and proper that those rights should transfer at the lowest possible cost in order to give a fair wind to the success of the trusts. Obviously at this stage I seek to withdraw the amendment, but I hope the Minister may be able to come forward with something a bit more precise at a later date.

With my local government background on planning issues, when I hear people continually say, "We want to be flexible and will treat all cases on their merits", I tend to remember that that meant one did not have a policy. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Sewel moved Amendment No. 2:

Page 1, line 27, leave out ("may") and insert ("shall").

The noble Lord said: I have referred to this already in moving the earlier amendment. At the present time the Bill gives a permissive power to the Secretary of State to transfer rights. I am seeking to make that mandatory, but clearly not transferring the rights against the wish of the trust. There is some further drafting to be done on that. But the issue must be that, if the land transfers, the rights that flow from the land should transfer as well. There should be no doubt about that. We should make it clear that it is a mandatory procedure rather than a permissive procedure. People would feel somewhat cheated if, having secured the transfer of the land, they found that a major asset which could make the difference between success and failure was not transferring at the same time. I beg to move.

Lady Saltoun of Abernethy

Before the Minister replies, are there any instances where the mineral rights or any other rights do not belong to the Secretary of State?

The Earl of Lindsay

I am grateful to the noble Lord, Lord Sewel, for moving Amendment No. 2 briefly. It picks up many of the issues that we discussed with the first group of amendments. I can immediately inform the noble Lady, Lady Saltoun, that the Secretary of State owns mineral rights on only 27 estates and only a few of those rights generate income. The total income from mineral rights at present is around £17,000 per annum.

As I said in answering the points made in respect of the first group of amendments, it is our intention at the moment that the crofting estates where those mineral rights reside should gain full access to that kind of level of income. It is only where income is disproportionate that we believe that the taxpayer—who has for decades invested first in purchasing the estates and subsequently in their continuing wellbeing—has a legitimate stake.

In addition to that reassurance, I reiterate to the Committee, and specifically to the noble Lord, Lord Sewel, that we are proud of a policy that includes flexibility and the determination to measure each circumstance and each case on its own merits. I would hate the Committee to think that the noble Lord's memory of Labour local government in Scotland applies here, and that measuring things on a case-by-case basis is merely the wrapping for a policy vacuum. In our case, when it comes to crofters, this is a deliberate and positive policy.

On a serious note, we recognise that, although one can perhaps define broad categories of crofting estate and crofting township, when it comes to the kind of detailed inventory that the noble Earl, Lord Mar and Kellie, is anxious to see, then distinct differences will emerge.

I would also mention in passing that the noble Lord, Lord Mackie, and others, raised some points on the first group of amendments. I have hesitated to respond to them in detail because I realise that they are points which will be dealt with fully in later amendments.

I hope the noble Lord, Lord Sewel, will accept that it will often be appropriate that all the rights that go with the land are transferred, whereas there will be other instances where the circumstances suggest it is not prudent simply to transfer all the rights. The assessment will be made by the Secretary of State and the crofters involved on a case-by-case basis.

The Earl of Mar and Kellie

I thank the noble Earl for referring to my request for an inventory. I certainly believe that, as this discussion has shown, there is a clear need to understand how each of these estates differs. I leave that point there.

I turn to the point made by the noble Lord, Lord Gray of Contin, about the amount of money that has been ploughed into crofting. While crofters receive grants and soft loans to enable them to build houses and sheds, these loans have to be repaid. Therefore we are effectively running a revolving fund, whereas providing council housing would be a less effective way of populating the north-west of Scotland and would have a considerable impact on the PSBR, on which the crofting grants and loans scheme has a lesser impact.

Lord Macaulay of Bragar

Can the noble Earl say why it is impossible to change the word "may" to "shall"? Surely that would give a degree of certainty in the transaction between the crofter and the Secretary of State. Looking at it from a legal point of view, if one was asked to advise the purchaser or the recipient of the goodwill of the Secretary of State and one is left with the word "may", that means nothing in relation to the land. Surely there should be an absolute transfer and disposal of the land and any rights of hearing to that land to the person receiving it so that he has a degree of certainty and ownership.

Taking the silly example which we used at the meeting in Inverness, if some great riches are found on a croft which has been given to the crofter in terms of Clause 1(5), the Secretary of State will then be able to say, "That's mine"—I do not mean that as a pun—"That was not transferred to you", because the word "shall" is not there.

5 p.m.

Viscount Thurso

The key word in this is "effeiring", and one area which concerns me is in regard to the salmon rights at Strathy Point. Even using the word "shall" as opposed to "may", the salmon rights would still fall outside this since those rights are not effeiring. On that basis, I understand that the use of the word "effeiring" in large measure in Scottish law—although I am not a lawyer by any stretch of the imagination—has the effect of "shall" to a certain extent. Therefore, using the word "may" with the word "effeiring" is almost a double negative.

The Earl of Lindsay

I am grateful for the opportunity to give the Committee the long version of the points raised by various noble Lords. To an extent, I shall be going over some of the ground we covered in the first group of amendments. The underlying principle, which cannot be overemphasised, is that we must retain flexibility because of the diversity between different estates, different townships and different regions.

As I explained, the ownership of sporting rights runs with the land, although that right may be let out to others. So, in all instances we expect sporting rights to be transferred with the land itself, with the caveat that actual freehold access, as it were, may be governed by a lease to a third party.

I also explained—as the noble Viscount, Lord Thurso, raised the point—that salmon rights are indeed separate from sporting rights. Therefore, they will be dealt with on a case-by-case basis depending upon the circumstances of the transfer that is being arranged between a group of crofters and the Secretary of State. Strathy Point is just one such circumstances that would deserve special consideration.

In relation to mineral rights, I can assure the noble Lord, Lord Macaulay, that not only is there nothing in the Bill to prevent the Secretary of State from transferring these either at the outset or in the future, but the general principle is that we want crofting trusts to have that fair wind that the noble Lord, Lord Sewel, refers to in order to be viable at the outset. In some circumstances where the Secretary of State has the mineral rights and those rights are being worked, the income arising will be possibly a crucial part of that early viability. Therefore, as I stressed in dealing with the first group of amendments, while there may be circumstances where we see very good reason why we should not be transferring the mineral rights initially, in such other circumstances the income arising from those mineral rights will at the levels which are currently accruing be transferred for the benefit of the crofters concerned.

My noble friend Lord Gray of Contin explored the principle that causes us to retain mineral rights for special consideration on a case-by-case basis and for the Bill to be drafted so that the Secretary of State "may" rather than "shall" transfer those rights. There are decades of investment by the taxpayer, by the public, in these estates, decades of investment in their well-being and their livelihood. Where there is the potential for considerable income to be generated from mineral rights—and we are talking about disproportionate levels of income—it is right that we consider retaining a stake for the taxpayer after decades of investment that the taxpayer has put in.

I hope that I have dealt with the major points arising from the amendment. Given that it is very similar to the first grouping of amendments, I hope that the noble Lord, Lord Sewel, will feel able to withdraw the amendment.

Lady Saltoun of Abernethy

Presumably where the Secretary of State does not own the mineral rights, the crofting tenant would have to negotiate with the owner of the mineral rights in order to buy them.

The Earl of Lindsay

As I understand it, if on one of the estates that benefited from the Bill and was able to propose a transfer of land the mineral rights had never transferred to the Secretary of State in the first place, and there remained a third party, it would be up to the crofters to negotiate with that third party for access to those mineral rights.

Lord Sewel

I have been trying to be as generous and as consensual as possible, but the Minister occasionally makes the odd point that is unworthy in some of his comments. When we look at the issue of transferring the rights, I believe that what the Minister has been saying actually supports the amendment. The intention seems to be that the sporting rights should transfer, as I understand it. When we come to the mineral rights I am slightly confused. If I heard the Minister correctly, he was saying that the present value of the mineral rights is £17,000 a year. Is that correct?

The Earl of Lindsay

The present income. The actual value of those mineral rights could clearly be much greater.

Lord Sewel

We are talking about an income of £17,000 a year. That seems to be a very low level. If that refers to the rights in minerals, why should those rights not be transferred?

The argument is that perhaps at some time in the future there may be some value out there of which we are unaware at present. If that is driving policy, that means that one would seek to protect the future by not transferring the rights in the first place. Surely we should concentrate on the perceived income at this time and, as the Minister has explained, that generates an income throughout the whole area of only £17,000 a year. I would have thought that that makes the case for transfer. We are not talking about major, major sums in any case, and I hope that the Minister at a later date might be able to meet us on that. For the moment, however, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 3 not moved.]

Clause 1 agreed to.

Clause 2 [Restrictions on disposal]:

The Earl of Lindsay moved Amendment No. 4: Page 2, line 11, leave out ("incorporate") and insert ("unincorporated").

The noble Earl said: This is a technical amendment to tidy up some drafting of the Bill. I beg to move.

Lord Jauncey of Tullichettle

I should like to raise one point with the Minister. Suppose either that the land were held or the crofting trust was incorporated as a charitable company limited by guarantee. I do not know whether that is a likelihood but it is probably possible. In such an event, would the deletion of the word "incorporate" prevent such a situation?

The Earl of Lindsay

I am advised that such a situation would not be prevented.

Lord Jauncey of Tullichette

It would not?

The Earl of Lindsay

It would not.

Lord Jauncey of Tullichettle

Why? Is that because a charitable company limited by guarantee is not incorporated?

The Earl of Lindsay

I am advised that that would be a body corporate and, therefore, allowed under the terms of the Bill as currently drafted.

On Question, amendment agreed to.

The Deputy Chairman of Committees (Lord Skelmersdale)

I have to tell the Committee that if Amendment No. 4A is agreed to I cannot call Amendments Nos. 5 and 6.

The Earl of Lindsay moved Amendment No. 4A: Page 2, leave out lines 15 and 16 and insert— ("(b) has the promotion of the interests of persons residing on such property as its primary objective.").

The noble Earl said: I would like to speak to Amendment No. 4A and, in doing so, speak also to Amendments Nos. 10 and 25.

Amendments Nos. 4A, 10 and 25 are government amendments which follow on from our consideration of the points which were raised through the evidence given to the Select Committee in Inverness. I recall that the noble Lord, Lord Macaulay, in particular, asked me to reflect further on these terms and to consider whether we should add definitions to the Bill. I refer, of course, to the references to "crofting interests" and "the crofting community" as they occur in Clause 2 of the Bill. The noble Lord, Lord Sewel, was also diligent in his interest in this aspect of the Bill.

We believe that the term "crofting community" would include not only residents of a particular crofting estate but also other members of the wider local community, such as doctors, teachers and ministers living outside the estate itself. We believe that the interests of such people should be taken into consideration by the Crofters Commission when it gives advice to the Secretary of State on proposals to establish crofting trusts. This is sensible and proper, and it is ensured in the terms of the Bill as currently drafted.

However, we do not believe that a crofting trust should be placed under a duty to promote the interests of those who are not resident on the land which it owns. Amendment No. 4A therefore makes clear that the trust should have the promotion of residents as its primary objective. This would not bar non-residents from being members of the trust, or from benefiting from its objectives. It does, however, mean that the interests of the residents would be primary.

Amendment No. 10 is consequential to Amendment No. 4A. It ensures that, when advising the Secretary of State on proposals to establish a trust, the Crofters Commission will have regard to the general interests of the crofting community in the district in which a property to be transferred is situated. We have been advised that the word "district" would be read as "districts" where the proposed trust covers more than one specific community. I beg to move.

5.15 p.m.

Lord Sewel

In talking to Amendment No. 4A I will, of course, refer to the grouped amendments standing with it. I thank the Minister very much for the slightly wider definition that has now been produced. That helps enormously, if the trusts are to achieve a broader contribution to the local development of their districts.

It will be realised that minds on all sides of the Committee have been exercised as regards our amendments. We have come up with the phrase "local community development" because that is essentially what the whole exercise is about. It is about producing a vehicle—for example, the crofting trusts—that actually enables local community development to take off and flourish in these areas. We are all strongly in support of that particular concept.

It seems to me right that that should be recognised when it comes to the process of consultation that has to take place before a transfer is agreed and, indeed, the objectives of the body to which the land is transferred. The legislation would benefit enormously if reference to the interests of local community development could be incorporated into the Bill. I recognise that the Minister has widened the scope quite significantly by his own amendments, but I still maintain that there is merit in having the reference to local community development in the Bill as it stands.

Lord Mackie of Benshie

It appears to me that it changes the point of the description. I do not know why it simply could not have said that "a body" would look after the interests of the crofting community, and other persons residing in the area, on such property. Which would seem neater?

Lord Macaulay of Bragar

Before the Minister replies, may I say how very grateful I am to him for taking note of the issues which were raised on what I regard to be a very important aspect of ownership of the crofts. I echo what my noble friend Lord Sewel has said, but I still find that, even with the best will in the world, the amendments do not deal with the issue of ownership of a person who, for example, is not residing on the island but actually owns the croft. That was the point which I believe we tried to raise during our visits to the North. I wonder whether the question of ownership of the croft is being ignored in the construction of the Bill, and too much emphasis is being placed on residence instead of ownership.

The Earl of Lindsay

I can reassure the noble Lord, Lord Mackie, that we believe there is a need to distinguish between two important considerations, one of which should have primacy over the other but with both of them still being valuable and unavoidable. The primacy should go to the interests of those who are residing on the property as tenants of the Secretary of State. The second consideration, which should form part of the advice from the Crofters Commission to the Secretary of State regarding any transfer, should not only include the interests of those who reside on the estate but also the interests of the wider community in the district in which that estate is situated.

As I explained in moving government Amendments Nos. 4A and 10, the future interests, were they to involve community development, or whatever, of those who are involved in the estate but who do not actually live on it, should not have the same priority as those who live on that estate.

The amendments moved by the noble Lord, Lord Sewel, and spoken to, in addition, by the noble Lord, Lord Macaulay, seek the specific inclusion of the phrase "local community development" into Clause 2 of the Bill. As I hope I have already explained, our proposed amendment to Clause 2(1)(b) seeks to make it clear that crofting trusts should have the promotion of the residents on the property being disposed of as its primary objective. That would include both crofters and non-crofters. We do not believe that a trust should be required to represent the interests of those not resident on the land of which it has taken ownership, and which it will be responsible for managing. "Promoting residents' interests" is, in our view, sufficiently broad to encompass community development as provided for by Amendment No. 5. In short, we agree with the sentiment expressed by this amendment and by the noble Lord, Lord Sewel, in moving it. However, we believe that the sentiment is already incorporated into the existing provisions of Clause 2.

Amendment No. 8 refers to the considerations which the Crofters Commission must take into account before advising the Secretary of State on any crofting trust proposal. The proposed amendment would require the Crofters Commission to take account of community development in the relevant district. Under the existing provisions of the Bill, the Crofters Commission is able to take account of "local community development" if it considers that to be important, either as part of the general interest of the crofting community or as another matter which is considered relevant.

I was remiss when speaking to Amendments Nos. 4A and 10. I also intended to speak to Amendment No. 25 with this group, which provides the definition of the term "crofting interests". As I explained earlier, when your Lordships' Committee was taking evidence in Inverness the noble Lord, Lord Macaulay, asked, and I agreed to give further consideration to, the precise definition of "crofting interests". These are interests of which a proposed crofting trust must be representative, and Amendment No. 25 seeks to define those interests.

We have always maintained that a crofting trust should be representative of the crofters on the estate. We therefore propose defining "crofting interests" to include crofting tenants and others, such as owner occupiers, who may have rights to use common grazings which form part of the property transferred to a crofing trust. This amendment is introduced for the avoidance of doubt. I hope that my comments on these various amendments have helped to clarify our position and that, in the light of my additional clarification, noble Lords who are involved in these amendments will feel able to withdraw them.

I also hope that the noble Lord, Lord Macaulay, will accept that in circumstances which will vary from trust to trust in terms of those who own crofts but do not reside in them, it will be for the Secretary of State to judge on the exact circumstances—having been advised by the Crofters Commission formally, and I would have thought in most instances, by other bodies as well which will want to make their views known to the Secretary of State—the best solution and future circumstances that reflect the interests of that estate and those who reside on or are involved in that estate.

Lord Sewel

Again I am in the position of thanking the Minister for his clarification on the issues, but my response is very much the same as on previous occasions. To be frank, the Minister is meeting us more than half way but, if we refer to the fact that the Crofters Commission may take into account local community development aspects, there is no harm in specifying and directing the commission to take that into account for the avoidance of any doubt. There is merit in making it clear that in proposing and encouraging this concept we have in the forefront of our minds the contribution that this policy can have to local community development in the Highlands and Islands of Scotland. The Bill would benefit enormously from that direct and explicit reference. While withdrawing the amendment at this stage, I retain the hope that the Minister may be able to go the last third of the way.

On Question, amendment agreed to.

[Amendments Nos. 5 and 6 not moved.]

Lord Sewel moved Amendment No. 7: Page 2, line 17, after ("consultation") insert ("or consenting to any subsequent conveyance from a transferee to a new owner").

The noble Lord said: We come now to the thorny and quite difficult problem of on-selling. I admit quite openly that the problem of on-selling is difficult. It was an issue which took up a considerable amount of time in Inverness. There was a recognition of the danger referred to in an earlier discussion on an earlier clause that once the initial transfer has taken place with what we must recognise are likely to be fair if not generous terms, there is the possibility that the whole concept will be eroded by the subsequent on-selling of the land.

Amendment No. 13 in particular is moved with the object of trying to establish a procedure. The procedure in the amendment may be flawed; there may be something completely wrong with it; but it is there to highlight the issue. I hope that the Government will be able to move their own amendment at a subsequent stage to deal with this problem.

What was worrying in Inverness, and it came through the evidence of Professor Bryden, was that in Assynt the recurrent cost of the trust's activities was being financed at least in part by the sale of the capital assets. Now, that is a path to perdition if one is not careful. There is at least the possibility that where there are housing development pressures outside the main villages in the Highlands, there will be enormous pressure in relation to decrofting and on-selling of land.

Perhaps I may look forward a little. It may be that over time those trusts will come under the control of perhaps a relatively limited active group of people, and the community will find that its major asset has partly disappeared from it. I appreciate fully the difficulties of finding an appropriate mechanism to control on-selling, but we shall have to look at that. As drafted, Amendment No. 13 presents an opportunity. I am quite prepared to accept that that is not the right way forward, but of all the issues, it is the one issue about which there was the greatest amount of concern shared among Members of the Committee and among those who gave evidence. I hope that the Government will be able to respond positively to the principle if not the actual detail of the amendment. I beg to move.

Viscount Thurso

I would concur with the noble Lord, Lord Sewel. This was one of the areas of greatest concern which was shared by everyone on the Committee. The problem is that, on the one hand, it is absolutely right that these fledgling birdies, which we are trying to ensure grow into big birdies, need to be protected. There is a period of time when they have to be looked after.

On the other side of the coin, however, one could easily see how, by imposing upon them the restrictions which their counterparts in the private sector are not bound by, they could not only miss out, but be seriously hampered by something that would be right and proper for them to do in the future. I regard this amendment as one which provides an opportunity to the Committee to perhaps explore this or other ways of finding the right formula because that is what we are all concerned to do.

One possibility might be to look at a period of years. Rather than attempting to amend the specific parts of Clause 2 by these two amendments, it may be better to deal with the matter as a subsection of Clause 2. I believe that there should be provision of a period of five or perhaps even 10 years during which there should be a mechanism of control. Thereafter, once the scheme is bedded in and mature, it should be left to fly on its own.

I did rather cheekily think of another way of dealing with it; namely, that perhaps the Secretary of State might retain the right of pre-emption!

5.30 p.m.

The Earl of Lindsay

We always welcome fresh ideas on these matters and I am therefore grateful to the noble Viscount for bringing forward those new ideas for us to consider. I am grateful to the noble Lord, Lord Sewel, for bringing this subject back to the attention of the Committee. The Government would share the concerns of the Committee which lie behind the amendment if there were a complete absence of safeguards. Perhaps I may explain why we believe that there are sufficient safeguards. I hope that I shall reassure those noble Lords who are feeling concerned. However, I would also refer to the comments made by the noble Lord, Lord Mackie, on the first group of amendments which really dealt specifically with the focus of this group of amendments. He speculated as to what might happen when the first crofter owners through a crofting trust then sold on to a second owner.

There are two safeguards in place which I hope the Committee will feel provide the reassurance that is widely sought. The first which applies across Scotland is planning law and planning regulations. The second is the most vital one; namely, the significant legislative safeguards which are there to prevent land being taken unnecessarily out of crofting tenure. Any landlord wishing to remove land from crofting tenure for development must apply to the Scottish Land Court to resume that land. The Land Court can authorise the proposed resumption only if it is satisfied that it is for a reasonable purpose and that that is a reasonable purpose as defined in the Crofters Act.

Crofting trusts, as crofting landlords, will be subject to these existing provisions in the same way that they will be subject to planning legislation. We are content that existing crofting legislation provides very efficient safeguards to protect the interests of the crofting tenants of a crofting trust. The proposed amendment would, therefore, introduce a bureaucratic hurdle which we see as being unnecessary in the light of the Crofting Act for trusts which wish to dispose of land in order to further the interests of the crofters which they represented. They would gain permission from the Scottish Land Court to resume that land for such development only if it passed the strict criteria imposed on any judgment made by the Land Court on the application.

The proposed amendment would also impose a requirement on crofting trusts established on land previously owned by the Secretary of State which would not apply to other crofting landlords, including crofting trusts established on privately owned land or, indeed, on crofting trusts on land which had been owned by the Secretary of State but which had been transferred prior to the Bill being enacted. The implication of this amendment is that crofting trusts cannot be trusted and that their decisions need to be subject to approval by a government agency; namely, the Crofters Commission. That is a specific reference to the second amendment.

The Crofters Commission has a continuing role where there are applications to decroft but the most significant factor in our response to both these amendments is the role of the Scottish Land Court in judging whether crofting land can be taken out of crofting and be resumed for further development. Our vision is for crofters to have the responsibility for making decisions which affect their lives and their estate and this is quite contrary to the paternalistic approach which has existed for many years on the Secretary of State's estate and which, with good reason, nevertheless lies behind these amendments. We want to provide freedom but we want to do that within the constraints and the safeguards that already exist through the Crofting Act and through the Scottish Land Court. Therefore, I am not unsympathetic to the fact that these fears have been envisaged.

However I would stress that, if we felt that those fears were a reality, we would be supporting these sorts of amendment ourselves. However, we do not believe that those amendments articulate a reality because of the Scottish Land Court and the important role which it plays.

Lord Jauncey of Tullichettle

I would like to as the Minister one question. I have before me the 1993 Act section 20 dealing with resumption of croft and decroft. I do not know if it is that to which the Minister has regard, but this would appear to relate to a situation where the land is being resumed by a landlord against the will of the crofter rather than with his consent, I wonder whether the Minister is satisfied that, in the event of all the members of a crofting trust agreeing to a disposal of part of the land, it would be necessary then to go to the Land Court at all.

Lord Mackie of Benshie

Further to that point, I know the Government do not like majority voting but would the trust be set up with majority voting? In other words will it affect the issue, as the noble and learned Lord has just said, if all are in favour of a move or if only the majority are in favour and some people wish to retain the present position.

The Earl of Lindsay

I shall write to the noble and learned Lord, Lord Jauncey, in order to give him a definitive answer, rather than an answer which is less than complete now. The interesting point raised by the noble Lord, Lord Mackie, touches on the different structures of trusts and different balance of majority versus minority as regards how a certain proposal might be handled or might be relevant in the event of a proposed development. We are not seeking to prescribe, through this initiative and through legislation, exactly what sort of format any crofting trust should take. We are not seeking to prescribe whether, before any development is allowed to take place, there should be thresholds achieved on a democratic basis; whether the voting should involve votes which are allocated on a per head basis or per property basis; and so forth. We believe that it is better that such management mechanisms are designed to reflect the circumstances pertaining to the trust which is involved in the transfer of land, rather than the Government or any other government agency dictating exactly how they should run their lives. Therefore, it is for the crofters themselves to decide the best way to make those decisions.

Lord Sewel

I thank the Minister again for his comments. To demonstrate how consensual we are this afternoon, I shall do what I have been urging him to do: I will take it away and reflect deeply on what he has said, and see whether there is a need from our point of view to persist with the amendment at a later stage. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 8 and 9 not moved.]

The Earl of Lindsay moved Amendment No. 10: Page 2, line 19, leave out ("that district") and insert ("the district in which the property is situated").

On Question, amendment agreed to.

[Amendment No. 11 not moved.]

The Earl of Lindsay moved Amendment No. 12: Page 2, line 21, at end insert— ("(3) In the application of this section to property mentioned in paragraph (b) or of section 1(3)—

1. (a) in each place where it occurs, the word "crofting" shall be omitted: and
2. (b) in paragraph (b) of subsection (2) for the word "crofters" there shall be substituted the word "tenants".").

The noble Earl said: I am grateful to my noble friend Lady Carnegy of Lour who drew our attention during the debate on Second Reading to the discrepancy which the amendment rectifies. The provisions of Clause 1 of the Bill allow the Secretary of State to transfer property which is part of his crofting estate, but not under crofting tenure. I refer in particular to the fishermen's dwellings and holdings in Lewis. While Clause 2(1)(a) requires that the body to which the property is transferred be representative of crofting interests, in order to ensure the inclusion of those tenants who do not benefit from the legal status of crofters but who are tenants of property covered by the Act, we propose this amendment. The effects of the amendment will therefore be to ensure that, where property is transferred with non-crofting tenants, the trust is representative of their interests and their views are taken into account by the Crofters Commission before giving advice to the Secretary of State. I beg to move.

On Question, amendment agreed to.

[Amendment No. 13 not moved.]

Clause 2, as amended, agreed to.

Clause 3 [Financial assistance by Secretary of State]: Lord Sewel moved Amendment No. 14: Page 2, line 27, at end insert (": and ( ) to defray the costs of meeting outstanding liabilities which may persist on the crofting property at transfer.").

The noble Lord said: With Amendment No. 14 we are discussing Amendment No. 15. Amendment No. 14 relates to the problem of liabilities, and its purpose is to try to achieve some balance. Earlier, we discussed the assets which may or may not transfer with the property, but there seems no doubt that the liabilities will transfer—you may get the goodies, but you will certainly get the baddies. That is the basic message to those seeking to set up a property trust.

The scope of Amendment No. 14 is modest. It seeks to give the Secretary of State powers to make payments to defray the cost of meeting the outstanding liabilities which may persist on the crofting property at transfer. It does not require him to do so, but it gives him a power to make a payment to defray the liabilities if, in all fairness, the scale of the liabilities is grossly out of proportion to the assets and likely income of the crofting trust itself. If we do not make this provision, there is the very real danger that a trust may find, after a couple of years and a severe storm perhaps, that it is faced with a liability, the costs of satisfying which would be so disproportionate as to undermine the whole viability of the trust's activities. The amendment is modest in its scope, and its purpose is to guard against that type of event having devastating consequences on the future of the trust. It does not impose any duty on the Secretary of State; it simply gives him a power. I hope that this modest amendment will be accepted. I beg to move.

The Earl of Lindsay

The noble Lord, Lord Sewel, has explained how Amendments Nos. 14 and 15 seek to extend the powers of the Secretary of State to provide financial assistance to trusts. As I have outlined in our deliberations to date, the Secretary of State has already determined that all trusts should be viable at their establishment. Therefore, the scenario that the noble Lord has painted of a trust which starts its life with a scale of liabilities way in excess of its assets or its income is extremely unlikely. We are determined that trusts should start off on a viable and promising basis. Clause 3, as drafted, enables the Secretary of State to deliver some of that vital assistance to ensure that they are viable on establishment.

Amendment No. 14 would allow assistance to defray costs arising from outstanding liabilities. Ownership of the land offers considerable opportunities for crofting trusts and many, if not all of the goodies, as the noble Lord, Lord Sewel, referred to them, will be transferred to trusts. The suggestion of the noble Lord, Lord Sewel, that we are somehow retaining—to employ the adjective he used earlier—in a penny-pinching manner all the goodies while imposing all the obligations is misleading. We are seeking to transfer as many assets as we can, depending upon the exact circumstances, and we are seeking to ensure that no trust is established that will not be viable.

In taking advantage of the opportunities it would clearly be appropriate for crofting trusts to take on normal maintenance and repair responsibilities that go with ownership: for example, a responsibility for march fencing. There may, however, be cases where the Government, for some historical reason, have a broader responsibility for maintaining a particular community asset. That is dealt with currently by the section of the department responsible for the crofting estates. One such example is the drainage system on Benbecula. In that instance we would not seek to transfer that obligation on to the appropriate crofting trust. I can give immediate assurance, therefore, to the noble Lord, Lord Sewel, that there are types of burden that we would not seek to transfer.

Given that, we do not believe that there would be any merit in giving the Secretary of State power to defray costs that would arise out of normal management responsibilities that go with the ownership of the land.

The noble Lord also referred to specific events such as storms and the chaos that they can bring. When there are emergency circumstances, both within and outside crofting Scotland, we would always hope that emergency procedures and emergency services would be triggered by such an event in order to bring succour.

I would like to refer to Amendment No. 15 in slightly greater detail than the noble Lord, Lord Sewel. It refers to transport and other infrastructure in and related to the crofting community. Burdens of that kind are relatively exceptional and where they did not form part of the normal maintenance and repair responsibilities of an estate they would be retained by the Government. Where the department retained a particular responsibility and wished to use the trust as an agent for undertaking certain work, that could be arranged on a contractual basis with the crofters concerned. But I can see no case for giving financial assistance to a trust to maintain transport and other infrastructure as a general principle. Those responsibilities properly lie with other bodies, such as local authorities. In taking the opportunity to own their land, crofting trusts will accept responsibility for normal maintenance and management of estates in the same way that they will have normal access to the opportunities that go with land ownership.

I hope that I have explained in some detail those circumstances where the Government would not be seeking to impose a transfer of obligations. On that basis I hope that the noble Lord will feel able to withdraw the amendments.

5.45 p.m.

Viscount Thurso

Perhaps I may ask the Minister for clarification. I have clearly misunderstood the word "liability", perhaps through being from a commercial background rather than a legal one. I always understood a liability to be the opposite of an asset on the balance sheet. Therefore, I thought that the amendment sought to ensure that in the process of handing over the assets the worst case would be a nil point but the trusts would not be handed over a minus point where there was a liability, as I understand it, equal to or even greater than the assets they were receiving.

If I have understood the Minister's reply, he is really speaking about the costs of running the estate, which would form part of the profit and loss. It is quite right that the proper ongoing costs, which would be defrayed by the income of the trust, should be met by the trust. I had thought that the amendment was addressing the liability, namely the opposite of an asset on the balance sheet.

The Earl of Lindsay

I hope that I can help the noble Viscount by saying that it is an even more simple principle. We intend that any trust to which land is transferred by the Secretary of State must be economically viable. In terms of its balance sheet, we do not want to see a trust being created which then has little chance of surviving economically.

In considering the amendments we are discussing, especially Amendment No. 14 which refers to outstanding liabilities which may persist, I took the opportunity to focus on continuing liabilities such as on-going maintenance. In terms of liabilities as the opposite of assets, we would insist that there was a liability at the point of start-up in terms of normal on-going maintenance. We would normally expect the trust to be able to afford that. We have no interest in setting up trusts which could quite clearly not meet the normal maintenance requirements of running such trusts.

Lord Jauncey of Tullichettle

Are there any liabilities which would be transferred with the land other than heritable securities? I presume the Secretary of State is not hocked to the hilt over the crofting communities, with bonds and dispositions and so forth. Reading the amendment of the noble Lord, Lord Sewel, it appears that he is concerned that the Secretary of State may have occurred certain liabilities which would be personal to him as landlord but which would be transferred to the crofting trust. I would have thought, speaking as a lawyer, that was a very unlikely event. It would only be that liabilities attach by way of standard security or some heritable security which would pass with the land.

Lord Sewel

May I help here? I am not a lawyer and my advisers are not lawyers. But for "liabilities" read "burdens".

The Earl of Mar and Kellie

As we have gone through this Bill I seem to have come across what may be only a rumour, or at worst a construct of my own mind, but one or two of the estates of the Secretary of State have somewhat unreasonable burdens in the form of public roads and public bridges, which I can only assume somehow or other were not adopted by the local authority. Since I believe maintenance of a public road and a public bridge is a considerable burden, I wonder whether the noble Earl could help me on that.

The Earl of Lindsay

I reiterate the assurance which I gave earlier to the noble Earl, Lord Mar and Kellie, that liabilities which attach to transport and other infrastructure of an exceptional nature will not normally be passed on to the trust. We are talking only about the normal maintenance and repair obligations that pertain to land ownership.

I shall offer to write a second letter to the noble and learned Lord, Lord Jauncey. We have embarked upon a series of concepts and definitions which are drawn both from the legal field and the accountancy field, and I would rather look in detail at the noble and learned Lord's question before replying.

Lord Jauncey of Tullichettle

The noble Lord, Lord Sewel, has clarified my mind. It appears only to be concerned with burdens on the land. I am grateful.

Lord Sewel

Before withdrawing the amendment, it seems to me that this has been a useful exchange. For the first time the Minister has indicated that there would be some burdens which would not be transferred and, if I understand him correctly, the only burdens which will be transferred will be the normal maintenance burdens. That is wholly acceptable. If the Minister could clarify that, it would help us enormously at a later stage. If that clarification cannot be given, we would seek to identify those particular burdens, to which the noble Earl, Lord Mar and Kellie, referred—bridges and roads—that we would wish to see specifically excluded from the transfer. I hope the Minister can respond positively.

The Earl of Lindsay

To save time at a later stage of the Bill, I can reassure the Committee that the burdens and obligations that will be transferred to a trust are the normal burdens and obligations which attach to land ownership per se and that, as I said earlier, there are aspects of some of the obligations attaching to current crofting estates that are unusual or exceptional. I have referred to one particular community asset, which was the drainage system on Benbecula. In terms of its maintenance and the costs arising from it, we would not be seeking to impose that or to transfer it, nor exceptional infrastructural assets which are more properly the responsibility of others such as the public roads and public bridges that the noble Earl, Lord Marr and Kellie, mentioned.

Lord Sewel

Is there any possibility of the Government bringing forward an amendment at a later stage that actually makes this clear? It is a matter of some importance, especially for those who may wish to set up crofting trusts themselves. It is not actually clear in the Bill what they are letting themselves in for. It would be very helpful if this clarification could be incorporated into the Bill.

The Earl of Lindsay

I shall consider anything that the Committee asks me to consider. I would also remind noble Lords that on the case-by-case negotiation that will precede any transfer of land, the details that we are looking at closely at the moment would form a large part of the discussion that will take place between the Secretary of State, possibly the Crofters Commission and any crofters who were seeking to have that land transferred.

Given that we do not want to see crofting trusts created which then are immediately less than viable, I can reassure the Committee that we would not be seeking to impose obligations or burdens that could not immediately be afforded.

Lord Sewel

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 15 not moved.]

Clause 3 agreed to.

Clause 4 agreed to.

Clause 5 [Rights of pre-emption]:

Lord Sewel moved Amendment No. 16: Page 1 line 32, leave out ("this section, be extinguished") and insert ("the disposal, be extinguished in respect of that disposal and").

The noble Lord said: On this occasion I take refuge in the well-known phrase that Amendments Nos. 16, 21 and 22 are technical drafting amendments and perhaps the Minister might care to respond to them. I beg to move.

The Earl of Lindsay

I am grateful to the noble Lord, Lord Sewel, for the full and detailed explanation he offered to the Committee for these technical amendments!

As I understand Amendments No. 16, 21 and 22, they seek to define critical points at which a disposal has been completed, at which a claim has been accepted and at which the right of pre-emption is extinguished. We believe that the Bill, as drafted, makes clear that the right of pre-emption over a property is extinguished for all time at the point of disposal and, therefore, that Amendment No. 16 is not necessary.

Amendment No. 21 seeks to broaden the description of the point at which a claim for compensation has been approved by the Secretary of State. We also feel this amendment to be unnecessary. It will be obvious when the Secretary of State has accepted a claim for compensation since he is required by Clause 5(4) to notify the claimant of acceptance of rejection. The Bill makes no provision to allow identification of the point at which the Secretary of State might be deemed to have accepted a claim for compensation; indeed, in contrast to the amendment, the existing provision in the Bill is clear and definitive.

Amendment No. 22 seeks to define the point at which disposal is affected. This does not require further elaboration on the face of the Bill. We believe that the date at which the Secretary of State transfers legal ownership to a trust is the point at which disposal is affected. Legal practice would be that this occurs on the date of settlement.

I am grateful to the noble Lord for giving me this opportunity to explain some of the strengths of the existing drafting of the Bill. I hope that, with those reassurances, he might feel able to withdraw his technical amendment.

Lord Sewel

I am particularly grateful to the Minister for the tour de force that he has given to the Committee in explaining these amendments and why they are not acceptable. With alacrity, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Jauncey of Tullichettle moved Amendment No. 17: Page 2, line 34, leave out ("he shall") and insert ("in respect of which a right of pre-emption existed at the date of disposal, he shall, within six weeks of such date, give notice of the disposal to any person who is entitled to exercise the right, provided that where he is unable, with reasonable diligence, to identify such person, he shall instead of giving notice").

The noble and learned Lord said: I move this amendment, appreciating first of all that rights of pre-emption, which we discussed a certain amount at the hearing Inverness, may well be of little or almost no value. I do not suggest that the terms of the amendment are ideal, but the purpose of the amendment is simply this. It seems to me that, as a matter of principle, where rights are being expropriated—which is the position here—and where compensation is being offered therefor, it is appropriate that notice, where possible, should be given to those whose rights are being taken away.

There may well be cases in which it is not possible to determine now in whom is vested the right of pre-emption which may have arisen in 1919 or perhaps even earlier. At the hearing in Inverness when I raised this matter with the Minister, he said that where the Secretary of State knew of the existence of holders of rights of pre-emption, he would notify them, in addition to advertisement. However, as a general principle, where compensation for removal of rights is to take place, it seems that notice ought to be given as a matter of statute and not as a matter of decency on the part of the Secretary of State. Notice ought to be given to those who are entitled to compensation, howsoever small that compensation may be.

As the Minister said, there will be cases where it is known who is entitled to the right of pre-emption and in that situation the matter should be written into the Bill. I do not suggest that my formula is by any means ideal, but I move it simply so that the Minister may consider it and an appropriate provision may be included. I beg to move.

6 p.m.

Lady Saltoun of Abernethy

As my wares are displayed alongside those of my noble and learned friend, perhaps it might be appropriate if I said a word about them.

In the first place, I should have put down three amendments because I should have put down a similar one on page 2, line 42. But having said that, I have to say that I infinitely prefer the amendments of my noble and learned friend to my own. However, it seems to me that he has asked for what he was prepared to settle for, whereas I have done my Persian carpet seller trick and asked for about twice what I am prepared to settle for on the basis that we might negotiate.

Six weeks is not long enough. We have been through all this before in the Natural Heritage (Scotland) Bill over the length of notice that the Secretary of State would have to give for designating a natural heritage area. It is not sufficient, particularly when people may be at the other end of the earth. Having said that, I shall leave the matter to the Committee.

The Earl of Mar and Kellie

On the subject of the right of pre-emption, when a property is being transferred at no consideration, it suddenly becomes rather attractive to someone with a right of pre-emption. Normally one has to pay rather a lot of money but in this particular case one would not, so the extinction of the right of pre-emption could come as quite a blow to someone who hopes one day to operate it.

I would like now to talk about the various definitions of the length of time that ought to be allowed for a pre-emptor to identify himself. I do not believe it matters at all, because under the scheme that we have the pre-emptor—or someone with a right of pre-emption—is not a factor at all in the negotiations or ultimate transfer of the estate. From Royal Assent, or whenever the Secretary of State determines, every right of pre-emption becomes what one might call a potentially extinguished right. At the point, presumably, of conveyancing it becomes an extinguished right. I therefore do not believe that we need to have any time limit at all. The Bill is ungenerous in allowing only six weeks. If someone is to come forward it does not matter. It is only a question of the compensation, and the person with the right of pre-emption does not have any say in whether or not the transfer should occur.

Viscount Thurso

I do not wish to retread the ground so ably trodden by my noble friend, but there seems to be a rather dangerous principle in the context that where a contract has been made we in Parliament can, by statute, remove a right under that contract in such a way that a party to the contract never comes to know of it. As my noble friend says, it is not a factor in the conveyance and disposal; it will not hold it up, and I have yet to meet the Scottish lawyer who can complete a conveyance in 12 weeks, present company excepted.

Even if it is part of the conveyance and is required to be completed before disposal, I do not believe it would hold it up. We are entering dangerous ground, not so much in respect of this Bill, under which it is only some poor landowners of ancient history who might lose, but for future legislation in which the principle of extinguishing something on a time frame as ungenerous as six weeks may well come back to haunt us.

The Earl of Lindsay

The noble and learned Lord, Lord Jauncey, and the noble Lady, Lady Saltoun of Abernethy, spoke to Amendments Nos. 17, 18, 19 and 20, and the noble Earl, Lord Mar and Kellie, and the noble Viscount, Lord Thurso, made constructive contributions. If the Government were seeking to extinguish these rights with the callousness that the noble Viscount envisaged, then I would be the first to look at how we might amend this clause. We are seeking to avoid any callousness and wish to be conscientious in delivering the obligations that we acknowledge.

I can only describe the situation which the noble Earl, Lord Mar and Kellie, envisaged as a Highland fantasia—an expression I read in the newspapers this weekend. Clause 5(1) extinguishes the rights of pre-emption at the point of disposal, so the noble Earl imagined that he could somehow exercise that right of pre-emption on a disposal that may take place free of charge; the proposed legislation quite deliberately prevents that from happening.

Amendment No. 17 moved by the noble and learned Lord, Lord Jauncey, requires the Secretary of State to attempt to identify existing holders of rights of pre-emption as a statutory requirement. I am pleased to reassure the Committee that where we believe a person might be entitled to claim compensation we shall give notice to that person to that effect. However, there would be particular difficulty in placing any statutory requirement upon the Secretary of State to try to identify current holders of all the rights of pre-emption.

Unlike practice with regard to rights of pre-emption in private sales, there is no paper record of the right which would identify transfer from one owner to another. Since very few, if any, of the original owners of the land in question are likely to be alive, there is no readily accessible and definitive source of information which could be used to identify the current owner of any rights. In those circumstances, attempting to trace through the statutory obligation of those holders would be disproportionately expensive in resources and would offer no guarantee of success.

However, I can reassure the Committee that, where the department believes that an individual or organisation may be entitled to claim compensation, we shall give notice to them to that effect. I give this assurance very specifically on that point. This may happen where the estate to be transferred to a trust previously formed part of a larger estate which still belongs to the family of the original owner.

In such cases, it is likely—but by no means certain—that the entitlement to rights of pre-emption may rest with the current owners of the estate of which the Secretary of State's land had previously formed a part. Even in such cases, there is of course no certainty, and I believe that the noble and learned Lord, Lord Jauncey, and others will appreciate that, therefore, we would have difficulty in accepting Amendment No. 17 as a statutory obligation. To underline the effort and the intelligence that we would bring while seeking to inform those who may well be the current holders of rights of pre-emption, I should also point out that through ourselves and the agriculture offices that we have around Scotland (which administer many of the crofting schemes through the Crofters Commission) and through other organisations, we have a body of intelligence from which to make an educated guess as to where the current holders of rights of pre-emption may well be now. However, in terms of a statutory obligation to trace these people, there are insufficient records on paper to carry out such an exercise.

Amendment No. 18 tabled in the name of the noble and learned Lord, Lord Jauncey, and Amendment No. 19, spoken to by my noble friend Lady Saltoun seek to extend the deadline for claims to be submitted to the Secretary of State.

As noble Lords are aware, we have received several representations, which have suggested that a period of six weeks, in which claimants must lodge a claim with the Secretary of State, is inadequate. The length of the period allowed for lodging claims will have no impact on the transfer of estates, as the question of compensation arises only after the right of pre-emption has been extinguished, which happens at disposal of the estate. It is important to point out that, if the period in which a claim could be lodged were extended, it would in no way act as an obstruction to the disposal of estates and the creation of crofting trusts.

In Amendment No. 19, my noble friend Lady Saltoun sought an extension of the period for lodging claims of up to six months and explained later on that this may have been part of a haggle in which she was seeking to indulge. The Bill here is extinguishing a right and we must treat the owners of this right fairly; of that the Government have no doubt. The Government are sympathetic to requests for an extension and it may be that we favour a period in line with the suggestion made by the noble and learned Lord, Lord Jauncey, in Amendment No. 18. However, in any event, I should like to take away the point raised by the noble and learned Lord, Lord Jauncey, and my noble friend Lady Saltoun to take a fresh look at it.

With regard to Amendment No. 20, tabled in the name of my noble friend Lady Saltoun, I am less convinced of the need to extend the deadline for claimants, who have had a claim rejected by the Secretary of State, to lodge an appeal with the Scottish Land Court. Here we are not dealing with people who may be unaware of the existence of their rights of pre-emption, or of their right to lodge a claim for compensation. In this case, we are talking about people who have already prepared and presented evidence to the Secretary of State and are aware of the procedural requirements for pursuing their claim further. Given this, a period of six weeks from the date of notification of rejection of the claim would appear to be adequate to allow the claimant to apply to the Scottish Land Court for a determination that the claim is valid.

With the reassurances that I have been able to give on various points, and the explanation as regards Amendment No. 20, I hope that the noble and learned Lord and my noble friend will feel able to withdraw their amendments.

6.15 p.m.

Lord Jauncey of Tullichettle

Given the Minister's detailed explanation, in particular pointing out how very difficult it was likely to be to trace individuals in whom the rights of pre-emption were presently vested, I withdraw Amendment No. 17.

Amendment, by leave, withdrawn.

[Amendments Nos. 18 to 22 not moved.]

Clause 5 agreed to.

Clause 6 [Continuation of tenant's entitlement to buy holding]:

The Earl of Lindsay moved Amendment No. 23: Page 3, line 19, leave out from beginning to ("as") in line 22 and insert ("Where relevant property is disposed of by the Secretary of State under this Act, section 6(3) and (4) of the Land Settlement (Scotland) Act 1919 shall apply to the tenant of that property").

The noble Earl said: I should like to thank the noble and learned Lord, Lord Jauncey, for raising in Inverness the question of whether existing and new tenants of non-crofting lands will continue to benefit from existing rights to buy.

Section 6(3) and (4) of the Land Settlement (Scotland) Act 1919 provided tenants with the right to buy the land that they tenanted at a price exclusive of any increase in value which was due to improvements executed by the tenant. Tenants of the land in the crofting estate not held under crofting tenure (described in Clause 1(3)(c)) would qualify for this right to buy.

The amendments are intended to ensure that this right is enjoyed by tenants who take up tenancy after transfer as well as those existing tenants at the point of transfer to a crofting trust. On the basis of the interest in the matter which was expressed in Inverness, not least by the noble and learned Lord, Lord Jauncey, I hope that the Committee will welcome this amendment. I beg to move.

The Earl of Mar and Kellie

This set of amendments had me reaching for a copy of the Land Settlement (Scotland) Act 1919 to see exactly what it said. I shall have to read it out in order to raise one or two points. Clearly subsections (3) and (4) of Section 6 of that Act are still in force. Subsection (3) says: A tenant of a holding provided by the Board on land acquired by the Board"— the Board" being the Board of Agriculture for Scotland— who has been in occupation thereof for a period of not less than six years shall, on notice of his desire to purchase the holding being given to the Board at any time before the tenant has received notice to quit, be entitled to require the sale to him of the holding at the expiration of one month from the date of the notice at the then value of the holding, exclusive of any increase of the value thereof due to any improvement executed thereon by and at the expense of the tenant, and thereupon the Board shall in the first instance sell the holding to the tenant accordingly, unless the Board obtains the consent of the Secretary for Scotland to the requirements of the tenant being refused by the Board". Subsection (4) says: The value of the holding shall, in default of agreement, be determined by the Scottish Land Court". I have no problem with subsection (4), but I want to ask whether there is any intention to equalise the terms of sale of a Land Settlement (Scotland) Act tenant and those of a crofting tenant. The Crofting Reform (Scotland) Act 1976 and the 1993 consolidation Act do not incorporate any time-scale that I can see before the tenant has a right to purchase. I know that this is not directly related to the transfer, but I wondered whether there was any intention to equalise the two as such tenants will now be included in transferable estates. Secondly, I am interested in the last phrase: Unless the Board obtains the consent of the Secretary for Scotland to the requirements of the tenant being refused". I think that that means that the Secretary of State has the right to decline to sell in a way that is not, as far as I understand the matter, accorded to crofters. My question is whether there is any intention to do anything about that and to equalise it.

The Earl of Lindsay

I am grateful to the noble Earl for two incisive questions on Clause 6. The first point which he made was about equalising the prerequisite period of occupation prior to a sale being possible by the tenant. As regards the distinction between tenancies which originate under different legislation, I shall certainly pay some attention to that issue after the Committee is over in order that I can be more familiar with what is concerning the noble Earl. My immediate response, I fear, is that if something requires to be done, this is not the right Bill in which to address a much wider change in tenancy law.

On the second point, I hope to be able to reassure the noble Earl by reading an amendment that was brought forward later to the text that the noble Earl read to the Committee. The crucial text is as follows: Unless it appears to the Secretary of State that there are good and sufficient reasons for refusing the requirements of the tenant". As I understand it, therefore, the presumption is on the tenant's part to have access to this opportunity and it is only if the Secretary of State sees a good and sufficient reason for refusing that he is able to refuse. I hope that that will give some reassurance.

The Earl of Mar and Kellie

I am particularly grateful to the noble Earl for being able to respond. I am not certain whether I want to apologise for going back to the original document but the Minister's explanation is certainly extremely helpful. I wonder whether the Secretary of State ever did refuse or if he were so minded, whether that would get in the way during the process of transferring estates.

The Earl of Lindsay

The answer that I shall give the noble Earl will be an encouraging one but it is an answer that will come by letter. We can then set out the matter on a more comprehensive basis and include any other references to other legislation which I know the noble Earl would want to have included. I commend the amendment to the Committee.

On Question, amendment agreed to.

The Earl of Lindsay moved Amendment No. 24: Page 3, line 26, leave out subsection (2) and insert— ("(2) A tenant's period of occupation shall continue to run for the purposes of section 6(3) of the Land Settlement (Scotland) Act 1919 notwithstanding that the relevant property has been disposed of by the Secretary of State to a body under this Act or to any successor in title.").

On Question, amendment agreed to.

Clause 6, as amended, agreed to.

Clause 7 [Interpretation]:

The Earl of Lindsay moved Amendment No. 25: Page 3, line 30, at end insert— (""crofting interests" in relation to any property, means the persons with an interest in the property—

1. (a) as tenants: or

1. (b) by virtue of rights to use any common grazings forming part of the property:).

The noble Earl said: I spoke to this when moving Amendment No. 4A. I beg to move.

On Question, amendment agreed to.

Clause 7, as amended, agreed to.

Remaining clause agreed to.

Title agreed to.

Bill reported with amendments.

The Committee adjourned at twenty-five minutes past six o'clock.