SECOND SCHEDULE. (Hansard, 24 October 1946)

HL Deb 24 October 1946 vol 143 cc722-34 722

§ PROVISIONS AS TO VALUATION OF SHEEP STOCKS IN SCOTLAND.

§ PART I.

§ Provisions as to a valuation made in respect of a tenancy terminating at Whitsunday.

§ 1. The Land Court or the Arbiter (in Part I and Part II of this Schedule referred to as "the valuer") shall ascertain the number of, and the prices realized far, the ewes and the sold off the hill from the stock under valuation at the autumn sales in each of the three preceding years, and shall determine by inspection the number of shotts present in the stock at the time of the valuation.

§ 6. In making his award the valuer shall value the respective classes of stock in accordance with the following rules, that is to say— (a) ewes of all ages (including gimmers) shall be valued at the basic ewe value with the addition of fifteen shillings per head;

§ 6.52 p.m.

§ THE DUKE OF BUCCLEUCH AND QUEENSBERRY moved, in paragraph 1 of Part I, after "the"—[the ewes]—to insert "draft". The noble Duke said: This Amendment and the definition of "draft ewes" which I have on the Paper at page 31, line 19, are closely related. I am reluctant to speak again, but I feel it is important to say a few words on this very vexed subject of valuations of bound sheep stocks, which has caused deep concern for a great many years, particularly in the Highland areas. It is a complicated problem, and if nothing were said here and no Amendment moved it might be believed that everyone concerned was satisfied and that the position was satisfactory. That, I am afraid, is not so. I am sure that everyone will agree with what the Balfour of Burleigh Committee say in paragraphs 723 89 to 93 of their Report and again in paragraphs 225 to 235. There have been many discussions concerning sheep-stock valuations, and I will not go into details now. I will only quote a few of the opening words of the Report in this connexion. They are as follows: Over the past fifty years the system of sheep stock valuations commonly adopted has become increasingly unsatisfactory, and valuations have tended to diverge more and more from real values. From time to time there have been various cases of exaggeration which are indicative of the faults underlying the general run of valuations. This is a statement of fact from which we cannot get away.

§ There is nothing wrong with the principle of valuing the ewe and the lamb, but unfortunately the additions have become most excessive. The Committee rightly say that …what is wanted in place of the present system is a practical method of assessing the real commercial worth of a bound sheep stock as a going concern. I feel sure your Lordships will all agree that what is wanted is a valuation which is fair to everyone. The thanks of Parliament are due to the Balfour of Burleigh Committee for the immense trouble which they have taken over the matter of these sheep stock valuations. They have endeavoured to find and to suggest a formula, and everyone hopes that this formula will be a great improvement on anything that has gone before. But I am afraid it is doubtful whether that will be so, and that it is perhaps even more doubtful if it is possible, by legislation, to find a solution of this problem. I am sure that everyone hopes that in return for the assistance to the industry a big effort is being made by the Government to put valuations on a more satisfactory basis.

§ We are moving this Amendment because we are doubtful whether the formula will achieve the purpose which it is desired to achieve. I am afraid that references to loopholes are being made quite openly in discussions among farmers. I hope that the Amendment can be accepted as strengthening the expression of the intention of the Government. It is difficult to know what objection there can be, but if the Amendment is objected to because the definition is not satisfactory, then I am sure a more satisfactory wording can be found. Again, if the 724 objection is that this might not be agreed upon, I feel that there would be more agreement than there is at present if the words were incorporated. If the Government are not willing to accept the Amendment, can they give any assurance that they will watch the position very carefully?

§ I feel that it is necessary to give a friendly warning on this subject. On this occasion, curiously enough, it is the members of the Government who are safeguarding the interests of the landowners, the proprietors, who are, principally, the Department of Agriculture and the Forestry Commission. They are the chief sufferers. Apart from any personal losses, either to individuals or to the taxpayers, the harm to the industry is considerable, especially when it is realized that good men willing to go into these farms are discouraged from doing so by not knowing what high prices they may have to pay for the valuation on going in. In consequence, many of these farms are not tenanted by people who would otherwise take them on, and they have to remain in the hands of the proprietors.

§ Since the Committee stage in another place, last summer, there have been many conversations in Scotland about these valuations, and I am afraid that it is the case that one commonly hears expressed among knowledgeable valuers and farmers the view that there is a serious danger of Parliament encouraging and legalizing a form of robbery. I hope that that is not correct, but I am very anxious about it. If this happens I would like to know what the Government intend to do; if they will watch the matter and take further action. I hope that this Amendment will be accepted, but if it is not, I trust that the Government will consider in what way they can best strengthen the position before the Report stage and the Third Reading.

§ Amendment moved— Page 29, line 1, after the second ("the") insert ("draft").—(The Duke of Buccleuch and Queensberry.)

VISCOUNT ELIBANK
I understand that the Amendment which my noble friend has just moved is to insert the word "draft" before "ewes and the lambs" in the first line of page 29. I have got two Amendments later on to lines 5 and 6 which really affect the same point. I suggest that the word "cast" 725 should be used. My noble friend suggests the word "draft." I have no objection to the word "draft," I think that in some parts of the country the word "draft" is used and in other parts the word. "cast" is used, but they amount practically to the same thing. These are sheep that are sold off the hill and not what you might call the breeding animals. They are sheep sold for profit every year off the hill. I have no objection to adopting my noble friend's Amendment to insert the word "draft," and in that case I would not move my Amendment to insert "cast" unless the noble Lord who is to reply says that he prefers my description of "cast" to "draft."
My noble friend has made a fairly full statement us to the reasons why this word should be inserted, and I would like to amplify it a little. If one or other of these words is not included, if we do not refer to "draft" ewes or "cast" ewes, then it will be possible for a dishonest farmer who knows that he is going out of his holding in a year—or three years, under the Bill—to pass out not only his draft ewes, but a certain number of the gimmers and other ewes of higher value during each year, thereby increasing the average value of the whole of the stock which will form the basic value of the property. If the noble Lord tells me that legally this has a certain meaning, my reply is, why should it not be made quite clear? As I understand this Schedule, it is intended that it shall refer to good draft ewes; so why not insert the word "draft," so that there can be no misunderstanding about it? Then we shall all be satisfied. This question does not affect only the proprietor; it affects the incoming farmer as well. I support the noble Duke in his Amendment that the word "draft" be inserted before "ewes" in that line.

§ LORD WESTWOOD
I. assume that the noble Duke and the noble Viscount, Lord Elibank, wish me to deal with the proposed Amendments together, because there is a similarity between them. The proposal is to calculate the average prices of ewes and lambs sold at autumn sales in the previous five years, instead of three years as provided in the Schedule. The adoption of the three years' average as a clearly defined basis for sheep-stock valuations was one of the recommendations made by the Committee on Hill Sheep Farming in 726 Scotland, of which Lord Balfour of Burleigh was Chairman. As with other recommendations made by the Committee, this was thoroughly discussed with representatives of the main interests concerned, before being incorporated in the Bill. It can be said, therefore, to have been accepted by these interests as a reasonable basis upon which the arbiter can begin to assess the future profitability of the stock under valuation. In any case, a three-year average is no less reliable as a guide to future profit-earning than a five-year average.

VISCOUNT ELIBANK
May I interrupt for a moment? The noble Lord has referred to the Report of the Balfour of Burleigh Committee as supporting the present wording of the Schedule. If the noble Lord will look at Recommendation 236 in the Report he will see that it says: For a Whit-Sunday valuation (a) The valuation shall be based on the averages of the prices obtained for all the cast ewes and all the ewe and wether lambs sold off the hill in the autumn sales in, the previous three years. The noble Lord will notice that the Committee used the words "cast ewes," but the Bill does not. I am quite prepared to accept "draft ewes" because it means the same thing.

§ LORD WESTWOOD
But the Balfour Committee dealt with this matter, and the point I raised was one of the recommendations regarding sheep stock valuations. If an arbiter were called upon to distinguish "cast" or "draft" ewes from other ewes he would have to determine what classes of ewes should rightly be regarded as "cast" or "draft," in the light of sound practice as applied to the particular flock he was valuing. There can be no hard-and-fast rule about what ewes can properly be sold out of a particular flock, by an honest and capable farmer, without impairing in any way the balance of the flock and, therewith, its profitability to the new owner.
In practice, however, the arbiter would have a problem still more difficult to solve. Equipped only with sales notes, he would be required to pick out from a list of prices those which he thought had been paid for ewes, other than the cast or draft ewes, which, in his opinion, had properly been sold from that farm. I am advised that he could never do so on that evidence alone. If he were led in any 727 way to consider that the profitability of the flock had been impaired by improper management, he would have only one means of deciding whether his opinion was well or ill-founded—namely, the state of the flock. Similarly, his only method of discounting the extent to which it had been impaired would be to make an appropriate adjustment in terms of paragraph 5 of the Second Schedule. Even if the word "cast" or "draft" were included, the net change would be to leave the procedure essentially the same as it is now.

VISCOUNT ELIBANK
May I ask whose view that is?

§ LORD WESTWOOD
The view of the Department concerned.

VISCOUNT ELIBANK
As opposed to the Committee. The Department have not accepted the Committee's recommendation, because the Committee specifically said "cast ewes". It seems that in one instance the Department accept the recommendations of the Committee, and in the next they repudiate them.

§ LORD WESTWOOD
I did not say that the recommendation of the Committee was "draft" or "cast" ewes. The recommendation of the Committee was on a clearly defined basis for sheep-stock valuations.

VISCOUNT ELIBANK
I have read out from the Committee's recommendation. I cannot say more.

§ THE DUKE OF BUCCLEUCH AND QUEENSBERRY
A rather greater assurance would be welcome on some of these points, but I hope that in the course of the Third Reading the Government will be able to give a satisfactory assurance as to how sheep-stock valuation will work out in practice. Meanwhile I beg leave to withdraw.

§ Amendment, by leave, withdrawn.

§ 7.10 p.m.

§ THE DUKE OF BUCCLEUCH AND QUEENSBERRY
I beg to move the next Amendment which stands in my name.

§ Amendment moved— Page 29, line 2, leave out ("sales") and insert ("auction sales and at the graded sales of the Ministry of Food").—(The Duke of Buccleuch and Queensberry.)

728

§ LORD WESTWOOD
I think the answer which I gave in respect of the first point raised by the noble Duke about the adoption of the three-year average as a clearly defined basis for sheep-stock valuations was the correct answer in dealing with that particular point. I think that the Amendments on page 29, line 2; page 29, line 21, and page 30, line 16, are all similar. The answer is a comprehensive one and covers the point raised.

§ VISCOUNT SWINTON
Do we understand from that that the Government accept or reject these Amendments?

§ LORD WESTWOOD
The Government do not accept the Amendment.

VISCOUNT ELIBANK
Which is the Amendment?

§ LORD WESTWOOD
The one proposed by the noble Duke at page 29, line 2.

§ THE DUKE OF BUCCLEUCH AND QUEENSBERRY
I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ VISCOUNT ELIBANK moved, in paragraph (1) of Part I, to leave out "three" and insert "five." The noble Viscount said: I am going to raise an issue now which I hope the noble Lord may be able to consider. Under the Bill it is provided that the basic value shall be worked out on a three-year average. In my humble submission, a three-year average is not long enough, because during those three years it is possible for a dishonest farmer to sell some of his better stock each year, and, consequently, bring up the average at the end of the three years. The life of sheep stock is between five and six years. I suggest that the three years should be increased to five years, for the simple reason that I hear on different sides that there is a movement on foot to try and get three years' notice to quit a farm. Supposing that were to come about, it would be quite within the capacity of a farmer, as I have said, to get his stock increased to such a value that the basic value would be higher than it ought to be. I beg to move.

§ Amendment moved— Page 29, line 3, leave out ("three") and insert ("five").—(Viscount Elibank.)

§ LORD WESTWOOD
The Amendment proposed by the noble Viscount seeks to 729 specify the expression "autumn sales" as "autumn auction sales" and "the graded sales of the Ministry of Food."

§ VISCOUNT SWINTON
That was the last one. We have passed that one.

§ LORD WESTWOOD
That is the question dealing with the valuation proposals as a whole, which I think the noble Viscount has raised, and there is a third point, that fifteen shillings is an arbitrary addition to recognize the fact that the basic ewe value, while a good measure of the value of the older age of ewes in the flock—

VISCOUNT ELIBANK
That is not the Amendment.

§ LORD WESTWOOD
That is the Amendment as I have got it.

VISCOUNT ELIBANK
. No.

§ LORD WESTWOOD
I think I dealt with that in the very early part when I mentioned that we did not see any difference in making it a five-year valuation. A three-year valuation is just as simple as a five-year valuation. The adoption of the three-year average as a clearly defined basis for sheep-stock valuations was one of the recommendations—as I have already mentioned (however much the noble Viscount may differ)—made by the Committee on Hill Sheep Farming in Scotland. As with other recommendations made by the Committee it was thoroughly discussed with representatives of the main interests concerned—that is, the National Farmers' Union, the Land and Property Federation and all the other people involved. It can be said, therefore, to have been accepted by all interests as a reasonable basis on which the arbiter can begin to assess the future profitability of the stock under valuation. In any case, a three-year average is no less reliable as a guide to future profit-earning than a five-year average. We have already stated that.

VISCOUNT ELIBANK
The noble Lord has now answered my Amendment. I cannot agree with him over it, but I beg leave to withdraw it, as there is no other course open to me.

§ Amendment, by leave, withdrawn.

§ 7.8 p.m.

§ VISCOUNT ELIBANK moved, at the end of sub-paragraph (a) of paragraph 6 of Part I, to insert "for acclimatization 730 value when such is payable." The noble Viscount said: This is an Amendment which to some extent is designed to get clarification of what the Bill really means. Paragraph 6 of the Second Schedule says: In making his award the valuer shall value the respective classes of stock in accordance with the following rules, that is to say— (a) ewes of all ages (including gimmers) shall be valued at the basic ewe value with the addition of fifteen shillings per head. I want to know what that fifteen shillings per head means. Is it, 15s. per head for acclimatization and heftings, or is it 15s. that must be added to the basic value? If your Lordships will refer to paragraph 5 of the Second Schedule you will see that it states: The three year average price for ewes shall be subject to adjustment by the valuer within the limits of ten shillings upwards or downwards as he may think proper having regard to the general condition of the stock under valuation.…

§ As I see it, the result of this is that: if a sheep is valued at 60s. the valuer may add ten per cent., which is 6s. As it reacts here, he must add another 15s., which would be 21s., and there is no reference at all to acclimatization and heftings, which are today very often valued—I know of a case quite recently—at 22s. 6d. per head. The amount above the basic value would be £2 2s. 6d., a great part of which either the proprietor or the farmer would have to meet.

§ The first question I want to ask the noble Lord is: Must this 15s. be added? The second question I want to ask is: Is this 15s. the value of the acclimatization and the heftings? The third question is: Why is it that in the whole of this Schedule there is absolutely no mention of acclimatization values and heftings except in paragraph 6 (d), in which reference is made to the valuations of tups having regard to acclimatization? Perhaps the noble Lord can give me an answer to these three questions, and also to my fourth question as to what are the lines upon which the acclimatization and hefting values are to be made by these arbitrators.

§ LORD WESTWOOD
This proposal is at variance with the underlying conception of the valuation proposals as a whole. Fifteen shillings is an arbitrary addition to recognize the fact that the basic ewe value, while a good measure of the value of the older age of ewes in the flock, is 731 something less than the value of the younger age of ewes. Ewes with two, three, or four more years of breeding life ahead of them are worth proportionately more than the basic value. This 15s. addition in respect of younger ages takes account of that factor. It is a cardinal feature of the new valuation proposals that no recognition shall be made of acclimatization except in so far as it affects the general condition of the flock and its profit-earning capacity. To the extent that acclimatization has a bearing on that position it will, together with other relevant considerations, be taken into account by the valuer on paragraph 5 of the Second Schedule.

VISCOUNT ELIBANK
May I ask the noble Lord if that 15s. is fixed, or is the amount to be varied according to the condition of the stock?

§ LORD WESTWOOD
Fifteen shillings is an arbitrary addition to recognize the fact that the basic ewe value, while a good measure of the value of the older age of ewes in the flock is something less than the value of the younger age of ewes. It is a fixed amount.

VISCOUNT ELIBANK
I beg to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ 7.25 p.m.

§ VISCOUNT ELIBANK moved to add to the Schedule the following new Part:

§ "Part V,

§ (1) There shall be established in Scotland a 'Court of Arbitration and Sheep Valuations' which shall be the Court of Appeal against any valuations made under Parts I and II of the Second Schedule.

§ (2) The Court of Registration and Sheep Valuations shall consist of not more than five members, one of whom shall be of the legal profession, who will be appointed by the Secretary of State for Scotland. They will be remunerated on a scale to be determined by him in consultation with the Treasury.

§ (3) The Court of Arbitration and Sheep Valuations shall:

(a) have full power to adjudicate upon and adjust in equity and in accordance with the facts, any valuation brought on appeal before that Court;
(b) have full power to require the outgoing and incoming tenants including the proprietor or his factor to attend the Court, and to inform the Court upon any point in dispute and to call for the production of any books, figures or other material which 732 may assist the Court in arriving at an equitable decision. The Court's decision shall be final;
(c) the costs of any appeal shall be borne by the parties in accordance with the decisions of the Court."

§ The noble Viscount said: I know the hour is getting late but this is an important issue even if the Amendment is not accepted. I wish, in the first instance, to refer to a statement made on hill farming by Lord Balfour of Burleigh. He said this: It is commonly said that there are three levels of value, one, the lowest, for an incoming tenant, another, a higher one, when a landlord takes over a stock, and a higher one still when a stock is taken over by a Government Department. The mere fact that the statement can be made, be it literally true or not, suggests that something is wrong with the system. It is generally understood in Scotland that something is wrong with the system, and in 1937 there was an attempt to improve the system by a Bill which was brought in by the noble Lord, Lord Thankerton. That has not improved the system as results since then have shown.

§ Now this is a Bill which purports to improve the system and I hope it does improve the system. Still, in spite of that, in this Bill conditions are laid down by the Government upon which the values are to be made. Will the noble Lord give me his attention for a moment? This Bill purports to improve the terms of valuation in Scotland. Certain conditions are laid down upon which the arbitrations of the valuations shall take place. When these were made there was no provision in the event of dissatisfaction with such valuations for an appeal. I am given to understand there may be an appeal to the Court of Session. We all know how cumbersome and how expensive such an appeal would be. My intention in this is to ask the Government whether they will not set up a special Court of Appeal which I have called here a "Court of Arbitration and Sheep Valuations" for the purpose of enabling proprietors and farmers, if they are not satisfied with the valuation that has been laid down under the terms of the new Schedule, to appeal to such a Court—the Court will be so formed as to have a special knowledge and ability—charged with dealing with such appeals.

§ I feel that if such a Court were established it would give a much greater faith 733 throughout the industry upon the terms which are now presented to them as the terms or conditions by which these valuations will be made. In fact, I would have gone even further if it had been possible—but as the Bill is submitted it would not be possible to do it—to make the Government establish a Court of Arbitration and Sheep Valuations for any of these valuations. Then one could have hoped that one would have got a much fairer valuation than has been the case in the past. I will not say anything more. That more or less seems to be my case. I beg to move the Amendment standing in my name.

§ Amendment moved— Page 31, line 19, at end insert the said new Part.—(Viscount Elibank.)

§ LORD WESTWOOD
In reply to the noble Viscount, the Bill already allows for a substantial alteration in the law as at present with regard to sheep-stock valuations. The arbiter called upon to carry out a valuation under a new lease will no longer be able to make an award without indicating in detail how his calculations are made. He will be required to conform to a strict formula starting from the basic ewe and land values calculated from sales notes available to both parties and variable thereafter at this discretion only within defined limits. Unless he conforms to these requirements his award will be open to be contested in the Courts. Again, in so far as any party has no confidence in a private valuer the Land Court can be called upon to undertake the valuation. The establishment of an additional Court of Appeal is not considered to be necessary.

VISCOUNT ELIBANK
There is nothing very new in what the noble Lord has said. At the present time under the 1937 valuation they have to state exactly how they have made up their valuation. Practically everything that the noble Lord said must be done is already being done. What I am anxious about is lest, in spite of these valuations and certain new conditions—I agree they are new conditions—there should still be wrong valuations. That is why I have advocated an Appeal Court. But the noble Lord says: "If you are not satisfied, go to the Courts in the country." That recourse has always been open to us in the past, but the cumbersomeness of the machinery and the ex- 734 pense involved have always prevented the farmers and the proprietors from using it. I cannot thank the noble Lord for his reply. I can only ask that as time goes on, if it is found that these valuations are not as accurate as is hoped under the Bill, the establishment of an Appeal Court will be considered. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ Second Schedule agreed to.

§ Bill reported without amendment.