HL Deb 22 July 1957 vol 205 cc18-26

3.38 p.m.

Report stage resumed.


My Lords, may we return to the Amendment moved by the noble Lord, Lord Wise? As the House will appreciate, compensation for disturbance is quite an expensive item, being the equivalent of between one and two years' rent. The noble Lord spoke of one year's rent, but nowadays on average it is nearer two than one. It is payable when the tenant quits after the landlord has given him notice to quit, but not when the tenant has himself given notice. We included it in the list in the clause because it is a substantial part of the owner's costs in arranging an amalgamation of the type which we wish to see take place.

I would point out, first of all, that these amalgamations will be eligible for grant-aid only where one of the farms is uneconomic and where an economic unit will be formed at the end of the arrangement. At the same time I should like to make quite clear that by grant-aiding this item we are in no way attacking the security of tenure of the tenant farmer. Provisions for compensation for disturbance are not intended to deter landlords from giving notice to quit, but, as the words themselves indicate, are intended to compensate the tenant for losses which he incurs as a result of having to leave.

As your Lordships know, the tenant's security of tenure rests not on this but on other parts of the Agricultural Holdings Act, which enable the tenant, subject to specified exceptions, to require the landlord to get the Minister's consent to the notice, and lay down a number of conditions which must be satisfied before the Minister may give his consent. This Bill does not touch these safeguards for the tenant, and his security is unaffected by it. I would once again emphasise that the whole object here is to assist in any reasonable way we can the production of economic units out of uneconomic ones. We do not believe that it would be right that we should in any way encourage the retention of units which are completely uneconomic. At the same time we do not wish to bring n any form of compulsion towards amalgamation. It must be done voluntarily. We feel it is necessary that there should be this provision in the Bill, and so I hope that your Lordships will not accept the Amendment.

3.41 p.m.


My Lords, we are very much obliged to the noble Earl for the clear statement which he has made upon this matter, but I am not at all sure that it will satisfy my noble friend Lord Wise. The noble Earl has particularly emphasised in his reply the voluntary nature of the process that will be followed in order to secure amalgamation of what would otherwise be uneconomic units. But it seems to me that the landlord's position will be this: he will be able to make the best possible arrangements in the amalgamation, either to dispose of the whole of his interests in the particular farm or piece of land in the amalgamation, at a price which he is willing to accept, or to become a part owner of an amalgamated agricultural unit. He should be able to obtain an economic return upon his retention of his share in the land.

I think that what my noble friend has in mind is this. Under the Agricultural Holdings Act, 1948, there is no liability upon the State in any way to assist the landlord in regard to sums he has to pay for compensation, and it ought surely to depend entirely on the nature of the voluntary arrangement entered into for amalgamation as to whether this part of the cost should fall for Government grant or not. That, I think—if I have interpreted my noble friend's idea sufficiently well—is the test question which we are trying to get settled while the Bill is going through Parliament to-day.

There is much which the noble Earl has mentioned with which I have a great deal of sympathy, and nobody wants to be arbitrary in any sense or to try to prevent a general move for the amalgamation of uneconomic units. But it does not seem to me to be right, in the interests of the general taxpayer, to bring in a new form of Government grant to a landlord who may very well be doing just as well out of the amalgamated unit as he would be doing out of a single unit which is to be incorporated in the amalgamated unit. I hope that we may have some fairly clear understanding from the noble Earl as to whether, in these circumstances, statutory provision for compensation to the landlord is really required.

3.44 p.m.


My Lords, with your Lordships' permission I will try to answer the noble Viscount, Lord Alexander of Hillsborough, now. I think he was under a slight misapprehension in his earlier remarks when he said that the landlord might become part owner of an amalgamated unit. There is no question of the payment of any grant except where the whole unit will be in one ownership. That applies to any of these grants. The ownership must be a single one as a unit. There must be no case of part A being owned by one farmer and part B being owned by another farmer and the two farmers working together. It must be a single ownership.


In fact it may well be a single ownership. A company may be formed to take over the amalgamated unit, and the man who was landlord of one section may become a shareholder or director of the company.


My Lords, that is quite correct. I feel that the noble Viscount, Lord Alexander of Hillsborough, is rather looking at this with the idea in his mind that the people concerned are prosperous farmers. As I said, we are dealing with a unit which is uneconomic and which can be made economic only by amalgamation with another farm. It is not a unit which could be made economic by improving its buildings. Grant aid will be given only because the area of land and the quality of land is such that it cannot on its own ever be economic. It must be in the interests of the nation that these uneconomic units should by degrees—admittedly over a very long period of time—be reduced to an absolute minimum. In the long run money which will go in the form of subsidies to the farming industry will in time be reduced and eliminated. With regard to these uneconomic units, what we are doing is giving the owner some incentive to amalgamate. We do not feel that we are giving him something which he should not have or that is not in the interests of agriculture as a whole. We feel that just that little extra incentive is needed in getting these amalgamations done, amalgamations which are apt to be complicated and in regard to which the landlord may be given a great deal of trouble in dealing with the various buildings, and he involved in a great deal of extra expense.


My Lords, with the permission of the House I should, like to reply to the noble Earl. In a way, I think he has proved my case fairly well for me. He has shown your Lordships that the person who benefits from this amalgamation is the owner of property who may be faced with a claim for compensation for the land which he has taken by the amalgamation and added to his own farm. So he gets it twice over. He improves his Own farm by amalgamating some other land with his original land, and then the State comes along and pays him compensation for disturbing the tenant whose land has been added to his own.

Again, I think the noble Earl has proved my case, because he has stressed the reference I made to compensation for disturbance based on one year's rent. I agree that it can be two years' rent. It may rightly be, in these times, on the basis of two years' rent. The State has to bear one-third of that cost. For that reason I think we should remove this portion of the clause. The noble Earl has spoken of incentive. If the Government want to give the owner incentive, why do they not go a bit further and not only pay one-third of the disturbance claim but pay one-third of the tenant-right valuation? That would be an incentive indeed. But the Government do not do that. They stop at one-third of the disturbance claim. In view of the clauses of the previous Acts, by which there is a liability on the owner, the landlord, who gives notice. I consider that that particular landlord should bear the whole cost of the disturbance.


My Lords, as one who has had experience of the type of land where this may apply, I would say that surely the amalgamation of two uneconomic pieces of land can quite easily make an economic piece of ground, but the amalgamation of two uneconomic rents does not make an economic rent for the landlord; and I think it is quite just that he should have some encouragement. Furthermore, as soon as farms are amalgamated, it is open to the tenant of the amalgamated farm, who takes over under his ingoing valuation a lot of usually derelict fences and so on, to get assistance under the Act to put the holding in first-class condition. Therefore, I should think that it would be wrong to accept this Amendment.


My Lords, I have had some experience of precisely the kind of land that is contemplated, though I have none of the kind now, so I have no direct interest. It seems to me that a proprietor has so little to gain by such an amalgamation that it would be stupid to put obstacles in his way, and the noble Lord's Amendment would probably kill the operation of the Act. There is another side to it which ought to be considered. Where there are two uneconomic holdings there are two families living in the maximum discomfort. Is it not better to reorganise the whole of the land on an economic basis and have one family living in a reasonable amount of comfort and prosperity?

On Question. Amendment negatived.

Clause 17 [Amount and payment of grants under s. 16]:


My Lords, this Amendment is exactly the same as that of my noble friend to Clause 14, which was accepted. Therefore, I move the Amendment formally.

Amendment moved—

Page 14, line 18, leave out from "Minister" to end of line 20 and insert—

  1. "(a) shall, if so requested, give to any person who appears to him to have an interest in the land concerned or to whom the relevant grant would be payable, a written notification of the reasons for the proposed revocation; and
  2. (b) shall afford to every such person"—(Lord Wise.)


My Lords, I am very willing to accept this Amendment.

On Question, Amendment agreed to.

Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of July 15):


My Lords, I beg to move that this Bill be now read a third time.

Moved, That the Bill be now read 3a.—(Earl St. Aldwyn.)

3.52 p.m.


My Lords, if I am in order. I should like to take this opportunity of expressing thanks to the noble Earl in charge of the Bill. During the discussion of an Amendment to Clause 10 on Committee stage, when the Amendment was withdrawn, he gave an assurance that he would see that early discussions were arranged between representatives of the Association of Municipal Corporations, who represent the local authorities, and officials of the Ministry. Those conversations were immediately arranged and took place, and they have proved very helpful. The Association are now perfectly satisfied that the repeal of the Livestock Act, 1937, will not be used in future as an argument against the consideration of any case that they may wish to put forward for granting local authorities power of control over their markets. I thought it was only right that I should inform your Lordships that the Association have been very courteously treated, and have expressed their satisfaction.


My Lords, I am most grateful to the noble Lord for what he has said. It is always our wish to meet, whenever possible, the opinions of various sections connected with the Bill and I am glad to know that the noble Lord and the Association are satisfied with the discussions they had with us.


My Lords. I should like, on the Motion for Third Reading, to say a word or two about the Bill as a whole. I am sure that in general your Lordships welcome a Bill which takes steps to improve capital equipment on our farms in order to make them more successful and economic. During the passage of the Bill, and even before its introduction, the Government had many questions put to them as regards the date for applications and the date from which the improvement grants scheme would be operated. They have steadily resisted any real decision being taken in regard to grants until the Bill was on the Statute Book. I think that that was correct. No doubt a considerable number of applications have been prepared already.

There is one danger which I see and which I hope the noble Earl will bear in mind. The larger estates, where there are obvious improvements to be carried out to make holdings more economical, are owned by people who have the necessary capital in hand, or the means of obtaining it forthwith, to meet the two-thirds of the cost of improvement not covered by grant. These people will be in a much more favourable position to benefit under this Bill than the smaller man, who will have to borrow the two-thirds he has to provide in addition to the grant which will be received. With the present high rates of interest for borrowing, it will not be easy for the smaller man to be able to partake in this excellent piece of well-intentioned State bounty.

From listening to the debate, I understand that the Government are to spend up to £50 million over a period of some ten years. It may well be that, as that period goes on, the situation may improve a little for the smaller man, but what I should like to know is whether, now that the Bill has got this far, it is the intention of the Government to confine the expenditure, for the time being. to round about £5 million every year, so that there will always be money available for the later years of the ten-year period, in case the smaller man is able to accumulate sufficient resources of his own or borrow enough to be able to launch a scheme qualifying for Government grant. I think that the way in which this scheme is administered, in meeting the need of the whole country and not merely of those sections of it who are better able to finance them and who will be hastening to make their applications, will have a great effect upon the ultimate general success of the scheme. I think that it would be helpful if, upon Third Reading, the noble Earl could make some statement on what is the general administrative intention of the Government.


My Lords, may I say, first of all, that I am most grateful to all noble Lords who have taken part in the discussions on this Bill at its various stages. If I may say so, there has been a realistic approach from all sides. The noble Viscount, Lord Alexander of Hillsborough, has asked me two specific questions. First of all, dealing with the position of the large and wealthy landowner, as opposed to the rather more impecunious owner of a farm, I think that it is only fair to point out that, under the present rates of taxation, anyone who pays a high surtax will benefit only to the extent of about 7 per cent. from these grants, instead of getting the full 33⅓ per cent., of which the smaller man, paying little or no tax, gets the full benefit. I think that is a material point. It means, in fact, that these grants are of real assistance to the people who need them most.


Is the noble Earl saying that the capital grant is subject to annual income tax or sur-tax, or is he referring to the gain that will ultimately accrue to the persons who can carry out the improvements?


What I am referring to is that it is possible to lay off expenditure on agricultural improvements against income tax and stir-tax. The higher you are up in the sur-tax bracket, obviously, the greater the benefit you will receive; and for those in the top bracket the fact that the grant-aided portion of expenditure does not rank for tax allowance does reduce the value of these grants to something of the order of 7 per cent. as compared with something of the order of 33⅓ per cent. for those who pay less tax. It is not our intention to confine expenditure on grants to £5 million a year, or to have any annual limit. The intention is that we should go ahead and get the work done. What the position will be if, in six years' time, the £50 million has all gone, I am afraid I cannot forecast at all. A lot can happen between now and then; we might no longer have to employ a credit squeeze, and there might be a freer movement of money. In any case, it might he considered well worth while to have more. But, as I say, it is certainly not our intention at the moment to confine the expenditure to £5 million a year.


I am glad to have that guidance, but it seems that it might leave the impression on the smaller farmer that, unless he can raise his share of the money required, he will be squeezed out of this bounty and that it will be extended only to people better off than himself.


I think that is an unjustifiable assumption by the noble Viscount.

On Question, Bill read 3a with the Amendments, and passed, and returned to the Commons.