Agricultural Holdings Bill [H.L.]

HL Deb 13 December 1983 vol 446 cc202-30

10.5 p.m.

House again in Committee.

Lord John-Mackie moved Amendment No. 61A:

After Clause 7, insert the following new clause:

("S.I. 1973/1473

(" The provisions of the Agriculture (Maintenance, Repair and Insurance of Fixed Equipment) Regulations 1973 shall apply to am, tenancy granted on or after the date on which this Act is passed.").

The noble Lord said: We have put down this amendment because in the last Budget there was considerable relief given to landlords in relation to various financial matters to do with holding agricultural land, and there is pressure—and rightly so—for something more to be done in order to help landlords in running their businesses by taxing them not on investment income but on management income. But if that is the case, then landlords must manage. The present practice, with every new tenancy lease that is made, is to make it a full repairing and insuring lease. In our opinion this is not landlord management at all, and we should like to see landlords taking full responsibility, such as they used to take, and a fair share of the repairing and insuring of buildings with fixed equipment, roads, et cetera, on their estates. That is why we have put down this amendment. I beg to move.

Lord Middleton

I share the noble Lord's disapproval of full repairing leases, and I believe that I am supported in this by the vast majority of private landlords. I am not quite clear about the tax point which the noble Lord was making, but I should like to make another tax point very briefly. Private landlords are under a taxation difficulty, because if a private landlord can recover VAT on his repairs expenditure he will be far more willing to do repairs. Landlords cannot recover VAT, but tenants can. Therefore, landlords are more inclined to arrange with tenants that they should do their repairs. But that is by the way.

I do not think it is necessary to legislate about this, as the noble Lord is seeking to do by this amendment. Under Section 6(2) of the 1948 Act, a tenant can go to arbitration to vary the agreement so as to bring it into conformity with the statutory repair clause, under which the liability between the landlord and tenant is shared in the traditional way. So I do not see that there is any need at all for this amendment.

The Earl of Swinton

I am grateful to the noble Lord. Lord John-Mackie, for explaining the purpose of this amendment, and I am also very grateful to my noble friend Lord Middleton for pointing out the tax disadvantage as regards VAT. I feel that while the 1973 regulations prescribe an allocation of liability between landlord and tenant for maintenance, repair and insurance of fixed equipment, the question of any variation from that allocation of liabilities is a matter for negotiation between landlord and tenant. Also, the terms of the contract of tenancy are a relevant factor which must be taken into account in any arbitration on rent. I am sure that we should not interfere with the provisions in the legislation by a departure from the terms of the 1973 regulations, and I hope that the noble Lord will feel able to withdraw his amendment.

Lord John-Mackie

The noble Lord, Lord Middleton, is probably correct in what he said. When I talked about the taxation point, I was referring to the fact that the income from a tenancy after expenses have been paid is investment income, not management income, and I understand that there is pressure from landlords to have that altered. I can quite see the point about VAT, but that does not alter the fact that I do not know of any recent tenancy agreement which has not been a full repairing and insuring one. Sometimes the landlord pays the insurance, but in most cases it is a full repairing and insuring tenancy agreement. If a tenant can appeal against that, then well and good; but I do not think he does. The noble Lord may correct me there; but if that is the case I am willing to withdraw our amendment, though I am not very happy in spite of what noble Lords have said.

Amendment, by leave, withdrawn.

10.10 p.m.

Lord Prys-Davies moved Amendment No. 61B:

After Clause 7, insert the following new clause:

('Institutional landowners.

. Incorporated or unincorporated institutional landowners whose principal business is other than agricultural shall make all agricultural land in their ownership available for letting to a tenant.")

The noble Lord said: The wording of this amendment expresses in an imperfect way part of the evidence we have received, which suggests that there is unease about the role of some of the institutional landowners. I say that the wording is obviously imperfect: for example, we have not defined the meaning of "institutional landowners". There is also a danger, on the evidence we have seen, of generalising.

I recognise that there is an acceptance that many of the institutional landowners such as the colleges, the Church Commissioners and the pension funds are playing an important part in the agricultural industry and that they let a substantial part—if not the entirety—of their land. Some colleges use their farms for research and for experimental purposes, and so obviously there would have to be some exceptions to the principle. But the fear is that among some institutional landlords, there may be speculators who may be tempted to, play fast and loose in the countryside", to use the words employed by the noble Lord in the course of our debates.

I understand that a survey in the process of being conducted by the Tenant Farmers' Association shows that when land ownership passes to new institutions the tenanted farms in their ownership steadily decline in number. It is on the basis of that survey—which may be incomplete—that this amendment is founded. I accept it is not clear—certainly not to my noble friend or myself—whether that is because the institutional landowners pursue a vigorous policy of amalgamation or because they take over the farming business.

It may be that the noble Lord the Minister, when he comes to reply, will be able to assure the Committee that the trend which appears to have been identified by the TFA has been exaggerated. But the principle embodied in the amendment gives expression to something which may be important and of which your Lordships ought to take note. I acknowledge that the amendment may or may not markedly increase the supply of tenancies, but it would give notice to the institutions that the Government want them to continue their policy of letting farms, where they are letting farms: and it would also be a warning to absentee land speculators that if they purchase agricultural land they will have to make it available for letting to working family farmers.

It is not our intention to press this amendment to a Division, but we believe that the Government ought to appreciate that the amendment may be saying something which many farmers believe to be important. I beg to move.

Lord Northfield

Perhaps I might explain briefly the reasons why there will not be much attempt to press this issue? I believe my noble friend is referring mainly to the financial institutions; namely, insurance companies, pension funds, property unit trusts, and property bonds. I believe that any amendment or any debate which adds fuel to the fire about those institutions is to be regretted. The position is that those institutions own only about 1.2 per cent. of land. They are unlikely to own any more than 7 per cent. to 11 per cent., even on recent trends of acquisitions, in another 40 years' time. I would guess that, as there has been some retrenchment, they are unlikely ever to reach that figure now. So any attempt to make them scapegoats is in some sense a mistake.

Not only do they own very little land: they do not bid up the prices of vacant land; it is nearly always the farmer next door who does that. They are mainly buying tenanted land, and they are not buying much—6 to 10 per cent. of the land offered on the market in any year. They are also good landlords, and have in most cases a very good record as landlords. Finally, they do not push up rents any more than anybody else, by and large. So first of all we should try to reduce the hysteria about these owners.

Let us come to the issue of in-hand farming, which is really what my noble friend is raising. It is true that on a survey which we in the Northfield Committee attempted to undertake it looked as if perhaps 19 per cent.of the land they owned was being held in hand. I have to say to the Committee that, along with 23 million other people, I am part of this new ownership. I contribute to a pension fund, and I am delighted that the ownership of let estates is being spread through pension funds and life insurance companies of this kind to 23 million people. What is to be regretted about that? Why, if I am an investor with 23 million other people, should I have rules different from any other private landlord? We can only accept that there should be rules if they are for all private landlords, among whom we in the pension funds—people like myself and many noble Lords who contribute—are numbered. Why should there be special rules for us as compared with the individual private landlord?

The fact is that pension funds, like everybody else, have to assess their position under present law and under present fiscal regulations. If they need to have some land in hand in order to preserve the vacant possession premium on land, or if they need some land in hand in order to learn about farming because many of them are new to it, or if they want some land in hand because they want to avoid the three generation tenancy, why should they not? Every other landlord can—and I am one of the 23 million.

So I have to say, if I may, that this is a slightly misguided attempt. These people are us, all of us in the community. They are not somebody over there; some faceless gang of people who are robbers and speculators. They arc people honestly investing money on behalf of the rest of us, and I wish them fair wind in making the best of present regulations, like every private landlord.

Lord Stanley of Alderley

I think that in principle I would support this amendment, and I do not think I agree with a single word the noble Lord, Lord Northfield, has said. I support the principle of resident farmers rather than absentee city farmers. I am particularly concerned at the moment, if I may say so, about the ownership of land encouraged by the Business Expansion Scheme. These schemes are heavily tax subsidised, and I do think, contrary to what the noble Lord, Lord Northfield, said, that these schemes may well push up the price of land, as opposed to the institutional buying.

Lord Mackie of Benshie

I, too, will try to be short. I think that the general intention of the clause might be worthy of some support, but the clause itself is unjust and unworkable, and therefore we oppose it.

The Earl of Caithness

May I very briefly support the noble Lord, Lord Northfield. I think this "institutional bashing" by certain Members of your Lordships' Committee and of another place is not good for agriculture, and we must divorce ourselves from any association to that effect.

Lord Belstead

I think the noble Lord, Lord Northfield, the noble Lord, Lord Mackie, and my noble friend Lord Caithness have really answered this amendment for me. All I would add is that I am advised that the figures are that the financial institutions own only 5 per cent. of all agricultural land, and that 70 per cent. of their holding is let. I think, therefore, that this would be a rather poor return for that record. Having said that, the noble Lord, Lord Prys-Davies, was very fair in making it clear when he moved the amendment that the wording would not do and that it obviously would catch, in its present form, many institutions which it was not intended to catch. Perhaps on those grounds, although I must say there are other grounds as well, this is an amendment which ought to be withdrawn.

Lord John-Mackie

My noble friend Lord Northfield said that we were getting hysterical about—

Lord Northfield

No.

Lord John-Mackie

That was the word he used, and he evidently used it about us, as we put forward the amendment. I would say that he got hysterical at the end of what he was saying about the situation. It is easy to produce figures and say there is 5 per cent. of this and 10 per cent. of that. I also have some figures to point out what is happening. I have knowledge of six estates totalling about 70,000 acres. One had 12 tenants when it was bought less than 10 years ago and now there are none. Another had 11 tenants and now there are only two. Another had 10 tenants and now it has none. Another had 11 tenants and now there are only five. Another had 12 tenants and now has only five. Another had six tenants and now there are none. That is what is happening with institutional landlordism.

The noble Lord need not shake his head. I can give him the figures and the places although I do not want to disclose them tonight, as that is not right. I know of many more. Farmers see this happening. These tenants have gone over the years, probably old men retiring, but the people round about see the land being taken in hand and that has a psychological effect, if nothing else. We are not being hysterical but factual about what is happening. These are facts, and I can produce the names of the estates. I visited one not long ago. We are not being hysterical but just putting forward the fact that institutional landlords are doing this and in these particular cases there are 50 tenancies that have gone out in the past 10 years. I do not think that is being hysterical.

However, we know the situation and, with that very firm point, that we are not being hysterical and that I have 50 tenancies in front of me that have been lost, we withdraw the amendment.

Amendment, by leave, withdrawn.

10.23 p.m.

Lord Sandford moved Amendment No. 61C:

After Clause 7, insert the following new clause:

("Amendment of Schedule 1 to the 1948 Act.

. In Schedule 1 to the 1948 Act (matters for which provision is to be made in written tenancy agreements), after paragraph 10 there shall be added— (" . Any agreement to modify the management of the holding in the public interest, between—

1. (a) an appropriate body with a statutory interest in the management of the holding; and
2. (b) either the tenant or the landlord or both.".").

The noble Lord said: I must disappoint the Committee because there is nothing here to get hysterical about. All this amendment does is to introduce again the issue of agreements to modify the management of the holding in the public interest. This is a concept which we have already discussed on Amendments Nos. 48 and 57. We were grateful when my noble friend the Minister undertook to take away the arguments and points that he had heard discussed and consider them between now and the next stage. We now know, and it is very welcome news, that officials concerned in this matter are meeting with his officials later this week. That is good news and an indication that his undertakings were given in earnest, as we had expected.

On those two Amendments Nos. 48 and 57 we were discussing modifications to the management of a holding in the interests of conservation. The three aspects we were discussing were the conservation of field monuments, conservation of flora and fauna and conservation of the landscape. Those were the issues picked on. I said at the time that I thought any amendment dealing with this matter ought to be rather more widely drafted. It has since been borne in on me by a number of the public bodies involved that this is indeed so.

I have been reflecting on the upland management experiments in the Lake District and Snowdonia in the mid-1970s. Looking back, it is clear that the agreements entered into during the experiments covered a number of aspects besides conservation. Perhaps I could give the Committee one or two illustrations. There were in those experiments—and there have been many since—instances where a county council in its highway authority role came to agreements with farmers to move a footpath from one side of a valley to another, or rather to establish a permissive path and to persuade the public to use that rather than the statutory definitive path on the other side. Sometimes it was in the interests of the farmer, sometimes in the interests of the walker.

In other cases a regional tourist board would come to an agreement with a farmer that a building might be taken out of agricultural use and converted to self-catering tourist accommodation. That would be done by the regional tourist board. There were other cases—and there have been many more recently—where the Development Commission (of which the noble Lord, Lord Northfield, was chairman at one time) offered conversion grants to farmers for the conversion of farm buildings to workshops in the interests of creating more employment in the countryside. A fourth example is where a local education authority comes to an agreement with a farmer or a landlord that some part of a holding might be allocated for field studies.

None of those examples—footpaths, self-catering, workshops or field studies—can be described as conservation, but I think that the Committee would agree that they can all potentially affect the management of the holding. For that reason I put forward this amendment, with a view to indicating the breadth that such an amendment would cover. I move the amendment so that my noble friend the Minister can see what I mean in rather more detail when I say that such amendments ought to be more broadly drawn than they might otherwise be if we left the matter merely at conservation. I shall be interested to hear views from other noble Lords. I beg to move.

Lord Stanley of Alderley

I should like to ask my noble friend Lord Sandford a question. Who can the agreement be made with? He has mentioned a number of bodies, but does he suggest that an agreement could be made, for example, with a way-out conservation body? If the agreement is made with such reputable bodies as the NCC or the National Park Authority, I very much welcome the suggestion. I understand that there is evidence that tenants have been somewhat shy of making agreements with those bodies for fear of their tenancy agreement. I should welcome it if my noble friend could confirm who the agreement can be made with.

Lord Sandford

Perhaps I can answer that question before my noble friend the Minister replies. In the discussions which will go on between now and the next stage it may well be necessary to look at paragraph (a) of my amendment to see whether the term, an appropriate body with a statutory interest", needs to be defined in a schedule or in some other, better way. It was not intended to include any bodies other than the kind which I mentioned—the county council as a highway authority, the regional tourist board, the Development Commission, the county council, local education authority, district council or the water authority. They are all statutory bodies. It was not intended to include some of the way-out bodies which had perhaps better not be mentioned by name.

Lord John-Mackie

I am rather interested in the points that the noble Lord is making about reaching agreement with various people. As Members of the Committee know, I farm 20 miles from where we are sitting this evening, and many of the footpaths which run through my farm are completely out of date. We have made arrangements with the local people so that, instead of using a footpath, they can go round the field, up a lane, or various other ways, and it seems to work. But there may be an occasion when someone digs in his toes and says, "There is the footpath, it is on the map. You may have made a private arrangement, but I am not having anything to do with that".

I should be interested in a proper system under which proper arrangements could be made, but, if one goes to the county council, one finds that it is years before it will decide on anything. If one goes to the ramblers, they hum and haw because they feel that there is an advantage to the farmer, whereas, as the noble Lord has said, there is probably an advantage to both parties. I am interested in this matter and I look forward to hearing what the noble Lord has to say about it.

Lord Belstead

We come to the Government spokesman and I am afraid that he does not have an answer at all on this particular point. But, secure in the knowledge that in a moment my noble friend will have an answer to the point which the noble Lord, Lord John-Mackie, has put forward, I should like to say two main things. First, if we were to decide in favour of the amendment this evening, there really would be a problem, in that a management agreement between a public body—be it the Nature Conservancy Council, the Countryside Commission, or any other body—with one of the parties to the tenancy—either the landlord or the tenant—could, as I understand the amendment, become a term of the tenancy without the other party's consent. Therefore there is in the proposal an element of compulsion, which one would have to think about extremely carefully before agreeing to.

That leads me to the second point. My noble friend was good enough to say that arrangements have been made for representatives of the Ministry of Agriculture to meet various interested bodies later this week to see whether it is possible to bring forward an appropriate provision or provisions to cover the various conservation matters which we have discussed during the three days of the Committee stage, ranging originally from Amendment No. 11 up to the present amendment, No. 61C.

The second point that I should like to make is that those representing the Ministry will have two questions in mind. First, I think that we should be extremely reluctant to import compulsion into arrangements for conservation in the Bill. I do not want to say that as though my mind is closed about anything, because it is silly, and it is not desirable, to sit down with a closed mind to have talks. I think that we should be very reluctant on that point.

Concomitantly with that, the Government do not, of course, want to provide formatters that are already covered. On one of the previous amendments—I now forget which it was—I felt that perhaps we were beginning to discuss matters which are already covered by tenancy agreements.

I thought that I would take the opportunity to make those points about the discussions which are to be held later this week—discussions which I genuinely hope will be fruitful.

Lord Sandford

I am grateful to noble Lords who have spoken. Perhaps I may first answer the point made by the noble Lord, Lord John-Mackie. I think that what the upland management experiments in Snowdonia and the Lake District showed was that there is a halfway house between the purely informal arrangements which the noble Lord described, and which are adequate if the pressures are not too great—though in the Lake District they are too great—and other arrangements. On the other hand, if the farmer has to deal directly with the highway authority, he undoubtedly has a major problem of bureaucracy on his hands.

The problem was overcome in the experiments by the appointment of an ex-ADAS officer to run the experiments. He acted as a broker between the farmer on the one hand and all the authorities on the other hand. That makes it feasible to enter into agreements slightly more formal than those that the noble Lord is used to, but less formal than those negotiated in a legal framework with a highway authority. That is the essence of the art.

I now turn to the points about compulsion raised by my noble friend. I do not think that one can rule out compulsion altogether. In using the very broad term "any agreement", my amendment was designed to cover some arrangements which are the result of compulsion, and others which are not, some which are formal, some which are informal, some which have financial backing, some which are in legal form and some which are not.

As an example of those which are compulsory, there is a statute which requires as a matter of law that field monuments should be protected. I am afraid that the managers of an agricultural holding have no option but to comply with them. If they are enforced, they become the subject of an agreement to manage the holding in a different way from that in which it would be managed if the field monument was not there. So there is an element of compulsion, and there is no getting away from it.

Lord Winstanley

Before the noble Lord leaves this point, I wonder whether he will confirm what I believe to be true, so that there can be no misunderstanding: that is, that in the Lake District upland management scheme, which was so outstandingly successful, there was no element of compulsion, nor was there any need for it.

Lord Sandford

Yes, I was going on to make that very point. The upland management experiments went ahead on the basis of all the agreements being voluntary. But I did not want my noble friend to be under the impression that one can totally exclude compulsion, because one cannot. Some of it has the force of law. But the whole intention is that the agreements are entered into freely, and the great majority of them are informal. The largest number now being entered into are those resulting from the notification scheme under the agricultural and horticultural grants scheme of 1980.

I am advised by those whose job it is to enter into these agreements that something of this sort, but not exactly this, would make the operation of these agreements that much easier and would be beneficial to all parties concerned. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10.37 p.m.

The Earl .of Caithness moved Amendment No. 61D:

After Clause 7, insert the following new clause:

("Assignment of tenancy.

.—

1. (1) If a tenant wishes to relinquish his tenancy he shall be entitled to assign the tenancy by offering for sale that tenancy on the open market following the service of due notice of his intention upon his landlord not less than twelve months prior to the next ensuing term date at which the tenancy could be terminated by a valid notice to quit.
2. (2)Upon such assignment taking effect the landlord shall be entitled to demand up to 40 per cent. of any consideration received by the tenant in respect of the assignment of the tenancy.
3. (3)Upon the service of a valid notice to quit by the landlord on a deceased tenant's executors the executors may, within one month of receipt of that notice, serve a counter-notice on the landlord stating their intention to offer the tenancy for sale in accordance with the provisions of the foregoing subsections.")

The noble Earl said: I must first apologise for the fact that this amendment, with which I know your Lordships are aware I am concerned, was put down only yesterday. Many noble Lords have mentioned that this Bill does not get to grips with the landlord-tenant problem. Many of us believe that the patient is terminally ill, and that without major surgery it will die. The Bill will not do enough to preserve a system which has been useful but which does not now serve the needs of the commercial landlord or the commercial tenant. My amendment seeks a radical change in the landlord-tenant system by allowing the tenant to offer his tenancy for sale. This, after all, is permitted in the commercial and residential world, so why not in agriculture? There are a host of reasons why a tenant might wish to assign his tenancy, but he is at the moment barred from doing so by the 1948 Act.

Subsection (1) permits a tenant to assign his tenancy on giving the landlord at least 12 months' notice. The value of the tenancy will be decided by offering it for sale on the open market. As a result, land owners might feel that they are being deprived of a part of their interest in their property, and will therefore justifiably be entitled to some compensation. This can be assessed in a number of ways, but I have put forward one. Subsection (2) allows the landlord up to 40 per cent. of the value of the tenancy, which he can bid for in the open market along with others should he want to take the land in hand. In order for this idea to work properly, it must apply to all tenancies. Thus, those parts of the 1976 Act relating to succession would have to be repealed.

Following the death of a tenant, the old procedure of serving a notice to quit on the executors would be re-established, and subsection (3) permits the executors to serve a counter-notice on the landlord and then to offer the tenancy for sale. I appreciate that the drafting might be imperfect, and probably is, but it is the principle that I feel should be discussed. The advantages are that it would enable a free flow of tenancies, for which there seems, at the moment, to be an insatiable demand. A tenant can get out of farming at any time, not just on retirement or for ill health, and receive a capital sum for his interest. This, I believe, would encourage him to give someone else an opportunity to farm.

There is a concern that the landlord has no control over the charge of the assignee. At present, he has no control over a successor, provided that that successor is eligible and suitable. Furthermore, that concern is only a good argument for supporting my earlier amendment to tighten up the rules relating to notices to quit. I believe that my amendment will reinvigorate and give new impetus to the landlord-tenant system; the industry will attract a steady flow of new entrants, bringing with them more capital, novel ideas and fresh enthusiasm. I beg to move.

Lord John-Mackie

If I can just say a word on this, we studied this amendment very closely and, on the face of it, it has attractions, but we could see great anomalies because of the succession in the 1976 Act. The noble Lord has put us right there: he says that would have to be repealed, in which case that convinces us that we cannot support it at all.

Viscount Ridley

Speaking as a landlord on this Committee stage, the noble Earl, Lord Caithness, said that the patient was terminally ill. I would go further and say that this amendment would put the last nail in the coffin of the landlord and tenant system. I could not conceivably think of a system whereby a tenancy could be sold and a total stranger appear on the farm; the whole relationship would be finished. I hope that this amendment will be speedily withdrawn.

Lord Middleton

I could not agree more with the noble Viscount, Lord Ridley. As my noble friend Lord Caithness has said, this is a brand new amendment and I can only give a very hurried judgment and a very rapid reaction, which is that it would not be welcomed by the industry at all. Certainly under the amendment the landlord could purchase a tenancy, but landowners can do that now anyway; if they want to buy out a tenant, and the tenant agrees, that can be done.

As my noble friend has just said, it seems to provide that a tenancy could be assigned, as of right, by a tenant with whom the landlord had originally willingly entered into a contract, and it could be assigned to someone with whom the landlord might be quite unwilling to enter into a contractual relationship. The choice as to who would farm his land would be taken right away from him, not just for one generation but for three generations possibly; there would be three generations of unacceptable tenants because no new tenancy would have been created to bring it under Clause 2 of this Bill.

Even the 1976 Act provided that by succession a tenancy had to pass, if it did pass, to a successor as someone with whom the original contract had been made who was, first, an eligible person—that is, a near relation—and, secondly, a suitable person; that is one who is suitably qualified and had sufficient capital, and so on. This amendment would completely take away those safeguards and I cannot believe that from the point of view of the farming community they would welcome it any more, because surely the chief reason why they support this Bill is that it attempts to make tenancies available to applicants who do not have to pay excessive premiums as they might have to do by going through this procedure. I am sorry that I cannot be more enthusiastic.

Lord Stanley of Alderley

I would like to put one more nail in this particular coffin. My noble friend says it would encourage new entrants. I very much doubt it I think that if anybody gets these tenancies they will go to the "agri-business man" helped with my pet hate, the business expansion scheme. I have to tell my noble friend that I really think this is rather a nasty amendment.

Lord Walston

There are many curious bedfellows. It started off with the rather odd combination of the NFU and the CLA and now we find that we have the Labour opposition and the Conservative Benches (possibly even the Conservative Front Bench), even including the noble Lord, Lord Stanley of Alderley, all in the same bed together; and to make it even odder, the Alliance will see if there is any room for them to get in, too.

We feel exactly the same. I am sorry to say so to the noble Earl, but I do not think this is a starter, and it is certainly not a finisher.

Lord Hylton

I am inclined to agree with the noble Viscount, Lord Ridley. The analogy was drawn between commercial and industrial properties and let farms. It might perhaps apply in the case of institutional landlords. I am quite sure that it does not apply in the case of individual private landlords, and particularly resident ones, where the relationship between the landlord and the tenant is of an extremely personal nature. Such people would resist to the last the introduction of total strangers. I do hope that the amendment will be withdrawn.

Lord Northfield

Before I offer just a few words of encouragement to the noble Earl, Lord Caithness, may I say to my noble friend Lord John-Mackie that I apologise if he thought I was accusing him of hysteria? His gentle, restrained and equable character is not one that would attract that sort of accusation at any time. I was really saying that we must not add to the hysteria about institutions that undoubtedly exists outside this Chamber. That is what is worrying me and has worried me for many years.

On this particular amendment, I have a great deal of sympathy with what the noble Earl, Lord Caithness, is trying to do. He is, in fact, challenging a great deal of the basis on which we look at agriculture today. He is asking, "How much longer will we stop it being subject to some commercial forces, in which the market can play much more widely and have its effect, its disciplines and some of its rigours as well?" That is a very legitimate question to put to all of us. Why should we treat agriculture rather like housing, with controlled rents, protection and all sorts of things? Why is it not a business?

All the evidence I took in holding this inquiry into land ownership was that farmers were clinging too strongly to these vestiges of the past in wanting to be a sort of protected cottage industry, instead of having the true commercial wind blowing around them and having its good effects.

The noble Lord, Lord Middleton, raised the possibility of assigning to awful people. In the commercial world some people live over shops as well, and the landlord's relationship with people who have shops and homes over them can be quite intimate, just as it is with farming. They do not have any of this sort of protection around them.

But the answer to leases concerning shops is that the lease always says that it is assignable to a proper and respectable person: such consent not to be unreasonably withheld by the landlord". So the landlord always maintains the right to vet somebody taking over a lease of a commercial property, and that sort of thing can be built in as well in the case of agricultural tenancies.

I have enormous sympathy with the noble Earl, Lord Caithness. It is about time that we let a bit more commercial vigour and discipline into this industry, and the noble Earl is on the right track. He will not win now, but I bet he will win in about 10 years' time.

10.48 p.m.

The Earl of Swinton

Until the noble Lord. Lord Northfield, got up, I really thought that I would simply have to get up and say that the Government agree with what everybody else has said. But I see that now I shall have to take a little time. I have, of course, listened most carefully to the reasoning of my noble kinsman, Lord Caithness, in introducing this amendment, but it seems to me—as it does to a number of noble Lords who have spoken in this debate—that the amendment has some highly undesirable features.

I realise that the amendment could stop landlords taking land in hand on the death of a tenant, but against that we must recognise that it would put up considerably the key money element of a new tenancy. This would increase enormously the difficulties for would-be new entrants to the industry and would not make more tenancies available to those without capital. It is thus contrary to the objectives of the Bill.

I think it was my noble friend Lord Ridley who said that he thought this operation would not work. I was going to say that, if this amendment went through, it would probably be a case of the operation being successful but the patient dying. I must agree with other noble Lords that, from the landlord's point of view, this would probably be the absolute death of the landlord/tenant system. It could take away for ever the landlord's right of choice of his tenant. My noble friend said that the landlord could go out and bid to get his own tenancy back. Big deal! Who wants to do that? I certainly should not. To go and buy back something that belongs to me anyway would be against all my Yorkshire principles.

There would be no check on suitability—a point that several noble Lords made. The purchaser could be a limited company. The outgoing tenant has no long-term responsibility to the land which would influence his choice of purchaser. All this is certainly not in the interests of farming and would totally undermine the landlord/tenant system. I hope that my noble friend will withdraw his amendment.

The Earl of Caithness

We have had the desired effect of a good debate, anyway. My noble friend Lord Middleton said that this would last for three generations. It would not, because that part of the 1976 Act would be repealed, and therefore it is for the lifetime of that one tenant only. I am grateful for the support of my noble friend Lord Northfield, if I may so call him. He said that the true commercial wind is blowing through agriculture. He is right. It is beginning to happen at long last, but it is going to take some time before they have to face reality. I believe that in 10 years' time something along these lines will have to be brought in. Meanwhile, I withdraw the amendment and look forward to re-introducing it in the next Bill.

Amendment, by leave, withdrawn.

Remaining clauses agreed to.

Schedule 1 [Minor and consequential amendments]:

Viscount Ridley moved Amendment No. 62:

Page 13, line 25, leave out from ("following") to end of line and insert ("paragraphs shall be substituted for paragraphs (e) and (f)—").

The noble Viscount said: Perhaps we may get back to the smoother waters of smallholdings. I hope that the two amendments, Nos. 62 and 63, may be taken together.

Amendment No. 63: Page 13, line 40, at end insert— ("(ee) if the holding consists of land held by a smallholdings authority or the Minister for the purposes of smallholdings within the meaning of Part IV of the Agriculture Act 1947 or Part III of the Agriculture Act 1970, and the tenancy was granted by them or him in pursuance of the said Part IV or Part III;".").

The purpose of these amendments is to try to clarify a situation regarding tenancies of statutory smallholdings, to which I have referred before. The 1976 Act intended to make it clear that statutory smallholdings were excluded from the rights of succession to ordinary tenants. I think there is no doubt about that fact. Section 18 of the 1976 Act provides that there shall be no right of succession if a smallholding is let by a smallholdings authority for the purpose of a smallholding in pursuance of the Agriculture Act 1970.

However, there are still in existence smallholdings tenancies—rather more than half—which were let by smallholdings authorities under the legislation which was in force prior to the 1970 Act. It is not sufficiently clear from the provisions of the 1976 Act that these earlier lettings are also to be excluded from succession, although this was the clear intention of the 1976 legislation at the time. Indeed, there have been one or two cases heard in the Agricultural Lands Tribunal which appeared to suggest that on a strict interpretation of the law the right of succession in the case of smallholdings lettings prior to 1970 might still arise.

The county councils responsible for smallholdings have over the last two or three years made many representations to the Ministry of Agriculture for suitable amending legislation to make clear that all smallholdings tenancies are outside the succession provisions. The position has been reached that the Ministry agreed to consider the matter when a suitable opportunity arose. I do not think there could be any more suitable opportunity than the present Bill. Indeed, as other noble Lords have said, we might have to wait for ten years for another Bill of this kind.

There was a joint working party consisting of representatives of the NFU, CLA, RICS, MAFF and something called WOAD (which I think is a Welsh Office affair, and nothing to do with the ancient Britons) which put forward proposals for a number of amendments to this legislation which included the very proposal which I am now suggesting. This working party forwarded its report to the Government, suggesting unanimously that all statutory smallholdings should be excluded from the provisions of the 1976 Act; that there was an anomaly in that tenancies granted before the 1970 Act are not now excluded.

In the face of this it was hoped that the Bill would include some provision to take care of this technical point, and it is a pity that it does not do so. I am sure that Ministers wish to avoid complicating this legislation and to avoid stirring the pudding and getting involved in any NFU-CLA dispute. But this is something which I think is agreed by everybody specifically relating to statutory smallholdings only, and I hope that we can look at it in that light.

We had a debate earlier tonight about the farming ladder and the need for statutory smallholdings, all of which I have said before and with every word of which I agree. The noble Lord, Lord Belstead, referred to the need to keep people moving up the smallholdings ladder. But if the succession of three tenancies of smallholdings tenants was to be established, then the farming ladder would cease to exist. Then there really would be serious incentives for smallholdings authorities to sell land, which was the subject of the debate a few hours ago. I beg to move.

Lord Northfield

May I ask a question in the hope that the Minister will reply on this? As I understand the present situation with regard to smallholdings, succession is governed by the Smallholdings (Selection of Tenants) (Amendment) Regulations 1976. What they do is to tell county councils that, although smallholdings are outside the 1976 Act, they should consider certain specified near relatives of the deceased tenant as successors and only to consider other applications when these have proved unsuitable. Is it still the case that the 1976 Act, although not now applying, is continued by these regulations? If that is so, would the amendment overtake the regulations as well? In other words, would we find that those regulations were effectively being annulled? It is important to know where we would end up if the amendment were agreed to.

I sympathise enormously with what the noble Viscount is trying to do. We want to keep more movement in smallholdings. He is absolutely right, but I direct attention to the sort of recommendations my committee made about compulsory retirement, and all that goes with it, and the possibility of short-term lettings to enable people to make a start on smallholdings. In other words, my second point to the Minister is this. Could we not at Report stage consider all these matters together, and the impact of the general approach of the Bill on the whole of smallholdings? It is a very important issue to include smallholdings in a number of the issues that have been raised in the debates—short-term tenancies, retirement, and all the other matters. It would be right to ask for consultations about the wider impact of the Bill on smallholdings before we reach Report stage.

The Earl of Swinton

If I may deal with the noble Lord, Lord Northfield, first. Basically, yes, he is correct in what he says, but I shall not give any undertaking to consider smallholdings in any great detail before Report.

I am grateful to my noble friend Lord Ridley for proposing the amendment. The question of the possible lack of exemption from three-generation succession on smallholdings tenancies granted under various smallholding Acts prior to the Agriculture Act 1970 has exercised our minds for some time. I hesitated to include in this Bill an amendment to remove the apparent anomaly in this area in view of the fact that, as my noble friend is aware, a case on this very question is currently before the courts. However, I have listened carefully to the arguments put forward by my noble friend and I can confirm that we should be happy to consider his proposal.

I am sure that my noble friend would agree that the wording of his amendment does not go far enough because, although his amendment would close the loophole for tenancies under Part IV of the Agriculture Act 1947, it would leave in doubt the succession arrangements applying to tenancies under smallholdings legislation prior to the 1947 Act. So if he would he happy for us to consider his proposal and to put forward an appropriately worded amendment to cover precisely these points, I hope, perhaps, my noble friend will feel able to withdraw his amendment.

Viscount Ridley

I am extremely grateful to my noble friend Lord Swinton. Did I understand him to say that he would bring forward an amendment at the next stage to cover the technical point I have made?

The Earl of Swinton

Yes.

Viscount Ridley

If that is the case, I am delighted to withdraw the amendment. I beg leave to withdraw.

Amendment, by leave, withdrawn.

[Amendment No. 63 not moved.]

10.58 p.m.

Lord Mottistone moved Amendment No. 64:

Page 17, line 4, at end insert— (" ( ) At the end of subsection (1) there shall be inserted the words "and not being a contract of tenancy made after the commencement of the Agricultural Holdings Act 1983 under which the said land is let to the tenant by a local authority if the said land was at the date of the said contract held by that authority for the purposes of the Allotments Acts 1908 to 1950".")

The noble Lord said: If I might take your Lordships' minds from smallholdings to allotments, there are many allotments which are administered by parishes throughout the land, and indeed by other local authorities. I am particularly concerned with parishes.

It is the fact that, at the moment, if an allotment is not taken up by the local inhabitants in a given area and is lying fallow, it is convenient for the parish to let it to a farmer to take it on; and that works very well. But if, in due course, somebody comes to live in the parish who would like to take up the allotment—the purpose for which it was originally intended in the arrangements which declared the allotments—then the parish finds it incredibly difficult to get the allotment back from the farmer, who will invoke all sorts of Acts of Parliament—and I am talking very much in shorthand since we have not got much time—so as to hold on to it, in which he is hacked up by the Minister under, particularly, the 1948 Act.

What this amendment seeks to do is, after the passing of this Act—so that it is not retrospective—to remove the definition of allotment from agricultural holdings as described in the 1948 Act. Since I tabled this amendment, there has been an exchange of correspondence both between the secretary for the National Association of Local Councils and my right honourable friend the Minister and also between myself and my noble friend Lord Belstead. My latest letter in this exchange of correspondence with my noble friend arrived yesterday, It is very long and detailed and I have not had time to consult with anybody in the meantime. What I propose to do at this moment therefore is to invite your Lordships to consider that it is really very difficult for local councils—who, one must remember, are quite often officered (if that is the right word) by part-time people who have not got immense experience of administration—to fight their way through against the great bureaucracy which, in local terms, is represented by the divisional officer of MAFF, and to find farmers resisting them and invoking all sorts of things Farmers are much more competent in using bureaucracy than are the clerks of parish councils.

It is really an unfair balance—and I think that my noble friend is aware of this—against the parish which is seeking to carry out the wishes of the original purveyors of the allotments who wanted them to be used for the local inhabitants to till for themselves. It is quite a problem and one to which this amendment is a solution, if it is accepted. I am quite sure it could be improved but I would hope very much that out of this I might get some more relief than undertakings from my noble friend that things will be run better in the future. I should like to see something in this Bill before it leaves us. I hope I shall get a great deal of encouragement but I reserve every right to come back to your Lordships at the next stage of the Bill when I shall have had time to consult with the people who understand these things over the latest letter that I have had from my noble friend, I beg to move.

Lord Hylton

I want to support the principle of this amendment for two reasons. First of all, I know from personal experience that the demand for allotments fluctuates up and down in the most remarkable way. Secondly, where there are occupied allotments next to unoccupied ones there immediately arise problems with weeds. Anything that can be done to control that and make possible interim cultivation is very desirable.

Lord John-Mackie

I have experience of this. I used to rent a farm on the borders of the London borough of Enfield which, at one time, had given off quite a large area for allotments. As the noble Lord, Lord Hylton, says, the demand for allotments goes up and down quite considerably. In this case, more than half of them were not being used. I suggested to the borough officer concerned that I should move the fence back and take into the farm the piece of land that was not being used. He was quite agreeable just to do that without any consideration of the legal side of it, and although I do not agree with the noble Lord, Lord Mottistone, about farmers being better at using democracy than council officials, I could have had that back and probably "played at agricultural tenants" and they would not have got that back. Actually I did not do it, because the demand for allotments started to increase again and it was not necessary. But the noble Lord has a real point in this amendment.

Lord Belstead

I agree with noble Lords who have spoken, and indeed with the noble Lord, Lord Hylton, who specifically made the point that the numbers of allotments which are in occupation seem to increase and decrease in a sort of cyclical way. I have observed that myself. But the problem with this amendment is that, by taking allotment land out of the scope of agricultural holdings legislation, as my noble friend Lord Mottistone proposes, allotment organisations could find it much more difficult to regain possession of their land. This is because the arrangements between the organisations and farmers would then be covered by the provisions of the Landlord and Tenant Acts of 1927 and 1954.

Of course, the interests of tenants are very' well guarded under those Acts, but since agricultural holdings are specifically excluded from that provision none of the special circumstances in which the landlord can regain possession are likely to be particularly helpful to the allotment organisations under that legislation. In particular, it would not be possible to regain possession, which is what the noble Lord would wish to do. I think therefore we really need to tackle this in another way, and my right honourable friend has the power under Section 2 of the 1948 Act to give his approval to the letting of agricultural land, not being a letting of the land of a tenancy under the Act from year to year.

I know perfectly well (and I will speak in shorthand, if I may) that my noble friend is concerned that this has not been perhaps the smoothest of operations in the past. That is my noble friend's contention; and I would like to assure him that if a local authority requests a Section 2 approval from the Ministry of Agriculture to cover the short-term letting of allotment land for agricultural purposes in the future, the request would be sympathetically considered. Indeed, I give an assurance to my noble friend that we will issue specific instructions to our local Ministry of Agriculture offices in order to overcome any problems which might arise in connection with allotment land. Therefore, I hope that my noble friend, on reflection—because I think he feels he would like to read this, with interested parties, to see what has been said—will feel that the Section 2 procedure may be the way to proceed.

There is one last thing I ought to say. Where a local authority wishes to make temporary arrangements which are expected to last longer than could be dealt with by the Section 2 procedures, the agricultural holdings legislation still provides a way for them to regain possession if they wish to return the land for use as allotments. This would require them to seek the consent of the Agricultural Land Tribunal for the operation of a notice to quit under the 1977 Act. One of the grounds under which the tribunal is required to give its consent is where the land is required for the purpose of the enactments relating to allotments. I have to say that this means going through a tribunal hearing, but this, of course, is necessary' in the interests of both parties if they are to be properly protected when longer-term arrangements are made. I hope that is helpful. I know that my noble friend will reserve the right to come back again if he feels he needs to. I hope he will not.

Lord Mottistone

I am most grateful to the noble Lords, Lord Hylton and Lord John-Mackie, for their general support of the concept. I am sure my noble friend Lord Belstead will realise that, although I appreciate very much the administrative measures that he will take to try to overcome this difficulty within the existing framework of law—and it goes some way towards what we want—it might be that we shall come back again if we can find a way through that looks more acceptable. There is something to be said for having a provision underpinned by law which could reduce the amount of dealings which part-time clerks must have with officials, who are very experienced in organising things in the direction in which they want to go. So I have a basic underlying feeling that there may be room for doing so here. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

11.10 p.m.

Viscount Dilhorne moved Amendment No. 65:

Page 17, line 24, at end insert— (" . After section 2(1) of the 1948 Act the following subsection shall be inserted— (1A) The Minister may on the joint application of the persons who will be the landlord and the tenant in relation to a tenancy of an agricultural holding to be granted for a term of years certain not exceeding five years approve an agreement excluding in relation to that tenancy the provisions of section 3 of this Act, if the agreement is contained in or endorsed on the instrument creating the tenancy; and an agreement contained in or endorsed on an instrument in pursuance of the Minister's approval shall be valid notwithstanding anything in the provisions of this Act".")

The noble Viscount said: I propose to move this amendment in place of my noble friend Lord Renton. And may this amendment be taken with Amendment No. 71, which relates to it?

Amendment No. 71: Page 25, line 23, leave out sub-paragraph (6).

The proposed amendment is totally non-partisan. It merely tries to put on a workable legal basis what is already contained in the Act and the policy statement that is set out in a letter from the Ministry dated 22nd July. The policy, as I understand it, behind ministerial approval to a contract which does not get converted into a tenancy on a year-to-year basis has never been clear and has never been consistently applied.

Furthermore, the attitude of regional offices of the Ministry differs considerably in different parts of the country.

I understand that the policy is that an increase from three to five years in the period for tenancies, granted under the Minister's discretion under Section 2 of the 1948 Act, in relation to trial tenancies or where a landlord's son or daughter is expected shortly to take over a vacated tenancy, can be implemented administratively without legislation. I intend to speak fairly quickly because of the hour, and I have cut down a great deal that I had proposed to say. I submit that it is unsatisfactory that this policy should be kept on an administrative basis, because it has never been applied consistently.

The nub of the legal argument is this. The Minister has power to approve a contracting-out arrangement for a licence of any duration—now up to five years—or a tenancy for an interest of less than a year-to-year basis. That can he seen from Section 2(1) of the Act. But he does not have power under present legislation to approve a tenancy of more than a year, although he can approve a licence of any duration. The difficulty, as a matter of law, is to draft a genuine licence that will last as long as five years. Any documents purporting to be a five-year licence are almost certain to be construed as a tenancy in the courts.

The Ministry is therefore advertising that it is going to adopt a policy of approving five-year licences which it is improbable that any sensible lawyer will advise a client, particularly a landowner, to sign. That is a sincere and real criticism of the present system and one which would be easily overcome by the proposed amendment. We say that the new policy is to allow a contracting-out of tenancies up to five years, with the Ministry's approval. That will enable lawyers to avoid drafting tortuous and convoluted documents in the hope that they will be construed as licences rather than tenancies. They can prepare a straightforward and honest tenancy agreement that can be put before the Minister for his approval as a tenancy. If exemption is to be on a proper basis—a proper basis being, I hope, the one that I am submitting—it will give the landlord and the tenant more confidence in the contracting-out system which the Minister is, I hope, proposing to operate. The word to emphasise is "tenancy". Without enactment, the policy of approving a five-year agreement which claims to be a licence will, in my opinion, lead to much litigation and great uncertainty—which we hope my noble friend the Minister will agree can be avoided by this amendment.

In this debate, various references have been made from both sides of this Committee—and, in fact, from the Division Lobby itself—to the personal interest which lawyers have in legal confusion. I hope this is one of many examples of responsibly-minded lawyers attempting to reduce disputes rather than encourage them. I beg to move.

Lord Prys-Davies

May I just get one point clear? Is the noble Viscount saying that because there are difficulties in drawing up a licence for a five-year duration, that the legislation ought to provide for a fixed-term tenancy of up to five years—because that would get around the technical difficulties of drafting a licence?

Viscount Dilhorne

The noble Lord, Lord Prys-Davies, is absolutely right. At the moment, one cannot really draft an agreement for a five-year licence without it being turned into a tenancy. So, if one has a tenancy for five years, one will overcome that difficulty.

Lord Prys-Davies

So the tenancy for a fixed term of five years drawn under this section would be deprived of any protection given by the Agricultural Holdings Act?

Viscount Dilhorne

I am slightly at a loss to know how exactly to answer the noble Lord's question accurately. What it would do is to give the tenant considerably more security than the tenant would enjoy by having a licence that is in fact a tenancy. It does improve his position under this particular section.

Lord Prys-Davies

In the sense, presumably, that he will have occupation of that land as a tenant for five years, and that will be indisputable?

Viscount Dilhorne

That is right.

Lord Belstead

My noble friend Lord Dilhorne has explained—at least, I think he has explained—that this amendment is designed to introduce much greater certainty where a landlord grants a short-term licence which has been subject to the Minister's prior approval under Section 2 of the Act. The Minister's approval is only given in fairly closely-defined circumstances in which it would be unreasonable to grant a full agricultural tenancy, where the land is shortly to go out of agriculture.

My noble friend's amendment would not change those limited circumstances in which approval is given but, as I understand my noble friend, it would remove the danger that the licence could in law be construed as creating a full agricultural tenancy.

I should like to look very carefully at the drafting of this provision. The reason that I said I believed my noble friend had explained the amendment was not a discourtesy to my noble friend in respect of his opening remarks but because of the quick exchange between the noble Lord, Lord Prys-Davies, and my noble friend, which I should like to read in Hansard afterwards.

If the amendment does indeed have the effect which I am advised we believe it has, I can confirm that the Government have a very great deal of sympathy with the objectives of my noble friends Lord Dilhorne and Lord Renton, in whose names the amendment is. I should like to give my noble friend an assurance that we shall consider very carefully the point which has been made. I feel that I cannot accept the amendment as it stands because I should like to study closely the exchange between both noble lords.

Before I sit down, I understood my noble friend Lord Dilhorne to say that he was moving at the same time Amendment No. 71: was he speaking also to Amendment No. 71?

Viscount Dilhorne

That is so. I was speaking also to Amendment No. 71, which would leave out subparagraph (6) on page 25, which reads: (6) In paragraph 6, for the word `twenty-eight' in both places where it occurs there shall be substituted the word 'thirty-five' ".

Lord Belstead

I am grateful to my noble friend. With respect to him, I am not entirely sure that Amendment No. 71 really goes with Amendment No. 65. However, as I have the Chief Whip sitting only a few yards away, I think it is almost as much as my life is worth not to take two amendments together, if we can possibly kill two birds with one stone.

I should like to say that this is the period of time which is allowed for the submission of statements of case. The Government thought they were being really rather sensible and generous in extending the period of time from 28 days to 35 days. But earlier on in the afternoon—it may have been before my noble friend came into the Chamber—the noble Lord, Lord Renton, moved an amendment in which he asked that Schedule 6 to the 1948 Act should be subject to rules made by my noble and learned friend the Lord Chancellor: and after parading some of the reasons why the Government were reluctant to agree to that, I finally agreed on behalf of the Government to go away and discuss this with the Lord Chancellor. Therefore, I think perhaps Amendment No. 71 ought to be left there.

Viscount Dilhorne

I am greatly indebted to my noble friend. He is of course completely right. All I can say is that, looking at the hour, I can only hope for forgiveness for having raised the matter. I was here and spoke to the amendment of my noble friend Lord Renton in the same terms as those which he used, so I am guilty of having contradicted myself quite without thought. I beg leave to withdraw this amendment.

Amendment, by leave, withdrawn.

[Amendment No. 66 had been withdrawn from the Marshalled List.]

The Earl of Swinton moved Amendment No. 67:

Page 18, line 10, after ("Act") insert (" (provisions for securing written tenancy agreements) ")

The noble Earl said: With permission, in moving Amendment No. 67 I should like to speak also to Amendment No. 72.

Amendment No. 72: Page 28, line 3, leave out ("the 1977 Act") and insert ("that Act (reduction of rent where notice is given to quit part of holding) ")

I am sure these amendments are obvious to the Committee. They correct omissions in the text of the Bill. Amendment No. 67 inserts in paragraph 8 of the schedule an explanation of the subject matter of Section 5 of the 1948 Act. which it amends. Similarly, Amendment No. 72 inserts in paragraph 44 of the schedule an explanation of the subject matter of Section 10 of the 1977 Act, which is amended by that paragraph. I beg to move Amendment No. 67.

On Question, amendment agreed to.

The Earl of Swinton moved Amendment No. 68:

Page 19, line 14, leave out first ("and")

The noble Earl said: This amendment corrects an error in the text of the Bill by deleting the superfluous word "and" in line 14 of paragraph 10. I beg to move.

On Question, amendment agreed to.

Viscount Dilhorne moved Amendment No. 69:

Page 19, line 28, at end insert— (" .—

1. (1) Section 11 of that Act (tenant's rights as respects disposal of produce and cropping or arable land) shall be amended as follows.
2. (2) In subsection (4)(a) after the word "or", where it first occurs, there shall be inserted the words "in cases where a valid notice of less than twelve months is given in accordance with section 1(2) of the 1977 Act".
3. (3)The following subsection shall be inserted after subsection (4) —
4. "(4A) The landlord shall not unreasonably refuse his consent to proposals by the tenant for the cropping of arable land during the periods of restriction mentioned in paragraphs (a) and (b) of subsection (4) above and any dispute arising as to the reasonableness of a refusal of consent shall be determined by arbitration under this Act.".")

The noble Viscount said: Under Section 11 of the 1948 Act there is freedom of cropping. Freedom of cropping is taken away from the tenant after he has received a notice to quit. As at present worded, the second limb of Section 11 (4)(a) states: any period after he has given or received notice to quit which results in his quitting the holding". Therein lies the question: are the words "any period" to be taken literally? If they are, and no brake is applied in the statute, there is no maximum period for serving the notice to quit. This question has never been resolved, and it has perplexed textbook writers (I am told, I not having been alive then) since 1908.

This amendment works to take away freedom of cropping in the last year only. There are three summarised matters. The first deals with the situation where the landlord has served a long notice, and in the new subsection (4A) it gives the tenant the right to take to arbitration the landlord's refusal to grant consent to the tenant's cropping proposals during the period of notice. The second deals with certain cases where a valid notice of less than 12 months is given. The insertion of subsection (4A) will restrict the freedom of cropping during the period of notice only.

The third point is to enable the tenant to challenge by arbitration a landlord's unreasonable refusal, if it is, to allow cropping where the period of notice is greater than 12 months. These last two matters go very much together and work neatly into the statute as it now stands. If the amendment is read with the statute I submit that what is not very apparent from what I have said then becomes clearly apparent. I shall say no more. It is a complicated legal provision. It is meant to be non-partisan and I hope that my noble friend will consider it. I beg to move.

Lord Stanley of Alderley

All I would say to my noble friend is that he is a lawyer but not a farmer. I suspect that the amendment is totally impractical because by the time one has gone through the process I suspect my noble friend wants us to go through, the tenant will have gone anyhow.

The Earl of Swinton

This amendment has at first sight a good deal to recommend it, and indeed the last part was an agreed proposal of the Ministry-NFU-CLA-RICS Working Party. However, as my noble friend Lord Stanley of Alderley said, on close examination practical difficulties over timing make the realisation of this proposal difficult. In the case of some tenancies, particularly Michaelmas tenancies, there may well be insufficient time for the tenant to make proposals for cropping in the final year, for the landlord to have a chance to consider them and for an arbitration to be arranged and take place (bearing in mind that 28 days must be allowed for delivery of statements of case alone) unless the notice to quit is given well ahead of the beginning of the final year of tenancy. But I believe that the landlord will usually, for the sake of good relations, delay giving notice until the last year is about to begin. It is likely therefore that the crops will often have to be planted—I am thinking particularly of winter wheat, barley and oil seed rape—before the arbitrator can make his award. This leaves the only remedy as monetary compensation for the tenant should his proposals be upheld, which is not a matter referred to specifically in the amendment, and which may seem a rather severe penalty for a landlord who has done no more than rely on the terms of the tenancy agreement (albeit perhaps an old-fashioned one).

Alternatively, a tenant would have to go ahead with his substitute cropping plan without knowing the result of the arbitration. I also feel sympathy with the first part of the amendment, but again I think it may prove difficult in practice not to deal with the last year of tenancy as a whole. While, therefore, I agree that this is in principle a worthwhile amendment, I feel that practical factors make it very difficult to realise in a way which is free from difficulties. May I, therefore, as a practical farmer, beg my noble and nearly learned friend, as a lawyer, to withdraw his amendment.

Viscount Dilhorne

I thank my noble friend for his answer. I should, however, like to have the opportunity to consider it rather more fully when it is published in Hansard. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Caithness moved Amendment No. 70:

Page 19, line 40, after ("(4A)") insert ("Failing mutual agreement")

The noble Earl said: This is a minor amendment to encourage the landlord and tenant to agree matters without any dispute. I beg to move.

The Earl of Swinton

While I applaud my noble kinsman's search for clarity in legislation, I feel that the present wording in the Bill is clear enough. Surely, if the landlord and tenant agree, there is no dispute, and therefore no need for arbitration. I hope my noble friend will withdraw his amendment.

The Earl of Caithness

I certainly will do so. The reason for the amendment was that we regularly have these words in agricultural Acts and I thought that they were suitable on this occasion. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

11.29 p.m.

The Earl of Caithness moved Amendment No. 70A:

Page 20, line, 1 leave out paragraph 12.

The noble Earl said: I understand from paragraph 12 that, except for ground game, the tenant could claim for any crop damage caused by any other animals or birds whatsoever, unless he has been given permission in writing to kill them. I believe that the working party has missed a point here. What happens when, for instance, a farmer living in Norfolk near the Wash suffers crop damage from geese which have suddenly arrived in large numbers but which move on again a short time later? Is the landlord to be blamed for that? Furthermore, if he raises a large number of greylag geese and they eat the tenant's crop, is the tenant entitled to claim? As I read the Wildlife and Countryside Act 1981, these birds, being reared, are not classified as wild. I beg to move.

Lord Belstead

As the notes on the schedule make clear, we have replaced the word "game" in Section 14 of the Agricultural Holdings Act 1948 with the words, any wild animals or birds". This is because game as defined in Section 14(4) of the Act is restricted to deer, pheasants, partridges, grouse and black game. It is a definition which indeed, as my noble friend has just said, excludes, for example, geese.

My noble friend has given me an example of a tragedy which might occur in north Norfolk. He gave me notice that he would put this point. My answer is this. In the first of my noble friend's examples—the geese arriving as if from nowhere—I think it would be only if the landlord kept the right to take geese to himself that the tenant would be entitled to compensation. If the tenant were free to protect his crops by, for instance, shooting geese, clearly the landlord would not be liable to pay compensation.

In the second example which my noble friend put forward—which is what the remedy would be for the tenant if he suffered damage from geese which the landlord was rearing—I think that the first answer would cover the matter again. Presumably the geese are still wild. However, if they were to be termed domestic in my noble friend's example, of course the tenant could pursue the landlord, or anyone else to whom the birds belonged, for damages under the common law, because that would be a matter for the courts.

The Earl of Caithness

I am grateful to my noble friend for that answer. I am concerned about a landlord being liable for crop damage in my instance of a large number of geese coming in. I think that this is something I should like to look at again from a conservation point of view. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Caithness moved Amendment No. 70B:

Page 25, line 10, at end insert ("who shall immediately notify the parties in writing of the appointment." ")

The noble Earl said: The purpose of this amendment is to record within the legislation what is already standard practice in both the Ministry of Agriculture, Fisheries and Food and the Royal Institution of Chartered Surveyors where they appoint an arbitrator under the Agricultural Holdings Act. Nevertheless, it is no more than practice and I think the provision needs to appear in the legislation for the protection of all the parties. It should be remembered that the Richards v. Allinson county court ruling will no longer apply and the parties now have 35 days from the date of the appointment in which to submit their statement of case. Therefore I regard the amendment as a question of justice being seen to be done. It will not alter the existing practice in any way. I beg to move.

Lord Belstead

These are matters of administrative detail which it would be unusual to enshrine in legislation. Indeed matters have worked perfectly well for many years, as my noble friend very fairly implied in his remarks. But I owe it to my noble friend to give an assurance which will go into Hansard that the Ministry of Agriculture, Fisheries and Food and the Welsh Office agricultural department will continue to notify both landlord and tenant of the arbitrator's appointment. Furthermore, the arbitrator will himself be instructed that on receipt of his letter of appointment he is to notify the parties immediately of the date by which their statements of case are to be submitted. I hope therefore that my noble friend may feel able to leave the matter at this. That is quite a mouthful, and we should prefer not to start putting it all in legislation. I hope that the reassurance which I have given on behalf of the Government, and which will now go into the official record, will satisfy my noble friend.

The Earl of Caithness

I am most grateful for that reply from my noble friend. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 71 not moved.]

The Earl of Caithness moved Amendment No. 71A

Page 27, line 11, leave out paragraph 39.

The noble Earl said: I was more than slightly surprised to find paragraph 39 in the Bill. In fact, my attention was drawn to it by a number of arbitrators and senior members of the RICS, who pointed out how inequitable is the paragraph. Was it really the Government's intention to give further preferential treatment to tenants who are already privileged by succession? Did they really mean to say, "Not only, if you are eligible and suitable, can you inherit a tenancy to the exclusion of others who would like the opportunity, but now you can succeed at a sitting tenant rent rather than at a market rent"?

I believe this to be a ludicrous situation, and there is no more sure way of depressing rents and killing off the landlord-tenant system for good than is contained in the paragraph. I should like to ask my noble friend why a successor should not be asked to pay the open market rent on succession, when a third party tendering for a tenancy has to do so?

It was this paragragh which led me to investigate the cost of agriculture and the benefits which a tenant, as a farmer, already receives. I shall not list them, but with the benefits of exemptions from rates, VAT, CTT, as well as new plant and machinery allowances and the net cost of the CAP, I calculate—and this is being generous to the tenant—that we subsidise each tenanted holding in this country to the tune off 15,000 per annum. I consider that to be a rather substantial sum of money. Despite their advantages and subsidies, the tenants are now being further mollycoddled by the Government, who wish to place a burden on the landlord to give a further subsidy by way of rent. I do not think that that is either right or fair. I beg to move.

Lord Belstead

I must disagree with my noble friend that the Bill is in any way giving further preferential treatment to tenants. At present a succession tenant is treated in exactly the same way as any other sitting tenant when he succeeds to a tenancy. The open market rent formula in Section 8 of the 1948 Act is the basis on which the rent is established in both cases, and we are proposing that exactly the same principle should apply when the present Bill is brought into effect. If that is agreed, succession tenants would therefore continue to be treated as sitting tenants.

As I tried to demonstrate in a debate on Clause 1, the purpose of the clause is to do no more than give statutory cover to arbitrators' current practice. Under the present arrangements an arbitrator determines the rent for a succession tenant in the same way as he does for a sitting tenant. If for this purpose the arbitrator disregards any key money element, he is treating both types of tenant similarly.

The new rent formula that we are proposing is not designed to raise or to lower the levels of rent set at arbitration. The paragraph to which my noble friend is drawing attention—paragraph 39—will simply ensure that succession tenants will continue to have applied to them the same rent provisions as will be applied to sitting tenants. Therefore, with respect to my noble friend, there is nothing new in this.

However, the amendment that my noble friend proposes would try to introduce a new concept, though it is a little difficult to see how it would work in practice. The rent formula in Clause I would apply to sitting tenants, but the amendment would seek to apply the existing rent formula to succession tenants. If arbitrators continued with their existing practice, this change would have no effect. But if this amendment was made and provided for two quite different formulae, one for the sitting tenant, one for the succession tenant, because that is what it does, arbitrators might then feel obliged to assess a key money element in the latter case. There would be practical difficulties in doing this but, more importantly, it really would introduce a new and highly contentious principle that would apply in the event of succession. We would therefore be changing the rules on succession and we could be charged with doing so retrospectively. For the reasons that I advanced in debate on Clause 2, which I shall not repeat now, I would not wish to do this. I would therefore ask my noble friend to reconsider this amendment.

The Earl of Caithness

I think that I may have misunderstood the purpose of the paragraph. The point that I am not clear about is this. When there is a succession, is that a new tenancy? If it is a new tenancy, why should not the successor pay his first rent open market and then the rent clause apply? If you say to the landlord that he must let the farm, he goes to the market and a tender rent, on the evidence that we have got to date, would be above a sitting tenant rent. It seems to me, therefore, that if the Government are saying that the successor, on the first rent, when he takes over the holding, has to pay a sitting tenant rent and not a tender rent, the landlord suffers. Am I right?

Lord Belstead

The short answer to my noble friend is that it is because this is the way that it has been done. At present, a succession tenant is treated as a sitting tenant for the purposes of rent, but if the arbitrator was to apply the provisions of the existing law with full vigour, this would make no difference. The rent would be the open market rent, key money and all. In practice, however, as we know, because we have said it so many times, arbitrators do not do this. Instead, they have regard to other factors. But if I may come hack to the real answer to my noble friend's question, it is so because it has been so for many years. We do not intend to change this retrospectively.

The Earl of Caithness

I do not wish to prolong this discussion, but I reserve my right to bring the matter hack at a later stage because I think that there is a point here. If we have got it wrong in the past, perhaps now is the time to correct it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Swinton moved Amendment No. 72:

[Printed earlier: col. 223.]

The noble Earl said: I have already spoken to this amendment with Amendment No. 67. I beg to move. On Question amendment agreed to.

Schedule 1, as amended, agreed to.

Schedule 2[Enactments repealed].

[Amendment No. 72A not moved.]

Schedule 2 agreed to.

Schedule 3 [Transitional Provisions and Savings]:

Lord Belstead moved Amendment No. 73:

Page 30, line 30, leave out ("Subsection (5A) of that section, as so amended,") and insert ("In section 18 of the 1976 Act, as amended by this Act, subsection (5A) ")

The noble Lord said: This is a drafting amendment. I beg to move.

On Question, amendment agreed to

Lord Belstead moved Amendment No. 74:

Page 33, line 2, leave out ("or 2 to this Act so far as relating") and insert ("to this Act, or in the repeals made by this Act, so far as relating (in either case) ")

The noble Lord said: This is a drafting amendment. I beg to move.

On Question, amendment agreed to.

Schedule 3, as amended, agreed to.

House resumed: Bill reported with the amendments.

House adjourned at a quarter before midnight.