HL Deb 10 May 1983 vol 442 cc426-33

3.7 p.m.

The Minister of State, Scottish Office (The Earl of Mansfield)

My Lords, I beg to move that the House do now resolve itself into Committee upon the Bill.

Moved, That the House do now resolve itself into Committee.—(The Earl of Mansfield.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Lord NUGENT OF GUILDFORD in the Chair.]

Clause 1 agreed to.

Clause 2 [Variation of rent]:

The Earl of Mansfield moved Amendment No. 1: Page 2, leave out lines 3 to 10, and insert— ("'(1A) Where the evidence available to the arbiter is in his opinion insufficient to enable him to determine the rent properly payable or he is of the view that the open market in rents for comparable subjects in the surrounding area is distorted by scarcity of lets or by other factors, the rent properly payable for the purposes of subsection (1) of this section shall be the rent which he would expect to be paid, in a market which was not affected by such distortion, having particular regard to the following—'").

The noble Earl said: When we considered this Bill on Second Reading I explained that both sides of the industry had expressed concern that Clause 2 of the Bill as drafted, which introduces a new formula for determining rent on review, might not achieve one of the main aims of the Bill; that is, to require an arbiter to have regard to the factors additional to open market rents in the surrounding area, as defined in Clause 2, where these open market rents were unrealistically high because of the scarcity of subjects to let.

Your Lordships will recall that I indicated we were re-examining the wording in detail and that we would present an amendment for the consideration of the House in Committee at this stage. The result of this re-examination is that we have produced this amendment to make it quite clear that, if the arbiter is of the opinion that the evidence of open market rents is distorted by scarcity of lets, or by other factors, he shall, in determining the review rent, discount such distortion and have regard to the additional factors which are defined in Clause 2. I beg to move.

Lord Ross of Marnock

I think this amendment was promised in another place and again promised on Second Reading, so that we now have a chance of seeing exactly what the Government propose. I had hoped that we would also have some reference to the premium factor, or key money. I do not see that key money can be stopped. It is not part of the rent; it is part of the bargain of entry. This was one of the other elements I had hoped to see and I was not alone in that wish. Other people had expected the Government to deal with that.

Will the Minister tell us exactly what the change is? He said the amendment meets the point, but we have not had much time to read it. It was not available yesterday. I think I received it a couple of hours ago. It is up to the Minister to let us know what world-shaking change there is here, and I should be grateful to him for that. We are denied further opportunity of discussion because of the farcical nature of the remaining legislative procedure. Frankly, I think that legislation in the House of Lords is given a far greater importance by the public—certainly from the Scottish point of view—than I can see in it. There is an element of farce in it.

There are quite a number of things in relation to this clause and in relation to rents that we could have raised. I was hoping to have put down some amendments in relation to this and to the things that the Government have ignored in the Northfield Report. It may be that that will be a suitable subject for discussion in the debate on the Question that the clause stand part of the Bill, although I have been well enough brought up in legislation to know that when one speaks on "clause stand part" one speaks on things that are in the clause and not on things that should have been in the clause. The only time properly to do that is when one puts down an amendment and it is discussed. Although the business has been curtailed of necessity, it certainly was not with my agreement that this bargain has been reached in respect of this particular Bill. I view it with very mixed feelings, and I may refer to it at a later stage.

The Earl of Mansfield

In order to understand the way in which the clause has been amended, one has to read the Bill as we had it on Second Reading with the amendment. The difficulty was to enjoin the arbiter to have regard to the four factors which we conceive on lines 10 to 25 of page 2 of the Bill and at the same time, while he must take an objective test of those factors, to disregard the scarcity (if it exists) of subjects to let in the particular geographical area in which he is working. We had it on good advice—and this was confirmed by both sides of the industry agreeing—that as paragraph (b) of Clause 2 was drafted, there was a real danger that the arbiter was being enjoined to disregard scarcity which was precisely the opposite of the effect which was intended. Therefore, this amendment in those circumstances came to be drafted in the way it has been drafted. The effect of it is that the arbiter will disregard scarcity when he is determining the rent and will confine himself to the four factors which are set out of which probably the most important is sub-paragraph (iii).

What I have to say to the Committee is that this is an amendment which has been (as it were) vetted by both sides of the industry. Of course, it is not for them to agree or disagree to legislation; it is for Parliament to do that. But I can tell your Lordships that, in so far as they were asked to signify an opinion of the amendment, they were both in favour of it.

Lord Ross of Marnock

I think it is important to get it right because it is not either House of Parliament which is the last determiner of what is the law, it is the courts. Therefore, we want as much clarity as possible in respect of that. One of the other things that people were concerned about in respect of rents was the actual fact of the evidence to the Northfield Committee. We find it on page 25, although it is stated in more than one place and it is also in the minority recommendation of Mr. Colburn and Mr. Peat—and at least one of them was a Scotsman. It reads: There is some evidence to support the view that the price of land is too high if viewed strictly in terms of its current agricultural earning capacity". Of course, it is true that at times rents are being fixed which are not related to the productive capacity of a farm. There seems to be an independent value for the land as opposed to the profitability of the farm.

I am glad that the Government made another change in another place in relation to sub-paragraph (iv), which reads: the current economic conditions in the relevant sector of agriculture". Originally, I think, the Government had the words, "current economic conditions in agriculture"; whereas, as we all know, there are sectors of agriculture which even at this moment are posing problems and a certain lack of profitability.

Did the Government consider the question of the separation that has grown up in respect of the value of land as evidenced by sales and rent as opposed to the productivity capacity of the individual farms that are being rented or being sold? Because of the situation it is too late now to put down any further amendments. The Government seem to think that they have now put right this misunderstanding. I only hope they are right hut, so far as the explanation given by the Minister is concerned, we could read very many things into even the amended version of paragraph (b).

Viscount Massereene and Ferrard

Of course, to a certain extent—but not necessarily to a great extent—the productive capacity of land depends on who is farming it. Some farmers are more efficient than others.

Lord Ross of Marnock

May I say that it also depends upon who owns it, as to whether they have ever put anything into it?

Noble Lords

Hear, hear!

On Question, amendment agreed to.

3.17 p.m.

The Earl of Mansfield moved Amendment No. 2: Page 2, line 33, leave out from ("subsection") to ("earlier") in line 35, and insert ("is").

The noble Earl said: This is really a drafting amendment but, because it is slightly more than that, I will explain it to the Committee. Clause 2(d) of the Bill provides, by an amendment to Section 7(3) of the 1949 Act, for the substitution of three years for five years as the minimum review period for determination of rent in arbitration. The proviso to Clause 2(d) provides transitional arrangements for the introduction of the three-year rent-review period under which any rent agreed or determined before the commencement of the amending legislation would not be subject to review by arbitration until the end of a five-year period.

In ordinary language, that means that any rent fixed before the new legislation came into effect, on the assumption that it would run for five years, should not be subject to review by arbitration until the end of the five-year period; thereafter the rent review period would be three years. The classes which these transi- tional arrangements were intended to cover, with reference to Section 7(3) of the 1969 Act, were: first, rents agreed on the creation of a new tenancy; secondly, rent changes by agreement or arbitration; and, thirdly, cases in which there had been a direction by an arbiter that a rent should continue unchanged.

We have now established that the Bill as drafted covers the last two of these elements but not the first; that is to say, cases where a new tenancy has been created with an agreed rent less than five years before the commencement of the Act. This amendment corrects the error. I beg to move.

Lord Ross of Marnock

We are grateful to the noble Earl for having explained the amendment. Subsection (d) is not the most popular part of the Bill because the rent review in Scotland for a statutory period of five years has now been reduced to three years, so that the tenant farmers in Scotland can look forward to having their rents raised every three years instead of every five years. I know that some of the Liberals were even arguing for this proceeding at our Second Reading stage. I hope that they are now explaining to the tenant farmers in the North of Scotland, particularly round Caithness, how helpful they have been to them in supporting the Government in enabling rents to be raised every three years instead of every five years.

The noble Earl the Minister of State was a bit tetchy when I interrupted him during his Second Reading speech—I think during his winding-up—when he was proclaiming Northfield as the justification for the departure from the five-year period and insisting on three years as it was in England. I pointed out to the noble Earl that the recommendation in Northfield was not unanimous; it was a case of most of the members of the committee thinking the period should be the same as in England—three years. That is a fairly important point, especially if the dissenting members of this committee, drawn widely from the United Kingdom, were the Scots. Traditionally we have had a shorter period than in England for rent review. I see no reason why we should not continue with that because farming traditions and a lot of other things are different. I know that is not the point made by this amendment.

I hope the noble Earl the Minister will appreciate that we have to speak where we can in respect of this particular Bill. Let him be thankful it is going through in a very hurried way. The important point is that they seek to be fair. Quite apart from the terms of the lease the period is five years by statute, which has now been reduced to three years, and if there has been a decision by an arbiter we should try to ensure that it will not be changed until a certain period. It would be unfair to apply this new power of review in these particular cases.

I think what the Government are doing is fair and reasonable. I thank them for having discovered their mistake. As we went through this Bill with the usual toothcomb regarding legislation in your Lordships' House, it might well have been that all the Scots and all the English noble Lords were rushing to take part in it because, after all, they insisted that Scottish legislation should be dealt with here and not in Edinburgh. We are not great devotees of devolution—

The Earl of Mansfield

Neither is the noble Lord.

Lord Ross of Marnock

When speaking from a sedentary position the noble Earl is even less careful of accuracy than when he is speaking on his feet.

A Noble Lord

Hear, hear!

Lord Ross of Marnock

When the noble Earl is speaking on his feet, he usually has guidance from others behind the scenes, but he does not know very much about this argument in relation to devolution or he would not have used this particular phrase. If the noble Earl cares to go back to the last Parliament he will discover my name applied to a Bill promoting devolution for Scotland. But from this particular point of view, I would have thought that if we had had that kind of close inquiry we might well have discovered this flaw in the Bill—who knows what other flaws there are?—which will never be noticed until such time as their Lordships in the courts of Scotland decide that what the Bill says is not exactly what the Government meant.

The Earl of Mansfield

Perhaps I should respond briefly. The noble Lord, Lord Ross of Marnock, accuses me of being tetchy last week—I think that was his word. If I were tetchy it was because the noble Lord struck what the Americans call a bum note and the sound has not become any clearer over the weekend. The reason for the difference between a three-year and a five-year period as opposed to Scotland and England was that traditionally farm leases in Scotland were longer than those in England. Therefore it came to be that five years was considered a reasonable period for review whereas in England, where they were shorter, a shorter period of three years was considered right.

As the noble Lord perhaps knows, in Scotland most, if not all, leases are on tacit relocations, and therefore the old considerations are totally inapplicable. In fact, this was part of the agreement which was, if not welcomed by the National Farmers' Union of Scotland, at least assented to, the reason being that instead of as now, when every five years a tenant can more or less expect to have his rent doubled under what I might call a push-pull principle, now the thing falls to be considered in the future after three years and the ordinary conditions which will prevail at the time of the review will apply. I would ask the Committee to accept that this is probably a more logical and satisfactory way of proceeding.

Lord Ross of Marnock

Can we have a pledge from the Government that they will not be doubled after three years instead of waiting for five years?

The Earl of Mansfield

I would have thought that was not for the Government.

Lord Mishcon

Would the noble Earl the Minister care to confirm to the country that his forecast is that every five years the cost of living will be doubled and therefore the rent will have to be doubled every five years? Is that the message of the Government?

The Earl of Mansfield

It has nothing to do with the cost of living. In the past it has been due to the deplorable attitude shown by the then Labour Government to the farming community. In fact, rents bore no relationship to the cost of living except and in so far as the standard of living in agriculture went down because of the appalling policies exhibited by the then Minister of Agriculture towards the European Economic Community.

Lord Ross of Marnock

In that case, can the noble Earl tell us why the cost of farms has gone up and up and up even while there was a Labour Government? For the first time, from the 1948 Act onwards, in Scotland the farmers have a sense of security that they never had before, and if the noble Earl wants a lecture on that, may I refer him to what is going to be part of my bible during the Committee stage—which has been frustrated by some event announced from Downing Street—on land ownership and land use of the Scottish Highlands, which has just come from Aberdeen University. If the noble Earl has time—because he will not be contesting any election—to read that, he will find the latest state of affairs in relation to land use in Scotland and the Scottish Highlands.

On Question, amendment agreed to.

Clause 2, as amended, agreed to.

Remaining clauses agreed to.

Schedule 1 [Grounds for consent to operation of notices to quit a tenancy.]

On Question. Whether Schedule 1 shall be agreed to?

Lord Ross of Marnock

For the purposes of clarity and the understanding of those outside who will be interested in this matter, could the noble Earl the Minister tell us what part of the schedule is new? I think a part is just repeating the law as it is at present. Can the noble Earl tell us what part is old and what part is new? Can he tell us what is repetition of what presently exists and what is new law?

The Earl of Mansfield

Part I is basically old and Part II is new.

Lord Ross of Marnock

Can the noble Earl make clear as to what it does?

The Earl of Mansfield

I am sorry, I did not hear that request.

Lord Ross of Marnock

If that statute is still in force and new provisions are added, can the noble Lord tell us just exactly how they apply? In other words, I want the noble Earl to make clear to the farming community in Scotland just exactly what the difference now is in respect of those who are affected by Part I and Part II.

The Earl of Mansfield

We went into this during Second Reading when I explained the difference between the old and the new concept of near relatives. If the noble Lord will look at the Official Report and read it with the schedule to the Bill, he will then see how it is that so far as leases in existence are concerned—and we are now talking about succession—there will be no change at all. But, in respect of new leases after the Bill takes effect, which is two months after it receives the Royal Assent, there will be a second class, as it were, of relatives or successors to the tenancy where different considerations will apply so far as a notice to quit is concerned. Of course the cases which are really important are cases 4, 5, 6, and 7—although 7, I hazard, is less important than the other three.

Lord Ross of Marnock

I am very grateful for the explanation. I am very sad that the noble Lord, Lord Mackie of Benshie, and his colleague who spoke on Second Reading are not here, because they had a great deal to say about the 1968 Act. What this Bill does, in Part I of this schedule, is confirm that that Act which they condemned so much still remains in force and is accepted by the Government for all existing tenancies. The change in tenancies will apply only to those which are entered into after 1st January 1984, when new tenants will discover that they have not the same security of tenure, or conditions of tenure, in respect of succession as existed under the 1968 Act. Following the speeches of those two noble Lords from the Liberal Benches, I was hoping to see an amendment down to leave out the first part of this schedule, but evidently their interest did not sustain them quite to that point.

Schedule 1 agreed to.

Schedule 2 agreed to.

House resumed: Bill reported with the amendments: Report received.

Lord Denham

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Agricultural Holdings (Amendment) (Scotland) Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Then, Standing Order No. 43 having been suspended (pursuant to Resolution), Bill read a third time, with the amendments.

The Earl of Mansfield

My Lords, I beg to move that this Bill do now pass. I hope it is not out of order to thank noble Lords opposite for having, as it were, facilitated the passage of this Bill towards the statute book. Nobody is going to pretend that it will have a tremendous effect on land holding in Scotland but I think that most people believe it will have a beneficial effect. I am therefore grateful to noble Lords for having made the agreements that they have to accelerate its progress. Perhaps it is not out of order if I also say that I imagine this will be the last time, certainly in this Parliament, that the noble Lord, Lord Ross, and I shall face each other across these Despatch Boxes. The last three years or so have been pleasant. Just occasionally tetchiness has broken out but never for long, and it has always been interesting.

Moved, That the Bill do now pass.—(The Earl of Mansfield.)

Lord Ross of Marnock

My Lords, I have to be grateful to the Minister for his further explanation on Third Reading of the importance of this Bill. When it had its Second Reading in another place the Minister in charge said that the aim of the Bill was to stem the decline in the number of tenant farmers in Scotland and indeed to increase that number. If that was his aim, I notice that the aim put forward by the noble Minister just now is a little bit less optimistic. We just hope that something good will come out of it. I can tell him the good that will come out of it. For the landlords it will be increased rents—more frequent periods of review and increased rents. For new tenants entering succession after 1st January, they will not have the security that was afforded by the Labour Government's Act of 1968.

It is not so had a Bill as I expected because anyone who knows what happened in connection with the 1956 Act—part of which was put right in Scotland, by the way, long before anything was done in England, because it was 1976 before the change was made in England—will appreciate just exactly the importance of it.

The Minister referred to our confrontations across this Table on Scottish legislation. This is where I think the House of Lords slips up. It has been virtually a dialogue between the noble Minister and myself. I do not call that "close scrutiny of legislation". I think I am right in saying that I occasionally had some help from my noble and learned friend—when he sees a point he makes it, as he did today—but it really is a bit of a farce if this is to be considered an adequate legislative process for Scotland in relation to matters of very considerable importance. I think the noble Minister has learned over the past two or three years. I remember in his early period I described him as "the master of the infelicitous phrase". He has learned that a little more control of that "tetchiness" of his will get him a little further forward.

I have heard reference made to the length of my speeches from this Bench from some noble Lords. Take Second Reading: we had about two speeches from the noble Earl; we had four or five speeches from the Back Benches—all from the Tory side—and two Liberals spoke. You add up all that time and you will see that I have to make up for it in some way and I think I have been very abstemious in relation to my occupation of this Bench. I certainly look forward to legislation in the next House when the noble Earl is sitting on this side and I am supporting the Minister of State from the other side.

On Question, Bill passed, and returned to the Commons.