Agricultural Holdings Bill [H.L.]

HL Deb 07 February 1984 vol 447 cc1004-41

3.11 p.m.

Report received.

Clause 1 [Determination of rent of agricultural holding]:

The Earl of Caithness moved Amendment No. 1: Page 1, line 16, leave out from ("holding") to ("and") in line 17 and insert ("at the next termination date").

The noble Earl said: My Lords, I fear we have another long session in front of us, but I am sure my noble friend on the Front Bench will defend his angles slightly better than his compatriots did at Murrayfield, although I was delighted at the way they played. This amendment is really a very small one. It is designed to bring the rent review date into line with the normal contractual rent reviews by requiring the arbitrator to determine the rent payable on the termination date; that is, the relevant anniversary date of the tenancy. It is illogical and unsatisfactory to have a rent review date which can vary widely when the intent should be to fix the rent properly payable at the anniversary date. It would otherwise be possible, as it is at present, for a landlord or tenant to judge in, say. May or June how the levels of the rents are likely to move between then and the date of termination, and to demand an early reference to arbitration, if that were felt to be in his personal interest.

The point I am driving at is this. As worded, the Bill presents an opportunity for an aggressive landlord or an aggressive tenant to use the Bill to manipulate the situation with regard to rent reviews. I think this is a dangerous precedent to set. Although it has worked satisfactorily to date, in the future when everybody has had time to scrutinise the Bill and go through it with a fine toothcomb they will want to seek every opportunity to maximise their interests. I beg to move.

Lord Stanley of Alderley

My Lords, may I start the afternoon by agreeing with my noble friend Lord Caithness. I have some sympathy for this amendment. If I may give an example to fortify his case, what is happening today is that some land agents are negotiating Michaelmas rents now under the old rules because they fear—in my opinion, quite incorrectly—that the new rules under Clause 1 might not be attractive for them.

I hope that my noble friend Lord Belstead and the House in general will agree that such a practice is unattractive in the extreme while legislation is going through your Lordships' House. Similar situations could be envisaged, as my noble friend has said, whereby the tenant might want to go early because he thought farming was improving or because the landlord in the case was going early. I hope that the Government will give this some thought.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead)

My Lords, we have indeed given this quite a lot of thought and I have discussed it outside the House with my noble friend Lord Caithness; but I think that his cure may be rather worse than the disease. At the moment an arbitrator is required to determine the rent properly payable at the date the arbitrator is appointed, and in most cases I think it is fair to claim that he is appointed close to the termination date so there is no real gap between the date at which the rent is determined and the date on which it comes into effect. It is true that arbitrators may be appointed well ahead of the termination date, in which case there will be a period of perhaps several months between the date of the reference and the termination date. I absolutely take that point. In these relatively few cases, therefore, the rent is determined some months in advance.

The purpose of my noble friend's amendment is to overcome this perceived difficulty by seeking to delete the date of the reference and insert the words "at the next termination date". This would require the arbitrator to embark on the really very difficult task of trying to estimate what the rent properly payable would be at that time, which of course could be several months ahead. He would be required to guess what the conditions would be relating to the holding at that time, rather than proceeding as he does at present under the law on the basis of the actual conditions obtaining at the time the arbitrator is doing his assessment.

This would be an additional obligation upon arbitrators, The present date for making an arbitration is well established and is one which I gather has become well used to in agriculture. Indeed, I think that my noble friend very fairly said that it has not given rise to any difficulty. I think we ought to bear in mind that of course the rent will be payable for a whole three years until the next rent review, and I suggest to my noble friend Lord Stanley that just a few months really are not of very great significance in the context of a three-year review, whereas, as I have said, there would be a difficulty in requiring arbitrators, on top of all their other work, to have to look ahead in some cases and conjecture what the rent ought to be at a date not even reached.

It is for these reasons that I cannot accept my noble friend's amendment. I am sorry, because I know that my noble friend feels that this would be an improvement, but, as I have said, I think it may not turn out that way.

Lord Walston

My Lords, I am sorry that the noble Lord has taken the line that he has with regard to the amendment. I would suggest that he canot really have it both ways. As I understand his argument, it is twofold. Either there is absolutely no difference or there will be no difference between the rent at the time the arbitrator is setting about his work and at the time the tenancy comes to an end and the new rent comes into force. That is one argument; and the other argument is that it is impossible for an arbitrator to look so far ahead, that he is not going to be able to see what the conditions are at that time. They seem to me to be mutually contradictory arguments.

The difficulty could be overcome, although I am not suggesting that it should be in this case, by stipulating that the arbitrator may not give his judgment until, let us say, two months before the termination of the tenancy. In default of that-—and I do not put that forward as a realistic suggestion—it seems to me that this amendment is a minor one though a useful one. I very much hope that, if not at this stage at any rate at some later stage, either here or in another place, the noble Lord and his colleagues will see fit to accept this proposal.

Lord Belstead

My Lords, with the leave of the House perhaps I might just reply to that point, which is the one point I have not replied to. I do not think that the noble Lord, Lord Walston, uncharacteristically, is being wholly fair in this matter. What I am saying is that, on the one hand, there are not many cases where the arbitrator has to look a long way forward. Therefore, in the context of the three-year period for every rent review, I do not think the problem is a very great one. But, on the other hand, if I accepted my noble friend's amendment we would be requiring the arbitrator in every case always to have to look some period of time ahead in order to conjecture what the rent ought to be, instead of being able to say what it ought to be at the time the arbitrator is doing his work.

I do not want to be difficult about this because I realise there has been support from both my noble friends and from the noble Lord, Lord Walston. I shall be happy to look at this again, if that were the wish of the House. It might be possible, if we were persuaded, to bring forward an amendment on Third Reading. I will not give an assurance on that, however, because there are difficulties. If my noble friend would agree to withdraw his amendment on the basis of what I have said, perhaps I could meet him again and talk about it.

The Earl of Caithness

My Lords, I am grateful for the support I have received, and also for that last answer from my noble friend the Minister. He referred to there being few cases where the arbitrator would have to look ahead any length of time. We have spent many hours in Committee, and we shall spend a few more hours today, debating the very few cases where rents go to arbitration, so I do not think that that is any justification for excluding this from the Bill.

My noble friend also raised the point that rents will not vary greatly by making an arbitration decision a few months in advance. I can well remember rent reviews in which we started our homework in February for a Michaelmas review, and by the time we came to Michaelmas the rents had changed substantially, depending on the farming climate during the summer. It is exactly that situation that I am trying to avoid. However, in the light of my noble friend's kind words when he said that he will look at this again, I beg leave to withdraw the amendment with a view to discussing it with him and, perhaps, bringing it before the House at a later stage.

Amendment, by leave, withdrawn.

The Deputy Speaker (Lord Aberdare)

My Lords, I have to point out that if Amendment No. 2 is accepted I cannot call Amendment No. 11.

3.21 p.m.

Lord Belstead moved Amendment No. 2 Page 1, leave out from line 22 to end of line 17 on page 2 and insert— ("(3) For the purposes of the foregoing subsection the rent properly payable in respect of a holding shall be the rent at which the holding might reasonably be expected to be let by a prudent and willing landlord to a prudent and willing tenant, taking into account (subject to subsections (4) to (6) of this section) all relevant factors, including (in every case) the terms of the tenancy (including those relating to rent), the character and situation of the holding (including the locality in which it is situated), the productive capacity of the holding, and the current level of rents for comparable lettings, as determined in accordance with subsection (4) of this section. (3A) In subsection (3) of this section "productive capacity", in relation to the holding, means the productive capacity of the holding (taking into account fixed equipment and any other available facilities on the holding) on the assumption that it is in the occupation of a competent tenant practising a system of farming suitable to the holding.").

The noble Lord said: My Lords, I beg to move Amendment No. 2, and would speak also to Nos. 14, 15, 16, 17 and 18; and, coming towards the end of the Bill, Amendment No. 74 brings into the Bill exactly the same concept. Amendment No. 14: Page 2, line 18, leave out ("subsection (3)(d) of this section") and insert ("that subsection"). Amendment No. 15: Page 2, line 27, leave out ("those relating to rent)") and insert ("terms fixing the rent payable)"). Amendment No. 16: Page 2, line 28, leave out from ("shall") to end of line 30 and insert ("disregard—"). Amendment No. 17: Page 2, line 36, leave out ("and") and insert— ("(aa) any element of those rents which is due to the fact that the tenant of any comparable holding is in occupation of other land in the vicinity of that holding that may conveniently be occupied together with that holding; and"). Amendment No. 18: Page 3, line 13, leave out from ("holding") to ("and") in line 15. Amendment No. 74: Schedule 1: Page 27, leave out lines 13 to 18 and insert— (""(6) For the purposes of this section the rent properly payable in respect of the holding shall be the rent at which the holding might reasonably be expected to be let by a prudent and willing landlord to a prudent and willing tenant, taking into account all relevant factors, including (in every case) the terms of the tenancy or prospective tenancy (including those relating to rent) and any such other matters as are specifically referred to in subsection (3) of section 8 of the 1948 Act (read with subsections (3A) and (4) of that section)".").

Lord Renton

My Lords, I wonder whether my noble friend has considered, and whether the noble Lord on the Woolsack has considered, the desirability of discussing all the amendments between Nos. 2 and 11, inclusive, together. One general discussion on the various alternatives which arise on those amendments would undoubtedly save time.

Lord Belstead

My Lords, I have discussed with the noble Lord, Lord John-Mackie, and, through the noble Lord, Lord Mackie of Benshie, the noble Lords, Lord Hooson and Lord Walston, the desirability of doing just that. I understand that all noble Lords are agreed, except that Amendment No. 11 falls outside in the sense that it is not an amendment to Amendment No. 2. But for the Government's part I should be only too pleased to discuss Amendment No. 11 at the same time also.

Lord Northfield

My Lords, if we are taking all amendments between Nos. 2 and 11, I would say that my amendment No. 7B hardly falls in the general discussion. So I should like to reserve the right to say something about that separately.

Lord John-Mackie

My Lords, I believe that the noble Lord the Deputy Speaker said that if Amendment No. 2 was accepted No. 11 could not he discussed.

Lord Renton

My Lords, that would be a very grave misfortune.

The Deputy Speaker

I am sorry, my Lords. I said that if No. 2 was agreed to I could not call No. 11. I cannot prevent your Lordships from discussing Amendment No. 11.

Lord Belstead

My Lords, may I take it, then, that we are agreed that I am moving on behalf of the Government Amendment No. 2—

The Earl of Onslow

My Lords, if I may interrupt my noble friend very briefly, we are getting ourselves into the most appalling muddle, totally by mistake, and with no disrespect meant to the noble Lord, Lord Aberdare, in the Chair. Some of us feel that Amendment No. 11 makes a very great deal more sense than Amendment No. 2, because it happens to be written in rather better English, and that is something which we all appreciate. I do not see why, if it receives a large amount of support on the Floor of the House, and if noble Lords on all sides of the House say that my noble friends Lord Renton and Lord Dilhorne are correct in their interpretation of what we want to do, we cannot have a Division on it, if the spirit so moves your Lordships.

Lord Belstead

My Lords, I think that I ought now to move Amendment No. 2 and speak to Amendments Nos. 14, 15, 16, 17 and 18 with it. It seems to be generally agreed by noble Lords that they will be speaking to Amendments Nos. 3 to 10, which are of course amendments to Amendment No. 2. I think I must leave it to my noble friend Lord Renton to allude to Amendment No. 11 if he and my other noble friend wish to do so, and I shall not stop them. Indeed, if my noble friend raises points on Amendment No. 11, then on behalf of the Government I shall of course do my best to reply.

Your Lordships will recall that during Committee we had a very extensive debate on the rent formula. I believe that we had under consideration no less than eight different formulas, although your Lordships seemed to be agreed on one objective, which was to do no more than provide statutory cover for arbitrators' current practice. The Government had hoped that the original formula contained in the Bill had achieved this objective, but in the light of the arguments put forward by your Lordships in Committee I undertook to consider whether we could introduce modifications which would help to achieve a greater measure of agreement. Over the last two months we have tried to do just that, and I hope with some success, for Amendment No. 2 and the related amendments reflect views expressed in Committee by many of your Lordships.

I must say a word about the organisations which are closely concerned with this and which have also been involved in consultations. All of them have approached this issue in a very constructive way. There has been broad agreement on the objective; namely, to find a way of reflecting in law what arbitrators currently do. I hesitate to claim that we have got everything quite right, and indeed my noble friend Lord Onslow has already said that he favours another amendment, although with the very greatest respect I am not completely sure that that amendment is entirely, in some parts, in line with what almost all your Lordships agree you would want to be doing. But we can look at that in a moment or two. What we have done in Amendment No. 2 is to retain the key elements of the original formula. This is very important, since we have been careful to avoid doing anything which might upset the delicate balance which was established in the NFU/CLA agreement which underpins the concept of the Bill.

The individual changes in detail which I am moving are these. First, there is a newly-drafted subsection (3) to Clause 1. The first part of this subsection reflects much of the amendment which was moved in Committee by my noble friend Lord Kinnoull, and which was tabled also by the noble Lords, Lord Howard of Henderskelfe, Lord Northfield and Lord Northbourne. The effect is to give arbitrators a starting point and, more importantly, an end point, by expressing the rent properly payable in terms of the rent at which the holding might be expected to be let by a prudent and willing landlord to a prudent and willing tenant. There is, however, an important qualification. In arriving at this rent an arbitrator must in every case pay full regard to the four particular relevant factors mentioned in subsection (3). The factors are those contained in the original rent formula, but I will say just a word more about that in a moment. Subsections (3) and (4), because of the words "in every case", must be taken by the arbitrator as a whole.

There are two further changes in subsection (3). We have made it clear that the arbitrator can consider under the terms of the tenancy any terms relating to rent, including the current rent if he considers this particularly relevant; and this is a point to which the noble Lord, Lord Northfield, attached importance at the Committee stage. We have also accepted that the locality of the holding ought to be included. This was always the intention, but I am indebted to the noble Lords, Lord John-Mackie and Lord Prys-Davies, for bringing out this point, although I see from the amendments that my noble friend Lord Onslow does not agree with them.

In subsection (3A) we have not reproduced the reference to profit from farming the holding. I see that the noble Lord, Lord John-Mackie, has Amendment No. 10 down on that, so may I explain why. In the discussions on the rent formula which have taken place since Committee, it was pointed out to us that the words which we included in that formula, could reasonably be expected to profit from farming the holding", could be regarded as precluding the arbitrator from considering, for the purposes of rent determination, any other profit produced by the holding from non-farming activities. The most obvious example is the letting of land for rent sites, or something of that kind.

We did not believe that this would be the case, since any additional profit of this type could be considered as an additional relevant factor. But if the specific reference to farming profit put, alone, into the Bill jeopardised the consideration of earnings generally, we felt that we had to do something about it. We felt that it was advisable to delete the reference to "profit", since the most important factor is the productive capacity of the holding in the hands of a competent tenant. This encompasses the idea of profit, since in converting productivity into the rent properly payable the abitrator must form some idea of the degree of profit which the holding can produce when farmed by a tenant of average ability.

Having said this, I shall listen very carefully on behalf of the Government to what is said on the profit issue. If it is the general wish that these words ought to be reinstated without endangering the reference to earnings generally, the Government will of course not stand in the way, but I believe that the formula we now have, for the reasons I have just given, preserves the interests of everyone and endangers the interests of no one. In summary, these amendments seek to introduce into subsection (3) a change that I believe achieves an objective to which great importance is attached by noble Lords.

There is also one change to subsection (4). It was brought out by your Lordships in two very interesting debates. It is this: the purpose of paragraph (aa) is to make it clear that in considering the rents of comparable holdings the arbitrator must disregard any element in these rents which is the result of proximity—that is, the fact that the tenant of the comparable holding is occupying other land close to it. That puts into the Bill the effect of an amendment which my noble friend Lord Stanley of Alderley moved in Committee. At the same time, however, we have deleted the latter part of subsection (6)(a) which would have required an arbitrator to disregard proximity in the case of the subject holding. The advantage which proximity gives to a tenant will therefore be something which the arbitrator will be permitted to take account of in assessing the rent for subject holdings.

This is the response to the amendment which was moved in Committee by the noble Lord, Lord Howard of Henderskelfe. And that is the effect of Amendment No. 2 and the related amendments. I beg to move.

The Deputy Speaker

My Lords, as an amendment to Amendment No. 2, I call Amendment No. 3. If Amendment No. 3 is agreed to, I cannot call Amendments Nos. 4 and 5.

3.34 p.m.

Lord Prys-Davies moved Amendment No. 3: Line 3, leave out from ("let") to end of line 4.

The noble Lord said: My Lords, I beg to move Amendment No. 3. Clause 1, as amended, reproduces the nine or 10 elements which were contained in the original Clause 1, with one exception—that is, the second limb of (3)(c)—but they have been moved about and they reappear in Clause 1, with one exception and one addition. The additional words which we are unable to support are in lines 3 and 4: the reference to a prudent and willing landlord and a prudent and willing tenant.

We are not sure what is the true significance of this modification. I have seen at least two interpretations of the significance of the additional words. According to one view, they are merely cosmetic because they do not include a reference to the "open market". The opposite view is that, although the words "open market" have not been introduced into the new section (although they were included in the old 1958 Act), their sense has nevertheless been retained.

One wonders what the arbitrator will make of these additional words. What meaning will be attach to them? Obviously that is not ascertainable. Arbitrator A may consider that he has to pay regard to market value, to be discounted later on in order to have regard to scarcity. But arbitrator B may take a different view and consider that, as the words "market value" have been omitted although they were included in the 1958 legislation, there is no duty on him to seek a rate which might be acceptable as between a willing and prudent landlord and a willing and prudent tenant. There will therefore be considerable uncertainty.

I agree very much with the noble Lord, Lord Renton, and the noble Viscount, Lord Dilhorne, that the code set out in Clause 1(4), which determines the rent, is sufficiently complex without the concept of a willing and prudent landlord and a willing and prudent tenant being introduced on top of the eight or nine other elements to be found in Clause 1. My noble friends and I pleaded in Committee for a simpler code. Therefore we press this amendment because of the uncertainty which the words introduce. We believe that they will lead to conflicting interpretations and will take us perilously close to the open market. I beg to move.

Lord Renton had given notice of his intention to move Amendment No. 4: Line 4, leave out first ("prudent and").

The noble Lord said: My Lords, perhaps I may speak now—hoping that I am in order in doing so—to Amendment No. 4. I invite your Lordships to consider at the same time Amendments Nos. 5 to 9 inclusive and Amendment No. 11 as mentioned by my noble friend Lord Belstead when he opened this debate. Amendment No. 5: Line 4, leave out second ("prudent and"). Amendment No. 6: Line 6, leave out ("(in every case)"). Amendment No. 7: Line 7, leave out ("(including those relating to rent)"). Amendment No. 8: Line 9, leave out (", the productive capacity of the holding,"). Amendment No. 9: Leave out lines 12 to 17. Amendment No. 11: Page 1, leave out line 22 to end of line 19 on page 3 and insert— (3) For the purposes of the foregoing subsection the rent properly payable for the holding shall be the rent at which the holding might reasonably be expected to be let without premium by a willing landlord to a willing tenant, the arbitrator taking account of all relevant factors but disregarding—

1. (a) any effect on rent of the occupation of the holding by the person in occupation thereof
2. (b) any effect on rent of the proximity of the holding to other land occupied by the tenant;
3. (c) any scarcity of comparable holdings in the part of the country where the holding lies;
4. (d) any tenant's improvements or fixed equipment other than improvements executed or equipment provided under an obligation imposed by the terms of the contract of tenancy; and
5. (e) any landlord's improvements, insofar as the landlord has received or will receive grants out of moneys provided by Parliament or local government funds in respect of the execution of those improvements.

(4) On any such reference the arbitrator shall not fix the rent at a lower amount by reason of any dilapidation or deterioration of, or damage to, buildings or land caused or permitted by the tenant."). The noble Lord, Lord Prys-Davies, has just referred to the complexity of the law. It really is most unfortunate that our largest industry, which affects the lives of so many of our people, should now, from the legislative point of view, be overridden by one of the most complex groups of legislative provisions that we can find on the statute book. I only wish that I could say that Amendment No. 2, which was moved by my noble friend Lord Belstead as an alternative to what appears in the Bill as amended at the Committee stage, had reduced the complexity. I fear that I shall have to explain in some detail that it increases the complexity. Before I go any further, may I say that I have no objection to Amendment No. 3, moved by the noble Lord, Lord Prys-Davies, but I prefer Amendment No. 4, which I have moved. That is clearly understood.

I propose, although this is such a big and complex subject, to simplify as far as I can my remarks to your Lordships by dealing with the amendments in this way. First, I propose to comment on Amendment No. 2 in detail. Second, I shall draw attention to Amendments Nos. 3 to 9, which are intended, modestly, to improve the Bill. Third, I shall invite your Lordships to consider Amendment No. 11, which is a constructive and more simple alternative to Amendment No. 2 and, indeed, to subsections (3) to (6) inclusive as they stand—or as they will stand if Amendment No. 2 is accepted.

I have to accept the fact that, owing to the nature of our procedure, I could be stymied, and those who agree with me could be stymied, if Amendment No. 2 is carried. I shall therefore ask my noble friend Lord Belstead, who has shown such wonderful open-mindedness in this difficult matter—open-mindedness in the face of all kinds of conflicting advice which he has received—whether he will be so good as to take away Amendment No. 2 in any event, so that we may have a further chance of getting it right. I hope very much that either there will be no Division on Amendment No. 2 or, if there is one, that it will be defeated.

Lord John-Mackie

My Lords, I am rather puzzled. At the top of page 2 of the Marshalled List there are printed the words: [As amendments to amendment No. 21]", which I take it cover all the amendments to the bottom of page 2, including that of the noble Lord, Lord Renton. So his is really an amendment to Amendment No. 2; it is not a separate amendment to the main Bill. If we discuss the two or three other amendments and they are all withdrawn, voted upon, or what-have-you, we will then come, before the main amendment, Amendment No. 2, is put, to the amendment of the noble Lord, Lord Renton, which is Amendment No. 11. I should like some guidance, but surely that is the process, is it not?

Lord Renton

My Lords, it may be that the noble Lord is a much greater authority than I am, but, with respect, that is not my understanding of the procedural position. The procedural position is that before Amendment No. 2 is put to your Lordships for voting, Amendment No. 3 will be put. If that is carried, Amendments Nos. 4 and 5 will fall. Then Amendments Nos. 6, 7, 8 and 9 will be put. If any of those amendments are carried, or if they are not, then Amendment No. 2 will be put. If Amendment No. 2 is carried, with or without amendment, then Amendment No. 11 cannot be put or discussed any further. I understand that to be the position.

The Deputy Speaker

My Lords, the noble Lord is not quite correct, because Amendment No. 10 is an amendment to Amendment No. 2. So we shall go through all the amendments to Amendment No. 2; that is, from Amendment No. 3, which we are now debating, to Amendment No. 10. They also include Amendments Nos. 7A and 7B.

Lord Renton

My Lords, I am most grateful to the noble Lord on the Woolsack. He is of course quite right; I should have mentioned also Amendment No. 10.

Lord John-Mackie

My Lords, why not include Amendment No. 11, which is an amendment to Amendment No. 2?

Noble Lords

No, it is not.

3.45 p.m.

Lord Renton

My Lords, may I try to save time by dealing with the matter in the three ways I mentioned? First, I should like to comment on Amendment No. 2. My noble friend, as I said before, has been wonderfully patient and open-minded, but I suggest to your Lordships that he has been much too indulgent. The outcome as expressed in Amendment No. 2 is not satisfactory. I am also very sorry for the draftsman; I should think he has had an awful time behind the scenes.

In order to try to please somebody, my noble friend Lord Belstead has introduced into the rent formula the requirement that the parties must not only be willing—which is plain, sufficient, well-understood and established—but that they must also be "prudent", which is new, unnecessary and, as I shall show, likely to cause confusion. If the word "prudent" has been inserted to make it unnecessary to introduce an express disregard of scarcity, or an express disregard of what has come to be known as "marriage value"—a strange expression which is very descriptive, because although it has nothing to do with marriage between human beings it does concern the marriage of pieces of farmland—then it does not achieve either of those purposes. If that word is added, arbitrators and those addressing them will have to consider why it was added by Parliament. That in itself will cause people to wonder.

It cannot be assumed that a prudent landlord will necessarily ignore the scarcity factor. Indeed, some landlords—a minority, no doubt—may concentrate upon it. The National Farmers' Union will then indeed have something to worry about—and I believe that they, among others, were content for the word "prudent" to be inserted. The insertion of the word "prudent" certainly will not bring rents down, or stop them from going up. Indeed, in the long run—and I stress "in the long run"—it may cause rents to go up still further.

I am told that when the present rent formula in the 1958 Act was being devised in that year, the word "prudent" was thought about but was rejected on the ground that it added nothing to the law. Strangely enough, I was then responsible, as Under-Secretary at the Home Office, for agriculture in Northern Ireland. I was therefore a sort of "mini agriculture Minister". I must confess that I remember nothing of that particular discussion, but I am convinced that the word "prudent" does not add anything to the law and would have no legal effect.

My next criticism of my noble friend's Amendment No. 2 is that all the words appearing between brackets are unnecessary. One wonders why they were put between brackets at all, rather apologetically. Let us consider each instance. The first occurs in subsection (3), where it says: (subject to subsections (4) to (6) of this section)". That is a very strange point to insert, because all subsections of every section in every Act of Parliament are subject to all subsections within that section. So those words are unnecessary.

Then we come to the words: all relevant factors, including (in every case)". Of course the law applies in every case if we enact it, and it is mere surplusage to write that in, whether or not it is between brackets. There then appear the words: the terms of the tenancy (including those relating to rent)". One wonders whether any sane arbitrator can take account of the terms of the tenancy without thinking of those relating to rent. So those words between brackets also are mere surplusage.

The next words appearing between brackets occur in the phrase: the character and situation of the holding (including the locality in which it is situated)". The only relevance of considering the situation of the holding is in respect of its locality, so those words between brackets are also mere surplusage. I hope that my noble friend, with all his wisdom and patience, will agree that all the words appearing between brackets in his amendment should disappear. Then we come to "productive capacity". May I say in passing I am so glad that the references to profit have been cut out; that would have taken up an awful lot of time at every arbitration without getting anyone anywhere. But what would "productive capacity" do? That is mentioned in line 9. I suggest that there is a nice little pot of gold for professional people in that concept. There will be endless argument as to the facts, as to what is the productive capacity of a particular holding, and endless arguments in law as to my noble friend's definition of "productive capacity", and even more perhaps as to the way in which that definition affects the amount of rent to be fixed by the arbitrator in the particular case. Would it not be better to leave this question of productive capacity to be dealt with simply as a relevant factor, a broad question of judgment on the arbitrator's part, instead of trying to pin him down with a formula within a rent formula?

The net result of Amendment No. 2, coupled with the minor amendments to which my noble friend referred, Nos. 14 to 18, would be this: to leave subsections (4), (5) and (6) of the Bill intact, having redrafted subsection (3) and added the new subsection (3A). The rent formula would then be contained in one and a half pages of detailed directions to arbitrators, some of them unnecessarily verbose and complex, when in my opinion we should leave matters mainly to their judgment, after hearing the parties, inspecting the land and buildings, and using their knowledge of the part of the country. I have tabled only six amendments to leave out unacceptable parts of my noble friend's amendment, and may I say with humility that in doing so I have been surprised by the restraint that I have shown. I hope that some or all of my amendments to my noble friend's amendment will appeal to him.

Lastly, I come to the constructive alternative to it contained in Amendment No. 11 on which I have the valuable support of my noble friend Lord Dilhorne and other noble friends who have said that they agree with Amendment No. 11. It has the merit, first, of being short and simple. It reduces the length of the statutory directions to arbitrators from one and a half pages to half a page. That is of no mean merit in itself. We start with the simple hypothesis that the rent should be that at which the holding might be expected to be let without premium. Subsection (4)(b) of the Bill as at present before us refers to "premium" in a different way. I suggest that it is right that the arbitrator should assume that the rent to be fixed should not have any key money element in it and should not have any regard to premiums. That should be clearly stated in the initial and important part of the instructions to the arbitrator. Then we say it should be between a willing landlord and a willing tenant, the arbitrator taking account of all relevant factors.

There is a danger in being selective about the factors to be taken into consideration, because as a rule of interpretation which binds our courts and everyone who has to apply the law, if you express one thing you are presumed to have omitted other things intentionally: if I may use the Latin tag, "expressio unius est exclusio alterius". My noble friend has selected in lines 6 to 9 some things that the arbitrator has to bear in mind as relevant factors. There will be a temptation perhaps on the part of some arbitrators, and of those addressing them and trying to persuade them, to say, "These are the factors that matter; really, Parliament is not worried about the others". Whereas we say that we should invite arbitrators to take a broad view of this vital matter.

However, we say—and we agree with the Government, the Opposition, and with others, too—that there are some matters which should be expressly disregarded by the arbitrator, and that this should be made plain to him. We have mentioned five, partly for removal of doubt and partly to meet the views expressed by interested bodies. Paragraphs (a), (b) and (c) in our new subsection (3) are already in the Bill in various ways. We have simplified the drafting. Paragraphs (d) and (e) are taken from subsection (5) of the Bill as it stands using just the same drafting, so presumably there is nothing exceptional about them.

If I may finally refer to the drafting of paragraph (c)—"any scarcity of comparable holdings in the part of the country where the holding lies"—that brings together several different propositions. I hope your Lordships will feel that it has been done in a compendious and fair way. There should be no difficulty about the expression "part of the country". If I may give an example, I am not a Yorkshireman but I would say that the plain of York must be regarded as a different part of the country from the Yorkshire Dales. In the part of the country where I live and which I used to represent in Parliament, I would say that the Fens are so different in character and in locality that they must be regarded as a different part of the country from the neighbouring Clayland. So there should be no difficulty about that definition. If we look at the Bill as it stands, without my noble friend's amendment, there is nothing new in our amendment as expressed in paragraphs (a), (b), (c), (d) and (e).

In conclusion, may I say that we are trying to help—and this is not a wrecking amendment; this is a constructive alternative to my noble friend's amendment—by asking your Lordships to consider a simple alternative to the Government amendment, which I ask my noble friend not to press today. In spite of his valiant efforts to get it right, it really will not do as it stands.

4 p.m.

Lord Stanley of Alderley

My Lords, I should like to speak on one or two points made by my noble friend Lord Renton, but first I should like to thank my noble friend on the Front Bench for his Amendment No. 17. I do not think it is quite right and I propose amending it with Amendment No. 17A, but I shall speak to it then.

Secondly, my noble friend on the Front Bench referred to earning capacity and how that has been left out. That is a very grave error and I cannot accept the case that he put forward. It might happen that there is a very highly productive farm producing potatoes, but it has no quota so, therefore, it has no earning capacity. The same could apply to hops or sugar beet and it does not take a great stretch of the imagination to see further controls like those being put on through the common agricultural policy, which I believe is in surplus on certain items.

I should like to speak very seriously on Amendment No. 2, and also Amendment No. 3, which is an amendment to Amendment No. 2, moved by the noble Lord, Lord Prys-Davies, because that is where my sticking point lies. My noble friend Lord Renton said that the National Farmers' Union was perfectly happy with the word "prudent". I can assure him that we are not. Secondly, as regards what my noble friend said—much of which, as usual, went well above my head—there is one part of the words in brackets which I should like kept in. I agree that the rest do look pretty unnecessary. The words I refer to are: including those relating to rent". My noble friend will find in the original draft the words, other than those relating to rent". I would rather deal with this point when my noble friend Lord Kinnoull and the noble Lord, Lord Howard, speak to Amendment No. 16A because it is a valid point.

I support Amendment No. 3 because despite what my noble friend Lord Belstead said I am still not clear what the words "prudent and willing" mean. If my noble friend Lord Kinnoull and the noble Lord, Lord Howard, care to tell me what they think the words mean I shall be deeply indebted to them. Do the words "prudent and willing landlord" and "prudent and willing tenant" mean in practice the same as the original amendment tabled by my noble friend Lord Kinnoull in Committee, including the words "open market"? If they do not, can someone tell me the difference? I know that your Lordships will consider that I am excessively sensitive about the words "open market". Indeed, I am. I am sensitive about the whole of Clause 1 which is, for me, the whole reason for the Bill.

I have heard that certain organisations, particularly the landowning charities, consider that the phrase "prudent and willing" in effect means that it is the open market rent that is referred to, in which case we might as well go back to the original amendment of my noble friend Lord Kinnoull. Certainly, the CLA says in its brief that these befuddling words: give the arbitrator a clear objective and starting point". If this interpretation is correct I shall find myself at the end of the day in the same Lobby as the noble Lord, Lord John-Mackie. Frankly, I do not think—I do not hope—that these interpretations are correct. Listening to my noble friend Lord Belstead, I think he takes my view. The trouble is, I only think; I do not know. Despite the soothing words of my noble friend to reassure me and the soothing words he has addressed to the House, at the end of the day it will be the arbitrator in the field, appointed by the RICS, and eventually, perhaps sadly, the courts, who will decide what this funny phrase means. That is my real objection.

The original Clause 1 was clear; or it was to me. Perhaps the institutions did not like it, but it was clear. We now have substituted a new clause which is not clear. That is bad parliamentary practice. It should be our job to make the law as clear as possible and I fear that the Government, in order to try to placate everyone, have fudged the issue and produced this very difficult clause.

It is always difficult to be unkind to my noble friend on the Front Bench. I listened very carefully to his opening remarks but I am still not happy. I shall wait to see what the lawyers outside your Lordships' House make of the new Clause 1. If in their wisdom the lawyers persuade me that this phrase "prudent and willing" and Clause 1 are not as originally agreed between the National Farmers' Union and the Country Landowners' Association, I shall object on Third Reading, in which case the Government may well have to proceed with this Bill without the support of the National Farmers' Union.

Lord Hooson

My Lords, today I am standing in the shoes of my noble friend Lord Mackie—shoes which are rather too large for me—and it is the only time that I have intervened on this Bill. My noble friend told me that he was broadly in favour of the amendment moved by the noble Lord, Lord Belstead, but having listened to the criticism of the drafting of it by the noble Lord, Lord Renton, I very much sympathise with the viewpoint of the noble Lord, Lord Renton, and I think that he is basically right. It seems to me that the great danger in drafting this kind of Bill is that there are so many lobbying interests that one tends to get a cosmetic Bill. The interests concerned want to see the words that they have suggested to the Minister, and were agreed when they saw him privately in his room, in print in the Bill itself. That leaves very bad drafting.

I should like to talk for a moment or two about Amendment No. 3, moved by the noble Lord, Lord Prys-Davies. Your Lordships have to consider whether the words: by a prudent and willing landlord to a prudent and willing tenant add anything to the Bill. I am astonished to learn that they are regarded as a disguise, as it were, for an open market rent. It appears to me that the two words "prudent" and "willing", in juxtaposition as they are in this drafting, are very difficult to interpret. After all, we are concerned with an arbitrator deciding a rent in a controlled tenancy. I am told that in the present economic climate the situation is that if a landlord is prudent he is not willing, and if he is willing he is not prudent.

How do you interpret the words together? It seems to me that the words are put in to satisfy lobbying interests and add nothing to the clause. The message has come loud and clear from the noble Lord, Lord Renton, over many years that we should be much more simple in our drafting. He must be basically right and his criticisms are entirely justified, but I do say to the noble Lord, Lord Prys-Davies, that I entirely support him in his amendment.

The Earl of Onslow

My Lords, as I tabled Amendment No. 7A I should like to talk very briefly to it. My amendment proposes that we leave out, (including the locality in which it is situated)". This refers to the situation of a holding. It seems to me tautological that one could add that set of brackets after the first sentence. It is rather like saying. "a blackboard is black". How one can avoid a situation where something is situated and ignore the locality blows one's mind and imagination as to how that could have been drafted. My criticisms are the same as those made by the noble Lord, Lord Hooson, and my noble friend Lord Renton. The Minister's amendment does not make sense. I suggest that we are attempting to do something which, if I were to draw a parallel with the 1920s, would be to enact an Act of Parliament and say, "You will not take into account the scarcity value of tenants and therefore you will automatically charge 5£ an acre rent", as opposed to the market rent which was something in the region of 30 shillings, "or give it away if you can possibly get it farmed".

If you mess about with the open market formula beyond a very limited amount on the sideline, you will destroy that market. It is as simple as that. If we try to hedge about with the tautological subsections that we have in the new Government amendment, we shall make a situation which is bad, worse and it will not achieve the objects of the Bill. As I understand them, the objects of the Bill are to produce more order and slightly less injustice than that caused by the Agriculture (Miscellaneous Provisions) Act 1976 and also to produce more tenancies. This clause will not produce one single tenancy more.

I strongly suggest that the amendment put down by the noble Lord, Lord Renton, and the noble Viscount, Lord Dilhorne, is much, much clearer. It sets out in words of one, and at a maximum three, syllables something that we can all understand. I make a small criticism of that amendment. It is the same point that was made forcibly in Committee by the noble Lord, Lord Northfield. If a farmer for the next-door 50 or 60 acres when it comes on the market bids silly money—by that I mean £120 or £130 an acre, or even £60 in some circumstances—I see no reason why he should go back to the arbitrator three years later and say, "Look, I obtained this land by bidding silly money, but the Act says that I have to be acquitted of my silliness and I need not hid the money I offered the landlord". In those circumstances, it seems to me totally right that, if the tenant is prepared to pay silly money for his tenancy, he should be made to pay for his misjudgments. That of course means deleting the word "prudent".

If a tenant can suddenly go back to the landlord and say, "Look, I made the most terrible mistake. I was not prudent over this", and the arbitrator has to say, "No, I am afraid, dear boy, you were not a very prudent fellow. We shall reduce your rent by 50 per cent.", that is not how to run an agricultural landlord and tenancy system, nor even a sweetshop on the corner. It is a total and utter formula for disaster and will not improve the letting of land, which for social and agricultural reasons we all want to see. I beg my noble friend, who is a wise and civilised man and for whom we all have great respect, to take this away and he less wise and civilised and slightly nastier to the people who have been banging on his door and begging him to do this.

4.13 p.m.

Lord John-Mackie

My Lords, there has been a lot of talk about muddle. I am one of the people who are muddled by the Bill, the clause, these amendments and the omnibus discussion of all the amendments. It is very difficult indeed. I presume that I am now talking to our Amendment No. 10 and may speak to all the other amendments at the same time, including the amendment of the noble Lord, Lord Renton, Amendment No. 11. I apologise for being a little befogged about why it was not an amendment to Amendment No. 2. I see that it deals with the original Bill, as amended, and not with Amendment No. 2. Had the noble Lord thought that he would be frustrated in the way that he has been, he might have put down his amendment to Amendment No. 2. That would be a perfectly sound approach. However, it is too late for him to take my advice now.

The noble Lord, Lord Belstead, said that he could not agree to the word "profitability". He thought that a curious difficulty would arise, as extra activities on a farm—and for some reason the parking of caravans seems to be the main one—would distort the situation if the word "profitability" was inserted. I cannot follow that at all. After all, on how many farms do caravans make much difference to profitability? That may occur along the coast and in one or two other places, but there are 200,000 farms in the country. The main point in the NFU brief is that there must be some reference in the clause to profitability.

The matter was well enough put by the noble Lord, Lord Stanley of Alderley. A whole host of things can control the profit of a high productivity farm. I had a first-class farm in Scotland in the late 1920s and early 1930s. Its productivity was very good indeed but we could not make a profit. If the word "profitability" is not included, I can imagine a farmer producing his books to an arbitrator and saying, "Look at the past three years and see how low my profits have been", or, "Look at my losses"; and the arbitrator saying, "I am sorry, old boy, but it is not in the Act that I take any account of that. It is just too bad".

At this point I must take to task the noble Earl, Lord Kinnoull, and others who seem to think that, irrespective of what happens in farming, people who have invested in agricultural land must have their cut, whatever else happens. That seems to be the basis of the amendments that they have put down—whether or not a tenant farmer makes a loss, he has to pay the rent to the landlord and that cannot be an argument to bring down the rent. When people invest in shares and various other things, if they fall in price there are no dividends, and they have to accept that. Why should farming be different?

The Earl of Kinnoull

My Lords, does the noble Lord not recognise the fact that there is a rent review every three years?

Lord John-Mackie

My Lords, yes, but I point out that three years is a long time if you are making a loss. I want to insist on our amendment, which would insert the words: taking into account the extent to which a competent tenant practising a system of farming suitable to the holding could reasonably be expected to profit from farming the holding". To a certain extent that should satisfy the NFU.

I should like to say a word or two about the earlier amendment to which my noble friend Lord Prys-Davies spoke concerning the terms, "prudent and willing tenant" and "prudent and willing landlord". I am glad that it has considerable support from the noble Lord, Lord Hooson, and to a certain extent from the noble Lord, Lord Renton, although he seems anxious to retain the word "willing".

I move now to Amendment No. 11.

Lord Renton

My Lords, perhaps the noble Lord has overlooked the fact that the word "willing" is in previous rent formulas and is now well established and understood.

Lord John-Mackie

My Lords, I take that point; but in the noble Lord's amendment it would appear that both words could be left out and the proposition still remain perfectly sound. In Committee we put down an amendment to simplify Clause 1. It was almost the same as the noble Lord's amendment, apart from missing out his disregarding points. We left it to the arbitrator to use his common sense about what he had to disregard. I am sorry that the noble Lord did not support us then, but I am glad that he has had second thoughts and produced Amendment No. 11. We shall have great pleasure in supporting it. We are perfectly certain that it is much, much better than the amendment of the noble Lord, Lord Belstead, Amendment No. 2. Having listened to what every speaker has said so far, it seems to me that that is the feeling of the House. It will be interesting to see what happens in due course.

Lord Middleton

My Lords, I think it is time that there was voiced some support for my noble friend Lord Belstead and for the Government amendment. As my noble friend Lord Belstead has reminded us, in recognition of the very long debate in Committee, he then undertook to consider some of the improvements that were proposed, to see whether they could be incorporated in the Bill without destroying the sense of the original formula that had been threshed out over such a long time, and with such care, by the CLA and the NFU, and, despite what is frequently said to the contrary, with valuable help from the profession.

My noble friend also undertook to see what measure of agreement he could obtain before the Report stage. Just as one would expect, he has honoured those undertakings in the most painstaking way, and I and other noble Lords who are interested in Clause 1 are very well aware of the immense trouble that he personally, and his departmental advisers, have taken to do precisely what he promised your Lordships in Committee he would do. The result of that labour and consultation—I repeat, consultation—is the amendment which we are now debating.

I think that we should also congratulate my noble friend Lord Kinnoull and the noble Lord, Lord Howard of Henderskelfe—and I say this despite what was said just now—on introducing the idea of the prudent and willing parties, which is incorporated in the amendment of my noble friend Lord Belstead. I remember saying in Committee that I thought that their original amendment contained elements which, if incorporated into a new amendment, might stand a chance of wider acceptance.

Though I was involved in the negotiations which produced the recommendations for the original rent formula, I was well aware of the constraints under which we were working, and I have no hesitation in saying that the Government amendment, Amendment No. 2, that we are now looking at is an improvement. I believe that it meets some of the quite understandable criticism of the original version. I believe that it could easily be understood by arbitrators. I consider that it is helpful to landlords without being disadvantageous to tenants. It is not perfect, and this fact is clearly reflected in the debate that we are having this afternoon. But it is the best that we shall get and still obtain substantial acceptance.

I always have enormous respect for the advice and wisdom of my noble friend Lord Renton, but I shall not support any of the amendments to the Government amendment. I very much hope that we shall agree to Amendment No. 2. That is the one that I shall vote for, and so I hope will a great majority of noble Lords.

Lord Peyton of Yeovil

My Lords, perhaps I may remind your Lordships' House of the fact that some years ago my noble friend Lord Renton chaired a committee which looked into the murky subject of the quality of our statute law. The hostile verdict which that committee, with justification, felt obliged to deliver on that occasion was endorsed by a very slender audience in another place. That endorsement was accompanied by expressions of every kind of regret and determination to do better. It came as no surprise I think to anyone present that such expressions of determination and good resolutions were soon jettisoned.

While I have every sympathy with my noble friend on the Front Bench, who is obliged to father this amendment, I am bound to recall my own agreement of years ago with my noble friend Lord Renton that opaqueness was not necessarily a virtue in the law. Here in Amendment No. 2, proposed by my noble friend on the Front Bench, we have a quite extraordinary marriage between confusion and explanation where none is needed, but explanation which when offered only seems to make things worse.

We are told—I suppose that we should greet the information with some surprise—that the terms of tenancy are in every case intended to include rent. That, I am bound to say, came as no news to me, and I do not doubt that it will not be news to any of your Lordships. Then we are told that character and situation, which are also to be considered, should include locality, but the words "in every case" are omitted.

I do not wish to take up your Lordships' time, nor to add to the pain which my noble friend must already have experienced in listening to my noble friend Lord Renton. But in conclusion I wish to make a modest plea that my noble friend on the Front Bench should take away this rather nasty, messy amendment. Though I entirely endorse what the noble Lord, Lord Middleton, said about my noble friend's patience and his willingness to take pains, I hope that he will take away the amendment and inflict some pain upon those who produced it.

Lord Northfield

My Lords, I think that we are due for a speech from this side of the House. First, I should like to echo what noble Lords have said from all sides of the House about the immense patience and courtesy of the noble Lord, Lord Belstead. Since the Committee stage no one could have worked harder, nor, I guess, longer hours than he has to try to reach agreements about this matter. In a very long parliamentary experience I have known no other Minister who has put so much effort into reaching agreement, and I think that we should all record that with immense gratitude to the noble Lord.

However, if the noble Lord will allow me to say so, that does not absolve us from being immensely critical of the net result of his labours. I suppose that the noble Lord is sitting thinking that he is doing rather well; he is sailing carefully between the Scylla of the excessive demands for protection of the NFU and the Charybdis of those who want the total open market situation restored. The noble Lord must think that that is rather a good position to be in, and that he will finally carry the troops along with him.

The noble Lord also might think that we who are critical of this draft are making a mistake; namely, that, despite what the noble Lord, Lord Renton, has said—and, if I may say so, I very much agree with him—we are concentrating too much on the fine print and the drafting and forgetting to examine whether the solution that the noble Lord has provided is in principle a good one. It is that question which I wish to ask.

What is the noble Lord proposing? He opened the debate with what I thought was a very skilful speech. In listening to his first speech no one could have thought that this was a climb down, that this was the Government doing a volte-face, and saying, "Of course we must bring back in the open market". Oh, no, the noble Lord did not say that at all. What he said was—and I can almost quote him—that he thought that noble Lords wanted to bring back what is now happening in practice and legislate for it. That is a very skilful way of disguising his retreat.

But is he really doing that? Of course he is not. What he is bringing in is a system of regards and disregards. He is saying that the arbitrator must regard a whole list of factors, but he must also disregard one other main factor, which is scarcity in the market, and one or two other factors as well. But I say to the noble Lord, Lord Belstead, that that is not what arbitrators are doing at the moment. In the package he is not legislating for what is going on at the moment. He is altering it to bring in a mandatory disregard of scarcity. That is not in either present law or present practice. It is what many of us feel will end up as the real basic trouble.

What the Northfield Committee said was that there should be no mandatory disregard of this kind. As I remarked on Second Reading—we all seem to come back to this—what we should have basically is an open market situation for arbitrators to take into account with discretionary, not mandatory, ability to say that sometimes they had better use their common sense to disregard some elements of scarcity. That perfectly sensible practice happens now. I would legislate for it tomorrow. It is not what we are legislating for here. We are bringing in the mandatory disregard of scarcity. That will cause all hell and high water.

An example was given by Mr. Peter Trumper, of Cluttons, in a lecture last week. Let us get down to what happens on the ground. We have three farms. Rents are at the moment £35 an acre. One of the farms comes up for re-letting and goes out to tender. The tenders come in at anywhere from £75 to £55 an acre. People say that this is a sensible sort of level of rent given the passage of time and possibly taking into account some scarcity in the market and the ability of the new tenant to work harder and make the farm pay at a slightly higher rent.

What does the poor arbitrator have to do? Or, to take it one stage further, what would a sensible landlord do in those circumstances? He would probably disregard the bottom tender and the £75 an acre tender. He would probably say that the sensible answer was about £65 an acre. But the poor arbitrator under the Bill has to say, "I am sorry, but that rather sensible approach, which is to discount ridiculous tenders, cannot now be followed. I have to discount for all scarcity in the market. I have to pretend that there is equilibrium in the market, just enough people demanding and just enough farms on the market".

The arbitrator will have to say—this is mandatory, so he has no discretion—that it is not £75, it is not £65 and it is probably not £55 an acre. It is probably, in practice, nearer £40 an acre. We shall therefore have a special class of tenant created, if you like, who will be able to say, "I am now protected from all those elements of scarcity in the market and, whereas someone who was prepared to work harder or take an extra risk would have paid £55 an acre, I have had my rent assessed as if there was total equilibrium in the market". In a totally artificial situation which no one can imagine, the rent comes down to about £40 an acre.

That is not the end of the story, as Mr. Trumper points out, based on his years of experience in valuing and arbitrating. You have then to take into account whether the present rent of £35 an acre contains an element of scarcity. If so, the figure has to be brought down even further. If you take such examples, you see the absolute folly of legislating to make this disregard of scarcity mandatory. We shall have a totally artificial set of tenants on totally artificial rents with no room for play of market forces and everyone regretting that greater elements of market forces had not been left in the picture. It will mean disaster, as many people have forecast, unless—our best hope, if this poor proposal goes through in its present form—quite sensibly, as at present applies, arbitrators take no notice of it and begin to use their common sense all over again. I hope to goodness that this is exactly what will happen. I hope that arbitrators will put this on the shelf in the belief that no one will challenge their common sense as they have practised it up till now. So we end up having spent all this legislative time for no good purpose except to tell arbitrators that we have made such a mess of it that they had better continue using their common sense.

There are two other points that I wish to make before I conclude. I shall make it one point, and spare the House the other. It is the point that the noble Lord said that he had met. In his kind opening remarks he referred to me and said that he had met the point about taking into account rents that the tenant is already tendering for land he is farming. With respect, I do not think that he has met the point. Again, let me give an example. A farmer has a tenancy but also has a separate piece of land, another 10 acres on which he is paying a fancy rent because he can average out the rent beautifully over the whole holding. When he comes to a rent review on the original holding, not on the extra 10 acres on which he has bid a fancy rent, the arbitrator must discount this silly money that he has paid to get hold of an extra piece of land. It is a comparable holding. Under subsection (4)(a) it must be disregarded. It is one of the disregards.

Can we really have anything much sillier than that? Here we have a farmer who goes round bidding up land all round him because he knows, happily, that he is sitting on a lovely island in the middle of rent protected land. He can bid up all the others round him to get extra acreage without it ever being reflected on the rent of his original holding. To try to meet that, I have put down Amendment No. 7B which says that this is to be taken into the regards as opposed to the disregards. We must pay regard to what he is tendering and getting in the way of land all round him. His own actions on the market must not be disregarded; otherwise we are in a very silly position with his freedom to avoid all the penalties of his own folly.

I must ask your Lordships to consider these fundamental points about the amendment. I shall follow the noble Lord, Lord Renton, into the Lobby, if he so wishes, on his redraft. Given what the Government intend, that is a much better way of putting it. I beg noble Lords, however, to address themselves to the fundamentals. Do we really want mandatory disregard of scarcity with all the nonsense that it brings instead of discretionary disregard, which I would favour? Do we want farmers able to go round bidding up land and this not having any effect on their present holding when rent reviews come along? I hope that we shall discuss the fundamentals of the Government's approach and leave on one side for a moment the redrafting so eloquently suggested by the noble Lord, Lord Renton.

The Earl of Onslow

My Lords, before the noble Lord sits down, can he comment on the possibilty that if you have a silly rent bid for a neighbouring piece of farmland, the arbitrator can then reduce it, disregarding the scarcity value?

Lord Northfield

My Lords, that is another point. The noble Earl has made the point successfully. I did not want to repeat it. I think that he is right and that farmers will be able to get their rents down at rent reviews under the present draft if they have offered silly money for it in the past. If so, the situation is even worse than I had imagined.

The Earl of Caithness

My Lords, I, too, should like to thank my noble friend Lord Belstead for all the time that he has devoted between Committee stage and now in trying to arrive at a formula that he believes would be acceptable to everyone, taking into account the manner in which he has been pushed and pulled. The proposal is a great deal better than what we had originally, but I still do not like it. The reasons have been well expressed by my noble friend Lord Renton and by the noble Lord, Lord Northfield. I dislike the last part of Amendment No. 10 to which the noble Lord, Lord John-Mackie, spoke in regard to the word "profit". I can think of nothing worse than an arbitrator being put in the position of assessing the farm accounts which the noble Lord, Lord John-Mackie, wanted to present as evidence of the profitability of the holding. I would not mind looking at the accounts of the noble Lord, Lord John-Mackie, but I would not trust at all the accounts of some tenants. That would be a very dangerous opening.

With regard to the point raised by my noble friend Lord Stanley, may I just remind him that it is not the NFU that makes laws? It is Parliament that makes laws. If the NFU wishes to go off by itself, let it go off. I think, however, that the NFU would do better to stay with us and work to try and improve the situation.

If my noble friend Lord Belstead presses his Amendment No. 2, I shall not be able to speak to my Amendments Nos. 12 and 13, which are amendments to the amendment in the name of the noble Lord, Lord Renton. Therefore, if the House will bear with me, perhaps I may briefly go through them.

There is much to recommend in the amendment in the names of my noble friends Lord Renton and Lord Dilhorne. It is noticeable for its conciseness and brevity, while at the same time conveying the essential points which my noble friend Lord Belstead wants to get across to the arbitrator. I hope that it will receive the support which it deserves for its principles and its drafting. Indeed, as the noble Lord, Lord John-Mackie, has already stated, it embodies many of the thoughts behind his amendment, which he moved in Committee.

To my noble friend Lord Belstead I would again pose the question, as the noble Lord, Lord Northfield, did: why tie the hands of the arbitrators? They are highly qualified, experienced and respected surveyors who—and there is no dispute on this point—have performed an extremely good job to date on a brief and concise rent formula. Surely it is wrong for us to tell them now: "Here is a list of items that you must include; here is a list that you must disregard; but if we have missed any, do not worry because you are covered by the words 'relevant factors' ". On a point of law, I know that my noble friend Lord Renton says that that is not quite correct because, having put something into a Bill, the Government are automatically saying that one must disregard everything else. At the same time my noble friend Lord Belstead says that that is not the case because one can include it under "relevant factors". I believe that what we are doing is an insult to the intelligence of the arbitrators; that it reveals a lack of understanding of their work and shows a lack of confidence in them when, quite plainly, this House has given them a tremendous vote of confidence in the job that they are doing.

On a point of detail in relation to the amendment of my noble friend Lord Renton, my Amendment No. 12 seeks to leave out the words relating to what we now call "marriage value" in lines 8 and 9 of his amendment. The noble Lord, Lord Northfield, has gone into this in some detail. I would also add the point that it would be retrospective legislation, for, as I explained in Committee, on behalf of owners I and many others have let vacant farms to existing tenants. The farms remained separate holdings on separate agreements, but it was agreed that, when assessing the rent of one holding, the fact that the tenant was in occupation of the other was also taken into account. The tenant was happy with this, for by farming the two units he was able to improve his efficiency and the farms' ability to make money.

Turning to my second amendment, I believe that my noble friend Lord Renton has got it wrong when he refers to the "scarcity of comparable holdings". Surely we are all concerned with the effect on the rent as a result of that scarcity. Amendment No. 13 therefore defines "scarcity" and seeks to reduce a tender rent, should the need arise, to one which a willing tenant would agree with a willing landlord. I believe that this covers the point that we want to take the froth off the top of the tender rents, because at the moment there are three tiers of rent: there is the mad tender rent, which none of us really wants; there is the open market rent, or thereabouts; and there is the sitting tenant rent—and the sitting tenant always gets the benefit of the doubt. He takes a long time to change his habits; he takes a long time to adapt his farming policy in the light of the common agricultural policy.

Therefore, on review, we must seek to discount the mad tender rents, but at the same time we must give the arbitrator a base to start from and a point at which to finish, saying: "Ignore that froth on the top, if there is any; if it can be proved that it was a mad tender rent, we will reduce it a bit"; but let us work on that and then let us go for what the sitting tenant in occupation could reasonably afford to pay.

Lord Howard of Henderskelfe

My Lords, I spoke at considerable length a great many times during the Committee stage of this Bill. On this occasion I do not intend to repeat that performance, but there are one or two comments which should be made from these Cross-Benches on what has been said this afternoon. First. I wish to join with others in thanking the noble Lord, Lord Belstead, for the extreme courtesy with which he has treated all of us, and for the way in which he has tried to reconcile often irreconcilable positions.

Secondly, I should like to deal with what the noble Lord, Lord Renton, said about simplifying legisation. It is all very well to talk about simplifying legislation, but that is a very different matter from trying to do it. I speak as someone who is not a lawyer. Due to continual criticism of a similar nature in previous years, when I was about four years of age a Bill was introduced which had something to do with rent, which was supposed to express in simple, understandable, everyday English what the new law was to be. As I have understood it since—and it is true that at that age I was not reading Acts of Parliament—the amount of legislation on that matter which subsequently ensued has exceeded that of any other Act of Parliament. If one wants to be clear, one often has to be abstruse. I am afraid that that is a fact of drafting life.

I want to return to one or two of the points that I made at an earlier stage of this Bill, and in particular I want to thank the noble Lord for bringing to the front of this particular provision a clear objective towards which the arbitrator can work. I am not sure whether it was the noble Lord. Lord Northfield, who mentioned a military analogy, but previously we had a position in which we told the infantry what their start line was and what their time was, and similarly we said how the barrage was to be operated as the artillery progressed; but what we forgot to say was what our actual objective was—whether we were trying to capture a particular hill or wipe out a particular formation of infantry, or whatever it might be. Therefore, in this provision we now have a clear statement of the objective.

I would further remind those noble Lords present who have been associated with agriculture for many years (and who have perhaps forgotten) of one of the first phrases they ever heard in connection with the relationship between landlord and tenant; namely, "a prudent and willing landlord and a prudent and willing tenant". I suppose that that is one of the best understood phrases in the business. It may be a term of art; I do not know. I shall not attempt to define it exactly for the House. Anyone who has anything to do with the landlord-tenant system in this country knows exactly what it means. It means that we exclude the loonies; it means that we work towards the kind of objective which the noble Lord, Lord Northfield, expressed so very clearly and without any humbug whatever in his speech.

If we had asked the noble Lord, Lord Northfield, to draft the brief to parliamentary counsel for this Bill, rather than adopt the somewhat extra-parliamentary convention of getting organisations which have nothing to do with this House to do so, then we might have had a much better Bill. Certainly the clauses relating to scarcity would have said that this is one of the elements which must be considered and which must not be completely disregarded, because if one did completely disregard it one would get a lunatic situation. Certainly we would have something better than we eventually received. We might even have had a better solution in relation to the further lunacy of succession of tenancies; but as that does not come under this clause, obviously I must not refer to it.

However, of all the amendments which I see on the Marshalled List at the present time, I shall certainly vote for the Government's amendment. All that the amendment of the noble Lord, Lord Renton, has to commend it is that it is shorter than the Government's amendment, but I do not think it expresses as clearly as the Government's amendment what the Government themselves are trying to do.

4.50 p.m.

Earl Waldegrave

My Lords, may I briefly say that I have sat through all stages of this Bill. I also sat through all the stages of the 1958 Bill because I moved it from the Front Bench here as the junior Minister. I totally agree with what has been said to us from the Cross-Benches, that us "oldies" know perfectly well, as I am sure the noble Lord, Lord Middleton, knows perfectly well, what a prudent and willing landlord and tenant relationship is. It is a term that has always been used in the Ministry, and that we had to deal with.

All I wish to say now is that I have listened carefully to all these matters. Over and over again a phrase has come into my mind as I have listened this evening. The late Lord Butler of Saffron Walden, who spoke from our Benches in the past, used to say—and he wrote a book about it—that politics is the art of the possible. I am certain that the amendment in the name of the noble Lord, Lord Belstead, today is by that definition politics. It is the art of the possible.

That could help the noble Lords, Lord Middleton and Lord Stanley of Alderley, to keep the cohesion between the landlord and the tenant side of this industry which, after so much trouble and so much hard work, has to get together. We should not revert to the legalistic troubles and bothers of everybody hoping to get something frightfully complicated so that they can all go to law about it. These are things we shall not settle here tonight, and I hope that we can support the Govenment amendment which has been thought out with so much care.

The Earl of Kinnoull

My Lords, may I intervene briefly to say that I have never known so many experts on a subject such as the Agricultural Holdings Bill both inside and outside the House. I suspect—and I do not know whether noble Lords and noble friends will agree—that at the end of the day the arbitrators will carry on the good job that they have been doing for many years. Having said that, I believe that this debate has proved two things. First, it is understood, whatever the noble Lord, Lord Hooson, suggests—and perhaps he was not completely briefed by the noble Lord, Lord Mackie—in the industry what is a prudent and willing landlord and a prudent and willing tenant. As the noble Lord, Lord Howard, said, it is a firm understanding, and I assure the noble Lord that it is understood in the professions, among landlords, and among tenants.

The second thing I would say which has not been said is that so far as I know both the NFU and the CLA have gone along with my noble friend's amendment for the Government. That is important to remember. The third thing one should remember is that this all arose because there was considerable concern outside the House as to the original drafting of this rent clause. As the noble Lord, Lord Howard, said it got us nowhere. It used the strange words: shall determine what rent should be properly payable". The question really was: should Parliament leave it all to the arbitrators to decide what decision they made—there are no registered rents; there is no appeal on their decision; there is even no criticism if there is inconsistency—or should Parliament give some clear guidance? I think that my noble friend with this amendment has done that. He has given an objective and he has restored a vital confidence among those who are investors in land; and, after all, that is the purpose of this Bill.

I say finally something that other noble Lords have said, and that is a word of thanks to my noble friend for the effort he has shown in seeking a way through this difficult rent clause. I do not think that I have ever known a Minister more patient, or indeed more willing to give sympathetic listening, and to give accessibility. I know the charities which have consulted many of your Lordships here are indeed grateful to the noble Lord for removing some of their anxieties in a difficult clause.

Viscount Dilhorne

My Lords, I should like to support my noble friend Lord Renton very strongly and vigorously. I am really incapable of adding anything to what my noble friend has said for he put the point marvellously. However, I am forced to get to my feet by what has been said about the word "prudent". The word "prudent" may well be hallowed in jargon, in general chit-chat, but it has never been used in a statute, and it is the statute that is going to operate. It is not common chit-chat and jargon and what we talk about as "a prudent and willing landlord". What has to work is this Bill when it is enacted.

I do not wish to recite everything that the noble Lord, Lord Renton, has said; but I wish to bring before this House one or two things that my noble friend Lord Renton raised just to remind your Lordships. Under a new Section 8 which had the word "prudent" included in it, it would be extremely hard for a tenant to argue that a landlord who accepted a rent which reflected scarcity was imprudent, or that a hypothetical tenant whose bid reflected scarcity was acting irresponsibly. The noble Lord, Lord Hooson, put it equally well as my noble friend Lord Renton, and to allow "prudent" to remain as part of this Bill would only cause confusion. The word "willing" does it all, and I really have no more to say on that particular point.

Lord Hooson

My Lords, before the noble Viscount sits down, would be give us the benefit of his experience? The term "willing" has often been used in Acts of Parliament, in the Rent Acts, and so on, but it has not been interpreted. It has never been held to add anything to the meaning, and therefore why should "prudent and willing" be in at all?

Viscount Dilhorne

My Lords, I did not get the full sense of what the noble Lord was saying. Did I understand the noble Lord to say that "prudent and willing" really is just the same as "willing", and that really "prudent and willing" should be left out?

Lord Hooson

My Lords, I should like the noble Viscount's comments on whether the word "willing" is necessary. I know that it is time-hallowed in that it has been in previous legislation, but has it ever added anything? If a judge or an arbitrator is interpreting the matter, why should he be burdened with the word "willing"?

Lord Renton

My Lords, I do not know whether it would be in order for me, with the leave of the House, just to tell the noble Lord, Lord Hooson, that the expression "willing" has been interpreted by the courts in more than one case. It was held to exclude any element either of reluctance or of over-anxiety on the part of the assumed landlord or tenant.

Viscount Dilhorne

My Lords, I am most obliged to my noble friend.

Lord Woolley

My Lords, as I did not take part in the early stages of this Bill, your Lordships will perhaps forgive me if I wander about a little on matters that are well known and perhaps on a very well trodden path, so I ask your patience for a few minutes. The first thing that strikes me, coming rather fresh to the scene, is that we are rather losing sight of the origin of this Bill. For quite a long time there has been this great unease about the legislation and about the arbitrations, and about the whole of the private landlord and tenant system.

Ever since I have been involved, which is quite a long time now—I was involved in the original 1948 legislation as chairman at that time of the National Farmers' Union committee, the parliamentary committee dealing with it—there has been a high regard for our system of land holding. Granted that the proportion of owner-occupiers and tenants has been changing and there are now many more owner-occupiers, but things have been getting much more difficult. I have been rather concerned, not being as closely involved as I used to be, to find when I have taken part in my own county and listened to discussions on this matter that what I can only describe as disenchantment for the system seems to be growing. I believe we are at a stage where it is important for the landlord tenant/system that we try to get this right. It is no time for trying to seek party or sectional advantages.

Reference has been made to the National Farmers' Union. The noble Lord, Lord Stanley of Alderley, was criticised for referring to it, as were at least two other noble Lords. But let us recall that this legislation could only come forward and the Minister for Agriculture could bring it forward only if there was agreement between the National Farmers' Union and the Country Landowners' Association. They have been very much involved. As I appreciate the situation, it has been understood right throughout that there should be agreement of these fundamental points and a wide measure of agreement has been reached.

I am wondering now whether that agreement is beginning to split because one important element has been taken out, which I believe is fundamental to the Bill; that is earning capacity. The noble Lord, Lord John-Mackie, has referred to this. He has referred to his own experience. The productivity of the farm is different from the ability to pay a level of rent. It has a bearing, clearly. A more productive farm has a better capacity to pay a good rent; that is obvious. But it is important that, if we are to give these guidelines to arbitrators, we should do this fully.

The noble Lord, Lord Renton, said that if these things are included others are automatically excluded. I do not think that is true in the Government's amendment. It says that regard shall be paid to all relevant factors and then it points to five or six particularly important factors. That seems sensible.

As regards the "prudent and willing", I see that the noble Lord, Lord Howard of Henderskelfe, has returned. He has more enthusiasm for this phrase than I have. I suspect that this phrase will be received with much more enthusiasm by the landlords than by the tenants. I do not think it will be at all well received by the tenants. To say that it is supported by the National Farmers' Union is incorrect. At best it is simply flowery language. At worst it can be regarded as being sinister. I would rather see the Bill without it.

But far more important is the omission of the reference in the amended Bill, as it came from Committee, to earning capacity. I believe that Lord John-Mackie and his colleagues are right in their amendment. I say, without any question in my mind, that if this reference is omitted and the Act is brought forward finally without that reference—having regard to the fact that in the first instance the legislation is based on agreement between the NFU and the CLA; and there was agreement between the NFU and the CLA that this reference to earning capacity should be embodied—that will be regarded as being a sinister change. I am sorry to say that that is what will happen, and it is no use my not making that point clear.

It would be a great pity because we have the opportunity to do something. Of course the Bill will not cure the whole situation and immediately bring many farms on to the market to let. But it will move in the right direction. With other measures which are not appropriate for me to talk about now, we could be moving towards a sounder position in the landlord/tenant system which has served us well for many years. I am sorry to see this change but it is the fundamental point I wish to make. I hope your Lordships will support the amendment that the earning capacity should be embodied in the Bill.

Lord Bishopston

My Lords, after the speech of the noble Lord, Lord Woolley, there is hardly anything I can say to help come to what I think would be a conclusion of the debate on this subject. We have had an extremely good debate this afternoon. On behalf of my noble friends in Opposition we pay tribute to the Minister for the work he has done. Someone said that no predecessor of his—I am one of them—could have done more to be co-operative in this matter. We recognise the way he has co-operated following his wise agreement to take back Clause 1 at a much earlier stage.

The House will recognise that Amendment No. 2 has very few friends today. I will summarise the remarks of the noble Lord, Lord Renton, who has enormous legal expertise, by stressing the appeal he made to his noble friend the Minister to take back Amendment No. 2 which, as he said, is at the very core of the Bill. The noble Lord, Lord Renton, also expressed, as did many other noble Lords, including the noble Lord, Lord Stanley of Alderley, the importance of productivity. This is embodied in my noble friend's Amendment No. 10 which stresses that we should have regard not only to productivity but to profitability at the same time. The noble Lord, Lord Stanley, mentioned several matters including potatoes and the quota, sugar, and we now can bring in milk which is in surplus, and we do not know about the future profitability of the milk sector. That is another point which stresses the importance of the amendment which has received widespread support on all sides.

The noble Earl, Lord Onslow, also stressed that Clause 1 will not produce more tenancies. Of course, this is what the Bill is all about. It is not just a matter of gaining more tenancies and allowing more people to enter farming, but there is also the matter of retaining the viability of those already in the industry. This is, therefore, most important.

The House is blessed with a great multitude of farmers, landowners, tenants and people such as myself who are concerned with charities. I am concerned with the Church Commissioners and the National Trust, although I speak for my noble friends in Opposition. We have had legal experts as well and the benefit of all their expertise. It is not only a matter of what is wanted in legislation, but how it is expressed to avoid any legal uncertainties when the Bill comes into force. The aim of the Bill is to encourage more to come into the industry. Although we applaud the cooperation of a package deal between the NFU and the CLA we also have to recognise that it is important to get the matter right now. Some have said on other occasions that we do not reform land law very often, so getting it right now is far more important than making progress, although we want to make both.

I also stress the point made by the noble Lord, Lord Woolley, that there is no party advantage in this. Indeed, comments have been sincerely made from all sides of the House, some from practical experience of farming, of tenants, of surveying, of land law and advice from our legal friends as well. I believe that it is most important that we should be free to vote on this occasion to get the matter right and not to pass something because it is an agreed package and that is the best we can do. That does no service to the industry which has such an important role to play in our economy.

5.10 p.m.

Lord Walston

My Lords, we have listened to a very long discourse but I think that it has been of value and it has clarified the matter—although it has obscured certain points. I should like at the outset to associate myself with those who have expressed thanks to the noble Lord, Lord Belstead, not only for his courtesy but for the care that he has taken over this Bill. It is refreshing to find a Government Minister who is prepared to listen to all the arguments, to do his best to take out the best of them and to reject the worst. My own opinion is that I dislike the language of his amendment and much prefer the language of Amendment No. 11 put down by the noble Lord, Lord Renton—and it is rather surprising that two distinguished lawyers should be able to write such clear and intelligible English. Although I prefer his method of expression, in the case of content I prefer Amendment No. 2 in the name of the noble Lord, Lord Belstead.

It has been criticised on a number of points. People have made great play with his "prudent and willing"—including my noble friend Lord Hooson. To me, as a layman, there is nothing confusing about this. Let me give one simple example which is relevant to the types of case that we might be discussing, You can have a landlord who has a farm for rent and he may be offered by one tenderer an inordinately high rent, a rent which has been described as a silly rent. A willing landlord who is not prudent, who does not understand the situation of agriculture, who has newly come into it, who possibly might be an institutional landlord or a landlord without good professional advice, willingly accepts this very high rent, ignorant of the implications for the future; whereas a prudent landlord would not accept such a rent. I believe that it is necessary to have the two words "prudent" and "willing" in this Bill.

The noble Lord, Lord Northfield, talked a lot about the importance of the free play of the market. I must say that it is quite refreshing and stimulating to find from the Opposition Benches, the Labour Benches, such forceful arguments being put forward for the free play of the market and the importance of the market mechanism. I believe that the market mechanism is of enormous importance but I do not think that it is of overriding importance. Amendment No. 2 bridges the gap well between reasonable control of market forces and the importance of market forces. After all, the arbitrator is instructed to take into account not only the productive capacity of the holding—and I shall come to that later—but also the current level of rents of comparable lettings. That surely must be a rather deep bow in the direction of market forces.

But there is a caveat after that (which is in the Bill as it stands) which tells him that he must not take into account any element of a rent which is due to appreciable scarcity. It may be that one can find better words to do that. I certainly cannot. But the meaning of that to me, as I think to most noble Lords, is absolutely clear; and it is what was expressed in our Committee stage. I believe that this amendment covers it adequately.

With regard to the question of productivity and profitability, I believe the use of the word "productivity" is correct because, to my mind, productivity is what is in the farm itself; whereas profitability depends upon the farmer. You do not see farms being advertised for rent or for sale saying, "This is a profitable farm" because nobody knows whether it is going to be profitable; that depends upon who will farm it. But you do see a farm advertised as a productive farm—which is something which can be objectively assessed by arbitrators. Therefore, I think that the wording here is correct.

It is very easy to criticise this amendment and this Bill on the grounds that it gives an undue number of instructions to the arbitrators. I have heard many people say—and some of your Lordships have said it—that arbitrators are skilled and experienced people who know their job; and that it is not for any Act of Parliament to instruct them as to every factor to be taken into account. Also, one has heard criticisms of this Bill and of other Bills saying that there is not enough instruction given, that the intention of Parliament is not made clear. This Bill could be criticised on both grounds. If I were to criticise it, I would say that it gives rather too many instructions and that some, without detriment to the Bill, could be left out. But those are minor criticisms. In general this appears to be a valuable amendment, an amendment which takes into account the expressions of opinion which we have heard not only today but at Committee stage, and I hope that your Lordships will support it.

Lord Northbourne

The noble Lord, Lord Walston, has just succeeded in saying everything that I intended to say and therefore I shall not weary you for more than a moment. I rise only to say how much I endorse what has been said by all those who have congratulated the noble Lord, Lord Belstead. I would add our thanks not only for his industry and the care that has been taken in the preparation of this Bill but also his success in re-wording it. I shall support the amendment.

Lord Belstead

My Lords, I was once told that in religious matters we do well to follow the same sort of precautions that we would if we had a box of fireworks in our hands which we were about to let off—look carefully at the label which says that you are strongly advised to follow the makers' instructions. I wish that I could affix to Amendment No. 2 just such a label which reads: "There are the instructions. I ask you to follow them".

But I realise from the debate, which comes from an enormous amount of experience in this House, that there are areas of difficulty. Nonetheless, I should like to add to what the noble Lords, Lord Walston and Lord Northbourne, (the last two speakers in this lengthy debate) have been kind enough to contribute in support of Amendment No. 2 by saying only the briefest word about the areas, as I see them, of agreement. First, Amendment No. 2, as a result of the long debates in Committee on the amendment of my noble friend Lord Kinnoull, includes the concept of the prudent and willing landlord and the prudent and willing tenant. I would say to noble Lords opposite who seek in Amendment No. 3 to remove that concept that we are talking here of landlords and tenants who are not reckless and that in doing this we are following substantially the advice given by the Northfield Committee on this particular point when the noble Lord's committee said that rents needed to be acceptable to a willing landlord and prudent tenant.

But if that concept is to mark both the start and the finish of an arbitrator's work, it is important to make explicit that the whole rent formula in subsections (3) and (4) are to be taken together as one. So, we have inserted the words "in every case" into line 6 of Amendment No. 2, which confirm that the four particularly relevant factors must be considered by the arbitrator in every case in order to arrive at the rent which the prudent and willing landlord and the prudent and willing tenant would agree. For reasons which I gave when I opened this debate, we have not attempted to mention specifically either profit or earning capacity.

I am absolutely delighted to see the noble Lord, Lord Woolley, here this afternoon. His name was a household word when I was starting to work in farming, and of course I listened with the greatest attention to him. But, if I may say so with respect to the noble Lord, he was not here during the previous debates that we had on this Bill, and I do not think that his interpretation of the difficulty of "profits" and "earning capacity" was quite on the nail. As I said earlier, by simply remaining silent on profit and earning capacity we have prejudiced the interests of none and preserved the interests of all. In particular, by making absolutely certain, as both the NFU and the CLA were so anxious to do, that the productivity of the holding is expressed in legislative form for the first time, the concept of profit must be encompassed when the arbitrator converts productivity into the rent properly payable which a prudent and willing landlord and a prudent and willing tenant would agree.

I was most grateful to my noble friend Lord Waldegrave for saying that politics is the art of the possible and that at the end of the day, however well or badly we have done, we perhaps ought just to try and get what we can. I say this because I think that if we are contemplating starting again with an entirely fresh draft, we have sadly only to look at Amendment No. 11 in the name of my noble friend Lord Renton. My noble friend is an absolute authority on drafting—a very kind and wise counsellor over the years to me and to others of us who try to make our way in politics—and he is practically always completely right. But just for once Homer has nodded!

What does my noble friend's Amendment No. 11 do? First, it leaves out the word "prudent", which goes clean contrary to what the noble Earl, Lord Kinnoull, and the noble Lords, Lord Howard, Lord Northfield and Lord Northbourne, all wanted in Committee; and, if I may say so, that was quite rightly severely criticised in Amendment No. 11 by many noble Lords this afternoon. Secondly, Amendment No. 11 (for some reason which is not explained) disregards proximity so far as the subject holding is concerned. That was criticised root and branch by my noble friend Lord Caithness. Thirdly, Amendment No. 11 omits all reference to the four particular relevant factors which I guess would make noble Lords opposite and my noble friend Lord Stanley of Alderley go through the roof and come down again in a few hours' time.

Finally, Amendment No. 11 contains the words "without a premium", which I think, with respect to my noble friend, would have a meaning contrary to that which he intends. By putting those words in, instead of disregarding excessively high tender rents it could mean that without a premium there would need to be much higher rents assessed for arbitration, which would have an effect entirely opposite to that which my kindly and generous noble friend intends.

If I may say so, I think that we are left with a simple choice: that is, whether we want to put the simple concept of a prudent and willing landlord and a prudent and willing tenant into the formula. I am sorry that noble Lords opposite do not want that but that is what the Government are asking your Lordships to agree to. If we do that I believe it will be said that we have inserted a simple concept into the formula which will work. On that point I have had an extremely firm letter from the Royal Institution of Chartered Surveyors, saying that it most certainly will work and that we will have a formula which will provide legislative cover for the current practice of arbitrators and by that means therefore will not artificially alter rents from levels which they ought to be at.

I also believe that if we write Amendment No. 2 into the Bill it will be said that your Lordships have turned a difficult situation, through your skill and forbearance, if I may say so—and with perhaps just a bit of common sense—into an improvement in the law which people will welcome. I beg to move.

On Question, amendment to the amendment negatived.

Lord Renton moved Amendment No. 4:

[Printed earlier.]

On Question, amendment negatived.

[Amendment No. 5 not moved.]

Lord Renton moved Amendment No. 6:

[Printed earlier.]

On Question, amendment negatived.

Lord Renton moved Amendment No. 7:

[Printed earlier.]

On Question, amendment negatived.

[Amendment No. 7A not moved.]

Lord Northfield moved. Amendment No. 7B: Line 9, after ("situated), ") insert ("the rent of any comparable land already farmed with the holding.")

The noble Lord said: When we began our proceedings this afternoon I mentioned that I would like to say a special word about this and I said something briefly in the course of my general remarks, but I did not have a reply from the Minister on this general point. Could he now tell me whether he sees force in my argument on Amendment No. 7B that what we should include in the regards, as opposed to the disregards, which arbitrators have to take into account is the fact of tendered rents which the tenant has made and had accepted for other land which he is farming with his present holding.

As I said, I think it would be totally wrong for him to be sitting on an island of rent-controlled land bidding up other land and not having that fact reflected in the rent review of his original holding. I think the Minister is seized of the point. I do not think it is covered by his Amendment No. 2, as drafted. The effect of my words would be to bring this wider tendering which he does voluntarily himself into the regards which the arbitrator would take into account. I beg to move.

Lord Belstead

My Lords, with the leave of the House, I must apologise to the noble Lord that I did not reply to his point on Amendment No. 7B, which was put down on the list at a late stage. I do not cavil at that, of course, but I do apologise. My understanding is that my Amendment No. 18 would cover the point which the noble Lord is making. If he feels on reconsideration that this is not so, I most certainly say that we could and should return to the point; but for the moment I believe that Amendment No. 18 covers the point.

Lord Northfield

My Lords, I am most grateful to the noble Lord. I had not realised, and do not yet realise, until I have studied what has been said, that Amendment No. 18 could possibly cover my point. However, the noble Lord has generously conceded that the point must be taken into account and therefore for the moment my best plan is to seek leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Renton moved Amendment No. 8:

[Printed earlier.]

On Question, amendment negatived.

[Amendment No. 9 not moved.]

5.30 p.m.

Lord John-Mackie moved Amendment No. 10: Line 15, leave out from ("holding") to end of line 17 and insert ("taking into account the extent to which a competent tenant practising a system of farming suitable to the holding could reasonably be expected to profit from farming the holding.")

The noble Lord said: My Lords, I beg to move.

On Question, Whether Amendment No. 10 (as an amendment to Amendment No. 2) shall be agreed to?

Their Lordships divided: Contents, 55; Not-Contents, 173

DIVISION NO. 1
CONTENTS
Ardwick, L.	Llewelyn-Davies of Hastoe, B.
Barnett, L.	Lockwood, B.
Birk, B.	McIntosh of Haringey, L
Bishopston, L.	Melchett, L.
Blyton, L.	Molloy, L.
Brooks of Tremorfa, L.	Mulley, L.
Bruce of Donington, L.	Nicol, B.
Carmichael of Kelvingrove, L.	Oram, L.
Cledwyn of Penrhos, L.	Ponsonby of Shulbrede, L. [Teller.]
Collison, L.
David, B. [Teller.]	Prys-Davies, L.
Davies of Penrhys, L.	Ross of Marnock, L.
Dean of Beswick, L.	Sefton of Garston, L.
Donnet of Balgay, L.	Stallard, L.
Elwyn-Jones, L.	Stanley of Alderley, L.
Ennals, L.	Stewart of Alvechurch, B.
Gaitskell, B.	Stewart of Fulham, L.
Gallacher, L.	Stoddart of Swindon, L.
Graham of Edmonton, L.	Strabolgi, L.
Hale, L.	Taylor of Blackburn, L.
Houghton of Sowerby, L.	Taylor of Mansfield, L.
Jacques, L.	Underhill, L.
Jeger, B.	Wallace of Coslany, L.
Jenkins of Putney, L.	White, B.
John-Mackie, L.	Willis, L.
Kagan, L.	Wilson of Rievaulx, L.
Kirkhill, L.	Woolley, L.
Kissin, L.	Wootton of Abinger, B.
NOT-CONTENTS
Abinger, L.	Diamond, L.
Airey of Abingdon, B.	Dilhorne, V.
Alexander of Tunis, E.	Drumalbyn, L.
Allerton, L.	Duncan-Sandys, L.
Amherst, E.	Dundee, E.
Ampthill, L.	Ellenborough, L.
Auckland, L.	Elliot of Harwood, B.
Avon, E.	Elton, L.
Aylestone, L.	Fanshawe of Richmond, L.
Bauer, L.	Foot, L.
Belhaven and Stenton, L.	Forester, L.
Bellwin, L.	Fortescue, E.
Belstead, L.	Fraser of Kilmorack, L.
Bessborough, E.	Gainford, L.
Bledisloe, V.	Geoffrey-Lloyd, L.
Boyd-Carpenter, L.	Gibson-Watt, L.
Brookeborough, V.	Gisborough, L.
Brookes, L.	Glasgow, E.
Bruce-Gardyne, L.	Glenkinglas, L.
Caccia, L.	Gray of Contin, L.
Caithness, E.	Grey, E.
Campbell of Alloway, L.	Gridley, L.
Carnegy of Lour, B.	Grimond, L.
Carrington, L.	Grimston of Westbury, L.
Cathcart, E.	Hailsham of Saint Marylebone, L.
Chitnis, L.
Clinton, L.	Halifax, E.
Cockfield, L.	Hampton, L.
Coleraine, L.	Hawke, L.
Colville of Culross, V.	Hayter, L.
Cork and Orrery, E.	Henley, L.
Cottesloe, L.	Hives, L.
Cox, B.	Holderness, L.
Craigavon, V.	Home of the Hirsel, L.
Craigton, L.	Hood, V.
Cullen of Ashbourne, L.	Hooson, L.
Daventry, V.	Hornsby-Smith, B.
Davidson, V.	Howard of Henderskelfe, L.
Denham, L. [Teller.]	Inglewood, L.

Ingrow, L.	Radnor, E.
Kaberry of Adel, L.	Raglan, L.
Kemsley, V.	Rathcreedan, L.
Kinnoull, E.	Reay, L.
Kintore, E.	Renton, L.
Kitchener, E.	Rochdale, V.
Knutsford, V.	Rodney, L.
Lane-Fox, B.	Romney, E.
Lauderdale, E.	St. Aldwyn, E.
Lawrence, L.	St. Davids, V.
Lloyd of Hampstead, L.	Saint Oswald, L.
Long, V.	Salisbury, M.
Lonsdale, E.	Sandford, L.
Lucas of Chilworth, L.	Sandys, L.
Lyell, L.	Savile, L.
McAlpine of Moffat, L.	Seear, B.
McFadzean, L.	Sempill, Ly.
Mackay of Clashfern, L.	Shannon, E.
Mais, L.	Sharples, B.
Malmesbury, E.	Skelmersdale, L.
Mancroft, L.	Stedman, B.
Margadale, L.	Stodart of Leaston, L.
Marley, L.	Strathspey, L.
Massereene and Ferrard, V.	Sudeley, L.
Maude of Stratford-upon-Avon, L.	Suffield, L.
	Swansea, L.
Merrivale, L.	Swinfen, L.
Middleton, L.	Swinton, E. [Teller.]
Milverton, L.	Taylor of Gryfe. L.
Molson, L.	Terrington, L.
Monson, L.	Teviot, L.
Morris, L.	Thorneycroft, L.
Mottistone, L.	Tranmire, L.
Mountgarret, V.	Trenchard, V.
Mowbray and Stourton, L.	Trumpington, B.
Murton of Lindisfarne, L.	Tryon, L.
Newall, L.	Tweedsmuir, L.
Northbourne, L.	Vaux of Harrowden, L.
Northchurch, B.	Vivian, L.
Nugent of Guildford, L.	Waldegrave, E.
O'Brien of Lothbury, L.	Walston, L.
Onslow, E.	Ward of Witley, V.
Orkney, E.	Westbury, L.
Orr-Ewing, L.	Whaddon, L.
Pender, L.	Whitelaw, V.
Peyton of Yeovil, L.	Wigoder, L.
Plummer of St. Marylebone, L.	Windlesham, L.
	Winstanley, L.
Portland, D.	Wynford, L.

Resolved in the negative, and amendment to the amendment disagreed to accordingly.

5.41 p.m.

On Question, Whether the said Amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 156; Not-Contents, 53.

DIVISION NO. 2
CONTENTS
Abinger, L.	Brookeborough, V.
Airey of Abingdon, B.	Brookes, L.
Alexander of Tunis, E.	Brougham and Vaux, L.
Allerton, L.	Bruce-Gardyne, L.
Amherst, E.	Caccia, L.
Ampthill, L.	Caithness, E.
Auckland, L.	Campbell of Alloway, L.
Avon, E.	Carnegy of Lour, B.
Aylestone, L.	Cathcart, E.
Bauer, L.	Clinton, L.
Belhaven and Stenton, L.	Cockfield, L.
Bellwin, L.	Coleraine, L.
Belstead, L.	Cork and Orrery, E.
Bessborough, E.	Cox, B.
Bledisloe, V.	Craigavon, V.
Boyd-Carpenter, L.	Craigton, L.

Cullen of Ashbourne, L.	Middleton, L.
Daventry, V.	Molson, L.
Davidson, V.	Morris, L.
Denham, L. [Teller.]	Mottistone, L.
Diamond, L.	Mountgarret, V.
Drumalbyn, L.	Mowbray and Stourton, L.
Duncan-Sandys, L.	Murton of Lindisfarne, L.
Ellenborough, L.	Newall, L.
Elliot of Harwood, B.	Northbourne, L.
Elton, L.	Northchurch, B.
Faithfull, B.	Northfield, L.
Fanshawe of Richmond, L.	Nugent of Guildford, L.
Forester, L.	O'Brien of Lothbury, L.
Fortescue, E.	Orkney, E.
Fraser of Kilmorack, L.	Pender, L.
Gainford, L.	Platt of Writtle, B.
Geoffrey-Lloyd, L.	Plummer of St. Marylebone, L.
Gibson-Watt, L.
Gisborough, L.	Portland, D.
Glasgow, E.	Radnor, E.
Glenkinglas, L.	Raglan, L.
Gray of Contin, L.	Reay, L.
Gridley, L.	Rochdale, V.
Grimston of Westbury, L.	Romney, E.
Hailsham of Saint Marylebone, L.	St. Aldwyn, E.
	St. Davids, V.
Halifax, E.	Saint Oswald, L.
Hawke, L.	Salisbury, M.
Henley, L.	Sandford, L.
Hives, L.	Sandys, L.
Holderness, L.	Saville, L.
Home of the Hirsel, L.	Seear, B.
Hood, V.	Sempill, Ly.
Hooson, L.	Sharples, B.
Hornsby-Smith, B.	Simon, V.
Howard of Henderskelfe, L.	Skelmersdale, L.
Inglewood, L.	Stanley of Alderley, L.
Ingrow, L.	Stedman, B.
Kaberry of Adel, L.	Stodart of Leaston, L.
Kemsley, V.	Strathspey, L.
Kinnoull, E.	Sudeley, L.
Kintore, E.	Suffield, L.
Knutsford, V.	Swansea, L.
Lane-Fox, B.	Swinfen, L.
Lauderdale, E.	Swinton, E. [Teller.]
Lawrence, L.	Terrington, L.
Lindsey and Abingdon, E.	Teviot, L.
Lloyd of Hampstead, L.	Thorneycroft, L.
Long, V.	Tranmire, L.
Lonsdale, E.	Trumpington, B.
Lucas of Chilworth, L.	Tweedsmuir, L.
Lyell, L.	Vaux of Harrowden, L.
McAlpine of Moffat, L.	Vivian, L.
McFadzean, L.	Waldegrave, E.
Mackay of Clashfern, L.	Walston, L.
Mais, L.	Ward of Witley, V.
Malmesbury, E.	Westbury, L.
Mancroft, L.	Whaddon, L.
Margadale, L.	Whitelaw, V.
Marley, L.	Wigoder, L.
Massereene and Ferrard, V.	Windlesham, L.
Maude of Stratford-upon-Avon, L.	Wrenbury, L.
	Wynford, L.
Merrivale, L.
NOT-CONTENTS
Ardwick, L.	Ennals, L.
Barnett, L.	Gaitskell, B.
Birk, B.	Graham of Edmonton, L.
Bishopston, L.	Hale, L.
Blyton, L.	Hayter, L.
Brooks of Tremorfa, L.	Jacques, L.
Carmichael of Kelvingrove, L.	Jeger, B.
Cledwyn of Penrhos, L.	Jenkins of Putney, L.
Collison, L.	John-Mackie, L.
Colville of Culross, V.	Kirkhill, L.
David, B. [Teller.]	Llewelyn-Davies of Hastoe, B.
Davies of Penrhys, L.	Lockwood, B.
Dean of Beswick, L.	McCluskey, L.
Dilhorne, V.	Molloy, L.
Elwyn-Jones, L.	Mulley, L.

Nicol, B.	Stewart of Alvechurch, B.
Onslow, E.	Stewart of Fulham, L.
Oram, L.	Strabolgi, L.
Pearl, L.	Taylor of Blackburn, L.
Ponsonby of Shulbrede, L. [Teller.]	Taylor of Mansfield, L.
	Tryon, L.
Prys-Davies, L.	Underhill, L.
Renton, L.	Wallace of Coslany, L.
Ross of Marnock, L.	White, B.
Sefton of Garston, L.	Willis, L.
Shannon, E.	Wilson of Rievaulx, L.
Stallard, L.	Wootton of Abinger, B.

Resolved in the affirmative, and amendment agreed to accordingly.