HL Deb 07 February 1984 vol 447 cc1047-70

6.18 p.m.

Consideration of amendments on Report resumed.

The Deputy Speaker (Lord Murton of Lindisfarne)

My Lords, I think the House understands that Amendments Nos. 11, 12, and 13 cannot now be moved. We therefore come to Amendment No. 14.

Lord Belstead moved Amendment No. 14:

[Printed earlier: col. 1007.]

The noble Lord said: This is the first of a string of amendments to which I spoke with Amendment No. 2. I beg to move.

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 15:

[Printed earlier: col. 1007.]

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 16:

[Printed earlier: col. 1007.]

On Question, amendment agreed to.

The Deputy Speaker

My Lords, the next amendment is an amendment on a supplementary list, Amendment No. 16A, and it should be in the names of the Earl of Kinnoull, Lord Howard of Henderskelfe, Lord Northbourne and the Earl of Caithness. It should not be in the name of Lord Northfield.

The Earl of Kinnoull moved Amendment No. 16A: Page 2, line 31, at beginning insert— ("In respect of tenancies which commenced not more than three years before the date of the Arbitrators' Award and of prospective tenancies").

The noble Earl said: My Lords, I hope that the amendment will be supported by the noble Lord, Lord Northfield. Subsection (4) is a matter of very deep concern for those existing long-term landlords in the agricultural industry—the charities and the universities—which are at the sharp end of the interpretation and effects of the Bill, which we are trying to clarify. As the House knows, subsection (4) introduces a new concept of a discount of scarcity which arbitrators must take into account when considering evidence of comparable lettings. The language of the subsection is complex and somewhat vague. Although the concept of removing key money from comparable evidence is not at all in dispute, the wording and effects of the subsection are matters of considerable concern.

No one knows at the moment how the subsection will work, not even the greatest valuers or the greatest lawyers. Only time will tell. But we know that this new concept will be taken very much into account not only for new lettings—which was the original purpose of the working committee of the NFU and CLA—but also for existing lettings, which is not what it was intended to include. This little amendment which we have put down and to which I hope my noble friend will be sympathetic is to restrict the evidence of comparable lettings to new lettings. The wording is to cover new lettings which may have gone back three years and which have not had a rent review, or existing prospective lettings which are subject to negotiation at the moment.

Earlier on, the noble Lord, Lord Northfield, gave examples of the effects of the rent clause which particularly concerned the provisions in this subsection about scarcity. He gave examples of three farms which a leading valuer at a meeting last Thursday used in his interpretation of the Bill. I must admit that they present a gloomy picture. This little amendment does not really at all remove the major worry but it limits it to new lettings.

This restriction, if accepted, will be identical to that in the Scottish legislation which was passed only last May. That is an important point which I know that the noble Lord, Lord John-Mackie, will take on board. The restriction was then accepted and no doubt the noble Lord spoke in favour of it. The amendment would restrict the potential harm if an arbitrator misused or over-calculated the discount element of the rent under subsection (4). I hope that my noble friend will give the amendment a fair wind and will accept the principle if not the wording. I beg to move.

Lord Stanley of Alderley

My Lords, I find this a rather interesting amendment, because it touches on the problem I raised in Committee. Does my noble friend Lord Kinnoull consider that after three years, when the rent goes for arbitration or review, the premia that the person has paid in order to get into the farm will be reduced to nil? If that is so, I would accept the amendment. But my reading of it is that that will not be so. The position will be roughly the same as today, where a new tenant comes in and is forced to pay a very high rent. He has no option. Over a period of, say, three reviews—nine years—his rent becomes more or less the same as those of his neighbours; theirs have gone up and his has gone down. If in the future that would be the position, I cannot accept the amendment, because there is an element of premium and scarcity after three years.

Lord Belstead

My Lords, the purpose of this amendment is to require that any discount for appreciable scarcity under subsection (4)(a) shall apply only to newly or recently tendered rents. It would therefore exclude all sitting tenant rents, although for some reason my noble friend Lord Kinnoull has not excluded arbitrated or agreed rents for new succession tenancies, which, if I may say so, may be a defect which he did not intend.

Perhaps I may leave that aside for the moment, and go to the merits of the case. It is common ground that appreciable scarcity is likely to appear only in respect of newly or recently tendered rents. If I may, I shall come to the point of my noble friend Lord Stanley of Alderley in a moment. In the case of sitting tenant rents, the present practice of arbitrators has itself tended to eliminate appreciable scarcity, in that arbitrators tend not to apply the full rigours of the current rent formula. The proposal of my noble friend Lord Kinnoull would not therefore be likely to have a very substantial effect. The discount for appreciable scarcity is, however, an objective test, and it would therefore not be consistent to apply it to one category of rents and not to another, we believe.

If I may come to the point of my noble friend Lord Stanley of Alderley, it is not inconceivable that some element of appreciable scarcity could have crept into a few arbitrated rents. If this is indeed the case, then it would be right, we believe, and so apparently does my noble friend Lord Stanley, to ask arbitrators to apply an appropriate discount if these rents are to be used as comparables.

In short, what I am trying to say is that I think it is a difficult concept to try to say that some rents ought to be treated as comparables and others not. If I may say so, I think that this has led my noble friend Lord Kinnoull into a small drafting error which I think was not intended. But the point of principle is that the discount for appreciable scarcity is an objective factor and should therefore be taken into account in all comparable rents. What I am saying is that, if there is no appreciable scarcity, then there will be no discount. I think that that is how the matter ought to be left.

Lord John-Mackie

My Lords, the noble Earl, Lord Kinnoull, mentioned my name when he mentioned the Scottish Bill. I cannot find the precise reference.

The Earl of Kinnoull

My Lords, I am quoting from a brief which I have received and which I have no doubt is accurate. It makes the point that under Scottish legislation passed last May the comparable evidence is limited to new lettings and does not cover existing sitting tenants.

Lord Northbourne

My Lords, as I understand it, the object of this Bill is to make more tenancies available. If we are to achieve this objective, we have to be absolutely satisfied that the legislation to which we contribute and which eventually goes on the statute book is fair to both parties and is clear and unambiguous. The noble Lord, Lord Belstead, has done an enormous amount to clarify the intention of Clause 1 by the introduction of Amendment No. 2. However, there is still one major area which lacks clarity, and I refer to the words "appreciable scarcity".

It has been stated by a number of valuers and other reasonable people that it is impossible to assess the amount of a particular rent or of any other transaction which is attributable to "appreciable scarcity". Scarcity is in the nature of the market and the market is in the nature of scarcity. What is appreciable scarcity? What is great scarcity? What is no scarcity? If there were indeed no scarcity, the landlord would presumably be glad to have the tenant occupy the farm in order to see it being occupied and the buildings being kept up. Possibly there would be no rent at all. Some noble Lords have drawn attention to the situation in the 'twenties.

We must I think accept that the word "scarcity" is unclear. I for one should prefer to have the word "scarcity" entirely expunged from the Bill. This I understand is not politically possible. I should prefer to see it more clearly defined, or in some way limited. It has, for example, been suggested that it might be limited by introducing another subsection which would ensure that scarcity applied only in so far as the relevant rent was also in excess of the rent which would be agreed between a willing and prudent landlord and a willing and prudent tenant. That alternative has not been tabled today. This particular amendment was thought to be more moderate and, it was hoped, entirely acceptable. The amendment simply brings the drafting of the Bill back, as we understand it, to the intention of the original joint working party of the NFU and the CLA. In paragraph 3(a) of its report, the working party referred to: Rents paid or tendered in respect of comparable lettings to the extent that they contain an element due to scarcity of holdings available for letting… These must by definition be new lettings. Therefore it was in the minds of the NFU and the CLA when they made that agreement that the scarcity element should refer only to new lettings. It is the intention of this amendment to reintroduce that idea. I submit that it is most important that we should do so if we want the Bill to be clear and not to cause misunderstanding and fear in the minds of landowners, which would discourage them from letting their land in the future.

The Earl of Caithness

My Lords, I am very keen to support the amendment. I must be very careful because the next amendment, No. 16B, in the name of the noble Lord, Lord Northfield, deals with appreciable or substantial scarcity, and I do not want to go over the same ground twice. To my noble friend Lord Stanley I would say that every rent contains a scarcity element because it is an integral part of rent. There cannot be a value without scarcity, and therefore if there were no scarcity, the land would be occupied free. Therefore, scarcity is an element of a rent; it has got to be; it is an element of anything which has value.

What concerns us is the situation with established sitting tenants. I have spoken to a number about this point, and they have all said that because they are on agricultural holdings, part of their rent relates to appreciable scarcity. Frankly, I think that is a very one-sided way of looking at the matter and it could lead to enormous problems. That is what really concerns landowners, and that is why we have come forward with the amendment to provide that when looking at comparables it is only with the most recent lettings—or, I think it would be fair to include, the most recent arbitrated lettings—that one must discount the element of appreciable scarcity. If a landlord and tenant willingly have agreed a rent, I do not think that there should be any scarcity element in it.

The Earl of Kinnoull

My Lords, my noble friend said that he felt that there was no substantial effect that this small amendment would have upon subsection (4). My advice from outside was that in fact it would have a substantial effect; it would have an effect of at least giving more confidence to existing landlords. This is a very complex subject and I do not intend to try to press it or to argue it further, but I should like to say that I shall withdraw the amendment on the understanding that I shall look at it again and perhaps see my noble friend before the Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.35 p.m.

Lord Northfield moved Amendment No. 16B: Page 2, line 32, leave out ("an appreciable") and insert ("a substantial").

The noble Lord said: My Lords, our earlier long debate was characterised by an anxiety on all sides to seek common ground, and I thought that that was a very laudable way to conduct our proceedings on this very important Bill. If I may say so, I voted with the Government on their amendment because, to use the words of the noble Earl, Lord Waldegrave, given what is possible, they had not done too bad a shot with Amendment No. 2, and it went a long way along the road towards getting the Bill right.

But at one time or another we have all made the point that the common ground could be extended just a little further. I want to quote the words which the noble Lord, Lord Belstead, used in winding up the debate half an hour ago, or whenever it was. I took down his words at the time. He said that what we want the arbitrator to disregard when he starts looking at comparable lettings in order to take them into account—and these were the noble Lord's words—"are the excessively high tender rents". I think that that is common ground. We would all agree that in rent fixing we want to exclude what the noble Lord calls excessively high tender rent, and what the noble Earl, Lord Caithness, and I call silly rents, the stupid ones right at the top end of the market, the crazy ones that we know nobody could really achieve.

If that is our common ground, how do we express it? I have suggested one way which the House has not followed. I suggested that the way that we should approach the question—and I shall return to it on Third Reading—is that we should allow the arbitrator discussion in this matter; it should not be mandatory for him to disregard every element of scarcity, which I think makes a nonsense of the situation. I gave examples of rental questions where I felt it would become a nonsense and arbitrators would simply take no notice of what is in the statute.

Another way to achieve what we want is contained in the present amendment. The amendment would provide that an arbitrator would disregard—to use the words which are at line 31 on page 2 of the Bill— any element of the rents in question which is due to a substantial scarcity of comparable holdings …". My view is that if we were to say that, it would leave arbitrators with some discretion to say, as the noble Earl, Lord Kinnoull, has just said, that there is always an element of scarcity around, and there is probably always an element of appreciable scarcity. What we want the arbitrator to take no notice of and to disregard are elements of substantial scarcity that have resulted in silly rents or, to quote again the noble Lord, Lord Belstead, excessively high tender rents.

That is the aim of my amendment. It is one step, I hope, towards a little more common ground in trying to exclude what we are really all trying to exclude, and not trying to pretend that somehow we can make an unreal situation real; that is, to pretend that there is any equilibrium in the market. All that the arbitrator should be asked to disregard in the comparable rents are the stupid ones. That is the aim of my amendment. I beg to move.

The Earl of Caithness

My Lords, we did not have a very positive discussion on the words "appreciable scarcity" at the Committee stage because my noble friend Lord Belstead had already agreed to look again at the rent clause. At that time the amendment was, I think, No. 16, in the name of my noble friend Lord Kinnoull, who did not move it when we reached it. However, my noble friend Lord Belstead said in col. 149 of Hansard of 22nd November: Amendment No. 16, which deals with an alternative method of adjusting for appreciable scarcity, is something which need not perhaps present quite the same problems—certainly it is something which we should consider very carefully."—[Official Report, 22/11/83: col. 149]. Despite important consideration, we still have the same wording in the Bill but we have managed to tackle, with tremendous help from my noble friend Lord Belstead, the primary problem, which was the rent clause amended today. The words "open market" are a red rag to the NFU. I appreciate its concern. Similarly, the words "appreciable scarcity" and, particularly, the word "scarcity", are a red rag to the land owners. These two words, "appreciable scarcity", give rise to as much cause for concern as anything else in the Bill.

During recent discussions on the matter, I believed that I had a revised form of words that met with the passive approval of the NFU; in other words, it would not oppose them if the Minister backed them. Alas, he did not. It is therefore right that the subject is being fully aired now. I am grateful for the amendment put forward by the noble Lord, Lord Northfield. I am concerned by what the words "appreciable scarcity" mean. I have seen several lawyers, QCs and surveyors and each one has come up with a different answer. It is perturbing if one is to be faced with the problem of interpreting these words at a rent review. It will be the first point at which the landlord or tenant will say, "Right! Enough is enough. We are never going to agree. Back to the courts we go". This is one thing that we do not want to happen if we can avoid it. I therefore ask my noble friend, please, to reconsider the matter. The whole question of subsection (4)(a) was raised by the noble Lord, Lord Northbourne, on the last amendment. Can he please have one more look at it?

Lord Hooson

My Lords, I would have thought that "a state of scarcity" is a state of substantial deficiency. What does the word "scarce" mean in ordinary English? Does it need to be qualified at all?

Lord Howard of Henderskelfe

My Lords, at an earlier stage of the Bill, there was a good deal of discussion of the fact that one of the reasons why we had to have the Bill at all was that arbitrators and valuers generally were completely ignoring what the law said, in other words, that they were deciding themselves what they were going to do without any guidance from the law. Fears had been expressed that at some stage those same arbitrators or valuers might be taken to court, that the full rigours of the law would start to bite and that we should get huge rents, and so on. This was one of the reasons put forward for the Bill.

We are beginning to get back to the position where it is suggested that arbitrators and valuers will be told to do certain things in the Bill but that they will do what they have always done in the past. It cannot be good if the chief reason for the Bill is not achieved by the Bill. I do not know what the words "appreciable scarcity" mean. I have a fair idea what "substantial scarcity" means. I do not like the word "scarcity" at all. I believe, for all the reasons already given, that, without some form of scarcity, there cannot be any value. A little elementary economics of the sort that has not led us down too many garden paths, might prove rather helpful here. Nevertheless, without some form of scarcity, there cannot be any value. "Substantial scarcity" certainly means much more in the minds of those who have to deal with these things than "appreciable scarcity". I wish strongly to suport the amendment.

The Earl of Onslow

My Lords, I should also like to support the amendment for almost identical reasons to those given by the noble Lord, Lord Howard of Henderskelfe. I should also like, while we are dealing with this exact point of scarcity, to express my opinion that the reason for the scarcity of tenanted land is a scarcity of landlords willing to let at a return that they think reasonable. If that happens, it is almost impossible to legislate for substantial scarcity because I suspect that the scarcity will get worse anyway. Adam Smith must be revolving in his grave over this. All those lovely 19th century liberals who are Her Majesty's Government's present advisers must be equally going dotty because they seem to be in the vice-like grip of the NFU. It is rather like suggesting that a press law should be cobbled up by the National Graphical Association and the Newspaper Publishers Association with my noble friends expecting to push it through an unwilling House.

We have got ourselves into a muddle. I believe that "substantial" is better than "appreciable" because it means a big scarcity that we must ignore. That is what we want to ignore. We do not really want to ignore a medium sized scarcity. That is what we are trying to say. I do not think that it will work. I thought at first that it would be better. But the more one looks into it, the more dottiness comes bubbling happily to the surface. But the amendment of the noble Lord, Lord Northfield, who is probably a truer liberal than some of the present advisers to Her Majesty's Government in this context, says that it makes slightly more sense than "appreciable scarcity". I therefore support it.

Lord John-Mackie

My Lords, we have now heard the word "dotty" together with the word "muddle" applied to the Bill. This seems to be an argument about the meaning of the word "appreciable" against "substantial" or the legal meaning of the word "scarcity". Frankly, I do not want to take part because I am neither a lawyer nor an English scholar. But "substantial" seems to emphasise it better, if emphasis is required. I therefore support my noble friend on the word "substantial".

Viscount Bledisloe

My Lords, at the risk of being labelled the noble Earl's 12th lawyer, may I say that in my view, as a lawyer, the word "substantial" is a great deal clearer than "appreciable". "Substantial" is a concept very well known to law, while "appreciable", I imagine, would be very difficult. If "appreciable" was, as it might well be held to be, to mean anything other than minimal, one would be landing arbitrators with the enormous task of trying to give a 2 to 3 per cent. discount on other rents because there was an appreciable scarcity, albeit not a substantial scarcity. I believe that "substantial" would be clearer and would make the arbitrator's task a great deal easier.

The Earl of Swinton

My Lords, perhaps some of the reason for this debate is the fact that it was I and not my noble friend Lord Belstead who spoke about scarcity and appreciable scarcity at the Committee stage. If noble Lords care to consult Hansard for 22nd November 1983 they will find the discussion recorded in cols. 205, 206 and 207. Perhaps, unlike my noble friend, I made no impression upon anyone, because noble Lords seem to have forgotten what took place. I did at that time go into a fairly lengthy description of the reasons for using the words "appreciable scarcity". I should like to repeat them.

The word "appreciable", I am advised, would exclude de minimis scarcity. It means something less than substantial but is intended to be a pointer to the arbitrator not to be influenced by insignificant scarcity. Scarcity must therefore be qualified and "appreciable" seems as good a word as any. In fact, we had quite a long and interesting debate. Noble Lords may care to refresh their minds by consulting Hansard.

I turn now to the proposal before the House of the noble Lord, Lord Northfield. The effect of this proposal, by substituting "substantial" for "appreciable", would apply a much stronger test. I remind the noble Lord and other noble Lords who have spoken that the qualification "appreciable" means that we have in the Bill a stronger wording than in the new Scottish rent formula where scarcity stands on its own. To go further and to refer to "substantial scarcity" would be a major change—in fact, a change of substance—which would markedly alter the balance of the new formula. The noble Lord, Lord Northfield, said he hoped that this would bring unanimity to the matter. I suggest that, far from bringing unanimity, it would bring discord. I was amazed that the noble Lord, Lord John-Mackie, rose from the Opposition Front Bench to support his noble friend. I should like to remind the noble Lord that his colleagues on the Benches opposite pressed in Committee for all scarcity to be disregarded. I would not go that far. But, equally, I would certainly not go as far as the noble Lord proposes here by the insertion of the word "substantial". Therefore, I hope that the noble Lord will withdraw this amendment.

Lord Stanley of Alderley

My Lords, before the noble Lord, Lord Northfield, replies, I should like for a change, to give a little help to my Front Bench. If this amendment is accepted, I would agree with my noble friend that it would drive a coach and horses through the whole idea of scarcity which is in the clause and which has been agreed, or has sought to be agreed, over a long period of time.

Lord Northfield

My Lords, I think that the little debate that we have had has been very interesting, because it has raised two matters which have always amused me in this House, one is that when we want to disregard Scottish parallels, we do so by saying, "Why should we follow Scotland?" But we now have it plotted out the other way. The Government want it both ways. This time they want to say, "Of course we should always keep in line with Scotland". It is funny how it is used one way one day and the other way another day according to the suitability of the circumstances for the Minister concerned. Therefore, I think that that falls by itself. At this point I do not think that the Scots got it right anyway, and therefore I do not think we should follow it. Nor is their precise situation on holdings similar.

The Earl of Swinton

My Lords, in fact, "appreciable scarcity" is not in the Scottish Bill, so we are not going the same way. It is "appreciable" in England and Wales and just "scarcity" in Scotland.

Lord Northfield

My Lords, to use my own words, the noble Earl was saying that it is such a substantial departure from the Scottish formula. Never mind, he was having it both ways as Ministers do.£

The other point that is interesting about this is that the noble Lord, Lord Stanley, again let the cat out of the bag, as he has kindly been doing all the way along: this is one of those sacred tablets that came down from the NFU, and who are we to start disagreeing with them? Once again, it shows the sordid ancestry of this Bill. It did not start from principles; it did not start with Ministers saying, "This is what we want. Parliamentary draftsmen, go away and do it". There was nothing as sensible as that. No, it was a sordid deal in some smoke-filled room between men who we otherwise might look twice at, and then we are told that we must follow its hallowed words into legislation. Is it not tragic that the House is reduced to this situation? It really is tragic.

In his reply to me the noble Earl said that he accepts that "substantial" means more scarcity than "appreciable". I stick to that. I will join him in that definition. I thought that that was the common ground; that we wanted to exclude those silly tender rents that came in conditions of substantial scarcity, and we wanted arbitrators to be able to take account of, and not have to disregard, a reasonable appreciable scarcity. The noble Earl has called the troops in to vote down what I think is an amendment of common ground that was emerging beautifully from our earlier discussions. It is a very sad situation. I think that I will withdraw the amendment.

Noble Lords

No.

Lord Northfield

No, my Lords? My instinct is to withdraw it and to ask the noble Earl at least to have some talks about it. The noble Lord, Lord Belstead, was extremely helpful during earlier stages of the Bill and if he would, by a nod of the head, indicate that we will have another talk about this, it would not close doors. If I were to divide on this and be voted down by the troops, who have obviously turned up given the number in the Divisions earlier on, it would not help me to get a bit of common sense on to the statute book. If the noble Earl would agree to have another chat about this with those of us from all sides of the House—not just on this side—who see the force of trying to get common ground extended this little step further, I should be more than content to withdraw the amendment.

The Earl of Swinton

My Lords, by leave of the House, as this is the first amendment for which I am responsible, there is nothing I would like to do more than give way. But I think that this amendment would drive a cart and horses through this Bill and I simply cannot give way.

Lord Northfield

My Lords, I will even try knocking at the noble Earl's door between now and Third Reading. But I shall move it and probably press it on Third Reading. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Belstead moved Amendment No. 17:

[Printed earlier: col. 1007.]

The noble Lord said: My Lords, I spoke to this amendment when I moved Amendment No. 2. I beg to move.

The Deputy Speaker (Lord Murton of Lindisfarne)

My Lords, I shall now call Amendment No. 17A as an amendment to Amendment No. 17.

6.56 p.m.

Lord Stanley of Alderley moved, as an amendment to the amendment, Amendment No. 17A: Line 2, after ("holding") insert (", or any person tendering for such a holding,").

The noble Lord said: My Lords, I should like to ask my noble friend whether or not he will accept this amendment. I think that he should.

Lord Belstead

My Lords, the answer is, more or less, yes. I have been advised that we need to look at the wording of this amendment. I agree with what my noble friend is trying to do. If my noble friend will accept from me that I undertake to bring forward an appropriate amendment to cover the point on Third Reading, or at least to discuss it with him so that perhaps he can bring forward such an amendment, perhaps he would agree to withdraw this amendment.

Lord Stanley of Alderley

My Lords, I shall certainly be very happy, not more or less to withdraw it but completely to withdraw it until Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Amendment No. 17 agreed to.

Lord Belstead moved Amendment No. 18:

[Printed earlier: col. 1007.]

The noble Lord said: My Lords, I also referred to this amendment when I dealt with Amendment No. 2. I beg to move.

Lord Northfield

My Lords, when I moved Amendment No. 7B the noble Lord was good enough to say that he thought this amendment covered the point I was making in Amendment No. 7B. I have taken some advice and I do not think that that is so. In this amendment he is talking about marriages; I am talking about something quite separate. Perhaps I could leave it that if the noble Lord would be kind enough to look again at what I said on Amendment No. 7B; we could then have some further discussion about it, as he indicated that Amendment No. 7B raised a matter that ought to be covered somewhere. If I may hold him to that, I would simply say that I am advised that Amendment No. 18 does not cover my point.

Lord Belstead

My Lords, I must apologise if I have misled the noble Lord. I have also taken advice since I said that and, to be absolutely frank, I have been told that I was wrong. I have a short speaking note here, but if the noble Lord would prefer to discuss this matter outside the Chamber with a view to returning to the point possibly on Third Reading, that would be the way to go ahead. Of course, I agree to the noble Lord's suggestion.

On Question, amendment agreed to.

[Amendments Nos. 18A and 18B not moved.]

Lord Renton moved Amendment No. 19: Page 4, line 26, leave out paragraph (b).

The noble Lord said: My Lords, I am sorry to say that Amendment No. 19 has been the subject of an attempt by some splendid person in the Public Bill Office to improve upon my own work. As a result, I am afraid that he or she has got it wrong. It should read: Page 4, line 23, leave out (b)", instead of as written. I only discovered this today so it was too late to put the matter right. It is hardly fair on my noble friend to ask him to comment on the point. In any event, I shall withdraw the amendment.

Like most of my remaining amendments, this one is detailed, technical, boring and important. Perhaps I may just explain the short point that arises here. The purpose of leaving out paragraph (b) is to ensure that variations in rent at times other than those specified in subsection (7)(b) of Clause 1 will not start or restart the three-year cycle: for example, a variation in size of the rent agreed within three years of the beginning of the term. I should mention that, in order to get over that difficulty, we shall also be doing something consistent with Section 8(3) of the 1948 Act. That is the short point involved. I think it is a sound one, recommended by the Agricultural Law Association. I beg to move, but sympathise with my noble friend.

Lord Belstead

My Lords, my noble friend has explained that due to a slip between my noble friend's pen and the Marshalled List the reference to line 26 ought to be to line 23. This is a pity, I agree, because my noble friend—and indeed those whose advice he has been taking in the Agricultural Law Association—are on to a series of detailed but important points. Before we take any further amendments which have come from the advice of the Agricultural Law Association through my noble friend, I should like to say that the Government are indebted to them for the detailed work they have done on the Bill, and to my noble friend for the detailed' interest he has taken.

Having said that, I do not think that it is for anybody's advantage if I simply say that the reference was wrong, and therefore could we go at it again. I have a brief note here which I should like to use for the record in reply, because then my noble friend will know whether to pursue the matter or not, because with respect to my noble friend I do not think that this particular amendment is necessary. We are coming to one or two amendments soon which certainly are necessary, but I am not sure that this one is.

It is already the position, I am advised, under Section 8 as drafted that an increase or reduction of rent falling within paragraphs (a) to (d) of Section 8(10) does not start the rent cycle regardless of when such an increase or reduction of rent is made. An increase or reduction of rent starts the three year cycle by virtue of Section 8(7)(b) unless the increase or reduction of rent falls within one of the categories in new Section 8(10) which are specifically excluded from the application of new Section 8(7)(b).

If that sounds complicated, then all I can say is that the amendment is complicated. I hope that my noble friend will think it is helpful for me to have given that brief and rather tortuous reply as to why I am advised that this particular amendment is not necessary. I hope that it may assist my noble friend in deciding what to do so far as the amendment is concerned for the future.

Lord Renton

My Lords, my noble friend has been more helpful than I was entitled to expect. I am grateful to him, and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Caithness moved Amendment No. 20: Page 4, line 28, at end insert (" , or any reduction of rent agreed between the landlord and the tenant of the holding in consequence of any change in the fixed equipment provided on the holding by the landlord;").

The noble Earl said: My Lords, this is an amendment similar to one I raised at the Committee stage. My noble friend and kinsman Lord Swinton agreed to have another look at it. It has been redrafted and is a technical amendment to make sure that if a reduction of rent is agreed between the landlord and tenant as a result of a reduction of fixed equipment, it does not start the three year cycle for rent again. I beg to move.

The Earl of Swinton

My Lords, I am most grateful to my noble kinsman for raising this point at Committee stage and putting down this amendment again today. He is absolutely right. It is something that had escaped us. Clearly where the landlord and tenant agree a reduction in rent in the way suggested by my noble kinsman this should not count for the purposes of the three year-old rule on rent reviews, and I am happy to accept this amendment.

The Earl of Caithness

My Lords, we have made substantial progress. I am very grateful.

On Question, amendment agreed to.

Lord Renton moved Amendment No. 21: Page 5, line 19, after ("tenant") insert ("either during any preceding tenancy held by him or during the current tenancy").

The noble Lord said: My Lords, I beg to move Amendment No. 21, and suggest that No. 22 should be taken with it because they stand or fall together. Amendment No. 22: Page 5, line 25, at end insert ("or without the tenant having been compensated therefore;").

Your Lordships will recollect that in subsection (5) of Clause 1 there is a reference to tenant's improvements. Then we find on page 5 in the new proposed Section 8A of the 1948 Act, and particularly in subsection (3) of it, a definition of tenant's improvements. I am obliged that that definition is all right so far as it goes, but it needs to have added to it the words on the Marshalled List set out in Amendments Nos. 21 and 22.

The reason is that we ought to ensure that the tenant's improvements are disregarded whether they were carried out during the current tenancy or by the same tenant during a previous tenancy, unless equivalent allowance or benefit was made, or given, by the landlord in consideration of those improvements being made, or compensation paid for them. It is felt therefore that the definition on page 5 of tenant's improvements should be amended accordingly. That is the purpose of these two amendments, and I beg to move.

Lord Belstead

My Lords, I am grateful to my noble friend for proposing this change. As I promised during Committee stage, we have considered the proposal put forward then by my noble friend, and it is really a single proposal of course although it needs two amendments. This amendment is a modification of what my noble friend was saying at that time. It has however been necessary to iron out certain difficulties which were raised by some organisations who were looking at the amendment, and who were I think entirely sympathetic to it; but I am glad to say that this has now been done although only in the past few days.

What I should like to do is to accept the amendment; but I am in a difficult position over this. Owing to the time factor, parliamentary counsel has not even seen it at all. If my noble friend will not think that I am cavalier in this matter, I would ask that I could have time to consult parliamentary counsel, but with an assurance that an appropriate provision will be handed to my noble friend to put forward, or if my noble friend by any chance is not in your Lordships' House to another noble Lord on my noble friend's behalf, or the Government on my noble friend's behalf. This is a matter which has been spotted by my noble friend and those who advise him, and we are extremely grateful.

Lord Renton

My Lords, I am obliged. This is a satisfactory answer. As I said at an earlier stage, I have great sympathy with parliamentary counsel over this aspect. Trying to dovetail what the various parties want to get done by means of this Bill and dovetailing it into the previous law is a most frightful business. In the nature of things one could not table one's own amendments, even though people outside had been helping one with the drafting of them, until one saw the Government amendments on the Marshalled List. It is almost a vicious circle. But I understand, I sympathise, and I am grateful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 22 not moved.]

7.9 p.m.

Clause 2 [Abolition of statutory succession to agricultural holdings in the case of new tenancies]:

Lord Renton moved Amendment No. 23: Page 6, line 15, at end insert— ("( ) the tenancy was granted or vested in the circumstances specified in section 18(5) of that Act;")

The noble Lord said: My Lords, this Amendment No. 23 has as consequential amendments Amendments Nos. 63 and 64 to the first Schedule. They are set out on page 13 of the Marshalled List at the bottom of the page, and I should like to refer to them. Amendment No. 63: Page 14, line 6, after ("let") insert ("(whether under a tenancy granted by the landlord or by an assignment of the current tenancy)") Amendment No. 64: Page 14, line 8, after ("grant") insert ("or assignment")

Clause 2, as we all know, abolishes statutory succession to agricultural holdings in the case of new tenancies, but it states four exceptions to that rule. Those four exceptions are set out in subsection (2), and there is no need for me to repeat them. It is suggested that subsection (2) should be amended in such a way that Section 18(1) of the 1976 Act shall continue to apply in the case of an inter vivos cession. If I may, I should illustrate what may lie at the back of this. Let us suppose that in 1976 a tenancy was granted to a tenant whom we shall call T1. In 1985 the tenancy granted to T1 was surrendered by him in return for a new tenancy to T2 in circumstances specified in Section 18(5) of the 1976 Act. Unless Clause 2(2) of this Bill is amended, that new tenancy will be free of succession. That may be the wish of many of your Lordships. This, therefore, is a probing amendment. I am not committing myself to the principle. But the point should he clarified. The Government should state a view on it, one way or the other.

I am advised that what is in the Bill is not consistent with Government policy, which is to leave the arrangements already covered by the 1976 Act unaffected by the abolition of succession. In other words, the Government are saying—it is always right for Governments to say it where the citizen is concerned, where there are no concessions being given by the Government—"no retrospective legislation". It is to avoid retrospection that these amendments have been tabled. That is also the point I am making.

It could be said, "Let the parties in the circumstances I have mentioned contract in to the 1976 Act and make no special provision". That might work in some cases, but it might not be fair to some simple souls who were not alert to the need to contract in the avoid retrospection. Although my instinct is to go along with those who want to modify the right of hereditary succession, I feel that in justice and for the sake of clarity this is a matter that needs to be resolved. I shall be most interested to hear what my noble friend says. I beg to move.

Lord Belstead

My Lords, I have listened with interest to the argument put forward by my noble friend but I feel that I must resist his amendment for the following reasons. After succession to new tenancies is excluded by Clause 2(1), a situation could arise in which the grant of a new tenancy is voluntarily offered by a landlord in circumstances similar to those discribed in Section 18(5). Your Lordships will remember that Section 18(5) of the 1976 Act is the provision for retirement counting for succession.

However, the landlord might voluntarily offer a new tenancy in those circumstances on condition, under this new law, that no further succession was to follow that tenancy. The prospective tenant may wish to accept these terms to avoid a contest and the risk of not succeeding at all. It is therefore not desirable for Clause 2(2) to apply automatically to inter vivos grants of a new tenancy in the circumstances to which Section 18(5) applies, because this would prevent agreements of the kind I have just tried to describe.

My noble friend said that it could be said that we were being retrospective. My noble friend fairly went on to say that he supposed that the landlord and the tenant could contract in. That is precisely what we should expect a landlord and tenant to do; to contract in to the succession arrangements by providing in the tenancy agreement that succession shall apply. An agreement in writing of this kind will be covered by Clause 2(2) (c).

I hope that that sounds fair. I believe it is and I hope that this has been a useful exchange and will enable my noble friend and those who are advising him to think whether they wish to carry this matter any further.

Lord Renton

My Lords, we are indebted—everybody should be—to my noble friend for the clarification he has given as to the effect of the Bill in the circumstances I have described. It may be that that clarification is enough to alert all concerned, because it goes to show how in this branch of the law, which has become one of the most complicated branches of the law, nobody should ever act without the assistance of a professional adviser who can find his way through this labyrinth which already exists and which is becoming even more of a maze.

There it is. My noble friend's words are on record. I thought that he skated a little lightly over the retrospectivity point, but all concerned have been alerted and with what now is on the record I think we should leave the matter. It may be the subject of further consideration in another place, but I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Belstead moved Amendment No. 24: Page 6, line 16, leave out ("an agreement in writing") and insert ("a written contract of tenancy")

The noble Lord said: My Lords, this is a drafting amendment. I regret to say that I cannot find my notes. I beg to move.

On Question, amendment agreed to.

Lord Bishopston moved Amendment No. 25: Leave out Clause 2.

The noble Lord said: My Lords, I think the House was right to take the Minister on trust on the last amendment when he said that he could not find his notes, but sometimes we are giving too much trust to the Minister on the Bill. I am not being personal because the Bill is an agreed package, I will not say of a holy trinity, but of the trinity of the NFU, the CLA and the Government. It seems that we are taking a lot on trust today because, as the noble Lord, Lord Renton, said, he has been among the foremost critics of Amendment No. 2 which, as he and others have said, is substantially the core of the Bill. The noble Lord, Lord Renton, said a few minutes ago quite correctly that this is a labyrinth of a Bill. I wish to be fair and say that that may apply to much legislation of this sort.

Lord Renton

My Lords, if the noble Lord is quoting me he should do so accurately. I said that the existing law was a labyrinth and that this Bill makes it more of a maze.

Lord Bishopston

My Lords, the noble Lord has made an amazing observation. I will not go into the difference between a labyrinth and a maze, but I may be right in what I said, that any legislation of this sort is likely to be a labyrinth whether it is past legislation, present or future. When he says that those concerned would be well advised to seek specialised advice, that undoubtedly is true.

In the amendment we urge the House to leave out Clause 2, which is the clause which brings about the abolition of statutory succession to agricultural holdings in the case of new tenancies. This has been touched on in Lord Renton's last amendment. We have to look at the ancestry of this Bill. I think it was my noble friend Lord Northfield who referred to the sordid ancestry of the Bill. We must be absolutely sure that the industry and, in particular, all those who have an interest outside the NFU and CLA, are satisfied with the passage of this Bill and that it will achieve what it set out to do. That was, as we have said many times, to give more opportunity for new entrants into the industry and also to ensure the viability of those in the industry. We were also assured by the NFU that they were in support of the 1976 Act, which is concerned with succession, and in relation to which this clause seeks to end the statutory right. As we know, this concerns three generations, including the tenant concerned.

I do not wish to go into the merits of succession and of the 1976 Act because this has been debated many times and even many of those who support the Bill also have some regard for the 1976 Act with the security that it gives and the fact that a lifetime of work and capital investment and a lot of skill and training go into the building up of a farm and that this can be passed on to those who succeed. After all, there are still new entrants although one gets the impression that, unless land is put on the open market for sale to the highest bidder or what have you, the entry of new people is rather restricted.

It is important to remember that the NFU are exchanging the rights of many farmers in the succession aspects of the 1976 Act for the package which we have before us. The Minister will say that the House has voted in favour of Amendment No. 2—which was essentially the core of Clause 1 and much of the Bill itself with regard to the rent formula—but one wonders whether the voting in the Lobby was because that was about the best formula before the House and not necessarily because it was the right formula to do the job we have to do. I made a plea before we voted that it was not a matter of getting the best deal we can but of getting the right kind of deal. We all know that this kind of legislation does not come before the House very often and if we do not get it right at the start, then we are lumbered with a lot of shortcomings which will be irksome, to say the least, and cause an enormous amount of trouble to the industry. That, I think, accounts for the fact that the Government got Amendment No. 2 through the House. When one looks at some of the comments which were made during the debates on Amendment No. 2 and on other amendments which the noble Lord, Lord Renton, and my noble friends and others tried to amend with our amendments to Amendment No. 2, the noble Lord, Lord Renton, as I said earlier, said, "Take back Amendment 2!" This is hardly a sign of great confidence in what it seeks to achieve. He had concern about the meaning of productive capacity. He called some aspects of the amendment unnecessarily verbose. I think I am right in saying that the noble Earl, Lord Onslow, said that Clause 1 will not produce more tenancies. The noble Lord, Lord Peyton, spoke about the extraordinary marriage of confusion with explanation and I think I am right in saying that he said, "Take this nasty thing away!"

There were an enormous number of critics and it is rather surprising to have a Government measure opposed by so many Lords who had misgivings about what Clause 1 would do. But the clause has been passed and, as I say, I think that is was because the House thought that it was the best amendment before us. If one were to ask noble Lords—especially noble Lords opposite—if they really believed that this is the kind of thing which the NFU and the CLA set out to achieve in the package, then I think that there would be some misgivings, to say the least.

This is the opportunity now on Clause 2 for us to ask whether in Clause 1 (which is the main part of the package) although it has been passed, we can all be satisfied without any doubt that this is exactly as we would have wanted it. I will not press that point. Maybe noble Lords will say what they think about it; although I am going by what has been said in the debates earlier today. The Minister rightly considered Clause 1 during the Committee stage and afterwards; and Clause 1 has been amended. But I ask whether it is the kind of thing that we should expect.

The House has voted after debate against the amendments which my noble friends and I tabled, amendments which added not only the need for productivity but also the profitability of a holding. It may be that in future, when the arbitrators are told by noble Lords opposite and their friends, that the profitability of a holding is not something of concern and is not in the Bill, then they may have some misgivings that they were not wise enough to vote for that when they had the opportunity. The CLA and the other bodies have been concerned that income from all uses of land, including non-agricultural land, should be taken into account in assessing the rental value. Amendment No. 10, to which I have made reference, sought to ensure that the holdings should not only be productive but profitable as well. It may be in the way in which things are going—and I have mentioned the dairy industry where the surplus is subject to a penalty and the co-responsibility levy and so on which will discourage over-production or, indeed, any production at all by cutting profitability—this is going to be an important point.

I would not want to say more about the CAP except that no-one in the industry can be happy about the future prospects of profitability on many aspects of food production. I say now that Clause 1 has been amended and that we are therefore, in this amendment, looking at Clause 1 not in view of the fact that the House passed it but as to whether it is adequate to do the job and whether it has justified the NFU saying that they are prepared to sacrifice the succession aspects of the 1976 Act in order to achieve Clause 1 as the main part.

I notice that the Central Association of Agricultural Valuers' survey of the let sector in 1983 was not as pessimistic about letting prospects as some who wished this Bill to be brought before us have claimed. I think I am right in saying that almost 60 per cent. of the tenanted land in private ownership was not re-let and that there were 5 per cent. more private lettings than during the year before. The House will recognise by the report (which they will have had an opportunity to study in full) that the situation is not as bad as some would wish and that the succession aspects of the 1976 Act have a real contribution to make. Therefore, I believe that the House will be well advised to question whether Clause 2, as it is, should stay in the Bill devoid of some of the improvements which the noble Lord, Lord Renton, and other noble Lords on both sides of the House wished to put in before Amendment 2 to Clause 1 was accepted in its raw state.

I believe that this is the opportunity for the House to speak because it may well be too late if we allow the Bill to go on unamended in the way that it has; because this will surely not be what the two main organisations in the industry wanted when they were pressing the Government for reform. I think the time is coming when many outside will be saying that it is a pity that they sought any package deal at all in view of what they are getting as a consequence.

7.30 p.m.

Lord Middleton

My Lords, I hope the noble Lord will forgive me if I say that I have found him a little difficult to follow. I could not make out whether he was saying that because Clause 2 was complicated it should be abolished or whether he genuinely wants to put the clock back by saying we must keep succession provisions that came with the 1976 Act for the benefit of the industry, which is the only thing that can be inferred from this amendment.

If that is so, I must say that we discussed very fully in Committee the importance of Clause 2 of this Bill. The noble Lord has referred to the fact that we regard it as a key clause. I do not wish to rehearse again all the arguments as to why it is the centre of this rescue operation which the Government, by this Bill, are launching for the landlord-tenant system. I would merely remind noble Lords opposite that if there is anything which unites the whole industry and all the professional bodies concerned, it is that something ought to be done and done urgently to modify the succession provisions in the 1976 Act. If the Labour Party take the opposite view, then they do so in disregard of this great weight of opinion and of what has happened to the landlord-tenant system since 1976.

If there has been any criticism in this House of Clause 2, it has been that it does not go nearly far enough. Back in 1976 I took the charitable view that the Labour Party of the day just lurched into that unfortunate Bill, animated by very laudable but mistaken motives. But seeing this amendment being moved now, I must say that it raises all sorts of doubts in my mind. Do they really want a thriving letting sector or do they want to see it crippled so that it would appear to be ripe for the kind of treatment envisaged in the Labour Party's 1983 policy document, The New Hope for Britain? Or would it be the solution that was advocated by the noble Lord, Lord Melchett, when we debated agriculture just about a year ago and this subject was raised? The provision of farms to let depends on confidence and the landlord-tenant system needs a shot in the arm. It does not require a coup de grâce, which is what you would get if you knocked out Clause 2.

The Earl of Onslow

My Lords, I should like to rise and totally support my noble friends on the Front Bench. I have listened to the noble Lords opposite, who are supposed to agree with Clause 4 of the Labour Party constitution, arguing for a hereditary landed caste, and it is something that gives me quite enormous pleasure. It really is the most extraordinary piece of mental gymnastics or skating on a line, like one of those produced by Torvill and Dean on the ice rinks of Nottingham and Belgrade.

The merits of succession, the noble Lord, Lord Bishopston, said he was not going to discuss. I would suggest to your Lordships that the merits of succession are such that there are none to discuss. My noble friends, in my view, have not gone nearly far enough in releasing land from hereditary tenanted succession. We all agree—I think this is common ground between everybody—that it is very important to have a thriving tenanted sector. If you deprive the landlord, be he institutional, charitable or private, of the motive to let, he will not let. It is as simple as that; and since for a long time we have been depriving the people of the motive to let, consequently, as the Northfield Committee showed, we have been reducing the tenanted sector.

I must repeat again to your Lordships the parallel which there would be with the 1920s if we had said: "You will be forced to inherit a tenancy and you will be forced to pay more than you can afford for that farm". That is an exact parallel to what is being imposed upon the private landlord and the institutional landlord now. Unless we take that very simple lesson on board the system will fail; but if we are going one small step up the road towards abolishing hereditary tenancies on new lettings, that is—what was it Buzz Aldrin said?—"A small step for man but a large step for mankind", or something when he set foot on the moon: a very, very small start towards getting the landlord and tenant system such that we can increase the number of tenants in the countryside, so that we shall broaden and make the social life of the countryside come more to life than it is at the moment.

Lord Renton

My Lords, I agree with my two noble friends in what they have said. I, too, support the Government on this. I would only add that I am very surprised indeed that the noble Lord, Lord Bishopston, whom I have known for many years and for whom I have a high regard, should have fallen into the error of saying that because some of us thought that Clause 1 was defective (for numerous reasons on which he and I agree) therefore Clause 2 should be jettisoned. I simple do not understand the reason for that. There is no reason and no logic. It is what lawyers pompously call a non sequitur.

Lord John-Mackie

My Lords, my noble friend, who has left his seat, used the word "hysteria" earlier (and he said he was not including me) on an earlier amendment. Quite frankly, I would suggest that a good number of noble Lords opposite are getting almost pathological about succession, and I use the word advisedly. If you take a look at a report which has just come out from the surveyors which gives some interesting figures, they show that last year 5 per cent. more farms came to be let and in their survey something round about 300 farms came on the market to let. That is 5 per cent. more than in the year before. So landlords are letting farms. You would think that the letting of farms had stopped completely, but that is not the case——

The Earl of Caithness

My Lords, would the noble Lord give way? He mentioned surveyors—did he say that a report had been introduced by surveyors?

Lord John-Mackie

My Lords, it was the Central Association of Agricultural Valuers.

The Earl of Caithness

My Lords, that is more accurate.

Lord John-Mackie

My Lords, it probably is. I am sorry if I used the wrong word. This is the problem that we have of getting accurate figures of what is actually happening. Many noble Lords have just taken it into their heads that this has stopped lettings when the figures prove that it has not stopped the lettings, and farms are being let. As I pointed out in the figures that I gave at Committee stage, the graph shows a steady decline all the way from 1920 to the present day, with scarcely a move upwards or downwards, as the case may be, between 1976 and the present day. The Northfield Report, which has been quoted very freely, said that so far as they could see nothing would stop the graph from continuing. Certainly nothing up till now that has been produced in his Bill will stop it. A number of your Lordships have said that they do not think the Bill will do any good in increasing tenancies—if not in this House, then it has been said privately. I think I could quote the noble Lord, Lord Howard, but he is not in his place, I believe he thinks that as well—I beg the noble Lord's pardon; I see that he is in his place.

Lord Howard of Henderskelfe

Excuse me, my Lords; I was looking in despair downwards.

Lord John-Mackie

My Lords, I should like to go back to what the noble Earl, Lord Swinton, said during Second Reading when he pointed out what his family had done in the way of estate management and the letting of farms. I think he said that 8.9 was the proportion of land they had in hand and that that was about the correct amount of land. He also said that they had always re-let to sons and even looked for second sons to let to, but when it became mandatory to do that they objected to it. It is like the seat belt legislation. I remember that a noble Lord who is not here was very much against the seat belt legislation. He always wore a seat belt before, but when it became mandatory he objected co it. It seemed an extraordinary thing to do.

I should like to take the noble Earl, Lord Onslow, to task. He said that I was anxious to create a dynasty of farmer tenants. I would ask him: Why not? I feel that a dynasty of farmer tenants would make a much better job of looking after the land than a dynasty of hereditary landlords has done. Over the last 50 or 60 years, they have had to sell upwards of 60 per cent. of their estates. I know that I shall be told that that is due to taxation and so on, but that is absolute rubbish. There are any amount of estates under good management which have held on to their land, have managed it well and where people have succeeded in remaining as good landlords. So, for goodness sake, do not let us get emotional about landlords, taxation and everything else! My noble friend's point was simply that he was perfectly certain, as I am, that the NFU have nothing of what they wanted in Clause 1. That was the quid of the matter. The quo was giving up the tenancies, and because of the position in that connection we wish to retain the 1976 Act.

Lord Northbourne

My Lords, I wonder whether I may just explain to the noble Lord, Lord John-Mackie, the reason for many landowners' fears of the hereditary provisions of the 1976 Act by telling a little story. Let us suppose that I let a farm which has fallen vacant. I go home to lunch with my son—who happens to be sitting on the steps to the Throne, listening to me—and I say "Charles, I have just given away half your birthright." He asks, "What do you mean?" and I reply, "Well, I've just signed a tenancy which reduces by half the value of the land that you are going to inherit." He then says, "I suppose you've let it to some worthy charitable cause", and I have so say, "No, I have let it to that nice guy down the road with a Range Rover and two daughters at Benenden." So he replies, "But I wanted to farm", and I have to say, "The only answer is that you will have to marry the eldest daughter. She will inherit the farm." It is the value of a farm that you give away when you sign a tenancy agreement today.

Lord Belstead

My Lords, I do not think I can say very much more than has been said on this point in the last quarter of an hour. Perhaps my noble friend Lord Renton, characteristically, had what should have been the last word when he said that Clause 2 stands by itself and, standing by itself, it does not look too good and it ought to fall. The fact of the matter is that this proposal would have the effect of continuing the three-generation succession, about which the noble Lord, Lord Northbourne, has just spoken in a very personal way, and it would have that effect for all tenancies, including new ones.

Noble Lords opposite will forgive me if I say that the amendment would be largely ineffective, because, as my noble friend Lord Onslow explained so clearly, the deletion of Clause 2 would ensure that very few new tenancies would come on to the market. Both the noble Lord, Lord Bishopston, and the noble Lord, Lord John-Mackie, spoke about the CAAV's statistics, which show a rosier picture so far as the number of farms being let is concerned. That was entirely characteristic of both noble Lords, because, both having been Ministers in the Ministry, they have these matters at heart and are knowledgable on the subject. So, of course, I accept from both noble Lords that this picture is an accurate one.

But why has the picture been painted rosier in the last few months? It has been so painted, no doubt, because landlords and tenants knew that a splendid new piece of legislation was to go on to the statute book, which my right honourable friend the Minister of Agriculture, Fisheries and Food has very wisely put into the hands of your Lordships' House. Also, there is no question that landowners know that there is capital transfer tax relief which, in all equity and justice, has been granted by two successive Conservative Chancellors of the Exchequer in 1981 and 1983. It must go to the hearts of both noble Lords because——

Lord Bishopston

My Lords, will the noble Lord give way?

Lord Belstead

My Lords, will the noble Lord let me get to my next full stop? It must go to the hearts of both noble Lords, because their hearts are so much in the right place. But, my goodness me, seven months ago what did the Labour Party do? They said, as part of their election manifesto, that they would remove all those CTT reliefs. I do not think you will find, if that sort of manifesto undertaking were carried through, and certainly if the move to leave out Clause 2 were carried through, that there would be such a rosy picture painted of the number of lettings in this country.

Lord Bishopston

My Lords, is it not a weakness of the Minister's case that he has called in aid some matters which are quite irrelevant to those that we are discussing? With regard to the report which we have quoted, surely this legislation is not retrospective. The lettings figures concerned are subject to the 1976 legislation on succession, and the provisions of this measure will not come into force until a date to be given later.

Lord Belstead

My Lords, both the points which the noble Lord has raised show that I was being relevant and I will now immediately explain why. Both noble Lords talked about statistics, but I ventured to put to the Committee of your Lordships' House that there had, if one was talking about the total area of the tenanted sector, been an accelerated decline in tenancies following the enactment of the 1976 legislation. That led to a certain amount of debate across the Floor, as to whether those statistics were valid, because one ought to talk not about area but about individual tenancies.

What I could have done, but did not, was to go on to point out that, other things being equal, one would have expected that the 1976 Act would, on any statistics, have slowed down the decline in the tenanted sector. That is because its effect has been forcibly to retain land in the occupation of successor tenants, when it might otherwise have fallen vacant. So I suggest that the effect of the succession provisions in the 1976 legislation, in terms of their disincentive to new lettings, must have been even substantially greater than the figures that I quoted in Committee some weeks ago.

But I return to the absolutely basic point which my noble friend Lord Swinton made when he wound up the Second Reading debate on this Bill in 1983. If we do not do something now about the succession provisions, there will be very few new tenancies. My noble friend Lord Middleton talked about a rescue operation. If noble Lords opposite want to preserve some form of tenanted sector, they will not do it by trying to force landlords to let land subject to three-generation succession. Those who want to obtain a first rung on the farming ladder realise this more clearly than most and that is why, in 1976, the young farmers came out strongly against that legislation. I put it to your Lordships' House that this clause is needed. As my noble friend Lord Middleton said, it is wanted by a great weight of agricultural opinion. It is therefore one of the fundamental objectives of this Bill, and I ask your Lordships to ensure that Clause 2 remains part of the Bill.

On Question, amendment negatived.

The Earl of Swinton

My Lords, this might be a convenient, if rather late, time to adjourn the Report stage of the Agricultural Holdings Bill. May I suggest that further consideration on Report of the Bill shall not be resumed before ten minutes to nine o'clock.

Moved accordingly, and, on Question, Motion agreed to.