Agricultural Holdings Bill [H.L.]

HL Deb 13 February 1984 vol 448 cc90-120

8.44 p.m.

Further considered on Report.

The Earl of Caithness moved Amendment No. 52B: After Clause 7, insert the following new clause:

("Arbitrations.

. In section 77 of the 1948 Act for subsections (2) and (3) there shall be sbustituted the following: (2) The Lord Chancellor may by order make rules for the conduct of arbitrations under this Act and, in so far as it may be necessary for that purpose, may vary the provisions of the Sixth Schedule to this Act. (3) The power to make orders conferred on the Lord Chancellor by this section shall be exercisable by statutory instrument (which shall be subject to annulment in pursuance of the resolution or either House of Parliament) and shall include a power, exercisable in the like manner, to revoke or vary any order made thereunder."").

The noble Earl said: My Lords, I beg to move Amendment No. 52B together with, by leave of the House, Amendment No. 73A, which is consequential. Amendment No. 73A: Page 25, line 23, leave out subparagraph (6).

The procedure of agricultural lands tribunals is governed by rules made by the Lord Chancellor by order under Section 73 of the Agriculture Act 1947. These rules give general satisfaction and can, if necessary, be amended without primary legislation. The procedure for agricultural arbitrations, however, is governed by the Sixth Schedule to the Agricultural Holdings Act 1948, and any alteration can be made only by amending that schedule. The present procedure is, in a number of ways, unsatisfactory for dealing with the many matters now referred to arbitration under the Act.

For example, under paragraph 6 of that schedule the party who is in the position of a defendant has to deliver his statement of case without having seen that of the applicant. This may have been satisfactory when arbitrations dealt only with compensation or rent, but it is totally inappropriate to cases which arise under Cases D or E of Section 2 of the Agricultural Holdings (Notices to Quit) Act 1977, where possession is claimed on the grounds of the breaking by the tenant of the tenancy agreement. Such claims have been known to give rise to such questions as whether the tenant is estopped by his conduct from denying that he is an assignee of his father's tenancy and so bound by its terms. In cases like that—and there are many—proper pleadings are essential.

Again, there is no provision for the relaxation of time limits in any circumstances. By paragraph 6 the parties must deliver their statements of case within 28 days of the appointment of the arbitrator. Since the parties are confined at the hearing to matters alleged in that statement of case, any party who fails to deliver one in time is shut out from putting his case forward. So far as I know, no other court, tribunal or arbitrator is subject to such rigid rules.

Under Section 77 of the 1948 Act the Minister is empowered to make rules to make such provision as he thinks desirable for expediting or reducing the cost of arbitration, but since he is expressly forbidden to make rules which are inconsistent with the provisions of the Sixth Schedule it is perhaps not surprising that the power has never been exercised. The only proposal made in this Bill to deal with this situation is to increase the time for delivering the statement of case once more, this time to 35 days. This, I believe, is the wrong approach. Five weeks is too long for most arbitrations. What is required is more flexibility. Therefore, my amendments propose that the Lord Chancellor should have the same power to make rules for agricultural arbitrations as he has for agricultural lands tribunals, and by a consequential amendment the proposed extension of the time limit is deleted. I beg to move.

The Earl of Swinton

My Lords, when this was considered in Committee my noble friend Lord Belstead undertook to approach my noble and learned friend the Lord Chancellor to see whether we could adopt an arrangement on the lines proposed in this amendment. I am glad to say that agreement in principle has been reached on this with my noble and learned friend, and an amendment will be tabled as soon as possible. My noble friend's amendment now before the House has certain drafting defects, and I hope that in the meantime I can persuade my noble kinsman to withdraw this amendment.

The Earl of Caithness

My Lords, we have started very well this evening. I shall certainly withdraw it. I am grateful to my noble friend and kinsman on the Front Bench. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord John-Mackie moved Amendment No. 53: After Clause 7, insert the following new clause:

("Institutional landowners.

. Incorporated or unincorporated institutional landowners whose principal business is not agricultural shall make 90 per cent. of all agricultural land in their ownership available for letting to a tenant provided that this section shall not apply to a teaching or research institution connected with agriculture.").

The noble Lord said: My Lords, we are getting to the end of what I can only call this useless Bill. The noble Lord, Lord Belstead, has used great patience and skill, with a certain amount of charm, in resisting practically all amendments, with the result that he has achieved nothing. I therefore move this new clause, slightly restructured, in order to give to the Minister a last chance to do something that will produce some more tenancies, which is the object of the Bill.

My noble friend Lord Northfield made a vigorous plea for his amendment on the Crown lands at our last sitting, which, as he said, would, however few, give, at least some more tenancies to the already dwindling supply; but it fell on deaf or unwilling ears. I do not know which. What has the Bill done up to now that will produce any new tenancies, or, for that matter, stop the decline? Will Clause 1 do anything?

Some people say that Clause 1 may actually be a deterrent—I think it was the noble Earl, Lord Onslow, who said that—because as farmers were expecting (wrongly, in my opinion) that it will bring down rents, landlords will be unwilling to re-let. There is a slightly more sinister view that, because of the doubt in the wording—and there is grave doubt in the wording of Clause 1—and the fact that there is no section on the profitability of farms, rents can be kept up even in had times, and so this may tempt landlords to re-let. Noble Lords can take their choice. It is my opinion that Clause 1 will not bring one single extra farm on to the market to let.

Will Clause 2 do anything? It removes succession. We go back to life tenancies and little or no other changes are made from the 1948 and 1958 Acts. There is nothing in the Bill that will alter the steady decline in the let section of agriculture which started seriously just after the 1914 War with about 90 per cent. of the let land then and has continued on a more or less steady graph to this day. I have the graph here. I am not sure whether I am allowed to show noble Lords something, but there is the graph. There is a slight wiggle during the 1939–45 war. To satisfy the noble Earl, Lord Caithness, I include—but I am not sure that I was right to do so—the downward trend between 1976 and 1982. I then took the graph from the Northfield report which goes straight down to show that if it continues that way we shall be without any let land by just after the year 2000. The steady graph shows today's figure at between 35 and 40 per cent. and I can see nothing that has been done that will alter that graph.

I have had to say repeatedly and most other people have also said, that it is so difficult to get accurate figures. One has to glean them from wherever one can, but last year 40.8 per cent. of farms that came on the market were re-let one way or another. Of these 10.2 per cent. were let on a partnership basis, but 49 per cent. were either taken in hand or sold; 26.3 per cent. were sold and 22.7 per cent. were taken in hand and, for all I know, perhaps were sold in due course.

Another interesting figure that I have gleaned—and there are various estimates—is that not more than 30 per cent., although I saw one estimate of 15 per cent., of tenancies that come up for succession are taken up. That is an interesting figure: that 70 per cent. go on the market or are included in the figures that I have given before.

I quote these figures to show that the Bill will have no effect unless the Government are prepared to accept a clause such as that moved by my noble friend last week, or the one that I am moving now. We realise that based on the recommendation in the report of my noble friend Lord Northfield that it is good that any landlord should have some land in hand. That is why we have suggested in the new clause that we should be letting 90 per cent. instead of the 100 per cent. in the original clause that we moved in Committee. I quote again from the noble Earl, Lord Swinton, who thought that up to about 10 per cent. was right to have in hand. That would give the landlord a picture of what the farmer was doing and he could treat his tenants accordingly. That should apply to institutional landlords as well.

I gave the figures in Committee of how institutions were taking land in hand and I do not need to repeat that. But to give the total figure, 50 tenancies went from estates of 70,000 acres inside 10 years after the institutions bought the land. That is a high figure. The report of my noble friend Lord Northfield—which I shall quote though I know he will take me to task, but I am prepared to accept that—says at page 140, paragraph 347: It is our opinion that the primary role of the financial institutions in agriculture ought to be as long term investors in let land and not as farmers". Admittedly on page 233 the report goes on to say "having rejected restrictions". Well and good, but I feel there should be a restriction. The report continues: Having rejected restrictions … the extent of in-hand farming land by landowners: institutions told us that, like private landlords, they were mainly interested in letting land. We should like to see general acceptance", of that principle. Based on that we have put forward this amendment again.

If the Minister wants to do something definite—I say "definite" because everything else is philosophical, if nothing else—in the Bill; I quote the gracious Speech: to make more farming tenancies available", he should accept this new clause on the principle of it. It may not be well drafted. That is always an excuse that Ministers use to get out of taking on anything; but he should accept the principle of it. I am sure the noble Lord will sleep more soundly tonight if he could say that he had done something concrete in this Bill at last. I beg to move.

8.57 p.m.

Lord Middleton

My Lords, I very well understand What noble Lords opposite are trying to achieve by this amendment, but I have some sympathy with them; though in his jaundiced view of this Bill and in the matter of the achievement of my noble friend Lord Belstead, I am in total disagreement with the noble Lord, Lord John-Mackie.

I believe that the agriculture industry will flourish best where there is freedom for private individuals and institutions within the private sector to buy and sell land, to let or not to let, without undue interference. One has to search fairly hard for common ground in this Bill with the party opposite, but I believe that I am on common ground with noble Lords opposite in saying that institutional investment in agricultural land provides a useful source of capital for farming, and that, as a rule, institutions maintain and create tenancies and only in a small proportion of cases do they farm themselves. But I do not believe that they wish greatly to enlarge their farming activities especially in the years ahead when farmers expect to experience a more rigorous economic climate. At this time institutions of all kinds own about 20 per cent. of the total let land in England and Wales, and the fact that they farm a small proportion of the land themselves means that they are providers of a substantial—not minimal nor appreciable, but substantial—proportion of land for tenanted occupation.

Despite the understandable suspicion with which they are held by part of the farming community, the role of institutions in land ownership is important, as was recognised by the noble Lord, Lord Northfield, and his Committee. I agree with that Committee's conclusion, to which the noble Lord, Lord John-Mackie referred, that their role should be as landlords, not as farmers. But I am sure that they should be allowed to continue to own land free from this kind of fussy attention. As a matter of detail—I have not taken advice on this—I am by no means sure that the word "institution" in the amendment would necessarily catch only those bodies that the mover intends should be caught. I am not sure that the definition of the word "institution" might not also embrace private farming companies.

The way to encourage the creation of tenancies is to make it a more attractive proposition than it is now. That is what the Bill is trying to do. The letting of farming land is not made attractive by hedging it about by unnecessary legislation. If we have not learnt that since 1976, we shall not learn anything.

The Earl of Onslow

My Lords, I should just like to ask the noble Lord, Lord John-Mackie, whether he is a subscriber to a pension fund. If he is a subscriber to a pension fund, the trustees of that pension fund will say, "We want the noble Lord, Lord John-Mackie, to have the best pension he can possibly have, and to do that we must farm 100 per cent. of the portfolio of the agricultural land that we have".

Lord John-Mackie

My Lords, the noble Lord, Lord John-Mackie, would say: "You have no business taking a risk with my money. You buy that land and you let it, which is a safe way to handle my money."

The Earl of Onslow

My Lords, the noble Lord, Lord John-Mackie, would be very unwise to say that, because the noble Lord may have invested in a pension fund where the trustees take that decision. If they take that decision, which they think is the wrong decision to take, they would reduce his pension. That seems to me an extremely draconian measure to take. It may be all right for the pension of the noble Lord, Lord John-Mackie, to be reduced: he may accept that. But there are thousands of other ordinary men and women who invest in pension funds—or they may invest in life assurance or in any other of the institutions—because they want a secure pension. The noble Lord, Lord John-Mackie, also resisted other attempts to secure a limited amount of short-term tenancy to increase the number of tenancies available. He resisted the inheritance provisions. Noble Lords opposite are trying, in a manner that only the noble Lord, Lord Wilson of Rievaulx, would normally try, to have it all ways, up and down and sideways as well. You cannot have it all ways. Either we release land for tenants or we do not. This is not going to release any land for tenancies. It is draconian, anti-libertarian, and against all the best traditions of the British landlord and tenant legislation.

Lord Northfield

My Lords, I got into hot water with my noble friend at Committee stage and so I shall be as inoffensive to him as possible tonight in the hope that I can persuade him that this is not a very good idea. The problem mentioned by the noble Earl is not so small as he made out in referring to a few thousand people. The point is that it is a figure of 23 million people who have invested in pension funds.

As I said at Committee stage, I do not see why anybody acting on my behalf in a pension fund management situation should be put in a worse situation than any private landlord in relation to making money out of land, rents or anything else. What we want to do, if we put on any limitations at all, is to put them on landlords as a whole. I shall not suggest that tonight, but certainly I do not see why I, as a part-owner through my pension fund of some of this land, should be put in a very had position as compared with the single owner of a farming estate. I think the matter is as simple as that.

However, I would go one stage further and say to my noble friend—I do not say that he is himself indulging in a campaign, but if this sort of campaign that has gone on outside against financial institutions in particular goes on much further we really shall have them being unwilling to invest in agricultural land at all. That would be a disaster for two main reasons, which I hope my noble friend will accept. The first point about the financial institutions—and I think he is really getting at them: he is really talking about pension funds, life assurance companies and property unit trusts (which, by the way, own only just over 1 per cent. of the land, so please let us be sure that we are not exaggerating this into a huge ownership)—is that the main hope they contribute to my noble friend's cause—my cause, our cause, the cause supported on all sides of the House—is that at the moment when a let estate comes on to the market very often they are the only purchasers who are prepared to buy that estate and leave it let. The danger, if you freeze these estates out of the agricultural land market is that many of them will simply be split up and sold off into owner-occupation. I am sure that my noble friend should be welcoming their interest in buying that let farmland, that let estate, and keeping units at a size of what we have long found to be the right unit for managing groups of farms.

It goes further than that, because I would guess that many friends of my noble friend are in a position where they find these institutions extremely useful for a second reason: namely, that they are a very good source of funds when a farmer wants to buy the farm next door on a lease and lease-back basis. Very often he goes to a pension fund and says: "I am willing to sell my farm to you if you will lease it back to me, because I then will have enough money to go out and buy the farm next door."

This is not a negligible proportion of the work of these funds. In fact when we conducted our inquiries, something like 30 per cent. of the annual expenditure on these farms was available to help in lease and leaseback situations. So these institutions are doing a good job in a second way for the farming community, acting as a source of funds for a lease and lease-back situation.

The third thing I want to mention is that really a lot of the blame for the increases in land prices is put at the door of these institutions, whereas in fact they do not buy in the vacant possession market at all: only 5 per cent. of the land sold in the vacant possession market in any one year is bought by the institutions. So they are not the people who are forcing up those prices for vacant possession. That is another reason, please, to lay off this continuous criticism of these institutions.

I conclude by saying to my noble friend that I have enormous sympathy with what he is saying; but he was a bit unfair when he read out the section from our report which appears on page 233, I think, because what he did not read out was the fact that this was in the context where members of the committee has said that the right way to handle the problem was not by imposing restrictions on any body but by setting out guidelines for all agricultural landlords. That appears on page 233 and that is the right way to deal with the problem. Let us approach the private landlord and the institutions—all of them—and say that this is the right way to behave when you are in agricultural land.

Lord John-Mackie

My Lords, may I just say to my noble friend that his report came out in 1979? It is now 1984 and my graph shows that we still have a decline so that all his appeals to private landlords and institutions are of no avail.

Lord Northfield

My Lords, that may be so, but we took an estimate that there would still be a let sector of a certain figure in the 20th century. I do not depart from that and I do not think that the facts have changed. I do not think that my noble friend need be so alarmist. It will be very small and something could be done to make it better. But it will not be the minimal figure that he is suggesting, and we were suggesting that there should be guidelines to cover his point. I repeat what has been said from all sides, that you cannot impose restrictions on one kind of private landlord which you are not prepared to impose on them all. That is the simple commentary on his case. Let us move towards guidelines for all private owners, including the institutions, if that is what he wants.

Lord Hooson

My Lords, I share the fears of the noble Lord, Lord John-Mackie, that the result of this Bill may be that we do not have any more let land and no more tenancies and that the objects of the Bill will fail. But, in a way, that is almost inevitable in a world of inflation where the agricultural economic climate has been fairly good in recent times. Therefore, when land becomes free, it is inevitable that the landlord should seek to keep it in hand or to sell it when it comes on the market, unless he is very highly motivated to let. As I said the other week, the difference between a prudent landlord and a willing landlord is a contradiction in terms in the present economic context.

But this amendment is a most illiberal way of trying to deal with the situation and I do not think that it has anything at all to commend it. It is invidious to draw a distinction between institutional landlords and other landlords, and I do not think that the distinction can he drawn. It seems to me that, whatever the merits or demerits of the Bill, this amendment would add nothing to its merits and, certainly, from these Benches we will oppose it.

The Earl of Swinton

My Lords, I shall not be tempted to follow the noble Lord, Lord John-Mackie, and, to a certain extent, the noble Lord, Lord Hooson, in another Second Reading speech in this debate. I will just say that, as a result of the Report stage, the Bill is now studded with good amendments and improvements made to the Bill, due to suggestions by noble Lords on all sides of the House. The main purposes of the Bill remain. We are ending the iniquitous three-generation succession in Clause 2 and we now have a very good rent formula based on the good work of the NFU and the CLA.

But the goodness stops when we come to the noble Lord's present amendment. I do not think that there is very much I need to say. It has been said by my noble friends behind me, by the noble Lord, Lord Northfield, and by the noble Lord, Lord Hooson. Our financial institutions own no more than 5 per cent. of all agricultural land, and 70 per cent. of their holding is let. As my noble friends on this side pointed out in the previous debate, they are good landlords and should not be subjected to special rules which do not apply to the individual private landlord. To forbid institutions to manage their land as they wish would be an unacceptable intrusion on their freedom of choice. I think that it was my noble friend Lord Onslow who used the word "draconian", and I think that that would describe absolutely the Government's reaction to this amendment.

Lord Prys-Davies

My Lords, we are obviously disappointed, but not surprised at the Minister's response and at our inability to interest the House in the principle embodied in this amendment; that was our experience in Committee. However, we were right to return to the principle embodied in this amendment and I say that for two reasons. The noble Lord, Lord Middleton, has hinted at one of them. There is concern among some farmers, and I believe the TFA, about the role of the financial institutions in relation to agricultural land. It is there whether we like it or not, and if there is concern it is right that that should be voiced and reflected in Parliament.

Secondly, as my noble friend Lord John-Mackie has pointed out, this could be one source which could play a role in expanding the rented sector. Certainly, it is a small sector. About 1 to 2 per cent. of the owners of agricultural land are financial institutions and no more. It is our belief that this Bill will not reverse in any substantial way at all the decline in the rented centre. Therefore, this could be a source for expanding the sector. My noble friend Lord John-Mackie was absolutely right to go back to paragraph 347 of the Northfield Report. I do not propose to detain the House on it; but in fairness to my noble friend, I should like to quote another sentence from that paragraph because it is in this context that the sentence quoted by my noble friend must be seen. These are the critical words: The occasions when a financial institution should need to engage in direct in-hand farming should be few and the reason ought to be a compelling one, for example in order to gain practical experience of problem8UIs faced by their tenant farmers, or where an estate has been acquired which includes an in-hand 'home farm'.". Although the Minister is not prepared to take the action that we suggest, which we believe is in line with the thinking in paragraph 347 which reflects the fears of many farmers about the role of the financial institutions, nevertheless we suggest that he or the department should keep a watchful eye on the role of the financial institutions in relation to agricultural land. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.15 p.m.

Lord Prys-Davis moved Amendment No. 54: After Clause 7, insert the following new clause:

("Smallholdings.

. No land held by a smallholding authority for the purpose of smallholdings shall be sold or leased by the authority for nonagricultural use unless the Minister of Agriculture, Fisheries and Food (or the Secretary of State for Wales in the case of Wales) is satisfied that in all the circumstances the land which the authority desires to sell or lease should be released from the authority's smallholding estate.")

The noble Lord said: My Lords, we on these Benches—and I am sure many noble Lords on all sides of the House—are concerned about the reports that, in general, county councils are continuing with their policy of selling off parts of their smallholding estate. In Committee we did not produce any figures to substantiate our belief, but since then I have been reading the annual reports submitted to Parliament. It is very clear to me that the county councils were selling their smallholding estates before 1979 and that it is continuing.

Since the publication of the Wise Report, which goes back to 1966, the number of smallholdings and the total acreage of smallholdings has been diminishing. Professor Wise and his committee recommended that the number and the total acreage should be reduced; but he also recommended that there ought to be a minimum total acreage of statutory smallholdings. We are now approaching the minimum total acreage that the Wise Committee considered necessary and desirable for the agricultural industry. However, the figures for 1981–82—I have not seen the figures for 1982–83—show that we are now below the total which was recommended by the Northfield committee, which was anxious that we should retain the 1979 area of smallholdings land. I believe that the Northfield Committee described this as the primary aim of the smallholding estate, but it has not been maintained.

In 1979, the smallholding estate in England, let as such, consisted of 144,540 hectares; but by March 1982—the last figures available to me—the total acreage was down to 140,000 hectares. In 1979–1980, 1,317 hectares were sold; and of the 46 county councils in England, 34 sold off part of their smallholding estate. In 1980–81, 2,088 hectares were sold. Again, 34 of the county councils were on the market. In 1981–82, 1,283 hectares were sold, and 26 county councils took part in the sales. Those figures are available in the Library.

As the professed primary aim of the Government, through the Bill, is to arrest the decline in the tenanted sector of agriculture, and as the total acreage of smallholdings is now down to the minimum recommended by two departmental committees, and is probably still diminishing, we do not believe that it is good enough for the Government to say that it is for the local authorities to decide whether or not to sell part of their smallholding estate. Smallholding land should not be sold on the say-so of the local authority. However, this can happen, even though there is a demand in the locality for smallholding estates, and even though there is a waiting list.

It may well be in the interest of local authority finances that chunks of the smallholdings estate are sold, but it may not be in the interest of agriculture, in the interest of the countryside, or in the interest of the country. We on these Benches believe that the primary aim ought to be to retain the existing smallholding acreage unless the agricultural Ministers are satisfied in the circumstances of the case that the land should be released from the agricultural portfolio. I beg to move.

Viscount Ridley

My Lords, I hope that I may be able to ask the Government to resist this amendment. I spoke on this matter at some length at Committee stage and I should not wish to repeat what I said then. But I believe that the noble Lord, Lord Prys-Davies, did not put a totally fair picture. He spoke about the Wise Committee, which recommended a certain number of smallholdings and that this number be reduced. But the Wise Committee recommended also that the size of smallholdings should be increased so that they were a viable economic unit. That is why the number has been reduced—because the acreage has been increased. One surely cannot have it both ways.

As I demonstrated at Committee stage, the existing smallholdings estate is extremely viable and much more economic than it used to be. It has meant a reduction in the number of smallholdings to that figure which local authorities consider can be economically let and supply the demand which exists for them.

Secondly, the noble Lord, Lord Prys-Davies, did not give any figures. I—alas!—cannot do so either but I know that there are such figures, and, given time, I could produce them. They show the number of smallholdings which have been developed from bare land during the period of which the noble Lord spoke. At a time of economic difficulties, that has not been too easy. Buildings have been created from scratch, existing holdings have been divided, and new holdings produced from land which is in the occupation or ownership of local authorities. They must be set against the number which have been disposed of.

The primary objection to this amendment must surely be, as I said at Committee stage, that the provision of smallholdings is not a statutory function placed upon county councils; it is for their discretion whether or not they produce smallholdings and whether or not they make them available. To deny them the right to buy or sell such land as they may have owned for the past 70-odd years since the smallholdings function started in 1908 will be to increase Government control over local authorities at the very moment when that is the least desirable thing to do. I hope very much that in that spirit the Government will have the confidence in county councils to do what they think is right for their smallholding tenants and will not accept this amendment.

Lord Northfield

My Lords, I have enormous sympathy with what my noble friend on the Front Bench is trying to achieve. I support strongly the aim of his amendment, although not its precise drafting. The noble Viscount is not being as frank as he normally is to the House, because although he knows well that some counties are selling simply to get rid of uneconomic units or for laudable purposes of management, others are not so enamoured of having smallholdings as we should all like them to be. I put that at its lowest in order to offend nobody. In other words, some county councils want to get rid of their smallholdings in principle, or at least to cut them down significantly. Or some parties on some county councils wish to do so. That is the kind of situation that this amendment is really aimed at—to keep a substantial volume of smallholdings.

I believe that we could return to this point at Third Reading in another form. If I may say so, what we proposed in the Northfield Report was probably the right way to go about it. We stated in paragraph 547: In the case of proposed sales of smallholdings land above a given size"— and that would exempt the sale of small units, to suit the noble Viscount— local authorities would be required to notify the Minister or the Secretary of State for Wales of their intention to sell. He would then have the choice of designating the land for smallholdings use, allowing the sale to proceed without restriction, or of vetoing it". What we said was, "All right; even in cases where counties want to get rid of substantial holdings, the Minister should have a right to say this should not pass out of the smallholdings system, and if you insist on selling you must find a purchaser, an institution, who will buy it and either lease it back or themselves run it as a set of smallholdings". I am sure that is the right way to proceed. If the Minister is going to resist this amendment because it is simply a ministerial veto without the refinement I am suggesting, I suggest we return to the matter, in the form in which I have outlined it, at Third Reading.

Lord Hooson

My Lords, we on these Benches would support this amendment. It is important that the smallholdings estate should be maintained. I do not appreciate the point made by the noble Viscount, Lord Ridley, who pointed out that this is a non-statutory duty imposed on a county council. That may be so, but the situation that would obtain if the amendment were passed would be no different from that which is required in regard to planning matters, where the Ministry of Agriculture has to certify in relation to agricultural land whether they are opposed to it passing out of agricultural use for planning purposes. It seems to me that on a like principle there is such an interest in maintaining the smallholdings estate.

When I was in another place I happened to represent a seat which was an old county, Montgomeryshire, which had the largest smallholdings estate in the country bar Cambridgeshire—certainly the largest in Wales, and the second largest in England and Wales. I know what a valuable asset that estate was. So many large farmers in my part of the world—we are not an area of large farms, but what passes there for large farmers—started in county council smallholdings. It is a very valuable stepping stone into agriculture. I really object to the reduction of these smallholdings, and I would support this amendment. I would go further and say that the words "for non-agricultural use" are not required in this amendment. I do not see why the permission of the Minister of Agriculture should not be required for the sale or lease for any purpose, whether agricultural or non-agricultural, in this context.

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

My Lords, I recognise the concern of the noble Lord, Lord Prys-Davies, in moving this amendment, but I do not think, with respect, that it would work as it is presently drafted. The noble Lord is asking the Minister to identify which proposed sales would lead to the loss of the land to agriculture, and I do not think this is a forecast which my honourable friend could make.

With respect to the noble Lord, Lord Hooson, it is not on all fours with the information required from the Ministry of Agriculture so far as planning is concerned. There the Ministry is asked to give a view about the use of land, which they can give; they are not being asked to give a forecast. And it is only advice to the planning authority; it would not be a definite edict, which is what is being asked for in this amendment.

There are two other problems with the amendment. The first is one identified by my noble friend Lord Ridley: the question of freedom of local authorities to make their own decisions is at issue here. If the noble Lord, Lord Northfield, feels that he would wish to return to this at Third Reading, I think there will be a difference of view on this which would become evident if we pursued the matter further. Finally, I think my noble friend was right to say that the Wise Committee itself made the point that smallholdings should be able to rationalise in order to provide a better deal for their tenants in terms of holding size, accommodation and equipment. The noble Lord, Lord Northfield, is, I have no doubt, justified in saying that not in every case is that the reason why smallholding sales are made; but in many cases the sales of smallholdings are made in order to get a better deal for the tenant. Therefore, on those grounds—and not least, if I may say with respect to the noble Lord, because this amendment could not be put into practical effect—I must resist it.

Lord Northfield

My Lords, before the Minister sits down would he go one step further and be prepared to say that the Government do want smallholdings very broadly to be kept at their present acreage? Further, would he be prepared to offer guidance to county councils that they should seek the sort of solutions which we outline; namely, if they insist on selling considerable areas they should see that the land does not go out of smallholding use?

Lord Belstead

My Lords, of course I recognise the point made by the noble Lord, Lord Northfield. I have figures which show the reduction in acreage. They lead to some concern but not, I think, the need to go down the road which the noble Lord is trying to press on me.

Lord Bishopston

My Lords, the Minister has just said that the figures lead to some concern and we therefore have cause to urge him to reconsider this matter. The whole point about this Bill is to provide more land for letting, and therefore more opportunity for people to come into farming. In the many hours we have been considering amendments and the legislation generally there has been very little evidence that the Bill will make any difference to the present situation. Indeed, noble Lords sitting behind the Minister have been foremost in defending the status quo. We have a very short way to go before we can get any evidence of progress.

The amendment, which I shall briefly quote, is important, and it has no measure of edict, as the Minister put it. The amendment states: No land held by a smallholding authority for the purpose of smallholding shall be sold or leased…for non-agricultural use unless the Minister…is satisfied that in all the circumstances the land which the authority desires to sell or lease should be released from the authority's smallholding estate. It is up to the Minister who, in the light of this Bill and the declared objectives of the Government, should be looking at every aspect to see whether a word of guidance is justified in order to increase the land for letting.

We are talking about a significant quantity of land. My noble friend Lord Northfield reminded us in Committee (col. 153, of Hansard for 13th December) that, smallholdings provide something like 15 per cent. of the opportunities for new entrants to come into the industry. He reminded us that that is not a negligible figure.

The noble Viscount, Lord Ridley, has just spoken. I was reading his speech made on 13th December, col. 152, on the subject covered by this amendment. He defended the right of local authorities to decide, as he has today. On the giving of powers to the Secretary of State he said that, local authorities will regard this as a totally unjustified attack on their powers of decision. He went on to say—and how right he was—that: Quite a lot of powers of local government have been removed by this Government when they came into office. He can say that again! We have had council houses which some authorities did not want to sell but they have been told that they must do so. There is no choice there, on a much bigger issue. I shall not mention the abolition of the GLC and the metropolitan authorities. Abolition is a complete interference. I take his point that local authorities may not be very pleased about the Government having these powers, but they are not powers saying one shall or one shall not. They are powers which will be using the land in partnership with the authorities which now administer the smallholdings. In this, if the local authority can say that they want to rationalise their smallholdings estates—that, of course, is quite reasonable—then they are free to do so. That is not inconsistent with the amendment.

The noble Earl, Lord Swinton, when he wound up the last debate on this Bill on 7th February, really gave the game away about the Government's policies. We were then debating about the Crown Estates Commissioners having land which the Treasury had in lieu of death duties, and so on. He said that the Government's policy in relation to land held by government departments is to dispose of it where it is not required for departmental purposes, often by sale to the existing tenant. That may be commendable, but it does not increase the amount of land for new entrants to come into agriculture and farming. Here again, the Government have said very clearly, in effect, that their doctrinaire reasons for selling land and realising all the money they can get is their policy and that is a priority over the aims of this Bill, which are to ensure that more land is available for letting.

I believe that at this late stage the Government should be prepared to look at all these aspects in order to see whether a change of policy can bring about the fulfilment of the objectives of this Bill, on which we do not differ. On the last amendment and earlier amendments my noble friends and I have all been anxious to ensure that more people get the opportunity of going into farming. I hope that the Minister will look at this amendment, with others, before the later stages of the Bill.

On Question, amendment negatived.

Clause 8 [Interpretation]:

9.37 p.m.

Lord Belstead moved Amendment No. 55: Page 11, leave out lines 19 and 20.

The noble Lord said: My Lords, in moving this amendment, I should like to speak also to Amendments Nos. 56, 57, 58 and 59.

Amendment No. 56: Page 11, line 26, at end insert— ("( ) Unless the context otherwise requires, expressions used in this Act and the 1948 Act have the same meaning in this Act as in that Act. ( ) Section 87(1) and (2) of the 1948 Act (Crown land) shall have effect as if references to that Act included references to this Act (except paragraph 34 of Schedule 1).") [Amendment No. 57: printed earlier; col. 1086.] Amendment No. 58: Clause 9, page 11, line 29, leave out ("Part") and insert ("Schedule"). [Amendment No. 59: printed earlier; col. 1125.]

My Lords, all these are drafting amendments. I beg to move.

On Question, amendment agreed to.

Lord Belstead moved Amendments Nos. 56 to 59:

[Printed above.]

On Question, amendments agreed to.

Schedule 1: [Minor and consequential amendments]:

Lord Belstead moved Amendment No. 60: Page 13, line 10, leave out ("1948") and insert ("1977").

The noble Lord said: My Lords, in moving this amendment, I should like to speak also to Amendment No. 61.

Amendment No. 61: Page 13, leave out lines 22 to 24 and insert— ("2.—(1) Subsection (4) of section 18 of that Act (cases where provisions of Part 11 of that Act do not apply) shall be amended as follows. (1A) In paragraph (a), the following sub-paragraph shall be substituted for sub-paragraph (ii)— (ii) the Tribunal consented before that date to its operation;". (1B) In paragraph (c)—

1. (a) in sub-paragraphs (i) and (ii), for the words "that Act" there shall be substituted the words "the 1948 Act"; and
2. (b) the following sub-paragraph shall be substituted for sub-paragraph (iii)—

(iii) the Tribunal consented before that date to the operation of the notice;". (1C) In paragraph (d), sub-paragraph (ii) and the word "or" immediately preceding it shall be omitted. (1D) The")

Amendment No. 60 is a drafting amendment, and Amendment No. 61 is a technical amendment. I beg to move.

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 61:

[Printed above.]

On Question, amendment agreed to.

Viscount Ridley moved Amendment No. 62:

Page 13, line 40, at end insert— ("( ) In paragraph (f), for the words from "and the" to the end of paragraph there shall be substituted the words "(whether the tenancy was granted before or after the commencement of the said Part III;".")

The noble Viscount said: My Lords, I hope we can dispose of this amendment as quickly as we disposed of the last two. The amendment has one sole purpose—to clarify the existing legal position as to the exclusion of succession where statutory smallholdings are concerned. At the Committee stage on 13th December we had a debate on an amendment which I moved, and I believe the Government were sympathetic to what I am trying to do. All I am asking is that it should be made quite clear beyond any possibility of doubt that the succession provisions of the 1976 Act do not apply to statutory smallholdings.

As I have said, I think that the Government are sympathetic. I am quite certain that in 1976, in their stated intentions regarding the Act at that date, the Government wished to exclude statutory smallholdings. There is doubt legally whether they did so in detail in that Act, and therefore I wish to make it clear beyond doubt that the present Bill will do so. I hope that the amendment is acceptable to the House. My Lords, I beg to move.

The Earl of Swinton

My Lords, I am most grateful to my noble friend Lord Ridley for proposing this amendment. I am sure that smallholdings within the meaning of Part III of the Agriculture Act 1970 should be excluded from the three-generation succession provisions of the Agriculture (Miscellaneous Provisions) Act 1976, and I am happy to accept the amendment.

On Question, amendment agreed to.

[Amendments Nos. 63 and 64 had been withdrawn from the Marshalled List.]

Lord Belstead moved Amendment No. 65:

Page 16, line 1, at end insert— (" .—(1) In section 18(1) of that Act, after "20(14)" there shall be inserted "and (15)". (2) In section 20 of that Act, the following subsection shall be added after subsection (14)— (15) If at the expiry of the period of three months beginning with the day after the date of the death of a tenant there are pending before such a tribunal separate applications made under this section by any person, or (as the case may be) by each one of a number of persons, in respect of more than one agricultural holding held by the tenant at that date, then, subject to and in accordance with the provisions of any order under the said section 73(3), those applications (together with, in each case, any associated application made under the following section) shall be heard and determined by the tribunal in such order as may be decided—

1. (a) where those applications were made by one person, by that person;
2. (b) where those applications were made by two or more persons, by agreement between those persons or, in default of agreement, by the chairman of the tribunal;

and any decision made by the chairman under paragraph (b) above shall he made according to the respective sizes of the holdings concerned so that any application in respect of any holding which is larger than any other of those holdings shall be heard and determined by the tribunal before any application in respect of that other holding.".")

The noble Lord said: My Lords, when read with the new subsection (3C) in Amendment No. 28, this amendment implements the second part of proposals put forward by the CLA and the NFU which had the objective that in the case of multiple succession an applicant should not succeed to more than one holding of "commercial unit" size. Amendment No. 65 adds to Section 20 of the 1976 Act a new subsection (15), which prescribes the order in which applications for succession are to be considered in cases where a tenant, on death, is in occupation of an agricultural unit which comprised more than one tenancy.

At an earlier stage of the Bill my noble friend Lord Sandys asked whether applications would be dealt with one at a time or separately. The answer is, separately, and the order as to how they will be dealt with will be chosen by the applicant, or, if there is more than one applicant, by agreement between the applicants, or, in default of such agreement, by the chairman of the agricultural land tribunal. However, if the choice rests with the chairman, he will be required to consider the applications by reference to the respective size of the holdings to which the tenancies relate in descending order.

The new subsection (3C) in Amendment No. 28 (which has already been taken) provides that once succession is granted by a tribunal, for the purpose of satisfying eligibility under the commercial unit occupancy test, the applicant is deemed to be in occupation. This is really the main change that we have made so far in the Bill in trying to attain the objective which I think all your Lordships share, and about which the noble Lord, Lord Northfield, spoke during a previous stage of the Bill: to try to see that multiple successions are prevented in undeserving cases. The effect of the two provisions together—that is, what is provided for in both this amendment and Amendment No. 28—is to restrict the holdings to which an applicant may succeed.

Details of the procedure to be followed by a tribunal in considering the applications will be provided by order made by my right honourable friend under Section 73(3) of the Agriculture Act 1947. All this will, I hope, ensure greater conformity with the spirit of the succession provisions of the 1976 Act, which were designed to limit succession, as far as possible, to tenants who were not already occupying commercial holdings. My Lords, I beg to move.

Lord Sandy's

My Lords, I am most grateful to my noble friend for his clarification of this important matter, and the details which he has given to your Lordships give some indication of the instructions which will be given to a tribunal. But let us suppose that the chairman of the tribunal is somewhat heedless of the instructions. I am wondering what there is in the Bill to prevent a tribunal from taking all the applications together—and we have within our knowledge cases where there are as many as 27 pieces of land in separate holdings in a situation of this kind.

Lord Northfield

My Lords, I, too, should like to say "thank you" to the noble Lord because this is a very important provision indeed. I am slightly surprised that the NFU in fact accepted it. I believe I can offer a further compliment to the noble Lord because, taken with Clause 2, it should mean more tenancies—it really should! It will mean that land that would otherwise be taken on by a successor will become available, and in the light of Clause 2 (relating to the limitation to one generation) the landlord will be more inclined to let the land than to sell it with vacant possession or to farm it in hand. With goodwill on all sides and full realisation of what this involves, I believe that this provision will probably do more to increase the number of farms available for rent than almost any other part of the Bill.

Lord John-Mackie

My Lords, we spoke in favour of this amendment earlier when it came forward. We have not altered our opinion. I believe, however, that my noble friend Lord Northfield is a little optimistic. I wonder how many multiple tenancies there are, which will make such a great difference. If it makes a difference, then the noble Lord, Lord Belstead, has something in his favour.

Lord Belstead

My Lords, I am grateful for what noble Lords have said. I should like to look at what my noble friend Lord Sandys said and, if necessary, write to him. I think that the wording at the top of page 4 of the Marshalled List making clear that we are talking about separate applications, which shall then be dealt with in the way set out in the rest of the schedule, answers my noble friend. I must admit, however, that I am not sure. It is certainly the intention that the applications shall be dealt with separately. It is certainly the procedure that they shall be dealt with in the way that I have explained. If I feel that I should add to that (I do not think that my explanation has been quite as satisfactory as it ought to be) may I write to my noble friend?

On Question, amendment agreed to.

[Amendment No. 66 not moved.]

9.47 p.m.

Lord Mottistone moved Amendment No. 67:

Page 17, line 24, at end insert— (" .After section 1 of the 1948 Act there shall be inserted the following section:

"Exclusion for tenancies of allotment land of provisions of this Act and of the Agricultural Holdings (Notices to Quit) Act 1977

1A.—(1) Where in any contract of tenancy made after the commencement of the Agricultural Holdings Act 1984 land held by a local authority either for the purposes of the Allotments Acts 1908 to 1950 or as field gardens allotted pursuant to the provisions of the Inclosure Acts 1845 to 1882 is let to a tenant as an agricultural holding no provision in this Act other than those contained in section I above and no provisions in the Agricultural Holdings (Notices to Quit) Act 1977 shall apply to the said contract, tenancy or holding.

(2) For the purposes of subsection (1) above 'local authority' has the meaning given to it in section 270(1) of the Local Government Act 1972.".")

The noble Lord said: My Lords, at the Committee stage I introduced an amendment somewhat different from this which my noble friend, at column 219 on the 13th December, showed to be in error. The problem is to facilitate the use for general cultivation of allotment land not currently needed for allotments and which may go derelict if not used. The allotment authority has the choice of leaving it unused, paying from the rates to keep it decent, or allowing a local farmer to cultivate it. In the latter case, there are problems within the agricultural holdings law which I aired at Committee stage. I shall not bother your Lordships with that tonight.

A further problem to which I made reference was that this sort of situation occurs mainly in rural areas where the local authority is usually a parish council with a part-time unqualified clerk. They have difficulty in dealing with the complexities of the sort of law that agricultural holdings have built around them. At Committee stage, my noble friend kindly accepted the problem of the clerk and did so also in a letter. He gave a warning that, in the amendment as it then was, we had the risk of falling into the trap of the Landlord and Tenant Acts of 1927 and 1954.

I am grateful to my noble friend for the points that he made and for the fact that he has undertaken to make the procedures as unbureaucratic as possible. On examination, however, we feel that this is probably not enough. The defects of using ministerial consent are that the need for reapplications means that the farmer and the council cannot plan for a settled period of occupation; secondly, that the part-time clerk has to arrange for the reapplication and, on a change of clerk, the reapplication may be overlooked; and thirdly, the reluctance of either party to be involved in such procedures for a smallish piece of land.

Having taken the points made by my noble friend, the new amendment seeks to cure the difficulties simply by removing from the new arrangement for agricultural use of allotment land the protection of the agricultural holding code, leaving the land subject to the legislative codes prescribed for allotment land, thereby, in all essentials, allowing the farmer and the council to agree terms to their own satisfaction that regulate the whole period of the tenancy and its termination. It is important that these arrangements will take place at a very local level where both parties know better than anyone else what they wish to agree and where it is as important to avoid local ill will because one party has prayed in aid a statute that was not originally intended to apply as it is to ensure that the land does not become derelict. We have therefore sought to—

A noble Lord

Who are "We"?

Lord Mottistone

My Lords, "We" are my advisers, the National Association of Local Councils.

Lord Denham

My Lords, will my noble friend give way? My noble friend speaks for himself in this House and he may share the views of his advisers. But it is a rather important point.

Lord Mottistone

My Lords, "We" relates to thinking as opposed to putting the amendment. In conclusion, I hope that my noble friend will accept that this revised amendment of mine meets the Bill; steers clear of the problems of the Landlord and Tenant Acts; gets out of the problems of the bureaucracy; and does not create for my noble friend and his right honourable friend the difficulties of trying to organise his own local man to help in an area where perhaps it is better that the negotiations should be strictly between the farmer and the council. I beg to move.

Lord Belstead

My Lords, my noble friend is on to an important point, which is that surplus allotment land should be able to be let temporarily and easily. All Members of the House will know of the value of allotments and the difficulties which occasionally can be encountered if one has problems in letting allotment land. There is nothing more depressing than to see allotments falling into disuse which ought to be used productively and giving pleasure to those who should be tilling them. Therefore, my noble friend has plenty of sympathy coming from both me and from the Ministry at which I work. From looking at what my noble friend has written to me and also said in the House, we have brought in new procedures for Section 2 approvals which I hope my noble friend will feel will make his amendment unnecessary.

At the previous stage I gave my noble friend an assurance that we would issue specific instructions to our local offices—and, incidentally, I am talking about the Ministry of Agriculture when I say "our local offices"—to overcome any problems that might arise in connection with applications for Section 2 approvals for allotment land. I am pleased to be able to confirm to my noble friend that these instructions have been issued, and I have a copy of them with me. What they say in simple terms is that if there is a Section 2 application for allotments to be let for up to five years, then approval ought to be given.

However, my noble friend is concerned that the need for parish councils to seek a new approval every year might act as a disincentive on them and the farmers, to become involved in such relatively complex procedures for what will normally be small parcels of land. I have much sympathy with this view and this was one of the factors in our mind which led the Government to propose the next two amendments which we come to on the Marshalled List. Those amendments—Amendments Nos. 68 and 69—if accepted, would meet all of my noble friend's remaining concerns. They would permit the parish clerk to make one application, and one application only, for the Minister's approval for a letting of not more than five years. Both the council and the farmer concerned could plan ahead in the knowledge that occupation was certain. There would be no danger of a part-time clerk, who is busy with other things, omitting to re-apply, and the procedures would be as simple as possible.

I hope that the House will accept the need for Amendments Nos. 68 and 69, and I hope that my noble friend will feel that I am not being bureaucratic when I say that I think that there are dangers of applying a broad exemption to a Bill of this kind. For instance, I am advised that one would still have to look very carefully indeed at the drafting of my noble friend's amendment in order to be absolutely certain that some aspects of the legislation would not still apply. Therefore, we have tried to go about it in this other way. I hope that the explanation that I have given will persuade my noble friend that there will be no inconvenience for the smallholdings authority, for the farmer concerned or for the clerk concerned, and that we are setting up a situation which in genuine cases will mean that there can be lettings of up to five years at a time with no other problems connected.

Lord Mottistone

My Lords, I am indeed grateful to my noble friend for having gone such a long way to try to meet my particular problem. I have not been able to take advice on his Amendments Nos. 68 and 69. Therefore, I am not quite sure to what extent they completely fulfil the whole purpose of what we are after. But certainly I very much take my noble friend's own remarks as being his attempt to go as far as he can in that direction. I also accept the fact that the drafting of Amendment No. 67 may have loopholes in it that we have not been able to determine. I shall of course seek further advice and may possibly write to my noble friend if there is any other little loophole that we think might be helped by the wording being slightly changed. Perhaps that could be the subject of an amendment on Third Reading. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.57 p.m.

Lord Belstead moved Amendment No. 68:

Page 17, leave out lines 25 to 29 and insert— ("7.—(1) In section 3 of that Act (tenancies for two years or more, unless terminated by notice, to continue as tenancies from year to year)—

1. (a) at the beginning of subsection (1) there shall be inserted the words "Subject to sections 3A and 3B of this Act"; and
2. (b) at the beginning of subsection (4) there shall be inserted the words "Subject to section 3B of this Act".

(2) The following sections shall be inserted after that section—")

The noble Lord said: My Lords, I beg to move this amendment and to speak to Amendment No. 69.

Amendment No. 69: Page 18, line 9, at end insert:

("Exclusion of continuation of tenancy by agreement

3B.—(1) This section shall apply to any tenancy of an agricultural holding for a term of not less than two, and not more than five, years.

(2) Where, before the grant of any such tenancy,—

1. (a) the persons who will be the landlord and the tenant in relation to the tenancy agree that section 3 of this Act shall not apply to the tenancy; and
2. (b) those persons make a joint application in writing to the Minister for his approval of that agreement; and
3. (c) the Minister notifies them of his approval;

section 3 shall not apply to the tenancy if it satisfies the requirements of subsection (3) of this section.

(3) A tenancy satisfies the requirements of this subsection if the contract of tenancy is in writing and it, or a statement endorsed upon it, indicates (in whatever terms) that section 3 of this Act does not apply to the tenancy.")

I am indebted to my noble friend Lord Renton for the effect of this amendment which he spoke about in Committee. In essence, this amendment seeks to achieve the situation where the Minister can give his approval to a fixed-term tenancy for a period not exceeding five years. This approval will have to take effect in such a way as to exempt these tenancies from the provisions of Section 3 of the 1948 Act. Without this amendment Section 3 would convert the fixed-term tenancy into one from year to year, that is, a full agricultural tenancy at the end of the term.

After a good deal of thought since my noble friend Lord Renton spoke in Committee, we think that it would be entirely right to accept the spirit of what he was trying to do. The amendment that I now propose would permit the Minister to approve a letting of more than two and up to five years, which would not at the end of its term be converted by Section 3 of the Act into a full agricultural tenancy. In order to be sure that both landlord and tenant are fully aware of what is being proposed, they would have to make a joint application in writing—only one—to the Minister who will notify them both of his decision. Furthermore, the tenancy agreement will have to contain a provision or be endorsed to the effect that Section 3 of the Act does not apply to the tenancy. I beg to move.

The Earl of Caithness

My Lords, I should like to press my noble friend on two brief points. First, what happens when the tenant dies during the five-year term? Secondly, can my noble friend remind me when these provisions come into force?

Lord Belstead

My Lords, to answer the second question first, we are, of course, talking about Section 2 tenancies under the 1948 Act which exist now. I would make two brief points to my noble friend. First, when we originally introduced this Bill I made the point on behalf of the Government that we intended to lengthen the period of time of Section 2 tenancies to five years, particularly for two cases which we thought specially deserving. One is where there are trial tenancies for prospective tenants, and the other is where the son or daughter of a landowner will come back and wants to take the tenancy up at a later stage. But I have also gone out of my way on the previous amendment to say to my noble friend Lord Mottistone that I believe that Section 2 tenancies will be suitable so far as his case for smallholdings is concerned.

Section 2 tenancies exist now. All that Amendments Nos. 68 and 69 do is to make sure that, under Section 3 of the 1948 Act, Section 2 tenancies are not converted into fixed-term tenancies from year to year which end up being full agricultural tenancies at the end of the term. Therefore, landowners will not in any way be afraid of resorting to Section 2. As to what happens when the tenant dies, I assume that the tenancy will remain with the executors—and I see that my assumption is correct.

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 69:

[Printed above.]

On Question, amendment agreed to.

The Earl of Swinton moved Amendment No. 70: Page 18, line 33, at end insert ("make")

The noble Earl said: My Lords, this is a drafting amendment. I beg to move.

On Question, amendment agreed to.

The Earl of Onslow moved Amendment No. 71:

Page 18, line 49, at end insert— ("(6) Any transaction entered into in contravention of subsection (4) of this section shall be void.")

The noble Earl said: My Lords, I regret that the noble Lord, Lord Renton, is on holiday and the noble Viscount, Lord Dilhorne, has been wafted away to Singapore suddenly, so I have been asked to move this amendment. Paragraph 8 of Schedule 1 provides a bar against assignment or subletting after the statutory request by landlord or tenant for inclusion of a covenant to that effect in a tenancy agreement. This is to avoid giving one or other of the parties the opportunity to evade the outcome of arbitration pending the arbitrator's award.

This further small amendment, which has been suggested by the Agricultural Law Association, would simply make it clear that in the event of such an assignment or subletting taking place, the transaction would be void. I beg to move.

The Earl of Swinton

My Lords, I am sure that my noble friend will be delighted to know that I am happy to accept this amendment.

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 71A:

Page 19, line 28, at end insert— (" .—(1) There shall be inserted in subsection (4)(a) of section 11 of the 1948 Act after "or", where it first occurs, the words "in cases where a valid notice of less than 12 months is given in accordance with section 1(2) of the 1977 Act". (2) After subsection (4) of section 11, as so amended, there shall be inserted the following new subsection (5)— (5) The landlord shall not unreasonably refuse his consent to proposals by the tenant for the cropping of arable land during the periods of restriction mentioned in paragraphs (a) and (b) of subsection (4) above and any dispute arising as to the reasonableness of a refusal of consent shall be determined by arbitration under this Act."")

The noble Earl said: My Lords, subsection (1) of my amendment deals with Section 11(4)(a) of the 1948 Act, which at present reads: any period after he has given or received notice to quit which results in his quitting the holding". This could refer to a period of less than 12 months where this is valid, or a period of more than 12 months; indeed, a period of years. The wording first appeared in Section 3 of the Agricultural Holdings Act 1906, which never came independently into operation but was superseded by the 1908 Act; and since then various attempts at interpretation of the wording have been suggested.

It would clearly be unfair if a landlord could give a notice to quit of some years' length, thereby restricting freedom of cropping and disposal for an inordinate time. The proposed amendment leaves unaffected the normal restriction during the last year of the tenancy, but provides that in a case of a notice to quit of less than 12 months in length the restriction will apply only for that shorter period.

Subsection (2) of my amendment relates to cases that arise from time to time where a landlord refuses consent to a tenant's cropping programme which covers the last year of the tenancy and the tenant considers this refusal unreasonable. At present the landlord can rely on Section 11(4), and the tenant has no means of challenging that refusal. The proposed amendment provides for arbitration under the 1948 Act in the event of a dispute which the parties cannot resolve by agreement. A refusal of consent would have substantial financial consequences for the tenant; and, therefore, I beg to move.

The Earl of Swinton

My Lords, I find this amendment very little changed from Amendment No. 69 moved in Committee by my noble friend Lord Dilhorne. As I explained on that occasion, the Government do not argue with the principle of what my noble friend is attempting to achieve, but there are flaws in the method that he proposes to adopt. The matter has been given a great deal of thought by the department and by parliamentary counsel, and it has not been possible to find a simple formulation which would be equitable to both sides. I hope that my noble friend will recognise that it is not desirable to add to the complexities of the legislation. I hope, in the light of these remarks, that he will withdraw his amendment.

The Earl of Caithness

My Lords, I do not want to add to the complexities; I was only trying to simplify matters. Since 1906 we have been trying to achieve a sensible definition. I appreciate the amount of work that my noble friend has put into this provision and I should like to take the amendment away and talk to my advisers. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10.7 p.m.

Lord Belstead moved Amendment No. 72:

[Printed earlier: col. 1125.]

The noble Lord said: My Lords, this is consequential on Amendment No. 50 and so is Amendment No. 73. I beg to move.

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 73:

[Printed earlier: col. 1125.]

On Question, amendment agreed to.

[Amendment No. 73A not moved.]

Lord Belstead moved Amendment No. 74:

[Printed earlier: col. 1007.]

The noble Lord said: My Lords, this amendment is related to the earlier amendment, Amendment No. 2, which we had on the rent formula. It simply moves the effect of the rent formula into Schedule 1 relating it to the 1976 Act. I beg to move.

[Amendment No. 74A not moved.]

[Amendments Nos. 75 and 76 had been withdrawn, from the Marshalled List.]

The Earl of Caithness moved, as an amendment to Amendment No. 74, Amendment No. 77: Line 4, leave out from ("tenant") to end of the amendment.

The noble Earl said: My Lords, this amendment is similar to one that I raised in Committee, which related to a different rent formula. The purpose is to put the succession tenant who will succeed by right on the same footing as a new tenant in so far as rent is concerned. During our discussions on this provision on 13th December my noble friend Lord Belstead said (at col. 229): At present, a succession tenant is treated as a sitting tenant for the purposes of rent". [Official Report, 13/12/83: col. 229.]

I believe my noble friend was again badly advised for that is not the case. The 1976 Act clearly states that on succession the tenant must pay the open market rent. Indeed this was confirmed on 8th April 1976 in Committee in another place, when in col. 1172 the record clearly shows that the noble Lord, Lord Bishopston, who alas is not in his place at the moment, but who was then Minister of State as Mr. Bishop said: The brief answer is that subsection (5) provides for the determination of the rent on a new tenancy on the basis of the open market, "Rent" is defined in section 8(1) of the Agriculture Holdings Act 1948. I mentioned in my speech that determination of rent would be made on that basis". [Official Report, Commons, 8/4/76; col. 1172.]

Clearly the Government are seeking to make a major fundamental change in the law relating to rent. I appreciate that the words "open market rent" have been replaced by a new formula, but this is not a sufficient reason to change the law. On first review I realise that Clauses 3 and 4 of the Bill will apply, but they should not apply on succession. I beg to move.

Lord Belstead

My Lords, I am sorry to have to disagree with my noble friend on this, because on so many aspects of this Bill we are in agreement. Basically, rent arbitrations on succession under the 1976 Act have always been treated the same as rent arbitrations for sitting tenants. My noble friend, of course, is quite right in saying that basis was the open market rent; but now that we are changing the rent formula from open market to the prudent and willing landlord and tenant formula, together with all relevant factors, the four particularly relevant factors and the consideration of comparables, which are all in the rent formula now in Clause 1, we really do have, in order to be consistent, to deal with rent arbitrations for sitting tenants in the same way as the rent arbitrations now to be set out in Clause 1.

My noble friend's amendment would mean that we should be asking arbitrators on a succession rent to determine what an open market bid might be without any specific reference to relevant factors, let alone any regard being paid to comparables. That would, of course, depart from the formula we have now got in Clause 1, which would mean that we should have two rent formulas for arbitrators to have to live by. I think this would be highly undesirable. I know that my noble friend does not agree with the conclusion I have reached, but I hope he may feel that my explanation is at least logical. Rent arbitrations on succession under the 1976 Act have been treated the same as rent arbitrations for sitting tenants, and that is what we are still doing.

The Earl of Caithness

My Lords, I am afraid I would query my noble friend's last statement. The evidence I have got clearly shows that when a tenant succeeds and the rent is not mutually agreed it is in most cases agreed between the landlord and the incoming tenant who succeeds by right—he has a right more than anyone else in the market to get hold of that tenancy. The cases that I have looked at clearly show that the arbitrator, if he is called into this situation, which he very seldom is, awards a rent higher than a sitting tenant rent. This is a perfectly good valuation exercise that valuers can undertake. I think we are here changing the law. I appreciate what my noble friend is saying, but I think that a tenant, if he can succeed by right to a tenancy and then have his rent assessed, taking into account appreciable scarcity and comparables, is being given two advantages. I believe that this is against the principle of the law as it stands. It is to be regretted and is totally inequitable.

On Question, amendment to the amendment negatived.

On Question, Amendment No. 74 agreed to.

The Earl of Caithness moved Amendment No. 80:

Page 27, line 30, at end insert— (" ( ) for the words "The Lord Chancellor may by order provide" there shall be substituted the words "The Lord Chancellor shall by order provide" ")

The noble Earl said: My Lords, this is rather a sledgehammer of an amendment which is intended to crack a very small nut. The Ministry and working party agreed in Recommendation 103/1 that, when a tenant has served a notice requiring arbitration upon the reasons stated in the notice to quit, the tenant, if he wishes to pursue the matter, must ensure that the arbitrator be appointed within three months. The Lord Chancellor had already issued Statutory Instrument No. 257 in 1978—Agricultural Holdings (Arbitration Notices)—under Section 5 of the Agricultural Holdings (Notices to Quit) Act 1977, which regulates arbitration procedures at this point. However, the Bill, in paragraph 42 of Schedule 1, does no more than enable the Lord Chancellor to amend the regulations, and makes no mention of the working party's recommendation of three months. Therefore, I ask my noble friend the Minister these questions. Can we put the working party's recommendation into the legislation? If we cannot, will he give me an undertaking that he will amend the statutory instrument and will do so between the passing of this Bill and the commencement thereof? My Lords, I beg to move.

Lord Belstead

I am sorry, my Lords. But I find it a little difficult to follow my noble friend on this amendment, because the statutory instrument which my noble friend talks about, giving the Lord Chancellor the enabling power to make certain provisions, has, so far as I know, been acted upon by my noble and learned friend and by my noble and learned friend's predecessors with one exception, and one only; that is, the power relating to sub-tenants. Therefore, unless my noble friend has a particular point which is worrying him about sub-tenants, I think that the Lord Chancellor has all the power that he needs and has, in fact, used it.

The Earl of Caithness

My Lords, I think that there may be a misunderstanding between my noble friend and myself. I said that the amendment was a sledgehammer to crack a nut. I was referring only to the specific issue of the working party's Recommendation No. 103/1. It was that point that I tried to get across, rather than go through the whole of the statutory instrument. I am afraid that, in that sense, the amendment was badly drafted. But perhaps it will be opportune for me to withdraw this amendment and talk to my noble friend about it between now and Third Reading. My Lords, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10.17 p.m.

Lord Belstead moved Amendment No. 81:

[Printed earlier: col. 1086.]

The noble Lord said: My Lords, this amendment is consequential on Amendment No. 30. My Lords, I beg to move.

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 82:

[Printed earlier: col. 1087.]

The noble Lord said: My Lords, this amendment, all nine pages of it, is consequential on Amendment No. 31. My Lords, I beg to move.

Lord Sandys

My Lords, I wonder whether I may raise a number of points with my noble friend on the new schedule. It will probably be for the convenience of my noble friend and of the House if I list a series of questions, to which I do not expect my noble friend to reply at any length now. First, I would refer my noble friend to the meaning of paragraph 2(1)(b) and ask him this question. If one brother fails, is the second brother or a close relative who is an applicant thereby unable to make a fresh application? The second question relates to paragraph 2(1)(c)(ii). Does this mean that, if there have already been two successions under the 1976 Act, there cannot be a further one on retirement?

I am sorry to weary your Lordships, but these are important matters on a whole new schedule. I wonder whether, with your Lordships' permission, I may pursue one point. In paragraph 7(1), there appears to be a mistake in the drafting. Where the tenant gives a retirement notice and then dies before the relevant time, it seems that the Government have overlooked the fact that applications have not been heard before the time has expired. The Government have assumed that any application will be heard before the terminal date, but, in the experience of certain professional bodies, where the application has not been disposed of before the relevant time there is considerable difficulty. I fear that this is a somewhat lengthy explanation, but these are important matters.

Lord Belstead

My Lords, I do not think that I can answer all my noble friend's questions, and I must apologise to him for the fact that he may have bowled me out. However, as to his question concerning whether the second brother can apply on death, the answer is, no, there cannot be a further application on death. I shall have to write to my noble friend on the first two questions he asked me.

This is a highly detailed schedule which puts into effect the agreement on voluntary retirement which was reached between the NFU and the CLA. We moved through it when we dealt with Amendment No. 31. I am perhaps guilty of not looking forward and realising that my noble friend would give mature thought to it and come up with some difficult questions, as he now has. I do not believe that the questions should cause any particular problems. I wish I now had the answers to the other two questions which my noble friend asked me. Because I do not, I should be grateful if my noble friend Lord Sandys would allow me to write to him so that we can move Amendment No. 82 into the Bill.

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 83: Transpose Schedule (Statutory succession by person nominated by retiring tenant) to after Schedule (Minor amendments with respect to statutory succession).

The noble Lord said: My Lords, this amendment relates to Amendment No. 81. I beg to move.

On Question, amendment agreed to.

Schedule 3 [Transitional provisions and savings]:

Lord Sandford moved Amendment No. 84:

[Printed earlier: col. 1105.]

The noble Lord said: My Lords, on behalf of my two noble friends I beg to move Amendment No. 84. At the same time I wish to speak to Amendments Nos. 85 and 86. If the House agrees, perhaps we might take the amendments en bloc.

[Amendment No. 85: Printed earlier; col. 1105.]

[Amendment No. 86: Printed earlier; col. 1105.]

I spoke to all three amendments in the course of speaking to Amendment No. 35, which dealt with conservation. I have no more to say about the matter, except that the House might care to know that my noble friend on the Front Bench and I have agreed to meet on Thursday of this week to take further the extension of this concept to cover cases where management agreements refer not to conservation but to diversification on a farm. It is a matter upon which I hope we shall have made good enough progress by Thursday to have something to offer to my noble friend. Whether it will be in time for an amendment at Third Reading, or something that has to be pursued in the other place, remains to be seen. I thought the House would like to know that we are making progress. I beg to move Amendments Nos. 84, 85 and 86.

Lord Belstead

My Lords, on behalf of the Government I would simply respond to my noble friend on these three amendments by saying that, as he knows, the Government very much welcome these amendments, which complete the package of amendments which he started, together with his noble friends, by moving Amendment No. 35.

Lord Sandford

My Lords, as I was unable to be present last week when this group of amendments was taken, may I add my thanks to my noble friend Lord Belstead for the co-operative way in which the whole subject has been dealt with, and for the Government's very welcome acceptance of the projects.

Lord Bishopston

My Lords, may I add that, further to what was said in the last meeting of the House on Report stage, the noble Lord, Lord Sandford, has raised various points in regard to conservation. We recognise that conservation is of very great importance—as is good husbandry. I pointed out at the time that matters raised in the amendments proposed then, as in the amendments before the House now, were of very great importance.

I thought that on previous occasions the House had been a little dissatisfied in a way with the apparent lack of enthusiasm of the Minister with regard to conservation aspects. We recognise that, rightly, the Ministry require in the interest of good husbandry that certain constraints are exercised. That has some effect on the way in which land is used. One has in mind the tendency towards working larger holdings and the less profitable aspects which are sometimes necessary in the interests of conservation.

I rise only to say that while one is always pleased about the further discussions which are being held with the noble Lord, Lord Sandford, and others, and with the Minister, I hope that in the light of the fact that we are reaching the end of this Bill, and there is only one further stage before that point is reached, we shall be satisfied that all the safeguards we have been seeking will be realised and that the constraints placed on the industry will be accepted by those involved without any undue loss in terms of viability. These are very important aspects.

Basically, it is a matter of realising that conservation is not an extra. I have dealt with this point before, but it needs stressing. It is not an extra to be brought in as far as possible but is an integral part of good husbandry. One hopes that the Bill in its final stages will reflect that to the satisfaction of all those who, quite rightly, have been making representations on these important aspects.

On Question, amendments agreed to.

The Earl of Caithness moved Amendment No. 87: Page 32, line 38, leave out ("applies") and insert ("shall not apply")

The noble Earl said: My Lords, with the leave of the House, in moving this amendment, I should like to speak to Amendment No. 88 as well, because the two hang together. Amendment No. 88: Page 32, line 40, leave out from ("Act") to end of line and insert ("; where such applications are made after the commencement of this Act the continuous three year period shall apply up to the date of that application.") It is really a question of trying to incorporate into Schedule 3, and make it workable in the transitional period, the word "continuous", which it has already been agreed should be added in paragraph 34 on page 26 of the Bill. As presently worded, I found paragraph 15 of Schedule 3 very difficult to understand. I believe I have the gist of it, but these amendments would put it forward in slightly different language. I beg to move.

Lord Belstead

My Lords, Schedule 4 of the Agriculture Act 1958 gives power to the Agricultural Land Tribunal to direct a landlord to provide or repair fixed equipment needed by a tenant to carry out an agricultural activity so that he can comply with relevant statutory requirements. The proviso to Section 4(1) restricts this power when the activity in question has not been carried out on the holding for a period of at least three years immediately preceding the making of the application". As the law stands, it is not clear whether this means continuously throughout the period or at any time in that period. The purpose of paragraph 34 in Schedule I of the Bill is to clarify the law by inserting in the proviso to Section 4(1) the word "continuously".

If I may, I will suggest to my noble friend that, as this is a matter of clarification and not a change in the law, it has been considered appropriate to provide in Schedule 3 a transitional provision which has the effect of making paragraph 34 bite on applications both before and after the commencement of the Bill. I would not have thought there was a reason to change that. I hope that my noble friend will feel that his amendment is not necessary.

The Earl of Caithness

My Lords, I will read with care what my noble friend says. I think he is right and I am wrong, which is more often than not the case on this Bill. I am very grateful for the considerable help he has given me. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 88 not moved.]

House adjourned at twenty-nine minutes before eleven o'clock.