Agriculture Bill

HL Deb 16 June 1986 vol 476 cc592-654

2.51 p.m.

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

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

Moved, That the House do now again resolve itself into Committee.—(Lord Belstead.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Lord Belstead

Before my noble friend Lord Middleton moves Amendment No. 26, let me say that I wish to suggest that consideration of two government amendments be postponed to places later than those shown on the Second Marshalled List, which has been prepared for us today. That is because I think it would be convenient for the Committee to consider milk quotas in England and Wales before those in Scotland.

I apprehend that most of the debate on the first amendment will be on milk quotas in England and Wales, and perhaps it would lead to a logical train of thought if we kept to that.

If the Committee agrees—and this would have been more or less the sequence of events had we kept to the Marshalled List of last Thursday—it will mean that Amendment No. 40, a new clause concerning milk quotas in Scotland, will be debated immediately before Amendment No. 41, on page 17 of the Second Marshalled List, and Amendment No. 39, a new schedule which depends on the new clause, Amendment No. 40, will come after Amendment No. 75.

Lord John-Mackie

The noble Lord has spoken to me about this. We are perfectly agreeable to this suggestion, and I think that it is sensible.

Clause 11 [Compensation to outgoing tenants for milk quota]:

Lord Middleton moved Amendment No. 26: Leave out Clause 11 and insert the following new clause:

("Compensation for milk quota

( ) After subsection 70(1) of the Agricultural Holdings Act 1986 (Compensation for special system of farming) there shall be inserted the following subsections— (1A) Where the adoption by the tenant of an agricultural holding (or by an assignor of the tenancy to the tenant where the assignment occurred after 2nd April 1984) of a system of dairy farming has increased the value of the holding as a holding, having regard to the character and situation of the holding and the average requirements of tenants reasonably skilled in husbandry, by reason of the amount of milk quota allocated to him and registered as his in relation to the holding, the tenant shall be entitled on quitting the holding on the termination of the tenancy, to obtain from the landlord compensation of an amount equal to the increase. (1B) Where by virtue of a transaction the cost of which was borne wholly or partly by the tenant of the holding (or by an assignor of the tenancy to the tenant where the assignment occurred after 2nd April 1984) some or all of the milk quota allocated to the tenant and registered as his in relation to the holding was obtained by the tenant, the tenant shall be entitled on quitting the holding on the termination of the tenancy, to obtain from the landlord compensation in respect of the milk quota so obtained equal to the increase in the value of the holding as a holding attributable to such milk quota. (1C) Subsections (2)(b) and (3) of this section (a record of condition to be a condition precedent for compensation) shall not apply to compensation provided for by subsections (1A) and (1B).

( ) At the end of section 70(4) of the Agricultural Holdings Act 1986 there shall be inserted the words "or milk quota".")

The noble Lord said: We now come to the clause which provides for compensation to an outgoing farm tenant who leaves on the farm a quota for the production of milk. I think that the Committee should examine this clause and Schedule 1 carefully for three reasons. The first is that this clause was not scrutinised in Committee in another place. The reason for that is that the proposal to compensate for milk quotas caused division and dissension within the industry, and the Minister spent several months trying to reach agreement on how to do it. He did not get agreement. This clause and its schedule were introduced at the final stage of the Bill's passage through the Commons.

Surely it was to his credit that the Minister of Agriculture tried so hard to find an acceptable solution. But if there are Members of the Committee who wonder whether it is worth while causing alarm and despondency and upsetting so many farmers and so many organisations for a measure that is peripheral to the real and urgent problems of agriculture in the community, they may be forgiven. This clause will do nothing to curb over-production of milk, and nor will it remove one ounce from any butter mountain.

The second reason is that I think we should be wary of legislation that might affect adversely our landlord and tenant system in agriculture. The lessons of 1976 were learnt the hard way. We laboured for many long hours both in and out of your Lordships' House over the Agricultural Holdings Act 1984, which was designed to limit the damage of the 1976 legislation, and no one knows that better than my noble friend Lord Belstead and I. The benefits of the landlord and tenant system, especially for young entrants into the industry, were clearly spelt out in a report by the noble Lord, Lord Northfield, which was commissioned by the Labour Government and published in 1979. The system is a tender plant, and it is a valuable one. It is in decline. There are those who say that this controversial decision will damage it yet further.

The third reason why I think that we should give this matter particular attention is that we may well see—and I should deplore it—quotas introduced by the European Commission for other commodities; wheat, for instance. The way that we legislate, if we have to, for tenants' compensation for milk quotas must set a pattern. If it is the wrong pattern we shall regret it; the industry will be torn by yet more wrangling.

Clause 11 and Schedule 1 were criticised on all sides of your Lordships' House at Second Reading. Indeed, not one noble Lord who followed my noble friend Lord Belstead in his introduction had anything good to say about it at all. The chief criticism of Schedule 1 was its complexity. In trying to produce a formula that would cover all cases, when every farm and every dairy business is different and when the respective inputs of landlord and tenant are infinitely variable, the Government have given us an 11-page schedule which is exceedingly difficult to understand. If the Committee were to approve Amendment No. 39, which would introduce a formula appropriate to Scotland, that would add another 11 pages for the lawyers and the valuers to sort out at the farmers' expense.

It is doubtful, too, whether the compensation sums that would emerge after applying that formula would be fair. Certainly the NFU did not think so. In its Second Reading brief to peers, a copy of which I received, it said: Schedule 1 would lead to some very illogical and inequitable results". I have to say that the amendment of my noble friend Lord Stanley, Amendment No. 31, would in my view exacerbate the situation. I have seen calculations where quite small variations in the figures that are fed in at one end produce huge variations in the tenant's share of the farm quota at the other end—sums ranging from 20 per cent. to 60 per cent. as being the tenant's percentage where the size of the herd has been constant.

The Government have gone to immense trouble to try to produce a system acceptable to the farming industry and the professions, but they seem to have satisfied no one. The NFU wants to change it; the CLA is deeply unhappy; the Scottish Landowners Federation is incensed; and even the Royal Institution of Chartered Surveyors, which did a lot of work on producing the formula, does not think that the Government have it right. The Milk Marketing Board, in its brief to peers, says: The mechanism proposed is complicated and is in our view incapable of providing outgoing tenants with a fair deal". I have just received a recent brief from the board which shows that it does not particularly like my solution, and nor does it like the Government's. Perhaps it is still sorting out its ideas.

The chairman of the Royal Association of British Dairy Farmers has written to the farming press a letter, part of which I shall quote because it sums up well the difficulty which we are in and why I am attempting by these amendments to solve it. The chairman states: The Royal Association of British Dairy Farmers believes most strongly that ministerial legislation based on percentages is neither necessary not desirable. It can only lead to extreme unfairness to one side or the other. Milk producers, whether landowners or tenants, having suffered two years of uncertainty and bewilderment following the imposition of milk quotas are deeply concerned as to where matters now stand. Tenant producers are embittered because impending legislation would appear to be bad news for them. From the many calls from members it has become clear that most are tired of and disgruntled at the never ending problems relating to quotas. Indecision and arguing must cease and common sense prevail … Practically every case relating to quota rights is different. If any agreement is to be achieved, it must be decided between landlords and tenants themselves or their respective agents and based on tenant right. If they cannot agree, the matter should go to arbitration".

That is what my amendment seeks to do. We start from what I believe is common ground: first, that a milk quota is attached to the land, and, secondly, that where a tenant by virtue of his hard work, efficiency and investment leaves a farm with a milk quota such that it has enhanced the value of the holding, he should be compensated.

From that base—what I call a common base—the Government have pursued a road which in my view ignores two important guidelines which were laid down in the old 1948 legislation and which have so well stood the test of time. The first is that any outgoing tenant should be compensated according to statutory provision, which is based on a sound principle of compensation, and, secondly that provision should be readily comprehensible. Schedule 1 is neither.

If we are to provide for end-of-tenancy compensation for milk quotas, it must be in a way that has regard to the well-established compensation provisions which were laid down in the Agricultural Holdings Act 1948. The provision must be laid down in a way which is simple to understand and operate. It will give much more scope for valuers to exercise and apply their deep knowledge of farming conditions and values in their own localities. In seeking how to achieve that my mind went back to Section 56 of the 1948 Act which is now Section 70 of the consolidated Agricultural Holdings Act 1986. That section provides for compensation to the outgoing tenant where he has adopted a special system of farming beneficial to the holding. The measure of compensation under Section 70 is an amount equal to the increase in the value of the holding due to the tenant's system for farming. That is the same measure of compensation as for a tenant's long-term improvements.

Amendment No. 26 uses Section 70 and adds into it a provision for compensation to a tenant who has carried on a system of dairy farming which has increased the value of the holding by reason of the amount of milk quota he leaves attached to the holding. My amendment is less stringent—I should like to emphasise this—than the high farming Section 70(1). That high farming provision limited compensation to where a tenant has either adopted a farming system more beneficial to the holding than is required by his tenancy agreement or more beneficial than systems normally practised. The high farming compensation could be made only to the exceptional tenant.

The new subsection in my amendment says merely that the tenant, has increased the value of the holding as a holding, having regard to the character and situation of the holding and the average requirements of tenants reasonably skilled in husbandry". That increase is due to the quantity of milk quota that he leaves behind him.

My amendment also caters for the tenant who has bought some or all of the milk quota that he leaves behind. It excludes the requirement for a record of condition which applied to compensation for high farming because that would be inappropriate to a claim for milk quota.

Finally, Amendment No. 26 brings milk quota into the subsection of Section 70 which excludes double compensation for improvements, and arbitration is then provided for by Section 83.

I shall say just a word about improvements because that has worried people. Where a tenant has carried out improvements such as putting up a cattle shed he will be compensated under the usual provisions of the 1986 Act. Where, however, the tenant right value of the improvement has been written off by a form of agreement between landlord and tenant—that is common—the fact that the tenant's buildings or improvements are on the holding, and have contributed to the size of the milk quota, will be taken into account in assessing the increased value of the holding.

The amendment removes Schedule 1 lock, stock and barrel, and it deals with milk quota in the same way that end-of-tenancy compensation has always been dealt with. As I have said, the measure of compensation due to the outgoing tenant will be an amount equal to the increase in the value of the holding. It will be up to the respective parties' valuers to assess that value. That is what they are trained to do. I thought that it was extremely important to ensure that the professions could work the system in practice. I am told that the new clause would be workable by valuers, and so with that knowledge I beg to move that this very much simpler measure of compensation be adopted.

Lord Walston

I put my name in support of the amendment moved by the noble Lord, Lord Middleton, not because I thought it was the final answer to this complicated question but because it gives the Committee an opportunity to discuss still further something which is of great importance. I put my name to the amendment also because it appeared to me to be a great improvement—I admit that that is faint praise—on the wording of the Bill as it was presented to us on Second Reading when, as the noble Lord, Lord Middleton, rightly reminded us, not one noble Lord other than the Minister spoke in favour of the clause.

It is a complex matter and one to which I have given a great deal of thought, as I am sure have many Members of the Committee. The difficulty arises because of the imposition or introduction by Brussels of quotas for milk production. It is worth reminding ourselves that this is an indication of the complexities which follow when actions such as the milk quota are taken. I hope that it will be a lesson and a warning to those who advocate future individual farm quotas. I stress "individual" because that is a different matter from the global or national quantum which we have discussed on many occasions.

We have heard a great deal about milk quotas. Most of the comments have been adverse. The ones we heard originally were those of aggrieved farmers whose quota was lower than they thought it should have been. We now have a position where the quota has created a value for those fortunate enough to own one in the same way as in the old days the hop quota created an artificial supplementary value for land on which one was entitled to grow hops.

The question we now have to decide is how that extra value, whether we think it justified or not, should be divided as between landlord and tenant. To my mind, neither of them has any right to it. Neither has done anything to create that value. It is a gift, not from God but from Brussels. It should perhaps in equity be returned to Brussels or returned to some other good cause. But that is clearly not very practical. Therefore in principle it seems to me right, as neither of them has done anything to create this basic quota, that it should be divided equally between them—a form of judgment of Solomon, if you like.

In default of any other argument, the value arising as a result of the quota that belongs to the farm, the farmer, the landlord—whichever way you like to put it—should be divided equally at the end of the tenancy between the farmer and the landlord. It is then open to either of those two parties to put forward a case claiming that the quota is larger than it would otherwise have been from some particular action that they themselves have carried out—by the landlord in terms of buildings, irrigation and drainage and by the tenant through good farming, improved grassland or various other things that the tenant may have done.

Those matters can be argued out by the valuer. This amendment at least lays the groundwork for that type of arbitration. What it does not do and what I am suggesting might well be incorporated at a later stage is that, in default of any such arguments and decisions about the extra value that has accrued, the division should simply be down the middle, with half to the landlord and half to the tenant. Thereafter the argument takes place, as outlined in the amendment, on how much of the extra value that has been created should go to the landlord and how much should go to the tenant.

I hope that the Minister will be able to say that this is something he is prepared to consider and that we can return to it at Report stage. I do not pretend—I repeat this—that the amendment is the last word in solving the problem. It is only the first step towards it. I suggest, however, with the greatest respect, that it is a considerable improvement on the Government's enormously complex scheme and even, I am sorry to say, on the scheme of the noble Lord, Lord Stanley, which, while not being quite so lengthy, still carries with it a fair degree of complexity.

3.15 p.m.

Lord Stanley of Alderley

I can agree with my noble friend Lord Middleton in his opening remarks that we need to give this matter some considerable thought. But that is where any agreement with my noble friend ends. If my noble friend on the Front Bench believes that he can pick up the sword of Solomon and cut the baby in half between us, I feel so strongly against my noble friend's amendment that I shall let him cut the baby. There is one point on which I would agree with my noble friend Lord Middleton. It is that his method of dealing with milk quotas appears simpler than Schedule 1—simpler for the landlord but simply horrendous for the tenant. I shall explain why within, I hope, two minutes.

This amendment requires a tenant to have achieved a certain level of quota on his holding, a level that a tenant reasonably skilled in husbandry should have achieved. Unless a tenant achieves that level, he will get no compensation at all for that part of the quota. In effect, the vast majority of tenants, who are reasonably skilled in husbandry and who would not be in the job if they were not, because they would have gone broke, will get absolutely nothing from my noble friend's amendment. Only those who are exceptional will receive any compensation at all. They will get very little indeed, as I shall show in a moment by giving some figures. Believe it or not, they will get far less than even the Government's Schedule 1 gives them. My noble friend Lord Belstead knows that tenants, the National Farmers' Union, the Tenant Farmers' Association and the Milk Marketing Board consider his amendment to be well under par, if I may put it that way.

I shall put figures to my noble friend's amendment to show how the value of quota might be apportioned between landlord and tenant compared to the Government's Schedule 1. I shall use the same method as that produced by the Milk Marketing Board, which in a brief that most Members of the Committee will have received criticised the Government's Schedule 1 as being unfair to producers. Assuming that the Minister prescribes 4,500 litres as standard yield per cow—that is, incidentally, in my terms, 1,000 gallons, which is quite a high yield, or was so in my day—the proportion of that quota available for the great majority of tenants will follow the pattern that I now give.

A tenant producing 4,500 litres having 10 per cent. of rental value gets 10 per cent. in the Government's scheme. He gets nil under my noble friend's scheme. A tenant who had 20 per cent. of the rental value would get 20 per cent. under the Government's scheme. Believe it or not, he gets nil under my noble friend's scheme. If the tenant was an exceptional producer and had a yield of 5,500 litres, his proportion under the Government's scheme would move up to 26 per cent. and 35 per cent. respectively. Under my noble friend's amendment, he might get a measly 18 per cent.

The figures on different yields are in similar proportion to those in my example. The exceptional tenant who produces, say, over 6,500 litres gets up to 31 per cent. in my noble friend's scheme whereas under the Government's scheme, which I complain about as measly, he would get 58 per cent. There are not many tenants producing an average yield of 6,500 litres. I am not sure that we want them to do so because we have, I believe, a surplus. But maybe I am wrong. I hope that I have explained one reason why this amendment seems to me to be a terrible one; as it does to the National Farmers' Union, the Milk Marketing Board and, believe it or not, the Tenant Farmers' Association, as well as to any producer or tenant or any Member of the Committee who considers that the tenant should be fairly treated. I would remind the Committee that there was not one single voice at Second Reading against fair compensation for the tenant. I include in that remark my noble friend Lord Middleton and, of course, my noble friend Lord Belstead.

I hope that I have made clear beyond any shadow of doubt that I am totally, completely and utterly against my noble friend's method. It is totally unacceptable not just to me but to all organisations putting forward the tenant's case. I have to tell my noble friend Lord Belstead that much as I always want to give him the chance to show his well-known expertise for compromise and his great skill—I say this with great feeling—in getting parties together, I can give him nothing. I can only remind my noble friend of the statement made during the Agricultural Holdings Bill when he turned down an amendment proposed by my late kinsman Lord Howard, I think it was, and said that if he accepted the amendment the noble Lord, Lord John-Mackie, the noble Lord, Lord Mackie of Benshie, and his noble friend would go through the roof. I do not know what state of elevation the noble brothers Mackie are in at the moment. I can assure the Committee that I am bumping against the ceiling. This time, there is not even a wooden partition; so I am that much higher.

I was going to say some fairly unpleasant things to the noble Lord, Lord Walston. But I was absolutely staggered when he brought up the scheme. I would say to him that if he is looking for a 50–50 split, I shall support him. I would remind him that this amendment was put forward in another place, was divided on and, sadly, was defeated. I hope that I have made it crystal clear that any one of your Lordships who supports this amendment will get the kiss of death so far as giving a fair deal to tenants is concerned.

Lord Mackie of Benshie

I was originally very attracted by the thought of simple arbitration. I must be a little kinder to the noble Lord, Lord Middleton, than his noble friends are. He has done a tremendous amount of work on this, and basically the idea is infinitely preferable to the 12 pages—or is it 16?—of amendments between the two countries which are difficult to understand, though, like the curate's egg, I understand them in part.

However, the snag about the amendment of the noble Lord, Lord Middleton, is that it lays down that compensation will be based on the average farmer's skill in production. Where did this manna from heaven come from? It came from the EC. But it was not manna for the people who were producing the milk; it was a bitter blow to the farmers. Many of them had invested a lot of money. Many of them were in debt and suddenly their production was cut back against rising expenditure. It hit an enormous number of milk producers extraordinarily badly. The extraordinary thing was that the landlord—who was not hit at all, who still had his rent—suddenly found that against a falling market the value of dairy farms with their quota rose by a considerable amount. It was an extraordinary phenomenon. The chap who produced the milk was hit badly; the landlord suddenly found the value of the farm rising.

When it comes to assessing where this manna from heaven should go noble Lords in this Chamber are agreed that there is obviously a case for sharing it. The Government have produced a very complex scheme which I think is very unfair. I think that the people who have been hit very hard are the tenants, and if we are looking at the raised value, they should get a very considerable share of it, to put it mildly. This amendment does not do that, unfortunately. The average farmer who has been dairying may well have put up buildings, but may well have a clause in his lease which says that no compensation will be paid for the buildings which he has put up. I know a considerable number of leases like that. That the manna from heaven should go almost entirely to the landlord I do not think is right. I do not think that is equitable. That is what this amendment in its present form proposes.

One then has the case—in, for instance, the west of Scotland, a traditional dairying area, with some good and rich landlords who have done up farms which are let as dairy farms—where the buildings are all provided. In that case the tenant has done little or nothing towards the quota and it might be quite right that he should get none of it. I would accept that. There is again no provision for this kind of situation in either the Government's scheme or this one. That is why I am afraid that I must be against this amendment. If it were differently based, it would be very much simpler. However, as the provision stands it must be wrong that the tenants, who have already been hard hit—with the average tenant producing the average amount of milk; and dairying is not a nice job, anyhow—should get nothing. Much as I sympathise and much as I admire the work that the noble Lord, Lord Middleton, has done, I must be against the amendment in its present form.

Lord Burton

I must declare an interest. I am a joint tenant of a large dairy farm in England. Last Tuesday I attended the Scottish Landowners' Federation Council—quite a large body with many farmers on it—and milk quotas were discussed. The council made a unanimous decision to oppose the proposals that landowners should pay tenants on waygoing what is currently a hypothetical sum for the quotas which cost the tenants nothing. Apart from anything else it is retrospective legislation for existing leases.

These amendments were inserted in the Bill at such a late stage that Members of another place had less than a week to consider the English and Welsh clause before Report and therefore no proper chance of consultation nor debate. They never even saw the Scottish proposals, which were received only last Thursday, giving us no chance whatsoever to have consultations. This is a typical example of the way that Scotland is treated, and we have been left on the sidelines all along while discussions have gone on in England on these amendments. Now at very short notice we are presented with a six page amendment—complicated, contentious and yet of extreme importance to agriculture. Today is the first day of the Royal Highland Show. The president of the Scottish Landowners' Federation, my noble friend the Duke of Atholl, has therefore no option but to be in Edinburgh. He wanted to speak on this. No doubt there will be other noble Lords from Scotland who will have prior engagements there. It has therefore fallen upon me to make the strongest possible protest against these proposals. We feel that this is no way to treat Parliament, agriculture, nor the large part of Britain called Scotland.

The Bill is not even now complete. We are to have an order to follow. I understand that it is a negative order which it will not be possible even to debate. Surely we should have an affirmative order on this very important matter. As a result we have no idea as to what the potential liabilities are to be, but for even small farms a landlord may well have to find £50,000 or more. I think that the noble Lord, Lord Mackie of Benshie, at Second Reading, suggested a sum of £54,000 for a 60-cow herd, which, after all, is not all that large a herd.

These amendments have been brought forward because it is contended that the milk quotas have a value as they can be bought, sold or leased. That is the case for an owner-occupier but not for the tenant farmer. The tenant could possibily lease his quota—and I understand that the Ministry of Agriculture is permitting this—but as it is attached to the land he would probably be contravening his lease by subletting. However, as it is attached to the land he clearly cannot sell as the land does not belong to him. How therefore can the quota be considered to have a value for the tenant? There has been a lot of talk about the tenant's hard work, but farming is hard work, and the Agricultural Holdings Acts make provisions that the farms let must be properly worked. Furthermore, these proposals are to give the tenant very large sums of money for something for which he had paid nothing. Furthermore, it is paying for something of a temporary nature which may cease to exist in a few years. What happens if there is a further cut in quotas, let alone the abolition of quotas?

There is also the probability that if this legislation is passed, it could become a precedent for quotas on other commodities thereby raising the landlords' liabilities to what could be astronomical figures. In another place the Minister maintained that these payments would normally be passed on to an incoming tenant. Where is a young farmer to raise this money? If I were a bank manager, I would certainly refer to head office if a young man came to see me with this proposal; I would not make the decision. How could one possibly grant a loan to a tenant on a quota, knowing full well that the quota was not a saleable commodity? It is not a valid item to set against an overdraft. Is the Minister correct in saying that these payments would normally be passed on to a tenant? A farm with vacant possession could well fetch twice as much as a farm with a sitting tenant, and the owner could well wish to sell the farm if it became vacant.

I wonder whether we need to go on with this debate? What is now being proposed is not what stands under the existing Agriculture Act. I should have thought, in view of what I have already said, that the Government amendments should be withdrawn. If the Minister is not prepared to do so, then I must present him with more reasons which show why the Scottish Landowners' Federation is right, and that the Minister has been hoodwinked by the NFU and the Tenant Farmers' Association, some of the senior ranks of which are no doubt looking for lovely golden handshakes.

There will be cases where farms are not let as dairy farms but where the tenants with their freedom of cropping, have produced milk from them. The landlords may not feel that They are suitable units to produce milk, and they may well be right. Yet they will be obliged to pay for something which they do not want, and they may well have to pay very heavily.

There is considerable doubt as to whether a landlord could legally compel an incoming tenant to take over the quota. The new tenant may want some different type of farming and he may not want the quota. Will the Minister clarify whether or not quotas are to be classified as improvements under Parts I, II or III? Will they be like unexpired manures which the tenant is bound to take over? Will the improvements used to compile the tenant's fraction be those qualifying under the Agricultural Holdings Act, or will they be just any erections on the holding? If the latter, there could be substantial extra valuations required.

The whole concept of payments for quotas is unsound. I need scarcely tell my noble friend the Minister that the Government have no friends from the farming community over these proposals. Indeed, they have been attacked from all sides including several of their own party in another place. As my noble friend Lord Middleton said, not one voice was raised in favour of the Government's proposals in this House at Second Reading. The Government's idea is bad for British agriculture. I wonder how many dairy farmers are likely to retire each year? I understand that there are 37,000 producers in England and Wales, 40 per cent. of whom are tenants. There are more in Scotland, and there has been no mention of Northern Ireland.

However, assuming that there are 500 retirals at £50,000 each, it means that £50 million a year will go out of agriculture. On top of that, there will be very large legal and valuation fees to sort out the complicated mess. The Minister in another place confirmed that those payments would be subject to capital gains tax. Therefore, even the outgoing tenant will lose a large amount of what the landlord has paid him. I wonder whether VAT will also be due? A recent visit to my bank manager confirmed that agriculture in my part of the world can ill-afford to lose this type of money. He confirmed that overdrafts were very high—dangerously high—and he feared that many farmers were near bankruptcy.

However, perhaps the most damaging aspect of all is that landlords will think even more carefully before letting a farm. There are already many deterrents, such as the refusal of the Government to consider the management of tenanted land to be taxed as a business, and there is the threat of inherited tenancies. If this Sword of Damocles were also to hang over one as well, I think that one could say goodbye to tenant farming.

I am sure that when my noble friend has pondered these matters carefully he will withdraw the whole idea. If he cannot do so, then the orders needed to ascertain values must be published this week so that we shall know where we stand on Report. As I said earlier, we still do not know what we shall have to pay.

Regarding the amendment of my noble friend Lord Middleton, if the whole concept of payment for quotas is not wrong, then he has put forward an eminently sensible proposal. His proposal is simple, unlike that of the Government. His proposal is easily computed by a valuator, unlike the Government's proposal. It is not subject to dispute and legal difficulties, unlike the Government's proposal. It ties in with the existing principle reiterated by the Minister in another place who said that what tenants expect at the end of the tenancy is to be paid for improvements. Again, that is unlike the Government's proposal.

If the SLF did not disagree with the fundamental misconception in paying for quotas, then I could strongly recommend the Committee to accept the amendment. No doubt we shall return to this matter; but today I hope that the Committee will support my noble friend Lord Middleton.

Lord Mottistone

I should like to reduce this debate to a much simpler scale and to talk about the simple individual case of a friend of mine who is a tenant farmer on the Isle of Wight. I understand that in England and Wales—I do not know about Scotland—about half the dairy farmers are tenant farmers. There is no doubt that both the Bill as it stands at present and the amendment of my noble friend Lord Middleton will be extremely harmful to my friend. To use the words of the Milk Marketing Board: He provided a whole dairy unit in a green field site". In the 12 years before what he calls quota day he increased the output of his farm by four and a half times what it was previously. If the noble Lord, Lord Walston, thinks that his share should be equal to that of the landlord who put nothing into the improvements at all—which is the sense of what I thought the noble Lord was saying—then in my view that is quite wrong. It is not for me to go into the detail—

Lord Walston

Perhaps I may put the noble Lord right. I said that if there were no arguments in favour of one side or the other, there should be a 50–50 division. However, if, for instance—as in this case—the tenant could come up with strong arguments showing how much he had increased the quota, then that should be taken into account by the valuer.

Lord Mottistone

As I understand it, the amendment of my noble friend Lord Middleton does not put that right. Therefore, without going into the detail which noble Lords far more expert than I may do, I shall leave the Committee with three particular thoughts.

First, the Bill as it stands does not provide a fair return for tenant farmers such as, for example, my friend and many others. Indeed, that is made particularly clear by the Milk Marketing Board's advice which we all seem to have received. Secondly, matters are made worse by the amendment of my noble friend Lord Middleton which is biased entirely towards the landlord; and no doubt that is why it is welcomed by my noble friend Lord Burton. Thirdly, the amendment which is proposed by the Minister does not sufficiently improve the situation. The amendment, to which I shall be giving my support if all else fails, has been put forward by my noble friend Lord Stanley, and in my view it is the best on the carpet at present, but it is still not good enough. I hope to have the opportunity to speak more on that matter as the various amendments come up.

Lord Burton

Before my noble friend sits down, will he please say how the value has been increased? Under this arrangement the tenant cannot get any value for the quota except when he goes out. At the moment he cannot sell that quota. The quota has no cash value to the tenant even if he went in on a green field site.

Lord Mottistone

As I understand it, the quota is at its present level because of the enormous amount of money and effort which my friend, as the tenant, has put into the farm over some 12 years in order to increase the dairy output of that particular acreage by four and a half times before what he calls quota day. That is a tremendous contribution for which in the long term he should receive some kind of recompense.

The Earl of Onslow

Is it not also true that the landlord could sell the quota over the tenant's head? Quotas are worth a lot of money. They could be sold just like that and the tenant would be landed with a great many cows, a milking parlour and no quota.

Lord Monk Bretton

I should like to say something in support of the amendment put forward by my noble friend. I am very glad that he has tabled it and that the noble Lord, Lord Walston, has supported it. It will not suit everyone; but the tragedy of this business is that in fact it can suit nobody because what we are really talking about is the division of a loss, and nothing else. There is a great deal of talk about windfall profits here and windfall profits there because of quotas; but we are really talking about the division of a loss.

The reason why I am anxious to say something in support of the amendment is that I prefer the tailor-made approach. Circumstances alter cases, and the circumstances of every dairy farm are different. There are going to be difficulties at the fringes, undoubtedly, with the formula that we have seen in Schedule 1 as it now is. Feeding only very slightly altered base figures into that formula creates such major changes that it really is fairly frightening.

One of the few points of agreement we have is that we want some greater flexibility in the remedies we apply, and at least this amendment is an attempt to provide greater flexibility. There has been a lot of unhealthy comment in the press and elsewhere about windfall profits to landlords, but a loss is what we are thinking about, and the division of that. Inevitably there is not so very much cash to go round if the compensation is to come from landlords. Some may not have very great difficulty; some will have great difficulty; some will be able to pass these things on to well-heeled tenants, and in other cases that will be very difficult.

I think it must be stressed that premiums have always been a very bad thing in the farming industry. The industry has never been served well by substantial premiums being taken right out of it. They have always been had news and they can be ill-afforded. It is really for the sake of future farmers coming in that we have to remember that. I do not want to criticise the NFU because I understand the difficulties, but it must consider not only the farmers of today but those of the future.

I should finally like to mention just one case, where the landlord owns only part of a dairy holding and there are no buildings on his part of the holding. The tenant is a neighbouring owner-occupier and the dairy buildings are on his owner-occupied land. What happens there'? It is certainly not going to be a bed of roses on this occasion for the landlord. In fact, it could turn out to be a perfectly miserable affair, even under this much criticised amendment. Though that landlord had no choice in the matter and would not previously have expected it, it appears that now he must pay substantial compensation to the outgoing tenant for the increased value of his land because of the buildings and the business developed on the neighbouring land.

Either that landowner must pay for this himself, in which case he will be able to charge an increased dairying rent if he lets again; or, if he manages to get the tenant to take over the liability for that premium, he will then let merely at the value of the land without the quota. If he were unable to get the tenant to take over the premium and if, nevertheless, it had to be paid to the outgoer, it could well run up, with the depreciating land values, to half the value of the land concerned with vacant possession, and he might very well have to sell. Perhaps in that case the sale of a holding which is in any way fragmented does not matter too much, but what I want to stress is that if this sort of fate befell whole viable dairy farms which might otherwise have been relet, it could indeed be a tragedy.

3.45 p.m.

The Earl of Radnor

I should like very strongly to support my noble friend Lord Middleton and bring down, if necessary, the kiss of death and all sorts of things upon my head; though I should like to remind the Committee of the quotation which the noble Lord, Lord Middleton, made, which came from the president of the Dairy Farmers' Association and seemed to favour his approach to the question rather than many of the other ones that have been produced.

I am not going to speak for very long, but I feel that for once noble Lords have completely missed the point and are committing the same error that Schedule I and the amendments, though not my noble friend's amendment, have committed; in other words, you are going into too much detail, making too many suppositions, anticipating results rather than going back to principles which will last and perhaps set a pattern, as my noble friend said, for other quotas which will inevitably, should they come, involve once more the end of the tenancy and the landlord and the tenant.

The point that I think is being missed is that one cannot have a blanket solution to cover all dairy farmers and all tenants, which is what the schedule, Clause 11 and the amendment want to do, together with all its suppositions and all its guesswork. My noble friend Lord Monk Bretton briefly touched upon this. It seems to me that, as has always been done with matters of the same kind—I appreciate that quotas are in a way totally new—this should be sorted out between the landlord and the tenant, each case being taken as an individual case. It seems that the professionals who would be involved in these kinds of negotiations feel that that would be possible and reasonable to accomplish.

I shall not give examples, but as things are written at the moment I am very worried about the really good dairy farmer who produces very little milk on rather a lot of acres. He exists. There is a very famous farmer, Mr. Rex Patterson, who is known to many noble Lords. I do not think he would have fitted in any way whatsoever into these kinds of blanket arrangements that are being suggested. His cows gave about 650 gallons each, and I think they probably lived on air!

I have nothing further to add. I am not going to go into figures of what might happen, partly because I do not understand a great deal of this and I am quite certain that a lot of people in my part of the world, who are no more stupid than people in other parts of the world, would have a great deal of difficulty in sorting this out or understanding how it had been sorted out before. That in itself is a bad thing. The only suppositions that the noble Lord, Lord Middleton, has had to make are perfectly reasonable ones. There has to be a supposition somewhere or other, but his amendment is straightforward and simple; it adheres to a pattern to which farmers, landlords and their advisers are used, and I think noble Lords should not really look any further at all. If noble Lords go on and on discussing this matter they can only make it worse, as I believe they already have.

Lord John-Mackie

Many years ago I had a talk with the noble Lord, Lord Diamond, a former First Secretary of the Treasury, and asked him why he could not simplify income tax legislation. He said, "Well, if you want to make things fair, they have got to be very complicated. If you make them simple, they become unfair." If this legislation, as the Government have issued it today, is any criterion to go on, it is going to be very fair legislation indeed, because it is the most complicated I have ever had anything to do with in this Chamber and for that matter in the other place as well.

I started by having great sympathy for the noble Lord, Lord Middleton, early in the debate when he was getting little or no support, but it has gathered momentum as the debate has proceeded. I should like to say that the amendment—and I think that the noble Lord, Lord Stanley, and another noble Lord agreed with this—has the great virtue that it gets rid of 10½ pages of Schedule 1 which, as nearly everybody here has said—and I should like the noble Lord, Lord Belstead, to remember this—they cannot understand; nor can I.

I have looked at the amendment, and I have also spoken privately with the noble Lord. There is no guideline for a starting point that is an obvious standard quota that is thought to be fair. I know that the noble Lord made a good case for the centre of the first paragraph of the amendment, but I cannot see that that meets the tenant farmer's real need of a starting point that would be fair, and I cannot support the amendment unless that need can be met.

We are now faced with 10 pages in the Bill, and another 11 to 12 pages about Scotland, making, if I may correct my noble kinsman, I think 21 pages in all. I cannot think that it requires all this complicated legal phraseology to decide the issue. The noble Lord, Lord Burton, and several others made the point—and it is a real point—that really this has arisen because of a value being given to quotas. The noble Lord made the point that dairy farmers had no business taking advantage of that value.

I do not want to be personal, but I think that many landlords—and I am looking along the Bench at his noble friend Lord Lovat; and I look at the Bench here where the noble Viscount, Lord Thurso, sits—have had a lot of benefits from things that have happened outside their ken and with which they had nothing to do. You cannot blame farmers if something is dropped into their lap—I forget what my noble kinsman called it; manna from heaven, or something like that—and that gives more value to their operations. The noble Earl, Lord Onslow, was wrong in saying that the landlord could sell the quota at his will. The quota is tied to the land and he cannot sell it at his will; but that can be settled elsewhere.

So far as one can see, the whole question revolves around the point of how to calculate the starting point, or, as it is put, the standard quota. If this could be agreed, the noble Lord's amendment could well be something with which we could put up, and the aribtration would then be easy. But then I do not think that the amendment settles this point about the starting point.

In another place the Minister, on 17th April, at col. 1046 of Hansard, made the point: The starting point is that for each holding a standard quota will be calculated. That will be done by taking the number of hectares used for dairying on a holding and multiplying it by a standard yield per hectare which will be prescribed later in a statutory instrument. We do not know what the statutory instrument will do or how it is going to work, and until that is settled it is going to be difficult.

On the Second Reading here on 6th May the noble Lord, Lord Belstead, made the point at col. 623 of Hansard: The assessment will be based on the concept of a 'standard quota'. This will normally be calculated by multiplying the number of hectares etc. If the tenant has more than this standard quota, he will receive the full value of the excess. I do not know whether the noble Lord has any more information than we have, but who is going to decide this value? That does not satisfy everybody, but some alterations have been made which no doubt the noble Lord will explain to us today when later we come to his amendment. In his speech he mentioned "full value". A lot of noble Lords, and certainly a lot of farmers, wonder what this value is. Is it per litre? Who decides what value it is? Is it the figure of 17p mentioned in the outgoers' scheme, or is it to be left to the arbiters to decide? We need to know a lot of these things before we can decide on any amendment on this Schedule to the Bill.

The landlord having compensated the outgoing tenant—and the noble Lord, Lord Middleton, made this point—we have to look to the future. This has started off without being thought through on the question of quotas, and we should start to look a little further ahead than just at what the tenant and the landlord are going to share in the meantime. What is going to happen to this compensation after the tenant receives it? What does he do? Does the landlord charge the incoming tenant for it, or what? If he can do that, need he worry what his share is if he is going to charge the incoming tenant, and so on?

There are a host of anomalies that can arise. The Milk Marketing Board has made some calculations which we have all seen—and I have some calculations here as well—which show five examples. With very little difference in the situation other than that two of them have put up buildings and are getting a rental for them, and another has a low stocking per acre, the differences in percentage that these farms are going to get varies from 18 per cent. to 59 per cent. You see the enormous difficulty that there is to be solved before this part of the Bill can be agreed.

It is a pity that the Government put it into the Bill at all. I am not sure whether the Minister would not be wise to take it away, along with his colleague from Scotland (from whom we shall be hearing later) and see whether they can come up with something a good deal simpler than this. As one paper described it, it is a many-headed monster.

Lord Northbourne

I should like briefly but strongly to support the noble Lord, Lord Middleton, in his amendment. I think that everybody in the Committee is agreed that the Bill as proposed is thoroughly unsatisfactory. There is an old adage that hard cases make bad law. I suspect that the converse also is true and that bad law makes hard cases. I listened with fascination to the noble Lord, Lord Stanley of Alderley, and others bringing forward special cases which precisely illustrate the point I am making. Does it not seem better to leave these matters to the valuers' profession? It is a profession to which I have had the honour to belong.

Lord Stanley of Alderley

I was not bringing forward a special case. I was giving the Committee the majority of cases. I could bring special cases on the whole lot and put them in the Library, if the noble Lord wishes.

Lord Northbourne

I would question that the cases that the noble Lord brought forward represent the majority but that is perhaps another question. I should like to think that any profession that has been able over the years to cope with the Agricultural Holdings Act without civil disobedience has the confidence of both sides of the agricultural industry, and could also, with an amendment roughly in the form of the amendment proposed by the noble Lord, Lord Middleton—and some interesting and valid points have been made by the noble Lord, Lord Mackie of Benshie and others—provide a much more satisfactory solution than the solution proposed at the moment by the Government. I shall certainly march behind the noble Lord, Lord Middleton into the Lobby, if it comes to that.

4 p.m.

Lord Belstead

I appreciate the efforts that my noble friend Lord Middleton, together with the noble Lord, Lord Walston, have made in an attempt to find a more simple solution to the question of end of tenancy compensation for milk quotas. However, I have to say that a large number of people in the farming community would not see this particular amendment, apart from the attempt for simplicity, as being fair to the tenant.

I shall say a brief, a general word before I come to the amendment. My noble friend Lord Middleton was critical of Clause 11 and Schedule 1 on one ground: that it will not, as my noble friend said, solve the problems facing us in agriculture at the present time. Perhaps not, but the introduction of milk quotas has created the situation where the possession of a quota is an asset of some value. However, as the law stands because quotas are said by the Community to be linked to the land, when a tenant retires or moves he can have no share of that value whatsoever. Yet the tenant may have worked over many years to build up the level of milk production on which the quota is based.

Therefore, although landlord and tenant have each in their different ways contributed to the quota, unless we do something—and this Bill provides an opportunity—the tenant will receive nothing for the value of the quota when he leaves the land. My noble friend Lord Middleton quite rightly said that despite many months of discussion the National Farmers' Union and the Country Landowners' Association were not able to reach agreement on this problem. That is why my right honourable friend decided that we had to put some proposals into this Bill.

The Committee has with some justice said that Schedule 1 is complicated. But may I venture the remark that the objective of the system set out in Schedule 1 is based on not such a complicated principle. It is based on the concept of having a standard and an excess quota. When we come to Amendment No. 30 (if we do come to Amendment No. 30), I shall endeavour to put some figures before the Committee, but on this amendment all I should say is that standard quota would be basically the sort of amount of milk quota which one would expect to find on a farm calculated per hectare—I have listened to what the noble Lord, Lord Northbourne, has said—hut subject to adjustment by valuers if it were felt that the standard ought to be altered because of the quality of the land or the climatic conditions in a particular case.

Excess quota would be any quota above the standard. As that could fairly be regarded as the result of the tenant's extra efforts, under Schedule 1 the tenant can claim 100 per cent. of the value of the excess quota. The tenant's share of the standard quota would be based on the contribution he has made in terms of tenant's improvements. The landlord must get his share of the standard based on the value of landlord's improvements and on the provision of the land itself. The system proposed in Schedule 1 is to have a standard quota which landlord and tenant share, and any excess above that would be claimed in full by the tenant.

The difficulty with the system that is suggested in Amendment No. 26 is that it would only appear to provide a vehicle for compensating a tenant who has done better than might be expected. The amendment appears to provide nothing for those who have around the average level of quota on the holding, even if they have made a great deal of effort over many years to achieve their level. Furthermore, I suspect that even among those tenants who under the Government's proposals would have excess quota (that is to say those of above average performance) there may be some who would get nothing under the system being proposed in this amendment.

I say that because there is no certainty that the fact there is a higher level of quota on the holding than the norm would result necessarily in an increase to the value of the holding. After all, this could apply if the land concerned was in an area where other farming enterprises were more profitable than milk production. In addition, the removal of tenant's improvements from the valuation assessment might produce very disappointing results for tenants who have made a large contribution in this way to the quota level.

I suggest that in this respect the wording of the amendment might not reflect the real intention of my noble friend or of the noble Lord, Lord Walston.

However, whether I am right or not on that point, my noble friend Lord Stanley certainly was right in saying that this amendment would be much less satisfactory for tenants in general than the Government's proposals. With respect to the noble Lord, Lord Walston, this amendment would be miles away from the ideal 50–50 split which the noble Lord suggested to the Committee during his speech. I recognise that Section 70 of the Agricultural Holdings Act 1986, suitably adapted, might possibly have been used as a basic model if our aim had been only to compensate those tenants who are at the top of the range. However, as I have tried to explain that is not the Government's aim. We have to recognise that the average tenant has also made a contribution to the level of quota attaching to the land. It is for that reason I believe that the system proposed in this amendment would not be fair to tenants. Indeed, some would say that it would be heavily biased in favour of the landlord.

May I put one last point on this amendment because it is one that concerns me? I hestitate to cross swords with my noble friend Lord Middleton who knows such an enormous amount about this. But I wonder whether including milk quota provisions in the agricultural holdings legislation does not hold some very real dangers. Milk quotas are different from the physical improvement of land or buildings which are dealt with in the holdings legislation. Further than that, the proposal to apportion the value of milk quota between landlord and tenant will be an one-off exercise, as Schedule 1 makes perfectly clear, That is very important from the point of view of landlords. But once we come to integrate the quota provisions into the system of land law, I very much fear that we might be storing up problems of a more general nature for the future.

It is on those grounds with the greatest reluctance—because almost always I agree with my noble friend Lord Middleton and even, though we sit on different sides of the Committee, with the noble Lord, Lord Walston—I feel that on behalf of the Government, I cannot agree with this amendment.

Lord Broxbourne

I wonder whether before my noble friend sits down he would clarify one point. I am possibly not the only person in the Committee who finds this schedule rather difficult of interpretation. I have no expertise in the Agricultural Holdings Act, but I am not entirely inexperienced in arbitration in other fields not altogether less complicated. My noble friend more than once in his exposition of this matter—to which I listened with great respect and attention—used the phrase "excess quota". Will he clarify and identify that? Does it come within Schedule 1 in those terms? There are definitions in the interpretation clause, Clause 18, of six sorts of quota: milk quota, relevant quota, standard quota, transferred quota, etc. There is no interpretation so far as I can see of excess quota. Can my noble friend clarify that?

Lord Belstead

The figures which we intend to put before the Chamber for consideration for the computation of excess quota are something to which I was intending to come on Amendment No. 30. These figures would be written into the statutory instrument if Parliament agrees to Schedule 1 becoming a part of the Bill. In addition to that, the concept of an excess quota is also contained in Amendment No. 30, which I shall be hoping to move in a few minutes' time when we have finished with other amendments.

Lord Middleton

I listened carefully to what was said and particularly to what was said by my noble friend Lord Belstead. It is quite clear that we are agreed, all of us, about the principle of compensation. Where the Committee is in disagreement is as to what shall be the measure of compensation. I and the noble Lords who support me have a totally different concept of what a tenant may or may not have contributed to the holding at the end of a tenancy from that of my noble friend Lord Stanley, the NFU and, indeed, the Government.

That concept is that a farm quota, whatever its size, looked at with that of other comparable farms, is an asset which must be carved up at the end of the tenancy according to the formula set out in the much criticised Schedule 1. That is the path which the Government have followed and this very complicated schedule is the result. I think the most trenchant objection to the Government's concept, and the National Farmers' Union concept, came in a letter to me last week from the Association of Land-owning Charities. At this stage I hesitate to quote it, but I ask the Committee's indulgence to do so because I think it answers in some measure the criticisms made by the noble Lord, Lord Mackie of Benshie. It says: Too much milk has been produced; so a quota system has been introduced. Its introduction has in no way increased the productivity (or value, which derives from productivity) of any farm; indeed, since the quota is in the nature of the case less than the farm could produce, productivity (and value) have been reduced. The notion, current in some circles, that quota is an adventitious additional value to be shared out is wholly erroneous and leads to total confusion of issues that are really simple. Quota is not a permission to produce more milk; it is a requirement to produce less".

Lord Mackie of Benshie

Would not the noble Lord admit that there must be something curious in that people are willing to pay quite large sums for a quota if they can transfer it?

Lord Middleton

I understand that you cannot pay large sums for quota divorced from land. It you are buying land with a quota on it, I take it that you pay the market value for that land having regard to the size of the quota on it. I think it is as simple as that.

This division of opinion which the Minister of Agriculture has made great efforts to reconcile has given rise to strong feelings in the industry, and so I am asking the Committee to take a different path. If I may repeat this for the benefit of noble Lords who have come into the Chamber since I first spoke, I am asking the Committee to take a different path forward from the basic common ground to which I earlier referred. I am suggesting that we solve this difficulty by going back to the old principle, long established and embodied in statute, that where a tenant leaves something on a farm that adds to its value he gets paid for it. That is the tenant right solution. The way that he gets paid for it is to be worked out by the parties. The valuing profession, as the noble Lord, Lord Northbourne, confirmed, are thoroughly familiar with working out and agreeing compensation. They have said that they can cope with valuing milk quota on the terms of my amendment.

Perhaps I may very briefly refer to one or two detailed points. I must deny most strongly the charge levelled at me by my noble friend Lord Stanley of Alderley that this is some kind of tenant bashing, some action by wicked landlords to squeeze the ultimate drop of blood out of the tenant. He says that it is horrendous for the tenant. My noble friend Lord Mottistone says that this is biased entirely towards the landlord. I deny that. I deny that the vast majority of tenants would get nothing. I said when I opened the debate that I have taken the wording of my amendment and have modified it from the old Section 70 wording, so that it is not just the exceptional tenants who will get compensation.

The noble Lord, Lord Mackie of Benshie, said that this was manna from heaven which goes largely to the landlord. I do not agree. I hate producing figures in debate. I think they are always confusing and they are always suspect; but my noble friend Lord Stanley of Alderley produced figures to show how incredibly unfair it is going to be for tenants and how marvellous it is going to be for the landlords. I have just done a little scribbling on the back of an envelope to illustrate where I think this is not going to be all that unfair on the tenants. Let us take a 100-cow herd. A normal level of production from that herd would be 500,000 litres, and that would be worth, according to my calculations, about £65,000. We have heard that the tenant's share may vary between 30 per cent. and 50 per cent.—and this is under the Government scheme. So of the £65,000 which has to be carved up according to the Government scheme and according to this formula, if the tenant's share worked out at about 30 per cent., he will get £21,000 on 100 cows when he retires. If he is due to get 50 per cent., he will get £32,000 as his compensation.

Then I did a quick calculation on my own scheme, and I think it would be quite realistic. These quick calculations can always be faulty, but I hope that this is right. If we take the farmer with a 100-cow herd, it is quite realistic to suggest that he is producing the milk on a 150-acre farm. I think that if he has done well, it is realistic to say that he might have increased the tenanted value from, say, £500 an acre to £700 an acre. I calculate that his compensation in that case would be £30,000, which is about equivalent to what the tenant who was going to get 50 per cent. of the quota would have got. I do not think that is unfair.

My noble friend Lord Onslow produced out of the hat a statement that the landlord was likely to sell over the head of his tenant. Of course, he can. In a free country he can sell tenanted land whenever he likes. If he sells, the quota will go with it and so will the tenant; and he will get the market price, as I said just now to the noble Lord, Lord Mackie of Benshie. He will get the market price of the land according to its tenanted value and according to the size of the milk quota that is on it.

I take the point of the noble Lord, Lord John-Mackie. I think it is a very good point. I think he held out to my noble friend Lord Belstead a proposition which I would certainly go along with. The noble Lord, Lord John-Mackie, I think quite rightly, said that there was a shadow of doubt as to where the obvious starting point was in my amendment. I think there is something to be said for that point and I think that that is the reason why we are getting some misunderstanding.

It may be that the wording that I have used is not entirely clear because I referred to the average requirements of tenants reasonably skilled in husbandry. Noble Lords have taken this to mean the average production.

I think my noble friend Lord Belstead said that only those above the average would get anything. My view is that a man reasonably skilled in husbandry is below average; he is just ticking over. If he was not reasonably skilled, he would not be in business, he would not be able to pay his rent. So we are looking at the minimal man and I should have thought that most British, Welsh and Scottish farmers were above the minimal and would be entitled to some compensation by reason of the increase in value.

I think that I have answered most of the points that my noble friend Lord Belstead has made. I do not agree that the tenants would be compensated only if they had done better than average. I think he is right in saying that some tenants would get nothing. The minimal man would get nothing. Why should he get anything? He will leave the landlord with a below average value for his farm since the milk quota cannot be increased.

I really could not agree with my noble friend Lord Belstead when he said he thought it might be dangerous to include milk quotas in agricultural holdings legislation and that I was doing this. But that is what the Government are doing. What is Schedule 1 doing except including milk quotas in agricultural holdings legislation? That is exactly what they are doing. Perhaps my noble friend can indicate that there is something to be said for the road along which I have asked the Committee to tread. Perhaps, as the noble Lord, Lord John-Mackie, rightly pointed out, my wording is not quite perfect or might confuse valuers, although they tell me they could operate under it. If there is a doubt and if my noble friend Lord Belstead can assure me that he will take this back and look at it, I shall be very happy to withdraw the amendment.

Lord Belstead

I do not wish to be unforthcoming to my noble friend; indeed, he is one of the last Members of your Lordships' Committee to whom I should wish to be unforthcoming on an agricultural matter. But there is really one particular difficulty in connection with this amendment. Incidentally, I think both my noble friend and I can take some comfort from the fact that the disagreement which has existed in the agricultural organisations and which has prompted my right honourable friend to come to Parliament with proposals in Clause 11 and Schedule 1 has to some extent been reflected here this afternoon in that your Lordships, in giving advice on this amendment, have not by any means always agreed, if I may say that gently and mildly.

But the comfort does not go further than that, I fear. A gulf—and a nasty one—which neither my noble friend Lord Middleton nor I wish for lies between this amendment and the position that the Government say they are trying to achieve in the Bill, in that the amendment is absolutely bound to give something only to those who are of above average performance. I shall look very carefully at what my noble friend Lord Middleton said in his closing remarks on that particular matter. However, from what I can see from the drafting of the amendment I still think that that is the case. If it is the case, with the greatest of regret I must say that the amendment is unacceptable to the Government.

Lord Middleton

I think that it is not just the above average tenant who is going to get compensation. If my noble friend will assure me that he will look at the matter again and come back at a later stage, I will withdraw the amendment, but if there is a real difficulty between us, I am afraid I must ask the Committee to decide.

Lord Stanley of Alderley

I wonder whether I may intervene because I think it might help the Committee. I have to tell my noble friend on the Front Bench that unless my noble friend Lord Middleton moves so much to the right or to the left to give average quota to 500 litres, which is ridiculous, I cannot accept this method of doing it. I must be honest here. I am sorry to fall out with both parties, but I must make it clear; otherwise we shall just go on with this.

Lord Middleton

I can understand that from my noble friend in the NFU. We must get right the matter of the milk quota and I do not think we can do that by tinkering with what is in the Bill. My way is the better way to do it.

My noble friend Lord Stanley has referred to the Tenant Farmers' Association, and since we are dealing with tenants' compensation I think we would do well to listen to what the Tenant Farmers' Association has to say. Two weeks ago it was giving evidence to the House of Lords EC Select Committee on Agriculture and in the course of that evidence the Chairman, Mr. Henry Fell, had this to say about milk quotas: I think you are referring to the clause on compensation and milk quotas. None of us"— he was referring to the tenant farmers, apparently— has any hesitation in saying we think that is a recipe for chaos and dispute, and totally unnecessary. I do hope that next week and the week following it will be possible to do something much more constructive about that. We are optimistic that common sense will prevail. We have a lot of faith in the valuing profession. We work closely with the RICS and the CAAV. Our views are very close to theirs, and subject to provisions to safeguard in particular the man who started dairying on a low-cost system on a green-field site, the valuing profession and the system of compensation for tenants' rights improvements is the right road to go down to deal with that". That is the road I am inviting your Lordships' Committee to tread. I believe it is the right road and I hope I have convinced the majority of the Committee to follow me into the Lobby.

4.25 p.m.

On Question, Whether the said amendment (No. 26) shall be agreed to?

Their Lordships divided: Contents, 28; Not-Contents, 133.

DIVISION NO. 1
CONTENTS
Annan, L.	Kinnoull, E.
Blake, L.	Manton, L.
Burton, L.	Middleton, L.
Cawley, L.	Monk Bretton, L.
Clinton, L.	Newall, L.
Derwent, L.	Northbourne, L.
Dulverton, L.	Peel, E.
Fitt, L.	Radnor, E.
Forester, L.	St. Davids, V.
Gisborough, L. [Teller.]	Sandford, L.
Grimthorpe, L.	Savile, L.
Harvington, L.	Stallard, L.

Stathcarron, L.	Wynford, L. [Teller.]
Truro, Bp.	Zouche of Haryngworth, L.

NOT-CONTENTS
Airedale, L.	Lane-Fox, B.
Airey of Abingdon, B.	Lauderdale, E.
Alexander of Tunis, E.	Layton, L.
Amherst, E.	Llewelyn-Davies of Hastoe, B.
Ardwick, L.	Lloyd of Kilgerran, L.
Auckland, L.	Lockwood, B.
Ayleston, L.	Lucas of Chilworth, L.
Barnett, L.	Mackie of Benshie, L.
Bauer, L.	McNair, L.
Belhaven and Stenton, L.	Mancroft, L.
Beloff, L.	Marley, L.
Belstead, L.	Marshall of Leeds, L.
Boston of Faversham, L.	Melchett, L.
Boyd-Carpenter, L.	Merrivale, L.
Brabazon of Tara, L.	Mersey, V.
Brockway, L.	Mishcon, L.
Brougham and Vaux, L.	Molloy, L.
Broxbourne, L.	Mottistone, L.
Bruce of Donington, L.	Mulley, L.
Butterworth, L.	Nicol, B.
Buxton of Alsa, L.	Nugent of Guildford, L.
Caithness, E.	Onslow, E.
Cameron of Lochbroom, L.	Oram, L.
Campbell of Alloway, L.	Pender, L.
Campbell of Croy, L.	Peyton of Yeovil, L.
Chitnis, L.	Phillips, B.
Cledwyn of Penrhos, L.	Pitt of Hampstead, L.
Coleraine, L.	Plummer of St Marylebone, L.
Constantine of Stanmore, L.
Cottesloe, L.	Ponsonby of Shulbrede, L.
Cowley, E.	Porritt, L.
Cox, B.	Portland, D.
Craigton, L.	Rankeillour, L.
Crawshaw of Aintree, L.	Reay, L.
Cullen of Ashbourne, L.	Ritchie of Dundee, L.
Davidson, V.	Rodney, L.
Davies of Penrhys, L.	Seear, B.
Dean of Beswick, L.	Selborne, E.
Denham, L. [Teller.]	Sempill, Ly.
Denning, L.	Shannon, E.
Dilhorne, V.	Shrewsbury, E.
Drumalbyn, L.	Skelmersdale, L.
Elles, B.	Stamp, L.
Elton, L.	Stanley of Alderley, L.
Elwyn-Jones, L.	Stewart of Fulham, L.
Ennals, L.	Stodart of Leaston, L.
Ewart-Biggs, B.	Stoddart of Swindon, L.
Fraser of Kilmorack, L.	Strabolgi, L.
Gallacher, L.	Strathspey, L.
Glenarthur, L.	Swansea, L.
Graham of Edmonton, L.	Swinton, E. [Teller.]
Gray of Contin, L.	Taylor of Mansfield, L.
Hailsham of Saint Marylebone, L.	Teviot, L.
	Thorneycroft, L.
Hanworth, V.	Tranmire, L.
Hirshfield, L.	Trenchard, V.
Hives, L.	Trumpington, B.
Home of Hirsel, L.	Underhill, L.
Hood, V.	Vickers, B.
Hooper, B.	Vivian, L.
Hughes, L.	Wells-Pestell, L.
Hylton-Foster, B.	White, B.
Jeger, B.	Whitelaw, V.
John-Mackie, L.	Wigoder, L.
Kaberry of Adel, L.	Williams of Elvel, L.
Kilbracken, L.	Winchilsea and Nottingham, E.
Kinloss, Ly.
Kitchener, E.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

4.33 p.m.

Clause 11 agreed to.

The Chairman of Committees (Lord Aberdare)

The next amendment is No. 40.

Lord Belstead

I beg to move that consideration of the new clause in Amendment No. 40 be postponed to before Amendment No. 41.

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

Schedule 1 [Tenants' compensation for milk quota]:

Lord Belstead moved Amendment No. 27: Page 17, line 13, after ("had") insert ("instead").

The noble Lord said: I beg to move Amendment No. 27, and ask for the Committee's agreement to speak also to Amendments Nos. 28, 29, 34 and 35. The first three amendments, Nos. 27, 28 and 29, are clarifying amendments. The main amendments, Nos. 34 and 35, are necessary in order to clarify the procedure where a tenancy has been terminated and there is the possibility of statutory succession on death. These amendments will prevent a claim being made under paragraph 11 of Schedule 1 until the succession issue has been resolved.

In another place, concern was expressed that the provisions as drafted might give rise to the situation where both the executor for the deceased tenant and the statutory successor might be able to claim compensation. We think it is doubtful that this could happen, but the issue highlighted another possible problem. Although there are unlikely to be many occasions when a tenancy will terminate before the Agricultural Lands Tribunal has ruled on an application for succession, it is by no means impossible and problems could arise if the current wording is not amended. An executor could surrender the tenancy and claim the compensation due to the deceased tenant and we would not wish the executors to claim as this right should pass to the statutory successor. If executors were paid compensation, in practice the landlord would be unable to claim this back from the statutory successor who was eventually given a direction to the tenancy.

Our intention is, and has always been, that the right should pass to the statutory successor even though there may be a gap. We have therefore introduced these amendments to overcome such difficulties by ensuring that no claim can be made while an application for succession is being considered. The quota originally allocated or transferred to the former tenant will be treated as having been allocated or transferred to the successor. I beg to move.

Lord John-Mackie

It seems an eminently fair point that the Minister has put forward and I think we would agree to it. I presume that should the succession not be agreed to, it would go back to the deceased's or retiring tenant's executors?

Lord Belstead

Yes, that of course would be the case if there was then no statutory succession. May I just underline the fact that, as Schedule 1 makes clear, this is a one-off exercise. This payment of compensation at the end of a tenancy to retiring or moving tenant farmers who have a milk quota is a once and for all payment. That is made clear, I think, in Schedule 1.

On Question, amendment agreed to.

Lord Belstead moved amendment No. 28: Page 17, line 33, after ("had") insert ("instead").

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 29: Page 18, line 1, after ("had") insert ("instead").

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 30:

Page 19, line 2, leave out paragraph 6 and insert—

("6.—(1) Subject to the following provisions of this paragraph the standard quota for any land for the purposes of this Schedule shall be calculated by multiplying the relevant number of hectares by the prescribed quota per hectare; and for the purposes of this paragraph—

1. (a) "the relevant number of hectares" means the average number of hectares of the land in question used during the relevant period for the feeding of dairy cows kept on the land or, if different, the average number of hectares of the land which could reasonably be expected to have been so used (having regard to the number of grazing animals other than dairy cows kept on the land during that period); and
2. (b) the prescribed quota per hectare means such number of litres as the Minister may from time to time by order prescribe for the purposes of this sub-paragraph.

(2) Where by virtue of the quality of the land in question or climatic conditions in the area the amount of milk which could reasonably be expected to have been produced from one hectare of the land during the relevant period ("the reasonable amount") is greater or less than the prescribed average yield per hectare, then sub-paragraph (1) above shall not apply and the standard quota shall be calculated by multiplying the relevant number of hectares by such proportion of the prescribed quota per hectare as the reasonable amount bears to the prescribed average yield per hectare; and the Minister shall by order prescribe the amount of milk to be taken as the average yield per hectare for the purposes of this sub-paragraph.

(3) Where the relevant quota of the land includes milk quota allocated in pursuance of an award of quota made by the Dairy Produce Quota Tribunal for England and Wales which has not been allocated in full, the standard quota for the land shall be reduced by the amount by which the milk quota allocated in pursuance of the award falls short of the amount awarded (or, in a case where only part of the milk quota allocated in pursuance of the award is included in the relevant quota, by the corresponding proportion of that shortfall).

(4) In sub-paragraph (3) above the references to milk quota allocated in pursuance of an award of quota include references to quota allocated by virtue of the amount awarded not originally having been allocated in full.

(5) In this paragraph—

1. (a) references to land used for the feeding of dairy cows kept on the land do not include land used for growing cereal crops for feeding to dairy cows in the form of loose grain; and
2. (b) references to dairy cows are to cows kept for milk production.

(6) An order under this paragraph may make different provision for different cases.

(7) The power to make an order under this paragraph shall be exercisable by statutory instrument and any instrument containing such an order shall be subject to annulment in pursuance of a resolution of either House of Parliament.").

The noble Lord said: The Committee will recall that during the debate on the Second Reading of this Bill many noble Lords said that there ought to be greater flexibility for individual circumstances to be taken into account in any given case. "Why not leave it to the arbitrator?" was the sort of thing said by many noble Lords with considerable experience. It is with this in mind that I bring this amendment before the Committee.

The Committee will recall from our earlier discussion of the matter on Second Reading that the question of the level of the standard quota is at the heart of the calculation of the compensation which will be payable. As I said, concern has been expressed that our existing provisions are too restrictive and that more account should be taken of the individual circumstances of a farm. Following an assurance that I gave on Second Reading, this amendment, No. 30, will remove the 20 per cent. restriction on variations in the standard quota.

The amendment also makes some other related adjustments which are important. Sub-paragraph (1) of the amendment provides that in calculating the standard quota we should look at the area of land used by the dairy cows alone, excluding followers, and that the calculation should therefore reflect the yield achieveable on that basis. Although the Bill makes provision for the figures to be prescribed by order, it may be helpful to the Committee if I give an indication of what we would intend to prescribe.

In setting the prescribed quota per hectare we would intend to see a stocking rate of around 1.8 cows per forage hectare and a yield per cow of 4,500 litres, which reflects the 10 per cent. cut back on production when quotas were introduced. With a little rounding down this would give a standard prescribed quota per hectare of 8,000 litres. This is the figure where the land in question could reasonably be expected to give a yield of around the national average of 9,000 litres. The difference between 8,000 litres and 9,000 litres takes account of the quota cutbacks.

If it is felt that a particular piece of land ought to give a yield higher or lower than the national average, the percentage variation from the national average has still to be calculated. This percentage adjustment will then be applied to the standard figure of 8,000 litres per hectare to arrive at the standard quota for the land. The purpose of this is, as I have said, to ensure that all tenants receive the benefit of the fact that in order to reflect the quota cutbacks the prescribed quota at 8,000 litres has been set at a lower level than the national average of 9,000 litres per hectare.

In sub-paragraph (2) we have made it clear I hope that any variations made by an arbitrator from the standard prescribed yield per hectare will have to be strictly related to the quality of the land in question or to the climatic conditions of the area.

Concern has been expressed that if the provisions had been left as they currently stood in the Bill, it might be argued that just because it was the normal practice in the area where the land was situated for, let us say, three times a day milking to take place, or that very high levels of concentrates were being fed, the standard quota should be varied upwards accordingly. I am sure that the Committee will agree with me that such practices are a result of the managment skills or enterprise of the tenant and ought therefore not to be used as an argument for increasing the standard for farms upwards and thereby reducing the tenant's share of the quota value.

Since our original provisions were published concern has also been expressed about the case of the tenant who had received a development award from the Dairy Produce Quota Tribunal. The fear has been that where that award has not been allocated in full because of the limited amount of quota no account ought to be taken of this.

Sub-paragraph (3) of this amendment recognises that in many cases farmers do not have the full amount of their development award and makes provision for an appropriate adjustment to be made to the standard quota where a tenant has not received his development award in full.

Before I sit down perhaps I may go back to subparagraph (1) and try to add some figures to the explanation I have given of what I think is at the heart of the amendment which is before the Committee. I shall take two different examples. The first is of a farm which is just above the national average in terms of land quality. The arbitrator, if it is an arbitrator, who comes in looks at the farm and decides that it ought to yield 9,000 litres. That means there is no deviation from the national average in the case of this farm. So the standard prescribed quota of 8,000 litres per hectare will be used in this case. The number of hectares used for the dairy cows is that multiplied by 8,000 to get the standard quota for the holding. If the actual quota is more than this, the tenant gets the full value of the excess.

Perhaps I may try again with a second example. It is along the same lines, but it involves a different farm. This farm is rather below the national average in terms of land quality. Here again let us suppose that an arbitrator comes in, looks at it and says he feels that a yield of 8,400 litres per hectare would be reasonable on that farm. This is just over 6 per cent. below the national average of 9,000 litres. So the standard prescribed yield of 8,000 litres per hectare must be reduced by just over 6 per cent. This would give 7,467 litres per hectare, which will be used to calculate the standard quota in this case. The number of hectares used for the dairy cows is then multiplied by 7,467 to get the standard quota for the holding. If the actual quota is more than this, again the tenant gets the full value of the excess. I hope that this perhaps is one of the occasions when putting some figures on an explanation helps. I beg to move.

4.45 p.m.

Lord Stodart of Leaston

On Thursday my noble friend was kind enough to say that I was one of the few who had given him some friendly support. I am afraid that this afternoon he will have to face up to some very reluctant criticism because, despite his latest effort to introduce more flexibility which undoubtedly is welcome, with great respect he has not provided us with even a morsel of simplicity. The hungry sheep still look up for simplicity and they really are not getting fed. I cry out for simplicity. It was certainly one of the things which attracted me, and still does, to the drafting of the amendment of my noble friend Lord Middleton. I still hope that at the end of this debate the impossible may come to fruition and that if the drafting of the noble Lord, Lord Middleton, can be so amended as to meet with the approval of noble Lords, we can then build on that.

This schedule was debated at short notice in another place. It contains, believe it or not, between 7,000 and 10,000 words. In no conceivable way can that be good legislation. Indeed, out of just short of 10,000 words in the debate in another place came only one clear piece of information. It was when my right honourable friend the Minister for Agriculture said: the tenant who has performed well could receive more than about two thirds of the total value of the quota. At the other end of the scale the tenant who has invested nothing and has a low level of milk production could get nothing".—[Official Report, Commons, 17/4/86; col. 1048.] Even now I do not know how this two-thirds is arrived at. Nor do I understand how or why it is that the NFU is widely claiming that on average a tenant's share of the quota will be between 25 per cent. and 30 per cent. How it arrives at that is a mystery to me. In answer to this my right honourable friend in another place said: It is not the average that matters anyway. What matters is the result for each individual farmer and whether the individual is being treated fairly. If tenants and landlords are being treated fairly in individual cases, we can say that the totality of the system is fair."—[col. 1049.] However, by basing the system on what is called a standard quota—which is not stated here but I gather is to appear in the statutory instruments—and then bolstering this up with something called a tenants' fraction, you are giving birth to a system which is based on an average. I am hound to say that the Government are making not only a gigantic meal of this, with the length of the schedule, but a totally indigestible one. I hope that the Government realise that there will be many aches and pains still to come.

I find it totally incomprehensible. Therefore, although I know the intentions behind the amendment are admirable I am also bound to say that I find the amendment of my noble friend Lord Stanley pretty difficult to understand, although I think I get the gist of it. Where you have failure to understand there is suspicion bred, and by and large tenant farmers are convinced that something is being put across them, that they are being conned.

Is not this the situation—and this is probably trying to simplify things to the ludicrous—each farm has a quota of its own and that quota is an actual number of litres? It goes with the farm and it has a specific value. If that is so, why invent the standard quota? The quota is an estimate. In the course of his earlier remarks my noble friend said it was a different asset to the cows which produce the milk, the buildings which house them and the fences which keep them in the fields. To my mind the quota is still an asset of the farm to which it is allocated. Therefore, why not allocate the value of this actual quota between the tenant and the landlord according to the commercial value of the contribution which each side makes to the process of producing milk?

It is perfectly clear that the landlord provides the land. He probably—but not necessarily—provides the buildings. Again, very probably, he provides much of the fixed equipment for which he is responsible. So be it. The tenant's share would come from the value of the herd, the feed, the labour and the management provided. An arbitration along these lines is perfectly well understood and is totally accepted in the agricultural world. That approach would be fair, it would be simple and it would be easy to understand and to operate.

My imagination goes back over a period of 20 years to a Committee room upstairs in another place. There I can see the noble Lord, Lord John-Mackie, on the Government Front Bench facing an Opposition putting forward a schedule of the same sort of length as this one. It would certainly be on a Thursday morning because on that morning the Minister would excuse himself in order to attend a Cabinet meeting and the junior Minister would have to take the flak from across the Floor of the Committee. I am in no doubt who it would have been on the Back-Benches of the Opposition 20 years ago excelling in the taunts, the jibes and the mockery that he would be slinging across the Floor of the Committee room with brilliance, enthusiasm and great panache. It would most certainly have been the present Minister of Agriculture.

As I said earlier, I think my noble friend Lord Middleton has got somewhere near the principle of what we want. I do not think he has it right, and I believe he agrees with that. I would only say to my noble friend Lord Belstead that I believe he would take a tremendous weight from the shoulders not only of those noble Lords here but many outside if he could tell us at the end of this debate that he will take away this difficult subject and have another look at it.

Lord John-Mackie

As the noble Lord, Lord Middleton said, and I think the noble Lord, Lord Belstead would agree, putting figures across in Committee is not easy and it is difficult to follow where they get one. The amendment certainly seems to get somewhere in the calculations. The noble Lord gave us two examples which I quickly noted. Having forgotten my arithmetic, I always carry a calculator in my pocket which I have used in trying to work out how this amendment would operate against figures that have been given to me on how little differences in the calculations can make such a variation in the percentage that the tenant might get.

Taking the noble Lord's figure of about 1.8 cows per hectare, and taking someone who is on worse land, or however one looks at it, with one cow per hectare, you can arrive at differences as big as 34 per cent. or 60 per cent. in the calculations. I have my calculations in front of me and I shall not read them out to the Committee or try to explain them; but that seems to be exactly what could happen. I believe that is too wide a difference. Admittedly, the arbitrary 20 per cent. variation which has now been removed might have been too rigid; but I am not sure that the calculations given by the noble Lord would make it as fair as we would all like it to be.

The noble Lord, Lord Stodart, was reminiscing and I may say that on one of those occasions he caught me and my honourable friend napping. We did not have our troops available—I was not so good at that as is the noble Lord, Lord Denham—and he defeated us on a Bill, which he had no business to do! I had some sympathy for him but unfortunately I never managed to get my own back. However, that is beside the point.

All I should like to say is that if these calculations could be incorporated—I believe this is what the noble Lord, Lord Stodart, was getting at—in the amendment of the noble Lord, Lord Middleton, we might have something simple because, like the noble Lord, I only counted the pages and he only counted the words in the schedule. We might then be getting somewhere.

I again make the plea that the Government should look at the matter more carefully to see whether they cannot come back on Report with something that would satisfy tenants and farmers better than at present. I cannot see that I object to the amendment as given to us by the noble Lord but, as I have said, the calculations give a very wide variation. I have given the noble Lord the calculations I have in front of me and if he looks at them he will see the differences that can arise.

5 p.m.

Lord Mackie of Benshie

I am sorry that I cannot take part in the nice chit-chat between former Ministers of another place, but I should like the Minister to explain to me a little further what it is that this amendment achieves. As I understand it, the amendment would give a percentage advantage to a tenant of poorer ground who had done well by reason of suitable cows, good manuring, good feeding of concentrates and so on. It gives an advantage which I suppose is well worth having, if he exceeds the standard figure of 8,000 litres per hectare, which figure can in fact be reduced further if an arbiter says that the land is worth that much less. If I have that half right, perhaps the Minister will give me a nod—and I see that he is giving me a nod.

I do not think this amendment really solves the problem because one has to go a tremendous distance down the way in order to make it worth while. The calculation of the tenant's fraction—of the widow's mite, as I call it—is grossly unfair. The calculation is done apparently by taking as the numerator the annual rental value at the end of the relevant period—and I am not quite sure what that means; I view it with some suspicion and I must ask about it—of the tenant's varied improvements and fixed equipment. One does not take his cows or anything like that. One takes the fixed equipment that he has provided and a rental value is put upon it. But then the fraction is arrived at by adding that sum to the rental value of the land on which the cows are kept, and of course in that way the more that the tenant has done the more the tenant's fraction is automatically reduced. That is how I read it and I think that I have understood it aright.

The trouble is that this amendment is merely tinkering with the problem. I agree with what both the noble Lord, Lord Stodart, and my noble kinsman have said—that we must find a simpler method. I voted against the amendment of the noble Lord, Lord Middleton, simply because the amendment itself did not perform its task. We have to look at something simple which will give justice to both sides, and I do not think that this amendment does that. I do not object to it much; it just does not solve the problem. It tinkers with the problem and that, I think, is the trouble.

Lord Stanley of Alderley

Before my noble friend replies, I should like to ask him a few specific questions. I do not think he answered them when he made his original speech, but if he did perhaps he will answer them again. First of all, I go along with the noble Lord, Lord Mackie of Benshie. I am afraid that the amendment only tinkers with the problem and does not really deal with it radically enough.

The first question I should like to put to my noble friend is in relation to paragraph (2), which says: Where by virtue of the quality of the land in question of climatic conditions in the area". I was not absolutely certain whether that was intended to be a regional or a national criterion. I think I understood it to be national but perhaps my noble friend can confirm that. I have to say that I am interested in this amendment and in my noble friend's approach. I hope he will not mind my saying it, but I think it is moving slightly toward the principle of my next amendment, Amendment No. 31, as I shall explain to my noble friend Lord Stodart.

Secondly—and I am fairly certain that he answered this question when he told us about the average hectares per cow—am I right in saying that the average yield per cow will be 5,000 litres, and therefore 9,000 litres per hectare according to paragraph (2), which is then deflated (as I call it) because of the cut? I think I am right, in saying that.

Lastly and most importantly there is paragraph (6), which I do not think my noble friend mentioned. I wonder what he has in mind here. Paragraph (6) says: An order under this paragraph may make different provision for different cases". Is he thinking about low yielding cows, for instance Jerseys? The other question which my noble friend may not want to answer at this stage is whether he is perhaps thinking of less favoured areas. Could both those points be covered by that paragraph?

Lord Walston

Very briefly, I should like to go along with what the noble Lord, Lord Stodart, has said. I felt rather sad that the last amendment was not treated as a probing amendment, which would have given a chance for more discussion later, though it is still not too late for that to happen. I hope that the move toward simplicity that is embodied in the amendment can be discussed before Report stage and that some of the difficulties can be overcome. I agree with what my noble friend Lord Mackie of Benshie has just said.

There are two very minor points that have occurred to me. One of them has been touched on by the noble Lord, Lord Stanley of Alderley. I speak as a former breeder of Channel Island cattle, and would ask whether the Minister is satisfied that the interests of farmers who have high quality but lower yielding breeds have been taken into account in this formula. I am not sufficiently in the picture now with regard to the amount of feed that is needed per gallon produced and so on compared with other breeds to know whether they are properly taken care of.

Secondly—and this is a rather more important though perhaps more hypothetical question—as I understand it, it is always open to the Commission to alter the quotas. We know that in spite of quotas milk production is still vastly in excess of the requirements of the Community. It is not inconceivable that quotas will be reduced any year. If that happens, will this legislation take care of it? Are the figures that the noble Lord has given firm figures which will not vary depending on the quota, or can they be varied without any need for new legislation? I hope that that is an unnecessary question but I think it is one which deserves an answer.

Lord Belstead

I am, grateful to the Committee, which I must admit has looked at this government amendment in a questioning and not uncritical frame of mind. I think that perhaps I ought to say that I entirely realise why my noble friend Lord Stodart regrets that the element of simplicity is not present in either the amendment or the schedule, though my noble friend was good enough to say that he felt that this amendment was importing more flexibility.

One thing that I hope I have learnt from the exchanges of the past 20 minutes or so is that, even with all the expertise that is available in the Committee, there are still differences of view which require the Government at least to try to suggest what they believe is a practicable way forward. For instance, I think it is fair to say that my noble friend Lord Stodart welcomed the fact that this amendment brought more flexibility. On the other hand, the noble Lord, Lord John-Mackie, said that he was a little suspicious of that flexibility because there would be such a wide range of figures that could be found in different cases.

As I said when I spoke on the early part of the amendment of my noble friend Lord Middleton, the main organisations in our industry felt that in a period of some three months or so they simply could not reach an agreement on this very difficult issue. I repeat that I come to just one conclusion. Without wanting to be hidebound and certainly without wanting in any way to imply that the Government will not listen to what the Committee is saying—because this is exactly the point of putting a difficult Bill through the Committee stage in this Chamber—nonetheless the Government have a responsibility to try to find a way through the middle.

I understood why my noble friend Lord Stodart said that if something is complicated people become suspicious of it, and in this case tenant farmers may feel that something is being put across them. Let me say two things in reply. First, if Schedule 1 passes into law in some form tenant farmers will receive payments which they would never have guessed a few months previously would be coming their way. Along with many Members of the Committee, I rejoice in that. Having worked in the ministry for the past three years I realise the difficult problems that have assailed our milk producers through the imposition of milk quotas. But at the same time we must remember that if the outgoing tenant may be receiving a payment that he did not expect, the incoming tenant will almost certainly be called on to pay something to the landlord which he would not have expected to pay. We have to keep a sense of proportion therefore in looking at the size of the payments.

On Second Reading my noble friend Lord Mottistone was concerned that tenant farmers were not being well enough treated by the government proposals. As I said, my noble friend Lord Stodart said that there is a suspicion that something is being put across tenant farmers. But if the amendments are passed, substantial sums are involved for tenants.

Quite a few of the briefs put out by organisations of the highest reputation in all the cases that I have seen were probably written before the Government put down their amendments, and that is the difficulty. But that is my fault for having put down the amendments late. For instance, a brief prepared by the Milk Marketing Board suggests that the maximum that our provisions in the Bill would provide would be 40 per cent. for the tenant. I believe that that very much understates the position, even before these amendments were put down. I am confident that a significant number will obtain more than 60 per cent.

Let me be specific. It is dangerous to put figures on individual cases. It may be misleading. But purely by way of illustration let me take the hypothetical case of two identical farms, each of 100 hectares, of average quality, used solely for grazing cows, each paying a rent of £100 a hectare and in each case, let us say, the tenant's improvements are worth £5,000 per annum. The only difference is that in one case the tenant has earned a lower than expected quota of 600,000 litres; in the other the quota is at precisely the level expected, 800,000 litres.

Assuming that the value of a quota is 13p a litre, which is the figure that it is reckoned the profession would light on at the present time, in the first case the total compensation payable would probably be in the region of £19,000 and in the second case some £34,000. We are talking about a lot of money. On behalf of the Government, I feel that that is only fair to the tenants. It is not something that is being put over on tenants as a sector of the farming industry.

5.15 p.m.

Lord Mackie of Benshie

The calculation appears to be nice and simple and even I can make it. The fraction is £5,000 over £5,000 plus £10,000, which is a third. The tenant would get one-third and the landlord two-thirds. The tenant might regard that as unfair. When the tenant goes out the landlord can sell his two-thirds and he can add to his value twice what the tenant gets. The tenant would regard that as unfair.

Lord Belstead

The noble Lord's intervention demonstrates the Government's difficulty and the different views put forward. He feels that the idea of the tenant's improvements being related to the amount that the tenant gets of the standard quota (which is called the tenant's fraction) is not fair, whereas Members of the Committee who voted for the first amendment of my noble friend Lord Middleton would say that what is in the Bill is fair and that the amounts that I have read out are considerable.

Finally, let me try to answer the questions put by my noble friend Lord Stanley and the noble Lord, Lord Walston. I hope that all Members of the Committee will feel that the changes proposed are right and will let the profession have a much freer hand in deciding in the case of an individual farm whether the whole basis of the valuation should change. When we say that that ought to be done only on the grounds of either land quality or climatic condition, we bear in mind that we are talking about regional variations.

When we get to the subordinate legislation we wish to propose that in the original less favoured areas—and I am talking about England and Wales at the moment—there should be a standard prescribed quota not of 8,000 litres but only of 6,000, and that in the new (what we called extended) less favoured areas there will be a standard prescribed quota of 7,000 and not 8,000 litres. Separate average yields would also be prescribed for those areas.

My noble friend secondly asked me whether the average yield per hectare per cow is 9,000 litres. He is right in that. He and the noble Lord both asked about the question of making different provisions for different cases. The Government precisely had in mind the need to think of the special characteristics of yield from, for instance, Channel Island herds. We hope that we would cover the matter in that case. The noble Lord finally asked me what would happen if quotas were altered. That will alter the basis of the valuation.

On Question, amendment agreed to.

Lord Stanley of Alderley moved Amendment No. 31: Page 19, line 2, leave out paragraph 6 and insert—

("6.—(1) For the purposes of this Schedule standard quota shall be calculated by multiplying—

1. (a) the average number of hectares of land in question which could reasonably be expected to have been used during the relevant period for the feeding of dairy cows kept on the land (having regard to the number of grazing animals other than dairy cows fed from the land during that period); by
2. (b) the amount of milk quota which could reasonably be expected to have been allocated to one hectare of the land in question.

(2) The amount of milk quota referred to in sub-paragraph (1)(b) above shall be the number of litres of cow's milk which could reasonably be expected to have been produced by dairy cows fed from the land in question taking account of any reduction from the level of production in the relevant period subsequently imposed by the Minister.

(3) In this paragraph references to the feeding of animals are to grazing and feeding of crops (other than loose grain) harvested from the land in question and references to dairy cows are to cows kept for milk production.").

The noble Lord said: On previous amendments my noble friend Lord Belstead said that unless we did something, no share at all of the quota would go to the tenant. We cannot be like ostriches and do nothing. I shall now put my head on the block and I have no doubt that in common with others, including my noble friend Lord Middleton, I shall have it cut off.

Arbitrators will have to interpret the law. I suggest that the situation is similar to that of a person caught speeding. He knows that he is wrong and he roughly knows the situation but he will not know the small print of all the road traffic Acts. He will rely on his solicitor. When it comes to the calculation of quotas, the farmer will have to rely on expert advisers.

The purpose of my amendment is simple. It will give a fairer deal to tenants than that offered by the Government, but it does not give them the whole cake. I agree with my noble friend on the Front Bench that in order to achieve anything like a fair deal for tenants and to ensure that it is standard throughout the country, it is absolutely necessary to lay down a starting point for the arbitrator. That has been acceptd by my noble friend on the Front Bench and by arbitrators. Each Member of this Committee who spoke on Second Reading and who said that tenants should receive some value for the quota was saying, although he may not have known it, just that.

The problem and the question that the Committee has to ask and decide is: what is fair? As I have said, no tenant to whom I have spoken, or the NFU or the Milk Marketing Board, considers the Government's amendment to be fair. The amendment moved in another place which allowed the arbitrator to start 50 per cent. for the landlord and 50 per cent. for the tenant was considered by many tenants to be unfair. My amendment does not go so far as that. I noted that my noble friend Lord Stodart and the noble Lord, Lord Walston, were saying that they would like such an amendment. If they like to table an amendment to Clause 11 it could be just as simple as that of my noble friend Lord Middleton.

This amendment gives a simple guide to the arbitrator as to where he should start in the division of standard quota. It rests on the principle of giving into Caesar that which is Caesar's. I hate to say it, but in this case Caesar just happens to be the landlord. I start by accepting the definition given by the noble Lord the Minister that standard quota is the amount that could reasonably be expected to be produced from the holding.

I therefore ask the Committee to consider whether it is the landlord or the tenant who is responsible for that production. My amendment gives to the landlord that proportion of the quota that can be produced from his land and the forage that that land should produce. It gives to the tenant the proportion that the tenant has produced by way of bought-in feedingstuffs, his herd management, his expertise and his hard work—I would say slavery, because I managed only two years of it and gave up. That is the substance of my amendment. I suggest that it is simplicity itself.

Moreover, anyone who farms knows that there are proven figures to show what should be produced from grass for the arbitrator to refer to. In fact, the method that I was taught and still use for how to feed the grazing animal rests on that. Because of the need to keep my amendment simple, I accept that relatively the extensive, low-cost producer or small producer does not fare so well as the vast majority of reasonably normal tenants, whoever they may or may not be. But he fares very much better under this amendment than under the one proposed by the Government. If the Committee considers he is still hard done by, I can assure the Committee that I shall draft a further amendment on Report to deal with his specific case.

I must cover one point which was mentioned by my noble friend Lord Monk Bretton, because I think that there is concern, though my noble friend Lord Belstead dealt with it to some extent. It is the concern that has been expressed that if the tenant's share of the quota value is increased, it would increase the financial burden of any incoming tenant to the holding. The problem of new tenants to the dairy industry will not be solved merely by giving the greater part of the quota value to the landlords. A regulated quota transfer system would provide the best opportunity to take account of the needs of new tenants.

Furthermore, landlords do not always relet their farms with quota to new entrants. There have already been instances where landlords, once they have the whole quota, have been selling them at the expense of the outgoing tenants. That will not necessarily help the incoming tenant. I hope that I have made that point clear. My character, whether I am wearing the hat of landlord, owner-occupier or tenant—I wear all three—does not change. If I have quota, I am afraid that I am greedy whichever hat I am wearing. I am sorry about that, but it is human nature.

I must repeat that my amendment is only giving the arbitrator a starting point. I agree with the Committee that the arbitrator should be given latitude, and there is no question in this amendment of tying his hands. The amendment merely gives him the necessary starting point. I hope that the Committee will accept the logic of my argument. I beg to move.

Lord Middleton

When speaking to the last amendment, my noble friend Lord Stodart said that he thought that he had understood the gist of what my noble friend Lord Stanley was trying to do with it. I think I understand very well the gist of what he is trying to do. He must have had his tongue in his cheek when he spoke. The key part of my noble friend's amendment is to be found in paragraph 3. Let us be reminded that the basic fact is that the lower the standard quota the higher the compensation that has to be paid to the outgoing tenant by the landlord and finally by the incomer.

This is a device to reduce the standard quota and therefore to increase compensation by taking out of consideration that part of the farm's milk production which is attributable to the feeding of concentrates. We all know that no respectable yields are possible without feeding some form of concentrates. The whole basis of the Government's calculations assumes a level of production by a reasonably competent farmer and one who feeds concentrates. If this scheme is favoured by the NFU, I have to say that it is being greedy. I am surprised that my noble friend Lord Stanley should move this amendment.

Lord Mackie of Benshie

I am grateful to the noble Lord for giving way. In the Government's amendment paragraph 5 states: In this paragraph— (a) references to land used for the feeding of dairy cows kept on the land do not include land used for growing cereal crops for feeding to dairy cows in the form of loose grain".

Lord Middleton

That is a different point. I am surprised that my noble friend Lord Stanley should put forward this amendment. Let us not forget that there are two tenants affected by compensation. There is the outgoer and the incomer. The greater the compensation to the outgoer, the more the incomer will have to pay to get into the tenancy. If the NUF favours the amendment, I should have thought it would do well to think of those members who are likely to be incomers. This amendment should be opposed.

5.30 p.m.

Lord Belstead

I should like to say to my noble friend Lord Stanley that we have now had about two and a half hours or more of close discussion, and I know that whenever I have spoken it has been a bit tortuous. My noble friend has produced an amendment which contains a good deal of ingenuity. It is terse, clear and based on an interesting concept, but I agree with my noble friend Lord Middleton that my noble friend is opening his mouth a little wide.

The fundamental point which my noble friend Lord Stanley is making and which worries me is the suggestion that the standard quota for any holding should be based on what the holding could produce if no concentrates were fed to the cows. There is an objection in principle to that. My noble friend Lord Middleton talked about that. There is also a practical problem.

As to the matter of principle, if the tenant has, through his own efforts, acquired a higher quota than the standard he will receive full compensation for the excess as well as an appropriate share of the standard quota. Although the noble Lord, Lord Mackie of Benshie, and I have not agreed about the amount of the standard quota that the tenant should receive, nevertheless that is what the Government are putting forward.

My noble friend defines standard quota in his amendment in a very different way to saying what a holding ought reasonably to produce. In this amendment it would no longer be the amount that one would reasonably expect. In most cases it would be a very much lower amount. This is the point that my noble friend Lord Middleton has fastened upon. The reason is that the amendment takes into account only the milk that could be produced from the forage grown on the holding. However, as the Committee will be the first to tell me, all dairy farmers, to a greater or lesser extent, feed concentrates. Leaving concentrates out of the picture completely would result in standard quota being well below the level of quota that one would expect when looking at a farm. This is, in the Government's view, an artificial distortion and would substantially increase the amount of excess quota. This means that even tenants who had performed significantly less well than the average would be rewarded with excess quota on which they would receive compensation from their landlords at 100 per cent. value. Honestly, I do not think that this is a just solution.

There is, I believe, a difficulty of practice. The amendment contains the serious danger that the method proposed could not be operated so as to produce even and consistent results. After all, we are law-making. The energy system on which my noble friend bases Amendment No. 31 is a well-recognised management tool for measuring the efficiency on grassland utilisation. But my noble friend proposes to use it for a purpose that was never intended; namely, to define a statutory right. The difficulty is that in the first place the contribution made to milk production by forage is not, I understand, a constant factor. Weather and the quality of the forage, both grazed and conserved, can affect the picture considerably. My goodness, did we not all realise this last winter?

In the second place, the contribution made to milk production by concentrates cannot be assumed to be proportionate or precisely predictable. We have all heard of cases where a farmer has increased concentrate usage and got a disappointing response in terms of milk production. Equally, we know the results of a report from Milk Minder, the dairy enterprise recording scheme developed by ADAS and the Milk Marketing Board, that compared 2,000 herds over a two year period, 1983–84 and 1984–85. The Committee may remember that this showed that overall production fell in 1984–85 by 5 per cent. while concentrate usage fell by 25 per cent. I cannot resist the temptation to observe that if we pursued the logic of my noble friend's amendment to its conclusion, it could imply results very different from those that might be expected. If a 25 per cent. drop in concentrate usage leads to only a 5 per cent. drop in milk production, does it not follow that stopping concentrate usage altogether would only reduce milk production by 20 per cent.? Of course, things do not happen quite like that. I am over-simplifying. But it demonstrates that the method that my noble friend tries to use in the amendment is far too insufficiently precise to be used in making a law and in defining statutory rights to compensation. In other words, with great respect, to my noble friend I am saying that I do not think that it will work.

It is much too soon, in the time that has elapsed since last week, for me to report what the profession is saying. I have not read on paper that the profession has reached any final view on the amendment. I have nonetheless heard that the initial reaction of the profession is one of anxiety. It would consider that we were presenting valuers with serious professional difficulties if we asked them to implement the method of calculation indicated by the amendment. I am conscious of the additional work that we shall, in any case, be putting on the profession in asking it to arbitrate for the purposes of Schedule 1, if eventually your Lordships agree to it. The task will not be easy. I do not believe that we should burden the profession additionally with a methodology that I understand it would find difficult.

There is one last point that my noble friend himself very fairly mentioned. We should not forget that these are going to be payments to the outgoing tenant from the pocket of the incoming tenant. The amounts of money we are talking about will in many cases be substantial. Do not let us jeopardise the landlord-tenant system upon which we have worked so hard in this Chamber by over-egging the pudding however much we may wish to see a fair deal for the tenant. It is because I believe there are both practical problems and a problem of principle in the amendment that the Government regretfully feel that they cannot support it.

Lord John-Mackie

I am in some difficulty. Although the Milk Marketing Board seems to have been eminently fair, the amendment proposed by the noble Lord, Lord Middleton, is too hard; that proposed by the noble Lord, Lord Stanley, goes the opposite way; and the Government amendment is about halfway between. One wants to be fair. I have received some calculations this afternoon while sitting on the Front Bench. It appears that the noble Lord, Lord Stanley, is being too kind to his friends, and the noble Lord, Lord Middleton, too kind to his. I should like a solution somewhere between the two but also one that is simple. However, as the noble Lord, Lord Belstead, has said, whatever the outgoing tenant gets, the incoming tenant has to pay for. A balance has to be struck.

I do not believe that the amendment now being discussed strikes a fair balance in the same way that the amendment proposed by the noble Lord, Lord Middleton, did not strike a fair balance. Whether the Government amendment is as good as it should be, I do not know. It seems to contain fluctuations that are rather too big. I admit that I am not being very helpful. I am simply re-stating the point made by the noble Lord, Lord Belstead, that we are in a difficult position. One hopes that the noble Lord may be able to go back and think again. I know that the noble Lord says that he has gone back often enough and that if one cannot get agreement between landlord and tenant, what is the sense of doing so again. But it is amazing what one can do if one tries. I hope that he will try to see whether he can come up with something that would satisfy us.

The Earl of Onslow

I have listened to most of the discussion. It reminds me of the Irishman who, when asked the way to so-and-so, said, "I would not be starting from here". It also reminds me of Schleswig-Holstein and Palmerston's remark, I think, that only three people understood it and one was in Switzerland. Would it not be better, instead of these highly complicated arrangements, to have a system of totally negotiable quotas, bought and sold on the open market? If, then, the European Community wanted to allow an increase in milk production, it would sell some extra quotas. If it wanted to reduce milk production, it would buy in extra quotas. As an investment, one would be able to buy a quota, not having to be a farmer, and lease that quota at 2½p a litre, or whatever the price is, to someone who is farming. That seems miles more sensible and might even be Community-wide. But the complications—the Clonmels and the Schleswig-Holsteins mentioned during this debate—have not been understood by most of us. I have certainly not done so. There must be simpler ways.

Lord Mackie of Benshie

This is a little complicated, but if I can understand it, most people should be able to do so. The Government have brought forward their own extremely complicated amendment, which we have just passed, that will cause just as much trouble for valuers and arbitrators as that proposed by the noble Lord, Lord Stanley. It is reasonable, having failed to get an agreed, simple measure, that efforts should be made to produce an amendment to bring what we feel to be justice to one party or another. This is quite simply what the noble Lord, Lord Stanley, is trying to do. He is trying to "up" the proportion which goes to the tenant.

I think that I have already produced figures for the tenant's fraction showing that it is about a third. My noble friend has said that he thinks it should be about 50 per cent; that that is the fair starting point to go for arbitration. That is the kind of situation towards which we are moving. I do not think that the Minister can complain about the amendment because it would lead to trouble for arbiters—you call them arbitrators, I call them by the old term—in settling a question. We are trying to get a proper adjustment which we think is fair. We have to use the Bill as it stands. That is what the noble Lord is doing.

I see no reason why we should not support this amendment if we think that the present division, as worked out by the tenant's fraction, is unfair. I happen to think that it is a little unfair. I therefore think that it is a rather good amendment.

Lord Walston

It was very refreshing to hear both the Minister and my noble friend Lord Mackie of Benshie use the words "just" and "justice". I think it is the first time that they have been used in our discussion. However, what is confusing matters is this. So far as I know the Government have not defined what they consider to be a just division of the value of the quota as between landlord and tenant. I think they agree that any quota in excess of a certain amount per standard quota belongs mainly, if not entirely, to the tenant because he has been responsible for creating it. However, we have not heard from the Government what they think is a just division of the standard quota—if we may use that term; I think that we now understand what it means—between landlord and tenant. Possibly they consider that it should all belong to the landlord; I do not know. It would be helpful if the Minister could make that clear to us.

It would also be helpful if the noble Lord, Lord Middleton, could make it clear to us what he thinks is a just division of the standard quota as between landlord and tenant If we can reach agreement on that, I think most of our difficulties will be solved.

I would make one further observation. Both the Minister and the noble Lord, Lord John-Mackie, made the point that the more the outgoing tenant receives, the more the incoming tenant pays. That surprises me. I thought that what we were arguing about was not the value of the quota—that is presumably fixed by the open market—but what proportion of whatever the incoming tenant pays should go to the landlord and what should go to the outgoing tenant. If I am wrong about that, and the incoming tenant pays more or less depending on what the outgoing tenant demands or is able to obtain, I hope that the noble Lord, Lord Belstead, will make it clear to us.

Lord Belstead

Perhaps I may make one point before we finish. The noble Lord, Lord Walston, has said that this Chamber does not know what the tenant's fraction amounts to. The way in which the tenant's fraction is to be computed is set out in paragraph 7 of Schedule 1. It is supposed to be the part of the standard quota which is to be credited to the tenant. Its size will depend upon the value of the tenant's improvements compared with the rental value of the land.

I would just add that when we come to Amendment No. 32, with which I shall seek to take Amendment No. 33, the Government will propose that the tenant's share of the standard quota should be related to his dairy improvements and fixed equipment on the land used, for the feeding, accommodation or milking of dairy cows only, and that the rent paid to the landlord similarly will be based on the land used for the feeding, accommodation or milking of dairy cows kept on the land only.

I do not think that it needs very much imagination to see that this again is a slight but significant move in the direction of the tenant. I say this because I am sure that my noble friend Lord Stanley will not take it amiss when I say that this amendment, notwithstanding considerable moves this afternoon in the direction of the tenant by the Government, would be a very significant shift in the direction of the tenant. With respect to my noble friend, for the reasons which I have attempted to deploy in my speech this is an amendment which I do not think will work anyway.

Lord Walston

May I pursue this for a moment in order to clarify the position? It is a very important point. As I understand it, the Government's position is that the tenant is entitled to no proportion whatsoever of the standard quota other than that to which he has contributed by his own activities as a tenant over a certain number of years. If he has contributed nothing, if he has taken over a well-equipped farm with all the right buildings, with good grassland capable of carrying 100 milking cows, and he continues to carry 100 milking cows and continues to farm adequately so that the grassland is kept up to standard but not improved, he is entitled to nothing. But he is entitled to that which by his own actions has increased the quota. Have I understood the Minister correctly?

Lord Belstead

That is correct.

5.45 p.m.

Lord Cledwyn of Penrhos

I apologise for rising to speak, bearing in mind that my other commitments elsewhere in this building have prevented my being present throughout the course of this very important debate. We are dealing with the most complex matter in the Bill before us. I have read with great care the multitude of papers that have come to me through the post. I have followed with great interest the arguments in the debate on the amendment of the noble Lord, Lord Middleton; it seems to me that the judgment of Solomon is required to come to a conclusion that would please everybody. That would be impossible. Nevertheless, I believe that the amendment moved by the noble Lord, Lord Stanley, is worthy of further consideration. Given the number of speeches that have been made by noble Lords who I think can properly be called experts in this field I believe that the noble Lord, Lord Belstead, should give this matter further consideration and come back to us again.

In my view if there is one organisation in this field to which we should listen with respect, it is the Milk Marketing Board. It has great experience, great knowledge, and is furnished with all the facts. It is in touch with the dairy industry throughout the country. It is fully aware of all the implications of the three amendments before the Committee. What has it said? I have carefully studied the brief that it sent me. I shall quote what the board says. It says that it supports the amendment of the noble Lord, Lord Stanley of Alderley, believing that it would produce a much fairer distribution of the value of quota between the landlord and the outgoing tenant". I am bound in all fairness to agree with the noble Lord, Lord Belstead, when he says that the Government amendment is a shift in the right direction. However, whether it is a big enough shift, or whether it is a fair enough shift, is another matter. Without detaining the Committee much longer I would say that this is so important a matter to such an important segment of the agricultural industry that I think the noble Lord has a duty to take this back again and to come to us at Report stage, having studied the implications of all the figures.

I believe that Lord Stanley's amendment would be fair to the landlord, and I also believe that it would be fair to the tenant. The Committee will bear in mind that agricultural tenants have recently gone through an enormously difficult time, and they deserve the most careful consideration. I am not asking the noble Lord to give a final decision now: I am asking him to take the matter away and to come back to your Lordships' House on Report and to give us the benefit of the further discussions which he may have had with his right honourable friend.

Lord Belstead

I always listen with the very greatest care to what the noble Lord, Lord Cledwyn of Penrhos, says. The noble Lord was a Minister previously, and he has unrivalled experience. However, there is one difficulty as regards what the noble Lord has just said. The noble Lord understandably attributed some of his views on this particular matter to briefs which had been issued by the Milk Marketing Board. I think it is fair to say that the Milk Marketing Board's assessment understates the value of the Government's proposals to tenants. For example, it ignores the fact that we have allowed for the full effect of 10 per cent. quota cut-back even though many tenants have had some of that cut-back made up.

What I am really saying is that I think—and I repeat, "I think"—that probably the Milk Marketing Board brief was written just before the Government tabled their amendments last week. I referred to this matter a little earlier this afternoon, and the noble Lord will forgive me for repeating it now. Indeed, I hope that all Members of the Committee will forgive me for repeating one more point, and that is: for goodness sake, let us be fair to all tenants, both incoming as well as outgoing. We are talking about very large sums of money in this particular schedule to the Bill, and quite rightly so, in the interests of milk tenants who have suffered very considerably from the imposition of quotas over the last two and a half years.

However, we can only go so far. The Government have genuinely tried to go a long way this afternoon, and I know that some of my noble friends have been worried that the Government have gone as far as they in fact have. We have all looked at the matters carefully. We have thought seriously and, as regards this amendment, I have to say quite seriously that I think that it goes too far as well as not being practically possible.

Lord Cledwyn of Penrhos

I am most grateful to the noble Lord, whose observations I obviously respect. In reply to my point about the Milk Marketing Board he prefaced his remarks with the words, "I think". He was not absolutely certain. He said, "I think" that they drafted these observations before the Government published their amendments. The noble Lord may or may not be right, but given the importance of this matter he should be absolutely sure before he stands at the Dispatch Box to make a final definitive statement on behalf of the Government.

I suggest, therefore, that the noble Lord's speech supports my argument that he should take the matter away and talk to the Milk Marketing Board and get the benefit of its advice. Certainly from my experience—and this is probably true of the noble Lord—the Milk Marketing Board was the one body to which I listened on questions of milk production and the dairy industry. It is the one body whose observations I took very carefully into account. Therefore, I say say to the noble Lord that if he is not sure now when he stands at that Dispatch Box that the Milk Marketing Board drafted its observations before or after the Government tabled their amendment, then it is his duty to go back and talk to it and to come back to your Lordships' House and give us the benefit of that consultation.

Lord Belstead

I was indulging in a courtesy. The figures which the Milk Marketing Board had set out in its briefs are not correct.

Lord Mackie of Benshie

This weeping over the incoming tenant is a little inaccurate, to put it mildly. To think that the landlord will not extract his full share of the quota value by way of rent or in some other way is absolute nonsense. The hard-pressed landlord—and we have heard them today—will of course do that, but the tenant does not need to pay it. If he does not want to go into dairying, if it is too expensive, he will go into something else. The argument that we must be fair to the incoming tenant has nothing to do with justice for the tenant who is going out.

Lord Stanley of Alderley

First, I should like to repeat what the noble Lord, Lord Cledwyn, has said: this is a very important matter which gets everyone very steamed up. As I have said, I spent most of the beginning of this afternoon somewhere on the ceiling, and I am just about coming down. We must return to the matter again because it affects so many people.

I must also thank the noble Lord, Lord Mackie of Benshie, for the last point which he raised about the incoming tenant. I thought that I had laid that point to rest, but I obviously had not done so. There will be a value of quota on that farm when the tenant leaves. The incoming tenant will have to pay for that. He may pay for it in tenant's rights as he comes in, in notes. But it is much more likely, I suggest, that the landlord will charge him extra rent. It does not matter one hoot whether it belongs to the outgoing tenant or the landlord: the money is still there for the incomer. If you cannot see that, I cannot explain it any better than the noble Lord, Lord Mackie of Benshie, tried to do.

I should have liked a simple amendment. As I said to the noble Lord, Lord Walston, and to the noble Lord, Lord John-Mackie, I am quite happy to go back to a 50–50 division: let us start in the middle of Clause 11 with no schedule. However, that was not accepted in the Commons.

As far as my noble friend Lord Onslow is concerned and the point which he raised about negotiable matters, I do not want to go down that path. It still does not solve the problem of where we are now. The Committee knows my feelings—I would not have quotas anyhow. I am like the person who said, "I wouldn't have started from here, anyhow". However, we are here and we have to solve the matter. That is the Committee's job.

I understand very well the point made by my noble friend Lord Middleton that I am being greedy. I think that my noble friend on the Front Bench thinks that I am being greedy. It will be up to the Committee to decide. As the noble Lord, Lord Cledwyn, said, it will require a judgment of Solomon. You will have to decide between us in the end. You will have to make a decision, if not now, later. It will not be now because we have not seen the end of the story. As has been mentioned, the Milk Marketing Board has issued four or five different briefs. I do not know whether my noble friend on the Front Bench has the most up-to-date brief. There are no dates on mine, and I keep getting myself in a muddle as to which brief I am looking at. I ask my noble friend to ask the Milk Marketing Board between now and Report how it sees his new amendment. I think—and I only say, "I think"—that the last brief which I saw from the Milk Marketing Board took into account his amendment, but I shall not swear to it.

My noble friend on the Front Bench says that my amendment is imprecise. As the noble Lord, Lord Mackie of Benshie, has said, I do not think that it is any more imprecise than his. However, I can certainly try between now and Report to make it more precise. I accept absolutely that I have moved in favour of the tenant compared with my noble friend Lord Middleton. Of course I have done so. I do not hide my light (if I can call it that) under a bushel. Again, the matter will have to come back to your Lordships to decide whether or not it is the landlord who should receive it. He certainly works hard. He owns the land. I was a tenant, and I am trying to see whether my noble friend Lord Butterworth is present because he was my first landlord. I was a tenant for many years. I greatly liked the system, and profited from it. I should hate to see it ruined. However, the tenant also works hard, particularly the dairy tenant. He gets up at 5 o'clock every morning. It is slavery. He deserves something, too.

I know that my noble friend will think about this matter between now and Report. If we could come nearer a judgment it would be to everyone's advantage. At the end of the day I am sorry to say your Lordships will have to listen to the arguments again and will have to decide. Bearing that in mind, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6 p.m.

Lord Belstead moved Amendment No. 32: Page 20, line 9, leave out ("in connection with the production of cow's milk") and insert ("for the feeding, accommodation or milking of dairy cows kept on the land").

The noble Lord said: I beg to move Amendment No. 32, and I wish to speak also to Amendment No. 33.

I mentioned earlier when we discussed the government amendments to paragraph 6 of Schedule 1 that in assessing the standard quota for any land account should be taken of the area of land used by the dairy cows only, excluding land used by followers. It would therefore seem appropriate when assessing the relative contributions of the landlord and tenant that a similar concept should be used. The purpose of these amendments is to achieve that aim. The tenant's share of the standard quota will be related to his dairy improvements and fixed equipment on the land used for the feeding, accommodation or milking of dairy cows kept on the land. The rent paid to the landlord similarly will be based on the same land. I beg to move.

Lord Mackie of Benshie

I wonder whether the Minister can answer a few questions for me on this matter. How is the rental value to be calculated? Is it to be at the cost of overdraft at the present time on the initial cost of the buildings? Is it on a valuation of the buildings if he has put up the buildings? How is it to be done? Is depreciation to be taken into account? If he can explain that to me I shall be most grateful.

Lord Belstead

Annual rental value at the end of the quota base period, normally 1983, of the tenant's dairy improvements and fixed equipment is to be the basis, so it is proposed in paragraph 7 of Schedule 1—that is, so far as the tenant's contribution is concerned—that the annual rent paid for the land used for the feeding, accommodation and milking of dairy cows during the base period will be the assessment of the landlord's input.

Lord Mackie of Benshie

But how do you calculate the tenant's bit? I asked whether you calculated it on what he would pay on overdraft interest. There does not appear to me to be a method of calculating the value of old buildings which have been put up 10 years previously by the tenant. It is a very difficult matter and one on which we need some guidance.

Lord Belstead

I should have thought that the answer I gave first does not include overdraft interest. It is a straight annual rental value at the end of the quota base period of the improvements and the fixed equipment. If that leads still to trouble of interpretation for the noble Lord, perhaps I may write to him.

Lord Mackie of Benshie

I am sorry to bother the Minister, but does he mean that perhaps you would get an arbitrator or arbiter to assess the value of the buildings? Is it the annual value at which we are looking?

Lord Belstead

I have just been passed a note to the effect that of course if it has been genuinely written down one will take the written-down value. Does that take us a step further forward?

Lord Mackie of Benshie

A step backwards so far as this amendment is concerned.

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 33: Page 20, line 17, leave out from ("improvements") to end of line 18 and insert ("to, or tenant's fixed equipment on, land used for the feeding, accommodation or milking of dairy cows kept on the land in question").

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 34:

Page 21, line 44, at end insert—

("(2A) In any case where on the termination of the tenancy in question a new tenancy of the land or part of the land may be granted to a different tenant by virtue of a direction under section 39 of the Agricultural Holdings Act 1986 then, as respects any claim in respect of that land or part, references in sub-paragraphs (1) and (2) above to the termination of the tenancy shall be construed as references to the following time, namely—

1. (a) in a case where no application is made under that section within the period within which such an application may be made; the expiry of that period;
2. (b) in a case where every such application made within that period is withdrawn, the expiry of that period or the time when the last outstanding application is withdrawn (whichever is the later);
3. (c) in a case where the Agricultural Land Tribunal refuse every such application for a direction under that section, the time when the last outstanding application is refused; and
4. (d) in a case where the Tribunal give such a direction, the relevant time for the purposes of section 46 of that Act;

and no notice may be served under sub-paragraph (1) above before that time.").

The noble Lord said: Amendment No. 34 went with Amendment No. 27. I beg to move.

On Question, amendment agreed to.

Lord Belstead moved Amendment No. 35: Page 22, line 2, after second ("tenancy") insert ("or, in a case where sub-paragraph (2A) above applies, after the time substituted for the termination of the tenancy by virtue of that sub-paragraph,".

The noble Lord said: This amendment also is consequential on Amendment No. 27. I beg to move.

On Question, amendment agreed to.

Lord Belstead moved Amendments Nos. 36 and 37:

Page 24, line 31, leave out paragraph (d).

Page 24, line 46, leave out ("revenue") and insert ("revenues").

The noble Lord said: I beg to move Amendments Nos. 36 and 37 together. The first of these amendments is a technical amendment. Paragraph 17 of Schedule 1 relates to Crown land and provides that such land will be subject to the schedule or to such modifications as may by regulations be prescribed. Paragraph (2)(d) refers to land held in trust for Her Majesty for the purposes of a government department and states that the department will represent Her Majesty and be deemed to be the landlord. The advice now is that this subparagraph is no longer required because government land nowadays is held always on trusts directly vested in the appropriate Secretary of State or Minister who will accordingly be the landlord under the general law.

Amendment No. 37 is a purely drafting amendment. I beg to move.

On Question, amendments agreed to.

Lord Belstead moved Amendment No. 38:

Page 25, line 47, at end insert— ("(1A) In this Schedule references to land used for the feeding of dairy cows kept on the land and to dairy cows have the same meaning as in paragraph 6 above.").

The noble Lord said: This amendment is consequential on Amendment No. 32. I beg to move.

Lord Mackie of Benshie

I do not want to hold up the Committee, but really we are going back to further complications. It was my impression that this amendment and the previous one meant practically the same thing as the amendment of the noble Lord, Lord Stanley. I think I recall that the Minister said that the tenant would be compensated for the skilful feeding of concentrates over and above the standard quota. He may or may not have said that, but certainly the inference was that it was one of the things that a tenant could profit from in raising his quota. I accept the amendment quite happily, but I think it illustrates the enormous complexity of the Bill and the need to consider further whether a simpler solution could not be found.

Lord Belstead

With respect to the noble Lord, Lord Mackie of Benshie, if I may say so there is a world of difference between the Government's proposal in Amendments Nos. 30 and 32, which seeks—and the Committee has agreed—to use as the basis for calculations the land used for the feeding of dairy cows when looking at what ought to be the quota on that particular farm, taking into account normal management, and my noble friend Lord Stanley's amendment, Amendment No. 31, which we have disposed of, which specifically said that one only took into account the actual land itself and the feeding of no additional concentrates in deciding what the standard quota ought to have been. I hope that makes it clear. I think the amendments are entirely different, and Amendment No. 38 is really consequential on Amendment No. 32. I beg to move.

On Question, amendment agreed to.

On Question, Whether Schedule 1, as amended, shall be the First Schedule to the Bill?

Lord Middleton

I think that had my amendment been approved by the Committee, Schedule 1 would have fallen. Clearly, as the Committee did not agree to my amendment, Schedule 1 must remain part of the Bill.

Schedule 1, as amended, agreed to.

The Deputy Chairman of Committees (Lord Wells-Pestell): Amendment No. 39.

The Minister of State, Scottish Office (Lord Gray of Contin)

I beg to move that consideration of Amendment No. 39, this new schedule, be postponed until after Amendment No. 75.

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

Lord Gray of Contin moved Amendment No. 40:

After Clause 11, insert the following new clause:

("Scotland: Compensation to outgoing tenants for milk quota.

.—(1) Schedule [Scotland: Tenant's compensation for milk quota] shall have effect in connection with the payment to outgoing tenants who are—

1. (a) tenants of agricultural holdings within the meaning of the Agricultural Holdings (Scotland) Act 1949;
2. (b) landholders within the meaning of section 2 of the Small Landholders (Scotland) Act 1911;
3. (c) statutory small tenants within the meaning of section 32(1) of that Act;
4. (d) crofters within the meaning of section 3(2) of the Crofter (Scotland) Act 1955,

of compensation in respect of milk quotas.

(2) On a reference to arbitration or, as the case may be, on an application to the Scottish Land Court regarding the fixing of a rent under any of—

• section 6 of the Crofters Holdings (Scotland) Act 1886;
• section 32(7) of the Small Landholders (Scotland) Act 1911;
641
• section 7(1) of the Agricultural Holdings (Scotland) Act 1949;
• section 5(3) of the Crofters (Scotland) Act 1955,

the arbiter or, as the case may be, the Scottish Land Court shall disregard any rights the tenant may have under Schedule [Scotland; Tenant's compensation for milk quota] of this Act.".)

The noble Lord said: Perhaps it may be for the convenience of the Committee if, in moving Amendment No. 40, I speak also to Amendment No. 39 and Amendments Nos. 73 and 74. These amendments introduce a new clause and schedule to the Bill to provide in Scotland for compensation by landlords to tenants in respect of milk quotas on the termination of the tenant's lease. This amendment is broadly comparable to the provisions for England and Wales contained in Clause 11 and Schedule 1, and takes account of such additional amendments thereto, introduced earlier by my noble friend Lord Belstead, as are relevant in a Scottish context.

This amendment is the outcome of a great deal of discussion between the Government and the agriculture industry. These discussions have not been easy and have been conducted against a background of highly emotive public debate. We have worked hard in Scotland for an acceptable agreement with representatives of landlord and tenant interests, and it is a source of deep regret to me that it has not been possible to achieve a consensus view with these bodies as to how the matter should be resolved, especially in view of the good relationship which exists in Scotland between landlords and tenants, and, indeed, the good relationship which exists between both bodies and the Scottish Office. In these circumstances, and given the Government's acceptance that waygoing dairy tenants have a right to compensation in milk quota, we have had to devise a statutory framework which balances the interests concerned and which allows the individual circumstances of each case to be taken into account.

At this stage I must take issue with what my noble friend Lord Burton said a little earlier, when he suggested that something was just being pushed off on to Scotland and that there had been insufficient time for consultation. I was involved in several meetings with both the Scottish Landowners' Federation and the Scottish National Farmers' Union. I was engaged in two special meetings with them, each of an hour's duration, in an endeavour to try to bring the sides a little closer together. Although at the second meeting the mood was harmonious, I am afraid that I failed in my endeavour to try to reach a consensus, but it is quite wrong of my noble friend to suggest that every effort was not made to try to be helpful so far as a solution was concerned.

The basic legislation governing milk quotas comprises European Community regulations. This means that we have to be careful to avoid any discrimination between farmers in similar circumstances north and south of the Border. Nevertheless, clearly some recognition has to be given to the particular circumstances of the Scottish dairy tenant where they differ from his counterpart south of the Border, and I shall return to that point in a few moments.

All in all, I believe that the arrangements we have devised in this new clause and schedule provide a workable and fair solution to this thorny issue. The need for a separate provision for Scotland in the Bill is of course caused by the different and more complex body of Scottish land tenure legislation, and this, along with weather, accounts almost entirely for the differences from the provisions for England and Wales.

As the Committee have already agreed to this approach for England and Wales, I shall not trouble you with a further detailed exposition of the approach but instead will concentrate of the differences to which I have referred. The first and most significant is the need in Scotland to cater for four different land tenure systems and categories of tenant farmer: namely, tenants of agricultural holdings; crofters; small landholders; and statutory small tenants. Within these various systems there are differences in provisions for arbitration, in certain circumstances involving the Scottish Land Court instead of, or as an alternative to, an agricultural arbiter; and in provision for succession.

The arbitration and succession provisions in the context of this amendment are also the main differences between land tenure legislation north and south of the Border. The succession provisions in particular are much more liberal in Scotland in their protection of the security of tenure enjoyed by the tenant farmer. The Committee may be interested to note that one result of this will be that we anticipate far fewer cases in Scotland than might be expected as a direct proportion of those likely to arise in England and Wales. Indeed, only a handful of cases per year seem likely.

A further difference in paragraph 2(4) of the schedule is the inclusion of provision to override this schedule where the landlord and tenant agree in writing as to the amount of compensation to be paid. This reflects the situation which obtains for compensation available under existing legislation. In addition we have made provision in paragraph 7(4)(c) of the schedule to ensure that certain private agreements between landlords and tenants in relation to waygoing compensation payable under existing legislation, which are a feature of the Scottish system, do not unfairly disadvantage the tenant in the calculation of the amount he is due in respect of quota compensation. Finally, there are some minor differences in a few of the terms used in the schedule.

May I now return to the point I made earlier about the recognition of particular circumstances of Scottish dairy tenants where they differ from their counterparts in the South. These circumstances, such as a greater dependence on marginal land and on bought-in feed, are of greater significance in the case of the tenant dairy farmers in the original less-favoured areas in Scotland and will be reflected in the standard yield per hectare figure which will be prescribed by the Secretary of State by statutory instrument. The figure we have in mind for original less-favoured areas in Scotland is 5,500 litres per hectare. This concession is particularly significant for Scottish dairy tenants since the majority are located in the less-favoured areas. Figures for extended LFAs and non-LFA tenants are likely to be the same as for England and Wales. We have in mind to prescribe an average yield figure for the original LFAs in Scotland of 6,200 litres per hectare.

In conclusion, I commend these provisions to the Committee as a fair and balanced solution to the milk quota compensation issue in Scotland which takes account not only of the complex body of existing legislation but also of the particular circumstances, production patterns, and farming practices of the Scottish dairy tenant. I beg to move.

Perhaps I may now briefly make mention of Amendments Nos. 73 and 74. These amendments to Clause 16 are consequential amendments that require to be made if Amendments Nos. 40 and 39, to which I am also speaking and which deal with compensation for outgoing tenants for milk quotas, are inserted in the Bill. It is desired that the Scottish clause on compensation for milk quotas should come into force on the same day as the English clause on milk quotas. Clause 16(2) provides for certain sections of the Bill to be brought into force by means of an order made jointly by the Minister of Agriculture, Fisheries and Food and the Secretaries of State for Scotland and Wales. One of these sections is the clause in the Bill on milk quotes. The first amendment is to the effect of including a reference to the Scottish clause on milk quotas; the second, small amendment being made in line 29 is consequential on the first.

Lord Burton

Until recently, in Scotland landlords were at a disadvantage compared to their English neighbours. They were allowed to revise rents only once in every five years. Thus some Scottish landlords are sitting with three, four or five-year-old rents. Indeed, for crofters it is seven years. I know that the Conservative Government have slowed down inflation, but it will be appreciated that a five-year old rent is now far too low, and yet the Government's proposals are that tenants will benefit from these out-of-date rents. Once again this is quite unfair to the landowner. In three years' time this situation will cease to exist; but the Government are desperately trying to rush through this legislation. Are Scottish landowners to suffer until then?

The schedule also excludes cereal crops for feeding dairy cows. This is part of the dairy enterprise, and why should this land be excluded? The schedule also refers to the fixed equipment which is relevant to keeping dairy cows on the tenancy. Would this include retail equipment such as bottling plant? The schedule also refers to the situation in relation to crofting. I do not know of any crofts with a dairy unit, but no doubt there are some in Orkney. Clearly there has been no opportunity to consult over the weekend with the Orcadians. The seven-year revisions of what are pittances of rents for crofts must be an unfair comparison with the rents of ordinary agricultural holdings.

I think that the landlord's position could well be difficult in this decision. Clearly, we must have more consultation on this matter and we shall reserve our position. Scottish landlords must not be placed at a greater disadvantage than their English counterparts. From what my noble friend has just said, it seems that tenant farmers will be better off in the poorer areas where there is an LFA and presumably that means that in these areas the landowner will have to pay greater compensation. Because the land is poorer it seems totally unreasonable that the landowner should have to pay higher compensation. We hear that the English National Farmers' Union is possibly being greedy, but it seems to me that the Scottish union is being even more greedy. I do not see why Scottish tenants should have more than English ones.

I submit that once again the schedule is bad. It has been taken largely from the English proposals. It states that 'Dairy cows' means milking cows and calved heifers". In England many dairy farmers rely on what I believe is called a flying herd, that is bought-in cows in milk which are then sold out when they are dry. In Scotland, very wisely, it is not often that this happens. The farmer is much more inclined to rear his own stock. Surely therefore the words should be "dairy animals" and that should cover the whole dairy herd.

I am afraid I have given my noble friend quite a few, perhaps rather thorny, questions. If he cannot answer them now then perhaps between now and Report stage I may have an answer to these problems.

Lord Stodart of Leaston

I am bound to say I am a little sad that my noble friend has allowed himself to be taken through the uncharted waters in the wake of his colleagues at the Ministry of Agriculture because, so far as I am aware, there is no history or experience in Scotland of translating the worth of a tenant's improvements into annual rental values. Yet these figures are an essential element in determining the tenant's share of the standard quota. I am bound to say that I should have thought in echoing or repeating my earlier cry for simplicity in all this what a marvellous system we already have in Scotland so far as hill sheep transfers are concerned. The system is known as the hefting of a stock which is bound to the farm on which it is running and I should have thought it would have been admirable to build this Scottish system of valuation of an outgoing quota on a foundation which exists in Scottish law but not, I think, in English law. We should have been spared all the arguments we have had because the incoming tenant merely takes over the stock at valuation and the landlord would be left out of it altogether with no argument at all.

Lord Mackie of Benshie

I agree entirely with the noble Lord, Lord Stodart of Leaston, that it is a pity that we should have had the debate entirely on the English half, followed by a short speech by the Minister, on the differences (which will be beautifully set out as the Scottish Office is very good at that) between the systems of crofting, land tenure, and so on. I think we can trust the Scottish Office to do that well enough.

But to follow the basic method in England was a grave mistake. There is no question but that what the noble Lord, Lord Stodart, has said is right. Nothing could be simpler than to follow the taking over of a sheep stock; the quota is valued, the new tenant takes it over and that is it. It could have been easily done and no one need have any fear. The noble Lord, Lord Burton, need have no fear that he would be denuded of all his worldly goods. He knows that if he lets the farm they will take it over and the poor chap—I mean the noble Lord!—will have cause, I fear, greatly to regret the reduction in the period for arbitration from five years to three years, as I am certain that the next tenant who comes up for arbitration on his rental will have it reduced. I do not think he should beef too much about that.

I should like to ask the Minister how he gets the figure of 5,500 litres per hectare, which is well over 1,000 gallons per cow, whereas the old figure for keeping a cow used to be 2½ acres, which I understand is a hectare. It appears to me to be a high figure for the less-favoured areas, In the original less-favoured areas, I think he said, to produce 5,500 litres off 2½ acres from that sort of land appears to me to be a creditable performance. I did not quite understand the other figure, also for an LFA, of 6,200. Was that for better LFAs? I should be interested to hear. But this is, I am sorry to say in a Scottish debate, rather pointless. We have had the argument on the English figures. The Scottish Office has followed the English method so those of us who oppose this or those of us who think it is a dog's breakfast reserve our position until Report stage. However, I should like an answer to those two questions.

Lord Stanley of Alderley

I am sorry to come in on Scottish law, but there are two small technical points. I understood my noble friend to say that for less-favoured areas the standard quota would be 6,000 litres. I did not hear him say anything about ordinary areas. In paragraph 6 it comes, where he has "standard yield per hectare". Do I gather this will be the same as the English at 4,500? I wonder whether he would let me know that. I was concerned about another remark. My noble friend talked about tenant's improvements. He said if they were genuinely written down that would be the value. Can he explain that more fully?

Lord Mackie of Benshie

I should like that too.

Lord Gray of Contin

I am sure that when I give my noble friend Lord Stanley his answer he will be willing to share it with the noble Lord. My noble friend Lord Burton asked me at the outset: why exclude loose grain from harvested crops?—farmers often grow grain for feeding their dairy cows. This is to ensure an even basis for assessment. The standard yield per hectare which will be prescribed will be based on a stocking ratio figure which represents the average number of cows kept per hectare of grass and fodder crops. This figure cannot be compared directly with one which takes account of areas used for grain crops.

My noble friend also made a point about rents and said that the rents would be out of date. The rent applicable is the rent at the relevant period of 1983. I think it would be possible to argue this both ways. It is almost a swings-and-roundabouts situation.

My noble friend also asked about dairy followers. They are excluded, of course, but my noble friend suggested that they should not be excluded. Quota is milk produced. Dairy cows produce the milk; dairy followers do not produce the milk. The numbers of followers carried vary by production practice. We felt that that is not a consistent enough basis to introduce into a statutory calculation. The noble Lord raised a number of other issues with me and suggested that I might write to him with answers to them. I am happy to accept that suggestion.

My noble friend Lord Stodart of Leaston highlighted the differences between the Scots and the English and suggested that we had perhaps followed our English colleagues rather too closely. This was echoed by the noble Lord, Lord Mackie of Benshie, but I would remind my noble friend and also the noble Lord, Lord Mackie of Benshie, that we are dealing with a situation which has a very strong relationship to our membership of the European Community. The scope for difference between what we have south of the Border and what we have north of the Border is limited.

We believe that we have been able to reflect the more difficult circumstances which exist north of the Border, particularly in the less favoured areas, but essentially the principles on which the statutory instrument will be made will have to be the same north and south of the Border. I think, to be fair, that this was broadly recognised by the Scottish National Farmers' Union from the outset. They were anxious that the differences should be reflected; but they were sufficiently realistic to appreciate that those differences could not be as radical as they would wish.

The noble Lord, Lord Mackie of Benshie, asked about the calculation of annual rent. I dealt with this when I answered the noble Lord, Lord Burton, but I shall perhaps become a little more forthcoming and I could give the noble Lord, Lord Mackie of Benshie, a copy of the letter which I let my noble friend have which will deal in more detail with this point.

My noble friend Lord Stanley asked about the standard yield in the original less favoured areas. The noble Lord, Lord Mackie, also asked about this. I quoted 5,500 litres. This is a reflection of the difference which exists north and south of the Border. The other areas, the non-LFA areas, and the new LFAs, will be the same as in England and Wales.

The question of the written-down value was also raised by my noble friend and had previously been raised by the noble Lord, Mackie, with my noble friend Lord Belstead. I cannot do better than give the answer which my noble friend gave: that the depreciation in the asset value occurs principally because of the passage of time. That is the depreciated value, the written-down value, and that is the value which will be accepted.

Lord Mackie of Benshie

Is the noble Lord telling me that if buildings have been put up at a cost of £50,000 and they are 10 years old and are therefore written down, the tenant's fraction will not improve by one iota because of the buildings although they may be valued today at £150,000?

Lord Gray of Contin

The tenant's balance sheet will indicate that the buildings have been written down. While it is our endeavour to try to be as fair as we possibly can to the tenant, it is rather difficult to have it both ways. If the buildings are completely written down, they will not affect the tenant's fraction as much as they would if they were only half written down. But in such circumstances I am sure that the noble Lord would agree that there will be other issues which will be taken into account in the tenant's fraction. But so far as the buildings are concerned we cannot do other than take the asset value.

Lord Stanley of Alderley

I am afraid that I am at a loss now. What I understood to be the case not in Scotland but in England—though I understand it is the same—is that when we discover how to do the tenant's fraction the valuer will come along, look at the buildings as they are today, and say to himself, regardless of what the tenant has put into it, "They are worth X". If, on the other hand, it is going to be written down, as the noble Lord has said, I think it is time the tenant really jumped in the sea. Rather than ask my noble friend to answer this now perhaps I may ask him to write to me between now and Report because I am worried about this one.

Lord Gray of Contin

I can perhaps do even better. I shall give an answer and write to my noble friend. The situation is that arbiters are accustomed to assigning values to tenant's improvements in rent determinations. The method will be to assess the full rental value of the holding and from that deduct their assessment of the rental value of the holding where there are no tenant's improvements or fixed equipment. The difference will be the annual rental value of the tenant's improvements and the fixed equipment.

Lord Mackie of Benshie

The noble Lord the Minister has just completely contradicted what he said before—that it will be based on the written-down value. But that is sensible; I thank him very much.

Lord Gray of Contin

If I have completely contradicted what I said earlier, I am sure that will give the noble Lord great joy. He will have an opportunity to study this when he sees the report and my reply. I am glad to hear that he is satisfied at the end of the day.

Lord John-Mackie

If the noble Lord, Lord Stanley, feels that he can enter a Scottish argument, I think that a renegade Scot can enter it as well. Quite frankly, to me these 10 or 11 pages containing an extra schedule seem to be quite ridiculous. I have farmed in both Scotland and England dairy and arable land at the same time and I could never see any difference whatsoever between the two. I cannot for the life of me see dairy farming in Scotland in less favoured areas as being very different from dairy farming in Wales in less favoured areas. I should be glad to know how the noble Lord was persuaded by the Scottish NFU that there is this great difference.

Lord Gray of Contin

I am extremely interested to hear the noble Lord say this, particularly with his experience of farming. I think that he would find it very difficult to spend as much time as I have with the Scottish NFU and not be persuaded by some of the arguments that they put forward. Apart from anything else, I think there is a very considerable difference in the physical attributes of the less favoured areas in many parts of Scotland, particularly the old LFAs, compared with those south of the Border. However, if the noble Lord is suggesting that there should be no difference, I would have to disagree with him very strongly indeed.

Lord Mackie of Benshie

My noble kinsman has lived for too long in England!

Lord Burton

I am grateful to my noble friend for offering to write to me, particularly on the crofting point, because I think we would be getting into deep water if we tried to negotiate that one. I am relieved to say that I am not the landlord of any dairy tenant so that I do not myself have these problems. But in the south-west of Scotland I think they will be very concerned at the suggestion that the landlord of poorer ground is going to have to pay more to his tenant than somebody on better ground. I hope I am mistaken about this, but I think that will be the case. I should be grateful if my noble friend could confirm that that is the case.

Lord Gray of Contin

Yes, that is so.

Lord Stodart of Leaston

May I press my noble friend on one point? Was it not possible to adopt what I suggested about treating the quotas in the same way as "bound" farm stock because of European Community regulations? Was it impossible to do that, or did he not regard it as a good plan?

Lord Gray of Contin

That is a point that we did look at, but the best advice available to me was that it would not be preferable to that which has been presented.

On Question, amendment agreed to.

Clause 12 [Duty to balance interests in exercise of agricultural functions]:

Lord Melchett moved Amendment No. 41: Page 10, line 2, leave out ("in relation to any land").

The noble Lord said: I beg to move Amendment No. 41, which brings us to Clause 12 and the new clause inserted by the Government, which was warmly welcomed by a number of us during our debates last week. I am happy to repeat that today. I do think it is a pity that the clause could not have been contained within my honourable friend's Wildlife and Countryside (Amendment) Bill last summer, when it was pushed very hard and the Government said it would be quite impossible for a statutory duty of this sort to be imposed. I am delighted that things have changed so rapidly in such a short space of time.

This is a probing amendment because I want to ask the noble Lord the Minister why the functions connected with agriculture in which the Minister has to balance the various factors mentioned in paragraphs (a), (b), (c) and (d) are restricted by the phrase "to any land". I particularly wanted to ask the noble Lord whether this meant, for example, that in making appointments to advisory bodies and the many other bodies to which the Minister of Agriculture makes appointments this new clause would not be applying. I beg to move.

6.45 p.m.

Lord Belstead

I am grateful to the noble Lord, Lord Melchett, for welcoming this clause. I think I ought just to say, as we embark on Clause 12, that the arguments about whether an amendment to a clause of this sort ought to have been written into a Private Member's Bill some months ago were in the context of furthering a duty rather than introducing a balancing duty, which is found in this particular clause. And, of course, in this particular case we have four different considerations which need to be balanced and which we believe are important, whereas in a particular amendment to that Private Member's legislation some months ago there were only two considerations (agriculture and conservation) which were under consideration. So we are talking about a different kind of clause and also a much wider-ranging one. We are also talking about a different kind of duty.

Clause 12 is about balancing the needs of an efficient and stable agricultural industry with the other interests in the countryside. The primary purpose of agriculture is food production, and since agriculture is carried out on the land and since the interests cited in the clause all relate very closely to the land, I think it is important that the clause should be clearly defined in terms of functions relating to land.

I think the achievement of the required balance would not be possible were that not the case. If a balance is to be achieved then the interests involved, I think, must be identifiable in some sense. Even if not strictly quantifiable, they must be what I would call in focus; and by widening the scope of the clause to include all agriculture functions I think one could bring in functions in relation to which the extent of the various interests for consideration could not easily be related to the others with which they must be balanced. For instance, it occurs to me that it might be difficult to assess the balance which one ought to achieve between the effects of the price-fixing settlement and the public enjoyment of the countryside, just to give one example.

The noble Lord was generous in saying that the clause is to be welcomed. Of course that is so, because it requires the Ministry to take into account a wide range of considerations in making decisions. I think we have got the wording right. if we are serious, as we certainly are, in wishing to achieve a balance, then we must not jeopardise that achievement by widening the scope of the clause to such an extent that eventually we lose sight of the original purpose. I hope that in the circumstances the noble Lord will feel that this is a clause which is wide and really ought not to be widened further.

Lord Melchett

I did ask the noble Lord a specific question, but I may have put it too briefly and perhaps he missed it. I shall be delighted to put it again. What I was trying to find out for clarification, for those outside your Lordships' Committee as well as those inside, is whether the new duty, in being restricted to land, will not apply, for example, to appointments made to advisory committees and similar bodies by the Minister. I had in mind the Hill Farming Advisory Committee for England, Wales and Northern Ireland and the sub-committee for Wales, about which I recently asked the noble Lord a Question for Written Answer. The noble Lord said in reply to my Question that when Clause 12 (the clause we are now discussing) was enacted it would provide statutory backing for what Ministers of Agriculture are already doing. He also said (and I quote from col. 534 of Hansard on 22nd May): In keeping with its existing approach the membership of the Hill Farming Advisory Committee for England, Wales and Northern Ireland and its sub-committee for Wales already embraces a considerable range of expertise and experience in these broader areas, as well as covering practical involvement in hill farming". The broader areas are of course those covered by the four paragraphs in this clause. What was not clear, if I may say so, from the noble Lord's reply to that Question—nor is it clear from the reply which the noble Lord has given to my amendment today—was whether the appointments made by the Minister of Agriculture to the Hill Farming Advisory Committee and similar bodies are going to be governed by the new clause that we are discussing now or whether the appointments are simply to be made on a wide-ranging basis because that is what the Minister already chooses to do. Could the noble Lord help me on that particular point?

Lord Belstead

As the noble Lord says, we have communicated with each other about the Minister's Hill Farming Advisory Committee and, of course, there is a wide range of experience on that committee in regard to all aspects of hill farming. I have a feeling that the noble Lord, Lord Melchett, does not approve of that reply, but I do not really think I can improve on it.

Lord Melchett

I neither approve or disapprove, because that is not the reply to the question I asked, with respect. I asked the noble Lord whether or not, when the Minister comes to make appointments to the Hill Farming Advisory Committee, the clause we are discussing today will cover those appointments.

Lord Belstead

Clause 12 will be taken into account when the committee consider relevant agricultural functions. There again I am not entirely sure that the noble Lord will like that reply, but I think it is the right one.

Lord Melchett

The noble Lord does not like the reply only because it is so obscure and it is difficult to tell what it means. I wonder whether I could ask the noble Lord the specific question: will Clause 12 influence the Minister and will the Minister need to take account of his new duty under Clause 12 when making appointments to the Hill Farming Advisory Committee?

Lord Belstead

If I may say so, the previous answer which I have just given to the noble Lord is the one which I must stick on. We have Clause 12. We take it into account where committees relate to relevant agricultural functions. If the noble Lord feels that in the case of the Hill Farming Advisory Committee the appointments we made were not consonant with Clause 12, then the noble Lord must say so to me. But I do not think one can stand by that thesis.

Earl Ferrers

May I add to this obscurantism and perhaps throw a little clarification on it? The noble Lord, Lord Melchett, has not said what he means by his amendment. As I understand it, at the moment the Minister appoints the Hill Farming Advisory Committee from among those people who he feels are competent in hill farming. What I think the noble Lord, Lord Melchett, means by his amendment is: will the Minister in future be able to appoint, and will he appoint, people who are basically conservationists and not hill farmers? If that is what is implied by the noble Lord's amendment—and I think the answer by my noble friend that he would not wish to do so, is equally obscure—I think my noble friend is right, because the point of the Hill Farming Advisory Committee is to advise the Minister on hill farming and the inference and influence of conservation matters, important thought they are, are secondary to the Hill Farming Advisory Committee.

Lord Melchett

We are on a narrow point and I do not want to prolong the debate, but the noble Lord's reply to my question in Hansard says, unlike what the noble Earl supposes, that the Government are taking into account these wider interests in making appointments to the Hill Farming Advisory Committee, and the membership of that committee apparently already embraces a considerable range of expertise and experience in these wider areas. So I was not at this moment wanting to quarrel with that. I do quarrel with it, but I was not raising that point on this amendment.

What I wanted to know on this amendment was whether the Minister was doing this just because he felt like it, or because in due course Clause 12 would require him do that, when he came to make appointments to the Hill Farming Advisory Committee. The noble Lord, Lord Belstead, was kind enough to give me a general answer, but he has not given me an answer to the specific question: will Clause 12, when it becomes law, cover appointments to the Hill Farming Advisory Committee?

Lord Belstead

Let me follow what my noble friend Lord Ferrers said, and give one more reply to the noble Lord, Lord Melchett. The purpose of my right honourable friend's Hill Farming Advisory Committee is to have advice given to the Minister on hill farming affairs. I was very careful, in starting my reply to the noble Lord, Lord Melchett, on this amendment, to say that we must remember that the primary purpose of agriculture is still food production, but that in carrying out that primary purpose Clause 12 is saying that there should be a balance. That is why the word "land" is there and why paragraphs (a), (b), (c) and (d) are in subsection (1) of Clause 12. The Hill Farming Advisory Committee of my right honourable friend is all about the management of land in the hills; but in getting advice on that primary purpose we will of course be taking into account our duties under Clause 12.

Baroness White

I wonder whether the noble Lord could enlighten us as to the attitude to forestry, because this is the favourite alternative of the Minister of Agriculture for land use in the less favoured areas. Leaving aside the more general socio-economic factors which are referred to in the question of balance, and the conservation matters which are no doubt in the mind of the noble Lord, Lord Melchett, many of us really want to know something which is hardly touched on, if at all, in this Bill—that is, the relationship envisaged between forestry and agriculture as alternative uses of many areas of land. Will the advisory committee have any people who know something about the pros and cons, and advantages and disadvantages, in specific areas with which they will be concerned, of using the land for food production in some shape or form or turning it over to trees?

Lord Belstead

I think it would be fair to say, because I chair the committee and my noble friend Lord Ferrers chaired it before me, that we have a wide range of expertise on this committee and are not wanting members of the committee who have a working knowledge of forestry. But I think the committee would not mind if I said that, when we were specifically considering farmers in the hills and uplands, we would obviously want to have expert advice. I assure the noble Baroness that we would certainly consider the importation of expert advice if we were considering forestry on this committee.

Lord Melchett

I think I have either to withdraw the amendment or to press it, and I am inclined, despite the noble Lord's reluctance to give me a straight answer to a specific question, to withdraw the amendment. I take it from what the noble Lord said in reply to my last intervention that in fact Clause 12 will apply when the Minister comes to make appointments to the Hill Farming Advisory Committee in future, because the noble Lord said that the Hill Farming Advisory Committee is all about land. He did not say yes to my question, but he answered it by saying that the Hill Farming Advisory Committee is all about land. I therefore assume that Clause 12 must apply to future appointments to the committee. If I find after reading Hansard that I have it wrong, I am sure that the noble Lord or somebody else will correct me. But, in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees: Perhaps I ought to point out to the Committee that Amendments Nos. 43 and 44 should be in the name of the noble Lord, Lord Melchett. I call Amendment No. 42.

Lord Montagu of Beaulieu moved Amendment No. 42: Page 10, line 12, after ("physiographical") insert ("and archaeological").

The noble Lord said: I am sure that those concerned with the environment very much welcome Clause 12, which clearly places a formal duty on agriculture Ministers to take into account conservation interests in exercising their functions. However, the definition in paragraph (c) of what constitutes the natural beauty and amenity of the countryside is in my view defective; and I speak, in particular, as the chairman of English Heritage which is the statutory adviser on archaeology to the Secretary of State for the Environment.

It is not perhaps sufficiently understood, notwith-standing the growing popularity of archaeology, that large tracts of the countryside which we wish to preserve are not natural at all, but man-made. For instance, prehistoric field systems, deserted settlements, groups of barrows and other features are part of our rural heritage and often relate inextricably to areas of high scientific value and scenic beauty. It is illogical for Ministers to have regard to conservation of the countryside without reference to the archaeology which constitutes an integral part of what we seek to preserve.

The noble Lord may well put to me that the present wording of Clause 12(1)(c) is sufficiently wide to include archaeological features, but with great respect I must question that. The very strong impression left by the present wording is that this clause is intended to cover only natural flora, fauna and physiographical features. If it is the Government's intention that the paragraph should have a wider meaning, I cannot see why they should object to putting the matter beyond doubt by including a specific reference to archaeological interests.

The present wording of Clause 12(1)(c) is even more illogical when viewed alongside Clause 13(1)(c). There it has been explicitly recognised that there is a need to take not only archaeological but other man-made structures into account in designating environmentally sensitive areas. I believe that at least two of the areas under consideration for designation at the moment contain important archaeological sites. So, in brief, what I am seeking here is not a change in policy, since I assume that it is not the intention of Ministers to ignore our archaeological heritage. I am simply seeking a definition of conservation interests which matches the reality of countryside management. I beg to move.

Lord Denning

I should like to support this amendment. In our part of North Hampshire, when I was young we had seven barrows which were the burial places of the Stone Age people. Now, I am afraid, there are only two left. A high road has knocked off one or two, and agriculture has worked off the rest. They ought to have been preserved. People nowadays go over the fields with metal detectors in order to try and find Roman remains and the like and they call it treasure trove. They make money out of these things that they find. It would be a very good thing to have the word "archaeological" added to the others. I support the amendment.

Lord Walston

As the son of an archaeologist, the father of an archaeologist and the uncle of an archaeologist, I have perhaps some interest to declare. I support the amendment most strongly. This is a matter of very great value and importance, not so much at the present time but for many years. Farmers, in complete ignorance, have very often destroyed places which have potential archaeological interest. This matter has been far too much ignored in the past and it would be extremely valuable if this modest addition to the clause were made. What is more, I think this amendment is completely uncontroversial and I hope that the noble Lord, Lord Belstead, will accept it with both arms.

Lord Melchett

I too should like to support the amendment and make one point which I do not think has been made. In drawing up environmentally sensitive areas and in particular the management prescriptions for environmentally sensitive areas under Clause 13 of the Bill, I understand that county archaeologists were consulted and note was taken of the importance of archaeology and archaeological features in the countryside. If it is possible to do that when designating and deciding on the management of ESAs under Clause 13, it would be very helpful to accept this amendment to Clause 12.

Lord Belstead

I agree with all that has been said on this amendment. Our intention was that archaeological features should be covered. But I quite see that there might be some element of doubt in the minds of those who have a particular interest in the archaeological aspect as to whether these interests are to be taken into account on the face of the Bill.

I had hoped to be able to accept this amendment straight out but I think there is a difficulty in that the word "natural" seems to us to govern the rest of sub-paragraph (c). I think that just to put in the word "archaeological" might not sit very happily with the other words which are there. I should therefore like to give an assurance that the Government accept this amendment in principle but we should like to think carefully about the precise wording. I undertake to bring forward a slightly modified version at Report stage to carry out the intention of this amendment.

Lord Montagu of Beaulieu

I thank my noble friend very much for that assurance, and in view of it I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Swinton

This may be a convenient and rather amicable time to resume the House. In doing so, perhaps I may suggest that we do not return to the Committee stage of this Bill before eight o'clock. I beg to move that the House do now resume.

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

House resumed.