Agricultural Holdings (Amendment) Bill (Hansard, 16 May 1990)

§ Lord Mackie of Benshie
My Lords, I beg to move that this Bill be now read a second time. The Bill deals with resumption of tenanted land in the agricultural sector. It was introduced into another place by my honourable friend Mr. Alex Carlile and amended with the co-operation of the Ministry and the support of the Government.
The facts are as follows. Case B of Schedule 3 of the Agricultural Holdings Act 1986 states that a landlord can give notice to quit if the land is required for non-agricultural use, either where planning permission has been granted, or where it is not required other than by virtue of the town and country planning legislation.
Until July last year the consensus of legal opinion was that the second provision referred only to the Crown being exempt from the requirement of planning consent and that any private landlord wishing to resume possession of tenanted land for normal agricultural use could not do so without having first obtained planning permission.
Then we come to the case of Bell v. McCubbin. In that case the landlord wanted to resume possession of a farmhouse that was being sublet as a residential dwelling. He also wished to let it as a residential dwelling; thus no change of use was involved, and planning permission was not required. The court upheld the landlord in that case.
That is contrary to the thinking on agricultural security of tenure which has been held for the past 40 years. The Bill was then introduced in the other place by my honourable friend. As I have said, it was amended. I do not think I can do better than quote what was said by the Parliamentary Secretary of the Ministry, Mr. David Maclean, at Third Reading: The amended Bill before the House will, it is hoped, make absolutely clear the circumstances when an incontestable notice to quit can be served where land is to go for use other than agriculture. In effect, the Bill provides three circumstances where an incontestable notice to quit can be served under case B. The first is where planning permission has been obtained. That is the same as under existing legislation. The second deals with cases where Parliament has given an effective permission for a particular development. It seems clear that the current Agricultural Holdings Act 1986 also covers the use of land for which an Act of Parliament not dealing generally with town and country planning grants planning permission. That is where the developer does not have to obtain planning permission from the local authority. Those circumstances, together with Crown immunity, are covered by the 1986 Act. The Bill therefore covers circumstances in which an Act gives planning permission. It provides for private and local Acts as well as the various ways in which Parliament may, in Acts or parliamentary orders not forming part of the general town and 377 country planning legislation, remove the need for a planning application. As I have already said, we wish the Bill a fair wind. I am glad that my officials have been able to co-operate with the hon. and learned Gentleman in the measure. I hope that the Bill will reassure tenants, and I commend it to the House". — [Official Report, Conmons, 27/4/90; col. 664.] As I have said, the Bill deals with a fairly simple circumstance. I trust that the House will commend it.
Perhaps I may make one or two remarks about security of tenure and notice to quit for resumption. It was traditionally the practice —and it was certainly so in Scotland—for the landlord to insert into the lease a clause which allowed for resumption for forestry or for building. This was accepted up to a certain amount of the holding by the tenant. In those days land was easy to acquire and there was a good deal of land to let; but land is now extremely scarce. As the provision for compensation allows for only up to six times the rent, it is an extreme hardship for the tenant if a part —a large part or even a small part—of his holding is resumed. This has been accepted by the Government and is accepted generally in agriculture.
It is true that in our system of tenanted land we need more manoeuvre and an alteration to the law. However, the Bill does not deal with new land to let. It deals with agreements made under previous legislation. It has nothing to do with any sensible arrangement which might be arrived at between the NFU and the CLA and backed by the Government. It has to do with past legislation. It is righting a situation which was previously held to be correct in regard to security for the tenant. I commend the Bill to the House.

§ Lord Stanley of Alderley
My Lords, I should like to thank the noble Lord for presenting the case for the Bill so well. This is a modest measure. It merely makes quite clear the intentions of the 1986 Act which, as the noble Lord said, have been thrown into doubt by the Court of Appeal ruling. Doubt and uncertainty in any area can cause chaos, expense and, much worse, hardship. It is surely one of the main functions of this House to try to make legislation as clear as possible. That is what the noble Lord seeks to do in the Bill.
I therefore hope that noble Lords will give the Bill a speedy passage and will resist the temptation to amend it even though many noble Lords—and perhaps the noble Lord himself—would like to see more radical changes to agricultural holdings. This is not the place to do it. I wish the Bill a speedy passage.

§ Lord Gallacher
My Lords, on this side of the House we welcome the Bill, which, as the noble Lord, Lord Mackie of Benshie, said, had all party support in another place. We are grateful to the noble Lord for the manner in which he introduced the Bill. It may seem a somewhat lengthy process to introduce a Bill to rectify an unexpected Court of 378 Appeal decision on the Agricultural Holdings Act 1986, but the case in question is of immediate importance to tenant farmers, and more especially so in the present context of change of activity on farms, including alternatives to agriculture.
The position of tenant farmers in general was well aired in a debate in the House on 18th April last. I quoted then from the speech made by the Minister during the Second Reading of the Bill in another place, a speech to which the noble Lord, Lord Mackie, also made reference. Part of the speech, however, expressed the Government's willingness to see changes in landlord/tenant legislation, subject to finding parliamentary time for such legislation, and change even in the absence of a consensus among interested parties. I hope that, when the noble Baroness replies, she may find time to say whether the view expressed by the Minister in another place still represents the Government's position.
The question in general is one of growing importance in the light not only of the Bill's provisions but also of pending changes in landlord/tenant relationships, especially where local authorities are landlords. A recent BBC "Country File" programme dealt with a change of policy by Cambridgeshire County Council affecting tenant farmers in the southern part of that county. The county council favours alternative use of farmland and is reputedly giving notice to certain tenant farmers. I am not au fait with the nature of the leases concerned —I have no doubt that the terms of the leases have been complied with—but the length of notice in reported cases appears to have been very short indeed. Thus it may be necessary to go for a wider measure of reform than that contained in this modest Bill.
In the meantime, we warmly support it. I give the noble Lord, Lord Mackie, the glad tidings that we shall not be seeking to amend it in Committee.

§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington)
My Lords, perhaps I may say Amen and Hooray to that last remark. Noble Lords will recall the excellent debate on the tenanted sector in which some of us took part last month. It is with some trepidation that I once again venture into matters relating to this complex area of the law so soon after that discussion. But, with landlord/tenant issues very much to the fore at the present time, it is perhaps not surprising that we should be discussing it again today.
Before moving on to the Bill which is the subject of our debate tonight, it may be helpful if I take the opportunity to elaborate on some of my previous remarks about the future of the landlord/tenant system. I believe that an industry can thrive only if new blood can get in to promote active life. The agricultural industry is no exception. We shall always need good, healthy food at competitive prices, but now the industry needs farmers who can respond to market forces, contribute to diversity in rural economy and farm in an environmentally friendly way.
379 The decline in the area of tenanted land from 90 per cent. in the early part of the century to 37 per cent. now is putting a tourniquet on the industry's essential blood supply. The shortage of land to rent forces up initial rents, making it difficult for new tenants to make ends meet. In turn that puts pressure on the rent review mechanism. It also means that, when a landowner has an opportunity to develop land with a sitting tenant, there is a major crisis for the tenant and his family. It is bad enough to lose some land or, worse, the whole farm, but the shortage of land to rent means a tenant cannot find new land. This leads to requests for changes to the compensation system, but such pressures are resented by landlords, who see them as a further disincentive to the letting of land.
We must find ways of increasing the amount of land and holdings available to rent if the sector is not to wither and die. Clearly the present position is unhealthy, but the question is: what changes will do the trick? We have an open mind at this stage on the specific approach and we welcome the wide-ranging industry debate. We want to hear the views of all sections of the industry. It is worth noting that increasing security of tenure over the years has made a significant contribution to the decline of the tenanted sector.
The Government have repeatedly stressed the need for effective measures; otherwise it is not worth burdening Parliament with the legislation. The CLA's landlord/tenant survey last year suggested that retirement tenancies would have only limited effect and, by definition, over a long period. It is, therefore, disappointing that a recent joint statement by NFU, TFA, FUW and the Association of County Councils went no further than recommending an optional retirement clause. We doubt very much whether this prescription will pass the effectiveness test and we believe that a more radical approach is needed.
Concern has been expressed in some quarters that the position of existing tenants should be protected. That is quite understandable and I should like to reiterate what I said in last month's debate: all existing tenants should be reassured that no one is suggesting that their tenancies under the 1986 Act will be affected by any new system which may be introduced.
It is also clear that we need to consider how to enable tenants to diversify. Increasingly, tenants want to take advantage of new business opportunities and it should be possible as the norm for tenancy agreements in the future to allow for this. In this connection, I understand that the TFA has some ideas about a fixed-term but renewable rural business lease. It would be available as an alternative to a tenancy under the Agricultural Holdings Act. This adds a new and encouraging element to the debate. We shall be interested to learn more about it and hear industry reactions.
I recognise that there will be great difficulty in achieving a consensus on the way forward and I do not think there is any point in waiting for it. We tried that approach in 1984 and it did not work. One 380 possibility is to approach the problem the other way around by first finding an effective solution and then considering what safeguards need to be built in. These would be safeguards for the landowners, the tenants and the land. We could also see what can be learned from experiences outside agriculture, for instance, through the application of the Landlord and Tenant Act.
Smallholdings authorities have, since 1979, had the freedom—and here I hope that I am answering the point made by the noble Lord, Lord Gallacher—to retain or dispose of any interest in land which they own, including smallholdings. This is a freedom which they have exercised to varying degrees over the past few years in the light of their own assessment of the most efficient methods of managing their estates. In some cases the decision has been taken to sell some land in order to finance the upgrading of other parts of the estate; in other cases the money generated by such sales has been earmarked for projects which will benefit the rural community as a whole. In all such cases, I believe it is right that the decision should be made by the local authority, which is best placed to judge the implications, financial and otherwise, of its actions. Furthermore, those holdings which are sold will not necessarily go out of agriculture or be lost to the tenanted sector.
I think that I have said enough about that. Let me return to the legislative problems of today. The Bill presented by the noble Lord, Lord Mackie of Benshie, addresses a small but important aspect of the agricultural holdings legislation—one where everyone thought that there was no problem prior to the Bell v. McCubbin ruling in the Court of Appeal last July. The extent of the loophole revealed by the ruling has not been tested in the courts, but it has caused considerable concern to tenants. They fear it could have widespread implications and reduce their security of tenure. Although the repercussions of the ruling are likely to be much more limited than has been suggested, we understand the tenants' concerns and we recognise the spirit behind the Bill.
Like my honourable friend in another place I was, therefore, pleased that officials within my department and parliamentary counsel were able to help in defining the original text while the Bill went through its stages in another place. The amended Bill before your Lordships' House will, it is to be hoped, make absolutely clear the circumstances when an incontestable notice to quit can be served where land is to go for a use other than agriculture. I very much hope that this will reassure tenants. I wish the Bill a smooth passage through this House.

§ Lord Mackie of Benshie
My Lords, I thank all speakers who have taken part in the debate. I also thank the Minister for wishing the Bill a fair wind. I should like to spend half an hour discussing the whole issue but, as the Minister is busy and I am hungry, I shall confine myself to saying that this is a sensible little Bill. The trouble with security of tenure arises when it turns into stagnation. To a large degree security of tenure is still necessary for 381 good farming. Having said that, I ask the House to give the Bill a Second Reading.