HL Deb 30 January 1995 vol 560 cc1258-73

3.7 p.m.

Baroness Trumpington

My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Agricultural Tenancies Bill, have consented to place their prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament, for the purposes of the Bill.

Read a third time.

Clause 4 [Agricultural Holdings Act 1986 not to apply in relation to new tenancies except in special cases]:

Lord Carter moved Amendment No. 1: Page 3, line 27, leave out from ("applied") to end of line 31.

The noble Lord said: My Lords, we return to a matter that has already been discussed. However, I thought it important to table the amendment again in order that the Minister will accept that it is worth consideration when the Bill reaches the other place. It relates to the important issue of surrender and regrant under the Agricultural Holdings Act 1986. I shall paraphrase what I said on Report. Preserving security for the existing tenant where there is an expressed surrender and regrant is as important as the surrender and regrant which occurred by the inadvertent operation of the law.

We accept that the Government's intention is that all tenants with existing protected tenancies shall have that protection continued and shall not inadvertently lose their security when the Bill becomes law. I have discussed the matter with a number of practitioners since it was dealt with on Report. They are anxious about an inadvertent surrender and regrant or an expressed surrender and regrant. It is entirely a matter of good law and practice and not a point of principle on the operation of the Bill. It seems that there is a strong feeling among those who must deal with these matters that if landlords and tenants wish to exchange land or rearrange an estate or if tenants are moved around within an estate, the tenant may find, without realising it, that he has lost the security which he has under the 1986 Act and he will end up with a farm business tenancy.

On Report the Minister put the point well when he said: As drafted, the clause provides protection for people who have an existing tenancy under the Agricultural Holdings Act 1986 against losing their rights under that Act—for example, their security of tenure—simply because a variation in their tenancy agreement has effect by operation of law as an implied surrender followed by the grant of a new tenancy". The Minister seemed to accept an important point because he said: We accept that in those circumstances it would be inequitable for the new tenancy to be excluded from the scope of the 1986 Act when the parties had not intended that to happen".—[Official Report, 23/1/95; cols. 894–5.]

On Report, the Minister made a fair point when he said that the amendment as drafted would affect all tenancies under the Agricultural Holdings Act 1986 and he was concerned about the effect of that. I understand that. However, I have tabled an amendment with the same wording but I accept that there is a weakness in it. I hope that the Minister will be able to say that the point will be dealt with when the Bill reaches the other place. That would satisfy those practitioners—and there are a number of them—who are saying that there is a weakness in the 1986 Act with the new Act coming in. The Government's intention is that all tenants who are now secure under the 1986 Act should remain so unless they decide expressly to come away from the 1986 Act and have a farm business tenancy. But if they intend the security of the 1986 Act to continue, there should be some words in the Bill which will allow that to happen.

At present, that matter is causing anxiety. If, for reasons of good estate management, holdings are rearranged on an estate, tenants are concerned that they will be caught unless there is a provision in the Bill to take account of the problem. I beg to move.

The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe)

My Lords, we discussed a very similar amendment last week on Report, as was indicated by the noble Lord, Lord Carter, but I should like to explain again why the Government are resisting it.

The first reason is on policy grounds. We have proposed that new tenancies granted on or after 1st September 1995 should be farm business tenancies. In order to avoid legislative confusion, Clause 4 of the Bill therefore provides, as the side-heading so succinctly puts it, that the Agricultural Holdings Act 1986 is not to apply in relation to new tenancies except in special cases. Those special cases do not include cases where people elect to make changes to the holding, or to their contract, and enter into a new tenancy agreement. Those people will know that they cannot have a new tenancy under the 1986 Act; but they will have the opportunity to weigh up the advantages and disadvantages of exchanging their 1986 Act tenancy for a farm business tenancy. In such cases, the parties are taking a decision with their eyes open.

Clause 4(1)(d) deals with a different kind of case: our intention here is to protect people who have an existing tenancy under the Agricultural Holdings Act against losing their rights under that Act simply because of a variation in their tenancy agreement which has effect by operation of law as an implied surrender and regrant. These cases, which could occur inadvertently, will, by way of exception, continue to be subject to the 1986 Act even though they are, legally, new tenancies granted on or after 1st September 1995.

The noble Lord suggests that tenants who wanted to relocate to another farm within an estate would benefit from this amendment. I do not think it would have that effect. My understanding is that, unless the new holding included the whole or a substantial part of the land held under the 1986 Act tenancy, they would still fall outside the scope of Clause 4(1) (d).

When we discussed this amendment on Report, the noble Lord referred to the doctrine of estates and drew a distinction between a protected annual tenancy and a fixed term lease. That was because I had remarked that after the Bill comes into force a landlord can still offer the tenant a new long fixed-term farm business tenancy, including many of the provisions of the 1986 Act, which would confer considerable security of tenure on the tenant.

Lord Monkswell

My Lords, I apologise most sincerely for rising to intervene but it has become increasingly difficult to listen to the Minister's remarks because of discussions on the Benches opposite. Perhaps the noble Earl will continue his remarks and I hope that there will be less disturbance in future.

Earl Howe

My Lords, I am sure that all noble Lords are conscious of the potential for distraction. I am grateful to the noble Lord for his wish to give my words the maximum possible airing. I am sure that those to whom the noble Lord's remarks are directed will take the appropriate action, although I should not like to say who they may be.

Of course, I appreciate that under a protected annual tenancy, it is open to the tenant to terminate the tenancy at any time by giving a year's notice. However, the fixed term tenancy could include suitable break clauses in the event of the tenant becoming ill or incapacitated or in such other circumstances as the parties agree. Therefore, I believe that my original point is still valid.

I remain of the view that the amendment is unnecessary since parties can make adequate arrangements. The amendment is defective in that it would not achieve its aim. Therefore, I hope that with that explanation, the noble Lord will withdraw the amendment.

3.15 p.m.

Lord Carter

My Lords, I shall withdraw the amendment; but I am rather disappointed. The Minister started off by saying that it is a matter of policy, and almost immediately he pointed out that there is an exception which is allowed for in the Bill under Clause 4(1) (d).

I admit that the wording of the amendment is not perfect but its intention is to highlight a problem and to see whether the Government are prepared to consider the matter. I believe that tenants may become locked into situations. There may be a lack of flexibility. It seems a pity that on rather spurious policy grounds, the Government are not prepared to deal with the problem.

Obviously, the Minister was slightly stunned on Report when I mentioned a fundamental misunderstanding of the doctrine of estates and the distinction between a protected annual tenancy and a fixed term lease. I am not sure that I am convinced by what he said about that; but he will realise that I was reading from the brief and I should not dream of accusing myself of a fundamental misunderstanding of the doctrine of estates.

We have tried hard to bring the point home. Perhaps the problem will be dealt with in another place but we have not been able to change the Minister's mind. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 13 [Amount of rent]:

Earl Howe moved Amendment No.2: Page 7, line 30, leave out from ("tenancy") to ("which") in line 31 and insert ("(including those which are relevant for the purposes of section 10(4) to (6) of this Act, but not those relating to the criteria by reference to").

The noble Earl said: My Lords, this is a drafting amendment which we consider necessary to make the meaning of Clause 13(2) clear beyond doubt. Under the clause as drafted, an arbitrator at a rent review is required to take account of all relevant factors, including the terms of the tenancy, except those relating to the manner in which any new rent is to be determined. It has been pointed out to us by the RICS that this might possibly be taken to mean any provisions in the tenancy agreement relating to rent reviews. This was not our intention.

The amendment makes clear that the arbitrator should disregard provisions in the tenancy agreement relating to the criteria by reference to which any new rent is to be determined—in other words, any provision which purports to lay down a method for reviewing the rent—but not those provisions which relate to the intervals between rent reviews or the dates on which reviews are to take place. Those clearly have a bearing on the new open market rent and should be taken into consideration at the arbitration. I beg to move.

On Question, amendment agreed to.

Clause 16 [Tenant's right to compensation for tenant's improvement]:

Lord Carter moved Amendment No. 3: Page 8, line 34, at end insert ("save that where milk quota was registered in relation to land held under a tenancy to which the Agricultural Holdings Act 1986 applied and which was let immediately on the expiry of that tenancy as a farm business tenancy, and where no claim was made for compensation in respect of that quota under the Agriculture Act 1986, that Act shall still apply to that milk quota which shall not be the subject of any other claim for compensation").

The noble Lord said: My Lords, with the above amendment, we move to the vexed question of milk quota. We have already discussed the matter during the passage of the Bill, but I thought that it was important to have one last try to draw the attention of the House, and of the Government, to the problems which are foreseen in the situation outlined in the amendment. I refer to the transfer of the tenancy and the tenant somehow losing his compensation for milk quota while wishing to take such provision with him. I believe that that point was not answered by the Minister in his response on Report. At the stage where one was creating a new tenancy to deal with changes to the registered quota he said that it would be extremely complicated and very difficult; indeed, the Minister called it a nightmare.

It seems to me that if the landlord and tenant wished to crystallise the value of the quota at that point, and then, so to speak, to pass it on to the new tenancy they should be able—in the jargon—to massage it through into the new tenancy. That was the point that I was trying to make. I see that the Minister is nodding his head in agreement, so obviously the point has been picked up in his brief.

I should like to know why it would not be possible for the tenant to take the compensation for milk quota under the 1986 Act—he may, perhaps, be encouraged to move into one of the new tenancies—and have the value crystallised. In that way, it would be established so that there would be no fear of a double payment or, indeed, of no payment at all. I agree that the whole area is complicated as regards the compensation for milk quota. Obviously it is complicated because of the schedules to the 1986 Act. But clearly there should be the opportunity for the landlord and the tenant to crystallise the value of the milk quota, if they wish to do so, and to pass it on to the new tenancy.

The amendment gives me the chance to raise another point for the last time. I promise that it is the last time; indeed, it has to be. I refer to the point I made about the business of the Euro holding where the tenant has some quota under the 1986 Act and takes up a farm business tenancy with the same landlord. He then buys some quota for the new tenancy in the happy expectation that, as he has paid for all of it, it belongs to him. The tenant consequently leaves the two tenancies and, as I understand it, because of the European rules on Euro holdings, the landlord is entitled to some compensation for the quota which the tenant purchased outright, so to speak, for the new tenancy.

In his response, I believe that the Minister said that my understanding of the situation was correct. However, perhaps the noble Earl or the department would like to reconsider the matter. It has been drawn to my attention that it is not the intention that such a thing should happen, but the situation has to apply under European rules. I wonder whether there is any way to ensure that the problem can be dealt with when the legislation reaches the other place. The two related problems are the crystallisation of the value of the quota as outlined in my first example and the curious situation regarding the effect of the Euro holding as explained in my second example. I beg to move.

Earl Howe

My Lords, I am grateful to the noble Lord, Lord Carter, once again for his explanations on milk quota matters. We have now considered the question of compensation for milk quota at every stage of the Bill since it received Second Reading in your Lordships' House. I must confess that I was unsure before the noble Lord's explanation whether he wished really to press the amendment or was in fact looking to me to shed further light on the complexities of milk quota legislation. I hope I am right in thinking that the noble Lord desires the latter.

I believe it is common ground between the noble Lord and myself that milk quota is already a fearfully complicated and technical subject. It would only add to those existing complications if tenants who take up a farm business tenancy immediately after a tenancy under the Agricultural Holdings Act has ended were to be given the statutory right to use the current milk quota compensation provisions in the Agriculture Act 1986 in respect of the new tenancy. I should, however, make clear once again that the Bill does not prevent them from agreeing to do so. Such an agreement might be attractive in cases where the tenant occupies no other land than the holding in question. Where the tenant occupies some other land for milk production, he may find that matters begin to get extremely complex.

As I indicated on Report, in response to a question posed by the noble Lord, Lord Carter, because of the operation of EC rules any additional quota acquired during the new tenancy would have to be aggregated with all the existing quota registered in the producer's name. Any subsequent disposal of quota from another part of the tenant's aggregated Euro holding would require the consent of the farm business tenancy landlord, as well as anyone else with an interest in that wider "holding". In that situation, the parties would be well advised to agree as early as possible apportionments of quota to the various areas of land used for milk production. Arbitration is available where parties are unable to reach agreement. Of course, the Bill in no way alters the existing position.

The noble Lord also asked me whether a tenant could transport the value of compensation between farms. The Agriculture Act gives a legal entitlement to payment of compensation at the end of a tenancy which is subject to the Agricultural Holdings Act (including one granted on a statutory succession) but does not provide for roll-over to any other holding. I therefore think that any such roll-over would only be possible with the agreement of the parties themselves. I cannot see any obvious way of enabling that to happen by means of a provision in the Bill.

The people best placed to make appropriate arrangements for compensation in respect of milk quota where a 1986 Act tenancy is immediately followed by a farm business tenancy are the parties themselves. It will, of course, be a matter for the tenant's judgment as to whether he wishes to end a current tenancy and take up a farm business tenancy. Milk quota compensation will be one factor—albeit a very weighty factor—among many to be balanced when reaching a decision.

To repeat what I said in Committee on 13th December, Clause 16(3) as drafted in no way prevents parties from agreeing the most appropriate arrangements on compensation to meet their own particular needs. The noble Lord asked whether the tenant might be able to crystallise the value of the milk quota under a 1986 Act tenancy before embarking on a new tenancy. A tenant can indeed do so; and should do so. Certainly, the Bill does not prevent him from so doing. However, the central point is still the value. After a decade or so of milk quotas, with the price of quota being as high as it is at present, I really cannot believe that parties will forget to deal with the matter before a tenancy ends. I doubt whether the noble Lord will be entirely happy with the fact that I cannot accept the thrust of his amendment. Nevertheless, on reflection, I hope that he will feel able to withdraw the amendment.

Lord Carter

My Lords, the Minister is correct. However, one never ceases to be amazed at what landlords and tenants do forget to deal with when they are rearranging their affairs. The Minister's response was most helpful. An interesting point has emerged from this last discussion. The fear was that if the value of the quota was crystallised, payment would actually have to be made under the Act when, in a sense, neither side wanted that to happen.

However, it is to be hoped that the noble Earl is correct and that the parties can agree to roll over the value of the quota from one holding to another. That meets the point, and is a most helpful explanation of the problem with which we are trying to deal. I agree that anything one attempts to do with milk quota will add to existing complications. In that respect, I must remind the noble Earl that he said that he did not wish to add to such complications but then went on to suggest the apportionment of quota and the possible referral to arbitration.

The point is, indeed, complicated but has been well aired during our debates. Anyone who reads the Hansard reports of the debates during the various stages of the Bill will soon realise the thrust of the arguments. I entirely agree with the Minister that the landlord and tenant should be extremely careful in such a situation and that applies especially to the tenant: he must not lose the value of the quota that he assumes is his. That fact needs to be spelt out in any agreement between the two parties. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.

3.30 p.m.

Clause 17 [Consent of landlord as condition of compensation for tenant's improvement]:

Lord Gallacher moved Amendment No. 4: Page 9, line 6, at end insert:

("() This section does not apply in any case where the tenant's improvement consists of one or more of the following—

  1. (a) growing annual crops;
  2. (b) pasturing;
  3. (c) beneficial acts of husbandry;
  4. (d) liming of land; or
  5. (e) application to the land of purchased manure or fertiliser, unless there is provision to the contrary in an agreement in writing between the landlord and the tenant.").

The noble Lord said: My Lords, the Bill as drafted provides that for a tenant's improvement to be eligible for compensation it must have the landlord's written consent. In all cases, except planning permissions, the question of consent is referable to arbitration before the improvement is made. The amendment lists five items of tenant right as specific exceptions to this rule. If approved, no written consent would be needed for these essentially operational matters to be eligible for compensation. The parties' freedom is preserved by allowing them to contract otherwise in a written agreement.

Under English common law, anything that is fixed to land becomes the property of the landowner. It is the peculiar position of the farm tenant that many of his day-to-day actions fix value to the landowner's land. Tenant right grew up to address this problem creating a customary claim to compensation which the law steadily consolidated until custom was finally abolished in 1947. The custom of tenant right reflected the fact that the agricultural year has no absolute end, neither has it a beginning. Something will always be left at the end of the tenancy and has the desirability of encouraging the tenant to farm as though he were the incoming tenant.

The Bill removes the legal basis for tenant right by insisting absolutely on the consent of either the landlord or the arbitrator. Nonetheless, it seems possible that over time the courts would intervene to recreate some customary claim to tenant right. Rather than face the cost and uncertainty of that process—and the denial of fair treatment to some outgoing tenants along the way—we feel it is best to tackle the question as part of the Bill. In contrast to this amendment, it is impossible to foresee how far-reaching might be the consequences of court intervention.

The approach taken in the amendment to Clause 17 is to identify five specific exceptions to the general rule requiring consent for compensation. This list has been prepared after discussion with valuers and farmers from all parts of the country and the items have been selected on the basis that they are operational rather than policy items. They should be significant enough to warrant statutory reference. The specific areas are, first, the growing of annual crops. This would not cover trees or orchards but would protect, say, a cereals crop on a tenancy which ends in late March. It would also protect crops that should have been harvested before the end of the tenancy but for difficulties of the season—a situation where it could be too late to apply for arbitration.

In the case of pastures, this would allow the tenant to be paid for pastures he has established on arable ground as might be required by a livestock enterprise meeting official stocking limit or extensification requirements. Beneficial acts of husbandry would cover the normal operations and cultivations of the farming year so that they are performed when the time is right and so unlock profit for the incomer or save him effort. The liming of land can be important to the status of some soils and has a significant cost, but the benefit carries forward for several seasons. Provision of tenant right for liming encourages the tenant to take the longer-term view. Finally, under this head, there is the application to land of purchased manures and fertilisers. Again, these are important to the fertility of the land and, particularly in root crop areas, can amount to significant expenditure which we believe should be recognised.

Most written agreements could be expected to cover these items, but there will be some tenancies with only a sketchy written basis and others that are purely oral. In those cases, the Bill's present form would require the tenant to seek the landlord's written consent—perhaps every year in a tenancy from year to year. This is likely to feel unnatural to both parties. The tenant may feel awkward about taking the matter to arbitration and sometimes may not even have the time: the requirement is for the arbitrator's prior consent. Most tenants will simply assume that the matter is covered and be badly surprised should they find the landlord making it clear that he is not required to pay. Without some cover as proposed in the amendment, other tenants will clearly feel more cautious about committing themselves to normal operations on the farm in the last years of the tenancy. That would not be in the interests of the incomer, the owner or the industry and would be bad for the reputation of the legislation. The amendment provides a general rule which would operate as a default, but does not give the parties the opportunity to make other provision in a written agreement, so honouring the approach of the Bill. It will be for valuers to address the claim in these circumstances.

At the Report stage the noble Earl expressed some sympathy with the intention of the amendment then before us but was concerned that there could be later pressures to add non-agricultural tenant right clauses. There is no evidence of such examples being found under business tenancy law and such diversification would almost always be by written tenancy agreement. It is the particular problem of farming that its operations almost inevitably fix value to the land. The tenant farmer is putting his money into the landlord's land to earn his income in a way that the factory, office or shop tenant does not.

The noble Earl said that the listed items needed further definition. Our view is that our terms are all of very long-standing familiarity to valuers—tenant right has a longer history than statute law in these matters. If this is really a key objection it can be addressed by practical discussion between the Ministry, industry and professional organisations rather than lose an important issue on a point of phrasing or definition. In practice, the introduction of new definitions may add to the problems rather than help them. We are agreed that we want sensible definitions and not excessive detail. It has been suggested that some items might be long term. The items listed capture the significant normal farming operations. Policy matters are indeed best addressed between the parties. If the landlord wants a lower level of fertility as a matter of policy—as some might for conservation reasons—that can be covered in the tenancy agreement, as this amendment allows. Otherwise, the tenant should be able to claim the value he has made available to an incomer through these items.

The noble Earl suggested that the tenant has time to secure consents. Our response to that is that he does not if the weather turns against him and crops that should have been harvested before the term date cannot be harvested. It will be too late to secure an arbitrator's prior consent. Finally, it could all be put in a standard clause. We believe that most written agreements may be expected to follow this route but this amendment provides a fall-back with legal force for the oral agreement on the issue of compensation which in our opinion is central to the framework of the Bill. I hope on this occasion for a sympathetic response from the noble Earl. I beg to move.

The Earl of Kinnoull

My Lords, I wish to support this amendment and congratulate the noble Lord, Lord Gallacher, on the comprehensiveness of his arguments. I see that he almost repeated the brief that I was sent as well. This is the second time that this amendment has come up. The more one looks at the amendment, the more one realises that it adds continuity to farming. As has been known for generations, and in fact since 1947, the one thing one could never do was to contract out of tenant right. It was a case of an operational improvement to the land accepted by custom and statute. I recall that as a student learning some of these intricacies, one had to understand how to value unexhausted manurial values and indeed farm-yard manure as well. The noble Lord rightly listed five key items which this amendment covers. The part of the amendment which I like best is the end which states that the measure would not apply if it specifically came under a written tenancy agreement. Therefore the amendment does not damage the Bill at all, it simply gives a continuity which I think is of value.

Lord Stanley of Alderley

My Lords, I have much sympathy for the amendment. I wish to ask my noble friend one or two questions and I hope that he can clear my mind on those points. If nothing is mentioned in the lease, I rather understand from the noble Lord, Lord Gallacher, that it would have to be renegotiated each year. I believe he said that might be awkward. I would use a totally different word from "awkward". It would be totally impractical and no tenant would think of doing it each year. He would forget.

I cannot emphasise too strongly that tenant right is embedded in tenancy law. It would never occur to me to ask permission to apply lime. By the time I had asked for permission, it would have rained and I would not have time to apply it anyway, and that would be to the detriment of the farm.

If that is covered by the agreement, can my noble friend say whether it would be necessary therefore to obtain the landlord's permission for every single thing one intends to do? That is totally impractical. Although I do not want to press my noble friend on the matter this evening, I hope that when the Bill reaches another place it will be considered very carefully, because I believe that that is a mistake.

Earl Howe

My Lords, since our debate on this subject last week, I have looked carefully at the arguments which the noble Lord, Lord Gallacher, advanced in support of provisions on tenant-right in the Bill. I also listened with interest to the comments which he and my noble friends made in support of the amendment. I remain unconvinced that a provision in the legislation is necessary or indeed desirable.

As I said at Report stage, this is a matter which is best left to the RICS guidance. I would expect that the guidance might propose a standard clause giving the tenant consent to undertake various short-term improvements and tenant-right matters with the consequence that he will receive compensation for them. Such a clause could become a standard part of a tenancy agreement, perhaps balancing a similar clause giving the landlord the right to compensation for dilapidations since, just as for tenant-right matters, no dilapidation provisions are included in the Bill.

When a tenancy agreement does not contain a standard clause or any other provisions on compensation for tenant-right matters, it is true that the tenant would need to apply for his landlord's consent as soon as he received notice terminating the tenancy. In all cases there will of course be at least a year's notice of termination.

I hope that that answers one of the questions posed by my noble friend, who asked whether, when the lease was silent on these matters, they would have to be renegotiated each year. The answer to that question is, strictly, no. That would only be the case if it were a tenancy which ran from year to year. In a term tenancy, the question of compensation arises only at the end of the tenancy so there is no need for repeat consents.

At Report stage, I touched on the fact that the amendment as it stands would be inadequate and some definitions would be needed. I should like to return to that point for a moment and give an example of the problems which may arise, however familiar the concepts may seem. The amendment refers to "beneficial acts of husbandry". I have seen it suggested that that should cover "normal operations", but I doubt very much whether that would be adequate. Schedule 8 to the 1986 Act also refers to "acts of husbandry". There is a Statutory Instrument which sets out the methods for calculating the compensation for such acts of husbandry and it may be instructive if I quote part of that Statutory Instrument. It says that the value of compensation is to be the reasonable cost taking into account: (a) normal current costs, having regard to the current agricultural wage, the cost of horse and tractor operations, the size and shape of fields, and other relevant factors; (b) reasonable costs of hired tractor cultivations; (c) increased costs over normal tractor rates, where owing to the size of the farm or fields, the shape of the fields or to other special circumstances, it was reasonable to use horse labour." '

Your Lordships will agree with me that that sounds more appropriate to the 1930s or 1940s than to the 1990s. There are other examples in the 1986 Act, for instance complicated provisions on sod fertility. The problem is that once something gets onto the statute book it is not so easily removed. Neither the Government nor Parliament needs to be involved in updating legislation all the time. That is why it is so much better for guidance of this nature to be provided by organisations such as the RICS.

Finally, the amendment does not have the support of the industry group. I hope that in the light of that fact and my comments the noble Lord will feel able to withdraw the amendment.

3.45 p.m.

Lord Gallacher

My Lords, I am grateful to the noble Earl for his not unexpected reply. I am even more grateful to the noble Earl, Lord Kinnoull, and the noble Lord, Lord Stanley of Alderley, for their support. As they spoke, I reflected that I was hearing from a professional man on the one hand and a practical farmer on the other. To some extent that compensates for my own lack of knowledge of the subject, which I freely admit.

The noble Earl said that following our earlier discussion, he had looked carefully at the amendment. Having said that, I know the noble Earl has carried out that exercise very carefully. However, from my point of view it is disappointing that he remains unconvinced that there is merit in the amendment. As he developed his arguments against it I formed the impression that, far from containing merit not only was the amendment devoid of merit but that it contained the seeds for future difficulty and litigation. Since the object of the exercise is to avoid just that, it seemed to me a peculiar paradox that having put our hands to the plough we had produced more potential problems than we hoped to solved.

The Minister's position is firm: we should look to the RICS for guidance on these matters, with the possibility of a clause being devised by the RICS to form part of the standard agreement. No doubt that observation, which I have deliberately repeated in my response to the Minister, will be taken up by the industry. Certainly the industry should reflect upon both the principle involved and the practicalities.

I concede that the one-year notice of termination gives some protection. However, we do not operate in a perfect world and there may be situations in which problems arise simply because the deficiences of a sketchy oral agreement are only discovered when the agreement comes to an end.

The noble Earl also said that the amendment is inadequate. In support of that observation, he cited the fact that, for example, "beneficial acts of husbandry" are already defined by Statutory Instrument under the 1986 Act. He gave the House, in some detail, the benefit of what that SI contains. Undoubtedly that is an extensive piece of legislation. The noble Earl rightly pointed to the dangers inherent in trying to define in too much detail in statute matters which are perhaps best left to the parties concerned.

We shall go along with the proposition that this matter can be safely entrusted to the RICS. I am sorry that there has not been wider support for the amendment. Nevertheless, it has raised matters of continuing importance. As the Bill is to go to another place, I do not think that we have heard the last of it. The fact that the industry as a whole does not support the amendment does not rule out the validity of some of what the amendment contains. It would be a very sorry situation if a strongly-held minority view did not find expression in your Lordships' House at some point in the discussion of a Bill of this kind.

Having said that, we shall reflect on what has been said. We may even take the trouble to alert our colleagues in another place to the matter. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Gallacher moved Amendment No. 5: After Clause 30, insert the following new clause:

("Section 22 of the Solicitors Act 1974 not to apply

. For the purpose of drawing or preparing any instrument under this Act, subsection (1) of section 22 of the Solicitors Act 1974 shall not apply to any Fellow or Associate Member of the Royal Institution of Chartered Surveyors.").

The noble Lord said: My Lords, Amendment No. 5 is grouped with Amendment No. 6 in the name of the noble Earl, Lord Howe. To my untutored eye they are virtually the same type of amendment and have the same objective. Amendment No. 5 has been carried over from the Report stage of the Bill. The noble Earl promised a Government amendment on the same lines. In putting down our amendment, we wished to ensure that an amendment would be tabled for the Third Reading.

The noble Earl has kept his promise. Therefore I can be brief in speaking to Amendment No. 5 because I am anxious to hear what the noble Earl has to say on Amendment No. 6. If we are satisfied that the drafting of Amendment No. 6 is as good as or superior to that of Amendment No. 5 we shall not need to be hit over the head with a hammer in order to know what to do with Amendment No. 5. A point has arisen which is supplementary to our deliberations at Report stage. I shall bother the Minister with it although I do not expect him to give an answer today. Any pursuit of the point raised will have to be elsewhere.

Since the Minister gave his promise at Report, we have been told that full members of the Central Association of Agricultural Valuers are fellows or associates of the Royal Institution of Chartered Surveyors or the Incorporated Society of Valuers and Auctioneers. We have been further told that the examinations of the latter body are at a similar level to those of the RICS. For good measure, full members must also pass the CAAV practical and written examinations which require practical experience in agriculture. Therefore, those qualified persons are specialists in agriculture in their own right. It has been suggested that the amendment as drafted may exclude some CAAV members; they may wish to pursue the matter in another place. I do not even ask the noble Earl for an answer to the point today; I merely state that the point has been raised with us. I know well that sometimes the chartered bodies and incorporated bodies have difficulty in coming to terms on such matters. I have done what I was asked to do in bringing the issue to the attention of the House and of the Minister. It is to be hoped that the matter can be resolved to the satisfaction of both parties, or at least one party, when the Bill goes to another place.

I move Amendment No. 5 without giving details in support of it because I have already done so. I look forward to listening to what the noble Earl says in support of his Amendment No. 6 which is grouped with the amendment. I beg to move.

The Earl of Kinnoull

My Lords, the noble Earl may wish arguments to be put at this stage although clearly we hope to accept his amendment. If there is one improvement in the Bill which I believe is much welcomed outside, it is the acceptance of the deregulation of the legal fiefdom on drawing up agricultural tenancies. It is a sensible, practical and wise decision of my noble friend and his department to accept that the RICS is capable and professionally competent to do so. I, too, have received communication from the CAAV. It explained that although 90 per cent. of its members are members of one of the other two bodies, in particular the RICS, 10 per cent. are not. That 10 per cent. are more than competent. They are practical practitioners who probably know more than most professionals about the subject. Therefore, I hope that my noble friend will at least say that he will examine with sympathy the proposal that CAAV members will be accepted.

Lord Stanley of Alderley

My Lords, if those other bodies will make up agreements, I hope that they will be properly insured for possible mistakes, as are members of the legal profession.

Earl Howe

My Lords, I am grateful to the noble Lord, Lord Gallacher, for introducing his amendment, the purpose of which is identical to government Amendment No. 6 that is grouped with it and to which I now speak. I am grateful to the noble Lord and to my noble friend Lord Kinnoull for their support.

As I said at Report stage, the Government have concluded that it would be appropriate to amend the Solicitors Act 1974 to empower members of the RICS to draw up farm business tenancy agreements of more than three years' duration and prepare other instruments relating to farm business tenancies. This amendment adds a new exception in Section 22 of that Act which will allow RICS associates or fellows to undertake that work. I am satisfied that those RICS members have sufficient expertise to carry out that function and that they may be able to offer the service at a lower cost to the parties.

It may be helpful if I explain why it is necessary to refer to the preparation of an instrument which the RICS member, believes on reasonable grounds will create a farm business tenancy". Those are the words used in the amendment. This is needed to cater for the situation in which the instrument does not become a farm business tenancy because it fails to meet the conditions set out in Clause 1 of the Bill. This phrase avoids the RICS member committing an offence in that situation, provided, of course, that he or she had reasonable grounds for believing that a farm business tenancy was being created.

The noble Lord, Lord Gallacher, asked me to consider the proposal that fellows and associates of the ISVA should also be empowered to prepare tenancy agreements. My noble friend Lord Kinnoull referred to the CAAV in the same context. The first proposed amendment to enable RICS members to prepare tenancy agreements was debated at Committee stage on 13th December, as noble Lords will recall. Although my response at that time was not particularly encouraging, it was clear that certain noble Lords wished to pursue the matter. It is therefore a little unfortunate that these further proposals were not raised until after we had already debated the matter twice and the Government had consulted interested parties on what amendment should be tabled.

Before we could consider, in the amendment which I had tabled, extending the exemption to members of any other organisation we would have to be absolutely convinced that their qualifications and expertise were equal to those of associates and fellows of the RICS. The noble Lord, Lord Gallacher, indicated that he believed that that was so, but I have no independent information on that. What I can say is that those members of the Incorporated Society of Valuers and Auctioneers who are also members of the RICS would, of course, be able to undertake that work.

My noble friend Lord Stanley expressed the hope that members of those bodies would be properly insured were they to be allowed to sit alongside RICS associates and fellows in that context of the Bill. We have raised that point with the RICS. It has told us that it will revise its general rules of conduct and will be advising its members to obtain adequate indemnity cover. I cannot speak for the CAAV members because we have not yet had discussions with that body. I have no doubt, nevertheless, that the matter will need to be considered further. The noble Lord has the privilege of moving his amendment, or not, as he decides.

Lord Gallacher

My Lords, I am grateful to the noble Earl for the detail of his reply and for the sympathetic way in which he dealt with the problem which has arisen rather late in the day. I would have left the matter entirely for another place because I am a great believer in the avoidance of the short pass. Invariably, if you go for it you get your leg broken; and if you do not the home supporters boo you. Nevertheless, we have served sufficient notice to allow inquiries to be made and I warmly welcome that fact. The provision is a major concession for which we are extremely grateful. If it is to be extended in any fashion, the Government have a right and a duty to be satisfied that that extension is justified even though the number of persons involved may not be numerous. I also agree with the importance of full insurance for all who are likely to benefit from the concession.

I leave the nature of the consultation for the Minister to decide. However, the industry groups are close to the matter and may have a point of view of value to the Government in deciding what, if anything, they will do about the request.

I said at the outset that Amendment No. 5 had been tabled only as an insurance policy. From what the noble Earl said, I am satisfied that Amendment No. 6 fully covers what we are anxious to see provided in the Bill. In view of that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Howe moved Amendment No. 6: After Clause 33, insert the following new clause:

Preparation of documents etc. by surveyors

. In subsection (2) of section 22 of the Solicitors Act 1974 (unqualified person not to prepare certain instruments), after paragraph (ab) there shall be inserted— (ac) any Associate or Fellow of the Royal Institution of Chartered Surveyors drawing or preparing any instrument—

  1. (i) which creates, or which he believes on reasonable grounds will create, a farm business tenancy (within the meaning of the Agricultural Tenancies Act 1995), or
  2. (ii) which relates to an existing tenancy which is, or which he believes on reasonable grounds to be, such a tenancy;".").

On Question, amendment agreed to.

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