§ 3.19 p.m.
The Parliamentary Under-Secretary of State, Scottish Office (The Earl of Lindsay)
My Lords, I beg to move that this Bill be now read a second time.
This Bill is an enabling measure to give the Secretary of State for Scotland the power to dispose of his crofting estates to bodies which he believes are representative of the crofters on the estates. Such organisations are commonly referred to as "crofting or community trusts" and although I shall refer to them as such noble Lords will wish to note that there will be no requirement that the bodies be trusts in the legal sense.
Before going into the details of the various provisions contained in the Bill, it may be helpful if I give a brief explanation of the background to these proposals. This, in turn, requires some delving into the history of crofting and, in particular, the origins of the Secretary of State's ownership of an extensive crofting estate.
The 19th century was a period of turmoil and hardship for many people in the Highlands and Islands of Scotland. The collapse of the kelp industry, the potato famine and periodic recessions formed the background to what is now known as the Highland Clearances when many agricultural tenants left or were forcibly removed from their land. The Napier Commission was appointed by Parliament in 1883 to inquire into conditions in the Highlands and Islands. Its recommendations formed the basis for the Crofters Holdings (Scotland) Act 1886. It introduced a unique form of land tenure, now known as crofting tenure. This gave crofters—agricultural tenants with smallholdings in the crofting counties of Argyll, Inverness, Ross and Cromarty, Sutherland, Caithness, 871 Orkney and Shetland—certain fundamental rights and protections. These included security of tenure; the right to a fair rent; the right to compensation for permanent improvements on the termination of the tenancy; and the right to assign their crofts to certain members of their family.
Although the 1886 Act was an important milestone and the basis of crofting tenure as we know it today, it did nothing to reverse the effects of the Clearances. Successive Parliaments responded to pressure from crofting interests to provide land for those who had been dispossessed. They passed a series of Acts giving powers to acquire land for purposes of land settlement and to arrange for the creation and letting of new croft holdings and townships. The principal Acts were the Congested Districts (Scotland) Act 1897, the Smallholdings Colonies (Scotland) Act 1916 and the Land Settlement (Scotland) Act 1919. The 1919 Act, the most important of the various pieces of legislation, sought, in particular, to provide crofts for returning servicemen. It gave powers to acquire land by agreement or compulsory purchase. The necessary work of acquiring the land and creating new holdings was overseen initially by the Congested Districts Board and subsequently by the Board of Agriculture. Most of the Secretary of State's current estate was obtained in this way in the 20 years following the 1919 Act.
The Secretary of State's crofting estate now includes over 50 separate crofting estates with a total area of over 105,000 hectares. The estate contains over 150 townships with almost 1,400 separate crofts. The bulk of the land is in the West Highlands and the Western Isles, where the typical crofting estate includes both common grazings to which crofters in townships have agreed grazing rights and individual crofts with their inbye land. For almost all crofters on these estates, the size of the crofts and the quality of the land means that agricultural activities are now undertaken on a part-time or spare-time basis. Some of the Secretary of State's crofting estates, mostly in the Eastern Highlands in Caithness and Easter Ross, are on better quality land. Common grazings are not a feature of these estates and the typical croft is more like a smallholding elsewhere. Only 2 per cent. of the total land is, however, to be found on estates of this type.
In the early years of this century, the establishment of state owned and run estates was undoubtedly a significant benefit. The land itself is still the cornerstone of the culture and way of life of these crofting communities. But as we move towards the closing years of the century, it is surely legitimate to ask whether state ownership and management is still the most appropriate way forward. With the best will in the world, officials employed by a government department cannot be as sensitive to local needs and priorities as those who actually live there.
This is the fundamental premise which underpins the crofting trusts initiative which gave rise to the proposals on which the Bill before the House is based. My right honourable friend the Secretary of State for Scotland suggested in the autumn of last year that he would be willing to transfer ownership of his crofting estates to crofting trusts. His aim was to give crofters greater 872 control of the management and future of the land on which they live and work. Most of the tenants acknowledge that the Secretary of State is, indeed, a good landlord, but the success of the trusts at Assynt and at Borve and Annishadder has shown what can be achieved by local trusts serving local communities.
In February my right honourable friend published a consultation paper, Crofting Trusts, which set out his proposals in more detail. The Government made it absolutely clear in that consultation paper that any transfers of land would be on a voluntary basis and that there was no question of the Government selling the estates to other third parties. The proposals in the consultation paper were widely welcomed. The measures in the Bill before you are based on the consultation paper and the representations which we received during consultation and subsequently.
The Bill is necessary because there is no general power in the original legislation which allows the Government to dispose of their land to third parties. Noble Lords with knowledge of crofting matters may ask why the crofters concerned cannot simply use the powers provided in the Crofting Reform (Scotland) Act 1976 which allow crofters the right to seek to buy their land at an agreed price. These powers do indeed allow individual crofters to buy their crofts, irrespective of their landlord, but they cannot be used to acquire the common grazings which form a substantial proportion of the land in crofting tenure. Moreover, under crofting law, tenants who acquire their crofts may lose some of the benefits afforded to crofting tenants. Properly constituted, a crofting or community trust can avoid these limitations and ensure that land is available for any development initiatives which the local community might wish to promote. It is important to note that tenants of a crofting or community trust would still retain the right to buy their individual croft if they so wished.
We have sought a solution which would be flexible enough to address the differing circumstances of individual crofting communities. This is because we are aware that there is no one type of trust which will address the needs of all the communities involved. The Bill gives the Secretary of State the flexibility to transfer land to different types and sizes of trusts that might be proposed by the crofters. In short, the provisions of the Bill would allow for trusts based on a single township or estate, or a group of estates in a particular area.
Clause 1 of the Bill gives the Secretary of State power to dispose of his crofting property. This is, of course, a discretionary power. The definition of "property" includes all the land held under crofting tenure. It also includes the so-called fishermen's holdings in Lewis which were initially established under the Congested Districts (Scotland) Act 1897, and certain other small pockets of land such as areas of grazing land which, while not held under crofting tenure, have traditionally formed part of the Secretary of State's crofting estate. The clause also provides the power for the Secretary of State to dispose of any interest which he has in the property including mineral, sporting or other rights. This clause also gives the Secretary of State the right to transfer the land, with the consent of the Treasury, on 873 such terms as may be agreed with the body concerned. There is a need for flexibility to strike the right balance in individual cases between the interests of the local crofters and those of the taxpayer. Each application will be looked at on its merits but my right honourable friend has made it clear that the Government are prepared to consider transfer at no consideration where this is necessary to make sure that the trust gets off to a good start.
Clause 2 restricts the Secretary of State's discretion in disposing of the estate. It requires him to consult with the Crofters Commission before disposal, and requires that the disposal should only be made to bodies which are representative of the crofting interests in the property to be disposed of, and which have the promotion of the interests of the crofting community in the district as a primary objective. The commission, in preparing advice for the Secretary of State, will be required to consider the general interests of the crofting community and the views of crofters in the district.
These provisions are necessary to ensure that the scope of the Bill is limited, in line with our objective, to transfer to crofting or community trusts rather than other third parties. The Crofters Commission is the Government's statutory adviser on crofting matters and it is only right and proper that it should be given an opportunity to offer its views before a decision is made in any particular case. The commission is well placed to offer objective and dispassionate advice on the merits of any specific proposal and in particular where it properly reflects the views of crofters in the district in question.
Clause 3 provides the Secretary of State with the power to provide financial assistance towards the costs of establishing the body. Those might include, for example, costs involved in obtaining advice, necessary equipment or training for trust board members. The clause also allows assistance to be given to defray expenditure incurred in effecting the transfer of property to a trust.
Clause 4 is linked to Clause 3. For the avoidance of doubt, it disapplies a provision contained in the 1897 Act which could have required the Scottish Office to undertake all conveyancing and other work involved in preparing titles and deeds in respect of the transfer. Instead, the trusts will commission this work with assistance, where this is agreed, under the provisions of Clause 3.
Clause 5 deals with any rights of pre-emption which may exist over the property. These may arise from statute or from provisions contained in title deeds. It is important that the existence of such rights should not be a barrier to the establishment of trusts, but, at the same time, any persons who may hold such rights must be treated fairly.
The Bill seeks to achieve those twin objectives by removing for all time any right of pre-emption over any property in the estate while providing for compensation to be paid to those who have lost a right of pre-emption.
We are proposing that claims for compensation should be made when the Secretary of State has disposed of any property. This is the point at which 874 those with rights of pre-emption would have been able to exercise them if they had not been removed. Claims would be made to the Secretary of State, who would, in the first instance, decide on the validity of the claim and the amount of compensation to be offered. Where agreement cannot be reached between the claimant and the Secretary of State on either of those questions, provision has been made for appeal by either party to the Scottish Land Court which has considerable experience in crofting matters.
Clause 6 deals with a right to buy which arises from the 1919 Act and applies to tenants who have been on the holding for more than six years. This applies only to tenants on land which is not subject to crofting tenure and the effect of the clause is to ensure that such rights are protected if the land is transferred to a crofting trust. It is important to note that this clause does not affect the right of crofters to seek to buy their crofts, which, as I explained earlier, is not affected by the Bill.
I trust that I have given a sufficient explanation of the content of the Bill and the policies which underlie it. The Government propose that the Bill will be referred to a Scottish Select Committee to take evidence from interested bodies. It is clearly a matter for that committee to make its own arrangements and to decide on a venue. However, I do not think that noble Lords will object if I remark that Inverness would have the advantage of being the recognised administrative centre for the crofting counties. It also has good communication links and is, therefore, readily acceptable to most organisations from whom the committee may wish to take evidence.
The Government see the Bill as a logical extension of the development of crofting since the Napier Commission was appointed in 1883. The initiative will offer crofters on the Secretary of State's estate a chance to follow the example of those trusts which have been set up on land previously owned by private landlords. This is a vital piece of legislation. It offers a unique opportunity to the crofting tenants and will allow a significant and far-reaching initiative to be progressed. I commend it to the House.
§ Moved, That the Bill be now read a second time.— (The Earl of Lindsay.)
§ 3.34 p.m.
§ Lord Sewel
My Lords, I thank the Minister for his clear explanation of the contents and objectives underlying the Bill and for his historic commentary, although some particulars may be open to challenge, in particular when he dealt with the causes of the Clearances.
It is a short Bill but it is not as simple as it may appear at first sight. I fear that the measure may become even more complex the more we look into it. However, it is a significant Bill. It is significant because at last, within seven months of a general election and after 17 years of Conservative government, there is a recognition by the Secretary of State for Scotland that the land question, the issue of land ownership and the pattern of land tenure are important factors affecting the 875 development of the crofting areas of Scotland. There is clear agreement on both sides of the House on the importance and centrality of land and land ownership.
Over recent years many of us have been impressed in particular by the success of the Assynt crofting community trust which may provide the model behind the Bill. Clearly Assynt has seen a new sense of dynamism develop very much as a result of local control and external support. Such innovations are to be welcomed, although we should recognise—I take to heart very much what the Minister said—the need for different solutions to different problems in different areas. There must be no fear—I believe that the Minister has removed this fear—of there being a centrally imposed solution. That simply would not work. I also wonder, if crofting trusts become widespread, whether the level of external support on the scale available to Assynt would be generally available. That is an issue of some importance.
Let me make it clear that we on this side of the House are strongly supportive of community based development. We further believe that the community ownership of the land is a necessary underpinning for successful community development. To the extent that the Bill enables progress to be made in that direction, we support it. However, I should make clear that there are a number of points of detail, some coming close to points of substance, where we should like to see modifications made, and some areas where we shall wish to seek clarification.
I welcome the proposal that the Bill will be subject to what is still the relatively new Select Committee procedure which will enable us, as a committee, to collect evidence from those whom the Bill will most directly affect. It is entirely right that the proposals contained in the Bill should be subject to detailed scrutiny within the crofting areas. Given the definition of a croft as a small piece of land surrounded by a great deal of legislation giving rise to a lot of litigation, we should approach our task with a degree of caution.
However, having urged caution, there are two areas where I believe the Government are being over-cautious, especially in the wider context of the relationship between land ownership and local development. First, the Bill relates only to the Secretary of State's crofting estate. Secondly, the Bill gives powers to the Secretary of State rather than confers rights on the people. The present Bill is a modest and limited proposal. A more comprehensive and necessary review of land reform is likely to be a high priority of a Scottish parliament. As it is, the Bill has the potential both to provide us with a first step on that road and to set an interesting precedent.
I now turn to more specific points and matters of detail. If the scheme is to succeed, it is important that it should enjoy the support, confidence and agreement of those affected by it. Anyone who has been concerned with policy innovation in the Highlands and Islands will know that support, confidence and agreement do not come easily. It is vitally important that the Bill contains a trigger mechanism that ensures that a transfer will take place only where there is demonstrable local support for such a transfer. I recognise that the Government have 876 attempted to deal with the matter of local interests in Clause 2. However, the clause as it stands is deficient. It fails to recognise that not all those who are resident on crofting estates, and sometimes not even the majority, are crofters. As they are as likely to be affected by a transfer of ownership, their views and interests matter and should be taken into account.
Rather than requiring the Crofters Commission to gauge the views of crofters and then advise the Secretary of State, there is a strong case for having a straightforward democratic trigger which would include all residents, crofters and non-crofters. Anything less runs the risk of the transfer taking place in conditions of suspicion and resulting in resentment and distrust. Clearly that is something that we all seek to avoid.
The Bill is less than clear on the approach that the Secretary of State would take on the financial basis of transfer. Although the Minister gave some clarification this afternoon, there is still a lack of clarity both with respect to the land itself and, more importantly, with respect to the sporting, mineral and other rights. We are concerned with the apparent lack of balance that appears to have been taken towards the rights that the Secretary of State may transfer and the burdens which, as I understand it, would automatically transfer with the land.
On rights, Clause 5 is purely permissive. It raises the possibility that the land would be transferred and the rights retained. Quite frankly, such a situation would be unacceptable. In many cases the mineral and sporting rights represent the only actual or potential route to economic viability; as importantly, the lack of such rights would seriously constrain the potential for future local development.
The burdens that would transfer with the land are in some cases on such a wide scale—covering, I understand, bridges, drainage systems and indeed the public water supply—that they would most effectively deter anyone from taking on the land in the first place and lead to possible bankruptcy in the face of major repair costs. I appreciate that this is a difficult area; however, I wish to explore with the Minister the possibility of ameliorating the transfer of burdens. We are certainly uncomfortable with the situation presently capable of being contained within the Bill whereby the onerous burdens would transfer, while the rights, representing a source of local income, may not.
One of our other major concerns is the problem of on-selling. The Bill creates a situation whereby the Secretary of State may transfer his estates to a limited number of individuals, it is to be hoped in the form of a crofting trust. But, as the Minister made clear, even that is not required by the Bill. Following that initial transfer, those individuals or the trust will be in a position immediately to sell on to a third party and even to seek to decroft some or all of the land. The implications, especially for those areas where there are strong residential development pressures, are far-reaching, affecting the whole social structure of the local community. Under the Bill there is a possibility of the land initially being transferred to a minority of local residents who, in turn, sell on to a third party, while the 877 majority of local residents are powerless as the nature of the land use changes irrevocably. Such a state of affairs would be wrong and we will seek to ensure that even the possibility does not arise.
Finally, I take up the remark made by the Minister about pre-emption rights. It is perhaps ironic that the one group who stand to benefit immediately and directly as a result of the Bill are those who are entitled to exercise a right of pre-emption. They will be compensated. The Bill may very well have the effect of giving value to land that was previously of little or no value before. It is the landed interest that will benefit.
I have dealt with our concerns in some detail. I very much hope that we can proceed on the basis of a broadly based agreement. However, I return to my remarks at the beginning. If a proposal such as this is to succeed, it has to have the enthusiastic support of those who will be affected. For our part, we look forward to the Select Committee taking evidence and our view at later stages will be informed by what we hear in Scotland.
§ 3.45 p.m.
§ Viscount Thurso
My Lords, I, too, thank the noble Earl the Minister for his clear and very lucid explanation of the Bill. I am not entirely sure whether I have an interest to declare. I own a number of the crofts to which he referred—I believe included in the 2 per cent. of more valuable land that was mentioned. If that represents an interest, then I declare it.
The last time I spoke in this House was in the debate on the Address. I observed that consensus in politics was rather out of fashion, particularly given the current bout of election fever that is doing the rounds. We on these Benches, and I myself, have always believed that a little dose of consensus rather than conflict would be a very healthy thing for our body politic. I am therefore delighted to be able, on behalf of all of us on these Benches, to welcome the Bill warmly. I fully expect it to receive a broad consensus in this House.
Clearly, the objective of the Bill is sound. The Government own a great deal of crofting land in the Highlands. I think it is correct to say that they are rather reluctant owners and the crofters are probably rather reluctant tenants. Provided that all those affected by the legislation, and most particularly the crofters themselves, are properly looked after by the bodies that will take over from the Government, I believe that this Bill will be warmly welcomed by both crofters and those others within the communities who are affected by the success of crofting in the community.
At first glance the Bill seemed rather like my wife, small but beautifully put together. However, when I came to read it in more detail, like the noble Lord, Lord Sewel, I managed to find one or two little mines hidden away in it. Although there is a broad consensus on the principle of the Bill, I foresee problems with a number of technical areas which will need to be examined in some detail to ensure that unlooked for consequences are avoided. In that regard the system of evidence gathering will be of the utmost importance. I am delighted that the Minister was able to confirm that that 878 will take place. I have in my notes a little plea that this might take place in Inverness, the geographical centre of the crofting world. I am delighted that he was also able to confirm that.
The key to making the scheme work will be in the nature of the bodies that will take over the ownership of estates from the Secretary of State. Having been involved with a number of trusts in both England and Scotland, and having been on one occasion the tenants' representative in a business where a major landowning trust was the landowner, I have to say that there are just as many difficulties with a corporate or trust type of landowner.
It is quite a challenge to find the right vehicle for ownership. That is dealt with in Clause 2, which states that,The Secretary of State may dispose of crofting property … only to a body … which has been approved by him, after consultation with the Commission … a body which … is representative of the crofting interests … and … has the promotion of the interests of the crofting community … as its primary objective".Those laudable objectives are fine so far as they go. However, if the bodies to which the Secretary of State may dispose of the crofting properties are to be truly representative of their communities and the crofters within them and, most importantly, if they are to be successful landowners, considerable work will need to be done in fashioning the correct entity and ensuring their viability for the future. Again I echo the words of the noble Lord, Lord Sewel. Estates are both costly and complex to run. It is therefore most important that these acquiring bodies are financially sound. Can the Minister tell me what the profit or loss on the estate is at the present time and whether what will be transferred will in fact be a burden or a boon?
A point which does not seem to be covered by the Bill—though I believe the noble Earl, the Minister, has clarified it in his remarks—is the status of the crofts in respect of the crofters' right to purchase after the estates have been sold by the Secretary of State to an approved body. I believe I understood the Minister to confirm that the ultimate sanction for any crofter who fell out with the acquiring body would remain that he himself would have the right under the law as it currently stands to purchase his croft.
Another small area which gave me cause for some concern, and which I should be most grateful if the Minister will look into, is in relation to paragraph 5 of Clause 1 at line 27, which states:The disposal may include the disposal of any interest he has in the mineral, sporting or other rights effeiring to the property.I have found one peculiar example where this may cause problems. It serves to illustrate the little mines that are peppered about in this Bill. It relates to a crofting estate in the north west of Sutherland where the Secretary of State, as part of his estate, owns the salmon fishing rights at Strathy Point. These rights have been let to a tenant netsman for a number of years. The rumour on the north coast is that the crofters will acquire the salmon netting rights as part of their acquisition and exploit these rights for themselves. It seems to me that this would not be at all in the spirit of this legislation, which I believe is to enable a more appropriate vehicle 879 for the traditional exploitation of agricultural use in the Highlands, i.e. for the crofters. I do not suppose for a minute that it is intended that the effect of the Bill should be to deprive other equally traditional forms of commercial exploitation of their livelihood, namely the tenant netsman. I note that this clause uses the word "may" and I assume that that denotes a degree of flexibility. I agree with the noble Lord, Lord Sewel, that it is important that the land-based sporting rights, mineral rights and other such rights should be transferred, but I believe that the particular instance to which I have drawn attention should be given serious consideration.
I was particularly glad to note in Clause 3 of the Bill that the Secretary of State may provide such financial assistance as he considers appropriate, particularly to help defray expenditure incurred by the acquiring body by way of legal fees, since I have much personal experience of how costly legal fees can be in these matters. I hope that instinctive Scottish generosity will not be curtailed by the traditional tight-fistedness of the English Treasury.
I was also particularly pleased to hear the Minister mention that the cost of training would be eligible for aid. I believe it is very important that crofters should receive help of this kind.
There is a provision in Clause 5 of the Bill in relation to compensation which provides for the Secretary of State to agree a claim in the first instance. If the claim is rejected the claimant will then have the right to appeal to the Scottish Land Court. Clearly, a successful claim, following all the steps described in the Bill, will involve considerable cost. Will the Secretary of State consider compensation for that cost? Many of the people who have rights of pre-emption are no longer members of what the noble Lord, Lord Sewel, described as the landowning classes since the properties are in many cases now owned by smaller landowners.
The points I have raised, although important, are relatively small and of a technical nature and I believe they will be resolved as the Bill is examined by your Lordships. I return to my opening remarks. I compliment the Government on bringing forward this measure and hope it will receive a warm welcome on all sides of your Lordships' House.
§ 3.55 p.m.