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Column 778Shaw, Sir Giles (Pudsey)
Shaw, Sir Michael (Scarb')
Shelton, Sir William
Shephard, Mrs G. (Norfolk SW)
Shepherd, Richard (Aldridge)
Skeet, Sir Trevor
Smith, Sir Dudley (Warwick)
Smith, Tim (Beaconsfield)
Soames, Hon Nicholas
Spicer, Sir Jim (Dorset W)
Spicer, Michael (S Worcs)
Stanley, Rt Hon Sir John
Stewart, Allan (Eastwood)
Stewart, Andy (Sherwood)
Stewart, Rt Hon Ian (Herts N)
Stradling Thomas, Sir John
Tapsell, Sir Peter
Taylor, John M (Solihull)
Thompson, D. (Calder Valley)
Thompson, Patrick (Norwich N)
Townend, John (Bridlington)
Townsend, Cyril D. (B'heath)
Twinn, Dr Ian
Waddington, Rt Hon David
Wakeham, Rt Hon John
Waldegrave, Hon William
Walker, Bill (T'side North)
Walters, Sir Dennis
Wardle, Charles (Bexhill)
Young, Sir George (Acton)
Tellers for the Noes :
Mr. Tristan Garel-Jones and
Mr. Tony Durant.
Question accordingly negatived.
Mr. Scott : The amendments are purely technical. They amend clause 4 to take account of the recent commencement order which brought into effect from 1 April 1989 sections of the Family Law Reform Act 1987 which amend section 26(4) of the Social Security Act.
As originally drafted, clause 4 provides for amendments of section 26(4) before and after its amendment by the Family Law Reform Act. This is no longer necessary and the clause is therefore simplified by the two amendments.
Amendment agreed to.
Amendment made : No. 23, in page 3, line 30, leave out as substituted by' and insert
"reference to a person's children to be construed in accordance with".-- [Mr. Scott.]
Further consideration of the Bill adjourned.-- [Mr. Fallon.] Bill, as amended (in the Standing Committee), to be further considered tomorrow.
That the draft Food (Northern Ireland) Order 1989, which was laid before this House on 16th January, be approved.-- [Mr. Ian Stewart.]
Queen's Recommendation having been signified--
Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.), and the order [7 April].
That there be paid to or in respect of the Data Protection Registrar such pension as is provided for in the Pension Arrangement attached to the Home Office letter of 1st March 1989 to Mr. Howe, a copy of which was laid before this House on 15th March.-- [Mr. Fallon.]
Question agreed to.
Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Fallon.]
Mr. Richard Alexander (Newark) : I am grateful for the opportunity to initiate an Adjournment debate that concerns tenant farmers. From inquiries that I have made and briefings that I have received, I know that the concerns of tenant farmers are shared by the National Farmers Union, the Tenant Farmers Association and the Country Landowners Association. These organisations have come together, especially over recent months. It is a sign of the concerns of all the organisations that represent tenant farmers that they are co-operating with one another on such a vital matter. For example, the Country Landowners Association is surveying some landowners to try to ascertain what, if anything, would bring new tenancies on to the market.
The tenanted sector represents 35 to 40 per cent. of all activity in agriculture. It is estimated that it represents one half of dairy production. It is, therefore, a significant part of the agriculture scene. That being so, it is important that, as far as possible, we as a nation ensure a fair working environment for the tenant farmer. Additionally, the tenanted sector has offered a means of entry into the industry for those without considerable means. The landlord tends to be a business investor, and often a long-term one. We need both the tenant farmer and the landlord, yet the tenant has constraints on his activities which the freeholder does not face. The tenant has to work within the legal structure of the Agricultural Holdings Act 1986. His balance sheet cannot show a capital asset in the same way as a freeholder's. His income is greatly reduced by the rent that he has to pay.
If things go really bad, the freeholder can sell up and pay his liabilities. The tenant cannot do that. He has no collateral apart from his machinery, which is often not very much and which is usually depreciating. In addition, he has his livestock. The tenant cannot sell and restructure his operation.
If the tenant is not too highly geared, he may be in a better position than the owner-occupier, who may have recently taken on his farm with very high capital and interest repayment obligations. I would suggest to my hon. Friend the Parliamentary Secretary that not many tenant farmers are in that happy position. Most of them are highly geared, and their lack of collateral causes bank managers to monitor them carefully and constantly with a view to pulling in their loans. Therefore, in matters of finance the tenant has much less flexibility than the freeholder.
The Tenant Farmers Association has produced figures to suggest that the 1988 statistics show that the value of the tenant sector per acre has fallen from £590 in 1978-79 to £322 in 1987-88. They show, for example, that the farmer who is growing winter wheat that is sold for feed has a surplus of only £40 per acre. From that, he pays his rent, his tax and his personal drawings. With so may arable farmers paying more than £40 per acre in rent, the tenant farmers' base is weakening. His reliance on short-term bank borrowing, with an increase in financial charges, is increasing.
The Agricultural Holdings Act provides a framework that imposes obligations on tenant farmers' husbandry. If
Column 781a tenant looks after his farm he can generally be assured of lifetime security and even more than that if his tenancy was created before 1984, as close members of his family can succeed to the tenancy.
Tenant farmers believe that the present framework of law has served them well in the past, during a period of expanding production. However, in times of restraint and diversification, they face additional problems. Most tenancy agreements allow the landlord power to serve notice to quit on two or three months' notice if the landlord gets planning permission. In addition, a county council farm tenant may be prevented from taking on more land or from having another source of income.
Government schemes such as set-aside and the concept of environmentally sensitive areas were introduced to reduce overall agricultural output and attain certain environmental objectives, but in practice they are not available to all classes of farmers. Many diversification schemes involve proposals that fall outside the legal definition of agriculture, which means that they are subject to landlords' consent. There are many supportive landlords, but in some cases landlords have refused consent to otherwise reasonable propositions that would not have affected their long- term interests. The tenant has no power to challenge such a refusal. Some tenants feel too vulnerable even to consider such a scheme, and some landlords' agents have been known to send threatening letters when a tenant has gone only as far as registering his eligibility for set-aside.
I appreciate that a wise tenant will want to consult his landlord at an early stage and should first obtain a business study, for which a grant can be obtained under the farm diversification grant scheme. It is sensible and natural that a landlord should want to see a viable proposition that has been well thought out.
The Tenant Farmers Association has suggested that a tenant should have a right of appeal to the agricultural lands tribunal if the landlord does not agree to his diversification plans. As a lawyer, I appreciate that the difficulty is that the tribunal has no power to amend a tenancy agreement. If the tenancy agreement specifically prohibits non-agricultural activity, it would require quite fundamental change to the Agricultural Holdings Act if this route were to be followed, and it would be highly contentious.
In some ways, diversification can be a disaster for the tenant, for when planning permission is needed for a non-agricultural use the grant of such permission is a ground for an incontestable notice to quit. Most incontestable grounds in a notice to quit rely on something that the tenant has done wrongly or badly, but that is not so when planning permission has been granted, even if it were granted on an application by the tenant. Usually, planning permission and the notice to quit relate to the whole farm, and the notice must be between one and two years. I learn that many tenants are being offered agreements that allow landlords to serve a notice to quit on part of the farm only, which allows much shorter notice--usually two or three months only. This is another aspect of the vulnerability of the tenant that I draw to the House's attention. As the farmhouse is often the attraction for development, the tenant may be left with the prospect of losing some or all of his farm buildings, including his farmhouse.
That brings me to the problem that a tenant faces with compensation. When he loses his holding, the tenant is
Column 782entitled to the equivalent of five or six times the rent of the lost area, but where that area includes a farm or buildings, it is not adequate compensation for the destruction of one's life's work. The Tenant Farmers Association is calling for compensation for loss of potential profits and the cost of replacement of fixed equipment, among other things, to be awarded to the tenant, by arbitration if necessary. The claim seems to be fair and equitable, and I suggest it to my hon. Friend the Minister. Even though it is an abuse of the notice to quit powers under the 1986 Act, there is nothing to stop a landlord obtaining planning permission without ever intending to implement it or actually implementing it, just to gain possession of the property. I suggest that if planning permission is to be used just as a device to end a tenancy, surely the tenant should in turn be awarded proper compensation for his loss.
Had my time to speak not been limited, I would have addressed the House at greater length on the problems arising out of the dairy quotas. I should like to stress to my hon. Friend the Parliamentary Secretary the difficulties with regard to arbitration. Usually new rents are negotiated between landlord and tenant, both sides using agents, and if an agreement cannot be reached, the 1986 Act lays down factors that an arbitrator should take into account.
The hazards of arbitration are now only too apparent. In a recent case in Lancashire five tenant farmers had to carry the landlord's entire cost of arbitration of £75,000 on some 700 acres. It was an astonishing award by any standards. The fact that it happened means that arbitration is not now to be considered lightly, even by some larger farmers. Many agents are reporting that tenants are instructing them to act in negotiations, but not to go to arbitration, with the result that higher rents than can be justified economically are often agreed to avoid this. At a time in the economy of agriculture when it would be an effective argument for a tenant to press for a reduction in the new rent claimed, arbitration is of itself generating unjustified rent increases.
The remedy is clear : each side should bear his own costs of an arbitration, unless an arbitrator makes a specific finding that one side or the other was unreasonably pursuing his case to arbitration. Arbitration should be simple and cheap and should be an acceptable outcome and procedure. Without that reform, it is rapidly ceasing to be any of those things. I believe that the problem is even worse in some cases for the county council tenant, where the approach is often confrontational rather than conciliatory, with arbitration almost the inevitable outcome. Once again, the smaller farmer is the one to suffer.
The tenant farmer has historically been of the greatest importance to agriculture. When farming faces declining incomes, the tenanted sector faces particular disadvantages and difficulties, especially as agriculture moves from a period of growth to one of restraint and diversification. I hope that in his reply my hon. Friend the Parliamentary Secretary will recognise the importance of the sector and its difficulties, that he will reaffirm his belief in a healthy tenanted sector and that he will pledge the Government to take action from time to time when difficulties such as those I have outlined are brought to his notice. Only in that way will the tenanted sector continue to be a healthy one in the agricultural scene.