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Column 79typically, nowadays, that premium is worth between about £200 and £300 an acre, or about 50 per cent. of the market price of agricultural land.
In the Vale of Evesham, about 420 tenants are affected, many of whom have paid the premium or have included it in their balance sheets, to the extent that they bought it or it was bought many years previously. I am told that 420 tenants in my constituency are affected in that way by the Bill, but there may well be an equal number throughout the country who will suffer a similar deprivation if the Bill is passed. If the Bill was passed unamended, they would suffer a loss of anything up to thousands of pounds in terms of loss of premium valuations and, being small businesses, they would be very badly affected.
Should the premium that those tenants have paid for, or have found in their balance sheets over the years, be stripped from them retrospectively? I hope that the Government will reconsider the issue, because there has been considerable confusion about the matter, certainly in departmental circles. Not many people have thought the matter through. It affects only 420 tenants in the Vale of Evesham, but, crucially, it affects the premium that has been added to the other valuations, and I emphasise that it would be retrospective. The Government have made a big play of the fact that the legislation is not to be retrospective, so I hope that they will consider the retrospective element of that matter very carefully.
An amendment could easily be added to the list of exemptions in clause 4 of the Bill. Those would disallow new tenancies using the Evesham custom, but would allow present tenancies to be saved from retrospective abolition. In practice, the custom would die out, partly as a result of the trend towards ownership of larger parcels of land, and partly because the custom already dies on the death of the incumbent unless it is passed on.
This is a wrinkle in an otherwise very welcome Bill, but it is an important one, at least for the 420 tenants who are, rather worryingly, affected, or potentially affected, by the Bill--to the extent that several of them could well go out of business through no fault of their own, as a result of the effect that the change in the premium valuation would have on their balance sheets.
I said at the start of my speech that the Bill would help the process by which new entrants come into agriculture. Sadly, the effects of the Bill must be seen in the context of the general working of the common agricultural policy, one part of which is the distortion deterring new entrants to agriculture. The artificial suppressions of supply and price, and above all the inflated values of certain holdings to which quotas apply, are real deterrents. The Labour party claims to have a magical way of dealing with the distortions of milk quotas, for example, but it seems that we would still be left with basically the same system.
If we are to encourage new entrants, we must radically reform the CAP. The United Kingdom will have to have control over the way in which its agriculture is supported, which should be only where that support is directly required. We should not be in the business of distorting our agriculture for the purpose of helping other countries' agriculture.
I welcome the Bill, but it is a small drop in a large bucket if the purpose is to release agriculture from its present constraints and to make it more flexible, and to
Column 80make it more worth while to rent and own agricultural property and to work in the interests of British farming and horticulture. 7.51 pm
Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury): First, I declare my interests. I am connected with the Royal Institution of Chartered Surveyors, the Country Landowners Association, the National Farmers Union and the Charities Property Association.
Perhaps the interests of our 250,000 farmers and 48,000 agricultural workers have been forgotten during the debate. In the 1900s, 90 per cent. of farming land was let while only 30 per cent. is now let. How will the Bill attempt to remedy that? Words such as "stewardship" and "benefit" to agriculture must be uppermost in our minds. That is why the four major parts of the industry came together, following some tortuous negotiations, to produce an industry-wide agreement.
The parties to the agreement were the CLA, the NFU, the Tenant Farmers Association Ltd., and above all--the organisation has not, to my knowledge, been mentioned before this evening--the young farmers. The young farmers are especially important because they are the people who are trying to get into agriculture. It is regrettable that the present system locks them out of it. Young farmers cannot afford the entrance fee that the current system demands. If the health of the industry is uppermost in our minds, we should be encouraging younger people to enter it. It has been said that the average age of a tenant farmer is 55 years. If that is the fact, we should be seriously concerned. We should be considering ways of reducing that average age.
Apart from youngsters, there are those who have had a first career in a profession or industry, who have made a bit of money and who want to have a second career in farming. They, too, should be able to enter the industry.
The Royal Agricultural college is in my constituency. We know that there are other such excellent centres of education. We have a great tradition of training new entrants into agriculture and we have done that extremely well. It is a tradition that we export throughout the world. I was a student at the RAC, and when I travel the world I meet other ex-students who are advising foreign Governments. We have excellent training and it would greatly enhance the health of agriculture if we encouraged new entrants.
The Bill has been produced after tortuous negotiations. As is apparent, it is largely a deregulatory measure. It will allow much greater freedom for agreement between landlord and tenant, and between lessor and lessee. At the same time, there are dangers and pitfalls for both sides of an agreement. It is for both parties carefully to negotiate a tenancy agreement. I recommend that anyone entering into such an agreement should ensure that it is set out in writing. It would be foolish for either a tenant or a landlord to enter into a verbal agreement unless it were for two years or less. Contrary to what was said earlier, it is possible under the Bill to have a verbal agreement.
The RICS has been criticised for estimating that more than 1 million acres of farming land would potentially be created by the enactment of the Bill. The estimate was arrived at because 10,000 agreements in the private sector are now negotiated outside the provisions of agricultural holdings legislation. I shall deal later with the options.
Column 81Having arrived at an industry-wide agreement and the Government having produced an extremely good Bill, the industry is poised to let much more land go forward for tenancies. Agricultural husbandry is set to improve by encouraging new entrants into agriculture. What has happened? We find at the last minute that the Labour party has decided to oppose the Bill.
It is incredible that the hon. Member for Edinburgh, East (Dr. Strang), who is about to walk out of the Chamber, was a Labour Minister when what was the Agriculture (Miscellaneous Provisions) Bill passed through the House, to be enacted in 1976. The hon. Gentleman has recognised the folly of that Act as it applied to the tenanted sector of agriculture. He knows that almost overnight the lettings of farms dried up. Why was that? The answer was that the current tenant had security of tenure, as did the two succeeding tenants. The hon. Gentleman came to recognise that. He has made various statements since I have been a Member of this place, and I have not been here for very long. He has recognised the damage that was done to the tenanted sector by the 1976 legislation. I hope that, although time has passed, this Bill will go a long way to remedy the disastrous effects of the Labour Government's legislation. Why does the Labour party oppose the Bill? The hon. Member for Edinburgh, East has made some extraordinary statements. For example, he said that he wanted the pattern of farm sizes to adjust to market forces. He said in his next sentence that he was worried about social justice and the relationship between landlord and tenant not being equal. The hon. Gentleman cannot have it both ways. Either he believes in market forces or he does not. It should be understood that no one is forcing a landlord to let or a tenant to take land. There must be a free market agreement. That is the best approach if both parties are subsequently to be happy about what they have done. If I were one of our 45,000 agricultural workers, I would be quaking at the Labour party's attitude to the Bill. If the Labour party opposes the Bill, there will be no farms to let and the number of farms and farmers will decline. Above all, the number of farm workers will decline because the industry will not be sufficiently profitable to continue to employ them all. The trend that we have seen since the war will continue.
It is foolish of the Labour party to oppose the Bill. I hope that the Opposition will not divide the House, but if they insist on doing so--I suspect that they are so shortsighted that they will--they will give a signal to the industry that they intend subsequently to change the proposed legislation. If they intend to do that, let them give an undertaking that any such change will not be retrospective. At least we would not then have to wait 20 or 30 years until Labour came to power with the industry being apprehensive and not letting. I should be grateful if the Labour party would give the industry that assurance, as landlords and tenants would then be given the confidence to go forward from the enactment of the Bill--one hopes well before the end of the year--and use its provisions to the benefit of the industry.
Column 82When I wrote my speech, it just so happened that I wanted to comment on clause 4, although not the type of clause 4 which Labour is talking about.
Mr. Williams: I shall intervene before the hon. Gentleman moves on to clause 4. The hon. Gentleman made a ringing declaration about free market forces, and how the Bill allows the free market to work within tenancies. Does he feel comfortable in his own mind that he is talking about agriculture, when the common agricultural policy is the most interventionist policy one could imagine? Is not it contradictory to be strongly advocating the free market in what is an incredibly rigged market?
Mr. Clifton-Brown: I have a great deal of sympathy with the hon. Gentleman and with my hon. Friend the Member for Worcestershire, South (Mr. Spicer) on this. We must press for the European Community to expand to the east, and it will be difficult under GATT and the CAP to continue the present regime. I expect the present regime to continue until the reforms which are due to take place in 1999. Thereafter, there may be some phasing out and reduction of the CAP, not least when the second stage of GATT starts to bite.
I return to clause 4 and, before I am ruled out of order, I must add that I am not referring to the Labour party's clause IV. Clause 4 is important, because it puts an absolute seal on anybody being able to make the legislation retrospective. The clause rules out those tenants who already come under the terms of the Agriculture Holdings Act 1986. Even artificial devices with the agreement of both the landlord and the tenant will not be affected by the Bill. Having said that, clause 4(1)(d) was amended in another place, and I ask my hon. Friend the Minister to look at it. I have read it several times and--although I shall take advice from my legal friends--it is a tortuous clause. Perhaps it can be simplified a little.
Clause 37, which is the most fundamental clause in the Bill and which has not been mentioned tonight, relates to the definition of agriculture, which has been lifted from the definition in the Agricultural Holdings Act 1948 and which I believe to be somewhat out of date. For example, the clause talks about osier land, but I doubt whether there are many commercial osier beds left. The definition needs to be updated.
The definition--which is the basis of the Act--must suggest where the industry will go in the future. For example, we need to think about including in the definition crops for industrial and fuel uses. We must think about those tenants who will have land in various Government schemes, such as set-aside, environmentally sensitive areas and nitrate sensitive areas. Will they be included in the definition? The basis of the Bill could be undermined unless we consider updating that clause.
Clause 10 relates to rent reviews. There was great discussion in the other place about this, and the clause was subject to an amendment which enshrined the Government's intention that the Bill could be used to review rents upwards as well as downwards. My hon.
Column 83Friend knows that it is possible to have a rent review by agreement which includes the usual clauses referring to the default of an agreement in which an arbitrator can be appointed. It is also permissible to draw up a tenancy agreement in which the rent is to be reviewed by a formula. I have talked to several professionals in the industry, and it would be helpful if my hon. Friend at some stage--perhaps not this evening, but in Committee--could clarify what sort of formulae would be accepted which would give rise to the possibility of a downwards, as well as an upwards review. Would a formula on a retail prices index basis be acceptable? Would it be acceptable to have a formula based on some form of profitability of the tenant's farming? The industry is interested to know about those things, and it would be helpful if my hon. Friend could clarify them.
Rent reviews have been mentioned widely by professionals in the industry, and one aspect of those discussions has been the resumption of part of the holding, for which the Bill rightly makes no provision and for which prudent landlords and tenants will wish to make provision. If a tenant wished to surrender part of the holding and the landlord wished to resume part of it--the rent being altered thereby--would that trigger a fixed-term review date? We need to be clear about that.
I have said that the Bill is largely a deregulatory measure which allows greater freedom of agreement between landlord and tenant. Therefore, I believe that it will start to incorporate some of the facets which are well known in commercial property law, including the concept of forfeiture. Under the old agriculture holdings arrangements, where a tenant had an irredeemable breach of covenant, there was an incontestable notice to quit. This Bill contains nothing like the seven deadly sins that were covered by the Agricultural Holdings Act 1948. Those matters have--quite rightly--been left to the landlord and the tenant to agree. But, as in the case of commercial property, I believe that the law of forfeiture will apply in those cases.
One other piece of commercial practice which I believe may apply to the legislation--I raised the matter with my hon. Friend the Minister earlier this week--is the concept of privity of estate and privity of contract, which was the subject of an amendment by Lord Gallacher in another place. It is a highly technical matter, and I shall try to explain the concept simply to the House.
Where the parties to a lease agree to certain matters which affect the property, they are bound by that agreement. That is called privity of estate. One can, of course, enforce those covenants in a court of law, and that becomes what is known as privity of contract. Under commercial agreements in England and Wales--not Scotland, as the law there is the opposite to that in England and Wales--where an assignment takes place and the assignee defaults on the lease, the enforcement of the original covenants can go back to the original assignee. In commercial property, the original assignee can be several stages and many years down the line.
I have had one very bad case in my constituency, where a couple had been retired for many years in a very nice town. They had totally forgotten about the commercial lease of their small premises, and the landlord had gone back through all the lessees, all of whom had--for one
Column 84reason or another--been unable to meet their obligations under the covenants. Suddenly the couple found themselves with a huge bill for a lease which they had long since forgotten. I would be very interested to hear what my hon. Friend has to say about that. Although some professionals disagree with me, I think that if we had a comparatively long lease for farm business tenancies--for example, 25 years--and there was more than one assignment during that term, those assignees could be held to account by the landlord. That is a very undesirable and insidious practice, and I am talking to the Lord Chancellor's office to try to abolish it in the commercial sector. As the farm business tenancy scheme is an entirely new concept, I urge my hon. Friend--if he and his experts agree with me--to see whether it will apply to the Bill. My hon. Friend should consider seriously amendments to make sure that that does not apply under the new concept. It is an entirely new concept; it is not retrospective and it will not affect existing tenants. I think that it would be a thoroughly worthwhile exercise.
Mr. Peter Thurnham (Bolton, North-East): I am grateful to my hon. Friend for giving way. I support the points that he has made and I add my concern that the Bill might perpetuate the existing law in some way. My right hon. Friend the Lord Chancellor said in another place that there is a case for reforming the law and if the Bill allows the iniquitous practice of privity of contract to continue it is most important that we amend it in the House.
Mr. Clifton-Brown: I am grateful to my hon. Friend for his support. As hon. Members know, he has tried to introduce a private Member's Bill to remedy the situation. He and I are working hard with various parties in the commercial sector in an effort to avoid the pitfalls that should not befall the agricultural sector.
On the more technical aspects of the Bill, clauses 15 to 19 deal with improvements. There has been much discussion about what the words "physical" and "intangible" mean in the context of clause 15. I think that the word "physical" encompasses growing crops, tenant right, severed crops and so on, which my hon. Friend the Member for Stroud (Mr. Knapman) has mentioned. The "intangible" element of the clause is much more difficult to define and I think that it will give rise to many court cases in the future.
I urge my hon. Friend the Minister to give some examples now or in Committee of how the intangible aspects of the clause will be dealt with. Those which arise during the currency of the lease will be affected, as well as those intangible aspects that may not have been noticed when the lease was taken out. Intangible aspects encompass simple things such as planning permission and abstraction licences, but we must also deal with the difficult intangibles such as good will.
How does one compensate either the landlord or the tenant for good will at the end of a tenancy? How does one with deal with contaminated land, for example, which may be attributed to an act of the tenant but which may not be noticed for many years? Those matters must be considered very carefully.
Hon. Members have mentioned the problems of quotas and the compensation clauses. Under the previous legislation, the landlord was entitled to a share of the milk quota as of right, but this legislation does not prescribe
Column 85how quotas should be dealt with. One cannot foresee what will happen if we introduced a wheat quota, for example, which would decrease the land value considerably from the landlord's point of view. The tenant could then sell off that free quota for a substantial amount of money at the end of his tenancy and the landlord would suffer as a consequence. We must examine those aspects of the Bill.
A number of professionals have referred recently to a problem with serving notice under the legislation. I believe that it could be remedied fairly easily and there must be plenty of legal precedent as to how the notices should be served. The legislation does not outline how a landlord should deal with a tenant who consistently refuses to allow any form of notice to be served upon him. Those sorts of problems have been overcome in similar legal situations.
The Central Association of Agricultural Valuers has raised several other problems with me. Under the Act as it was drawn originally, clause 34 allowed only solicitors to draw up leases of three years or more. I believe that there will be an amendment in Committee to allow chartered surveyors-- of which I am one--to draw up such leases. Although I have a vested interest in not allowing anyone else to draw up the leases, I must point out that the Central Association of Agricultural Valuers is the most widely respected body in the area of agricultural valuations. Its yearly valuation tables form the basis of the work of all professionals in the field-- whether they are surveyors, accountants or solicitors. Therefore, it would be iniquitous for the Bill to exclude that organisation from drawing up leases.
My hon. Friend the Member for Stroud mentioned a problem with granting planning permission. What will happen if a tenant applies for planning permission for a housing estate, for example? It could involve the payment of substantial compensation to the tenant at the end of his term of tenancy and the sum involved may be well beyond the landlord's resources.
Under the present Act, the tenant must ask the landlord to allow him to apply for planning permission and the landlord may refuse to give that permission. The matter can then be referred to arbitration and the arbitrator may allow the tenant to apply for planning permission for a housing estate, which is duly granted. However, if the housing estate is not built, when the tenancy comes to an end the landlord may have to compensate the tenant for many hundreds of thousands of pounds. The Bill should contain a mechanism to allow the landlord to block tenants applying for planning permission. We must examine that area closely.
Many of the Bill's clauses allow for matters to be taken to arbitration under the Arbitration Act 1950, which will give arbitrators far greater freedom than they have at present. The Bill also gives the landlord and the tenant the right to appoint an independent expert and there may be a temptation to appoint such as expert as it will be a much cheaper process than arbitration. What will happen
Column 86if an independent expert makes a decision in favour of one side and the parties disagree? Will they be able to appoint an arbitrator subsequently?
Mr. Clifton-Brown: I am grateful for my hon. Friend's clarification. Perhaps he will clarify what will happen if one party wishes to appoint an independent expert but the other party does not. The matter will then almost certainly have to go to arbitration because the Bill provides that the matter should be referred to the Royal Institution of Chartered Surveyors, which will appoint an arbitrator. I hope that that assertion is correct. If my hon. Friend does not wish to clarify that point now perhaps he will do so later. We have had a long canter around the course this evening. I welcome the Bill as one of the most important milestones in the post-war history of agriculture. It is a long-overdue reform from which landowners, tenants, agricultural workers and new entrants to the industry will benefit. Yet the Labour party consistently opposes it. It is typical of the Opposition to think that their only role is to oppose. They cannot see that, when it is in the interests of the entire industry, for once they should support the legislation. I welcome the Bill and I wish it a speedy passage on to the statute book.
Mr. Alan W. Williams (Carmarthen): I have listened intently to the speech of the hon. Member for Cirencester and Tewkesbury (Mr. Clifton- Brown). I followed the first half quite well, but I found it more difficult when he began to discuss privity of contract. The hon. Gentleman has certainly done his homework in that area and if he is as voluble in Committee as he has been this evening the Committee process will be a long one. I agreed with his early comments about the common agricultural policy, although I beg to differ about how the free market will assist agricultural tenancies.
I also listened intently to the opening speeches by the Minister of Agriculture, Fisheries and Food and my hon. Friend the Member for Edinburgh, East (Dr. Strang). My hon. Friend concentrated on the insecurity that the Bill will create among tenant farmers. Farming is a long-term enterprise and requires considerable commitment and investment-- particularly in the case of livestock. The present legal framework offers lifetime tenancies and succession rights, but if there is a move to the free market and no minimum tenancy, there will be enormous insecurity.
The right hon. Gentleman said that most new land on the market is the subject of short-term lets. In Wales in 1993, only 11 per cent. of all relet private land was the subject of long-term agreements, whereas a massive 72 per cent. was accounted for by short-term agreements. The Bill will tend to encourage the latter. The right hon. Gentleman said that when the market settles, it will be in the interests of landlords and tenants to enter into long-term agreements, typically of 10 to 15 years. That is more an article of faith than a belief based on experience. There is a risk of a multiplicity of short-term contracts of three, five, seven or 10 years in place of existing lifetime
Column 87tenancies. That could inflict on British agriculture the short-termism that cripples British industry, with its failure to plan and invest for the long term.
Short tenancies would make it difficult for new entrants. Banks will be reluctant to lend money for farm improvements and investment unless there is security of tenure for 20 years or more.
Mr. Jack: Can the hon. Gentleman substantiate that claim with the views of any particular clearing bank, particularly bearing in mind the fact that banks already transact substantial business in providing finance to tenants who are only on Gladstone v. Bower agreements?
Mr. Williams: At a presentation given last year by the Welsh NFU, one of its officers stated that Barclays was reluctant to lend to new entrants unless there was long-term security of tenure. I cannot quote chapter and verse, but I know that the statement was made. The NFU's chairman in Wales, John Lloyd Jones, stated in a press release dated 16 February 1994 that
"virtually all lettings in the last few years have been on the minuscule 20 month Gladstone Bower arrangement, which gives neither tenant nor landlord adequate returns or opportunities . . . You have to remember that the present situation is not encouraging young farmers into the tenant sector, but simply enabling existing farmers to be larger because they are the only people who can take the risks implied in a tenancy as short term as 12 to 20 months."
Mr. Clifton-Brown: I wonder whether the hon. Gentleman heard my remark that 10,000 current private landlord agreements are skirting existing legislation. That represents a large amount of agricultural land. The RICS calculates that a high proportion will come within the Bill's scope, which would provide much greater stability. Does the hon. Gentleman agree?
The proposed legislation could mean short-term exploitation of the environment to its long-term detriment. In upland areas, what value will the upkeep of hedges, dry stone walls and wildlife features command if all contracts and agreements are short term? I am aware of the NFU's qualified support for the Bill, but the Welsh NFU wants tenancies of a minimum of 15 years. Ninety per cent. of farms in parts of Wales such as Betws and Coed in Snowdonia are tenanted. If they become short term, there will be severe repercussions. The average age of farmers in Wales is 58 and the industry desperately needs a new early retirement scheme. There is a case for helping older farmers to retire, provided that they make way for their sons or daughters or for another person.
I am concerned about the Bill's effect on rents for existing tenants. The December 1994 parliamentary brief that hon. Members received included an article by Roger Gibbard, lecturer in land management at Reading university. He stated:
"Throughout the debate, perhaps the fiercest opposition has come from existing tenant-farmers, despite repeated assurances that existing tenancies will not be affected. One of the greatest fears is that the rents on new lettings, which will inevitably be higher due to competitive tendering in an under-supplied marketplace, will be used as comparables in traditional rent reviews, much in the same
Column 88way as residential rents are often quoted as comparables for farmhouses. The consequence of this will be pressure on existing tenants to pay higher rents."
Other hon. Members mentioned the importance of local authority smallholdings in offering a way in to young people. Dyfed county council has 167 such farms, ranging from 40 to 180 acres. They are retirement tenancies with an age limit of 65. Ten to 12 farms become available every year to let. There is an appalling danger that local government reorganisation and the financial pressures on councils will put them under pressure to sell. Councils must resist if their farms are to remain as breeding grounds for new farmers.
The Bill suits existing owner-occupier farmers who want more land, agribusiness or contract agriculture. However, short-term agreements will make life much more difficult for new entrants. It will drive up rents for existing tenant farmers and can only be destructive for the environment. I am happier with the present system, which offers greater security to tenant farmers, and allows them to plan long term and to farm in harmony with the environment.
Mr. Michael Colvin (Romsey and Waterside): I declare my interests in agriculture as a landlord, owner-occupier, tenant, member of the Country Landowners Association and National Farmers Union, a past president of the Hampshire Association of Young Farmers Clubs and one of its current vice- presidents. I believe that I have the credentials to speak in this debate.
It is a pleasure to follow the hon. Member for Carmarthen (Mr. Williams). He reflected the Farmers Union of Wales brief in demanding longer tenancies, but that is entirely in his hands and those of Labour's Front Bench. If they removed the uncertainty that persists over the future of tenancy legislation, landlords would be greatly encouraged to grant longer- term lets.
The contribution by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) was probably one of the most powerful that we have heard this evening, and one would expect that from a former student of the Royal Agricultural college, Cirencester. I, too, am a former student --only I did the short course. From the great knowledge that he obviously has of both landlord and tenant legislation and the proposals before the House today, it is clear that he did the long course and came out very fully qualified. I was interested in some of the other contributions. My hon. Friend has obviously talked himself on to the Standing Committee that will consider the Bill, but so, too, has my hon. Friend the Member for Worcestershire, South (Mr. Spicer), who referred to the 420 tenants in his constituency and the way in which the Bill will affect premium valuations. I sense that there was confusion on the Government Front Bench when he put his questions. It will be interesting to see whether he gets an answer this evening.
The hon. Member for Lancashire, West (Mr. Pickthall) made an interesting contribution. I was surprised that, as a member of the Select Committee on Agriculture, he did not have a greater knowledge of landlord and tenant legislation. It is perhaps a pity that the Select Committee did not look at the present law and decide how it might be reformed. He referred to the Bill as total deregulation, which it manifestly is not. One cannot just repeal all
Column 89landlord and tenant legislation and hope that case law will take its place. The Bill replaces what is in existence with something that we think will be very much better.
The hon. Member for Lancashire, West referred to the speech by Viscount Hampden. I seem to recall, from reading through Hansard of the debates in the other place--I am thinking in terms of the much earlier intervention by the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) about the rather dubious ways in which some landowners came to possess such large acres of our country--that the noble Lord has, in fact, owned his estate for more than 600 years. I also recall that he discovered from one of the early tenancy agreements which he looked up in preparing for the debate that the rent in 1314 was payable in barbed arrows. I suspect that they were used to ill-effect, because that is the date of the battle of Bannockburn, which, I am glad to say as a Scot, the English lost. No doubt some of my ancestors and those of the hon. Gentleman were there on that day and took part in that decisive battle and victory against the invading English.
The contribution by my hon. Friend the Member for Harborough (Mr. Garnier) was interesting. I am pleased that he did not stray on to the subject of the A427, but I made a mental note that if in future there is any need to prolong debates in the House, an intervention on that question may provoke a lengthy reply from him.
My hon. Friend the Member for Stroud (Mr. Knapman) made a contribution based on his experience as a land agent. He called for a free market in farm tenancies, and, of course, it is freedom of contract within the market that the Bill will introduce. That is precisely what it is all about.
The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd)--I am pleased to see him back in the Chamber--made an interesting speech as a solicitor with much experience of farming matters. He left us in no doubt of the line taken by the Farmers Union of Wales in its call for a minimum term. I have already said that I believe that the proposed legislation will lead to greater security and more tenancies. The hon. Member for Meirionnydd Nant Conwy also referred to the black eye of my hon. Friend the Member for Cirencester and Tewkesbury. I must confess that I, too, had a black eye. That was 25 years ago--the last occasion on which I had a black eye. The hon. Gentleman said that at least it was not a Welshman who gave my hon. Friend his black eye. It was, however, a Welshman who gave me my black eye. I was a tenant farmer in the hon. Gentleman's constituency. I was visiting my farm and was being driven around it by the Welsh manager. He tipped me over a precipice in a Land Rover and we fell 300 ft. I had two black eyes, and 15 other breaks. It was a Welsh doctor who put me together again. I sat in Aberystwyth hospital contemplating the future and read the biography of Iain Macleod, and it was at that moment that I decided that politics was for me; so, had it not been for the black eye that the hon. Gentleman's constituent gave me--I hope that he is still alive, because he, too, was in a mess afterwards--I might not be here today. I am pleased to say that my hon. Friend got his black eye in the hunting field. I very much hope that the circumstances under which he got his black eye will persist for many years to come and that the House will resist any attempt that might be made at any time in future to abolish hunting.
Column 90The opening speech by the hon. Member for Edinburgh, East (Dr. Strang), the Opposition spokesman, was revealing. There was one lovely moment in his speech when he said that a Labour Government would not be returning. Then there was a very long, rather Freudian pause. I think that it was a great pity that he continued. He should have stopped his speech right there.
The hon. Member for Hemsworth (Mr. Enright) took big farmers to task, because they were environmentally unfriendly. He painted a picture of small farmers being extremely careful with the environment. I must point out to him that every farmer and landowner is very conscious of the need to protect our environment. It is a costly matter. I would argue that the bigger the farmer, the more able he is to bear the cost of protecting the environment. I should like to see less cross-compliance than there has been, whereby grants available for other aspects of agriculture depend on environmental measures being undertaken. I would far rather have a policy of direct grants for environmental purposes.
Mr. Llwyd: Is it not a fact that, because of the recent changes in the law regarding the farm conservation grants available to farmers to comply with environmental sanctions, and so on, more of an onus is placed on potential tenants and the short-term tenancy without guarantee is even less likely to be practical?
Mr. Colvin: That may be the hon. Gentleman's view. It is not mine. There is obviously an obligation on both landlord and tenant. On the point made earlier about the stewardship scheme in Wales, I believe--I stand open to correction--that the provisions of such grant aid under any stewardship scheme would continue even if the tenancy were to change. There is an obligation, which becomes a liability jointly on the landlord and the tenant of a farm.
Mr. Clifton-Brown: Is not the precise issue raised by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) the sort that could well be coped with under the proposed legislation? Referring to the slurry disposal system, an incoming tenant could say to his landlord, "This farm is defective and I shall not take it on unless you allow me to make this improvement and compensate me for it at the end of the tenancy."
Her Majesty's Government have been wise to introduce this measure in the other place rather than here. Reading through the contributions made in the other place, I was struck by the number of peers who referred to their wealth of expertise both as landlords and as tenants. There are, of course, very few farmers in the House. Times have changed. There used to be many, but I recall that, at the end of the Maastricht debate in July 1993, my right hon. Friend the Foreign Secretary, having concluded the debate, slammed shut his notes, turned around and said, "Well, that is the end of that very important business, now let us all go off and gather in a really good harvest." Looking around the Chamber, I did not see many hon. Members on either side of the House who had anything to do with gathering in the harvest, and I thought how much times had changed.
Column 91It is not surprising that the Bill has arrived with very few amendments from the other place. It is the product of many months of work by the Tenants Reform Industry Group, which comprises the Country Landowners Association, the National Farmers Union, the Tenant Farmers Association and the National Federation of Young Farmers Clubs, supported by the Royal Institution of Chartered Surveyors and the Central Association of Agricultural Valuers. I agree with what hon. Members have said about the importance of bringing the Central Association of Agricultural Valuers within the scope of clause 34 so that agricultural valuers, as well as solicitors, can prepare leases.
The Bill is well thought out, and has been on the launch pad since December 1993 following a lengthy period of consultation set up by Ministers back in 1991. Of course there have been differences of opinion, but ultimately sensible compromises have been made. The Bill also follows a 1992 Conservative manifesto commitment to liberalise radically the agricultural tenancy laws
"in order to make more land available to rent, especially for new entrants."
The involvement and agreement of the National Federation of Young Farmers Clubs has not been mentioned enough, given the extent to which the Bill will improve the younger generation's prospects. At present, having left college or university with good qualifications and, often, with practical experience, members of the younger generation are doomed to a life on the road as travelling salesmen trying to sell agricultural products to, for instance, my right hon. Friend the Minister and to me--or, at best, to being agricultural contractors working for other farmers. I believe that the Bill will enable youngsters to get into farming more easily, although I acknowledge that there will always be the problem of trying to raise capital. Hitherto, they have been the victims of outdated legislation dating from 1947 and 1948, and of the 1976 legislation that extended security of tenure from one generation to three.
Many hon. Members have referred to the regrettable shrinkage of the tenancy sector. In 1900, total acreage was 90 per cent. let; the percentage is now down to 35. I acknowledge what the RICS has said about the real percentage of land that is let: it puts the amount at 27 per cent., and ascribes only 20 per cent. to tenant farmers. I think, however, that the number of genuine arm's-length tenancies is even smaller. Many tenancies nowadays are merely arrangements dictated by tax considerations. I refer, of course, to tax avoidance rather than tax evasion. There is nothing wrong with that. The value of land for probate purposes, with vacant possession, is probably £1, 400 an acre; the value of land that is let is between £800 and £900 an acre. Landlords can hardly be blamed for taking farms in hand and then reletting them to family farm partnerships to reduce valuations for probate purposes.
Labour Members have said that the Bill heralds the end of security of tenure for tenant farmers. I say that, if it is not enacted, it will herald the end of tenant farmers: there will be none for whom to provide security of tenure. The Bill's principal objectives have been adequately set out, and, as I have said, it has come from the other place with very few amendments; those that have been made are mainly minor and technical.
Column 92Opposition Members may not remember very well our recent debate on the rural economy, as few were present, but the Bill is relevant to it. The Bill will benefit the countryside, because agriculture will remain the foundation of our rural economy and farmers will continue to be the principal stewards of rural areas. I hope that the White Paper that the Government intend to publish soon will encourage farmers to be more environmentally aware, following the progress that has already been made, and that such awareness will be based on the voluntary principle rather than compulsion.
I also hope that planning policies will be more proactive and will support diversification. I hope that our tax policy will recognise farming, forestry, the letting of land and buildings and alternative farm enterprises on agricultural holdings as farm businesses--what the Country Landowners Association has described as rural business units.
Clause 1 is important, because it defines a farm business tenancy and goes on to describe tenancies that cannot be farm business tenancies. According to a brief from Conservative central office, the proposals relate solely to the agricultural sector and are not concerned with tenancy provisions relating to business premises; but the Bill says that they can cover commercial activities when the character of the tenancy is primarily agricultural. Confusion will arise as farms diversify and alternative enterprises spring up. I hope that my hon. Friend the Minister will explain precisely where the division will come.
These are times of rapid change in farming, and of great opportunities which the Bill will extend to the younger generation of farmers. In 1800, George Crabbe said:
"Our Farmers round, well pleased with constant pain,
Like other farmers flourish--and complain."
I have not heard a single farmer complain about the Bill, but one thing that farmers do complain about is lack of capital.
Farmers tend to be capital rich, although the capital is usually locked up in land and fixed assets; but they are often revenue poor, unless they are overwhelmed by the concrete jungle of development--in which case, they cease to be farmers altogether. The 1970s saw an influx of new institutional capital into farming, and of remote landlords with little interest in farming other than its relation to the balance sheet and its provision of a hedge against the galloping inflation produced by Labour Governments' economic policies. I hope that we never see such inflation again. Many of those investors burnt their fingers. The hon. Member for Edinburgh, East said how wrong it was for farming decisions not to be made locally, and I agree. I felt very sorry for tenants whose landlords were on the other side of the world, and saw landowning only as a temporary investment. I believe that the Bill can provide the basis for a far closer partnership between landlord and tenant. It should be welcomed by all political parties. It is certainly in accord with what was called for in the Labour party's consultation paper "Encouraging new entrants into farming", which was published last September. The Opposition should avoid sewing any seeds of doubt about the durability of the proposals: farming is a long-term business, and a stable legal framework is vital.
Column 93For the record, let me correct the quotation from Jonathan Swift that my hon. Friend the Member for Stroud wrongly attributed to Charles Dickens. It was Swift who wrote:
"that whoever could make two ears of corn or two blades of grass to grow upon a spot of ground where only one grew before, would deserve better of mankind, and do more essential service to his country than the whole race of politicians put together." My farm, like most others in the United Kingdom, and certainly the farm of my right hon. Friend the Minister of Agriculture, Fisheries and Food, has done just that. As a farmer cum politician, I am in two minds about the quotation. However, I am not in two minds about the Bill which I commend to the House. It is long overdue and it is a sensible package of reforms for landowners who do not wish to farm or cannot farm, and for farmers who do not wish to own or cannot own. I trust that it will get its Second Reading.