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Mr. Hogg: I am trying to relate my hon. Friend's amendments to the clause. My understanding of the practical effect of the amendment is that it would require compensation in Wales, as the Bill already requires a scheme in England, but not in Wales. Am I right?
Mr. Moss: That certainly was not the intention of the amendment and I am puzzled by my right hon. and learned Friend's interpretation. According to the present wording of the Bill in subsection (1),
- The appropriate authority may (and in the case of the Minister of Agriculture, Fisheries and Food, shall) by order make a scheme for the making of payments by that authority.
Mr. Moss: I am slightly puzzled by that conclusion. The amendment is an attempt to impose on the Minister, who is the appropriate authority in England, and the appropriate Welsh Minister, a requirement to introduce the scheme. Amendment No. 6 provides that that scheme shall--not may--fulfil certain functions.
Amendment No. 7 would require the setting up of an independent advisory body in accordance with new schedule 1 to advise the appropriate authority on all aspects of the scheme. It then places further requirements on that independent advisory body.
Amendments Nos. 6 and 7 are crucial in that they would establish a group of independent experts to investigate and assess the compensation requirements of fur farmers who were caught by the legislation. It would make the independent aspect of the compensation scheme completely transparent and would honour the commitment that the Minister repeatedly gave in Committee.
During our third sitting, the Minister promised:
- Independent valuations will be conducted not by Ministry staff, but by independent valuers who will talk with farmers about capital and income streams before reporting back to the Ministry. Those professionals can be sent out to farms as quickly as possible, and almost immediately after Royal Assent.--[Official Report, Standing Committee E, 6 June 2000; c. 83.]
Under the Government's proposals, the scheme to be set up by the appropriate authority will have responsibility for implementing clause 5(2). We believe that the Bill therefore gives great control to the Minister and the Ministry. Clause 5(2)(a) requires the authority to specify
- the descriptions of losses and businesses to receive payment . . . and the basis of valuation for determining losses.
- the amounts of the payments to be made and the basis on which they are to be calculated.
- provide for the procedure to be followed in respect of claims.
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Amendment No. 7 would give that role to the independent advisory body. It tasks that body with advising the Minister
on all aspects of the scheme,
The phrase "all aspects" means that all the facets, components, considerations and calculations that must be taken into account when arriving at a fair and accurate valuation shall be part of the assessment. To achieve that, the independent body must be made up of people with a range of professional skills--a point that the Minister has already conceded in Committee.
The independent advisory body must be free to start from basics. There should be a clean sheet of paper, with no preconceived notions as to what is ruled in or out. A lengthy discussion took place in Committee about the financial guidelines set out in the explanatory notes to the Bill. Paragraph 26 of those notes is headed "Financial Effects of the Bill", and states:
- It is estimated that the cost of compensation under the Bill for the . . . 13 mink farms could, in respect of assets, be up to £400,000 and perhaps four times that amount if income were to be compensated.
- We will consider carefully whether the figure might have to be varied . . . We feel that our figure is broadly right, but if some adjustment is required, we shall consider it carefully following the valuations.
- The valuers certainly will not be instructed to draw up a scheme within the maximum of £1.6 million.--[Official Report, Standing Committee E, 6 June 2000; c. 83-5.]
Another vexed issue was whether income would be considered in a compensation scheme. That question was put to the Minister in Committee by my hon. Friend the Member for Cotswold (Mr. Clifton-Brown). The Minister replied:
- I can assure the hon. Gentleman that the provision of compensation for income will certainly be considered in the compensation scheme. The Bill makes provision for that.
- I have already said that there will be an independent valuation of the businesses, including their income.--[Official Report, Standing Committee E, 6 June 2000; c. 62-5.]
- specify . . . the basis of valuation for determining losses.
8.45 pm
Let us look first at proposed subsection (2B)(a), which deals with the payment of legal fees for the advice that fur farmers will need. A similar amendment was tabled when the private Member's Bill promoted by the hon. Member for Liverpool, Garston (Maria Eagle) was considered in Committee. It was rejected because it was too loosely worded, referring as it did to "advisers" in the plural. Those in favour of the Bill argued that that placed no limit on the number of people whom fur farmers could consult, thus creating the need for a blank cheque. Amendment No. 8 is specific, in that it refers to the payment of reasonable professional fees for advice--in the singular. That would, we hope, rule out payments to a long list of advisers.
To my knowledge, no other Government have introduced legislation to ban an entire sector of farming. That places even greater emphasis on the unbiased and independent advice that the fur farming community will require.
It has been standard practice for many years that claimants under the land compensation code are entitled to have their professional advisers' reasonable fees paid for by the acquiring authority. The Bill will impose a compulsory ban on fur farming, which we argue is similar to a compulsory purchase order under the land compensation code. The effect would be pretty much the same in each case--the state uses compulsory purchase powers to confiscate an individual's property.
Fur farming is a very specialised form of farming. We believe that it is essential for the farmers involved to have access to good professional advice, in the consultation period and during negotiations, on the level of compensation to which they feel that they are entitled. The amendment would help to ensure not only that such professional advice was available but that the fees for it would be allowable in reaching a figure for compensation.
Proposed subsection (2B)(d) in amendment No. 8 would provide for the cost of land clearance to be included in any appropriate compensation scheme. In Committee, the Government gave an assurance that, as a general principle, they would consider the cost of demolition in relation to a claim in particular cases. However, they were adamant that such consideration would be given only on a case-by-case basis and on a case's individual merits, rather than blanket coverage. We accept that, and believe that the amendment conforms to that requirement.
Because the Government are proposing a unique measure, and because fur farming is so specialised, there is very little professional opinion available on what effect the ban will have on the future use of these specialised buildings and the equipment that is associated with
fur farming businesses. An example was given in Committee--a farmer in Northumberland had turned some of his sheds over to the growing of strawberries. Other people commented that he had gone out of business, for whatever reason. There are limited other uses to which the buildings can be put. It is important that the cost of demolishing and clearing the land be included in any scheme.We know that land clearance, especially if someone wants to return the site to a greenfield site that can be farmed in more conventional ways, can be extremely expensive. Figures have been quoted of about £100,000 for a substantial farm of, say, 600 breeding females. Pro rata, that would come out at £17,000 per hundred breeding females. Those are substantial sums in anyone's book, and we feel that it would not be unreasonable that they should be included in the calculations in the compensation scheme.
Proposed subsection (2B)(e) would provide for compensation to cover costs associated with the winding up of a fur farming business. As a general rule, claimants in any scheme of compensation should mitigate their losses wherever possible, but there will inevitably be costs associated with winding up businesses as a result of the coming into force of the offence in clause 1. There may have to be forced sales of capital equipment, land and the property that goes with it. If a farmer was leasing land, there might be costs for early termination of the lease. There is always a cost when people wish to terminate a lease in advance of the appropriate date. Contracts may have been entered into with subcontractors to do work on the farm; they, too, may require compensation.
Proposed subsection (2B)(b) in amendment No. 8 would allow for interest to be claimed on any outstanding compensation and to be payable in the period from the date of the final settlement to that of payment. We hope that whatever scheme the Minister puts in place as a result of the advice that he receives from the independent advisory body will be regarded by all parties as fair and honourable, and that it will not take a great deal of time to reach agreements on the level of compensation. However, in the real world, things rarely go so smoothly.
Negotiation and settlement of claims could take considerably longer than a few months. If negotiations turn out to be lengthy because there are disputes about the scale and the amount of compensation, that may involve the matter going to arbitration, as we know from other parts of the Bill. It may well go to the Lands Tribunal, under clause 5(5). If it does, settlement could take years rather than months. In those circumstances, it would be appropriate for compound interest to be payable on the amount that is finally agreed. The advice to the Government from their working party on compulsory acquisition was that such interest was payable.
Proposed subsection (2B)(c) relates to what we call payment on account. It would allow for interim compensation payments to be paid when the final payment was unreasonably delayed. Since 1973, claimants under the land compensation code have been entitled to request advance payment of 90 per cent. of either the agreed compensation or, more usually, the acquiring authority's initial estimate of their entitlement.
As I have said, it can take months or years to reach a final settlement in practice, especially if the Lands Tribunal route is entered into.The amendment sets a lower figure than the 90 per cent. under the code; 60 per cent. is fair and reasonable. That would extend to the fur farming industry rights similar to those applicable to land compensation. It would be unreasonable of the Government to reject that proposal. It is in their interest to accept the amendment, because it is likely to enable fur farmers sooner to establish other businesses and sources of income.
- That the agreement of the appropriate authority to refer a dispute as to a person's entitlement to arbitration under subsection (4) shall not be unreasonably withheld.
The inclusion of an arbitration procedure under the Bill is welcome. In the absence of agreement, we would support the selection of an arbitrator by the president of the Royal Institution of Chartered Surveyors. However, under the measure, there is a risk that the Minister could refuse to go to arbitration; or he could wait until the full nine months had elapsed before making his offer and force the claimant to settle at that late hour or face the unattractive option of taking the case to the Lands Tribunal. That would give the Minister unfair leverage in the negotiations. We should like him to accept our amendment, because it would give an assurance to all involved that he would not withhold unreasonable agreement to arbitration if the parties had not reached an earlier settlement.
Amendment No. 11 relates to clause 7. In Committee, the Minister said:
- I take the point that some fur farmers may want to get out of the business as quickly as possible; I understand that point . . . I want the scheme--
- to be introduced as quickly as possible in order to assist people.--[Official Report, Standing Committee E, 6 June 2000; c. 81-2.]
New schedule 1 relates to the independent advisory body. The body should comprise no fewer than three and no more than seven members. The numbers are fairly arbitrary; we want a workable number of people--more than seven would be unwieldy and three is probably the minimum. Our proposal offers the Minister plenty of scope to act as he sees fit.
Paragraph 2 would require members of the body to possess such professional qualifications as the Minister deems appropriate to the job in hand. The RICS should be involved--because of the auctioneers and valuers. An accountant should be included. Someone from the legal side--a solicitor or barrister--should be involved;
also perhaps a National Farmers Union representative, and perhaps an expert in fur farming from the European Union. After all, there is a huge fur farming industry in the other member countries of the European Union, and some of those have already considered compensation schemes, so their expertise might be helpful.
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