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The Minister for Rural Affairs and Local Environmental Quality (Alun Michael): I am grateful to my hon. Friend the Member for Monmouth (Mr. Edwards) for securing this debate and I congratulate him on taking up the cudgels on behalf of tenant farmers. Tenant farmers have long been and remain an integral part of the UK agriculture industry and the social fabric of our rural communities. Before the first world war, 90 per cent. of agricultural land in England and Wales was tenanted. Today, the figure is nearer 33 per cent.

Despite the reduction in scale, the tenanted sector continues to make an important contribution to farming in several ways. It allows people to farm without the capital needed to buy land. As my hon. Friend rightly pointed out, that is the only way into the industry for many people. The sector also provides opportunities for new and younger entrants to the industry to ensure a dynamic and vibrant future for farming.

That is especially important, given the ageing farming population—although I am not sure that the word "ageing" is accurate. The average age of farmers is
 
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59, and, although that may seem old, when we look at the statistics we find that it was much the same immediately after the war. The farming population is ageing in the sense that we are all ageing, but the extent to which its profile is changing is open to a little more discussion. The industry is certainly changing and it faces a variety of challenges. It is frequently more difficult for older farmers to adjust to changes at a time of transition such as the present, so the current opportunities are relevant. The tenancy option offers landowners and tenants the flexibility to let or rent land according to individual needs.

As part of our strategy for a sustainable food and farming industry, the Government have made clear our commitment to encouraging a viable and prosperous future for the tenanted sector.

Mr. Roger Williams (Brecon and Radnorshire) (LD): Will the Minister give way?

Alun Michael: I am not sure of the protocol, Madam Deputy Speaker. I am not aware that intervention by a third party is possible.

Madam Deputy Speaker (Sylvia Heal): It is entirely up to the Minister whether he chooses to give way.

Alun Michael: I will give way to the hon. Member for Brecon and Radnorshire (Mr. Williams), but I am rather surprised that he is making an intervention without notice.

Mr. Williams: Thank you, Madam Deputy Speaker. I apologise to you and to the Minister. I was told that the debate could continue until half-past seven, so I thought that I might make a contribution. May I encourage the Minister to say something about single farm payments for new entrants, especially tenant farmers? It is a UK scheme and many new entrants and business builders are concerned.

Alun Michael: The hon. Gentleman is not a new Member and my understanding of the protocol is that if a third party wishes to speak they have to seek permission from both the Member instigating the debate and the Minister, but that may merely be politeness rather than a requirement of the House. I shall certainly be addressing the issues that were raised, including single farm payments—

Madam Deputy Speaker: Order. Perhaps I should clarify that that would be the case if a speech was being made, rather than an intervention.

Alun Michael: I am grateful, Madam Deputy Speaker. We learn something every day.

I was pointing out the importance of the tenant farmer sector, before I turned to the specific points that my hon. Friend the Member for Monmouth raised on behalf of his constituents. If, as we want to do through the strategy for food and sustainable farming, we are committed to ensuring a viable and prosperous future for the tenanted sector it is important that we ensure that tenant farmers are able to adapt to the changing circumstances in agriculture and take advantage of emerging possibilities.
 
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Farmers today can no longer rely on food production, or food production supported by subsidy-related production, as the sole means of earning their income. Diversification from traditional agricultural activities is often essential to ensure the sustainability and prosperity of a farm business. Greater awareness of the need to protect the environment has led to changes in the way in which land is farmed and managed.

Tenant farmers have often been hampered in adapting to those changes due to the legislative framework and the structure of agricultural tenancies, which relates directly to one of my hon. Friend's points. That is why, at the end of 2002, Lord Whitty and I asked the Tenancy Reform Industry Group to look at the way forward for tenancy reform. I am pleased that my hon. Friend noted the work of the group, led by Julian Sayers. The TFA made a constructive contribution to that work.

The main features of the group's recommendations were proposals for changes to the Agricultural Holdings Act 1986 and the Agricultural Tenancies Act 1995. At the end of September, the Government issued a consultation document on a regulatory reform order on tenancy reform, which, if adopted, will implement all the proposals for legislative change made by the Tenancy Reform Industry Group. The proposed amendments to the legislation will create a more flexible framework for agricultural lettings and enable tenant farmers to take greater advantage of the opportunities presented by diversification and agri-environment activities.

Specifically, the amendments would allow tenant farmers to include income from diversified activities, carried out with the consent of the landlord, in the eligibility criteria for succession to a tenancy. They would allow the simplification of procedures relating to succession to a tenancy on retirement. They would provide for greater flexibility for landlords and tenants to reach agreement on rent reviews and end-of-tenancy compensation. They would also make it easier for landlords and tenants to agree to restructure a holding without jeopardising the status of the tenancy. Each of these points is important not only for the future of the tenanted sector but for the capacity of individuals to move on from a tenancy. My hon. Friend is right to say that that is sometimes a challenge and a problem.

The consultation period on the regulatory reform order ends this month and I hope that the amended legislation will come into force at the end of 2005. In addition to working on changes to legislation, the Government have worked with the Tenancy Reform Industry Group to produce a code of good practice for agri-environment schemes and diversification projects within agricultural tenancies. The code will assist landlords and tenants in reaching agreement on diversification and agri-environment projects. We have agreed to back up the code by providing funding for an adjudication scheme to consider cases where landlords and tenants have been unable to reach agreement.

The fresh start initiative that Lord Whitty launched at the Smithfield show earlier this month will benefit all farmers. Many of its measures will be particularly relevant to tenant farmers, and draw on the structural recommendations proposed by the tenancy reform
 
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industry group. In particular, fresh start addresses the problems of farmers considering retirement. Representatives of tenant farmers have lobbied strongly for an early retirement scheme under the England rural development programme, which my hon. Friend mentioned. The Government are not convinced that this would be good value for money, and money would have to be diverted from other grant schemes that are providing valuable public benefits, such as the agri-environment schemes.

We are aware that there is a particular problem for tenant farmers in finding suitable accommodation for their retirement. Tenant farmers want to be able to retire in rural areas—in other words, to be able to live where they have lived and worked all their lives. I think that that has been dealt with in general by ensuring that more affordable homes are built in rural areas.

In referring to that and referring specifically to his constituents' experience, my hon. Friend referred to the work of ARC Addington, which has offered interesting and constructive ideas on shared equity. A few months ago, its director made a presentation to the rural affairs forum for England, which I chaired and which was also attended by my right hon. Friend the Minister for Housing and Planning, and I understand that there are proposals with the Office of the Deputy Prime Minister on that type of model.

Shared equity is one of the ways of ensuring that affordable housing is not only provided but remains and can be recycled for future generations, whether that be 30 years on—the next generation—or, as sometimes happens with affordable housing, on a 10-year cycle, so the benefits of that model could be considerable. My understanding is that some elements of the proposal could be accommodated within existing arrangements but others would require changes.

Affordable housing in rural areas is the issue that leads to the problems; if there was sufficient affordable houses it would not be as difficult for people to find accommodation. I met the director of the Housing Corporation recently, and received very strong assurances that it will do what it has done over the past few years, which is to exceed the targets set out in the rural White Paper for the provision of social housing in rural areas. I know that colleagues at the Office of the Deputy Prime Minister have proposed a number of measures, particularly in relation to planning, that will assist in the provision of specific opportunities at the local level. We are often talking about the very smallest of communities—those under 3,000—and we are also talking about arrangements where the exceptions policy has been very constructive in recent years; that policy will continue.

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