Agriculture Bill

Written evidence submitted by the Tenant Farmers Association (AB25)

1. Introduction

1.1 The Tenant Farmers Association (TFA) is pleased to provide written evidence to the House of Commons Agriculture Public Bill Committee. This follows the oral evidence session provided by the TFA’s Chief Executive, George Dunn on Tuesday, 11 February 2020.

1.2 The TFA is only organisation dedicated to representing the interests of those who do not own the land they use for agriculture in England and Wales. Its membership comprises farms of all types and sizes but active, family farms predominate.

1.3 The tenanted sector of agriculture is responsible for farming at least one third of the agricultural area of England and Wales and approaching half of that is now under Farm Business Tenancies (FBTs). It is estimated that a further 10% to 20% of land is farmed by individuals who do not own that land and who operate under other types of occupation and use agreements. The TFA therefore represents a very significant constituency of interest within the agricultural industry. Sector by sector, the proportion of farmed tenanted land is slightly higher in the upland, livestock and dairy sectors and slightly lower in the arable sector.

1.4 The TFA recognises the opportunity afforded by the UK withdrawal from the European Union to put in place bespoke policies for food, farming and the countryside in the four countries of the United Kingdom and we recognise that this is a time of change, not just for agriculture but for the whole nation. The TFA welcomes the introduction of this important piece of legislation at this time.

2. Context

2.1 Notwithstanding the opportunities that arise following our exit from the European Union, there are also challenges. In particular, Parliament is having to consider the Agriculture Bill without fully understanding the future trading relationships between the UK and the European Union and our position within the WTO in the event of the UK failing to reach a Free Trade Agreement with the EU before the Implementation Period Completion Date (currently 31 December 2020).

2.2 This uncertainty will have a significant impact on the profitability, resilience and sustainability of domestic agriculture. It must be recognised that whatever policy framework is put in place by any new legislation, there must be sufficient flexibility to respond appropriately when there is greater certainty in our international trade position, particularly with respect to the European Union.

3. General Comments on the Bill

3.1 The TFA acknowledges that the Bill as presented has seen some significant change in comparison to the Bill introduced in the last Parliament. We are grateful to see several improvements including the following:

· The recognition of the importance of soil quality and the conservation of native livestock as public goods.

· A requirement for the Government to have regard to the need to encourage the production of food in an environmentally sustainable way.

· The requirement for the Government to produce multi-annual financial assistance plans.

· The requirement upon the Government to report on food security.

· Reform of agricultural tenancies.

3.2 However, there remain areas where the TFA believes that the Bill is in need of further improvement and these are explained further within this written evidence. Where appropriate, the TFA has drafted suggested amendments to the Bill which it would encourage members of the Bill Committee to take forward. These can be found in Annex 1.

3.3 It is appreciated that, in the main, the Bill provides a framework for implementation of existing and future Government policy. Much of the detailed work of implementation is to be set out in Regulations, many of which are to be drawn up under the Affirmative Resolution procedure. The TFA would like to see the Government commit both to make full use of the powers that it will be reserving to itself in bringing this legislation into force and making available sufficient Parliamentary time to allow for the large number of Regulations to be confirmed. The TFA believes that there is an opportunity to use the Environment Food and Rural Affairs Committee to scrutinise any draft Regulations the Government may wish to introduce. The TFA would encourage the Government to make a firm commitment to these requirements at Committee Stage.

4. Chapter 1 – New Financial Assistance Powers

4.1 The TFA welcomes the scope of the new financial assistance powers. It is particularly pleasing to see the powers to provide financial assistance for productivity – Section 1(2).

4.2 However, the TFA believes that the list of purposes set out in Section 1(1) - broadly speaking those which are considered public goods – is incomplete. Although the Bill later provides duties upon the Government both to bring a report to Parliament on food security and to have regard to the need to encourage food production, these elements must be included within the scope of public goods. The TFA suggested this could be achieved using amendment TFA1.

4.3 Also, whilst welcoming the inclusion of the conservation of native livestock in the list of public goods, the TFA believes that this should be extended to include all pasture fed grazing livestock systems, particularly those within an upland context. We note that the definition of "cultural or natural heritage" includes support for uplands and other landscapes, we would again consider it appropriate to have this fully recognised within Section 1(1). This could be achieved by utilising amendment TFA2.

4.4 In the context of this legislation being an Agriculture Bill, the TFA believes it is necessary to restrict the financial assistance powers such that they are available only in respect of individuals who are operating units which are predominantly agricultural in nature. Therefore, in Section 2 of Part 1 of the Bill it should be made clear that financial assistance may only be made to individuals or groups of individuals natural or otherwise operating land where the predominant use is agricultural as defined by the Agricultural Holdings Act 1986 Section 96 (1). See the first part of amendment TFA3.

4.5 There also needs to be a clear limitation of who can be considered a beneficiary by ensuring that it is targeted at "active farmers" or "active land managers" defined as individuals being in occupation of, or with rights of common over, the land they are farming, taking the entrepreneurial risk for the decisions made in relation to the management of that land and in day to day management control. See the second part of amendment TFA3.

4.6 Within the context of Devolution, the TFA would wish to see a commitment to the principle that the four countries of the United Kingdom are provided with at least the same level of funding as they received previously to deliver agricultural and rural development policies and that this funding must be earmarked for the delivery of the objectives set out within the Bill.

5. Multi-Annual Financial Assistance Plans

5.1 The TFA welcomes the requirement upon the Secretary of State to prepare Multiannual Financial Assistance Plans, something which was entirely missing from the previous Bill considered by the House. In addition to the elements specified, there must be a requirement upon the Government to identify the level of expected expenditure over the lifetime of the plan and a clear statement as to the outcomes that it expects to achieve. See amendment TFA4.

6. Part 1: Chapter 2 – Direct Payments After EU Exit

6.1 We note the intention, set out in Section 8 (1) for a seven-year transition to phase out current direct payments and that this period can be modified by the Government by Regulation. Whilst not objecting to the seven-year transition, we do believe that the transition should start in 2022 rather than in 2021. In that we are creating a new policy framework for a generation, the TFA believes that it is better for it to be introduced well rather than quickly. We fear that a rushed implementation could lead to significant problems both in terms of the administration of new arrangements and for the industry. Therefore, we believe that the seven-year transition should start a year later than stated. See amendment TFA5.

6.2 The Government should also be clear about its plan for phasing out direct payments. Previously, an indication was provided for how the transition would begin in the first year but we would like to see clarity about the way in which the remaining years of the transition period will be handled and, in particular, an assurance that smaller recipients will be protected for a longer period of time in comparison to larger recipients to help with farm business adjustment.

6.3 The TFA supports the concept of delinking payments and the provisions for providing a lump sum payment in lieu of future direct payments (Sections 12 and 13). The TFA believes that this will be of significant assistance to progress restructuring within the industry allowing individuals to use both de-linked payments and consolidated payments to retire from the industry or invest in their businesses or to invest in other economic activities either on their holdings or off their holdings. However, it will be essential that recipients of these payments must meet the active farmer test at the time they make the application for these payments to be made. See the second part of amendment TFA3.

6.4 The TFA welcomes the flexibility available to the Government to extend the transition period if required. The TFA believes that the Bill should also reserve the necessary powers to ensure that DEFRA does not lose any money recouped from direct payments if, for whatever reason, the new financial assistance schemes proposed are not available to the extent necessary to make full use of the available funding. The TFA believes that any surplus funding identified on an annual basis should be reallocated through direct payments until sufficient schemes are available.

7. Part 2: Chapter 1  – Food Security

7.1 The TFA congratulates the Government for recognising the need to consider matters of food security and has included a requirement in the Bill for the Government to prepare and lay before Parliament a report on food security. However, we are disappointed that for such an important issue this is only to occur once every five years. As this is such an important issue, not only should it be identified in the list of public goods, but the Government’s report should be an annual requirement. We would ask MPs to insist that five years is replaced with an annual requirement. The TFA supports tabled amendment number 7 in the name of Fiona Bruce

 

7.2 The TFA also believes that the Government must be required to specify food security targets and to identify any actions it needs to prioritise if those targets are not being me t. See amendment TFA6.

8. Part 2: Chapter 2  - Exceptional Market Conditions

8.1 The TFA welcomes the provisions within the Bill to allow for financial and other assistance to be made available to the farming industry at times of exceptional market conditions. The TFA would wish to be assured that this will cover natural phenomena such as drought, flood and disease as well as economic phenomena that may impact upon markets. See the first part of amendment TFA7.

8.2 The TFA would also wish to have an assurance from the Government that this part of the legislation will cover not only situations of "acute" hardship or difficulty but that it will also be able to be invoked if "chronic" or long-lasting difficulties are apparent. This might involve things like endemic disease or structural changes in agricultural markets which may require farmers to undergo significant adjustment. See the second part of amendment  TFA7   .

8.3 A similar change will be required for the provisions relating to Wales in respect of Schedule 5 to the Bill. See amendment TFA7W.

9. Part 3: Chapter 1  - Collection and Sharing of Data

9.1 The TFA welcomes this part of the Bill as it will provide the potential for a greater degree of information to be available about the operation of supply chains that will lead to more informed negotiation between farmers, processors, retailers and food service outlets. This has important links to the provisions set out in Part 3 Chapter 2 of the Bill dealing with provisions to ensure fairness within the supply chain.

10. Part 3: Chapter 2 - Fair Dealing with Agricultural Producers and Others in the Supply Chain

10.1 The TFA is delighted that the Government is proposing to reserve significant powers to regulate the operation of supply chains and, in particular, relationships between farmers and first purchasers. The TFA believes that this is a vitally important role for Government in the face of significant market failure within agriculture and food supply chains. However, it is concerning that the Government does not see this forming part of an expanded role for the Groceries Code Adjudicator. It has been proposed that the appropriate regulator here would be the Rural Payments Agency (RPA). The TFA does not believe that the RPA has sufficient expertise in this area. The TFA sees no reason why this responsibility should be placed anywhere else other than with the Groceries Code Adjudicator. See amendment TFA8.

11. Part 5: Marketing Standards, Organic Products and Carcass Classification

11.1 The TFA welcomes the inclusion within the Bill of powers for the Government to set marketing standards for agricultural products. It will be important to ensure that these are used to protect the high standards of production evident on UK farms in respect food safety, animal welfare and environmental management. It will be important to see this joined up with the Government’s policy on international trade such that these same standards apply to agricultural products imported into the UK from abroad. The Government has given an oral commitment to protect our high standards in trade and in signing new free trade agreements, but this also must be supported by clear legislation in order to sustain these arguments within the context of the World Trade Organisation. The TFA supports either of the tabled amendments numbered NC1 in the name of Luke Pollard or NC4 in the name of Simon Hoare.

A 12. Agricultural Tenancies

12.1 The TFA is very pleased that the Bill includes Schedule 3 with amendments to certain aspects of agricultural tenancy legislation which formed part of the consultations on tenancy reform conducted by DEFRA and the Welsh Government in 2019. From discussions with the Government, it has decided to proceed with what it considers to be the most urgent matters and those which were least contentious considering the consultation responses.

12.2 The TFA is pleased to support all the changes that are being made but there is a need for certain aspects to be improved.

12.3 Whilst we welcome the new provisions which will allow a tenant the ability to object to a refusal from the landlord for consent to enter into a scheme introduced under the financial assistance provisions of the Bill or to carry out works in accordance with a statutory obligation, currently this only applies to tenancies regulated by the Agricultural Holdings Act 1986. These provisions must be extended to tenancies regulated by the Agricultural Tenancies Act 1995. See amendment TFA9.

12.4 Also, the Bill envisages that tenants can use these new provisions only if the landlord’s consent is required by the terms of the tenancy agreement or by a variation of the terms of the tenancy. However, this should be widened to include any situation where landlord’s consent is required. For example, whilst a tenancy agreement itself may not require landlord’s consent, a scheme under which financial assistance has been provided may by its own terms require the tenant to have obtained landlord’s consent before participating. See amendment TFA10 (also included with TFA9).

12.5 The TFA also believes it is necessary to make it a requirement for regulations to be brought forward to give effect to the clauses providing tenants with the opportunity of objecting to a landlord’s refusal for consent. See amendment TFA11 (also included with TFA9).

12.6 Given that Welsh ministers are not reserving powers for financial assistance schemes, there is a need to ensure that the provisions of this part of the schedule apply as and when Welsh Ministers come forward with new financial assistance schemes. See amendment TFA12 (also included with TFA9).

12.5 There was a further legislative change which was not deemed to be contentious following the tenancy reform consultations which, inexplicably, the Government has decided not to take forward. This was a provision to encourage landlords to consider letting for longer periods of time on Farm Business Tenancies (FBTs). The proposal was to allow landlords granting new FBTs with an initial minimum term of 10 years and without Landlords’ scheduled break clauses, the ability to terminate the tenancy early in the following circumstances:

o non-payment of rent (as an alternative to forfeiture);

o breaches by the tenant of contractual terms or conditions;

o the death of the tenant;

o the landlord’s need to remove land from the holding where planning consent has been granted for non-agricultural use.

12.6 To achieve this, the TFA is proposing amendment TFA13. At the same time, the Agricultural Holdings (Arbitration on Notices) Order 1987 should be updated to provide the opportunity for tenants to serve a counter notice in respect of any Notice to Remedy served by a landlord, not just those requiring work.

12.7 during the debate on Second Reading, there was a call for the Bill to provide an extension to the eligibility for tenancy succession under the Agricultural Holdings Act 1986 to nephews, nieces and grandchildren. The TFA would support this extension and has prepared amendments TFA14 and TFA15 for consideration in this respect.

13 Conclusion

13.1 The TFA would welcome support from Members of the Public Bill Committee and other Members of Parliament on the matters set out in this evidence.

February 2020

Annex 1 – Proposed Amendments

TFA1

Section 1(1), page 2, after line 24 insert the following :

(k) protecting or improving the health, well-being and food security of citizens.

TFA2

   

Section (1)(1)(g) lines 18 and 19 delete and replace with:

(g) protecting or improving the management of landscapes and biodiversity through pasture fed grazing livestock systems including the conservation of native livestock, native equines or genetic resources relating to any such animal.

TFA3 (new clause)

Section 2, page 3, after line 27 insert the following:

(2A) In every case such conditions shall include the following restrictions to the eligibility of a recipient of financial assistance –

(a) financial assistance may only be made to individuals or groups of individuals natural or otherwise operating land where the predominant use is agricultural as defined by the Agricultural Holdings Act 1986 Section 96 (1); and

(b) financial assistance may only be made available to individuals or groups of individuals natural or otherwise who are –

(i) in occupation of or with rights of common over the land for which the financial assistance is being claimed; and

(ii) taking the entrepreneurial risk for the decisions made in relation to the management of the land for which the financial assistance is being claimed; and

(iii) in day-to-day management control of the land for which the financial assistance has been claimed."

TFA4

Section 4, page 5, after line 14 insert the following:

(d) Set out the budgeted annual expenditure to be used to achieve each of the aforementioned strategic priorities for the plan period.

TFA5

Section 7, page 7, line 40

 

Replace "2021" with "2022".

TFA6

Section 17, page 14, after line 32 insert the following:

 

(3) As part of the report the Secretary of State must set out food security targets and specify and implement any necessary actions required to ensure those targets are met.

TFA7

Section 18, page 15 replace lines 2 and 3 with following:

(a) there is an acute or chronic disturbance in agricultural markets or a serious threat of an acute or chronic disturbance in agricultural markets caused by economic or environmental factors, and

TFA7W

Schedule 5, Section 6, page 60 replace lines 32 and 33 with following:

(a) there is an acute or chronic disturbance in agricultural markets or a serious threat of an acute or chronic disturbance in agricultural markets caused by economic or environmental factors, and

TFA8

Part 3, page 17 after line 33 insert the following:

Chapter 1

Groceries Code Adjudicator

(20A) The Adjudicator established by the Groceries Code Adjudicator Act 2013 shall be responsible for ensuring compliance with Part 3 of this Act.

Then renumber subsequent Chapters.

TFA9 (New Clause)

 

Schedule 3, Part 2 Page 56 after line 8 insert the following:

 

Requests for landlord’s consent or variation of terms

30 Before section 28 insert-

27A Disputes relating to requests for landlord’s consent or variation of terms

(1) The appropriate authority must by regulations make provision for the tenant of an agricultural holding to refer for arbitration under this Act a request made by the tenant to the landlord where-

(a) the request falls within subsection (3), and

(b) no agreement has been reached with the landlord on the request.

(2) The regulations may also provide that, where the tenant is given the right to refer a request to arbitration, the landlord and tenant may instead refer the request for third party determination under this Act.

(3) A request falls within this subsection if-

(a) it is a request for-

(i) the landlord’s consent to a matter which under the terms of the tenancy requires such consent, or

(ii) a variation of the terms of the tenancy, or

(iii) the landlord’s consent to a matter which otherwise requires such consent

(b) it is made for the purposes of-

(i) enabling the tenant to request or apply for relevant financial assistance or relevant financial assistance of a description specified in the regulations, or

(ii) complying with a statutory duty, or a statutory duty of a description specified in the regulations, applicable to the tenant, or

(iii) to secure either or both of the full and efficient farming of the holding or an environmental improvement, and

(c) it meets such other conditions (if any) as may be specified in the regulations.

(4) The regulations may provide for the arbitrator or third party on a reference made under the regulations, where the arbitrator or third party considers it reasonable and just (as between the landlord and tenant) to do so-

(a) to order the landlord to comply with the request (either in full or to the extent specified in the award or determination);

(b) to make any other award or determination permitted by the regulations.

(5) The regulations may (among other things) make provision-

(a) about conditions to be met before a reference may be made;

(b) about matters which an arbitrator or third party is to take into account when considering a reference;

(c) for regulating the conduct of arbitrations or third party determinations;

(d) about the awards or determinations which may be made by the arbitrator or third party, which may include making an order for a variation in the rent of the holding or for the payment of compensation or costs;

(e) about the time at which, or the conditions subject to which, an award or determination may be expressed to take effect;

(f) for restricting a tenant’s ability to make subsequent references to arbitration where a reference to arbitration or third party determination has already been made under the regulations in relation to the same tenancy.

(6) The provision covered by subsection (5)(e) includes, in the case of a request made for the purpose described in subsection (3)(b)(i)), conditions relating to the making of a successful application for assistance.

(7) In this section-

"appropriate authority" means-

(a) in relation to England, the Secretary of State, and

(b) in relation to Wales, the Welsh Ministers;

"relevant financial assistance" means financial assistance under-

(a) section 1 of the Agriculture Act 2020 (powers of Secretary of State to give financial assistance),

(b) section 19 of, or paragraph 7 of Schedule 5 to, that Act (powers of Secretary of State and Welsh Ministers to give financial assistance in exceptional market conditions), or

(c) a scheme of the sort mentioned in section 2(4) of that Act (third party schemes),or

(d) a scheme of financial assistance in whatever form introduced by Welsh Ministers;

"statutory duty" means a duty imposed by or under-

(a) an Act of Parliament;

(b) an Act or Measure of the National Assembly for Wales;

(c) retained direct EU legislation.

TFA10

 

Schedule 3 Clause 7 page 50 delete lines 25 to 36 and replace with:

(3) A request falls within this subsection if-

(a) it is a request for-

(i) the landlord’s consent to a matter which under the terms of the tenancy requires such consent, or

(ii) a variation of the terms of the tenancy, or

(iii) the landlord’s consent to a matter which otherwise requires such consent

(b) it is made for the purposes of-

(i) enabling the tenant to request or apply for relevant financial assistance or relevant financial assistance of a description specified in the regulations, or

(ii) complying with a statutory duty, or a statutory duty of a description specified in the regulations, applicable to the tenant, or

(iii) to secure either or both of the full and efficient farming of the holding or an environmental improvement, and

TFA11

Schedule 3 Clause 7, page 50, line 15, leave out "may" and insert "must"

TFA12

 

Schedule 3 Clause 7 page 51 at the end of line 34 delete ";" and replace with:

,or

(d) a scheme of financial assistance in whatever form introduced by Welsh Ministers;

TFA13 (New Clause)

 Schedule 3, Part 2 Page 56 after line 8 insert the following:

 

30 Before section 8 insert -

Termination of tenancies of 10 years or more

7A - (1) Where a farm business tenancy has been granted for a fixed term of 10 years or more without any provision for the landlord to terminate the tenancy on a specific date or dates during the fixed term the landlord may serve notice to quit on the tenant of the holding using the provisions of the Agricultural Holdings Act 1986 Schedule 3 Parts I and II in accordance with the Agricultural Holdings Act 1986 Schedule 4 and all Orders introduced as mentioned in that schedule in respect of the following cases –

(i) Case B

(ii) Case D

(iii) Case E

(iv) Case F

(v) Case G

(2) In addition to any compensation required to be paid to the tenant by the landlord following the termination of a tenancy using Case B, the landlord shall pay additional compensation to the tenant at an amount equal to ten years’ rent of the holding or attributed to the part of the holding upon which notice to quit has been served at the rate at which rent was payable immediately before the termination of the tenancy.


TFA14 (New Clause)

 

Schedule 3, Part 1 Page 54 after line 20 insert the following:

21A The Agricultural Holdings Act 1986 Section 49(3) shall be replaced with:

(3) In this section and sections 50 to 58 below (and in Part I of Schedule 6 to this Act as applied by section 50(4))-

"close relative" of the retiring tenant means-

(a) the wife husband or civil partner of the retiring tenant;

(b) a brother or sister of the retiring tenant;

(c) a child of the retiring tenant; 

(d) a nephew or niece of the retiring tenant;

(e) a grandchild of the retiring tenant;

(f) any person (not within (b) or (c) or (d) or (e) above) who, in the case of any marriage or civil partnership or other cohabitation  to which the retiring tenant has been at any time a party, has been treated by the latter as a child of the family in relation to that marriage or civil partnership or other cohabitation;

TFA15 (New Clause)

Schedule 3, Part 1 Page 54 after line 20 insert the following:

21B The Agricultural Holdings Act 1986 Section 35 (2) shall be replaced with:

(2) In sections 36 to 48 below (and in Part I of Schedule 6 to this Act)-

"close relative" of a deceased tenant means-

(a) the wife husband or civil partner of the deceased;

(b) a brother or sister of the deceased;

(c) a child of the deceased;

(d) a nephew or niece of the deceased;

(e) a grandchild of the deceased;

(f) any person (not within (b) or (c) or (d) or (e) above) who, in the case of any marriage or civil partnership or other cohabitation to which the deceased was a at any time a party, was treated by the deceased as a child of the family in relation to that marriage or civil partnership or other cohabitation;

 

Prepared 25th February 2020