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5.12 p.m.

Lord Jenkins of Putney: My Lords, it is not really surprising that there is no mention in the gracious Speech of what has been called,

I tried to get in touch earlier today with the noble Earl who is to reply to the debate to warn him of my intention to refer to the City of Westminster. I hope that he received my message. I note that he nods his head in acknowledgement.

The description that I quoted did not come from a hostile politician; it came from an eminent Queen's Counsel, Mr. Andrew Arden, QC, after reading the 750 pages of the preliminary report of the District Auditor, with its 12,000 pages of evidence. As many noble Lords will doubtless be aware, Mr. Arden is the author of several works on local government law and on housing. I refer of course to what the popular press have called Westminster City Council's "Homes for Votes Scandal".

Mr. Arden continued:

    "Not corruption in the conventional sense but corruption of the machinery of the authority itself, given over to Party gain in a way—and to an extent—that is absolutely without precedent. Nothing prepared me for such a naked abuse of power, people and resources. I would have said it was unthinkable".

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I could go on to quote many more trenchant comments in the responsible press, but perhaps it is sufficient to say that the District Auditor's provisional finding is that Dame Shirley Porter, the leader of the council, and nine other members and officers of the council should be barred from office and surcharged a total of over £21 million.

In 1986, the ruling Conservative administration of the council came within a whisker of losing control; so a policy called "Building Stable Communities" was introduced. As a result, a number of marginal seats were recovered and the majority of the ruling party rose from four to 30. That was against the national trend at the time. How that was achieved is the subject of the report which is now being examined in public hearings at which the burden of proof lies with the 12 objectors, who needed legal representation; that is, the 12 citizens of Westminster.

The comment of the Observer was:

    "It is outrageous that private residents should be left to scratch together money to make the case".
It is certainly unfortunate that justice, which Disraeli, no less, described as "truth in action", so often depends on money. Perhaps that could have been avoided if the Government had decided on a judicial review at an earlier stage. But the present procedure is in train, it will continue until the end of the year and may end up in the High Court next year.

There are members of the Conservative Party—for example, Mrs. Kirwan, the former housing chairman—who revolted against the policy. She gave evidence showing how the deed had been done and how local government officials became embroiled. That is a good example that this need not necessarily be a party issue, although on the face of it it must be.

When replying to the debate, I hope that the Government will feel able to give an assurance that they recognise the seriousness of what has been exposed and the need to root out political corruption before it becomes the norm. I believe that many will agree that the illegitimate use of political power, by whichever party employs it, is in the end an even more dangerous form of corruption than the bribery or the personal misbehaviour of politicians.

For that reason, I thought it right to raise the matter this evening. But in the end we are all in it because if we do not keep the parties clean the electorate may come to the conclusion that democracy itself is inevitably corrupt. That would be a very wrong and disastrous outcome. The truth is quite the opposite. Democracy is the form of government in which wrongdoing can be and is exposed. It is one of our most important duties and we must not shirk it, especially not in this Chamber which depends on a representative parliamentary democracy that it does not yet share.

Perhaps I may draw the attention of the House to a letter which appeared in last Sunday's Observer. It was written by Mr. Roy Hattersley MP and was supported by many distinguished people, including my noble friend Lady Jay and Helena Kennedy QC. The letter draws attention to the fact that the 12 objectors are strapped for cash. As I have already said, the matter may

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well reach the High Court at the end of the year. But even now the objectors are already deeply in by having to try to match the considerable resources deployed by Dame Shirley Porter and her friends. And this in spite of having been helped by much reduced fees accepted by their legal advisers, including Andrew Arden, QC. It is unfortunate that justice so often depends on money. Our noble and learned Lord Chancellor is, I hope, going to do something about that before very long. However, if any of your Lordships in any part of the House feels able to help, I know that it will be most welcome from all and any source.

The 12 residents are striving to raise £200,000 and if the matter goes to the High Court they will certainly need that. Remarkably, they have already reached £65,000. I hope contributors will include supporters of the Government. There are those of us, including Conservatives, as I have shown, who do not always confine our perception of wrongdoing to members of other parties. I hope that Mr. Hattersley's internal post will be heavy in the next few days.

5.21 p.m.

Lord Dixon-Smith: My Lords, it is a little unfortunate that the noble Baroness, Lady Thomas of Walliswood, has slipped out of the Chamber for a moment for I would have wished to thank her for her remarks, with which I have a great deal of sympathy as a man who has spent much of his life toiling in county government. I particularly wish to say how much I enjoyed the speech of the noble Lord, Lord Phillips of Ellesmere. It really was a pleasure to listen to, and more importantly it gives me the pleasure of thanking him as one of the leading scientific figures of so often unsung teams of researchers on whom simple farmers like myself depend for the enormous increases in productivity that we have been able to achieve over past years and some of the developments that are still going on.

The conjunction of environmental and agricultural issues in a single debate is a fortunate one. For many people agriculture, as custodian of the countryside, has a major responsibility for the environment. A simplistic view is that if we can reduce urban ugliness and keep the countryside attractive all is well. I wish things were so simple. Before the commencement of this debate on the gracious Speech, the noble Lord, Lord Williams of Elvel, invited my noble friend the Leader of the House to request the Select Committee on Sustainable Development to consider the meaning of the words "sustainable development". That committee, which very kindly tolerates my attendance, may well be equal to the task; I must confess that I am not. There is too much that we cannot know with any certainty. The strategic environmental issues arising as a result of population growth, which is the main motor for pollution, will be dealt with only as a result of concerted international action; but will that happen? There are hopeful signs. However, the possibility of environmental degradation as a result of economic or technological development can only be assessed within the limits of current knowledge. We can only travel hopefully and use the information and tools that are available to us.

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With that preamble in mind the House will probably be relieved to hear that I intend to talk about agriculture, or more specifically, as I prefer, farming. It cannot be said too often that farmers as custodians of the countryside are dependent upon the level of their profitability if they are to fulfil their custodial responsibilities. The farming community at large will welcome the arrival of the Agricultural Tenancies Bill and wish it God speed through the legislative process. It is facile to say that it is too little and too late. There has been no agreement within the wider agricultural industry as to what was necessary by way of reform until this time. With generous helpings of hindsight, it might have been better if those who were responsible for some of the earlier legislation in this field had stayed their hand.

Security of tenure across the generations, together with Finance Act provisions that penalise let land for inheritance tax purposes, have done their work. Farmers out in the real world, which is unsentimental, commercial and very competitive, have been developing their own solutions. It is to be hoped that the Agricultural Tenancies Bill will assist that development, but at best that assistance can only be slow as the Bill cannot upset existing agreements and it will be a very, very long time before they have all expired.

In the meantime the needs of farmers and the pressures upon the industry are forcing an evolution that will transform our traditional way of looking at farm organisation. These pressures are perhaps best illustrated by discussing the problems that would face an imaginary landowner with a small farm of, say, 100 acres who has a reasonable and not wholly inaccessible house, and at the same time the problems faced by a young man who has appropriate training but no agricultural background and limited capital who wishes to become a farmer.

First, the problems of the putative farmer: in times past, although it was never easy, it was possible for an energetic young man to hire a small block of land, buy perhaps a score of cows, some sheep, a few pigs, an old tractor and a few secondhand implements and make a modest living as a result of total devotion to hard work. Today, however, besides energy, knowledge and ambition, he will need a considerable block of capital. An ordinary milking cow at present costs around £500. It is interesting to note that six months ago it would have cost more than twice that sum and in six months' time that may well be the case again. Who can say?

Sheep cost around £60 a head and we could select an arbitrary figure for machinery of £5,000. Then there are things called quotas, as we have heard, and set-aside regulations. Milk quota currently trades at 60p per litre of annual production. That is approximately £3,000 for the production of an average cow, which I should say is only about half the production that my older brother would expect to get from his cows. If the landlord has a quota, it is a tradable asset and its value will be assessed in the rent by raising it. Sheep are on quota too, quota trading, I believe, at about £30 per head. With banks as cautious as they must be today, how can any young man overcome such problems? The set-aside regulations raise another obstacle. Eligibility for

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set-aside payment requires two years of occupancy and this reduces cash flow in the start-up period. What a nest of problems!

Let us now consider the reverse side of this coin—the landowner's problems. The first advice that he will probably receive is that, if he lets his land, he will put at risk 100 per cent. relief from capital transfer tax on inheritance because let land attracts only 50 per cent. relief. That position is now changing, as the Bill we are to consider shortly, with the creation of farm business tenancies, which are short-term but continuing agreements subject to conditions of notice, in conjunction with the latest guidance from the Capital Taxes Office that 100 per cent. relief may be available where the value of tenant right has little impact on the freehold value, should be of help to our landowner and reduce his qualms. However, I expect that many valuers, accountants and even lawyers will become rich before those matters are finally determined.

Then there is the matter of the farmhouse. Because of its situation it would probably command rent of approximately £100 per week in the open market. There is no conventional system of agricultural production on a farm of that size that can carry an overhead cost at that level unless the system of farming is highly capital intensive. Indeed, because of that factor, my land agent friends tell me that one of their most difficult tasks is assessing the proper rent for small blocks of land.

Our landowner has family commitments and must do what he can on his children's behalf. So what happens? Somebody, probably one of his advisers, mentions management agreements, and our friend finds himself facing a hardened professional farmer. He finds that he could let the house separately. He finds that he can earn a return that is greater than he would be likely to earn if he did all the work himself and certainly greater than any return he could gain from letting. He finds that there is apparently no downside risk on the inheritance tax front. I say "apparently" because the validity of some arrangements that have been entered into may yet be fought through the courts. I do not need to say any more about that particular problem. The conclusion is inevitable.

Farming practice is moving ahead of the legislative framework which surrounds the industry. The creation of farm business tenancies is a bold and imaginative attempt to reverse to some extent some of the ossification created by our legislative predecessors. However, the industry is moving on. A century ago only 15 per cent. of farm land was in owner occupation. Today the figure is 65 per cent. and there is an increasing trend for either landlords to buy out their tenants or tenants to buy out their landlords' interests.

Add to that a rapidly increasing number of highly professional farmers who are prepared to tailor their services to suit the needs of individual landowners and who, because they can offer real economies of scale and highly technical cultural techniques, can offer the landowner a better return than he can earn himself, and the picture of the future begins to emerge.

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I expect land to go increasingly into owner occupation, with the owner playing a real part in the management of the farm while much of the work is undertaken by farmer-led, very efficient management companies.

There is little point in deploring that trend, even if the tax man shakes out some of the agreements which presently exist, which I hope he will not be able to do. This House recently considered the report by the Select Committee on the European Communities on the implications of the expansion of the European Community. One conclusion enunciated during the debate was that the Community could have expansion or the common agricultural policy but it could not have both. In any event, the common agricultural policy is vulnerable because its high cost may become politically untenable. Farmers out there in the harsh real world are contemplating life without the CAP. Some of them are already mapping out the way ahead.

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