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Lord Carter: My Lords, I referred to the tenancies that are likely to be let in the first two years after legislation. If the noble Lord looks on the chart he will see that the majority are for five years.

Lord Northbourne: My Lords, I have to say that I do not agree with the noble Lord. We shall have to meet and discuss the chart outside the Chamber.

The purpose of the research was to determine what would happen if the legislation was put in place. The 148 chartered surveyors who took part in the survey and who manage 3.25 million acres believe they will let 156,000 acres--that is to say, 4.8 per cent. of their management --for five years or more under a farm business tenancy. If that projection is extrapolated to all of the managed land in this country, it is likely that around 1 million acres will be let under this kind of tenancy. That will be additional to the existing tenancies under the Agricultural Holdings Act.

The Bill will probably need to be amended on certain issues. I am particularly concerned about the arrangements for arbitration for compensation on improvements. I acknowledge fully the importance of there being provision for compensation for improvements, but I think that there might be two difficulties. In this case I am looking at the matter particularly from the landlord's point of view. There may be difficulties from the tenant's point of view which I have not noticed. One difficulty might be the requirement to find a very large sum of money at 18 months' notice. That is particularly the case where a tenant may be putting up a corn storage and cleaning and storage complex. If finance terms are negotiated when the building or plant is put up, it can be purchased on a lease purchase or a hire purchase arrangement. If,

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five years after the building has been put up, when it is partly paid off, the landlord has to try to re-arrange finance, he may find it very difficult indeed to do so. That kind of consideration will have to be looked at when we come to setting down amendments at the Committee stage.

The other area where I would be concerned about improvements from the landlord's point of view is that the directions to the arbitrator should be quite clear that the improved value of the holding created by the improvement is the value to a normally competent tenant and not to a specialist tenant. I have built up a very substantial business growing lettuces and salad plants and packing them for the supermarkets. That involved an enormous investment in irrigation, packing plants, and so forth. It is very improbable, had there been a landlord, that that landlord, when I retired, would be able to find another tenant who wished and was able to go on with the same business. We have to look again at that area of concern.

Another area of concern is the housing of the tenant at the end of the agreement. A major emotive issue in the landlord/tenant question is the fact, as the noble Lord, Lord Carter, said, that the farm is the home of the farmer and his family. One of the problems is that, even if the farmer wants to make provision for his housing at the termination of an agreement, it is difficult for him to do so, or he does so on less favourable terms than those of a normal employee because he cannot get the benefit of mortgage interest relief. That point needs to be looked at.

It may also be worthwhile to try to think a little creatively about this issue. Is it not the case that many estate owners would have houses into which a retiring tenant farmer could move to spend the rest of his days? If so, does the present legislation provide a vehicle by which such a person could be given a tenancy for his lifetime, or for the joint lifetimes of he and his spouse, which would come to an end and which would not give them statutory rights? I am not sure to what extent the provisions of the shorthold tenancy accommodate a life tenancy or a tenancy for life.

Finally, I believe that other noble Lords have already referred to the need for tax reform to reinforce the effect of this Act. I believe that also to be extremely important.

4.20 p.m.

Lord Dixon-Smith: My Lords, I too begin by saying how much I enjoyed the speech of the noble Earl, Lord Yarborough. I should declare my interest. I am an owner occupier. I used to be proud of my status as a yeoman farmer although my friends have long held that to be a fiction. I am not sure what my elevation to this House has done to that particular status. I am also a member of both the National Farmers Union and the Country Landowners' Association. That said, I hold no brief to represent their views. Indeed, I believe that I would be somewhat disappointed if they did not disagree, at the very least, with the tone of some of the things that I say.

In the debate on the gracious Speech I described the Bill we are reading for the second time today as bold and imaginative. The House will be relieved to hear that I do not intend to repeat all that I said on that occasion,

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but I hope for noble Lords' forgiveness in repeating my view that this is what I call "catching up" legislation. It will be interesting to see in time whether those who are leading the way ahead wish to be caught.

Statistics in the report of the Central Association of Agricultural Valuers for 1993 dealing with tenanted farms handled by the association in that year make interesting reading. The trend, which has gone on for a long time, of agricultural land transferring from the tenanted sector into the owner-occupied sector continues. Overall, in a survey covering more than 230,000 acres, over 33,000 acres were sold by landlords in that year to sitting tenants. A further 14,000 acres were taken in hand by the owner on the cessation of a tenancy. In other words, if my analysis is correct, some 20 per cent. of formerly tenanted land that was, so to speak, "on the market" in that year, has ceased to be so. I wonder why. It will be interesting to see whether the Bill, with its creation of farm business tenancies--a novel type of tenancy that transforms the traditional meaning of the word--can reverse the trend.

There are other forces at work. The landlord-tenant system was unquestionably the most appropriate way of organising farming one-and-a-half centuries ago. In those days it could take a full day just to travel round a large estate--and that without doing any business on the way. Working the land was labour intensive and the man management and cultural problems of a really large unit were insuperable. Today you can span the globe in 24 hours. Mechanisation, which is continually improving, means that only small numbers of increasingly sophisticated and skilled craftsmen are required to work the land. Add to that the intensifying pressure for the raw materials of the food industry to be produced at ever lower levels of unit cost and the trend is set. That will apply just as strongly in the specialist organic farming sector--of which my noble friend Lord Clanwilliam is such an able advocate--as it does in the more traditional agricultural field.

With these pressures, farmers will have to be able to organise for themselves a structure that meets the needs of the times. I do not believe that the taxpayer who all too often is the ex-redundant miner, the ex-redundant steelworker, the ex-redundant carmaker or the ex-redundant city worker, will for long wish to bear the social cost of keeping the countryside populated when he realises that the beauty of our landscapes can be maintained and even enhanced despite the fact that there may be fewer people working directly in farming.

And so to the Bill itself. The creation of farm business tenancies should be supported although there may be argument about some clauses in the Bill. The measure should be supported because it brings change to the present legal structure for agricultural tenancies that marches well with developments on the ground. But we must not be sentimental. We cannot bring back the past. The world and farming are moving on. The legal

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framework for landlords and tenants must move also or else it will be swept aside as irrelevant by the march of events.

4.25 p.m.

Lord Cledwyn of Penrhos: My Lords, it is a pleasure to congratulate the noble Earl, Lord Yarborough, on his excellent and witty maiden speech. It is clear that he is knowledgeable and experienced in agricultural affairs and the House looks forward very much to hearing him on these subjects in the future.

The noble Earl, Lord Howe, reminded us that farming organisations generally have given the Bill a welcome and that reform of the tenanted sector is urgently necessary if the long-term decline to which he referred is to be halted. We must accept that a decline has taken place. In 1900 90 per cent. of the land was let but by 1990 the figure had fallen to 35 per cent. We also know that the Bill follows the agreement made by the agricultural organisations last December. It therefore deserves our constructive attention.

I must, however, emphasise that reform of the land law and of tenancy law in particular is a sensitive subject, not least in Wales. These were major political issues a century ago. They were one of the contentious subjects adopted by Lloyd George as a parliamentary candidate and a young solicitor in Caernarvonshire. The 1875 Act, to which the noble Earl referred, and subsequent legislation, did not give tenants at that stage the security they sought and deserved. Lloyd George and others were concerned to obtain security of tenure for tenants who had been evicted from their holdings by many landlords on political and religious grounds. I was told of a great uncle of mine who was deprived of his holding and his living in Caernarvonshire because the landlord disliked his politics. He and his family had no alternative but to emigrate to America, as did so many others at that time.

Things have changed. The old prejudices, thank heaven, have gone. But the sensitivity remains, and it would be a great mistake for the Government to neglect it. We must look carefully at the Bill and analyse it to ensure that it does not take us too far away from that element of security which is essential if farmers are to farm efficiently. I shall return to that in a moment.

There is one question which must be asked and answered by Ministers: will the Bill result in more successful and efficient tenant farming? We are told that the present system has discouraged new lettings of agricultural land. There is an element of truth in this, but we must not overlook the fact that today it is generally the son or another member of the family who succeeds his father. He has acquired experience. These days he has usually been to one of the agricultural colleges.

There is, I agree, an argument for broadening the scope of opportunity, but in so doing we must not deprive young local farmers of what has become their reasonable expectation.

I appreciate that Clause 2 provides that existing tenancies covered by the 1986 Act will not be affected, and I welcome that. But we must look very carefully at

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the new tenancies, which are to be called farm business tenancies, because the Bill imposes a range of new regulations and it may not be easy to adapt to them. Clearly, the Bill expects the farmer to be a businessman, but there are very good farmers who will not fit easily into that frame. I know plenty of good businessmen who do not know the difference between a Friesian and a Welsh Black!

The Royal Institution of Chartered Surveyors, to which reference has already been made, gives the Bill its general support and makes this important statement in its paper:

    "Nothing should be signed before the 1st September, 1995, if people want to take advantage of a Farm Business Tenancy. When the Act comes into force there will be serious pitfalls for those who do not take good advice. Indeed because the parties are largely free to set their own terms they will need to have regard to the general law of landlord and tenant, common law and case law as well as tailoring an agreement which suits their particular circumstances".

That is sensible advice.

The institution is preparing advice on all the relevant issues. We should be grateful to it. I know that the farmers' unions and the Country Landowners' Association are ready to help. I should add, as a former country solicitor, that my colleagues in practice will be very glad to help as well. In fact, their assistance will be essential in the drafting of agreements. It is an ill wind which blows nobody any good.

Finally, there is one fundamental point which I must stress; namely, that the farming industry is not a short-term affair. It is a long-term enterprise. Whatever emerges from the Bill, that reality must always be borne in mind. It relates particularly to the traditional livestock farm. The farmer must look ahead. He must plan ahead. He must invest substantially in stock, machinery, quota rights and so on. You cannot build successful farms on the basis of short lets. With short lets, the tenant farmer would face worry and uncertainty and would not be able to plan properly for the future. And when the farmer on a short let goes to his bank for some financial support, what will be the response of the bank manager? He will say regretfully that he cannot help with so short a tenancy. The Government must bear that in mind when they promise increasing opportunities for young people. They must look at the reality of the situation and the problems which face young farmers and prospective young farmers in the countryside.

There are communities in Gwynedd which depend on the farming industry and which consist mainly of fairly small traditional farms. I do not want to see them disappear. I want to preserve those communities. Tom Williams's great Agricultural Act of 1947 set the industry on a course which made it the most successful in the world. We should not forget that achievement in this debate. Of course, reform and change are inevitable, but we must take care not to destroy the foundation of the industry. The Bill must be studied and dealt with bearing that in mind.

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