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Lord Middleton: I try not to make Second Reading speeches in Committee, but the noble Lord has referred to what is known as "the industry agreement". Perhaps I may say this very briefly at this point. I shall not weary the Committee again when the same argument applies in amendments which are to follow.

This Bill aims to save the landlord and tenant system from terminal decline. One of the main causes of this decline was very well put by my noble friend the Minister at Second Reading. It is the tangle of legislation which has grown up around farm letting. The whole point of this Bill is to cut away that tangle. Subject to certain safeguards, it allows landlord and tenant to negotiate their own terms. This is not a measure which has been put together in haste. For several years the main components of the farming industry have worked together and have finally agreed the best way to reform the system. This Bill embodies its conclusions very precisely.

The noble Lord, Lord Carter, has put his case so well that I am sorry to have to say this. I am surprised that the Opposition feel that they are in a better position to find a solution than the Tenant Farmers' Association, the National Federation of Young Farmers' Clubs, the National Farmers' Union, the Country Landowners' Association, the Royal Institution of Chartered Surveyors and the Central Association of Agricultural Valuers.

Members of the Committee opposite have produced some useful proposals for amending this Bill which I shall support in due course, but they have tabled amendments, including the next one, where the criticisms which I have just voiced apply. I have promised not to repeat them. I think that I understand why the noble Lord is opposing Clause 1 standing part of the Bill. It must, however, be part of the Bill. It is the foundation of the Bill and without it the Bill is nonsense.

The Earl of Kinnoull: I am confused and concerned about the second Second Reading speech of the noble Lord, Lord Carter. The noble Lord's first Second Reading speech was much better because at that point he supported the principle of the Bill and recognised the importance of freeing the agricultural industry and allowing more tenancies. I think that he said that the number of tenancies had dropped by 25 per cent. since he served on the Northfield Committee. The noble Lord must have been very young when he served on that committee because it sat 15 years ago.

When replying to the previous amendment, the noble Lord said that he rested his case on that amendment on the fact that the Government were introducing a form of

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business tenancy which may not have any relationship to agriculture. I think that that is what the noble Lord said. I wish that agriculture were so simple.

What the Government have done—what the industry wanted—is to try to frame something that will last at least 10 years and look to the future. They have sought to answer the questions, "What is agriculture? Where is agriculture going?" The noble Lord did not address those questions. I hope that he will because in my view in many places arable and livestock farming depends entirely on CAP payments. We know perfectly well that in two or three years' time those payments will be renegotiated and may well decrease because of the increased number of states in the European Union. Therefore, the Government are rightly supporting efforts to find other uses for agricultural land. Therefore, it is appropriate for the Government to design a farm business tenancy that will include those other uses. If they did not do that, the Government would have to amend the Bill within a few years. Therefore, I think that the noble Lord, Lord Carter, was wrong on that point.

Earl Howe: I am grateful to my noble friends for restating so clearly why the Bill and this particular clause are so central to the Government's objectives for agriculture in this country. The noble Lord, Lord Carter, told us a number of things that he does not like about the Bill and said how he would tackle the problems differently. We heard, for example, that he appears to be against any form of farm diversification, which is something for which the Bill explicitly allows.

Leaving aside the peripheral matters such as the lists of covenants which the noble Lord wants to introduce and to which we shall come in a moment, in my view there is no substance to his proposals. In most cases he is harking back to the prescriptive and, I would say, over-regulatory approach of the 1986 Act. The noble Lord seemed to be overlooking the simple fact that that approach has been tried and has been found singularly wanting. What we need is a fresh approach with more of the flexibility that other commercial sectors enjoy and from which they benefit.

In other areas the noble Lord's proposals are out of tune with what the industry wants. I reiterate what my noble friends have said—the noble Lord, Lord Carter, apparently keeps trying to avoid the fact—which is that the Bill has the wholehearted support of all the main industry organisations, with the notable exception of the Farmers' Union of Wales. A year or two ago the idea of achieving consensus among the industry organisations seemed a tall order. Now, however, the noble Lord seems to criticise us for not having the unanimous support of every farmer in the country as well as of the main organisations. Achieving unanimity in a large and diverse industry such as agriculture is an unrealistic prospect. Nevertheless we have a remarkable degree of agreement. That is why we regard our proposals as soundly based and believe that they will stand the test of time.

The noble Lord, Lord Carter, still clearly favours some statutory minimum term or even some form of retirement tenancy. I shall not repeat all the arguments

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which we heard on Second Reading, but I must try once more to persuade the noble Lord of the error of his ways. There is no point in putting bars on the windows when the landlord does not need to walk in the front door. Letting land is a voluntary activity. If the minimum term was longer than the landlord wished to offer, there would be absolutely no reason for him to take on that obligation unwillingly. That is the central difficulty that we are now facing in agriculture.

The commercial sector manages perfectly well without a minimum term. To the extent that agriculture may require a longer-term perspective—I accept that it often does—it will be in the landlord's interest as much as in the tenant's. That is no doubt why the RICS survey found that over half of the equipped farms surveyed would be let for 10 years or more. It is much better that the agreement should be based on mutual trust rather than on legal compulsion. It is worth reminding ourselves that about 75 per cent. of all new lettings, such as there are, are for very short periods. The industry has come to see that the tenanted sector is gradually being suffocated by restrictive legislation and that it needs the oxygen of reform. That is why the industry supports the Bill and opposes a minimum term. That is why Clause 1 is central to the Bill and its aims. I very much hope that the Committee will support it.

5.15 p.m.

Lord Carter: I did not expect to convince the Minister or Conservative Members of the Committee. I turn first to the point that was made by the noble Lord, Lord Middleton. He said that the industry agreement has been worked out and has not been made in haste. I made the point that there has been a substantial change of stance within at least three of the organisations representing the industry in less than three years. There has not been a long period for consultation since within a very short period of time there has been a substantial change of stance. I could make the slightly flippant point about this being an industry agreement and say that a good rule in politics is that the establishment is usually wrong.

However, we are anxious to let the industry know what it has been let in for. That is important for farmers outside this House. Even if they do not read Hansard, the debate will be reported in the farming press and elsewhere. Throughout the Bill's passage through this House, and I suspect in another place, we shall be trying hard to make sure that the industry knows just what the industry agreement will produce. I apologise if my speech moving that Clause 1 should not stand part of the Bill sounded like a Second Reading speech. Clearly, Clause 1 is the heart of the Bill. I accept that, which is why I thought it important to take a few moments to explain why we are so concerned about the operation of the Bill.

I must advise the noble Earl, Lord Kinnoull, that all that I have done is to congratulate the Government on the fact that, in the Minister's words, "A farm tenancy under this Government does not have to meet the agriculture condition". That seems extraordinary. If a farm tenancy meets the notice of business conditions, it does not have to meet the agricultural condition. I hope

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that all noble Lords opposite who support the Bill are aware of the implications of that. It is an important point. As I have said, it is a matter of some congratulation that the Government may have achieved the agreement of the industry group to that situation, which seems extraordinary.

The Earl of Kinnoull: If one reads Clause 36, one sees what "agriculture" means. In my view, when one has widened the definition of "agriculture", that allows one to come back to the wider farm business tenancy.

Lord Carter: We have tabled an amendment, which the Government may or may not like, which seeks to improve the definition of "agriculture" which has been inherited from the 1947 Act in successive Acts of Parliament.

In fact, the noble Earl has conceded the point that I was seeking to make. The provisions do not have to meet the agriculture condition. I repeat that if a farm tenancy meets the business condition, it does not have to meet the agriculture condition in the Bill. That seems extraordinary. If I had to guess, I would say that much of the change of stance to which I have referred relates to genuine concern about tenants' compensation. Perhaps there was some trade-off. I do not know: I was not a party to the negotiations.

We are not against the diversification of farm activities. What I was anxious to point out was that a farmer can diversify his activities as much as he likes and can end up with just a few sheep and chickens, but he will still have a farm business tenancy under the terms of the Bill.

The Minister pointed out fairly that there has been a substantial reduction in the number of farms available to let. This is not the Bill to discuss taxation; but my view is that it has a great deal more to do with taxation than with agriculture and tenant law.

I was interested in the Minister's reflection that he thinks that in agriculture the landlord and tenant should have the same freedom as they have in other areas—that is, with commercial property the tenant has the right to renew. We have some amendments down to that effect. If the Minister feels like that, I shall look forward to having his support on the matter.

I realise that were the Committee to reject Clause 1 and accept our Motion that it should not stand part of the Bill, we could all go home earlier. Although that would be desirable, I have no intention of dividing the Committee on this point. We now have clearly on the record in all our discussions on Clause 1 where the Government stand. Farmers outside this place will be interested to read that.

Clause 1 agreed to.

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