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Lord Carter moved Amendment No. 15:

After Clause 2, insert the following new clause:

Model clauses

(".—(1) The Minister shall, after consultation with such bodies as appear to him to represent the interests of landlords and tenants of agricultural holdings, make regulations prescribing terms as to the maintenance, repair and insurance of fixed equipment and the respective covenants to be observed by landlord and tenant (in this Act referred to as "the model clauses").
(2) Regulations under this section may make provision for any matter arising under them to be determined by arbitration under this Act.
(3) The model clauses shall be deemed to be incorporated in every farm business tenancy except in so far as they would impose on one of the parties to an agreement in writing a liability which under the agreement is imposed on the other.").

The noble Lord said: In moving the amendment I shall, with the leave of the Committee, speak also to Amendment No. 87, which is consequential. I believe I know the answer that I am likely to receive from the Minister; but at least I can have another try.

We come now to our old friends the model clauses, though in fact I prefer to call them the model heads of agreement. I understand that discussions are taking place within the industry, with the RICS and others—I also hope that the other organisations in the industry group are involved—regarding the models under the tenancy agreements which we all hope we shall be able to take off the shelf and use when the Bill becomes law.

However, we feel that the matter cannot be left to the good will of organisations outside the House without the protection of statute. Therefore, we have drafted a proposed new clause, which states:

    "The Minister shall, after consultation with such bodies as appear to him to represent the interests of landlords and tenants of agricultural holdings, make regulations prescribing terms"—

and the Minister will be absolutely right if he says that it is a prescriptive amendment; I say that to save him from so doing—

    "as to the maintenance, repair and insurance of fixed equipment"—

the thing that we are all familiar with under the 1986 Act—

    "and the respective covenants to be observed by landlord and tenant".

Amendment No. 87 has been tabled for clarification. It states that:

(""Minister" means—
(a) in relation to England, the Minister of Agriculture Fisheries and Food, and
(b) in relation to Wales, the Secretary of State.").

We now know that it is likely that a number of tenancies will be made without a written agreement. The comprehensive background structure of the 1986 Act is to be removed, as is the Government's intention. We believe that it is desirable that the parties to those agreements should have some precise understanding of the division of responsibilities between them for the maintenance, repair and insurance of fixed equipment.

Over the years, we have all agreed that the landlord and tenant system is an excellent example of the division of responsibility for the provision of capital. As regards the covenants between the landlord and the

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tenant under the 1986 Act and those that precede it, we know that the landlord and tenant system is a good example of the division of responsibility in practice. In that sense, it has worn well. However, we now know that the Government do not believe in that being prescribed in any way and that, so far as I understand it, they do not believe that the Bill should include any definition of the respective responsibilities of landlord and tenant. We are trying to put that right with the amendment.

From our professional experience, we know that the whole area within tenancy agreements can lead to frequent misunderstandings and disputes unless the position is made clear from the start. It is not a wish to prescribe; it is a wish to try to get the landlord and the tenant something to fall back on and to work from, and to bring the government into play by giving them the responsibility to make such regulations.

We know that parties are free to negotiate their own variations of rights and obligations independently from the statutory recommended clauses. But the effect of the model clauses is to prevent difficult disputes arising with the bad feeling that they can generate between the parties and the costs that they can incur in going to arbitration or to court. We are all familiar with the model clauses that have been developed under the Agriculture (Maintenance, Repair and Insurance of Fixed Equipment) Regulations 1973 which have been amended over the years. We believe that they could well form the basis of any order made by the Minister.

We suggest that the Government should consult with the industry group which has been continually referred to as well as the RICS and that they should then make the regulations which would help to prevent much litigation. That is an important point, not just in relation to this amendment but also in connection with many others. When the Minister says, "Leave it to the landlord and tenant", I believe he is really saying that we must leave the matter to the courts. That is what will happen in the new free-wheeling air that we shall have which will surround the whole of agriculture and the landlord and tenant system. A number of solicitors who specialise in this area of the law have been talking to me. They are licking their lips in anticipation of the kinds of cases that they will be able to bring. The purpose of the amendments is to try to avoid that situation. I suggest to the Government that they do have a responsibility to prescribe. I make no apology for saying so. I beg to move.

Lord Middleton: The noble Lord, Lord Carter, is quite right. There should be very precise terms in any new tenancy agreement as to who carries out the repairs and what repairs need to be done. However, I believe that the answer he will receive from the Government is that the proposal to introduce model clauses goes outside the industry's agreement and is not consistent with the object of the Bill; namely, to allow freedom of contract. If that is the reply, I shall support it.

The Earl of Kinnoull: I have not had the advantage of seeing the notes that the noble Lord, Lord Carter, supplied to some Members of the Committee when tabling the amendments. As regards the amendment, I

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have not quite understood whether the noble Lord is suggesting that the model clause should be mandatory and override the terms of a written agreement. If that is so, I could not support it. On the other hand, if the purpose is to fill a gap for, say, a tenancy of over two years, then I believe his proposal may have some merit on the grounds that it is a fall-back situation. In other words, rather than go to the courts to try to unravel the legal complications in a landlord and tenant dispute, one actually has a model clause to fall back on thus saving on costs.

6 p.m.

Earl Howe: Perhaps I may point out a small feature of detail regarding the amendment. Whether intentional or not, the amendment does not deal adequately with any holdings other than those which were wholly agricultural in nature. However, more fundamentally, I am not convinced—as, no doubt, the noble Lord suspected—that the right way to deal with matters such as parties' respective responsibilities in respect of a diversified holding is by regulations in the way that the noble Lord proposes.

The agreement signed by the CLA, the NFU, the TFA and the NFYFC last December, was perfectly clear. Those organisations will work with the professions to agree model clauses which are specifically adapted to the special needs of farm business tenancies. They will be recommended to members for use on a voluntary basis. I believe that that is a very practical way forward. There really is not a likelihood of a free-for-all or a bonanza for barristers, as the noble Lord seems to fear.

I would never seek to slap down the noble Lord. I am sorry if I appeared to do so a moment ago. However, I suggest to him that the best interests of those who enter the new world of farm business tenancies are not served by making regulations as to who is to oil the gate hinges, clear the ditches and insure the milking equipment. As the noble Lord, Lord Northbourne, said during our debate on Second Reading—a point I myself have made this afternoon—the Bill treats farmers and tenant farmers as grown-ups, able to negotiate with the help of professional advisers proper agreements for their tenancies. If it is any assistance to the noble Lord, I would say that there is no need for the wheel to be re-invented during the apportionment of responsibilities for agricultural matters because the regulations which apply to 1986 Act tenancies will continue to exist in respect of those tenancies. Parties will be able to incorporate into their tenancy agreements as much or as little of the content of those regulations as they choose. Even where they are keen to diversify, they will have a good basis on which to begin to negotiate. For all those reasons I hope that the noble Lord will feel that this has been a useful discussion but will nevertheless feel able to withdraw his amendment.

Lord Carter: I am grateful to the Minister for mentioning, as he said, a point of detail. The noble Earl will know that in these cases one has some help in drafting amendments but they are not perfect and they are intended to tease out the Government's arguments, in so far as they exist. I am beginning to think, every

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time I hear reference to the industry agreement, that I am almost hearing a mantra. The NFU, the TFA, the Federation of Young Farmers' Clubs and the CLA are referred to. I am slightly tempted to add, "And Uncle Tom Cobbleigh and all", but I must not do that.

The noble Lord, Lord Middleton, also referred to the industry agreement. But who makes the law—the industry agreement or the Government? We are saying here that this matter is the Government's responsibility. The Government cannot shuffle off and say there is an industry agreement. Perhaps I should not say this, but I would be surprised if in other cases where there has been agreement within an industry—not within agriculture—this Government have always accepted the view of that industry. Agriculture seems to be very much a special case. I could cite many examples where an industry has been united in dislike of a government's proposals and the government have still gone ahead with them. But in agriculture obviously we can see that it is the other way round.

If I understood the noble Earl aright, he said that under the 1986 Act tenancies the 1973 regulations which are in existence would still apply. Was he implying that those could then be picked up if the parties wished and used in the farm business tenancy? I would assume that they could be. This raises an interesting point to which we shall return. I hope the Committee will think this matter through. If this Bill is successful and there are many of these farm business tenancies, there will also be the 1986 tenancies in existence, particularly succession tenancies, which will still continue for a long time. We are probably only into the first generation of succession tenancies, if at all. Therefore there will be an interesting situation in the agricultural land market, or in the tenanted sector, when arbitrators are looking for comparable rents and all the rest of it. That is a point that I flag up in passing and that I believe we shall deal with on a later amendment, or perhaps at Report stage. I believe that the Government in their overwhelming rush to simplify this matter and not to overprescribe are to some extent avoiding their responsibilities.

The model clauses could be adjusted by the parties if necessary. They were intended to be a help. It seems that the Government do not wish to have any responsibility at all. It is implied throughout that there is a level playing field between the landlord and tenant. As I have said, this is an example of a deregulation mode in full swing—if a mode can be in full swing. However, that does not reflect reality. There is not a level playing field. Every one of us engaged in the industry knows that the scales are weighted against the tenants because there is a larger supply of farmers who wish to rent land than there are farms to let.

The Government will say that this Bill is intended to put that right. However, on this point I would remind the Committee that the tenanted sector is an odd market in many ways. We have to look back only a few years to the period when farm incomes had fallen to their lowest level in real terms, I believe, since the end of the war. There was a situation then when, for almost the first time in my experience as a professional, tenants were serving notice on landlords to review the rent in the hope of achieving either a rent freeze or a reduction

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in rent. At the same time there were landlords who were not serving notices to review the rent in the hope that, in the absence of a review, the rent would be frozen and there would not be an application for a reduction. But at the same time, if there was a farm to let, there was a long list of farmers who wished to rent that farm. We had a situation, therefore, where farm incomes were at their lowest level in real terms since 1945 and where existing tenants were looking to secure a reduction in their rent or a rent freeze, but they hoped a reduction. At the same time, if there was a vacant farm up for let, there was a big supply of farmers who were willing to pay some extremely high rents in the circumstances.

This is an odd market and we feel in that situation the Government have a responsibility. We shall return to that point on a number of occasions in the Bill. The Government in their wish to wash their hands of this matter, to leave it to the parties concerned and to rely on the industry agreement, are failing in their responsibilities. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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