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Lord Carter: As we are in Committee, it is important to get it right. I shall have to read Hansard, but I thought that the noble Lord said that he wished to bring to an

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end the 1986 Act and only have the farm business tenancy, but the two will exist side by side for a long time yet.

Lord Middleton: All I was trying to say was that there was no wish to perpetuate the 1986 Act for ever. My noble friend's amendment would draw a line, but that would not mean to say that the parties could not have what might be called 1986 arrangements in future agreements if they wanted to.

Lord Carter: I shall be very surprised if there are that many landlords around who will be letting succession tenancies under farm business tenancies.

Lord Middleton: I shall be surprised, too, but there is nothing to prevent them from doing it.

Earl Howe: We have had a very interesting exchange. I am grateful to my noble friend Lord Stanley for introducing his amendment so clearly. I am also grateful to the noble Lord, Lord Carter. I was also interested by the observations of my noble friend Lord Middleton. I believe that we shall be coming to amendments that deal more specifically with the desirability of the continuation of the 1986 Act in various guises.

I hope that my noble friend will not mind my revealing that the amendment is derived from an earlier draft of the Bill prepared by the Government. Your Lordships will realise that it is a rather complex area. We are all exhorted to make legislation simple. Therefore, we decided to replace this complex provision with a much simpler one. In our view Clause 4(1) (c) of the Bill is adequate. We consider that it allows statutory succession by agreement, although we recognise that in theory it will also allow parties to opt in to the 1986 Act by offering a tenancy subject to the succession provisions. We considered it so unlikely that a landlord would offer a tenancy with explicit succession rights to a tenant who did not already possess such rights that it was unnecessary to include a complex provision to prevent that from happening.

However, in view of the doubts that have been expressed today as to whether Clause 4(1) (c) of the Bill will permit statutory succession by agreement, I am willing to give further thought to the provision and to my noble friend's amendment. For the record, I confirm that it is intended to protect succession rights that exist under the 1986 Act. We believe that the Bill does this, but clearly there is a difference of view. I hope that in the light of my undertaking my noble friend and the noble Lord, Lord Carter, will agree to withdraw their amendments.

Lord Stanley of Alderley: I am more than happy to withdraw this amendment. We are all agreed on the principle of what is sought to be achieved. It may be that I do not agree with my noble friend on the Front Bench that the Bill is drafted in such a way that, first, it will preserve the rights of existing 1986 Act tenants and, secondly, allow any future tenancy to come only under what will become the 1995 Act. In passing, succession rights for tenants under the 1995 Act will be rare but I

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do not entirely disregard them. If we cannot tackle the overriding problem of tax, it is a way to devalue land which perhaps some landlords will wish to do for inheritance tax purposes. Meanwhile, I beg leave to withdraw the amendment.

Lord Carter: Is the noble Lord saying that the Bill provides a loophole for tax avoidance?

Lord Stanley of Alderley: The noble Lord puts words into my mouth. I have no intention of replying to such a mischievous question.

Amendment, by leave, withdrawn.

[Amendment No. 23 not moved.]

Lord Carter moved Amendment No. 24:

Page 3, line 22, at end insert:
("( ) is granted by a written contract of tenancy indicating (in whatever terms) that the 1986 Act is to apply in relation to the tenancy; or").

The noble Lord said: This amendment runs on from the previous discussion. The present wording of Clause 4(1) (c) allows the parties to contract into a new succession tenancy but not a new life or retirement tenancy. It seems to us that, if the parties wish to do that and have the protection and prescription of the 1986 Act, they should be allowed to do so. I expect that the Minister will reply that if they wish to do so they can write the 1986 Act into their agreement under farm business tenancies. I would need advice as to whether that would be so. What we suggest is that, if it is logical to allow the parties to contract into a new succession tenancy, they should also be allowed to contract into a new life or retirement tenancy. If the Government reject that, I believe we can read into it that they cannot do anything about succession tenancies except by acting retrospectively but have determined not to allow the 1986 Act to be extended in other cases.

It also brings into question the important matter of smallholdings. Smallholdings are now caught by the Bill. They were deliberately excluded from the 1986 Act in the schedules etc. The provisions of the 1986 Act as they relate to tenants of smallholdings are close to the profile of tenancy protection which a lot of people believe meets the needs of the coming years. We argue that in the case of smallholdings a higher standard of social responsibility is expected from public authorities than from a private landowner.

We in the Labour Party do not believe that a tenant should have his security of tenure destroyed. Therefore, it is logical to do our best to protect any class of tenant which can be easily identified. Smallholders are a special class of tenant who do not need to be drawn into the proposed legislation. I shall be interested to hear from the Minister why the Government have not continued the special status of smallholdings which they were given under the 1986 Act. The industry did not want it, and for once we would like to hear the Government's opinion. It is a clearly defined class. The maximum size of a smallholding is 900 standard man-days, but most of them are well below that. By definition, the people who occupy them tend to be those who have little personal capital to back them. The chance to accumulate capital from the income of such

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holdings and to move on is limited, and there are statutory limits on the degree of expansion that the tenant can undertake.

The option for an efficient smallholding tenant at the end of a short let would often be to become a farm worker or to leave agriculture. To move on to farm another holding in his own right would be more difficult now than when the smallholdings scheme was first conceived at the beginning of the century or even in 1970 when the present statutory arrangements for smallholdings were introduced.

The control by smallholdings authorities of tenancies is already greater than that of normal agricultural landlords under the 1986 Act. An extremely helpful letter has been received from the property services department of Norfolk County Council. The county land agent deals with a number of matters related to smallholdings. He states:

    "I should like the flexibility to be able to continue to relet statutory smallholdings [and] 'County Farms equipped holdings' under the 1986 Act and an amendment to this effect would be very helpful".

The object of this amendment is twofold: first, to ask the Government why they have not included a provision which decides the succession of tenancies, which they more or less have to agree to unless they intend to act retrospectively. Secondly, to ask why they have concentrated upon that and not written in an express provision that if the landlord and tenant wish to have the protection of the 1986 Act for a life or retirement tenancy they cannot do so but they can do so if they write the Act into their new farm business tenancy. We feel that it would be easier if they could just lift the 1986 Act directly into their farm business tenancy, particularly in the case of smallholdings. I understand that the smallholdings authorities would welcome an amendment which in effect reproduced what happened under the 1986 Act.

It would be helpful if the Minister could explain the reasons why the Government did not choose that route. I beg leave to move the amendment.

Earl Howe: The noble Lord, Lord Carter, has explained that this amendment will enable parties to opt into the 1986 Act. I recognise the force of some of his arguments. But I have to say that it would be strange for us to introduce a new framework of law from 1st September 1995 and at the same time leave the old legislation open alongside it.

There is general recognition throughout the industry that the 1986 Act is far too rigid. Farmers and landowners need the flexibility to adapt to changes in policy and market conditions or, if they want to, to make their farms more attractive to wildlife. It is most unlikely that any landlord would choose to sign up for the 1986 Act even if he had that option.

But, as my noble friend Lord Middleton pointed out a few moments ago, it is much better to close it off in order to avoid having two different systems of tenancy law running on indefinitely in parallel. A point to bear in mind, as the noble Lord himself indicated, is that if the parties wish to enter into a tenancy with a similar

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degree of security, they are well able to do so within the new legislation by including the relevant provisions in their tenancy agreement.

The noble Lord spoke in particular about smallholdings. The 1986 Act does apply to tenants of smallholdings. The statutory succession provisions do not apply because it was not considered appropriate. As he well realises, smallholdings are intended to provide opportunities for young farmers on the first rung of the ladder.

Following from that, the noble Lord asked why, if it was logical to let people contract into a succession tenancy, they should not contract into the 1986 Act generally. To abolish succession rights will involve retrospection, which we, and I hope the party opposite, do not wish to happen. So we have to allow parties to grant such tenancies by agreement where succession rights exist—we think it unlikely that anyone will use that option where such rights do not exist.

However, the position on the 1986 Act is different. Existing tenancies are not affected but all new tenancies will be farm business tenancies. As I indicated, that is a cleaner and neater arrangement than having the two systems running in parallel.

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