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Lord Cledwyn of Penrhos: Will the noble Earl agree that, whatever the advantages, the tenant will have lost something very important; namely, his security?

Earl Howe: He will at least have a tenancy, which is a lot better than the kind of short-term arrangements that are now being negotiated under Gladstone v. Bower or grazing-type agreements that certainly do not help tenants to establish thriving businesses and enable them to invest for the long term. This Bill will at least get the industry out of that rut. We know from indications provided in a recent survey by the RICS that much of the land that will come onto the market for letting will be available for 10 years or more.

Lord Stanley of Alderley: I believe that I started this hare in relation to the question of rent and scarcity—a point brought out by the noble Lord, Lord Carter. My noble friend will not be very pleased when I say that the noble Lord, Lord Carter, is right. Of course, as a tenant I will agree to practically anything. The tenant-right and everything else will go, but —this is where I will annoy the noble Lord, Lord Carter—if I wish to agree to it, so be it. Under the agreement that is now before your Lordships in the Bill, I believe that, on balance, the tenant will pay a higher rent and will sacrifice his soul to get it, but it is better to have that and land put on the market than to have the present situation where obviously the landlord will not let. I should like this question to go to sleep. We have aired the matter, and I believe that both of us know where we stand.

Lord Carter: The noble Lord, Lord Stanley, said that he would agree to anything. I know that the Whips, on the basis of past experience in this House, will agree with that.

Lord Monkswell: This afternoon reference has been made to different forms of tenancy; that is, the things that do not amount to a proper tenancy which it is hoped

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will come into a proper tenancy. It is interesting to those of us who are not intimately involved in agriculture to learn about these kinds of assets.

I make two other points. The type of landowner will be different. The Bill refers to landowners. Someone who is not closely involved in agriculture will think of a landowner as a country squire—someone who has a large acreage of land to let to a tenant farmer and who is intimately involved with its long-term future. We have to recognise that landowners are not necessarily of that ilk. Many of them are institutions and City firms with no love for the land and no interest in maintaining the environment to the benefit of the countryside.

Because of the horrendous market situation that will be engendered by the Bill, a lot of people will want tenancies and very little land will be available for them. It will drive up rents and the price of tenancies. What will be the knock-on effect of that? In this country and overseas we can see examples where increases in rents charged to tenant farmers have been so large and have put so much pressure on farmers that to eke out an existence they have been forced to rape and pillage the land. One thinks of the Oklahoma dust bowl in the 1930s. I wonder whether, in their ideological fervour for free market solutions to everything, the Government have thought through the implications for our countryside and for the land.

Lord Middleton: With great respect, the Oklahoma dust bowl is a long way from the amendment we are discussing.

The Earl of Kinnoull: We are addressing Clause 17 stand part. Coming back to tenant-right, I am a little unhappy. No doubt the industry has agreed this, but whereas the noble Lord, Lord Carter, said yesterday that he did not always agree with the industry, perhaps he is changing his mind today. Where there is an unwritten tenancy and where the Royal Institution of Chartered Surveyors gives guidelines or model clauses, will they address the question of tenant-right? I remind my noble friend that tenant-right has been fundamental in all previous legislation.

The Earl of Harrowby: I, too, would like to express my concern about the possibility of a tenant having to surrender tenant-right. I do not have the same optimism as my noble friend the Minister about the freedom that will be engendered in the bargaining position and the equality of the bargaining position. I do not think it will arise until the whole tax situation is fundamentally altered. I am concerned that a tenant can be inveigled or pressurised into losing his age old rights. I cannot believe that that is what the average landlord would want. He would not think it was right. I accept the point about institutional landlords. I ask my noble friend the Minister to give this matter further consideration.

Earl Howe: We have had a very interesting debate on this clause which, I must say, I was not expecting. I take on board all the points that have been made about tenant-right. We had a debate on that subject earlier on. My noble friend himself said that most landlords would be keen to see their tenants properly compensated for tenant-right. I am sure he is correct in saying that. The

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answer that the prospective tenant would give if he were refused the opportunity of compensation for tenant-right would be to walk away from negotiations. I contend that in most cases that will become a possibility because there will be a lot more land on the market to rent and there will be much greater choice available.

The noble Lord, Lord Monkswell, expressed his fears about the way the world is moving. He said that the type of landlord may turn out to be rather different in the future from how he has been in the past. There are already institutional landowners. Not all of them are faceless. Charities, foundations and the National Trust are, I am sure, good examples of very responsible landowners who like to see the land managed properly. Indeed, it is in their interests to do so because they are protecting their own asset.

I do not necessarily accept that the effect of the Bill will be to drive up rents. Views on that subject differ. If market forces operate, then increasing the supply of land for letting should, if anything, tend to bring rents down. We must remember that 75 per cent. of all new letting at the moment is currently done on short-term arrangements that are not subject to the 1986 Act rent formula. Therefore, one cannot necessarily make too many judgments from that. The scarcity factor should melt away, which will have a beneficial effect on rents as far as concerns the tenant.

I do not want to detain the Committee for too much longer. I have stated my view that I regard the future with optimism. I hope I am proved right.

Clause 17 agreed to.

Clause 18 [Conditions in relation to compensation for planning permission]:

[Amendment No. 60 not moved.]

Lord Gallacher moved Amendment No. 61:

Page 8, line 42, leave out paragraph (c).

The noble Lord said: Amendment No. 61 is in the form of a probe. In order that the probe can be comprehensive, the terms of the amendment are to leave out paragraph (c). The query turns on the definition of the word "completed" in this paragraph and also on why it is necessary to have it. For example, a development may be phased. Phases 1 and 2 may be completed—the leisure park and the miniature golf course—but not phase 3; the conversion, say, of a barn to a restaurant. Even a partially completed individual improvement may add some value to the tenancy and may be worthy of compensation. In addition, with no counter notice procedure to protect the tenant, the landlord may give the tenant notice before he has been able to complete the improvement in order to avoid the payment of compensation. Our fears in this respect may not be well founded because what I have just outlined may not be the intention. Indeed, it may not even happen. Nevertheless, we believe a possibility exists and the reason for the probe is to ascertain the Government's response to this possibility. I beg to move.

4.45 p.m.

Earl Howe: I am grateful to the noble Lord because he has enabled me to put my reply on the record, which

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I am sure will be helpful to him. Compensation for a planning permission as a separate item is only paid when the physical work has not been completed or the change of use has not been effected. Where the work has been completed the tenant is compensated for the value of the improvement, including any value due to the planning permission. That is made clear in Clause 20(4). If one were to carry this amendment through into the Bill it would lead to double counting.

The noble Lord asked about work in progress. That may or may not be an asset to the holding at the end of the term, an asset which a subsequent tenant would find of value. Clearly, that is a matter to be assessed when the tenancy comes to an end and the valuer does his work. It could, on the other hand, be deemed a liability in certain circumstances. I do not think one can necessarily generalise but the point of principle is, I hope, clear as regards the planning consent itself.

Lord Gallacher: I am grateful to the noble Earl for what he had to say about Amendment No. 61. I have always been wary about work in progress and valuations in balance sheets and I shall look at that in the context of this amendment. I am grateful for the noble Earl's reference to Clause 20(4), which I shall study together with his remarks. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 62 to 64 not moved.]

Clause 18 agreed to.

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