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Page 9, line 1, at beginning insert ("Subject to subsection (3) below").

The noble Lord said: My Lords, in moving Amendment No. 23, I shall speak also to Amendment No. 26. Amendment No. 23 is in the nature of a paving amendment, so I turn at once to Amendment No. 26, which is the important part of this grouping. Amendment No. 26 seeks to make an important exception to the provision of Clause 18 regarding the rules about obtaining the prior consent of a landlord before applying for planning provision. Agricultural business tenancies in our view are likely to extend over a number of years. Indeed most of the received wisdom on the subject is that one of the benefits that may flow from this Bill will be the fact that tenancies will be for longer periods and this will allow both the landlord and the tenant to fully benefit from the fact that it is not a short tenancy of excessively short duration.

However, if the tenancy is for a number of years, say five, during this time planning law or regulations could change quite dramatically. We are very well aware at the present time of many well-meaning people who are strongly advocating much extended planning regulation in the countryside. I think it is appropriate to take notice of this in considering a Bill of this kind. In addition to the propaganda which—if that is not too harsh a word—is being put around in favour of planning extensions in the countryside, the planning authorities, it has to be said, are seeking to extend their powers in this particular area. It has also to be said, in fairness, that the seeking of that extension is in many cases quite legitimate.

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On the other hand we feel that the nature of farming changes are such that major changes in planning law during the currency of a farm business tenancy could seriously affect the operation of the farm. Indeed there is much in this Bill which allows for flexibility in this regard and we welcome it. While talking of change, one has only for example to contrast the original proposals by former Commissioner MacSharry for revising the CAP with what emerged at the end of the day largely due to some powerful argument well received by the United Kingdom which resulted in the removal of restraints which would have had a very adverse effect on the economy of many farmers in Britain.

As I have said, the Bill recognises the importance of flexibility. What we are seeking to do in this amendment is to ensure that that flexibility is not subject to a barrier because a change has taken place in planning law with the passage of time which would not have existed had the particular development been necessarily undertaken at an earlier stage in the tenancy. Amendment No. 26, as I say, now seeks to protect a farmer from such changes. I think it is an important issue and I hope that the Minister will be able to respond sympathetically to it. I beg to move.

Earl Howe: My Lords, I am grateful to the noble Lord, Lord Gallacher, for his explanation of this amendment. However, an important effect of the amendment would be that if the planning laws change after a farm business tenancy has been taken up and the tenant applies for such planning permission as is then needed for an improvement, obtains that permission and quits the holding before completing the improvement, he will subsequently be entitled to compensation for the planning permission without having had the landlord's consent. We have already debated this afternoon, in respect of Clause 17, the basic principle under the Bill that a tenant's entitlement to compensation rests upon securing the landlord's consent. I see no good reason to depart from that principle in the circumstances of changed requirements under the planning laws for physical improvements or changes of use.

If, at the start of the tenancy, there was no requirement for planning permission then, ipso facto, the tenant could not have claimed compensation for such permission. I come now to the key point. Refusal by the landlord to consent to the tenant applying for planning permission does not prevent the tenant from making the application. It simply means that, if he obtains planning permission and quits the holding before completing the relevant improvement, or effecting the relevant change of use, he will not be entitled to compensation from the landlord for the planning permission on its own.

There is a similar point with regard to liming which we have just discussed. The tenant does not need the landlord's consent to carry out liming. He only needs it if he wishes to claim compensation. The principle is exactly the same. If the building, or whatever the improvement is, has been completed with the landlord's consent, then the tenant is entitled to compensation, which may include an element for the value of the planning consent under Clause 20(4) of the Bill. In

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practice, of course, it is usually the proposed improvement or change of use itself which is more important than the planning permission. That is because, if a landlord refuses consent to what the tenant wants to do, the tenant will not receive compensation for it and the question of planning permission is unlikely to arise anyway unless an arbitrator overrules the landlord.

Almost every landlord will be aware that nowadays rural developments, whether or not of agricultural origin, are likely to require planning permission. If asked by a tenant for consent to make an improvement or change of use which benefits the holding, landlords will understand that planning permission is probably needed. The parties then decide who is best placed to apply to the local authority.

Changes in planning law are something of a red herring. If a new requirement for planning permission is imposed, that is no reason for the tenant to be entitled to compensation for obtaining such permission without consent. If the consent is refused, that does not prevent him from seeking the planning permission in any event.

I hope that, with that explanation, the noble Lord will be more than somewhat reassured and will feel able to withdraw his amendment.

6.30 p.m.

Lord Gallacher: My Lords, I found the noble Earl's response somewhat disappointing and, as someone who is not a practitioner in this field, a trifle removed from reality.

We are agreed that farming will change radically, even in the short term. Certainly in the longer term it would be a very bold man who attempted to forecast what a typical farm —whether a mixed farm or a specialised farm—will look like five years after a farm tenancy agreement has been entered into. It would be an even bolder man who would assume that local authorities will not seek to extend considerably their powers over planning law in the countryside.

The Minister sought to assure me that I see difficulties which either will not arise or, if they do arise, will be capable of resolution. I hope that he is right because, for my own money, I would be inclined to advise any person contemplating a farm business tenancy to take a long look at what he was putting his hand to and, in particular, to try to anticipate events. Those of us who have come up against the planning machine in urban areas know to our cost and sorrow that, even at the hands of our friends in government, some painful lessons have had to be learned. Equally, when decisions have been given in urban areas they are sometimes so ringed with planning conditions that, having obtained the consent one sought, one sometimes wonders whether it would have been better to have lost both the application and the appeal.

Nevertheless, I shall take on board what the noble Earl said and shall study it carefully. I do not wish to be a prophet of doom and gloom. Nevertheless, I feel that this is an aspect of the Bill which is not sufficiently clearly resolved. Although we may not return to the issue, it may be that those who look ahead in these matters should be aware that there are dangers on this score. I understand the motivation for seeking to

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regulate the question of planning consents within the Bill, but Amendment No. 26 seeks to introduce a measure of flexibility and tolerance to give the tenant farmer a greater measure of protection, not so much against his landlord as against the effect that changes in the law which will result from growing consciousness of the environment may have upon him as a farmer. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 24 not moved.]

Earl Howe moved Amendment No. 25:

Page 9, line 2, at end insert:
("( ) The variation referred to in subsection (2) above must be related to the physical improvement or change of use in question.").

The noble Earl said: My Lords, I have already spoken to the amendment. I beg to move.

On Question, amendment agreed to.

[Amendment No. 26 not moved.]

Clause 19 [Reference to arbitration of refusal or failure to give consent or of condition attached to consent]:

[Amendment No. 27 not moved.]

Lord Carter moved Amendment No. 28:

Page 9, line 31, leave out from ("may") to the end of line 34 and insert ("withhold his approval for the proposed tenant's improvement or may approve it either unconditionally or subject to such conditions as he may think fit after considering the matters set out in subsection (4) above.").

The noble Lord said: My Lords, Amendment No. 28 deals with Clause 19(5). It was helpful in relation to a previous amendment to have the Minister's agreement regarding our understanding that pendulum arbitration—where the arbitrator can say either yes or no but cannot attach any conditions to his decision—applies only to the particular case where a tenant has been refused permission by the landlord for an improvement and has gone to arbitration and in that case the arbitrator can only unconditionally approve the provision or unconditionally withhold it.

We discussed the matter in Committee, but we consider it worthwhile to return to the point because we still feel that this provision is not quite in the real world. It removes a degree of flexibility from the arbitrator. We know as a result of our earlier discussion that this provision does not apply to arbitration in relation to rent or the valuation of tenancy improvements but only to this specific case. Although it is attractive in theory, in practice it could give rise to problems.

There has been a great deal of interest in the concept of pendulum arbitration in relation to industrial relations. It has been discussed by theoreticians, but I am not aware of any instances where it has been applied in practice. I wonder whether the Government, in their desire for simplification, are going too far down the road of lack of flexibility and whether they should not consider the amendment. The amendment would still allow the arbitrator to approve an improvement unconditionally if he wishes or, as often happens in arbitration,

    "subject to such conditions as he may think fit after considering the matters set out in subsection (4)"

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    of the clause, which are,

    "the terms of the tenancy and any other relevant circumstances (including the circumstances of the tenant and the landlord)".

I believe that this is an area where it would be wise to give the arbitrator some flexibility.

I shall be interested to know why the Government have adopted this approach. Is it based on advice, or because they want to try the system and believe that it will work better? Are there cases in agriculture where that system of arbitration is applied? I am not aware of any cases, but I am prepared to be corrected. Perhaps the noble Earl can show whether there are examples of where this type of arbitration is already working. It is rather like a referendum in which one either says yes or no, and there is no "maybe" about it. It removes that degree of professional flexibility on the part of the arbitrator which we are used to him having. It is a surprising approach to this particular part of the Bill. I beg to move.

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