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I beg to move, That the Bill be now read a Second time.
In doing so, I draw the attention of the House to my entry in the Register of Members' Interests, which shows that I have an interest in a tenanted farm.
I open the debate with three facts. First, if a landowner offers an agricultural tenancy for a term of two years or more, the tenant has virtual security of tenure for life under the present law. Secondly, when agricultural tenancies terminate, it is known that, at present, about 10 per cent. of landlords choose to relet their land only on the basis of protected tenancies. Thirdly, the proportion of land that is rented in England and Wales has fallen from about 90 per cent. at the turn of the century, to about one third now. I happen to agree with Labour's spokesman in the Lords, the noble Lord Carter, that the true figure is probably lower than that.
I shall explain how those three facts are not unconnected. I shall also argue that this Bill, which has unprecedented support from within the industry, is well designed to address those problems: to tackle the decline in tenancies offered; to open up opportunities for new entrants; and to provide the flexibility for our agriculture industry to remain competitive in the face of increasing international pressures, as trade in agricultural products becomes freer.
The Bill, combined with the recent announcement of the extension of relief from inheritance tax to new lettings, will have a major effect. Last summer, it was estimated that more than 300,000 more hectares—nearly 1 million acres of land—would be let, even without tax changes. The Bill would have revitalised the tenanted sector without the level playing field between tenanted farm and vacant possession in taxation. I believe, as does the industry, that the Bill, if enacted, combined with the tax changes, may well transform the situation for the better. As the Tenant Farmers Association said today:
it is a major step towards a revival of tenanted farms".
Since 1875, there have been more than 20 pieces of primary legislation relating to agricultural, Iandlord-tenant law. Of those, the most important Acts have related to security of tenure. In particular, the Agriculture Act 1947, which was introduced by a Labour Government—led by a great Minister of Agriculture and Fisheries, Tom Williams—heralded a major change. That was because the landlord's notice to quit was made subject to consent being given by the Minister. As such consent could he given in exceptional circumstances only, the effect of the change was to give all tenant farmers who farmed their land efficiently complete security of tenure for life. At that time, when nearly two thirds of farmers were tenants, it was believed that that would contribute to improving agricultural output—rationing was still in place and the overwhelming national interest was seen to be the increase of home food production at all costs.
The most damaging piece of legislation was that introduced by a subsequent Labour Government in 1976. During the passage of the Agriculture (Miscellaneous Provisions) Bill, they introduced a series of fundamental amendments in Committee—in itself an extraordinary thing to do—which provided security of tenure, retrospectively, for two further generations of successors to an existing tenant, subject to certain eligibility conditions. I am sure that the hon. Member for Edinburgh, East (Dr. Strang) needs no reminding of that fact, as he piloted the provisions through the Standing Committee. By taking the land out of the landlord's control for three generations, that legislation went almost as far as it was possible to go in the direction of security, short of confiscating the legal title from the landlord and giving it to the tenant.
Reading copies of Hansard at the time and the background that goes with them, I find it impossible to avoid the impression that that legislation was driven through as part of the internecine left-right battles then raging in the Labour party. Let us remember that the national executive committee had proposed the nationalisation of land with support from left wingers in the Cabinet.
The Minister is discussing legal title to land. Surely he must be aware that some of the largest landowners obtained that title through murder, rape, pillage and all sorts of barbaric means. I am not suggesting that that gives any Government any authority to confiscate—far from it—but the right hon. Gentleman should be equally even-handed, when he comments on the rights of tenants, as we are when we comment on those hereditary landowners.
I cannot think that the hon. Gentleman is referring to the Co-operative Wholesale Society, which is one of the largest landlords in the country. I am sure that its title was based on other methods of acquisition. I accept his challenge that we must achieve an even-handed balance and will return to my explanation of how the Bill will do exactly that in today's conditions.
Does my right hon. Friend accept that the Co-operative Wholesale Society is one of the largest owners of farmland in my constituency, is a good landlord, treats its farm workers well, is a major member of the Country Landowners Association and should not have ascribed to it the hideous activities that the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) ascribed to landlords?
It was to defend the CWS against the accusations of rapine and pillage that I rose to my feet a moment ago.
Be that as it may, even if those pieces of legislation were genuinely designed—I am sure that they were—to protect tenants, they have had a different outcome. The Labour Government turned out to be misguided. They ignored the crucial fact that the letting of land is a voluntary activity on the part of the landowner. The point is that the more restrictive the legislation, and the greater the security of tenure that it provides, the stronger is the disincentive to any landowners who might otherwise consider letting their land. As a result, tenants' interests suffer.
That is not just the wisdom of hindsight. The point was put fairly and squarely to the hon. Member for Edinburgh, East at the time, particularly by my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), who later became a distinguished Minister of Agriculture, Fisheries and Food. On 3 February 1976, he asked the then Minister, the late Lord Peart:
Will the Minister give an undertaking that that"—
that is, not detrimentally affecting the supply of farms to let—
will be part of Government policy?
Lord Peart replied:
I believe that I can given that assurance".—[Official Report, Standing Committee C, 3 February 1976; c. 443.]
Later, on 8 March 1976, the then junior Minister, the hon. Member for Edinburgh, East, said:
A major issue, which I recognise Conservative Members have raised in good faith, is the suggestion that one effect of the clauses will be to dry up the supply of tenanted farms. I cannot agree that such an outcome will be significant."—[Official Report, 8 March 1976; Vol. 907, c. 115.]
It turned out to be extremely significant. Having reached the position that we are in today, I very much hope, as does the industry, that the Labour party has learnt that lesson.
Although we removed the succession provisions in relation to future tenancies in 1984, it is clear that the present restrictive legislation is still gradually suffocating the tenanted sector. The supply of new full tenancies has slowed to the merest trickle and the vast majority of lettings are on short-term arrangements. If one excludes succession tenancies, 90 per cent. of new let land is let in that way. That is how the three facts with which I began my speech are connected.
Not surprisingly, almost everyone in the industry now agrees that corrective action must be taken. In response to that pressure from the industry, my Department issued proposals for reform in February 1991. There followed a long and thorough period of consultation with all the interested parties, including landowners, tenants, young farmers, Iand agents, valuers and others connected with the industry. In December 1993, an agreement was reached, which was supported by organisations representing all those interests, on the changes that were needed to the present system. The result is the Bill that we have brought before the House today. That consultation and continuing industry support gives us the confidence that this reform is what the industry wants and is what it so badly needs.
I congratulate my right hon. Friend and his colleagues on bringing the industry together in introducing the legislation. At the beginning, the industry was not in agreement. There were differences between the Country Landowners Association and the National Farmers Union but, thanks to the hard work of my right hon. Friend and his colleagues, a great measure of consensus has been established and the Bill is now widely welcomed throughout the industry.
My hon. Friend is right. It would be fair to give a good deal of the credit to my predecessor, the present Secretary of State for Education. But I hope that the action that I have taken since arriving at the Department with my hon. Friends has taken forward the work that she laid in hand.
While my hon. Friend the Member for Somerton and Frome (Mr. Robinson) was nearly right to say that the entire industry is in agreement on the Bill, will the Minister bear it in mind that that is not absolutely true? In some areas, particularly Cumbria, there is a certain amount of disquiet because it is felt that the proposals will not revitalise the tenanted sector. The Minister may recall that I am a tenant of land in family ownership of which I am part. I have received a letter from the National Farmers Union saying that certain tenant members of the Cumbria NFU are concerned about
the absence of any guaranteed minimum term since they believe that as farming is a long-term business a minimum term is essential.
Although I do not believe that that is enough to cause one to oppose the Bill, I hope that the Minister will bear it in mind throughout its passage that some farmers are worried about some of the implications.
My right hon. Friend is right. I intended to return later in my speech to the substance of the argument made by what I think it is fair to call "the minority" in this matter, as that argument needs to be confronted head on.
My right hon. Friend knows very much better than I do, because for several years he held the office that I hold, that it is a strange idea that unanimity ever exists in the British farming industry. I have never met a roomful of farmers who would agree wholly about anything—and if they all agreed about anything, some of them would change the opinions that they had earlier expressed, to ensure that they did not.
My right hon. Friend, who was a member, will remember a famous cartoon from the Victorian "Punch" in the Farmers Club, called "The Grousing Room in the Farmers Club". So there is always a certain amount of fractiousness in our industry. I believe that he will perhaps agree with me that "an overwhelming consensus with some dissidents" would be a fair description of the position. There are also some dissidents in Wales, and I have spoken to some of them.
As my hon. Friend rightly says, there are a few in Lancashire—another county where there are people of individual opinions. It would be very surprising to me if every Lancastrian agreed about any subject.
Would it be helpful to my right hon. Friend if I described my own circumstances? When I came to the House seven years ago, it would have suited me very well to let land, but on the present basis, I am disinclined to do so, and I have not done so.
Mention has been made of the tremendous efforts that have been made to achieve consensus throughout the industry—an admirable achievement. Is my right hon. Friend aware that the hon. Member for Edinburgh, East (Dr. Strang) today issued a press release, stating that he will oppose the Bill?
Considerable apprehension has been caused throughout the industry about the Opposition policy towards the Bill. My right hon. Friend will be aware that, in framing the Bill, he has taken considerable trouble to ensure that it is not retrospective—in other words, Agricultural Holdings Act 1986 tenancies will not be included in the scope of the Bill. Throughout the debate, will my right hon. Friend ask the Labour party whether, if it proposes changes in the future, it will decide not to make them retrospective? That would create some stability in the industry.
My hon. Friend makes a powerful argument. Doubtless the hon. Member for Edinburgh, East will discuss it in due course. I was going to put that very question to him, because it would be fair. On other occasions, he has said that, should he find himself on the side of the House where I am now standing, he would inquire into how any Act that we passed was working before he amended it further. I am sure that we shall listen carefully to what he says today.
I thank my right hon. Friend, who will be aware of the speech made by the hon. Member for Edinburgh, East (Dr. Strang) during the 1976 debate, when he said that the Conservative party, by tradition, represents the landowners and the Labour party, by tradition, the farmers. However, in the case of the Bill, the National Farmers Union, the Small Farmers' Association and all the rest support the Bill, so surely it is reasonable to suppose that the Labour party will support the Bill at this stage.
It is disappointing that the Labour party does not support the Bill. I think that the historic analysis offered on that occasion by the hon. Member for Edinburgh, East was wrong. The landowners were usually the Whigs and the farmers were usually the Tories, and an element of that remains in some parts of the country.
I shall now describe the main changes that the Bill will bring about. First, it will make diversification easier for tenants. Under clause 1, the parties may exchange notices before the tenancy is granted, confirming their intention that the tenancy is to be, and remain, a farm business tenancy. If they do so, the tenancy will remain a farm business tenancy if its character is primarily or wholly agricultural at the outset, and as long as the business conditions are met—that is, as long as some part of the holding is farmed for the purpose of trade or business. The effect of that will be to allow more flexibility for tenants, with the permission of their landlords, to extend their enterprise into non-agricultural areas, without calling into question the nature of their tenancy. That is useful in terms of the importance of the rural economy as a whole.
Secondly, Iandlords and tenants will be free to agree how long a tenancy should last. That is the key to getting more letting of land. That freedom is crucial to persuading landlords that it is in their best interest to let the land instead of taking it in hand or entering into contract farming, or some other arrangement. There is consensus on that point.
The Bill prescribes a minimum period of one year's notice to be given to end tenancies of a fixed term of more than two years. Unlike the present legislation, there will be no grounds on which such tenancies can be terminated with shorter periods of notice. Nor will there be any grounds for issuing notices to terminate the tenancy before the agreed date, or to resume possession of part of the holding, unless the tenancy agreement contains provisions that allow for the exercise of such options. The provisions will give tenants extra certainty as to where they stand.
On rent, the Bill will give parties more freedom than the present legislation to reach their own agreement as to the level of rent, subject to certain safeguards. Part II of the Bill allows the parties to agree on a fixed rent for the whole duration of a tenancy by stating explicitly that there will be no rent reviews at all, or they can agree that the rent should be adjusted according to an objective formula.
If the parties do not agree such arrangements, they will be able to provide for rent reviews at a frequency of their own choosing. If they make no such provision, either party will be able to demand a rent review every three years. When rent reviews take place, either party has the right to demand arbitration, in which case the Bill requires that the arbitrator must determine the rent on an open market basis. That is described in clause 13. One cannot have only upward rent reviews. The reviews would have to relate to the open market, where rents might well have gone down.
The Bill contains mandatory provisions on compensation for tenants' improvements. Unlike the present legislation, the provisions will override any agreement to pay less than full compensation, so there will be no scope for the "writing down" of the value of compensation, such as frequently happens now. That is a potential advantage to the tenant.
Under the Bill, the definition of a tenant's improvement is wider than the one in the present legislation. It includes not only physical improvements, but any intangible advantage obtained for the holding by the tenant that is capable of increasing the value of the holding. An obvious example would be planning permission, which is dealt with specifically in the Bill, and there may be other items which may add value to the holding but which are not physical structures or operations. Provided that the landlord's written consent has been obtained for any such improvements, he is required to pay full compensation for them at the end of the tenancy.
Milk quotas are an extremely good example, since milk quotas—as opposed to other quotas—are attached to the land that might have been obtained by the tenant, which would be for the benefit of a holding. Therefore, the tenant would have a right to compensation at the market rent for the milk quotas at the time of the ending of the tenancy. That is exactly the sort of requirement that the Bill now allows for, and there may be others in the future where it would be relevant. The tenant would need the landlord's written consent to buy the quota.
The tenant has the right to demand arbitration if the landlord refuses consent for a proposed improvement—other than planning permission—or if there is disagreement after the end of the tenancy on the amount of compensation to be paid.
Finally, the Bill sets out procedures to be followed for the resolution of disputes arising under the Bill or under the terms of the farm business tenancy. The provisions provide unilateral access to independent arbitration, which represents a simpler and cheaper alternative to the courts, while at the same time leaving room for the parties to make use of an alternative disputes resolution procedure of their own choosing, if they so wish.
I have described the main features of the Bill, which is welcomed by all parts of the industry, although there are some dissidents, as my right hon. Friend the Member for Westmorland and Lonsdale pointed out. Sadly, the Labour party does not seem able to shed the legacy of the past and to bring itself to support the Bill. Perhaps we shall hear differently today.
May I take the Minister back to what he said about planning permission? What will be the position if a tenant who seeks to apply for planning permission is refused the necessary permission by the landlord? What will be his or her right of redress? I was under the impression that certain assurances were given by Ministers in the other place that the matter was being actively reconsidered. What is the current thinking on it?
We may want to discuss the matter in more detail in Committee, but I think that a landlord should have the right to say to a tenant that he does not want the use of his land to change without his perrnission. However, he could then find himself in the odd situation whereby he might be deemed to have agreed to a planning permission that he might wish to oppose on other grounds. We must look closely at whether there is room for arbitration in such disputes and, if so, how it could be handled. It is a special and interesting area and the hon. Gentleman was correct to raise that point.
The Labour party does not seem to have adjusted or modified its attitudes on those matters. It produced a document on tenancy reform last September, which had some sensible things to say, but they are largely embodied in our proposals. On compensation, the Labour party document proposes that a landlord must pay
compensation equal to the increase in value of the farmland brought about by the activity of the tenant".
That is precisely what part III of the Bill achieves. The Labour party document goes on to say—and this addresses the point made by my right hon. Friend the Member for Westmorland and Lonsdale—that
it will be in the landlord's interest to keep tenants on for the full term of their tenancy agreement, thus both boosting the tenant's security and encouraging the tenant to improve the environmental aspects of the farm".
That is exactly right and the Bill provides for it. If we combine the greater freedom to set terms that are agreed between the two sides with a strengthening of the tenant's rights to compensation, the balance will be right. The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) was correct when he intervened earlier to say that we should seek an exact balance. If the tenant is to be repaid for his investment, the landlord will seek a reasonable length of time—it will vary according to the
type of holding and so on—to ensure that the investment has been made. Equally, the tenant will be certain that, when the tenancy ends, he will receive proper compensation for his investment. The Government—and, more importantly, the industry—believe that that balance has now been set correctly.
On rent, the Labour party document proposed a system of rent assessment to prevent tenants from being exploited and it claimed that
upward-only rent rises are enshrined in the Tory plan".
That is wrong. As I explained, the Bill gives the landlord or the tenant the right to demand that an arbitrator should set the rent on an open market basis, which clearly could not be an upward-only review.
Lastly, the Labour document mentions the fiscal system. It is fair to say that here it has been overtaken by subsequent events. My right hon. and learned Friend the Chancellor of the Exchequer announced last week that we shall introduce the level playing field between vacant possession and tenanted land for which the Labour party called. However, we are doing that by lowering the inheritance tax on tenanted land, not by increasing it on owner-occupied land, as I suspect Labour's rather opaque commitment meant.
As hon. Members know, we have decided to extend the 100 per cent. relief from inheritance tax on agricultural land to all new tenancies granted on or after 1 September 1995—the date when I hope that the Bill will come into force. I join my right hon. and learned Friend in hoping that the Labour party will at least feel able to welcome that measure, since its document states that such reform will be "very beneficial".
I thank my right hon. Friend for giving way. The Opposition are always telling us about the importance of new jobs, and the Bill will be important to new entrants to the industry. Surely that is a good reason for the Opposition to support the Bill in the Lobby tonight.
I genuinely believe that that is so. I hope that, even at this late stage, the hon. Member for Edinburgh, East will show a willingness to listen to the debate. I do not know precisely what his position is, as we have yet to hear from him.
Many of the reasonable objectives set out in the Labour document have been achieved. The fiscal change is the icing on the cake, which is intended to help the revival of the tenancy sector and make it easier for people to enter the industry, to support the family farm and to increase jobs.
In my county of Wiltshire there are 12,500 acres of county council tenancies, which are occupied by about 126 farmers for an average length of more than 20 years. Can my right hon. Friend confirm that the Bill will apply to county council tenancies? If it will, does he believe that it will breathe new life into a system that is not working at present?
The Bill will apply to all new tenancies after 1 September. Although county council tenancies have often been valuable in particular areas, I hope that the revitalisation that we shall see in the rented sector will mean that, if we can get the whole tenancy sector moving again, it will become less necessary for local authorities to intervene in an area that is not their natural habitat.
Two or three minutes ago, the right hon. Gentleman described circumstances in which the landlord and tenant would decide that it was in their mutual interests to think long term and to plan over 10 or 20 years. However, when introducing the Bill, he said that all new lets tend to be short term. Why is he confident that the industry will think long term, when the history of the industry and the free market is of short-termism?
The present arrangement offers only life terms, which are too long and under which virtually no one lets, or Gladstone and Bower. With all the convenience of the latter tenancies, which are for only 18 months, people are not turned out after 18 months, but I believe roll on for 10 or 15 years—it has not been possible to make a proper survey.
Another source of evidence is Scotland. The Bill does not cover Scotland, but the different partnership law in Scotland means that there is probably no need for it there—although there have been some calls for reform. One can arrive at the same effect using Scottish partnership law. The average length of Scottish partnerships is 10 to 15 years. When there is effectively a free market, as there is in Scotland with use of partnership laws, that is the average length of tenancy. It would be wrong—and I apologise for going on so long, Madam Speaker, and must try to make myself wind up—to set a single target in the Bill because it would by definition be wrong in more than half the cases.
Once again, the right hon. Gentleman points out that Scottish law is a great deal better than English law in this as in other respects. I note from the schedules that the Bill amends the Coal Mining Subsidence Act 1991 and the Opencast Coal Act 1958, which apply equally to Scotland as to the rest of the United Kingdom. British Coal, which is a major landowner having a number of tenant farmers, is in the process of selling off its land—and unfortunately, not giving the first option to purchase to its tenants. Although this is not strictly covered by the Bill's provisions, is there any way that the right hon. Gentleman and his colleagues in the Department of Trade and Industry can persuade British Coal that it is in the interests of British agriculture to sell its holdings to tenants who have farmed them for a lifetime?
I must not go too wide of the Bill, but I have been engaged in discussions about that matter, relating to England, with my right hon. Friend the President of the Board of Trade. Steps have been taken, which largely meet the concerns that many tenants feel. Perhaps I may write to the hon. Gentleman about that.
Is my right hon. Friend prepared to give an assurance that he will consider tabling an amendment in Committee, to allow members of the Central Association of Agricultural Valuers the same status in clause 34 as members of the Royal Institute of Chartered Surveyors, in terms of drawing up tenancy agreements?
I am biased in my hon. Friend's favour, but there are other professional views on that matter. Perhaps it should be considered carefully in Committee, but we shall give a fair wind to discussion of my hon. Friend's suggestion.
I hope that the hon. Member for Edinburgh, East will show today that he can listen to the industry—I know that he can—and at least confirm that the Labour party will not once again damage tenant farmers with threats of retrospective legislation. Existing tenancy agreements are not affected in any way by the Bill. More rented land will become available both for existing tenants and for people who want to enter farming and get a start on the ladder. The package of reforms is workable and fair and is supported by the main industry organisations. It provides a flexible framework, which will create opportunities for new entrants, encourage investment and benefit the rural economy. It will also put British agriculture in a stronger position to adapt to the inevitable changes that lie ahead.
The measure carries through an explicit commitment that my party included in its previous election manifesto. It has the warm and active support of the National Federation of Young Farmers' Clubs, the Tenant Farmers Association Ltd., the Country Landowners Association and the National Farmers Union. It is the right thing to do and I commend it to the House.
The legislation that should govern the relationship between a landlord and an agricultural tenant is a matter that the House has addressed regularly for well over a century. Indeed, in years past—certainly in previous centuries and at the beginning of this century—that relationship was a large factor in major social developments. I refer to the enclosures, the highland clearances and the development of crofting, where people were driven off their land and moved to other areas of land. I think even of the Irish question, where that relationship has been an ingredient in Irish history over the past century.
The number of people directly involved in those matters has fallen dramatically over the decades. The number of landowners and farmers is relatively small, but that does not alter the fact that the proposed legislation is important to them and, indeed, to agriculture and the countryside generally.
As the Minister said, there have been major changes in agriculture, in the ownership and tenure of land, throughout the century. At the beginning of the century, there were more than 1 million farm workers in Great Britain; now the figure is down to well under a quarter of a million. At the turn of the century, there were more than half a million agricultural holdings; the figure is now down to well under a quarter of a million. As the right hon. Gentleman said—I do not disagree with him—at the turn of the century, some 90 per cent. of agricultural land was tenanted, whereas the figure now is probably less than 33 per cent. Those figures refer to England and Wales, because the Bill applies only there.
There have been important changes in the industry. I am glad that the right hon. Gentleman referred to not only the Rent (Agriculture) Act 1976 but the Agriculture Act 1947, which, in some respects, is probably more important, not least because it has been in operation longer. Both Acts had the effect of holding in tenure land that might otherwise have gone out of tenure. The other side of the argument, which the Minister regards as a great concern to the industry, is that the existence of that security for tenant farmers has been a major disincentive to landowners to let new land, and I shall address that issue.
It is helpful to think about our objectives. Let us take a broader view, because, after all, it is a Second Reading debate. The first objective that I suggest—I do not put them in any order of importance—is agricultural efficiency. We want a farm structure and legislation that are conducive to increased productivity, investment and efficiency. Over the decades, many hon. Members, especially Labour Members, have argued that security is a factor in the productivity of tenant farmers, because, even if compensation is to be paid, security will be needed for investment purposes.
The second objective is what I would describe as the defence of the social fabric of the countryside. That generalisation includes support for rural communities and the maintenance of rural employment. I have made the same point more than once in the last couple of years, but Labour has changed its stance. In the 1960s, a Labour Government used taxpayers' money to encourage farm amalgamations, but we no longer wish to do that; we want to encourage the maximum number of people to secure their living from the land. Most will be farmers, but we want as many farm workers as practicable, as well.
If that objective is to be fulfilled, farming decisions should be made locally. We do not want huge operations and huge estates farmed from hundreds of miles away, with few people in the community working on the land or directly involved with it. We do not dispute the fact that some big farms provide a career structure: because of the current high capital values, one way for employees to enter the industry is to obtain jobs in such farming companies. That may be easier than entering it through a holding. We want the farming pattern—the size of farms, for instance—to adjust to technological advance and market forces. That factor must be taken into account, but it is not the Holy Grail.
Our third objective—again, let me stress that I do not list them in order of importance—is social justice. The Labour party believes that the relationship between landlord and tenant is not equal, and since 1947—despite the number of Conservative Governments between then and now—the House has accepted that principle. Legislation has been needed to protect tenants, and since 1947 tenant farmers have been given security of tenure. We stand by that: we think it unjust for people to enter into tenancies without such security. Farming is a business, but it is more than a business; it is a way of life. People are investing their money in the land, and living in farmhouses. That is not just a business relationship. The Bill, however, takes us back to the days when it was treated almost as just another business transaction—almost, although not quite, a contract. The Minister made some important points in this context, however, which we support.
Given what the hon. Gentleman has just said, will he conider withdrawing his statement in a press release today that the Bill's aim was
to end security of tenure for tenant farmers"?
As those who have tenancies will keep them, and as the tax disadvantage of letting over a longer term will be removed, how can the hon. Gentleman possibly deny that there will be increased security of tenure in the letting of farms of this kind?
I was referring to tenancies under this legislation. As the hon. Gentleman knows, if the Bill becomes law as it stands, all future agricultural tenancies will be governed by it and there will be no minimum term. That will mean that security of tenure will not be a statutory right. Some landlords will, I hope, choose to continue to let their farms on the basis of a tenancy that extends throughout the working life of the tenant. There will be no legal requirement for that; far from it, because the provisions are designed to discourage it. That is what I meant in my press release to which the hon. Gentleman kindly referred.
That is an interesting point. Conservative Members may laugh, but I suspect that the Tenant Farmers Association agreed with the National Farmers Union four years ago when the NFU was certainly arguing for minimum fixed-term tenancies. I do not think that the Tenant Farmers Association attacked that position, but I am happy to be corrected on that if the hon. Gentleman wishes to do so. There is not a jot in the Bill about fixed-term or minimum-term tenancies. The NFU also argued for compensation for disturbance, but there is not a jot about that in the Bill.
I hope that Conservative Members understand what compensation for disturbance means, because it is a significant issue. It applies when a tenancy comes to an end prematurely, for various reasons. There is no compensation for abandoning it in advance of the end of a contract. My next point is arguable, but it could have been addressed in a way that did not encourage the fragmentation of farms from the farmhouse, a point that the Country Landowners Association made in its briefing on the Bill. I believe that the NFU advanced the point about security of the family in the farmhouse, but I do not know whether the TFA supported that.
My question to the TFA and the NFU and the NEU—but not to the CLA, because I understand the position that it has taken from the beginning—is why were those guarantees worth obtaining four years ago but not worth obtaining in the final agreement?
I agree; but, under the Bill, tenancies are not just slightly less than perfect. The hon. Gentleman and the Minister have a background in farming. I did not choose to farm, but I would not be happy about my son or nephew going into farming on the basis of a three-year or four-year tenancy agreement.
That is a fair point. I am concerned not just about existing tenants but about future ones and their families. One must strike a balance between security and social justice for the tenant and trying to encourage the provision of more land for letting. We should address the issue of encouraging landlords to let more land. There should be some incentive and they should be encouraged to let it reasonably long term. I put it no more strongly than that.
The Bill may lead to an increase in agricultural let land. Our concern is that it may not lead to a significant increase in the number of complete agricultural holdings that are let. As the House may be aware, many critics of the legislation, and especially those farmers who have heavily criticised it—I saw one of them being interviewed on television this morning—say that much of the land will be let short term, but to neighbouring farmers. I agree with that criticism. The land will be let to people who are already in farming, rather than encouraging the letting of new holdings and the whole structure of the family farm, which the Opposition support. I think that, probably, Conservative Members also support that.
I listened to the hon. Gentleman's description of the historic pattern of tenancies, and I understand exactly what he is saying. However, I am sure that he would not disagree with the idea that times have changed and that it might be instructive to look at the commercial letting sector of the economy. Traditionally, in that sector it would have been usual for tenants to have a 21-year lease, with rent reviews at seven years; now, we see more and more advertisements with easy in, easy out terms for tenants.
I know that the hon. Gentleman makes a distinction between commercial property and farm letting; so do I. However, times have changed and the change in the commercial sector has occurred because it clearly suits both parties, Iandlord and tenant. I think that the hon. Gentleman will accept that, because times have changed, there must be a new look at farm tenancies.
I shall explain to the hon. Gentleman why his argument is flawed. We cannot treat the letting of agricultural land in the same way we treat the letting of commercial property. There is a real market in commercial property: if the price is high, more is provided. That is how the market operates. That cannot happen with agricultural land because the amount of that land is fixed.
As I said, my third objective is the need to maintain the social fabric, to keep as much employment as possible on the land and to allow as many people as possible to secure their livelihood from the land.
My fourth objective goes wider. I am sure that many landowners and farmers would agree with our view that they are holding the land in stewardship for future generations. During the past decade or two, we have rightly paid great attention to conservation of the environment. I am not persuaded that the encouragement of short-term lets and the insecurity of short-termism are the best ways to secure nature conservation, preservation of natural habitats and all the long-term wider countryside issues to which farmers, to their credit, are now responding; farmers are certainly much more environmentally conscious than they were in my father's day.
I want to deal with the subject of new entrants. I appreciate the fact that the Minister referred to the consultation paper drafted by my hon. Friend the Member for Clwyd, South-West (Mr. Jones), which was issued in September. However, only a small part of that paper related to tenancy reform. The right hon. Gentleman did not deal with the paper's main points, so I shall remind the House of them.
First, there is the question of quotas. It is no accident that the traditional way into the industry has been through milk. That was because of cash flow. An individual—perhaps a farm worker, a farmer's son or someone from the town—entered the industry through milk because he knew that if he worked hard he would receive a regular cheque. Dairy quotas have killed that. Frankly, because of the present milk quotas I would not encourage anyone to borrow money to become a dairy farmer. As the Minister knows, we have suggested a practical scheme to deal with that problem. I hope that the Government will respond to it, but there is certainly nothing about it in the Bill.
Secondly, we raised the important issue of the Government's refusal to implement the common agricultural policy retirement scheme for farmers. For Britain, we want the link between structure and retirement to be broken. It would be a positive step if we helped the older farmer to move out of the industry, thereby creating a vacancy for a new entrant.
Last year, I went to a presentation by the Farmers Union of Wales, which vigorously opposed the Bill. It forcefully made the point that the average age of hill farmers in Wales was 58. Many of those farmers cannot afford to retire. They are small farmers. They cannot afford to buy houses because they do not have the necessary equity—they are dependent farmers. Any step in the direction that my hon. Friend mentioned would therefore be a major help in relation to not only that social problem but released land for new entrants.
I am grateful to my hon. Friend. He is right. This is an important issue among farmers in the United Kingdom, especially in Wales.
A third proposal in our document on new entrants deals with what have been called smallholdings; I prefer to call them county council holdings, because there is no need for them to be too small. Traditionally, such holdings were—I am glad that the Minister raised this point—an important route into the industry. I do not exaggerate their role, but it was significant. We should resurrect the role of county council holdings as a route into the industry.
It is a matter of concern that, as a consequence, albeit an indirect one, of local government reform, the number of county council holdings may decrease further. We should deal with that issue. If we are serious about new entrants, surely there should be something in the Bill on county council holdings. Again, not a thing is included.
We raised the question of tax. The Minister is right. On that issue, I said:
Labour believes that we should look again at the tax arrangements for farm land. There is no doubt that some abuse is taking place and wealthy individuals are buying up farm land to reduce their tax liability. Labour is looking at how we can create fiscal arrangements which will encourage landowners to let their land under the traditional system of lifetime tenancies.
That quotation comes from my statement at the press conference that we held on the document, but the wording of the document is not too dissimilar to it. The Government have responded, but the right hon. Gentleman is keeping up with the tradition that his predecessors have all lived up to—if the Conservative Government can get it wrong on British agriculture, they will. The tax concession will be linked to the new short-term farm business tenancies—the Minister made it clear that that is the intention. I understand—I do not know whether this is deliberate—that the proposal may apply to succession tenancies under the 1976 Act. The Minister nods his head. The proposal, however, does not apply to other land that is held in tenure for a lifetime.
No doubt the right hon. Gentleman managed to persuade the Chancellor of the Exchequer in relation to the proposal. It is a small advance, but, sadly, it is in the wrong direction. The Labour party wanted to consider the whole question of equalising the tax treatment of owner-occupied land and of tenanted land, but it should not have been linked to such short-termism. Under the proposed tax arrangements, a landlord has no incentive to let a farm, even for a respectable minimum term. We are interested in encouraging new entrants into farming and we do not regard the Bill as an adequate response to that challenge—it is totally inadequate. It deals only with the narrow question of making more land available for letting.
Making more land available for letting does not necessarily mean that many new opportunities will be provided for young men and young women to become farmers. We must make the distinction between letting complete holdings and simply letting a few fields, or breaking up farms between the farmhouse and the wider farm. We believe that security is fundamental. Successive Governments may not have liked the 1976 Act—they were certainly fairly quick to repeal the aspects relating to new tenancies—but the Minister also made an implied criticism of the Agriculture Act 1947.
Agriculture is not only a business. It is a way of life. Tenant farmers must have security, which is also in the interests of agriculture as a whole. Until 1875, all the legislation was intended to protect the interests of the landlords, but after that date it was recognised that protection must be given to tenants. Only if they had a reasonably long outlook would they look after the land. I heard it said on BBC television this morning that one should live as if one were going to die tomorrow but farm as if one were going to live for ever. Farming is a long-term business.
We want to encourage the creation of new tenancies. It is not only wrong and socially unjust but against the interests of agriculture itself that young people should enter into arrangements with minimum security and have an unequal relationship with their landowner, whether that landowner is an institution or an individual.
The hon. Gentleman has spoken for a long time about social justice between landlord and tenant. Does he agree that the taxation regime under the Labour Government in the 1970s, whereby landlords were taxed at 98 per cent. on their rental income, was wholly unfair? Will he pledge that, should we be unfortunate enough to have another Labour Government, they would not impose such a stringent and punitive taxation regime on landlords?
The hon. Gentleman may have noticed a certain caution and hesitancy among Opposition spokesmen about making off-the-cuff statements about public expenditure and taxation. I am happy to share that caution, but I shall say that most people believe—rightly—that a Labour Government will not return to penal rates of taxation. I would regard a rate of more than 90 per cent. as penal. That is my assessment of the general position, but public expenditure and taxation are matters for the shadow Chancellor. The Conservatives tend to think of incentives only for the better-off, but we believe that there should also be incentives for medium earners and people at the bottom of the scale.
There is a real advantage for the environment and the countryside in continuity and security. There are advantages in encouraging family farms and maintaining the social structure, for which security is needed. The problem is that the Bill will do nothing to encourage security; indeed, it implies that the Government have given up and that the land can be let for two, three, five or 10 years. We cannot support such a notion. The Bill will not result in a significant increase in the number of complete agricultural holdings let to new tenant farmers on terms that allow them to build a long-term business and to support not only themselves but their families.
We believe in security of tenure for tenant farmers, and encouraging short-termism and the fragmentation of holdings is not the right way to proceed. On the contrary, that will do real damage to the fabric of our countryside, which is why the Opposition will vote against the Bill.
I speak in my capacity as second Church Estates Commissioner. The Church Commission is the second largest agricultural landowner in England after the Crown. We currently own 148,000 acres comprising some 500 let farms averaging about 300 acres each. The value of this holding is about £210 million. As the Church Commission is in effect a parliamentary charity, every hon. Member sitting here has a stake in that gigantic agricultural land ownership. My right hon. Friend the Secretary of State said that only one third of the agricultural land in England and Wales is now let land. I think that he and the House can gauge what a significant proportion the commissioners represent.
I welcome the Bill and the support that the joint industry agreement managed, by a miracle, to impart to it but I must disagree with the allegation made by some critics that the Bill is a landlords charter. We do not regard that as a remotely fair criticism of the Bill. I believe that there is a genuine balance between the provisions for encapsulating security of tenure in the terms of a lease under a free contract between responsible and free parties to that contract and the imaginative and generous provisions for tenancy compensation covering intangible assets, which will prove very attractive.
I must say, almost in parenthesis, that because the Church Commissioners have come in for some criticism for the extent to which they are overextended in the ownership of property, it is their current policy to sell when they are able to gain vacant possession. However, there is no doubt that the freedom within a contract, introduced by my right hon. Friend, and the flexibility and encouragement that that produces for giving new tenancies, especially perhaps to younger applicants, means that when the Church Commissioners have brought their agricultural portfolio into a slightly better balance, they will be more inclined to look sympathetically at the new flexible provision.
However, speaking on behalf of probably the largest landlord of let tenancies in England, I am bound to tell the hon. Member for Edinburgh, East that if the flexibility becomes circumscribed by minimum tenancy provisions of, say, 10 years, the Church Commissioners will not readily take advantage of my right hon. Friend's provisions but will tend to return to the current policy of selling whenever we get vacant possession.
Would the right hon. Gentleman care to expatiate on how the philosophy that he has distilled to the House matches up to the description of the early Christians in the Acts of the Apostles:
And all that believed were together, and had all things common; And sold their possessions and goods, and parted them to all men, as every man had need.
It was also a feature of the arrangements in the early days of the Church and the New Testament that it was made very clear to the owners of property that they did not have to pool it if they did not want to do so. It was entirely voluntary and not compelled by the collective diktat of an overbearing, authoritarian, secular authority or even, in later days, by the fairly potent directives of papal power. However, I hesitate to pursue that idea.
As I was saying, if there is to be a voluntary arrangement, the option that will continually face the Church Commissioners—whether to go for a sale on vacant possession or to turn to my right hon. Friend's admirable and flexible alternative—will depend and turn fully on whether he is able to maintain the flexibility in the Bill and resist the temptation to write in a minimum term of, for example, 10 years, as the Opposition have suggested. I hope that my right hon. Friend will bear that point in mind and that it will assist him in his policy of maintaining flexibility.
I would not like it to be implied that we had suggested 10 years as a minimum term. I know that the right hon. Gentleman did not mean to mislead the House; I think that he was probably talking about the principle of a minimum term. I would not like anyone to think that the Opposition were arguing for a minimum term of 10 years.
As there remains a possibility that the Opposition might be returned to office, the fact that they oppose the Bill introduces a degree of nervousness which will seriously damage the whole purpose of the legislation. The Opposition can make their points and argue their case. It will be enormously beneficial if they then say that they will go along with, and respect, the legislation.
I have no doubt that the hon. Member for Edinburgh, East and his colleagues have heard what my hon. Friend has said. When the time comes for tabling amendments in Committee, the Opposition may table amendments aimed at circumscribing the flexible arrangements in the Bill. Those amendments may prove to be exploratory, a good debate may ensue and the Opposition may not push their amendments to a conclusion. I hope that the hon. Gentleman will bear in mind the anxieties of the Church Commissioners.
When we come to the end of the necessary phase of selling on vacant possession, we shall look sympathetically at new tenancies under those flexible provisions as long as they are not too circumscribed. I hope that there will be no attempt to introduce special provisions affecting farmhouses on let agricultural land, such as residential shortholds specifically applying to farmhouses within a separate agricultural tenancy.
The Bill is a good example of deregulation. Many of the points at present covered by statute will become matters of contract. That must surely be an important step forward in a free and liberal—in the best sense of the word—democratic society which believes in the ownership of property. I warmly support the Bill.
I confess that the constituency of Hemsworth does not spring to everyone's mind when we are talking about matters agricultural. In fact, that is a basic error. Pit villages—the Hemsworth constituency is a series of pit villages—are surrounded by farms. Some of the farms were let out under British Coal and others were farmed by the tenants of large landlords in the area. One instantly springs to mind.
The hon. Gentleman will be delighted to know that the fields that used to proclaim their loyalty to the Conservatives have moved to the Liberal Democrats and are fast on their way to the Labour party. I can put the hon. Gentleman's mind at rest. Logic lives and thrives in Hemsworth.
As my father worked on the railway and we had to go round the London and North Eastern Railway region, I was brought up in a place called Gaisgill near Tebay. All the farms there were small farms with decent folk—families who had been there for generations and who were tenants. They did not own their property in any way. The richest person was the lady who owned the village shop. Hers was the sole shop and all the small farmers had to buy from her because, unfortunately, public transport even then did not run people rapidly to Penrith.
In thinking of those people, I am much reminded of ancient history, which I know that the Minister will appreciate. One recalls in particular the early Greek reforms—ges and anadasmos—and the whole problem of the threat to the stability of society caused by people who were landless and who were not part of society. It was well recognised that if there was to be stability in society, people had to have a stake in society. Even the most right-wing reformers were prepared to give certain guarantees to small people who could work on their land.
The Minister will recall, in early Roman history, Cincinnatus the great consul. He was tired of state affairs—perhaps some of the Minister's colleagues might take a lesson from this—so he went back to the land and tilled the soil until, once more, the ungrateful Romans called him back. He had learnt his lesson behind the plough; that was the essence of it. The Minister will also recall that Cato the censor, who was by no means a radical left-winger, extolled the virtue of medium-sized farms. He extolled not the great farms—the latifundia—but the medium-sized farms. The idea is expressed most beautifully, perhaps, in Virgil's "Georgics". Virgil says that happy are the farmers who have their small estates. He speaks not of large estates or too-small estates, but of medium estates. Indeed, this country has grown in democracy as a result of the people who have served as yeomen. I think especially of the people who served under Cromwell.
I cannot resist a brief addition. The hon. Gentleman will remember the landless farmer in the "Eclogues" who left his farm, probably because it had been confiscated by the central Government so that it could be given to a soldier. If the protection, in terms of notice and so on, in the Bill had been available to that farmer, the situation would never have arisen.
I note that the Minister refers to the "Eclogues" and to what resulted from civil war. I knew that we had social turmoil in this country, but I did not know that we were on the brink of civil war or that the Bill would prevent little farmers from having their land taken away during it. The Minister's point does not really wear; it is a bit thin. It is a very poor "Eclogue" anyway, as I think that he will agree.
I now come to the point about British Coal, which is relevant to what the Minister has just talked about—the dispossessed farmer. After the privatisation of British Coal, property that had been let to farmers and, perhaps even more importantly, to allotment holders—there are many allotment holders in my constituency—was no longer to be owned by British Coal. What will the property board do? Will it say, "The Bill says nothing about allotments"? It jolly well should say something about them. Will the property board offer first choice to the allotment holders? Not on your life. Will it offer first choice to the farmers? The only advantage that the Minister gained from the President of the Board of Trade was that farmers who had previously put in a firm bid to buy their farms would be taken into account. That did not apply to anybody else.
How will that land be sold? I defy any hon. Member to defend the means, as it is to be sold in huge lots, in London, to people who have the ready cash. In other words, Hemsworth smallholders could become the property of Kuwaitis in next to no time, which is a living, breathing scandal. The Bill does not deal with that problem.
The Country Landowners Association has an interest in this type of Bill, but that does not mean that it cannot speak intelligently on the subject. The association spoke intelligently on inheritance and how inheritance tax discourages people from letting their land, which is a valid argument. Tidying up that part of the law makes sense.
Having said that, the Bill does not assist newcomers to the land, as my hon. Friend the Member for Edinburgh, East (Dr. Strang) said, or the county councils, which are in such a desperate financial position that they are having to sell some of their smallholdings and farms to raise capital. County council land was a prime source for people who wanted to set up afresh in farming with remarkably little capital.
Some of those people go to our excellent agricultural institutes, which are as good at training people in agricultural ways as any other section of our further and higher education. They do a magnificent job and I have yet to visit one in which standards are slack or there is no control over what is happening. They are able to make young people think about the future of agriculture and what they should be doing, not only in a United Kingdom context, but in that of Europe and the general agreement on tariffs and trade. Many newcomers do not have any capital and their interest originated in schools, which provide imaginative courses. How are such people to get into farming? It is extraordinarily difficult and the Bill does nothing to help.
As my hon. Friend the Member for Edinburgh, East said, reform of the common agricultural policy does not depend on the pious utterances of the Government, or of the Opposition, but on making farmers willing to go along with root and branch reform. Those with large farms have been unwilling to do so, especially when the reforms have been allied to environmental considerations. Those with family farms consider the environment and can see what is happening in the wider world. They are sufficiently flexible to respond, and to feed into the Government machine the sort of policies that can best be put across.
Short-termism is another worrying aspect of the Bill. The right hon. Member for Selby (Mr. Alison) expressed it when he said that tenancies must not be too long. Short-termism has crept into our economy and I am not thinking merely of those people who have made great profits from electricity, water or whatever, although they must certainly take their share of the blame for creating a certain atmosphere. I am thinking of the many short-term work contracts of three or six months, which lead to all sorts of insecurities. The Bill will introduce those same insecurities into the farmer's world and the family farmer's world.
I have no worries for those with large farms, who can look after themselves. They can always get out and go into something else—if they cannot, they do not deserve to succeed. Family farmers need our support, however, and they need to be able to plan over a long period. They must plan from "generation unto generation", to quote the Bible again. It is important for people to be familiar with the land that they farm and to have sympathy with it. People have feelings about the land—that is a difficult concept, but it is true.
I have also been extremely worried about the number of tax farmers and I am sure that that concerns the Minister too. It is appalling that rich people, such as pop idols or footballers, can save huge sums of money in tax by investing in farms to which they bring no productivity. The family farm is part of the core and the foundation of this country. The Bill does nothing to strengthen such farms and much to destabilise them.
I speak as a former tenant farmer who has consistently opposed security of tenure, which has done so much damage to the system. It is extraordinary for the hon. Member for Edinburgh, East (Dr. Strang), who propounds the merits of the system, to talk about improving entry to the industry. No man alive has done more harm to the system than the hon. Gentleman did in the Agriculture (Miscellaneous Provisions) Act 1976. It is clear from the tone of his speech that nothing much has changed in his mind.
I sat through the Standing Committee that considered the 1976 Act with him and I acknowledge that he probably knows as much about the subject as any hon Gentleman, but somewhere in his soul he hates landlords and believes that tenants should be preserved. The inevitable result of such a policy is that the supply dries up, as it did with housing, and the system stagnates.
It is universally accepted that the system will not continue without some sustenance. I acknowledge the hon. Gentleman's point—his only point—that the Conservative party has failed to grasp that nettle despite the fact that it has been in power for so many years. Minister after Minister felt that to act without the agreement of all sides of the industry would simply be stirring up a hornets' nest, which is not something that Ministers like to do.
Not long after I succeeded the hon. Member for Edinburgh, East as Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food in 1979, the Northfield report came to the Government for an answer. The then Minister—the noble Lord Walker—was very nervous of the whole subject. He felt that the problems of the agricultural world were similar to those of the housing world. I tried to persuade him that that was not so and that tenants did not feel the same about their landlords as housing tenants felt for the Rachmans of the day.
In a debate in another place, the noble Marquess of Hertford described the status of landlord as having an "aroma of sulphur"—an apt description. Those of us who have been tenant farmers recognise that, to a large extent, one's prosperity depends on the amount of rent that one has to pay. I observed that no sooner had my farm begun to prosper than the landlord would collect an extra slice of rent every three years, which put one back to where one started. Matters such as capital investment, plant and drainage were constantly negotiated and those negotiations were crucial to the business.
If one recognises that the return from owning agricultural land is tiny, even at today's much increased rents, and that the opportunities to find capital to buy land are extremely limited, one can well see the merits of a system that divides the owning of land from farming it. That is why we had such a strong and prosperous landlord-tenant relationship for so many years, with landlords minding their landowning business and tenants getting on with farming. I accept that the cost of equipment in a modern milking parlour, probably installed by the tenant, runs into tens if not hundreds of thousands of pounds and does not compare with the elementary equipment that farming required only 50 years ago. Substantial changes have been made, but there is no reason why there should not be a free market.
The Agriculture Act 1947 spelt the beginning of the end and the 1948 and 1976 Acts made matters worse. Landlords have lost their land for three generations. If a landlord signed a lease under the 1976 Act, he could say goodbye to his land for his lifetime and probably that of his sons. There is no need for such contracts, which should be an agreement between a willing landlord and a willing tenant. Historically, that was so, but the Acts of 1947, 1948 and 1976 were all retrospective and imposed new conditions on contracts that had been freely entered into.
If I were on the Standing Committee of this Bill—I sincerely hope that I shall not be—I would table amendments proposing that those who signed leases under those Acts should no longer be subject to retrospection. For example, if a tenancy was held before 1947 between a willing landlord and a willing tenant, the tenant knew that he would have short-term notice, different rent reviews and other conditions, but the Government of the day altered such contracts and then altered them again in 1976. If a landlord and tenant have signed a contract under the 1976 Act, that is between a willing landlord and a willing tenant. The Bill is an opportunity to remove retrospection from the agricultural landlord and tenant relationship.
If someone owns an office block as an investment, it is worth much more when it is let than when it is empty, but precisely the opposite is true of a farm, which is worth twice as much with vacant possession as it is with a tenant. I hope that my right hon. Friend the Minister will be in his position for many years to come and will swiftly give further thought to how he might progress the improvement of the landlord and tenant system. He will not succeed until a let farm is worth more than a vacant farm; that position prevailed until 1947 and we should seek to return to it. We have succeeded in doing so in housing and we must work towards that in farming.
Many benefits derive from freedom of movement. The hon. Member for Edinburgh, East admits that the only benefit in his proposal is that he has "locked in"—those were his words—a number of tenants. I see no benefit whatever in that.
The Bill is a small acknowledgement of the fact that the various interested parties have managed to agree. I referred to the Leasehold Reform Act 1967, which I voted against, as the Building Societies (Robin Hood) Act. If ever the Robin Hood principle applied, it applied to the landlord and tenant system in the agricultural world: rob the rich and give the proceeds to the poor. It is no longer entirely that way round, because many tenants have had a good deal. For a small percentage of the capital cost of the land, they have been able to rent that land, sometimes for many years, but now they are unwilling to give up their position and they scream their heads off at the thought of some justice being returned to the system. They argue that they have invested a lot in their farms. That is fair enough, but provisions for tenants' and landlords' rights are well established. I shall discuss landlords' rights in a moment.
I am delighted to see that, in the short term, leases that will be available under the Bill will include a definition of "tenant right". The important point is that the improvements concerned will be made only with the landlord's approval. Tenants have sometimes been able to improve their farms without permission but. on termination of the tenancy, Iandlords have had to find a substantial sum to pay to the tenant. That did not encourage movement.
I see my hon. Friend the Member for Stroud (Mr. Knapman) nodding. He is an expert in those matters.
I strongly welcome the inclusion in the Bill of written agreements, which are essential. In my long experience of misunderstandings between landlord and tenants and affairs of the countryside, agents or landlords often cannot remember having said that a tenant could make certain changes. When it is the other way round, nor does the tenant. I welcome the definition in the Bill that those agreements must be in writing. I foresee a majority of those agreements being fairly short term to start with. Landlords will tread warily, and I do not blame them for doing so. They will gradually gain confidence in their new tenants. I take the point that they may be old tenants with expanded farms. The law can do nothing to prevent that. It is surely the landlord's right to let his farm to whom he wishes. A great deal of nonsense is spoken about new entrants into agriculture. Few businesses of substance today allow new entrants to start with little money or experience and become their own masters overnight, yet for some reason people say that newcomers have the right to enter agriculture. It is a lovely theory but in practice it should be examined in today's scene, where high capital, high technology and education are more important than ever before.
I entirely endorse the view of my hon. Friend the Member for Salisbury (Mr. Key). County council smallholdings—I call them that because that is what the relevant legislation is entitled—are an anachronism of the past.
If the hon. Member for Hemsworth (Mr. Enright), who shakes his head, were to go to the Library and examine the annual report, he would discover that hundreds of millions of pounds of public money are tied up in county council smallholdings, all of which could be sold tomorrow to their tenants or at an equivalent tenanted price. County councils such as Somerset, where I live although my constituency is elsewhere, have thousands of acres of county council smallholdings yet bleat that they must make cuts in education. They had an opportunity to sell those, and they should be sold to their tenants. When the hon. Gentleman reads the bottom line, as he no doubt will, he will be astonished to discover how few new tenancies are being created. The capital and running costs of county council smallholdings are a scandal that should be exposed.
Is my hon. Friend aware that the Agriculture (Miscellaneous Provisions) Act 1976, passed when the hon. Member for Edinburgh, East (Dr. Strang) was on the Front Bench, specifically excluded county council smallholdings because they needed mobility of tenants, and the right to tenancy succession was not given?
I would hate to be reminded of all the aspects of that long—I was going to say "friendly"—tussle. It was not friendly at all. It was hard-fought legislation, imposed, if I recall, in the absence of the Minister. The Parliamentary Secretary picked up the torch and ran with it, to the eternal pleasure of his socialist friends and to disastrous effect throughout the system.
We have new complexities and new complications. Quotas have rightly been mentioned. They are a highly important and emotional subject, but I would say to the farming community that they came out of the blue, that they have acquired a value and that they may go back into the blue. It is the Government's avowed policy, in many cases, to get rid of quotas. Nevertheless, one or two of my friends retired upon selling their quota, and if I had 1 million litres of milk quota and someone offered me 60p a litre for it, I too would retire. It is extraordinary how those things have come from nowhere.
The premium paid for sheep on the higher land now runs into substantial sums of money, and quite small flocks can fetch tens of thousands of pounds because they are eligible for the sheep premium.
My hon. Friend mentions quotas. Given the debate about farmers retiring on the basis of their quota, does he agree that what Governments give, Governments can take away, and that, although quotas may be worth something today, if the quota system ended tomorrow those quotas would be worth nothing?
I was trying to say that, and my hon. Friend put it in much more succinct language.
That presents a problem for the landlord and tenant system. Let us take as an example the less-favoured areas ewe premium. A farm—probably an extensive farm—at a high level that did not attract that premium would find it hard to make a profit, hut, if the previous tenant has sold that quota, either the landlord or the new tenant will have to buy it back, and we are getting into extraordinarily large sums of capital. I do not know the simple solution to that, because in Europe and in Brussels the excellent way in which our system operates is not recognised, which is a great pity. I know that it causes my right hon. Friend the Minister problems. Perhaps when he replies he will say a word or two about the way in which that is to be tackled.
I strongly welcome the recognition, at long last, that there is merit in tax relief on let land. I wish only that we had been sensible enough to have introduced that many years ago, but I understand that it will apply only to land let after 1 September under the terms of the Bill—which by then I hope will be an Act—and to land that continues to be tenanted as a result of the succession provisions. I would go further, and say that, if there is merit in a family farm, which indeed there is, there is certainly merit in a family landlord letting his land, provided that the land is let. I think that that is perfectly reasonable.
As long as hon. Members on the Opposition Front Bench do not give an absolute statement of their intentions, there will be no confidence in the agricultural industry to employ the terms of the Bill, and the hon. Member for Edinburgh, East knows that, because he well knows what happened under the Agriculture (Amendment) Act 1984, which I voted against.
I was the only Conservative to vote against that Bill because it did not go far enough. I said that the Bill would not work, and my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), who has just left the Chamber, the then Minister, said, "Ah, but there will be new tenancies because the Country Landowners Association has promised me that there will be." I wonder how many there have been; perhaps a handful. I will bet that there have been fewer than 100.
Unless there is confidence—unless the landlord can return to the free and open possession of his own land at some definable period in the not too distant future, under the terms of a contract freely and willingly entered into with a tenant—the landlord will opt to keep his own land, use some other legal device or in some way seek to avoid the penal provisions of security of tenure.
I know that the hon. Member for Edinburgh, East has some responsibility for that matter, and at some time he will have to make that statement if he wishes the Bill to work. Given the agreement in the industry, I plead with him not to delay making that statement too long. We should not waste our time in the House with legislation that will take some time in Committee and on Report and so on, only to find that, in practice, it is destroyed as a result of a lack of confidence.
If the hon. Member for Edinburgh, East believes in the system, I hope that he will say so, and that he will at least give an assurance that contracts made under the Act-to-be will not be dishonoured by a future Labour Administration.
I am not a farmer. I do not declare an interest, but I have lived all my life surrounded by the working countryside. My present home is surrounded by tenanted farms—both by Cornwall county council's smallholdings and by Duchy of Cornwall farms.
In the past few weeks, I have been to Scotland, to Wales, to all parts of England and of course in the Celtic country of Cornwall, and I have met tenants in all parts of the kingdom.
Although the Bill is extremely important, it is only part of a three-pronged approach that must be adopted by the Ministry of Agriculture, Fisheries and Food, and by the Government generally, if opportunities for new entrants are to increase and if a healthy tenanted sector is to be maintained and expanded to everyone's benefit.
The approach that must be adopted is, if you like, Madam Deputy Speaker, a three-legged stool. First, we need the end of tax discrimination. I shall discuss that in a moment.
Secondly, we obviously need the maintenance of a flourishing county farm estate. In the light of what the hon. Members for Weston-super-Mare (Sir J. Wiggin) and for Salisbury (Mr. Key) said, it is a key part of the tenanted sector. I believe that it could play a much better part in future, if it returns to its original function of being a first rung on the tenanted ladder—the first rung of the farming ladder—instead of being the only rung that some tenants have found themselves able to get on to.
Thirdly—the subject of the Bill before the House—we need a legal framework that both potential landlords and potential tenants accept is reasonable, acceptable and likely to remain permanent. I shall return to the argument made by the hon. Member for Weston-super-Mare in a moment.
Those are the three elements that the sector requires to retain confidence.
The hon. Gentleman describes the county council holdings system as the first rung on the ladder. Can he give some evidence, from his own county or the Duchy of Cornwall, of the number of farmers who have left county council smallholdings to move on to other, larger, tenancies? We do not appear to be hearing much about that.
I am grateful to the hon. Gentleman for making my argument for me. The Bill is important precisely because smallholding tenants on county farms do not have an opportunity to move on to other tenancies. I think that he and I would recognise that the Bill will make it possible for tenancies to be loosened up in future. However, if we simply sell all the smallholdings to their tenants, or if the pressure on the county councils' budgets forces them to dispose of their holdings outright in the open market, the first rung of the ladder is removed. It is not an argument for strengthening the second rung of the ladder if one removes the first one.
It is obvious throughout southern Britain, where I have some experience, that it would be a disaster for the tenanted sector if county councils were forced by Whitehall to sell their prize possessions, especially when they may not be able to obtain the best of prices for them, as a result of local government reorganisation or budgetary restraint. The pressure on the other tenancies would put the system in an impossible position.
On county council smallholdings, will the hon. Gentleman give us some evidence that county council tenants on smallholdings have moved to larger tenancies?
In the county of Hampshire, there have been plenty of new lets of agricultural holdings. We also used to have a county Council land settlement. The county council, in its wisdom, eventually sold that settlement—most of it to the sitting tenants, because there was no evidence that any of the tenants of those land settlement holdings were moving anywhere. They were very happy and cosy doing what they were good at, but they had no intention of moving elsewhere. It was not the first rung on a ladder, but a first rung to nowhere. They were content to stay where they were.
I cannot speak with authority about Hampshire. In any event, it would be wrong for me to spend too much time on the issue that the hon. Gentleman raised. I have, however, met the county land agents for seven of the south-west counties. It is because they recognise that it is difficult to move from the first rung on to the second that they support the Bill. If Conservative Members think that the work that the agents are doing is wrong and that the agents' values and judgments are wrong, they should reflect that those professional advisers support the Bill, as I do.
The second leg of my three-legged stool is the tax treatment of tenanted land. As a member of the Committee that considered the Finance Bill in 1992, I moved an amendment which seems now to be remarkably close to the change that the Government seek to introduce by means of the current Finance Bill. The Minister, in urging his hon. Friends to reject my amendment, said:
If agricultural landlords were to benefit from 100 per cent. relief there would be ensuing pressure from other landlords for similar treatment and if 100 per cent. relief from inheritance tax were extended to other landlords, it would increase pressure for their businesses to be treated as qualifying for trading reliefs from other taxes. To extend trading reliefs to all landlords throughout the tax system would cost hundreds of millions of pounds."—[Official Report, Standing Committee B, 30 June 1992; c. 422.]
Of course, but we were not asking for that. When my hon. Friends and I pressed the amendment to a Division, all the Conservative members of the Committee voted it down.
Tonight, Conservative Members come before us as converted sinners. I welcome them aboard. I wish only that we could be sure that the tax distortion that has been built into the system for so long can be completely removed. It would be good to find in future that land, whether owner occupied or in tenancy, was treated in a non-discriminatory manner in terms of inheritance tax.
The third leg of my milking stool is that the Bill produces a new legal framework. It is pleasant, for once, to be able to welcome a Bill that is both sensible and progressive. Given the Government's record of unwanted and unnecessary legislation, it is encouraging to welcome a Bill that has widespread support in the industry. Indeed, it derives its parentage far more from the working group of all the interested parties—the Country Landowners Association, the National Farmers Union, the young farmers' groups and, most important of all, the Tenant Farmers Association—than from the Ministry. Perhaps it would be fair to say that the Ministry had washed its hands of trying to find an acceptable formula. It should be said that the persistent work of the organisations to which I referred achieved an important consensus.
It is worth noting that the TFA says firmly that it believes that the Bill is a major step towards the revival of tenanted farms. The Royal Institute of Chartered Surveyors, in undertaking a survey last year, considered the possible effect of the Bill. It projected that about 1 million acres would be let for five years or more soon after the Bill came into force, if it were enacted. It foresaw that over half of that land would be let for periods of 10 years or more and that more than 1,000 fully equipped farms and over 3,000 blocks of bare land would provide opportunities for new entrants, for farmers and for businesses to engage in restructuring, with better security and lower capital overheads, because it would not be necessary to buy expensive land to enable them to expand. That does not square with the nightmare scenario that the hon. Member for Edinburgh, East (Dr. Strang) was describing a short while ago.
The TFA endorses that view. In giving a warm welcome to the Bill, it states:
The tenanted sector is the traditional way into the industry for those with skill and energy but who cannot afford to buy land. Yet it has been in steady decline for reasons which include owners' fears that any letting could create life tenancies under present legislation and tax discrimination against letting land. Almost no land is now freshly let on full tenancies under the present law. Agriculture, facing economic and political pressures, needs the business flexibility that a free tenancy market can give for it to remain competitive; paying a rent rather than having to buy high priced land.
It is clear that there will be continuing difficulties if we make no changes to the law. It is equally clear that in Committee we must be careful about the way in which the detailed provisions of the Bill operate, especially as regards compensation—I have noted the arguments advanced about compensation for quota, which will be extremely difficult to calculate in the current speculative environment that is being suffered by the milk industry—and to ensure that we have the best possible arrangements for arbitration. I am confident that we have a good legal framework, which is a good basis on which to make progress. I am equally sure that it will be extremely important to deal with some of the concerns that tenants are already expressing about some detailed provisions.
I think that it was the hon. Member for Weston-super-Mare who referred to tenant right. There are still some problems about that, which have not been resolved. They were explored in another place, but they still require some definition. It is extremely important that the approach that is taken to the issue should follow the amendment to clause 17 that was put before the other place. I hope that it will be possible to identify specific exceptions to the general rule where consent is required for compensation.
For example, it is difficult to obtain specific consent from a landlord at each stage of the growing of annual crops, but that may be extremely important when it comes to compensation. The same can be said of pasture and beneficial acts of husbandry, which can add to the value of a farm but may not be appropriate for specific consent from the landlord. Similarly, there is the liming of land and the application to land of purchased manures and fertilisers.
In the normal yearly management and husbandry of a farm, there are elements that can add greatly to the value of the holding, and they must be taken into account when it comes to compensation. Tenant right will require some attention in Committee.
The fly in the ointment must be the attitude of Her Majesty's Opposition. I understand from the Opposition's press release that their spokesman in this place takes a different view from their spokesman in another place. It was evident from the way in which Lord Carter approached the Bill's provisions that he regarded the measure as a sensible framework for reform. He made a positive contribution to the debates upon the Bill, as one would expect. He has great practical experience of agriculture. He did not divide the other place on any of the principles underlying the Bill.
That being so, the issues to which the hon. Member for Edinburgh, East referred this afternoon and in his press release require some attention. I do not propose to analyse them myself. Instead, I shall take advantage of the work of the TFA. After all, it is members of that association who will be affected by the Bill. The TFA has, point by point, rebutted the objections of the hon. Member for Edinburgh, East to the Bill.
Labour suggests that the Bill will end security of tenure for tenant farmers. That is not true. It is absurd to frighten people by suggesting that that is the position.
I have already responded to that issue. I explained in answer to an intervention that I was talking about new tenancies under the proposed legislation, not existing tenancies. There will be a voluntary contract and no statutory right, as the hon. Gentleman will understand.
I heard the hon. Gentleman's explanation. However, I have had the benefit of re-reading his press release. Having done so, it is far from clear that what he says is the position. It is important that we take the TFA's views into account. There is a good case for saying that without this legislation, the position of tenants would be increasingly difficult.
In his press statement, the hon. Member for Edinburgh, East said that the Bill would mean the end of tenanted family farms, but the TFA rebuts that too, saying firmly that that is not expected to be the case. Through the freeing up of tenancies, many farmers will be provided with the flexibility that they need to cope with the radical changes that lie ahead for British farming.
The Labour press statement says that the Bill will cause a free-for-all and the fragmentation of many farms. But there is no empirical evidence to suggest that that would be the case. The TFA points out that economic pressures have caused that to happen. Those pressures include tax regimes, and local authority holdings and other big estates have been pressured to the point that they find it impossible to maintain their tenancies, and they have—when the opportunity has arisen—sold.
Labour's amendment in the other place, which insisted on long-term protection for farms with a dwelling, was not pressed because it became perfectly apparent to anyone with practical and realistic common sense that, if such a measure were introduced, Iandowners would simply avoid the burden by hiving off farmhouses, treating them separately and finding tenants who did not need the farmhouse. The so-called residential farm business tenancy was originally proposed by the noble Lord Carter, but he sensibly backed off because he had experience of the practical realities.
I did not understand what the hon. Member for Edinburgh, East said about the breaking up of holdings, or that holdings would just become larger rather than there being more of them. There is no suggestion that that would be the case, unless his own amendment on residential farm business tenancies was pursued. In that case, there would undoubtedly be a tendency to break up holdings.
I said earlier that there may have been a case for addressing the point to which the hon. Gentleman refers, but clearly if one does—this is a fair point, which the Country Landowners Association made in its briefing for the debate—one must do it in a way that will not achieve the outcome that the hon. Gentleman is suggesting; that is, encouraging the splitting of the farmhouse away from the holding. I thought that there was a consensus in the House that we should seek to discourage the breaking up of farms, which the hon. Gentleman will be aware is happening throughout the country, including in Cornwall.
I am again grateful to the hon. Gentleman for clarifying that point. If he does not press the probing amendment in this House, as his colleagues did in the other place, I shall be only too pleased. The amendment would have precisely the effect that I identified. It would tend to encourage the break-up of holdings, rather than their consolidation.
I hope that at end of the debate—not necessarily this evening's debate, but the debate during the whole process of the Bill—there will be consensus. The part of the agriculture industry with which we are dealing needs some long-term confidence and some real appreciation that the political system has reached a consensus about the way in which it is tackling what is undoubtedly a difficult problem. I hope that the Opposition spokesman who winds up will come clean and say whether they would seek to repeal the legislation should they ever come to government. For our part, I and my Liberal Democrat colleagues would wish to reach a point with this legislation at which it is not required to be torn up and thrown out of the window again, and we would wish to build on it, to make progress in the future.
Before the hon. Gentleman comes to his peroration, may I say that I have been able to obtain figures on county council smallholdings, which may be of interest to him? In the county of Cornwall, there are no less than 4,600 hectares of land, where there are 167 tenants. In the year before last, nine new tenancies were granted. In the country as a whole, out of 5,000 tenants, only 125 new tenancies were granted. There is public investment, however, in over 133,000 hectares of land. Surely that is not showing a first step on the ladder. It is simply showing that the concept is completely out of date. I hope that the Liberal Democrats will join us in seeking to destroy such a system.
The hon. Gentleman has proved my point. He obviously did not listen to what I said—perhaps he was studying the figures. It is because there has not been a second or third rung of the ladder that the tenanted sector has seized up in recent years. That is why I support the Bill. I thought that the hon. Gentleman would be pleased that I am supporting it.
It is not the fault of a bottom rung of a ladder that there is no way up after it. The hon. Gentleman and I may agree that, for a number of reasons which we have been discussing, we have not been able to free up other rungs of the ladder. That is why the land agents responsible for the county estates right through southern Britain are convinced that the legislation is important. They are convinced that we must get it right, and that it is extremely important that we have a political consensus. We can then give everybody confidence that they can get off the bottom rung and move up. The last thing that we want to do is to remove the bottom rung, as that would not help one little bit.
That is the first leg of my three-legged stool. The second leg is tax discrimination. I hope that the Minister will be able to explain why that is limited in its present format, as the logic of the situation is that it should be extended throughout, as the hon. Member for Weston-super-Mare said earlier.
The third leg is that it is very important not only that the legislation reaches the statute book in its best possible form, but that we all make sure that there is no future threat by any potential Government to undo the work that we do with the Bill this Session. Retrospection is a very unhappy way to deal with such problems. It almost always results in injustice and diseconomy.
Naturally, members of the Committee will want to scrutinise all parts of the Bill and I am sure that hon. Members on both sides will wish to make sure that the legislation meets all the requirements, not just for 1995 but, I hope, for many years to come. I hope and trust that Labour Members, both here and in Committee, will adopt a positive attitude to the legislation, listen to those with practical experience of the industry—including the noble Lord Carter—and come round to accepting that, at a later stage, the Bill should be given fair wind on to the statute book.
It worries me greatly that the Government have the support of the Liberal Democrats on the Bill. However, I find the news release from the hon. Member for Edinburgh, East (Dr. Strang) far more predictable. It says that it is not for use before Monday 6 February 1996; when one has read it, one wants to change the year to 9996.
The hon. Member for Edinburgh, East sees this as an issue of social justice. It would be interesting to know just which subject the hon. Gentleman does not see as an issue of social justice. We did hear this afternoon that he was basing his argument on the highland land clearances. He also complained that the Bill would result in the fragmentation of farms, but that is exactly what has. been going on. It is precisely because the Agricultural Holdings Act 1948 and the Agriculture Act 1947 bear no relevance to the needs of today that we need the Ministry's five-year terms and other partnerships to get around the existing legislation. That is why we have the fragmentation of farms, and why so few tenancies are available for those who wish to enter the industry.
I turn from the press release of the hon. Member for Edinburgh, East to the real world, where the Bill has been welcomed by almost every body associated with the industry, including the Royal Institution of Chartered Surveyors, the Country Landowners Association and the Tenant Farmers Association. To get those groups to agree was not just good; it strikes me as a minor miracle. That was acknowledged very much in the other place, where there was acknowledged to be a wealth of expertise, and a number of valuable amendments were accepted.
My right hon. Friend the Minister has not said whether there is a wealth of expertise here, although I must claim to be one of the few Members who can understand the residual manurial values of farmyard manure. I do not know whether that constitutes expertise, but I am tempted to take a few minutes on the subject.
As someone who was obliged to study agricultural law at Cirencester agricultural college—which, 30 years ago, some people thought was an alternative to education—I am pleased to see lengthy and complicated legislation reduced to a Bill of just 31 pages. It is a change also to consider legislation that deals with people who live and work in the countryside—bearing in mind the fact that so many think that the countryside is the green bit that separates the towns and that it is there primarily for access by, and for the recreation of, townspeople.
The number of people who live and work in the country is declining. The Labour party should consider the fact that the Bill is responsible for that decline to some extent. We must restore and increase the number of available tenancies.
We all agree that the Agricultural Holdings Act 1948—I note what my hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin) said—is well out of date. It was probably appropriate for its time, although my hon. Friend would have trouble accepting that. It is interesting to look at the report of the Second Reading debate on the Agricultural Holdings Bill in 1948, which lasted for two minutes. The Solicitor-General begged to move the Second Reading motion and Major Legge-Bourke of the Isle of Ely said:
I think that hon. Members on this side of the House would like to say that we are grateful to the Government for this Bill".—[Official Report, 16 July 1948; Vol. 453, c. 1659.]
Hon. Members were commendably brief on that occasion and I shall try not to trespass too much on the time of the House on this.
What was right in 1948 is certainly not appropriate now. Some Opposition Members cannot come to terms with revising clause IV, let alone revising the 1947 and 1948 legislation. At that time, circumstances were very different and the policy behind the Act was that Britain should not be caught out again and that we should not be short of food after the war. Convoys had saved us from defeat in the war and there was no post-war food surplus. Every effort was made to increase production.
In those circumstances, tenants were encouraged to rent smallholdings and to have county council smallholdings. The county council smallholdings—I think that the hon. Member for North Cornwall (Mr. Tyler) said this—were supposed to be the first rung on the ladder. However, once people got to the first rung of the ladder, they found it very comfortable and stayed there for ever. In any case, as a result of the prescriptive Agricultural Holdings Act 1948, when people reached the first rung of the ladder they looked up, to see that the other rungs had been sawn away because no one was letting larger areas of land.
That was the view in 1948. I think it was probably Charles Dickens—I may be misquoting him—who observed that any man who could make two ears of corn or two blades of grass grow where only one grew before deserves more from mankind than the whole race of politicians put together; but then Dickens did not live in the enlightened age of the common agricultural policy and the common fisheries policy.
I thank my hon. Friend for giving way and for pinching the quotation that I intended to make in my speech. However, I must correct him: the quotation is by Jonathan Swift from "Gulliver's Travels". My hon. Friend has saved me a couple of minutes in my speech.
Bearing in mind the fact that, first, I have credited the quotation to the wrong person and, secondly, I am not certain that I have the quotation correct, I think it is incumbent on my hon. Friend to set it right at an appropriate time.
The recent announcement by my right hon. and learned Friend the Chancellor about inheritance tax on let land will ensure that the Bill is more effective. I could quote at some length from an unusually supportive leader in last week's Farmers' Weekly, which said that the massive boost to the tenanted farm sector
has been heralded as the beginning of a new era by the Country Landowners Association and as a powerful boost to the tenanted sector by the Tenant Farmers Association".
I agree that that will not convince the hon. Member for Edinburgh, East, who is more concerned about highland land clearances. The article says:
They speak for the whole industry in predicting that this important new tax break will encourage more owners to offer land for letting. In doing so they will ensure the success of the new farm business tenancy agreements which take effect this September.
It should also encourage landlords to increase the length of new tenures because the tax implications of sudden death are less severe".
I hope that that is correct, but it will depend to some extent on whether the Inland Revenue can be prevailed upon not to offer too narrow an interpretation of what constitutes agricultural let land.
The 1948 Act was extremely complex and it led to a lawyers' beanfeast in later years—but I suppose that most legislation does. That was especially so of the Agriculture (Miscellaneous Provisions) Act 1976, to which my hon. Friend the Member for Weston-super-Mare referred—it seems to be engraved on his memory—and the three generations of succession provision. After a number of years, it was obvious that landlords were becoming increasingly reluctant to rent land. One needs a certain amount of confidence to rent out land; one must be prepared to accept that land may be let for up to three generations and that, during that time, its asset value will be half that under vacant possession.
As a result, there were virtually no traditional lettings of agricultural land, which benefited no one. I had the privilege of visiting the Smithfield show the December before last and I spoke to a leading agent who managed hundreds of thousands of acres of land. I asked him how much traditional tenancy land remained and he looked at me as though I were joking. No one does that sort of thing any more.
I must declare, rather late in the day, an interest in the debate. I am a partner in a small firm of land agents which is unsuccessful, first, because my partner is of advanced age; secondly, because he is over-fond of salmon fishing; thirdly, because he is fond of his own woodlands; and, fourthly, possibly because I spend so much time in this place. It was the only firm of chartered surveyors and land agents that was not the subject of a takeover bid during the boom years of the 1980s.
We managed to survive despite the fact there were few traditional tenancies on offer—I think that my right hon. Friend the Minister of State suggested that the figure was 10 per cent., but I thought that the Royal Institution of Chartered Surveyors had said the figure was only 6 per cent. Whatever the figure is, it is very small. Of the total, 3 per cent. is let to existing tenants or their relations and only 3 per cent. is let to what might be termed "outsiders".
I must tell those hon. Members who would vote against the Bill that that amounts to stagnation of the industry. The average farmer is now older than 50—although I have reached the stage of life where I do not consider that to be particularly old. All hon. Members should accept that the original purpose of the 1948 Act—to provide security of tenure—may have been sound, but, sadly, it has had precisely the opposite effect. As the hon. Member for Edinburgh, East was speaking, it occurred to me that there is no security if there is no tenancy available. That is the point to which the present legislation has brought us.
All those involved in the industry have known for many years that something is wrong. The National Farmers Union of England and Wales, the Country Landowners Association and the Tenant Farmers Association know that there is not a healthy balance between letting and owner-occupation. Even the National Union of Agricultural Workers, which the hon. Member for Edinburgh, East mentioned, must have suspected that something was wrong when it suddenly had so few members that it was obliged to merge with a larger union. I hope that, even at this late stage, the hon. Gentleman will try to appreciate the industry's problems.
I shall not mention the authorship of any quotation on this occasion. Surely one reason why the tenanted sector has dried up is the enormous extent of distortion because the industry is heavily subsidised and enjoys all manner of Government support. One reason why landlords were not prepared to let farms was that they could make much more money farming land in hand than they could letting to tenants. That is why landlords tended to take farms in hand whenever the opportunity arose.
I agree with my hon. Friend that most landlords go through that stage of thinking. It is only when they have the privilege of meeting several different managers—some better than others—that they go off the idea. Theoretically, Iand in hand should show a better return than tenanted land. I believe that landowners—and the Church Commissioners—want to continue with the traditional letting of land, provided they are satisfied that they can, at a reasonable stage, have vacant possession. That seems to be the guiding principle of most professional land agents and surveyors.
I have mentioned on numerous occasions the complexity of the 1948 Act, and I wonder whether my hon. Friend the Minister of State has thought about ensuring that we do not enter another minefield. There have been many cases of "horseyculture"—the letting of agricultural land for use by horses. If we mean to encourage extensification and diversification, we must be sure that any farm business tenancy can include letting to horses without the protracted rigmarole that occurred in the courts some years ago.
The horse can do many things, but I agree that it cannot sign anything. However, perhaps my hon. Friend will satisfy even me on that point in due course.
The popularity of litigation linked to the 1948 Act was second only to divorce at the time. Most cases revolved around what was a short let and an agricultural tenancy. There was a great deal at stake, which is why we were relieved when Gladstone v. Bower seemed to settle matters once and for all, albeit in the short term—which the hon. Member for Edinburgh, East should not like. Many cases were based on the various notices that had to be served one or two months before the end of a tenancy.
There is no end to it. One must constantly check one's professional indemnity insurance to ensure that such notices have been served in time. Even then, there have been court cases disputing the validity of such notices. Estates Gazette has been clogged with reports of such cases for nearly half a century. I hope that will end under the new legislation.
I must enter a caveat. Although I greatly welcome the Bill's brevity of 31 pages, compared with the 1947 and 1948 Acts, we must ensure that the brevity of contracts is not balanced by the complexity of valuation clauses and custom, where appropriate. The shorter the tenancy, the more likely it is that the contract will be silent—and where agreements are silent, we need a clear indication of the code of practice, which I understand is being prepared by the Royal Institution of Chartered Surveyors. In short, we must not generate more legal action based on the new legislation.
The hon. Member for Edinburgh, East took the House on a little history tour, and I agree with some of his points. If a farmer died in July or August in the 19th century, it was unfortunate, not just because he was severely short of breath but because one was not in a position to harvest his crops—and had no right to harvest them. Whatever was planted or attached to the soil remained with the soil. In Latin, as my hon. Friend the Minister will know, that is
quic quid plantatur solo, solo cedit.
If someone had the misfortune to die in July, having gone to all the bother of planting the corn, no claim could be made once the crop was ready for harvesting. It was obviously necessary to introduce legislation, and that dated mainly—although not exclusively, despite our briefing—from 1875.
The initial legislation was based primarily not so much on security of tenure, which so concerns the hon. Member for Edinburgh, East, as on equity between landlord and tenant in terms of the value of crops—particularly at the end of a tenancy. That is where the hon. Gentleman goes wrong. If he said that he was looking for equity between the two parties but would leave them to decide the contracts themselves, we would all he together. I am sorry that we are not.
My hon. Friend wants to see a contract freely entered into by the landlord and tenant. Is not the problem that, because we have not repealed the 1947 and 1948 Acts and others, the contract must be specified or one will appear as a result of the 1948 Act, for land let for more than two years? Something must be written into the Bill, unless we are prepared to repeal all the other legislation.
My hon. Friend is entirely right, which is why I mentioned the number of court cases to determine whether there was a grazing let or a full-blown tenancy. The financial rewards of winning a case that decided an agricultural tenancy were huge. One understands why so many people were tempted to suggest that they had a tenancy. It was an artificial form of legislation in the first place, and I hope that we can leave all that behind.
I thoroughly support the proposals of my right hon. Friend the Minister and his Front-Bench team, largely because my right hon. Friend made the point that the Bill will provide greater market flexibility and, I hope, opportunities for more tenancies. One recalls Disraeli's dictum of
lies, damned lies and statistics.
I like to think that 1 million extra acres will come on to the market, but I suspect that one could as easily make a case for 100,000 or 100 million acres. It is not that vast amounts of land will come on to the market as a result of the Bill, but it will release some extra land.
A broad-brush approach to compensation seems to be favoured. What is the status of the RICS guidance notes? Will they be ready and agreed when the Bill becomes law? It is rather important that they should be.
What part, if any, of the customs of the country will apply? If the Minister cannot tell me now, perhaps he will do so in Committee. Those customs are still important. Cornwall has a fairly clement climate—I am sorry to alliterate in such a way—and the Pennines have a rather harsher climate, especially currently. Their customs need to be retained wherever possible.
I am not clear in my own mind about the compensation provisions for relatively short-term lets. I hope that my right hon. Friend will take an interest—I am sure that he will—in the RICS's recommendations. For instance, it was traditional, under a 1947–48 tenancy, with, perhaps, a 200 acre heavy clay soil farm, to conclude that a proportion of the drains and ditches should be cleaned or cleared every year. There was more or less a seven-year term then, and it was thought reasonable that a tenant farmer should go around the farm. I am not sure that it is entirely equitable that a tenant with, perhaps, merely three years—in the Bill, it amounts to four—of farming should have the whole of that liability placed on him or her during that short tenancy. I am not sure that I have thought that matter through entirely—perhaps that is all too evident—but it should be borne in mind. We cannot place wholly on short-term tenancies—three to four-year terms—all the obligations laid on those tenants under the 1948 Act.
It was a pleasure recently to read an article in Estates Gazette, entitled "Implications of the Agricultural Tenancies Bill", written by Mr. Christopher Jessel of the
London firm of Farrer and Co. I am happy to give it publicity, bearing in mind the fact that it acts for a certain noble Lord in the west country who leases me my salmon fishing, which keeps me sane—although I appreciate that that might be a contentious observation. Mr. Jessel said:
There is, though, no provision in the Bill that would stop the landlord from restricting the use to pure agriculture if he wishes, although that will be reflected in the rent. If notices are not served (for example, where the tenant goes in on the basis of a handshake) and the character of the occupation changes, then it may become protected by the Landlord and Tenant Act.
In the past it has not usually mattered which protection has applied, so long as the tenant could claim some security, but this could become important in the future, for example, where someone is allowed to keep horses in a field in return for payment.
My hon. Friend the Minister of State mentioned some of the difficulties of horses, but I hope that he will take that point on board.
It is all very well for a parliamentary draftsman to say that all the improvements will be determined by the increase in the value of a holding. I have tried to imagine the increased value of a holding a good many times over the past 30 years or so and find that a somewhat theoretical guidance for any valuer.
Many of the extra bits of land that we all hope will come on to the market as a result of the proposed legislation will be 50, 100 or 200 acres of bare land. That is where the so-called "intangible improvements" envisaged by the Bill become most tempting to tenants; they may suddenly—particularly if there are enough acres—put in an application for an agricultural dwelling.
I can quite understand that whatever a tenant is going to spend should be returned on the appropriate basis at the end of the tenancy, but merely to obtain planning permission, and perhaps against the landlord's wishes? Is that the way in which we should proceed? If that is not my hon. Friend's intention, I should be pleased to hear him say no.
That is all well and good. One of the replies to a survey by the Royal Institution of Chartered Surveyors read:
We consider that if the present proposals for new farm business tenancies go through unaltered, then no landlord could be advised to let a farm to a tenant under any circumstances".
The reason is quite simple. It is proposed that a farm business tenant may carry out improvements without the landlord's consent, for which the landlord will be liable to pay at the end of the tenancy. This amounts to writing a blank cheque to the tenant when he moves, and no landlord could possibly be advised to take the risk. I am not alone in that opinion, and I think that the Government is so anxious to put through a consensus agreement that the point has not been addressed.
I am sure that that point has been addressed, but that is the fear of some people. I hope that my hon. Friend the Minister of State will see that such concerns are resolved.
Despite all that, I am perfectly satisfied that this is an excellent Bill. It is long overdue, as my colleagues have pointed out. We need greater flexibility and a fresh supply of tenancies to come on to the market. It has been traditional in agriculture to rely on entry either through patrimony, matrimony or parsimony. I hope that my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) was not going to say this: patrimony and matrimony are still in fashion, but parsimony, sadly, is no longer enough. So huge are the amounts involved that it is just not possible, however parsimonious a person is, to save up enough money to get into farming on a vacant possession basis. The only way in which we can allow young farmers with limited capital behind them to get into farming is to increase the number of tenancies coming on to the market. That is what the Bill does. That is why I enthusiastically support all that my right hon. Friend the Minister proposes.
I am pleased to be able to make a contribution to the debate. A generation ago, my family were farmers. Indeed, if it were not for the fact that the farm occupied by my paternal grandfather was too small, I might today be a farmer myself.
In the 1930s, in Meirionnydd Nant Conwy, my father, like many others, faced the prospect of leaving the land because there was no room for him to farm. Not enough land was available for new tenancies. We heard today—and we are aware of it—that the percentage of let land has been in decline consistently since the beginning of the century. Indeed, in the 1900s, the figure was about 90 per cent., but, as we heard today, a recent survey showed that it is now 30 per cent. or less. The Minister mentioned that in his opening remarks.
Undoubtedly, legislation is necessary for several reasons. The present law on agriculture and agricultural holdings is complex and is contained in a plethora of statutes. I speak as a country solicitor who had substantial dealings with agriculture law. "Scammel on Agriculture" was actually read by lawyers in Meirionnydd, not simply used for pressing flowers. I also speak as one who has the honour to represent a constituency in which at least one in five families has some financial connection with the industry. Of course, farming is what gels the community together. Daily life in Ambridge is very much what it is in parts of my constituency, although the language used may be different. The farming community is the backbone of the rural economy. I realise that this is a Second Reading debate, and I cannot hope to cover all—or even most—of what I believe should be examined in Committee. I think, however, that hon. Members on both sides of the House will readily acknowledge the need to deal with the dramatic decline in the availability of land to new entrants.
I have argued for some time for the inheritance tax relief concession that has just been granted. It will make a substantial contribution, and I am pleased that the Treasury is to amend the Finance Bill to that effect. It will release many hundreds, if not thousands, of acres for letting at a stroke. The much-maligned Farmers Union of Wales, which was treated less than respectfully in another place, had campaigned for the move for some time; apparently it was entirely right in that regard, but wrong in others.
I attended the Royal Smithfield show with the hon. Member for Stroud (Mr. Knapman). He has already been corrected once or twice this evening, and I hope that we shall not fall out if I correct him again. I was with him, and the rest of the group, when we spoke to a partner in a large west country firm with, I believe, 25 or 30 branches. To the best of my recollection, he said that two or three full tenancies had been created out of several hundred, rather than none. That may be nitpicking, but—
The hospitality at the Smithfield show was generous, and I am prepared to accept that the figure may have been two or three rather than nil. I concede that I may have lost some of the argument.
I may not have lunched as well as the hon. Gentleman, but we will not go into that now. I meant no disrespect; suffice it to say that very few full tenancies were coming on line. No doubt the bulk of the tenancies that were created—I call them tenancies, although in strict legal parlance they are not—resulted from the Gladstone v. Bower agreements, which have already been mentioned. They have done nothing for agriculture, and I do not think that they have done anything for rural stability. They fell through because of an unfortunate judgment. I do not decry the judge concerned, but I think that they will become outmoded if the Bill is passed. That, in general, will be a welcome development.
Although it is beyond doubt that change is needed, if we want to give new entrants more opportunities we should consider a retirement scheme for farmers. For all its faults, the European Union has produced a mechanism for partial funding of such a scheme. Many farmers in my constituency, throughout Wales and beyond are in their mid-50s but cannot afford to think about retiring: the return on their investment has not been good, farming has had its ups and downs over the years and they have been able to put nothing aside. They will have no houses to live in once they leave their holdings, so they are in a difficult position.
The European Union perceived that difficulty, and sought to deal with it. The Government must reconsider; such a scheme would undoubtedly provide more opportunities for new entrants, and I feel that that is one of the main concerns of the Bill. The hon. Member for North Cornwall (Mr. Tyler) suggested a three-pronged milking-stool approach; this is one leg of that stool, which should he added to the inheritance tax exemption and the basic provisions of the Bill—some of which, at least, meet my approval. If we seriously wish to bring more people into the industry and to release more units of land, we should adopt the arrangements already adopted by the European Union.
The Bill is designed to deregulate the law governing agricultural holdings. The agreement to let land is essentially a contract between a willing landlord and a willing tenant, in which I consider equality of bargaining to be a key factor. I hope that, in freeing the legislation as they are, the Government are not thinking along the same lines as they were when they abolished some of the wages councils recently. The aim then was to allow employee and employer greater flexibility in the setting and agreeing of terms, but the only flexibility that I could see was the lowering of wages, as employers always had the right to pay more than the statutory minimum.
I fear that, similarly, agricultural landlords who are less than scrupulous will impose onerous terms on tenants who will be so desperate for land that they will accept those terms. I do not wish to create anxiety—I am trying to express an honest opinion on the basis of a little experience—but it is clear to me that there will be no equality of bargaining if that happens.
If a commodity is in short supply, a premium attaches to it. In this instance, the premium could manifest itself in unfair terms that would do nothing for individual tenants and even less for the industry as a whole. Let us not pretend that there will be true equality of bargaining. It follows logically, therefore, that we must build in safeguards for the weaker party in the negotiation—the tenant.
Rural stability and the future of our communities rely on a healthy and buoyant agriculture industry. I do not deny the need for incentives for landowners to let farms, but tenants must have enough security to enable them and their families to earn a decent living. Farming is at best an onerous and difficult task, and a balance must be struck between both parties; I believe that the Bill is the right vehicle for that balance.
The Farmers Union of Wales has mooted the idea of a working life tenancy lasting until the tenant reaches the age of 65. That is a halfway house between the 1986 system of successions and the complete so-called freedom of contract in the Bill; for reasons that I have already given, I challenge the phrase "freedom of contract". The idea of a working life tenancy is worth investigating, and deserves better than to be put down as it was in the other place. I hope that time will allow a full discussion of it in Committee.
If the Government do not accept the idea, as they may not, I think that there should be a minimum term. That will not drive a coach and horses through the purpose of the Bill. I respectfully suggest that a minimum term of 15 years with a right of renewal for, say, five years would deal with the problem of one-sided bargaining.
The hon. Gentleman said that he would comment on the views of the Farmers Union of Wales. Much has been made of the unanimity of support among landowners, tenants and other organisations. According to current reports, the union is alone in resisting the Bill. Is the hon. Gentleman speaking on behalf of the union or are his views his own? It would be useful for us to know which aspects the union does not like, so that we can deal with them in Committee.
With respect, I thought that I had made the position clear, but I shall do so again if it assists. The Farmers Union of Wales wants a lifetime tenancy until the tenant reaches the age of 65. That is an excellent idea, but I do not think for a moment that it will be realised. If I am on the Committee, I shall advocate a minimum term of, say, 15 years plus a renewal for five years. That would bring an element of stability and equalisation to the bargaining process. I do not know whether that assists the hon. Gentleman, but I thank him for raising the issue.
The second reason for some form of minimum term is that farming in general and animal husbandry in particular are long-term occupations. Years of careful development are needed to produce a good dairy herd or even a flock of upland sheep or cattle. No one can move in with a two-year agreement and expect to get anywhere. Further, it obviously takes time for a tenant to achieve a return on his investment. Many new entrants will have to borrow substantial sums from banks or lending institutions before they can purchase an item of equipment or stock.
Will banks queue up to lend a large capital sum to a new entrant whose only asset is perhaps a three-year or a five-year agreement? I do not think so. That matter was brought into clear focus by Lord Cledwyn of Penrhos in the other place. That may mean that the Bill will not assist the vast majority of family farmers, especially in Wales, or young entrants who are anxious to enter the industry and who see that opportunities are becoming fewer and farming is becoming totally impractical for them.
Alas, many youngsters have already voted with their feet. It is sad to note that the intake to agricultural colleges, particularly in north Wales, has been in sharp decline for the past five or six years. I suppose that that shows a lack of confidence in the industry.
I assure the House that the hon. Gentleman did not give me the black eye. He rightly spoke about the willingness or otherwise of banks to lend money to short-term tenants. Does he agree that a better criterion for bank lending would be the ability to repay the debt rather than the security offered? Does he further agree that banks are increasingly moving to that point of view?
I take the hon. Gentleman's point, but, traditionally, banks look at all sides. One matter to be looked at is the available equity, capital or collateral. Someone with a three-year agreement will not be entertained on that score. Perhaps he or she is exceptionally able. The applicant may have graduated with honours in agriculture or may come from Seale Hayne or some other college. However, we must remember that he has not been put to the test in that he has not been working as a farmer.
I should like to speak more positively but I am not making this up. I am reflecting what I hear and read every day in my constituency. No doubt there is some validity to what the hon. Gentleman says, but the length of the agreement is a telling feature.
Another important point is that in the Bill as it stands there will be no real security for farmers and their families. At the end of the term people will risk losing not only their businesses, however well they may have farmed, but their homes. That cannot be just or equitable on the verge of the 21st century. It is a backward step that is more in keeping with Victorian times.
There may be even fewer new entrants because the detail of the Bill may be tailor-made for expansion by established farmers. It will assist owner-occupiers with large farms who are looking for additional land so as to maximise profits. What will that do for the industry and for our communities? It is potentially damaging. I agree that the Bill contains important principles that are broadly acceptable to hon. Members in all parts of the House. But another recent measure which was heralded for its principles was the Child Support Act 1991. I do not think that I need to say any more. The Act has not worked out and has gone through a process of metamorphosis. It is still not right and many thousands of people in England and Wales are suffering because of it.
I hope that I am not putting forward too black a view, but I read with considerable interest the debates in the other place and note that there is a potentially serious environmental problem in the Bill. Short-term lets may lead to exploitation for short-term gain which would result in long-term detriment to the environment. Furthermore, in Wales there are three pilot areas for a scheme called Tir Cymen, which is similar to the farm stewardship scheme in England. Several schemes operate in my constituency and have been a great success. For example, there is heavy over-subscription for entry to the schemes. That typifies the environmental awareness of farmers who have been excellent and sympathetic custodians of the land for centuries.
Secondly, the modest sums that are available under these schemes are welcome in the current economic climate. The core point is that, typically, the schemes involve a 10-year cycle of works to be carried out. Many tenants in my constituency have signed up to them, but what is to become of such schemes in future if those tenants—I use the term loosely—have agreements that are for five years or less? I put that question to the previous Minister of Agriculture, Fisheries and Food on two occasions—once on the Floor of the House and once during a private discussion. I regret to say that I am still awaiting a reply.
The matter is important not simply for the tenants but more broadly for the environment. The mere fact that the Tir Cymen scheme and the stewardship schemes are so popular means that the point should be urgently addressed. If there is a prevalence of agreements with terms of five years or less many thousands of people will not be able to enter these environmentally sustainable and friendly schemes.
On Second Reading in the other place Lord Elis-Thomas said:
agricultural production and food production is an essential part of countryside management as is environmental and land management and the ensuring of countryside sustainability in environmental and landscape terms for future generations."—[Official Report, House of Lords, 28 November 1994; Vol. 559, c. 507–8.]
To that I say, "Hear, hear". No doubt in debates on the Bill the Government will be able to assure us that that point will be cleared up and that diversification in farming will not be hampered. That is also an important aspect, although it may not matter as much in my constituency because people who live on a mountain cannot start to grow coconuts. However, in many areas of England and Wales it is important. I hope that nothing in the Bill will stand in the way of further diversification because that is necessary. Something to that effect would be better in the Bill.
At a later stage I hope to develop the need for a written tenancy agreement in each case. Banks and lending institutions will be even less impressed if nothing is reduced to writing.
I remind the House of the provisions of the Solicitors Act 1974. I note that the hon. and learned Member for Montgomery (Mr. Carlile) is gazing in my direction. It is obviously to remind me to declare an interest as a country solicitor. The Act clearly states that agreements disposing of or dealing with an interest in land of more than three years' duration must be evidenced in writing and must be drawn up by solicitors. The Bill changes that responsibility, which will now be shared with the Royal Institution of Chartered Surveyors. I have read the debates in the other place, when the RICS was quoted almost as though there was no tomorrow. It is obviously in great favour with the Government. I am not sure why, but it is one of the flavours of the month. I want a uniform notice period of 12 months. That is a simple but sensible suggestion.
Hon. Members have mentioned council-owned smallholdings. There is a ridiculous anomaly in that set-up—it is that people aged 40 and over are automatically disbarred for applying for such a tenancy. I know of an experienced farmer who has moved into my constituency and applied for a tenancy. His wife works locally and his children go to the local school. He has been on the short list three times, but he is not being considered because he is 43. Being that age myself, I feel a little uneasy about such a provision. I sincerely believe that it should be reconsidered.
Quite astonishingly, the Bill does not contain a definition of the word "land". It is highly desirable to have such a definition in an agriculture Bill. The compensation provisions need further explanation and elucidation, especially regarding planning permission and the refusal of a landlord to grant that. In fairness, the Minister has said that there will be room for further discussion on that point and I am grateful for that.
Many other points arise and, no doubt, will be argued in due course. The authors of the Library research document say on the cover that farm tenancies will now be
in a similar position to business tenancies.
The Library is usually very good and I rely on it, but I regret to say that that is a complete misstatement. Nothing could be further from the truth. Farm tenancies are not in the same position as business tenancies.
As Lord Prys-Davies said on Second Reading in the other place, part II of the Landlord and Tenant Act 1954, which relates to general business tenancies, allows for an almost automatic renewal. This Bill does the opposite. He asked why a right of renewal would be available under the 1954 Act for a tenancy of a shop or an office, but will not be available to a tenant of a farm. I hope to raise that question in more detail in due course.
If the Bill is to be the panacea that it has been heralded to be, a great deal of detailed thinking and discussion will have to take place at a later stage.
I apologise for missing the earlier part of the hon. Gentleman's speech. As he has instructed me as counsel on numerous occasions over the years, I can testify to his expertise as a solicitor in drafting the sort of tenancies that we are discussing. Does he agree that the fiscal treatment of agricultural tenancies that the Government have announced needs careful examination? Welcome and necessary though it is to encourage tenancies by fiscal means, does he agree, from his experience as a solicitor, that if there is a danger that very short agricultural tenancies could be used as a way of evading inheritance tax that will dramatically push up the price of land and may make it more difficult for young entrants to come into the profession? Does he further agree that we need to consider a sophisticated means of ensuring that the fiscal provisions can work effectively?
I am grateful to the hon. and learned Gentleman for that view. I am sure that he is right. Indeed, I said earlier that I welcomed the fiscal amendment. I believe that there should be a minimum term. If there were, that would deal with the problem highlighted by the hon. and learned Gentleman. There could even be a sliding scale, which is not uncommon with fiscal arrangements. I have no doubt that we shall return to that matter in Committee.
The Government are deriving a great deal of misplaced comfort from the so-called industry agreement. The president of the National Farmers Union said recently:
As part of the deal the NFU will accept that there should be no provision for a minimum term.
The word "deal" is interesting. What is the deal? Will the NFU have two knighthoods a year instead of one? Time does not permit idle speculation, so we will have to speculate further about that outside the Chamber. However, I wonder whether it is a big deal. I do not know.
The Farmers Union of Wales is implacably opposed to the proposals and it wants a minimum term for the reasons that I have given. Many members of the NFU in Wales, Iancashire and Cumbria oppose the Bill on the simple ground that there needs to be a minimum period of tenure. The leadership of the NFU, having gone through the painful process of arguing with the membership, has reached some sort of consensus. However, when the Government say time and again that there is consensus in the industry, they are not really correct because a large percentage of NFU members have yet to agree. The whole of the FUW strongly disagrees with the Bill. Therefore, the argument continues.
If a reasonable minimum term were to be included in the Bill, that would not destroy its purpose of freeing up units. Common sense dictates that there is a great difference between tying up land for three generations and tying it up for 15 years. I am sure that such a provision would not drive a coach and horses through the raison d'être of the Bill.
Much of the Bill needs to be amended and strengthened, for the reasons that I have given. As it stands, the Bill is similar to the curate's egg—good in parts.
I join hon. Members on both sides of the House in welcoming the Bill. I note that two of my more experienced colleagues, the hon. Members for Weston-super-Mare (Sir J. Wiggin) and for Stroud (Mr. Knapman), who spoke very effectively, made the point that the one thing they did not want to do was serve on the Committee. They made one or two telling and difficult points that rendered them ineligible to sit on the Committee. I note that the Government Whip, my hon. Friend the Member for Leeds, North-East (Mr. Kirkhope) is shaking his head. Could I get away with saying that there is nothing that I would like more than to serve on the Committee? The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) said that he, too, would like to serve on the Committee. I am sure that my hon. Friend the Member for Leeds, North-East will have made a careful note of that and, no doubt, room will be found for the hon. Gentleman.
I welcome the Bill not only as someone who takes a personal interest in farming and agricultural matters, not only as a member of the Leicestershire and Rutland committee of the Country Landowners Association and not only as Member of Parliament for a rural constituency but as the Member of Parliament for the constituency of Harborough, where agriculture is practised by farmers who work both their own land and the land of others.
As occupants of the Chair will have heard earlier this evening, Mr. Deputy Speaker, the Bill has, I am happy to say, received the support of practically every organisation that has anything to do with agriculture. I am sorry that the hon. Member for Edinburgh, East (Dr. Strang) has apparently said that the Bill no longer has the support of the official Opposition Front-Bench team. It is out of step with all the people who have given the matter any thought.
I am also sorry that the hon. Member for Meirionnydd Nant Conwy has confirmed what I had heard before: that many Welsh tenant farmers are not as keen on the Bill as other farming practitioners in the rest of the United Kingdom. That is a pity. I hope that, if he is fortunate enough to be selected for the Committee, and I know that he has pressed hard to be selected, he will have an opportunity to listen to the arguments advanced by Conservative Members and, indeed, by Opposition Members who did not listen, or who listened to, but ignored, the arguments of the hon. Member for Edinburgh, East. I hope that the hon. Member for Meirionnydd Nant Conwy will support Committee members who support the Bill.
I support the Bill primarily because its general purpose is to encourage the letting of more farmland. That purpose is good and much to be welcomed, but I echo the words of warning that were uttered by my hon. Friend the Member for Stroud, and by people outside the House. We should not think that, if the Bill goes into law, acres and acres and acres of new let land will come on to the market—it will not. Some land will come on to the market. A lot more land than is now available to be let will be let, but a flood of new land, if I can mix my metaphors, will not become available.
A flood of new entrants will not come into the farming world as a result of the Bill. Of course, several new entrants will enter it—I hope that many of them will do so—but there will not be a great rush of landlords willing to open up their land to new young farmers in the way that we would all like to see. We are, however, making progress.
It is almost unnecessary to say this but I shall say it—the present law of agricultural tenancies is far too complicated; it has inhibited landowners from letting land; and it does not encourage them to do so. It serves neither landowners nor prospective tenants. If one considers the many Acts of Parliament which, in the past 150 years, have dealt with agricultural tenancies, one realises why that is so—they are all complicated. It took the half-hour speech of my hon. Friend the Member for Stroud to point out some of the more complicated aspects of landlord and tenant law in relation to farming tenancies. With the expertise that he has, he sought to explain the intricacies of the Agriculture Act 1947 and of the Agricultural Holdings Act 1948. Since 1948, numerous miscellaneous agricultural tenancy provisions, statutory instruments and Bills have been introduced and they have further complicated the whole question.
I should like to compare the present situation with that which pertained in the previous century. In doing so, I shall refer to some of the remarks that were made in another place by my noble Friend the Earl of Yarborough on 28 November 1994, in the Second Reading debate. During the course of his maiden speech to that House, he referred—I shall be referring rather than quoting, Mr. Deputy Speaker—to what life was like on the Yarborough estate in Lincolnshire not so many years ago. He said that things had changed considerably, even in the past 50 years. When his great-grandfather owned the estate, the written contracts of all employees stated that they were to attend church. Even up to more recent times, the lease required all farming employees to walk a hound puppy. That is an admirable clause to add to all farming tenancies. Coming from Harborough, where I am the happy Member of Parliament for three packs of fox hounds, I wish that that were still considered to be a perfectly normal thing to do.
The noble Earl went on to say that even his grandfather, the late Lord Yarborough, who did not die all that many years ago, had especially firm views on estate management. While reading the lesson in church one day, he quoted from St. Luke, chapter 2. When he got to the bit where the shepherds left their flocks to go in search of baby Jesus, he looked up at the congregation and exclaimed, "If they had been my shepherds, I would have sacked the lot of them." I think that things have changed a little. We have much to learn from the debates that took place in the other place just before Christmas.
One of the things that we can learn from the other place—here I criticise myself—is shown in the following example. On the evening of the Second Reading debate, the noble Viscount Hampden noted that 16 speeches had already been made in under two and a half hours—it was still only 5.45 pm. Even better, by 6.33 pm, the House had adjourned, having finished the Second Reading debate. Would that my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) were still in the Chamber to hear that the Jopling Committee's admonitions were taken more seriously in the other place than they are here.
Let me remind the House of one odd quirk that arose during the speech of my noble Friend Viscount Hampden. He told those listening to him and, indeed, it could be claimed that he told those who were not listening to him, that his grandfather was the only Member of Parliament to have been able to vote twice on the same Bill in a different House. He had voted against the Parliament Act 1911 as the Unionist Member for Brighton in the House of Commons. Then, on the death of his father, and as the successor to his title, he had whipped Upstairs or along the Corridor to vote against it again. We do things a little differently here, except in the case of the hon. and learned Member for Leicester, West (Mr. Janner), who we know succeeded his father, and in the case of my right hon. Friend the Member for Southend, West (Mr. Channon), who succeeded his father in that seat. Things in the other place are a little different from here.
Much is to be learnt about the Bill and its good sense from the debates that took place in the other place. As I said when I opened my few remarks, a great sense exists that this sector of agriculture is in decline. I am advised by the Tenant Farmers Association:
The tenanted sector is the traditional way into the industry for those with skill and energy but who cannot afford to buy land. Yet it has been in steady decline for reasons which include owners' fears that any letting could create life tenancies under present legislation and tax discrimination against letting land. Almost no land is now freshly let on full tenancies under the present law. Agriculture, facing major economic and political pressures, needs the business flexibility that a free tenancy market can give for it to remain competitive; paying a rent rather than having to buy high priced land.
It is regrettable that that is not the view of the Farmers Union of Wales. As I said earlier, I trust that the hon. Member for Meirionnydd Nant Conwy will be persuaded that he will have heard enough in the debate and in Committee to change his mind and to allow him to return to his constituency and to change the minds of the members of the Farmers Union of Wales.
The Tenant Farmers Association accepts the need for reform. Country landowners also accept it. As the hon. Member who opted on to the committee and who represents Leicestershire and Rutland, I should inform the House of the view of the Country Landowners Association on the Bill. It states:
Current agricultural holdings legislation serves neither landowners nor prospective tenants. It does not attract sufficient lettings, and the rented sector is in decline. In 1900, 90 per cent. of land was let. By the end of the 1980s, that figure had fallen below 35 per cent., and it continues to fall. Radical changes in the law are necessary to reverse this trend.
I yield to none in my admiration for the Country Landowners Association which is a magnificent body that represents its members' interests very well. However, does the hon. Gentleman really believe that it takes an impartial view and that it agonised before reaching a conclusion?
The hon. Gentleman's advocacy of rhubarb, which I greatly admire, is second to none. I am only sorry that he did not have time in his speech to commend Yorkshire rhubarb, something that he usually does when questioning any Minister on any subject. Of course the Country Landowners Association is self-evidently an association of those who own land—that is not a matter of controversy—but that does not mean that it is unsympathetic to, or careless of, the interests of all those who play a part in agriculture.
Does my hon. Friend agree that the intervention by the hon. Member for Hemsworth (Mr. Enright) was unworthy? It took considerable time and considerable courage on the part of all parties involved in the fanning industry to come up with the industry agreement and carry the bulk of their members with them. At many stages, all those organisations had to concede much more than their individual members would have wished.
I hear what my hon. Friend says but advise him not to take the hon. Member for Hemsworth (Mr. Enright) too seriously as he is a man with a very refined sense of humour. However, I am happy to place on record the hard work done by the leadership of the CLA, the NFU and the TFA and the many others who played a constructive part in producing the agreement. It goes without saying that the civil servants and Ministers at the Ministry of Agriculture, Fisheries and Food are also to be congratulated. However, I am being diverted. I was placing on record the view of the CLA and explaining why that organisation believes that there is need for reform.
In addition to citing the decline of the amount of land available to be let, the CLA said that it was essential for the industry to have a
dynamic … rented sector, attracting capital, expertise and new entrants … as it faces increased competition. Reform will lead to an increased supply of land to let.
I said at the outset that the Bill would increase the amount of land to let but not to the extent that many of us had hoped. The CLA also states:
the Royal Institution of Chartered Surveyors—
estimated that up to one million acres might come forward.
My hon. Friend the Member for Stroud referred to the figure of 1 million. It is difficult to see how that figure was arrived at but it is clear that that will exists to bring a great deal more land on to the market.
The present state of agricultural tenancy law was described by the Parliamentary Secretary in another place as a "tangle". In introducing the Bill last November, he said:
The present tangle of agricultural holdings legislation has grown up largely over the last 120 years or so. Before then the relationship between the landlord and tenant of agricultural land was a much simpler one, governed principally by the terms of the tenancy agreement itself. In the middle of the last century, freedom of contract was held in high esteem, both in society and in legal circles. For example, in a case before the Court of Appeal in 1875 the then Master of the Rolls made the following pronouncement:
'If there is one thing which more than any other public policy requires, it is that men of full age and competent understanding shall have the utmost liberty of contracting and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by courts of justice'.
The value of that dictum is timeless. I am only sorry that it did not receive the attention that it deserved during the passage of the Leasehold Reform, Housing and Urban Development Act 1993.
The Parliamentary Secretary claimed:
Although one-third of agricultural land is still rented, much of this is now rented on short-term agreements such as Gladstone v. Bower tenancies which do not have security of tenure.
Many hon. Members have spoken with feeling about that. The Parliamentary Secretary continued:
Thus, the proportion of land that is let on protected tenancies is small and diminishing, and where such tenancies terminate it is known that only about 10 per cent. of landlords choose to re-let on a similar basis."—[Official Report, House of Lords, 28 November 1994; Vol. 559, c. 485–86.].
Any measure that can halt the decline, make more land available to let and encourage landowners to let land to existing tenant farmers or new entrants is to be encouraged. However, the Bill cannot do that alone. I am therefore happy to join my hon. Friends in welcoming the alteration to the capital tax provisions affecting rented land. I suspect that the relevant amendment to the Finance Bill will make more progress than this Bill alone but together the two will have an advantageous effect on the agricultural sector and the let division of it.
As the hon. Member for Hemsworth intervened on me, it would be discourteous of me not to remind the House that he made an entertaining and learned speech, although it was dotted with unparliamentary Latin. However, his private little debate with my right hon. Friend the Minister was instructive for those of us who are not so familiar with the "Eclogues". No doubt as soon as the debate is over, many hon. Members will rush to the Library to check the hon. Gentleman's references and citations.
The hon. Member for Hemsworth mentioned the farming community in his constituency. He may know that I had the honour of attempting to take that constituency from the Labour party in 1987. I was not successful but I did manage to meet people who farm in that traditionally coal mining constituency. We are mistaken if we think that Labour Members represent only urban and industrial constituencies. It is certainly the case that many of them do but many—too many, sadly—represent constituencies in which there are farmers. I suspect that if the hon. Member for Hemsworth and his colleagues who represent similar areas were to conduct a detailed poll of farmers, Iandlords and tenants in their constituencies, they would find that many would be prepared to welcome the Bill.
Does my hon. Friend accept that the health of the agricultural sector goes far beyond farming per se? I previously represented the urban constituency of Bristol, North-West which contained, among other things, docks and aircraft factories. The health of the agricultural sector was important to my constituency because grain, feedstuffs and fertiliser were exported through the docks there. In other words, agriculture has to be healthy in order to support the service industries that feed on it.
I could not agree more. One of the sad effects of the industrial revolution was that, for obvious reasons, many people moved from the country to the cities and the affinity between them and the areas from which they came has been lost. The increase in incomprehension about what goes on in the countryside and the widening gap between the understanding of the urban population and the understanding of the rural population about what farming entails and about what country life is all about are much to be regretted.
The hon. Gentleman has corrected me. The farmers who have been contacted by the agricultural associations, including the unions, have overwhelmingly come out in support of the Bill. I am sorry that the hon. Gentleman has been unable to persuade his constituents of the good sense of the House passing the Bill. Next weekend, he can have another try; he may try a little harder this time. I do not want to part from the hon. Gentleman on a churlish note because his constituency is the birthplace of Geoffrey Boycott. It also has within it the greatest collection of Chippendale furniture to be found in one place in this kingdom, at Nostell priory—
Featherstone Rovers, too. I trust that when the hon. Gentleman takes time off from talking to his farmers about the good sense of passing the Bill, he will take the chance to look at the furniture at the priory.
I expressed disappointment at the speech by the hon. Member for Edinburgh, East. It was in line with the current attitude of the Labour party—the so-called new Labour party—in being unhelpful to those who live outside traditional Labour areas. It was also in line with the speech we heard from the hon. Member for Leicester, East (Mr. Vaz), the so-called shadow Minister for Inner Cities. Last week, he spent 26 minutes lecturing the House on rural England, a subject about which, as his speech made clear, he had no knowledge. It was interesting that my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food was able in her winding-up speech, which lasted about eight minutes, to dismiss the ridiculous remarks of the hon. Member for Leicester, East as the remarks of someone whose knowledge of farming and the countryside had been gained from the windows of InterCity trains at night. A truer word was never spoken in this House.
This debate gives me the opportunity to place on record my support, and that of the Conservative party and the Government, for landlord farmers, whether they are human or corporate, for tenant farmers and for all those who live and work in the countryside and who have concern for its wildlife. In my part of Leicestershire, over the centuries, they have made the countryside the green and pleasant land that it is today. Their daily lives and work are less and less understood by the majority of the urban population.
I have not spoken tonight about the A427 and for that you will be grateful, Mr. Deputy Speaker. What I have done is to express my whole-hearted support for the Bill. I have expressed one or two reservations about the enthusiasm felt by many inside and outside the House about the numbers of new tenants, and the amount of new tenanted land, that will come on stream. None the less, this is a good Bill. It deserves a fair wind and I am sorry that the Labour party appears to have taken such a churlish attitude towards it.
I noted with pleasure the speech of the hon. Member for Weston-super-Mare (Sir J. Wiggin). He always addresses arguments in the manner of a snow plough, brushing everything aside and ploughing straight down the middle. Some weeks ago, as a member of the Select Committee on Agriculture, of which he is the distinguished Chair, I asked him whether it would be a good idea for the Committee to investigate the issue before us this evening. His reply—I am sure that he will not mind my referring to this—was, "There is absolutely no point in discussing the subject because you lot will support the tenants and us lot will support the landowners. We will end up producing two reports and then we will be exactly where we were at the start." There was some sense in that and the conversation ceased at that point.
There is, however, an area between complete deregulation, which is what the Government are about, and the status quo, which the Government want to get rid of. There is still a great deal of scope for reasonable discussion and there may be solutions less disturbing than those that currently worry many tenants and many Labour Members. That area was well covered by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) who made an intelligent and weighty speech full of interesting points that the Committee will want to consider.
The hon. Member for Weston-super-Mare also mentioned, as have several other Conservative Members, that the Bill is supported across the industry. That is not quite so. The hon. Member for North Cornwall (Mr. Tyler) mentioned his extensive visits around the country.
He cannot have made it to Wales, or at least he cannot have listened there very much, and he cannot have made it to the north-west or to Cumbria.
As I said during my speech—as the hon. Gentleman would know if he had listened—I have paid three visits to Wales in recent months. I have also been to the north-west and the north-east. There is far from unanimity, even in the depths of rural Wales, for the view taken by the Farmers Union of Wales.
I am glad to hear the hon. Gentleman say that because that is my experience too. It makes his robust defence of the Bill even more surprising. The Bill is presented as if it had monolithic support from all organisations; it does not. Many of us have had meetings. A few months ago, my hon. Friend the Member for Edinburgh, East (Dr. Strang), my hon. Friend the Member for Clwyd, South-West (Mr. Jones) and I met the Farmers Union of Wales, many members of the National Farmers Union from the north-west and the Farm Tenants Action Group. That group included one Conservative county councillor from the constituency of the right hon. Member for Westmorland and Lonsdale (Mr. Jopling) who was a virulent opponent of the Bill. Until his recent sad death, Lord Derby was also an opponent of the total deregulation envisaged under the Bill. I did not hear that straight from his mouth; I did not move in those circles, but I heard it from many of his tenants.
At the end of 1993, the NFU dropped its support for a 15-year minimum tenancy. As the hon. Member for Meirionnydd Nant Conwy said, it would be interesting to know what deal brought that change about. At that point, the NFU tenants committee split in a way that made opposition very clear in the north-west, in Wales and in Cumberland. Perhaps the country does split along those lines; I do not know about that in detail. Farmers told us that they were angry because the provisions were not retrospective. They do not object to the lack of retrospection in itself; they would be crazy if they did. They saw this lack of representation, however, as taking the heat out of the debate.
As the provisions of the Bill are not retrospective, the tenant farmers to whom we spoke were personally secure and were thus talking out of a sense of altruism. They were worried about the future of farming and the fact that new tenants would find it more difficult to make a start in farming. They were worried about the threat to family farms and the fragmentation of farms.
Mr. Jim Heyes—a member of the National Farmers Union tenants committee until the split—farms close to my constituency. He described the Bill as a "time bomb", which would have little immediate effect, but would mean that, as tenancies ended, farms would be rented out in a new and insecure way. He said:
The position of farmers in the community will be undermined because they will always be moving on. Currently farmers tend to be in once place for at least 25 years, bringing stability to the community.
That is the other side of the stagnation argument voiced by Conservative Members. Mr. Heyes continued:
the law will cater for less sensible landlords and those who want to work the system".
It seems odd for me, as an Opposition Member, to be speaking on behalf of maintaining a system that has kept Jim and his family farming at Mossborough hall since the 16th century, but I am at home with that argument. He also said that the Bill would mean the
destruction of any career structure for farm workers
because of the short-term nature of their employers' business. Farm workers have not been mentioned in that context.
The Government have sought change for three main reasons: the unfavourable fiscal treatment of let land; the problems of the remaining rights of succession and lifetime tenancies; and the fact that the amount of let land is declining as a percentage of farmland, as many hon. Members have said, thus restricting new entry. In the other place, the noble Lord Carter estimated that it is now as low as between 20 and 25 per cent. Nevertheless, that is a quarter of farmland and it is not an inconsiderable amount.
The Government's announced equalisation of fiscal treatment for inheritance tax has sorted out some of the problems, but hon. Members have drawn to Ministers' attention where the tax regime is not yet satisfactory.
The original NFU policy of a 15-year minimum tenancy had some force. It answered the arguments about lifetime tenancy rights but retained an element of security that, while not going all the way to answering tenant farmers' concerns—certainly not those of the Farmers Union of Wales—at least acknowledged the need to protect continuity in law, with all that that means for career structure, the health of the land and the environmental investment of tenants.
My concern is whether the free-for-all that the Government and the CLA insisted on will create better conditions for new entry, or whether it is simply a means of increasing the value of land to the landowner—a process that will automatically follow from short tenancies. The shorter the tenancy, the greater the increase in value. Of course, that never occurred to the Church Commissioners. As we were assured, they are merely worried about flexibility and it never crossed their minds that their land holdings might rocket in value.
The Bill would create two classes of tenant—those who enjoy the present rights of security and those who do not. The former have the sort of security that can attract backing from banks to enable them to secure further rented land on a short or a longer-term lease, which might keep out new entrants, who will find that the short-term nature of their leases is not conducive to getting the financial backing or investment required. The same problem arises with larger owner-occupiers and their ability to take on extra parcels of land, and contract farming companies, which are able to offer higher rents.
It is more than possible—I put it no higher than that—that the number of tenant farmers will continue to decline and that new entrants will not get the toe-hold that the propaganda surrounding the Bill promises. We must take considerable care to deal with that problem.
The sons and daughters of farmers, who are the largest pool of future farmers, may well be discouraged from staying in the family business, or even in fanning, by the short-term nature of their parents' leases. The possibility of short-term leases might encourage the fragmentation of farms. Older owner-occupiers might be encouraged by the new system to retire, retain the farmhouse and lease off parcels of land to provide an income, which could divide more houses and farms and accelerate the demand for more building. I am concerned about that, as it might affect the green belt, and I know that the Minister of State will also be concerned.
During the debate a couple of weeks ago, I asked questions about the effects of planning policy guidance 7. The Minister did not have time to answer any questions because she spent so much time abusing my hon. Friend the Member for Leicester, East (Mr. Vaz), but she said that she would get in touch with me with some answers. That has not yet happened. As the Minister knows, PPG 7 loosens the controls on the alternative use of agricultural buildings, allowing landowners to secure planning agreements to change the use of such buildings, even if they are not redundant.
I am sorry. I stand corrected.
That change could be a significant means of elbowing out the tenant, by removing certain important buildings and I want the Minister to deal with that in his reply.
Tenants who want to move to bigger or better holdings will be able to do so only by giving up the security that they enjoy. They will be reluctant to do so—indeed, they would be mad to do so—which will further choke off the possibility of movement within the tenanted sector.
Several hon. Members have referred to the lack of stepping stones—I think that the ladder has been the metaphor. One of the significant rungs in such a ladder must be when a tenant moves from a small farm, or perhaps a difficult farm having made a good job of it, to a better farm and, he hopes, to an even better farm after that. He used to be able to do so with security. He is not going to move to a slightly better farm if he then suddenly finds himself without lifetime security. The total removal of the minimum term, therefore, might not achieve what the Bill's central purpose is purported to be—the increased flexibility to attract new tenants—and it could well do the opposite.
The probability of adverse effects on the environmental work that farmers undertake is just as serious. Because many farms are of a piece and are lived on for a long time, tenant farmers have traditionally improved the quality of the land, the buildings and often the marginal environment. Their role in improving ditches, sluices and drainage is especially important in a flat, low-lying, peat area such as mine. Under a 10-year lease, which is reasonably optimistic, will there be the same natural, cumulative process of positive work on the quality of the land and the environment in tenanted areas? I very much doubt it.
The Royal Institution of Chartered Surveyors, which seems to have written a bible in connection with this debate, suggests that some 50 per cent. of new land let will be bare land. That connects with a question asked by Viscount Hampden on Second Reading in another place. He asked, dramatically, what one should do about houses for farmers. Lord Stockton went on to another subject and left it as a rhetorical question. I do not blame him, for it is a difficult question. The demand by new entrants farming bare land to live close to or on their holdings will increase. That is only natural, especially when they must keep an eye on livestock, which cannot be done easily from five miles away in a neighbouring town with perhaps one or two remaining council houses, or when they have glasshouses. Pressure on the planning system to build on green belt or other sensitive areas will increase.
The hon. Member for Meirionnydd Nant Conwy asked who will house tenants evicted after five or 10 years. Where will they go? My hon. Friend the Member for Edinburgh, East discussed the Labour party's policy for freeing up entry into farming. I shall refer to just one element of that, which has been mentioned by several hon. Members this evening: county council smallholdings. Until last year, Iancashire county council, for instance, had 4,700 hectares of county council smallholdings. Once the current negotiations have been finalised, it will have only 1,750 hectares, comprising just 65 smallholdings in total. That has been brought about partly by the Government's decision in 1992 to allow councils to spend the proceeds obtained from such sales, so long as they got rid of them before December 1993, and now by the assumption in resettlement grants of ludicrous levels of capital receipts. County councils are being steadily and progressively removed from the tenancy sector and I imagine that most of them will be completely removed from it by the end of the year.
I accept that movement through the county council smallholding system has been relatively small. The hon. Member for Weston-super-Mare gave figures on that. None the less, in one area tenancies reached 65, so there was some possibility of movement in the system. If the Government wanted to do something about that, would not it have been more logical to give shorter tenancies for county council smallholdings?.
A colleague told me to look at the case of Johnson v. Moreton, which was heard by the Law Lords in 1987. I recognise that events have moved on since then. The dispute was over an attempt to evict a tenant in Warwickshire. I refer not to the details of that case, but to some of the Law Lords' judgments, which still apply. In the first sentence of their finding—they found in favour of the tenant—they discussed the 1948 Act on which their judgment was based. They said that
it was in the national or public interest to encourage efficient farming and good husbandry by conferring security of tenure on tenant farmers, and that such farmers, because of their inequality of bargaining power, required statutory protection in the making of contracts for the leasing of land.
I agree that, for the Government, many parts of the Bill, such as those on compensation agreements, are immensely compromising. However, I am dealing with the overall effects of the Bill, which, the Minister will agree, is primarily aimed at freeing up tenancies to bring new people into farm tenancies. I assume that the aim of Bill is not entirely to fill landowners' pockets with money. I have been trying to explain why, in reality, the Bill could have the reverse effect. In that respect, I share the opinions expressed by the hon. Member for Meirionnydd Nant Conwy.
Lord Salmon went on to say that, if there was no such thing as security of tenure,
there was no great inducement for those farmers to work as hard as they could, still less to plough money back into land which they knew they might well lose sooner or later.
The security of tenure which tenant farmers were accorded by the 1947 Act was not only for their own protection as an important section of the public, nor only for the protection of the weak against the strong; it was for the protection of the nation itself.
I shall not bore the House by quoting extensively from that judgment, but all the Law Lords agreed and I quote only the general principles on which they made their judgment, not the details of the law.
Some of the most striking phrases came from Lord Hailsham's judgment. He said that
since the 1880s successive Parliaments have considered the fertility of the land and soil of England and the proper farming of it as something more than a private interest … It takes years (sometimes generations) of patient and self-abnegating toil and investment to put heart into soil, to develop and gain the advantage of suitable rotations of crops, and to provide proper drains, hedges and ditches. Even to build up a herd of dairy cattle … These are not simply matters of private contracts from which the landlord can stipulate that the tenant can deprive himself … It is a public interest introduced for the sake of the soil and husbandry of England of which both landlord and tenant are in a moral, though not of course a legal, sense the trustees for posterity.
Obviously, the same applies to Wales.
I return to the point that I made at the beginning of my speech about the clear polarities between the parties, mentioned by the hon. Member for Weston-super-Mare. There are large areas for compromise, which I hope can get rid of many of the fears of Opposition Members and the tenant farmers with whom we have spoken in recent months. Most of the areas of compromise appear to be swept away in the Government's urge to deregulate. Ultimately, that will be detrimental to the future of farming in the north-west and the rest of the country, and to country life itself.
The hon. Member for Lancashire, West (Mr. Pickthall) seems to have discovered various cells of the National Farmers Union in Westmorland arid Wales that are against the Bill. He must accept that, nationally, the Country Landowners Association, the Tenant Farmers Association and the National Farmers Union, after enormous discussions among themselves, reached a mutual agreement on both sides of the industry. That is a fact of life, which he cannot avoid. Of course, one can find dissidents in those organisations, as one does in all organisations, but the national situation is clear.
I do not know about that part of the country, but the national position is clear. It is so clear that all those organisations have agreed; indeed, everyone is pretty well agreed except for, it would appear, the Labour party.
One can understand why the Labour party might oppose the Bill, because the Bill—to my mind, admirably—strengthens proper market principles with respect to the agriculture industry, and especially bases those principles on the supremacy of the contract within lettings. That has been done in the circumstances of a very sharp decline in the lettings industry due, as has been said, to factors on both sides of the industry—the lack of security of tenants or the feeling of lack of security, and the fact that, for years, Iandlords have not been able to get their properties back in the way that they would want to.
That dying letting industry is in a worse condition than most of the statistics that have been pushed back and forth across the House suggest. Arm's-length tenancies as a proportion of holdings had decreased to 19 per cent., according to figures published by the Royal Agricultural Society three or four years ago, and were declining. That is a very serious matter.
The Bill, as has been said, encourages new entrants; it encourages a flexibility of approach that must encourage new lettings, although this may be difficult to quantify precisely, as several hon. Members have said.
Would that the principles of the Bill—especially the liberalisation of taxation that goes alongside the legislation—were applied to that extent in, for instance, the residential lettings market. When I stopped being Minister for Housing and Planning, the residential lettings market accounted for the smallest proportion of the housing market of that in any country in the western world, and there were very large numbers of unlet houses: 600,000 in my time. I doubt that the figure has improved much. I certainly approve of the liberalisation measure in the agricultural tenancy sector.
I have one reservation, which relates to the famous "Evesham custom". I use the word, "famous", but I suspect that only you and I, Mr. Deputy Speaker, have heard of the Evesham custom before tonight. It will effectively be abolished if the Bill goes unamended. As I have the honour of representing Evesham and the vale, and have done so for 21 years, I am likely to be the only hon. Member to bring that matter, which is very serious in my opinion and that of my constituents, before the House tonight.
The Evesham custom became law exactly 100 years ago, when it was introduced by means of the Market Gardeners Compensation Act 1895 by two of my predecessors. In those days, two Members represented the Vale of Evesham; now we have two for the price of one. The grandson of one of those hon. Members, Sir Berwick Letchmere, continues to live prominently in the constituency.
The Evesham custom was maintained in the Agricultural Holdings Acts of 1908, 1923, 1948 and, most importantly in view of the argument that I shall make, in the Agricultural Holdings Act 1986. It applies exclusively to land tenanted for the purposes of market gardening. It relates, therefore, to small parcels of land—often of no more than two or three acres—on which the monitoring of improvements, and indeed valuation when there is a transaction, was regarded, and continues to be regarded, as so costly and time consuming for the large landlords that dominate our district—such as the Glebe and the Christ Church, Oxford—which tend to be ecclesiastical landlords as it happens, as to make it not worth their while to become too involved in matters that are important to the tenants.
A method was therefore devised by which tenants became responsible for their own purchases and sale of their tenancies, which carried with them a lifetime tenure. Tenancies were bought and sold, with the protection of statute, at prices that could and did include the value of improvements, the value of crops and, critically, a premium associated with lifetime security. I am told that typically, nowadays, that premium is worth between about £200 and £300 an acre, or about 50 per cent. of the market price of agricultural land.
In the Vale of Evesham, about 420 tenants are affected, many of whom have paid the premium or have included it in their balance sheets, to the extent that they bought it or it was bought many years previously. I am told that 420 tenants in my constituency are affected in that way by the Bill, but there may well be an equal number throughout the country who will suffer a similar deprivation if the Bill is passed. If the Bill was passed unamended, they would suffer a loss of anything up to thousands of pounds in terms of loss of premium valuations and, being small businesses, they would be very badly affected.
Should the premium that those tenants have paid for, or have found in their balance sheets over the years, be stripped from them retrospectively? I hope that the Government will reconsider the issue, because there has been considerable confusion about the matter, certainly in departmental circles. Not many people have thought the matter through. It affects only 420 tenants in the Vale of Evesham, but, crucially, it affects the premium that has been added to the other valuations, and I emphasise that it would be retrospective. The Government have made a big play of the fact that the legislation is not to be retrospective, so I hope that they will consider the retrospective element of that matter very carefully.
An amendment could easily be added to the list of exemptions in clause 4 of the Bill. Those would disallow new tenancies using the Evesham custom, but would allow present tenancies to be saved from retrospective abolition. In practice, the custom would die out, partly as a result of the trend towards ownership of larger parcels of land, and partly because the custom already dies on the death of the incumbent unless it is passed on.
This is a wrinkle in an otherwise very welcome Bill, but it is an important one, at least for the 420 tenants who are, rather worryingly, affected, or potentially affected, by the Bill—to the extent that several of them could well go out of business through no fault of their own, as a result of the effect that the change in the premium valuation would have on their balance sheets.
I said at the start of my speech that the Bill would help the process by which new entrants come into agriculture. Sadly, the effects of the Bill must be seen in the context of the general working of the common agricultural policy, one part of which is the distortion deterring new entrants to agriculture. The artificial suppressions of supply and price, and above all the inflated values of certain holdings to which quotas apply, are real deterrents. The Labour party claims to have a magical way of dealing with the distortions of milk quotas, for example, but it seems that we would still be left with basically the same system.
If we are to encourage new entrants, we must radically reform the CAP. The United Kingdom will have to have control over the way in which its agriculture is supported, which should be only where that support is directly required. We should not be in the business of distorting our agriculture for the purpose of helping other countries' agriculture.
I welcome the Bill, but it is a small drop in a large bucket if the purpose is to release agriculture from its present constraints and to make it more flexible, and to make it more worth while to rent and own agricultural property and to work in the interests of British farming and horticulture.
Perhaps the interests of our 250,000 farmers and 48,000 agricultural workers have been forgotten during the debate. In the 1900s, 90 per cent. of farming land was let while only 30 per cent. is now let. How will the Bill attempt to remedy that? Words such as "stewardship" and "benefit" to agriculture must be uppermost in our minds. That is why the four major parts of the industry came together, following some tortuous negotiations, to produce an industry-wide agreement.
The parties to the agreement were the CLA, the NFU, the Tenant Farmers Association Ltd., and above all—the organisation has not, to my knowledge, been mentioned before this evening—the young farmers. The young farmers are especially important because they are the people who are trying to get into agriculture. It is regrettable that the present system locks them out of it. Young farmers cannot afford the entrance fee that the current system demands. If the health of the industry is uppermost in our minds, we should be encouraging younger people to enter it. It has been said that the average age of a tenant farmer is 55 years. If that is the fact, we should be seriously concerned. We should be considering ways of reducing that average age.
Apart from youngsters, there are those who have had a first career in a profession or industry, who have made a bit of money and who want to have a second career in farming. They, too, should be able to enter the industry.
The Royal Agricultural college is in my constituency. We know that there are other such excellent centres of education. We have a great tradition of training new entrants into agriculture and we have done that extremely well. It is a tradition that we export throughout the world. I was a student at the RAC, and when I travel the world I meet other ex-students who are advising foreign Governments. We have excellent training and it would greatly enhance the health of agriculture if we encouraged new entrants.
The Bill has been produced after tortuous negotiations. As is apparent, it is largely a deregulatory measure. It will allow much greater freedom for agreement between landlord and tenant, and between lessor and lessee. At the same time, there are dangers and pitfalls for both sides of an agreement. It is for both parties carefully to negotiate a tenancy agreement. I recommend that anyone entering into such an agreement should ensure that it is set out in writing. It would be foolish for either a tenant or a landlord to enter into a verbal agreement unless it were for two years or less. Contrary to what was said earlier, it is possible under the Bill to have a verbal agreement.
The RICS has been criticised for estimating that more than 1 million acres of farming land would potentially be created by the enactment of the Bill. The estimate was arrived at because 10,000 agreements in the private sector are now negotiated outside the provisions of agricultural holdings legislation. I shall deal later with the options.
Having arrived at an industry-wide agreement and the Government having produced an extremely good Bill, the industry is poised to let much more land go forward for tenancies. Agricultural husbandry is set to improve by encouraging new entrants into agriculture. What has happened? We find at the last minute that the Labour party has decided to oppose the Bill.
It is incredible that the hon. Member for Edinburgh, East (Dr. Strang), who is about to walk out of the Chamber, was a Labour Minister when what was the Agriculture (Miscellaneous Provisions) Bill passed through the House, to be enacted in 1976. The hon. Gentleman has recognised the folly of that Act as it applied to the tenanted sector of agriculture. He knows that almost overnight the lettings of farms dried up. Why was that? The answer was that the current tenant had security of tenure, as did the two succeeding tenants. The hon. Gentleman came to recognise that. He has made various statements since I have been a Member of this place, and I have not been here for very long. He has recognised the damage that was done to the tenanted sector by the 1976 legislation. I hope that, although time has passed, this Bill will go a long way to remedy the disastrous effects of the Labour Government's legislation.
Why does the Labour party oppose the Bill? The hon. Member for Edinburgh, East has made some extraordinary statements. For example, he said that he wanted the pattern of farm sizes to adjust to market forces. He said in his next sentence that he was worried about social justice and the relationship between landlord and tenant not being equal. The hon. Gentleman cannot have it both ways. Either he believes in market forces or he does not. It should be understood that no one is forcing a landlord to let or a tenant to take land. There must be a free market agreement. That is the best approach if both parties are subsequently to be happy about what they have done.
If I were one of our 45,000 agricultural workers, I would be quaking at the Labour party's attitude to the Bill. If the Labour party opposes the Bill, there will be no farms to let and the number of farms and farmers will decline. Above all, the number of farm workers will decline because the industry will not be sufficiently profitable to continue to employ them all. The trend that we have seen since the war will continue.
It is foolish of the Labour party to oppose the Bill. I hope that the Opposition will not divide the House, but if they insist on doing so—I suspect that they are so shortsighted that they will—they will give a signal to the industry that they intend subsequently to change the proposed legislation. If they intend to do that, let them give an undertaking that any such change will not be retrospective. At least we would not then have to wait 20 or 30 years until Labour came to power with the industry being apprehensive and not letting. I should be grateful if the Labour party would give the industry that assurance, as landlords and tenants would then be given the confidence to go forward from the enactment of the Bill—one hopes well before the end of the year—and use its provisions to the benefit of the industry.
When I wrote my speech, it just so happened that I wanted to comment on clause 4, although not the type of clause 4 which Labour is talking about.
I shall intervene before the hon. Gentleman moves on to clause 4. The hon. Gentleman made a ringing declaration about free market forces, and how the Bill allows the free market to work within tenancies. Does he feel comfortable in his own mind that he is talking about agriculture, when the common agricultural policy is the most interventionist policy one could imagine? Is not it contradictory to be strongly advocating the free market in what is an incredibly rigged market?
I have a great deal of sympathy with the hon. Gentleman and with my hon. Friend the Member for Worcestershire, South (Mr. Spicer) on this. We must press for the European Community to expand to the east, and it will be difficult under GATT and the CAP to continue the present regime. I expect the present regime to continue until the reforms which are due to take place in 1999. Thereafter, there may be some phasing out and reduction of the CAP, not least when the second stage of GATT starts to bite.
I return to clause 4 and, before I am ruled out of order, I must add that I am not referring to the Labour party's clause IV. Clause 4 is important, because it puts an absolute seal on anybody being able to make the legislation retrospective. The clause rules out those tenants who already come under the terms of the Agriculture Holdings Act 1986. Even artificial devices with the agreement of both the landlord and the tenant will not be affected by the Bill.
Having said that, clause 4(1)(d) was amended in another place, and I ask my hon. Friend the Minister to look at it. I have read it several times and—although I shall take advice from my legal friends—it is a tortuous clause. Perhaps it can be simplified a little.
Clause 37, which is the most fundamental clause in the Bill and which has not been mentioned tonight, relates to the definition of agriculture, which has been lifted from the definition in the Agricultural Holdings Act 1948 and which I believe to be somewhat out of date. For example, the clause talks about osier land, but I doubt whether there are many commercial osier beds left. The definition needs to be updated.
The definition—which is the basis of the Act—must suggest where the industry will go in the future. For example, we need to think about including in the definition crops for industrial and fuel uses. We must think about those tenants who will have land in various Government schemes, such as set-aside, environmentally sensitive areas and nitrate sensitive areas. Will they be included in the definition? The basis of the Bill could be undermined unless we consider updating that clause.
Clause 10 relates to rent reviews. There was great discussion in the other place about this, and the clause was subject to an amendment which enshrined the Government's intention that the Bill could be used to review rents upwards as well as downwards. My hon. Friend knows that it is possible to have a rent review by agreement which includes the usual clauses referring to the default of an agreement in which an arbitrator can be appointed. It is also permissible to draw up a tenancy agreement in which the rent is to be reviewed by a formula. I have talked to several professionals in the industry, and it would be helpful if my hon. Friend at some stage—perhaps not this evening, but in Committee—could clarify what sort of formulae would be accepted which would give rise to the possibility of a downwards, as well as an upwards review.
Would a formula on a retail prices index basis be acceptable? Would it be acceptable to have a formula based on some form of profitability of the tenant's farming? The industry is interested to know about those things, and it would be helpful if my hon. Friend could clarify them.
Rent reviews have been mentioned widely by professionals in the industry, and one aspect of those discussions has been the resumption of part of the holding, for which the Bill rightly makes no provision and for which prudent landlords and tenants will wish to make provision. If a tenant wished to surrender part of the holding and the landlord wished to resume part of it—the rent being altered thereby—would that trigger a fixed-term review date? We need to be clear about that.
I have said that the Bill is largely a deregulatory measure which allows greater freedom of agreement between landlord and tenant. Therefore, I believe that it will start to incorporate some of the facets which are well known in commercial property law, including the concept of forfeiture. Under the old agriculture holdings arrangements, where a tenant had an irredeemable breach of covenant, there was an incontestable notice to quit. This Bill contains nothing like the seven deadly sins that were covered by the Agricultural Holdings Act 1948. Those matters have—quite rightly—been left to the landlord and the tenant to agree. But, as in the case of commercial property, I believe that the law of forfeiture will apply in those cases.
One other piece of commercial practice which I believe may apply to the legislation—I raised the matter with my hon. Friend the Minister earlier this week—is the concept of privity of estate and privity of contract, which was the subject of an amendment by Lord Gallacher in another place. It is a highly technical matter, and I shall try to explain the concept simply to the House.
Where the parties to a lease agree to certain matters which affect the property, they are bound by that agreement. That is called privity of estate. One can, of course, enforce those covenants in a court of law, and that becomes what is known as privity of contract. Under commercial agreements in England and Wales—not Scotland, as the law there is the opposite to that in England and Wales—where an assignment takes place and the assignee defaults on the lease, the enforcement of the original covenants can go back to the original assignee. In commercial property, the original assignee can be several stages and many years down the line.
I have had one very bad case in my constituency, where a couple had been retired for many years in a very nice town. They had totally forgotten about the commercial lease of their small premises, and the landlord had gone back through all the lessees, all of whom had—for one reason or another—been unable to meet their obligations under the covenants. Suddenly the couple found themselves with a huge bill for a lease which they had long since forgotten. I would be very interested to hear what my hon. Friend has to say about that.
Although some professionals disagree with me, I think that if we had a comparatively long lease for farm business tenancies—for example, 25 years—and there was more than one assignment during that term, those assignees could be held to account by the landlord. That is a very undesirable and insidious practice, and I am talking to the Lord Chancellor's office to try to abolish it in the commercial sector. As the farm business tenancy scheme is an entirely new concept, I urge my hon. Friend—if he and his experts agree with me—to see whether it will apply to the Bill. My hon. Friend should consider seriously amendments to make sure that that does not apply under the new concept. It is an entirely new concept; it is not retrospective and it will not affect existing tenants. I think that it would be a thoroughly worthwhile exercise.
I am grateful to my hon. Friend for giving way. I support the points that he has made and I add my concern that the Bill might perpetuate the existing law in some way. My right hon. Friend the Lord Chancellor said in another place that there is a case for reforming the law and if the Bill allows the iniquitous practice of privity of contract to continue it is most important that we amend it in the House.
I am grateful to my hon. Friend for his support. As hon. Members know, he has tried to introduce a private Member's Bill to remedy the situation. He and I are working hard with various parties in the commercial sector in an effort to avoid the pitfalls that should not befall the agricultural sector.
On the more technical aspects of the Bill, clauses 15 to 19 deal with improvements. There has been much discussion about what the words "physical" and "intangible" mean in the context of clause 15. I think that the word "physical" encompasses growing crops, tenant right, severed crops and so on, which my hon. Friend the Member for Stroud (Mr. Knapman) has mentioned. The "intangible" element of the clause is much more difficult to define and I think that it will give rise to many court cases in the future.
I urge my hon. Friend the Minister to give some examples now or in Committee of how the intangible aspects of the clause will be dealt with. Those which arise during the currency of the lease will be affected, as well as those intangible aspects that may not have been noticed when the lease was taken out. Intangible aspects encompass simple things such as planning permission and abstraction licences, but we must also deal with the difficult intangibles such as good will.
How does one compensate either the landlord or the tenant for good will at the end of a tenancy? How does one with deal with contaminated land, for example, which may be attributed to an act of the tenant but which may not be noticed for many years? Those matters must be considered very carefully.
Hon. Members have mentioned the problems of quotas and the compensation clauses. Under the previous legislation, the landlord was entitled to a share of the milk quota as of right, but this legislation does not prescribe how quotas should be dealt with. One cannot foresee what will happen if we introduced a wheat quota, for example, which would decrease the land value considerably from the landlord's point of view. The tenant could then sell off that free quota for a substantial amount of money at the end of his tenancy and the landlord would suffer as a consequence. We must examine those aspects of the Bill.
A number of professionals have referred recently to a problem with serving notice under the legislation. I believe that it could be remedied fairly easily arid there must be plenty of legal precedent as to how the notices should be served. The legislation does not outline how a landlord should deal with a tenant who consistently refuses to allow any form of notice to be served upon him. Those sorts of problems have been overcome in similar legal situations.
The Central Association of Agricultural Valuers has raised several other problems with me. Under the Act as it was drawn originally, clause 34 allowed only solicitors to draw up leases of three years or more. I believe that there will be an amendment in Committee to allow chartered surveyors—of which I am one—to draw up such leases.
Although I have a vested interest in not allowing anyone else to draw up the leases, I must point out that the Central Association of Agricultural Valuers is the most widely respected body in the area of agricultural valuations. Its yearly valuation tables form the basis of the work of all professionals in the field—whether they are surveyors, accountants or solicitors. Therefore, it would be iniquitous for the Bill to exclude that organisation from drawing up leases.
My hon. Friend the Member for Stroud mentioned a problem with granting planning permission. What will happen if a tenant applies for planning permission for a housing estate, for example? It could involve the payment of substantial compensation to the tenant at the end of his term of tenancy and the sum involved may be well beyond the landlord's resources.
Under the present Act, the tenant must ask the landlord to allow him to apply for planning permission and the landlord may refuse to give that permission. The matter can then be referred to arbitration and the arbitrator may allow the tenant to apply for planning permission for a housing estate, which is duly granted. However, if the housing estate is not built, when the tenancy comes to an end the landlord may have to compensate the tenant for many hundreds of thousands of pounds. The Bill should contain a mechanism to allow the landlord to block tenants applying for planning permission. We must examine that area closely.
Many of the Bill's clauses allow for matters to be taken to arbitration under the Arbitration Act 1950, which will give arbitrators far greater freedom than they have at present. The Bill also gives the landlord and the tenant the right to appoint an independent expert and there may be a temptation to appoint such as expert as it will be a much cheaper process than arbitration. What will happen if an independent expert makes a decision in favour of one side and the parties disagree? Will they he able to appoint an arbitrator subsequently?
I am grateful for my hon. Friend's clarification. Perhaps he will clarify what will happen if one party wishes to appoint an independent expert but the other party does not. The matter will then almost certainly have to go to arbitration because the Bill provides that the matter should be referred to the Royal Institution of Chartered Surveyors, which will appoint an arbitrator. I hope that that assertion is correct. If my hon. Friend does not wish to clarify that point now perhaps he will do so later.
We have had a long canter around the course this evening. I welcome the Bill as one of the most important milestones in the post-war history of agriculture. It is a long-overdue reform from which landowners, tenants, agricultural workers and new entrants to the industry will benefit. Yet the Labour party consistently opposes it. It is typical of the Opposition to think that their only role is to oppose. They cannot see that, when it is in the interests of the entire industry, for once they should support the legislation. I welcome the Bill and I wish it a speedy passage on to the statute book.
I have listened intently to the speech of the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown). I followed the first half quite well, but I found it more difficult when he began to discuss privity of contract. The hon. Gentleman has certainly done his homework in that area and if he is as voluble in Committee as he has been this evening the Committee process will be a long one. I agreed with his early comments about the common agricultural policy, although I beg to differ about how the free market will assist agricultural tenancies.
I also listened intently to the opening speeches by the Minister of Agriculture, Fisheries and Food and my hon. Friend the Member for Edinburgh, East (Dr. Strang). My hon. Friend concentrated on the insecurity that the Bill will create among tenant farmers. Farming is a long-term enterprise and requires considerable commitment and investment—particularly in the case of livestock. The present legal framework offers lifetime tenancies and succession rights, but if there is a move to the free market and no minimum tenancy, there will be enormous insecurity.
The right hon. Gentleman said that most new land on the market is the subject of short-term lets. In Wales in 1993, only 11 per cent. of all relet private land was the subject of long-term agreements, whereas a massive 72 per cent. was accounted for by short-term agreements. The Bill will tend to encourage the latter. The right hon. Gentleman said that when the market settles, it will be in the interests of landlords and tenants to enter into long-term agreements, typically of 10 to 15 years. That is more an article of faith than a belief based on experience. There is a risk of a multiplicity of short-term contracts of three, five, seven or 10 years in place of existing lifetime tenancies. That could inflict on British agriculture the short-termism that cripples British industry, with its failure to plan and invest for the long term.
Short tenancies would make it difficult for new entrants. Banks will be reluctant to lend money for farm improvements and investment unless there is security of tenure for 20 years or more.
Can the hon. Gentleman substantiate that claim with the views of any particular clearing bank, particularly bearing in mind the fact that banks already transact substantial business in providing finance to tenants who are only on Gladstone v. Bower agreements?
At a presentation given last year by the Welsh NFU, one of its officers stated that Barclays was reluctant to lend to new entrants unless there was long-term security of tenure. I cannot quote chapter and verse, but I know that the statement was made.
The NFU's chairman in Wales, John Lloyd Jones, stated in a press release dated 16 February 1994 that
virtually all lettings in the last few years have been on the minuscule 20 month Gladstone Bower arrangement, which gives neither tenant nor landlord adequate returns or opportunities …You have to remember that the present situation is not encouraging young farmers into the tenant sector, but simply enabling existing farmers to be larger because they are the only people who can take the risks implied in a tenancy as short term as 12 to 20 months.
I wonder whether the hon. Gentleman heard my remark that 10,000 current private landlord agreements are skirting existing legislation. That represents a large amount of agricultural land. The RICS calculates that a high proportion will come within the Bill's scope, which would provide much greater stability. Does the hon. Gentleman agree?
There may be stability in some cases, but in Wales generally there is strong opposition to the Bill.
The proposed legislation could mean short-term exploitation of the environment to its long-term detriment. In upland areas, what value will the upkeep of hedges, dry stone walls and wildlife features command if all contracts and agreements are short term? I am aware of the NFU's qualified support for the Bill, but the Welsh NFU wants tenancies of a minimum of 15 years. Ninety per cent. of farms in parts of Wales such as Betws and Coed in Snowdonia are tenanted. If they become short term, there will be severe repercussions.
The average age of farmers in Wales is 58 and the industry desperately needs a new early retirement scheme. There is a case for helping older farmers to retire, provided that they make way for their sons or daughters or for another person.
I am concerned about the Bill's effect on rents for existing tenants. The December 1994 parliamentary brief that hon. Members received included an article by Roger Gibbard, lecturer in land management at Reading university. He stated:
Throughout the debate, perhaps the fiercest opposition has come from existing tenant-farmers, despite repeated assurances that existing tenancies will not be affected. One of the greatest fears is that the rents on new lettings, which will inevitably be higher due to competitive tendering in an under-supplied marketplace, will be used as comparables in traditional rent reviews, much in the same
way as residential rents are often quoted as comparables for farmhouses. The consequence of this will be pressure on existing tenants to pay higher rents.
Other hon. Members mentioned the importance of local authority smallholdings in offering a way in to young people. Dyfed county council has 167 such farms, ranging from 40 to 180 acres. They are retirement tenancies with an age limit of 65. Ten to 12 farms become available every year to let. There is an appalling danger that local government reorganisation and the financial pressures on councils will put them under pressure to sell. Councils must resist if their farms are to remain as breeding grounds for new farmers.
The Bill suits existing owner-occupier farmers who want more land, agribusiness or contract agriculture. However, short-term agreements will make life much more difficult for new entrants. It will drive up rents for existing tenant farmers and can only be destructive for the environment. I am happier with the present system, which offers greater security to tenant farmers, and allows them to plan long term and to farm in harmony with the environment.
I declare my interests in agriculture as a landlord, owner-occupier, tenant, member of the Country Landowners Association and National Farmers Union, a past president of the Hampshire Association of Young Farmers Clubs and one of its current vice-presidents. I believe that I have the credentials to speak in this debate.
It is a pleasure to follow the hon. Member for Carmarthen (Mr. Williams). He reflected the Farmers Union of Wales brief in demanding longer tenancies, but that is entirely in his hands and those of Labour's Front Bench. If they removed the uncertainty that persists over the future of tenancy legislation, Iandlords would be greatly encouraged to grant longer-term lets.
The contribution by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) was probably one of the most powerful that we have heard this evening, and one would expect that from a former student of the Royal Agricultural college, Cirencester. I, too, am a former student—only I did the short course. From the great knowledge that he obviously has of both landlord and tenant legislation and the proposals before the House today, it is clear that he did the long course and came out very fully qualified.
I was interested in some of the other contributions. My hon. Friend has obviously talked himself on to the Standing Committee that will consider the Bill, but so, too, has my hon. Friend the Member for Worcestershire, South (Mr. Spicer), who referred to the 420 tenants in his constituency and the way in which the Bill will affect premium valuations. I sense that there was confusion on the Government Front Bench when he put his questions. It will be interesting to see whether he gets an answer this evening.
The hon. Member for Lancashire, West (Mr. Pickthall) made an interesting contribution. I was surprised that, as a member of the Select Committee on Agriculture, he did not have a greater knowledge of landlord and tenant legislation. It is perhaps a pity that the Select Committee did not look at the present law and decide how it might be reformed. He referred to the Bill as total deregulation, which it manifestly is not. One cannot just repeal all landlord and tenant legislation and hope that case law will take its place. The Bill replaces what is in existence with something that we think will be very much better.
The hon. Member for Lancashire, West referred to the speech by Viscount Hampden. I seem to recall, from reading through Hansard of the debates in the other place—I am thinking in terms of the much earlier intervention by the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) about the rather dubious ways in which some landowners came to possess such large acres of our country—that the noble Lord has, in fact, owned his estate for more than 600 years. I also recall that he discovered from one of the early tenancy agreements which he looked up in preparing for the debate that the rent in 1314 was payable in barbed arrows. I suspect that they were used to ill-effect, because that is the date of the battle of Bannockburn, which, I am glad to say as a Scot, the English lost. No doubt some of my ancestors and those of the hon. Gentleman were there on that day and took part in that decisive battle and victory against the invading English.
The contribution by my hon. Friend the Member for Harborough (Mr. Garnier) was interesting. I am pleased that he did not stray on to the subject of the A427, but I made a mental note that if in future there is any need to prolong debates in the House, an intervention on that question may provoke a lengthy reply from him.
My hon. Friend the Member for Stroud (Mr. Knapman) made a contribution based on his experience as a land agent. He called for a free market in farm tenancies, and, of course, it is freedom of contract within the market that the Bill will introduce. That is precisely what it is all about.
The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd)—I am pleased to see him back in the Chamber—made an interesting speech as a solicitor with much experience of farming matters. He left us in no doubt of the line taken by the Farmers Union of Wales in its call for a minimum term. I have already said that I believe that the proposed legislation will lead to greater security and more tenancies.
The hon. Member for Meirionnydd Nant Convey also referred to the black eye of my hon. Friend the Member for Cirencester and Tewkesbury. I must confess that I, too, had a black eye. That was 25 years ago—the last occasion on which I had a black eye. The hon. Gentleman said that at least it was not a Welshman who gave my hon. Friend his black eye. It was, however, a Welshman who gave me my black eye. I was a tenant farmer in the hon. Gentleman's constituency. I was visiting my farm and was being driven around it by the Welsh manager. He tipped me over a precipice in a Land Rover and we fell 300 ft. I had two black eyes, and 15 other breaks. It was a Welsh doctor who put me together again. I sat in Aberystwyth hospital contemplating the future and read the biography of Iain Macleod, and it was at that moment that I decided that politics was for me; so, had it not been for the black eye that the hon. Gentleman's constituent gave me—I hope that he is still alive, because he, too, was in a mess afterwards—I might not be here today.
I am pleased to say that my hon. Friend got his black eye in the hunting field. I very much hope that the circumstances under which he got his black eye will persist for many years to come and that the House will resist any attempt that might be made at any time in future to abolish hunting.
The opening speech by the hon. Member for Edinburgh, East (Dr. Strang), the Opposition spokesman, was revealing. There was one lovely moment in his speech when he said that a Labour Government would not be returning. Then there was a very long, rather Freudian pause. I think that it was a great pity that he continued. He should have stopped his speech right there.
The hon. Member for Hemsworth (Mr. Enright) took big farmers to task, because they were environmentally unfriendly. He painted a picture of small farmers being extremely careful with the environment. I must point out to him that every farmer and landowner is very conscious of the need to protect our environment. It is a costly matter. I would argue that the bigger the farmer, the more able he is to bear the cost of protecting the environment. I should like to see less cross-compliance than there has been, whereby grants available for other aspects of agriculture depend on environmental measures being undertaken. I would far rather have a policy of direct grants for environmental purposes.
Is it not a fact that, because of the recent changes in the law regarding the farm conservation grants available to farmers to comply with environmental sanctions, and so on, more of an onus is placed on potential tenants and the short-term tenancy without guarantee is even less likely to be practical?
That may be the hon. Gentleman's view. It is not mine. There is obviously an obligation on both landlord and tenant.
On the point made earlier about the stewardship scheme in Wales, I believe—I stand open to correction—that the provisions of such grant aid under any stewardship scheme would continue even if the tenancy were to change. There is an obligation, which becomes a liability jointly on the landlord and the tenant of a farm.
Is not the precise issue raised by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) the sort that could well be coped with under the proposed legislation? Referring to the slurry disposal system, an incoming tenant could say to his landlord, "This farm is defective and I shall not take it on unless you allow me to make this improvement and compensate me for it at the end of the tenancy."
That is the answer that I should have given. My hon. Friend is obviously far more learned in the matter than I am, and it is a very good reply.
Her Majesty's Government have been wise to introduce this measure in the other place rather than here. Reading through the contributions made in the other place, I was struck by the number of peers who referred to their wealth of expertise both as landlords and as tenants. There are, of course, very few farmers in the House. Times have changed. There used to be many, but I recall that, at the end of the Maastricht debate in July 1993, my right hon. Friend the Foreign Secretary, having concluded the debate, slammed shut his notes, turned around and said, "Well, that is the end of that very important business, now let us all go off and gather in a really good harvest." Looking around the Chamber, I did not see many hon. Members on either side of the House who had anything to do with gathering in the harvest, and I thought how much times had changed.
It is not surprising that the Bill has arrived with very few amendments from the other place. It is the product of many months of work by the Tenants Reform Industry Group, which comprises the Country Landowners Association, the National Farmers Union, the Tenant Farmers Association and the National Federation of Young Farmers Clubs, supported by the Royal Institution of Chartered Surveyors and the Central Association of Agricultural Valuers. I agree with what hon. Members have said about the importance of bringing the Central Association of Agricultural Valuers within the scope of clause 34 so that agricultural valuers, as well as solicitors, can prepare leases.
The Bill is well thought out, and has been on the launch pad since December 1993 following a lengthy period of consultation set up by Ministers back in 1991. Of course there have been differences of opinion, but ultimately sensible compromises have been made. The Bill also follows a 1992 Conservative manifesto commitment to liberalise radically the agricultural tenancy laws
in order to make more land available to rent, especially for new entrants.
The involvement and agreement of the National Federation of Young Farmers Clubs has not been mentioned enough, given the extent to which the Bill will improve the younger generation's prospects. At present, having left college or university with good qualifications and, often, with practical experience, members of the younger generation are doomed to a life on the road as travelling salesmen trying to sell agricultural products to, for instance, my right hon. Friend the Minister and to me—or, at best, to being agricultural contractors working for other farmers. I believe that the Bill will enable youngsters to get into farming more easily, although I acknowledge that there will always be the problem of trying to raise capital. Hitherto, they have been the victims of outdated legislation dating from 1947 and 1948, and of the 1976 legislation that extended security of tenure from one generation to three.
Many hon. Members have referred to the regrettable shrinkage of the tenancy sector. In 1900, total acreage was 90 per cent. let; the percentage is now down to 35. I acknowledge what the RICS has said about the real percentage of land that is let: it puts the amount at 27 per cent., and ascribes only 20 per cent. to tenant farmers. I think, however, that the number of genuine arm's-length tenancies is even smaller. Many tenancies nowadays are merely arrangements dictated by tax considerations. I refer, of course, to tax avoidance rather than tax evasion. There is nothing wrong with that. The value of land for probate purposes, with vacant possession, is probably £1,400 an acre; the value of land that is let is between £800 and £900 an acre. Landlords can hardly be blamed for taking farms in hand and then reletting them to family farm partnerships to reduce valuations for probate purposes.
Labour Members have said that the Bill heralds the end of security of tenure for tenant farmers. I say that, if it is not enacted, it will herald the end of tenant farmers: there will be none for whom to provide security of tenure. The Bill's principal objectives have been adequately set out, and, as I have said, it has come from the other place with very few amendments; those that have been made are mainly minor and technical.
Opposition Members may not remember very well our recent debate on the rural economy, as few were present, but the Bill is relevant to it. The Bill will benefit the countryside, because agriculture will remain the foundation of our rural economy and farmers will continue to be the principal stewards of rural areas. I hope that the White Paper that the Government intend to publish soon will encourage farmers to be more environmentally aware, following the progress that has already been made, and that such awareness will be based on the voluntary principle rather than compulsion.
I also hope that planning policies will be more proactive and will support diversification. I hope that our tax policy will recognise farming, forestry, the letting of land and buildings and alternative farm enterprises on agricultural holdings as farm businesses—what the Country Landowners Association has described as rural business units.
Clause 1 is important, because it defines a farm business tenancy and goes on to describe tenancies that cannot be farm business tenancies. According to a brief from Conservative central office, the proposals relate solely to the agricultural sector and are not concerned with tenancy provisions relating to business premises; but the Bill says that they can cover commercial activities when the character of the tenancy is primarily agricultural. Confusion will arise as farms diversify and alternative enterprises spring up. I hope that my hon. Friend the Minister will explain precisely where the division will come.
These are times of rapid change in farming, and of great opportunities which the Bill will extend to the younger generation of farmers. In 1800, George Crabbe said:
Our Farmers round, well pleased with constant pain, Like other farmers flourish—and complain.
I have not heard a single farmer complain about the Bill, but one thing that farmers do complain about is lack of capital.
Farmers tend to be capital rich, although the capital is usually locked up in land and fixed assets; but they are often revenue poor, unless they are overwhelmed by the concrete jungle of development—in which case, they cease to be farmers altogether. The 1970s saw an influx of new institutional capital into farming, and of remote landlords with little interest in farming other than its relation to the balance sheet and its provision of a hedge against the galloping inflation produced by Labour Governments' economic policies. I hope that we never see such inflation again. Many of those investors burnt their fingers. The hon. Member for Edinburgh, East said how wrong it was for farming decisions not to be made locally, and I agree. I felt very sorry for tenants whose landlords were on the other side of the world, and saw landowning only as a temporary investment.
I believe that the Bill can provide the basis for a far closer partnership between landlord and tenant. It should be welcomed by all political parties. It is certainly in accord with what was called for in the Labour party's consultation paper "Encouraging new entrants into farming", which was published last September. The Opposition should avoid sewing any seeds of doubt about the durability of the proposals: farming is a long-term business, and a stable legal framework is vital.
For the record, let me correct the quotation from Jonathan Swift that my hon. Friend the Member for Stroud wrongly attributed to Charles Dickens. It was Swift who wrote:
that whoever could make two ears of corn or two blades of grass to grow upon a spot of ground where only one grew before, would deserve better of mankind, and do more essential service to his country than the whole race of politicians put together.
My farm, like most others in the United Kingdom, and certainly the farm of my right hon. Friend the Minister of Agriculture, Fisheries and Food, has done just that. As a farmer cum politician, I am in two minds about the quotation. However, I am not in two minds about the Bill which I commend to the House. It is long overdue and it is a sensible package of reforms for landowners who do not wish to farm or cannot farm, and for farmers who do not wish to own or cannot own. I trust that it will get its Second Reading.
In view of the cautious words at the beginning of the speech by my hon. Friend the Member for Romsey and Watersicle (Mr. Colvin), perhaps I should remind the House of my interest in farming. More significantly, and as a matter of caution, I remind the House that, sadly and reluctantly, I am still a name at Lloyd's. I apologise for missing the Minister's speech at the beginning of the debate and that by the hon. Member for Edinburgh, East (Dr Strang). My reason for missing them was that I was at the sitting of the Treasury and Civil Service Select Committee which was interviewing the chairman of Lloyd's about Lloyd's self-regulation. You may be interested to know, Madam Deputy Speaker, that I have never in my life heard such a puny justification of self-regulation.
I welcome the Bill, as do most hon. Members who have spoken. I pay tribute to the National Farmers Union and the Tenant Farmers Association for negotiating on this matter between themselves for, I think, more than five years. I am glad that the NFU is giving the Bill the nod of approval, certainly in my constituency, and that is added justification for taking matters forward.
It is sad that Labour appears to have changed its view. It cannot understand that, to make a market, one needs a willing buyer and a willing seller. It appears that that is what the Bill will provide. Labour's attitude should come as no surprise to Conservative Members because for ages it has claimed that it is the friend of the farmer and the farm worker. It is a friend to as many people as it can possibly convince that Labour believes in their best interests. Sadly, that does not always turn out to be the case. A recent example is to be found in the export of live animals, because, in 1975, the hon. Member for Edinburgh, East voted for the restoration of such exports. We have been discussing the issue in the House for the past fortnight. The matter has been brought up two or three times and, twist and turn as he may, the hon. Member for Edinburgh, East cannot get away from the fact, because it is on record, that he voted for the restoration of the export of live animals.
Many tenant farmers have a vested interest in the export of live animals to the European Community and I wanted the House and anyone listening outside to appreciate that the hon. Member for Edinburgh, East is in favour of such exports and has voted for them in the past.
The Bill will bring new entrants to agriculture and give the industry new vigour. All industries need vigour, and let me make no bones about the fact that farming is a business. I am sure that you will let me get away with saying that, Madam Deputy Speaker. Vigour and new blood need to be brought in all the time, and farming is becoming more and more specialised. Hon. Members have said that the capital requirements of those involved in farming are becoming greater. Technology is developing and the knowledge of farmers is becoming greater.
Sadly, I was not able to go to Cirencester on the three-year management course which my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) attended. It obviously did him a lot of good. Farming is a specialist business, and out are going the small farmers and those people who for reasons of their own want to quit the business. Dynamic young men and women are coming in. It is probably significant that I have a parcel of land which I intend to let to a young farmer who lives near my farm. He is much more dynamic than I am and I shall welcome him to my farm because he will bring to it vigour, dynamism and excitement.
People want to own land for all sorts of reasons, but they do not necessarily want to farm it. They want to own it for fishing, conservation, tree planting, shooting, pride of ownership or the privacy that it gives them. There is nothing wrong with any of those aims. Term agreements will be helpful because they will ensure that a farmer does not lose control of his land. That is surely at the heart of the measure. No long-term contracts are coming on the market, because landowners do not want to lose control of their land for many years.
It is right not to fix term tenancies: there should be no minimum or maximum. The market will shake itself out and at the end of the day will reach the right conclusions. Rents will accurately reflect the opportunities in agriculture. It is right for a farmer to take the opportunity to generate wealth from a tenanted farm outside a town or urban area by adding value to his product, whatever it might be, through selling it directly to the consumer. However, he should pay a higher rent than a hill farmer.
Recently, many of us had an opportunity to meet some hill farmers who came to the House and gave us an extremely nice dinner of Welsh hill lamb. They told us that some of the difficulties that they were facing might force some of them off the land. They said that it was right and proper that, when their rents were being decided or reviewed, the difficulties they were facing should be taken into account. So be it: if there has to be a rent reduction to keep them on the land, we should welcome it and pave the way for it.
The hon. Member for Carmarthen (Mr. Williams) made great play of the fact that there was too much short-termism in farming and in the tenancies that are currently available. He is right: there is much short-termism in letting, for the reasons that I gave earlier—landowners do not want to part with their land for long periods. That is why there is such a growth in grazing tenancies, in the number of Gladstone v. Bower arrangements and in the number getting permission from the Ministry to have tenancies.
It is accurate to say that many businesses use rented property. Why should agriculture be any different from engineering? If an engineering business wants to occupy a factory from which to run its business, there is no problem—it can take the premises for whatever length of time it wants. It should be precisely the same with agricultural businesses.
The hon. Gentleman must know that an engineering business comes under part II of the Landlord and Tenant Act 1954, which allows it an almost automatic renewal of its tenancy. There is no such provision for agricultural tenancies in this Bill.
Perhaps that point should be studied further. A good landlord and a good tenant would want their arrangement to continue. Whether it is an engineering business or a tenanted farm, it does not appear to me that, in the long term, it makes any difference. As we all know, my hon. Friend the Member for Cirencester and Tewkesbury has volunteered to serve on the Standing Committee and he may wish to raise that point during its proceedings. It is right that we should provide the opportunity for people to occupy land on a term agreement, to be worked out between the landlord and tenant. They can go forward together on that basis.
I am glad that the new arrangements for tenant compensation at the end of a tenancy will reflect the value that a tenant has added to the holding, whether it is quota, a building improvement or the establishment of new enterprises on the land. The landlord and tenant can come to an arrangement either before the start of a project or, if the tenancy comes to an inexplicably early end, reach a proper agreement to compensate the outgoing tenant and/or his family or those whom he leaves behind in the event of his untoward death.
The question of tenant right should also be discussed in Committee. If a tenant dies when crops are growing—for example, when the wheat crop is just ready for harvesting—under current provisions that crop would belong to the landlord. I hope that that problem can be sorted out in Committee because it is an important aspect, especially for short-term tenancies.
The change in inheritance tax is something that all with an interest in the Bill will welcome, as will all those with an interest in the health of the countryside. The 100 per cent. relief from inheritance tax will ensure that newly available land for letting will come on to the market. I am absolutely certain that that is a major feature of the Bill, because many would-be landlords have been waiting to see the precise financial arrangements. I compliment the Treasury, which has agreed to this provision, because it will bring many new jobs and opportunities to the countryside.
The Bill will create not privilege but an opportunity for new entrants into agriculture. It will create opportunities for wealth creation in the countryside. It will create opportunities and jobs for the 48,000 agricultural workers who have already been mentioned. What will they say when they hear about the antics of Labour Members tonight? What will they say when they hear how their jobs and their future are jeopardised by Labour Members, who appear to be advocating a massive running down of opportunities in the countryside? Labour Members should seriously reconsider their position between now and 10 o'clock, because there is no doubt that what they have said will have a serious effect on the countryside.
Does my hon. Friend deprecate the fact that the number of agricultural tenancies has fallen to about 10 per cent. of all landholdings? Does he agree that the Bill will help to redress that imbalance to its previous position of almost 80 per cent. of landholdings?
I do not know whether the traditional figure is 80 per cent., but I am certain that there will be a tremendous increase in the amount of land that is available for letting, for all the reasons that other hon. Members and I have given.
As I said earlier, I am sorry that I missed the bulk of the debate. I wanted to explain in greater detail to you, Madam Deputy Speaker, why that happened, but you would not let me. I am really sorry that I have not heard the entire debate.
You may think, Madam Deputy Speaker, that I am again deviating from the subject, but I promise you that I am not. My hon. Friend the Member for Cirencester and Tewkesbury will back me in my assertion that there is a major problem with Gloucestershire county council. It is controlled by Labour and the Liberal Democrats, who have run it into a massive debt of £129 million, and it has a large agricultural estate. For some time, my hon. Friend and I have urged the council to reduce its debt. More than once, we suggested that it should liquidate a large part of its agricultural estate, for which it could obtain many millions of pounds.
Had the hon. Member been present during an earlier part of the debate, he would have heard hon. Members on both sides of the House recognise that county farms are the essential first rung on the tenancy ladder. That does not mean that it is the only rung, or that, if one takes away all the rungs above, one will be left with something that is worth preserving on its own. As a Conservative Member said, to cut the ladder at the point where people would be prevented from getting on that first rung is of no assistance to the tenanted sector. Hon. Members on both sides of the House acknowledged that before the hon. Gentleman returned from dealing with the matter of Lloyd's upstairs.
I wondered what defence the Liberals on Gloucestershire county council would come up with, and the hon. Gentleman has just given me a foretaste of that. Labour and Liberal members of that council have been saying precisely what the hon. Gentleman has just said, but the object of the Bill is to create more opportunities for new entrants—whether they be young, middle-aged or old men—to come into the industry. Justification no longer exists, therefore, for the hon. Gentleman's friends on the council to hang on to the agricultural estate. They should consider seriously the opportunity of selling it off.
I am sorry to interrupt my hon. Friend in the middle of his excellent peroration. Is not the real point about smallholdings that they could be perfectly well managed by a private or institutional landlord? Tenants would have security of tenure—they would still be there—but the tremendous capital value would be released. I agree with my hon. Friend about Gloucestershire county council. I put it in touch with someone who would do what he suggested, but it refused to listen to that person's advice. The council should reduce its landholding.
I am grateful for my hon. Friend's support. I am sure that we shall hear more about the matter because there will be some twisting and turning from the Liberals, as has been shown by the comments of Liberal Members.
Absolutely not, and I deplore words being put into my mouth. Is the hon. Gentleman aware that, earlier in the evening, a National Farmers Union delegation from west Yorkshire was here in the House? I was buttonholed for half an hour by a gentleman who hired his farm from North Yorkshire county council, and who complained about what might happen to him as a result of the Bill. That council, of course, is controlled by the Conservatives.
I obviously cannot discuss specific cases with the hon. Gentleman, but I am certain that, if he wanted to buy his farm from North Yorkshire county council, he probably could do. I do not know the debt position in relation to that council, so it is not possible for me to make a constructive comment on that point.
Nevertheless, I welcome the Bill. I wish it well in every way. I hope that it has a speedy passage through Committee and that, between now and 10 o'clock, Opposition Members will change their minds.
The Bill shows an important philosophical difference between the Labour party and the Conservative party. Conservative Members believe that society is best ordered by unbridled exercise of social position and the power of accumulated wealth. Labour Members recognise the strength and contribution of those forces, but we seek a society in which all people can live without fear of exploitation or harassment, and in the knowledge that the law will provide them with economic and social justice.
The notion that an agricultural tenant should have security of tenure for life was introduced by a Labour Government in 1947. It was part of a package of measures that were designed to bring stability to an industry that, before the second world war, had witnessed crushing depression and chronic insecurity.
The Bill is portrayed as part of a liberating process that will release land to be farmed by new tenants, and that will facilitate the expansion of progressive and successful operators in the industry. Labour Members do not believe that the interests of the industry and of the countryside will be best served by denying future agricultural tenants the benefit of a reasonable measure of security of tenure and of statutory protection in the complex relationship that they have with their landlords.
The Government, apparently with the full agreement of the landowning and tenant farmer organisations, are throwing to one side the whole panoply of legal safeguards and protections which have been developed over the years to prevent the tenant from becoming a victim of his landlord and to give him a legal framework in which he can invest with confidence and which will enable him to give of his best to the land. In its place is to be a system that has at its heart a key fallacy: that the parties to an agricultural tenancy are free agents and come as equals to the negotiations. In this respect, the Bill opens the way to a revesting of power in agricultural landowners, which will place them in a position not dissimilar to that held by their forebears in the 18th and 19th centuries.
All this has been done on the pretence that landowners will now be encouraged to award more lettings of their land to new entrants into farming. How shall we know whether this gamble has paid off? It has been estimated by the Royal Institution of Chartered Surveyors that 1 million acres of agricultural land will be released for letting as a consequence of the Bill. The Country Landowners Association estimates the figure to be 1.6 million acres. Wisely, the organisations give no idea of the period of time over which these acreages might be released.
Both estimates were made before the Government announced that let agricultural land is to qualify for 100 per cent. inheritance tax relief. Therefore, it is possible that the figures may be revised upwards. Indeed, that may be the only positive effect on tenancies. It was, as the Minister graciously acknowledged, mentioned in our document on encouraging new entrants into farming.
Apart from the public relations figures issued by interested bodies, what will tell us how many new tenancies will be created over a period of, say, five years from the date of Royal Assent? No doubt landowners will wish to include the reletting, under farm business tenancies, of land at present covered by grazing agreements, Gladstone v. Bower arrangements, Ministry-approved short lettings and other ingenious licence tactics which avoid the creation of an agricultural tenancy.
Also included in the total new lettings will be a substantial acreage of bare land. That will enlarge the size of neighbouring farms and provide no opportunity for a newcomer in the industry. In addition, there will be the let farms that become available during the period of assessment and that will now be let on farm business tenancies. We must be careful not to include them in the figures for "new let" land.
Assuming that at least half of the 1.6 million acres is composed of land at present in hand but which would be let to new tenants on farm business tenancies, and assuming that the average size of the holdings let is to be 250 acres, we should expect 3,200 new tenancies for commercial farms over, say, the next five years. We shall see. A tally could also be kept of the acreage of farmland which, over the same period, ceases to be tenanted, such as farms currently owned by British Coal.
I was using a putative figure to minimise the numbers. I am sure that the hon. Gentleman will agree that, if farms were to be 150 acres, considerably more tenancies could be expected.
What causes a sharp intake of breath is the absolute nature of the Bill's intent. There have been no half measures and no visible compromises. It might have been sufficient to open the door to many new entrants into farming if landlords had been given freedom of manoeuvre for tenancies of less than five years and lettings to tenants of a certain age or for holdings of, say, less than 80 acres, or to introduce period tenancies, the compulsory retirement of tenants at 65 or one of the many other proposals that must be on the table. Instead, the sword has been taken up and the rights of several generations of future tenants have been severed.
The hon. Gentleman was trying to talk down the acreage that would come on to the market as a result of the Bill but, according to his figures—3,250 farms of 250 acres—I calculate that the total land available would be in the region of 600,000 to 700,000 acres. That is still a substantial figure.
I was not talking down the figure; I was saying that it was rather a lot to expect out of the Bill. Perhaps the hon. Gentleman has his own views.
The right of the tenant to serve a counter-notice on his landlord when he is told to quit the holding has gone. Also gone is the sensible connection between the rent that the tenant is asked to pay and the productive capacity of the land. The tenant is now left to the vagaries of an imperfect open market in which agricultural rents are set on an upward course. Also gone is his entitlement to compensation for disturbance when he is ejected from the farm. All that is left is compensation for improvements that have received the landlord's approval. That provision has been described by the National Farmers Union as a hard-won concession.
Gone are the model clauses that made clear which repairs were the responsibility of the tenant and which were the responsibility of the landlord. The division is now left for the landlord to determine in the terms of the agreement that he offers to the tenant. Worse, where there is no agreement, confusion and uncertainty will prevail and will lead to endless legal wrangles.
Gone is the statutory right of the tenant to claim compensation for damage caused by wild animals and game birds, which only the landlord has the right to kill. That may be a small point, but it is indicative of a determination in this legislation to wipe the slate completely clean. The list could be extended by going more deeply into the schedules of the Agricultural Holdings Act 1986.
One consequence of the Bill is that the tenant of a 1,000-acre farm, with all the capital equipment and employment that is needed to run a farm of that size, could have less security of tenure and fewer rights when dealing with his landlord than the occupier of a small corner shop in Newmarket. How has that come about? The answer is that it is the result of a famine of agricultural tenancies.
We are told that landlords were deterred from creating tenancies because of the introduction of succession of tenancies in 1976; many hon. Members have said that. If that is true, why have landowners not taken the opportunity to let more land since 1984 when the succession provisions became optional for new tenancies? The truth is that the famine began long before 1976. Its cause lay in the level of returns that landlords and their advisers felt they should get from rents. Institutional owners, an important source of let land, felt that they could get a better return on their investment elsewhere and individual owners were advised that they would make more profit from taking their farms in hand.
The House should remember that open market rents were built into agricultural holdings legislation from 1947 to 1984. Under the operation of that formula and before the introduction of succession, the supply of tenanted land seriously diminished. Open market rents failed because the demand for farms outstripped supply and the rent that many new entrants were prepared to pay was in excess of what could be supported by the productive capacity of the farm. Those entering tenancy agreements with high rents lived in the hope that inflation would rise to reduce the cost of their rent in real terms. In many cases, they badly miscalculated and disaster befell them. It is to be seriously doubted that there can be such a thing as an open market for agricultural tenancies.
If the Country Landowners Association is to be believed, following this legislation, there will be an initial rush of privately owned land offered up for rent. After approximately five years, the flow of new tenancies will have slowed down and the turnover will be mainly in existing tenanted farms. If, as seems likely, we witness at the same time a further restructuring of UK farms, with amalgamations and multiple-ownership arrangements, the demand for tenanted whole farms will, predictably, increase and the supply will either begin to decline again or will remain static. The inevitable result will be to drive up rents.
Furthermore, all the bidders for a single tenancy will not be starting with the same advantages. A neighbouring farmer who estimates that he can run a nearby farm without increasing his labour force by using his own buildings and by making greater use of his existing range of machinery can offer a higher rent than an efficient newcomer who proposes to run the farm as a self-supporting enterprise. Similarly, applicants with sources of income from outside agriculture will tend to distort the market for the normal working farmer.
The difference between conditions 30 years ago and the conditions that will apply after the Bill becomes law is that having forced the rent as high as he can get it, with or without arbitration, the landlord will always be tempted at the end of the term to seek an even higher rent from a new applicant. The way will be clear for him to repossess the farm.
During the debate, we were told with monotonous frequency that the package has been agreed with the whole industry, including organisations representing the interests of tenants. We know, however, that the Farmers Union of Wales has maintained its opposition to the proposals throughout.
Also, in October 1992, the National Farmers Union and the National Federation of Young Farmers Clubs were clear as to the points that they were aiming to secure in their discussions, following the publication of the Government's consultation document. They considered it vital that a legal framework be maintained, to ensure that tenancies were let on fair and reasonable terms. They demanded a minimum term for the letting of not less than 15 years, with two years' notice of termination after the term was ended. They asked that an existing tenant who had proved suitable be given the option of continuing his or her tenancy when the fixed period came to an end. They said that wide statutory provisions were needed, relating to the payment of compensation at the end of the tenancy. They expressed total opposition to freely negotiated rents at open market values.
What has changed since those demands were made? Few of them feature in the legislation and the National Farmers Union has slipped quietly into line behind a triumphant Country Landowners Association. Significant numbers of their members have misgivings, however.
One of the strong points persuading the NFU and the Tenant Farmers Association to accept the package was that existing agricultural lettings would not be affected by the introduction of farm business tenancies. In our opinion, however, they should not be too complacent. On the face of it, existing tenants are safe from threat, but as the Bill becomes law, the landowner will have an even greater incentive to engineer the termination of old arrangements, or—in the case of pre-1986 agreements—to persuade the tenant's children to give up their rights of succession. Cash bribes are an obvious approach, but the tenant must also watch for the stealthy move—for example, sending a farm business tenancy agreement for the son or daughter to sign when the father is on his deathbed, in the knowledge that, for succession to operate, the successor must apply to the agricultural land tribunal to have the tenancy assigned to him or her. A tenant might be moved to a larger or more productive farm on the estate, on the condition that he or she entered into a farm business tenancy. The landlord might even accompany the transfer with an unenforceable verbal promise that the tenant's son would succeed him to the tenancy when the time came.
At all times, existing tenants will be well advised to be watchful. They should also not assume that their rents will be unaffected by the operation of the collateral open market for farm business tenancies. Rents on new lettings, which will inevitably be higher, due to competitive tendering in an undersupplied marketplace will, as my hon. Friend the Member for Carmarthen (Mr. Williams) said, be used as comparables in traditional rent reviews, in much the same way as residential rents are quoted for farmhouses.
On the supposed principle that the parties to a farm business tenancy agreement are free to come to their own understanding as to the terms that are to apply to the letting, it is true that neither party is forced to enter into an agreement, but beyond that the landlord has the asset and will create the terms under which the property is let. In most cases, the tenant will come to the negotiation as a supplicant.
If tenants are young, they will be keen to farm, eager to prove themselves, full of optimism and prepared to give the enterprise everything that they have got. The terms of the tenancy will be offered to them on a take-it-or-leave-it basis. Even if they take legal advice and are told the extent of their obligations and the precariousness of their position under the agreement, they will still sign because there will be only one thought in their minds—they want to farm more than anything else in the world.
That is hardly a negotiation between equals. The landlord, or his agent, will rely on the Royal Institute of Chartered Surveyors model agreement, appropriately modified by counsel to suit the needs of his estate. From his point of view, the landlord is merely being prudent. He may not know the potential tenant and will want to be able to escape from the agreement and repossess the farm, if the going gets difficult. He will be looking for no more rent than his land agent has told him that he can expect and he does not want the farm to deteriorate, but he also does not want to use his capital to carry out improvements for which he can expect the tenant to pay. If the tenant is young, the landlord will want to keep the farm on as tight a rein as possible, within the terms of the agreement.
I apologise for not being here at the start of the hon. Gentleman's speech. I hate to interrupt, given the exciting nature of what he is saying, but his theme assumes the present situation—no competition and no farms to let elsewhere. He is stating the present situation—the result of a Labour Government's legislation—in which there is a virtual monopoly. If there were plenty of farms for the hypothetical young man to rent, none of the problems that he describes would exist.
I hope that the hon. Gentleman was not at the meeting about Lloyd's, or at least is not affected by it. He misses the point. The supply of land is limited, no new farms are being created, and existing tenants will hang on to their tenancies, so we are talking about a small number of farms. Had the hon. Gentleman been here at the beginning of my speech, he would have heard the number that I expect. Sadly, he was unable to be here.
The inequality between landlord and tenant has been recognised by Parliament in the letting of domestic housing, and tenants have been given protection under the Housing Acts. Until the introduction of this Bill, Parliament recognised the multiple problems that can arise between landlord and tenant and sought to give the tenant adequate safeguards and protective rights in a series of Acts of Parliament from 1887 onwards. All that is now turned aside and the agricultural tenant is told that he must look out for himself.
On a wider point, there are other problems with the Bill. I refer to the duties of the Minister of Agriculture, Fisheries and Food as set out in section 17 of the Agricultural Holdings Act 1986. It seems strange that a Minister with such a wide-ranging duty to balance countryside interests has drafted a Bill to cater almost exclusively for the interests of agriculture. That is a dangerously myopic approach to a set of long-standing problems. It is in the best interests of both landlords and tenants to be able to enter into new tenancies and leases that permit the widest possible use of rural land, bodies of water and other natural and man-made resources in the countryside. The Minister may contend that a new, wider set of definitions will confuse rather than clarify, but such an assertion only ossifies definitions that are increasingly outmoded and limiting to rural enterprises and associated employment opportunities.
The Agricultural Tenancies Bill should cover all agricultural, silvicultural, natural, man-made, heritage, conservation and environmental land management uses and other related uses. New definitions should cover all existing and foreseeable enterprises and uses of rural land, buildings and bodies of water, including keeping livestock for the production of medical products; growing crops for industrial purposes; conservation; preservation; and enhancement of the countryside environment.
If the current, narrow definitions are not expanded, all other rural tenancies and leases must come under the terms of the Landlord and Tenant Acts, principally the 1954 Act. That general legislation was not designed to cater for such uses and enterprises. Indeed, the 1954 Act specifically excluded agricultural holdings. The result may be that, where a landlord and tenant agree to a variety of uses for rural land and buildings, they must enter into more than one type of tenancy or lease to comply with the legal requirements of their overall agreement. That duplication of professional charges and paperwork is far from the efficient and economic framework which the Government purport to introduce.
Over the coming years, we shall monitor the position closely. Inevitably, the lack of security of tenure for farm business tenancies will lead to disappointment, disillusionment and hardship. Landlords are being given back the full range of power and privilege that they exercised in former years. We shall expect them not always to seek perfection in their tenants, to be compassionate with tenants who become ill or meet misfortune and be understanding when tenants are no longer young. The function and exercise of the power returned to them is larger than the matter of pure economics.
The Opposition solemnly repeat our commitment to the family farm as the unit that has shown most resilience throughout the devastating economic storms that have swept through the history of agriculture. That unit is most in harmony with the rural environment. We also repeat our commitment to farm tenancies for the working life of the tenant. Such tenancies encourage good husbandry, and give the tenant confidence in dealing with his land and dignity in dealing with his landlord.
As the farming and landowning organisations have reminded us in discussions on the proposals, the economics have changed, as have the needs of agriculture since 1947, or even within the past 20 years. The economics and the science of economics may have changed, but the countryside changes more slowly and human nature changes even more slowly, if at all. The need for social justice was one of the guiding principles behind the now-to-be-disregarded agricultural holdings legislation. We shall not forget that fact when we look at the workings of this legislation when we are in government in years to come. It was enlightening to see many Conservative Members intimate that most people outside the House reckon that we shall be in government after the next election. Why else would they be so concerned about our stance on the Bill?
One could hardly describe the speech of the hon. Member for Clwyd, South-West (Mr. Jones) as riveting. If that was an example of new Labour, it shows that the Opposition must undertake much more modernising.
I thought that the idea of a wind-up speech was to reply to the telling points of hon. Members on the other side of the Chamber. The hon. Member for Clwyd, South-West did not reply to any of the points made by my right hon. Friend the Member for Selby (Mr. Alison) and my hon. Friends the Members for Weston-super-Mare (Sir J. Wiggin), for Stroud (Mr. Knapman), for Harborough (Mr. Garnier), for Cirencester and Tewkesbury (Mr. Clifton-Brown), for Romsey and Waterside (Mr. Colvin) and for Gloucestershire, West (Mr. Marland). All we heard was a dirge of despair and depression about the future.
That exactly sums up the Opposition's approach to the matter. The doomster approach was backed up by the hon. Member for Edinburgh, East (Dr. Strang), who in his opening dragged along as much of the luggage of agricultural history as he could. The hon. Member for Hemsworth (Mr. Enright) dallied in a dilettante way with the classical approach to agriculture, and I think that the best that we can say to him is, "rhubarb".
The hon. Member for North Cornwall (Mr. Tyler) was supportive, for which I thank him.
Not until I have finished my little review. The hon. Gentleman has had his entertainment; it is now my turn.
The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) made some interesting points, which I shall discuss later, as did the hon. Members for Lancashire, West (Mr. Pickthall) and for Carmarthen (Mr. Williams).
I was interested in a press release that the hon. Member for Edinburgh, East issued on 18 November 1994, in which he said:
Security of tenure is essential for the family farm
as though that was a newly discovered truth, which had not dawned on the Conservative Benches for many a long year. I was surprised that neither he nor his hon. Friends mentioned the construction of the Bill in clauses 1, 5, 6, 7, 16, 23, 24 and 25, all of which concern various aspects of security that are central to the subject of agricultural tenancy.
I shall not intervene again, but I think that it is a question of terminology. The hon. Member for Stroud (Mr. Knapman) may agree with us. It is one thing to compensate the tenant for his improvements; in so far as the Bill ensures that, we support that. I have no doubt that we shall even try to make that stronger. However, when we talk about security of tenure in relation to agricultural tenancy legislation, we talk about tenure. and a minimum term was quoted.
There was a time when, as several hon. Members said, the National Farmers Union supported a minimum term. I am sure that the Minister understands the Bill, which proposes no minimum term, so when it becomes law someone could have a tenancy of three years or five years. We do not regard that as adequate security of tenure.
I am afraid that the hon. Gentleman shows an inability to distinguish between the period of an agreement and the security embodied in that agreement. The Bill is drafted in terms of the definition of farm business tenancy: willing partners come together, in mutual interest, to define their rights and responsibilities, and to make very clear one with another the length of time that they agree that the tenancy should run. The Bill gives precise legal protection on the ending of the tenancy. Once agreed and signed, it is cast iron and copper-bottomed and provides excellent security of tenure. That is the whole basis and construction of the Bill.
The hon. Gentleman shakes his head. If he thinks that, by nominating a number such as 15, he will bring more land on to the market, he and his hon. Friends are in for a rude shock.
My hon. Friend the Member for Weston-super-Mare opened with a full-frontal attack on the hon. Member for Edinburgh, East. He pointed out that, in his opinion, the
hon. Gentleman was anti-landlord, and certainly a flavour of that emerged from what the hon. Gentleman said. My hon. Friend made some telling points about the cost of entry into farming. I received a letter from Barclays bank on the subject, part of which read:
Having read the Bill through carefully and considered the implications for the bank's future approach to farm financing with my colleagues in Barclays, our opinion is that, should the Bill become law in its present form"—
it would seem that the bank supports the Bill's enactment—
Barclays will continue to consider each application for farm finance on an individual, case by case basis.
The letter continues:
We lend currently into situations ranging from lifetime tenancies to annual seasonal lets.
The bank showed an understanding of the argument of my hon. Friend the Member for Weston-super-Mare and rebutted the claims made by the hon. Member for Carmarthen.
I shall not give way now.
It is important to understand that banks take into account the costs of going into farming. They understand the various problems that are faced, especially by new entrants.
I am glad that my hon. Friends have welcomed compensation mechanisms by agreement and the proper operation of the written agreement and notices, which are built into the framework of the proposed legislation.
Hon. Members have questioned information about land availability. My hon. Friend the Member for Cirencester and Tewkesbury dealt with the point when he referred to the excellent survey of its members by the Royal Institution of Chartered Surveyors. It is the institution's members who will determine the amount of additional land that will be available over five years. I have been asked by hon. Members when the extra land will come into the marketplace.
We have never claimed that the floodgates will open. We are merely saying that a more flexible farm business tenancy will reflect farming in the modern world. Opposition Members often talk about strengthening the rural economy. They should realise that without the flexibility of the farm business tenancy to combine agriculture with other forms of economic activity, it will be difficult for the countryside to live. How can enterprise be fostered without that flexibility? The Government understand the need for flexibility; it is regrettable that Opposition Members do not.
Compensation for milk and other forms of quota has been mentioned. As some of my hon. Friends have said, where additional quota has been bought during a tenancy it could be the subject of compensation arrangements with the landlord's permission. The rest of the quota would attach to the land. Sheep quota would move with the tenant. It is possible, as with all these detailed matters, for the landlord and tenant, in reaching an agreement, to define precisely where each party stands. That is an element of responsibility that the Government understand.
My right hon. Friend the Member for Selby spoke with authority and knowledge on behalf of the Church Commissioners, who are major landowners. Deprecating remarks were made by Opposition Members, who failed to place due weight on my right hon. Friend's remarks. He made the telling point on behalf of the Commissioners, in welcoming the Bill, that it was a deregulatory and simplifying measure. My right hon. Friend also said—the hon. Member for Clwyd, South-West failed to take up the point when he replied on behalf of the Opposition, as did the hon. Member for Edinburgh, East—that the Opposition had not clarified their intentions for the future of this proposed legislation. Tenant farmers, young farmers, the Country Landowners Association and the National Farmers Union will all have taken note. I shall have more to say about that later.
My hon. Friend the Member for Stroud spoke with knowledge and qualification. He went into important detail on repairs, for which tenants will be able to claim compensation for improvements with the landlord's consent.
On a number of other points I shall reply in detail in writing to my hon. Friend the Member for Stroud, as the details are important. He covered the central issue of the Royal Institution of Chartered Surveyors' code of practice, which will be very important in guiding people and in determining the nature of their tenancy agreement. That will be backed up by the professional information to which my hon. Friend adverted in his comments.
My hon. Friend the Member for Stroud asked about compensation. Clauses 15, 16 and 17 adequately define compensation—not only the circumstances in which it can be claimed but the methodology that can be used to determine the amount payable. Arbitration mechanisms are available in statute to resolve disputes between landlord and tenant. I hope that my hon. Friend will find those clauses interesting reading, and I commend them to him.
My hon. Friend the Member for Harborough rightly said that the current law is too complex and that it has inhibited the availability of land for rent. Many of my hon. Friends, in excellent analyses of the history of tenanted land, pointed out that there has been a long-term decline in the amount of land available for rent. The hon. Member for Clwyd, South-West tried to suggest that we are arguing that the availability of land declined only between 1976 and the present. We agree that it had been declining, but I must point out that the amount of land available dropped between 1976 and the present by a further 10 per cent., so the legislation must take some responsibility.
My hon. Friend the Member for Harborough pointed out that there was widespread support for the Bill. I am amazed that the Opposition do not feel deeply uncomfortable about that widespread support. Nobody would ever claim that there was not some disagreement in certain parts.
The hon. Gentleman may say that, but I disagree.
We do not disagree that people will have sensible questions to ask about the Bill, which will no doubt be explored properly in Committee, but the Opposition must surely feel uncomfortable about our success in bringing together the powerful players whom I have mentioned.
My hon. Friend the Member for Worcestershire, South (Mr. Spicer) who, sadly, is unable to be in his place, told us about the Evesham custom, which is no small matter in his constituency. I hope that my hon. Friend will have an opportunity to read the Official Report, because I want to reply in detail to the points that he made.
The Bill is not retrospective. I am advised that when a tenant passes on a tenancy, under the Evesham custom a new tenancy arises, although it is not treated as such for the purpose of the rent review provisions of the Agricultural Holdings Act 1986. Any new tenancies after 1 September 1995 will be covered by the Bill. Thereafter, the tenant will not be able to claim compensation on improvements that he installs without the landlord's consent. That will not affect the legal position of the tenant's existing tenancy. The Evesham custom applies—as I understand it—only where the tenant has served notice that he is leaving, so the decision to a certain extent is in my hon. Friend's constituents' hands.
My hon. Friend fears that a tenant deciding to leave might have difficulty in finding a new tenant to reimburse him for his capital expenditure, but other options are open to him. One is for the tenant to remove his fixtures and buildings and relocate or sell them. Another is to suggest that the new tenant agrees suitable provisions with the landlord on how the matters are to be dealt with in the new farm business tenancy. These are complex matters, and I shall write in more detail to my hon. Friend. I hope that he understands that his principal concern about retrospection is not an issue about which his 420 constituents need to worry any longer.
The House will agree that my hon. Friend the Member for Cirencester and Tewkesbury was knowledgeable, thought-provoking and probing—all in one speech. I congratulate him on what he had to say. My hon. Friend is a qualified chartered surveyor. He presented the plight of young farmers and he referred to the problem, to which I adverted, of the amount of tenanted land drying up following the passage of the 1976 legislation. He also gave a critique of the Opposition's views about the marketplace.
In one document, the Opposition say that they are worried about the operation of the free market, but then Opposition Members say that they want what they describe as a "fair market rent". They cannot have their cake and eat it, as my hon. Friend the Member for Cirencester and Tewkesbury said in his speech.
My hon. Friend talked about clause 4 of the Bill—not the Labour party's clause IV, but our respectable clause 4—and he highlighted the fact that this key element of law stops retrospection. He knew that the Opposition were not prepared to give a similar commitment.
My hon. Friend specifically picked out clause 4(1)(d) and asked whether it could be simplified. I will examine that clause in Committee. He also referred to clause 37 as defining "agriculture". I disagree with him on that point: we believe that it is an adequate description but, as always, I will consider carefully what he said about industrial crops and biomass. On his point about downward rent review, if he studies the detail in the relevant clauses he will find that, once an arbitrator is involved, the arbitrator can review either up or down and the terms under which that occurs are defined clearly in the Bill.
My hon. Friend raised the difficult and complex question of privity and I am grateful to him for giving me prior notice of his intention to do so. I think that he described accurately the long-term consequences for the tenant of the first party in relation to any liabilities that might ensue vis-à-vis assignment. With foreknowledge of the issue, it may be possible to design the agreement to cater for such circumstances—although that may not become a reality in view of the current limited time scale.
I do not think that I can assuage my hon. Friend's concerns in that area. As he said, the Lord Chancellor's Department is examining the matter in the round. I believe that that very difficult problem should be dealt with in that way.
My hon. Friend the Member for Cirencester and Tewkesbury and other hon. Members discussed the various aspects of planning permission. My hon. Friend outlined a scenario whereby the landlord could be forced to pay a huge amount in compensation for planning permission without having consented to the application for planning permission. That nightmare scenario will not occur under the Bill. The refusal of consent for planning permission cannot be referred to arbitration under clause 18. The Bill deals with planning permission carefully and it ensures that, if gain is made by the tenant, proper compensation is available, subject to the landlord's consent.
My hon. Friend the Member for Romsey and Waterside, in an excellent review of the remarks of hon. Members on both sides of the House, asked about the nature of the farm business tenancy. I think that he was confused about the various briefings that he received on the subject. The Bill provides more scope for the types of non-agricultural business that can be developed during the lifetime of the tenancy.
Initially, the tenancy must predominantly involve agricultural activity, but if the tenant develops a new business within the curtilage of the holding it will not obstruct the tenancy agreement that has been signed. The early clauses of the Bill deal with that subject very clearly. I am grateful for my hon. Friend's support for the Bill because he speaks from a practical and a knowledgeable base.
My hon. Friend the Member for Gloucestershire, West made a wide-ranging speech, finally homing in on the heart of the matter. He welcomed the Bill's provisions for compensation. I will consider the Bill's approach to tenant right, which was mentioned by a number of my hon. Friends. That is a tricky subject but it can be covered by the terms of the tenancy agreement. There is an element of responsibility on the parties concerned to identify matters important to them and to specify them in the agreement.
It would be churlish to spend all my time commenting on Conservative Members' excellent speeches and not remark on others. The hon. Member for Hemsworth, an expert on rhubarb and classics, entertained the House with an interesting speech.
No. My hon. Friend the Parliamentary Secretary has already given the House her views on that subject.
The hon. Member for Hemsworth mentioned British Coal. My right hon. Friend the Minister had discussions about that matter with my right hon. Friend the President of the Board of Trade. British Coal has written to the remaining tenants who have expressed interest. That matter is primarily for British Coal and the Department of Trade and Industry. We are closely monitoring the position and understand the sensitivity surrounding that matter. I hope that the hon. Gentleman takes some comfort from that response.
No, it grows naturally in Lancashire. What they do in Yorkshire is their business.
I welcome the support of the hon. Member for North Cornwall. Unlike some Liberals, he has not changed his mind since 7 December 1993, when he put on record his support for the measure. We must be charitable occasionally when we receive support. I am glad that the hon. Gentleman commented on the tax situation, which was a triumph of negotiation by my right hon. Friend, in responding to the genuine concerns expressed by farmers and landowners. It was important to ensure no fiscal barrier to more land becoming available.
The hon. and learned Member for Montgomery (Mr. Carlile), who intervened briefly, cannot have his cake and eat it. The Bill is not about forcing county councils to sell smallholdings, although several of my hon. Friends advanced extremely good suggestions for ways in which councils could make use of those assets.
The Bill will cover all forms of farm business tenancy from the beginning of September. I hope that answers the hon. and learned Gentleman's point. He commented also on the RICS survey, which indicated the source of additional land. I welcome his analysis, and we will examine his point about tenant right. He also attacked Labour's attitude to that issue, which shows unanimity across the House. We want to know more of Labour's thoughts about that matter. It is possible that some of the concerns listed by the hon. and learned Gentleman could be dealt with in the tenancy agreement.
The hon. Member for Meirionnydd Nant Conwy—
The hon. Member for Meirionnydd Nant Conwy spoke about planning issues. Where consent for improvements has been given by the landlord, it is possible for compensation to be paid to the tenant. If the landlord! refuses consent, the tenant can refer the matter to arbitration. Clearly, there may be important issues of planning that reflect the tenant's own thoughts about developing the holding. I refer the hon. Gentleman to the Bill, where those matters are dealt with in considerable detail.
The hon. Member for Lancashire, West and I share at least one thing—we both know Mr. Heyes of Mossborough hall. The hon. Gentleman knows him as a constituent; I know him from my former incarnation in the horticulture business and have done business with him. He is an excellent salad and vegetable grower. I, too, have spoken to Mr. Heyes, whose enthusiasm for criticising the Bill has perhaps matured with time. My noble Friend Earl Howe, the Parliamentary Secretary in another place, and I had a meeting with him, at which we listened carefully to what he had to say.
The hon. Member for Lancashire, West mentioned the security of tenure. I refer him to clauses 1, 5, 6, 7, 16, 23, 24 and 25, all of which lock together a security of tenure once the landlord and the tenant have reached an agreement and which offer very good protection not afforded by many of the existing arrangements.
I think that I have already dealt with the point made by the hon. Member for Carmarthen.
I now deal with some of the substantive comments made by the hon. Member for Edinburgh, East. When I looked at the Opposition's approach to the matter, I could not believe my eyes. I read the document, "Encouraging new entrants into farming". I thought that it would be a voyage of discovery. Would there be some new truth in it that I had missed? I turned to the first page. One of its headings is, "Background". Then, "The Tory Response". It talks about "their"—the Tory—"plan". Clearly, Labour had not heard that the Country Landowners Association, the National Farmers Union, tenant farmers, young farmers and many others had helped to write the Bill.
I continued reading this illuminating document. The next thing that I found was, "Land Tenure Legislation at Present"—a sort of description. I thought that it would be a brief summary, but, no, it runs on for the next two pages—I am still nowhere nearer understanding what the great plan is. I finally got to, "The Labour Party's Tenancy Reform Strategy", followed by "Structural Support for New Farmers". We have heard much this evening about retirement plans. Where will the money come from? As the hon. Member for Edinburgh, East said, the shadow Chancellor has not given him any right to spend anything, so any claims that the hon. Gentleman makes on that are as nothing.
The first part of the document talks about compensation. Where is the money to come from? It is yet another false agenda from the Labour party. The next part of the great document deals with quotas. The Labour party wishes to take away from those who have and create some pool of new quota. That is not supported within farming. I went through the rest of the document: rent, European aid, county council aid—I am still searching for the great Labour plan, but nowhere can I find it. What it eventually says is:
the 1986 Act would be reformed and simplified".
I think that I am getting nearer the holy grail, but where is the detail of the reform, the simplification, the improvement, the factors that will attract new, young blood into agriculture? I have waited for hours this evening to hear the answers to those questions and we still have not heard them. All we have heard is a tatty, second-hand critique of the existing situation, which is the Labour party's own legislation.
The present arrangements do not serve farming well, as Marie Skinner said in an article entitled "Talking Point", in the NFU magazine. She said:
Landowners cannot be forced to rent out land. They can be encouraged to do so".
She also said:
There is a widely held misconception that security is vital if land is to be farmed well. However, the opposite is probably true. Too much security in an industry creates complacency and mediocrity.
We have heard complacency and mediocrity from Opposition Members; I commend that article to them.
As we reach the end of a thoughtful and well-argued debate, I am struck by the fact that members of the so-called new Labour party—the modernisers—are behaving like Luddites. Young people who want to hang on to the dream of going into farming need the support of Conservative Members: they are not getting it from Labour.
|Division No. 64]||[9.59 pm|
|Alexander, Richard||Evans, Roger (Monmouth)|
|Amess, David||Evennett, David|
|Arbuthnot, James||Faber, David|
|Arnold, Jacques (Gravesham)||Fabricant, Michael|
|Arnold, Sir Thomas (Hazel Grv)||Fenner, Dame Peggy|
|Ashby, David||Fishburn, Dudley|
|Atkinson, Peter (Hexham)||Fox, Dr Liam (Woodspring)|
|Banks, Matthew (Southport)||Freeman, Rt Hon Roger|
|Bates, Michael||French, Douglas|
|Batiste, Spencer||Fry, Sir Peter|
|Beith, Rt Hon A J||Gallie, Phil|
|Bellingham, Henry||Gardiner, Sir George|
|Beresford, Sir Paul||Garnier, Edward|
|Bonsor, Sir Nicholas||Gill, Christopher|
|Booth, Hartley||Gillan, Cheryl|
|Bottomley, Peter (Eltham)||Goodson-Wickes, Dr Charles|
|Bowis, John||Greenway, Hany (Ealing N)|
|Brandreth, Gyles||Griffiths, Peter (Portsmouth, N)|
|Brazier, Julian||Hamilton, Rt Hon Sir Archibald|
|Brooke, Rt Hon Peter||Hampson, Dr Keith|
|Brown, M (Brigg & Cl'thorpes)||Hargreaves, Andrew|
|Browning, Mrs Angela||Hawksley, Warren|
|Bruce, Malcolm (Gordon)||Hayes, Jerry|
|Burns, Simon||Heald, Oliver|
|Burt, Alistair||Heathcoat-Amory, David|
|Campbell, Menzies (Fife NE)||Hill, James (Southampton Test)|
|Carlile, Alexander (Montgomery)||Horam, John|
|Carlisle, John (Luton North)||Howell, Sir Ralph (N Norfolk)|
|Carrington, Matthew||Hughes, Robert G (Harrow W)|
|Chidgey, David||Hunt, Sir John (Ravensbourne)|
|Clifton-Brown, Geoffrey||Hunter, Andrew|
|Congdon, David||Jack, Michael|
|Conway, Derek||Jackson, Robert (Wantage)|
|Cope, Rt Hon Sir John||Jenkin, Bernard|
|Cormack, Sir Patrick||Jessel, Toby|
|Cran, James||Johnson Smith, Sir Geoffrey|
|Currie, Mrs Edwina (S D'by'ire)||Jones, Gwilym (Cardiff N)|
|Davies, Quentin (Stamford)||Jones, Nigel (Cheltenham)|
|Deva, Nirj Joseph||Jones, Robert B (W Hertfdshr)|
|Douglas-Hamilton, Lord James||Jopling, Rt Hon Michael|
|Dover, Den||Kellett-Bowman, Dame Elaine|
|Duncan, Alan||Kennedy, Charles (Ross, C&S)|
|Duncan Smith, Iain||Kilfedder, Sir James|
|Durant, Sir Anthony||King, Rt Hon Tom|
|Eletson, Harold||Kirkhope, Timothy|
|Evans, Jonathan (Brecon)||Knapman, Roger|
|Evans, Nigel (Ribble Valley)||Knight, Mrs Angela (Erewash)|
|Knight Greg (Derby N)||Shaw, David (Dover)|
|Kynoch, George (Kincardine)||Shaw, Sir Giles (Pudsey)|
|Lamont, Rt Hon Norman||Shepherd, Colin (Hereford)|
|Legg, Barry||Speed, Sir Keith|
|Lidington, David||Spencer, Sir Derek|
|Lilley, Rt Hon Peter||Spicer, Sir James (W Dorset)|
|Lloyd, Rt Hon Sir Peter (Fareham)||Sproat, Iain|
|Lord, Michael||Stanley, Rt Hon Sir John|
|Lynne, Ms Liz||Stephen, Michael|
|MacKay, Andrew||Stern, Michael|
|Maddock, Diana||Streeter, Gary|
|Maitland, Lady Olga||Sykes, John|
|Malone, Gerald||Taylor, John M (Solihull)|
|Marshall, Sir Michael (Arundel)||Taylor, Matthew (Truro)|
|Martin, David (Portsmouth S)||Temple-Morris, Peter|
|Mawhinney, Rt Hon Dr Brian||Thomason, Roy|
|Merchant, Piers||Thompson, Sir Donald (C'er V)|
|Michie, Mrs Ray (Argyll & Bute)||Thompson, Patrick (Norwich N)|
|Mills, Iain||Thurnham, Peter|
|Mitchell, Andrew (Gedling)||Twinn, Dr Ian|
|Moate, Sir Roger||Tyler, Paul|
|Nelson, Anthony||Vaughan, Sir Gerard|
|Neubert, Sir Michael||Viggers, Peter|
|Nicholson, David (Taunton)||Waldegrave, Rt Hon William|
|Nicholson, Emma (Devon West)||Walden, George|
|Norris, Steve||Walker, Bill (N Tayside)|
|Onslow, Rt Hon Sir Cranley||Waller, Gary|
|Paice, James||Wardle, Charles (Bexhill)|
|Patnick, Sir Irvine||Waterson, Nigel|
|Pawsey, James||Watts, John|
|Peacock, Mrs Elizabeth||Wells, Bowen|
|Pickles, Eric||Whitney, Ray|
|Porter, Barry (Wirral S)||Whittingdale, John|
|Porter, David (Waveney)||Widdecombe, Ann|
|Portillo, Rt Hon Michael||Wiggin, Sir Jerry|
|Powell, William (Corby)||Willetts, David|
|Richards, Rod||Winterton, Mrs Ann (Congleton)|
|Riddick, Graham||Winterton, Nicholas (Macc'f'ld)|
|Robinson, Mark (Somerton)||Wood, Timothy|
|Rowe, Andrew (Mid Kent)||Yeo, Tim|
|Ryder, Rt Hon Richard||Tellers for the Ayes:|
|Sackville, Tom||Mr. David Lightbown and Mr. Sydney Chapman.|
|Scott, Rt Hon Sir Nicholas|
|Ainger, Nick||Cunliffe, Lawrence|
|Ainsworth, Robert (Cov'try NE)||Cunningham, Jim (Covy SE)|
|Anderson, Donald (Swansea E)||Dalyell, Tam|
|Ashton, Joe||Darling, Alistair|
|Austin-Walker, John||Davies, Bryan (Oldharm C'tral)|
|Banks, Tony (Newham NW)||Davis, Terry (B'ham, H'dge H'l)|
|Barnes, Harry||Dixon, Don|
|Battle, John||Dowd, Jim|
|Bennett, Andrew F||Dunnachie, Jimmy|
|Bermingham, Gerald||Eagle, Ms Angela|
|Betts, Clive||Eastham, Ken|
|Blunkett David||Enright, Derek|
|Boyes, Roland||Etherington, Bill|
|Bradley, Keith||Evans, John (St Helens N)|
|Bray, Dr Jeremy||Fatchett, Derek|
|Brown, N (N'c'tle upon Tyne E)||Fisher.Mark|
|Burden, Richard||Flynn, Paul|
|Byers, Stephen||Foster, Rt Hon Derek|
|Caborn, Richard||Foulkes, George|
|Callaghan, Jim||Gapes, Mike|
|Campbell, Ronnie (Blyth V)||Gerrard, Neil|
|Clark, Dr David (South Shields)||Godsiff, Roger|
|Clarke, Eric (Midlothian)||Golding, Mrs Llin|
|Clelland, David||Gunnel, John|
|Clwyd, Mrs Ann||Hall, Mike|
|Coffey, Ann||Heppell, John|
|Cook, Robin (Livingston)||Hill, Keith (Streatham)|
|Corbyn, Jeremy||Hinchliffe, David|
|Corston, Jean||Hoey, Kate|
|Cox, Tom||Howarth, George (Knowsley North)|
|Hoyle, Doug||Olner, Bill|
|Hughes, Robert (Aberdeen N)||O'Neill, Martin|
|Hughes, Roy (Newport E)||Patehett Terry|
|Illsley, Eric||Pearson, Ian|
|Jackson, Glenda (H'stead)||Pickthall, Colin|
|Jackson, Helen (Shef'ld, H)||Pike, Peter L|
|Jamieson, David||Pope, Greg|
|Jones, Ieuan Wyn (Ynys Môn)||Powell, Ray (Ogmore)|
|Jones, Jon Owen (Cardiff C)||Prentice, Gordon (Pendle)|
|Jones, Martyn (Clwyd, SW)||Prescott, Rt Hon John|
|Khabra, Piara S||Primarolo, Dawn|
|Kilfoyle, Peter||Quin, Ms Joyce|
|Livingstone, Ken||Raynsford, Nick|
|Lloyd, Tony (Stretford)||Redmond, Martin|
|Llwyd, Elfyn||Robertson, George (Hamilton)|
|McAllion, John||Ross, Ernie (Dundee W)|
|McCartney, Ian||Skinner, Dennis|
|McFall, John||Smith, Andrew (Oxford E)|
|Mackinlay, Andrew||Smith, Chris (Isl'ton S & F'sbury)|
|McMaster, Gordon||Soley, Clive|
|McNamara, Kevin||Stevenson, George|
|Madden, Max||Strang, Dr. Gavin|
|Mahon, Alice||Sutcliffe, Gerry|
|Mandelson, Peter||Taylor, Mrs Ann (Dewsbury)|
|Marshall, David (Shettleston)||Timms, Stephen|
|Marshall, Jim (Leicester, S)||Turner, Dennis|
|Meale, Alan||Watson, Mike|
|Michael, Alun||Wicks, Malcolm|
|Miller, Andrew||Williams, Alan W (Carmarthen)|
|Morley, Elliot||Wise, Audrey|
|Morris, Estelle (B'ham Yardley)||Wray, Jimmy|
|Mowlam, Marjorie||Young, David (Bolton SE)|
|Mullin, Chris||Tellers for the Noes:|
|O'Brien, Mike (N W'kshire)||Mr. John Cummings and Mr. Joe Benton|
|O'Brien, William (Normanton)|