Amendment 69

Agriculture Bill - Report (2nd Day) – in the House of Lords at 8:15 pm on 17th September 2020.

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The Earl of Devon:

Moved by The Earl of Devon

69: Clause 34, leave out Clause 34Member’s explanatory statementThis amendment is intended to remove agricultural tenancies provisions.

Photo of The Earl of Devon The Earl of Devon Crossbench

My Lords, Amendments 69 and 89 seek the removal from the Bill of Schedule 3 and the reforms contained therein updating the law on agricultural tenancies. This is not because I am not in favour of agricultural tenancy reform. To the contrary, it is because I do not believe that this is reform enough. My proposed amendments therefore form a protest and express frustration at the modesty of the admittedly sensible agricultural tenancy reforms contained in the Bill.

As discussed at length in Committee and on Tuesday, agriculture is key to meeting the nation’s net-zero carbon ambitions and assisting the Government to ensure that this generation hands a better environment on to the next. To achieve that, agriculture will need to change fundamentally. The biggest change will be to swap short-term profit for long-term sustainable investment and productivity.

The clearest illustration of this change is in the handling of our soils. The building of organic matter in soils, along with a healthy soil structure, requires long-term investment and a short-term decrease in productivity before any financial return can be realised. The same can be said of agroforestry, hedgerow management and any number of the worthy ELM schemes we have debated. None of this is possible if the farm operator enjoys only a short-term interest in the land.

The tenanted sector accounts for approximately one-third of our farmland, of which nearly half is now let on farm business tenancies. The average length of an FBT is less than three years, and 90% of all new tenancies are let for no more than five years. It is difficult, if not impossible, to achieve both a sustainable business and a sustainable environment when farming with a three-year horizon. There is an urgent need to change this and to permit everyone who farms in the UK to enjoy a much longer horizon in which they can expect to reap the long-term benefits of adopting environmentally sensitive farming techniques.

This is urgent, and I am concerned that if we make do with what TRIG has agreed is possible now, we will lose the impetus for further reform for a generation and our agricultural landscape will continue to be blighted by a short-termism diametrically opposed to the noble goals of environmental land management, as set out in Clause 1. I beg to move.

Photo of Lord Wigley Lord Wigley Plaid Cymru

My Lords, I am glad of the opportunity to support the amendment and to speak to my Amendment 84, which is attached to it. My amendment is very simple; the words on the amendment paper spell it out. It is to ensure

“that tenant farmers in Wales have a mechanism to object”— if they need to—

“to a landlord’s refusal to consent to enter into a financial assistance scheme.”

I am very grateful to the noble Baroness, Lady McIntosh, for her support for it.

The point is that there must be a system operating in Wales, and for clarity it should be included in the Bill that this right exists and that the responsibility lies with Welsh Ministers. For that reason, I am glad to speak to Amendment 84 in my name.

Photo of Lord Russell of Liverpool Lord Russell of Liverpool Deputy Chairman of Committees

I understand that the right reverend Prelate the Bishop of St Albans is not on the call, so I call the next speaker, the noble Baroness, Lady Rock.

Photo of Baroness Rock Baroness Rock Conservative 8:30 pm, 17th September 2020

My Lords, I declare my interest as a director of Wrackleford Farms Ltd, a tenant farming enterprise. I shall speak to Amendments 81, 82, 83, 85 and 86, which stand in my name. I am grateful for the support of the noble Baroness, Lady Bakewell of Hardington Mandeville, for these amendments. I shall also speak to Amendments 69 and 89 in the name of the noble Earl, Lord Devon, Amendment 84 in the name of the noble Lord, Lord Wigley, and Amendments 87 and 88 in the name of my noble friend Lady McIntosh of Pickering.

In speaking to my Amendment 81, I speak also to Amendment 84 in the name of the noble Lord, Lord Wigley, which will achieve the same outcome for Wales prior to it coming forward with its own legislation, as this amendment envisages for England. This amendment is a straightforward change to require the Government to come forward with the necessary regulations to allow an agricultural tenant to refer to dispute resolution an unreasonable refusal from a landlord following a request made by the tenant to join a scheme developed under the provisions for financial assistance.

While the Government may give an assurance that they will use the power available in this part of the Bill to bring forward the necessary regulations, there is no reason why the Government should not commit to doing so in the Bill. Tenant farmers are rightly concerned about their ability to access new public payments for public good schemes in light of their tenancy agreements and some of the restrictive clauses which they contain. Tenants must be given the assurance that they will be able to enter new schemes without the landlord being able to unreasonably withhold consent. The change which this amendment will make is entirely in line with the Government’s policy and should not cause any issue for them but at the same time it would give a tremendous boost of assurance to tenant farmers who are looking at the possibility of taking part in new schemes as they develop.

Sadly, there are circumstances where landlords refuse consent on an unreasonable basis for their tenants to enter schemes. Although it may be considered prudent for landlords to allow their tenants to remain profitable, it can sometimes be the case that landlords seek to use the leverage involved in having to give their consent to make unreasonable demands of their tenants, including surrendering secure tenancies in favour of insecure farm business tenancies, seeking the surrender of land, buildings or dwellings or merely to make the life of the tenant difficult. Having said that, there are, of course, plenty of examples where relationships between landlords and tenants are very good and where the changes being envisaged by this amendment would not be a risk to those good relationships or undermine what the parties are trying to achieve in those circumstances.

Amendment 82 closes a potential loophole in the provisions of the Bill around gaining the consent of the landlord, which is required to be obtained by the tenant in entering a financial assistance scheme. The Bill contains a relatively narrow set of criteria which need to be in place before the tenant has recourse to potential dispute resolution for an unreasonable refusal of consent to join a financial assistance scheme. The Bill envisages providing the tenant only with the option to object where the tenancy agreement or legislation governing the relationship between the landlord and the tenant restricts the tenant’s ability to participate without the landlord’s consent. However, there may be individual requirements set out within the financial assistance schemes which require tenants to seek the landlord’s consent. It may be because of the nature of specific land use changes envisaged by schemes being considered by tenants. Currently, that situation would not be covered by the provision in the Bill, and the amendment seeks to address that by ensuring that all refusals by a landlord can be referred by the tenant to dispute resolution on the grounds of reasonableness.

The Government may say that they will ensure to address this point in the way in which they design schemes, and I have some sympathy with that, but it would be better to have the provisions in the Bill rather than have to rely on individual schemes having their own appeal mechanism.

Amendment 83 would address specific issues around unreasonable restrictions within tenancy agreements which prevent farm tenants investing in their holdings to carry out activities or improvements which assist with the productivity or sustainability of the holding. This could include using the holding for non-agricultural activities which are in keeping with and complementary to its agricultural uses, which many farms want to do and which adds much-needed financial stability to those holdings.

Many tenants will have agreements which require them to seek their landlord’s consent for the installation of new fixed equipment or to carry out new activities where the requirement for the landlord’s consent is absolute. In these circumstances, there is no recourse for the tenant, who feels aggrieved by a refusal from the landlord. In that it is a point of public policy that farming should become both more productive and more sustainable, it would be an error not to allow tenants the same ability to fulfil those objectives as others. Of course, reasonable landlords will give reasonable consent for activities which improve the productive capacity of the holding and/or its sustainability, but, sadly, there are situations where such consent is not forthcoming. This is mostly because landlords are seeking to extract other concessions from their tenants, as I have set out previously. This amendment does not seek to provide a carte blanche ability for tenants to avoid reasonable clauses within their tenancy agreements, but it would provide the opportunity for them to appeal against an unreasonable refusal from their landlord. Indeed, this suggestion formed part of the recommendations of the Tenancy Reform Industry Group in its report to Defra in October 2017.

Amendments 85 and 86 would enhance the franchise of individuals who are able to apply for succession of tenancy for the limited number of Agricultural Holdings Act 1986 tenancies which continue to have rights of succession. Where those rights of succession apply, a narrow list of close relatives are able to apply to be considered to be eligible to take on succession tenancy. Up to three generations of members of the family can be tenants of the same holding. The current franchise includes husbands, wives, civil partners, sons, daughters, individuals brought up in farm families and treated as children of a marriage or civil partnership, and brothers and sisters of the deceased or retiring tenant. However, crucially, the list of potential successors does not include the grandchild, the nephew or the niece of the deceased or retiring tenant, nor does it include children from a cohabiting partner of the deceased or retiring tenant. The amendment seeks merely to correct for those omissions. This is also an issue that was considered by the Tenancy Reform Industry Group. It is often the case that the most appropriate successor in a family business is not to be found in the immediate generation but in the next, and there is no reason to deny the ability for the tenancy to be passed to those individuals should they also be able to meet the other eligibility criteria.

I strongly support Amendment 87 in the name of my noble friend Lady McIntosh of Pickering, as it seeks to provide a framework for encouraging longer-term farm business tenancies. As the noble Earl, Lord Devon, raised, the average length of FBTs is under four years. With 90% of all tenancies let for five years or less, this is a crucial issue. I look forward to hearing what the Government plan to do about it and ask that consideration be given also to the taxation environment within which landlords make decisions about farm tenancy letting, as has been proposed by the Tenant Farmers Association.

Amendment 88 in the name of my noble friend Lady McIntosh of Pickering is crucial to this legislation. FBT tenants should not be left out of the possibility of objecting to their landlord’s refusal to allow them to enter into a financial assistance scheme. Should my noble friend push this matter to a vote, I would certainly vote in favour of the amendment, as it closes a dangerous loophole for nearly half the tenanted sector of agriculture.

Finally, I turn to Amendments 69 and 89 in the name of the noble Earl, Lord Devon. I cannot support the removal of the tenancy provisions in the Bill that those amendments would achieve. However, I understand and fully agree with his view that we urgently need a specific Bill covering agricultural tenancies. It could pick up on many of the issues already recommended by the Tenancy Reform Industry Group. I urge my noble friend the Minister to give an assurance that an agricultural tenancies Bill will be brought before this House in the not too distant future.

I know that my noble friend the Minister is very supportive of the tenanted sector and highlights its importance to the whole agricultural industry. I thank him particularly for his empathetic engagement on this. It is therefore right that new legislation, providing security and stability to the tenanted sector, should be brought before the House. Although I am minded to test the will of the House on my amendments, I will listen carefully to what the Minister says before making my final decision.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, I am delighted to follow my noble friend Lady Rock and thank her for her staunch and eloquent support for Amendments 87 and 88. Perhaps I may briefly address Amendments 69 and 89, in the name of the noble Earl, Lord Devon. I have great difficulty with them because they would remove from the Bill all provisions relating to agricultural tenancies. That would be a very regrettable move. However, I support Amendment 84 in the name of the noble Lord, Lord Wigley, which is a mirror image of the amendments standing in my name.

I will address my remarks primarily to Amendments 87 and 88. Clearly, as I say in my explanatory statement, Amendment 87 would seek to

“bring into effect a legislative change proposed in the tenancy reform consultation carried out by DEFRA and the Welsh Government, which has not been covered by the Bill, to encourage landlords to let longer Farm Business Tenancies.”

I would like to draw out some of the comments made by my noble friend Lady Rock in speaking to her amendments as passionately and eloquently as she did. I am minded to press Amendment 88 to a vote, not on my behalf but on behalf of all the agricultural tenants for whom, I know, this is close to their hearts.

I have had cause to raise this issue at previous stages of the Bill and I feel passionately about it. I grew up in a part of the world—Teesdale, in the Pennines in the north of England—where the farm incomes are among the lowest in the land. The farmers there probably survive only because their wives go out not just to help on the farm in all weathers, particularly at lambing time. In normal circumstances, outside Covid, they also go out and try to earn a living to keep the family afloat.

The basis of Amendment 88 is very simple. It is to put the tenants’ agreements under the Agricultural Tenancies Act 1995 on exactly the same basis as under the Agricultural Holdings Act 1986. My noble friend Lady Rock referred clearly to the devastating effects of moving from a secure tenancy agreement to an insecure tenancy, which do not bear thinking about in the present climate. Tenant farming is the bedrock of this country; it is almost unique to the English countryside. I remember so clearly from my years as a Member of the European Parliament how we stand out as one of the few areas of Europe with such a well-developed system of tenancies.

What I find so heartbreaking about the current situation is that the two Acts have not yet been brought together. To me, the provisions covering tenants under them should be absolutely as one. This is a highly regrettable situation. To be fair, my noble friend the Minister tried to go to some pains to put my mind at rest in Committee. Yet I find myself tabling the same amendment on Report, and potentially putting it to a vote, because I have not had satisfaction on this point.

I believe I am here as a voice for those people who cannot be represented otherwise than through our good selves in this House. I urge my noble friend to consider any reason why the tenancies under the two Acts cannot be treated in exactly the same way. It would be grossly unfair if any tenants’ possible access to financial assistance could be refused at the whim of a landlord. I accept there are good tenants and bad tenants; there are good landlords and bad landlords. But we have to look at the worst-case scenario.

Photo of Lord Carrington Lord Carrington Crossbench 8:45 pm, 17th September 2020

My Lords, I declare my interests as set out in the register, together with my membership of the National Farmers Union and the CLA.

I sympathise with, but do not support, the noble Earl, Lord Devon, in his amendments which would remove both Clause 34 and Schedule 3 from the Bill. Although, in an ideal world, the legislation on the reform of tenancies would be in a separate Bill, the clauses cover several matters that have been agreed by the industry through TRIG. So, if necessary, I would reluctantly accept Clause 34 and the schedule. However, what I certainly would not support—and I am afraid I do not support either the noble Baroness, Lady Rock, or the noble Baroness, Lady McIntosh of Pickering—are Amendments 85 and 86 regarding succession on the death of an Agricultural Holdings Act 1986 tenant.

The suggestion that the rights of succession should be given to nephews, nieces, and grandchildren as well as partners and their children is several steps too far and begs the question, “Why stop there?” It would unnecessarily prolong the life of the AHA 1986 tenancies when we have moved on to the Agricultural Tenancies Act 1995, along with a more modern and flexible regime for letting agricultural land, with the hope of bringing new entrants into the industry.

All these amendments would achieve is benefiting a small group of successors, some of whom might succeed anyway in view of their existing competence and relationship with the landowner, and others who might see it as an easy way to inherit an otherwise unaffordable house and a deceptively attractive way of life. It would also have the serious effect of depriving landlords again of their property rights and access to their own land for another generation.

Land could and should be freed up for a wider pool of occupiers under arrangements and agreements that are more flexible and more market-oriented and might help deliver productivity advantages. New tenancy agreements or share farming, as well as joint ventures, which are more collaborative, work well for new entrants and young farmers.

I am also opposed to Amendment 88 with its proposed changes to the Agricultural Tenancies Act 1995. All stakeholders in the industry have expressed their agreement that the 1995 Act provides a suitable framework for tenancies in the modern era, with flexibility for the parties to agree the terms that suit their arrangement. This legislation has generated very little need for litigation or dispute resolution, and on previous occasions, all parties were agreed that the Act did not need revision or reform.

The amendment would create a situation where a recently agreed tenancy agreement can be amended in a way not foreseen or agreed to by the parties. If the parties are not able to agree on amending terms—an option that is, of course, open to them—to do this by recourse to an expensive alternative dispute-resolution process will have a very negative impact on that relationship and more widely on the landlord/tenant sector. It will undermine cross industry efforts to encourage parties into longer term agreements and possibly undermine the lettings market altogether. It is a different context to that under the Agricultural Holdings Act 1986 framework and will be counterproductive to the industry. It is also proposed in the amendment that the detail of how such a dispute would be resolved by secondary legislation be determined at some later point. This is very unsatisfactory.

Issues and factors like these certainly need to be further discussed and considered by TRIG before being legislated upon. The National Farmers’ Union has welcomed the reforms in the Bill but also urges that other reforms, such as landlords’ consent to variation of terms under tenancy Acts, are taken forward through TRIG. Please could the Minister consider separate legislation to cover tenancy reform issues that are not currently in this Bill on the back of the TRIG recommendations?

Photo of Lord Taylor of Holbeach Lord Taylor of Holbeach Conservative

My Lords, it is a pleasure to follow the noble Lord, Lord Carrington, and to participate in the debate on this group of amendments. Noble Lords will know of my interest in my family business, which is on the register.

I speak as someone privileged with “boys’ land”—they say this of the silts around the Wash. This land is ideal for arable farming, and we grow a diverse range of crops, from bulbs, in which we are prominent, to cauliflowers and potatoes. My neighbours are engaged in a great variety of different cropping, and this diversity —together with the marketing and distribution facilities —has encouraged field-scale horticulture similar to that in the Netherlands. It has also led to large-scale investment in protected cropping indoors and not exclusively under glass. I admit that this experience colours my thinking as to how we can raise productivity and harness modern techniques of scientific agriculture. It also colours my thinking about the role that the occupation and use of land plays in allowing a lively and prosperous industry.

I spoke in Committee on amendments covering tenancy issues and, in particular, about the value of cropping licences. I explained the background to my conviction that a dynamic farming and growing industry depends on having a lively market for land occupation to make this land readily available to up-and-coming farmers and growers. Schedule 3 is the product of the dialogue between the Government and the Tenancy Reform Industry Group, where different parties to this issue are seeking to find consensus on landholding issues.

Consensus must be the right way to seek to change something as complex as this. I might add that it seems to me that this whole Bill is about establishing a consensus on a path for agriculture into the future. It is with this in mind that I cannot support the wish of the noble Earl, Lord Devon, to remove Clause 34—and, with it, Schedule 3—of this Bill. I believe that Schedule 3, which his amendments seek to remove, delivers on the Government’s consultations in England and Wales and, indeed, on many of the recommendations from TRIG.

The Bill is not a root-and-branch reform of tenancy legislation. It is not intended to be. Listening to this debate, I am very much aware that many noble Lords are impatient for more changes. However, these modest key and agreed changes, which form Schedule 3, will help to modernise agricultural tenancy legislation and, more importantly, play a part in giving this key industry the flexibility to adapt to change, and this is why they should remain in this Bill.

Having said that, I hope there can be consensus on further issues that the UK and Welsh Governments will wish to discuss with TRIG to see what other actions will lead to a thriving tenancy sector. In turn, this will require further consideration by Parliament and legislation. However, as it is, Schedule 3 makes considerable changes now, and they should be supported.

Photo of Lord Inglewood Lord Inglewood Non-affiliated

My Lords, although I declared my agricultural interests earlier, I should specifically declare that I am, and have been, a landlord, as a freeholder and as a trustee of let agricultural land, as well as having been a tenant, both of family land and, until recently, some land belonging to a third party. What I found interesting and remarkable about the speeches on the amendment is that, while a number of speakers have taken varying stances, they almost all seem to be coming from the same general place on the map—as I do and hope will become apparent.

It is helpful when thinking about these matters to start from the original economic rationale for the landlord and tenant system. Landlords provided fixed equipment and the tenant the working capital. The parties negotiated around that and the farm business was put together as what might be described as a form of joint venture. The reality in days gone by was that the landlord’s negotiating power was frequently stronger than that of the tenant. This point was graphically drawn to the attention of the House by the late Lord Williams of Mostyn in his final speech on the Bill reorganising the composition of this House, some 15 or so years ago, in what I consider to be the finest speech that I have heard in this Chamber. The imbalance over the years has led to a series of specific pieces of legislation to introduce rules for fair trading—something that we have just been considering in a different context—into this marketplace. That is as it should be.

Too often, the debate is conducted in black and white terms, when it is in reality shades of grey. Landlords range from hard-nosed financial institutions and Dukes to widows, orphans and charities—for example, the National Trust, which interestingly is not always popular among its own tenants. Tenants range from huge farming companies to smallholders. Their circumstances are wide-ranging. There are good and bad landlords, and tenants who are exemplary farmers and some who are chancers and incompetents. However, both sides, whatever characteristics they have, ought in a free society to be treated even-handedly within the legal framework surrounding whatever arrangement they wish to put in place. While this may, to a degree, depend upon one’s perspective, the landlord is not, in granting a lease, conveying away his freehold or emotional and other commitments to the land. It is not the re-creation of some form of copyhold system.

A tenant, particularly when he also obtains a farmhouse, is acquiring more than a mere business asset but a home, and making a considerable investment in someone else’s property. This must not be forgotten. Questions around bare land may be different. On top of that, both parties may be investing substantial sums of money, and all this must be taken into account. There is a perhaps an understandable tendency, at least superficially, to treat tenants as good and landlords as bad. That is not, by any means, universally the case. I speak from first-hand experience on which it is unnecessary to elaborate further here.

The conclusion that I have come to when thinking about these matters over the years is that perhaps the best way to make a mess of the landlord and tenant system is to rewrite it on the hoof on the Floor of Parliament in an ad hoc manner. Rather, as a number of speakers have said, those in the industry should, from time to time, review the matters to find a middle way that, as far as possible, represents a compromise acceptable to all those involved. That will need to be led by some entity or organisation like the Tenancy Reform Industry Group, TRIG. Failure to do that will not only wreck a system that must adapt anyway to completely new circumstances as the output of farming changes but, as many speakers have said, but properly ensure fairness on all sides. It is certain that if changes are made in an ad hoc, incremental way, real injustice in all kinds of unexpected places is likely to result. I am old-fashioned enough to think that it is a matter that Parliament should do its best to avoid.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, the noble Lord, Lord Curry of Kirkeharle, has withdrawn, so I now call the noble Baroness, Lady Bakewell of Hardington Mandeville.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat Lords Spokesperson (Environment, Food and Rural Affairs) 9:00 pm, 17th September 2020

My Lords, it is a pleasure to follow the noble Lord, Lord Inglewood. This is an important group of amendments, to which others have spoken eloquently. I added my name to Amendments 81, 82, 83, 85 and 86 in the name of the noble Baroness, Lady Rock. I congratulate her on her speech and agree wholeheartedly with her detailed comments.

The noble Earl, Lord Devon, moved Amendment 69 and spoke to Amendment 89, which would remove agricultural tenancies from the Bill. I listened carefully to his speech and I am afraid I cannot agree with him. Removing reference to tenant farmers from the Bill because insufficient importance is given to them is not the answer. Tenant farmers are a vital part of the patchwork of agricultural holdings across the country. If they are removed from the Bill, I am unclear on just how we can safeguard their survival. However, I agree that three years is far too short for a farm tenancy business.

The amendments I will speak to all apply to Schedule 3 and would ensure that those currently involved in agriculture on a tenancy basis can function effectively. I support the comments of the noble Lord, Lord Wigley, and those of the noble Baroness, Lady Rock, on financial assistance schemes. These must be open to all tenant farmers. It is unacceptable for their landlords to refuse consent for them to engage in these schemes. Those who work the land and do the back-breaking jobs involved should be able to reap the rewards. It is unacceptable for landlords to block the rewards, cream them off for themselves or alter the tenancies to the disadvantage of the tenant, as the noble Baroness indicated.

I turn to the amendments that relate to the rights of succession to a tenancy on death. Many tenant farms will be run by extended family members. For some, the nephew, niece or grandchild of the farmer will have been helping to run the farm for some time and see it as the only way they themselves can get into farming. It is therefore imperative that they should be able to succeed to the tenancy. They have experience and expertise, often gained over many years, and the farm will be in safe hands. Similarly, those in civil partnerships or cohabiting should be able to succeed to the tenancy where they wish to do so.

We have on previous days on the Bill debated the importance of encouraging new entrants into farming. To shut out those who wish to carry on the family tradition by refusing succession to the tenancy would be both cruel and unwise. These are the very people the Government should be encouraging to take up the reins and carry on. They are also the ones likely to welcome a move to a more environmentally friendly way of farming. I disagree with the noble Lord, Lord Carrington: no one related to a farmer or his extended family could possibly think that farming is an easy option.

Lastly, I support the letting of longer farm business tenancies. In Committee, the noble Earl, Lord Devon, referred to the woefully inadequate length of farm business tenancies of three years. This is hopeless for anyone wanting to plan ahead and make the best use of the land.

While I accept that short tenancies mean that others can come on to the land, it is not likely to encourage proper management of the land if, at the end of three years, the tenant farmer has to give up and move on. Often, there are no farms for them to move on to, as the popularity of pony paddocks means that some farmers have sold off land piecemeal for this purpose. A longer tenancy agreement is vital if the Government are to ensure that ELMS are successful. The Government cannot insist that it will take farmers seven years to convert from CAP to the ELMS system and then legislate only for three-year farm tenancy businesses. These are all vital issues, and should the noble Baroness, Lady Rock, wish to test the opinion of the House, we will support her. I look forward to the Minister’s comments.

Photo of Lord Grantchester Lord Grantchester Shadow Spokesperson (Energy and Climate Change), Shadow Minister (Environment, Food and Rural Affairs), Shadow Spokesperson (Business, Energy and Industrial Strategy)

I thank the Tenant Farmers Association for its communications on these clauses. I also thank the noble Lords who have tabled these amendments for further consideration. They tackle many aspects of the two major Acts, the Agricultural Holdings Act 1986 and the Agricultural Tenancies Act 1995, following the Government’s consultations on their workings, on which there has been so much debate. I recognise the passion with which many speakers have spoken tonight. These relationships can certainly become fraught and I appreciate the experiences that the noble Baroness, Lady Rock, shared with the House. It is a difficult and complicated subject that has been deliberated on by the Tenancy Reform Industry Group over many years. The Bill delivers on many of its recommendations, and the Minister will see that they are drafted to balance the interests of tenants and owners.

I understand that many of the amendments were consulted on last year but did not receive enough support and that therefore further, more detailed work may be required. I understand that there remains an appetite in England and Wales to consider the situation further before coming to a conclusion by the enactment of these amendments. The amendments are certainly important and have our broad support, including Amendment 88 in the names of the noble Baroness, Lady McIntosh, and the right reverend Prelate the Bishop of St Albans. We agree that there should be parity between tenants under the 1995 Act and those under the 1986 legislation in objecting to a landlord’s refusal to enter into a specific financial assistance scheme. We wish generally that all farming operations, whatever the terms of their occupancy, should be encouraged to take up the various ELM schemes and make their contributions towards an environmentally sustainable agriculture.

We would also be receptive to the modern interpretation of relationships that could lead to wider inclusion in tenancies, in line with our general encouragement for new entrants to come into the industry, provided they can meet the various eligibility provisions. The noble Earl, Lord Devon, argues that these clauses should be excluded from the Bill, but we would not go along with such an approach. If improvements to the legislation have been agreed as part of the TRIG process, we would not wish to hold them up. However, regarding further amendments, we can see that these may not have received the more considered support as widely as may be necessary for enactment in the Bill. We await the outcome of a more comprehensive assessment throughout the industry.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

My Lords, I thank all noble Lords. The noble Lord, Lord Grantchester, used the word “passionate”. It has been a passionate debate and I think that, whatever the tenure of ownership, tenancy or commonhold, the challenges of farming are very profound. Obviously, the Government need to work towards creating an environment in which all types of tenure are able to run a strong business.

Turning to Amendments 69 and 89, the noble Earl, Lord Devon, proposed that we should in effect decide not to take forward what we have banked in our work. The package of tenancy reforms included in Clause 34 and Schedule 3 were shown by public consultations in England and Wales to have broad support. They deliver on many of the recommendations from the Tenancy Reform Industry Group—TRIG. The noble Lord, Lord Grantchester, made that point rightly, because the Government have brought forward those recommendations which commanded broad support. These provisions will help to modernise agricultural tenancy legislation, providing tenants with more flexibility to adapt to change. That is why it is very important that they remain in the Bill, so that they can be delivered now.

I understand that the noble Earl, Lord Devon, would like to see tenancy reform delivered through a separate dedicated Bill, and I can assure him and noble Lords that both the UK and Welsh Governments are keen to engage in further discussions with members of TRIG to explore whether any further actions may be needed to ensure what we all want, which is a thriving tenanted sector.

On Amendment 84, the tenant farming sector remains, as the noble Lord, Lord Wigley, said, and as we all know, a crucial element of agriculture in Wales. Within last year’s consultation, the Welsh Government outlined their proposals for a new sustainable land management scheme in Sustainable Farming and Our Land. It also consulted on a series of measures to modernise the tenant farming sector in the agricultural tenancy reform consultation. Policy development on tenancy reform remains ongoing in light of the consultation responses received and is being carried out in conjunction with development of sector-wide proposals for future agricultural support.

The Welsh Government acknowledge the importance of ensuring that tenant farmers are able to access any new scheme, and their view is that a Senedd Bill would provide a more appropriate legislative vehicle for that purpose. Further consideration will be given to what provision is needed in due course. The Welsh Government intend to publish a White Paper later this year to pave the way for an agriculture (Wales) Bill to be introduced in the next Senedd term.

On Amendment 87, there can of course be benefits from tenants and landlords entering into a longer-term tenancy agreement. There has been a lot of talk of three years. As far as I am aware, the parties can, if they so choose, have any length of term they desire; in the same way as with arrangements with any other property, that is a matter for the parties. I was therefore a little concerned that there appeared to be among certain of your Lordships this idea that everything was for three years and there was no leeway. As far as I know, and from my experience, that is not the case.

However, when the Government consulted on this matter of longer-term tenancy agreements, the feedback gathered indicated that introducing shorter notices to quit would be unlikely to affect significantly landowners’ decisions about the length of tenancy to offer. Other factors such as the size, quality and location of the land, and personal motivations for owning land have a much greater influence on decisions about the length of the tenancy term offered.

It is also important to recognise that, while there are benefits to longer-term tenancy agreements, shorter-term tenancies can be more suitable for different business models. For example, short-term lets have been shown to be very often more appropriate for new entrants looking to rent land on a flexible basis to gain experience. They can also be more suitable for some seasonal horticultural businesses. However, I can assure your Lordships that the Government will continue to work with TRIG on this important issue. That includes exploring how the sector can encourage more landowners to offer innovative long-term agreements to tenants who would welcome them rather than defaulting to standard short-term agreements.

On Amendment 88, when considering changes to agricultural tenancy legislation, we consider the effect on the tenant farming sector. Responses to our public consultation showed that there is not the same need for dispute provisions for farm business tenancies as there is for Agricultural Holdings Act tenancies. I refer to this because I can well understand the instinct which questions why the two forms of tenants are not treated the same. The noble Lord, Lord Carrington, referred to these two pieces of legislation and I would like to explain why they are different. I am worried about the proposals here because, in my judgment, there are dangers.

The Agricultural Holdings Act agreements were negotiated 30 to 40 years ago, in a very different policy and commercial environment, and they often contain outdated restrictions that have not been reviewed for many years. Farm business tenancies—FBTs—are the modern commercial agreements negotiated more recently, and within the context of environmental schemes being available. This a very important point. They are reviewed more regularly, giving tenants the opportunity to renegotiate terms if they deem it necessary, for example to enable diversifications or to enter future financial assistance schemes.

Respondents to the consultation also noted the risk that challenging the terms of very recently negotiated agreements could undermine landowner confidence in letting land through FBTs, reducing opportunities for tenants in future. I cannot believe that this is what anyone wishes. My view on the tenancy structure and sector is that we need to do everything we can to foster a climate in which owners see FBTs as a desirable route for the farming of their land.

I am very concerned that, as my noble friend Lord Inglewood said, if we go along what I would call the ad hoc line, there could be unintended consequences. In my view, if we want to have more innovative new entrants coming into agriculture via the FBT system, it is absolutely necessary, with no more land being created, to have owners who might well think of having a tenancy with their neighbour or someone else, and that this is seen as a positive. Particularly given the more modern arrangements that have been so recently negotiated, I think there are dangers in this.

I say to my noble friend Lady McIntosh, because of her passionate introduction of this amendment, that the Tenancy Reform Industry Group is updating its guidance to support tenants and landowners in discussions about diversification and entering environmental schemes, including what I believe is important in any financial arrangement between parties—highlighting the benefits for both parties.

In addition, we are designing our future schemes, such as ELM, to be accessible to as many farmers and land managers as possible, particularly tenant farmers. We have six trails and test areas where landholders and tenants are working together to deliver ELM schemes. For example, the Barningham Estate Farmers Group is made up of tenant farmers and landowners who farm on and around the Barningham Estate in County Durham and North Yorkshire. It covers an area of over 7,000 acres, reaching from open moorland with blanket bog habitats and miles of dry-stone walls, through rough pasture and a black grouse lek, to hay meadows, wetlands and SSSI ancient woodland.

The group is testing an innovative cross-holding, collaborative system for planning and delivering environmental management on land that encompasses a variety of farming systems and a tapestry of nationally and internationally important habitats. This will include testing how a natural capital approach could be used to create a landscape-scale management plan within the context of tenancy agreements, and how collaboration between tenants and landowner can be supported and incentivised.

On Amendment 81, I understand my noble friend is seeking assurances that the Government will make these regulations, and I can give that assurance. We will make them at the earliest opportunity. It is important to ensure that tenants of Agricultural Holdings Act agreements are not unreasonably prevented from entering future financial assistance schemes due to outdated restrictions in their agreements which may have been agreed many years ago in a very different commercial and policy environment. The Government will develop the details of these regulations in discussion with members of the TRIG over the next few months to ensure the interests of both tenants and landowners are taken into account.

I will take Amendments 82 and 83 together. I assure my noble friend and other noble Lords that the Government are designing ELM, and all other future schemes, to be accessible to as many farmers and land managers as possible. I have mentioned tenant farmers but, in another group, I mentioned the importance of those who work on common land. The question of landowner consent will be considered as part of the co-design process. This includes delivering test and trial projects involving tenants and landowners, so we can learn from their feedback. These dispute provisions have been very carefully constructed using feedback from the Government’s public consultation considering the needs of both parties. They are designed to offer a fair dispute process to be used in limited circumstances and as a last resort by tenants of Agricultural Holdings Act agreements who find they are unreasonably prevented from applying for financial assistance schemes due to outdated restrictions in their leases.

Broadening the provisions any further would risk undermining confidence in the benefits of letting land through agricultural tenancy agreements. In practice, many landowners and tenants come to practical agreements on environmental schemes without the need for dispute resolution. To encourage this approach further, TRIG is working on updated guidance to support tenants and landowners in discussions about diversification and environmental schemes, highlighting the benefits to both parties.

On Amendments 85 and 86 on tenancy succession, the Government consulted last year on proposals to expand the list of relatives eligible to succeed a tenancy agreement. Concerns were raised that doing so would disproportionately affect owners’ rights to their property. This is because the proposed changes could extend a tenant’s occupation of the holding for many years beyond the timescale a landowner has been expecting, particularly in the case of succession by grandchildren of current tenants. Of course, there are examples of landowners wanting and willing to negotiate solutions to family succession, such as offering long-term tenancy agreements to grandchildren of the tenant where they are the most suitable future tenant with the best knowledge and skills to continue the farm successfully. I and the Government believe that this is a sensible way forward. The Government will continue to engage in discussions with TRIG, which represents both parties, to encourage this approach.

I conclude on these tenancy matters by underlining the supreme importance that the Government place on our ongoing work with TRIG. This is crucial as we continue our work over the coming months to implement the provisions in this Bill through regulations and then, as we take the next steps, to review and progress the actions from our tenancy consultation which require further work, either through legislative or, possibly, non-legislative means. I assure my noble friend and other noble Lords that this important work with TRIG will continue with care and attention, so that we can ensure, importantly, that landowners are confident in letting land that they own and, equally and probably more importantly, that tenants can thrive and build successful businesses.

I have something to recommend to noble Lords—and, of course, my noble friend and noble Lords can do as they wish. The reason why I have spent a little time on my reply and have considered it beyond my script is that I understand the thrust of what has been said. It is my responsibility to say that, if we want to have the numbers of new entrants, very often younger people, coming into this great and important sector, we have to think about how we can encourage people who own land, who may decide that they do not want to farm it themselves—it may be small parcels of land or large parcels of land—and do everything we can to create an environment in which this is seen as a positive and a route by which people who own land, of whatever size, decide “This is the route,” rather than saying, “Oh no, I might never be able to say that this is land I own. This is a route whereby I might go down the contract farming line or I might get a contractor in”. The tenant farming sector is, as has been identified, historic—but, importantly, there are strong reasons why, for current and future tenant farmers, we want this to be a very contemporary way of farming in this country.

In asking the noble Earl to withdraw his amendment, I take the opportunity to say to my two noble friends—for whom I have continuous regard and with whom I enjoy working—that I am very worried about the potential unintended consequences of their amendments. I will take the opportunity, if I may, to say that this is continuing work; let us get this done in a way that pulls everyone together in a consensus position. That is what we have done so far, and there is every reason to think that, through TRIG, we can make much greater progress; it may require legislation and other methods to get us forward. I very much hope that tonight at least the noble Earl might withdraw his amendment.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees, Deputy Speaker (Lords) 9:15 pm, 17th September 2020

I have received no requests to speak after the Minister, so I call the noble Earl, Lord Devon.

Photo of The Earl of Devon The Earl of Devon Crossbench

I am very grateful to all noble Lords for their conscientious and passionate contributions. I did not expect much support but wanted to prompt some vigorous debate, which I am pleased to have done.

I pay tribute to the wise work of the noble Baronesses, Lady Rock and Lady McIntosh, in this area. TRIG deserves great credit for its tireless efforts, and I agree with the noble Lord, Lord Inglewood, that we should follow the industry where we can. The ability of tenants to obtain access to financial support and support for capital improvements is important, albeit that I would note the need to maintain contractual freedom in such a highly regulated area. Increasing the opportunities for new entrants to farming via succession is also an important consideration—I say that as landlord to at least one tenancy that began under Queen Victoria. However, I note the words of warning from the noble Lord, Lord Carrington, about unduly extending cumbersome and outdated AHAs.

I have heard what the Minister had to say and appreciate the length of his response. I look forward to holding him to his assurances of further engagement with TRIG in the years to come. I agree with the need to foster enthusiasm among landlords and tenants with the increased adoption of FBTs, but preferably those that enhance the environment and our rural communities.

In three days of debate on Report, we have spent barely a late hour on agricultural tenancies. I believe this proves my point: it is not nearly enough.

Before I conclude, as this is my last appearance on Report, I thank both Ministers for their endless courtesy and patience with the efforts of a novice. With that, I beg leave to withdraw the amendment.

Amendment 69 withdrawn.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees, Deputy Speaker (Lords)

We now come to the group consisting of Amendment 70. I remind noble Lords that Members other than the mover and the Minister may speak only once and that short questions of elucidation are discouraged. Anyone wishing to press this amendment to a Division should make that clear in debate.