Amendment 109

Environment Bill - Report (4th Day) – in the House of Lords at 6:31 pm on 15th September 2021.

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The Earl of Devon:

Moved by The Earl of Devon

109: Clause 113, page 113, line 25, leave out “appears from” and insert “is stated within”Member’s explanatory statementThis amendment, along with another, adds formality to the process of creating a conservation covenant to reflect the serious, long-term nature of the commitments being made, and to ensure conservation covenants include provisions regarding the duration of the obligation and the consideration due to the landowner in return for the commitments given.

Photo of The Earl of Devon The Earl of Devon Crossbench

My Lords, this is a groundbreaking Bill in many ways but, from the perspective of English property law, no provisions are more revolutionary than Part 7 and the introduction of conservation covenants. This is a seismic shift, meaning that, for the first time since the Normans introduced common law, owners of land will be able to bind successors in perpetuity to positive obligations to manage land in a particular way. More radical still, and in a departure from the recommendations of the Law Commission, the counterparties to these obligations will now include for-profit companies—private enterprise. As a farmer and a former property barrister now practising at an agricultural law firm with clients in this space, I support this scheme and want it to succeed, but there are glaring imperfections in Part 7, causing major concern to, among others, the NFU, the Bar Council and the RICS. Because of that I have tabled Amendments 109, 110, 112, 113, 114 and 115.

Amendments 109 and 110 focus on the formalities by which conservation covenants are created, ensuring that they say what they are and what they do on their face and are created by deed rather than, as currently drafted, by a simple exchange of emails. Amendment 112 ensures that for-profit responsible bodies are conservation- focused, not distracted by other, competing duties, such as making profits for their shareholders at the expense of the environment. Amendments 113 through 115 resolve the untenable position when a responsible body defaults, such that the Secretary of State steps in and, in perpetuity, binds a landowner to a positive obligation without any reciprocal duty to pay the fees covenanted. Since Committee, I am grateful for the support of the noble Baroness, Lady Jones of Whitchurch, the noble Lord, Lord Oates, and the noble Viscount, Lord Ridley, and many others, including the noble Baroness, Lady Jones of Moulsecoomb, indicating a very broad consensus across your Lordships’ House for these modest but vital amendments.

I am also grateful to the Ministers in Defra and the Bill team for their engagement, although I remain concerned that there is a failure to grasp the significance of the issues raised. Given the time, I do not propose to restate the hypothetical parade of horribles that I set out in Committee, but I note that no one has argued that those hypotheticals are wrong. The Government erroneously asserted that conservation covenants needed to be executed by deed in order to be registered as local land charges, but they have since accepted that that was inaccurate. That is appreciated; however, this only reinforces the sense that this radical change to property law is being rushed through without due consideration or understanding. It is our duty to build in necessary safeguards to protect farmers, the environment and future generations from the threat of zombie covenants blighting our green and pleasant land in perpetuity.

Key to resolving these concerns is Amendment 110, requiring that conservation covenants be executed by a deed which contains its key terms as to duration and payments on its face. This is the traditional and best way to ensure that advice is taken such that the potentially punitive and perpetual implications of entering a conservation covenant are properly understood at the outset. The Government say that their draft guidance recommends legal advice, and this should be sufficient, but anyone willing to enter a perpetual covenant by a mere exchange of emails is hardly going to sit down and read the guidance first. Defra wants no brake on the uptake of these covenants and, rather unusually, it is farmers seeking greater formality and not the Government. Defra has directed me to other statutory covenants created without necessarily using a deed, but none of these contains positive covenants, perpetual in nature, with a for-profit private counterparty. These are largely restrictive covenants with trusted statutory authorities.

Amendment 111 in the name of the noble Earl, Lord Caithness, sets out at considerable length the full formalities to be considered in executing a conservation covenant, formalities the RICS would no doubt recommend. Such extensive formalities may not be warranted within the legislation, but they are exactly what will be considered by properly advised parties executing such a covenant by deed.

The Government suggest that Amendment 112 is unnecessary because Defra will ensure that responsible bodies are truly responsible, but I have read the draft guidance and nowhere does it state the objective parameters against which responsibility will be judged. Indeed, it appears that foreign entities can be responsible bodies, so long as they have a PO box in the UK, and entities directly connected with the landowner could be responsible bodies too—there is no prohibition.

I was also surprised in Committee that the Minister cited the example of for-profit water companies as the type of body the Government consider to be responsible. Would that include Southern Water, recently fined £90 million for environmental degradation on an industrial scale in the pursuit of shareholder profits?

Amendments 113 to 115 solve the intolerable impact of the responsible body becoming bankrupt or deregistered and passing its role as counterparty to the Secretary of State, who then has no obligation to pay anything to the landowner, whatever the cost of the landowner’s conservation commitments. These amendments strictly limit the duration for which the Secretary of State is holder of last resort to 12 months, after which, if no responsible body is willing to take the covenant on, it is simply discharged. This has the effect of killing a zombie covenant and protecting the landowner and the land from the risk of a perpetual obligation with no payments in return. Without this change, the scheme is fatally flawed, as anyone advising on such covenants would have to identify this very real risk and advise against it. Of course, if landowners do not take advice, they will not know of this risk, as I note that no mention is made of it in Defra’s draft guidance.

I could go on, but time is short and the arguments are clear. For these reasons and the myriad others I set forth in Committee, I beg to move.

Photo of The Earl of Caithness The Earl of Caithness Conservative

My Lords, I support the noble Earl, Lord Devon, in his amendments. They are hugely important. I am a great supporter of conservation covenants and I want them to work effectively. As he just said, I have a number of amendments in this group.

I am looking at conservation covenants in something akin to a divorce situation. One can enter into marriage with the very best of intentions and it is all going very well, but then it starts going sour. Divorce can be extremely costly and brutal. A conservation covenant could be entered into with the very best of intentions, but here the situation is complicated because the parties entering it could be different parties when it comes to a conclusion. There could be very different interpretations and a great deal of costs.

The noble Earl, Lord Devon, did not actually mention costs so much today as he did in Committee, but in Clause 126 the final remedy is the Upper Tribunal and that can cost £50,000 to get started. Can farmers really afford that, particularly tenant farmers? The average size of a farm in England is 87 hectares and the cash flows are bare at the most. They might be a little better with the wheat price at the moment but, sure as anything, we have seen wheat prices go up and come down. You cannot expect farmers to have that amount of ready cash to fight in the courts.

I therefore seek to spell out in some detail the sort of things that need to be taken into account. I do not expect many conservation covenants to be undertaken by tenants but, if one is, all the freeholders of the land should be signatories to that agreement. I hope my noble friend will confirm that. It is a very un-Conservative thing to deprive the beneficiary of a reversionary interest of the full value of that interest, which could easily be done if a tenant enters into an agreement which prejudices the farm at the end of the tenancy. Not only does a conservation agreement affect one property, but it could very easily affect the neighbouring properties and surrounding farms if that conservation covenant involves the re-wetting of the land, which can take many years to undo.

I hope we can get a simpler way to modify and change the tenancies. When negotiation has failed, we need a simple system. I suggest in my amendments that there is an alternative dispute resolution which is simple, cheap, and which farmers, tenants and landowners are used to. I am hugely concerned by the impact that outside bodies might have. As the noble Earl, Lord Devon, has just reminded us, all you need is a PO box. You could get foreign investment companies coming in, taking over these conservation covenants and making life extremely difficult for the occupier.

I very much hope that the Government will be sympathetic to the amendments tabled by the noble Earl, Lord Devon. His Amendments 109 and 110 cover all the points I have raised, but I have spelt them out in a different way because they are of extreme concern to farmers.

Photo of Baroness Jones of Moulsecoomb Baroness Jones of Moulsecoomb Green

My Lords, I will speak briefly. When I first looked at these amendments, I decided to leave them well alone because I did not know what covenants were. Looking at them a little more closely, my working-class bigotry kicked in and I thought that if three hereditary Peers were dealing with this then I ought to be careful. But, in fact, I am convinced, soothed and reassured, and I will be voting for the amendment.

Photo of Viscount Ridley Viscount Ridley Conservative 6:45 pm, 15th September 2021

Follow that, my Lords. I declare my interest as a landowner. The noble Earl, Lord Devon, has made some very good arguments, both today and in Committee in what is a very good example of the House of Lords at its best. He made a very powerful speech in Committee that made a lot of people think hard about a difficult topic. Like him, I support the scheme for conservation covenants very strongly indeed. I saw how conservation easements work in the United States years ago and have argued for years that we ought to have a similar system here. However, he raised some key questions in Committee, and I do not think they were adequately answered either from the Dispatch Box or in later correspondence. That is why I have added my name to these amendments. I am not looking to cause trouble; I am looking for reassurance from my noble friend the Minister that the Government have listened to his concerns and come up with some important reforms to this legislation.

Conservation covenants are, or should be, formal, solemn, momentous undertakings. That should be reflected in the way they are entered into. They should be done by deed and not by an email. They should be with a focused and specialised partner, not a potential scallywag, as we have heard. I am not a lawyer, but the law that worries me here is the one we cannot repeal: namely, the law of unintended consequences. As the noble Earl, Lord Devon, put it, the prospect of zombie covenants blighting our green and pleasant land is not a pleasant one.

The other key concern is the possibility that the advice on how to conserve a habitat, species or piece of biodiversity may prove wrong over time, and a sort of flexibility needs to be built into this to correct a covenant. I spoke at Second Reading about a real example of this with peewits on the Isle of Sheppey. Essentially, it was discovered that, by providing super-habitats for the peewits to nest but no predator control, you were actually draining the population of birds. They were attracted to the place but could not rear any chicks and died of old age without any grandchildren. There has been another example recently in the media of the fact that the willow tit is declining largely because there are too many bird feeders, benefiting the blue tit, which takes over the willow tit’s holes and evicts it.

These are small examples and may seem trivial ones, but the point is that we learn that conservation advice changes over time. We need to be able to reflect that in these very solemn and long-term undertakings. Again and again I have seen practice in one decade that turns out to be wrong in the next. I will listen carefully to my noble friend the Minister and to any response that comes.

Photo of Lord Oates Lord Oates Liberal Democrat Lords Spokesperson (Energy and Climate Change)

My Lords, I am pleased to give my support to the amendments in the name of the noble Earl, Lord Devon, and he will have the support of these Benches. I must say he has caused me some slight difficulty as, like him, I also have an American spouse, who recently watched the programme about Powderham Castle with Mary Berry and turned to me and said: “How come we don’t have a castle? Aren’t you a lord too?” I have put that aside in the interest of these amendments and I will not detain the House too long, as the noble Earl has set out the case very compellingly.

Whatever anybody’s views about Part 7, we are all agreed that it is significant and the covenant agreements that will be entered into are significant. Therefore, those entering them should do so not simply by email but with advice. That amendment is a basic thing we should be able to agree on.

The other amendments set out by the noble Earl also have compelling resonance. We do not want private companies with no interest in conservation buying up land, and there should be no perpetual obligation on landowners, with no payments. So we support these amendments. They are very reasonable, even modest, and can only improve the Bill and the likelihood that conservation covenant agreements will have a good chance of success. I hope the Government will be willing to move on them but, if they are not, and the noble Earl wishes to divide the House, he will have the support of these Benches.

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Shadow Spokesperson (Environment, Food and Rural Affairs)

My Lords, I do not have an American spouse to declare and I am certainly not a landowner, so maybe I bring more of a working-class approach to this. But I do declare an interest as a member of the South Downs National Park Authority, where conservation covenants are already becoming a live and slightly perturbing issue. I speak in support of Amendments 109, 110, 112, 113, 114 and 115 in the name of the noble Earl, Lord Devon, to which I have added my name. I also thank the noble Earl, Lord Caithness, for his amendments, which echo our concerns about the current wording of Part 7 of the Bill.

As the noble Earl, Lord Devon, said in Committee and again today, conservation covenants are a new and radical concept. They could bring great benefits to our landscape and to improving our biodiversity, but they are long-term agreements with huge implications for the landowners, so it is essential that we make the wording watertight from the start. The noble Earl’s Amendments 109 and 110 would require any conservation covenant to be underpinned by a deed. We believe this provision is essential. It would ensure that the landowner received appropriate legal advice before locking in the land to agreements that could last 100 years or more, committing their family for generations.

In the noble Lord the Minister’s letter following the debate in Committee, he made it clear that the covenants would not require a dominant and servient tenement. The implication was that this would be an equal agreement between the landowner and the responsible body, but we know this is not necessarily how it will work in practice. We are talking about public bodies or large institutions with huge resources compared to a single landowner, who may be a small farmer. So it is crucial that they get the best legal advice, which a deed would deliver. There would then be clarity for all on what the conservation requirements are.

As I mentioned in Committee, the concept of environmental stacking is also taking hold, where a landowner might have multiple conservation obligations to different bodies, with all the legal complexities that that would ensue. Could the noble Baroness clarify how it would work if a covenant existed for a piece of land? For example, would the landowner also be able to claim additional financial support through the sustainable farming incentive scheme?

We are also concerned about the implications of individual farmers being approached to sign covenants that are at odds with the wider plans for the landscape. How would we ensure that the covenant was in keeping with, for example, the strategic plans for the protected landscapes in the national parks? As I mentioned in Committee, farmers in the South Downs are already being approached to provide carbon offsets for developments elsewhere, and the new biodiversity offsets will complicate matters further. All of this underlines the need for a land-use framework for England, which my noble friend Lady Young will be debating in the next group.

I also agree with the noble Viscount, Lord Ridley, that the advice on conservation may turn out to be wrong, over a period of time, so we need a simple mechanism to adapt and sign off new amended conservation agreements.

Finally, we agree with the noble Earl that the responsible bodies that determine the basis of the covenant, if they are not public bodies or charities, should be organisations focused solely on conservation —we all had a great deal of sympathy with his example of Southern Water, which did not quite tick the box of being a trustworthy conservator—otherwise, there is a danger of the covenants being traded by for-profit institutions with no interest in the biodiversity outcome and no direct engagement with the landowner. In the worst case, it is possible to imagine all these covenants bundled up into packages and traded internationally, with the UK losing control of its land use. I hope noble Lords see the sense of these amendments and agree to support them, if the Minister is not able to adequately address these concerns.

Photo of Baroness Bloomfield of Hinton Waldrist Baroness Bloomfield of Hinton Waldrist Baroness in Waiting (HM Household) (Whip)

My Lords, I thank all noble Lords who have contributed to this debate and especially the noble Earls, Lord Devon and Lord Caithness, for their amendments. I also thank the noble Earl, Lord Devon, for taking the time to discuss this important topic with the Secretary of State last night, and with Defra officials and the Law Commission. I start by emphasising that the Law Commission concluded that a regime for statutory conservation covenants is needed because there is currently no simple legal tool that landowners can use to secure conservation or heritage benefits when the land is sold or passed on.

Amendment 111, in the name of the noble Earl, Lord Caithness, risks limiting crucial flexibility in the design of covenants. The Government strongly support the Law Commission’s approach of keeping the content and procedural requirements for conservation covenants simple and proportionate. We want to avoid unnecessary complexity and cost—and cost might dissuade landowners from entering into conservation covenants, leading to important conservation opportunities being lost. It is also vital that parties have the flexibility to design conservation covenants to suit their needs, given the wide range of conservation purposes they could be used to secure. We expect to see a range of different covenants created, from preserving small-scale heritage work done on a Tudor house through to securing long- term landscape-scale conservation management.

Amendment 109, in the name of the noble Earl, Lord Devon, seeks to prevent landowners inadvertently signing up to agreements, but I think this scenario is unlikely. The agreement must show that the parties intend to create a conservation covenant. A conservation covenant cannot be validly created unless the agreement clearly shows that the parties intended to create it. The Government have been working closely with stakeholders, including the NFU, CLA and the National Trust, to develop guidance, to be published, that will set out in more detail the process for creating conservation covenants and encourage both parties to take legal advice before entering into such an agreement.

On Amendment 110, I will first clarify something I said to noble Lords during the debate on the eighth day of Committee. To confirm, it is not necessary for a conservation covenant to be executed by deed for it to be registered as a local land charge. I also reassure the noble Earl, Lord Devon, that his concerns were carefully considered by the Law Commission: Clause 113 adheres to its final recommendations. His proposal that the agreement must be created in writing and signed was well received. In practice, those who prefer to execute their agreement as a deed may do so, and of course executing an agreement by deed does not guarantee that the parties will seek legal advice on the terms set out in the agreement—although, as I said, our guidance will encourage parties to take legal advice.

A perpetual agreement might be desirable to some; equally, a fixed-term conservation covenant could be appropriate to others. The proposal for flexibility on duration had the clear support of consultees and the Law Commission saw no sensible alternative. Where consideration forms part of an agreement, the clauses already allow for that to be captured. Requiring agreements to include provisions on duration and consideration risks rendering otherwise helpful agreements invalid if they fail to mention them, as consideration in particular may not be relevant to all agreements.

On Amendment 112, regarding responsible bodies, I agree with the noble Earl, Lord Devon, that for-profit bodies have a role to play in ensuring the success of conservation covenants. The Government’s 2019 consultation found broad support for allowing for-profit organisations to apply to be responsible bodies: 58% of respondents agreed, with only 26% against. The Government will closely check approved responsible bodies. Regulations on annual returns may require responsible bodies to provide an update on their eligibility. As part of the application process, we will also require organisations to notify us if conservation is no longer their main purpose or activity.

Noble Lords mentioned water companies as potential responsible bodies and were somewhat horrified at the prospect. However, if a water company were to be designated, it might find it helpful to make a covenant so that the land is managed in such a way as to prevent sewage flooding and storm overflows. There are genuine environmental reasons why water companies may wish to enter into a covenant, given how much we have been discussing the environmental impact of water companies in debate on previous days. These proposals are largely in line with the Law Commission’s draft Bill.

The most significant change that we made is to allow a wider range of bodies, including for-profits, to apply to be responsible bodies. This approach received broad support from consultees. We will consider a range of organisations with expertise in land management that could deliver long-term conservation outcomes. Applicants will be designated by the Secretary of State if they fulfil the necessary conditions. The noble Earl’s amendment aims to restrict for-profit bodies to those whose sole purpose is conservation. Very few bodies, if any, would fulfil this criterion, and this could lead to important conservation opportunities being lost. There are already sufficient safeguards built into the clauses. The Government’s responsible-body selection process will be rigorous, and ultimately, the Secretary of State has the power to de-designate responsible bodies which are not fulfilling their role.

Turning to the noble Earl’s Amendments 113, 114, and115, while I respect his intention to safeguard landowners’ interests if a responsible body should cease to operate, these amendments will not provide any substantive additional safeguards and in fact may have the unintended consequence of undermining the general intention of the custodianship provisions. The custodianship provisions act as an important backstop in the event that a responsible body ceases to be a responsible body, something that we expect will happen only rarely. They ensure that a conservation covenant can continue while a new responsible body is found, something that the Secretary of State will want to do swiftly. Our provisions already enable the Secretary of State to exercise the powers afforded to a responsible body. This will include the power provided under the Bill to bring the covenant to an end through agreement with the landowner, if both parties agree that this is the best course of action. Amendment 115 would set an arbitrary 12-month time limit on custodianship, after which a covenant would automatically be terminated. This could lead to opportunities for conservation being lost on a technicality, which is exactly the eventuality that this clause seeks to avoid.

Finally, I turn to Amendment 116, tabled by my noble friend Lord Caithness, whom I thank for his consideration of the Bill and for his proposed amendments in this group. However, I assure him that this amendment is not needed. If parties wish to convert existing non-statutory agreements into conservation covenants, so that they can take effect as statutory conservation covenants, they are free to do so. There is no need for an additional mechanism for this purpose. Responding to what my noble friend said earlier in his speech, the Government do not believe that it is necessary for this legislation to require a landlord to secure approval from the tenant, or vice versa, before entering into such a covenant.

I hope that I have reassured noble Lords, and I ask the noble Earl to withdraw his amendment.

Photo of The Earl of Devon The Earl of Devon Crossbench 7:00 pm, 15th September 2021

I thank noble Lords for their thoughtful contributions to this short debate.

I reiterate that we are clearly all supportive of conservation covenants. However, in Committee and on Report there has not been a single dissenting voice against the amendments that I have tabled. I had hoped that the Government would listen to this clear message, but it appears that they may not be able to hear it. I do not understand why the taking of advice would be prohibitive of cost in terms of setting up a perpetual covenant over land; that seems entirely reasonable. The Government say that intention must be shown in order for a covenant to be established. If an intention is to be shown then the covenant should say that it is a covenant. That shows the intention. Otherwise, the only beneficiaries will be lawyers such as myself arguing over whether intention was shown.

Finally, the Minister does not recognise that in the absence of any specificity as to the duration of these covenants, they are perpetual by default. If the parties do not get around to saying how long it will last, it will last for ever. They must be advised of that and they must understand it.

Given that today is “Back British Farming Day” and that these amendments are promoted and supported by the NFU, I really think that your Lordships’ House should get behind them. I hope so. However, I beg leave to withdraw Amendment 109.

Amendment 109 withdrawn.