My Lords, I thank all noble Lords who have participated in this debate. At its heart is our consideration about how we ensure that there is a vibrant farming sector in the future, with young people coming into a very important industry and way of life. I agree with what was said by the noble Lord, Lord Curry, about new skills.
I thank the noble Lord, Lord Whitty, for Amendment 158, which I will address alongside Amendment 159. For a successful long-term future, agriculture relies on attracting new talent and bringing new skills and innovation into the sector. For many years, local authority smallholding estates and council farms have provided opportunities for entrant farmers. While Amendment 158 is aimed at preventing further disposal of smallholdings and council farms by local authorities, such intervention may conflict with the Local Government Act, which gives local authorities the power to manage and dispose of their land according to local priorities and the principle of delivering best value.
Rather than adding regulatory burdens, the Government want to work collaboratively with local authorities, supporting them to retain and invest in the rejuvenation—the noble Baroness, Lady Jones, may have used the word regeneration—and development of their smallholdings and council farms. As stated in Defra’s Farming for the Future: Policy and Progress Update, published in February, this Government intend to use the powers under Clause 1 to offer funding to councils, landowners and other organisations to invest in creating more opportunities for new entrants to access land, delivering the kinds of outcomes that my noble friend is seeking through Amendment 159.
Local authorities can take advantage of rural exception sites to help the delivery of affordable housing, and the revised National Planning Policy Framework includes new policies to support the building of homes in isolated locations where this supports farm businesses with succession. We will work with local authorities, community land organisations and other landowners as we develop this funding scheme, and further details will be set out in the Government’s multiannual financial assistance plan. Working collaboratively with local authorities in this way and supporting them to manage their estates to provide important fresh opportunities for new farmers will be more effective than adding regulatory burdens.
My noble friend Lord Marlesford may know—I am sure he does—that in April 2018 the Government amended a national permitted development right to
support rural housing and agricultural productivity, meaning that up to five new homes can be created from existing agricultural buildings on a farm, rather than the previous maximum of three. I say to the noble Baroness, Lady Jones of Moulsecoomb, regarding allotments, that these are matters for local authorities. The decision to increase local provision is taken at a local level.
On Amendment 222, the community infrastructure levy is a matter for local authorities and the MHCLG. It is an important tool to help them deliver the infrastructure needed to support development in their areas. In setting rates, local authorities must strike an appropriate balance between using CIL to fund the infrastructure required to support the development and the potential effects of imposing CIL on the economic viability of development across the area, including agricultural developments. Although it is a matter of education and therefore within another department’s remit, out of considerable interest I will take what was said by the noble Baroness, Lady Young, and see what further I can make of it.
On tenancies, in relation to the stand part debate and Amendment 223, measures in Clause 34 and Schedule 3 are designed to make pragmatic modifications to tenancy legislation. This package of reforms received broad support from respondents to our public consultations in England and Wales last year, and they deliver on many of the recommendations from the Tenancy Reform Industry Group. The provisions have been carefully drafted to balance the interests of tenants and owners. I agree that agricultural tenancy legislation is complex. Any further changes impacting on landlord and tenant property rights must be very carefully considered in a timely way and not rushed.
Some of the proposals that we consulted on last year are not included in Schedule 3 because they did not have broad support, or because responses showed that they needed more detailed development work before the proposed changes could work effectively, and alternative ways of achieving the policy aim should be explored. The UK and Welsh Governments are very willing to engage in further discussions about those proposals and to review the need for further tenancy reform with members of the Tenancy Reform Industry Group, which includes representative of owners and tenants.
In Amendment 237 my noble friend Lady McIntosh is seeking assurance that the Government will make these regulations; I can give that assurance. The Government intend to start discussions with members of the Tenancy Reform Industry Group to develop the details of these regulations over the next few months, to ensure that the interests of tenants and owners are taken into account.
On Amendments 238 to 240, 245 and 246, many owners and tenants come to practical agreements on such issues without the need for dispute resolution. To encourage this approach further, the Tenancy Reform Industry Group is working on updated guidance to support tenants and owners in discussions about diversification and environmental schemes highlighting the benefits for both parties. This dispute provision has been carefully constructed, after consultation, to
be used in limited circumstances, balancing the interests of both tenants and owners, so that market confidence in the benefits of agricultural tenancy agreements is not undermined. Broadening the provision to cover a much wider range of circumstances, such as for diversified activities, may result in lasting changes to land use and the value of the owner’s assets. As such, it is more appropriate that such requests are negotiated between the parties.
Regarding tiers 2 and 3, and landlord issues relating to public access, I say to my noble friend Lord Caithness that we are currently finalising eligibility requirements for ELMS, including whether landlord consent or consultation would be required for tenants to join ELMS, including for tier 2 and tier 3 projects. As I said, our tests and trials are designed to include tenant farmers in the schemes. We are actively considering this as part of the codesign with all stakeholders, and I do not want to pre-empt the process but, as I have said, we are very clear that the tests and trials will include tenant farmers.
Responses to our public consultation show that there is not the same need for dispute provisions for farm business tenancies as there is for Agricultural Holdings Act tenancies. Agricultural Holdings Act agreements were negotiated sometimes 30 or 40 years ago in a very different policy and commercial environment, and often contain outdated restrictions that have not been reviewed for many years. Farm business tenancies are more modern commercial agreements negotiated more recently in the context of environmental schemes being available. They are reviewed more regularly, giving tenants the opportunity to renegotiate the contract’s terms if they deem it necessary, for example, to enable diversifications or to enter future financial assistance schemes.
Respondents to the consultation also noted that there is a risk that providing tenants with opportunities to challenge the terms of recently negotiated agreements could undermine owner confidence in letting land through farm business tenancies, reducing opportunities for tenants in future. Because I have no interest to declare in this matter, I will respond to the point that my noble friend Lady Neville-Rolfe made. In all our desire to ensure that there is a vibrant farming sector with both owners and tenants—as well as other sectors—all of which make a great contribution, we need to be mindful of getting the right system in place, one that does not have the consequences of many owners of properties with a small amount of land deciding that this tenancy route may not be for them.
We have sometimes conceptualised this discussion as being about large landowners and small tenants. Very often, the modern arrangements are for owners with a small acreage deciding they might have a farm business tenancy. It is unfortunate that we sometimes characterise these matters in this way. It is often about someone with a smallish acreage wanting a farm business tenancy with an incoming tenant.
I agree that there can be benefits from tenants and owners entering into longer-term tenancy agreements. The Government consulted widely on this last year. The feedback gathered indicates that introducing shorter notices to quit in certain circumstances is unlikely
significantly to affect owners’ 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 to offer.
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 can be more appropriate for new entrants looking to rent land on a flexible basis to gain experience. Short-term lets can also be more suitable for some seasonal horticulture businesses.
I turn to Amendments 243 and 244. The Government consulted on proposals to expand the list of relatives eligible to succeed a tenancy agreement. Concerns were raised that doing so could disproportionately affect owners’ rights to their property because the changes could extend a tenant’s occupation of the holding for many years beyond the timescale an owner has been expecting, particularly in the case of succession by the grandchildren of current tenants.
There are examples of owners being 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. We believe that this is the sensible way forward. The Government will continue to engage in discussions with the Tenancy Reform Industry Group —which represents both tenants and owners—to encourage this process.
My noble friend Lord Taylor of Holbeach referred to cropping licences—they are not tenancies and they are part of the farming scene now. ELMS will provide funding to those who are carrying out the management of the land or water to deliver the environmental public goods being funded.
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On Amendment 241, the Welsh Government acknowledge the importance of ensuring that tenant farmers are able to access any new scheme. Their view is that a Senedd Bill would provide a more appropriate legislative vehicle for this purpose. Further consideration will be given to what provision is needed in due course.
On Amendment 242, I reassure my noble friend Lord Lucas that where the practical year of a sandwich course is spent working on the family holding—which is often the case—that year will already count under the current livelihood test provisions.
The Government will continue to work with industry on these important issues. This includes ongoing engagement with the Tenancy Reform Industry Group, which we think is the right way forward. We have brought this schedule and the clause forward because these were parts of the consideration that came from the Tenancy Reform Industry Group that we thought were pragmatic and widely accepted. Of course, it would have been possible not to have had them at all, but they address some important elements of modernising a very important feature of the agricultural landscape:
a vibrant and successful tenant farming sector, operating alongside an owner sector. Both have important roles to fulfil and will be an enormously important part of the agricultural food production of this country as well as environmental enhancement.
Going back to the amendment of the noble Lord, Lord Whitty, we believe that there is an important future, particularly for new entrants, and we must consider how to ensure that new entrants come along. I am mindful of what the noble Lord, Lord Cameron of Dillington, said, but that new entry route is very important and is continuing work. On that basis, I hope the noble Lord, Lord Whitty, will feel able to withdraw his amendment.