---

Agriculture Bill

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.

9.15 pm

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.