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Nusrat Ghani (Wealden) (Con)
I beg to move,
That this House has considered tenant farming.
It is a great pleasure to serve under your chairmanship, Mr Hollobone. I am grateful for the opportunity to lead this debate.
As hon. Members know, tenant farming is an agricultural system in which a landowner contributes land and perhaps some capital and management, and the tenant contributes labour and the remaining capital and management. It is an important part of the agricultural industry. In my county of East Sussex, it is estimated that there are more than 35,000 hectares of tenanted land. One in three farms throughout the country are tenanted, and between 20,000 and 25,000 farmers are wholly or mostly reliant on tenanted land.
Two organisations fight the corner of tenant farmers—the Tenant Farmers Association, whose national chairman, Stephen Wyrill, is in the Public Gallery, and the National Farmers Union. I thank both for their assistance in preparing for this debate. The Government are also proud to fight the corner of tenant farmers. They have a proud record of putting in place policies to help the farming community. I want to note two in particular: first, my right hon. Friend the Chancellor’s announcement that farmers will be able to average their income over two to five years for tax purposes, which is very welcome and helps rural businesses to survive in difficult seasons; and, secondly, the recent decision by the Department for Environment, Food and Rural Affairs to agree to move forward on recommendations to draw up a mental health strategy for the farming industry in Britain. Farmers can face immense strain, as they have to contend with the difficulties of business and climate, and they often work very long hours in isolation. It is right that proactive measures are put in place to ensure their mental wellbeing as they cope with those pressures. I congratulate the hon. Member for Upper Bann (David Simpson) on his leadership on that issue.
There is always more to do, and that is the case with tenant farming in particular. Over the past couple of years, one theme that has emerged consistently in my discussions with tenant farmers across Wealden and the organisations that represent them is the length and security of tenancies. The Agricultural Tenancies Act 1995 introduced farm business tenancies to the industry. The measure marked perhaps the most comprehensive deregulation of the agricultural let sector in its long history. Farm business tenancies are extremely widespread, although there is scepticism in the industry about whether they have helped or hindered. High rents, limited security, stretching repairing obligations, which are key to keeping businesses thriving, and other liabilities are commonplace and do little to limit the stress and instability that naturally come with farming.
The majority of tenancies run for fewer than five years, and independent surveys report that the average is less than four years. That does not give tenant farmers the security they wish for.
Scott Mann (North Cornwall) (Con)
Does my hon. Friend agree that agricultural landlords should develop lasting relationships with tenant farmers through long-term flexible tenancy agreements in areas such as North Cornwall and Wealden?
Nusrat Ghani
My hon. Friend is absolutely right. I will come on to that point later. Flexible tenancies and good relationships between landlords and tenants are absolutely key.
The big problem for tenant farmers is that the negotiation of tenancies is key, but they have little leverage over it. Farming is a long-term process that needs capital investment, patience, good soil management and the ability to balance the profitable years against the bad. Most recently, that problem has affected farmers in the dairy industry.
Antoinette Sandbach (Eddisbury) (Con)
One of the big issues obstructing young entrants into the market is the longer tenancy agreements. Does my hon. Friend agree that shorter agreements allow new entrants—particularly those under 40—into market?
Nusrat Ghani
My hon. Friend makes an interesting point. Tenancies need to be flexible but, if a tenant farmer wants to explore their industry and their business, they need the opportunity to extend their tenancy. Farmers can struggle if their tenancies are short; those things are not facilitated by short-term tenancies. I referred to the Government’s welcome move to extend tax averaging from two to five years, but it is odd that that example of good Government policy is undermined by and inconsistent with tenancy terms, which are, on average, shorter than the period allowed for averaging farm profits. Similarly, many tenants cannot even begin to think of the Government’s 10-year countryside stewardship scheme. What is the point when they cannot guarantee being there for the length of the scheme?
At the moment, landlords can offer short terms for high rents at little risk to themselves, but they leave the tenant in endless uncertainty and hold back investment and long-term sustainable land use. Such tenancies can be particularly difficult for livestock tenant farmers, who see limited returns. I spent a morning with my constituent Elizabeth Buchanan of Black Ven Farm in Nutley, testing for tuberculosis—I assure hon. Members there is no TB on her farm—and she said to me:
“It encourages short-termism of the worst sort.”
I tried to get other quotations from tenant farmers in my constituency, but they were concerned that raising them in the Chamber might reflect badly on their landlords. That is an issue as well.
Some have argued that legislation to impose long-term security on tenancies is the answer. As a free-market Conservative, I do not wish to see that kind of imposition, but we should not be afraid of providing incentives for longer-term tenancies. Landowners get 100% agricultural property relief from inheritance tax if the person who owned the land farmed it themselves, or if it was used by someone else on a short-term grazing licence, or if it was let on a tenancy that began on or after 1 September 1995—after the introduction of the farm business tenancy. For all other landowners, the level of relief is set at 50%.
What if we restricted the 100% relief to landlords who let their land for five years or more, or perhaps even 10 years or more? There are obviously disadvantages for landlords in doing that, despite the advantages for the tenants, so we could offer them something in return. For example, we could give landlords who are willing to let for a longer term the ability to declare their income as trading income for tax purposes and easier mechanisms for ending tenancies if there is a breach of contract. Other alternatives include reforming stamp duty land tax, which currently disincentivises landlords from offering long-term tenancies, to end the discrimination against such tenancies.
The Conservative party, which I and the Minister are proud to be members of, often talks about its long-term economic plan. Will the Minister tell us what discussions he has had with tenant farming representatives and the Treasury on the possibility of making the changes I have suggested? How will those issues be dealt with in his Department’s upcoming 25-year food and farming plan? Let us make the long-term economic plan a reality in the farming industry and incentivise long-term tenancies to promote investment and economic security.
I am delighted to be a parliamentary representative for the Conservative rural affairs group, alongside my hon. Friend the Member for Taunton Deane (Rebecca Pow). I recently spoke to Richard Haddock, who has just departed as chairman of the group. He said that we must work harder
“for the working farmer, not the landlords, because the landlords have the asset of the land and can borrow against it. If a tenant farmer wants to diversify, he does the work and takes the risk, but the landlord still takes the cut.”
The farmer increases the value of the landlord’s asset, but is often cheated out of many of the rewards that are owed to him.
A couple of weeks ago, the Prince’s Countryside Fund released new research showing that half of UK farmers no longer make a living from farming alone. They have to diversify to make their businesses sustainable, but diversification is a risk. Why would they take that risk if they do not know how long they are going to stay on their land and are at risk of eviction once their tenancy lease is up—especially if the landlord takes a cut from the diversification enterprise?
Nigel Huddleston (Mid Worcestershire) (Con)
In my constituency, like my hon. Friend’s, many farmers are making huge strides in diversifying their incomes, whether through farm shops or holiday lettings. Does she agree that the short-term nature of some tenancy agreements inhibits such planning and diversification? Should the Government provide incentives for longer-term diversification in farms?
Nusrat Ghani
Absolutely. My hon. Friend is reading my mind—I hope to go on to that. For tenant farmers to diversify, which they have to in order to keep their business thriving, they need some assurances that they can reap the rewards of their investment in the land they take care of.
Will the Minister outline what steps the Government are taking to ensure that farmers have an incentive to diversify, so that they and the rural economy can benefit from new initiatives and enterprise? Also, how is he communicating the 25-year food and farming plan to local authorities, so that they may support tenant farmers and local businesses to survive?
In Sussex, in particular, the problem many tenant farmers face is that there is simply not enough land available to them. They want to expand, invest and diversify, but they cannot. Often, that is because they are out-competed by developers, who simply have more financial leverage with landlords. Understandably, those landlords are looking for the most profitable way in which their land can be sold. The most profitable way for the landlord, however, does not necessarily mean the most profitable way for the rural economy. Will the Minister describe the action the Government are taking to ensure an increase or, at least, to prevent a decrease in the availability of land to tenant farmers?
President Eisenhower of the United States once said:
“Farming looks mighty easy when your plow is a pencil, and you’re a thousand miles from the corn field.”
He was right, of course—it is easy for us consumers to take those who are striving in green fields for granted, and to expect a steady supply of meat, vegetables and dairy products at respectable prices. The food security of our country lies on their shoulders, and the role of farmers in Sussex and elsewhere in keeping food on our table in an unstable world is vital.
In January, my hon. Friend the Member for St Ives (Derek Thomas) led an important debate on food security in this Westminster Hall Chamber. He highlighted how, as the world’s population grows and with increasing unrest and conflict, as well as what may be considered fractured relationships between Russia, China and the United States, the ability of some regions to produce food that can be turned into affordable imports for us in Britain is not guaranteed. He also made the valuable point that every tonne we import is a tonne less that is available to other nations, which might not have the ability to produce as we can. So we must empower our farmers to produce, and not limit their capacity by withholding land, saddling them with excessive regulation or disincentivising them from diversifying and investing.
Views on the European Union within the farming community are mixed, but in my opinion the EU does itself no favours when it issues regulations about crop rotation and the size of a hedge to recipients of the basic payment scheme. Such regulations all cost time, money and effort, and do not help British farmers—already adhering to high standards—to achieve a competitive edge, especially when the basic payment scheme payments are delayed, as they have been. Furthermore, landlords are known to take advantage of the basic payment scheme: if they know what the farmer is receiving, they can put their rent up accordingly, meaning a higher charge for the farmer before they even start producing.
Today, I have focused on tenancy security, but tenant farmers face many challenges—tax issues and incentives, tenancy succession, encouraging new entrants with loan schemes, and the arbitration process are all causes for concern. Time does not allow me to speak about those concerns in any great depth, but they and the interests of tenant farmers should be heard. I am grateful for the opportunity to have contributed in a small way, and I hope that other Members will do the same now and in future.
Mr Philip Hollobone (in the Chair)
The debate is due to finish at 4.30 pm. The recommended time limits for the Front Benchers’ speeches are five minutes each for the Scottish National party and Her Majesty’s Opposition, and 10 minutes for the Minister. Two Members are standing and have caught my eye, the first of whom is Jim Shannon.
Jim Shannon (Strangford) (DUP)
Thank you, Mr Hollobone. It is a pleasure to be called to speak in this debate.
I spoke to the hon. Member for Wealden (Nusrat Ghani) last night and asked what the thrust of her opinion and thoughts would be, which she clearly outlined for me. I have prepared some notes on farming—tenant farmers in particular—and on some of the experiences I have had in Northern Ireland.
I declare an interest as a member of the Ulster Farmers Union—we are the sister body, or maybe the brother body, of the National Farmers Union. I also own a small farm in Northern Ireland. We are probably a nation of fairly small farms; most of us can remember being brought up on a farm with an average size of about 60 or 70 acres. A family was reared on it and everyone did well, but they could not do that today—it would be quite impossible—because farms are now probably, on average, closer to 200 acres.
That is just an example; I now want to make some comments and to congratulate the hon. Lady on bringing this issue forward for consideration in Westminster Hall. The reason why the debate is important has been outlined very well by the hon. Lady. I am pleased to see the shadow Minister, the hon. Member for Blaenau Gwent (Nick Smith), in his place, and I look forward to his contribution and that of the Minister of State, the hon. Member for Camborne and Redruth (George Eustice). As the Minister knows, I hold him in high esteem, and not only because he is an outer in the EU campaign. I hold him in high esteem no matter what, because he was always there for us on fisheries issues. I remember that very well and thank him very much.
The Tenant Farmers Association is concerned that those who develop Government agricultural policy unconsciously, or unintentionally, assume that all farmers are owner-occupiers and are therefore able to make their own decisions about how to respond to Government schemes and initiatives. The reality is very different. For those farming as tenants, decisions have to be made within a more complex set of circumstances. The hon. Member for Wealden, and some of those intervening on her, outlined that; other speakers will do likewise. How a tenant farmer responds to policy will have much to do with the impact of tenancy legislation, the framework of the tenancy agreement in place and the ongoing relationship with the owner of the land being farmed. The relationship that tenant farmers have with the owner is critical. Such factors need to be taken into consideration when the Government are drafting farming policy.
Under the previous Government, there were clear examples of policy developments in the Department for Environment, Food and Rural Affairs where those landlord-tenant considerations were obviously not taken into account by those responsible for drawing up the policies. Some of the concerns have already been outlined. Those policies include the development of the agri-environment schemes, such as the higher level stewardship scheme and the uplands entry level scheme; the requirements for fixed equipment within the new nitrate vulnerable zone regulations, which cause nightmares for us all, especially around the edge of Strangford lough in Northern Ireland; rural development grants for farm diversification, which the hon. Member for Mid Worcestershire (Nigel Huddleston) referred to in his intervention; and the move to flat-rate payments under the single payment scheme.
Tenant farmers are a large and too often unaccounted-for sector of the farming community. That is why this debate is so important in highlighting and focusing attention on a sector of the agri-food industry that needs help and assistance. I very much look forward to the Minister’s response. This is a welcome opportunity to raise awareness of tenant farmers among all Members in this House, not just those in government.
I want to make some comments about Northern Ireland, which is of real relevance to this debate as it is one part of the United Kingdom where large estates and the traditional type of landlords were largely done away with—I am trying to get the right words: sometimes when I say that, people ask, “Has there been a revolution?” There has not been a revolution, but those landlords were done away with by legislative means. The process was cumulative, starting in the 1870s and the 1880s with rights, first, to compensation for improvement and, secondly, to security of tenure, the key security of tenure measure being an Irish Land Act, the Land Law (Ireland) Act 1881.
About 40% of the land in Northern Ireland is let out on 11-month lets. In our system in Northern Ireland, owner-occupiers rent to other owner-occupiers, which is quite successful. There is the potential for incoming grazers or growers to achieve tenant rights, but in reality that does not happen very often. It is simply not in the culture anymore, because things have changed—owners know to look out for that, agents are wise to it and on the whole nobody tries to outwit them.
Interestingly, we would never hear anyone taking land in Northern Ireland being referred to as a “tenant”—the word is never used and would be inappropriate. It is not a word that is in the rural culture anymore—maybe that is what we need to be thinking about in the future—and perhaps it came to be regarded as derogatory at some point, due to the historic context of tenant farming in Northern Ireland. Some farmers in Northern Ireland almost looked across to tenant farmers in England or Scotland. They did not accept their lot as tenants and are suspicious of those who did not push for the same rights at the same time—rightly or wrongly. The children of current farmers or landowners would look at things differently. There would be a period of transition, when difficulties remain, simply because interpersonal relationships were soured in many areas—that is the case with the tenant farmer and with the person who owns the land—and that would be damaging. However, there might be occasions when the opposite happened.
In Northern Ireland, the tenants who bought out their farms in the 1920s were quite happy—I use this example as a person who is in favour of foxhunting—to continue to allow foxhunting over their land, because that was a social thing and members of the community relied on it for work. Their children did not have the same ties and in some cases quickly ended the practice. If we were to see the same rafts of changes here on the mainland, there would be a transitional period—perhaps not to the same extent, but there would none the less be a move in that direction. Some people would look to quickly deal with any potential for conflict; others would use the opportunity to assert their new status in ways that they were never able to before.
I will conclude with this comment. The other big difference in Northern Ireland was that the entire landlord class was reduced in a very short time. There was not anything cynical or murderous in people’s minds, but the Land Act enabled them to buy their land and they took that opportunity. Owing to the historic context, some people obviously remained, because they had at least some in-hand farming, forestry or other land assets. Lessons have been learned. The Land Act gave farmers in Northern Ireland a chance to buy their land and to farm and work it, as they have done.
I ask the Minister to take those points on board. I support the hon. Member for Wealden. I will be the one—there may be others here—to stand up for tenant farmers and ensure that they get their rights, as they should.
Antoinette Sandbach (Eddisbury) (Con)
I draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests, which indicates that I am both a landowner and a farmer. I held the shadow rural affairs brief in Wales for four years and now represent my wonderful constituency of Eddisbury, which has a high proportion of dairy farms.
The important word that my hon. Friend the Member for Wealden (Nusrat Ghani) mentioned was “flexibility”. I am sure that she will remember the days of the Agricultural Holdings Act 1986, when tenancies were inheritable from generation to generation. As someone who was involved with an Agricultural Holdings Act tenancy and saw the lack of investment—the second-generation farmer in that case was not farming the land at all; in fact, he had full-time employment elsewhere—I am sure that my hon. Friend would not want to see the abuses of the system that occurred under such tenancies.
It was for that reason that flexibility in farm business tenancies was introduced. That flexibility led to an additional 100,000 acres of land coming up for rent. That is important; in fact, from my experience in the last five years, the biggest constraint on tenants has been rent levels. That has been the biggest pressure on the system, not the length of tenancies. In fact, a very short tenancy can offer flexibility to someone who wants to expand for the short term or to a landowner or neighbouring farmer who has spare capacity because of either disease or a change of farming method. Such tenancies allow people to offer land to a neighbour on a short-term basis and give the system important flexibility.
In my experience, many landlords, if they are asked by tenant farmers, will actually sign the indemnities that allow those tenants to claim under the higher level stewardship scheme, on the basis that they will be reimbursed. It then becomes the landlord’s risk, but if they have a good relationship with the tenant, they are likely to do that. My hon. Friend’s speech did not recognise that there is a difference between good landlords and bad ones. A farmer who is interested in their land, who wants flexibility and who wants to encourage people to come forward will want a good relationship with their tenant. That is the best way of producing a good outcome for both the tenant and the landlord.
That is the very flexibility in operation in the farm business tenancies system. For example, a farmer may die, his widow may not have short-term arrangements in place and the children may have to return to take on the farm. The flexibility in the farm business tenancies system allows that approach; it is not there in the kind of long-term tenancies that my hon. Friend proposes.
Nusrat Ghani
My hon. Friend is absolutely right: people tend to come to us as Members of Parliament with problems rather than to say that things are going well. I have some fantastic landlords in my constituency, but I held a number of meetings at which tenant farmers said they felt they did not have the right support to negotiate longer-term tenancies; they felt uncomfortable about raising that. I am here today because they do not have the time, capacity or energy to lobby that the big farmers would.
Antoinette Sandbach
I would advise those tenants to speak to the Tenant Farmers Association, which is effective at representing its tenant farmers, as well as to the NFU and other organisations, who also provide effective representation.
I plead the cause of young farmers in particular. It is a big risk for a landowner to take an unproved tenant under 40, who may not have had their foot on the ladder before, on to their farm for a 10-year tenancy of the type that my hon. Friend argued for, but it is vital to encourage younger entrants to come forward. They have bright ideas and they want to progress, but that is a risk. The danger of the course of action that she proposes, with longer-term tenancies, is that innovation and support is stifled because the risk is too great. A 10-year commitment is also a great risk for the tenant, who will have that liability for 10 years.
My hon. Friend is in effect arguing for better representation in negotiations rather than reducing flexibility in the system. I say to the Minister that for tenant farmers in my constituency the real pressure in the system comes from the level of rents and, in particular, what has happened to dairy prices. I certainly saw livestock farmers priced out of the market when milk prices were high because high levels of rent were being asked for relatively small parcels of land, which prevented some getting on to the ladder in the livestock sector. I experienced that in north Wales and there are also high levels of rent in Eddisbury. That, rather than flexibility, is the real issue.
Diversification has risks associated with it, but again a good landlord will want to encourage a positive relationship with their tenant and the tenant will want to have a positive relationship with their landlord. When that works, there can be some really good, productive, experimental diversification programmes.
Steve Double (St Austell and Newquay) (Con)
Does my hon. Friend agree that when there is a positive, constructive relationship between the landlord and tenant, that can work in the long term? My father-in-law has been a tenant farmer with the Duchy of Cornwall for more than 50 years, which has worked well for both parties.
Antoinette Sandbach
I certainly do agree. We should focus our attention on providing support and encouraging those constructive relationships to go forward rather than on legislating to alter the lengths of tenancies. Quality and support are the two issues, and a good relationship will almost inevitably lead to an extension of tenancy agreements when that suits both parties.
If we constrict the amount of time to a minimum term of 10 years, with relief available only at that time, what happens to someone who wants to renew for another five years? Is that done from the baseline of the tenancy? What happens if someone wants to bring in a partner to farm with them? Does that count as a new tenancy? In my submission, the current system is flexible. It has wrinkles, and I do not pretend that there are not problems, but I urge caution before this place passes more legislation on farm business tenancies.
Mr Philip Hollobone (in the Chair)
We now come to the Front-Bench speeches, after which Nusrat Ghani will have two or three minutes to wind up the debate.
Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)
Thank you, Mr Hollobone, for the opportunity to participate in this debate. May I congratulate the hon. Member for Wealden (Nusrat Ghani) on securing it? I thought she made an excellent speech on the issues at play here. It is always welcome in a Westminster Hall debate, as in any debate, when constructive ideas and suggestions are put forward. This forum seems to lend itself better to that than the main Chamber, and that is something we should all consider.
The critical nature of the length and security of tenancies is emphasised by the fact that most tenancies are shorter than the Government period for averaging out profits. That speaks volumes about the need for action. The idea of bringing a long-term plan to farming made me smile. Hopefully it is a lot better than the long-term economic plan, which is clearly a work in progress. I congratulate the hon. Lady on kicking off the debate with lots of ideas, and I have no doubt the Minister was scribbling furiously.
The hon. Member for Strangford (Jim Shannon) is always a champion for Northern Ireland. I have not yet known him to get through a speech without mentioning a union. Quite often it is in my direction, but in this case it was the European Union. I congratulate him on being, as ever, a champion of Northern Ireland and giving us that important perspective as we consider what we should do.
The hon. Member for Eddisbury (Antoinette Sandbach) emphasised the importance of flexibility, and I agree. It is not necessarily a case of one size fitting all. Whatever we do, we should always consider that protection and support are needed for landlords as well as tenants. Rents are an important issue. I fear she is slightly more laissez-faire in her approach to that than I am, and certainly more than the Scottish Government are. I would like to see a lot more action from the Government.
Tenant farming plays a vital role across the UK, but in Scotland it is of particular importance. It accounts for 1.3 million hectares, amounting to more than 18% of our land mass. However, the sector has been declining for decades and has almost halved to just 24% of farmland since 1982. The new Land Reform (Scotland) Act 2016 is an attempt to breathe life into tenanting and to ensure that it thrives. It is also a critical component of the Scottish Government’s drive for a fairer, more equal and more socially just Scotland. According to the Scottish Tenant Farmers Association—they are not here today, but it is rather a longer journey for them—the new Act is
“the most significant reform to tenancy legislation since tenant farmers were granted security of tenure in 1948.”
A central part of the Act is ensuring fairness between tenants and landlords. The creation of a tenant farming commissioner will help with that process and, we believe, improve relations. There will also be a much fairer and more transparent system of rent reviews; improvements in end-of-tenancy compensation; a broadening of the class of relative entitled to succeed to a tenancy; and the creation of an exit route for 1991 tenants to assign their tenancies to new entrants or other farmers if the landlord does not want to buy them out. Assignations are a central feature of the Act, which seeks to protect them while accepting that it is an ongoing process that needs to be subject to regular review.
By taking those evolutionary and common-sense steps, the legislation will bring real and meaningful land reform, which will restore confidence to the sector, address many of the issues faced by tenant farmers and bring vibrancy and certainty. At the same time, and contrary to the claims of some, it should not deter landlords from providing new tenancies and will not materially disadvantage them.
Tenant farming and land reform will always be works in progress, but the Act is a highly positive step forward in Scotland. It will hopefully encourage investment in the sector, address long-standing concerns, build confidence and make our legislation fit for the 21st century. Tenant farmers deserve certainty, security and fairness. That needs to be embedded in legislation, and that is what we are doing in Scotland. Hopefully lessons can be learned for the rest of the UK too.
Nick Smith (Blaenau Gwent) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for Wealden (Nusrat Ghani) for her strong introduction to the debate. I also thank colleagues who have intervened and made contributions. The hon. Member for Strangford (Jim Shannon) spoke powerfully on tenant farmers in Ulster, and the hon. Member for Eddisbury (Antoinette Sandbach) emphasised the difficulty of high levels of rent for farmers, particularly in the north-west.
Tenant farmers are often the ties that bind together agriculture in the UK. They deserve peace of mind and security so that they can make their living in a fair and environmentally sustainable way. It is vital that the Government take a long, hard look at the relationship between landlord and tenant. With their upcoming 25-year plan, they could either usher in a new era for tenant farming or leave too many high and dry.
I appreciate the strong views of the Tenant Farmers Association and its campaign. It is rightly defending its members from abuse from landowners and from uncertain futures. I equally note the Country Land and Business Association’s position that some of the ideas suggested to protect tenant farmers may lead to reduced land stock. That is why the Government’s food and farming plan is so important. They must gather the evidence needed and bring in the right measures to make the tenant-landlord relationship a positive one.
The Farming Minister has said that longer tenancies for farming businesses are important to provide security, investment and growth. Will he tell us what the 25-year plan will do to help tenant farmers and landlords? For instance, county council farm estates are an increasingly painful issue for tenant farmers which the Government need to address. Herefordshire Council has become the latest to sell off its estates—land that provided a good entry point for young farmers. Unfortunately, the council has committed to selling that land, evicting 42 tenants in the process. The Landworkers’ Alliance said in April that 219 farms had been sold by councils since 2010. As the Farming Minister described those sales as a tragedy, will he detail what long-term steps the Government are taking to support and protect those vital estates and their tenants?
Another area the Government need to protect is the environment and the role of the tenant farmer as a steward. Farmers incentivised to invest will work on better land and choose long-term health over short-term gain. That is why I was pleased to see a statutory instrument passed recently that widened compensation for tenant farmers for soil improvements. If we recognise that good stewardship is bolstered by secure tenancy, why has DEFRA separated its plans for the environment from its food and farming strategy? Will the Minister assure us that those plans will be closely integrated in what the Department hopes to achieve?
One such mechanism for the good care of land is the much trumpeted countryside stewardship scheme, yet last year’s effort was branded “not fit for purpose”, with farmers complaining about large amounts of bureaucracy and an IT system that failed to deliver. Only 2,314 applications were made, but 8,000 had been expected. The Government say they have made efforts to make the scheme more attractive and workable this year, but those measures will count for nothing if there is not a vastly improved take-up. Will the Minister give us an early indication of expected take-up for the scheme and whether it will match last year’s target?
Tenant farmers need peace of mind and land tenure that helps them build their business. They need county councils that work with the TFA and the NFU to develop an estates strategy that helps young farmers get a head start. Finally, they need a Government who deliver on their promise of a countryside stewardship programme that works.
The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Wealden (Nusrat Ghani) on securing this important debate. It is an issue that I have followed closely as Farming Minister over the past two and a half years. She is absolutely right: tenant farmers have a vital role to play in our countryside. Roughly one third of farms and one third of the land we have is tenanted. Farm tenancies are a vital route for new entrants coming into the industry. They help existing businesses expand and take on new land, and they are essential because the prohibitively high capital cost of land is a real bar and obstacle to new people entering the industry.
Every industry needs new talent, fresh thinking and new ways of doing things. Farming is no exception. In our 25-year food and farming plan, we will consider how to encourage alternative models of doing business in farming so that we do not think just about landowners, owner-occupiers and tenant farmers, but look at ways of expanding some of the contract farming models that have been very successful. Perhaps farmers could progress to share farming models where they have a stake in a business and earn in the business before taking on their own tenancy and perhaps even buying land at the end.
I come back to the crucial farm business tenancies. It is important to remember why they were introduced. The deregulatory measure was taken in 1995 because there was real concern that, as my hon. Friend the hon. Member for Eddisbury (Antoinette Sandbach) said, not enough land was coming to the market and that was restrictive and acting as a barrier. The burdens and obligations in the Agricultural Holdings Act 1986 prevented land from coming to the market but, generally speaking, the Agricultural Tenancy Act 1995 was judged a success. Between 1996 and 2003, 35,000 acres a year came on to the market. That has stabilised since and things have not changed as much, but it was undoubtedly successful in deregulating and bringing more land to the market, creating more opportunities.
However, I am aware that the Tenants Farmers Association and others have expressed concerns about the average length of some tenancies. Currently, they are around three and a half years. A couple of years ago they were around three years and have gone up slightly. As my hon. Friend the Member for Wealden pointed out, the challenge of having such short-term tenancies is clear. If someone has tenure of the land for only three years, they do not have the incentive to invest in that land.
I worked in the farming industry for 10 years and grew up on a farm. I know that if someone takes on a piece of land that has not been farmed adequately or properly for a period of years, it can take four or five years to turn it around and get the land back to its full potential by investing and putting on farmyard manure, and adding fertilisers, sand or lime to bring the soil to its full productive potential. That takes time and if someone is there for only three and a half years it can fuel short-termism, which is not good for the quality of our soils. We should be concerned about soil in agriculture because it is at the heart of everything we do and we must protect it.
We are interested in finding ways to incentivise longer term tenancies without losing the benefits of flexibility in farm business tenancies. I have had numerous discussions with agricultural lawyers and land agents, and with representatives from the Tenant Farmers Association and the Country Land and Business Association. The last two do not always see eye to eye on this issue, frankly. I recently met representatives from a selection of county farms around the country. I share the concern expressed by the shadow Minister about the potential loss of some county farms. About a month ago, we had an interesting session with representatives to discuss how to refresh that model in a way that recognises some of the pressures on local authorities.
The Government have no fixed view on the need for change to legislation or otherwise. Many of the issues raised by my hon. Friend the Member for Wealden are for the Treasury and she might want to have conversations with Treasury Ministers. The area is complex and I am mindful of the points raised by my hon. Friend the Member for Eddisbury that we must be careful when making changes that we do not create unintended consequences. Having caveated what I am going to say with those crucial points, I want to explain the context and texture of my discussions with some of the leading experts in the field and some of the ideas that we could consider.
The first thing to recognise is that although the average length of a farm business tenancy is three and a half years, there is a big division between bare land, which people rent for a short-term crop—perhaps potatoes —for a couple of years and a farm that has a farmstead, a yard and a house where people live. The average length of a tenancy of a farm with a farmstead is more than eight years, which is much closer to the 10 years that the Tenant Farmers Association is calling for.
The other thing to bear in mind is that short-term lets are important for some business models. Even in my part of the world—Cornwall—businesses often specialise in particular areas. Some may specialise in brassica crops—cauliflowers and cabbages—which can be grown on the land for only two to three years before a new rotation must come in. Often, a potato grower will follow for a period and a daffodil grower will follow that. Finally, when the land has been hammered for a few years of intensive cropping, a cattle farmer comes in and puts it into grazing for the best part of a decade. That model can work and can suit some farm enterprises.
I have had discussions with the Tenant Farmers Association about agricultural property relief. I subsequently had discussions with Treasury officials about the TFA’s proposal and I helped to facilitate a meeting between George Dunn, its chief executive, and Treasury officials to discuss his ideas further. The officials told me they will consider these ideas and feed back their thoughts to me. I am still awaiting that feedback. They have obviously been busy with the Budget recently, but I look forward to having their feedback about whether it is a good thing or not because it is a policy area for them. There is a danger that such a measure could restrict the market and that less land could come to the market for the agribusinesses that value flexibility.
A second matter raised was stamp duty land tax. Tenant farmers and landowners agree that they would like changes. Again, this is an issue for the Treasury, but the challenge is that the longer the term of the tenancy, the higher its value and the more likely it is to trip over the threshold for SDLT.
I have received proposals about considering the law on rules of forfeiture of farm business tenancies. At the moment, if there is a breach of a covenant, the only option open to the landlord is to go for full forfeiture, which is quite a high hurdle to clear in a court. That makes landlords nervous about longer-term tenancies and makes them more likely to go for a shorter term tenancy because there is less risk. One suggestion is that we may be able to borrow some of the other remedies and tenancies in the Agricultural Holdings Act 1986 and have options and measures that fall short of full forfeiture—for example, an enforcement notice to get a covenant in a tenancy abided by.
I have received some suggestions about borrowing elements of commercial property tenancies with a right to renew, which would stop short of longer term tenancies but might create some sort of soft presumption that someone who has been a good tenant for a three-year term should have priority to renew that tenancy—a right to renew rather than being held to ransom for a higher rent. Again, that is an interesting idea that I am keen to consider, although I have heard mixed opinions about how significant a change that would be and whether it would have much impact.
Going into more detail in these areas, I have had representations to repeal section 31 of the Agricultural Tenancies Act 1995. Under the Law of Property Act 1925, there has been a statutory right for a landowner to create a tenancy on their land. They did not have to have the permission of any moneylender who had a charge over that land to do so because it was deemed important that land was kept in productive capacity and that the interests of banks and moneylenders should not be placed ahead of food production for the country. Some deft lobbying by the British Bankers Association in 1995 resulted in a change to the flagship Law of Property Act 1925, which undermined landowners’ ability to put a tenancy on their land to the extent that to create a tenancy they now need prior permission from someone with a charge on that asset if that is in the mortgage deed.
The shadow Minister referred to county farms. There has been concern about those, particularly in Herefordshire, which prompted me to set up some discussions. The Agriculture Act 1970 gives DEFRA a role to work with local authorities to help them to refine their plans and I am considering that. We cannot block them from selling those assets—they have a statutory right to do that—but we have a role to play in working with them on any plans for reorganisation of their county farms. That is why I am keen to have discussions with them about how we can try to refresh the model and make it a real option for new entrants to the industry.
I want to give my hon. Friend the Member for Wealden a chance to come back on some of these issues, but on contract farming, there are some interesting models out there that enable new entrants, who perhaps do not have a huge amount of capital behind them, to get access and set up a new business. I will give just one example of the kind of thing that we are looking at in our food and farming plan. Tulip, which is a very large pig producer that accounts for about 20% of all pig production in this country, runs a system called franchise farming, whereby it owns the units and gives access to its animal genetics. It takes care of all the marketing and gives people access to its science and veterinary expertise. But on each unit it has a franchise farmer, who basically runs the unit for a fee, for a contract per pig completed, with all sorts of performance-related pay. That is a great way to give young people who want to farm, but have no capital behind them, the first stepping stone into the industry. It is also a model that can lead to better knowledge transfer and access to technology.
My final point, therefore, is that as we think about the future of farming in this country, we perhaps need to move beyond the traditional notion of tenancies and land ownership and look at some of those other, more creative models, which may actually have far more promise for new people trying to get into the industry.
Nusrat Ghani
I thank the Farming Minister for his response. I thank my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston) for talking about diversification. Farmers do much more than till the soil on their land, and they have to diversify their businesses. I also thank the hon. Member for Strangford (Jim Shannon). I do not think that a debate could take place in this Chamber without his support or intervention, and his passion was a delight to hear. To my hon. Friend the Member for Eddisbury (Antoinette Sandbach), I say that I am not proposing that we legislate for longer- term tenancies. What I want us to do—I think that the Minister alluded to this—is to incentivise landlords to offer longer-term tenancies, and make it easier for tenant farmers to try to negotiate those better deals. Quite often we talk about the importance of food security, but we do not offer support for the farmers who are providing that.
I thank the Minister for his comprehensive response. I now need to move on and speak to the Treasury, but my local tenant farmers will be reassured by some of his comments today. I would also like to place it on the record that I have been a Member of Parliament for about 11 months and every time I have approached the Farming Minister, he has made himself available. We have had two very large meetings with the Conservative Rural Affairs Group, and he is due to meet members of the East Sussex farming business community, who will no doubt pick up all the points that he has not covered in this debate. I hope that they will challenge him and push him even further.
My final point is that I come from a delightful constituency, with a huge number of landlords and tenants farming, but I feel that there is some nervousness about raising the concerns of tenant farmers who are not new entrants into the market. They are not young people; they have been farming for quite a while and they struggle to move their business from site to site. I would like to work with the Minister on ensuring that we can provide them with as much help as possible.
Question put and agreed to.
Resolved,
That this House has considered tenant farming.