Agricultural Tenancies

Earl of Leicester Excerpts

Monday 12th June 2023 Lords Chamber

[Lord Benyon (Con)]

The noble Lord speaks an awful lot of sense. To an extent, it is impossible for government to be perfect here because, as he says, we are dealing with human relationships. Government should create the right incentives. We are talking about a business relationship. There are so many different types of tenure in this country—owner-occupier, tenancies under the Agricultural Holdings Act 1986, farm business tenancies under the 1995 Act, graziers, contract farmers, share farmers and multiple graziers on commons. The complications of trying to create a farming support system that can be accessed by them, particularly in areas such as Countryside Stewardship, are really difficult, but it is vital that they are there.

The noble Lord is absolutely right that, if we get this wrong and government tries to impose things that the market does not want, we will end up getting the worst of all possible worlds—people we want to see on the land not on the land. We want to make sure that we keep this vibrant, diverse form of occupation and use of land, which requires landlords and tenants to work together for their mutual benefit and for the societal benefit of us all, through the use of our vital natural capital, which will deliver many more wider societal benefits.

[The Earl of Leicester (Con)]

My Lords, I declare my interests as a landowner with a number of tenants, as a farmer and as an agricultural contractor. I too welcome the excellent Rock review, but I quite understand the Government not accepting all 70 recommendations. Some of the proposals in the review have the potential to harm confidence in the tenancy industry. While they may enhance the interests of existing tenants, they would reduce the land available to new tenants. We must remember that tenancy is not the only entry into agriculture; there are share farming arrangements and a lot of young people start off as contractors and build up as they increase their capital. Can my noble friend elaborate on inheritance tax and on how longer tenancies, with regard to planting of trees et cetera, might affect inheritance tax for landowners?

[Lord Benyon (Con)]

I thank my noble friend; his experience is really important in this debate.

I do not know that any report that has so many recommendations has been accepted in full by any Government, but we think the vast majority of these recommendations are really good. Some of them, such as the inheritance tax point, is one where we think we need to do more work. Government does not exist in an ivory tower; that is why we commissioned this call for evidence, which closed on Friday. We want to explore more ways to encourage more landlords and tenants to consider a longer-term tenancy agreement while retaining the flexibility that farm business tenancies currently provide.

As we transition to new farming schemes, there will be more certainty and encouragement for both landlords and tenants to enter into longer-term tenancy agreements and we are designing our new schemes to be accessible to as many farmers and land managers as possible. As I said earlier, at the Spring Budget the Chancellor launched this consultation to explore the extension of inheritance tax relief to include land in environmental land management schemes and this consultation will also explore the benefits and impacts of the Rock review recommendation to limit inheritance tax relief to land let out for a minimum of eight years and analyse further what impacts that would have on the length of a tenancy agreement. A number of noble Lords made the very good point that if one goes about this in the wrong way, one achieves a perverse outcome, which is that fewer landlords are incentivised to let land and we suffer because our tenure becomes less diverse and less accessible to new entrants.