Agricultural Tenancies

Baroness Bakewell of Hardington Mandeville Excerpts

Monday 12th June 2023 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

My Lords, I begin by welcoming this Statement and the fact that the Government are agreeing to implement many of the recommendations from the Rock review. I also thank the noble Baroness, Lady Rock, and everybody who has been involved in the Tenancy Working Group for their work in producing such an excellent report.

Why does this report matter? Tenant farmers remain an important part of British agriculture. Tenants farm 30% of farmed land in the UK, and this is a traditional means of entry for young farmers who do not happen to inherit a farm.

Tenant farmers are vital if the Government are to meet their ambitious commitments across food security, the environment and climate change, as well as levelling up rural communities. A clear government commitment to the agricultural tenanted sector is important to the future of farming in this country, so it is very good to see that, as the Statement says, three-year agreements are now being offered for tenants to participate in the sustainable farming initiative. Yet, according to the Tenant Farmers Association, a lack of security over the future and not knowing if they will still have their farms in five years’ time is the biggest worry for most tenant farmers, who are under a farm business tenancy. This therefore provides very little incentive for them to invest in the medium to long term in their farms.

In commenting on the Government’s response to the review, the noble Baroness, Lady Rock, said that she was disappointed that they had not recognised its findings regarding the increase in new clauses being inserted into farm business tenancies that reserve the right to enter public and private schemes solely for the landlord. Can the Minister tell us why the Government made that decision?

The Statement also says that the Government must

“remove any remaining barriers to accessing our farming schemes”.

This, of course, includes much more than just the sustainable farming initiative. Why did the Government not accept the proposals from the Rock review to make it easier for tenants to enter the tier 2 and tier 3 versions? This is where a lot of the schemes will sit. I am thinking particularly, for example, of Countryside Stewardship and landscape recovery. Can the Minister also tell the House how the Government intend to deliver the review’s recommendations on securing tenant access to the new environmental land management schemes on tenanted land when there is no landlord consent?

The noble Baroness, Lady Rock, also said that she was

“disheartened that the Government has avoided the recommendation to allow tenant farmers to have a fair basis on which to engage in diversified activities and that the proposal to involve the independent Law Commission has been downgraded”.

Again, can the Minister provide an explanation as to why these decisions were taken?

I move on to the next announcement in the Statement: the establishment of the farm tenancy forum. We very much welcome this, but is the Minister able to further clarify its role? It will be important that it does more than just monitor and ask for further evidence. It will need to fulfil its task of implementing the Government’s response to the Rock review—all the good things that are in that—and should not be just a rolled-over version of its predecessor.

We are pleased to see that the Government are going to progress the development of the new code of practice and very much welcome the leading role to be taken by the Royal Institution of Chartered Surveyors.

Regarding the further consideration of the recommendation of a tenant farming commissioner, the review clearly laid out exactly why this is needed. Can the Minister assure your Lordships’ House that the call for evidence will be carried out with a real sense of urgency?

Finally, we know that there is continued anxiety around the future of farming and a need for more training and business support, so we very much welcome the commitment in the Statement regarding the new entrant support scheme pilots. Can the Minister provide any information as to when we are likely to have more detail about that? It would be interesting to know how long the pilot scheme will last, when they are likely to implemented and so on. Encouraging more people to enter farming is vital if we are to have a thriving agricultural tenanted sector in the future.

I look forward to the Minister’s response, but we warmly welcome the fact that the Government are committed to implementing the bulk of what is in the Rock review.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I am grateful for this opportunity to comment on the tremendous work that the noble Baroness, Lady Rock, and her team have done on the tenant farming sector, which plays such an important part in the agricultural provision of the country.

The Statement, given in the other place on 24 May, draws on the government response to the Rock review, which was published in October last year. The review itself was extensive and covered every area of the way that agriculture is conducted by tenant farmers, from relationships with landlords to tax systems. Tenant farmers are now firmly at the centre of the agriculture industry. I am delighted that Defra has proposed setting up a tenant farmers’ forum; that is excellent news. Tenant farmer voices need to be not only heard but listened to.

I read the Rock review, the government response and the Statement, and thought that the Statement was very thin on the detail of the government response and the review itself. The review splits its recommendations into two parts: those requiring immediate action and those taking place over a longer timeframe.

There are aspects of the government response that were good. First, the Government are ensuring that the various ELMS are easily accessible and open to tenant farmers; that is essential. Recommendation 1 gives details of how this could be achieved, including by ensuring that landlords are not able to block tenant applications. However, in terms of the SFI, it is true that tenant farmers have not rushed to take part. Can the Minister say what the Government are doing to rectify that situation?

Secondly, the Government are ensuring that Defra communicates with the tenant sector and that funding schemes are easily accessible to tenant farmers; that is important. Doing this through the farm tenancy forum is also important. Thirdly, they are continuing to invest in farm infrastructure through the farming investment fund by means of grants to farmers, foresters and growers, which will include tenants. Science and technology are moving at a pace; it is vital that tenant farmers have access to resources to invest in innovation. Is the Minister able to say how much of the £168 million in the FIF has been allocated to the tenant farming sector, and is this likely to be sufficient to make a real difference to the tenant farmer?

Other aspects of the response were not so encouraging. Requiring a longer period for implementation is the proposal in recommendation 6 for the appointment of a tenant farmer commissioner. This role would ensure that government policy is tenant-proofed. The commissioner would be able to examine and strengthen any dispute resolution processes. That was met by Defra with a call for evidence over the summer months. This seems to have been in response to industry lobbying with differing views, possibly from the landlord sector. That was disappointing, so I would welcome the Minister’s view on the appointment of a tenant farmer commissioner.

There were also a large number of recommendations, where the government response was to

“work with the … Farm Tenancy Forum”.

While that is exactly what they and the forum should be doing, it seems to me that the Government were pushing a disproportionate amount down to the forum. It would be better if they made a much more positive response to the individual recommendations in the Rock review in the first place.

The chapter on tax contained a number of recommendations, including recommendation 62:

“Reform Stamp Duty Land Tax to end discrimination against”


farmers. The government response to this and to recommendations 56 to 58 was to explore the potential for relief on tenancies of eight years or more and to work with the forum on solutions. Again, that was not as encouraging as it might have been.

In the other place, the previous Secretary of State raised the issue of the Law of Property Act 1925 and the Agricultural Holdings Act 1948, whereby landowners had a right to rent out their land. However, following lobbying by the banking industry, that was taken away through Section 31 of the Agricultural Tenancies Act 1995, which requires that they now need permission from a bank. The question was asked whether the Government had considered repealing Section 31. The Minister’s response was to look into the matter and get back to the right honourable Member. Given the length of time that has elapsed since the Statement was first debated, can the Minister update the House on whether this is likely to be considered?

Tenants, and farmers in general, are bogged down in measuring and monitoring what they do. Recommendation 68 calls for Defra to

“systematise the measurement, monitoring and collection of data on tenants and their involvement in schemes”.

This is not rocket science and it will make a tremendous difference to tenants and other farmers. The Government’s response was quite long and ended with:

“We will keep this question under review as part of our monitoring, evaluation and learning work, to ensure we have all the necessary evidence to inform ongoing policy review and development”.


So that was a no. The Government are obsessed with monitoring and evaluation; as the saying goes, you do not fatten a pig by continually weighing it. The noble Baroness, Lady Rock, has taken an enormous amount of time on this review and produced some workable recommendations which would enhance the lives and viability of tenant farmers. I am disappointed by the government response.

[The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)]

I thank both noble Baronesses for their welcome for the review, which I entirely share. I should refer noble Lords to my entry in the register: I am not just a farmer but a member of the Royal Institution of Chartered Surveyors.

I pay a real tribute to my noble friend Lady Rock for what she has done to ensure that tenant voices are heard at this key moment in our agricultural transition. It was entirely right of my right honourable friend George Eustice to commission her. The team she had around her did an enormous amount to help Ministers on policy, but also to give a voice to a very important part of our agricultural sector.

From day one of the agricultural transition, we have worked with tenant farmers as we have codesigned our farming schemes, utilising their input through our tests, trials and pilots to develop schemes so that they are accessible to all. But we are grateful to the review for highlighting some areas which we have taken action to ensure are accessible to tenants. We recognise how critical the tenanted sector is to a successful agricultural transition. When we commissioned the tenancy working group to carry out this comprehensive review, we were absolutely clear from the start that tenants must continue to be a very significant part of the occupation of land and the production of high-quality food in this country.

I will address the various points that the noble Baronesses raised, but not in any order—I hope they will forgive me. On the farming investment fund raised by the noble Baroness, Lady Bakewell, we have made productivity and capital grants, such as those available through the farming investment fund, available to both landlords and tenants.

There are over 70 recommendations in this review and many we have already delivered on, such as the very important point about sustainable farming incentive standards. We have three standards that were launched a year ago: they are the standards on arable and horticultural soils, improved grassland soils and moorland. We have announced six new standards for this year, which include hedgerows, integrated pest management, nutrient management, arable and horticultural land, improved grassland and low-input grassland. We want to make sure that tenants can access those, in many cases without landlords’ consent. That is an absolutely key point, but other measures are also available to them in such areas as countryside stewardship.

Some of the Rock review recommendations have widespread stakeholder support. There is less consensus on others and we want to make sure that we are getting it right, so asking for a call for evidence on whether having a tenant farming commissioner is right seems a good process to undergo before appointing one. However, we are open to the idea; I want to reassure noble Lords on that.

The noble Baroness, Lady Hayman, asked about the Farm Tenancy Forum. The current Tenancy Reform Industry Group is an ad hoc organisation that meets on an irregular basis to resolve particular issues. The Farm Tenancy Forum will meet quarterly; it will be co-chaired by my right honourable friend Mark Spencer, the Farming Minister; and it will have a remit to find solutions to various issues relating to the tenanted sector and feed back real-world experience and insight on progress. We are inviting industry organisations that represent tenant farmers, agricultural landlords and professional advisers who work in the sector to be members of this group. The forum will build on the valuable work the Tenancy Reform Industry Group delivered over many years. To explore the issue of a tenant farming commissioner in more detail, we will make an announcement this summer at the completion of the call for evidence.

We recognise that, in many cases, tenants and land agents—and I speak as somebody who qualified as a land agent—work collaboratively. The vast majority of the relationships between landlords and tenants is good. There are some bad cases, and the report highlighted the actions of some advisers that need to be addressed. I am pleased that the Royal Institution of Chartered Surveyors is looking at a new code of practice. That will build on work that has already been done by the CLA and the Central Association of Agricultural Valuers to make sure we are getting that right.

The government response recognises that the issue of restrictions in farm business tenancy agreements needs to be examined further to see whether those are a widespread barrier to tenants accessing new schemes. We have to remember that if we make dramatic changes to policy, we could stop the access to farming by this key group of people, because the incentives to landlords to let land will not be there. That has happened in other countries, and we want to make sure that the vibrant tenant farming sector exists because landlords are incentivised to let land and, once they have let it, farmers can get on and farm it, secure in the knowledge that they are going to be able to access the schemes and know they are not going to have what is known as unreasonable land resumption, which is basically the ending of tenancies.

I can speak from first-hand experience about the importance of the term of years of tenure. The report makes some really interesting comments about trying to incentivise landlords to give longer tenancies, and some of the tax reforms announced by the Chancellor—the Government are seeking evidence on them before making a change, and it comes under the Treasury and not Defra—are the sorts of things we will be promoting. What is clear is that as you get to the end of a farm business tenancy, the tenant has less and less incentive to invest—in buildings, in the natural capital that he or she is seeking to exploit—and nobody wins. To give them some sort of surety was one of the best points that was made in the review.

The noble Baroness, Lady Hayman, asked about new entrants, something vital to me and to us in Defra. On the one hand, we have given the exit scheme to allow farmers to exit their holdings with dignity and support from the Government. At the same time, we are putting in £1 million for access to special benefits by tenants as part of the development of the new entrant support schemes. We will involve tenancy industry bodies such as the Tenant Farmers Association to be part of the stakeholder advisory group. We will share data on the number of tenants that have signed up to the pilots, use the feedback we get from tenants to embed tenant farmer thinking back into policy design, and look to the extent to which new entrant support scheme pilots support people to gain new tenancies.

The biggest barrier to somebody succeeding in farming and getting through the door is a shortage of capital or skills. If you assist a new entrant in setting out a business case for a tenancy that comes available, how to talk to a bank and how to do a cashflow, their skills and enthusiasm will take on the rest. We have seen this happen, and I applaud so many good landlords for doing it. That is the experience of the Duchy of Cornwall, the Crown Estate and many others. Clinton Devon Estates is a great example of a really enlightened policy of trying to encourage new people into farming and bringing in new ideas, which is absolutely vital.

I am conscious that this is a long Answer; I was asked a lot of questions. On the tax recommendations, as I said, at the Spring Budget we launched a consultation to explore the extension of inheritance tax relief to include land in environmental land management schemes and ecosystem service markets. The consultation also explores the option to limit inheritance tax relief to let land out for a minimum of eight years. Since publication of the review, HMRC has updated its inheritance tax manual to help clarify the tax treatment of agri-environment schemes.

On the point about technology and the collection of data, this is not particular to tenant farmers: it is absolutely vital across the farming sector. Technology is our friend here. Someone with the scars on their back of IACS, going round with a measuring wheel and arguing on the phone with Defra—or MAFF, as it was then—about whether you had one-metre or two-metre margins, can now do it from satellite data or with their mobile phone. The collection of data has to be easy and sensible, and we need to incentivise people to do it. That will assist in so many areas of the governance of farming, not least the availability of land for tenant farmers. We want to make sure that that is happening.