Agricultural Holdings (Fee) Regulations 2022

Baroness Hayman of Ullock Excerpts

Tuesday 6th December 2022 Grand Committee

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the Minister for his introduction to what is, on the face of it, a fairly non-contentious amendment to the fees paid for the appointment of an arbitrator to resolve disputes or make certain records about agricultural tenancies under the Act that we have referred to. Other noble Baronesses have talked about the increase in the fees and whether it is still appropriate considering when it was set, so I will not go into detail about that.

I want to focus on the concerns raised by the Tenant Farmers Association about the increased costs that are in this SI, and about tenancy arrangements more generally. The TFA has said it is worried there has been a lack of contact between it and Defra, and the Secretary of State, around the report on the Rock review. The noble Baroness, Lady McIntosh of Pickering, has referred to this. She asked a question yesterday in the Chamber and the Minister basically gave the same response as he has today, which is that the Rock report is very interesting, the Government are benefiting from it, it is being reviewed and had lots of recommendations, and that they will report in due course. I think what we would all like to see is a little more information about what that looks like going forward. Clearly, it is a very important report.

I am sure the Minister will know George Dunn from the Tenant Farmers Association. He has raised some real concerns. If the Minister will bear with me, I would like to go through them because his response to these concerns is important. George Dunn says the TFA is objecting to these proposals, and he cites the recommendations of the Rock review, which expresses concern about the way in which agents operate in general and how arbitration is in need of oversight and reform. The report also highlights the need for a commissioner or ombudsman to oversee the operation of arbitration and the Tenant Farmers Association’s view is that this needs to be implemented, preferably before or alongside any decision to increase the appointment fee. I would be interested in the Minister’s response and comments on that proposal.

George Dunn also says that the increase in the fee would land much better with his members if they had some sort of indication or assurance that Defra would be taking seriously the recommendations set out in the Rock review about the appointment of a commissioner or ombudsman with a role to look at the operation of arbitration. In addition, he comments that most of the costs associated with the accreditation, assessment, training and continuing professional development of arbitrators fall to the arbitrators themselves. He believes that the cost of using arbitrators already reflects increasing costs, as the arbitrators pass on those costs to the parties involved in the process. I hope that is clear. What is unclear is what costs RICS and others incur in the appointment process, because none of that is on the record.

It would be very helpful, ahead of any formal response to the Rock report, to know that Defra and the Minister were listening carefully to the concerns being expressed by the Tenant Farmers Association, so that we can work with it going forward to ensure this process works as it should and is effective. At the end of the day, that is what we want it to be.

[Lord Benyon (Con)]

I am grateful for the noble Baronesses’ views on this instrument. I believe we all recognise the importance of the tenant farming sector and the need for tenants and landlords to have access to independent arbitrators to resolve any disputes when they arise. I also believe that it is right for the professional authorities delivering arbitration appointments to be able to recover their costs through an appropriate statutory fee. The improvements this Government have made, including widening the choice of professional authorities that tenants and landlords can go to and the introduction of a regular review clause, will drive continuous improvement in delivery of the service going forward.

I am actually someone who has attended one of these tribunals. I was a trainee at the time. It was in Wales. I remember being struck by one thing: the complete breakdown of the relationship between the landlord and the tenant. That is very rare. Mostly, there is a good working relationship. Where disputes occur—even the best relationships can be tested at times of rent reviews and suchlike—there needs to be a mechanism in place for this.

The only issue on which I differ from my noble friend Lady McIntosh is her feeling that we should have somehow given our response to the Rock review by now. That review has taken many months and was published just over a month ago. The Farming Minister, Mark Spencer, and I have spent many hours going through its nearly 80 recommendations. We also have officials working through them. I do not want to prejudge, but noble Lords will be pleased to know that many of them have “agreed” next to them, while there are also some where we need to do some more work. But with all that is going on—and to do my noble friend Lady Rock and her review panel justice—it is not possible just to publish a response that does not respect the work that has gone into the review and thoroughly respond to the important points it makes.

To answer my noble friend’s other point, this instrument relates principally to the Agricultural Holdings Act, which is a succession tenancy law. There are of course many other types of tenure that can be the subject of disputes, such as farm business tenancies. My noble friend is entirely right that the best type of tenure is a long-term tenancy where there is a commitment to invest and improve. In extreme cases, some short-term tenancies have the effect of little or no investment and a lot of extractive activities, so the natural environment and natural capital involved in the farm are depleted. In most cases, longer-term tenancies are better, but we want to create flexibility for certain circumstances where, for whatever reason, for the landlord or the tenant’s advantage, there is the possibility of short-term arrangements.

Of course, there are many other types of tenancy; my noble friend referred to her family but it could be a grazing tenancy or many others. On our uplands we see how farmers work together with commoners’ rights, which also need to be respected. My noble friend is absolutely right that small farmers need to be supported. I believe passionately in that; I want to see coming through our transition in agriculture a real attempt to understand that small can be beautiful. Small farmers can adapt in a way that some bigger farmers cannot. Some of them will be able to access government support when they were not able to do so before. People who were not able to use the basic payment scheme will be able to access our environmental land management schemes.

My noble friend Lady McIntosh asked about the cases that could be taken to such an arbitration. I remember from my chartered surveyor training something called the “seven deadly sins”. One of them was the failure to pay rent. Another was poor husbandry, which is incredibly difficult to prove. There are a number of other issues that could go to arbitration. The Royal Institution of Chartered Surveyors reports that it receives an average of 195 requests for the appointment of an arbitrator each year. When you think how many thousands of tenants and farmers there are in this country, that is a very small percentage, but it is vital that they have access to a good arbitrator. About 25% of those requests come from tenants, and about 75% from landlords.

The Government recognise that farming is often a long-term business. We are interested in exploring ways of encouraging more landlords and tenants to consider longer-term tenancy agreements. I applaud organisations such as the Duchy of Cornwall, which, by and large, gives 20-year farm business tenancies; that kind of commitment is very valuable. As we transition to new farming systems, there will be more certainty and encouragement for landlords and tenants to enter into a longer term agreement.

There is also a role for industry leadership and best practice guidance in setting out the options and benefits for tenants and landlords of longer term arrangements. A tenant of a small family farm can request the appointment of an arbitrator for all circumstances, such as notice to quit on land resumption, where they have a case to dispute that, as well as for other matters such as tenancy compensation, maintenance and rent reviews. The thorny issue of tenant rights when a tenant vacates land is also sometimes the subject of dispute.

I think 70% over nearly 30 years is probably affordable. We will review it every five years, and I hope it will be considered on a cost basis. We came to the figure working with the CAAV, RICS and the Agricultural Law Association; we did not pluck it out of thin air. It is important that we keep this as a cost-recovery activity for the small number that use it. The noble Baroness, Lady Bakewell, made the point that it is three years out of date. After nearly 30 years, I do not think it is an unreasonable figure; in five years’ time, we shall see what it is like and how this is working.

I turn to the points very properly made by the noble Baroness, Lady Hayman. First, on lack of contact with the Tenant Farmers Association, nobody has more respect for George Dunn than me. The Tenant Farmers Association operates out of a village next door to where I live. He is somebody with whom I have had the pleasure of working. His contribution to the Rock report and to the welfare—mental, financial and in business terms—of tenants over many years is exemplary. It was a great pleasure to go to an event at the Farmers Club to celebrate a milestone in his commitment to the Tenant Farmers Association.

When we respond, soon, to the Rock review, I hope that he will feel that we have considered the points that he makes. I will not pre-empt that response by saying where we are on issues such as a commissioner. We will not agree on everything, but I state absolutely that it is the Government’s intention—the intention of my colleague Mark Spencer, the Secretary of State and me—that we see a vibrant tenanted farmers’ sector. As I said in the House yesterday, without it, the only way that people can get into farming is by buying land or inheriting it. We think it is vital that we see new entrants being able to get access to farming businesses. We have developed our exit scheme for those who want to exit the farming industry with dignity, and we are also working on a new entrants scheme, which will encourage skills, support and the availability of land for new entrants.

We hope to create more mobility within the sector; we can do that only if we have the right systems in place, the right tenure and, as and when issues result in dispute, a proper mechanism for their resolution. We think that that lies within this SI; it is a small part of it. We will be working with noble Lords as we develop the thinking in the Rock report and other measures in environmental land management to make sure that we are supporting farmers—owner-occupiers, tenants and the large number who are both. We have to recognise that they all have a place in our farming system. With that, I commend this instrument to the Committee.