Environment Bill

Earl of Devon Excerpts

Report stage
Wednesday 15th September 2021 Lords Chamber

Moved by

[The Earl of Devon]

109: Clause 113, page 113, line 25, leave out “appears from” and insert “is stated within”
Member’s explanatory statement
This amendment, along with another, adds formality to the process of creating a conservation covenant to reflect the serious, long-term nature of the commitments being made, and to ensure conservation covenants include provisions regarding the duration of the obligation and the consideration due to the landowner in return for the commitments given.

[The Earl of Devon (CB)]

My Lords, this is a groundbreaking Bill in many ways but, from the perspective of English property law, no provisions are more revolutionary than Part 7 and the introduction of conservation covenants. This is a seismic shift, meaning that, for the first time since the Normans introduced common law, owners of land will be able to bind successors in perpetuity to positive obligations to manage land in a particular way. More radical still, and in a departure from the recommendations of the Law Commission, the counterparties to these obligations will now include for-profit companies—private enterprise. As a farmer and a former property barrister now practising at an agricultural law firm with clients in this space, I support this scheme and want it to succeed, but there are glaring imperfections in Part 7, causing major concern to, among others, the NFU, the Bar Council and the RICS. Because of that I have tabled Amendments 109, 110, 112, 113, 114 and 115.

Amendments 109 and 110 focus on the formalities by which conservation covenants are created, ensuring that they say what they are and what they do on their face and are created by deed rather than, as currently drafted, by a simple exchange of emails. Amendment 112 ensures that for-profit responsible bodies are conservation- focused, not distracted by other, competing duties, such as making profits for their shareholders at the expense of the environment. Amendments 113 through 115 resolve the untenable position when a responsible body defaults, such that the Secretary of State steps in and, in perpetuity, binds a landowner to a positive obligation without any reciprocal duty to pay the fees covenanted. Since Committee, I am grateful for the support of the noble Baroness, Lady Jones of Whitchurch, the noble Lord, Lord Oates, and the noble Viscount, Lord Ridley, and many others, including the noble Baroness, Lady Jones of Moulsecoomb, indicating a very broad consensus across your Lordships’ House for these modest but vital amendments.

I am also grateful to the Ministers in Defra and the Bill team for their engagement, although I remain concerned that there is a failure to grasp the significance of the issues raised. Given the time, I do not propose to restate the hypothetical parade of horribles that I set out in Committee, but I note that no one has argued that those hypotheticals are wrong. The Government erroneously asserted that conservation covenants needed to be executed by deed in order to be registered as local land charges, but they have since accepted that that was inaccurate. That is appreciated; however, this only reinforces the sense that this radical change to property law is being rushed through without due consideration or understanding. It is our duty to build in necessary safeguards to protect farmers, the environment and future generations from the threat of zombie covenants blighting our green and pleasant land in perpetuity.

Key to resolving these concerns is Amendment 110, requiring that conservation covenants be executed by a deed which contains its key terms as to duration and payments on its face. This is the traditional and best way to ensure that advice is taken such that the potentially punitive and perpetual implications of entering a conservation covenant are properly understood at the outset. The Government say that their draft guidance recommends legal advice, and this should be sufficient, but anyone willing to enter a perpetual covenant by a mere exchange of emails is hardly going to sit down and read the guidance first. Defra wants no brake on the uptake of these covenants and, rather unusually, it is farmers seeking greater formality and not the Government. Defra has directed me to other statutory covenants created without necessarily using a deed, but none of these contains positive covenants, perpetual in nature, with a for-profit private counterparty. These are largely restrictive covenants with trusted statutory authorities.

Amendment 111 in the name of the noble Earl, Lord Caithness, sets out at considerable length the full formalities to be considered in executing a conservation covenant, formalities the RICS would no doubt recommend. Such extensive formalities may not be warranted within the legislation, but they are exactly what will be considered by properly advised parties executing such a covenant by deed.

The Government suggest that Amendment 112 is unnecessary because Defra will ensure that responsible bodies are truly responsible, but I have read the draft guidance and nowhere does it state the objective parameters against which responsibility will be judged. Indeed, it appears that foreign entities can be responsible bodies, so long as they have a PO box in the UK, and entities directly connected with the landowner could be responsible bodies too—there is no prohibition.

I was also surprised in Committee that the Minister cited the example of for-profit water companies as the type of body the Government consider to be responsible. Would that include Southern Water, recently fined £90 million for environmental degradation on an industrial scale in the pursuit of shareholder profits?

Amendments 113 to 115 solve the intolerable impact of the responsible body becoming bankrupt or deregistered and passing its role as counterparty to the Secretary of State, who then has no obligation to pay anything to the landowner, whatever the cost of the landowner’s conservation commitments. These amendments strictly limit the duration for which the Secretary of State is holder of last resort to 12 months, after which, if no responsible body is willing to take the covenant on, it is simply discharged. This has the effect of killing a zombie covenant and protecting the landowner and the land from the risk of a perpetual obligation with no payments in return. Without this change, the scheme is fatally flawed, as anyone advising on such covenants would have to identify this very real risk and advise against it. Of course, if landowners do not take advice, they will not know of this risk, as I note that no mention is made of it in Defra’s draft guidance.

I could go on, but time is short and the arguments are clear. For these reasons and the myriad others I set forth in Committee, I beg to move.

[The Earl of Caithness (Con)]

My Lords, I support the noble Earl, Lord Devon, in his amendments. They are hugely important. I am a great supporter of conservation covenants and I want them to work effectively. As he just said, I have a number of amendments in this group.

I am looking at conservation covenants in something akin to a divorce situation. One can enter into marriage with the very best of intentions and it is all going very well, but then it starts going sour. Divorce can be extremely costly and brutal. A conservation covenant could be entered into with the very best of intentions, but here the situation is complicated because the parties entering it could be different parties when it comes to a conclusion. There could be very different interpretations and a great deal of costs.

The noble Earl, Lord Devon, did not actually mention costs so much today as he did in Committee, but in Clause 126 the final remedy is the Upper Tribunal and that can cost £50,000 to get started. Can farmers really afford that, particularly tenant farmers? The average size of a farm in England is 87 hectares and the cash flows are bare at the most. They might be a little better with the wheat price at the moment but, sure as anything, we have seen wheat prices go up and come down. You cannot expect farmers to have that amount of ready cash to fight in the courts.

I therefore seek to spell out in some detail the sort of things that need to be taken into account. I do not expect many conservation covenants to be undertaken by tenants but, if one is, all the freeholders of the land should be signatories to that agreement. I hope my noble friend will confirm that. It is a very un-Conservative thing to deprive the beneficiary of a reversionary interest of the full value of that interest, which could easily be done if a tenant enters into an agreement which prejudices the farm at the end of the tenancy. Not only does a conservation agreement affect one property, but it could very easily affect the neighbouring properties and surrounding farms if that conservation covenant involves the re-wetting of the land, which can take many years to undo.

I hope we can get a simpler way to modify and change the tenancies. When negotiation has failed, we need a simple system. I suggest in my amendments that there is an alternative dispute resolution which is simple, cheap, and which farmers, tenants and landowners are used to. I am hugely concerned by the impact that outside bodies might have. As the noble Earl, Lord Devon, has just reminded us, all you need is a PO box. You could get foreign investment companies coming in, taking over these conservation covenants and making life extremely difficult for the occupier.

I very much hope that the Government will be sympathetic to the amendments tabled by the noble Earl, Lord Devon. His Amendments 109 and 110 cover all the points I have raised, but I have spelt them out in a different way because they are of extreme concern to farmers.

--- Later in debate ---

I hope that I have reassured noble Lords, and I ask the noble Earl to withdraw his amendment.

[The Earl of Devon (CB)]

I thank noble Lords for their thoughtful contributions to this short debate.

I reiterate that we are clearly all supportive of conservation covenants. However, in Committee and on Report there has not been a single dissenting voice against the amendments that I have tabled. I had hoped that the Government would listen to this clear message, but it appears that they may not be able to hear it. I do not understand why the taking of advice would be prohibitive of cost in terms of setting up a perpetual covenant over land; that seems entirely reasonable. The Government say that intention must be shown in order for a covenant to be established. If an intention is to be shown then the covenant should say that it is a covenant. That shows the intention. Otherwise, the only beneficiaries will be lawyers such as myself arguing over whether intention was shown.

Finally, the Minister does not recognise that in the absence of any specificity as to the duration of these covenants, they are perpetual by default. If the parties do not get around to saying how long it will last, it will last for ever. They must be advised of that and they must understand it.

Given that today is “Back British Farming Day” and that these amendments are promoted and supported by the NFU, I really think that your Lordships’ House should get behind them. I hope so. However, I beg leave to withdraw Amendment 109.

Amendment 109 withdrawn.

Moved by

[The Earl of Devon]

110: Clause 113, page 113, line 27, leave out “in writing signed by the parties.” and insert “signed as a deed by the parties,
(d) the agreement makes provision for the payment of consideration to the landowner, or states that no consideration is to be provided, and(e) the agreement includes provision regarding the duration or end date of the agreement.”Member’s explanatory statement
This amendment adds formality to the process of creating a conservation covenant to reflect the serious, long-term nature of the commitments being made, and to ensure conservation covenants include provisions regarding the duration of the obligation and the consideration due to the landowner in return for the commitments given.

[The Earl of Devon (CB)]

My Lords, I wish to test the opinion of the House.