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House of Commons Hansard
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County Farm Estates: Tenant Farmers
09 January 2007
Volume 455

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I am delighted to introduce this debate. This is the third time I have troubled the House on the subject, but I have not done so for some time, and a debate on the future of rural land estates is long overdue. I welcome the Minister and thank him for coming today. I know that he has difficulties with events that clash, so I congratulate him on being able to attend to answer for the Government. I am also indebted to George Dunn, the chief executive of the Tenant Farmers Association, Dennis Brewer of the south-west National Farmers Union, and Martin Large of Gloucestershire Land for People, who have helped me to construct some of my argument; the fault is entirely mine if I get it wrong. I hope that we shall receive some illumination on where the Government are going, and what they expect of local authorities.

I have some background in the area covered by the debate, because I chaired Gloucestershire’s rural estates advisory group when I was a county councillor, between 1993 and 1997. Smallholdings are, to me, an important part of the fabric of the countryside. I shall not say much about history, but I remind hon. Members of how developments arose from the first world war idea of a land fit for heroes. The two key principles remain important in my view: the gateway that allows people with no other means of getting access to farmland to gain it through county council smallholdings; and the ladder principle, which allows people to develop their skills and capabilities, by moving on to larger holdings. If anything, that has been helped by the tenancy reforms, farm business tenancies, and so on.

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I am grateful to my neighbour for giving way. He may be interested to know that I discussed the issue with the local NFU on Friday, and was told that the problem with the county farms is that, although the ideal that the hon. Gentleman set out is exactly right, there is no ladder by which people from the smaller farms can progress to bigger ones, because so few bigger ones ever come up for let.

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I think that that is a problem, and I want to allude to it and to some ways in which we can take the matter forward. However, I agree that in essence that is a difficulty for the estates.

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Do my hon. Friend’s proposals include giving the tenant farmers in the circumstances described, and tenant farmers generally, the right to buy?

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Not as far as I am concerned, because I am in favour of keeping the holdings in state control, so to speak. However, there are ways in which, through community land trusts, we might consider giving farmers opportunities to bridge the gap between the public and private sector.

My starting point, and my main concern, is that there has been a reduction in the overall size of the farm estate nationally, and more particularly that there has been a piecemeal decline in size. That is particularly apposite at this time, as my close neighbour the hon. Member for Cotswold (Mr. Clifton-Brown) knows, because there has been a further debate in Gloucestershire county council about the future of the estate, and some alarm was raised by both tenants and their representative bodies—both the TFA and the NFU.

Correspondence has come to my notice that has gone to the county council and to my noble Friend Lord Rooker, trying to ascertain where we are going, with respect to the future of the county farm estate. It is not for me to ascribe blame. As I have said, I have some responsibility with regard to a previous time when we decided to keep and develop the estate, and I consider anything that will detract from that unacceptable. However, in these days of pressures on local authorities and central Government there is always a likelihood that the issues will come up again. I want to lay some of the ghosts and encourage authorities to keep their holdings, because of the principles that I still hold dear.

There are other reasons for what I am saying. The estate is not inconsequential. It brings £375,000 a year to Gloucestershire in rents, but when such things are considered purely as pounds, shillings and pence, to use old terminology, it is difficult to argue that there are pure economic reasons to retain the smallholdings. I nevertheless want to examine some other arguments, because there are deeper and wider arguments for doing so. New approaches are being introduced. I am not talking about just keeping a set of estates that will decline over time. I should like to consider the idea of community land trusts, which provide the opportunity to bring affordable housing into the areas in question; more particularly, different forms of ownership are suggested for consideration. My mind is not closed to those ideas and I want to talk later about the idea of mutualising the farm estate, which might provide protection. In the end each local authority will make decisions on merit, but perhaps collectivising and considering ways to get greater asset value from the land might provide us with greater certainty about where we are heading.

In Stroud we are thinking about new forms of agriculture; we have Stroud Community Agriculture, which is a group of people who are not on a county farm estate, but who have formed a smallholding and are farming it organically; their intention is that it should grow. The importance of the land can be seen in different ways. I shall not get into arguments about the idea that the land is ours, but I certainly think that it is of crucial importance in what it can bring—not just food, but the uses that people want from it.

I see the estates as being under attack; there has been debate in Gloucestershire and it continues in North Yorkshire. Indeed there has been almost a process of sale in Somerset. I see a threat of piecemeal as well as wholesale sales. That does not mean that I have ever been against selling some land to accumulate capital value, which can be invested in other services in the county council. However, I argue that that can be done strategically rather than as a whole or by selling farms as they come up. We need to be much more thoughtful about it.

Opportunities are also provided by the new environmental world we live in, by carbon sequestration and by the European rural development programme. I hope that we shall consider ways of investing collectively, through county farm estates, to encourage farmers to look for new ways to farm. With that in mind, Fresh Start is an important development, but we need to fund it.

To return to the concerns of the hon. Member for Cotswold, I would argue that we must not look at estates in isolation. We must consider links with the National Trust, the Duchy of Cornwall, the Church Commissioners and, indeed, large landowners such as the Bathurst estate in his area. They are always looking for good tenants and the county farm estate is often somewhere for people to develop their skills. We should not see them in isolation.

Other problems come to mind. The NFU talked to me about the conflict in local government, when estates have been sold off by county councils. Issues have now arisen in the planning process in that those who acquired the estates seek planning permission for purposes far from what was originally intended. That is inevitable, because people are trying to use land for creative reasons. An interesting paper in the Library, by Christopher Barclay, considers farm diversification, countryside and planning and the new planning policy guidance note 7. It is a good move, but there are inherent dangers in relation to who is to apply for planning permission and what they want to do.

That aspect of the matter links to the problem of the ever present drive to get rid of the estates. There is pressure on tenants and increased regulation, such as nitrate vulnerable zones and animal welfare measures. All those pressures come together, particularly in Gloucestershire, where there has always been a tradition of a large number of dairy holdings; it is those that are decreasing. It is important that removing dairying is not the end of the farm estate; that should not be a reason. There are reasons for the changes happening in dairying.

I congratulate the Government—the Tenancy Reform Industry Group has come up with some valuable proposals, and that discussion must continue. To be churlish, there are issues well beyond the Minister’s pay grade but which he could take forward as questions to the Treasury.

Where are we with some of the fiscal proposals? This issue covers five different tax areas: inheritance tax, because of the ownership of the estates and the way in which tenancy reform is dependent on landowners—of course the situation is slightly different if it involves a county farm estate, but I am talking also about tenancy farming—income tax, capital gains tax, corporation tax and VAT. The issue goes across the whole fiscal range. That has been covered by TRIG, but very little progress has yet been made. I have tabled parliamentary questions on the matter, not to this Minister but to the Treasury, and so far I have received a fairly bland set of replies—I put it no more strongly than that.

The Minister gave an answer yesterday on the end of the adjudication scheme. I am disappointed about that, as are the NFU and the TFA. My hon. Friend said in his answer, quite rightly, that no one has yet used it, but that does not mean that some mechanism will not need to be considered in future. It is good that there is now a code of practice, but that, by necessity, will not be as strong as the adjudication process. It would be useful if the Minister talked to his noble Friend Lord Rooker about the letter, as yet unanswered, from the TFA, so that we can have an explanation as to why the Government have removed the scheme and what they see as being put in its place.

Let me move on to the issue of the retirement scheme. We argued in favour of that in the 2001 election manifesto. It disappeared in 2005 but, again, tenants would, to a person, always argue that they would want that matter to be considered. With the ageing of the farming population, we need, alongside Fresh Start, a way to encourage people to retire from the land. The average age of people on county farm estates is increasing considerably. I suspect that we have more 60-year-olds than 30-year-olds, which is not a good way for an industry to run.

My main argument today is that the time is long overdue for the Government to launch a review of county council smallholdings. We have had no legislation on the matter for a considerable time. We have not even had a statement from the Government since 2003-04. Lord Rooker, in a previous ministerial post, made very good remarks about how he saw the strategic importance of these landholdings, but that is not the same as a proper review and guidance—I put it no more strongly than that—to local authorities on the importance of keeping these estates, rather than seeing wholesale or even piecemeal sales. There is a need, therefore, to examine how the Government plan to take the matter forward. The challenge to the Minister, and my fear, is that we are seeing a different and more threatening approach to the future of the estates. Death by a thousand cuts is still death, and even though there seems to be some lessening of the pressure for wholesale sales, piecemeal sales are certainly growing.

I shall conclude shortly to give the Minister plenty of opportunity to respond. I am looking for leadership on this issue now. I talked earlier about mutualising the whole estate. So far, George Dunn, the chief executive of the TFA, and I have done some stargazing, but we want real definitive investigation of the potential of unlocking some of the asset value by allowing counties and other local authorities to draw down some of the value from the land and invest it in the estate. Everyone talks about the acre-for-acre policy as though it exists, but in effect it is somewhat mythical. However, where there is investment in county farm estates—certainly Gloucestershire has invested over recent times; I cannot deny that—we can see the value coming back in terms of the holdings themselves, which of course adds to the land value in due course.

We need a forward-looking approach. If we did not have county farm estates, someone would be calling for us to invent the concept. The need for local food chains, the need to feed local schoolchildren, the need for strategic opportunities to get people out into the countryside and the need for people to have a stake in the land through public ownership of it provide great opportunities. It is a no-brainer to be talking about getting rid of the estates at this time by whatever measures are in place. More particularly, we should value them, invest in them and certainly be willing to talk about the way forward.

I hope that the Government will think seriously about the issues that have been raised. That is the key impression that I want to leave with the Minister. We must have a review. We must think about where the estates fit in the overall picture of farming. We must celebrate tenant farming in this country, which is unique in Europe. It provides a valuable way in which people can come on to the land and a different form of farming that allows change, as opposed to some of the stultifying ways in which Europe seems to do these things—that will be my only dig at Europe in this debate.

We need leadership on this issue from local authorities and from central Government. Then, agricultural practice, which is undergoing huge changes at the moment, can be supported and the changes can be seen through. I see county farm estates and tenant farmers as the jewel in the crown of our control and maintenance of our land.

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I am very pleased to respond to this important debate under your chairmanship, Mr. Pope. My hon. Friend the Member for Stroud (Mr. Drew) has a matchless history when it comes to bringing these matters to the attention of the House. I think that the first debate that he initiated on the issue was in November 1997, and he entered the House that year. He introduced a further debate in 1999. Indeed, the issue has been a constant theme that he has brought to the attention of the House. I noticed that George Dunn got an honourable mention today, as he did in 1999. I only hope that John Warfield and Ken Oliver, who were mentioned on previous occasions, are still hale and hearty and have been informing my hon. Friend on this issue as well.

Tenant farmers have a very important role to play in securing a sustainable future for the farming industry in this country. The Government are committed to ensuring a vibrant and prosperous tenanted sector. Only recently, my noble Friend Lord Rooker, speaking at the 25th anniversary conference of the Tenant Farmers Association, emphasised the importance of the tenanted sector. Tenancies give many farmers the flexibility that they need to adopt new farming practices. They also provide a much- needed way into farming, particularly for young people who do not have a farming background. I take on board my hon. Friend’s remarks about the increasing age profile of tenant farmers on county farm estates. That seems to be at odds with part of the purpose that we have talked about, and we need to consider the issue.

Statutory smallholdings, or county farms as they tend to be called, have traditionally played a key role in helping new entrants to get a foot on the farming ladder. That role is recognised in the literature published to promote Sir Don Curry’s fresh start initiative, which is aimed at getting new people into the industry, as well as helping older farmers to retire. The traditional image of county farms means that they are often thought of solely as agricultural holdings. As a result, some local authorities may be reluctant to allow tenant farmers to develop new business ideas. However, there are many examples of county farm tenants who have taken advantage of diversification opportunities in order to adapt to changes in consumer demands.

For example, on the Monmouthshire county farm estate, one farm is a training school for horse riding. Specialist plant nurseries have been set up, while other farms have diversified into bed and breakfast. In Dorsetshire, several county farms are fully organic and the estate has strong links with the local farmers markets. Those are all things that my hon. Friend has mentioned. Also in Dorsetshire, a farmer on the county farm estate has set up his own farm shop. In Cornwall, the county farms estate, together with Penwith Farm business centre and Penwith district council, has developed a website to enable consumers to purchase produce direct from the farmer’s gate. Again, much of the produce is organic. There are many other examples of good practice throughout the country.

County farms also have an important role to play in promoting increased public access to the countryside. They provide an educational resource that enables the public and particularly children to learn more about farming practices. The origins of county farms are, as my hon. Friend said, in the Small Holdings Act of 1892, which established statutory smallholdings to relieve the depressed conditions of agricultural labourers. Later, the Agriculture Act 1947 introduced provisions to allow agricultural workers to farm in their own right, placing a duty on smallholding authorities to provide smallholdings. The legislative provisions that govern county farms today are set out in the Agriculture Act 1970, which requires smallholding authorities to make it their “general aim” to provide opportunities for people to farm by letting holdings to them, but there is no longer an obligation on authorities to provide smallholdings. Similarly, there are no provisions in the Act to prevent local authorities from disposing of county farm estates. That is a theme that my hon. Friend has brought before the House very forcefully over the years—the fear that those estates will be sold off piecemeal.

Faced with growing financial pressures and the need to consider the interests of all their taxpayers, many local authorities have sought to realise assets that are bound up in county farms. My Department will continue to support the county farm system, particularly—I stress this—in its role in providing opportunities for new entrants. We have encouraged local authorities to think carefully before disposing of farms. My noble friend Lord Whitty wrote to all smallholding authorities in January 2004, reminding them precisely of their obligations under the 1970 Act to make it their aim to enable people to farm in their own right. In doing so, he honoured a commitment that the Government gave in their response to the recommendations of the Tenancy Reform Industry Group.

The Government believe that county farms provide a valuable first step on the farming ladder, and they therefore urge smallholding authorities to consider all their options before deciding to sell their farms. However, the Government have no statutory powers to influence the management of county farms or to prevent their disposal. Those decisions are entirely for individual local authorities.

I know that the recent decision of Gloucestershire county council to review tenancies when they fall due is disappointing to those representing tenant farmer interests. It is fair to say that Gloucestershire has run a model estate in the past and that other smallholding authorities have often looked to it to provide a lead. I hope that Gloucestershire will continue to honour its existing tenancy agreements and that as tenancies come to an end the authority will take a balanced view on the retention of each farm in question.

My hon. Friend suggested that there should be a major investigation into the role and value of county farm estates, but we have no plans to use the provisions of the 1970 Act to initiate a review of smallholdings. That idea was considered in the light of the TRIG report, but after receiving advice that such a review could not prevent the further disposals of county farms we agreed that it would serve no purpose and would, moreover, be a burden on local authorities.

My hon. Friend also suggested that there should be liaison between local authorities and other major institutional landlords. That might be possible, but the initiative would need to come from local authorities and the institutions themselves. Similar exercises have been tried in the past, such as the rural starters register, but few landlords expressed interest.

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I have agreed with almost everything that the Minister said until his last point. If county farms are to work properly, there needs to be a ladder so that young people can come on to them and then move on to bigger farms. For that to happen, the Government must provide the right fiscal climate so that landlords and institutions are prepared to let bigger farms. The whole purpose of the county farm will be lost if tenants stay there for many decades until they become older and retire.

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I know what the hon. Gentleman has said on this, and I am sure that the Treasury will also have noted the spending commitment that he is prepared to undertake in this area. As he has recognised, that would demand a financial commitment that his party is, perhaps, prepared to put a figure on—I will happily give way to him if he has a figure for how much it will cost—but that is not something that we have seen fit to undertake at this point.

Looking at tenant farmer issues more generally, we recently amended the Agricultural Holdings Act 1986 and the Agricultural Tenancies Act 1995 to establish a more flexible framework for agricultural lettings. I thank the Tenancy Reform Industry Group for its work in securing an industry consensus. The changes remove some of the barriers that would have prevented tenant farmers and their landlords from adapting to the needs of a sustainable agricultural industry in the 21st century.

My hon. Friend raised several other issues that are relevant to tenant farmers to which I would like to respond. As he acknowledged, TRIG’s fiscal recommendations are primarily matters for the Chancellor. The recommendation on business asset taper relief was implemented by the Chancellor in the 2003 Budget. The other recommendations are still under consideration and TRIG should pursue them directly with the Treasury.

I assure my hon. Friend that the decision to withdraw the funding for the adjudication scheme to support the code of good practice for agri-environment schemes and diversification projects within agricultural tenancies was not taken lightly. It was part of an urgent wider review of expenditure within DEFRA that resulted from the current financial pressures on the Department, of which he is well aware. There has not been a single application for the scheme since its launch in December 2005. Given the financial constraints on the Department and in light of the lack of take-up, it did not seem a sensible use of funds to continue to allocate money to the scheme for a further three years. That decision does not affect the validity of the code of good practice, which remains an important document for landlords and tenants when considering proposals for diversification.

With regard to an early retirement scheme for tenant farmers, I know that fellow Ministers have considered this issue carefully in the past few years. The Government have decided against introducing such a scheme because it would not provide value for money compared with the large costs that are likely to be involved and because it would offer little public benefit. That view is shared by the policy commission on the future of farming and food. Further, funding a retirement scheme could mean having to close down or shrink other grant schemes that provide valuable public benefits, such as the agri-environment schemes. That would be a poor shift of resources.

On the single payment scheme, common agricultural policy payments have always been capitalised into land values and rents to some extent, and that process would have continued whatever model of the SPS had been adopted in England. Some argue that the effect would have been less if a different model had been chosen but, as my right hon. Friend who is now the Foreign Secretary made clear at the time, we needed to avoid a situation in which subsidies were allocated solely on the basis of past activities undertaken in the context of production-linked support policies. It would be difficult to justify an ongoing link between support payments and business decisions taken 10 or more years earlier. We now operate in a very different policy context.

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Does the Minister agree that one way in which real opportunities can be created is by collectivising decisions so that we get local food chains? Tenants are ideally suited to work co-operatively to supply local schools. Surely we should be looking to do that with the single farm payment.

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Without linking it to the single farm payment, I acknowledge what my hon. Friend said about the importance of local food chains and the capacity of the sector to work co-operatively to put them in place. That is an important part of the whole strategy of sustainable food and farming that we want to be developed.

The system of occupancy conditions known as agricultural ties is a policy rather than a law for which the conditions are set by local planning authorities, which have appropriate powers to enforce them. I understand that the Department for Communities and Local Government has no plans to review that policy.

The suggestion that landlords should receive capital gains tax relief is a matter for the Treasury. The provision of affordable housing both for rent and for purchase is vital for a prosperous and vibrant countryside because it helps to support diverse communities that are socially and economically vibrant and inclusive. We established the Affordable Rural Housing Commission, which reported to Government in April of last year, and some 4,000 homes have been built in villages across England in the past couple of years—500 more than planned. We still have plans for more homes to be built in the next two years as we work towards ensuring that there are affordable homes in all rural areas in the future. DEFRA and the DCLG have worked together closely to ensure that the new planning policy statement on housing appropriately reflects the needs of rural communities. It retains the exception sites policy, but goes further in promoting a positive and proactive approach to planning that is informed by evidence of local need.

My hon. Friend talked about the Community Land Trust. I thought his idea interesting, but it would be for local authorities to look to funding for that.

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Order. We must move to the next debate.