Motion to Consider
My Lords, I am pleased to introduce this instrument, which updates agricultural tenancy compensation provisions set out in Schedule 8 to the Agricultural Holdings Act 1986. This relates to compensating outgoing tenant farmers for short-term improvements that they have made to the holding during their tenancy which have value to incoming tenants—for example, the application of manure to land to improve soil condition.
This instrument applies to all landlords and tenants in England who have agricultural tenancy agreements governed by the 1986 Act. There are approximately 21,500 of these tenancies in England, accounting for approximately 17% of agricultural land. These agricultural tenancies tend to be traditional lifetime tenancies with succession rights of up to two generations.
The relationship between landlord and agricultural tenant is governed partly by the terms of their individual tenancy agreements and partly by agricultural tenancy legislation. The 1986 Act sets out detailed provisions for the terms and conditions of agricultural tenancies covered by the Act.
The instrument before your Lordships today will deliver the final reform in a package of proposals that the Government consulted on in 2014 to update and modernise the 1986 Act. The changes have the support of industry representatives for both landlords and tenants.
Why are we proposing this instrument? Schedule 8 to the 1986 Act is now out of date with current farming practices in the following way. First, compensation can currently be claimed only for improvements derived from purchased manure and fertiliser applied to the land. This excludes improvements resulting from applied manure that has been made on the farm and other beneficial material such as digestate—the by-product of anaerobic digestion—and soil improvers such as compost, which are now commonly used on farms to improve soil condition.
Secondly, manure is currently compensated for only if it comes from horses, cattle, sheep, pigs or poultry, thereby excluding other species now found on farms, such as deer, alpaca and llama.
What changes are we making? To bring Schedule 8 to the 1986 Act in line with current farming practices the instrument does the following. For improvements from inputs applied to the land, we have broadened the list to include digestate and soil improvers; for example, compost. In addition, we have removed the restriction of compensating only for purchased manure and fertiliser applied to the land. This is because how the manure or fertiliser was acquired, whether paid for or not, has no bearing on the resulting soil improvements delivered. For manure on the holding held in storage, we are broadening the scope of the schedule to allow compensation for manure derived from a wider range of livestock and equidae. This means that any animal now kept on the holding for agricultural purposes will be included. Equidae includes horses and related species such as donkeys and asses.
In conclusion, this instrument will update and modernise Schedule 8 to the 1986 Act to provide a more effective incentive to outgoing tenants to leave the soil in good condition for incoming tenants. The changes are supported by the Tenancy Reform Industry Group, which includes representatives of tenant farmers, landlords and professions such as agricultural valuers, surveyors and solicitors. For these reasons, I commend the instrument.
My Lords, I am very grateful to the noble Lord for introducing the instrument. It makes very good sense in both the extended definition of the animals that can contribute to farmyard manure and the added inclusion of digestate and other soil improvers such as compost to the estimate of land value.
As I was until recently a member of the board of WRAP, I would not dare to challenge its estimates of the value of usage of these new soil enhancers to the overall value of the land. Clearly, anything which encourages consistent improvement of soil quality leading up to the end of tenancies makes sense, and these proposals seem to have been very well thought through.
I have only one question. The variations to the schedule became necessary because farm practices and the science of effective soil enrichment have moved on since 1986. It would be regrettable if we found ourselves behind the curve again with new additives for improving soil and yields. That is particularly the case as the pressures to recycle and reuse organic materials increase to avoid landfill. Can the Minister reassure me that other materials are not currently being developed which would be excluded from the revised regulations but are destined to be adopted as soil enhancers by the farming community in the near future? It would be a shame if we had to wait another 30 years before tenanted farmers could be compensated for their use.
I am aware that there is also a wider discussion to be had about how we can encourage longer-term tenancies for tenant farmers so that these calculations for compensation become less crucial, but I realise that that goes wide of the subject of the revised order before us, so perhaps I shall reserve my comments on that for a future date. In the mean time, I look forward to the noble Lord’s response and confirm that we support the changes.
My Lords, I am most grateful to the noble Baroness for her support for the order. It is one of these occasions when a lot of very good work has been done by all parties and we have come forward with something which will assist the agricultural sector.
I am conscious of the experience that the noble Baroness brings to these matters, and she was absolutely right to seek reassurance that materials adopted in future as soil enhancers will not be excluded from the revised schedule. I can assure her that our proposal to include “soil improvers” is deemed sufficiently broad to cover future developments in soil enhancers where those new inputs could be shown to improve the soil. I am very pleased to say that on this occasion, we will not have to wait another 30 years; this point has deliberately been covered so that that can be taken forward.
I also noted the noble Baroness’s other point. This is probably for another day but it is very important that we ensure that we have a thriving agricultural sector and that all the plans we have in Defra for the next 25 years for the food and farming sector include new people coming into the industry and the enhancement of agri-technology so that we produce food for the nation and also export a great deal of our wonderful products. We want to ensure that there are people coming into the sector and that they bring skills with them which will be so valuable to us.
This order will update and modernise Schedule 8 to the 1986 Act to bring it in line with current farming practices which will ensure tenant farmers can claim compensation for the short-term improvements they have made which have value to the incoming tenant. This ensures end-of-tenancy compensation provisions set out in Schedule 8 provide an effective incentive to outgoing tenants to leave the soil in good productive condition for incoming tenants. I think this is something that we would all commend. I therefore commend this order to your Lordships.
Committee adjourned at 4.51 pm.