Official Report 573KB pdf
I welcome everyone back. We move to item 10, and we will return to the other items on the agenda.
Under item 10, we are seeking information from the Scottish Government on the delegated powers contained in the Land Reform (Scotland) Bill. The committee has seen the delegated powers memorandum and the written responses received on the topic, and we have decided that oral evidence is required to scrutinise the delegated powers provisions.
I welcome Rob Gibson MSP, convener of the Rural Affairs, Climate Change and Environment Committee, who is attending this part of the meeting and will no doubt have questions to ask. I also welcome, from the Scottish Government, Steve Sadler, head of the land reform and tenancy unit, Kate Thomson-McDermott, head of the land reform policy team, Billy McKenzie, head of agricultural holdings and the Scotland rural development programme, Fiona Leslie, agricultural holdings policy officer, and Andrew Campbell, who is a solicitor in the Scottish Government’s legal directorate. Good morning, one and all.
I invite questions from members, starting with John Scott.
I should first declare an interest as a farmer; I refer members to my entry in the register of members’ interests.
My first question has a bit of a preamble, so please bear with me. In the Scottish Government’s written response, in relation to section 25, you cite as an example of a code not subject to parliamentary procedure the code of practice under section 48 of the Adult Support and Protection (Scotland) Act 2007. That code applies to local authority officials and health professionals when carrying out their duties. What, if any, are the consequences of failure to comply with the Adult Support and Protection (Scotland) Act 2007 code of practice and why is it considered that the procedure appropriate for that code is equally appropriate for the code of practice on agricultural holdings, given the clear effects and consequences of that code, which are that the Scottish Land Court must take into account relevant provisions of the code, and reports of the tenant farming commissioner regarding breaches of the code, in determining questions relating to agricultural holdings?
On the comparison between codes, we believe that each code of practice has to be determined on its own basis; each one is unique. We put down those examples to show that some codes have statutory scrutiny and some do not. It was just an example, rather than an exact comparison. Each code has to be decided on its own merits.
Within the bill we have taken the approach that the list of codes for the tenant farming commissioner is, first, a non-exhaustive list. The tenant farming commissioner can decide to expand that list and tackle other issues. Also, the tenant farming commissioner and the commission will be at arm’s length from Government. The commission will be an independent body that will have its own powers. We believe that it is appropriate for the tenant farming commissioner to have time to develop the codes in full consultation with the industry.
That is why we took the approach that we have taken in the bill. It is for that range of reasons that the bill has the provisions that it has. We know that the issue is not settled. We will listen to Parliament on this throughout the process.
The codes of practice that are provided for by sections 15 and 27 of the Wildlife and Natural Environment (Scotland) Act 2011—on non-native species and deer management respectively—are subject to the affirmative procedure for the first and replacement codes, and to the negative procedure otherwise. Both codes are capable of having significant effects on individuals: in the first case, because failure to comply with the code may be taken into account in determining any question in judicial proceedings, and in the second, because Scottish Natural Heritage must have regard to the code in exercising its functions in relation to deer control agreements and deer control schemes.
Why does the Scottish Government consider that the approach to parliamentary scrutiny of the code of practice on agricultural holdings merits a different approach from that which is taken under the Wildlife and Natural Environment (Scotland) Act 2011?
The key difference is that the codes relating to the 2011 act require ministerial approval or oversight of some sort. Ministers either develop the codes or have powers of approval for the codes. The second set of codes is for the tenant farming commissioner and the industry to develop in consultation. That is the difference, in terms of parliamentary scrutiny. One set of codes requires the approval of the Scottish ministers, whereas the other is for the industry to shape with the tenant farming commissioner.
I note that section 25(8) of the bill says
“the Land Court must take that provision of the code into account in determining that question”.
Does that not put the code of practice in a slightly different place? It is being required that the law of the land takes that into account. It has the force of law.
We believe that it is appropriate that the court takes account of the tenant farming commissioner’s codes. The court is not bound by the code of practice, but it must consider the code and exercise its own judgment, based on the law. We believe that there are aspects that are appropriate for primary legislation, others that are appropriate for secondary legislation and aspects that are best left to codes of practice that the industry shapes itself. The Land Court is the ultimate decision maker, taking account of all that information, and it exercises its own judgment.
I will put the counter-argument, as an MSP and parliamentarian. If I have read that aright, Mr McKenzie is suggesting that it is for the court to decide what it wants the law to be and whether it happens to like the guidance. I would argue as a parliamentarian that it is our job as a Parliament to decide what the law is, and for the court to implement that.
I accept that. We believe that we have got the balance right here between the different levels and the parliamentary process. We know that we are not at the end point. We will listen to Parliament on the matter. The Scottish Government will consider all the points that committees and the Parliament make. We believe that we have the balance right in relation to where the regulations, guidance and so on should be pitched.
I have a wee technical point. While codes clearly do not have the force of law, equally it is clear that they have force in law. They can become a material consideration in what a court may decide in relation to some particular action. That being the case—in other words, that the existence of the court has an effect on legal outcomes, albeit not the effect that the primary or even secondary legislation would have—it is important that such codes are considered at a parliamentary level so that they are given the necessary scrutiny, as they are matters that will affect legal outcomes.
As I said, we believe that the structure that we have put down provides the appropriate balance and that parliamentary scrutiny is not required in this specific instance for this specific subject, for the reasons that I have outlined. However, this is not the end of the process. We will consider all the points that have been made.
Forgive me. Are you agreeing or disagreeing with my fundamental point that the existence of the code will, and is intended to, have an effect on legal outcomes?
I can assist the committee on that point. Some of the provisions in section 25 provide for the court to take the code into account in determining questions. Obviously that is different from the court having to take its decisions always in relation to what the code says. The code is something that the court can take into account; that does not mean that the court must always follow what the code says. As policy colleagues have said, it is for the court to weigh up the relevance of a code to the particular question that a court is facing.
In some situations, the code could well be a material consideration for the court, but in other cases it may well not be.
Fundamentally, you are agreeing with my core point that the code can affect legal outcomes.
It is certainly something that the court can take into account when it comes to its decisions.
Are you agreeing with me?
It can affect outcomes, yes.
I think that that point is what might underlie this committee’s expressing the view—if it chooses to do so—that the codes should be subject to parliamentary scrutiny. The codes have a legal consequence. That is a matter for the committee to consider, not necessarily now.
I will pursue that point. Surely, if a code of practice lays down a procedure for doing something—no matter what it is—and there is no other chapter and verse anywhere on what the right way of doing that might be, the court is absolutely bound to take the view that that code of practice lays out the right thing for the parties to have done. The court cannot find any other answer if a code of practice has come forward from the industry. If there is no other word out and around, and no other significant history—or if the code of practice manifestly overrules history—surely that code of practice becomes what the court regards as good practice and the law.
It is certainly good practice, yes. Where I would differ is in the interpretation that it binds the court in any sense. It is a code of practice; it is guidance. It is one of the things that the court would take into account along with many other factors in deciding on a particular case.
There may well be reasons why following the code is not appropriate for the parties in a particular case. One would expect the court to take into account the content of the code, as it is under that obligation, but in such a situation it may well say, “We are bound to take the code into account, but we are not giving it much weight.”
This issue is absolutely fundamental, which is why we want to tease it out. I would turn that around and say that courts are used to distinguishing between the law as it used to be—or as they see it in generality—and the particular case in front of them. I would expect the Land Court to be no different from that.
However, I am still stuck with the general principle that, if there is nothing to distinguish it, the code of practice effectively tells the court what is normal practice and what is expected. It is, in a sense, the written-down common law on that subject at that time, except that a commissioner has written it down rather than it being a work of antiquity that says what the common law is. Why is it different from that in its effect in court?
There is a fundamental distinction between something that is law and something that is guidance. The code is a strong form of guidance. That is the distinction.
Ultimately the court remains the arbiter in the decision that it wants to make in a given case. The court is the forum to which parties bring together all the considerations of the case. The code is one of those considerations and the court must take it into account, but it does not necessarily follow that what is in the code must always be followed by the court.
I think that we would accept that.
12:00
If providing codes of practice is good practice, as you say, why does the Scottish Government consider that it would be unduly burdensome for the Parliament to scrutinise a package of up to eight codes of practice covering different aspects of the tenant farming commissioner’s remit? We scrutinise many more instruments than that every week.
There could be more than eight. It would depend on what the commissioner and the tenant farming community thought was needed.
On the appropriateness of scrutiny, we believe that the information in the bill allows Parliament to give the proper scrutiny to the overall issue and leaves other aspects to the industry and the commissioner to sort out, because of the level of technical detail that is involved and the need for stakeholder consultation. Certain aspects are in the bill in order to ensure scrutiny of the overall principles and approach. Sometimes we leave that to regulations, because we believe that there is still room for parliamentary scrutiny of the detail. Other aspects are left out of legislation altogether, because we believe that it is for the stakeholders, the commissioner and the industry to shape them.
As a member of a committee that scrutinises the fine print of the way in which our systems work, I sense that there is a reluctance to subject yourself to scrutiny in this regard. The examples that you cite do not appear to us to be entirely relevant.
As I said, we scrutinise eight or 10 instruments a week, regularly. Why would we not be allowed to do that?
I am not sure that I can add anything on the issue of what you are allowed to do. That is for the Parliament to decide. You have asked a reasonable question and we have given our response. It is not that there is a reluctance to allow Parliament to scrutinise anything. We will consider the points that have been made. Steve Sadler might want to say something.
All that I would say is that, across the bill, we have tried to take a balanced approach to various degrees of scrutiny. I understand the points that you are making and I agree with the points that Billy McKenzie has made in response. Across the legislation, ministers have taken decisions up to a point on the type of scrutiny that they consider to be appropriate, and those decisions are reflected in the bill.
Is there a reason why the Parliament cannot seek to scrutinise any particular set of guidance it so chooses, if there is concern that the tenant farming commissioner requires that further scrutiny?
If Parliament wishes to subject codes of practice to scrutiny, that is its choice.
Yes. In other words, there is a choice about whether the bill says that something will be laid or not or will be scrutinised or not.
But there is a possibility that, when the tenant farming commissioner is in place, given that he or she will have the ability to develop the codes, it will be incumbent on Parliament to be able to call in any of the decisions to debate and scrutinise them.
I am sure that that is the case, but we are trying to establish what should be in the bill and the Government officials have plainly given their view about the balance. Our job is to question that and we will see what the evidence looks like as a totality.
There is a question about whether Parliament’s involvement should be ad hoc or post hoc. In other words, should Parliament be involved before the code has force, or should it review the operation of a code that is in force? I am not taking a view on that, but I would be interested to know what practical effect ad hoc consideration might have on the ability, in particular of the commissioner, to respond rapidly. I am almost leading you to an answer, but I am not trying to do so. Do the arrangements that are proposed enable the commissioner to act rapidly in circumstances in which prior approval from Parliament might inhibit them? If that is the case, can you give us an example?
That is one of the reasons why one would want certain aspects to be developed after the parliamentary process. There are some codes, for example around rental negotiations or how to take account of tenants’ improvements, that are very complex, technical and need heavy input from assessors and people working in the industry. Those might need to be tweaked because we may get it wrong. It is a very uncertain area; some people say that is one of the reasons why we are legislating on it. With the best will in the world, and all the engagement in the world, we could still get it wrong and we would have to take rapid action to correct that.
Are you suggesting that the potential for urgency could underlie the justification for Parliament not having the right to scrutinise a code before it is brought in?
In every legislative process there is a decision to be made about what needs to go in primary or secondary legislation and what is left for this type of situation—guidance, codes of practice and so on.
Forgive me: although I accept the generality, we are dealing with the specifics of this environment. It would be mildly helpful if you could identify even one scenario in which you think that urgency might justify the commissioner acting in advance of parliamentary scrutiny and/or approval.
Rental situations would fall under that category. Rental situations are on-going; rent negotiations can be spread across the year, so rapid action when something needs to be done quickly in such situations would prevent potential adverse effects. If it takes three months before a change can happen, all the people who want to be involved in a positive change would still have to go through the old system, or be delayed until the new system is in place. That would create uncomfortable and uncertain territory. Another example would be tenants’ improvements, because the codes could be used every day across the country. They are very technical and could have a significant effect.
The game management codes are another example; if there were an animal health problem or disease outbreak among game birds there would need to be a rapid response—potentially in hours and days, rather than in weeks. If there were another bird flu epidemic, the codes of practice between the two parties might need to be significantly altered during that time in order to protect the interests of both and to deal with the accompanying disease risk.
The response that we are getting now is much more helpful to my understanding of your reasoning. I am not necessarily pre-empting the committee’s view on the matter, but I can say that I begin to see the justification. That was helpful.
I will move on to rights of access to information on persons in control of land. We are unclear as to what the policy objectives are behind the need for such disclosure. We are also concerned, in the context of article 8 of the European convention on human rights, in respect of a legitimate and proportionate aim. Your written response to the committee states that the purpose in taking the power is to enable information about individuals who are making decisions about land to be made available
“where this information is needed to address particular practical difficulties by persons including the owners of adjoining or related land.”
Would it not be possible to frame the power with reference to access to information for a general purpose of resolving practical difficulties in relation to land? If that is the policy intention, why take such a broad power?
I will respond to that question, if I may.
The direct response to the question is that the power that is set out in section 35(1) could be framed in the manner that has been suggested, although that is not the option that the Scottish ministers chose to go for. Section 35(1) is framed in such a way as to make it clear that the power relates to access to a limited set of information by a limited class of persons. Given the wide range of circumstances in which practical difficulties may arise, and the high likelihood that there will be broad differences between situations, depending on the case, it was considered preferable to limit the scope of the provision to persons affected by the land rather than to particular circumstances that caused the effect.
By limiting the scope of the provision to persons affected by the land, we are limiting it to circumstances in which it has been shown that those persons have been affected by the difficulty in question. We have attempted to narrow the scope of the provision in the way that has been suggested by using a slightly different formulation, because we think that that is, in practice, the preferable route to go down. It will be necessary to have either a detailed definition of “persons affected by land” or of what would be meant by “practical difficulties” in the circumstances, and this is the route that we propose to go down.
The Scottish Government considers that the provision as it stands adequately defines the scope of the power, but we would be open to considering the committee’s views, if it thought that alternative wording would be more appropriate.
Elsewhere in your response, you suggest that the purpose in taking the power is
“to increase transparency and accountability of land ownership.”
Is that additional to the purpose of enabling practical difficulties with land to be resolved? I think, going by what you have said, that it probably is.
That could be the other side of the same coin. The purpose of the regulations that are to be made under section 35 is to provide greater transparency and greater accountability of landowners in specific cases in which the provisions would apply, so that practical difficulties can be better addressed.
I take your point, but we understand that the vast majority of information about land ownership in Scotland is already in the public domain and may be accessed through the land register, the register of sasines or Companies House, so why is a power to access information about persons in control of land considered to be necessary? Why is it considered necessary to enable individuals within a legal entity that owns land to be contacted, rather than the legal entity itself?
I certainly agree that some information is already in the public domain and that some information can be accessed through various public registers. However, there is not a comprehensive accessible source of information on land ownership in Scotland. That was highlighted as a real concern by the land reform review group. Although it is possible for people—if they go to a lot of effort—to look through what is in the land register, the register of sasines and Companies House, and thereby eventually to piece together a picture of the ownership of a specific piece of land, that is quite a complicated process for which a broad basic understanding of company law and charity law is needed in order to access all the different information and pull it together in a way that can be readily understood.
On why it is necessary to look behind the legal entity, the right of ownership of land can be held by natural persons and non-natural persons. In cases in which the owner is an individual, it is generally very clear who owns the land and who should be contacted—it is the person who is named in the proprietorship section in the title sheet.
It can be more difficult to establish who is making decisions about the land and who is in control of it when the legal right of ownership is held in the name of a company or a trust. Most company ownership structures are simple, but there are examples of companies in which the structures are far more complex.
There are cases in which shares in companies are owned by other companies or trusts, which might be in offshore jurisdictions where no information is required to be disclosed. In such cases, trying to establish who actually controls the land and makes decisions on it can be very difficult, if not impossible. Although the legal ownership of land might be clear, the owner might be a company that is registered in an offshore jurisdiction where there is no requirement to make any disclosure, or it might even be a company that is registered in the United Kingdom or the European Union, but which has such a complex structure that it is not possible to get much further than the first two or three layers or to have any luck in trying to get a response from anybody on the issues that are causing the problem. We argue that in such circumstances it is very important to be able to look behind the legal owner to find information about who actually controls the land.
12:15
We have just been dealing with the laws of succession and one of the things that we talked about was the scale of the problem. How big is the problem that you have outlined—that there is a need to know who the owners are for reasons such as, let us say, mending a fence?
That is one of the issues that was strongly emphasised in the land reform review group’s report. The group was certainly convinced that there was a sufficient amount of information to indicate that the problem needed to be addressed. Evidence from a number of stakeholders, such as Community Land Scotland and the Development Trusts Association Scotland, points to the problems that communities face in trying to address such situations. We have heard from stakeholders involved in wildlife crime issues that they find it difficult to work with, or make contact with, landowners to try to address issues that may be affecting wildlife or the environment. There seems to be a spectrum of evidence from a broad range of stakeholders that such issues are significant.
Who does the Scottish Government intend should exercise the functions of the request authority?
The options for who will exercise the functions of the request authority are still to be assessed and no decision has been taken at this stage. As the role is new, it will be necessary to consider which public body or organisation would be best placed to take it on, and whoever does so will be set out in the regulations. It is the Scottish Government’s policy to minimise the establishment of public bodies as much as possible, so the Scottish ministers would attempt to find the best and most appropriate place for that function to be exercised within an existing body or department.
I return to the policy that, where there is a legitimate privacy reason, such as concerns over personal safety, the persons in control of land will not have to supply information about themselves. Why does that restriction not appear in the bill?
In drafting the provision, the Scottish ministers did not consider it necessary to provide for the detail of that to be set out in the bill. Rather, the regulation-making power makes specific reference to the need to address those issues, in sections 35(2)(g), (h) and (i). It would be the Scottish ministers’ intention to consult on the privacy exemptions that would be required and on how a person who needs a privacy exemption can ensure that it applies to them. The Scottish ministers were also of the view that it is essential to retain a degree of flexibility to ensure that those exemptions can be updated to react to changing circumstances, so that sufficient protection is always provided for persons with article 8 interests and rights.
We will come to article 8 later.
I find myself quite baffled by the whole concealment issue. The valuation roll shows the owner, the resident and the tenant. The voters’ roll is publicly accessible, even if you are excluded from the published part of it. The owners of ships and aircraft have their details published, as do company directors, and for the payment of a small fee I can go into Register House in Edinburgh and look at records of births, deaths, marriages, divorces and wills right up to 12 months ago. Given all that, why in particular are we concealing the beneficial ownership—I am asking in technical terms, not about a policy issue—when in many other areas of public life no such protection from identification is provided, although the effect on public policy operation is likely to be substantially less in those other areas for which that information is provided?
To clarify, are you asking why we are not going further in requiring the disclosure of beneficial ownership?
That is correct. Given that your name and address has to be provided on the valuation roll, the voters’ roll, lists of owners of aircraft and ships and lists of company directors, and that very personal information about your antecedents and so forth is available to anybody who walks in and pays a modest fee, why is this category of information different?
It is a finely balanced argument. Many aspects need to be taken into consideration and the Scottish ministers have had to weigh up the interests and rights of all parties who are involved in the matter. I note that the committee papers referred to the “corporate veil” on our current structures and understanding of company law. At the moment, there is no concept of beneficial ownership in Scots law and, although we can start to consider looking further than legal entities, we need to ensure that there is a clear evidence base for why we are doing that and the circumstances in which we do it.
The Scottish ministers have considered the range of evidence on why it is important to look beyond legal ownership and consider concepts such as beneficial ownership and controlling interests. They have tried to bring together a range of provisions—sections 35 and 36, completion of the land register and a land and property information task force—to consider exactly how we can get better-quality information in cases in which the interests of all parties remain balanced and there is a good evidence base to establish why it is necessary to look beyond legal ownership.
I am interested in the concept of beneficial ownership. Why is it important for the Government to break new ground and establish that concept? Do I understand what you just said correctly?
Yes. I was just reflecting that it is not a general concept in Scots law at the moment. It is a concept in English law, as I understand it, although I am not a lawyer. The EU fourth anti-money laundering directive and the UK Small Business, Enterprise and Employment Act 2015 include concepts of beneficial ownership for other purposes, such as the prevention of money laundering and tax evasion. Therefore, the concept is generally well understood and legislated for but, at present, in areas where there are different policy aims and objectives from the transparency and accountability of land ownership.
All right. To take it back to the potential for further disclosure of information, you state:
“there may be circumstances where the information may have to be shared with third parties in order to resolve the practical difficulties.”
Why is there no provision in the bill limiting the disclosure of information to third parties to circumstances in which such disclosure is necessary to resolve practical difficulties?
The Scottish ministers took a slightly different approach to when it was most appropriate to apply that test. They did not consider it necessary to limit the disclosure of the information about persons with control to the third parties once that information had already been provided to the person affected by land.
There is a broad range of reasons why and ways in which, once the information has been provided to the person affected by land, they may need to use that information to address the practical difficulties that are being caused. As such, the Scottish ministers considered it preferable that the test to ensure that the interests of third parties are protected be brought back a stage and taken before, or as part of, the decision about whether to release the information to the person affected by land at all.
It would be difficult to set up a system in which we could protect the information from becoming wider, more public knowledge once it was released. Therefore, we felt that, to protect the interests of third parties, it was better to bring the test back to part of the decision about whether to disclose the information in the first place.
I will put that as I have understood it. Ministers may, by regulations, introduce a basis on which information about, in essence, neighbours can be disclosed on the basis that it will help to resolve some kind of issue to do with those neighbours and, thereafter, it will be public knowledge, in effect.
There would not be an automatic assumption that the information would become public knowledge but it would be difficult to control or contain that information once it had been provided.
There is no expectation that it could be contained and, therefore, it becomes public knowledge—potentially, at least.
Yes.
Your written response confirms that significant aspects of the policy on the disclosure of information—including, crucially, the meaning of “persons affected by land” and the criteria for requiring the disclosure of information—are still under development in consultation with stakeholders. Why should the Scottish Parliament confer power on the Scottish ministers to legislate for that matter when its purpose and parameters are not yet clear?
The Scottish ministers take the view that the purpose and the overall parameters of the regulation-making power are set out clearly in the bill. The purpose of the regulations is to provide that, where a person, an individual or a community is being affected by issues connected to the land, and there is a person who has control of the land, those parties should be able to obtain information about that person.
In addition to the clarity that the drafting of the regulation-making power provides, there is further information in the policy memorandum, the delegated powers memorandum and the response from officials to the committee’s written questions, which—we hope—will provide sufficient additional background information on the purpose and scope of the proposed regulation-making power.
The Scottish ministers consider it appropriate to carry out further consultation with targeted stakeholders on the detail of the provisions and the way in which the process will work in practice. We have drafted the provision in the way that we have in order to carry out that further consultation.
Ultimately, of course, it is for the Scottish Parliament to decide whether section 35 should be implemented as currently drafted. The Scottish ministers will be happy to consider the views of the committee, and of Parliament and stakeholders, during the process.
Finally, has the Government given any consideration to making provision for the power to be subject to an enhanced form of parliamentary procedure?
As with all the provisions in the bill, the Scottish Government considered the two standard procedures—affirmative and negative—for subordinate legislation. Negative procedure was not considered to be appropriate for the regulations, given that there is a significant level of detail to be set out in them, and we have therefore adopted the affirmative procedure.
In addition, we have stated quite clearly that we intend to consult further with targeted stakeholders on the detail that is to be set out in the regulations. There is a requirement on the Scottish ministers to do so, which is set out in section 35(6). We consider that the affirmative procedure and the requirement to consult provide a sufficient level of scrutiny for the exercise of the power.
Thank you. That is all that I have to say for the time being.
Thank you, John. I think that Stewart Stevenson wants to continue on the detail.
My interest in asking these questions is in the keeper of the land register. In your response to the committee, you state:
“It is anticipated that information about an individual with a controlling interest will only be disclosed to the Keeper with the consent of that individual.”
How can the keeper ask for that consent when the keeper is not permitted to know who the person is of whom they may ask consent?
That is one of the areas in which the Scottish ministers will want to consult at a significant level of detail with legal representatives and various stakeholders. A number of options are being considered, from requiring the person who is making the application to confirm by ticking a box or signing a statement that they have obtained the permission of a third party, to requiring the keeper to write to the third party to inform them and give them a chance to object before the information appears on the register.
There are a number of ways in which that aspect could be affected, and Scottish ministers intend to work with stakeholders and those who interact regularly with the register to ensure that the most appropriate and least onerous procedure is used while still ensuring that the interests of the parties involved are protected.
I understand the issue of consent being withheld for the publication of the register, but in your response you spoke about the issue of disclosing information to the keeper in the first place. If the information cannot be disclosed to the keeper in the first place, how can the keeper ask for and obtain—or be refused—consent?
Sorry, I am not quite clear—
I am referring to the Government’s response to the committee, in which you said:
“It is anticipated that information about an individual with a controlling interest will only be disclosed to the Keeper with the consent of that individual.”
The keeper cannot initiate an inquiry; a third party must do so. Is that the implication?
12:30
Yes. It is the intention that the applicant would be required to disclose the information, so it would be for the applicant to ensure that they had the necessary consent to release information to the keeper. I was talking about the potential need for additional protections, if they were required to ensure that interests were protected.
Do you really think that, in the circumstances that we are talking about, anyone would give consent when they were not legally required to do so?
We think that there will be a strong positive response in providing the information. Certainly in our engagement with stakeholders such as Scottish Land & Estates, we found stakeholders to be committed to greater transparency on land ownership, and we anticipate that a number of applicants will voluntarily provide the information. In requesting it—sorry, I will finish there.
That might be wise.
Under proposed new section 48A(2) of the Land Registration etc (Scotland) Act 2012, the Scottish Government may provide
“for the information to relate to the category of person or body into which a proprietor falls,”
and
“for the information to relate to individuals having a controlling interest in proprietors of plots of land and leases,”
but the list of matters about which the keeper may ask is far from exhaustive. When might the list be exhausting, rather than not exhaustive?
There is probably a range of information about which we would love to ask the people who interact with the land register. Ideally, we would ask them to fill in numerous boxes and give us a huge amount of information, because information helps to build evidence, which helps to assess policies. There is a broad range of areas in which information can be useful.
However, we need to ensure that what we ask of those who interact with the land register is proportionate and reasonable and does not place an undue burden on applicants. The point of registration with the land registry is obviously to obtain one’s real right, which needs to be factored in.
On the basis of the work of the land reform review group, the responses to the Scottish Government’s consultation and the Scottish ministers’ consideration of the information that would help them, two specific areas—categories of landowner and information on controlling interest—are considered to be most significant and important in helping to generate transparency on land ownership in Scotland.
As time moves on, policies and law on land and even objectives on land reform will develop, and we thought that it was important that ministers should have the scope to add new categories in future if necessary and to remove categories that might no longer be considered relevant or helpful. It is not anticipated that the categories will grow exponentially, but we thought it important to have the flexibility to be able to address future needs and to keep what we are asking under review, to ensure that it remains proportionate and useful.
Your response to the committee suggests that quite a lot of the information that the keeper might seek will already be in the public domain. Will the keeper have the power simply to incorporate such information into the register without reference to anyone else? More to the point, will anyone have the right to veto the information being put in the register even when it is in the public domain?
The provisions are very much based on voluntary disclosure—the provision of information by the applicant on interaction with the land register. That was considered to be the most proportionate approach at this stage. There would be significant burdens on the keeper if they started to try to include information that is available externally. Where something is fundamentally clear from the information that has been provided to the keeper, there may be scope to consider that, but the Scottish ministers certainly do not intend to place the sort of burden on the keeper that would involve them in any investigatory work to try to gather that information.
Finally, when we are setting the regulations initially about what the keeper’s request could be, that will be an affirmative instrument. The plan is that subsequent regulations would be negative instruments.
Given the uncertainty around this, the clear steer that we are getting as a committee that, over the long term, there might be significant changes to the regulations, the point that subsequent instruments could entirely supplant the original, and the significance of what they might cover, would it not be more appropriate that the procedure should be affirmative throughout its life?
We acknowledge that subsequent regulations could alter the regulations substantially, although they could not make any changes to primary legislation without being subject to the affirmative procedure.
As noted in the delegated powers memorandum, the Scottish ministers consider that any subsequent exercise of the power to be inserted into the Land Registration etc (Scotland) Act 2012 is more likely to make amendments to the definitions contained in section 36 or even additions to the category of information on proprietors that may be collected. It should not bring in a change in the overall policy of providing regulations that allow the keeper to request additional information but will involve refinements to the definitions used in the regulations.
The Scottish ministers therefore considered that the negative procedure would be more appropriate. The Scottish Government would, of course, be willing to consider the views of the committee and Parliament on this issue, should the committee take a different view from the Scottish ministers.
Can I reflect on the difference between sections 35 and 36 and see whether I understand it correctly? Maybe I do not.
I get the impression that section 36 is to give the keeper a power to ask questions, which over time might cover all the land in Scotland in a comprehensive way. Clearly they would not ask everybody the same question at the same time, because that would be too much information.
In contrast, it would appear that section 35 gives the requesting authority, whoever that might be, the power to ask questions in very particular cases for particular purposes.
If I am right in that, and nodding heads suggest that I am, how would we expect Scottish ministers to be able to draw up regulations under section 35 that meet all those circumstances, if by definition we are dealing with particular cases? As a new case arises, it might sometimes be necessary to bring forward a new regulation to cover a piece of information that had not been required for the first set.
Am I right in painting that picture, and, if so, how comprehensive do you think the first set of regulations under section 35 might be so that we do not have to revisit them every time a case comes up?
That general description of the different aims of the provisions is correct. They are aiming to achieve different outcomes. Both relate to improving transparency and accountability of land ownership. Section 35 is focused on the compulsory disclosure of information in specific cases where there is a harm that needs to be addressed. Section 36 is much broader. It is about the voluntary disclosure of information across the broad range of land ownership in Scotland and is intended to develop a better evidence base of official statistics on patterns of land ownership throughout Scotland.
The reason why section 35 has been drafted in the way that it has, and the reason why Scottish ministers have not focused on limiting the wording of section 35(1) to particular or practical difficulties, is to try to ensure that any situations in which there is a justifiable reason to require the disclosure of information going beyond legal entities will be encompassed by the regulations.
Should in practice that turn out not to be the case, it is hoped that, through making amendments to the regulations using the affirmative procedure, we can react quickly and ensure that they continue to function. The intention would be that, as first drafted, they should be sufficiently broad, while respecting the rights of parties, to cover the vast majority of cases in which it could be justifiable to require the compulsory disclosure of that information.
If I have understood you correctly, you would expect those powers to be very widely drawn but the purpose to be very narrow.
Yes.
Thank you.
I want to touch on section 79 and the conversion of tenancies under the Agricultural Holdings (Scotland) Act 1991 into modern limited duration tenancies. I have a series of questions. First, can you explain why it is considered necessary to have this power to permit conversion from the one to the other? Linked to that, is there an underlying policy justification for it?
You asked why we believe that it is appropriate to legislate to allow conversion. We had a review group that explored the overall issue of the tenanted sector, what we needed to do to make sure that it continued to be vibrant and how to continue to get new entrants entering the sector and people progressing up the farming ladder. Conversion is part of the box of solutions for the overall agricultural sector in the rural economy. It is an important aspect of it.
Sorry, but what is the problem at the moment? I am not from a rural background.
Sorry, that was the overall intro to the situation—maybe it was too much.
The review group found that the current situation is not satisfactory in that it does not allow people an effective exit out of the sector. There are people sitting with 1991 act tenancies who are going to remain sitting there while the farm is run down. The opportunity for them to exit is not attractive enough to give them a dignified retirement, and that blocks people from coming into the sector as well. It is a static situation that is getting worse.
The solution proposed was to give the tenant an opportunity to convert a tenancy, sell it on the open market and get some financial reward. That would give new entrants and those progressing up the farming ladder an opportunity as well. It was about expanding the diversity and resilience of the agricultural sector.
The group proposed conversion and proposed a minimum term. It recognised that there are issues with that recommendation that the Scottish Government will have to resolve, particularly with regard to article 1 of protocol 1 of the European convention on human rights—the balance of responsibilities and rights et cetera. That is what we have been doing. We will be getting into detailed consultation with stakeholders once we have worked out the pros and cons of all the solutions.
That is why we believe that it is appropriate to take action. Now we are working out the precise detail of that action.
Okay. The power comes across as quite wide. Will it be the case that all 1991 act tenancies could be converted?
It is the intention that 1991 act tenancies could be converted, depending on the exact solution that we end up developing with stakeholders. I could not say what the full range of circumstances would be—there are options.
Did I hear you say that, if the tenants undergo such a conversion, the tenancies could be sold on the open market? I think that those were your words.
That is the intention. We are still exploring detail, but that is the intention, yes.
That is a new concept—to be able to sell a tenancy on the open market.
Yes, because the problem that has been identified with the 1991 act tenancies is that, for some, there is not an attractive exit out of the sector. They remain within their tenancy, the farm gets run down, the farmer is in a situation that they do not want to be in and there are other people who cannot get into the sector because those tenancies are tied up. It is one of the issues with the sector.
Just to clarify, it is because of this overall logjam that there is this whole concept of converting the tenancies. Therefore, you would not have to have a specific reason why some of the tenancies could be converted and some could not, because it potentially affects all tenancies. Is that right?
It is an overall desire to have that flow within the system.
I want to explore that. I have a constituent who is in precisely the position that you have just outlined. There probably are not a huge number of such tenants, but the situation has to be dealt with. Are we looking at a situation in which all 1991 act tenancies can be converted and the condition is essentially about who decides that they want to convert? Alternatively, are we in a position where, in principle they could all be converted but it will be subject to conditions, which are not the choice of one or the other party but might relate to the current state of the lease and to the successors?
Both of those are possible directions. The second one—having certain conditions that have to be met—is possibly a more valid option to address the policy issue. However, I stress that we are still working through the pros and cons of the policy options to ensure that we get the balance right in relation to A1P1 of ECHR. I could not land on exactly where we are going to go at this point, and nor should I.
12:45
I have two comments to add to that. First, on the concept of selling the tenancy, we are really talking about allowing the tenancy to be assigned to another person—it is assignation rather than sale of the tenancy.
That is a completely different concept.
Yes. Talking about sale of the tenancy is just the kind of accessible language that we have got used to using in the bill team to describe that but, ultimately, it is assignation that would be permitted.
Secondly, on the regulations, as Billy McKenzie mentioned, we are in a sense getting into hypotheticals. Until the consultation has been done, it is difficult to know where to draw the lines or what conditions might be added and which might not be necessary. Ultimately, article 1 of protocol 1 requires an evidence base for what is done in policy. For something to be A1P1 compatible, we need an evidence base. Therefore, until that is there, it is difficult to give a view—even in the abstract, unfortunately—that the power might say this or that or might be used in a particular way. I appreciate that the power is widely framed—nobody disputes that at all.
If you are so far back in the consultation process, I cannot help but wonder why the power is even in the bill at this stage. The Rural Affairs, Climate Change and Environment Committee will worry more about that than I do, but this committee has to worry about human rights issues. Those are definitely within our remit. If you cannot establish that the power is ECHR compliant before it is in front of us—
To be clear, that is exactly not what I am saying. The power is capable of being exercised compatibly; otherwise, it would not be in the bill. That is not only the view of the Scottish ministers; it is the view of the Presiding Officer, who has issued a certificate of competence.
The reason why we have a long list of things in section 79 that the regulations can cover is to try to give some flesh on the bones. Clearly, we still need to pull together an evidence base on targeting the power. It is difficult to put the cart before the horse and say, “We know what we want to do, but we have not finalised the evidence base.” Until that evidence base is finalised and is clear and robust, it is difficult to know what the regulations might say.
As I said, that is why we have taken the power. The Government has to have the flexibility so that the bill has the headline policy in it but we can expand on that through regulations.
I want to go back to the difference between assigning a tenancy and selling it. I want to be clear about the issue. How will assigning a tenancy relieve the problem with the 1991 act, which Mr McKenzie defined as a matter of people not being able to get adequate compensation when moving out of a tenancy? How will assigning a tenancy help? I want to be clear: are you talking about assigning or selling? Which is it, and why?
My colleague will expand on the policy but, with assignation, the assignor would approach an assignee and, in return for money—the value of the tenancy to an incoming tenant, whatever that may be—the assignee would step into the shoes of the former tenant. That would allow the former tenant to leave with the money, and the new tenant would come in. That is essentially how the process is expected to work.
So it is not selling the land in the normal sense of the word. The land still belongs to the original owner.
Absolutely—this is assignation of tenancy.
No land changes hands; it is merely the right to be there as a tenant that can be passed on.
It is the tenant’s interest that is passed on. It is nothing to do with land ownership.
I make the point for the record that a tenancy under the 1991 act cannot be assigned.
There is limited assignation.
There is limited assignation and therefore there are tenants who do not want to be there but who cannot do anything in a practical, commercial sense.
That is why we are allowing conversion into a term and for the tenancy then to be offered on the open market under certain conditions. There is a value to be had for the existing tenant from the incoming tenant.
To me, offering it on the open market would suggest that it is being sold.
The tenancy is being sold, rather than the farm.
Yes, I understand that, but is all this happening—and forgive me for not being more up to speed on this—without the consent of the landlord?
We are still looking through the options on that. There are landlord’s rights that we have to balance against the rights of the tenant. They have to be finely balanced. That is important, not just for A1P1, but for the policy intention. We need to create some measure of confidence in the sector among both tenants and landlords so that tenancy land can continue to be made available. We need to get that balance right but we cannot say in fine detail where it will go.
That is clear. Thank you.
Okay, I think that we have explored that issue. There may be a policy issue for another committee further down that route. I return to John Mason, who was following a line of inquiry.
If I understand this correctly, all tenants would have the power to convert their tenancy, so the current consultation and discussions are primarily about the conversion process, rather than whether there could be a conversion. Is that correct?
The consultation is on the detail of the term of the tenancy that is being converted, the detail of how it is targeted, to whom it is available and how we ensure that we address the rights of the landlord appropriately. All of that is being considered.
The review group and stakeholders made a convincing case for the overarching goal of conversion, so we believe that doing this is absolutely appropriate. However, we need to take the time to get the detail right. That is why we have put a broad power in the bill. It is the right thing to do, but we need to take time to explore the fine detail.
You must understand that the committee is a little bit concerned about broad powers, not just on this issue, but on any issue.
I want to dig down into a couple of things that you said. You mentioned the length of the tenancy and in another answer it was suggested that tenancies could be from 25 to 99 years.
There is a range of suggestions: some people have suggested 15 years, while others have suggested 25, 35 or 99 years. Some people wanted us to go the full way in terms of assigning the tenancy as a 1991 act tenancy and maintaining it as such. We did not believe that that struck the right balance, which is why we have conversion in the bill.
The answer that we got from the Scottish Government was 25 to 99 years. Are you saying it is wider than that, and is 15 to 99 years?
No, I am just putting forward the range of views that we have heard. The range is 25 years to—
So are we any closer to knowing the figure? Will the figure not be the same for everybody?
That it is not for me to decide. We are considering a range of figures.
You mentioned striking the balance between the tenant and the landlord. As a lay person reading this, it appears that the advantage is swinging towards the tenant. That is a policy decision. However, that is not my question, although it might appear to be. Are landlords being safeguarded in the process and is there a balance?
Yes, that is why we have taken the time to go through the process and ensure that we get the balance right. It is important that we try to maintain some confidence in the sector among landlords, but it is also important that we address the problem. Some people would say that the current balance is too much in favour of the landlord and not enough in favour of the tenant. We have to look at the whole situation, including the overall agricultural sector, and get that balance right for both sides.
As well as getting the balance right from our perspective, are you comfortable that the balance is right for the purposes of ECHR?
We are comfortable that conversion is capable of being legislated for within the competence of the Parliament, addressing A1P1.
My final point is that, given the significance of the power and the fact that the policy has not been developed, is it sufficient that we are looking at using a normal affirmative procedure, or should we be using a stronger mechanism?
We believe that we have the structure right. The overarching bill contains conversion, so there is debate within the Parliament right now on whether conversion in itself is appropriate. We believe that we have the regulations appropriately focused on the affirmative procedure. That level of scrutiny is needed because of the contention that lies below even conversion: there is contention about whether we should allow conversion, and there is contention on what we should do in terms of targeting the lengths of term and so on. We believe that the affirmative procedure is appropriate for those reasons. As with any area in the bill, we are open to considering that if the Parliament raises points.
Okay, thanks.
This is probably a daft-laddie question. This is an area of law where the Parliament has been found not to be ECHR compliant, and you tell us that you are absolutely confident that the power is A1P1 compliant. Can you show the committee your workings, as it were—the absolute thought process and the legal process—that take us to that conclusion?
I may be asking an unreasonable question—I do not know. However, given that this is an area where the Parliament has already got into trouble and been rebuked, I would be grateful if that could be done.
The simple answer is that, yes, we can give an assurance that the power is within competence. The question is how the power is exercised. When the affirmative regulations come before Parliament, members will have the opportunity to scrutinise them. As the power stands on the face of the bill, it is ECHR compatible—we are confident of that. Beyond that, I am not free to divulge the Scottish Government’s legal advice because of the ministerial code, as you will understand.
It was quite possibly naive of me not to realise that, but thank you nonetheless.
In addition to that, we provided information to the Rural Affairs, Climate Change and Environment Committee on the consideration of A1P1 and the ECHR issue across the agricultural holdings provisions, which would be useful information for you as well. It was either in an annex to a letter that we sent to that committee or it was within the body of the letter. However, we provided pretty comprehensive information on what we need to consider to ensure that we get the balance right, so that may help you.
If that information is not already in the possession of this committee, it would be helpful to get it because the issue is one of our concerns.
I think that it is available on the Rural Affairs, Climate Change and Environment Committee’s web page at the moment. It was submitted as written evidence last week. It is just a note of the Scottish Government’s approach to article 1 of protocol 1.
That is fine, thank you. We know where to find it now.
I move on to section 81, on “Sale to a tenant or third party where landlord is in breach of order or award”. When it is a sale to a tenant, the procedural rules are on the face of the bill, whereas when it is a sale to a third party, it is subject to regulations. Can somebody explain to me the nature of that procedural difference?
The tenant provisions within the bill mirror the relevant sections in part 2 of the Agricultural Holdings (Scotland) Act 2003—they mirror what is there already. The new affirmative regulations that will be prepared using the regulation-making power will set out the procedural aspects for the Land Court, valuers, auctioneers and other relevant parties involved in the sale to a third party.
The regulations will be quite technical in terms of the actual process that all the relevant parties will be required to follow because we need to ensure that the process is fair and transparent for everyone involved. That will then ensure that the court is comfortable that the whole of the industry is behind the procedures that are brought forward and that there is a level playing field.
The regulations will be primarily technical in terms of the process that will be applied and how that will work. They will contain information on who can and cannot buy the land and on a range of other elements that are set out in proposed new section 38M of the 2003 act, which sets the framework for what will be in the regulations. However, there will be much more detail.
The regulations will also help to manage the situation when land prices fluctuate, perhaps within a regional area or even across the country. They will help to manage that process and ensure that it works fairly for the landlord and for the tenant.
13:00
Thank you for that comprehensive answer—it is helpful.
The Government’s written response states that the power in section 38M deals with the procedural aspects of the sale of the holding in the circumstances in which the Land Court has varied an order for sale under new section 38L. It appears, however, that some of the matters listed in new section 38M(2) cannot be described as purely procedural.
For example, new section 38M(2)(e) provides that the regulations may include provision about the persons to whom the land cannot be sold, and new section 38M(2)(m) provides that the regulations may make provision about what is to happen where the land is not sold within the specified period.
I appreciate that you may not have such detail at your fingertips, but those matters in particular appear to be significant and are not related purely to the sale process. Why is it appropriate to leave them to regulations?
With regard to the persons to whom the land cannot be sold, we need to ensure that we are ECHR compliant on the provisions in the regulations, so that it is clear to both parties that the provisions cannot be used as a tool or mechanism to allow them to wait until the sale to the third party to try to regain either their family’s interest in the land or the tenancy.
Where the tenant has decided that they do not want to take on the tenancy and they have notified the court, and it has agreed to an order to enable the land to be sold to a third party, our approach ensures that the tenant does not use the provision as a way to come back in later and try to get a knock-down price on the land when it goes on sale on the open market. Any agricultural tenancy that is sold on the open market with a sitting tenant on it will have a different price value from that which it would have had without a tenant on it.
The approach also ensures that the landlord’s family or business interests do not try to use the provision as a mechanism to try to secure the land back into the family business. That is the reason for new section 38M(2)(e).
On new section 38M(2)(m), we think that the likelihood of the land never being sold is quite slim because the demand for land is so high. Regardless of whether a tenant is in place, demand is so great—and the prices for which land is going are significantly higher at present than they might be at some point in the future—that we need to ensure that we allow enough flex to manage the process.
If, in the future, land prices drop or the situation with the management of land changes significantly across the country, we will be able to manage that process; the Land Court will have a process to follow with which it is comfortable; and the auctioneers and the professionals in the industry will feel that the approach is fair and appropriate.
So you see that as a fallback position for some point in the future, as you genuinely do not know what the circumstances may look like.
Yes.
On that point, we move to Richard Baker, who has questions on rent reviews.
The delegated powers memorandum and the Scottish Government’s written response explain that the policy on the new system of rent review is subject to an on-going modelling process and to further consultation with stakeholders. For that reason, provision about significant aspects of the policy—in particular, provision about the productive capacity and the standard labour requirement of agricultural holdings—is held over for regulations.
Why should the Scottish Parliament confer power on the Scottish ministers to legislate for that matter when the policy on significant aspects of it is still not yet clear?
The response is similar to our response on conversion, but it applies even more in this respect. There is some contention over whether to move to productive capacity, and we believe that it is appropriate to put that provision in primary legislation so that there is appropriate scrutiny of it from Parliament and stakeholders.
Underneath that, there is a much lesser degree of contention on what needs to be done to define productive capacity and the factors that need to be taken into account. The meetings that are exploring the issue are bringing us closer and closer to a solution on which all in the sector—landlords, tenants and valuers—agree.
We believe that it is appropriate that the debate on the primary legislation should focus on the most contentious point, which is whether or not we should move to productive capacity. We also believe that it is appropriate that the other aspects underneath are dealt with in regulations under negative procedure because there is a much lesser degree of contention. The things that we need to take account of in reaching appropriate rental levels are very technical.
That is where we are at just now. We are sharing work with the RACCE Committee—and we are willing to share it with Parliament overall—regarding the detail of those meetings. We have suggested that we provide that material around the end of October in order to allow the work to settle to a point at which we can get a very good idea of where it is heading. We are happy to supply material at any point, but that would be the most appropriate way to give you a useful idea of where things are without giving you too much information that is still in the course of being agreed.
So you think that you will be a lot further down the line at the end of October towards reaching a conclusion.
Yes. In defining productive capacity and other factors that need to be taken account of when rent is determined, we are very close to broad agreement on certain aspects, and we should have made progress on more of the technical detail by the end of October.
Earlier, you mentioned the nature of the scrutiny that there should be of the regulations, and that is the subject of my next question.
In the new process for rent review that the bill provides for, the productive capacity of an agricultural holding is a highly significant factor in the determination of a fair rent for that holding. The delegated powers memorandum lists a number of elements of productive capacity that the Scottish ministers may ultimately decide should or should not be relevant to the rent review process, so it appears that there may be a range of policy choices on how productive capacity should be determined. Parliament might expect to have a greater role in scrutinising those substantive choices, regardless of the stakeholder engagement that has taken place. Why does the Scottish Government consider that the negative parliamentary procedure provides a sufficient level of parliamentary scrutiny?
I would compare the situation on productive capacity with that on conversion. On conversion, underneath what it is in the bill, there is still a lot of contention on where we should go and a variety of options are still available. On productive capacity, underneath what is in the bill, there is a lot less contention on what we need to do to make sure that a fair rent is assessed and about the technical details that form part of the process. That is why I believe that, for conversion, it is appropriate to have regulations that are subject to the affirmative procedure. On productive capacity, we believe that there is much less contention. The issue is much more to do with the technical detail, which will be based on the advice that we get from the industry. The industry will shape that to ensure that we get the detail right.
That brings us to the end of our questions. Does Rob Gibson have anything else that he would like to ask?
No, I do not, but thank you—this discussion will be very helpful to the Rural Affairs, Climate Change and Environment Committee in our deliberations on these matters. I am sure that we will come back to the issues that have been raised.
I want to return to the issue of timing. You mentioned the end of October. It is quite important that the Scottish Government ensures that the Parliament is on a timetable that is consistent with some of these things being nailed down. I do not know where on earth we are on timetables, although that will be known. If good information were to arrive shortly after we have gone through stage 1, that would be unfortunate. It might be rather better if the stage 1 debate were to take place once we have a lot more detail.
As I understand the timetable, it will be December before my committee writes its stage 1 report, so it should be possible for us to review anything that we get from the Government on this matter in good time.
It might be that we try to relax what we say on the same timetable, but we will talk about that separately.
I thank the witnesses very much for their evidence.
13:07 Meeting suspended.