Agricultural Holdings (Amendment) (Scotland) Bill: Stage 1
Item 5 is our final evidence session on the Agricultural Holdings (Amendment) (Scotland) Bill. We will question the cabinet secretary on what we have heard during our consideration of the bill. Again, I welcome the cabinet secretary, Richard Lochhead, and his Scottish Government officials, who are Iain Dewar, bill team leader, agriculture and rural development division; and Caroline Mair, solicitor, rural affairs, directorate for legal services. I invite questions from members.
Good morning. One of the key aspects that we have been discussing in our evidence sessions on the bill is the proposed succession provisions in section 1 and how a near relative should be defined. The bill proposes to include grandchildren in that definition. There is also an issue about the differences between those who can be assigned a tenancy and those who can succeed to a tenancy.
It is clear from our evidence that the proposed definition of “near relative” reflects the consensus that was reached by the members of the tenant farming forum. That said, when we took evidence last week, Christopher Nicholson from the Scottish Tenant Farmers Association said:
“From a tenant’s perspective, we would encourage the definition of ‘near relative’ to be extended beyond a grandchild to include nephews and nieces. ... We hope that the definition will be expanded, as that would allow easier succession to and possibly assignation of heritable tenancies, which would help to preserve the number of heritable tenancies in Scotland.”
In addition, Scott Walker from NFU Scotland said:
“It seems a bit strange to the layman, and certainly to many of our members, that in some situations there is a wider definition of who you can assign a tenancy to than who can get succession to it. It seems a little bit strange that, during your lifetime, you can assign a tenancy to a wider class of people, yet, at the point of your death, it is restricted to certain categories. That is a point to consider, but there is an industry-wide consensus that the bill is a step in the right direction.”—[Official Report, Rural Affairs and the Environment Committee, 18 January 2012; c 520, 522.]
I would be interested in your view on whether the current definition in the bill will deliver the objectives of giving tenants greater security and encouraging new entrants or whether we should extend the definition.
Thank you for the opportunity to come before the committee to give evidence on the bill, which is of course very important for the future of the tenancy sector and which I hope will help to attract new entrants, as Aileen McLeod suggested.
I am sure that I do not need to tell the committee that there has been a long, challenging and often difficult road to get to where we are today in terms of the relationship between landlords and tenants in Scotland, with the first agricultural holdings act dating back to 1883. Over the subsequent century-plus, there have been changes from time to time to try to improve that relationship: to improve the balance of power between landlord and tenant; to ensure that we have a healthy tenancy sector in Scotland; to offer the necessary protection; and to make land available for letting so that new entrants can get on the first rung of the ladder. That is a big challenge that we face.
Today we are discussing the remaining measures that have still to be implemented following the previous parliamentary session, when the tenant farming forum considered the future of the matter, with a particular emphasis on how to attract new entrants to agriculture.
The “near relative” issue is one of those measures that the tenant farming forum unanimously agreed had to be addressed. We have before us the proposal to extend the definition of “near relative” to include grandchildren as a result of the forum’s consensus view. We could easily ignore that consensus and put an alternative—or extend the definition further—in the legislation. However, we have chosen not to do that, because we agreed with the tenant farming forum that we would take forward its recommendations on a consensual basis, and its recommendation was to extend the definition of “near relative” to grandchildren.
Having said that, I will not sit here today and say that that is the end of the story. It has taken more than 100 years to get the current legislation on the books, and I cannot pretend to bring all the long-term solutions to the committee overnight. However, there is much more work to be done, and the succession issues will be part of that. That is recognised by the tenant farming forum, and certainly by the witnesses whom Aileen McLeod quoted in her question.
Related to this issue are the wider succession laws. Aileen McLeod rightly highlighted the difference between assignation and succession. We are talking about succession today, and there is perhaps no alignment in Scottish law per se between assignation and succession. The Scottish Law Commission has reported on succession issues, and the Scottish Government will respond to that in the coming months. This is a very legalistic issue and it is impacted upon by the wider law of succession in relation to all sectors of Scottish society. We will pay attention to that and see where that debate goes. We recognise, with regard to this particular legislation, that the succession issue is unfinished business.
Are there any further points on that?
Good morning again, cabinet secretary. What do you see as the advantages and disadvantages of extending the definition of “near relative” to nephews and nieces? As Aileen McLeod highlighted, that was raised as an area of concern.
As Aileen McLeod mentioned, we want there to be more opportunities available—where that can be justified—to encourage the continuation of the farming tenancy within the family. We therefore have a definition of “near relative” at present, which is taken into account as it is in the interests of agriculture that it should be, but the case has been made to the Government in recent years that that definition is too tight. If the grandchild in the family wishes to take on the lease for the farm and become the tenant, they should have that opportunity.
It is clear that the debate as to how far we extend the definition will continue, and it is not easy to work out where the cut-off point should be in defining “near relative”. As Aileen McLeod mentioned, some people feel that nieces and nephews should be captured by the definition.
As I said, we will work with the tenant farming forum and we will listen to the committee, which will address the issue in its stage 1 report, to see how the debate progresses in future. I think that most people—and certainly the tenant farming forum—recognise that it would be reasonable to include grandchildren as near relatives. If a farmer passes away at a fair age, and the grandchildren are coming up through the ranks and are involved in farming, it would make sense to allow them the opportunity to take on the tenancy, because their parents may not be around. We feel that that is a fair definition of “near relative” at this time.
Rather than revisiting the issue of nieces and nephews a year or two down the line, would it not be practical and sensible to get things right now, at this stage? There may not be a clamour, but sections of the industry are certainly keen to do that.
Some stakeholders want to extend the definition, and I understand why they would want to put that case, but there certainly is not a clamour for it. All members of the committee will know that any farmer—whether an owner-occupier or a tenant—will have strong views on a variety of issues, including how to improve the amount of land coming on to the market for letting, and how to encourage new entrants. Those issues are difficult, and for many reasons it has taken a long time to get to where we are today. I cannot turn back the clock and change history; I can only deal with the situation before me at the moment.
With legislation, we have to be careful about unintended consequences. We have to safeguard the rights of both landlords and tenants. Some would argue for extending the definition of “near relative” to go beyond grandchildren, but others would argue that such a definition might tie down a tenancy and make it so secure that the landlord who signed up for it in the first place would no longer have flexibility and would have their rights and expectations infringed.
We have not closed the door on any of the issues that we are discussing here. We have already given a commitment to consider, within 18 months of the act coming into force, the impact of the changes. In this session of Parliament, there will be an opportunity to consider how effective the latest changes have been in attracting new entrants and in helping the tenancy sector in Scotland.
I would like to ask for some clarification, because I have come to this bill quite late on. If a tenant dies intestate and more than one grandchild is interested in succeeding to the farm, what is the procedure for deciding which grandchild will take on the tenancy?
I have been cabinet secretary for a number of years now, and still I am seeking clarification on many of the issues that we are discussing, so do not consider seeking clarification a weakness in yourself. We are all seeking clarification on the legislation relating to agricultural holdings. It is a complex and difficult area, wrapped up in legalities, so I will bring in my legal colleague, Caroline Mair, to elaborate.
Different circumstances can arise when a tenancy is passed down the generations to near relatives. When a tenant passes away, there may be a will, or there may not be a will. The wider legal context kicks in when there is no will. If there is a will, and if a grandchild is named as the person taking on the tenancy, that will happen—and if Parliament passes this bill, grandchildren will have the right to inherit a tenancy. If there is no will, we move into a wider legal sphere. I will ask Caroline Mair to talk about the wider law of succession and what happens if there are various grandchildren.
Caroline Mair (Scottish Government)
If there was no will, the tenancy would pass by the laws of intestate succession, under the Succession (Scotland) Act 1964. That would happen first. The amending bill is not changing that; the amendment that we are making is to change the definition of “near relative”, which is relevant only when a landlord subsequently serves a notice to quit on a successor tenant. Matters such as competition between two grandchildren who want to succeed to the tenancy are determined under the law of succession, which the bill will not change.
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A separate debate is going on in Scotland about the law of succession, which impacts on such circumstances.
I have a general question. A point on which you have touched and which we considered last week with the NFUS and other witnesses is the bill’s impact on the ability of landowners and prospective tenants to negotiate freely.
There is an idea that the freedom to contract is being undermined in some way. That is having an impact on supply of land, which in turn has an impact on new entrants’ ability to come into farming. Farmers and landowners have told me that because they are not able to negotiate freely, they are entering into more short-term arrangements, as opposed to more secure tenancies. That means that tenant farmers are no longer prepared to invest in the land and farm steadings in the way that they would do if they had a more secure tenancy.
Given the drop in tenancies, which was highlighted a few weeks ago, are you concerned that, by interfering with parties’ contractual freedom, you are indirectly undermining parties’ ability to enter into the arrangements that they want to enter into? I know that that is not the Government’s intention.
Don’t worry—I welcome general questions on the topic. Your question gets to the heart of the debate. You used the word “interfering”; others, including me, say that we are regulating, to ensure that there is not an imbalance of power between tenants and landlords. We have historical baggage to deal with in that regard, which is why we have regulation to ensure that a democratic approach is taken.
We are talking about three key measures, which are left over from work in previous sessions of the Parliament. In the first session, we adopted measures to improve flexibility in leases, in the Agricultural Holdings (Scotland) Act 2003, to make it easier for landlords and tenants to strike the deal that is best for them. Time will tell whether the increased flexibility that we introduced makes a difference, particularly in relation to the transfer from a short limited duration tenancy to a limited duration tenancy—the five-year and 10-year leases issue—to make it easier for landlords and tenants to have a longer lease, if that is more appropriate for them, without having to start from scratch. I hope that the 2003 act will make a difference and that the extra flexibility will mean that more leases are created. That was the whole purpose of the approach. As I said, we will review the position, to see whether the new approach has worked. If it has not worked, the Parliament will have the opportunity to do more.
I do not think that we are interfering. South of the border, there is more freedom of contract, but many people argue that that is at the expense of security of tenure. There are many short-term leases south of the border and commentators there say that it is even more difficult for new entrants to come into farming. New tenancies and leases are not just about new entrants; they are about the existing set-up and how the whole system works. We are trying to have a system in which it is a bit easier for new entrants to get on to the first rung of the ladder. There might be more freedom of contract and flexibility south of the border, but it comes at the expense of security of tenure and does not necessarily help new entrants.
In Scotland, we are in a different situation and a different environment. We are trying to create a different regulatory regime, which promotes new entrants, in particular, and frees up more land for let while giving landlords the confidence to let their land.
I thank the cabinet secretary for that answer, but how does the 10 per cent drop in the number of tenancies fit with what he has just said?
As I have said before, there are no magic bullets. I do not think that anyone around this table or anyone in Scotland, including me, can come up with one solution that will suddenly get all of us to where we want to get to, as we are in a difficult environment. Many factors influence the availability of land for let in Scotland. The flexibility or lack of flexibility of the agricultural holdings legislation could be one factor, which is why we are addressing that issue, but there are many other issues. We know that the demographics and the profile of younger people in Scotland are changing, which can have an impact, but the economics of agriculture are perhaps the biggest factor. Anyone who is looking to become a farmer will consider the economics, which will, I hope, continue to improve and make it more attractive for new entrants to come on board. However, a range of factors—not only what we are discussing today—influences a person’s decision on whether to get involved in agriculture in Scotland.
There is a range of reasons for the 10 per cent drop in the number of tenancies. I do not welcome it, as I want to ensure that we have a healthy tenancy sector in Scotland, and we should be concerned by it, but tenant farmers buy their farms and become owner-occupiers, and then, by definition, less land is let. We have bigger farms in Scotland than there are elsewhere, so the economics sometimes drive tenant farmers to rent more land, which means that there is less space for new entrants to come in. Therefore, a range of factors is involved, and we have to tackle all of them, not just what we are discussing today.
I want to clarify a point before we move on from section 1, on succession by near relatives. I understand that the acceptance of grandchildren as near relatives for the purposes of succession was won in case law in the Scottish Land Court. Will you confirm that, as it puts a perspective on our difficulties in reaching the stage that we are now at of putting into law something relating to grandchildren?
There have been cases, which I will ask Caroline Mair to speak about. I recall that the conclusion of a case was not specifically down to the definition of a near relative, but I ask her to elaborate on that.
I would need to know the exact case in order to offer any meaningful legal comment, but I would be happy to provide any further written detail if that were requested.
If I remember rightly, I think that there was one involving Cawdor Estates, but I may be wrong, and I do not want to be quoted exactly on that. I wanted to establish the fact that case law often leads to the obvious necessity for change.
The next section is on the prohibition of upward-only rent reviews.
I think that we were all fairly surprised that there were cases, albeit just a few, in which tenancies’ rents could only go up and tenancy reviews could be initiated only by the landlord. It is interesting that the NFUS put a different spin on things. I think that a substantial but not large number of its members stated that it was sometimes beneficial to have clauses saying that rents could only go up because, otherwise, people proposing to take on tenancies could offer an extra large amount per year so that they would win the tenancy and then negotiate down afterwards. Have you considered that in any of your deliberations?
To be frank, I have not really considered that in my deliberations, and I cannot recall that point being made to me during my discussions with the NFUS. Some farmers may hold that view, but members may rest assured that many more farmers and others who are involved in the debate hold the alternative view that we should tackle that issue and, for the avoidance of doubt, simply make it law that any such clauses that are inserted into leases would be void.
I have asked this question before, and although it was a different audience I presume that I will get the same answer. When the bill is passed and receives royal assent, will existing tenancy agreements that have an upward-only rent review clause or a landlord-initiated-only review clause be seen as unfair and changed or is it only new tenancies that will be affected?
We have a clear position that we will not apply the change retrospectively. It will be the law that, although any future leases cannot have such clauses, existing leases will stay as is. We have no reason to believe that there is a great number of them.
I understand that it is a cleaning-up process.
A couple of points were raised at a meeting with the NFUS yesterday that some of us attended. The first concerns the problem at waygo when tenants have made improvements, such as a shed, with or without the landlord’s permission or knowledge. There is an argument about whether the landlord will take over the improvements. Has the Government considered help for the arbitration of that so that there is investment in tenanted farms and tenants are rewarded for investing?
The second point was about diversification. It has been stated that, in many diversification projects, landlords look for a share. In one example, a landlord wanted 80 per cent of the income from a diversification project. That basically stops anyone from wanting to diversify. Is that something that you will consider in this session?
We are aware of on-going concerns in the tenancy sector about waygo compensation and issues surrounding that. We cannot pull a rabbit out of a hat to give landlords enough confidence that it is worth while letting land and at the same time address some of tenants’ concerns about compensation at waygo. However, we are keen for the industry to look at that. Within 18 months of the act coming into force, we will review its impact so far, which is an opportunity for the committee and the industry to have its say. We are aware that there are issues surrounding waygo.
And the diversification issue as well I presume.
That would be linked, yes.
I want to add something to the debate on upward-only rent reviews, in case it is helpful. Although the bill would prohibit the inclusion of such a clause in future leases, that does not mean that rents would not go up. In the commercial sector, even when a tenant manages to negotiate away an upward-only rent review—which does not happen every day of the week because of the imbalance in the respective powers of the tenant and the landlord—we find that the rent can still go up, according to the applicable circumstances, when the rent is being reviewed. It is important to bear that in mind. I am sure that the tenant farming forum is well aware of that; we note that it has signed up to this provision.
That is a fair comment. The issue is the prohibition of upward-only rent reviews and landlord-instigated-only rent reviews. Landlords and tenants support what we are doing on that. As Annabelle Ewing says, there will still be a rent negotiation and the opportunity to change rent levels.
Section 3 is on the effect of VAT changes on the determination of rent.
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The committee considered issues relating to section 4(1) in the evidence session with the bill team and in our stakeholder evidence session last week. At present, the provisions on near relatives will apply only when a tenant has died on or after the date when the legislation comes into force. In our previous evidence sessions, it emerged that the majority view in the tenant farming forum was that the provision should apply when a tenant has died before the legislation enters into force, but no notice has been served. Why was the majority view in the tenant farming forum not reflected in the bill? Scott Walker of the NFUS said:
“Provided that someone has not gone through the entire process”—
or, in effect, no notice has been served—
“we believe that this aspect of the bill should still be allowed to apply to them. In that sense, we would not support what is proposed in the bill and would prefer the view that is held by most of the organisations within the TFF to apply.”—[Official Report, Rural Affairs, Climate Change and Environment Committee, 18 January 2012; c 536.]
Does the cabinet secretary agree?
Mr Walker also said that he does not believe that such a move would be retrospection in the true sense, because the process would not have been gone through and there would therefore be a clearly identifiable set of circumstances to which the measure could be applied. I ask the cabinet secretary to comment on the debate that we have had on the subject.
The member raises a valid concern, but the subject is a difficult one, for a couple of reasons. First, as you will imagine, we would rather avoid retrospective legislation because we do not want to be challenged on it. As I said, existing situations have expectations and rights built into them. If we try to change those retrospectively, we must be careful about the surrounding legalities. Therefore, our default position is not to implement legislation retrospectively. Secondly, with any new measure, there is a cut-off point; there will always be some people who just miss out on the benefit, irrespective of when the measure is introduced. Whatever we do on the definition of the term “near relative”, I expect that some people will miss out because of the timing, but it might be only one or two people, given that nobody expects many people to be affected by the measure.
We are reluctant to legislate retrospectively, but the member will have the opportunity to make her view known to the committee.
I wonder whether the bill team could reflect a bit more on the point that, because the application is dependent on a practical step being taken—a notice being served—the measure would not be retrospective in the true sense, as it would apply in a certain set of circumstances. That was the point that the chief executive of the NFUS and others made. I hope that that legal point will be reflected on further, because it perhaps addresses the concern about retrospective legislation. I am trying to be helpful.
That is a helpful point. I assure the member that I will reflect on the point, which we are aware of.
As there are no further points on that matter, I would like to correct something that I said earlier about succession. At last week’s meeting, Christopher Nicholson talked about the need for a wider agreement on assignation, succession, rent review and so on. He said:
“The issue is not just the cost of taking a case to the Scottish Land Court. Richard Blake”—
of Scottish Land & Estates—
“mentioned the Fleming v Ladykirk Estates case, which demonstrated that a tenancy could be assigned to a nephew. However, although the tenant won the case in the Land Court, the nephew did not become the tenant, because the landlord started an appeal process to the Court of Session and the tenant did not have the financial means to fight the case. The tenancy was lost and one more new entrant from a farming family was denied a start.”—[Official Report, Rural Affairs, Climate Change and Environment Committee, 18 January 2012; c 539.]
That case involved a nephew and puts in context the gains that have been made, mainly through the Land Court. I am sure that there are also cases that involve grandchildren, on which it would be interesting to reflect as we draw up our stage 1 report on the principles of the bill. The process of securing change seems extremely slow. I did not want to cast aspersions on other estates; but the Ladykirk Estates case is germane to the issue of nephews, nieces, grandchildren and so on.
I will ask about a more general issue, given that we have the cabinet secretary with us. A 10 per cent drop in the number of tenancies in Scotland has been referred to. During our evidence session with stakeholders, the Scottish Tenant Farmers Association said that it thinks that somewhere in the region of 100 tenants have bought their farms since the 2003 act came in. It was also brought to our attention that when a large estate is broken up tenants can “lose” tenancies and become owner-occupiers. It is clear that such factors impact on the drop in tenancies; it is also clear that a large number of tenancies appear to have gone. What do you think lies behind the figures?
We need a healthy tenanted sector in Scotland. We need everyone who has influence over the amount of land that can be let in Scotland to rise to the challenge of ensuring that the next generation of food producers and farmers has access to land to farm. That is the biggest challenge that we face in the context of this debate. We need landowners, landlords and owner-occupiers, as well as tenants, and to acknowledge that that is a priority.
Of course, the people who have the most power in that regard are those who own the land. Given the nature of land ownership in Scotland, we need people who have land to do what they can to make more land available. The Government is speaking to such people more than it has ever done, making in the strongest terms the point that we need to see more land put on the market. We feel that the legislation takes account of the needs of not just tenants but landlords, so the environment should be right for more land to come on to the market for letting. If that does not happen, we will have to keep returning to the issue. That is the Parliament’s job, and I am sure that the committee takes a close interest in the matter too. We need to see results. We do not want to run out of patience or to have to spend even more time trying to legislate; we want more land in Scotland to be available to let.
It appears that less land is being made available. Why is that?
Agriculture has changed. As I have said before, we are not frozen in time. The economic and global environment—not just the Scottish or European environment—is radically different from the environment 100 years ago. The size of farms is different and the number of people who are available to work in agriculture is different. There are new technologies. The whole profile of land use and agriculture in Scotland is changing and will continue to change.
There is an added complication, in that many landowners are awaiting the outcome of the common agricultural policy reform process before they make their next move. They might be hesitant, so I say to them that if they agree that we need new entrants in agriculture, as they say that they do, they should please do what they can to make land available. They have the land; they can make it available.
The bill is reasonable and takes account of the needs of landlords and tenants. We will return to the debate time and again, until we are confident that the next generation of farmers in Scotland has the opportunity to farm.
Concerns have been expressed in our discussions about the need for more adequate information on the number of tenancies and we are well aware of the debate in the press about reductions, particularly in secured tenancies. I do not know whether you will be able to answer this series of questions just now, but I need to put them on the record to help our deliberations. First, is it normal practice for a tenancy to pass through assignation to the next generation?
As I said, I am happy for you to answer these questions later, but if you can respond immediately, that is fair enough.
You are probably best to ask the questions and I will see whether I can answer them. If not, I will get back to you.
I want to put them on the record anyway.
How many individuals will be affected by the change to the definition of “near relatives”? How many limited duration tenancy agreements included upward-only or landlord-only rent clauses? Are estimates available for new entrants lacking access to farm tenancies? To what extent is the 10 per cent drop in the number of tenancies in Scotland between 2005 and 2011 a result of tenants purchasing their farms or landowners taking land back in hand or reletting it under alternative arrangements?
It would be very helpful to get some answers to those questions.
I am happy to write back to the committee on those questions; indeed, they are questions that I often ask. We are aware of the lack of data on the issue and are working with the industry on ways of capturing a lot more to understand exactly what is happening out there. In particular, it would be fantastic to have an answer to your final question on exchange of tenancies and the number that have been taken back in hand, but such information is very difficult to gather. However, it is a fundamental question and I agree with the committee that getting an answer to it would give us an exact picture of what is happening out there and allow us to understand why it is happening and to address some of the issues.
I am afraid that other issues, such as the number of people who will be affected by the change to the definition of “near relatives”, will depend on future circumstances. I do not want to predict the demise of any particular farmer in Scotland, but the fact is that we cannot predict who will wish to take over tenancies when existing farmers pass away, or the demand from grandchildren to inherit them.
I will do my best to come back on your questions, convener.
We will give you a list to ensure that you get back to us before we produce our report.
We will let you know exactly where we are going with gathering data and new ways of doing these things.
At last week’s meeting with industry stakeholders we were told that there were as yet no figures for the possible number of informal expressions of interest from new entrants keen to get into the industry, some of whom are not relatives of farmers but have been involved with the industry in some way. Those people are finding things very difficult and I wonder whether there is any possibility of collecting data on that issue. I also wonder whether you can provide—if not today, then at some other point—information on efforts by the Forestry Commission and the Crown Estate to develop starter units and RSPB Scotland’s suggestion regarding the possibility of conservation tenancies.
Finally, I know that, given the very difficult economic circumstances, there is no magic wand in this respect and that all businesses are finding it difficult to secure finance. However, the committee is aware of the difficulties faced by new entrants in getting finance for short tenancies. As with the questions that the convener asked, are you able to comment on those matters now or do you want to get back to us?
I can probably answer all three points and maybe follow up with some more detail.
The first issue to address is understanding how many potential new entrants there are in Scotland and how they wish to enter the industry. Today we are talking about tenancies, but many aspiring entrants find different ways of getting into the industry. As the industry is so capital intensive, the most challenging way is to become an owner-occupier, and the evidence shows that most new entrants who are owner-occupiers manage to achieve that only with support from family who have existing connections to agriculture. It is very difficult for anyone who is not currently involved in agriculture through family connections to become a new entrant as an owner-occupier. There are some very wealthy people who achieve that—I know many of them—but it is not easy for other people whom we want to encourage.
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There is a case for establishing a register that aspiring new entrants can put their name on, and I am looking at how we can achieve that. From time to time, I come across individuals who wish to have their own farm—I am sure that committee members meet such people, too. In the case of tenancies, it would be good to establish a national register with the co-operation of all the stakeholders. That would allow those who can make land available to know that there is a demand and to understand the kind of people who want to get on to the first rung of the ladder, and it would help us to understand how many such people are out there.
We want to look at such a register, and Claudia Beamish makes a good point. I fully accept that there is a lack of data overall, and the issue relates to the previous point from the convener.
I am interested in the idea of starter units. A lot of industry work is taking place at the moment, and I am very interested in the RSPB idea of conservation starter units. I will look into that—thank you for bringing it to my attention. As a Government, we are also looking at what influence we have. As the committee may know, the Forestry Commission is in the midst of establishing starter units. There will be more announcements on that issue in due course, and I will follow up in more detail. I agree that the Crown Estate and other landowners in Scotland have a role to play. The Crown Estate is working on that at the moment, so there is a lot of dialogue taking place with some major public sector landowners to see what can be done.
The final question was on finance. At the moment, new entrants receive extra finance through the Scotland rural development programme. They receive added support from other schemes that are up and running, and there are specific new entrant schemes available. However, as we have just discussed, although Government and European schemes to assist with cattle, equipment, training and skills are important and there is more to do through them, they are pretty meaningless if people cannot get access to land or, in some cases, access to several million pounds to purchase and own a farm. There is a big jigsaw. We can put some bits of the jigsaw together, but we also have to address some fundamental issues.
When it gave evidence last week, and when I spoke to it yesterday, the NFUS raised the issue of land agents. Does the Scottish Government have any proposals for taking forward a code of practice for land agents?
We have no direct proposals, but I understand that the industry is looking at the issue. That fact has maybe been alluded to in the evidence that the committee has received from witnesses. The chartered surveyors, who tend to be involved in the land agent business, are all members of a professional organisation, which is looking at the issue.
Some of the anecdotes that we hear describe situations that are not healthy for the tenancy sector in Scotland. Some of the practices that I have heard about are abhorrent, but I have often heard the stories only anecdotally. I like to think that the majority of individuals are involved in negotiating and drawing up agreements that lead to good outcomes. We have to remember that there are many good, healthy and positive relationships between landlords and tenants, and we must not tar everyone with the same brush.
Through legislation, we are trying to protect our tenants and ensure that the problems that occur in the cases that are brought to our attention do not happen again. A code of practice to address some of the issues with land agents would be a good thing, as long as there is a way in which the professional organisations of which the agents are members can enforce it internally.
So the Scottish Government would have no input into that whatsoever.
We have no intention of using legislation in that regard. The professional bodies are clearly the best people to police any individual who is out of line or behaving in a way that we think is unacceptable in today’s age. Such people should be held to account by their professional organisation.
On that point, cabinet secretary, Andrew Wood from the Royal Institution of Chartered Surveyors pointed out that not all land agents are members of his organisation. Can you confirm whether we have the ability to regulate the affairs of the RICS in the Scottish Parliament, given that it might be something to look into?
To answer your question specifically, there are always ways and means in terms of codes of practice. As you know, there is legislation elsewhere in the Scottish Parliament whereby we make codes of practice conditional or statutorily establish codes of practice. Frankly, we could have the power to ensure that codes of practice were a factor, but in the case of land agents who are members of professional bodies, those bodies should hold their members to account. I would much rather see the industry ensure that the land agents whose services are used are members of professional bodies. That is surely the way forward.
Thank you for that.
Leading on from that, in Scots law an agent by definition acts further to the instruction of somebody else. That brings us back to the essence of this debate regarding the power balance, shall we say, between the tenant and the landlord. The agent acts on the instructions mostly of the landlord, but from time to time acts on those of the tenant.
I was heartened to hear last week from the tenant farming forum in particular of the determination to explore further the use of the Arbitration (Scotland) Act 2010 as a potential way forward for avoiding terribly lengthy and costly cases coming before the Land Court and for finding a better dispute resolution mechanism for the sector. That was very encouraging, but obviously such things take time. What, if anything, can the Scottish Government do to facilitate the examination of how the 2010 act can be used in that regard? I understand that it is an excellent piece of legislation and that there is a determination to use it in any event to make Scotland a centre for arbitration. The sector that we are discussing would perhaps be an important start on that road. Can the cabinet secretary comment on that?
My more technical question concerns the Land Registration etc (Scotland) Bill. Scottish Land & Estates Ltd expressed last week what was at least a minor concern about the fact that limited duration tenancies of more than 20 years will require to be registered and wondered what the fee level would be. It was also concerned by what it understood to be a requirement to register all paperwork for such leases. I am not entirely sure that the requirement would be as wide as Scottish Land & Estates fears. Obviously, though, those are technical questions concerning a bill that is outwith the cabinet secretary’s jurisdiction, but I felt that it was important to put on the record that those concerns were raised at the evidence session last week.
It so happens that I met Scottish Land & Estates last week in the Parliament to discuss a range of issues and, as you can imagine, many of them were related to some of the issues that we are discussing today. Scottish Land & Estates made a similar point to me about the Land Registration etc (Scotland) Bill, which I undertook to consider. You have reinforced that organisation’s concerns, so that will ensure that it is at the top of my mind to do something about that.
Clearly, we encourage arbitration. We are very much in favour of going down a route that is more cost effective than ending up in the Land Court. As you said, that is expensive, emotionally and financially draining, and can lead to difficulties, particularly for those who do not have much money or wealth in the first place. It is worth bearing it in mind that arbitration was statutory until the 2003 act but, because that provision was seen as too bureaucratic and expensive, it was removed. We have come round in a bit of a circle because the Land Court is equally expensive and bureaucratic in some cases. We are now looking at using arbitration again, and I wrote to the tenant farming forum just over a year ago, urging it to consider the issue. When I go around Scotland and speak to farmers, I hear some horrific stories about the impact of long drawn-out legal cases that end up in the Land Court. That is not good; if we can do anything to support an alternative way of resolving such disputes, the Scottish Government will do it. I am not ruling anything out at this point. I am waiting to hear back from the tenant farming forum about how it sees a better way forward. We need a better way forward. We should not have long drawn-out court cases if we can avoid it.
I will return to some of the convener’s questions. The Scottish Government told us that there was a lack of figures and data about how many tenants have become owner-occupiers and how many landlords have taken their land back in hand. For as long as I can remember, twice a year, in December and June, farmers and farm-holdings have had to fill in returns in which they have to state the hectarage that they own or tenant. Cabinet secretary, you could extrapolate some information from those data.
We discussed that previously. Iain Dewar will give you a bit of information about where we think the debate stands.
Iain Dewar (Scottish Government)
At the moment, the information that we collect through the agricultural census gives us a high-level picture. It provides us with information about the amount of land that is rented and owner-occupied in Scotland. Since 2005, it has also given us some general information about the number of tenancies. We fully acknowledge that we need to get to the detail underneath that information so that we can better understand the interactions and what happens when a 1991 tenancy comes to an end. Is the tenancy to be bought or converted to a limited duration tenancy? If it is to be converted to an LDT, will the tenant be the same or will there be a new tenant? Is the conversion happening at the point of succession? It is quite difficult to interrogate the data to extract that information. We have started discussions with statisticians about how we might take the data that we get from the agricultural census and cross-reference it with corporate database information and perhaps information from the Registers of Scotland about who owns title to the land, and so on.
It is a very complicated business. At the moment, we are hoping to get that information and put an evidence base in place to inform the proposed review of agricultural legislation so that the review will have a sound evidence base.
That feeds into what we were discussing earlier. Off the top of my head, I wonder whether the census should contain questions that allow you to access more directly the changes that might have taken place, if it is not too complicated already.
We reduced the number of questions in the census and we took that as reducing bureaucracy. We have been talking about it ever since we reduced the number of questions. We will take that idea away and think about it. However, you are right that we need to ask the right questions, which are those that we need to know the answers to.
I think that we have run out of questions for the moment, but we have left you with quite a few more to answer before we make up our minds about our report. I thank the cabinet secretary and his officials. We have had a wide-ranging discussion in a legalistic area, but it is one that is important to so many people out there who are producing the staff of life, our most fundamental product. It is important that we know that there is an opportunity for people to do that and the bill should make it easier for that to happen.
Thank you for today’s opportunity. There are no simple answers to some of these complex issues and we will treat your views and comments about the issues that have been before us today and about the wider debate very seriously. We need to hear your ideas and conclusions from listening to the evidence. No one has a monopoly on the solution to what is a very serious issue for Scotland, which is the future of our land. To ensure food production, we need to ensure the future of the tenancy sector, so that young people who want to get involved in agriculture get that opportunity. That is still a huge challenge for the nation because we do not have all the answers. The Government will gratefully receive anything that you can contribute to that.
Thank you very much. We now move into private. I thank those who have been with us in the public gallery and those who have given evidence.
11:31
Meeting continued in private until 11:56.