Official Report 327KB pdf
Under agenda item 2, we begin our consideration of the Agricultural Holdings (Scotland) Bill. This is our first day of taking evidence at stage 1. We will also meet on Tuesday 5 November and Tuesday 12 November, when we will consider more oral evidence.
I have a wee croft in the west Highlands that is struggling and is not viable.
It is obvious that crofters can diversify as well.
I am a member of the Royal Institution of Chartered Surveyors in Scotland and a past chairman of the rural practice division of that institution. I am currently the chairman of the RICS agricultural holdings working party.
The Scottish Landowners Federation is a major stakeholder in the agricultural tenant sector in Scotland. We might be perceived as representing only lairds but, in reality, many of our members who let land let only one or two farms. Many of our members rent land as tenants in addition to owning their own holdings. Equally, a large number of our members are also members of the National Farmers Union of Scotland.
The Scottish estates business group represents large and small estates that are committed to a progressive approach to rural business and to environmental and socioeconomic issues. Tenant farming forms a significant part of estates' activities.
I thank the witnesses for keeping their statements relatively brief. We will move straight to questions.
I will start by quoting a brief extract from a speech that Donald Dewar made in 1998, after he had considered as part of the land reform consultation exercise at that time several case studies that tenants submitted to him about their experiences as tenants and the treatment that they received from landlords. He said:
It is up to the gentlemen to decide who speaks first, but perhaps Sandy Lewis could start.
Fergus Ewing's question involves a misunderstanding about the tenant and landlord relationship. I understand that the Agricultural Holdings (Scotland) Act 1991 ensures that tenants can call on landlords to equip farms to a satisfactory standard. Tenants may require investment in the land for several reasons—it might not be strictly for farming, but for diversification.
I question Mr Ewing's premise. If a tenant invests in improvement, the investment does not then become the landlord's and the tenant does not get nothing back for his improvement. As I understand the 1991 act, if a tenant invests in something such as a new building on the farm, he has the use of that building for his business. The tenancy may go on for generations, so the tenant will always have use of the building. If a tenant chooses to leave a tenancy, he will receive compensation for improvements based on their value to an incoming tenant.
Ten years ago, when farms were doing well, tenants invested in farms because they could see a return from that investment. The difficulty at the moment is that agriculture is not going through happy times. Farmers want to get out of tenancies but cannot because they have not yet had a return on their investment. The issue is complex and it is not correct to say that farmers have no incentive to invest. As Andrew Hamilton said, their incentive is the rent that they receive from their asset; that is their return on their investment. All investments have a write-off period.
I was thinking of examples in my constituency—not the Seafield estate, I should add. In one case, the landlord offered to invest in a particular improvement to farm buildings but sought a return of 10 per cent on the capital investment. The tenant disagreed with that and, although I believe that the Agricultural Holdings (Scotland) Act 1991 has machinery to resolve such problems, the result was stagnation. I am not convinced that the present system encourages investment and I am not quite satisfied with those answers, although I understand what you are saying.
I accept that our view about the impact of the pre-emptive right to buy is subjective. However, people are worried that the introduction of the pre-emptive right to buy will lead to an absolute right to buy. That risk is what is shattering people's confidence. By and large, the SEBG and the SLF could live with the pre-emptive right to buy, although we have proposed an alternative that would still achieve the minister's objective, but which would also give better benefits to tenants.
Do the other witnesses agree with my view?
I do not agree. We have said that we are opposed to the pre-emptive right to buy because of the effect that it will have on the market. We are looking for more land to be let in order to ensure that we have a healthy tenanted sector. The more seeds of doubt that are sown in the minds of those who might let land, the more difficult it will be to ensure that the sector is healthy.
I wrote down your phrase, "cannot be measured". That phrase seems to confirm your fear that the right to buy would impact on confidence—which cannot be measured. That is my point.
Can Fergus Ewing give me an example of what can be measured? One must consider opinion in the industry. If the industry's opinion is that a measure that is introduced by statute will have an effect, it may not be possible to measure it empirically, but it may be judged that there would be an effect.
The only example that I can think of was in the notes to the consultation paper. The minister estimated that the cost of an absolute right to buy would be £100 million. However, he has failed to date to provide any computation of that amount. The point, though, is that this is a subjective process and we cannot measure its impact. Therefore, when you say that the effect will be dreadful, that is an assertion; it is not something that can be proven. The opposite might be true: if more investment is unleashed by tenants' having the benefits of ownership, as do your members, confidence and the value of land could be increased. Is not that equally possible?
Much of that has been considered. One has to try to assess the views that are held, and the RICS commissioned a report from the University of Aberdeen. The university interviewed a large number of agricultural tenants, owners, land agents and agricultural lawyers to help inform the debate on the matter and to ascertain views. That report can be made available to the committee if members have not already read it. It gives the best indication that we could find of feeling throughout the sector. If members are seeking figures, the report contains a number of percentages.
I, too, would like to respond to Mr Ewing. It must be understood that estates today are far removed from what they were hundreds of years ago. They are run very much along business lines, with risk management and investment management measurements and assessments being made day to day. Therefore, when something is introduced that undermines confidence, that will move towards risk aversion along whatever scale the proprietor has.
We are here today to take evidence on the general principles of the bill that is before us, but the bill makes no mention of an absolute right to buy. We are focusing specifically on a pre-emptive right to buy, so I want to ask my questions on that.
We recognise that there is often concern that tenants may find themselves with new landlords without knowing anything about it, because the land has been sold from under them. We appreciate and understand such concern and have suggested that it should be a requirement that a landlord cannot sell his land without first informing the tenant and giving him an opportunity to bid. We prefer that to the pre-emptive right to buy because of what we discussed earlier—the question of confidence. If what we suggest were introduced, tenants would have the opportunity to buy their farms and would never miss that opportunity because there would be a statutory requirement on landlords to give them a chance to bid. However, moving one step further and introducing a pre-emptive right to buy has connotations that have affected confidence. We question the benefit of moving that extra step forward. That is what seems to cause the problem.
I am still not sure how what you are advocating differs from what is proposed in the bill. Could you clarify that?
Giving tenants an option to bid is different from giving them sole right to buy.
Whom would that benefit?
It would benefit the confidence of people who are thinking of letting land. If they feel that they have the opportunity to dispose of the land to whomsoever they wish without being restricted by statute, that will give them more confidence than if they are forced to sell land to one person.
I still want to pursue that, because I am trying to think about the matter logically. I am a lay person, not a farmer, and what you are saying does not strike me as being logical. The bill will give a right to buy to a tenant farmer, and the landowner would get more for the farm if he sold it to the sitting tenant than if he sold it on the open market. Is not that true?
That is generally the case.
So why are landowners against the provision? I do not understand what you say about confidence. If tenants may bid for the land anyway, how does that affect confidence?
The distinction is that the use of the term "pre-emptive right to buy" indicates that the tenant possesses a right to acquire the capital. Our three organisations agree whole-heartedly that tenants should have a right to offer. The SEBG and the SLF have suggested slightly different versions of a similar idea, in which tenants would definitely have a statutory right to bid. Tenants would not need to register, but would have a right on the day when an opportunity arises that would suit their circumstances on the day, whether they have cash or not. The right would not depend on where the tenant was five years previously when he made the registration. The tenant would have an absolute right to offer.
I get the impression that you are opposed to the absolute right to buy rather than the pre-emptive right to buy.
Absolutely. I think that if it were not for the threat of an absolute right to buy, which has existed for several years in various forms, landowners would gladly have accepted everything that the bill proposes.
There is another issue, even in terms of the pre-emptive right to buy, because the bill gives tenants the right, in some instances, to fragment a property. A property could have other land uses that are just as profitable as the farming sector. For example, there could be a major sporting interest on the land. The ability to fragment the land could be detrimental to the whole property.
I am interested to hear you say that because I heard you speak on the radio when the pre-emptive right to buy was announced and you seemed then to be content with that right and did not see it as a threat. However, your evidence now seems to attack the pre-emptive right to buy as unhelpful.
We are not attacking the pre-emptive right to buy as unhelpful. Our fear is that that right might be extended and that what happened to property in Ireland might happen here.
I want to pick up briefly on your point about other commercial interests on an estate. The two that strike me as most likely are sporting and forestry interests. I presume that there would be job implications if an estate that had those interests were to be broken up through the right to buy. Are those job implications quantifiable? Can you tell us how many sporting and forestry jobs exist?
Not off the top of my head. The job implications will vary for different areas in the country. They are not as relevant for lowland agricultural areas as they are for places such as Aberdeenshire. However, there will be job implications. I am sure that the Scottish Gamekeepers Association, for example, could inform you better than I can of how many jobs might be at risk in its field.
On the topic of quantifying issues, I think you said that the threat of the bill has led to land on the market drying up. Is that quantifiable?
Not yet. The advice of professional advisers—who are worried about the issue of professional negligence—on letting property, is just to ca' canny until the bill becomes law. That is why people are doing other things.
I will push a little in the direction of the absolute right to buy and tease out issues that are causing you concern. An absolute right to buy would have to come with compensation. If somebody pushed an absolute right to buy, they would have to compensate the landowner for the value of the property that they were buying. Further, they might not wish to buy things such as sporting rights, which would affect the overall value of the estate. If there were enough security to ensure that exercising the right to buy did not have a detrimental effect on the value of the greater property, would that make you happier about an absolute right to buy?
It would, but sporting rights cannot be alienated from the law of property. I am not a lawyer. I am only a surveyor. However, I am sure that Fergus Ewing will tell us that, other than salmon fishings, sporting rights cannot be alienated from a heritable property. Therefore, if a tenant bought the farm on a property, he would also necessarily buy the sporting rights.
I understand that that is not the case in the crofting right to buy. Crofters do not buy the sporting rights and the landowner can still exercise those rights over the land.
A system of leasing back the rights is proposed within the crofting right to buy. However, the sporting rights cannot be retained under a different ownership from that of the heritable land.
I am talking about the current individual crofter's right to buy and not the crofting community's right to buy as outlined in the Land Reform (Scotland) Bill. I am talking about comparing the crofter's right to buy with—
I can help with that. The situation is that when a croft is bought, the Scottish Land Court will award the use of the sporting rights back to the landlord, usually for a maximum of 20 years. However, the ownership of the sporting rights goes with the croft.
We are now drawing up new legislation. If we were able to include something that would allow landowners to retain sporting rights, would that give you any comfort?
It would give us some comfort, but not a lot. If an owner has a farm that is let to somebody, there will be cottages within it that are not let and forestry that is not let. The situation is complex. If we sold a farm that is around the principal residence of the property, we would in effect be selling the curtilage of the house.
Difficulties in separating out interests in the absolute right to buy have been mentioned. Estates with let land are models of integrated land use and they deliver public interest benefits. Integrated land use shapes the backdrop of much of our tourism industry. The system usually works relatively well. I understand why someone would want to buy a particular property, but I cannot understand why the present system should be lost, because I do not believe that there is anything seriously wrong with it. With the absolute right to buy, somebody's business property would be taken over by another individual.
The other problem with the absolute right to buy is the question of confidence. Somebody might want to spend their money buying a piece of land rather than buying stocks and shares, but if they feel that it could be bought off them whenever somebody else wants, rather than when they want to sell it, that will affect their confidence. We have heard about the £100 million that was in the original papers, although we do not know where that figure came from. There is an amount by which land would be devalued by the absolute right to buy. There are a host of reasons why people buy land, which are not just to do with its capacity to produce income. If somebody from an external source was thinking of investing money in land in Scotland and we said to them that the land could be bought off them at any time regardless of whether they wanted to sell it, that would dent their confidence in a big way and it would affect land value significantly. That is probably where many of the claims for compensation, which I know the Executive is concerned about, will come from.
It is perhaps relevant to say that the difficult circumstances within agriculture are part of the reason for the absolute right to buy. We have heard how the farming sector is aging and some people want to get out for whatever reason, perhaps because they have ceased to make a reasonable living from farming. The way in which compensation has been agreed to in the past has meant that they are not able to get out. We feel that the suggested tenant farming forum would be a way to discuss those issues and find solutions to the problems. We have already spoken to the Executive about solutions to those problems. We do not feel that the absolute right to buy is the panacea that some people think it is.
The fact that any investment that a tenant makes in a farm is usually written off over a short number of years so that they do not get compensation when passing their farm back to the landowner, should they choose to do so, stagnates the market. If they had ownership of their investment and were selling it on the open market, they would have more confidence to move on and let young people come in. Farming would become a moving industry rather than a stagnating industry. At the moment, the tenant is between a rock and a hard place. They cannot invest, because if they do, they cannot get compensation if they give the farm back. Unless you are saying that landowners would pay tenants who give up their farms real compensation, the industry will stagnate. The other way of not costing the landowner anything is to give tenants an absolute right to buy whereby the landowner receives the money that represents the value of the land but the tenant gets ownership of what they have invested in.
Some of the issues that you mention can be dealt with by the forum that we suggest. I have heard a number of claims for an absolute right to buy. I know that some of them come from a genuine sense of frustration with the existing system or with the particular circumstances that a tenant has with their landlord. However, I beg of the committee that it consider the industry as a whole and develop solutions that deal with the issues appropriately and that ensure that tenants are dealt with fairly. Those solutions need to be thought through. Investment and such issues often seem peculiar when seen in isolation. When they have been developed as part of negotiations on a larger scheme—such as adding land into a farm—they are sometimes understood far more readily.
Rhoda Grant said that the tenant gets nothing back. According to the 1991 act, that is not the case. I think that she might be referring to the fact that there are write-down agreements in some cases.
That may be the case in law, but it is not often the case in practice. Until we change the balance of power—or at least get some equity into it—we will not change the relationship between landlord and tenant. One will always be the underdog to the other. If tenants are going to invest in diversification, they will almost be forced to agree to whatever their landlords ask. If the tenant wants to diversify and make changes to the way that they farm, they will need the landowner's permission. The landowner can say, "Fine. I'll only give you permission if you agree to this write-down agreement."
Will Sandy Lewis explain how the forum would help in that?
Through the bill, as amplified by the tenant farming forum working together to deal with such problems in the industry, and through a long-term continual review, we should end up with a framework that—if properly put together—will ensure that neither the landlord nor the tenant has power in any negotiations. That is the way that industry and business work.
Rhoda Grant talked about diversification needing the landlord's permission. She has implied that there is a problem in being able to appeal to a higher authority. The bill also deals with diversification and dispute resolution. I think that we all agree that the dispute resolution under the 1991 act is not satisfactory, because it is expensive. The proposals in the bill have been designed to make dispute resolution more available to everybody.
I fully understand where Rhoda Grant is coming from, which is that the balance of power is upset because tenants are not in a good negotiating position—that is certainly the case in certain circumstances. The view of the RICS is that we need to look at the issue from all sides. As Sandy Lewis almost said, we need a balance in these situations. We need to remember that many of the new tenancies that might be created after the bill is passed will come not from traditional landowners but from farmers.
I am trying to get my head round this concept of how a pre-emptive right to buy or an absolute right to buy would create a lack of confidence. What do you mean by lack of confidence? How is confidence in rural Scotland's tenancy sector expressed? Is it expressed by the number of tenancies?
A survey was done of how landlords and tenants thought the proposed legislation would have an impact on them. Our institution also consulted our members, who are involved in advising both landlords and tenants. We asked our members how they would advise people. Our assessment of the confidence is based on the fact that replies said that people are being advised not to let land. That is what we are talking about. We want a healthy tenanted sector, but if people are not letting land, you ain't got that. That is the confidence that we are talking about. If we remove the ability of one chap to let a field to the bloke next door, that dries up the source of land. That is bad for the industry.
So is there total confidence in the tenancy sector at the moment? Are lots of new tenancies being created? If I wanted a tenancy tomorrow, could I go out and get one? Is that how it works just now?
No. As you are well aware, the Executive recognised a long time ago that, while we are going through the process of considering the new Agricultural Holdings (Scotland) Bill, there will be a slight reluctance to let, because no one quite knows what is going on.
Has the reluctance to let arisen only because of the bill?
The reluctance to let has arisen because of the right-to-buy provisions that have been inserted into the bill.
Was there total confidence in the tenancy sector, say, five years ago?
No. There have been calls for a review of the tenancy sector for a long time because of the secure tenancies that went on for generations. It was felt that such tenancies were stifling the amount of land that could come on to the market. That is why probably all the organisations here today welcome the fact that the whole thing is being freed up, so that we will be able to let for shorter periods.
I have a question for Robert Balfour from the SLF. The whole debate about the pre-emptive right to buy and the proposed absolute right to buy centres around secure tenancies. How many secure tenancies have his members created during the past 10 years?
I cannot give figures on that. We believe that there are about 14,000 tenancies, of which about 1,400—10 per cent of them—are let by Andy Wightman's 100 largest landowners.
All I want to know is, if the uncertainty has arisen because of the debate surrounding the bill over the past few years, when did we last have a confident tenanted sector in Scotland? For instance, when did landowners last create new secure tenancies?
Landowners have not created secure tenancies under the terms that are set out in the 1991 act for about the past 20 years. Over the past 20 years, most of the lettings have been made as limited partnerships under the Limited Partnerships Act 1907. The other underlying thing that must be recognised is that there has been a restructuring of the agricultural industry, as units have had to get bigger in order to survive economically.
Perhaps Robert Balfour can see why I am confused. The Parliament's researchers have produced a table that shows that the tenanted sector has declined from 43 per cent in 1971 to 31 per cent in 2001. Landlords have not created a secure tenancy in Scotland for the past 20 years or so, yet Robert Balfour says that the creation of a pre-emptive right to buy or absolute right to buy for secure tenancies would lead to uncertainty in the tenancy sector. I cannot quite square those two things.
The secure tenancy was created under the 1991 act. Up until now, unless a tenancy was made with a limited partnership, it led to a total security of tenure. We are now at the stage where farms have had to get bigger, farmers are getting older and some people want to let land to their neighbours for economic reasons. The new legislation would give people the ability to do that and more land would be let as a consequence. We saw that happen in England when the introduction of the farm business tenancy freed up the tenanted sector. That resulted in an increase in the amount of land that was let.
I accept that. I also accept that that is the debate about the new tenancies that are proposed in the bill. I am talking about secure tenancies, which are relevant to the pre-emptive right to buy.
You asked about confidence in the sector and why a lot of land was not being let. For a long time, there has been a call for the freeing-up of the tenanted sector in order to encourage more land to come on to the market. The RICS disagrees with the SLF and the NFUS in that it takes the view that we should have freedom of contract or something similar to farm business tenancies. We think that the business of five or 15-year lets does not serve the industry at all. The most common length of let under limited partnerships was between the two—it was eight, nine, 10 or 11 years. Such lets are going to be banned in Scotland and that is not going to do the industry any good.
Can you name a landowner who decided not to let land because of the bill?
I am not able to do that for reasons of client confidentiality.
Have members of the SLF decided not to let land because of the bill?
Yes.
Who are they?
Like Andrew Hamilton, I cannot give you names.
Why not?
It would not be right to do that, Mr Lochhead.
I have one final, small question about diversification. One of the motors of the bill was to encourage diversification in the rural economy. A number of stipulations exist whereby a landowner can frustrate diversification or raise objections. I would like you to comment on two or three of those. The first is the stipulation that the landowner should be able to object if the intended use of the land causes
Undue hardship is a provision of the 1991 act. It is a test that has been tested, as it were. Believe it or not, there are cases where the tenant might be a much wealthier person than the landowner. It may be the landowner who has a lot more to lose by allowing the diversification. Off the top of my head, I cannot give the committee examples of that, but situations could arise in which the landowner would suffer extra hardship as a result of the diversification going ahead.
Safeguards are built into the act. If a landlord uses one of those cases to—as Mr Lochhead put it—frustrate the diversification and the landlord's actions seem to be unfounded or unreasonable, the tenant should be able to do something about that. The tenant can go to the Scottish Land Court, for example. Giving examples is difficult, but I will highlight sporting interests, which are often reserved to the landlord and not included in the farm tenancy. If it looked as if the diversification on a tenanted farm that is in the middle of a shoot would do something that would damage the sporting interest, the greater hardship would be caused to the landlord. At the end of the day, the value of the sporting interests will be greater than the value of the diversification interest. Under those circumstances, it seems reasonable that the landlord can object.
I endorse the view that it is in the landlord's interest for the tenancy to be as viable as possible, as long as that means that the opportunities for diversification do not damage the land irreparably for agricultural use. If the diversification would not so damage the land, the landlord would be 100 per cent behind it. However, the diversification must be seen to be viable and to be able to be carried through. The last thing a landlord wants is to find that he has a bankrupt tenant and everything that the tenant has half-built falls back to him.
I refer to the written evidence from the NFUS, which is to give evidence next. In its submission, the NFUS refers to
We have not consulted our members in the same way that the NFUS did. From talking to our membership, the indication that I have is that, in most cases, they would be content with a pre-emptive right to buy. As Mr Rumbles said, many of our members responded to the NFUS survey, as they are also NFUS members.
It strikes me that they are more than okay about it. A 75 per cent positive response means that the measure is quite popular.
I have already said that I would let land on a long-term basis under a pre-emptive right to buy.
The pre-emptive right to buy would be a popular measure.
It would not be an unpopular measure.
We conducted a study, as I mentioned earlier. If members do not have a copy of it, I would like to give one to the committee. The University of Aberdeen conducted the study with tenants, landowners and so forth. It showed that 88 per cent of landowners were against a pre-emptive right to buy and that 82 per cent of tenants would consider buying their holding. It also showed that 57 per cent of tenants support an absolute right to buy. Most people thought that that would be the result, as most tenants are keen to buy and most landlords are agin it.
I will pursue that point with our next witness.
Thank you for giving us your time and for answering our questions in the manner in which you did.
Meeting suspended.
On resuming—
The second panel of witnesses is from the National Farmers Union of Scotland, which is represented by vice-president John Kinnaird and Ian Melrose. Thank you for coming. I am sorry that you have had to wait a bit longer than you were told you would have to, but we will give you a bit more time to make up for it. As with the previous panel, I invite you to make as brief an opening statement as possible and I will then open up the meeting for members' questions.
Thank you for inviting us to give evidence today. Let me introduce Ian Melrose, who is our legal policy manager.
I would like to start where I finished with the previous set of witnesses. Your written submission states that 82 per cent of your members—including 75 per cent of the landowners who responded to your consultation—were in favour of a pre-emptive right to buy that involves willing sellers and buyers. I ask the same question that I asked Robert Balfour of the SLF. Do you believe that that is a popular measure given that, since it was included in the bill, there has been some criticism of it? Do you believe that the measure is still supported by your membership, both tenants and landowners?
Yes, I believe that the proposal is a popular measure. All that it does is to highlight and tidy up what most responsible landlords do at the moment: when they are selling a farm with a sitting tenant, they offer it to the sitting tenant first. The proposals will ensure that no tenant will have the land sold from under them without first having the opportunity to bid for it. Many tenants cannot afford, or do not want, to become owner-occupiers. However, at least they will have the opportunity to do so, which is why the pre-emptive right to buy is so important.
Just for the record, it is important to point out that the policy has not been developed since that consultation of our membership, which reaffirmed long-standing NFUS policy. Indeed, some years ago we talked about it in our legal and commercial committee, which preceded the present legal and technical committee. Prior to commencing negotiations with the SLF on a modified form of holding—we reached the position of limited duration tenancies—we made it clear that the pre-emptive right to buy was our existing position, because some publicity was given to tenants' right to buy at that time. That position did not inhibit the freedom of discussion that we had with the SLF. We put the matter to one side and got on with the work of trying to create a new form of holding.
My question is about how to make land available. The bill as drafted provides for the creation of short tenancies, which will be good for encouraging young people into the farming sector. A problem arises when people get older, settle down and have families, because short tenancies may not provide the security that they need. People might want to use the short tenancy to start their business and prove that they have a track record. Then they might settle into a farm as owner-occupiers, invest in it and, when the time comes for them to retire, sell it on, capitalise on their investment and retire on the money.
I will answer the last part of your question first. Waygo compensation, which has been highlighted already, is one of the most important points that needs to be addressed. Compensation must be correct and adequate, but it is neither at the moment. That is why the anomalies in the 1991 act must be addressed.
I have a brief question on the new-style tenancies. A member of the first panel of witnesses—I think that it was Mr Hamilton—told us that a tenancy of 10, 11 or 12 years seemed to be popular under the English system. Is there a reason for not providing a tenancy of between five and 15 years under the new arrangements? Does the NFUS have anything against that?
Yes. We are looking at security for tenants. The Agricultural Holdings (Scotland) Bill aims to provide security for tenants. We do not believe in freedom of contract, which is available under farm business tenancies south of the border and which instantly ratcheted up rents. Such tenancies are falling out of favour because they no longer deliver what is required; they are detrimental to the tenanted sector. We need a minimum term.
The short limited duration tenancy was designed to address a kind of letting that posed a threat to landlords—the potato lets or cropping lets, or tattie lets as they are known, which, legally, could mature into fully secure tenancies. As well as those lets, we addressed the section 2 lets, which required ministerial approval. That is the legal animal that we set up to address that kind of holding.
That answers my question nicely.
I want to clarify that I was not suggesting that all tenancies should include an absolute right to buy. I was referring to a particular part of the market—the secure tenancies. That would allow a progression through the market.
If one did that, one would remove the farm or holding in question from the tenanted sector, which would mean that the tenanted sector would shrink. We are trying to increase, rather than to decrease, the tenanted sector. Many of the problems arise because the compensation at waygo is not adequate, which means that people cannot retire and move on. That explains why an absolute right to buy is being considered. Tenants are not adequately compensated for the investment that they might have made in buildings. If we address that problem, we will remove many potential difficulties.
I do not see how that problem can be addressed, given the current balance of power.
I am sorry, but I do not understand your question.
The present legal situation is that a landowner must compensate for their investment a tenant who hands back their tenancy. Much of the value of an investment is agreed in a write-down proposal, which means that the value of the investment falls over a number of years. Therefore, by the time that the tenant gives up their tenancy, their investment has no value and they receive no compensation. How can we tackle that situation?
There is still a value to the landlord. If a building has been put up, it has a value, even if that value is written down. On gaining vacant possession, the landlord obtains something that he can sell, even though he has not invested in it; or, if the landlord takes on another tenant, for example, he can charge the new tenant rent, even though he could not have charged the existing tenant rent.
As the law stands, tenants should be compensated properly. The problem is that agreements are reached to stop that happening. We can legislate until we are blue in the face, but if landlords can dictate to tenants, tenants will agree to whatever agreement the landlord wants to progress their business. How do we change the balance of power to allow tenants to receive full compensation when they give up the tenancy and to say that they are not willing to write off investments that have been made over several years? At present, if the landowner does not agree, that is the end of the story.
I agree. Tenants should have power over what can be done. We believe that using the Scottish Land Court in dispute resolution will make the system cheaper and will provide a satisfactory figure more quickly and more easily. It can take a long time to get anything back through the current arbitration system. That issue is addressed in the bill.
The Agricultural Holdings (Scotland) Act 1991 was a consolidating measure that brought together the various elements of Scottish agricultural holdings legislation since 1949. Section 5 of the 1991 act, which deals with the relative responsibilities for fixed equipment of landlord and tenant, has a strange element that allows contracting out, which was generally prohibited by that act. That is where the post-lease agreement, which has been used to the detriment of tenants for many years, comes from.
As a lawyer, I dare say that lawyers get paid rather more for longer agreements.
When one buys a house, one gets a book of conditions.
There is much in the bill that makes us feel that we are moving in the right direction, such as the creation of LDTs and SLDTs and the provisions on the Scottish Land Court. I suspect that those provisions will not be the source of huge controversy, although the details might be discussed.
Page 6 of our submission states:
I am grateful for that. I thought that you were going to say that—I have read your submission. One problem with such a short evidence session is that we would like to ask many more questions on more topics. I hope that the previous witnesses will also give their views on those two points to help us in our deliberations.
I can pass the buck, as I am not a legal mind either. We must be clear that we are talking about a pre-emptive right. We support a pre-emptive right, but we do not support an absolute right. Even regarding sporting interests, we would be talking only about a pre-emptive right.
Technically, I suppose that someone could do that. However, the value of the farm would be reflected in whether they elected to take the sporting rights as well.
Landlords would receive rather less. If they were not giving away the sporting rights, they would not be compensated for them. As a farmer, do you think that the majority of tenant farmers do not want to stop shooting rights but manage to co-exist with the carrying out of sporting rights—shooting, fishing and so on?
I believe that there should be little difficulty in allowing the two to co-exist.
None of us on the committee would want gamekeepers to be impacted on by the bill. Therefore, we want to protect them and the ghillies in all scenarios in the bill.
No, I disagree. Three years is the correct term, as it gives a degree of flexibility on either side. Farming is a cyclical industry. Much more important than rental determination is the viability of a holding according to the purpose of let of the holding. That is what needs to be addressed. Until that is taken into consideration, rental determinations will continue to be a thorn in the flesh. We must consider what is viable, what a farm does, and what the economic return to that farm should be. Those must be the criteria on which rents are based.
Let us expand on that a little. I understand that you support the Scottish estates business group's proposal to establish a tenant farming forum. If such a forum were established, would it have a role to play in relation to the answer that you have just given?
The forum should exist to address the 1991 act and the anomalies within it, not simply to be a sounding board or advisory board for the minister. It must be constituted purely of landowners, landlords and tenants because they are the people who are directly involved. Such a board would help us to arrive at sensible rental determination criteria.
We would like those issues to be addressed in the bill, but we realise that they are complex. Bringing to bear the collective wisdom of a forum in time for the passage of the bill might be practically difficult. I do not know what other legislative opportunity there might be in the field of agricultural holdings in the near future, when the forum might have a longer time to deliberate.
Can the committee get some legal advice on the exact position regarding shooting rights on the farms if tenants purchase them? What can the tenant and other new landowner do or not do? I am a little confused about the legal position.
That is a fair point. We have heard some disparate views on that subject. I was going to mention the fact that we need to seek some definitive advice on the issue. I am happy to take that request on board.
John Kinnaird said that the NFUS was a broad church that represented all walks of life within the agriculture and farming industry. Roughly, what is the breakdown of membership between landowners, owner-occupiers and tenants?
That is a good question. We represent approximately 10,500 members who make up 70 per cent of farmers, crofters and growers in Scotland. Somewhere in excess of 25 per cent of NFUS members are tenant farmers. The other 75 per cent will be made up of a mixture of landowners and owner-occupiers.
So the majority of your members own land.
Yes. Predominantly, they are owner-occupiers.
Who are you representing here today?
We are representing the National Farmers Union of Scotland, which has consulted widely on the issue of tenancies.
If landowners make up the majority of your members, how can you claim to represent fairly the interests of the lesser group, which is made up of tenant farmers?
Because we are specifically considering tenancy issues and the majority of tenancy issues are considered by tenants in the NFUS. We have to be careful and state that, although tenants are an important part of the make-up of the NFUS and Scottish agriculture, they are a minority.
You will be aware that the Scottish Tenant Farmers Action Group has come out strongly in support of the absolute right to buy and has made that case quite substantially. Why are you not representing that case today, given that you are representing the NFUS?
That view is not held by the NFUS membership. We will therefore not support an absolute right to buy.
I hear Fergus Ewing asking how an absolute right to buy will be to the detriment of Scottish agriculture.
No one will let land in the fear that an absolute right to buy will be introduced. We must remember that many secure tenants do not want to or cannot afford to buy their holdings. Landlords invest in those holdings. They put up buildings and improve fences. Such tenants will be put at a severe disadvantage if an absolute right to buy is introduced. They will be socially excluded, as no landowner in their right mind would continue to invest in a holding that a tenant could say that they want to buy some day in the future. That is why we believe that the absolute right to buy could be detrimental to Scottish agriculture.
No one can turn up on a doorstep and say that they want to exercise the absolute right to buy if that right applies only to secure tenancies. The scenario that you are painting would not happen.
I share the fear that the right might be extended beyond secure tenants.
Opponents of a pre-emptive right to buy talk about the fear that there will be an absolute right to buy. Why do you not oppose a pre-emptive right to buy?
It has always been our policy that a pre-emptive right to buy is the way forward. A pre-emptive right to buy puts in statute what responsible landlords currently do. First and foremost, there must be a willing seller. With an absolute right to buy, there will not be a willing seller. There must be a willing seller and a willing buyer.
You said that you are an owner-occupier and that you have a tenancy. Which did you have first?
A tenancy. Both farms were tenanted farms.
How did you get the owner-occupation?
It came through the landlord's offering to sell the farm to the current sitting tenant—that is, it was the equivalent of a pre-emptive right to buy.
So you or your family were attracted to owner-occupation.
That is not the case. I am not considering my particular interest—I am simply saying what happened in our case. In many cases, land is sold and the sitting tenant does not get the right to buy. I cannot speak for my current landlord. We had two different landlords. Perhaps our current landlord on the estate on which I am a secure tenant will not give me such an opportunity, but my thoughts about an absolute right to buy will not change.
People vote with their feet. You or your family were given the opportunity to buy and you bought. What if a tenant farmer wishes to own, but the landowner does not put the land up for sale?
I do not see why a tenant should have the right to buy that land. If they are desperate to own a particular piece of land, they should go to the open market to buy it. I am not here to make business decisions for such people, but I believe that it is wrong that they can demand to buy the land on which they have been tenanted at any time. As I have said, addressing the matter of waygo compensation would solve many of those issues and would allow tenants to move on and buy land elsewhere, if they wished to do so.
I want to go to the heart of the matter, which is the future of the agricultural sector and the rural economy. The bill is about such matters—it is not just about tenancy options. The minister's preamble mentions land reform and the future of the rural economy. The wider debate must also be considered.
It can be measured only after the bill has been enacted—it would be impossible to measure it beforehand. We have heard from owners of large amounts of land and owner-occupiers that they can see the new style of tenancy as a major step forward, because it gives a degree of security to both tenants and landlords. That must improve relationships and allow them to grow.
Some 57 per cent of tenant farmers who are members of the NFUS support an absolute right to buy. The majority of tenant farmers who are members of your organisation support such a right. How do you know that demand in the farming community in Scotland, and among tenant farmers in particular, is not for owner-occupation, but for more tenancies?
You must look beyond the figures. We did not just ask a question and leave no room for comments.
Are you saying that you have evidence—and this is the justification of your position—that there is demand in rural Scotland for more new increased tenancies, not better existing tenancies, as opposed to more owner-occupation?
From what we have heard, there will be a demand and a willingness both to take land and to let land under the new-style tenancy. We have to forget about the old-style tenancy, because I do not think that anyone will let land under a secure tenancy again, although the option exists.
I want to clarify a point about the consultation process. I refer to your submission, which states that 57 per cent of fully secure tenants were in favour of an absolute right to buy. Although 57 per cent of that category of tenant support the absolute right to buy, you have expressed total opposition to it. Does not that mean that you have a slight conflict of interest in speaking here on behalf of the NFUS?
I disagree with that point and refer you to what I just said in response to Richard Lochhead's question. I talked about the comments that followed that part of the submission. The reasons that were given for seeking an absolute right to buy were the lack of legal compensation and rental determination and so on. That is why it is important to address those issues head on and I believe that that is the committee's job.
Indeed. I am grateful for the evidence that you gave earlier. I noted that you said that you had 10,500 members. Is that right?
Yes, approximately.
But only 2,500 people responded to the consultation exercise. I know that the electorate can be apathetic—we know all about that—but what happened to the missing 8,000?
Some did not respond. More than 2,500 people responded, but we had a clear cut-off date. Other responses were not included in the breakdown. It is quite incredible for most postal questionnaires to get even a 1 or 2 per cent response. The level of response that we got shows the interest that our membership has in this issue.
Perhaps the rest were filling in their integrated administration and control system forms.
Perhaps the rest were quite content with the status quo.
Much has been made of your survey—indeed, individuals and organisations have used its findings in various ways. Are you satisfied that others have interpreted and used your findings correctly?
The findings were evaluated independently outwith the office, so I am clear that the figures and percentages that are given are quite correct.
Are you satisfied that other agencies, organisations and individuals have interpreted them in the same way in which you have interpreted them?
People can often be selective about how they use figures. That is a fact of life. I believe that had we been sitting before the committee saying that we should have the pre-emptive right to buy, which has been NFUS policy for a considerable time, but that that view had been arrived at by 12 or 14 members of a committee, we would not have had great credence. We sent out questionnaires to our membership and 2,500 members took the time to respond. I would say that that gives our figures a lot of credence.
The committee's consultation on the bill has received only 29 responses.
The bill is more important than concentrating on the NFUS's consultation. The bill is important, not our consultation.
You mentioned a fear that the right to buy might be extended to the new tenancies. Does not an equal fear exist that an absolute right to buy might creep across the board, not only to secure tenancies, but even to the new tenancies, which would be in danger of not being implemented?
From talking to some of our members, I am sure that that fear is real, whether or not it is justified. That alone will probably prevent people from letting land. We must guard against that. We must make more tenanted land available. The new-style tenancies provide an opportunity to do that. The right to buy has diverted everyone's attention from the guts of the bill, which are what is important.
On that note, we will draw that part of our evidence session to a close. I thank you, like the previous panel, for appearing and answering our questions so ably.
My surname is pronounced "Jimieson", because I am Scottish.
I apologise for mispronouncing your name.
I am a secure tenant farmer from Dumfries. On my right is Angus McCall, who is a secure tenant farmer from Golspie, and on my left is Andrew Thin, who is a rural business consultant from Caithness and who helped to prepare our submission on the draft Agricultural Holdings (Scotland) Bill. Andrew Thin is also a member of the Crofters Commission board and of Scottish Natural Heritage's north area board.
Thank you for your brevity, Mr Jamieson.
In your written submission, you say that
The fundamental public interest argument relates to investment and people's willingness to invest. Time and again, in the consultation that we carried out with members and others when drawing up our submission and in responses to the Executive, tenants have pointed out that they feel that they are in a stalemate situation. For example, they cannot invest because of write-downs, about which we have heard a lot this afternoon. Moreover, they cannot invest because they are inhibited by counter-arrangements under which landowners still retain a lot of control.
You seem to be arguing that owning is good and renting is bad. The bill is meant to stimulate the tenanted sector. Indeed, Richard Lochhead has already quoted figures that show that the percentage of farms in the tenanted sector has fallen from just under 50 per cent in the 1960s and 1970s to 40 per cent in the 1980s to under 33 per cent now. You seem to be saying that we will get the social, economic and environmental benefits that you have mentioned only if everyone owns their farms and the tenanted sector ceases to exist. Am I misinterpreting you?
Yes. We are in no sense saying that owning is good and renting is bad. However, we are saying that the current arrangements for secure tenancy are bad.
That fundamental issue overrides the general liberal principle in a liberal democracy that private ownership should move from one set of private hands to another by choice.
Yes. We are well aware of the point of principle, which earlier speakers alluded to, but we believe that the public interest argument is overwhelming. The converse of not introducing the absolute right to buy is that there will be a significant loss to the rural economy. Our interpretation is not that the bill is all about the tenancy sector per se; our interpretation is that the bill is about contributing to rural development.
We feel that, if the absolute right to buy is introduced, there will to some extent be a contraction in the tenanted sector. I do not think that we have a problem with that and I do not believe that there would be a major contraction, because I do not think that the absolute right to buy would be taken up by 100 per cent of tenants. To be fair, we do not know what the figures are—they should be established—but if the percentage of tenant farmers is 30 per cent, we believe that the absolute right to buy would be taken up by only a small percentage of them, so we may see a reduction in the sector from 30 per cent to 25 per cent. However, we would have a much more vibrant tenanted sector, because the 25 per cent who remained as tenants would be considerably more vibrant than the 30 per cent that we have at the moment. That goes back to what Rhoda Grant said about a change in the balance of power, which would be the significant factor in stimulating the tenanted sector.
You seem to be saying that in your estimation—and I am not sure how you arrived at it—about 5 per cent of farms in Scotland would be affected.
Yes.
Do you think that it is worth overriding the fundamental principle of private ownership to affect 5 per cent of farms in Scotland?
The change would not affect 5 per cent; it would affect 30 per cent of the farms in Scotland. I was trying to make it clear—perhaps I did not—that the absolute right to buy would be used by 5 per cent, but that the introduction of such a right would have implications beyond those who took it up. The introduction of the right to buy would have implications for all secure tenancies. The negotiating relationship between landowner and tenant would be affected by the introduction of the right.
I will tell you what is behind my question. In the NFUS survey, 57 per cent of secure tenants said that they would like to have the right to buy. It is obviously in individuals' self-interest to have that option to buy, but if we are going to override a fundamental principle and have the state force an individual to transfer property to another individual, there must be a real, specific and measurable public interest. I can see why we have compulsory purchase for the building of new roads or public utilities. Andrew Thin talked about social and environmental issues, but I cannot put my finger on the public interest in introducing the right.
The public interest is difficult to quantify, for many of the reasons that were stated earlier with regard to whether one can quantify the effect on the letting market, but we can look at large areas where tenanted farms have been sold to the tenants. Orkney is a good example. Orkney was, more or less, one estate. The farms were sold to the tenants a good many decades ago and Orkney is now probably one of the most dynamic rural economies with which I deal. We can also consider international examples, such as what has happened to the Irish rural economy. It is well over a century since that changed. We can also look at Denmark. There are parallels.
It is refreshing to see tenant farmers come before MSPs in a public forum, because I know that many tenant farmers are loth to speak out for fear of recrimination from their landlords. If I visit a tenant farmer in Aberdeenshire, they do not want me to tell the landlord that I have been there. If I visit the landlord, they do not give a damn whom I tell. That suggests an imbalance in the power relationship. Do you believe that, as it stands at the moment, the bill will eliminate that atmosphere?
I think that the bill will go a long way towards helping tenants to feel more relaxed about their relationship with their landlords. Part of the problem that the action group has faced is getting information from tenants. As you rightly say, tenants are loth to speak out. Many members of the NFUS did not respond to the survey because they had to put their names on the response. In effect, that prevented quite a few people from responding. We find that a lot of people will privately express their doubts and fears but will not do so publicly.
I am not sure that what Richard Lochhead suggests is true of the bill in its current form. There will need to be amendments of detail, such as on rental determination. We and the NFUS have suggested that rental determination should be based more on economic viability. That is vital because the economics of farming vary much more now than they ever did before. The ups and downs are much more irregular than they used to be. In general, the bill will give tenants more confidence, but amendments of detail require to be made.
What is the sector's experience of rental determination?
Rental determination has been far too closely geared to open-market values. Farming profitability probably varies much more than it did 10, 20 or 30 years ago.
My final question concerns some issues that we heard about earlier on the pre-emptive and absolute rights to buy. The possibility that tenancies could dry up if there were a right to buy has caused concern. It would be particularly worrying if the right to buy prevented new entrants to farming from getting a tenancy and young farmers from stepping on to the ladder. What is your response to those points?
First, the proposal for any right to buy has always been for secure tenants only. By their nature, secure tenancies do not break unless tenants voluntarily decide to give them up, so such land is not currently available for let. We would argue that, if the plug is taken out of the tenanted bath and the sector is allowed to move on, there should be a two-way ticket. The landlord might want to buy the tenant out. There is room for negotiation on both sides. A right to buy would not necessarily stop land being let. In the long term, it might even create more land available for let.
We should turn that question on its head and ask what will happen to the land: if the owner is not going to let it, what will they do with it? The notion that estates will suddenly take all the farms in hand seems improbable. There are two reasons for that. First, a lot of working capital is invested in land and a lot of expertise is used—the tenant invests a lot of capital and expertise. If the estates are to fill the gap, where will the capital come from? Will they suddenly employ an army of farm managers? If so, there will be many opportunities for new entrants in farm management, which is the best way for new entrants. Secondly, one has to consider the change in direction of agricultural policy and support across Europe. The thrust of that change is towards targeting support at smaller units. The notion that estates will take the units in hand, amalgamate and become bigger while support policy is moving in the opposite direction seems improbable.
Although you specifically asked about the right to buy, other aspects of the bill will encourage new entrants. I am thinking particularly of proper compensation arrangements at the end of a tenancy. At the moment, much of the stagnation in the tenanted sector is due to senior tenants not moving out. They do not move out because they cannot afford to do so. Not only is the farm their business, it is also their home. Many have come through difficult times and are faced with the possibility of redeeming only their capital, which has been devastated by falling stock values, and then moving out and buying a new home. Often, they cannot afford that, so they sit in the farm, because even if the business is not going that well, at least they have somewhere to live.
Let me put to you some of the arguments that we have heard against an absolute right to buy. The first is the thin-end-of-the-wedge argument. Are you arguing that the absolute right to buy should apply only to fully secure tenants?
Yes.
You are specifically not calling for the right to be extended to tenants under the new limited duration format.
That is right.
It is important to remember that very few secure tenancies have been let over the past 20-odd years. Those tenancies represent a significant investment on the part of the tenant in most cases. I do not think that an extension of a right to buy to a short-term business arrangement made between two individuals could be considered.
I know of nobody who is suggesting that the right to buy should be extended to short-lease tenants. Nobody is suggesting that it should be extended to tenants under the LDT format. Is that your position, as representatives of the action group? You may wish to reassure some of the earlier witnesses on that.
We propose that valuation methods should be the same. However, it has been suggested that, in order to comply with the European convention on human rights, it may be necessary to consider some other valuation point. There may be some sense in having minor differences between the two different rights—a pre-emptive right and an absolute right. Until we have clear legal advice on that, however, it is difficult for us to have a clear position on it.
I understand some of the technical issues. I hope that the committee might examine those matters and obtain advice on them.
We have no problem with that suggestion. There is a legal problem, however. As an earlier witness explained, sporting rights are currently tied up as heritable property.
Some people argue for a pre-emptive right to buy, saying that an absolute right to buy would be anathema. Other people question why those who support a pre-emptive right to buy are against an absolute right to buy. If some tenants have the right to purchase, why should not all tenants—in most cases, fully secure tenants, who have put in a lifetime of investment—have the right to buy? Do you have a sense of how many tenants would benefit from a pre-emptive right to buy? We might pass a bill to create a pre-emptive right to buy, but find that very few tenants will ever enjoy that right, because it is unlikely that the land will be put on the market. Is that how you see the issue?
I am not part of the profession and I do not have figures to hand, but my feeling is that very few tenanted farms are sold. Most of the large estates are tied up in trusts and would not come on the market anyway.
You mentioned that it is important to clarify that landed estates whose ownership is held in the vehicle of a trust that can be passed on to various beneficiaries will probably not come on the market. Am I right to conclude that the bill is irrelevant for those particular landed estates, because they will not come on the market?
My understanding is that the triggers for a pre-emptive right to buy will follow closely the triggers for community rights and will exclude trusts and companies.
Andy Wightman could give much more detail, but I will quote quickly a figure that we give in our statistics. Twenty-five per cent of estates of more than 1,000 acres have been owned by the same families for more than 400 years, which cuts out a lot of people from the right to buy.
There has been a gradual diminution of the tenanted sector during the past century. At the beginning of the 20th century, around 70 per cent of farms were tenanted; now the figure is 30 per cent. That situation of decline stopped about 20 years ago. There have been small movements since then, but no gradual decline. My impression is that that is partly, but not solely, because of the evolution of trusts, whereby large or valuable estates are no longer liable to substantial inheritance tax. The issue goes back to aspirations for ownership. Throughout the 20th century, there was a continual aspiration for ownership, but it dried up. If we went back to the 1940s, 1950s and 1960s, we would probably find that a good number of estates were in the habit of moving farms into ownership or away from tenancies to settle inheritance tax bills.
Members have information from the Scottish Parliament information centre, which contains startling figures. Despite what Stewart Jamieson has just said, the tenanted land sector has shown a dramatic drop over the past 20 years, from 41.9 per cent to 31.5 per cent.
First, I will respond to Mr Rumbles's points, then we will come to Stewart Jamieson.
It would be worth while to hear from the SGA. I have severe difficulty in believing that the figures that Mr Rumbles quoted are correct. I have read the document. The figure of around 40 per cent is 12,000 and the figure of around 30 per cent is 9,000; 100 per cent of those figures works out at around 26,000. I have severe difficulty in believing that if there were 26,000 farmers in Scotland 20 years ago, there are still 26,000 farmers today. I wonder whether someone could check the figures.
They were produced independently by the Scottish Parliament for the benefit of members of the committee.
Unfortunately, they were obtained by personal communication. The figures are vital and I do not consider a personal communication to be an appropriate vehicle for handling figures of such importance.
I am sorry, but I do not quite understand what you mean.
The document gives the source of the figures as being a personal communication.
The information that we have is that the source was the Scottish Executive.
We have been told that having proper compensation available would mean that we would not need to have an absolute right to buy, as the balance of power between landlords and tenants would be changed sufficiently to allow tenants to move on and to ensure that land was in circulation. Do the witnesses agree with that? If not, what would there have to be in addition to compensation to ensure that the balance of power was changed?
As we have heard, statutory compensation is limited, mainly because of write-downs and the fact that a value cannot be put on the stewardship of a holding over a period of years. If the issues of proper compensation at waygo and the value of the heritable tenancy were tackled, that would enable market forces to have an impact on the right to buy. Over and over again, we have heard the assertion that a tenanted farm is worth half of an owner-occupied farm, which I do not believe. We believe that the value of a tenanted farm has to reflect a balance between the input of the landlord and of the tenant.
There is a strong public interest aspect to encouraging investment. Rural regeneration and repopulation demand investment. That investment is not happening partly because of problems in the tenanted sector. Ownership produces confidence to invest, which is the issue on which I totally agree with Mr Balfour. A good landlord has nothing to fear and has the confidence to invest in the land. That is what the general population should demand of our landlords. However, far too many landlords are not fulfilling that obligation, which has been there since 1949, when the legislation came into effect. Since then, the economic situation has changed and, because of that, we cannot attribute blame solely to the landlord. Investing in a landlord's capital would give a poor rate of return. The situation cannot continue. If there is no investment, dilapidation will continue. How will we ensure that there is investment in the rural infrastructure? Giving people ownership would give them the confidence that they need to invest in the land.
Proper compensation arrangements would make a difference and would remove a significant part of the problem, which is that people will not invest as they are not investing on the same basis as everybody else.
You talked about landlords not investing and tenants needing the confidence to make that investment themselves. If the tenant does not have ownership of the farm, what collateral does he use to raise money to invest in the farm?
At present, the only collateral that a tenant has is his livestock. No bank manager would invest in a depreciating asset such as a building, which might not be able to be realised at any time. Finding the collateral to substantiate an investment is a big problem.
I would like to ask Stewart Jamieson about something that he said earlier, which has been quoted a lot today: that a good landlord has nothing to fear. If you were a good landlord, how would you feel about an absolute right to buy?
If an absolute right to buy were introduced, it would be there as part of the legislation. You can never be 100 per cent sure of anybody's feelings in a business relationship; you can only go on what you think are reasonable roles. If you know your tenants well enough and get a feel for them, you will know which ones aspire to be owners and which have no such aspirations. If you are willing to invest and show confidence in your farm, that sort of business partnership could persist.
Mike Rumbles's original point was about the evidence that exists on the public interest in a right to buy. I return to that point because, like him, I am not persuaded by what I have read. I am worried about the evidence for a couple of your statements, one of which is in paragraph 6.5 of your submission. It states:
One of the big problems with the whole debate is that there is no hard evidence for an awful lot of the views that are held. That is a grave difficulty. We have to look in a qualitative way at what has happened in different parts of the country and of the world where such changes have occurred, and examine the consequences. It is extremely qualitative, not quantitative. In so far as qualitative evidence is hard evidence, there is good evidence from a number of parts of Scotland, where farms have shifted from tenancy to owner-occupation. You can see what has happened on those farms. There is significant evidence that many of the new owner-occupiers have proceeded to invest quite heavily in environmental improvements, partly because they have greater freedom to do so because they are not constrained, and partly because of the psychological relationship that they now have with the place.
The bill will allow tenants to diversify considerably in terms of environmental input. I trust that we would all welcome that addition. I presume that you are not against that.
I do not disagree with that. That is why I said that the cause was partly the constraints and partly the psychological change.
You said in response to the convener's question that there is no hard evidence. I wrote that down. You are saying that subjective opinion is being given. You also say that we should consider the ownership transfers that have taken place. Will you provide the committee with the evidence? I am searching for it and have not seen it. We are after evidence.
I use the expression "hard evidence" to mean quantitative evidence. I distinguish qualitative evidence from subjective opinion. Rather more than subjective opinion exists—there is much qualitative evidence. We can provide the committee with several examples of such evidence and of individuals who have moved from tenancy to owner-occupation. However, that is not a matter for me.
I will comment on what may be a parallel. This is not a direct comment on farming but it is about environmental degradation, which has happened in my part of the world—Dumfries—and on the estate that I tenant on. On our estate, many private properties that have been left empty and untenanted have become dilapidated over years, which has produced environmental degradation, according to my definition of it. I am not sure why the properties could not be let. I guess that some have been unoccupied for between five and 20 years.
That is exactly the evidence that I would like to be produced formally.
I only talk to agricultural advisers who make such comments. I could not say that there are five farms in Dumfries-shire to which I could take you at this moment, although I would be happy to do that.
I am trying to get away from opinion. What are the facts?
I was going to say this in my winding-up, but I will say it now. I do not want to enter into a debate by letter, but if, having heard other people, any witness wishes to present factual evidence that we have not drawn out, they should feel free to write to the clerks to the committee, who will circulate the evidence to members.
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