Agricultural Holdings
The next item of business is a statement by Ross Finnie on the agricultural holdings white paper. The minister will take questions at the end of the statement. There should, therefore, be no interventions.
One or two members might have attended the question time that was held in Glasgow with the First Minister and the Deputy First Minister. Among the many and several questions that were asked were three on general agricultural matters, four on agrimonetary compensation and one on modulation. That surprised not only the members of the press who were present, but the First Minister and the Deputy First Minister. Given Glasgow's obvious interest in agriculture, it is highly appropriate that we should discuss agricultural holdings on the first morning that Parliament meets in Glasgow.
I am pleased to announce the publication today of the white paper on agricultural holdings, copies of which have been lodged with the Scottish Parliament information centre. The paper sets out my proposals for legislation to reform the present outdated agricultural holdings legislation.
The paper represents the first stage in the delivery of another major element of the Scottish Executive's land reform programme. In the long term, that element might be the part of our land reform agenda that has the greatest impact on rural land management. I expect that the measures that are outlined in the paper will command widespread support throughout the farming industry. The changes that are proposed will benefit landowners but will also particularly benefit farm tenants and, consequently, I hope that they will be welcomed by both sides.
The proposals have been developed from the work of the land reform policy group and take full account of the extensive consultations on land reform that have taken place. It is clear that there is a fair measure of consensus on the need for changes to the current agricultural holdings legislation. That legislation, which reflects the circumstances of the immediate post-war era, is badly in need of modernisation.
We consulted widely during the past year with the wide range of bodies and individuals who participated in the landlord and tenant consultation panel. That panel has proved an invaluable means of drawing on external expertise to explore the matter further.
The proposals also include the outcome of a special reference to the Scottish Law Commission on changes to disputes resolution. The recommendations are more radical than was envisaged, but the Executive is convinced that the commission has identified the right way forward.
I now refer to the white paper. There are three principal aspects of the proposed new legislation. First, there will be more scope for diversity of tenancy arrangements. The current legislation provides great security of tenure for existing tenants, but that has led to a situation in which landlords have been reluctant to let land. When they have let land, landlords have, increasingly, been prepared to do so only on the basis of a tenancy involving a limited partnership in which the landlord is a partner. That enables a landlord to terminate a tenancy at will, simply by dissolving the partnership—which gives no security to the tenant.
Before I outline the proposals, I stress that the new tenancy arrangements will not affect traditional tenancies. Where a tenancy exists, the tenant should be under no compulsion to change the tenancy arrangements. Undermining the tenure of existing tenants is not part of the Executive's plans for reform. We believe that traditional tenancies should continue to be an option in the future, and we do not want to remove that option.
We propose that a new limited-duration tenancy should be made available, but that legislation should not set a minimum term. The white paper suggests that the term should be agreed by the parties and the tenancy should be extendable beyond the originally agreed period if both parties agree. In all other respects, however, the provisions should reflect those that apply to existing agricultural tenancies. The objective is to encourage landlords to offer land for let in the knowledge that it will revert to them at the end of a fixed period agreed with the tenant.
Let me make it absolutely clear that the legislation must not merely encourage a more diverse range of tenancy; it must encourage a situation in which tenancy agreements actively promote investment in the land by tenants. If the evidence produced during the consultation period shows that landlords would want to use that section merely to offer year-on-year tenancies, I will have to look again at the proposals in the legislation about setting a minimum period. Just as importantly, if the discussions that have gone on for many years between the National Farmers Union of Scotland and the Scottish Landowners Federation reach a conclusion that meets the point that I have just made about obviating the question of annual tenancies that do not encourage good husbandry of the land, I will be minded to accept their proposals at the conclusion of the consultation period.
With the creation of limited-duration tenancies, we also propose that limited partnerships should be debarred as new tenants. However, that proposal cannot be retrospective, as we do not wish to disrupt existing tenancies in which the tenant is a limited partnership. At present, a landowner cannot safely let agricultural land other than for grazing or mowing for a period of less than a year without the consent of Scottish ministers. If he does, there is a serious risk that the tenant will claim that the let constitutes a full agricultural tenancy.
That requirement was introduced in 1949 to close what was seen as a loophole in previous legislation. However, circumstances have changed and the need for approval is out of step with the unfettered freedom of short-term letting. We have consulted on the issue and we therefore propose that current restrictions on lettings for periods of less than a year should be abolished. Taken together, those measures ought to create wider tenure choices for both tenants and landlords.
The second important thrust of the proposed legislation is the range of new opportunities that it provides for diversification. Diversification is crucial if agriculture is to adapt successfully for the future. The present legislation is founded on a post-war need to maximise food production and it fails to allow tenants to diversify into other economic activities should they so wish. It also fails to take account of the increasing public interest in protecting and enhancing the environment, and in environmentally friendly farming activity.
Existing farm leases usually deal with agricultural use, rather narrowly defined so that diversification could constitute a breach of tenancy. In practice, there is usually some flexibility, but the statutory bar is nevertheless a real constraint for many tenants. New legislation would therefore introduce a provision into new and existing statutory leases to permit diversification, and should incorporate suitable constraints to ensure that the nature of the holding is not fundamentally changed. There must also be scope for appeals by the landlord on the ground that his interests would be materially prejudiced.
The legislation should also deal with compensation at waygo, by providing for that to be determined by the Scottish Land Court on application of either party if the landlord and tenant cannot reach agreement. It is intended that the change should apply to new and existing secure tenancies and to the proposed new limited-duration tenancies.
Planting trees should also become a permitted development in new and existing statutory leases, subject to a similar caveat about changes that fundamentally alter the nature of the holding. Again, there must be scope for appeal by the landlord on the ground that his interests would be materially prejudiced and there must be provision for that appeal to go to the Scottish Land Court. New and existing leases should also allow conservation management, again with scope for appeal to the Scottish Land Court.
The third major element of the proposed legislation is simpler and cheaper disputes resolution. There is widespread dissatisfaction on all sides of the tenanted sector of agriculture with the existing systems of dispute resolution under the agricultural holdings legislation. We asked the Scottish Law Commission to suggest changes. As many members will be aware, its chairman, Lord Gill, is of course a noted expert in this field. The Scottish Law Commission's analysis, which is also available today, shows that the jurisdictions are needlessly complex and should be reformed; that there is a significant mismatch between what is provided and what is needed; that the system results in frustrating delay; and that it is needlessly expensive. Copies of the report are available from SPICe.
The Scottish Law Commission's solution, which I endorse, is to simplify the jurisdiction and to look in future to the Scottish Land Court as the single court of virtually universal jurisdiction on agricultural holdings cases. That means abolishing the existing system of compulsory arbitration. However, I stress that the parties would still be able, in all but those cases that are already excluded from it, to choose to have their disputes resolved by arbitration.
That solution would also mean abolition of the related jurisdictions of the sheriffs. In place of a multiplicity of appellate and supervisory jurisdictions, the system would be based in every case on a two-stage procedure, consisting of a first-instance decision and only one opportunity of appeal. I believe that that will result in justice that is better, quicker and cheaper.
There are also a number of minor measures. In some respects, the balance is unfairly tilted in favour of landlords, and we intend to redress that balance. The consent of the Scottish Land Court should be required for resumption of land by the landlord for a purpose that does not require planning permission. The present legislation specifies when the Scottish Land Court can consent to a notice to quit. It also provides that the court can nevertheless refuse that consent if it considers that a fair and reasonable landlord would not insist on possession. It is proposed that that test of the landlord's action should be modernised and widened to reflect the broader public interest.
Time limits for tenant rights to compensation for game damage should be changed and tenants who have land taken from them for mineral development should have the right to regain that land after mineral extraction and land restoration are completed.
Taken as a whole, the changes will free up both landowners and tenants from constraints that now hold them back. Radical changes are included in the package. The limited-duration tenancy arrangements offer a realistic and fairer alternative to the practice of using limited partnerships as the basis for new tenancies. I have set out my serious caveats and the requirement for those to be met before we move to legislation.
The measures on diversification, tree planting and conservation management will allow tenants to take full advantage of recent changes in the way in which agricultural support is delivered. The proposals for dispute resolution should do much to eliminate the problems of high cost and long delay, which caused so much concern under the present system, and the measures to strengthen the position of tenants deal with real problems in the present legal framework.
The new legislation will modify the framework for farming, from one that might have been right for the mid-20th century to one that I believe will be right for the 21st century. In short, it will make a crucial difference to securing the developments that will benefit a modern rural Scotland.
I remind members that a limited supply of copies of the white paper announced by the minister will, as he said, be available in the SPICe office, which is on the ground floor of house 3.
The minister will now take questions on the issues raised in the statement. I will allow 20 minutes for questions.
I thank the minister for giving us a copy of his statement in advance. The SNP would like to welcome it as far as it goes. I also welcome the minister's additional comments in relation to short-term tenancies and his willingness to review those proposals.
There are many useful proposals in the document, but the devil will be in the detail, not just of the document once we have read it, but of the legislation that flows from it. We are disappointed that there was not more exploration, throughout the process, of moves in the direction of the right to buy for tenants. I understand the argument that that would dry up the supply of land for rent, but it remains an issue in many parts of Scotland.
The minister said that many of the effects of the legislation would be long term, but many tenant farmers now face the problem that the value of their stock—which is virtually their only asset, apart from their equipment—is either low or zero. How will the minister address that? Will he revisit the option of an early retirement scheme?
I am grateful to Alasdair Morgan for his general welcome for the thrust of my remarks. I am glad that he picked up on the point that I added about short-term tenancies, which was missing from the original statement.
I think that the member has answered his own question about the tenant's right to buy. We are trying to move towards a situation of greater diversity, in which more leases will be offered. Neither the consultative group that existed before we took office nor that which was set up afterwards proved that instituting a tenant's right to buy would do anything other than dry up a limited supply. We were not persuaded that that was consistent with our aim of getting new tenants.
An early retirement scheme will not form part of the agricultural holdings legislation. Alasdair Morgan did well to work that in, notwithstanding the fact that there are some 400 pages of the Scottish Law Commission's report and 32 pages of the white paper for us to discuss. I am still consulting on such a scheme in relation to the rural development regulation. Although I can see its merits clearly, the costs of producing a scheme, given the present framework, are considerable. However, we will return to the matter when the consultation period on the rural development regulation is over, as it is one of the accompanying measures that are set out in that regulation.
I am a partner in two partnership tenancies and a landlord in a traditional tenancy, so I have a foot in both camps.
It might surprise some members, but the Conservatives broadly welcome the proposals. For some time, we have been calling for flexibility in letting land. However, we have one or two small reservations. We believe that a limited tenancy might discourage tenants and landlords from putting the necessary capital into the let land, which we would not want to happen. I also draw the minister's attention to a grey area that exists in relation to limited tenancy partnerships. After an initial period, those are often renewable on an annual basis. Would a renewal of that sort constitute a new lease, which would bring the partnership concerned under the terms of the proposed legislation?
We broadly welcome what was said about diversification. However, if tenants diversify too much, or are able to do so, that has the potential to change the basic character of the land and to dry up the amount of land available for lease, which none of us would welcome.
The Conservative party welcomes any measure to simplify and cut the costs of the dispute resolution procedure, in the few instances that it is required. However, will the minister clarify his statement:
"It is proposed that that test of the landlord's action should be modernised and widened to reflect the broader public interest"?
What does that mean?
I welcome Alex Fergusson's broad agreement that the measures that I have announced are necessary. That might come easily for him, given that he has a foot in both camps.
I made it clear that any changes made by the legislation would not be retrospective. It is my intention that if a new lease is entered into after the legislation has come into force, it should not be possible for the landlord to be a partner—perhaps a limited, rather than a general partner—in that lease.
Alex Fergusson expressed concern that diversification might materially affect the nature of a holding. The white paper addresses that issue. There must be much greater scope for diversification than is provided, rather narrowly, in the Agricultural Holdings (Scotland) Act 1991. I am proposing that that should be extended, but that there ought also to be a right of appeal in circumstances where, on the basis of the facts, the conclusion would be drawn that a proposal materially altered the nature of the holding. The devil, as has been said, is in the detail, but provisions will be made when we come to the draft bill.
The extension would be simply to recognise the fact that there might be a wider public interest in the matter. We hope that all matters will be referred to the Scottish Land Court, and that that will eliminate any frivolous appeals. If someone goes to an appeal court where the chair has the status of a High Court judge, they might not want to exercise a public interest in a way that the legislation did not intend that they should.
We will now have questions—and shorter ones at that.
It is a pleasure to be back in Strathclyde House. During my time as a councillor, I was never allowed to speak in this chamber, so I am pleased to be speaking now.
I have not been provided with a copy of the minister's statement, and I have only just located the SPICe office, so I do not have a copy of the report.
I would like to ask about a problem of a constituent of mine. The constituent and his family have been tenant farmers for some time. The terms of the agreement that they have with their landlord have left them in a position where they may be liable to pay for the removal of outbuildings with asbestos that were erected on the land by the landlord. I wondered whether the regulations that the minister has in mind will provide adequate protection for tenant farmers in such a situation.
I am grateful that Elaine Murray did not attempt to make up for her lifetime of silence in this chamber.
I am bound to say that Elaine Murray's question demonstrates that she did not read my statement and that she does not have the white paper in her possession. I can understand that her constituent is in difficulty, but the matter would be better dealt with by correspondence on what seems to be a special problem, but one that is not related to the reform of the legislation on agricultural holdings.
These radical reforms are very welcome; the Executive is delivering for rural Scotland. Will the minister confirm that getting rid of the limited partnership get-out clause will redress the balance between tenant farmer and landlord and that, taken together with the freeing up of tenancies, the new and flexible limited-duration tenancy will be welcomed by tenants and landlords in farming communities throughout Scotland?
I am grateful to Mike Rumbles for that question because it allows me to emphasise a particular point. The elimination of a practice that has been around for more than a quarter of a century—that of imposing a limited partnership on an agricultural lease for the purpose of removing the security that is available under the 1991 act—will be widely welcomed.
I go back to the point that I made in my statement. If all that the mechanism for a new limited-duration tenancy resulted in were year-to-year tenancies, that would not be satisfactory. That is why I am keen to hear the responses that result from the consultation process and, perhaps more important, to learn whether the Scottish Landowners Federation and the National Farmers Union of Scotland have reached any agreement on what a minimum-term duration might be.
I will try to make my question a little more challenging than the one asked by Mike Rumbles.
I, too, welcome the minister's statement and some of the proposals therein. My question relates to the input of tenant farmers to the consultation process. As the minister will be aware, tenant farmers are often reluctant to express their views, because they are concerned that their landowners might not take too kindly to them speaking out. The 1998 document of the land reform policy group at the then Scottish Office—"Identifying the Solutions"—says on page 6 that
"a notable proportion of tenant farmers asked for their views to remain confidential".
To what extent did the minister take that reluctance into account during the consultation process, to ensure that tenant farmers had full input? What mechanisms will he introduce to ensure that tenant farmers play a full role in the debate on the future of Scottish agriculture and rural Scotland?
I would not want to disappoint Richard Lochhead by judging whether he had been more challenging than Mike Rumbles, but it was a good question.
Tenant farmers were consulted, as is clear from the document that Richard Lochhead mentioned. In my visits to farms in Scotland, I have specifically asked to visit different types of tenancies. I have visited constituencies in the south-west. If only I had gone to Alex Fergusson's, I could have saved half my journeys by visiting both a limited partnership and a long-term tenancy.
People's views are taken into account. The move towards a shorter and shorter tenancy, and the use of the device of the limited partnership, have been of concern. Some tenancies run on for a long period, but the threat of the partnership being dissolved without notice hangs over people and means that they have no real security of tenure.
We have put our proposals in the white paper and those proposals will be consulted on until August. We will make every effort to ensure that, in the discussions that we have in the department and with farmers and farmers unions, the proposals are discussed and understood. If we can assist in increasing understanding of the proposals, I assure members that we will do so.
If the legislation is to be reformed radically, we must get it right. Richard Lochhead, as a member of the Rural Affairs Committee, will play a role in that work, as will I. We do not have a reforming or upper chamber, and the Parliament operates on the basis that we must get legislation right first time.
The reforms seem to me to strengthen the general position of tenant farmers, and I welcome them as part of the wider land reform programme.
What guidance does the minister intend to issue on what the changes to the legislation will mean for tenant farmers with existing tenancies, which will be affected by the change in the law, who wish to take up farm forestry and European Union agri-environment schemes? Will the same rules apply to those who take up the new type of tenancy that he announced today?
I will take Lewis Macdonald's last point first. The white paper proposes to broaden the definition of agriculture under the 1991 act, to permit greater woodland and agri-environmental development. Those proposals should be retrospective and, by definition, they will affect all new tenancies.
On communicating that information, there will be an initial process of ensuring that we engage a wide group of tenant farmers in the consultation period on the white paper, as Richard Lochhead pointed out. Once the legislation is in place, we will discuss with the NFU how best to publicise the broader access to those schemes that will be available to tenant farmers. They will not have to be concerned that embarking on such schemes will take them outwith the definition of agriculture in the 1991 act, which would have put at risk the substance of their leases.
I declare an interest. I am a tenant farmer and, in my previous life, I led the negotiations on behalf of the NFU with the SLF on attempts to reach agreement on the minimum length of tenancy.
I welcome today's announcement, which represents a significant shift in power from the landlord to the tenant.
Ask a question, please, Mr Lyon.
Will the minister confirm that he has definitely not ruled out the need for a minimum-term tenancy, which is fundamental to the review process and to the announcements made today? Without a minimum-term tenancy, the proposals could be flawed.
I am grateful to George Lyon for his support.
We are revolving round the crux of the issue. George Lyon will agree that there has been serious dispute and disagreement about a minimum-term tenancy over the years. I make it absolutely clear that in the white paper I am proposing a framework that offers the prospect of a minimum-duration tenancy.
In the absence of agreement between the NFU and the SLF—and indeed in the absence of anyone telling me what to do—the danger would have been to set such a duration at 20 years, which might have excluded the prospect of tenancies if disagreement remained, or even at three or five years, which might disappoint everyone else because the term is too fixed.
My proposal is framed in order to engender a serious and genuine discussion. I want to make it absolutely clear that it would not be in the best interests of Scottish farming or good husbandry for landlords to be able to use this as an excuse for year-on-year tenancies. As a result, I want to consult on that point, which I hope will allow us to have a specified minimum term by consultation and through agreement with the respective parties.
I call Irene McGugan and then Robin Harper.
The initial document recommended that existing provision should be amended to permit part-time operation. However, I understand that the minister now believes that it is not necessary to amend the 1991 act and that part-time tenant farming is no longer an issue. Will he care to explain that change of heart and tell us how confident he is that the white paper's provisions adequately address issues of part-time tenant farming?
Ross Harper. I am terribly sorry—I mean Ross Finnie. [Laughter.] Glasgow is clearly getting to me.
If I could address the green issue of part-time farming—[Laughter.] Seriously, the difficulty with the issue of part-time farming centred on whether the fact that a person was only in part-time occupation gave rise to the suggestion that, under the terms of their lease, that person was not conducting the good husbandry of that estate, which further gave rise to the question of at what point irritancy might be acted upon.
After further consultation, we have decided that a whole range of people engage in part-time farming, and by and large the majority look after their estate when they do so. If that is the case, do we need to do anything legally to protect those people? They are vulnerable to prosecution only if they do not look after their estate and therefore give rise to irritancy under the terms of their leases. Therefore, although the issue was raised in the initial consultation, a close examination of the facts showed that it was not necessary to enshrine in law any particular measure to deal with that situation.
First, I welcome the possible extensions to improvements in the farming environment in Scotland, and hope that such improvements will be extended to organic conversion.
As for the minister's statement, more members of young farmers clubs are currently not farming than are farming. Will the changes materially assist young people to get into farming in Scotland, as that is the real crisis in farming just now?
Through the Presiding Officer, I thank Mr Harper for his question.
The answer is yes, because we have to change fundamentally the holdings legislation. That said, we must not give up the range of protections that have been available in Scottish law since 1883—we should not throw that baby out with the bath water. However, as Alex Fergusson and Alasdair Morgan pointed out, if we achieve greater flexibility, people will have greater motivation to seek such leases and come into farming.
That concludes questions on the agricultural holdings white paper.
Meeting suspended until 14:30.
On resuming—
Before we begin this afternoon's session, I am sure that members will wish to welcome the President and the Clerk of the Catalan Parliament, who have flown from Barcelona to be with us today. They are very welcome.
I ask members to be sympathetic to the acoustics in the chamber. The kind of conversation between members that is acceptable in our own chamber does not work here. The background noise makes it difficult to hear. I ask members to restrain conversations in the chamber.