The next item of business is another statement, this time by Richard Lochhead, on the agricultural holdings legislation review group report. The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions.
14:55
As we all know, we need vibrant agriculture in Scotland to support our rural economy, put food on our tables and deliver a range of benefits for society. We are a lucky nation, in that we have the land to ensure food security and we have men and women with the skills to work our land. Many of them have rented the land to grow food and deliver those other benefits and, of course, we have landlords who are willing to let out land for those purposes.
Tenant farming continues to play a vital role in our country. Generations of tenant farmers, often representing the same family on the same land, have worked hard and contributed to our country’s success. Scotland’s total agricultural area represents 79 per cent of Scotland, and tenanted land makes up around a quarter of that, making it a crucial part of Scottish agriculture.
Tenant farming, however, like every other sector, has to cope with change and challenges. Since 1982, there has been a 42 per cent decrease in tenanted land in this country, and we now have one of the lowest proportions of tenanted land anywhere in Europe. Given that securing a tenancy is often the gateway to a career in farming, we are in danger of closing the door on future generations unless we act. One of the big challenges that we face is our ageing farming population, with 57 per cent of occupiers of farming businesses currently over the age of 55.
Therefore, to ensure that tenant farming thrives in the 21st century, steps must be taken to protect the sector’s vital role. Despite the progress of previous reforms to agricultural holdings legislation back in 2003 and subsequent legislation that was brought in by the current Government, there is a continuing decline in tenanted land. That is why, at the Royal Highland Show in 2013, I announced a fundamental review of agricultural holdings, with the aim of coming up with solutions to reverse that decline. Today, I am announcing the outcome of that review.
The remit was challenging, so it was essential to get the right people for the job. Sir Crispin Agnew, Barbara Brown, Hamish Lean, Iain Mackay, Jeff Maxwell and Andrew Thin brought their talents, expertise, passion and enthusiasm to the table, and I could not have asked for a better team.
From the beginning, the review group was clear that we needed to talk to people on the ground and bring the industry with us. Since the initial call for evidence in February 2014, the review group has held 78 meetings across Scotland. The members are grateful to all those who made time to share their views and experiences, as the group travelled from Bute to Blair Atholl and many places in between, while of course enjoying all the home baking and cups of tea round the tables in farmhouses.
We have benefited from hearing at first hand of the problems and issues facing the sector. For example, there is the aspiring new entrant who cannot get a tenancy to provide a secure base for his business and young family, or the tenant who wants to retire but cannot do so until he has resolved a stand-off with his landlord over waygo compensation. However, there were many strong signs of success and innovation too, such as a young tenant and his landlord who overcame initial concerns and barriers to increase the holding and secure significant funding to grow a dairy business. To back up what we heard, robust research was carried out, as well as wide-ranging surveys of the sector.
Last June, we reflected on what we had heard and published our interim report, which set out our vision and how we planned to develop our recommendations. Since then, we have developed our thinking and undertaken 12 public meetings across Scotland.
Today, we publish the final report of the agricultural holdings legislation review group. It is a significant package of 49 recommendations that has the potential to be a turning point for the tenanted sector in Scotland and to secure a vibrant future for those working in the sector. It is bold and radical. The recommendations aim to get to the heart of the matter and to address the three underlying issues that affect the sector and that the group decided are the key issues. The first is the need for stronger and more productive relationships, the second is the need to address the right-to-buy debate and, finally, there is the need to provide opportunities for new entrants and a framework for the sector that is fit for the 21st century.
Strong relationships are the foundations on which success is built—relationships with the land, the community and, most fundamentally, between tenant and landlord. Around 82 per cent of tenant farmers report having a good relationship with their landlord and 89 per cent of landlords agree. That shows that much of the sector is working. However, others describe relationships as poor—sometimes, very poor or non-existent—which highlights the point that there are still issues to be addressed.
Those issues are not insurmountable. The solutions will require effort and compromise from both sides. We have seen great examples of that already. In fact, one of the success stories of the past year or so was the facilitation of the industry-led rent review initiative, which highlighted that the power to resolve relationship issues often lies as much with the sector as it does with the Government or legislation.
Nonetheless, the review group’s recommendations are aimed at ensuring a strong role for the Scottish Government in working with the industry to promote better relationships by, for example, providing better support, guidance and oversight of the sector through the establishment of a tenant farming commissioner and robust codes of practice and by designing a clearer, fairer process for setting rents based on the productive capacity of a holding, which will minimise disputes.
As I made clear when I announced the review, it is not possible to have a meaningful discussion on the future of the sector without addressing the right to buy.
Over the past 18 months, the review has facilitated an honest and frank debate that has helped to identify the reasons behind calls for an absolute right to buy. The group identified: a loss of confidence in the system; concern over the lack of investment by landowners and the inability of tenants to realise their own, often substantial, investments; and a general feeling of imbalance in the rights and responsibilities of tenants and landlords under the Agricultural Holdings (Scotland) Act 1991.
We identified those as the key underlying issues, and the majority of the report’s 49 recommendations—such as the widening of succession rights to secure a future for 1991 act secure tenancies—are aimed at addressing them.
However, it is clear that there are some cases in which tenants feel that relationships have deteriorated to a point of no return and that a right to buy is the only solution and in the public interest. Therefore, the report proposes a range of measures to enhance the right to buy including: strengthening the pre-emptive right to buy by removing the requirement to register; enabling 1991 act tenants to apply to the Scottish Land Court to force the sale of the holding where a landlord does not meet their obligations; and further consideration of how any proposals taken forward in the proposed land reform bill could assist in addressing the issues that tenant farming communities face.
Those radical proposals have the potential to provide tenants with a solution to escape the clutches of bad landlords but pose no threat to the vast majority of landlords who have good relationships with their tenants.
Life, like tenant farming, is built on mature compromise and a focus on the path ahead. We all need to look forward to the many opportunities that lie ahead and to ensure that the tenanted sector is fit for the 21st century.
The review group is determined that tenant farming should play an important role in providing: routes for new entrants; security and flexibility for established businesses; and a dignified exit for older farmers. Its vision for letting vehicles and a legislative framework that are fit for this century will help to make the changes that are needed to make the most of the opportunities that lie ahead. Its recommendations are intended to provide greater flexibility, more innovation, more investment, more land and better security, by providing for the conversion of a 1991 act tenancy into a 35-year limited duration tenancy to be assigned on the open market and by replacing short limited duration tenancies and LDTs with a new, modernised, assignable limited duration tenancy with a minimum term of 10 years.
The group has also proposed innovative and groundbreaking tenancy apprenticeships through share farming to help remove the barriers that new entrants face when trying to access land. For those who have some capital but lack land, the report proposes potential new vehicles to enable tenants to take on a greater share of fixed equipment and repair and maintenance obligations in return for a minimum 35-year term and rents based on productive capacity.
Those proposals have the potential to be game changing and to deliver greater, much needed equality and diversity within the sector.
For some things to improve, people need to accept change and adapt to today’s environment. That is not always easy, but it is essential for the members of the tenant farming community to use the recommendations to make a real change to their lives and to their communities.
I am confident that the landmark report does indeed represent a turning point for the sector. We need a strong, vibrant, flexible sector where tradition and experience are respected, where new ideas and new investment are encouraged, where farming businesses are built on the principles of shared endeavour for mutual gain, and where landlords and tenants respect and value the contribution that both can bring.
In this, the Burns supper season, we remind ourselves that our national bard was an 18th century tenant farmer. Maybe not all landlords and tenants
“Shall brothers be for a’ that”,
but we must work together to ensure that the sector thrives in the 21st century. I commend the report to Parliament.
The cabinet secretary will now take questions on issues that were raised in his statement, for which I intend to allow about 20 minutes. It would be helpful if members who wish to ask a question of the cabinet secretary were to press their request-to-speak buttons now.
I thank the cabinet secretary for giving me sight of the statement and the final report in reasonably timely fashion, which is not always the case. I also thank the review group and all those who took part, because without them the review could not have happened and we would not be where we are today.
As the cabinet secretary said, it is a landmark report, which must herald a new era in agricultural Scotland that will bring opportunities for a range of tenants, new tenants and security in retirement. The final key aspiration of the interim report stated that
“The underlying culture will be forward looking and based on shared endeavour, mutual respect and partnership between owners and tenants.”
Can the cabinet secretary identify specific ways in which the final report recommendations will contribute to that culture of partnership, and how the balance between the confidence in the system that has been asked for by landowners, and the protection of tenants’ rights, in a vibrant tenanted sector, will be achieved?
I welcome the enhanced measures for the right to buy, which recognise that there can be breakdowns in relationships, but also acknowledge that many relationships are good.
Can the cabinet secretary also explain in more detail how the tenant farming commissioner will be appointed, what the commissioner’s functions will be, how the code of practice will be developed, and who will be part of making the code of practice real so that everyone can move forward together?
I thank Claudia Beamish for the spirit of her remarks. I agree that the report could “herald a new era” for tenant farming in Scotland. It will, of course, require landlords, tenants and all the other players in the sector to get behind the report. We must keep our eye on the ball if we want a vibrant tenancy sector in order to ensure that we have food security and all the other benefits that working the land brings for our country. I believe that we all share that aspiration.
The report’s radical proposals will help to get us there by promoting security of tenure for tenant farmers while recognising the shared responsibilities and obligations of landlords and tenants, and of everyone else who is involved in setting rents, or in other aspects of daily life in the tenanted sector. The report will also promote keeping land in Scotland in the tenanted sector, because if aspiring entrants do not have access to the first rung—land—on the ladder of a farming career, we will simply not be able to attract new blood into agriculture, which is a fundamental aim of the report’s recommendations.
Claudia Beamish asked many questions about the tenant farming commissioner. We will in due course bring forward further proposals for establishing the commissioner, having taken account of the report and its recommendations today. Some codes of practice are already in existence and more may be required. Discussions on that will take place within the Scottish Government and with all our stakeholders, but we recognise that we must move as quickly as we can on the recommendations. A lot of work still lies ahead, but there are in the report many signposts and radical recommendations that will deliver a much better future for the tenanted sector.
I draw members’ attention to my entry in the register of interests, which shows that I own land that is let under an SLDT—one of the 82 per cent of mutually happy arrangements, I am glad to be able to report.
I thank the cabinet secretary for advance sight of his statement. Clearly, there is a lot of detail still to be scrutinised, but on first sight we welcome many of the suggestions and proposals that have been made.
Is the cabinet secretary finally ruling out the absolute right to buy, as is recommended in paragraph 24 of the report? Given that tenants are to be given the pre-emptive right to buy without the need to register, will landowners be given a similar right over assignations that subsequently come on to the open market? How will the reforms increase the amount of land that comes on to the market and is available to let, which is what we need if we are truly to reinvigorate the sector?
As I said in my opening remarks, we could not divorce the many issues around the debate over the right to buy from this review. A land reform debate is going on at the moment and a consultation is open, which the review group refers to in respect of some of the routes through which a tenant might be able to buy a farm. We have made our position very clear in the review group: we want to keep land in tenancy in Scotland, because that is the only means by which many people can enter agriculture. However, unfortunately there are some situations in this country in which there may be no option but to allow the sitting tenant to purchase their farm under the right to buy.
We laid out in the report two clear routes for that. First, we propose that a tenant can go to the Land Court and force a sale when the landlord is not meeting their obligations. Secondly, one of the land reform proposals is a power for ministers to intervene when sustainable development is not being promoted, which could provide another option for tenant farming communities.
The message in the report is very clear. It would be good if we could rally behind it and move forward in order to deliver justice for tenant farmers and the wider sector.
I welcome the cabinet secretary’s statement. The review group recognised that about one fifth of tenant farmers exist in what could be called a Victorian landlord and tenant relationship. Tenant farmers in my constituency and many others will be pleased that a pre-emptive right to buy can be triggered. In his statement, the cabinet secretary said that 1991 act tenants can force a sale of their holding
“where a landlord does not meet their obligations”.
Can he expand on the detail of those landlord obligations?
That is one of the more radical proposals in the report, which will be warmly welcomed, because it is reasonable, proportionate and in the public interest. As the legislation is drafted and as we move forward there will be a lot more detail on landlord obligations for committees to consider. We will have to work with stakeholders to draft the legislation.
We have come across examples of a lack of investment. There are also landlords who take very little interest in their tenancies; there are situations in my constituency that I cannot quite believe. We will have to look at landlord obligations and draw up the legislation appropriately. However, anyone who is reasonable and knows anything about the issue knows that, unfortunately, there are in this country landlords who do not fulfil their obligations. It is therefore in the public interest that Parliament and the Government look for solutions to those cases.
What assessment has the cabinet secretary made of limited duration tenancies? Will they create more security for tenant farmers and will they get round the problems that have been identified in the Supreme Court case of Salvesen v Riddell?
I would prefer that we hear no references to that case. There may be very similar cases that are subject to on-going legal proceedings; as such, there is a risk that they are sub judice. With that caveat, cabinet secretary, you may want to answer the first part of the question and leave the other one behind.
I thank David Stewart, whose general thrust was about the role that limited duration tenancies can play. There has been an increase in the number of limited duration tenancies over the years since they were introduced and subsequently changed by this Government. The statistics show that in 2008 there were 509 SLDTs and in 2014 there were 834; and that in 2008 there were 205 limited duration tenancies—not the short ones—and in 2014 there were 528. There have been increases. However, at the same time there has been a decline in the amount of let land, so the review group’s proposals on more flexibility through limited duration tenancies and the potential to have 35-year limited duration tenancies will give more security to tenants. The proposals on tenancies will make them more attractive and will, I hope, lead in time to there being more let land in Scotland.
I, too, welcome the report and the statement by the cabinet secretary. Along with recommendation 13, which will improve family assignation rights by allowing a farmer to assign a farm in his or her lifetime for a secure 1991 act tenancy, we have recommendation 15, which makes provision to enable any secure 1991 act tenant to convert the tenancy into a new long-duration modern LDT with a minimum term of 35 years, and then to transfer it to anyone at open market value. That is as opposed to there being an open assignation on the market itself. Does the cabinet secretary believe that the combination of recommendations 13 and 15 strikes the right balance?
Dave Thompson raises issues that relate to some of the fundamental objectives of the review group. Both of the proposals in respect of 1991 act tenancies, to which he referred, relate to the review group’s hope that we can find ways to keep land in tenancy in Scotland, for the reasons that I outlined earlier, and provide a dignified exit route for older farmers. There are circumstances—this was highlighted to the group and was a big concern for stakeholders—in which a 1991 act tenant does not have a successor to whom they can assign under current legislation. Widening assignation will therefore increase the chances of tenancies staying in the system.
When there are no successors, even with the broader flexibility in legislation that has been proposed by the review group, farmers could have a dignified exit by converting the 1991 act tenancy to a long-term limited duration tenancy. Such tenancies being on the open market and available to new entrants would allow the older farmer with no successor to retire with dignity. As has been highlighted to the group, the lack of flexibility is preventing opportunities for new entrants, because such older farmers have nowhere to go. This is, I hope, a solution to such fundamental problems.
I welcome the proposals, particularly for tenancy apprenticeships and the new vehicles to enable tenants to take on a greater share of fixed equipment and so on.
The review examined the elements that make it extremely difficult for tenant farmers to access financial support from banks and other sources in pursuit of development plans, as well as the additional challenge facing tenant farmers in relation to their own often substantial investments. Can the minister provide any further detail about what steps he thinks the Government might take in the future to deal with those specific issues, and to what timescales?
I think that we are talking about one of the most exciting proposals from the review group. As Graeme Pearson correctly highlights, as agriculture has been so capitalised over the past few decades, it is very expensive for people to get their own farm. Because there are not many leases available, people are locked out of agriculture even though they want to start working the land and producing food. We have to open up opportunities.
The apprenticeship lease arrangement is an exciting way forward because it will allow new entrants to work with an existing farmer to get to know the ropes, have a stake in the farm and, over time, take over the lease. I hope that that will be attractive to many new entrants, because it will be a new vehicle that is available to people to get into farming.
I therefore think that that will be one of the most exciting developments, and it is right that we should back it up with support from Government. We have existing schemes to help new entrants, so over the coming months we will have to work on a package to link the various support mechanisms together to make it really attractive for young men and women to take up a career in agriculture.
The cabinet secretary will be aware of the warm welcome that the report will receive from many of my constituents, particularly those on some of the Argyll islands who have had considerable difficulties maintaining relationships with their landlord. This process is not simply about relationships, however; it is also to do with the nature of the community and the economic and social fragility of the area in which it lives. The key to that, as the cabinet secretary will also know, is section 8.7 of the report and recommendation 22.
Will the cabinet secretary confirm that he intends to bring forward legislation in the proposed land reform bill that will deal with the issue of ministerial intervention, or does he expect that to be undertaken by the Rural Affairs, Climate Change and Environment Committee? Will there be a wider consultation to ensure that ministerial intervention can take place in areas of economic and social fragility, which certainly defines some of the areas in my constituency?
Given Michael Russell’s constituency experience, particularly of some of the island communities, he will be very familiar with the rationale behind some of the review group’s recommendations. As he rightly says, there is a clear interaction between tenant farming and wider community interests and the health of the community, particularly in the more rural parts of Scotland.
The aim of the current land reform consultation is to find mechanisms for ministers to intervene to address issues where sustainable development is being frustrated by the actions of particular landowners. However, we will have to wait for the closing of the consultation, which is on 10 February, to hear people’s views.
At this stage, I say to Michael Russell that we are ambitious on the issue of ministerial intervention but that my job as the chair of the review group is to speak to my colleagues in Government and work through how we can implement some of the report’s recommendations, particularly on the question of ministerial intervention, in conjunction with the land reform consultation. A lot of good work will take place, and I urge the committee to have its say and work with stakeholders, whether they are in society or the Government, to ensure that we get this right.
I am mindful that another five members wish to ask a question of the cabinet secretary. I have some time in hand over all the debates this afternoon, so I intend to make progress, but I say to the remaining five members: if you want to get in, you need to keep it short.
Will the Government commit to providing security for tenants in the interim period between the publication of the report today and recommendations being put down in law?
Clearly, there is legislation in place at the moment that gives a degree of security for existing tenants in Scotland. Throughout the whole of the review group’s work, we have worked very closely with all stakeholders: tenants, landlords and other players in the sector. The recommendations are ambitious and radical, but I believe that they are reasonable. I also believe that we all want to see the same outcome for Scottish agriculture. I therefore hope that everyone will rally behind the report and its recommendations, even though they might not agree 100 per cent with every single thing in the report. However, I think that the spirit of what the review group is trying to achieve should be shared by all stakeholders, and I ask them all to get behind it and respect it.
I, too, welcome the final report, which is indeed bold and radical. What progress has been made towards increasing the proportion of land available for tenant farming since the Agricultural Holdings (Amendment) (Scotland) Act 2012 came into force?
As I indicated earlier, there has been an increase in the number of short limited duration tenancies and limited duration tenancies, particularly since the Government introduced some flexibility a few years ago, but there has been an overall decline in the amount of let land in Scotland, which reinforces the need for some of the recommendations in the report. A lot of work is still to be done.
The interim report pointed out that far more people who have no direct involvement in farming or the wider rural economy are now able to live in the countryside, and it was suggested that that presents a significant commercial opportunity for landowners. Many tenants feel that that has made access to farms that include affordable housing on-site or nearby extremely difficult. I am interested in knowing more about how the Scottish Government intends to address that important issue.
Cara Hilton raises a very important issue. In terms of affordable housing, there are some recommendations and references in the report in relation to planning policy and ensuring that housing opportunities are available for farmers and for retiring farmers, to give them an incentive.
In terms of the wider issues of life in the countryside, the capitalisation of farming and the cost of land—which I think are at the heart of the member’s question—there are references in the report to potential tax measures. We had a statement on the Smith commission earlier, so we know that we are going to have a very limited say over some of the issues raised in the report in terms of tax changes that might have to be looked at. I hope that the United Kingdom is paying as much attention to the report as the Scottish Government is, and I hope that the Smith commission’s recommendations are just the beginning of new powers coming to the Scottish Parliament so that we can address issues for ourselves.
I want to ask about the opportunity for the 1991 act tenants to apply to the Scottish Land Court to force the sale of holdings. As the cabinet secretary knows, turning to the Land Court can be a lengthy and expensive business. Will consideration be given to how we can avoid protracted and costly cases arising in such circumstances?
Graeme Dey asks a good question. I want to explore further the recommendation on the matter and where we take it. Often, it is not the fees but the legal representation and how long a case may go on for that influences the overall bill for using the Land Court. I accept that there are issues to be looked at. We must do that as we progress the recommendations.
A couple of my points have been answered—I thank the cabinet secretary for that.
On the right to buy, if a landowner was keen to sell a farm but not for farming to continue to be practised on the land, what right would the tenant farmer have if he were keen to buy the farm?
The recommendations would extend the existing pre-emptive right to buy to an automatic registration for the pre-emptive right to buy. Therefore, in the circumstances Jean Urquhart outlines, the farmer would have the opportunity to buy the farm. The review group also introduces other circumstances that may trigger the pre-emptive right to buy. I hope that that will deliver the benefits that we want to see.
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