Fifth Standing Committee on Statutory Instruments, &c.



Thursday 5 December 1985



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The Committee consisted of the following Members:

Chairman: Mr. DAVID KNOX

Best, Mr. Keith (Ynys Môn)

Brown, Mr. Hugh (Glasgow, Provan)

Buck, Sir Antony (Colchester, North)

Butler, Mr. Adam (Bosworth)

Corbyn, Mr. Jeremy (Islington, North)

Emery, Sir Peter (Honiton)

Farr, Sir John (Harborough)

Fenner, Mrs. Peggy (Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food)

Hardy, Mr. Peter (Wentworth)

Hicks, Mr. Robert (Cornwall, South-East)

Howell, Mr. Ralph (Norfolk, North)

Howells, Mr. Geraint (Ceredigion and Pembroke, North)

McQuarrie, Mr. Albert (Banff and Buchan)

Marshall, Mr. Michael (Arundel)

Maude, Mr. Francis (Warwickshire, North)

Randall, Mr. Stuart (Kingston upon Hull, West)

Torney, Mr. Thomas (Bradford, South)

Weetch, Mr. Ken (Ipswich)

Mr. R. J. Willoughby, Committee Clerk.

3 Fifth Standing Committee on Statutory Instruments, &c. Thursday 5 December 1985

[Mr. DAVID KNOX in the Chair]


10.30 am

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I beg to move, That the Committee has considered The Draft Agricultural Holdings (Fee) Regulations 1985.

The Chairman: With this we shall discuss The Agricultural Holdings Act 1948 (Variation of Fourth Schedule) Order 1985.

Mrs. Fenner: I shall deal first with the Agricultural Holdings (Fee) Regulations 1985 which are relatively straightforward. Under agricultural holdings legislation certain disputes between landlord and tenant about rent, compensation, or terms of tenancy, for example can be referred to arbitration by either party. Section 8 of the Agricultural Holdings Act 1984 provides for the transfer of the agriculture Ministers' responsibility for the appointment of agricultural arbitrators and persons to make records of holdings in England and Wales to the president of the Royal Institution of Chartered Surveyors. As hon. Members will recall, that provision was debated at considerable length during the passage of the legislation and it is not necessary for me to go over the same ground now. The Government, however, made it clear during those debates that the transfer of functions would not take place for at least one year after the enactment of the new legislation so that the industry would not face too many changes at once. In the light of those assurances, the Minister of State, Ministry of Agriculture, Fisheries and Food, announced on 18 December 1984 that the transfer will take effect from 1 January 1986. The necessary commencement order was made on 24 October 1985. The 1984 Act states that every application for an appointment must be accompanied by the prescribed fee. The purpose of the regulations is to set that fee at £70. Officials in my Department have discussed the proposed fee in detail with officials at the RICS and have carefully examined the case that they presented. I am satisfied that £70 is fair and reasonable. It is clearly advantageous that a fee of this nature should not be revised too frequently. The Committee will be pleased to know, therefore, that the RICS has given an undertaking that, unless anything unforeseen happens, the fee will stand unamended for the next five years. 4 If Ministers had retained responsibility, charges would inevitably have been introduced for that work. Our own costings show that, on the same basis, we would need to charge a fee of £73·50 to cover costs. I should also emphasise that, following the transfer of functions, there will be no additional fee for extra work, such as extensions of time required for the arbitrator to make an award. We have consulted the industry, which does not foresee that the £70 fee will cause any serious problems. Officials are working closely with the RICS staff who will be responsible for the day-to-day work, to ensure a smooth handover. I am sure that, following the transfer, the RICS will provide an equally effective and comprehensive service to the industry. A press notice giving the industry full details of the new arrangements will be issued shortly. The Agricultural Holdings Act 1948 (Variation of Fourth Schedule) Order 1985 relates to compensation at the end of a tenancy and is a more complex area of the lagislation. The Law Commission is in the process of consolidating the agricultural holdings legislation, and it has discovered three discrepancies in the fourth schedule of the Agricultural Holdings Act 1948 which must be rectified before the consolidation Bill, which was introduced in another place, can be considered by the Joint Committee. The fourth schedule relates to compensation for short-term improvements and other matters at the termination of a tenancy. We are concerned today only with the second part of the schedule, which relates to other matters for which compensation can be claimed. Agriculture Ministers in England and Wales are advised on compensation matters by a committee on agricultural valuation—the CAV. In the light of its advice regulations are made on the calculation of value for compensation and it is also sometimes necessary to make an order under section 78 of the 1948 Act varying the fourth schedule itself. The two previous variation orders were made in 1951 and 1978. Some of the amendments in the variation order before us are of a highly technical nature, but I will nevertheless attempt to explain them briefly. The first provision in the order which we need to consider is article 3(2), which amends paragraph 11 of the fourth schedule to introduce new definitions of hill sheep and hill land. Paragraph 11 allows compensation to be paid for the acclimatisation, hefting or settlement of hill sheep on hill land. It applies in those mountain or hill areas where hardly, locally reared hill sheep will thrive throughout the year but those brought in from other areas will not. When this provision was introduced in the 1951 order varying the fourth schedule the definitions of hill sheep and hill land were related to the Hill Farming Act 1946 and the hill sheep schemes made under that Act. All such schemes were brought to an end in 1975, but no replacement definition was introduced into the 1951 order. Article 3(3) amends paragraph 12 of the fourth schedule, which allows compensation for sod fertility value. This is a relatively new concept giving outgoing tenants in arable areas credit for improving 5 fertility within the soil by leaving more land under leys than normal farming practice in the area would dictate. Leys improve the soil structure and subsequent crops benefit from the increase in organic matter in the soil. The detailed method for calculating compensation for sod fertility value is prescribed in the Agriculture (Calculation of Value for Compensation) Regulations 1978. In 1983 a number of small amendments of a technical nature were made to these provisions but unfortunately it was not at that time realised that a separate order was required carrying some of them through to the fourth schedule. Article 3(3) rectifies that omission. Article 4 amends the 1951 and 1978 variation orders. Article 4(1) is a consequential amendment arising from the new definitions of hill sheep and hill land and deletes the references to the Hill Farming Act 1946 from the 1951 order. Article 4(2)(a) is also a consequential amendment, which makes it clear that in the Agricultural Holdings Act 1948 references to part II of the fourth schedule include a reference to paragraph 12—sod fertility—except in the specific cases listed in the paragraph where this would be inappropriate. For example, in the case of certain old tenancies a tenant has the option either to compensation under the Act or to compensation under custom. However, for reasons I shall later explain, this does not apply to sod fertility. Article 4(2)(b) also concerns the 1978 order and in particular the application of paragraph 12 to tenants of holdings who entered into occupation on or after 1st March 1948, but before 1st July 1978. The background to the repeal of article 4 is complex and requires further explanation. The general philosophy stemming from the Agriculture Act 1947 was that compensation under local custom should be phased out. However, the Agricultural Holdings Act 1948 allowed a tenant already in occupation when the Act came into operation to receive compensation under custom for matters listed in part II of the fourth schedule. If he wanted to receive compensation under the Act he had to give notice to his landlord. When compensation for hill sheep and sod fertility value were added to the variation orders in 1951 and 1978 respectively, similar provisions were introduced so that a tenant already in occupation had the choice of compensation under the Act or under custom. Sod fertility value, as opposed to tenants pasture value, was a relatively 6 new concept and as far as we are aware there were never any claims under local custom. In any case it is now considered that it was probably ultra vires to reintroduce the possibility of compensation under custom after a lapse of some 30 years. We have therefore decided that this provision should not apply in the future. To achieve that article 4 of the 1978 order is being revoked. In future all tenants eligible for sod fertility value compensation will automatically claim under the Act. The committee on agricultural valuation and the organisations representing landlords, tenants and valuers were consulted about the proposed amendments to the fourth schedule. They all agreed in principle to our proposals, although two organisations suggested some minor changes to the definitions of hill land and hill sheep. We were not able to accept these because they either widened the scope of the definitions or made the wording less clear. Both the instruments are important to the effective working of the agricultural holdings legislation. The fee regulations are an essential part of the transfer of responsibility from agriculture Ministers to the RMS. The variation order rectifies small defects in the fourth schedule to the 1948 Act and it must be approved before the Joint Committee can consider the agricultural holdings consolidation Bill. The industry welcomed the proposal for a consolidation Bill and I am sure it would like to see it receive a speedy passage through Parliament. I am sorry that the instruments required such detailed explanation. I commend them to the Committee.

Question put and agreed to.

Resolved, That the Committee has considered the Agricultural Holdings (Fee) Regulations 1985.


Resolved, That the Committee has considered the Agricultural Holdings Act 1948 (Variation of Fourth Schedule) Order 1985.—[Mrs. Fenner.]

Committee rose at sixteen minutes to Eleven o'clock.


Knox, Mr. David (Chairman)

Best, Mr.

Farr, Sir John

Fenner, Mrs.

Hicks, Mr.

Marshall, Mr. Michael

Maude, Mr.