Regulatory Reform (Agricultural Tenancies) (England and Wales) Order 2006

My Lords, I thank the Minister for bringing this order before us today. My only disappointment, and I am sure his as well, is that we could not get it in before the Recess. We did try, but I that think time in another place precluded it. One or two of the tenancy agreements have come up, so there has been a delay, but I thank him for explaining it. I have one query from the point of view of the NFU and then I have one or two directly. The Tenancy Reform Industry Group took its bearing back in November 2002 and reported its recommendations in June 2003. This coincided with the CAP reforms, and the recommendations were made without the benefit of knowing the detailed implication of those reforms. Defra then took a long while to get the RRO drafted, missing, as I have just said, the autumn slot. Although this order is welcome, there may well be some more desirable adjustments to be made in agricultural tenancy law to take account of changes within the CAP. Perhaps the Minister could clarify that. It would be helpful if we could get an assurance that the Government will look sympathetically on any further recommendations that the industry may wish to bring forward in the future. I do not think that that is controversial; it is plain common sense. We welcome this order. We are particularly pleased that the Government have responded to the way in which farming has changed in recent years, including contracting and other activities that are carried out on the holding. The Minister has, rightly, explained to us tonight that there had been confusion among the industry professionals and practitioners over whether Section 4(1)(f) of the 1995 Act applies only narrowly. I think that I have understood from what he said that that is not true. I hope that I am correct. Hansard records of the debates during the passage of the Agricultural Tenancies Bill suggest that the then Government’s intention was that the provisions would apply narrowly where parties had unwittingly surrendered the status under the 1986 Act. The effect of the legislation is that when a landlord is asked by a tenant to give his consent to an improvement on the holding, he has no means of knowing the extent of that liability at the end of the tenancy. That could mean that some landlords are reluctant to give their consent to a tenant’s proposals simply because they do not know how much compensation they will be required to pay. Will the Minister comment on that? I turn to the amendment to the provisions on notices to quit in the 1995 Act. Under that Act, a notice to terminate a farm business tenancy must be given in writing at least 12 months, but not more than 24 months, before the date on which it is to take effect. The current legislation prevents landlords and tenants from agreeing to a longer notice period than 24 months. There is therefore no flexibility to agree a notice period of, say, up to five years, which would give both landlords and tenants greater security and enable long-term planning. That is a small issue, but again I would be grateful for some comment. On the timing of consent, when the noble Lord, Lord Whitty, was the Minister responsible for these tenancies, he promised to monitor the responses of landlords when faced with requests from tenants for renewed consent. He suggested that if the Government had evidence that landlords were reluctant to grant consent, they would consider what further measures were necessary. It would be enormously helpful if the Minister were to reiterate those comments on the Floor. Finally, I turn to fiscal change. In order not to perpetuate a disincentive for landlords to grant tenants consent to diversify, all land, including buildings, let by a landlord under the 1986 Agricultural Holdings Act or the 1995 Agricultural Tenancies Act should be added directly to the definition of ““agricultural property”” for inheritance tax agricultural property relief to the extent that it is used for business purposes under consent from the landlord. Agricultural landlords should be able to defer payment of capital gains tax on gains to the extent that they are used to make improvements that increase the economic value of the land subject to agricultural tenancies that are used for business purposes. The business asset taper relief from capital gains should be available to all let land for business purposes, irrespective of the business of the occupier. Again, I would be grateful if the Minister could clarify that. While we welcome this order, I have raised one or two specific issues, and would be grateful if the Minister responded to them. We hope that the order will make it much easier for those who have tenancies to get on and diversify and make a little bit more money than they have been able to in the past, and at the same time give landlords a certain amount of security, which they also need.