The Agriculture Bill: A hasty revamp of the last one or real progress?

The 2017 Agriculture Bill failed to complete its passage through Parliament before the end of the last session.  The new Government has recently introduced a revised version of the bill which was given its first reading on 16 January.

The 2017 Bill did not get out of the committee stage in 2018 and numerous amendments were tabled during 2019.  Although frustrating, this delay did allow for consultation on tenancy reform and other potential amendments to take place. We now consider the contents of the new bill and the extent to which it now reflects these comments and proposed amendments.

Existing Funding

As in the previous Bill, DEFRA will essentially take over the legislative role from the EU Commission. Separate provisions will apply for Wales and Northern Ireland in respect of devolved responsibilities.

Looking forward, there are many calls on Parliamentary time and the pressure is on. Basic Payment Scheme (BPS) funding is guaranteed until 2020 and the phasing out of that support system will begin in 2021.  Clear policy guidance is required by 2021 at the latest.

Flexibility has been retained to continue the BPS or indeed phase it out or delink its payments from the requirement to occupy land.  Regulations may also be drafted to provide for lump sum payments to be made in lieu of remaining BPS income.

New ELM Scheme

The seven year transitional period for phasing out of BPS has been retained, but of course that means that the new environmental land management scheme (ELM) details will be required by 2028. 

The pilot schemes for the new system of support are in their very early stages and it was hoped that the 2020 Bill would provide some enhanced detail about what “public money for public goods” actually means.  Unfortunately little light has been shed on this topic and we may now have to wait until the committee stage of the Bill before further detail is provided.

New Focus

The list of activities for which financial assistance can be given has expanded and there is new and increased focus on the need to improve and protect the quality of soil.

Specific regard must now be had for the need to encourage food production in establishing whether financial assistance should be granted.  It is notable that whilst the production of food is now regarded as an aim in itself, that process must be carried out in an environmentally sustainable way.

Other notable changes include a specific reference to food security.  This was an issue that had been previously referred to in tabled amendments to the 2017 Bill.  The inclusion of this topic may well be a response to the gloomy predictions of how long it will take to agree a trade deal.  The Government is making provision to ensure the resilience of the food supply chain and the Bill makes specific reference to problems that might be caused by significant price increases for energy or the disruption of its supply.  That, perhaps, betrays concerns about wider trade and logistical issues that will exist following Brexit.

Tenancy Reform

One of the tabled amendments to the 2017 Bill was the requirement for agricultural tenancy reform.  DEFRA consulted on a wide variety of potential reforms to both the Agricultural Holdings Act 1986 and the Agricultural Tenancies Act 1995.  A few of those proposed changes have made their way on to the first draft of the new Agriculture Bill and it remains to be seen whether more will be added in due course.

  • Appointment of arbitrators

Those that have made it onto the 2020 Bill include the potential removal of the RICS’ monopoly on appointing arbitrators under both the 1986 and 1995 Acts.  The President of the Central Association of Agricultural Valuers and the Chair of the Agricultural Law Association will, under the Bill, be able to appoint arbitrators in response to a statutory application.

  • Third party determination correction

Changes were made in 2015 for the 1986 Act to allow a third party expert to determine the rent properly payable rather than leaving it to the sole jurisdiction of an arbitrator.  Unfortunately there was an omission in the drafting which meant that any such expert had to be appointed at the same time as the section 12 trigger notice was served which must be more than 12 months before the rent review date.  That would clearly result in the potential for unnecessary costs being incurred and indeed the whole proceedings getting off on rather a contentious footing.  That anomaly has now been corrected so, like an arbitrator, an expert can be appointed at any point up to the rent review date.

  • Improvement cost excluded from rent

I have drafted an increasing number of agreements allowing for landlords to invest in their tenanted holdings in return for a payment from their tenants, which normally covers the cost of borrowing the money for the improvement.  Such agreements have been required to ensure that the tenant is not charged rent for the improvement, whilst its cost is being paid off and also to ensure that the repayment sums themselves are excluded from the rent calculation process. The 2020 Bill contains provisions which will make the necessary changes to the 1986 Act.

  • ELMS participation dispute resolution mechanism

Another tabled amendment to the 2017 Bill was an issue that particularly concerned tenants. This was the possibility that they would be restricted from carrying out certain activities on the holding which might in the future attract financial assistance.  The obvious example is participating in environmental schemes which might be prevented by a user clause which did not allow such activities.

The 2020 Bill provides for a tenant to be able to refer such matters to dispute resolution, to require the landlord’s consent to such an activity, or a variation of the terms of their tenancy, where such requests relate to a tenant meeting a statutory obligation or accessing financial assistance.

  • Succession and smallholdings changes

Finally, the succession provisions of the 1986 Act were the subject of considerable scrutiny in DEFRA’s consultation.  In terms of retirement succession, the rule that prevents tenants serving a retirement notice below the age of 65 (unless due to reasons of ill health) is to be repealed.

In respect of succession on death or retirement the commercial unit test is also repealed and the suitability test is expanded to reflect tenants’ increasing responsibilities to farm in an environmentally sustainable manner, whilst maintaining a high standard of efficient production.

For lettings by small-holdings authorities, county council holdings will no longer be required to be surrendered when the tenant reaches the age of 65. The rule will now be that pensionable age will be the yardstick, which is in line with the ever increasing retirement age.

It is worth remembering that the 2020 Bill is in its earliest stages and the 2017 version underwent considerable change during its progress through the Houses of Parliament. Many tabled amendments to the 2017 Bill have not made it through to the current draft and many sector stakeholders will be making sure their voices are heard, so there is doubtless a long way to go before we have a clear idea of the shape of the future British Agriculture Policy.