After almost a year in the making the Agriculture Bill was finally enacted on 11th November 2020, now entitled the Agriculture Act 2020, and comes into full force on the 11th January 2021.
This marks a significant milestone in agricultural policy and it takes only a cursory glance at the Agriculture Acts of 1993 and 1986 to realise just how far policy has moved. By contrast, the old bureaucratic policy of the European Union is no longer visible throughout.
The aim of the legislation is to improve competitiveness, productivity, and use of technology, although it will be some time before the success of those objectives can be measured but it certainly means that schemes under the EU are now legacy schemes. Another point to note is that since the old legislation, we are now a group of devolved governments, just something else that happened whilst under the EU umbrella but without the implications really being realised, until now.
The Act is really about powers and not policy. Almost the entirety comes in on the 11th January 2021 but only in England & Wales, and even then there are some elements which Wales will come to at a later date. It is obviously skeletal at present and will require secondary legislation to bring forward the detail to put meat on those skeletal bones. The detail of this will be framed by the Governments 25 year Environment Plan.
It is striking that almost all the changes – in terms of tenancies – concern the Agricultural Holdings Act 1986, so those of you with a lifetime, or two generation tenancy are primarily affected, whilst only the arbitration procedures are amended within the Agricultural Tenancies Act 1996, for those of you under a Farm Business Tenancies. (FBT).
The Government with advice from the Tenancy Reform Industry Group (TRIG) came to the conclusion some time ago that lifetime or multi-generational tenancies are one aspect holding back development and productivity in the agricultural sector, for example when a Farm Business Tenancy ends it is (usually) relet on the open market. Without hesitation, productive farmers take over the tenancy and make it work for its money. Conversely, succession tenancies often sit in the hands of retired farmers some undertaking little on the land and so are seen as blocking either younger, or more proactive farmers, from coming forward.
Support payments, food security, trade, intervention, marketing standards and traceability are well covered in commentary elsewhere, so we thought it might be useful to widen out the tenancy elements of the new Act for clients and readers of this section.
Whilst the proposals first put forward were numerous and wide-ranging, it is only the less contentious of the original proposals of TRIG in 2017, which made their way into the legislation:
- The minimum age for service of a retirement notice (65 years) is removed.
- The commercial unit test for succession to a tenancy application disappears. The aim being to move tenancies on to successors with all other requirements being met. A commercial unit used to refer to another farm for land elsewhere that after some calculation could support the wage of two full time workers.
- Suitability – being one of the tests for succession – is to be further consulted upon. This includes experience, training and college attendance, with a business competency test, yet to be defined.
- Financing of capital items by Landlords will now not be lost on a rent review. This means where a Landlord provided finance for improvements to the holding which were written into agreement between the parties, such payments will not be taken into account in the assessment of a rent review before the date the last payment is made. This is to encourage Landlords to invest.
- There is now an ability to challenge the refusal by a Landlord to vary terms of a tenancy. The purpose is to loosen the restrictions on Tenants, which exist in their tenancy agreements, so that they have a better opportunity of accessing ‘public money for public goods.’ This may also be useful to comply with new environmental obligations in due course.
- The power to appoint arbitrators (either jointly or as is more likely, unilaterally) have been widened to include the Central Association Agricultural Valuers (CAAV) and the Agricultural Law Association (ALA), not just the RICS.
- The threshold for serving a retirement notice on a County Council Smallholding no earlier than 65 years is removed. It will now be the tenants pensionable age.
The new Act brings with it opportunities for change which will need to be carefully considered and embraced by everyone in the industry.
It will be interesting to see the secondary legislation that will support the aims of the 2020 Act. It certainly seems like a new beginning.