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Lord Carter moved Amendment No. 19:

Page 8, line 20, at end insert ("save that where milk quota was registered in relation to land held under a tenancy to which the Agricultural Holdings Act 1986 applied and which was let immediately on the expiry of that tenancy as a farm business tenancy, and where no claim was made for compensation in respect of that quota under the Agriculture Act 1986, that Act shall still apply to that milk quota which shall not be the subject of any other claim for compensation").

The noble Lord said: My Lords, it may help the Minister if I say that I have that look about me which means that I am not going to divide the House on this amendment.

The amendment deals with a technical point, and I wish to raise also another point which I mentioned in Committee.

The first relates to the situation where a farmer moves from land held under a tenancy to which the Agricultural Holdings Act 1986 applied. The amendment seeks to ensure that if he does not take from that holding the compensation for milk quota under the 1986 Act and he moves to another holding belonging to the same landlord and so on, he will still be able to claim the compensation. In other words, he will be able to carry with him the compensation. The Minister may wish to reflect on that point, which is important. We have been asked to raise that matter so that it is clear that the compensation for the milk quota is "transportable" from one tenancy to the next.

As we are dealing with milk quotas, I should like to raise again a point that I raised in Committee. Although the Minister offered to discuss the matter with me, we did not have an opportunity to do so. He may like to reflect again on this matter.

Perhaps I may give an example of a tenant who has an existing holding under the 1986 Act with milk quota allocated from, for example, 1983 or 1984. He then takes on a tenancy under this Act and buys quota for the new holding. I am told that if he then gives up the two holdings, under the milk quota rules in Europe the landlord may be entitled to compensation for that second lot of quota which the tenant has purchased for his new farm, happily thinking that, as he had purchased it, all the value belonged to him. It is a fairly straightforward point. It would be helpful if the Minister were to reflect upon that. The point was made to me by a practitioner. I am sure that, under the milk quota rules from Brussels, that would be the case.

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With regard to the amendment, it would be helpful to know whether the tenant is able to transport the value of the compensation of his quota; that it is possible to crystallise it at the end of one tenancy and then transfer it to the next tenancy without the involvement of any cash.

Secondly—and this is a separate but related matter—is it possible for a tenant who has bought some quota for a holding under this Act and has used all his money, with no involvement from the landlord, to then find that when he claims compensation the landlord may be entitled to some compensation for the second lot of quota? I beg to move.

Earl Howe: My Lords, I am grateful to the noble Lord, Lord Carter, for his explanation. Despite the fact that he is a professional in such matters, I am sure that he will be the first to admit that milk quota is a fearfully complicated and technical subject into which we venture at our peril. The amendment would allow the parties to use the Agriculture Act provisions where they took up a farm business tenancy immediately after a tenancy under the 1986 Act.

If that were allowed by the Bill, it would give rise to even more horrific complications than are already involved in dealing with milk quota. In effect, there would be two separate systems applying to a holding—one under the existing legislation and the other under the Bill.

Dealing with changes made to the registered quota after the new tenancy began would be a nightmare. If the tenant bought or sold quota—perhaps through part of his milk production business which was not subject to his tenancy—it would involve very complex calculations to determine exactly how the Agriculture Act compensation should be resolved. How would one know whether the tenant had sold his old quota or his new quota? The quota register records only the total amount of quota available to the producer at a point in time. If one supposes that the producer owns some land of his own besides the tenanted land, matters become even more confused.

I must confess that the legislation is difficult enough to follow as it stands, but at least under the Bill as drafted there is a clear cut-off point—the end of an agricultural tenancy under the Agricultural Holdings Act. Obviously there will be a number of issues which the parties must sort out between them in order to settle up at the end of the tenancy, and milk quota will simply be one of those matters.

I believe that by far the better legislative course is to give parties that clear legal cut-off. It does not prevent them reaching another arrangement if they find, for whatever reason, that they cannot settle up at the end of the 1986 Act tenancy. I am advised that the Tenancy Reform Industry Group does not support the amendment. Therefore, I hope that, on reflection, the noble Lord will withdraw it.

The noble Lord asked whether a landlord would have an interest where the tenant buys additional quota and it is added to another area of land. I am advised that the landlord would have such an interest. The European rules require all production units to be aggregated.

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However, parties may agree to apportion quota between parts of a Euro-holding. It is a complex area. I shall reflect on the noble Lord's remarks. If I can shed further light on the question, I shall of course write to him.

Lord Carter: My Lords, I am most grateful to the Minister. He is absolutely correct. As regards milk quota—I refer back to today's Question Time—it is true to say that professionals need almost continuous refreshers when dealing with such questions. I shall read Hansard and take advice on the matter. However, the problem is the total amount of quota that is held on the register and its disaggregation.

I was extremely interested to note that the noble Earl confirmed that the advice I received regarding the Euro- situation is correct. It is perhaps exactly a case where guidance notes from the Government would be most helpful. I hope that the RICS—and, indeed, all the industry groups —will take note of the point. It would be a comparatively rare case, but it could be extremely expensive to the tenant if it occurred. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 17 [Consent of landlord as condition of compensation for tenant's improvement]:

Lord Gallacher moved Amendment No. 20:

Page 8, line 28, at end insert ("relating to the tenant's improvement which is the subject of the consent").

The noble Lord said: My Lords, in moving the above amendment I shall speak also to Amendment No. 24 with which it is grouped. In doing so, I assume that the noble Earl will speak to Amendments Nos. 21 and 25 which are tabled in his name and which also form part of the group.

Our two amendments were first considered in Committee. They provide that the landlord may attach conditions to a consent to a proposed tenant's improvements only in so far as they relate to the improvement which is the subject of the consent. They thus prevent the landlord from using the opportunity of a request for consent to a proposed tenant's improvement to attach conditions which make alterations to a farm business tenancy which are not relevant to the improvement itself. They are a protection for the tenant who might otherwise be put off from seeking to make desirable improvements.

The Government have tabled amendments which appear to us at this point, subject to the noble Earl's confirmation, to have the same effect as ours. We believe that our amendments are clear and unambiguous, but if the Government could confirm that their amendments fulfil the same purpose we should prepared to look at them favourably. I beg to move.

Earl Howe: My Lords, with the leave of the House, I should like to address the two amendments tabled in my name which have been grouped with those to which the noble Lord spoke; namely, Amendments Nos. 21 and 25. The noble Lord will no doubt recall that he spoke to Amendments Nos. 57 and 64 in Committee—that is the Committee stage numbering—and sought clarification of the intention behind Clauses 17(3) and 18(2) in respect of variations in the terms of a tenancy

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as a condition of a landlord giving consent for an improvement. I explained then that I was not in the least opposed to a requirement that conditions must relate to the improvement proposed by the tenant. I undertook to look constructively at the wording of those clauses.

I believe that the amendments tabled in my name achieve the result intended by the noble Lord, Lord Gallacher. In the case of Clause 17, any variation in the tenancy agreement required by a landlord as a condition of giving consent must be related to the tenant's proposed improvement. In the case of Clause 18, which relates to compensation for planning permission, any variation in the tenancy agreement must be related specifically to the tenant's proposed physical improvement or proposed change of use for which planning permission is to be sought. Although the wording in my amendments differs from that contained in the noble Lord's amendments, I hope that he will allow my wording to prevail on this occasion and feel able to withdraw the amendment.

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