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Third Standing Committee
on Delegated Legislation
Thursday 11 April 2002
[Mr. Nicholas Winterton in the Chair]
Fur Farming (Compensation Scheme) (England) Order 2002
The Chairman: I welcome all Members to the Third Standing Committee on Delegated Legislation on this very pleasant afternoon. I remind Members that the Committee can sit for up to one and a half hours. Witnessing the marshalled ranks of Government Members here, I am sure that we are going to need every one of those 90 minutes. I remind Members that this is a prayer, so after the Clerk has read the title of the order, I shall ask the hon. Member for Mid-Norfolk (Mr. Simpson) to address us.
Mr. Keith Simpson (Mid-Norfolk): I beg to move,
That the Committee has considered the Fur Farming (Compensation Scheme) (England) Order 2002.
May I say what a pleasure it is to be under your regimental eye this afternoon, Mr. Winterton, and to have such enthusiasm from a Chairman? I know that colleagues on both sides, on some late Thursday afternoons, have been under the chairmanship of someone less than enthusiastic about the possibility of being here for one and a half hours. What a pleasure it is to be under your gimlet eye.
We are here to consider the fur farming compensation scheme. The Fur Farming (Prohibition) Act 2000 made fur farming a criminal offence, and made it punishable by a fine of up to £20,000 to keep or breed animals primarily or solely for their fur. However, the Act also provided for a winding-down period, until at least the end of 2002, and for the compensation of certain categories of loss.
Although not an election manifesto commitment, prohibition of fur farming has been Labour party policy for some time. Thus the Government introduced the Bill to ban fur farming, claiming that such action was necessary on the ground of ''public morality''. When the Act was passed, there were 13 licensed mink farms in England. To put that into context, in the early 1960s, there were some 600 fur farms in the United Kingdom. At the time of the Act, of the 13 licensed mink farms, 11 were operational, breeding up to 50,000 mink a year.
The question here is one of principle, as much as of anything else. I hate to mention principle in Parliament; we all get rather embarrassed and shifty about that kind of thing. Some outsiders believe that Members of Parliament have no principles at all, or that they can easily be bought. Fortunately, the Members of Parliament in this Room, including you, Mr. Winterton, and the Minister, are men and women of outstanding principle and fairness.
When Parliament legislates to take away a citizen's livelihood, it is only right and proper that he or she should be compensated. This Committee's
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consideration of the fur farming compensation scheme should be along the lines of whether the compensation put forward is fair. Of course, if we had a Treasury Minister here, his or her definition of fairness would probably be different from that of this Committee.
Throughout the debates on the 2000 Act and the consultation on compensation, the Minister continually emphasised that the compensation on offer should be fair. I have been involved in Committees and debates with him in the past, and he is a fair man. It is important that the design of a fair compensation scheme has regard to the nearest equivalent in law and practice, which is the code for compensating farmers whose land is compulsorily acquired and who are subject to disturbance as a result. That has been developed since the 19th century. I accept that the land is not being acquired in this case, but in effect the businesses are, and similar considerations should apply.
The scheme must, regardless of the various heads of claim, arrive at final compensation figures that fully account for the cost to the claimants of the extinguishments of such established, unique businesses. The basic principles of fairness in compensation described in a notable compulsory purchase case, Horn v. Sunderland Corporation 1941, must be applied. In that case, it was held that the compensation entitlement of an owner compelled to sell should be
''the right to be put, so far as money can do it, in the same position as if his land had not been taken from him. In other words he gains the right to receive a money payment not less than the loss imposed on him in the public interest, but, on the other, no greater.''
As with standard compulsory purchase procedures, all losses incurred by the fur farmers should be recoverable, provided they pass the following tests. First, the losses should not be too remote, and should be a natural and reasonable consequence of the disposition: in this case, extinction of the business of the owner. Secondly, there must be a causal connection between the disposition and the loss. Thirdly, the duty to mitigate has to be discharged. While making general provision for compensation for the fur farmers, the scheme must allow sufficient room for each case to be judged on its merits, bearing in mind the principle accepted by the Lands Tribunal in a 1995 case, Sceneout Ltd. v. Central Manchester Development Corporation:
''the proper measure of compensation is the value of what is lost to the owner or owners.''
In that case, it was recognised that the business was certainly unusual and had a good reputation. It was concluded that the value of the business to the claimants was likely to be greater than its market value. Similar considerations should inform the approach to compensating fur farmers, whose businesses make them one of the most specialist sectors in the farming industry.
On 9 August 2001, the Government issued a consultation paper based on a draft of the compensation scheme. Mink farmers were consulted and the National Farmers Union responded on their behalf by the deadline of 5 October. A further draft
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Bill was presented in December, but had to be redrafted because of the ambiguities found by the Scrutiny Committee. Does the redrafted Bill meet the principles of fairness that I alluded to earlier? Some improvements in the draft scheme were made in the light of the consultation, including more inclusive definitions, a more sensible arrangement for clawing back planning gain where a house that had an agricultural condition on it is sold, a wider definition of recoverable and professional fees and the establishment of the clearance of asbestos from farms as a claimable item.
Although those changes are welcome, it remains the case that the scheme falls short of what farmers would consider to be fair, and it contains inherent injustices. The qualifying breeding value of the mink is fixed at a flat rate of £40 per animal, but that excludes male animals, and takes no account of the variation in value of different species of mink. The figure of £40 is considered to be well below the market value of the animals concerned. As the typical ratio on the fur farms is one male to three or four females, a significant part of the breeding value of the animals has been excluded from the scheme. Some of the species of mink, such as blue iris, are more valuable than the ordinary brown mink, but the formula takes no account of that.
The payment for breeding value of animals under schedule 3 of the order is reduced by half if the farmer carries on after 1 October 2001 and would have been reduced to only one sixth for persons still farming after 1 March this year. At least two farmers have been caught by those time limits because the Ministry of Agriculture, Fisheries and Food had previously indicated that no decision on when to cease farming would need to be taken until November last year. The irony is that consultation on the scheme closed on 5 October, several days after the penalty for continuing beyond 1 October came into force.
The formula for assessing net trading profits is fixed at a multiplier of four times, but some farmers have a case for arguing for a higher figure which—for example, younger farmers and those who would be on the point of expanding but for the introduction of the ban. As with the fixed value for breeding animals, there is no mechanism by which the multiplier can be independently tested by arbitration or in the Lands Tribunal. In a written answer on 22 January, the Minister said:
''It was not considered appropriate for the Government to leave the determination of the value of breeding stock and the income multiplier to an arbitrator or the Lands Tribunal, if they were to meet their obligation to make a scheme that is fair and reasonable.''—[Official Report, 22 January 2002; Vol. 378, c. 797W.]
Some would see a certain contradiction in the fact that the Government are deciding what is fair and reasonable and therefore believe that the Lands Tribunal is unable to make such a technical judgment.
On land clearance, the Minister indicated during the Bill's proceedings that the Government were prepared to consider the costs of demolition in relation to a claim where there was no appropriate alternative use for the buildings and fixtures. However, the compensation scheme makes no provision for the
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expensive operation of removing buildings and fittings that cannot possibly be used for another purpose, although the removal of asbestos has now become a claimable item.
I urge the Minister to reconsider these issues. Whatever the views of hon. Members on fur farming, fur farmers have complied with Parliament's wishes and co-operated with the Government on the ending of their livelihood. The onus of responsibility is on Parliament to guarantee that fur farmers are given adequate and fair compensation. I am not arguing that fur farmers should receive extra or greater payment out of a sense of nostalgia or because they deserve more than anybody else, simply that they should receive adequate and fair compensation.
In future, our successors may decide to close some other commercial farming activity that involves the breeding and slaughter of animals or wildlife. For example, the House might take the view that fish farming was morally unacceptable and that it rated a degree of fair compensation. We are talking about very few people, but the Government have a duty to ensure that the men and women affected are treated fairly. Conservative Members believe that the proposals do not meet those requirements of fairness.