The following is a ‘Notified Amendment’ to the draft Agriculture Bill:
(1) Every smallholdings authority which immediately before the commencement of Part l of this Act holds any land for the purposes of smallholdings shall review the authority’s smallholdings estate and shall, before the end of the period of eighteen months beginning with the commencement of Part 1 of this Act, submit to the Minister proposals with respect to the future management of that estate for the purposes of providing—
a. opportunities for persons to be farmers on their own account;
b. education or experience in environmental land management practices;
c. opportunities for increasing public access to the natural environment and understanding of sustainable farming; and
d. opportunities for innovation in sustainable land management practices.
(2) No land held by a smallholdings authority as a smallholding immediately before commencement of Part l of this Act is to be conveyed, transferred, leased or otherwise disposed of otherwise than—
a. in connection with the purposes listed in subsection (l); and
b. in accordance with proposes submitted under subsection (l).
(3) For the purposes of this section, “smallholdings authority” has the same meaning as in section 38 of the Agriculture Act 1970.
Parliamentary Member’s explanatory statement: This new clause would limit the disposal of smallholdings (“county farms”) by local authorities and would require local authorities to review their holding and submit proposals for future management to provide opportunities to extend access to farming, education, and innovation.
The clause, as drafted, has the potential to significantly impact on the management of Local Authority Small Holding Estates. Whilst the ambitions contained with the proposed clause are admirable as to the support it could bring to new entrants to the agricultural sector as well as increasing environmental awareness and public access to the countryside. The reforms could however come at a very substantial cost to local authorities by depleting existing revenue streams, eroding surpluses and frustrating capital receipts from future disposals or rationalisations of their holdings.
Very few smallholdings are capable of providing a stand-alone income to tenants (and this is unlikely to improve in the years ahead) and the rents from such holdings represent a very low return on the investment value to their landlord, the Local Authority, when compared to other asset classes. This is before consideration is given to the ongoing investment such holdings require to fund day to day repairs and regular capital expenditure in new buildings and equipment. Once these factors are taken into account any Local Authority agricultural estate, as opposed to being a source of revenue capable of supporting council budgets for child and adult care or highways maintenance could very quickly become another drain on limited council income.
In addition to the above, Local Authority estates have the potential to provide occasional windfalls from disposals which can supplement council funds or in some cases provide valuable land which can be used by councils to enhance and improve local facilities such as education, housing and leisure and sports.
The proposed amendment could, in the longer term, limit prudent asset management of estates by the Authority, limiting rationalisation and development, increasing management costs, reducing revenue and delaying or potentially disposals.
The eighteen month review period referred to within the proposed amendment effectively suspends any Authority’s current management plan disrupting short-term plans until DEFRA has ratified that Authority’s future plans, in accordance with the Act.
We recommend that every authority considers carefully the implications of the above amendment to the Agriculture Bill on its agricultural estate. Assuming the most benign interpretation it has the potential to cause significant short-term disruption to the management and financial budgets of Local Authority estates. The most ferocious interpretation could lead to very substantial losses running into many millions of pounds for some Authorities as future development plans and windfalls are thwarted and management costs escalate.
Carter Jonas advises a number of local authorities on the management of agricultural estates and recommends in this case the Authorities consider any existing plans that may appear to be “in question” once this Bill enters law. Carter Jonas is able to undertake immediate reviews of estates to advise any action that could be taken in the short-term.
For further information, contact Mark Charter, Head of Estate Management (email@example.com / 01865 404406), or your local Carter Jonas office.