Category: Policy & Business

The letting of houses in Wales will see significant changes from the 1st December.  The provisions of the Renting Homes (Wales) Act 2016 (“the 2016 Act”) will come into force on this date and all Assured Tenancies in Wales will convert into Occupation Contracts.  This includes any Assured Agricultural Occupancies (AAOs) which exist in Wales.

Under the Act, which has experienced several delays, two new forms of Occupation Contract for letting residential property in Wales will be introduced: a Secure Contract and a Standard Contract; the latter will replace the Assured Shorthold Tenancy (AST).  Secure Contracts are for Community Landlords.   The legislation is retrospective, meaning it will apply to existing tenancies as well as new Agreements; existing ASTs will need to be converted to Standard Contracts.  The new Contracts will also be ‘Model Contracts’ meaning that, when setting up a new Tenancy, the contract will need to contain certain clauses and conditions set by the Welsh Government.  Model Contracts are available from the Welsh Government website.

One significant change surrounds bringing an Occupation Contract to an end.  Where the contract-holder has breached the Occupation Contract, the minimum notice period that must be given is one month (shorter where it relates to a breach of the anti-social behaviour or the serious rent arrears).  However, where a ‘no fault’ notice is issued (similar to the s21 notice under an AST), the minimum notice period that must be given is six months.  Furthermore, a Landlord will not be able to give such a notice until at least 6 months after the contract starts.  In practice, this means that there will be a twelve-month minimum term for periodic Standard Contracts under the new Act.  It will be possible to have a Landlord’s break clause but these will only be able to be incorporated into a fixed term Occupation Contract if the contract has a fixed term of 2 years or more and the Landlord will not be able to exercise a break clause within the first 18 months of occupation.

Further information can be found on the Welsh Government website at https://gov.wales/landlords-housing-law-changing-renting-homes

Following days of political and economic upheaval, many of the plans announced in the ‘Mini-Budget’ of the 23rd September, that we reported on last month, have been reversed.  Even the Energy Price Guarantee for households, that was not part of the Mini Budget, has been amended.  For simplicity, we have set out the changes in the table below;

The independant Tenancy Working Group (TWG) has set out its recommendations to Government on how to deliver a more resilient tenanted sector in the Rock Review: Working Together for a Thriving Agricultural Tenanted Sector.  The review is named after the chair of the TWG, Baroness Kate Rock.  The Group, which was formed in February 2022, was given two clear objectives by the then Secretary of State;

• to look at how the new government financial schemes would be accessible, open and flexible to tenant farmers
• to look at longer-term changes that would ensure a robust, vibrant and thriving agricultural tenanted sector for the future.

The Review makes 74 detailed recommendations and highlights 18 headlines which the more detailed recommendations sit within.  These are then separated into 10 that are for ‘immediate action’ and 8 that require action over a ‘longer timescale’.

Recommendations for Immediate Action

The key recommendation for immediate action is Defra must design all Environmental Land Management schemes and Productivity schemes to be accessible and open to tenant farmers.  The basic principle should be that Tenants should not need Landlords consent to enter tenanted land into schemes and Landlords should not be allowed to enter tenanted land into schemes unilaterally.  This means, where there is alignment between scheme length and the length and terms of the tenancy agreement, the Tenant can unilaterally enter tenanted land into schemes.  Furthermore, Landlords should only be allowed to enter tenanted land into scheme options that require permanent land use change (i.e. woodland) jointly with the Tenant and then only with the consent of the Tenant.

Other recommendations include;

• Defra should enable joint applications to woodland schemes that incentivise Landlords to discuss woodland planting with their Tenants so that both can benefit from any agreement and joint applications to productivity schemes and for fixed equipment
• Defra and the Treasury need to examine ways to incentivise investment into renewing and upgrading infrastructure on tenanted holdings
• Adequate protection to ensure land is not removed from tenancies for schemes such as woodland, natural capital and for the private ecosystems market (BNG, carbon etc.) and to ensure that Tenants are rewarded and not disadvantaged for their work in maintaining and improving these
• Defra needs to develop a long-term new entrant policy and consider ways in which it can best use public funds to incentivise and support private Landlords to help safeguard the future of the tenanted sector and progression of new entrants.
• Defra needs a consistent process and protocol that requires testing of all schemes with tenant farmers to ensure they are compatible with the constraints facing Tenants
• Defra needs to ensure that Government takes account of land occupation issues in development of policy.

Recommendations that Require Action over a Longer Timeframe

These include the recommendation for a consultation on Tenancy reform in 2023 and in particular why FBT agreements are using such a ‘narrow band of the flexibility available within the ATA 1995′.  The Review also recommends that Defra should consult on legislative changes to open up the ability for Tenants to diversify their businesses without the Landlord unreasonably refusing consent.  Other longer-term recommendations include,

• Defra should examine how it can incentivise and provide advice on how Landlords and Tenants can collaborate to develop and enter mutually beneficial agreements that cover public and private schemes
• The appointment of a Tenant Farmer Commissioner to ensure Government policy is ‘tenant proof’
• Improving the licensing of land agents so their performance and behaviour can be appropriately scrutinised and held to account
• Tax incentives to encourage Landlords to let more land for longer.
• Defra must publish an update on its progress against these recommendations every year of the Agricultural Transition Plan.

The above are only recommendations to Government and Defra will publish its response in due course.  The full Review can be found via https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1110805/The_Rock_Review_-_Working_together_for_a_thriving_agricultural_tenanted_sector.pdf

 

The Catchment Sensitive Farming (CSF) programme has been extended to the whole of England.  This means all English farmers can now benefit from the advice of CSF advisors.  Local advisors give confidential, on farm, advice on how to reduce air and water pollution including management of soils, nutrient, slurry and manure management and ammonia emissions reductions.  They also signpost producers to available schemes and grants.  In some cases, consent is required from a CSF advisor to be eligible for certain capital items under the CS scheme.  Further information and details on how to speak to a local adviser can be found via https://www.gov.uk/guidance/catchment-sensitive-farming-reduce-agricultural-water-pollution.  It is not clear whether additional advisors will be recruited in light of the increased number of farms to be covered.  There have been issues in the past with advisors being stretched thinly and, particularly, not being able to provide consents to farmers ahead of scheme deadlines. 

 

The ‘first-ever’ Agriculture Bill for Wales has been laid before the Senedd.  Like the equivalent Bills in England and Scotland, it is largely about providing the Government with the power to set agricultural policy.  The details of actual schemes will be filled-in by secondary legislation.  The Bill sets out the framework for Sustainable Land Management (SLM) the overriding principle of Welsh future farm policy which includes the Sustainable Farming Scheme (SFS) – the replacement for BPS and Glastir (see article https://abcbooks.co.uk/future-farm-support-in-wales/).

Part 1 sets out the four main objectives of the Sustainable Land Management (SLM):

• produce food and other goods in a sustainable manner
• mitigate and adapt to climate change
• maintain and enhance the resilience of ecosystems and the benefits they provide, and
• conserve and enhance the countryside and cultural resources and promote public access to and engagement with them, and to sustain the Welsh language and promote and facilitate its use

The Bill also provides for monitoring and reporting of progress towards achieving the objectives, including the setting of indicators and targets.  Ministers will be required to publish a statement of indicators and targets, and will need to report on progress towards these.

In addition to the new agricultural policy, the Bill provides protection for agricultural tenants, meaning a 1986 Act tenant has the power to challenge a tenancy term or consent in relation to Welsh financial support schemes, ensuring they are not unfairly restricted from accessing financial assistance.   It also introduces amendments to the Forestry Act 1967 to give Natural Resources Wales the power to add conditions to amend, suspend or revoke felling licenses to prevent felling that would contradict other environmental legislation.  And also amends the Wildlife and Countryside Act 1981 to prohibit the use of snares and glue traps.  One topic not included in the Bill is the National Minimum Standards for Agriculture – the replacement for cross-compliance.  Legislation to enact these was planned to be included and it is not clear why they have been dropped.  

The full Bill can be found via https://senedd.wales/media/51ncc5s0/pri-ld15330-e.pdf  and the accompanying Explanatory Notes & Regulatory Impact Assessment via https://senedd.wales/media/mbcn2e21/pri-ld15330-em-e.pdf

 

The Government has announced plans to boost domestic horticulture.  An additional £12.5m will be channeled through the Farming Innovation Programme (FIP) to fund projects in areas such as robotics and automation.  Projects will be able to bid for the funding from January with the competition being run through UK Research and Innovation (UKRI).  In addition, the Defra Secretary, Ranil Jayawardena, has pledged to appoint an ‘industry expert’ to look at the barriers and opportunities in Controlled Environment Horticulture (i.e. glasshouse production).  A set of recommendations and policy interventions that the Government can implement both immediately and longer-term are set to be produced.   For more details see – https://www.gov.uk/government/news/environment-secretary-commits-to-sustainable-horticulture-growth

Scottish farmers have been receiving their 2022 BPS payments.  We wrote previously (see https://abcbooks.co.uk/2022-bps-payments-scotland/) that Scottish farmers and crofters would be receiving their BPS around a month earlier than normal and, although not quite as early as expected, payments have made good progress.  As at 4th October payments totalling £328 million had been issued to 14,271 businesses (81.68%) – equating to 78.3% of the annual anticipated expenditure.  The table below sets out the rates for 2022 and also includes those for 2021 for comparison.  Advanced payments are expected to be ‘at least 95%’ of the anticipated payment due.

This year advanced payments are being made rather than loan payments following the Rural Support (Simplification and Improvement) (Scotland) Regulations 2022 coming into force on 18th September.  Recipients won’t really see any difference, but loan payments carry a higher risk as they are made on the basis of unverified applications.  Rural Payments has also said loans are processed manually and therefore use up a significant amount of resource to operate.  As advance payments are made on fully verified applications the risk of incorrect payment is minimal. Also, payments are delivered through a fully automated function with no additional resource required to deliver them.

 

After the chaos unleased in financial markets by the ‘mini-budget’ at the end of September, the Government has promised a full Budget on the 23rd November.  This will set out in more detail how it plans to start reducing public borrowing following the massive tax cuts announced.  There will also be a full analysis of the economic situation by the Office of Budget Responsibility (OBR) which was lacking from the mini-budget.  More information should be provided on the supply-side measures such as deregulation and Planning reform that are part of the drive to improve economic growth.

Following the reports of Defra reviewing ELM and the potential re-introduction of area payments, which we reported on the last Bulletin, the Department has released a statement.  This confirms the new Government’s commitment to the environment.  It also provides (slightly lukewarm) support for ELM.  The statement sets out that ‘We’re not scrapping the schemes [ELM]‘, but goes on to say ‘it is only right that we look at how best to deliver the schemes to see where and how improvements can be made‘.  The full statement (in the form of a blog post) can be found at – https://deframedia.blog.gov.uk/2022/09/26/government-reiterates-commitment-to-environmental-protections/

With the Conservative leadership race taking centre-stage over the summer, Northern Ireland (NI) Protocol issues were put on the back-burner.  This hiatus was extended due to the death of Her Majesty.  Recent events appear to have resulted in reflection both in London and in Brussels as the new Prime Minister held introductory discussions with European leaders.  This change of tone suggests a window of opportunity to achieve a negotiated outcome to the NI Protocol wranglings, which have bedevilled UK-EU relations since the onset of Brexit.

There have also been notable changes on the ground over recent weeks which have helped to create a cautious sense of optimism;

• The UK authorities have developed a bespoke data system delivering near real-time visibility of goods’ movements between GB and NI.  This system pulls together data from five separate sources with a 15-minute delay.  Therefore, soon after a ship departs GB, regulatory authorities know what the ship contains.  They can then carry out risk assessments and identify any shipments that they wish to inspect.
•  The availability of real-time data was a key demand from the EU negotiators to allow greater flexibility on the implementation of the NI Protocol.  This, in addition to the EU Commission’s October 2021 suggestions, gives greater scope for compromise with its chief negotiator Maroš Šefčovič suggesting the physical inspections could be limited to ‘a couple of lorries a day‘.

Whilst recent developments have improved the mood music, significant hurdles remain.  Not least, the Northern Ireland Protocol Bill which is currently passing through Westminster is still on the table and its activation could scupper progress.  There is also the end of October deadline by when an NI Executive needs to have been formed, otherwise there will be another Assembly election, possibly by year-end.

On 6th October, there is an inaugural meeting, in Prague, of the European Political Community – an entity devised by French President Emmanuel Macron to bring together leaders from across the European continent, including both EU member states and non-EU countries.  Liz Truss is exploring the possibility of attending.  Several experts see this as a key opportunity to make political progress on the NI Protocol as some believe that negotiations thus far have been heavily focused on technicalities due to the EU Commission’s input.  If Liz Truss attends and political progress is achieved at the Prague meeting, this could then pave the way at the next European Council meeting on 20-21 October to give greater flexibility in the negotiating mandate of Maroš Šefčovič to reach a workable solution.

Whilst there are remaining issues around the role of the European Court of Justice, VAT and competition rules, the central stumbling block remains agri-food trade and its associated Sanitary and Phytosanitary (SPS) rules.  The resolution of this issue will likely require some form of SPS agreement between the UK and the EU.  Many have advocated a Swiss-style SPS agreement in the past, whereby the EU would permit frictionless access in return for the UK dynamically aligning with EU regulation.  The prospects for this sort of agreement are now remote, due to the Retained EU Law Bill announced by the UK Government which will end the special status of EU law in the UK statute book.  This Bill includes a sunset clause by when all remaining retained EU Law will either be repealed, or assimilated into UK domestic law.  This will create scope for divergence in the future and would render a Swiss-style SPS agreement unworkable.

It remains to be seen what form an eventual SPS agreement to manage the Protocol issues will take.  The UK would prefer a New Zealand-style arrangement, with physical checks rates being as low as 1% on meat.  The EU does not favour this, given the UK’s size and proximity to the EU Single Market.  Amongst all of this, a bespoke UK(NI)-style arrangement will need to emerge if this issue is to be truly resolved.