Adam Corbin FAAV
Posted on 9 Feb 2018

Council Farms: A bird in the hand or cash in the bank?

The Council Farm Working Group (‘CFWG’) was appointed against a backdrop of a number of recent high profile sales of council “crown jewel” smallholdings estates. In those instances it might be suggested that Councillors faced with competing calls on limited resources were not prepared to preserve these estates in support of new entrants to farming. In an attempt to dissuade other Councils from following suit the CFWG considered how the smallholdings system could be modernised and developed for the 21st century.

The terms of reference for the CFWG were:

(a)          What actions would have most impact in refreshing and supporting the council farms system to encourage councils to retain and invest in their farm estates going forward?

(b)          Is there potential in exploring whether any changes or incentives might encourage more private landowners and larger estates to ring-fence some land opportunities to let specifically to new entrants in future (to play a similar role to the county farm estates system and provide a route into farming for new entrants)?

The working group focussed mainly on (a) above, on the basis that the area covered by (b) should be ‘left to the market’ (subject to the findings of the Working Group considering new entrants).

Statutory reform

Much work had already been done on reform of the letter of the law in this area following the “Red Tape Challenge”, as reported by TRIG on 6 December 2013. The current Working Group recommended that those proposed reforms were carried out.

The highlights of those include repeal of:

  • the ‘Smallholdings (Selection of Tenants) Regulations 1970 – 1970/1049’ as amended because they were now (then) outdated.
  • the ‘Smallholdings (Full-Time Employment)

Regulations 1970 –1970/1050’ asamended, and the relevant part of section 39 of the Agriculture Act 1970 dealing with the upper limit of a ‘smallholding’ because they were now (then) outdated.

  • the ‘Contributions to Losses Regulations 1970 – 1970/1051’ because they were now (then) obsolete.
  • repeal and/or revision of certain parts of the ‘Local Authorities Order 1974 – 1974/396’ because they were now (then) obsolete.

These adjustments are essentially good housekeeping, and should not be contentious.

New proposals

New proposals have now been provided by the Working Group. In considering ‘refreshing and supporting the council farms system’ the focus of the Working Group was on imposing the concept of a long-term strategy on Smallholding Authorities. Thus a large part of the Group’s recommendations concern the formation of an estate management strategic plan, with the following key strictures:

  • plans should cover 15 years
  • they will be subject to a public examination or independent panel assessment
  • the plan would demonstrate best value principles and accord with section 40 of the Agriculture Act 1970
  • the plan will always provide that income is reinvested in the smallholdings estate
  • infrastructure grants will be facilitated, but only if a plan has been produced.

Clearly the CFWG was proceeding on the basis that there is a need for County Council Smallholding Estates, and thus a need to preserve what is left of them, given there have been a number of high profile ‘bonfires’ or sales of the ‘crown jewels’, as some are apt to see them.

As an aside, it will be interesting to see how the emergent challenge to Hereford’s decision to sell its estate proceeds (see here and here).

Local Authority duty to support new entrants

Although the CFWG was clearly focussed on the retention of County Council smallholdings, some argue that the State should not be providing farms to those aspiring to farm, and that Local Authorities should, if anything, behave as ruthless commercial landlords, focussed upon yield, without concerning themselves with kick starting new entrants to farming, or any other objective.

That as a concept, prompted the author to consider whether there were any similar direct statutory duties imposed upon Local Authorities. An indicative list detailing 220 statutory duties imposed upon Local Authorities is available here. A consideration of this list reveals that there is little parallel to the smallholding concept. For instance, Local Authorities are not required to retain specific property to let out to aspiring entrepreneur brewers, chefs, shop proprietors, clothing manufacturers, engineers, and so on.

Indeed it is interesting to note that there is a continuing trend for Local Authorities, no longer, directly to provide housing (it being thought better that Housing Associations do that). A housing need review of 2016 statistics shows vast areas of England and Wales where no housing stock at all is held and a decrease in stock held from around 3.4m dwellings in 1996, to around 1.6m dwellings in 2016. See here.

One wonders whether there is the potential (and appetite) for a model for smallholdings, similar to housing, with dedicated (perhaps cross Authority) ventures aimed at fulfilling the requirements of the Agriculture Act, whilst increasing efficiency in estate management?

Would it not be better for the ‘stock’ of farmland to be managed by much larger institutions focussed on “… having regard to the general interests of agriculture and of good estate management… [and] ….make it their aim to provide opportunities for persons to be farmers on their own account by letting holdings to them…” as provided under section 39 of the Agriculture Act?

To some extent, perhaps organisations such as the Duchy of Cornwall and Ernest Cook Trust, which are at arms’ length of the State (arguably, anyway, in the case of the former) are already fulfilling such a role, demonstrating that it is possible.

A smallholdings association?

So what about a ‘Smallholding Association’? The main issue, and perhaps why the Working Group did not recommend it, is that Housing Association law is complex, and setting them up required substantial primary legislation, and then significant fiscal incentives for Local Authorities to divest themselves of stock. Moreover, once a Local Authority has lost its housing stock, it is difficult, if not impossible, to get it back. Losing control of a large amount of agricultural land, in a similar way, might well be unpalatable. Further, the housing function is not usually a ‘profit centre’, the aim is to break even, whilst many smallholding estates do run at a surplus.

On the other hand, there does seem to be an appetite amongst some Local Authorities for property investment; a recent report indicates that Local Authority commercial property holdings seem to be on the up, where it is stated that local councils spent over £1bn on real estate (see here). Incidentally, the article suggests that such commercial property assets are yielding 4.5-10%, not figures one might usually associate with an agricultural letting.

CFWG Proposals

Returning to the concept put forward by the CFWG, if the political will is behind encouraging Local Authorities to continue as Smallholding Authorities, then the proposals clearly will safeguard what remains of the national estate. On the other hand if there is no substantial political will behind putting those proposals into action, those wishing to preserve the national estate may need to gamble on a successful public law challenge to a disposal in order to bring a halt to the decline.

For more information please contact Adam Corbin, Barrister and Senior Associate in the Agriculture team.