Tenant farmers are at the heart of our rural economy.
In February 2022, the Tenancy Working Group was set up to review how government could better create the conditions for a thriving tenanted sector.
Chaired by Baroness Rock, the group published its findings in the Rock Review: working together for a thriving agricultural tenanted sector.
Today, we published our response to the Rock Review on GOV.UK.
In this post, I'll summarise how we have been incorporating its recommendations into our work to date and as we continue to roll out our reforms.
Our offer and tenant farmers
Our response builds on the steps we have already taken to make our ongoing payments and one-off grants work for tenant farmers.
Tenant farmers continue to help shape our offer through pilots, tests and trials, co-design and stakeholder groups.
For example, we designed Sustainable Farming Incentive (SFI) agreements to be 3 years in duration, making it easier for them to take part.
We also allow farmers with only 2 years remaining on their tenancy agreement to enter the scheme and leave without penalty after 2 years, along with those on rolling 1-year tenancies, or licenses that operate like tenancies.
We're adding twice as much scope into the scheme as planned in 2023, making a wider range of options accessible to tenants without landlord consent and on shorter agreement lengths than have historically been available.
We also invited tenant farmers to take part in project bids during the first round of Landscape Recovery long as they could show they had management control of the land, or the consent of those with management control, for the duration of the project development and implementation agreements.
We asked landlord applicants within Landscape Recovery projects to confirm that they had the support of tenants before submitting their applications. We also asked them to confirm that the support of tenants extended into the development phase.
Around half of the 22 projects in the first round of Landscape Recovery involve tenants.
We've made sure that our grants are accessible to tenant farmers, including the £168 million of investment we will make available throughout 2023.
We lowered the minimum Farming Equipment and Technology Fund grant to £1,000. The Rock Review makes specific reference to the need for joint agreements with county councils. The Farming Equipment and Technology Fund now allows local authorities to be the applicant.
Larger value grants under the Farming Investment Fund are available to both landlords and tenants.
Countryside Stewardship capital grants are available to both landlord and tenants.
We decided to evolve Countryside Stewardship instead of building an entirely new scheme. This is in line with the review's recommendations, as tenants are already familiar with the way it works.
We continue to work with tenant and landlord organisations to find practical and achievable ways to enable more tenant farmers to take part in tree planting schemes and contribute to the government's tree planting ambitions in England.
For example, we have worked with the Tenancy Reform Industry Group to develop guidance for how tenants can approach tree planting and woodland schemes such as the England Woodland Creation Offer (EWCO).
Scheme accessibility and flexibility
We know there is more we can do. In response to the Rock Review, we are bringing forward a range of actions relating to our environmental land management schemes which introduce more accessibility and flexibility of contracts, to give tenants and landlords better options.
Specifically, we will:
- offer further options on SFI terms and conditions in 2024 so that tenants can access them straightforwardly and on flexible terms that work for them
- bring together all schemes that support tree and woodland planting into a central service by bringing the England Woodland Creation Offer into enhanced Countryside Stewardship in 2025
- work with tenant farmers to explore how we can simplify and bring more flexibility into Countryside Stewardship options as we continue to evolve the scheme
- work with tenant and landlord organisations to find practical and achievable ways to enable more tenant farmers to contribute to England's tree-planting ambitions.
Strengthening landlord-tenant relationships
While the relationship between a landlord and a tenant is a commercial one, we know there is more we can do to support collaborative landlord-tenant relationships. For example, by:
- improving our engagement with the tenanted farming sector through the establishment of the new Farm Tenancy Forum. This will improve the way we communicate with the sector and help us ensure our schemes are as accessible as possible to tenants
- launching a call for evidence this summer to explore the benefits and impacts of how a Tenant Farmer Commissioner might work in practice and how such a role might fit within existing procedures and regulations.
Additionally, in response to the Rock Review, we are pleased to share that the Royal Institute of Chartered Surveyors (RICS) will lead, within its public interest remit, the development of a code of practice on expected standards of socially responsible behaviour for all parties involved in agricultural tenancy agreements. This includes landlords, tenant occupiers, land agents, and other professionals.
RICS will develop the new code collaboratively, working with industry bodies including the Tenant Farmers Association (TFA), the Country Land and Business Association (CLA), the National Farmers Union (NFU), the Central Association of Agricultural Valuers (CAAV), and the Agricultural Law Association (ALA).
Encouraging new entrants
Attracting and enabling bright new talent into land-based businesses is vital for a sustainable and productive agricultural sector. This is something the Rock Review highlights.
We are designing all our farming schemes to be as accessible as possible to tenant farmers and will continue to build on this as we deliver our schemes.
Through our New Entrant Support Scheme pilot, we're testing approaches to building entrepreneurial capacity and increasing opportunities to access land and finance.
We will commit to assessing how the pilot supports farmers to gain new tenancies and we will present emerging findings to the new Farm Tenancy Forum, to ensure that the views of the tenanted sector are embedded into the scheme.
By supporting tenant farmers and making our offer work for them, government can encourage new people into the sector.
Taxes and tenants
The Rock Review included recommendations on how tax incentives could encourage longer-term tenancies and tenant entry into schemes. In response, we:
- launched a consultation (at Budget 2023) to explore the extension of inheritance tax relief to include land in environmental land management schemes and ecosystems service markets. This explores an option to limit inheritance tax relief to land let out for a minimum of 8 years, which could provide tenant farmers with greater certainty over the length of tenancy agreements
- opened a call for evidence on the taxation of ecosystems service markets to understand the commercial operations and the areas of uncertainty around taxation
- updated the HMRC Inheritance Tax Manual to help to clarify the tax treatment of agri-environment schemes.
Our response today sets out the significant progress we have already made to ensure our new farming schemes work for every type of farmer - including tenants - and the actions we are taking forward in response to the Rock Review.
- work closely with the new Farm Tenancy Forum (FTF) to progress and implement many of the commitments outlined in our response
- share details of the FTF membership here on the blog later this year
- report on progress with our work with tenant farmers
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Finally, the inheritance tax consultation is being run by HM Treasury (HMT) and HM Revenue and Customs (HMRC) until 9 June. The responses will inform policy development before the government makes decisions on these issues, including whether to make any changes to current policy
If you'd like to participate in the consultation please send comments, questions, or submissions to firstname.lastname@example.org