Land Reform (Scotland) Bill: islands community impact assessment

Part 2

Name of Policy, Strategy or Service

Land Reform (Scotland) Bill: Land Management Tenancy, Agricultural Holdings, and Small Landholdings

Introduction

The Islands (Scotland) Act 2018 places a duty on the Scottish Ministers and other relevant authorities, including a number of public authorities, to have regard to island communities in exercising their functions, and for the Scottish Ministers, this will also include the development of legislation.

Testing a policy for how well it could impact on island communities should be an ongoing process. This is the case for the Land Management Tenancy, Agricultural Holdings, and Small Landholdings proposals in the Land Reform (Scotland) Bill. The purpose of this Island Communities Impact Assessment is to highlight this testing in relation to the proposals’ effects on island communities which might be significantly different from the effect on other communities.

Step One – Develop a Clear Understanding of Your Objectives

The legislative proposals aim to deliver the Programme for Government commitments 2021-22 including:

• modernising tenant farming legislation – a key part of the rural economy (for some people this is the only route to enter agriculture);
• modernising small landholding legislation;
• ensuring that tenant farmers and smallholders have access to climate change adaptation and mitigation measures;
• bringing forward a revised approach to rent reviews; and assessing the valuation for resumption.

In conjunction with these, the Bute House agreement committed to ensuring that tenant farmers and smallholders were not disadvantaged from participating in climate change adaptation and mitigation.

The objective of these changes are to ensure that tenant farmers and small landholders are able to contribute to delivering our Vision for Agriculture outlining our ambition to become a global leader in sustainable and regenerative agriculture.

The Agricultural Reform Route Map, underlines the commitment to ensuring that tenant farmers, smallholders and land managers are given equality of opportunity to allow them to play a key role in making our Vision for Agriculture a reality.

The policy objectives of each of the individual proposals are set out in detail in the Policy Memorandum accompanying the Bill. The aims of the provisions are summarised below:

Land Management Tenancy – this provision will seek to ensure that the model lease is developed in a way to enable individuals to undertake a range of land use activities in a way that supports sustainable and regenerative agriculture, the achievement of net zero targets, adaption to climate change, and increasing or sustaining biodiversity.

Modernising small landholdings legislation

Provisions include:

• Pre-emptive right to buy – providing small landholders with the opportunity to purchase the land comprised in their small landholding should the landlord (or a creditor with a right to sell) decide to transfer the land,
• Diversification – providing small landholders with greater opportunity to diversify their business, to support profitability and enable them to take action to help address the twin crises of climate change and biodiversity loss,
• Succession and assignation – ensuring that small landholders can bequeath and assign their tenancy to broadly the same classes of people as tenant farmers with secure 1991 Act tenancies,
• Guidance – extending the functions of the Tenant Farming Commissioner (TFC) to include small landholdings,
• Rent and compensation – modernising the law to ensure there is a fair balance between the interests of small landholders and their landlords.

Modernising Agricultural Holdings legislation.

Provisions include:

• Diversification – providing tenant farmers with greater opportunity to diversify their business, and in that way to improve farm incomes and help address the twin crises of climate change and biodiversity loss,
• Agricultural improvements – providing tenant farmers with greater scope to improve their holdings, and participate in sustainable and regenerative agriculture,
• Good husbandry and estate management rules – ensuring that tenant farmers can undertake sustainable and regenerative agricultural practices in accordance with these rules,
• Waygo – enabling tenants and landlords to settle their waygo claims in good time, and so move forward with the next stage of their life,
• Rent review – improving the 2016 Act changes, drawing on the work of the Tenant Farming Commissioner, to create a flexible ‘hybrid’ system of rent review meeting the needs of the industry,
• Resumption – ensuring that tenant farmers receive fair compensation where the landlord takes back any part of the leased land,
• Compensation for game damage – modernising the compensation for game damage provisions by making good a wider range of losses, and
• Pre-emptive right to buy – improving the registration process, to ensure that it is as least burdensome as is possible for the tenant.

The proposals in this Bill will contribute to the following national outcomes:

• Communities – We live in communities that are inclusive, empowered, resilient and safe.
• Environment – We value, enjoy, protect and enhance our environment.
• Economy – We have a globally competitive, entrepreneurial, inclusive and sustainable economy.
• Human Rights – We respect, protect and fulfil human rights and live free from discrimination.
• Poverty - We tackle poverty by sharing opportunities, wealth and power more equally.

Step Two – Gather Your Data and Identify Your Stakeholders

Agricultural tenancies and small landholdings have been subject to statutory regulation for more than 100 years. Agricultural tenancies are governed by two statutory regimes: the Agricultural Holdings (Scotland) Act 1991 and the Agricultural Holdings (Scotland) Act 2003. Small landholdings are governed by the Landholders (Scotland) Acts, which includes legislation from 1886 to 1931.

Information on tenancy type is available through the Scottish Government Agricultural Census and was last collected in 2021. The Scottish Government Agricultural Census 2021 results showed that there were:

• 3,821 secure 1991 Act agricultural tenancies,
• 175 Modern Limited Duration Tenancies (MLDTs).
• 743 Limited Duration Tenancies (LDTs).
• 1,258 Short Limited Duration Tenancies (SLDTs).
• 59 Small Landholders Act (SLA) tenancies.

The Agricultural Census in 2021 showed that there were approximately 12,300 holdings on Scotland’s islands, of which 8,000 were estimated to have rented land (including crofts).

Based on around 300 holdings on Scottish islands which responded to the ‘type of tenancy’ question in 2021, 57% were secure 1991 Act tenancies and 5% were 1991 Act Limited Partnerships, compared with 59% and 6% for Scotland, respectively. This suggests a reasonable level of comparability in the proportions of these tenancy types between the islands and mainland Scotland, based on the data available.

Out of 59 small landholdings there are estimated to be around 15 – 18 located on the Isle of Arran alone.

Due to low numbers of agricultural tenancies on islands, it is not possible to provide a data breakdown by island. We have instead compared island communities to the mainland.

The current legislative framework enables parties to enter into leases freely at the discretion of landlords and tenants across all of Scotland - the proposals do not change this position.

Step Three – Consultation

The proposed measures outlined in the Land Reform (Scotland) Bill 2024 build on an extensive consultation exercise.

Land Management Tenancy

The Land Management Tenancy was consulted on as part of the Land Reform in a Net Zero Nation consultation. The consultation received 537 responses, of which 162 were from groups or organisations and 375 from individual members of the public. Six in-person consultation events were also held across Scotland with a further event online. A number of discussions were held with environmental NGOs and tenant farming stakeholders to develop this proposal.

The written consultation included the following question:

Are you aware of any examples of how the proposals in this consultation might impact, positively or negatively, on island communities in a way that is different from the impact on mainland areas?

The responses to this question did not draw out any differentiating impacts for islands associated with the land management tenancy proposal.

Small Landholdings Consultation

The small landholdings consultation was conducted in 3 stages: (1) a legislative review which originated from the Land Reform (Scotland) Act 2016; (2) a written Small Landholdings Modernisation consultation; and (3) a Strategic Environmental Assessment consultation.

(1) The legislative review was published in 2017 after a comprehensive consultation. The consultation included contacting all known small landholders and their landlords. The Scottish Government attended various events to meet relevant stakeholders. Some of these were Scottish Government-led events which provided individual small landholders and landlords the opportunity to meet officials at a small number of separate events in the areas of Scotland with the highest density of small landholdings (including the Isle of Arran). Government officials also attended a number of industry events including the Smallholder & Growers Festival in Lanark, the Rural Parliament in Brechin, and AgriScot in Edinburgh. The legislative review report can be found here: Small landholdings in Scotland: legislation review - gov.scot (www.gov.scot)

(2) After the launch of the Small Landholding Modernisation consultation, officials endeavoured to make personal contact with all small landholders and ensure that landlords had fair representation. Where possible the consultation was sent to small landholders and landlords directly. Officials also held a workshop on the Isle of Arran and organised individual meetings with landlords. The consultation analysis can be found here: Small landholdings modernisation: consultation analysis - gov.scot (www.gov.scot)

(3) The Strategic Environmental Assessment consultation ran from 12 October 2023 to 11 December 2023. A total of 12 responses were received. The environmental report accompanying the consultation concluded that the proposals have the potential to lead to major positive effects for biodiversity and geodiversity, climate change, and soil and water, along with positive cumulative effects. The effects on the historic environment are uncertain.

The written Small Landholding Modernisation consultation included the following question:

Are you aware of any examples of how the proposals in this consultation might impact, positively or negatively, on island communities in a way that is different from the impact on mainland areas?

There were 15 responses to this question. Almost a third (29%) of respondents were not aware of any examples of potential different impacts of the proposals on island communities. Around a quarter (24%) were aware of potential impacts. Respondents identified a number of potential benefits of the proposals to island communities. These benefits related to increasing access to employment and housing; bringing in new residents; and giving small landholders on islands more control over their future.

A number of additional comments were also received in response to this question such as:

• Small landholdings playing an important role in island economies.
• Island communities are more sensitive to depopulation and the rural economy will benefit from new people and increased investment.
• There is an opportunity to give small landholders on islands access to further support, and benefit to communities, if brought within the crofting framework.
• Need for fairness and consistency across mainland and island holdings.
• The need to protect island small landholdings for future generations.
• Wider issues in rural and island areas including access to affordable housing.

These responses were considered during the development of the proposed measures, to help ensure that they applied consistently between island and mainland communities, while enabling positive impacts to remain. For instance, to address the third bullet point the Bill provides for the Tenant Farming Commissioner to produce guidance on converting small landholdings to crofts.

Agricultural Holdings

The agricultural holdings proposals were consulted upon in three stages: (1) a consultation as part of the “Delivering our Vision for Scottish Agriculture: Proposals for a New Agricultural Bill” consultation; (2) the co-development of the detail with the Tenant Farming Advisory Forum^[1]; and (3) a Strategical Environmental Assessment consultation.

(1) The Agriculture Bill consultation included a number of agricultural holding responses and ran from 29 August 2022 to 5 December 2022. The consultation received 392 responses consisting of 225 from individuals and 167 from organisations. A series of in person consultation events were carried out during the consultation period including Inverness, Skye, Aberdeenshire, Oban, Scottish Borders, Stirling, Dumfries and Galloway, Ayrshire, and Orkney. In addition, an online workshop was held on 15 November 2022 on modernising agricultural tenancies was open to everyone including island communities. The Agriculture Bill consultation analysis was published in June 2023 and can be found here: Agriculture Bill: consultation analysis - gov.scot (www.gov.scot).

(2) The proposals for tenant farming were co-developed in partnership with TFAF. The minutes and papers of these meetings can be found at the Tenant Farming Advisory Forum website - Tenant Farming - Our work - Scottish Land Commission

(3) The Strategic Environmental Assessment consultation ran from 12 October 2023 to 11 December 2023. A total of 12 responses were received. The environmental report which accompanied the consultation concluded that the proposals have the potential to lead to major positive effects for biodiversity and geodiversity, climate change, and soil and water, along with positive cumulative effects. The effects on the historic environment are uncertain.

The written consultation on the Agriculture Bill included the following question:

Are you aware of any examples of how the proposals in this consultation might impact, positively or negatively, on island communities in a way that is different from the impact on mainland areas?

The 53 responses received were particular to the Agriculture and Rural Community Bill, and the consultation analysis did not draw out different impacts associated with the agricultural tenancy proposals.

Subsequent Engagement

Separately to the consultations an MSP raised a concern around whether valuers were treating island communities different from the mainland. Concern was expressed that valuations could be difficult and more expensive to undertake in relation to assessing compensation. Further to this concern, the Scottish Government consulted with the Royal Institute of Chartered Surveyors (RICS) and Scottish Agricultural Arbiters and Valuers Association (SAAVA) who made clear that valuation services may in some circumstances be more expensive to access on islands, but this is related to their geographical location rather than the particular effect of the proposed measures. There is no difference in the approach to valuations between island communities and other parts of Scotland. Accordingly, the Scottish Government do not consider that the proposals have a significant adverse effect on island communities.

As part of the Scottish Firms Impact Test a number of online interviews were held, including a landowner, two agricultural tenants, and three small landholders located on islands. Each interviewee was asked, where relevant:

Are you aware of any examples of how the proposals might impact, positively or negatively, on island communities in a way that is different from the impact on mainland areas?

Interviewees did not believe there would be different impacts between people on an island and others on the mainland. However, 4 out of 5 tenants (agricultural and small landholders) acknowledged the proposals could benefit island communities.

Step 4 – Assessment

A full Islands Community Impact Assessment is NOT required.

In preparing the ICIA, the Scottish Government has formed an opinion that the policy is not likely to have an effect on an island community which is significantly different from its effect on other communities (including other island communities). The reasons for this are detailed below.

The Land Management Tenancy, agricultural holding, and small landholding proposals will apply throughout Scotland. From consultation analysis and engagement, the proposals are unlikely to have any negative impacts for island communities and will provide the same opportunities as those on the mainland.

Agricultural tenancies and small landholdings are private contractual arrangements between tenants and their landlords. These proposals have no element of compulsion.

From our engagement and analysis, we have not discovered any unique impacts for island communities. There will be no unique impacts in terms of demographic, economic, Gaelic, or social factors.

This part of the ICIA was completed by: Calum Jones

Position: Senior Policy Advisor

Signature: Calum Jones

Date completed: March 2024

This part of the ICIA approved by: John Kerr

Position: Head of Agriculture Policy Division

Signature: John Kerr, March 2024