RURAL AFFAIRS, CLIMATE CHANGE AND ENVIRONMENT COMMITTEE AGENDA. 5th Meeting, 2012 (Session 4) Wednesday 22 February 2012

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1 RACCE/S4/12/5/A RURAL AFFAIRS, CLIMATE CHANGE AND ENVIRONMENT COMMITTEE AGENDA 5th Meeting, 2012 (Session 4) Wednesday 22 February 2012 The Committee will meet at am in Committee Room Decision on taking business in private: The Committee will decide whether to take items 4 and 5 and future consideration of a draft Stage 1 report on the Agricultural Holdings (Amendment) (Scotland) Bill in private. 2. Long Leases (Scotland) Bill: The Committee will take evidence from Dale Strachan, Partner, Brodies LLP; Lionel Most, Member, Conveyancing Committee, Law Society of Scotland; and then from Richard Blake, Legal Adviser, Scottish Land and Estates Ltd; Alan Cook, Chair, Commercial Committee, Scottish Property Federation. 3. Subordinate legislation: The Committee will consider the following negative instrument the Less Favoured Area Support Scheme (Scotland) Amendment Regulations 2012 (SSI 2012/24). 4. Work programme: The Committee will review its work programme. 5. Agricultural Holdings (Amendment) (Scotland) Bill: The Committee will consider a draft Stage 1 report.

2 RACCE/S4/12/5/A Lynn Tullis Clerk to the Rural Affairs, Climate Change and Environment Committee Room T3.40 The Scottish Parliament Edinburgh Tel:

3 RACCE/S4/12/5/A The papers for this meeting are as follows Agenda item 2 Cover note RACCE/S4/12/5/1 Agenda item 3 The Less Favoured Area Support Scheme (Scotland) Amendment Regulations 2012 (SSI 2012/24) Cover note RACCE/S4/12/5/2 Agenda item 4 PRIVATE PAPER Agenda item 5 PRIVATE PAPER RACCE/S4/12/5/3 (P) RACCE/S4/12/5/4 (P)

4 RACCE/S4/12/5/1 Introduction Rural Affairs, Climate Change and Environment Committee 5th Meeting, 2012 (Session 4), Wednesday, 22 February 2012 Long Leases (Scotland) Bill 1. The Long Leases (Scotland) Bill 1 was introduced in the Parliament on 12 January The Bill was referred by the Parliament on the 18 January to the Rural Affairs, Climate Change and Environment Committee for Stage 1 scrutiny. The Bill 2. The Policy Memorandum 2 which accompanies the Bill outlines the policy objectives of the Bill. It states that The Bill converts ultra-long leases into ownership. An ultra-long lease qualifies if it has been granted for more than 175 years and has more than 100 years left to run immediately before the appointed day laid down in the Bill. On the appointed day, all qualifying ultra-long leases will convert automatically into ownership, unless the tenant choses to opt out. In some cases, compensatory and additional payments will be payable to the landlord by the tenant and some leasehold conditions will be preserved as real burdens in the title deeds. 3. The Bill is in six parts and is similar to the Long Leases (Scotland) Bill (SP Bill 61) 3 introduced on 10 November 2010 in Session 3, which fell prior to dissolution. The current Bill has been amended to take account of some of the recommendations made by the then Justice Committee in its Stage 1 report. 4 RACCE Committee s approach to Stage 1 scrutiny 4. At its meeting on 18 January 2012, the Committee agreed that the focus of its scrutiny of the Bill should take account of the evidence taken by the former Justice Committee and its Stage 1 report and that its scrutiny should focus on any new aspects of the Bill which have been introduced as a result of previous scrutiny. 5. A call for views on the changes made in relation to this Bill and how it relates to the previous Bill and the recommendations of the previous Justice 1 Long Leases (Scotland) Bill. All documents available at: 2 mo.pdf

5 RACCE/S4/12/5/1 Committee s Stage 1 report was issued with the closing date set as Friday 3 February A briefing on the Bill, prepared by SPICe, was published on 2 February and can be found at the following link: 7. On 8 February 2012, the Committee began its oral evidence-taking on the Bill by holding an evidence session with the Scottish Government Bill team. The Bill team provided written evidence on the changes made to this Bill from the previous Bill introduced last session in advance of the meeting and this has been previously circulated to Members. 8. On 22 February, the Committee will take evidence from two panels of stakeholders: The Law Society of Scotland and Brodies LLP followed by Scottish Land and Estates and the Scottish Property Federation. Evidence received 9. The Committee has received nine submissions in response to the call for views to date. These have been previously circulated to Members and have been posted on the Committee s webpages at the following link: aspx 10. The Committee received a late submission from Dundas and Wilson CS LLP. This submission has been reproduced at Annexe A. Next steps 11. The Committee will take oral evidence at its meeting on 29 February from Andy Wightman and Edinburgh, Glasgow and Aberdeenshire Councils and will complete its evidence-taking with a final evidence session with the Minister for Environment and Climate Change on 7 March The Committee will then consider a draft Stage 1 report on the general principles of the Bill which will be published in accordance with the Stage 1 deadline set by the Parliament of 27 April Clerks Rural Affairs, Climate Change and Environment Committee 2

6 RACCE/S4/12/5/1 Submission from Dundas and Wilson CS LLP Annexe A Exemption for leases where the annual rent payable under the lease is over 100. In terms of s1(4)(a) of the draft Bill, leases do not qualify for conversion if: "the annual rent payable under the lease is over 100". S2 goes on to provide that for the purposes of this section the rent payable under a lease is the rent: "as set out in the lease (or as the case may be the assignation of the lease)". Where you have a lease and the original rent reserved is less than 100 but the lease has been varied so that the rent is now greater than 100, would this qualify for automatic exemption? In our opinion it is not clear whether s1(4)(a) covers the rent as originally reserved or the rent as varied. The reference to the assignation is in our view particularly unhelpful as it could lead to an interpretation that it is only those two documents (the original lease and the assignation of it) that you would be permitted to look at. The draft provisions do not seem to take into account that a lease can be varied other than in gremio of an assignation. The wording could be easily clarified to ensure that there is no ambiguity. The addition of words such as "or any agreement varying the terms of the lease" after "the assignation of the lease" would in our view clear up any possible uncertainty. Exemption of qualifying lease by registration of agreement or order We are also of the view that sections 64 and 69 could be clarified to put beyond doubt what can be included in "annual rent" for these sections. Although it is clearly intended that variable rent will be included, the Bill does not expressly state this. 3

7 RACCE/S4/12/5/2 Rural Affairs, Climate Change and Environment Committee 5th Meeting, 2012 (Session 4), Wednesday 22 February 2012 Subordinate legislation cover note for SSI 2012/24 Title of Instrument The Less Favoured Area Support Scheme (Scotland) Amendment Regulations 2012 (SSI 2012/24) Type of Instrument Negative Laid Date 30 January 2012 Circulated to 3 February Members Meeting Date 22 February 2012 Minister to attend the No meeting SSI drawn to the No Parliament s attention by Subordinate Legislation Committee Reporting Deadline 12 March 2012 Purpose 1. These regulations amend the Less Favoured Area Support Scheme (Scotland) Regulations 2010 to enable an additional category of approximately 150 active farmers in the less favoured area ( LFA ) to be eligible for payments under the LFA Scheme who, despite having maintained eligible stock on LFA land in the historic year (2009), were technically excluded from the Scheme. 2. A copy of the Explanatory Note and the Executive Note are included with the papers. Procedure 3. Negative instruments are instruments that are subject to annulment by resolution of the Parliament for a period of 40 days after they are laid. All negative instruments are considered by the Subordinate Legislation Committee (on various technical grounds) and by the relevant lead committee (on policy grounds). Under Rule 10.4, any member (whether or not a member of the lead committee) may, within the 40-day period, lodge a motion for consideration by the lead committee recommending annulment of the instrument. If the motion is agreed to, the Parliamentary Bureau must then lodge a motion to annul the instrument for consideration by the Parliament. 4. If that is also agreed to, Scottish Ministers must revoke the instrument. Each negative instrument appears on a committee agenda at the first opportunity after the Subordinate Legislation Committee has reported on it. This means that, if questions are asked or concerns raised, consideration of the instrument can usually be

8 RACCE/S4/12/5/2 continued to a later meeting to allow correspondence to be entered into or a Minister or officials invited to give evidence. In other cases, the Committee may be content simply to note the instrument and agree to make no recommendation on it. Subordinate Legislation Committee 5. At its meeting on 7 February 2012, the Subordinate Legislation Committee considered the instrument and determined that it did not need to draw the attention of the Parliament to the instrument on any grounds within its remit. Recommendation 6. The Committee is invited to consider any issues which it wishes to raise on this instrument. EXPLANATORY NOTE These Regulations amend the Less Favoured Area Support Scheme (Scotland) Regulations 2010 ( the 2010 Regulations ). The 2010 Regulations make provision for the purposes of the implementation of Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ L 277, , p.1), Commission Regulation (EC) No 1974/2006 (OJ L 368, , p.15) and Commission Regulation (EU) No 65/2011 (OJ L 25, , p.8), both laying down detailed rules for the application of Council Regulation 1698/2005. Regulation 4 amends the definition of historic land area in regulation 9(8) of the 2010 Regulations. That definition relates to the calculation of stocking density based on the applicant s livestock units and area of land during a historical reference period. This is relevant to the calculation of the amount of less favoured area support in accordance with regulations 7, 8 and 10 of the 2010 Regulations. In determining the historic land area for the purposes of the 2010 Regulations, the amendment made by regulation 4 enables account to be taken of forage land declared by the applicant in relation to a single application in 2009 where no grazing category has been attributed for the purpose of previous less favoured area support schemes; and penalties imposed under Commission Regulation (EC) No 1975/2006 (OJ L 368, , p.74) as well as Commission Regulation (EU) No 65/2011. Although Commission Regulation (EC) No 1975/2006 was repealed by Article 34(1) of Commission Regulation (EU) No 65/2011, it continues to apply in respect of payment claims submitted before 1st January Regulation 3 amends regulation 2(1) of the 2010 Regulations to insert a definition of Commission Regulation (EC) No 1975/2006. No Business and Regulatory Impact Assessment has been prepared for this instrument as it has no impact on the cost of business.

9 RACCE/S4/12/5/2 EXECUTIVE NOTE THE LESS FAVOURED AREA SUPPORT SCHEME (SCOTLAND) AMENDMENT REGULATIONS 2012 SSI 2012/24 This note explains the purpose of the above SSI which is made in exercise of the powers conferred by Section 2(2) of the European Communities Act The instrument is subject to negative resolution procedure. The SSI amends the Less Favoured Area Support Scheme (Scotland) Regulations 2010 No. 273 ( the principal Regulations ) which came into force on 2 July Policy Objectives The purpose of the SSI is to amend the principal regulations to enable an additional category of approximately 150 active farmers in the less favoured area ( LFA ) to be eligible for payments under the LFA Scheme who, despite having maintained eligible stock on LFA land in the historic year (2009), were technically excluded from the Scheme. Although they held eligible stock in the base year, their land did not have a grazing category. The policy intention is to enable this group to now receive financial support under the Less Favoured Area Support Scheme ( LFASS ), via a minor amendment to the principal regulations. Background The EU s Rural Development Regulation (1698/2005) provides for an area based support scheme for LFA farmers in recognition of the permanent natural disadvantage they face due to, for example, poor soil, adverse climate or difficult topography, that make it difficult for them to compete on level terms with other areas. In Scotland 85% of agricultural land is classified as being within an LFA. LFASS has a high profile and will be worth in the region of 65 million per year to around 12,000 farmers and crofters for the period The terms of the LFASS have been approved by the EU and are reflected in the current Scotland Rural Development Programme. Description of LFASS The key features of the scheme implemented in the principal Regulations are that: it is historically based using values, including stocking densities, derived from area and livestock data declared by farmers in 2009; applicants must actively farm eligble land for the majority of the qualifying year; payments are made per hectare of eligible land, adjusted for LFASS grazing category and any minimum or maximum stocking density restrictions; Payment rates are varied according to LFASS Fragility area, i.e., Very Fragile, Fragile or Standard, according to the location of the applicant's main farm.

10 RACCE/S4/12/5/2 Changes introduced in 2011 The principal Regulations were amended in 2011 to introduce changes to better target support to the most active farmers. In particular, four levels of minimum stocking density replaced the single 0.12 threshold. This change was designed to better match payments to farming activity. In addition, the land eligibility rules were relaxed slightly in light of reduced pressures on the LFASS budget. Main changes made by these Regulations The SSI (regulation 4) amends the definition of the historic land area in regulation 9(8) of the principal Regulations to include land which, but for lack of grazing category prior to 2009, would otherwise have met the eligible forage land requirements under LFASS. This change will admit the small group of active LFA farmers, currently excluded from support, to the scheme, thus meeting the policy intention. Regulation 3 of the SSI also amends regulation 2 (1) of the principal Regulations by inserting a definition of Commission Regulation (EC) No 1975/2006, which was repealed by 65/2011 but continues to apply in respect of pre-2011 claims. That EU Regulation required deduction of a penalty area where an applicant over-declared land for LFASS in respect of pre-2011 claims. Thus it applied in relation to the relevant base year for determining the historic land area for the majority of applicants. For this reason, in order to obtain an accurate historic land area for the purposes of regulation 9(8), it is necessary to be able to also take into account any penalty area applied under Regulation 1975/2006. Timing of the 2012 SSI Payment will be made to those affected during the period March to May Financial Effects The changes affected by the amendment SSI can be absorbed within the existing budget. Consultation The change is being implemented following lobbying by LFA stakeholders. Period of the Instrument It is envisaged that this Instrument will remain in force until Scottish Government Rural Payments and Inspections Directorate January 2012