Smallholdings and County Farms
This section explores the background to smallholdings and county farms, the
legislative and executive structure, and the financial aspects for local authorities,
including tenancies. The Institute is grateful to Charles Coats, Gloucestershire
County Council for updating this section.
Background, History and Development
Introduction
The changes in the methods of agriculture, the diminishing numbers of small farmers
and the depressed conditions under which agricultural workers existed formed the
background against which the state policy regarding smallholdings evolved. The
provision of plots of land for cultivation goes back to an Act for the relief of the poor in
1601, promoting the provision of plots of land for cultivation as a means of self
support.
At the beginning of the twentieth century there were nearly 80,000 hectares of county
farms. After the First World War more land was acquired, primarily to assist the
employment and settlement of ex-service men. Smallholdings are still provided by
most county councils and some unitary authorities and the total land area of county
farms is currently about 121,000 hectares spread throughout England and Wales.
Holdings may be equipped farms (with house and buildings), bare land farms
(without buildings) or cottage holdings. Other lettings may include short term licences
and sporting rights.
Before the Agriculture Act 1970 the policy of providing holdings was directed at reestablishing employment on the land following the two World Wars. Since the 1970
Act the policy has broadened, encouraging authorities to provide larger commercial
holdings.
Previous Legislation
The Smallholdings Act 1892 authorised county councils and county borough councils
to purchase or lease land by agreement for the provision of smallholdings and equip
them with buildings. The Smallholdings and Allotments Acts 1907 and 1908
introduced a statutory duty for county councils to meet the demand for smallholdings,
empowering them to compulsorily purchase or lease land. Costs were refunded
centrally. The Land Settlement (Facilities) Act 1919 and Amendment Act 1925
specified the methods of identifying the amounts to be repaid to councils. The
Smallholdings and Allotments Act 1926 reinforced the statutory duty for councils to
meet the demand for smallholdings, with arrangements for the refund of most losses
centrally. It also allowed for the provision of cottages and a small plot of land for
agricultural workers.
Agriculture Act 1947 - Part IV
The Smallholdings and Allotments Acts 1908 to 1931 were almost wholly repealed by
this Act, but since cottage holdings were expressly excluded from the definition of
"smallholdings" in the Act of 1947 the provisions of the Acts of 1908 to 1931
regarding cottage holdings continued to apply.
The Smallholdings Advisory Council was created under this Act. It produced its first
report in 1949 which formed the basis of a manual of guidance to smallholdings
authorities. The council also produced a manual of guidance on the layout of
smallholdings, farm buildings and dwelling-houses.
The Wise Committee
In 1963 the Minister stated that the Advisory Council would not be reconstituted, but
he would set up a committee of inquiry into smallholdings, and in July 1963 a
committee was established under the chairmanship of Professor M J Wise, MC, PhD,
FRGS. The committee reviewed existing legislation relating to smallholdings,
investigated their economic position in estates owned or managed by councils and
their current management problems with regard to their statutory responsibilities.
The first report of the Committee (referred to as the Wise Committee) was published
in 1966 and dealt with general policy relating to local authority smallholdings. The
government broadly accepted its recommendations and gave them statutory effect in
Part III of the Agriculture Act 1970. This replaced the smallholdings legislation
contained in Part IV of the Agriculture Act 1947.
The second report of the committee was published in 1967 and dealt with
smallholdings managed on behalf of the minister of agriculture by the Land
Settlement Association and the farm settlement estates managed by the Agricultural
Land Service. The government policy based on this second report was published in
1968 but required no legislation apart from giving some additional powers to the
minister in the 1970 Act in relation to land held by him for smallholdings.
Under the Agriculture Act 1970 (Commencement No 2) Order (SI 1970/1045), Part III
of the Agriculture Act 1970 came into operation in England and Wales on 1 August
1970. It made important changes to smallholdings policy, the general aim being to
provide opportunities for people with agricultural experience to be farmers on their
own account. To achieve this, smallholdings authorities were required to submit to
the minister plans for the reorganisation of their estates.
Legislation
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Agriculture Act 1970
Local Government Act 1985
Agricultural Holdings Act 1986
Agriculture Act 1986
Agricultural Tenancies Act 1995
Power to provide smallholdings
Under Section 38 of the Agriculture Act 1970, the Greater London Council and every
county council in England and Wales were designated as smallholdings authorities.
The Local Government Act 1985 abolished the Greater London Council and the six
metropolitan county councils and the smallholdings belonging to those councils were
transferred to adjacent non metropolitan county councils or sold.
These authorities are required under Section 39 of the Act to make it their general
aim, by providing holdings, to enable people who satisfy the requirements of Section
44(2) of the Act (see paragraph 48) to be farmers on their own account. It also
defines a holding for this purpose as being capable, in the minister's opinion, of
providing full-time employment for no more than two workers (including the tenant)
with or without an additional part-time worker. The method of assessment is provided
in separate regulations (see SI 1970/1050).
Section 40 of the Agriculture Act 1970 required every smallholdings authority which
held any smallholdings land to review their smallholdings estate and submit to the
Minister proposals for its future management. The latest date for submission was 1
February 1972 but in some cases full implementation was delayed until changes in
tenancies occurred. The approval by the minister of reorganisation proposals,
subsequent reviews and proposals for further reorganisation and proposals arising
otherwise than from reviews are provided for in Sections 41 to 43 of the Act.
Acquisition of land for smallholdings
Section 120 of the Local Government Act 1972 concerning the acquisition of land by
agreement applies to the acquisition of land for smallholdings purposes. Section 48
of the 1970 Agriculture Act repealed the power of authorities to acquire land
compulsorily.
Section 48 of the 1970 Agriculture Act requires a smallholdings authority wishing to
acquire land outside its area to consult the county council in whose area the land lies.
Provision of fixed equipment
Under Section 46 of the Agriculture Act 1970, a smallholdings authority may provide,
improve, maintain and repair fixed equipment on smallholdings land and carry out
any other improvements on or for the benefit of such land. The authority may enter
into an agreement with the tenant for any of the foregoing to be carried out.
Surplus land held for smallholdings purposes
Where any smallholdings land is not for the time being required for that purpose it
may be let for such period and purpose as the authority think fit. The powers under
Sections 122 and 123 of the Local Government Act 1972 apply to the disposal of
surplus smallholdings land.
Management of smallholdings
Under Section 47 of the Act, smallholdings authorities are given all the powers they
require for the management of smallholdings, including encouraging the formation of
bodies to promote the efficient use of the holdings. They may also buy or hire and
sell or let machinery, equipment, live or dead stock, seeds or fertilisers and dispose
of the produce of smallholdings provided by them.
Lettings of smallholdings
With the repeal of the 1947 Act by the 1970 Act, the terms and conditions on which
smallholdings are let are matters for each individual smallholdings authority to
decide. However, Section 39 of the Agriculture Act 1970 states that in the
performance of their functions, smallholdings authorities must give regard to the
general interests of agriculture and good estate management.
Section 44 of the Agriculture Act 1970 provides that:
a. Smallholdings land may be let only to a person who intends to farm the land
personally and whom the authority regard as qualified by reason of
agricultural experience to farm the holding on his or her own account or a
person whom the authority are satisfied will become so qualified within a
reasonably short time.
b. Smallholdings may also be let to a group of people proposing to farm together
on a cooperative system if the authority are satisfied that they are or will,
within a reasonably short time, become qualified to farm together on their own
account.
c. Unless the prior consent of the minister has been obtained a smallholdings
authority may not let any holding resulting from an enlargement,
amalgamation or creation of a holding unless such enlargement is in
accordance with proposals for reorganisation under the 1970 Act which have
been approved by the minister. This provision is currently the subject of
discussion with DEFRA with a view to an annual report being prepared for
consideration by Parliament.
The Smallholdings (Selection of Tenants) Regulations (SI 1970/1049), effective from
1 August 1970, laid down a minimum period of practical experience and/or formal
education and training for applicants for smallholdings, prescribed exceptions in the
case of smallholders' widows and provided for holdings available for letting to be
advertised outside the authority's area. (See also SI 1976/2001 which extended the
exceptions to other near relatives).
Smallholdings rents
Under former legislation a smallholding had to be let at a full fair rent. However,
Section 45 of the Agriculture Act 1970 makes a change in the statutory guidance as
to the level at which smallholdings rents are to be fixed.
When a smallholding authority determines the rent at which any land is to be let by
them under Section 44 of the Act it must give regard to the rent which, in its opinion,
might reasonably be expected to be determined as the rent properly payable if:
a. the land were already let as an agricultural holding;
b. the terms of that letting (other than the terms relating to rent) were those on
which the smallholdings authority propose to let the land in question; and
c. the question of what rent should be payable in respect of that agricultural
holding had been referred to arbitration under the enactments relating to
agricultural holdings which are for the time being in force.
In the case of a rent that is referred to arbitration it is a requirement that the rent fixed
shall be the rent at which, with regard to the terms of the tenancy (other than those
relating to rent), a holding might reasonably be expected to be let in the open market
by a willing landlord to a willing tenant, disregarding any effect on the rent of the fact
that the holding is occupied by a sitting tenant.
Paragraphs 32 to 34 refer both to initial lettings and subsequent rent revisions. In
both cases the holding must be taken as it actually is, without making assumptions
about improvements or dilapidations which might be taken into account to reduce or
increase any rent which might reasonably be expected in the open market.
The 1970 Act brought the criteria for fixing smallholdings rents into line with the
criteria on which general farm rents are fixed if submitted to arbitration. If the
authority and the tenant cannot agree a rent revision, either may seek arbitration
under the Agricultural Holdings Act 1986, or the Agricultural Tenancies Act 1995 for
holdings let since 1995.
Annual reports of smallholdings authorities
Every smallholdings authority is required by Section 59 of the Agriculture Act 1970 to
make an annual report to the minister, who is required to report to parliament.
Financial aid for smallholdings
The grant provisions of the Agriculture Act 1970 are contained in Part III Sections 50,
51 and 52.
Accounts and records
Under Section 58 (1) of the Agricultural Act 1970, smallholdings authorities have to
keep separate accounts in respect of smallholdings (including capital receipts and
expenses). The previous legislation provides, in addition, that smallholdings receipts
should be used only for smallholdings purposes unless the consent of the minister is
obtained for them to be used otherwise. In his memorandum to smallholdings
authorities of the 23 July 1970 the minister stated that: “… authorities will therefore
be able to make their own financial arrangements in this respect, subject to the
provisions of general local government legislation as regards the purposes to which
capital moneys may be applied or the financing of schemes by borrowing and the
circumstances in which ministerial consent is required.”
Under Section 58 (2) of the Agriculture Act 1970, every smallholdings authority is
required to keep and produce if necessary to a person authorised by the minister:
a.
b.
c.
d.
a record of all land which is, or has at any time been, held for smallholdings;
a list of present tenants and rents;
record of the purchasers if any land has been sold;
a map or plan showing the size, boundaries and situation of each
smallholding provided by the authority.
Cottage holdings
The Agricultural Act 1970 brought to an end the power to provide cottage holdings.
No land may be sold, let or acquired for cottage holding purposes but existing
cottage holdings tenants may continue in their holdings for the remainder of their
present tenancies.
Rating
The Local Government Act 1988 Schedule 5 Section 51 defines smallholding land
and agricultural land and buildings that are exempt from rates. Dwelling houses are
not exempt and the occupier is liable to pay council tax.
Although smallholdings land and buildings (other than dwelling houses) are exempt
from rates, such exemption does not apply to drainage rates made under and in
accordance with the Land Drainage Act 1991 or a local Act, by a water authority.
Planning
The provision of smallholdings involves the use of land for the purpose of agriculture
within the meaning of the Town and Country Planning Acts.
Agricultural Holdings Act 1986
The 1986 Act repealed the 1948 Act, defined an agricultural holding and dealt with
tenancy issues.
The Agriculture Act 1986
Milk quotas
The Agriculture Act 1986 introduced milk quotas as part of an initiative to reduce the
over production of milk within the European Community. The Act gave the minister
power to allocate to particular farms a quota or permission to produce a given
quantity of milk. Financial penalties are imposed for exceeding these quantities.
These quotas rapidly became valuable although these values have now substantially
dropped and the implications for smallholdings were very important. The
Agricultural Tenancies Act 1995
This Act was not retrospective and only related to lettings entered into since
enactment in 1995. Essentially it enables all landlords, including statutory
smallholdings authorities, to let land for whatever duration they wish under what are
now termed farm business tenancies. This Act enables councils to let land on a more
flexible basis to encourage upward mobility of tenants within and off an estate.
Executive Structure
Department of the Environment, Food and Rural Affairs
The government department primarily concerned with smallholdings and the
supervision of smallholdings authorities is the Department of the Environment, Food
and Rural Affairs (DEFRA), or the Welsh Assembly in respect of holdings situated in
the principality.
The secretary of state has power to provide smallholdings and to acquire land for that
purpose and to make loans to tenants or prospective tenants for working capital, and
grants and loans to bodies promoting through co-operative methods efficiency in the
conduct of smallholdings (Section 54 of the Agriculture Act 1970).
If the secretary of state is satisfied that an authority is not carrying out its functions
satisfactorily, he may give directions to the authority or, by order, transfer its
functions to himself, in which case provision is made for recovering the net cost of
carrying out the functions from the smallholdings authority concerned (Section 56 of
the Agriculture Act 1970).
The Agriculture Act 1970 continues the former requirement that all smallholdings
authorities must make an annual report of their activities to the secretary of state,
who is required to report annually to Parliament.
Local authorities
Part III of the Agriculture Act 1970 empowers smallholdings authorities to provide
smallholdings for letting in fulfilment of their general aim under the Act. Section 40
continues the duty of smallholdings authorities to give regard to the general interest
of agriculture and good estate management in fulfilling their general aim under the
Act.
Inter-authority relationships
A county council may sell or let to a district or parish council for the purposes of
allotments any land acquired by them for smallholdings, and a district or parish
council may sell or let to the county council for the purposes of smallholdings any
land acquired by them for allotments, (see Section 45 of the Smallholdings and
Allotments Act 1908), subject to the provisions of the Community Land Act 1975 (see
also paragraph 16 of this section).
Financial Control
Revenue accounts
Under the Smallholdings and Allotments Act 1907 and 1908, local authorities were
required to keep separate accounts of smallholdings transactions, and receipts in
respect of smallholdings were to be applied only to smallholdings purposes. The
Agriculture Act 1970 removed this latter requirement and the transactions on the
smallholdings service should therefore be treated in a similar manner as those on
any other county fund service.
Management aspects
The major issue of financial management facing the operators of smallholdings is the
level of rents which tenants can sustain and the level of capital investment which
authorities can make available. The rents of holdings are usually reviewed triennially:
some authorities consider a proportion of their holdings each year while others
undertake a total review once in the three year period.
CAP reforms
2006 heralded the introduction of far reaching reforms to the European Union farm
payments regime. Subsidy payments no longer relate to levels of production, but l
have regard to the area of land farmed, the objective being to introduce more market
robustness to the industry.
Capital finance
From 1 April 1981 the capital expenditure on smallholdings became part of the 'other
services' block for capital expenditure control purposes.
Application of capital sale money
Smallholdings capital receipts can now be applied in the same way as the capital
receipts of any other service.
Acquisition of land by perpetual annuity
Section 9 of the Land Settlement (Facilities) Act 1919 authorised the purchase of
land for smallholdings purposes by the acquiring authority paying a perpetual
annuity. The Rent Charges Act 1977 repealed this authority, but annuities may
continue to be payable up to 60 years from the start of existing annuities.
These annuities may be redeemed by the authority giving one month's notice of
intention to redeem. Such redemption is deemed to be a purpose for which the
authority may borrow.
Financial Information
Minister's Annual Report to Parliament
Section 59 (2) of the Agriculture Act 1970 provides that the ministers must lay before
Parliament a report in respect of each financial year, summarising for that year the
proceedings of smallholdings authorities, and those of the minister and the ministers
acting jointly in relation to smallholdings. The report is normally published in June,
relating to the financial year ended the previous 31 March.
Local authority statistics
The Society of County Treasurers began publishing Smallholdings Statistics in
1953/54 originally at three yearly intervals and subsequently annually. Since
1985/86, CIPFA's Statistical Information Service have published annually County
Farms Statistics based on Actuals.
ACES Briefing Paper ‘The County Farms Service – Current Issues and Future
Directions’
Background
The national estate (see CIPFA Statistics 2004/05 edition):
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extends to 121,755 hectares (300,735 acres) in England and Wales;
comprises 3,954 farms;
estimated number of jobs sustained (direct and indirect) – approximately
16,000;
still provided by the majority of English counties, Welsh unitaries and a
number of English unitary councils.
Provenance Part III 1970 Agriculture Act – the provision of a ‘gateway’ for new
entrants into agriculture.
Rationale – ACES Rationale 2004 – see County Farms Service Rationale 2004
below.
Management policies and practices – at the discretion of each local authority.
Current issues
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Legal status
Part III 1970 Agriculture Act states “that it shall be the general aim of a
statutory smallholdings authority to provide smallholdings”. Leading counsel
has provided an opinion that this does not amount to a mandatory duty.
DEFRA have stated they cannot offer an interpretation of statute law, that
being the function of the courts. Previous legal advice was to the effect that
the Act does not impose a specific duty for smallholdings to be maintained at
any particular level.
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Financial pressures
 On councils – to realise capital value from these assets to assist in the
financing of other capital programmes.
 On tenants – with a lack of equity interest in the freehold value of
holdings, tenants are particularly vulnerable to the continuing
economic crisis, especially younger new entrants just starting their
farming careers.
Impact of Agricultural Tenancies Act 1995
FBTs (farm business tenancies) have undoubtedly created more internal
management flexibility and opportunities for internal progression.
Opportunities for progression to private sector estates remain limited although
greater than pre–1995.
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Interest
This remains reasonably buoyant, prospective tenants believing this is a good
time to commence their farming careers as ingoing costs are now relatively
low. Retention of estates is strongly supported by representative bodies,eg .
CLA, NFU and particularly the TFA and National Federation of YFCs.
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Best value
The duties now imposed on all councils to critically review their services are
again focusing attention on the future of these estates.
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Age profile
Whilst detailed statistical information in not available, this is undoubtedly
increasing. A significant number of tenants still enjoy lifetime security of
tenure although this is now reducing , thus perpetuating the bottleneck to
upward mobility.
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New entrants
These are the lifeblood of the industry who can bring new ideas and reinvigorate the countryside. Tangible financial support to help these tenants
through the difficult early years of a tenancy would be welcomed. The
introduction of the Fresh Start Initiative is providing a degree of help in this
respect.
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Community resource
Estates offer potential for use as educational resources, for increased public
access, etc.
Future directions
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Co-operation
In order to sustain viability, tenants will increasingly need to pursue cooperative initiatives with neighbours or join local marketing/purchasing
groups.
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Diversification
Opportunities to add value and utilise whole farm assets need to be more
vigorously explored.
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Organic farming
Small family farms are often well placed to establish high quality management
regimes and to positively pursue organic potential.
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Additional income
Many estate tenants are increasingly becoming reliant on additional income,
using holdings as a base to supplement their income from other rurally based
sources of employment.
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Partnering
In order to sustain viability, landlord and tenant must increasingly work
together to explore imaginatively new ways of working.
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Research
Credible, verifiable research, commissioned on a collaborative basis by
authorities on key issues would help to inform future management strategies.
Government financial assistance to initiate this would be helpful.
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Wider dimensions
Councils are increasingly using their estates for the wider benefit of their
communities, both urban and rural, for greater public access, as educational
resources and as a means of enhancing the wellbeing of the countryside.
Summary
The national estate:
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is vulnerable to financial pressures and political uncertainties;
remains the principal source of entry to aspiring farmers wishing to farm on
their own account;
brings new blood into an industry increasingly populated by ageing farmers;
is well supported and appreciated by agricultural representative bodies and
the farming community as a whole;
requires political support to sustain its future together with financial assistance
to help young entrants establish themselves;
plays an important role in the re-invigoration of the rural economy.
County Farms Service Rationale 2004
Introduction
Local authorities have a long and proud history of involvement in the agricultural
industry through their management of statutory smallholdings, now more commonly
known as county farms. The County Farms Service has a unique role and is a vital
niche player in the tenanted sector. The agricultural industry and countryside are
rapidly changing and the service can continue to play a major part in their
development. Against this background, and in order to assist those counties who
wish to retain their agricultural estates, the rural practice branch of ACES has
prepared the following rationale for the future direction of the service.
Rationale
That the County Farms Service provides:
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An affordable means of entry into farming businesses and diversified rural
businesses for those who would not otherwise have the opportunity to farm
on their own account.
The potential for many new entrants to establish and develop viable business
enterprises and the scope for internal progression to larger county farms and
advancement from the estate to bigger holdings on privately let estates.
A means of supporting the tenanted sector, boosted by the flexibility of
opportunities offered by agriculture tenure legislation.
A valuable source of rural employment opportunities on small family farms,
often in remote rural areas.
A tangible means of meeting the aspirations of the young farming community
and agricultural industry.
An opportunity to contribute to the wider economic well being of the
countryside.
A ‘bank’ of potentially surplus land arising from positive property reviews and
estate rationalisations, providing a valuable source of capital for essential
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estate reinvestment and to assist finance the provision of other council
services.
A potential land bank source for low cost/social housing development projects
in rural areas.
A valued council service managed on a dynamic, sound, commercial
business-like basis having regard to the principles of best value and effective
performance management.
A stake in the countryside and a direct link to the local farming industry and
the rural economy.
A wealth of traditional landscape features such as stone walls, hedgerows
and farm buildings which are more likely to be retained on small family farms.
A means of improving public assess to and awareness of the countryside
including proper use of public footpaths and developing farm walks and open
days.
An educational resource aid providing opportunities for school visits.
Opportunities, in partnership with tenants, for the development of positive
environmental strategies together with sustainable farm management and
good husbandry practices.
Sources of Further Information
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Halsbury's Statutes. 4th edition 1989 reissue, Vol 1 Agriculture. Butterworth
and Co. Ltd.
Halsbury's Laws of England. 4th edition 1990 reissue, Vol 1(2) Agriculture.
Butterworth and Co. Ltd.
Agricultural Law, Tax, and Finance. Release 1 1991, Lennon & Mackay
Longmans.
Halsbury's Statutes. 4th edition 1992 reissue, Vol 2 Allotments and
Smallholdings. Butterworth and Co. Ltd.
CIPFA Statistical Information Service, County Farms – Actuals (annual).
CIPFA
New Directions for County Government. Edited by Ken Young, 1989. Chapter
14: The County Farms Service