In 1965, Educational Films of Scotland made fascinating film narrated by Scottish actor Moultrie Kelsall about the history of Grangemouth from 1750 to modern times (1965). Among the highlights of the film is the focus on the role of Grangemouth Town Council as a local, democratic enabler of economic development. In Kelsall’s words,

I think that Grangemouth has been very well served by a succession of hard-working, and enterprising, forward looking Town Councils.”

Take the time to watch the film. Click on the image below or here.

Today, Grangemouth is in the news in relation to the future of the petrochemical plant and oil refinery. The plant operator, Ineos owns the petrochemical plant and is a co-owner of the oil refinery with PetroChina Company Limited.

To facilitate this investment with Petrochina, the Registers of Scotland, agreed to admit a voluntary registration of the  land in the land register. As reported in the Law Society of Scotland’s journal, the Keeper of the Registers was keen to highlight how registration can enhance the confidence of an investor by providing a state-guaranteed title.

Grangemouth Oil Refinery

Deborah Lovell, a partner in Anderson Strathern LLP’s Commercial Real Estate team, commented on their voluntary registration of Grangemouth Refinery.

“The voluntary registration process was used recently on behalf of our client, INEOS, for their landholding comprising their oil refinery and petrochemicals facility at Grangemouth and terminal at Finnart, all held on the historic General Register of Sasines. The registration of the land was key to a number of strategic deals involving transfers of the landholding, the reorganisation of the client’s funding arrangements, and the involvement of a new foreign investor. The benefit of the voluntary registration for our clients included speed and certainty for all parties, which was of major assistance in enabling the parties to achieve their goals.”

The Ineos site is registered under two titles (for links see below).

The petrochemical plant is registered in STG29375 and is owned by Ineos Chemicals Grangemouth Ltd. which is a company 100% owned by Ineos Europe Holdings Ltd. which is a company 100% owned by Ineos Jersey Ltd.

The oil refinery is registered in STG64980 and is owned by Ineos Manufacturing Scotland Ltd. which is a company 100% owned by Petroineos Manufacturing Scotland Ltd. which is a company 100% owned by Ineos Refining Li Ltd., a joint venture company between PetroChina Company Ltd. and Ineos Investments (Jersey) Ltd. This join venture company is not registered in the UK but probably in China and the “Li” in the name is probably a reference to Chinese Vice Premier Li Keqiang who, with Nick Clegg, witnessed the deal in 2011.

Curiously, the salmon fishing rights in the River Carron and 1486 hectares of the Firth of Forth are owned by BP Exploration Operating Company Limited under title STG27415.

Grangemouth Town Council was abolished at midnight on 15 May 1975 by the Local Government (Scotland Act) 1973 which received Royal Assent 40 years ago on 25 October 1973.

I hope someone returns to Grangemouth and makes a follow-up film to Moutrie Kelsall’s 1965 account. From indigenous local endeavours by Scottish businesses and municipal enterprise, we are now in a world of local government which is not local and does not govern and a world of global footloose private equity firms based in tax havens.

This is all about power.

TITLES

STG29375 (1.5Mb pdf)
STG29375 (plan) (2.9Mb pdf)
STG64980
STG64980 (plan) (3Mb pdf)
STG27415
STG27415 (plan) (6.9Mb plan)

 

Image: Abandoned farm on a Deeside estate.

Should tenant farmers in Scotland be given the legal right to convert their tenancies into ownership of the farm that they and their descendants have occupied and worked in some cases for over a century? It’s a question that will be at the centre of a review of agricultural tenancies soon to be announced by the Scottish Government. It is a question that has already been answered in the affirmative for individual crofters (Crofting Reform (Scotland) Act 1976), for leaseholders of residential property in England and Wales (dating back to Leasehold Reform Act 1967), for crofting communities (Part 3 of the Land Reform (Scotland) Act 2003), and for long leaseholders in Scotland (Long Leases (Scotland) Act 2012).

The issue was last debated in 2003 during the passage of the Agricultural Holdings (Scotland) Act 2003. This act provides secure tenants with a qualified right to buy their farm if and when it is put up for sale buy its owner. Secure tenancies (or 1991 tenancies – so-called after a consolidating Act in 1991) are the traditional form of agricultural tenancy many of which have been in place for well over a century. The Act also introduced new short tenancies for specified durations of 5 years (short limited duration tenancies) and 10 years (limited duration tenancies) – let’s call both of these “2003 tenancies”.

On 4 February 2003 during the Committee Stage of the 2003 Act, Fergus Ewing MSP argued that secure tenants should be given an unqualified right to buy at any time. He argued that,

“I find it somewhat ironic that Conservatives who extol the benefits of property ownership want to keep the benefits of property ownership to the few—indeed, the very few—landed estates. The Conservatives do not seem to realise the huge potential that could be unleashed by the creation of more property owners.

“I look forward to hearing what my Conservative friends on the committee have to say about why they do not want many more family farms under ownership in Scotland. Do they not accept that the vehicle of ownership will unleash a spirit of entrepreneurialism that could help to achieve some of the objectives that the Executive propounds in its forward strategy for agriculture?

“The SNP supports the absolute right to buy for secure heritable tenants. We recognise secure heritable tenants as a distinct group of people in Scotland. We do not advocate that those who have short leases should have the right to buy. We have never done so and will never do so, because, in most cases, secure heritable tenants have farmed the land for the whole of their lives, and their fathers and grandfathers, mothers and grandmothers did so before them.” (1)

Ewing’s challenge to the Conservatives is interesting. Back in 1946, Anthony Eden, in a speech to the Conservative Party conference had in fact extolled the virtues of just such a property owning democracy.

We believe that it is desirable to elaborate schemes whereby the private citizen and the returned soldier should be in a position not only to rent a house but to own one.” Conservatives believed, he added, believe “that the tenant farmer should be assisted and encouraged to become an owner-occupier.” (2)

The purpose of this blog, however, is not to visit the arguments for and against an unqualified right to buy for tenant farmers but to refute an assertion made by landowners in opposition to it – an assertion that has been repeated ad nauseum for over 10 years.

The day after Fergus Ewing’s amendment was defeated, Robert Balfour, the chairman of the Scottish Landowners’ Federation task force on land reform, said, “The SLF is glad that common sense has prevailed. An absolute right to buy will not achieve any of the aims of the Bill and will shatter the tenanted sector.”

More recently Scottish Land and Estates asserted that the revival of the debate on right to buy is jeopardising confidence among landowners to let land.

Many landowners, in evidence to the Land Reform Review Group argued that the threat of a right to buy would be a disaster. Richard Stirling-Aird argued that the right to buy was “probably the biggest deterrent to owners of land to let farms, and the mere threat itself is sufficient to pretty well dry up such supply of farms coming up for let

Roxburghe Estates claimed that “Any proposal to grant existing tenant farmers the right to buy their farm at any time, rather than, as at present, when a landowner plans to sell, will have a serious impact on the supply of land to let. Confidence in letting land would be destroyed“.

The problem with such prophecies of doom is that there is no rational basis to believe that either

1, the threat of a right to buy should lead to any reduction in the amount of land to be let or,

2. such a right would, if it were introduced, reduce the amount of land available to let.

Let’s deal with the first claim first.

The right to buy has only ever been and is only being proposed for secure tenants – so-called 1991 tenants. As Fergus Ewing confirmed in 2003, no-one has or is proposing that any such right to buy be granted to tenants of 2003 tenancies. It is thus disingenuous to claim that any landowner should be put off granting such short tenancies. Indeed from 2005 to 2012, the number of SLDT tenancies has increased from 285 to 540 and LDT tenancies from 99 to 321. (3)

As for 1991 tenancies, they have been in decline for decades (down from 6348 in 2005 to 5402 in 2012). There is no possibility of any reduction in land let under traditional secure tenancies for the simple reason that landowners stopped granting such leases a long time ago.

There are thus no credible or reasonable grounds for arguing that the threat of a right will lead to a reduction in the amount of land to rent. No-one is granting secure tenancies in any case and no-one is proposing that 2003 tenancies be made subject to any right to buy.

Now let’s deal with the second claim.

It presumes that if most or all of Scotland’s tenant farmers become owner occupiers, there will be a reduction in the extent of land that is tenanted. Since 1982, there has been a steady decline in tenanted land as illustrated in the graph below – down from 42% in 1982 to 24% in 2012.

GRAPH – Percentage of agricultural land under a tenancy lasting at least one year 1982 – 2010. Source see footnote 3

Of course, if all tenant farmers were to exercise their right to buy, there would be a further immediate reduction but the important point is that there is no evidence to suggest that the extent of land that is leased overall will, in the longer term, reduce any further than it has already.

Indeed, there is evidence to suggest the precise opposite. In Norway, for example, in a country of owner-occupiers where tenant farmers as we recognise them in Scotland don’t exist, tenanted agricultural land has increased from 20% in 1979 to over 42% in 2010. See graph below.

Source: Statistics Norway, Census of Agriculture 2010.

Most countries in the EU have a high proportion of tenanted land. Compared to Scotland’s 24%, France has 74% and Germany 62% of its agricultural land rented out to farmers.

Country percentage of tenanted land
France 74%
Belgium 67%
Germany 62%
Sweden 39%
Finland 34%
Greece 32%
Italy 28%
Spain 27%
Netherlands 25%
Scotland 25%
Ireland 18%
Share of rented land as a % of the total UAA (2007) Source: Eurostat

The difference is that the vast majority of Scotland’s secure tenants own no land – they rent the whole farm including the family home. In France and Germany, the vast majority of farmers who rent land are also owner-occupier farmers themselves. In other words, across most of Europe owner-occupier farmers lease land to each other as and when they need to. The landlord and the tenant have equal status because they are both landowners. So whereas in Scotland, it is common for landowners to have multiple tenants, in France and Norway, individual farmers have multiple landowners.

Implementing a right to buy for Scotland’s tenant farmers could easily, if the European experience is any guide, lead to an increase in the amount of tenanted land available. 

If this is the case, it lends weight to the argument put forward by Professor James Hunter that the introduction of the right to buy should be accompanied by new freedoms to contract. This would mean landowners were free to enter whatever arrangements they saw fit with prospective tenants. Existing leases would continue until they expired and perhaps the 2003 tenancies would continue to be available for those wishing an off the shelf arrangement.

Is it not time, as this respondent argued to the Land Reform Review Group, to let Scotland flourish?

UPDATE 18 SEPTEMBER 2013

Richard Lochhead gave evidence to the Rural Affairs, Climate CHange and Environment Committee this morning on agricultural tenancies. I will post a link to the official report as soon as it is available. Meanwhile, here is the text of a statement released after the Committee.

“Absolute right to buy will only be considered for secure farm tenancies in Scotland, the Rural Affairs Secretary has confirmed. Speaking after giving evidence on a range of agricultural matters to the Scottish Parliament’s Rural Affairs, Climate Change and Environment Committee, Mr Lochhead said:

“I have taken this opportunity to confirm more detail about the Scottish Government’s review of tenant farming legislation. I have already made clear that it would be inconceivable for this review not to include consideration of absolute right to buy.

“Today I was pleased to clarify, for the avoidance of any doubt, that consideration of absolute right to buy will be restricted to secure 1991 Act agricultural tenancies which can be passed down through families for generations.

“I also confirmed the review of Agricultural Holdings legislation will be a Ministerial-led, rather than external, review. I will soon be making an announcement on the remit of the review, the appointment of review group members and the timetable involved.

“Many tenant farmers have made the case that current tenure arrangements stifle on-farm investment. Given the current land reform debate in rural Scotland we need to consider what is in the best interest of rural communities and the role individual land ownership plays in this. Landlords’ views must also be heard.

“It is also important that we give all tenant farmers and stakeholders the opportunity to enter into full and frank dialogue about absolute right to buy.”

 

(1) (Col 4188 Scottish Parliament Rural Development Committee Official Report 4 Feb 2003

(2) Cited in David Torrance, Noel Skelton and the Property-Owning Democracy, Biteback, 2010. pg 208.

(3) Tenanted Agricultural Land in Scotland 2012. Scottish Government, 12 June 2013.