Interview: Scottish landowners’ chairman vows to fight right-to-buy

CAP reform has put landownership in Scotland under the spotlight. Nancy Nicolson met Lord David Johnstone, the chairman of the landowners’ organisation, Scottish Land and Estates (SLE). He owns and manages Annandale Estates in Dumfriesshire.

You have been elected chairman of SLE at a time when the political pressure on landowners in Scotland has never been more intense. SLE says its members feel “demonised”. How are you going to turn around the image people have of those you represent?

By proactively engaging with the debate, providing solutions, working with stakeholders and making sure we are seen as part of the solution – which we are.

There is a lot of historical baggage that comes with landowning in Scotland that continues to be brought into the debate despite no longer being relevant to it. We have got to show that we have moved on from that.

Can we expect to see a change in attitude under your chairmanship? Or will change be forced upon the landlord-tenant system politically?

We are always open to good arguments and reasons why things should be changed, so we will always listen. It is about dialogue, communication and working together. The vast majority of landlord-tenant relationships proceed absolutely fine. There is just a minority with problems, so the idea the system is fundamentally broken is wrong.

The Scottish government has excluded sporting estates from claiming CAP support and has introduced a 2013 reference period rule to stop landowners taking land back in hand to qualify for area payments. Do you believe the Scottish government doesn’t trust your members not to exploit the system?

There is no reason not to trust us. Our members have not been exploiting the system. There are many people who have been slipper farming who are not our members, so directing these measures at us solely is a little unfair.

We have asked the government to explain in great detail what they intend by this, what criteria they are looking to set and how they plan to interpret it. There is a huge amount that requires answers and we do not have the details yet.

Scotland has the most concentrated pattern of private land ownership in the developed world, with just 432 families accounting for half of all non-public land. Do you concede that land holdings need to be broken up and more fairly distributed?

No. I don’t. There are many thousands of other land holdings, and some of the large estates provide the backbone of tenant farming in Scotland. That does not come from smaller owner-occupiers. The figure is eye-catching and headline-grabbing but it does not reflect the fact that some of 
this land is very poor and unproductive.

A new Land Reform Bill is to be introduced in the current parliament and is expected to follow the “direction of travel” of the recent Land Reform Review Group Report. That includes a recommendation for secure, established tenants to have an absolute right to buy their land. Do you expect to see that enshrined in law under your chairmanship?

No, I don’t, and we will fight any absolute right to buy.

There are a number of issues in the tenanted sector that need to be addressed, including the way in which rent reviews are done, dispute resolution and compensation for waygo (financial adjustments when the tenancy ends). We are looking at addressing these core issues to get us back to a vibrant tenanted sector.

There is a huge demand from new entrants and established farmers for more agricultural tenancies to be created. Instead of meeting that demand, landowners are taking land back in hand and use annual grazing agreements or very short tenancies that give tenants no security. Do you agree that situation needs to change – and can you give prospective tenants an assurance it will?

First, there is nothing wrong with any landowners farming land themselves. Why should they not?

Grazing agreements provide flexibility for businesses to move around and there are more of them now because these government reviews do create uncertainty in the market.

I would rather see longer-term vehicles used, but shorter-term leases have their place as well. I let a 25-year limited duration tenancy (LDT) last year and it is not as unusual as you think.

What you want is people with long-term leases having security and knowing they can confidently invest. But at the same time landowners want to have the confidence they can let on a long-term basis to people they are choosing and that both parties know the political environment is not going to be changed by a third party at some point in the future. It is all about confidence.

And landowners don’t have confidence in the current political environment? Is that correct?

We have been slightly concerned by what’s been going on.

Tenant farmers have appealed for a change in the law that would allow them to freely assign their land to someone outside their immediate family to allow the current tenanted land area to remain in circulation. Will you back that proposal?

Well if the tenant has no heirs why should the farm not come back to the estate, which can then re-let it? What you are talking about is major retrospective legislation and that does not encourage owner-occupiers to let land. So that is a no.

In a landlord-tenant situation you have got a relationship that has built up over generations. Here you are talking about bringing in third parties that are unknown to one another and that is a business relationship you are trying to develop. We need to get more confidence in using LDTs as a normal vehicle.

If you want to increase the tenanted sector, you have got to include the smaller owner-occupiers, because the bigger estates are already letters of land. You need owner occupiers to say “I’m coming to a stage where I don’t want to farm anymore and don’t want to sell – let’s let”.

SLE recently conceded that Scottish tenant farm rent reviews should assess the productive capacity of the land as a factor in determining rent levels. SLE has argued vehemently against this in the past. What convinced you to change tack?

An independent industry review for the Tenant Farmers Forum came up with recommendations that said the system was fine but it needed to be better understood by the people operating it. We supported that process and agreed with the recommendations. We are at a stage where people still wish to see the way rent reviews are done changed and we recognise there is a demand for that. They have got concerns – so let’s look at it and get people involved.

I am no expert, but it would be more along the lines of the English model of looking at rents where the open market is one form of the comparables and productive capability is another form. There is a balancing act to be struck there.

But it is significant that you have agreed to change. Has that come about because of your chairmanship?

We have a group that works with us trying to understand people’s concerns and getting in expert witnesses to tell us the legal position, what it means and how it can be interpreted.

What is SLE’s, and your, position on Scottish independence?

Both strictly neutral. I am genuinely fascinated by everything going on and enjoying the debate.

What is the situation on your own estate – size, tenancies, area in-hand – and how has the pattern of land use changed in the past 50 years?

It’s about 15,000 acres of which 4,500 acres are forestry, 3,500 acres are used for our own sheep farm and there are 16 tenancies – a mix of older 1991 tenancies and four or five LDTs.

I am a little younger than 50 still, but it hasn’t changed hugely in that time. Quite a lot of farms are still the same shape and size, principally because of security of tenure, and others have been amalgamated to form bigger units because of economies of scale. And we are coming to a crux now with single farm payments. We spend a lot of time talking about land reform and tenancy reform but the CAP changes will have a huge effect on farm incomes – arguably much greater than land reform.

Have you taken land back in hand over the past 20-30 years?

Yes, we have taken a little back in hand but we are fundamentally an estate that is looking to let. We want to let with confidence and on a long-term basis.

So are you open to approaches from new entrants?

Yes, always. But then the problem is that neighbouring farms are desperate to get bigger to split fixed costs, so the demand is from all sides.

What would you like to see in the new Land Reform Bill? What needs to be changed?

It is an independent document with 62 recommendations. We do not know which way they are looking to go but we want to engage with it to play a full part in the process and constructively help with it.

Some of it has overlapped with the Community Empowerment Bill because where you have a willing seller and buyer it is a convoluted process to try to get the funding and ability to buy the land and there is huge scope there to make it easier and a more streamlined and efficient process.