To seek cabinet approval for future management arrangements for the council’s small holdings estate.

The Leader requested that comments and questions be put forward in a sensible and constructive manner.

He acknowledged receipt of a letter signed by group leaders requesting the decision be referred to full council.  Having considered this request in discussion with cabinet members, the Leader confirmed the decision against this, stating that the Cabinet had a clear mandate to decide on this as a Cabinet item.  The decision to be considered today was whether or not to sell smallholdings.  Should the decision be taken to sell, a plan would be produced and which would encompass all questions that would be raised today. The Leader emphasised that rumours that people would be turned out of homes was not accurate and whilst there would be some changes, it was arguably to the advantage of tenants.

In response, the group leader of It’s Our County recognised the constitutional entitlement to make decisions through the Cabinet. However, he explained that the letter intended to point out that this was not necessarily the right thing to do given the significance of the decision. He regarded this as a failure to engage with democracy which showed the council in poor light. The Leader reminded members that this was not the case; group leaders had participated in the review of this matter and following deferral by the previous administration the matter had been on hold for three years. He added that there had been opportunity for all to express opinions and the matter had been through the scrutiny process.

In presenting the item under consideration, the cabinet member for contracts and assets thanked the chairman of the general overview and scrutiny committee and the smallholdings task and finish group for their work on this matter which had helped inform the Cabinet decision. He explained that as resources reducd, the council’s strategy was to focus on those areas which were the Council’s responsibility and which could not be discharged by another party. It was not a duty of the council to manage a farm estate and there were many other agricultural landlords who may be much better placed to do so. The intention was to ensure that the council was securing best value for money for Herefordshire taxpayers in the use of this asset with the aim to use the receipts to help realise important growth opportunities to support Herefordshire’s future economic prosperity through investment in key infrastructure. He added that there had been concern about the loss of farm land, but emphasised that the majority of the agricultural land would not be lost to the county and the majority of tenants would not be affected by the disposal.    The disposals programme would come back to Cabinet for approval and those affected would be supported through the process. He reminded members that the council was not well placed as a landlord to effectively manage and provide the much needed investment and there was a strong case that new owners could do this more effectively. The cabinet member proposed that the recommendations set out in the report be approved.

The chairman of the general overview and scrutiny committee thanked officers for their work with the task and finish group, which came to a good conclusion although this differed from the recommendations put forward today. He expressed disappointment that the recommendation was rejected to support farms in order to support economic development through the introduction of new practices with both new and existing farmers, as well as maintaining links with communities, which he hoped would continue. He commented on the importance of improving county estates, noting the potential difficulty in selling estates at best value due their tenancies.  He also expressed disappointment not to have seen published a report prepared by consultants Fisher German.    On closing, he hoped that Cabinet would consider the decision carefully, not just for the best value of the council but also for tenants. 

The group leader of Herefordshire Independents commented that the selling-off of assets and not investing in the land is not the answer.   He believed that decisions should have been made sooner and managed properly and that once sold, could never be bought back.   Echoing the comment of the GOSC chairman regarding limited capital return, he added that tenants would seek strong legal advice to get the best outcome for themselves. He closed his remarks by commenting that entry into agriculture should not be through inheritance alone as many young people were keen to enter the industry and smallholdings were a key opportunity to do this.

The Leader responded that young people taking on smallholdings was dependent upon tenants moving and creating vacant tenancies, which had happened on just three occasions in ten years and therefore there was little evidence of turnover in practice. 

The director of resources confirmed that there would be a master plan for disposal of properties which would be reported to Cabinet. 

The Group Leader for It’s Our County asked for explanation of why the report from Fisher German had not been made publicly available including to the NFU despite a freedom of information request. He further asked why the council had failed to communicate properly with tenants.  He also questioned the valuations which had been requested by external auditors Grant Thornton as there was suggestion that council estates had been over valued compared with Duchy and crown estates.

 He also commented that the recommendations contradicted the Agriculture Act as there was a duty to manage farm estates, and asked how the council would meet obligations and give tenants assurance of continuing access.   He added that there was evidence that retaining estate would be to the advantage of the council, as demonstrated in Devon where retention had improved credit status and reduced borrowing requirement at the same time as providing social housing and business incentives.  His closing remarks were that if there were no assurances or answers to questions, this would be a black day for the county.

The Leader responded with the remarks that the smallholdings estate represented a public asset of significantly high value, occupied by 45 tenants, including lifetime tenancies and retirements which would revert to lifetime tenancies if ownership changed. The council’s duty of care would extend to the opportunity to speak to each tenant and duty of care would be regarded.  The Leader reminded all of the duty to ensure public assets were used to best advantage to the population as a whole and in that context, it would be unlikely that the council would spend money on acquiring smallholdings at this time. Income from estates was in the region of £400,000 against £2.5m outstanding in liabilities or work needed and therefore to retain properties was not a sensible use of publicly owned assets. Consultation showed that disposal was supported in order to support economic growth.

With regard to the Fisher German report referred to, the monitoring officer confirmed that the report was background and not relied upon as material to the recommendations.

In response to a question from the Leader of It’s Our County regarding cost of the report, the Leader advised that this was not pertinent to today’s decision and if there had been any options that presented better value properties would be retained.  The monitoring officer provided further assurance of satisfaction that the council did not have a statutory duty to provide agricultural estate and was not in breach of the 1970 Act, and there was no legal barrier to the sale of estate.

The chairman of GOSC commented that by retaining the estate, there would be proper progression for farmers. In response the Leader reiterated his earlier comments that there was no evidence that the estate brought in new farmers as movement in the last ten years was minimal. 

The Leader added that there was a collective view that turnover was influenced by the price of agricultural land and that with the council’s financial position there was a duty to ensure that assets were put to the best use of the community as a whole. 

The Leader of the Green group commented that best value was subjective and that the figures were a detriment to the GOSC recommendation to keep the smallholdings.   She added that the scrutiny system was pointless as the recommendations had not been regarded in terms of feasibility and that the figures influenced the sale of the estate because the council was not in a position to manage them.  This was not a business decision but an ideological one which failed to consider the feasibility of the GOSC recommendation which would enable the estate to be used for the wider community.  She asked about the report’s reference to the Agriculture Act and tenants’ rights to continued occupancy.  

In response the Leader refuted that the recommendations were ignored as this was not the case and duty of care was being observed. It was not the role of scrutiny to take the place of the council’s decision-making process and due process had been followed.   The council was in difficult financial circumstances and it was necessary to look at saleable assets and although the value was yet to be realised, the sale would do more for the economic future of the council. 

The monitoring officer confirmed that section 37 of the report clarified the legislation and explained the statutory protections for tenancies.

The Leader of the Green group closed by remarking that the council needed to make assets work and it was a lost opportunity to not consider this. 

The group leader for the Liberal Democrats stated that this was a very sad day for the county and for colleagues and was appalled that this decision was to take place rather than considering the rationalisation of the estate.  The Fisher German report was expensive and the council was not prepared to publish it which suggested it was not helpful to Cabinet’s case. This was a major issue for the council which concerned hard working families of the farming community and that it could not be possible that it was a good decision to sell the estate and it would destroy the social fabric of the county.

The Leader responded with the comment that it was not the case that the tenants were to lose their livelihood or suffer in some way as they were protected through new ownership. All had the opportunity to make offers for their properties and the council would sell to them. However, it was the case that tenants deserved better landlords as the council did not have the capital to keep up the maintenance of the properties.

The group leader of Herefordshire Independents queried the legality of the decision and felt that the decision would be called into question as it would not be supported by some group members on council although it should have been considered by council rather than cabinet.  

The Leader reiterated that it was the right of the cabinet to take such decisions. The monitoring officer explained that the challenge to the decision would be by way of judicial review. 

The cabinet member for infrastructure explained that he had met with tenants previously and that he had made it clear that there would be serious change ahead. As a farmer himself, he could relate to the tenants’ situation and this was not an easy decision, therefore so duty of care was critical for long standing tenants who had grown through the estates. It was the case that some tenants could not see how they could move forward.   Austerity had significant impact on the council and there was a duty to look after public finance. However, the council needed to engage properly with tenants.  The council had no influence over the price of agricultural land which had fluctuated over the years. Whilst he did not like the decision, he was not against the sale, but it was important to work with those affected. 

The Leader acknowledged the cabinet member’s comments and confirmed that the council would do what it could to alleviate the situation. The issue has been aired well but no-one would want to sell if it were not in the best interest of the assets. Members had the responsibility to make decisions and look after the county’s assets and the council had to drive the economy of the county and use this asset.

All cabinet members were in favour of recommendations.

RESOLVED

THAT:

(a)        the council undertakes a structured sale of the entire smallholding estate taking into account expert legal advice as to achieving best value for the council and excluding land and/or buildings which are identified as having potential development value which should be retained for separate promotion and sale/development to maximise commercial/development value;

(b)       the new smallholdings policy set out in appendix A be adopted; and

(c)        the executive response to the recommendations of the general overview and scrutiny committee (GOSC) be approved.