§ 7.11 p.m.
§ The MINISTER of STATE, HOME OFFICE (Lord STONHAM)
My Lords, on behalf of my noble friend Lord Kennet I beg to move that this Report be now received.
§ Moved, That the Report be now received.—(Lord Stonham)
§ On Question, Motion agreed to.
§ Clause 32 [General powers exercisable by local authority in general improvement area]:
Lord BROOKE of CUMNOR moved Amendment No. 1:
Page 18, leave out lines 1 to 4 and insert ("Where a local authority have declared an area to be a general improvement area they may, for the purpose of effecting or assisting any such improvement as is mentioned in section 28 (1) of this Act").
§ The noble Lord said: My Lords, I beg to move Amendment No. 1, and in the absence of the noble Lord, Lord Kennet, I think I can probably, with common agreement, expedite the proceedings of the House. Let me explain. I tabled an Amendment to Clause 32 in Committee. The noble Lord, Lord Kennet, was good enough to accept the idea underlying my Amendment in principle, but said that it could be better drafted. At his suggestion I withdrew my Amendment. I should like to express my gratitude to him for having assisted me with the drafting of Amendments Nos. 1 and 2. So far as I am aware they fully accomplish my object, and I understand that the draftmanship is much more satisfactory to the Parliamentary draftsmen than my poor effort. That being so, I beg to move Amendment No. 1.
§ Lord STONHAM
My Lords, I am extremely grateful to the noble Lord, Lord Brooke of Cumnor, for his remarks, and for the understanding way that he has dealt with the matters of immediate moment. As the noble Lord said, this Amendment arises out of the point that he raised at the Committee stage, and there has been collaboration with regard to the drafting. As the drafting is impeccable, and the sentiment was already accepted, I would advise your Lordships to accept the Amendment.
§ On Question, Amendment agreed to.
Page 18, line 11. leave out from ("acquire") to end of line 12 and insert ("compulsorily any land within the general improvement area or adjoining that area").—(Lord Brooke of Cumnor.)
§ On Question, Amendment agreed to.
§ Clause 68 [Payments to owneroccupiers and others in respect of unfit houses purchased or demolished]:
Lord BROOKE of CUMNOR moved Amendment No. 3:
Page 40, line 29, leave out paragraphs (a) and (b) and insert—
§ My Lords, in the absence of the noble Lord, Lord Kennet, I fear that the House may get into greater difficulties. This Amendment is linked with Amendment No. 8. These two linked Amendments were briefly discussed in Committee, and the reason I have tabled them again for the Report stage is because the noble Lord, Lord Kennet, said in Committee that he would look at the point again, I feel sure that he will have done so, but unfortunately he is not here to give us his observations after his re-examination of the point.
§ This is a highly technical matter, and I have a feeling that I might be wasting the time of your Lordships by explaining it in detail when the noble Lord is not here. My main purpose in moving it is to re-examine the subject of the Amendment with his help. If your Lordships wish I will continue, but it may be that if the noble Lord arrives I shall have to repeat parts of my speech.
§ We are dealing here with an agreed improvement—I mean agreed between all parties and all concerned—in the compensation payable to owner-occupiers of houses which are declared to be unfit. The point at issue is to get the right dividing line in time between those houses which will benefit from this clause and those which cannot benefit because they are, so to speak, too late. I say that it should depend on whether completion of the purchase of the houses by the local authority, or the vacation of the house by the owner, whichever it might be in the particular case, had taken place by April 23, 1968, which I believe was the date of publication of the Government's White Paper on which this Bill was founded. This is a clear-cut event. It is well understood by all those who will be affected. The owner has no doubt when the purchase of his house was completed, or when it was unavoidable that he should vacate it.
§ At this stage I should like to pause to welcome the noble Lord, Lord Kennet, to your Lordships' deliberations. I fear 858 that in all the circumstances, if the noble Lord will give me his attention, I must briefly repeat what I have been faying, because I think that is the only way to do justice to the point at issue. I trust that I shall not be out of order by being guilty of repetition—certainly no: vain repetition, because I want these Amendments accepted.
§ I had explained before the noble Lord was with us that Amendments Nos. 3 and 8 were briefly discussed in Committee. I have tabled them for the Report stage because the noble Lord said in Committee that he would look at the point again. He will be aware of the point at issue. It is to get the right dividing l: ne in time between the houses which will benefit from the new arrangements in Clause 68, and those which cannot benefit. I am saying that it should depend on whether completion of the purchase of the house by the local authority had, or had not, taken place by April 23, 1968. I was saying that that was a clear cut event. The date on which the purchase was completed, or the date on which they vacated the house under a clearance scheme, is well known not only to the local authority but in particular to the owners of the houses. The Government say that there should be a different dividing line, and that is what is in the Bill at present. The Government say that it should depend upon whether the proceedings leading to the purchase, or vacation of the house, have, or have not, commenced by April 23, 1968.
§ My proposal, of course, would cost the local authorities more money, but it is the course which the local authorities want Parliament to take, because they see that the course proposed by the Government will be demonstrably unfair as between one owner and another. My proposal to amend the Bill has the backing both of the Greater London Council and the Association of Municipal Corporations; and those two bodies, between them, must be concerned with by far the greater part of all the houses likely to be affected by Clause 68.
§ There are many areas which were declared clearance areas before April 23, 1968, but in which few houses, if any, have so far been acquired. That has happened through sheer pressure of work in council offices and in town halls, and we fully understand that. If the Bill stays 859 unamended, all those owners whose houses have still to be purchased will be denied the benefit of the new compensation terms. They will not be able to question why, when they find neighbours whose houses are bought on the very same day getting the benefit of the new compensation terms, simply because their area was declared just after and not just before April 23, 1968. No solution of this problem can be guaranteed to eliminate all anomalies everywhere. That is common ground. But what I am proposing would ensure that there was no possibility of any anomalies arising in respect of any houses that have been purchased or vacated under a slum clearance scheme, after the date of the White Paper. That is what the local authorities want, and it is they who will have to pay the extra money. So I urge the Government to agree to these Amendments. I beg to move.
§ The PARLIAMENTARY SECRETARY, MINISTRY of HOUSING and LOCAL GOVERNMENT (Lord KENNET)
My Lords, I must apologise for not being in my place when the Report stage of this Bill began. I think there has been a breakdown in the electronic arrangements by which we are summoned according to the course of business in the House. I hope that the House will accept my apology.
The noble Lord's Amendment, which is at present before the House, affects the transitional arrangements bringing into effect the major part of the scheme which comes in the Schedules, and I know he will agree with me if we discuss now the merit and substance of his later Amendment to Schedule 5.
At an earlier stage he asked whether the Government would have another look at this matter, especially in view of the fact that the larger authorities, the Greater London Council and the Association of Municipal Corporations, wanted an Amendment of the sort which the noble Lord has moved. This we have done, and we find continued difficulties in accepting this approach to the matter. It seems to the Government that the date proposed in the Bill is the most logical and defensible one for the introduction of the change; that is, on the declaration of the compulsory purchase 860 area as a whole. To go further back would certainly have capricious effects.
If everything turned on the timing of the purchase of the unfit houses themselves, owners of houses in the same compulsory purchase order would get quite different treatment. Houses in orders confirmed many months before April 23, 1968, would become eligible if the owners, for one reason or another, had been successful in spinning out the negotiations for purchase. They could have done this by appealing to the Lands Tribunal. The lucky owner-occupiers would be those who had been obstinate and had opposed the local authority at all stages, employing whatever delaying tactics they could. The unlucky owner-occupiers would be those who had co-operated with the local authority and had perhaps not opposed the order, or had been willing to sell by agreement. It would obviously not be right that owners of property in the same slum clearance area should be compensated on a different basis, especially if those who get the better deal are those who have been spinning things out and making difficulties, while those who get the worst deal are those who have been going along with the process of housing rejuvenation which is involved in all this.
It is true that the larger local authorities would like to do what the noble Lord proposes in his Amendment; they would like freedom to be more generous in this respect. The smaller local authorities, however, would not. It is of course the duty of Parliament to look after everybody, both the smaller authorities and larger ones, and the poorer local authorities would find real difficulty about this. We are talking about quite a large issue. The best estimate I have been able to obtain is that there are as many as 10, 000 owner-occupiers who would be affected by this Amendment. So this is a substantial matter.
In conclusion, I should not fail to remind your Lordships that since there is Exchequer subsidy involved, by reason of the cleared land subsidy where there is new housing to be built, this Amendment would involve a charge on central Government funds. No doubt the noble Lord will consider whether it would be right for this House to make an Amendment which would change the amount of 861 money which central Government are bound to provide to achieve the purposes of this clause. Having said all that, I should like to sum up by saying that we have had another look at this matter, and the difficulties seem as great as they did the last time round. The problem is really that the Amendment would introduce capricious differences between one owner-occupier and another. I really think that this would not be a good way to go about this matter and, on hearing what I have had to say this second time, I hope that the noble Lord may agree with me.
§ Lord BROOKE of CUMNOR
My Lords, I am grateful to the noble Lord for having carried out his promise to look at this matter again, even though his further look has been noticeably unfruitful. He thinks that the effect of my Amendment would be capricious. But I think that the effect of the Bill as it stands will be capricious. I have the local authorities in general on my side. The noble Lord takes the view, which is a common view in Government Departments, that those owners who have not instantly agreed to all the terms of compulsory purchase orders are rather bad men, who ought not to have as favourable treatment as those who have instantly signed along the dotted line. I do not think one can make those moral distinctions at all. However, I quite see that the Government are not prepared to yield on this matter, and in the circumstances I have no option but to beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 7.27 p.m.
Lord KENNET moved Amendment No. 5:
After Clause 81 insert the following new clause:
§ Price payable on enfranchisement of leasehold house, 1967 c. 88
". The Leasehold Reform Act 1967 shall have effect, and be deemed always to have had effect, as if in section 9 (1) (which provides for the price to be paid by a tenant on an enfranchisement under the Act to be calculated on certain assumptions, by reference to a sale of the reversion in the open market by a willing seller) there had been inserted after the words 'a willing seller' the words '(with the tenant and members of his family who reside in the house not buying or seeking to buy)', and as if at the end of section 9 (1) there were
added the words 'The reference in this subsection to members of the tenant's family shall ne construed in accordance with section 7 (7) of this Act':
Provided that this section shall not have effect where the price has been determined (by agreement or otherwise) before the passing of this Act.
§ The noble Lord said: My Lords, this proposed new clause would reinsert into the Bill the clause providing for the exclusion of the tenant's overbid from the assessment of the price of enfranchisement under the Leasehold Reform Act. The Clause is in an improved form, excluding the bid not only of the tenant but also of members of the tenant's family living with him. At this stage I do not want to run through all the arguments which we had both on Second Reading and in Committee on this difficult and contentious matter. I should simply like to remind your Lordships of the main lines of the situation.
§ A Great many freeholders have been asking more than they had been before the recent decision by the Lands Tribunal in the Custins case. Some have been putting up their prices by a very large sum, several hundred pounds—in one case even £1, 000—no doubt relying on the expense of bringing an appeal to the Lands Tribunal to deter the tenant from appealing. But, quite apart from those large increases, there have been a great many other cases in which the prices have gone up by smaller sums as a result of the Custins decision. These cases have been not only of individual houses but also of estates owned by large freeholders where houses covered by an enfranchisement notice have had their prices put up by reference to the Custins decision, no doubt following professional valuation advice.
§ It may be that the cases which have been brought to my right honourable friend's attention are those where the increases which are being asked are above the average, but in this connection I think it is relevant to remind the House that a Queen's Counsel who spoke on the Opposition side in the House of Commons, Sir Derek Walker-Smith, thought that the tenant's overbid would be very slight. I also cannot help remembering that Lord Silsoe said in this House on Second Reading that the clause as I then moved it would produce tiny benefits. Such 863 amounts are one thing, but the heavy increases being asked for by some landlords following the Custins case are another thing.
§ I said before that I did not mean to go too deeply into the matter and at this stage I shall not. The situation is the same as it always was. The law was going along in one way, enfranchisement prices were at a certain level, there came a decision in the Lands Tribunal and the prices suddenly jumped up. In the view of the Government, that was a matter to be regretted. This clause was therefore inserted into the Bill in order to maintain the leasehold enfranchisement prices at about the level at which they were before. The way the Government conceive is the right way to do this is to ensure that the tenant's bid over and above the open market price for the merger value should be excluded, and that is what this clause does. We believe that this is fair—no more than fair and no less than fair.
§ I am therefore moving this clause again, which was inserted in another place and was deleted here by a majority of one on Committee stage. In the course of so doing I am incorporating in the new clause which I am proposing to move back a small Amendment suggested by the Opposition side in the House of Commons. It is my hope that since our lively debate last week the noble Lord and his friends, having thought about this subject again, as indeed we on our side and the Government have, may have come to the conclusion that it will be tolerable to continue the basis of these valuations as it was before the Custins case, and will now be prepared to accept the re-insertion of this clause with one minor amendment in it. I beg to move.
§ 7.33 p.m.
§ Lord SILSOE
My Lords, I am afraid I have already spoken three times on this clause and I should have liked very much to say that I had nothing to add; but there are a number of your Lordships here who have not been present on any of the other occasions, and so I am glad that the noble Lord, Lord Kennet, gave a reasonably short explanation of what the Clause is about. The major difference between my own views and those of the Government is as to what this is about. The noble Lord, Lord 864 Kennet, has this evening talked about people asking for more money since the Custins case. I am sure there is some evidence, and I am grateful to the noble Lord for saying that attention has been drawn to the more obvious and large instances.
May I just remind your Lordships—I am afraid I have not the exact figure in my mind, but I am not very far wrong in what I am going to say—that in Custins case itself, which concerned a house of considerably larger value than the values generally applicable in, for example, South Wales, figures were given. One of the things the Tribunal did in the course of their judgment was to pronounce on certain disputes between the tenant's view and the landlord's view, and they set out in detail what, in their view, the adjusted figures were, as explained by the tenant and the landlord. The tenant, it will be remembered, was asking for the tenant's bid to be excluded, but when that was adjusted by the Tribunal the difference between the two figures as between the tenant and the landlord in that case was of the order of £50.
I cannot accept the view that there has been any justification for large increases in figures because of this decision. What I can say is this: that if the decision is that the tenant's bid—I leave out for the moment the family—is removed, the figure which is payable by the tenant for his freehold, the site value, will be less. But there is no possible justification in anything in that judgment for increasing the figure. Indeed there is no evidence that any case has gone to the Lands Tribunal since. Greedy people, it may be, are asking for more—I know not—and no doubt the Minister has heard of such cases; but to think that there is any justification for an increase since the Custins case is wrong. What this Amendment is about is not that there would be an increase, but that there would be a reduction if the Amendment was carried.
That is my first point; and I have said right the way through that it is very difficult for the noble Lord, Lord Kennet, and the Government, and still more difficult for me, to prove anything in this matter because no one has any statistics and no one knows whether there has been a case. I think there has not been a case at the Lands Tribunal since. So I start 865 in that way by saying that, from my experience, any idea of an increase because of Custins case is right out, and if anybody went to the Tribunal they would soon be told so.
But I am not asking for this Amendment to be rejected on the ground that it is, if I may rudely put it, a small baby or a large baby; I am asking for it to be rejected on quite wide grounds of policy and fairness. I speak with apologies to those who have been kind enough to listen to me before, but the main principle of the Act (which I consider, with all due respect, is binding upon this House) is that the landlord owns only the site and the tenant owns the bricks and mortar. I had not heard anybody, least of all myself, try to argue, in this House, or in the House of Commons, or in the Lands Tribunal, that that principle has been breached. What was being decided in this case—and it is this which has boiled up in this great excitement—is what was the site value of this house in North London. My Lords, just to put this question in perspective, what did the Tribunal say it was? The Tribunal said that it was £500. It also found that, but for the Act of 1967 the figure would have been over £3, 000; so the landlord has lost quite a lot of money by virtue of the Act, and I cannot attack that in any degree. But now the argument is: should it be £500 or, say, £450? There is no case, I repeat for the third time, for going up.
If I may follow the example of the noble Lord, Lord Kennet, I will not go through all the points, but there are two major points on this clause that I should like to raise. The first is that it was thought by the Government that the Tribunal were breaching the principles of the Act of 1967. The Minister, the Secretary of State for Wales, said so; the Parliamentary Secretary for the Ministry said so. I have ventured to say already that they have not breached it in any way whatever. This is a Tribunal which is now always used by Government and Opposition alike in every case concerning disputes on land values. When the need arises, in an Act of Parliament, for the provision of a body to arrive at fair settlements between members of the public over the value of land, there is no alternative suggested by Government, Opposition or anybody else, to the Lands 866 Tribunal. And the Lands Tribunal have said in their judgment that if this Amendment is moved and carried (again the noble Lord will perhaps allow me to leave out the family for the moment) the terms of compensation will not be fair. They have said so in unambiguous terms.
The Amendment asks that the bid of the tenant should be removed from the consideration. The Tribunal dealt expressly with that point; they decided, as a matter of law, that the tenant's bid ought to be included. But they decided also—quite apart from law—that if that bid was excluded the terms of compensation would not be fair terms. Section 1 (1), the very first section of the Leasehold Reform Act provides that the tenant may a;; k for the freehold on "fair terms" of compensation. Those very words, "fair terms", are in the very first subsection of the Act. It seems curious to me that when that judgment has been given by this very distinguished and experienced Land Court (if I may call it that), the Government should go out of their way to move an Amendment in direct contradiction to that Court's findings—and in exactly opposite terms with the addition of the word "not".
It is because of that point that I venture to say that this House ought not to have second thoughts: that it ought to follow the decision arrived at in Committee, however small the Committee that made the decision and however small the majority. If I may say so (having had little experience of these matters), we who support this view have had rather bad luck whenever the matter came up for discussion. Last time there were only 45 Members in the Committee. I do not know how many noble Lords are present now; but obviously there are not a great many. None the less, having regard to the fact that the Government are deliberately inserting that which the Court—the only Land Court in this country—has said would produce unfair results, I do not feel that I can give way. I cannot say that I will have second thoughts unless the noble Lord in his final reply gives some better reasons than before. I understand that I can speak on Report stage only once. I shall keep to the Rules, but I hope that, if by any chance something comes up that I have not dealt with, somebody 867 else will take up the point for me. If necessary I will ask for leave of the House to speak again. The noble Lord, Lord Silkin, was for many years my "boss". He will, I think, speak up for my view. I worked under him for a great many years on these matters. I will not, if I can avoid it, ask for permission of the House to speak again. As this will be my last remark, I would say that I cannot see my way not to divide the House.
§ 7.44 p.m.
§ Lord SILKIN
I am sorry to have to disagree with my former assistant; but this is a very simple issue. The question is: What was the intention of the Government in passing this legislation? What did they lead the House to believe? I am quite prepared to accept that the Act was inadequately drawn and did not altogether express the views of the Government, so that the Lands Tribunal were in a dilemma and had to interpret the Act as best they could. But as I understand it, what they had to do was to put a value on the site.
If you are going to include the owner of the site as a bidder you are going to get an artificial value. It will become artificial for two reasons. First, because an owner in possession will naturally tend to bid considerably higher for the freehold than an outside person who is buying it at market value. He will gain security and he will have the benefit of having a freehold instead of a leasehold. Secondly, he will gain by the fact that some of the values of the ground rent and the lease are always less than the value of the freehold. In other words, a person acquiring a freehold gains considerably more than the mere price he has paid for the ground rent. Therefore, a lessee will tend to give considerably more—and it will not be a matter of £50—than the site is worth. Sometimes he will tend to bid, and be forced to bid, considerably higher. Very often he will be forced to pay considerably higher than the true value of the site.
The purpose of this Amendment, as I understand it, is to ensure that the owner, the lessee, is paying merely the true value of the site. The noble Lord, Lord Silsoe, referred to experiences. There have been no cases before the Lands Tribunal; but 868 it so happens, strange as it may seem, that I am still in practice, and I have had quite a number of these cases before me. I can assure the House that a great many landlords are asking far higher prices for a freehold than could be justified in any circumstances. But for the fact that my clients get good advice from me they would be forced to pay dearly in order to get the freehold. In some cases I have known landlords to ask twice as much as the freehold is worth.
I think that the Government are doing the right thing in putting forward this clause, ensuring that their intention is being carried out and that the lessee will be required to pay no more than the value of the freehold. I am not commenting on the merits of the Bill. I had my doubts whether it was fair to assume that the bricks and mortar belong to the lessee; but that is not the issue. The noble Lord accepted that in Committee. If, therefore, the freehold is the only thing we are valuing I ask the House to agree that it should be valued fairly and not on a scarcity or arbitrary value.
§ 7.49 p.m.
§ Lord BROOKE of CUMNOR
My Lords, the noble Lord, Lord Silkin, is setting himself up against a judicial tribunal. There has been a firm determination by the Lands Tribunal (which is the highest judicial tribunal to which the matter has so far been taken) because the Government stepped in without waiting to see whether there would be any appeal against the Lands Tribunal's judgment. But there was none.
I realise that the decision of the Committee last week was taken with very thin numbers. I do not in any way criticise the noble Lord, Lord Kennet, for again putting down the Clause in a somewhat altered form so as to get a decision in a fuller House. I do criticise him in that he was reported over the week-end to have said, in connection with last week's vote, that there had been an extraordinary use of hereditary privilege in the interests of the great landlords. He may have been misreported, but he was reported in two national newspapers as having used words to that effect. It seems to me a most extraordinary interpretation of the votes that were cast here last Wednesday evening. I really 869 do not think that the noble Lord, Lord Helsby, or the noble Lord, Lord Holford, who both spoke strongly against the Government, were actuated by a desire to assist the interests of the great landlords. I am quite sure that my noble relative, who also voted, was not. Indeed, it really is an attempt to throw dust in the eyes of the public if the noble Lord, Lord Kennet, thinks it right to insinuate that a vote such as that was taken in the interests of the great landlords.
While I say that the noble Lord is acting wholly reasonably in putting down this Amendment again, it appears to me that in the light of the decision of the Lands Tribunal it would not be complete unless he added to the clause a provision that in Section 1 of the Leasehold Reform Act 1967 the word "fair" should be left out and the word "unfair" should be inserted. What that Section says is:This part of this Act shall have effect to confer on a tenant of a leasehold house, occupying the house as his residence, a right to acquire on fair terms the freehold or an extended lease of the house and premises—and so on. Now, of course, the question arises, what are "fair" terms? Fortunately for us that has been decided by a judicial authority. In its decision the Lands Tribunal said:We do not think that the exclusion of the tenant would result in a fair terms sale, because a price which was calculated on a basis which ignored the price which a tenant would be prepared to pay would not be on fair terms.That is the judicial judgment on this matter.
As the noble Lord, Lord Kennet, was anxious to assert last week, Parliament can, of course, alter the law in any way it thinks fit. But it cannot alter these decisions about fairness and unfairness so as to create an inconsistency. We have a judicial decision that "fair terms" means including the willingness of the tenant to buy. The noble Lord, Lord Kennet, is reintroducing this clause, the purpose of which is to get the price fixed with the exclusion of the tenant or members of his family seeking to buy. That has been stated by the Lands Tribunal to result in a sale that would not be on fair terms. The Leasehold Reform Act requires that the sale should be on "fair terms". It seems to me, therefore, that the noble Lord, Lord Silsoe, is quite right in criticising this clause as he has.
§ Lord MAELOR
My Lords, last Wednesday evening I begged noble Lords opposite not to vote in favour of excluding Clause 80. My appeal was in vain; we were defeated by a majority of one—a fluke Division—because there were only 45 Members of your Lordships' House present. I am going to repeat my appeal to-night more earnestly than I did on Wednesday, for two or three reasons. I speak as a Welshman, and we Welshmen, particularly those of us in South Wales, are very interested in this debate; far more interested than we were in what took place in this Chamber last night, because Welshmen in South Wales have suffered the iniquity of this system for so long.
Let me give one example which is common in South Wales. A terraced house in Swansea was bought by a working man for £1, 000. He spent £800 on providing modern amenities. At the end of the leasehold he received only the £1, 000 that he paid for it originally, and so he was literally robbed of £800 If I robbed any person of £800, I am sure that I should be sentenced to many years of imprisonment. But here is daylight robbery, and it has happened in Swansea, not once or twice, but hundreds of times. I could give example after example.
I beg your Lordships to support the Amendment for another reason. I heard the Leader of the Opposition, the noble Lord, Lord Carrington, say on one occasion in this Chamber that the Conservative Party in the House of Lords would never reject anything that was mentioned in the Labour Party Manifesto in the 1966 Election because obviously the people had voted for it by giving a majority to the Labour Party in the other place. This matter was mentioned in the Labour Party Manifesto. I. was definitely declared that this Housing Bill would be introduced in the House of Commons. Therefore I am going to beg noble Lords to be true to their own Leader.
Unfortunately, the noble Lord, Lord Carrington, is not present this evening, but I am sure that noble Lords will recollect what I have just said regarding what the noble Lord, Lord Carrington, said. I am quoting from memory, but the noble Lord said, very definitely, that if there was anything in the Election Manifesto, and if the people had voted in favour of it, 871 then on moral grounds they could not reject what the Government proposed to do. The Government have promised that they would do this and so, on the grounds given by the noble Lord, Lord Carrington, I say to-night that noble Lords opposite have no moral grounds for rejecting the Amendment proposed by my noble friend.
Thirdly, we all believe that the Government must have been hurt last night as a result of what took place here. But they will be hurt far more if this Amendment is defeated. We had a hint of that from the Prime Minister in his speech in Durham last Saturday evening. Are we going to repeat what happened last night? Are we going to anger the Government unnecessarily into taking a certain action? If so, I can only say that, at some date, children in the schools of this country will be asked, "What happened in the last week of July, 1969?" And the answer will be "Man went to the Moon for the first time—and the Tories in the House of Lords committed suicide."
§ 8.0 p.m.
§ Lord KENNET
My Lords, perhaps I may have another word on this matter before the Question is put. The noble Lord, Lord Silsoe, has said that he is not too happy about this proposed new clause and he wishes to divide the House against it. The noble Lord, Lord Brooke of Cumnor, said that he thought the noble Lord, Lord Silsoe, was quite right. I deduce, therefore, that if the noble Lord, Lord Silsoe, pursues his intention of dividing the House against this Amendment, the noble Lord, Lord Brooke, will advise his noble friends to follow the noble Lord into the Division Lobby. If I am wrong about that, I hope the noble Lord will interrupt me. It may be he has in mind that I might say something that would affect his judgment in this matter. I am anxious not to say anything which would provoke the noble Lord into this course, if he did not already have it in mind.
§ Lord BROOKE of CUMNOR
My Lords, if the noble Lord, Lord Silsoe, presses this Amendment, I shall follow him into the Lobby. My noble friends will do what they wish. I do not think, however, they will be influenced by the awful threat that the noble Lord, Lord Maelor, has just uttered, indicating that 872 it is a most unforgivable thing for the Opposition to provoke a Government.
§ Lord KENNET
No doubt they will be much influenced by the direction in which they see the noble Lord walking. For the third time round on this point, the noble Lord, Lord Silsoe, said that there has not been a case relevant to this matter before the Land Tribunal since Custins.
§ Lord KENNET
Perhaps I can correct him. There have been two. There has been Hall's case where the Tribunal came roughly to the same conclusion and there was a third case last week. I have only seen the full report of the judgment this morning and so I should not comment on it but, at first glance, it appears to fall into line with Custins. This is the interpretation which is being given by the Lands Tribunal to the law as it stands at present. The Committee will not want me to repeat for the third or fourth time that there is no possible criticism of that.
The noble Lord, Lord Silsoe, also said that there was no excuse for increased enfranchisement prices due to the Lands Tribunal decision. It may be that he is right. I do not know; I cannot judge about this. A Goverment should not survey the social scene and say for what feature of it there is an excuse. It has to survey the social scene, see what is happening, see that it is in accordance with what it conceives to be social justice; and if it is not in accordance with that, it must propose to Parliament that the law should be changed. Maybe there is no excuse for increased prices since Custins but there are increased prices. The City of London Corporation, no doubt acting on professional advice, and the professional advisers no doubt with copies of Custins in their pockets, have been putting up prices on at least one whole estate by between £100 and £200 per house since this decision, and no doubt as a result of it. I have already quoted odd cases of prices going up £1, 000. There is absolutely no doubt that this is happening. Whether there is an excuse for it, I do not know. I cannot take that into consideration. What concerns me and must concern Parliament is that it is happening. The noble Lord, Lord Silsoe, 873 said that the Government were deliberately inserting into the law something which the Lands Tribunal had said would have unfair results. Here we come back to the basis of the whole matter. The law says that the Tribunal shall make a fair settlement. The Tribunal has made two or three settlements now and this shows their interpretation of the word "fair" and its validity as written in the Act. The result has been that prices have gone up, that the leaseholder is disadvantaged and the freeholder is advantaged. Therefore the Government come to Parliament and invite Parliament to change this. That is the result of the word "fair". I am not saying that we want to write into the law something which, because it no longer uses the word "fair", is unfair; that would be absurd. I merely say that the result of injecting the word "fair" in its context of the words in the Leasehold Enfranchisement Act is something which the Government consider socially undesirable and invite Parliament to share their view. They therefore propose instead a more precise definition. This word "fair" is vague.
If, on the other hand, it is laid down in law that a hypothetical bid by the sitting tenant, the leaseholder, and his family living with him, is not to be taken into account in assessing the price for enfranchisement, then we are laying down something which Parliament has not only a full right to lay down but also something more precise. What I am advancing here is an increase in precision for the guidance of the court. My noble friend Lord Silkin, with his vast experience of these matters, said that if we included the owner in the market, we shall get an artificially high value. That is the nub of the matter. It is precisely in order to get rid of that artificially high value that the Government now propose to exclude the owner from the market.
To come to the main point, let us stand back for a moment and consider what has been happening. The Leasehold Enfranchisement Bill was introduced with a certain formula for settling this matter. It ran in a certain way for a certain length of time. Prices were set, enfranchisements took place and a fair level was established. There was then a case before the Lands Tribunal, the Custins case, followed up by two more, 874 as a result of which prices went up. The Government then proposed to charge the law by an Amendment in another place. The Amendment was not opposed by the elected Members of the Opposition. Indeed, the only criticism they had of it was that it should have been introduced earlier and they added a refinement to it, which would make it even tougher—this question of families, which on the invitation of the Opposition in another place I have included in this Bill. The Bill came here. The Opposition moved against it and succeeded in throwing it out by one vote at Committee stage.
§ Lord BROOKE of CUMNOR
My Lords, the noble Lord said that the Opposition moved against it. The noble Lord, Lord Silsoe, moved againstant and the Opposition Whips were not on for that Division.
§ Lord KENNET
I accept the noble Lord's correction most willingly. Of course, the Opposition did not move against it: the noble Lord, Lord Silsoe, moved against it and the Opposition supported him in his move and went into the Lobby in his support, and thereby achieved its rejection by a majority of one vote.
§ Lord SILSOE
My Lords, does the noble Lord not think that an effort by an independent person in winning at all is rather fine? Whe does he run down one vote?
§ Lord KENNET
Nothing could be further from my intention than to run down the noble Lord, Lord Silsoe. My battle is with the Opposition. The noble Lord moved as he thought fit. The Opposition have supported him. I am taking issue with the Opposition. The noble Lord, Lord Brooke of Cumnor, has taken me to task for using the words "an extraordinary use of hereditary privilege" and asked me whether I wanted to duck out of it. I do not, and repeat it. It is true, no doubt, that among the Opposition Peers who went into the Lobby against this Amendment and in support of the freeholders last week there were those who are not here by hereditary right; but I believe there was more than one who is here by hereditary right, and since the Amendment was carried by one vote then I assert, without fear of contradiction, that it was carried by hereditary privilege.
875 What happens, therefore, is that the Opposition come out at this point in defence of the great freeholders against the leaseholders of this country, against the Labour Party in another place and against the Labour Party in this House, none of which is surprising, but lastly, and this I do find astonishing, against the kind of Conservatives who can get themselves elected to another place and who welcomed this change in the Bill
§ Resolved in the affirmative, and Amendment agreed to accordingly.
§ 8.20 p.m.
§ Lord BROOKE of CUMNOR moved Amendment No. 6:
§ After Clause 81 insert the following new clause:
§ ". Provided that for the avoidance of doubt it is hereby declared that if the said alteration has effect under section 19 of the General Rate Act 1967 only as from a date later than the appropriate date and a certificate as to the manner in which the hereditament876
§ when it was introduced there—perhaps I am going too far and should say, the kind of Conservatives who omitted to oppose it and suggested improvements to this change in the Bill when it was introduced in another place.
§ 8.10 p.m.
§ On Question, Whether the said Amendment (No. 5) shall be agreed to?
§ Their Lordships divided: Contents, 53; Not-Contents, 47.875
|Addison, V.||Garnsworthy, L.||Ritchie-Calder, L.|
|Archibald, L.||Hilton of Upton, L.||Rusholme, L.|
|Arwyn, L.||Hughes, L.||Sainsbury, L.|
|Baldwin of Bewdley, E.||Kennet, L.||St. Davids, V.|
|Beswick, L.||Leatherland, L.||Serota, Bs.|
|Birk, Bs.||Lindgren, L.||Shackleton. L. (L. Privy Seal.)|
|Bowles, L.||Llewelyn-Davies of Hastoe, Bs. [Teller.]||Shepherd, L.|
|Brockway, L.||Silkin, L.|
|Brown, L.||Lloyd of Hampstead, L.||Sorensen, L.|
|Burden, L.||McLeavy, L.||Stonham, L.|
|Chalfont, L.||Maelor, L.||Stow Hill, L.|
|Champion, L.||Milner of Leeds, L.||Strabolgi, L.|
|Collison, L.||Mitchison, L.||Taylor of Mansfield, L.|
|Crook, L.||Noel-Buxton, L.||Walston, L.|
|Donaldson of Kingsbridge, L.||Peddie, L.||Wells-Pestell, L.|
|Energlyn, L.||Phillips, Bs. [Teller.]||Williamson, L.|
|Evans of Hungershall, L.||Popplewell, L.||Wilson of Langside, L.|
|Gaitskell, Bs.||Raglan, L.|
|Airedale, L.||Denham, L.||Lothian, M.|
|Auckland, L.||Drumalbyn, L.||Massereene and Ferrard, V.|
|Beauchamp, E.||Emmet of Amberley, Bs.||Merthyr, L.|
|Belstead, L.||Falkland, V.||Milverton, L.|
|Berkeley, Bs.||Falmouth, V.||Monson, L.|
|Bessborough, E.||Fortescue, E.||Mowbray and Stourton, L.|
|Boston, L.||Gisborough, L.||Nunburnholme, L.|
|Brooke of Cumnor, L.||Gray, L.||Rankeillour, L.|
|Brooke of Ystradfellte, Bs.||Greenway, L.||Runciman of Doxford, V.|
|Burton, L.||Headfort, M.||St. Oswald, L.|
|Chorley, L.||Henley, L.||Sandford, L.|
|Colville of Culross, V.||Holford, L. [Teller.]||Sandys, L.|
|Conesford, L.||Inglewood, L.||Silsoe, L. [Teller.]|
|Cranbrook, E.||Jellicoe, E.||Strang, L.|
|Crowther, L.||Kilmany, L.||Vivian, L.|
|Daventry, V.||Lauderdale, E.|
§ in question should have been treated in the valuation list has been obtained by the rating authority from the valuation officer under section 9 (3) of the General Rate Act 1967 and applies to the appropriate date, the rateable value shall be as stated in the certificate (if so stated), for the purposes of all proceedings instituted whether before or after the passing of this Act."
§ The noble Lord said: My Lords, we now come from the realms of broad controversy into a highly technical matter. I will explain the Amendment to your Lordships as briefly as I can. I know that the noble Lord, Lord Kennet, will be familiar with the point at issue, and 877 I trust he will correct me if I make any slip in my explanation in view of its complexity.
§ The Rent Act 1965, which has now been consolidated into the Rent Act 1968, made rent regulation and all that goes with it, including security of tenure applicable to houses and flats whose rateable value on March 23, 1965, was under £400 in Greater London, or £200 elsewhere. There was a general revaluation for rating purposes which took effect on April 1, 1963. But, of course, there is a procedure for appeal against rating assessments, and at any given date there will always be a lot of rating assessments subject to appeal. I would ask your Lordships to consider an appeal initiated in May, 1965. That might well be a proposal claiming that the 1963 valuation was wrong and had been wrong from the beginning; that is, right back to April, 1963. The appeal might succeed. That would then establish that the assessment ought to have been lower ever since April, 1963. But so far as recovery of overpaid rates is concerned, that would have retrospective effect, under the law, only back to April 1, before the date of the appeal. So a person whose rating assessment was raised in 1963 to something like over £400 in Greater London might appeal in 1965, and might have the assessment reduced to something under £400.
§ Then the question arises whether his property is subject to rent regulation or not. Though the assessment has been found to be wrong from April, 1963, for rating purposes he would benefit only from April 1, 1965. But how should the property be treated for Rent Act purposes? In Section 6 of the Rent Act 1968 the critical date is March 23, 1965, nine days earlier than when the new valuation comes into effect so far as payment of rates is concerned, in the hypothetical case that I have mentioned. But the finding on appeal shows that the valuation has in fact been wrong ever since the new valuation lists first came into effect in 1963—two years earlier. That being so, it would seem just that for Rent Act purposes the assessment should be treated as having been under £400, and not over £400, on the critical date in the Rent Act; that is March 23, 1965. The purpose of my new Clause is to put that beyond doubt. I am sure 878 it is the course of justice, and I hope the Government will accept it. I beg to move.
§ Lord KENNET
My Lords, On the surface there is so much to be said for the noble Lord's Amendment, but there are difficulties about it. Let us look first at the purpose of the 1965 Act, which created the rent-regulation system. This was, as Mr. Crossman said on Second Reading in the other place, to restore protection to those who had lost it through the 1957 decontrol. Rating revaluation having intervened, the old rateable value limits (£100 in Greater London and £75 elsewhere) were no longer applicable, and new limits had to be set. These limits—£400 in Greater London and £200 elsewhere—were deliberately set high to preclude any risk that any dwellings decontrolled in 1957 might not be covered by the new limits. In other words, a safety margin was allowed.
We realised that this margin would bring within protection some dwellings which had never been subject to control, but we thought that this was preferable to risking the exclusion of any which had been controlled. So a number of tenants of dwellings within the new limits which were never formerly controlled have obtained Rent Act protection by luck, and not of purpose. My right honourable friend has received no evidence to suggest that the chosen limits have failed or are failing to achieve their object. That is, any dwelling formerly subject to control and not in the meantime structurally altered or improved is still outside the Rent Act protection.
I come now to the question of the appropriate day for determining whether the dwelling does or does not fall within these limits. This, as the noble Lord has said, is March 23, 1965, the publication day of the Bill. I should like to stress that on that date the current valuation lists had been open to the public, for the purpose of varying the proposals, for two years. Anybody who thought his dwelling had been over-assessed, and to whom outgoings on accommodation mattered enough for him to wish not to pay excessive rates, had had ample time to ascertain his rights under rating law and to put in proposals for re-assessment. It was never the idea that people should be enabled to seek variations in 879 rating assessments for the purpose of getting dwellings inside or outside Rent Act limits.
When the Rent Bill of 1965 was introduced it contained the provision—as indeed did the noble Lord's Rent Act of 1957—preventing any re-assessment applied for after the introduction of the Bill from having effect for Rent Act purposes. So in each case the appropriate date was the date of the Bill's introduction. Although during the passage of both Bills this restriction was slightly modified, in both Bills it was still deliberately left impossible for anyone to alter his Rent Act position by applying for a re-assessment. So what is proposed in this Bill, as unamended, is in this respect the same as was proposed and carried through by the noble Lord in his 1957 Rent Act. Houses and flats assessed at something above the £400 and £200 limits, which on re-assessment might come below them, are in point of fact houses and flats of which there is little scarcity, and the person who is able to afford the market rent of such dwelling should have little difficulty in finding other accommodation at about the same value.
Moreover, at the time the 1965 Act was before Parliament, and when it came into force, there may have been—and I am sure there must have been—a number of tenants of dwellings of this sort who would have liked security of tenure but who, recognising that the Act would not or did not give it to them, accepted that fact, and have since vacated their homes on the expiry of their tenancies. These people might well reasonably feel aggrieved if the Government were, four years later, to turn round and reverse the position.
What we are being asked to do is to alter a considered provision in rent legislation at the last minute, and in the utmost haste. No Amendment was proposed on the Committee or Report stages in the other place, or on the Committee stage in this House, and this Amendment appeared for the first time on yesterday's Order Paper. What we are being asked to do is to alter the position in rent law in order to extend the security of tenure to a few people who, if they had obtained it in 1965, would have done so only through the luck of the safety margin, 880 and whose failure to benefit from that margin resulted from their own previous lack of concern with the rateable values on their dwellings.
I do not think this would be right and, whether it is right or not, I am sure the noble Lord will realise that with the timetable we have—the Bill going to the House of Commons to-morrow or the next day and back to us in two or three days—it would really be impossible to consider all the ramifications of this Amendment, which I think run rather wide. They would run into leasehold reform law and they might run wider. It would take longer than the two or three days we have on the timetable we all agreed, to see whether this would be acceptable for other reasons outside the immediate purpose for which it is moved. I hope that, with that explanation, the noble Lord may agree that the matter should wait to be pursued, if it should be pursued, which I very much doubt, on some other occasion because it is simply too late to do it now.
§ Lord BROOKE of CUMNOR
My Lords, I hope that your Lordships will think that the noble Lord has confirmed my original statement that this is a technical and complex matter. I trust he will not hold it against me that it has been raised at the Report stage of this Bill. Of course, I recognise the inconvenience in that to the Government. But I am sure he will accept my assurance that it was brought to my notice only at a late stage last week, and there was no case of my holding it back and springing it on the Government. It was brought to my notice, and it appeared to me to be an important matter which Parliament should consider in the context of this Bill. I will of course examine very carefully what the noble Lord has said and consider what to do next if he states firmly that nothing can be done about it in this Bill.
I am not inclined to accept his argument that, because a house was valued at over £400 in Greater London in the 1963 valuation, that necessarily proves that it had not been under rent control at an earlier stage. The noble Lord will, I am sure, be aware from his London experience that there were some very large increases in valuation when the 1963 revaluation succeeded the 1939 one.
881 I accept of course that a well-informed and well-advised person would have considered whether to appeal against the 1963 valuation at an earlier stage than 1965, but the noble Lord is as well aware as I am that there are masses of people who do not immediately turn to a solicitor or to a valuer when a new valuation comes out, and are somewhat slow in investigating what their rights of appeal are until it may happen that somebody comes along and in conversation they discover that they have a right of appeal of which they had not previously been even aware.
I appreciate that if this change in the law were to be made it would go more widely than the terms of my Amendment. To seek to press this Amendment might only add to the complexity of matters by putting into the law something which went half way and not the whole way; and I quite appreciate that the Government in another place would not be able to accept that. I hope the noble Lord will appreciate that I am not prepared to go all the way with his arguments, which to my mind gave less than full value to the merits of the proposed clause, and more than full value to the difficulties in changing the law. But I accept at once his argument that it would be almost impossible to get any amendment of the Bill to this effect completely right in the very short time we have; and there is common agreement that it is desirable that this Bill should receive the Royal Assent before the Recess. In these circumstances, while I am not dropping my interest in the matter, I am willing to beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 90 [Citation, construction, commencement and extent]:
Lord KENNET moved Amendment No. 7:
Page 50, line 20, leave out ("and 81") and insert ("to (Price payable on enfranchisement of leasehold house)").
§ The noble Lord said: My Lords, on Committee stage of this Bill we agreed that the provisions affecting leasehold law should be brought into effect immediately, rather than to wait for the usual month for the drawing up of circulars and regulations. Since we have just carried back into the Bill a provision affecting lease- 882 hold law, I should now move an Amendment, which will bring that leasehold provision into line with the other ones—that it should come into effect immediately, rather than waiting for the customary month. My Lords, I beg to move.
§ On Question, Amendment agreed to.
§ Schedule 9 [Savings and Transitional Provisions]:
§ Lord KENNET
My Lords, this is a highly technical and complex matter. It affects transitional provisions and it is the sort of thing that comes to light during the passage of a Bill through Parliament and the sort of thing for which we have several stages for consideration of the Bill. I think there can be no doubt about it. I beg to move.
§ Amendment moved—
Page 69, line 34, at end insert—
(". The repeal by this Act of sect on 49 of the Rent Act 1968 does not affect the operation of that Section in relation to any dwellinghouse while such a condition relating to the rent of the dwelling-house as is mentioned in that section requires to be observed.").—(Lord Kennet.)
§ On Question, Amendment agreed to.
§ Then, Standing Order No. 41 laving been suspended (pursuant to the Resolution of July 14): Bill read 3a, with the Amendments, and passed, and returned to the Commons.