§ 3.18 p.m.
§ Further considered on Report.
§ Clause 64 [Conversion of controlled tenancies into regulated tenancies]:
Baroness BIRK moved Amendment No. 68:
Page 46, line 34, after ("tenancy") insert ("subject to the property being certified as fit for human habitation (within the definition of section 4 of the Housing Act 1957) by the local authority.").
§ The noble Baroness said: My Lords, I rise with some trepidation, as the ceiling will fall down. This amendment was tabled by the noble Baroness, Lady Vickers, and the noble Lord, Lord Evans, in Committee, but was not moved then. Here we are talking about the residue of controlled tenancies, which are estimated at around 200,000. These tenants live in some of the worst conditions in the private rented sector. They are among the poorest tenants and include elderly people who have lived in their homes for several decades; indeed, 85 per cent. of them are over pensionable age. The purpose of the amendment is to give protection to those living in these wretched properties. In fact, Mr. John Stanley said in the Commons Committee, that it was conceivable that 150,000 of the 200,000 remaining controlled tenancies were quite unfit for human habitation.
§ If a property is defined as unfit, it is surely unreasonable for the tenant to have to pay the considerably increased rent which will result from decontrol. Although I suspect that the Minister will say that if the properties are unfit the rents will not go up to any great degree, we have to accept that average rents are now very much higher and these rents have lagged behind over the years. Therefore, they will increase irrespective of their condition, because of this enormous gap. The fact that the rents have not increased over the years is a quite different matter. Today we are dealing with the facts as they are. At the same time, by making decontrol conditional on the property being certified as fit for human habitation, we are providing an incentive to the landlord to bring the property up to a reasonable standard. I do not believe that it is justifiable to expect tenants to pay an increase in advance of the work 208 needed to make the property fit. In no other field would it be reasonable to expect people to pay for a service before it is provided.
§ Secondly, the landlord stands to gain from the enhanced capital value of the property if it is improved. Therefore, it is unreasonable to expect the tenant to pay towards the cost of the work which will bring about this result. The landlord will also be able to claim an improvement grant. For these reasons, I believe that this is an amendment which should receive general support and I hope that the Government will find that it is possible to accept it. I beg to move.
§ Lord EVANS of CLAUGHTON
My Lords, as the noble Baroness, Lady Birk, has said, at the Committee stage an amendment was put down in the names of the noble Baroness, Lady Faithfull, and myself. We did not move it on that occasion, because of the amendment standing in the name of the noble Lord, Lord Goodman, who wanted to exclude altogether the proposals for converting these tenancies into regulated tenancies, which we had hoped might meet with the approbation of your Lordships. Unfortunately, that was not the case. As the noble Baroness said, in all justice an assurance should be given that the tenants—who are now, generally speaking, elderly—will not have to suffer extremely bad household conditions. These were understandable when the landlord was receiving only a very small rent. It is right that an assurance should be given that now that these tenants will have to expect a fairly extensive boost in their rent, they will not have to suffer considerably inadequate conditions.
Noble Lords in all parts of the country, and particularly in inner urban areas, will have seen houses of this nature in which tenants have lived for very many years, admittedly at a low rent, with no commercial advantage to the landlord. I am not making a general attack on landlords because their position in this type of statutory tenancy has been very difficult. Neverthless, I am sure that noble Lords will agree from their own experience that if rents are to be increased and if tenancies are to become regulated tenancies, these are the least of the reforms which your Lordships should agree to for what amounts to a substantial change 209 in the status of these kinds of tenants. I have very much pleasure in supporting the amendment moved by the noble Baroness.
§ Lord SANDFORD
My Lords, in this amendment we are invited to deal with two distinct but interrelated issues. The first is the Government's intention to bring to an end controlled tenancies and to make them all into regulated tenancies. I should like to put it to the House that it is high time that this should be done. It is overdue. The position of the landlords—we had a profile of the landlords who are concerned presented to us in Committee—in the case of controlled tenancies has been grossly unfair and unjust for many years, and since the rate of inflation went into two figures the position has become quite intolerable. If the properties in question are not so good as they should be and suffer from serious shortcomings, the main blame lies in the perpetuation of the controlled tenancy system. So the first thing to do is to bring that to an end. The proposal that it should be made subject to certificates of fitness which would have to be provided by housing authorities in respect of some 200,000 properties is to involve them in an appalling waste of their time and resources. They have many other better things to do.
The second issue to face up to is the position of the tenants. That is safeguarded by two factors. First, the regulated rent is going to be assessed by a rent officer and related to the fair rent. Secondly, tenants who are not in a position to pay the full fair rent are fully protected by the provision of rent allowances in the private sector. There is no equivalent provision for the protection of the landlord, and there has not been for many years.
The third fact that we have to take into account is how to deal with those properties which are found to be unfit and unsuitable for human habitation in the process of assessing the fair rent for the regulated tenancies. This can be done in a number of ways. It can be done by the application of Section 4 of the 1957 Act. We had a debate in Committee on Amendment No. 271 which was moved by the noble Lord, Lord Evans of Claughton, who invited the Government to consider a few additional 210 criteria for unfitness. There is the process under Section 8 of the 1957 Act under which the measures for compulsory improvement can be set in motion in general improvement and housing action areas. It is to be hoped that that provision, which is suitable in many cases, could be invoked. But there is in every case the provision under Section 9 of the 1957 Act for the closing and demolition of properties which are unfit and beyond reclaim.
My question to my noble friend is this. Which of these processes for dealing with unfitness does he and his noble friend intend to invoke? In answer to the noble Lord, Lord Evans of Claughton, he indicated during the Committee stage that his right honourable friend was not prepared to make any special provision in this Bill, and we can all understand that it is now too late for that. But it would be useful to know by what manner the Government propose to deal with this —whether they will use unfitness under Section 9, compulsory improvement under Section 8, or changes in criteria under Section 4, or a combination of the lot. None of that, in my view, alters the fact that we ought no longer to delay in moving from controlled to regulated tenancies, and I believe that we can do so with equanimity if we bear in mind the two forms of protection which are available to tenants.
§ 3.30 p.m.
§ The PARLIAMANTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin)
My Lords, before I start what doubtless will be several hours of discussion, may I say that I hope the bloody scenes portrayed on both sides of the House will in no way be symbolic as to the discussions we will be having later on? After yesterday, I felt that such an observation might not be too far removed from reality.
This amendment would prevent any of the remaining 200,000 controlled tenancies from passing into the fair rent system unless and until—those are the operative words—the local authority has certified that the dwelling is fit according to the definition of the 1957 Housing Act. It is quite true that in our decontrol provisions in the 1972 Housing Finance 211 Act we excluded from decontrol any dwelling which had already been certified as unfit. In framing our present proposals for decontrol under this Bill we caretully considered whether we should do the same. We concluded we should not. The reason is simple. The damage and unfairness caused by the retention of the controlled system has been so great that very powerful considerations would be needed to retain any part of it. The unfairness of control, with rents pegged at 1956 levels, is even greater now than it was in 1972.
Furthermore, I should stress that even the 1972 Act prevented the decontrol only of tenancies already declared as unfit. The noble Baroness's amendment would go much further by requiring the local authority to visit and inspect each of the remaining controlled 200,000 tenancies and positively certify that they are fit. Unless and until that happened, the tenancies would remain controlled and a fair rent could not be registered. In my opinion, this is quite misconceived. No other category of tenancy entering the fair rent system must pass this test of fitness. Why single out the long-suffering controlled landlord? It was estimated in 1976 that a third of a million privately rented dwellings are unfit, and a great many of these will be regulated tenancies. Where a fair rent is fixed, the rent officer will of course take account of the state of repair of the dwelling. Section 70 of the Rent Act, of which the noble Lord, Lord Goodman, was a principal author, specifically requires that he must do so.
Prolonging decontrol as proposed by the amendment will do nothing to improve the fitness of the dwellings concerned. Nor do I believe that in equity it would be right to require possibly quite expensive works to properties that are unfit before a fair rent can be charged. I described in Committee how controlled rents have remained pegged at 1956 levels and how controlled landlords will often be worse off than their tenants. Concerned as I am with brevity, I think f owe it to the House to give at least one or two examples from the vast number of letters we get from landlords. On their behalf, I think I should give one or two examples. A lady who owns a house in Cromer writes to say she receives an annual rent of £120, from which she has to pay £87.95 rates and £10 insurance; that is a net rent of 212 less than £23 a year, or less than 50p per week.
Another lady, in Enfield, is faced with a repair bill of £300 which she just cannot afford. The rent she receives is only £1.08p after rates have been paid, so she would need six years rental income just to meet this one bill. And another letter tells of an old age pensioner in Stoke who lets a house to a family which includes three wage-earners. The rent she receives is £3 a week, from which she must pay rates and water rates. She also is faced with a repair bill of £300 and she does not know what to do. This is hardly the traditional image of the landlord with a Rolls and a pin-stripe suit. Many of these landlords clearly want to carry out the necessary repairs, but the rental income they receive just does not allow it. I know of no way of explaining to such people how it can possibly be fair to keep the rent fixed at 1956 levels while all other charges and costs keep increasing.
The Government can at least offer these people the chance of applying to the rent officer for a fair rent. The noble Baroness's amendment offers only a continuation of the wretched position of which they truly despair. I have stressed the landlord's side of the story because it is not often put, but the Government of course equally recognise that controlled tenants are generally on low incomes. Most are old age pensioners. But, as my noble friend Lord Sandford said, there are at least the supplementary benefit and rent allowance schemes to meet most or all of their rent. And as under our proposals their rent can be increased only by application to the rent officer, this will provide a valuable opportunity to ensure that tenants are aware of their eligibility under these schemes. Additionally, the Government will be providing leaflets free of charge explaining to landlords and tenants what is involved on decontrol.
I will not go into much of the rest of that which I have before me, which refers to what Richard Crossman said—not the quotations I gave in Committee but more quotations. He said in 1965 that something had to be done, that these houses had to be brought out of control. That was in 1965. Here we are in 1980 and we are still talking of the same thing, and yet noble Lords opposite have reservations. 213 We can hardly be said to be rushing into anything. At this stage I will not go further other than to say that quite clearly if the noble Baroness presses her amendment there would also be a major workload for local authorities, who would have to inspect each one of the 200,000 dwellings to see whether they were fit: and that would be additional to, and not instead of, inspection by the rent officer. I do urge the noble Baroness to withdraw this amendment because it would so greatly increase the administrative requirements of decontrol, and for those dwellings not passed as fit it would prolong indefinitely what is manifestly an unjust relationship between landlord and tenant.
§ Lord LEATHERLAND
My Lords, the noble Lord has given us some dramatic examples of the heavy burden which the local rates impose upon both landlords and tenants. I should like to ask him, therefore, whether Her Majesty's Government intend to take any action to fulfil the promise which they made at the last general election; namely, that local rates should be abolished.
§ Lord BELLWIN
My Lords, I do not really think that is apposite to the point we are discussing. I would think that the complaint we are getting in this House from noble Lords opposite is that we are in fact carrying out that which we said in our manifesto we would do. I would only say to the noble Lord on that particular point that he need have no cause to doubt that we are looking into that matter, as we are doing with everything else that we said in our manifesto. I trust he is one of those who will not criticise us at any time when we point out that what we are doing is what we said in the manifesto that we would do.
§ Baroness BIRK
My Lords, it seems to me that on the whole the Minister was talking about not decontrolling but leaving the whole control system as it is, which was in fact the amendment we debated in Committee. This really is quite different. On this amendment I am not arguing that there should not be decontrol. What I am saying is that where properties do not come up to what is really a very low standard of fitness for human habitation they should not at that point be decontrolled. This does not mean those properties which fit the criteria; they can be 214 decontrolled immediately. So it is not an argument against decontrol. It is an argument in favour of making sure that those properties which are decontrolled come up to a minimum standard.
I really cannot agree with the noble Lord, Lord Sandford, that issuing certificates of fitness would involve local authorities in an appalling waste of time and resources. This is something absolutely basic. We are discussing properties in which human beings are living—human beings who have been paying a rent, admittedly a very low rent, for a long period of time. Suddenly they are faced with an increase in rent, but without any improvement or difference to the property in which they live. I just do not think it is either fair, human or even healthy to do it in this particular way. The noble Lord, Lord Sandford, referred to rent allowances.
I think we are all aware that the take-up of eligible unfurnished tenants is only 50 per cent. I know the Minister has said before that a big publicity campaign will try to increase this, but I must tell him that we have all tried these publicity campaigns and they have very little effect because it is still a complicated procedure. There is still, particularly among older people, very great prejudice against it. They feel there is something shameful about it. This is wrong, but it is the way they feel. I do not think this will make any difference. The fact that that was said by Richard Crossman in 1965 is I think, with great respect, totally irrelevant because this is 1980 and we are dealing with the situation as it is now. I feel that in this amendment we are asking for such a minimal change and it would be quite wrong, anti-social and irresponsible to allow people to have their rents increased. This is not at all an anti-landlord amendment. I stress again that the landlord would be entitled to improvement grants; he only has to do a minimum and then of course he will get an increase in rent. It is for these reasons that I intend to press the amendment. In my view this safeguard is essential.
§ Lord BELLWIN
My Lords, by leave of the House perhaps I may say just this. I do not know whether the noble Baroness appreciates that the effect of her amendment is that it will not allow any immediate decontrol. There are so many 215 matters in this Bill and we have had so many amendments—and no doubt we shall have more—and I feel very passionately about some aspects of it. The noble Lord, Lord Evans, said "in all justice": how can it be in all justice that we come here and even contemplate a measure—and your Lordships can take it from me that I know what I am talking about—the effect of which will be to put back again for years and years any hope of overcoming this iniquity which exists at the present time? With every ounce of feeling that I can muster for those who are concerned I urge your Lordships to throw out this amendment because it is misconceived and will do great and continuing injustice, which has gone on for too long now. It is time this injustice was finished.
§ Baroness BIRK
My Lords, with the leave of the House, I would point out that it is still subject to the property being
§ certified as fit for human habitation. It has to have a certificate and I accept the result—which incidentally was a very close one—in Committee. If the Government insist upon decontrolling these tenancies instead of taking the advice which was offered to them from many parts of the Committee, this is the least they can do. I submit that they have put themselves into this position by not allowing the controlled tenancies to become decontrolled by natural wastage and so disappear. So what the noble Lord has said does not make any difference to the substance of this amendment, and therefore I intend to press it.
§ 3.44 p.m.
§ On Question, Whether the said amendment (No. 68) shall be agreed to?
§ Their Lordships divided: Contents, 96; Not-Contents, 132.217
|Airedale, L.||Foot, L.||Ponsonby of Shulbrede, L. [Teller.]|
|Amherst, E.||Gaitskell, B.|
|Amulree, L.||Gardiner, L.||Rathcreedan, L.|
|Annan, L.||Gifford, L.||Rochester, L.|
|Ardwick, L.||Gladwyn, L.||Ross of Marnock, L.|
|Aylestone, L.||Gordon-Walker, L.||Sainsbury, L.|
|Bacon, B.||Goronwy-Roberts, L.||Segal, L.|
|Banks, L.||Grey, E.||Shinwell, L.|
|Beaumont of Whitley, L.||Hale, L.||Soper, L.|
|Beswick, L.||Hampton, L.||Stedman, B.|
|Birk, B.||Hatch of Lusby, L.||Stewart of Alvechurch, B.|
|Blease, L.||Henderson, L.||Stewart of Fulham, L.|
|Blyton, L.||Hooson, L.||Stone, L.|
|Boston of Faversham, L.||Hughes, L.||Strabolgi, L.|
|Brimelow, L.||Irving of Dartford, L.||Strauss, L.|
|Brockway, L.||Jacques, L.||Tanlaw, L.|
|Brooks of Tremorfa, L.||Janner, L.||Taylor of Blackburn, L.|
|Bruce of Donington, L.||Jeger, B.||Taylor of Gryfe, L.|
|Buckinghamshire, E.||Kilmarnock, L.||Taylor of Mansfield, L.|
|Byers, L.||Leatherland, L.||Underhill, L.|
|Caradon, L.||Lee of Newton, L.||Wade, L.|
|Chitnis, L.||Llewelyn-Davies of Hastoe, B.||Wallace of Coslany, L. [Teller.]|
|Clancarty, E.||Lloyd of Kilgerran, L.||Walston, L.|
|Cledwyn of Penrhos, L.||Lovell-Davis, L.||Wedderburn of Charlton, L.|
|Collison, L.||McCluskey, L.||Wells-Pestell, L.|
|Cooper of Stockton Heath, L.||Maelor, L.||Whaddon, L.|
|Cudlipp, L.||Milford, L.||White, B.|
|David, B.||Northfield, L.||Wigoder, L.|
|Davies of Leek, L.||Ogmore, L.||Winterbottom, L.|
|Denington, B.||Oram, L.||Wootton of Abinger, B.|
|Diamond, L.||Pargiter, L.||Wynne-Jones, L.|
|Elwyn-Jones, L.||Peart, L.|
|Evans of Claughton, L.||Phillips, B.|
|Ailesbury, M.||Avon, E.||Berkeley, B.|
|Allerton, L.||Balerno, L.||Bessborough, E.|
|Amory, V.||Barnby, L.||Birdwood, L.|
|Ampthill, L.||Bellwin, L.||Boyd of Merton, V.|
|Atholl, D.||Belstead, L.||Boyd-Carpenter, L.|
|Boyle of Handsworth, L.||Gowrie, E.||Morris, L.|
|Bradford, E.||Gridley, L.||Mowbray and Stourton, L.|
|Campbell of Croy, L.||Grimston of Westbury, L.||Moyne, L.|
|Carver, L.||Hailsham of Saint Marylebone, L. (L. Chancellor.)||Netherthorpe, L.|
|Cawley, L.||Northchurch, B.|
|Chelwood, L.||Halsbury, E.||Onslow, E.|
|Clifford of Chudleigh, L.||Harmar-Nicholls, L.||Perth, E.|
|Clitheroe, L.||Hatherton, L.||Porrit, L.|
|Clwyd, L.||Hawke, L.||Rawlinson of Ewell, L.|
|Cockfield, L.||Henley, L.||Redcliffe-Maud, L.|
|Cork and Orrery, E.||Hill of Luton, L.||Renton, L.|
|Cottesloe, L.||Hillingdon, L.||Robbins, L.|
|Craigavon, V.||Hornsby-Smith, B.||Roberthall, L.|
|Craigmyle, L.||Hylton, L.||Rochdale, V.|
|Cranbrook, E.||Hylton-Foster, B.||Romney, E.|
|Cullen of Ashbourne, L.||Ilchester, E.||St. Aldwyn, E.|
|Daventry, V.||Inchyra, L.||Sandford, L.|
|De Freyne, L.||Kilmany, L.||Sandys, L.[Teller.]|
|Denham, L [Teller.]||Kimberley, E.||Savile, L.|
|Derwent, L.||Kinloss, Ly.||Selkirk, E.|
|Digby, L.||Kinnaird, L.||Skelmersdale, L.|
|Dundee, E.||Lauderdale, E.||Soames, L. (L. President.)|
|Eccles, V.||London, Bp.||Spens, L.|
|Effingham, E.||Long, V.||Strathclyde, L.|
|Ellenborough, L.||Lovat, L.||Strathcona and Mount Royal, L|
|Elles, B.||Lucas of Chilworth, L.||Swinfen, L.|
|Elliot of Harwood, B.||Luke, L.||Swinton, E.|
|Elton, L.||Lyell, L.||Thorneycroft, L.|
|Energlyn, L.||McAlpine of Moffat, L.||Trefgarne, L.|
|Faithfull, B.||McFadzean, L.||Trenchard, V.|
|Ferrers, E.||Mackay of Clashfern, L.||Vaizey, L.|
|Ferrier, L.||Macleod of Borve, B.||Vaux of Harrowden, L.|
|Fortescue, E.||Mansfield, E.||Vickers, B.|
|Fraser of Kilmorack, L.||Marley, L.||Vivian, L.|
|Gage, V.||Merrivale, L.||Ward of Witley, V.|
|Garner, L.||Milne, L.||Westbury, L.|
|Geoffrey-Lloyd, L.||Milverton, L.||Widgery, L.|
|Gisborough, L.||Monckton of Brenchley, V.||Worcester, Bp.|
|Glendevon, L.||Monk Bretton, L.||Young, B.|
|Godber of Wellington, L.|
On Question, amendment agreed to.
§ [Amendment No. 69 not moved.]
§ 3.52 p.m.
Lord BELLWIN moved Amendment No. 70:
After Clause 66, insert the following new clause:
§ ("Lettings by servicemen
The following Case shall be added to the Cases in Part II of Schedule 15 to the 1977 Act (mandatory orders for possession) after the Case inserted in Part II by section 55 of this Act—
§ "Case 20
- (a) at the time when the owner acquired the dwelling-house he was a member of the regular armed forces of the Crown serving outside the United Kingdom;
- (b) at the relevant date the owner was a member of the regular armed forces of the Crown;
- (c) not later than the relevant date the owner gave notice in writing to the tenant that possession might be recovered under this Case;
- (d) the dwelling-house has not, since the commencement of section (Lettings by servicemen) of the Act of 1980 been let by the owner on a protected tenancy with respect to which the condition mentioned in paragraph (c) above was not satisfied; and
- (e) the court is of the opinion that—
- (i) the dwelling-house is required as a residence for the owner; or
- (ii) of the conditions set out in Pz£art V of this Schedule one of those in paragraphs (c) to (f) is satisfied.
§ If the court is of the opinion that, notwithstanding that the condition in paragraph (c) or (d) above is not complied with, it is just and equitable to make an order for possession of the dwelling-house, the court may dispense with the requirements of either or both of these paragraphs, as the case may require.
§ The noble Lord said: My Lords, in speaking to Amendment No. 70, I wonder whether, for the convenience of the House, I can also speak to Amendment No. 70A. During the discussion of the amendment moved in Committee by the noble Earl, Lord Selkirk, and the noble Lord, Lord Greenwood, I promised to give careful considerstion to the idea of a special Rent Act repossession case which would enable serving servicemen to buy a house and let it with a mandatory right to repossession. As I said during the discussion of that amendment, the Government fully accept that service in the armed forces of the Crown imposes very special obligations on people. That is why we have come forward with this new clause, Amendment No. 70.
§ Our new clause is restricted in scope to those servicemen who are serving overseas. It would enable them to acquire a house while serving abroad and to let it with a mandatory right to repossession. Amendment No. 70A to our new clause, tabled by the noble Earl and the noble Lord, goes further and would extend this provision so that it would be available to any serving serviceman and not just to those posted abroad.
§ I am pleased to be able to tell your Lordships' House that on further consideration the Government accept that this provision should be available to all serving servicemen. While the primary need for this new provision arises from circumstances of servicemen posted overseas, we accept that it is not only while serving abroad that a serviceman may be unable to live in a house of his own before he lets it. There are also postings in this country where servicemen are encouraged to live in quarters provided by the forces. There are also postings remote from where most servicemen are likely to wish to buy their own homes. We accept that having accepted the case for those overseas it would be wrong for these people to be denied the possibility of acquiring their own homes with a view to living there when they leave the forces or are posted to where the house is situated.
§ I am therefore happy to recommend noble Lords to accept the amendments to the Government's new clause tabled by 220 the noble Earl, Lord Selkirk, and the noble Lord, Lord Greenwood. Might I say how grateful I am to them not only for raising this matter, but for the way in which they have done it, and for the strength of the arguments they have made. I feel that this is an amendment which will be welcome on all sides of your Lordships' House, and I ask noble Lords to accept.
The Earl of SELKIRK moved Amendment No. 70A:
In paragraph (a) of "Case 20", line 3, leave out ("serving outside the United Kingdom")
§ The noble Earl said: My Lords, I thank the noble Lord, Lord Bellwin, very much for finally getting the door wide open. I know it has taken him about a fortnight of hard work to do it, and I am very grateful indeed to him for doing so.
§ I understand that I am now speaking to Amendment No. 70A, which I beg to move. May I ask one question which has been asked of me: "I take it that this will cover furnished lettings?"? I said that I was quite sure it would, but I would be grateful to have Lord Bellwin's confirmation that it would, in fact, cover furnished lettings. I beg to move.
§ [Amendment No. 71 not moved.]
§ 3.59 p.m.
Lord GIFFORD moved Amendment No. 72:
After Clause 66, insert the following new clause:
§ ("Further amendment of 1977 Act
After section 22 of the 1977 Act there is inserted the following section—
Licences to occupy a dwelling-house.
22A. —(1) Where a person occupies a dwelling-house under a contract which reserves to the landlord the right to nominate another person to share the dwelling-house or any part of it with him, or himself to enter into occupation of the dwelling-house or any part of it, and by reason only of such reservations
that person is a licensee and not a tenant of the dwelling-house, he shall be deemed to be a tenant of the dwelling-house.
(2) Where two or more persons occupy a dwelling-house under a contract, or under more than one contract, by which there is reserved to the landlord the right to replace any one or more of such persons, or to nominate other persons to share the dwelling-house or any part of it with them, or himself to enter into occupation of the dwelling-house or any part of it, and by reason only of such reservations those persons are licensees and not tenants of the dwelling-house, they shall together be deemed to be the joint tenants of the dwelling-house.
(3) In this section, "landlord", in relation to any dwelling-house occupied under a right granted by a contract, means the person who granted that right, or any successor in title of his, as the case may require.").
§ The noble Lord said: My Lords, I beg leave to move Amendment No. 72 which stands in the name of my noble friend Lady Birk. This looked to be a very complicated amendment on paper, but in fact it covers a very important subject. The Rent Act, even as amended by this Bill, provides for a system of fair rents in the private rented market, but there are those who want to evade that system of fair rents by charging a black market rent, and this amendment is designed to cure one of the worst of those evasions. I think we would all wish to condemn blatant Rent Act evasions. The noble Lord, Lord Bellwin, himself criticised such evasions in the debate in Committee.
§ My Lords, so far as this amendment is concerned, this is how the evasion works. Ingenious lawyers have found a way of drafting an agreement whereby two or more people can take what, to all intents and purposes, is the letting of a dwelling house, but it is called a licence and it falls outside the Rent Act; the rent control system does not apply to it, nor does the system of security of tenure. Instead of having one agreement, you have two agreements. Instead of being called a tenancy, it is called a licence. Instead of each party being responsible for the whole rent, each party is responsible for half the rent, and if one goes the landlord says: "I can nominate a successor. You neither of you have an exclusive right to occupy the premises."222
§ That, speaking very simply, is how it works. The result is that against all kinds of logic and fairness people are signing agreements for the occupation of flats and houses at exorbitant rents with no kind of protection. The agreement is called a licence. In reality they are licences for profiteering.
§ The system is spreading around the country. In a recent survey undertaken by the National Association of Citizens' Advice Bureaux it was found that in the six months covered by the survey, 155 of these agreements had been brought to the attention of the Citizens' Advice Bureaux, and one can imagine, therefore, that that is only the tip of a very large iceberg.
§ The Government's new system of short-holds will not do anything to stop this because of what is now a very tight system of fair rent control imposed upon the shorthold procedures. Therefore, those who wish to exploit their property to the limit will still be able quite lawfully to have their tenants or their licensees sign these agreements. The rent officers refuse to register rents for such tenancies because they say they do not have jurisdiction. It is true that they can be challenged in the courts, in which case you then have a battle between ingenious lawyers for the tenants and ingenious lawers for the landlords which can drag on for months to nobody's profit. Sometimes the courts will declare these agreements to be bogus and sometimes not; it is something of a lottery.
§ This matter was raised in Committee, along with holiday lets and other kinds of Rent Act evasions. There was a kind of global discussion, and I fear that this particular amendment did not get the attenton it deserves. It certainly had very little separate consideration. In the course of the discussion, I offered to sit down with the Minister and those who advise him to try constructively to find a way round this form of Rent Act evasion. That oar has not been been taken up. I have not been told that there is anything technically wrong with this amendment. I appeal to the House that we should resolve—whether through this form of words or some other—this abuse of the Rent Act procedure, so that it is stopped by this House before the Bill passes from us. I beg to move.223
My Lords, this new clause seeks to close what is perhaps the best known of the so-called Rent Act loopholes—the non-exclusive sharing agreement. During the discussions in Committee, I undertook to speak to the experts in this matter to consider whether there was a possibility of closing these Rent Act loopholes. This I have done, but I regret to have to inform your Lordships' House that we do not see any way of closing these loopholes in this Bill. The noble Lord, Lord Gifford, has written to me on this matter, and others have also done likewise.
I hope noble Lords will find it helpful if I explain why we do not feel this new clause could be accepted. The non-exclusive sharing loophole depends on the fact that one of the conditions for full Rent Act protection is that there must be a tenancy. The distinction between a licence and a tenancy derives from common law, and is a fundamental feature of the law of landlord and tenant. I do not think it is necessry to go into this complex area in detail: the important point is that for there to be a tenancy, the tenant must have what is called "exclusive possession". That means the right to occupy on his own and to exclude anyone he does not want. If the agreement allows the landlord himself to share with the tenant, or to nominate that someone else can share with the tenant, this is prima facie evidence that the agreement is a licence rather than a tenancy because there is no exclusive possession.
However, I must stress that it does not follow that someone does not have Rent Act protection because the landlord makes him sign a purported licence agreement. This is something that can only be settled definitively in the courts and the courts will consider the intention of the parties at the time the agreement was made. There have been four cases in the Court of Appeal on the question of whether a licence agreement was genuine or sham. Two were decided in favour of the landlord, and two in favour of the tenants. It is, therefore, always open to someone to go to court if he does not accept his landlord's claim that he is a licensee rather than a tenant.
This new clause seeks to close the nonexclusive occupation loophole by deeming that there will be a tenancy rather than a 224 licence where the agreement would be a tenancy but for a provision about sharing. The first subsection of the new clause is concerned with the situation where the landlord reserves the right to nominate another person to share the dwelling-house or part of it. This subsection would have the effect that someone who was a licensee rather than a tenant only by virtue of this part of the agreement would be deemed to be a tenant. The second subsection is concerned with the situation where two or more people share the dwelling. If the only reason that they are licensees and not tenants is that the landlord reserves the right to replace one or more of them by other people, this subsection would deem them to be joint tenants.
I certainly understand and sympathise with the intention behind this clause, as I have already made quite clear. It was just because of conditions about sharing of this kind in the agreements that the occupier in the Somma v. Hazellutrst and Aldrington Garages v. Fielder cases were found to be licensees rather than tenants. However, I do not think it would be possible—as this clause would require—for the courts to consider a part of the agreement in isolation. As I have said, when considering cases of this kind, the courts will look not only at the written contract to see whether it represents the true agreement between the parties, but also at any evidence which may show that this was a sham. Study of the decisions I have mentioned, as well as earlier cases, does not suggest that the courts are likely to isolate one particular aspect of an agreement in order to determine whether there is a tenancy or a licence. It is the whole agreement that matters. This is demonstrated by the two Court of Appeal cases, Demuren v. Seal Estates and O'Malley v. Seymour, where it was found that there was a tenancy. As the noble and learned Lord the Master of the Rolls said in the case of Marchant v. Charters:All the circumstances have to be worked out. Eventually the answer depends on the nature and quality of the occupancy".A further consideration is that it might not always be in someone's interest to be deemed to be a tenant rather than a licensee. There are obligations as well as rights that attach to having a tenancy. For example, the rent. If two people are sharing with a non-exclusive licence agreement and one moves out, the 225 one who remains will not be liable for the rent of the person who has gone. But this would not normally be the case if they were deemed to be joint tenants. The one of two joint tenants who remained behind would be liable for the rent for the whole dwelling. This, I think, illustrates the kind of difficulty that can arise when agreements are deemed to be of a different nature from what the people entering into them thought they were.
For these reasons, I am not convinced that this clause would work in practice; nor do the Government see any easy way of closing this loophole. However, in my view, there are two ways of tackling the use of licences to evade the Rent Acts. First, it is important to remember that because an agreement says it is a licence, and so outside the Rent Acts, it does not follow that the courts will accept this. The two most recent cases in the Court of Appeal on this question have found that there was a tenancy. Secondly, it seems to me that the initiatives we are taking in this Bill to encourage landlords to go on letting and to make more accommodation available should mean that landlords will be encouraged to let within the Rent Acts rather than trying to resort to uncertain devices of this kind.
My Lords, I have gone to quite some trouble to be specific and to give detailed reasons why we feel the clause proposed by the noble Lord would not get us to where both he and we want to be. I certainly am happy to ensure that we do sit down and talk not only to him but to anyone who feels they have a solution to this problem, not necessarily within this Bill. We are always being told we have too much in the Bill, and there will be many other things coming later on. In saying that, I do not for one moment seek to prevaricate or attempt in any way to belittle the importance of trying to put right any loopholes of this kind in the Rent Acts. So, my Lords, I ask you not to accept the amendment, if the noble Lord feels he has to press it. I hope he may feel it is not necessary to do so because he certainly knows there is no difference between us in wanting to get there. The debate is about whether this is the right way I submit, with respect, this present way unhappily is not the effective way and that is why we are not 226 accepting the amendment to the clause.
§ Lord GIFFORD
My Lords, with the leave of the House, we are of course on fairly technical legal ground here and what the noble Lord says clearly has to be studied to be fully appreciated. One of the areas where we differ is in thinking that short-holds will do very much to cure this type of abuse. Time alone can tell which of us is right.
What I want to ask, and hear from the noble Lord, is this. If it is found that this type of abuse is continuing, despite the shortholds and despite the court rulings, that people who should be protected tenants or shorthold tenants are in fact licensees paying well over the odds, then will it be the Government's intention to put their minds, and their expert's minds to seeing that this abuse is closed.
§ Lord BELLWIN
My Lords, by leave of the House, I have no hesitation in saying, Yes, of course, we shall certainly try to do that, no hesitation at all.
§ Amendment, by leave, withdrawn.
§ 4.15 p.m.
Baroness BIRK moved Amendment No. 73:
After Clause 66, insert the following new clause:
(" Amendment of 1977 Act
. For section 9 of the 1977 Act (Holiday lettings) there is substituted the following section:
9. A tenancy is not a protected tenancy if the purpose of the tenancy is to confer on the tenant the right to occupy the dwelling-house for a holiday and—
§ The noble Baroness said: My Lords, this is really another sprig off the same tree or bush which my noble friend Lord Gifford moved. It is really concerned with another aspect of loopholes. He dealt with licences, this deals with holiday lets, and we did have quite a long discussion on it in Committee. The point, briefly, is that Section 9 of the Rent Act 1977 puts a tenancy outside protection if the purpose of the tenancy is to confer on the tenant the right to occupy the dwelling-house for a holiday. This has had the effect of driving a coach and horses through the intentions of the Act, because the use of so-called holiday lets is widespread, particularly in London, and many people are forced, for lack of any alternative, to take tenancies where they have no Rent Act protection and are open to gross exploitation. There is clearly a need to protect the position of owners of genuine short-stay accommodation. But anything worded in the general terms in which it was worded in the Act—I hasten to say, in parenthesis, which has been for so long under review, otherwise the noble Lord the Minister will remind me of that—is bound to be exploited by unscrupulous landlords with the connivance of tenants who really have no alternative because they are homeless.
§ I gave a number of examples in Committee with which I will not weary the House again, but the point is that—I wonder if I might have the Ministers' attention—the difference between the last amendment and this one is that on the last amendment the Minister raised the question, quite rightly, about a bona fide holiday which was in the amendment there. Points were raised as to how the landlord would be able, if the onus was put on the landlord, in fact to discharge this. The amendment is an attempt to deal with these problems and make it more specific, tightening up the opportunities for stopping up this loophole. We believe that the answer to this problem lies in giving the local authority the power to control such lettings through a system of registration. The cost could be met by charging a registration fee and the advantage of this would be, first, an end to uncertainties and the complex and expensive court cases for tenants and landlords. The legal position of such lettings would become clear and unambiguous. Secondly, 228 local authorities could plan for the number of short-term and holiday lettings appropriate to housing needs in their own areas.
§ I believe there are authorities—I think I am right in saying that Westminster is one—who already operate a register and do so quite satisfactorily. This would seem to me to be the answer. It would not prevent the genuine holiday letting; it would be a means of stopping the evasion of the new shorthold procedures because, whereas shorthold involves, of course, a registered rent, a holiday letting does not. So what have been used as a number of rather bogus holiday lettings under the new Act should fall into the shorthold category. I would have thought that a precaution of this kind, stopping the loophole by this new amendment which is really in working terms quite different from the old amendment moved in Committee, might meet with the Government's approval. I beg to move.
§ Lord BELLWIN
My Lords, as I said in discussing the last amendment, I have considered the whole question of Rent Act loopholes very carefully since our discussions in Committee. However, I am afraid that again I am not convinced that this new clause would deal satisfactorily with the so called "bogus holiday let" loophole. What this clause would require is, as the noble Baroness, Lady Birk, said, a special register of holiday accommodation to be maintained by local authorities. It would also require local authorities to approve the rent that it would be appropriate for landlords of holiday accommodation to charge. I would be extremely reluctant to see an additional burden of this kind imposed on local authorities merely as a way of enforcing the Rent Acts. Nor do I think local authorities, quite frankly, are in any position to determine what would be an appropriate rent for holiday accommodation in their areas. The noble Baroness said that some already operate such a register. They may indeed do so, and it is certainly up to them, but I would be very interested for myself to know how they decide what is an appropriate arrangement. Allowing, if you like, authorities to do this, is vastly different from imposing upon them a duty so to do. I think that there is a whole world of difference in that.
229 If someone who is evidently not on holiday is obliged to sign an agreement saying that they are, it must be for them to challenge this in the courts. I do not think the expense and complexity of maintaining a register of holiday accommodation, frankly, could be justified on the basis of preventing the use of this Rent Act loophole.
As I have already made clear, it seems to me that the attempt to use loopholes of this kind has arisen because landlords are deterred from letting within the Rent Acts by the legislation of those Acts, not least the one in 1974. Indeed it may well be as the noble Lord, Lord Gifford, intimated, a hope; it certainly is that. A guarantee it certainly is not. But I hope very much—and I am confident myself about this—that the shorthold will encourage more landlords to let within the Rent Acts. That has to be a better way of solving the problem than going into the very difficult problems, and I suggest to the noble Baroness, Lady Birk, that it would lead to many more difficult problems than she appreciates.
§ Lord EVANS of CLAUGHTON
My Lords, I concede what the noble Minister said, that it may be a clumsy way of dealing with the matter, but I think the noble Lord ought to concede from experience and his own evidence in his department—certainly this is so from my own personal experience as a lawyer—that this is a device which is used from time to time by people who want to avoid the Rent Acts. I suspect it will go on being used in spite of the proposals for shorthold, perhaps because many people may not think the shorthold will last very long in view of what has been said in another place.
In my submission, the Government should be looking for means of stopping up this loophole. I agree that it is a matter about which people can go to court and say that the thing was signed under a misapprehension and so on. But that involves lengthy and expensive legal proceedings for the tenants, who are at a disadvantage as compared to the position of the landlord. That is what happens so often in these type of cases.
It seems to me that it would have been helpful had the Government been able to say that they would look for means, 230 perhaps by requiring anyone who lets property as a holiday letting to apply for a change of use under the planning Acts, to perhaps have the property rated as business premises. That might have been a way, but there are many ways of doing it.
The amendment is an honest and genuine attempt to see a way out of the situation, and I should have thought that, if the way that is being sought here is beaurocratic, clumsy and difficult, the Government should recognise that there is a genuine case here of hardship and of advantage taken of people who are perhaps not able to defend themselves and they might have looked for one of the other means—one of the means that I have suggested, or other means that have been canvassed as no doubt the Minister knows—of dealing with what is a matter of some concern in certain areas of the country at certain times.
§ 4.22 p.m.
§ Lord GIFFORD
My Lords, before the noble Lord replies, I should like to put to him one other point which arises out of what he said. As regards the question of holiday lets and indeed as regards the last amendment, the noble Lord, Lord Bellwin, said, quite rightly, that these matters can be tested in the courts. He has greater confidence than I have in the capacity of the courts always to do what is just in those circumstances. The difficulty is that courts tend to hold the parties to the very letter of the agreement which they have signed. That is one of the principles of the law. Be that as it may, it is true that it frequently happens that one can show that the agreement is, in fact, a sham.
The difficulty is that the process of taking these cases to court can take months. We are dealing, by definition, with landlords who are overcharging, sometimes grossly overcharging. What is the person who is the victim of this to do? He goes to the rent officer and asks for the registration of a rent. The rent officer says that is a holiday let, or it is a licence, and that he cannot register the rent. The other party goes to the court and nine months elapse before there is a court decision in his favour. Because of the other provisions of the Bill, whereby the registration of the rent is the operative day for the coming into operation of the 231 reduced rent, a year will possibly have passed before the tenant, as he is now shown to be, will have any benefit. That cannot be right. Even allowing for the other understanding that we have to wait to see how these new provisions operate, will the Minister consider very seriously before Third Reading what to do about that situation?
§ Lord HYLTON
My Lords, I should like to suggest to the noble Baroness, Lady Birk, that her amendment is cumbersome and would be very costly to put into practice. If there is a large-scale abuse of holiday letting—and I have yet to be convinced of that, although there are perhaps some signs of it in London—I should have thought that a much better method of tackling the situation would be to bring in an amendment saying that a holiday letting can only go on for perhaps six months, and if the same person remains in those premises for longer than six months, then it shall be taken to be a shorthold letting.
§ Lord BELLWIN
My Lords, with the leave of the House I should like to make a few comments. I would only add to what I said previously that, as regards the loopholes in the Rent Acts—and noble Lords opposite know more about them than I do—we accept that there are, of course, problems. What I have said in answer to the amendment is that I just do not believe that this is the way to deal with the problems, for the reasons that I have given. That does not mean to say that I do not think that there should be attempts to find solutions to them. However, I certainly do not think that this is practical for a whole host of reasons.
A number of points were raised by the noble Lord, Lord Evans of Claughton. He suggested the use of the planning Acts to control holiday lets. I am advised that that would not solve the problem of bogus holiday lets, because a building with planning approval for holiday lets could be the subject of a proper Rent Act tenancy. That, and indeed the point made by my noble friend Lord Hylton, only illustrates that there are so many attempts to get this right that within the remaining time before the Bill is enacted there will not be the opportunity to find solutions which surely others ought to have been 232 looking at, and indeed for that matter probably have been looking at, for many years now. I would only say—and I am not sure what other amendments there may be as regards filling the loopholes in the Rent Acts—that this is an area on which at present, within the Bill, we cannot go any further. Time does not allow it. But no one is turning away from the problems. It will be for another time—not necessarily a long time in the future—when we have got through what we are doing at present when we shall probably want to sit down and talk about the matter.
§ Baroness BIRK
My Lords, I do not intend to take noble Lords on that long, long walk as regards this amendment. However, I should like to feel—and I am sure that with the leave of the House the Minister could nod to me—that the Minister will take this matter away and look at it in the same way as he promised as regards the previous amendment moved by my noble friend Lord Gifford. I think that he recognises that there is a problem.
I agree with the noble Lord, Lord Hylton, that this is a cumbersome amendment. The last one that we moved in Committee was not right and so it is a question of getting the right amendment. I think that if this continues it will probably involve some sort of register and that in fact is what the noble Lord, Lord Hylton, mentioned. If the Minister would undertake to find out—and I am sure that he would not find it very difficult to do so through the department—which authorities are using a register and how they are using it in an efficient and economic way, then I shall be quite satisfied. I should not like the matter to be completely forgotten and dropped and for this situation to continue.
The Bill was obviously prepared in a rushed way and I know that the Government are anxious to get it on to the statute book. However, although these different points will unfortunately not be ready in time for the legislation to go on the statute book, I still think that it is important that they should not be forgotten or overlooked; that action should be taken on them and that it should be as effective as possible. All that I want from the noble Lord, Lord Bellwin, is an undertaking that he will do that. Moreover, my noble friend Lord Gifford raised a 233 question that the noble Lord has not answered and perhaps he would, by leave, do that at the same time.
§ Lord BELLWIN
My Lords, with the leave of the House, I should like to say that, to the best of my knowledge, Westminster is not operating a register. It has expressed some interest in so doing and would like to know the implications. Certainly I see no reason why we should not approach the local authority associations and ask them to advise us, if they will, which of their members are so doing, and that I gladly undertake to do and to pass the information on to the noble Baroness. We shall check them all out and pass the information on.
§ Lord BELLWIN
My Lords, I do not know the point raised by the noble Lord, Lord Gifford, which I have not answered, but I hope that what I have said in general terms covers the fact that we are interested in the whole subject in any case, and therefore if there is a particular point presumably we shall pick it up. Once we have all this material away and have time to do it in a proper and hopefully, dare I say, more leisurely way, then I would expect that we can cover everything.
§ The DEPUTY CHAIRMAN (Lord Derwent)
My Lords, does the noble Baroness wish to withdraw the amendment?
§ Amendment, by leave, withdrawn.
§ Schedule 7 [Amendment of Schedule 15 to 1977 Act]:
§ 4.30 p.m.
The DEPUTY SPEAKER
My Lords, two manuscript amendments have been tabled to Schedule 7, Amendments Nos. 73A and 73B.
Lord BELLWIN moved manuscript Amendment No. 73A:
Page 119, line 39, leave out ("and 12") and insert (", 12 and 20").
§ The noble Lord said: My Lords, I have only a very brief comment to make 234 on this. These are two minor, consequential amendments to Amendment No. 7D, which provides a new Rent Act possession case for servicemen, Case 20. All they do is to make reference to Case 20 in Schedule 7 of the Bill. I ask noble Lords to accept this amendment. I beg to move.
Lord BELLWIN moved Amendment No. 73B:
Page 120, line 5, after ("12") insert ("and in paragraph (e)(ii) of Case 20").
§ The noble Lord said: My Lords, this is also a technical amendment. I beg to move.
§ Clause 67 [Rent agreements with tenants having security of tenure]:
Lord BELLWIN moved Amendment No. 74:
Page 49, line 46, after ("III") insert ("or IV").
§ The noble Lord said: My Lords, the Bill provides a special safeguard for tenancies being decontrolled by Clause 64. This is that the landlord cannot raise the rent by agreement with the tenant; only by applying to the rent officer for the registration of a rent. This ensures that the tenant pays no more than a fair rent, and that his rights—including his eligibility for rent allowances—are explained to him. The Bill also provides this safeguard in respect of decontrol under Part III of the Housing Finance Act 1972—for example, decontrol by qualification certificate.
§ This amendment additionally provides the safeguard in respect of Part IV of the Housing Finance Act 1972, which provided for the general programme of decontrol by rateable value. Special rules were applied to these tenancies in the 1972 Act, but for reasons which are not clear they seem to have been removed in 1975 when general decontrol was ended. As a result of the amendment, the same clear rules and safeguards will apply to all formerly controlled tenancies where the old controlled rent has not yet been increased. There will be later related amendments to Schedules 24 and 25; that is, Nos. 148, 151, 154 and 163. 235 I hope that your Lordships will agree that they are a useful modification. I beg to move.
§ [Amendment No. 75 not moved.]
§ Clause 72 [Dwellings forming part of Crown Estate or belonging to Duchies]:
§ 4.35 p.m.
Lord NORTHFIELD moved Amendment No. 75A:
Page 54, line 41, at end insert—
("( ) In the Duchy of Cornwall Management Act 1863 the words in section 21 "not exceeding Thirty-one Years in possession, but not in reversion, so that upon every such Demise, where the Subject matter thereof shall consist of Land or Property other than Mines or Minerals, there shall he reserved the full and fair annual Rent of the Property to be comprised therein, to be incident to the immediate Reversion of or in the Premises to be thereby demised without taking any Fine or Consideration in the Nature of a Fine for the granting thereof;" are omitted.").
§ The noble Lord said: My Lords, I beg to move Amendment No. 75A. When the House was in Committee dealing with this Bill on 3rd July, the noble Lord, Lord Bellwin, dealt with Clause 72, which covers tenants of the Crown and the Duchies. He was, of course, referring to the 1,000 or so Crown tenants, but also to the, I think he said, 200 tenants of the Duchy of Cornwall. I declare an interest immediately; I am one of those 200 tenants of the Duchy, although I am not here to complain about my landlord!
§ Secondly, I am sorry that notice of this amendment had to be given so late. As I shall explain in expounding the detail of the amendment, it was not possible until yesterday to track down the information which could result in this amendment. Clause 72 deals with the issue of applying the provisions of the Bill to some of the Crown and Duchy tenancies. As drafted, the clause deals successfully with applying the purposes of the Bill in so far as the properties shall be governed by the Rent Acts.
However, one other issue was raised in the other place which concerns these tenants; it is the right-to-buy provisions of the Bill. This afternoon I shall not enter
into the arguments about the extent to which the right-to-buy provisions should apply either to the Crown or to the Duchies. All I want to examine is what exactly the noble Lord, Lord Bellwin, said on 3rd July and why my amendment is appropriate to add to what he said on that date. On 3rd July, at column 571, he said that there had been:
…representations to the effect that the Crown Estates Commissioners should be regarded as a public body, and therefore brought within the scope of the tenants' charter provisions…including the right to buy at a discount".
et cetera. He then went on to say:
I see little merit in entering into
the argument. But he did offer a compromise in column 572 where he said:
The Government have also been discussing with the Commissioners their policy on the sale of long leases once the Rent Acts have formally been applied. The Commissioners have said that they will be prepared in principle to sell assignable but non-enfranchisable long leases to sitting tenants".
In other words, he is saying that they cannot agree or move that the Crown Estates should begin to sell, but that there is this compromise that they will now begin to sell assignable but non-enfranchiseable long leases.
§ As a tenant of the Duchy, I then wrote to the Duchy and said that that was very interesting, and asked how far the Duchy was prepared to apply these principles that are mentioned in column 572; because at that time we had mainly been discussing the Crown and the Duchies together, and I had hoped that they would be lumped together in this question of selling long leases as a compromise. The answer I obtained—and I obtained it only yesterday, because the chief officer of the Duchy is, I think, on holiday and I finally ended up with their solicitor, who was very helpful—was that whatever the Duchy may wish to do in this respect is limited by the fact that the 1863 Act of Management of the Duchy prevents them issuing leases longer than 31 years. So they could not fall into line even if they wished, and at this stage I do not know whether the Duchy so wishes—that is a matter of policy on which the solicitor could not, of course, advise me. He said that even if they wished to do so—and, who knows, they may so wish—they are bound by this very old Act not to issue leases of longer than 31 years.237
Therefore, I speedily turned to the 1863 Act and found in Section 21 that that limitation is indeed the case. The section reads:
It shall be lawful for the Duke of Cornwall, by Deed under the Seal of the Duchy of Cornwall, to demise or grant any Manors, Messuages, Parks, Lands, Tenements, or Hereditaments for the Time being, Parcel of the Possessions of the Duchy of Cornwall…
…for any Term or Number of Years not exceeding Thirty-one Years in possession,…
So the simple amendment which I thought it was expedient to move was to delete the words, as I have done in the amendments on the Marshalled List, which would leave the Duchy with a right to offer leases of any term. If they then wished to follow on the lead given by the Crown Estate Commissioners under the undertaking given by the noble Lord, Lord Bellwin, on 3rd July, nothing further will bind their hands in the act of management. I hope that explains the rather complicated situation, and I beg to move.
§ 4.40 p.m.
§ Lord BELLWIN
My Lords, I must confess that I find myself in some difficulty in responding to an amendment tabled at such a late stage and dealing with such an arcane statute as the Duchy of Cornwall Management Act 1863. I believe however that the matter is of some importance to the noble Lord. As he fairly said himself, he lives in a property owned by the Duchy of Cornwall.
As I understand it, and the noble Lord will appreciate that there has been very little time, to say the least, for consultation in that the amendment was only tabled yesterday afternoon, the Duchy, like the Crown Estate Commissoners, are prepared in principle to grant long assignable but non-enfranchisable leases to their tenants. However, the 1863 Act prevents such long leases lasting for more than 31 years, and the noble Lord wishes to remove that barrier. I fear that the Government cannot contemplate amending the 1863 Act in this Housing Bill, not least at a few hours' notice. The Act is a general one governing the manner in which the Duchy operates and is not specifically concerned with housing. I cannot say what wider issues would be involved if the noble Lord's amendment was accepted.
238 May I say, in an attempt to be helpful to the noble Lord, that his remarks are noted and will certainly be passed on to the appropriate authorities. I would certainly be exceeding my authority if I advised the House to accept the amendment. Therefore, I think I cannot usefully make any further comment, though I entirely take the points made, which will be considered later. For the moment, I wonder whether, in view of my perhaps not too helpful but I hope understandable remarks, the noble Lord would feel able to withdraw his amendment.
§ Lord NORTHFIELD
My Lords, the noble Lord has not been very helpful. I rather gathered from what he said that the aim of the amendment was agreeable to him; namely, that the Duchy should have the power to grant long leases. If I heard him aright, he also said that they would like to be able to grant long leases.
§ Lord BELLWIN
My Lords, I do not think I said quite that. It is perhaps important that I should carefully repeat what I said on that point. I said that the noble Lord will appreciate that the Crown Estate Commissioners are prepared in principle to grant long assignable but non-enfranchisable leases to their tenants. However, the 1863 Act prevents such leases lasting for more than 31 years, and it was the noble Lord who wished to remove this barrier. Then I went on to say that I cannot contemplate our amending that Act in this Housing Bill. I said, in an attempt to be helpful, that we would take careful note of what has been said, and that we would pass it on to the Duchy of Cornwall management, the people concerned, and that we would have a look later on to see whether there was anything that could be done to help. That is all I was able to say.
§ Lord NORTHFIELD
My Lords, looking at Clause 72 I can hardly accept what the noble Lord said in one part of his remarks. He said that a general Bill on housing is not the place to amend the 1863 Act. With respect to him, the whole of Clause 72 is designed to, and indeed does in a page and a half of amendments, amend various Acts as they apply to the Crown Estates and to Duchy properties. It is a further step, but I would say only a slight further step, to single out the 1863 Act, which is particular to the Duchy, 239 in order to amend it in the way I am suggesting. It is only a slight step further that I am suggesting.
To go one step further, he is going to leave the situation in a very anomalous position. We shall have the problem that the whole of the remainder of the Bill in broad terms will be applied to parts of the Crown Estates but not now, because of this loophole, to the few tenants—I readily confess a minority of 200 people—of the Crown properties. I really do not think that I can leave the matter entirely as it is. If the noble Lord would be agreeable to meet and discuss this matter and to see how we can proceed, I would be prepared to withdraw the amendment at this stage and then to look at the possibility of returning to the matter on Third Reading when he has had a chance to study it a little further, and perhaps to take further advice from the Duchy about their wishes and intentions. If he would give me that sort of undertaking I would be very ready to withdraw the amendment at this stage. Perhaps, with the leave of the House, he would respond to my suggestion.
§ Lord BELLWIN
My Lords, by the leave of the House, I am afraid that I cannot take up the noble Lord's proposal. The amendments which the Government have themselves made in your Lordships' House to extend the Rent Acts to the Duchy of Cornwall do not in any way amend the 1863 Act or the other legislation governing the Duchy. They stay within the four walls of the existing Duchy legislation. Certainly our Crown Estates amendments do not concern long leases at all. I cannot be any more helpful on this and I cannot take the point any further. This came up as an amendment yesterday afternoon referring to the 1863 Act. My goodness me! I do not think I am being at all unreasonable in saying that I cannot go any further with it now.
§ Lord NORTHFIELD
My Lords, with the leave of the House, I am not asking the noble Lord to go any further now. I am asking whether he would be prepared to look at it before Third Reading. I would then withdraw it today with the possibility, after consultation with him, of not coming back to it at Third Reading.
§ Lord MOWBRAY and STOURTON
My Lords, with respect, we are getting very 240 out of order in not asking for the leave of the House. This is Report stage.
§ Lord NORTHFIELD
My Lords, I am not sure what the noble Lord is protesting about. I am rising to withdraw the amendment. Very reluctantly, I beg leave to withdraw the amendment at this stage.
§ Amendment, by leave, withdrawn.
§ Schedule 8 [Crown Estate and Duchies—Consequential Provisions]:
§ 4.46 p.m.
Lord Bellwin moved Amendment No. 76:
Page 121, line 10, after ("to") insert ("the assignment, before the end of the year 1990, of").
§ The noble Lord said: My Lords, for the convenience of the House I should like to speak to Amendments Nos. 76 and 77 together. Section 72 and Schedule 8 to the Bill, which were introduced in Committee of your Lordships' House, extend Rent Act protection to short lease tenants of the Crown Estate Commissioners, the Duchy of Cornwall and the Duchy of Lancaster. As at present drafted, paragraph 4 of Schedule 8 would allow existing Crown Estate and Duchy tenants to charge full market premiums on the assignment of the remaining terms of fixed term leases existing at the time of commencement. They are specifically excluded from the ban on premiums in Part IX of the Rent Act. This met the request made by representatives of the Crown Estate tenants at a meeting with the Secretary of State on 11th June. The commissioners were also content.
§ Since the Committee proceedings it has been brought to our attention that there are some Crown Estate tenancies which will not be fully covered by the new premium provisions. Although the leases of these tenancies will not be extended until after the Bill has become law the tenants were, as I am advised, given an 241 undertaking in 1976 that they would be assignable up to 1990. Once these leases have been renewed they will find themselves alone among Crown Estate tenants in not being able to assign at a market premium because the Government's provision on premiums applies only up to the end of existing leases.
§ To deal with this problem the amendments extend the provisions of paragraph 4 of Schedule 8 so as to enable market premiums to be charged not only in respect of existing leases, but also in respect of renewals or extensions of leases granted to sitting tenants provided that the original lease was in existence at the time of commencement. The charging of premiums would be allowed on assignments only until the end of 1990. This means that the Crown Estate Commissioners' undertakings on premiums can be fully honoured and that no Crown Estate tenants are worse off following the application of the Rent Acts. I beg to move.
Lord BELLWIN moved Amendment No. 77:
Page 121, line 11. leave out from ("tenancy") to end of line 18 and insert ("falls within this sub-paragraph if it was granted for a term certain and its terms do not inhibit both the assignment and the underletting of the whole of the premises comprised in the tenancy, and either—
§ The noble Lord said: My Lords, I spoke to this amendment with the previous amendment. I beg to move.
§ Schedule 10 [Amendment of Part VI of Rent Act 1977]:
Lord BELLWIN moved Amendment No. 78:
Page 123, line 39, leave out paragraph 2.
§ The noble Lord said: My Lords, this is a minor and consequential amendment 242 to the Government amendments to Clause 61 and Schedule 25 dealing with the effective date of rent registrations, Nos. 57, 59 and 160. I beg to move.
§ Clause 77 [Allowable premiums in relation to certain long tenancies]:
Lord BELLWIN moved Amendment No. 79:
Page 58, line 5, leave out ("subsection (2)(c)") and insert ("subsections (2)(c) and (3B)(d)").
§ The noble Lord said: My Lords, I think it would be for the convenience of the House if I spoke at the same time to Amendment No. 80. In Committee I explained why the Government could not accept the amendment moved by the noble Lord, Lord Evans of Claughton, to try to deal with the problems that can arise when people who paid a full market price for a lease find that they risk being unable to sell it at a full market price because increases in the ground rent mean that the lease is likely to be affected by the premium provisions in Part IX of the Rent Act 1977. I said in Committee, in replying to the noble Lord, Lord Evans, that I hoped to come forward with a solution to this difficult and technical problem on Report. I am happy to say that we have been able to table these amendments, and I hope noble Lords will agree that they should provide a workable solution to this difficult problem, both for existing and future leases. I should also like to acknowledge again the helpful discussions that my officials have had about this with the Law Society and I wish to thank the noble Lord, Lord Evans, for having so ably raised the matter in Committee.
§ The circumstances in which a full premium can already be charged for leases are set out in Section 127 of the Rent Act 1977. The conditions that have to be met are that the lease is a long one—that is, it is not terminable within 20 years—and that the rent cannot be reviewed within the first 20 years or more than once every 21 years and that assignment or subletting of the whole is allowed. I will not explain the other criteria which are set out in the amendment, but the Government aim is to ensure that the Rent Act restrictions on the charging of premiums for leases 243 should not affect bona fide sales to home owners. I am confident that the amendments will achieve this objective.
§ Lord EVANS of CLAUGHTON
My Lords, I am grateful to the Minister for the trouble he and those advising him have taken to deal with what is a very complex matter indeed. The Law Society say that although he has approached it in a different way from them, he has come to the same answer, possibly a better answer, in the end, and I know that the Law Society is very pleased. I believe this will be helpful in a broad sense, and I am delighted the Government have taken this step.
Lord BELLWIN moved Amendment No. 80:
Page 58, line 14, at end insert—
("(4) After subsection (3) of section 127 there are inserted the following subsections—
(3A) If the conditions in subsection (3B) below are satisfied in respect of a tenancy, this Part of this Act shall not apply to that tenancy and, together with Part VII of the Rent Act 1968 and the enactments replaced by Part VII, shall be deemed never to have applied to it.
(3B) The conditions are that—
(3C) If the conditions in subsection (3D) below are satisfied in respect of a tenancy, this section shall have effect, in relation to that tenancy, as if for the words "20 years" and "21years", in subsections (2)(b) and (3) above there were substituted, respectively, the words "6 years" and "7 years".
(3D) The conditions are that—
For the purposes of this subsection the rateable value of a dwelling-house shall be
ascertained in accordance with section 25 of this Act (disregarding subsection (4)) by reference to the value shown in the valuation list at the date when the variation is made.".").
§ The noble Lord said: My Lords, I spoke to this amendment with the last amendment. I beg to move.
§ Clause 78 [Meaning of "premium" in Part IX of Rent Act 1977.]:
§ [Amendment No. 81 not moved.]
§ Clause 79 [Repairing obligations in short leases.]:
§ [Amendment No. 82 not moved.]
§ Clause 80 [Tenant's improvements.]:
Lord BELLWIN moved manuscript Amendment No. 82Z:
Page 59, line 19, after ("18") insert ("and 20").
§ The noble Lord said: My Lords, this, again, is minor and consequential on Amendment No. 70. It simply makes reference to the new Rent Act possession case—Case 70 in Clause 80—so that the tenant of a house where the landlord has a mandatory right to possession under Clause 20 will not have the right to carry out improvements, as the Bill already provides for the other mandatory possession cases in Part III of Schedule 15 to the Rent Act 1977. I beg to move.
§ 4.56 p.m.
Lord MONSON moved Amendment No. 82A:
Page 59, line 38, after ("if") insert ("(i)").
§ The noble Lord said: My Lords, I will, with permission, speak at the same time to Amendment No. 82B, 82A being the paving amendment. The Government are giving council tenants the right to make wide-ranging improvements to their houses and to redecorate them externally to any colour they choose, according to the promises set out in the Conservative Party's election manifesto, and very few people would take exception to that. However, very much at the last minute, it would seem, and certainly without adequate consultation with those likely to be adversely affected, they inexplicably decided to extend this right to private 245 tenants, and that was categorically not in their manifesto. Nor would anybody in the Central Office or elsewhere dare to have included it because, of course, it cuts right into the concept of private property rights which the Conservatives—and incidentally the Liberals, or so I believe—have traditionally upheld.
§ I suspect that the Government may have had mainly in mind large impersonal landlords, many of them resident abroad, whose general behaviour is often criticised by the noble Lord, Lord Janner, and others, frequently with extremely good reason. The Government appear to have overlooked the fact that most landlords are small, are far from impersonal and are people who care very much about their own property and its future. Take the case of a farmer who converts a cottage or possibly an old barn or stable for letting, one which is contiguous or at any rate extremely near to his house; take the case of a widow living in a house which is too large for her and who converts part of the house into a self-contained flat or maisonette with its own separate entrance; or take the case of somebody owning a pair of semi-detached houses who lives in one and lets the other, or two adjoining terraced houses in some modest street.
§ If they let these properties on seven-year full repairing and full insuring leases—and most landlords who do not want to lose money try to let on leases of that kind, given that the cost of insurance and repairs goes up so much faster than rents—they will be obliged, if the clause is left unamended, to allow their tenants to paint the exterior of their houses any colour they wish, be it fluorescent lime green, bright orange or whatever, whether or not that harmonises with their own house. My proposal is designed to spare owners the necessity of seeing, day in and day out, their own property decorated in colours which they personally may find quite hideous. The 50 yards radius point is necessarily arbitrary, but any figure one uses will be arbitrary and I think this is a reasonable one. I hope the Minister will give the amendment very favourable consideration.
§ Lord MOWBRAY and STOURTON
My Lords, many of your Lordships, myself included, will sympathise with the feeling behind the noble Lord's amendment. The appearance of dwellings in 246 a street is important to the character of our towns and to the quality of the environment. But it seems to me that the noble Lord, Lord Monson, in his enthusiasm for civic design, is unnecessarily restricting the tenant's right to improve. This amendment makes no allowance for the condition of the tenant's property, which may be in great need of attention, and it makes no allowance for the age or character of the property. So the amendment could mean that a landlord living in a Georgian property could refuse external decoration by tenant's of modern flats built, for example, on land which he owned at the rear of his dwelling. That seems perhaps to be unreasonable; and the essence of the tenant's right to improve is that it is firmly based on what is reasonable to allow.
I suggest that the essential part of what the noble Lord, Lord Monson, is seeking to achieve, is covered already by the drafting of Clause 80. Where there are reasonable grounds for a landlord to refuse consent to external decoration by a tenant, he may do so. Where the landlord wishes to impose reasonable conditions to an improvement by the tenant, he may do so. We have provided for the courts to determine what is reasonable in these situations, and I think that is fairer and more flexible than the kind of blanket exclusion which this amendment would introduce. I hope that on reflection the noble Lord will see fit to withdraw the amendment.
§ Lord MONSON
My Lords, I thank the noble Lord for that reply, but what he fails to stress, I fear, is that this is a totally novel concept. So far as I know, never before in history have private tenants been given the right to do more or less as they wish with someone else's property, on the basis that the consent cannot be unreasonably withheld. Of course, I take the point that it all hinges on the concept of what is unreasonable. I think that possibly my amendments to Clause 81 might cover the point rather better, and we shall come to those in a moment. For that reason, I beg leave to withdraw this amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 82B not moved.]
§ Clause 81 [Provisions as to consents required by section 80]:247
§ 5.3 p.m.
Lord MONSON moved Amendment No. 82C:
Page 60, line 1, leave out ("in particular") and insert ("among other considerations").
The noble Lord said: My Lords, now we come to the trio of amendments which might more readily fulfil the purpose that I had in mind. Noble Lords will see from the wording of Clause 81 that
the court shall, in particular, have regard to the extent to which the improvement would be likely
to do a number of things; three in all, in fact. The words "in particular" are likely to suggest to the court, which after all may have a tricky borderline decision to make, that the three considerations set out in paragraphs (a), (b) and (c) should, when it is making its judgment, count, to the tune of about 90 per cent., with all other considerations that the landlord may be anxious to put forward counting for only 10 per cent.
§ By means of the substitution of the words "among other considerations", the court would therefore be able to give a better balance. It would be able to give more weight to the other considerations, such as the external appearance of the house, and so forth. It is a matter of fine judgment, I know. But the courts have to interpret Acts of Parliament, and to them the words "in particulars" may imply that apart from the three considerations mentioned, all the others carry very small weight. I hope that the Government will see the merits of what I suggest. I beg to move.
§ Lord MOWBRAY and STOURTON
My Lords, the noble Lord, Lord Monson, has expressed concern about the implications which the tenant's right to improve could have. He has also sought to alter the factors to which the court shall have regard in determining whether a landlord was reasonable in refusing consent to an improvement. But my belief is that he has over-stressed the risks here, whereas I would emphasise the positive benefits of tenant's improvements.
On Amendment No. 82C, I would suggest that it is already implied in the drafting of Clause 81 that the court can take other factors into account besides those specifically mentioned in subsection (1). What the court has to decide is 248 whether refusal of consent, or the giving of consent subject to conditions, is reasonable in the circumstances of any particular case. It is not obliged to confine its consideration solely to the factors listed in that subsection: and it could lead to some very strange judgments if that were so. These factors are included in the provision to help guide the court on points which may be relevant where there is a dispute between landlord and tenant over an improvement. They are not meant, however, to exclude other factors which may be material to the case. I hope that what I have said explains why we do not see fit to approve of the noble Lord's Amendment No. 82C.
§ Lord MONSON
My Lords, the acoustics in this Chamber are not as good as might be imagined, and I am not quite sure that I have taken in all that the noble Lord, Lord Mowbray and Stourton, said. Of course, it is perfectly true that the courts are given a power to take other matters into account as well. The trouble is that courts are not allowed to read Hansard and take these points into consideration. They have to take the Act of Parliament, the wording, as it stands. It still seems to me that the words "in particular" give an undue, over-heavy stress on the three considerations set out in paragraphs (a), (b) and (c), to the exclusion of other considerations. Perhaps we can deal with this matter in my next pair of amendments. Therefore, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Lord MONSON moved Amendment No. 82D:
Page 60, line 7, leave out ("or").
§ The noble Lord said: My Lords, I beg to move Amendment No. 82D and, with the leave of the House, I shall speak also to Amendment No. 82E, which is consequential. Now we come to the heart of the question. Theoretically, the tenant will have powers under the Bill, as I understand it, to make quite extensive changes to the interior of the house and to its external appearance. It is not merely a question of erecting television aerials, installing extra power points, or anything of that nature, to which few landlords, if any, would object. In theory, the tenant can knock down a partition wall, provided that it is not a load-bearing wall, or he can 249 erect a wall and so make one room into two rooms.
§ With regard to the external appearance, it is not merely a question of painting. He may erect a sun lounge, so far as one is able to interpret the clause. He can fit dormer windows in the roof. He can render the exterior of the house with stucco; it might be a brick house. He can do any number of things of that nature. None of those things may detract from the value of the house—from either its capital value or its lettable value—but such things may make the house totally different from what it was at the beginning of the tenancy.
§ The landlord may not himself wish to live in the house—though if he does, this is covered by the exclusion in the clause as it stands—but he may wish for a son, daughter or other relative to live in it. The alterations made by the tenant as permitted by the clause may be extensive and may be totally unsuitable for the member of the landlord's family who is to live there. This involves taking an extraordinary liberty with the fundamental property rights of the citizen. I regard this as a very important issue.
§ Lord MOWBRAY and STOURTON
My Lords, I must still emphasise the importance with which we regard the tenant's right to improve the house. We regard this as an important matter. With regard to these two amendments, in our view there is no need to draw the court's attention particularly to internal layout or external appearance. I would remind the noble Lord, however, that we see it as a very important principle for tenants, especially council tenants, to have a right to decorate and to do internal alterations. There are too many council estates painted in the same uniform colours, and we want people to have a real chance of changing all that. Where questions of internal layout or external appearance are relevant to the case before the court, it will be able to take such points into account, and in our view no amendment is needed to emphasise this.
I should perhaps also remind your Lordships that nothing in this clause is intended to override the usual planning and building consents which may be required before works are carried out to a 250 property; and, of course, as I have just explained on the previous amendment, the landlord can impose any reasonable conditions as to internal alterations or external decoration. I would therefore again urge the noble Lord, Lord Monson, and your Lordships, in the first case to withdraw the amendment, and in the second case, if the noble Lord were to press it, to reject it.
§ Lord MONSON
My Lords, the noble Lord, Lord Mowbray and Stourton, has given us a picture of council estates ablaze with multi-coloured front doors, but I was not talking about council estates. The Government would have got themselves off this particular hook if they had confined to council tenants the rights extended under this clause. Then, nobody would have objected; it seems perfectly reasonable. But we are talking about the rights of private individuals, not of councils, and so on, who do not have any personal interest one way or another in what colour houses are painted.
§ Lord LYELL
My Lords, would the noble Lord step a little closer to the microphone? Both my noble friends Lord Bellwin and Lord Mowbray have found it rather hard to follow the gist of the noble Lord's argument, as indeed I did. I wonder whether he could step as close to the microphone as he can get.
§ Lord MONSON
Certainly, my Lords. I was saying that the noble Lord, Lord Mowbray, had given us a most inspiring picture of council estates ablaze with colour, and so on. Of course, this is a magnificent idea, but I was not talking about council estates. I was talking about private individuals, and this is a totally different matter. If the Government had excluded private tenancies from this clause, there would have been no worry at all; but for the first time in history, so far as I know, they are giving private tenants the right to make these very wide-ranging improvements, to which the landlord is virtually forced to agree unless he has extremely good and rather narrow grounds upon which to object. My Lords, this is a matter of principle, and I am afraid I cannot withdraw the amendment.
§ On Question, amendment negatived.
§ [Amendment No. 82E not moved.]251
§ Clause 86 [Extended discretion of court in certain proceedings for possession]:
§ [Amendments Nos. 83 and 84 not moved.]
§ Clause 87 [Discretion of court in certain proceedings for possession]:
§ 5.13 p.m.
Lord MOWBRAY and STOURTON moved Amendment No. 87:
Page 63, line 4, leave out ("by") and insert ("in three or more").
§ The noble Lord said: My Lords, this is a small, technical amendment to define more tightly, for the purposes of Clause 87, the nature of a rental purchase agreement as distinct from a normal house purchase transaction. The amendment will avoid the possibility that the clause might apply to the ordinary house purchaser who may, in some circumstances, be allowed into occupation of the house he is buying before contracts are exchanged. Without this amendment the present clause might inhibit conveyances in ordinary house purchase transactions. They might be more cautious about allowing purchasers into occupation of property before completion of the sale. I therefore invite your Lordships to approve this amendment. I beg to move.
§ Lord EVANS of CLAUGHTON
My Lords, if I may say so very briefly, I think that once again this is an amendment about which the noble Lord's department has been in consultation with the Law Society, and I have a postscript to a letter concerning the previous amendment that the noble Lord, Lord Bellwin, dealt with, saying:I have just heard that the Government propose an amendment to Clause 87 similar to the one suggested in my last letter".I can only assume that this is it, and on the assumption that it is then I think it should be welcomed.
§ Clause 90 [Power of local authorities to dispose of land held for purposes of Part V of Housing Act 1957]:
§ The noble Lord said: My Lords, in speaking to this amendment, No. 88, I should also like to speak to Amendments Nos. 89, 93, 94, 103 and 104. These are all drafting amendments to the provisions in the Bill requiring ministerial consent for the disposal of land. These amendments do two things. First, Amendments Nos. 88, 89, 103 and 104 substitute the word "land" for "property" in the consent requirements for "Part V" local authorities (in Clauses 90 and 91) and registered housing associations (in Clause 121). This will give a consistent use of the word "land". Secondly, Amendments Nos. 93 and 94 deal with the relationship between the words "land" and "house" in Clause 94—the provision requiring ministerial consent for the appropriation of certain "Part V" land by local authorities. These amendments are designed to avoid any possible confusion, and make the distinction between the words clear. My Lords, I beg to move.
§ Clause 91 [Consent to disposals and recovery of discount]:
Lord MOWBRAY and STOURTON moved Amendment No. 89:
Page 65, line 37, leave out from first ("to") to end of line 38 and insert ("any particular land or description of land")
§ The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
Lord MOWBRAY and STOURTON moved Amendment No. 90:
Page 67, line 3, at end insert ("by a body specified in subsection (5A) below").
§ The noble Lord said: My Lords, I have already spoken to this amendment with Amendment No. 9. I beg to move.
Lord MOWBRAY and STOURTON moved Amendment No. 91:
Page 67, line 6, at end insert ("or further advanced to him by that body.
(5A) The bodies referred to in subsection (5)(b) above are any building society and any of the bodies specified in paragraph 6, 7 or 8 of the Schedule to the Home Purchase Assistance and Housing Corporation Guarantee Act 1978")
§ The noble Lord said: My Lords, I have already spoken to this amendment, also with Amendment No. 9. I beg to move.
Lord MOWBRAY and STOURTON moved Amendment No. 92:
Page 67, line 15, after ("section") insert (" "building society" means a building society within the meaning of the Building Societies Act 1962 or the Building Societies Act (Northern Ireland) 1967 and")
§ The noble Lord said: Again, my Lords, I have already spoken to this amendment with Amendment No. 9. I beg to move.
§ Clause 94 [Appropriation of land]:
Lord MOWBRAY and STOURTON moved Amendments Nos. 93 and 94:
Page 69, line 31, leave out from ("appropriate") to end of line 32 and insert ("any part of that land which consists of a house or part of a house for any other purpose")
Page 69,line 36, leave out from first ("to") to end of line 37 and insert ("any particular land or description of land.")
§ The noble Lord said: My Lords, I have already spoken to Amendment No. 93, and it might be convenient to your Lordships if I move it with Amendment No. 94. I beg to move.
§ 5.20 p.m.
Baroness FAITHFULL moved Amendment No. 94A:
After Clause 94, insert the following new clause:
. The Housing (Homeless Persons) Act 1977 shall be amended as follows:
(5A) A housing authority shall not he the subject to a duty under subsection (5) above if they are of the opinion:—
§ The noble Baroness said: My Lords, I rise with the indulgence of the House, because this amendment was to have been moved by my noble friend Lord Mottistone. It is an amendment which we feel should be brought to your Lordships' notice in view of a very difficult situation that is arising due to the fact that on 10th July the Prime Minister, in answer to a Question in another place concerning homeless families from overseas and families moving from one area to another, said in connection with a judgment of the Court of Appeal, that she felt that it was a matter of great concern and hoped that it could be looked into. For that reason, my noble friend has tabled this amendment. Under the Housing (Homeless Persons) Act 1977 persons becoming homeless in an area are the responsibility of that particular area, whether or not they live in it. That means that people moving about, if they are homeless, have the right under the Act to go to the local housing authority of the authority in which they find themselves and, so long as they subscribe to certain conditions, they have a right to be helped.
§ The first part of the amendment concerns those people who come from overseas to local authorities particularly where there is an airport. In the borough of Hillingdon, for instance, between 1975 and 1980, 256 families from 41 different countries, were found to be homeless and, under this Bill, should be housed by the area in which they find themselves. From 1977 to 1980, 67 families from 67 countries came from overseas, landed at London Airport, were homeless and, therefore, by law had to be housed by the Hillingdon borough council. Equally those people from this country who move from one area to another, provided that they subscribe to certain conditions, must be housed by the local authority in which they find themselves. If people want to move from an undesirable area to a desirable area, they can move and claim to be homeless and, 255 provided that the conditions are subscribed to, must, by law, be housed. This is creating a great deal of financial difficulty for those areas which are desirable, but, much more important, for those areas where there is an airport and where people coming from overseas are found to be homeless.
§ This is an invidious position not only for the authorities which have to deal with the families but for the families themselves, because, not unnaturally, they are not wholly welcomed and inquiries must be made about them. The inquiries, not unnaturally, take time, and during that time the families must be put up in hotels, boarding houses or substandard accommodation. Your Lordships will remember that at the time of the Ugandan Asians coming to this country, we gave every possible help by having them at centres where specialised people were able to help them with their specialist problems. By this amendment—which, I am sure, my noble friend Lord Mottistone will be able to explain much better than I—it is felt that people should be accorded courtesy during the time that investigation is taking place and it should not be the responsibility on one particular authority but perhaps that of a centre where those coming from overseas might receive specialised help. From the point of view of people from this country moving from one area to another, it is felt that, unless they have local connections, they should not be declared as homeless people and become the responsibility of the authority to which they have moved. I beg to move.
§ Lord MOTTISTONE
My Lords, I must thank my noble friend Lady Faithfull for moving my amendment today and for putting the case so ably. I am sure that I could not have done better, but there are two points that I should like to emphasise. One is that there is evidence, both in the case of overseas people and in the case of people coming from (may I say?) undesirable parts of the country to more desirable parts, that this is done deliberately to exploit the Housing (Homeless Persons) Act. It seems to me that we must somehow have that Act modified. I am heartened by the fact that my right honourable friend the 256 Prime Minister answered my honourable friend Mr. Shersby by saying that the Housing (Homeless Persons) Act requires to be looked at. That is a good thing; but it seems to me that, with Government legislation as it is, any amendments to that Act will perhaps not take effect for some time. In the meantime, these people continue to flood in. The first point is that there is exploitation and, while one does not want to deprive the genuine homeless people from such facilities as the Housing (Homeless Persons) Act gives them, one does want to try to exclude the ones who are not genuine. It may be very difficult to do so, but I think that the Government should give great attention to it.
The other point which needs emphasising is that basically this is very unfair to people on the housing lists of the local authority, who in effect have to give place to these other people. It must have been appreciated by Parliament when the Housing (Homeless Persons) Act was first passed that this situation would arise to a certain extent. I would say that if it is a fair situation, people have to accept it. But where it is unfair and where there is exploitation, we must somehow get round it. In conclusion, I would suggest that the Government might like to look at the Housing (Homeless Persons) Act. In the meantime, to prevent the flood continuing, they might give thought to accepting my amendment so ably presented by my noble friend Lady Faithfull. If they do not like its precise wording, perhaps they might care at Third Reading to put forward something of their own to deal with this knotty problem.
§ 5.30 p.m.
§ Baroness BIRK
This amendment, my Lords, is a case of very great overkill. The case which Hillingdon Council have been making and on which the noble Baroness, Lady Faithfull, and the noble Lord, Lord Mottistone, base their amendment is simply not justified by the facts. The numbers of people arriving homeless from overseas who are entitled to be in this country who have no accommodation elsewhere and who have not become homeless intentionally is very small. A picture went through my mind of people sitting round the bush in Africa saying: "How can we abuse the Housing (Homeless 257 Persons) Act in Britain?" and coming across to do so. That was a little exaggerated.
The official DoE statistics on homelessness show that only 2 per cent. of homeless households accepted by local authorities have newly-arrived from overseas. Hillingdon's own figures show that in the 31 months since 1977—and with great respect, this is rather more relevant than the figures that the noble Baroness used as we are talking about the Act—they have had to accommodate only 83 such cases, an average of 32 a year.
What Hillingdon has not mentioned in all its considerations about the Act is that the Greater London Council offered to take a quota of housing for just such eventualities. If Hillingdon had taken it up, it would have ensured that Hillingdon could have discharged its responsibilities under the 1977 Act with virtually no effect at all on the housing prospects of local residents. Noble Lords may well remember the case of the Kenyan Asian family who arrived here as British passport-holders in November 1978, and were literally dumped by Hillingdon Council in a great blaze of publicity on the steps of the Foreign Office. That action resulted in an investigation by the Commission for Racial Equality into the possibility of racial discrimination—an investigation which is still in train at present. The test case heard in the Court of Appeal a few weeks ago involved Mrs. Sophia Streeting an Ethiopian born refugee who was homeless in Hillingdon.
The first point to make about this case is that it was set up purposely by Hillingdon Council. I do not object to that at all because it is quite right that councils or other bodies should make a test case to find out what exactly their position is. They advised Mrs. Streeting to contact a solicitor with a view to taking legal action. The chairman of the housing committee was quoted at the time (17th November 1979) in the Daily Telegraph as welcoming the challenge to the council's ruling that it would not house Mrs. Streeting. He went on to say:We want this to be settled once and for all. We have no intention of breaking the law, but it is ridiculous that someone can fly across the world to Heathrow and demand to be housed ahead of local people. The only way to test whether we are right is in the Divisional Courts".258 The case was heard in the High Court in February 1980. The court found in favour of Mrs. Streeting. I do not want to go into all the details of that. According to The Times law report, Mr. Justice Griffiths commented, in reaching the decision that Hillingdon Council had an obligation to house Mrs. Streeting under the 1977 Housing (Homeless Persons) Act:I reach that conclusion with satisfaction, for if anyone needed the succour of this Act it is this young woman and her child—homeless refugees in a strange country".Mr. Justice Griffiths also stressed that local authorities would be protected from an influx of homeless persons from abroad by immigration controls, and by the further protection that a person abroad could not give up accommodation and expect to be housed by a local authority under the Act, because by intentionally making himself homeless abroad the person would have disentitled himself to relief under the Act.
Hillingdon Council appealed against this judgment, and the appeal was heard before the noble and learned Lord, Lord Denning, earlier this month. In dismissing the appeal the noble and learned Lord described Mrs. Streeting's case as "meritorious" and emphasised that it must be comparatively rarely that a foreigner was allowed to enter the United Kingdom when he was homeless overseas and would be homeless here with no means to support himself. The trouble then with Hillingdon's reaction, having taken it as a test case and said "We will follow what the courts say", was that they did not like the court's ruling so they have attempted, so far as they can, to circumvent that. What they are now seeking would be done through this amendment. This would have far-reaching and very dangerous consequences—consequences of which perhaps those tabling it are not aware. In the first place, it would overturn the fundamental principle of people of refugee status like Mrs. Streeting, who are legally entitled to be in Britain, should receive exactly the same treatment under the law as all other United Kingdom citizens. This principle is fundamental to good race relations in this country, and was strongly endorsed by the Conservative Party in The Right Approach which emphasised the need for:fair and equal treatment before the law for everyone who lives here".259 Secondly, this amendment would, if agreed, have the curious effect of debarring from entitlement to help under the 1977 Act those British people who have been abroad for some years and who find themselves homeless on return to the United Kingdom. This means that if they had been abroad on work and come back then they would find themselves in that position. To establish a local connection, people have to have lived in the area for three out of the last five years or, failing that, have been there at least six months prior to their application. The noble and learned Lord, Lord Denning, specifically referred in his judgment to soldiers or sailors in our armed forces who had no local connection with any particular area. On returning to civilian life, if they were homeless, they should certainly qualify for the benefits of the statute. It would be quite absurd if such persons or others in civilian jobs who had been working abroad should be debarred from help under the Housing (Homeless Persons) Act. This is what the amendment would do.
Thirdly, the amendment is so drafted that it would be impossible for a local authority with whom an applicant recently arrived from overseas had no connection to refer that applicant on to another authority in the United Kingdom with whom the applicant had a connection. That is the case at the moment under the Act. I do not think that the movers of this amendment intended this; but this will be the result of their amendment.
To sum up—and I am sorry to have taken time over this—I think that this is an extremely important amendment and those objecting to it really have to object to it thoroughly. The amendment is not necessary. The numbers of homeless applicants from overseas to whom local authorities have an obligation are really very small. Furthermore, it would introduce some extremely unwelcome and injudicious changes to the current procedures which are well recognised by the overwhelming majority of local authorities as working well. Sir Duncan Loch, ex-chairman of ADC, said last year that the Act was working well; that the fears for it at the beginning were not realised; that the additional costs were a small price to pay for solving some of the homelessness in Britain.
260 Only last week the AMA considered this at their housing committee meeting. They came to the conclusion that, although there are difficulties in certain London boroughs, they are of the opinion that there is no reason for any change. The code of guidance and the cost of implementing the Act should be taken into account when working out the new housing subsidy system. In other words, this may need some bolstering through the subsidy system. Nevertheless, at the end of the day one is left with a problem of having to deal with homeless people. It will be a great pity if we are in the position of having turned into a country that turned its eyes, its hands and its help away from people who are really in need of help. They also have a legal right to be here with refugee status. Also, in a case like this, where the local authority concerned firmly refused to take up the quota of housing offer it had in order to make their point.
I imagine that the Minister, when replying, will also remind us that the survey being carried out on the Act by the DoE has not yet been finished. This is a large amendment that is being proposed to this Bill at this time and I do not think can be satisfactory whatever the merits of it may be.
§ Lord MOWBRAY and STOURTON
My Lords, I listened to my two noble friends with great interest on the arguments with which they introduced this amendment and, I do agree with the noble Baroness, Lady Birk, rather introduced at the last moment on a totally new topic. I agree with so much of what the noble Baroness said, that this matter deals with issues of very great sensitivity and with an area of very considerable complexity. For these reasons, we have to exercise the very greatest care to ensure that we are not mislead into thinking that with a few hasty and apparently simple strokes we can neatly dispose of the issue. I do not believe there is any simple solution here at all. The interaction between this proposal, the European Community legislation dealing with freedom of movement, the right to take up employment and the entitlement to rights and benefits of all citizens of member states, and the Race Relations Act 1976 must be explored with very great care. We must also consider the 261 wider implications of this isolated proposal for the operation not only of the Housing (Homeless Persons) Act 1977 but of all the parallel legislation in the social services field, particularly the Children and Young Persons Act 1963, which also includes duties towards dependent families with children who may find themselves without a home.
Your Lordships will be aware that a detailed and exhaustive review of the Housing (Homeless Persons) Act has, as the noble Baroness said, been under way for some considerable time. Representations have been received from a wide range of interests and are being carefully studied within our department. Your Lordships will also have noted the assurance given by my right honourable friend the Prime Minister in another place when answering a Question on the Hillingdon case. It has been suggested that the London Borough of Hillingdon needs a reception centre to deal with the problem of homeless immigrants. There have certainly been occasions when such measures have been necessary; for example, those thankfully rare occasions when world events have led to such misfortunes for large numbers of people that this country has had to make special arrangements to receive them as homeless, displaced refugees as, for instance, with the influx of Ugandan Asians. We have had the Ugandan Asians and also the Vietnamese boat people. On occasions like these the Government will be ready to consider what is the most appropriate assistance to offer.
However, the available evidence suggests that such a crisis does not, thankfully, exist in Hillingdon. Certainly the department's published figures do not support such a view. No special measures are therefore necessary. We are reviewing the operation of the Housing (Homeless Persons) Act 1977 and will take into account the implications of recent court decisions. Your Lordships will probably be aware that a High Court ruling in December, involving Crawley Borough Council and two Italian families, established that immigrants who come here without making adequate long-term arrangements for their accommodation run the risk of being declared internationally homeless, in which case the responsibilities of the local authorities towards them are 262 limited. Having said all that, I would urge my two noble friends to withdraw their amendment in the knowledge that the points they have made will be fully taken into account during the review, on which the Government have not yet reached a conclusion.
§ Lord MOTTISTONE
My Lords, I thank my noble friend very much for his statement. If I might say so, the noble Baroness, Lady Birk, greatly exaggerated the deleterious effects of this amendment. In the first place, there is no suggestion that there should he no housing at all for people who come from overseas. We are only talking about council housing and there is no reason why there should not be other sorts of housing for people from overseas. It is certainly not the intention of this amendment to—
§ Baroness BIRK
My Lords, I wonder whether I might ask the noble Lord this. Can he indicate what sort of housing homeless people who arrive here, or people of refugee status, could have? What are they going to do? Are they going into hotels?
§ Lord MOTTISTONE
I am coming on to refugees in a minute, my Lords. I am talking about people who are not refugees and who come here of their own volition. As to refugees, I noted what my noble friend on the Front Bench had to say. I personally think there is probably a good case for some special refugee facilities organised by the Government on a national scale, but no doubt the Government will take that into account when they study the problem, as they say they will.
The other point where I think the noble Baroness was slightly in error, and indeed the noble and learned Lord the Master of the Rolls also, was in suggesting that this in any way affects service families. They never get council houses and at one stage that was a great grumble. They either go into service quarters or they have to find accommodation for themselves. This is sometimes very difficult for them, but it is not relevant for them at this moment. So there are one or two loopholes, if I may say so, in the Opposition's case. However, I take heart from what my noble friend Lord Mowbray has said and, with your Lordships' permission, I beg leave to withdraw the amendment.
§ The DEPUTY SPEAKER (Baroness Wootton of Abinger)
My Lords, I think the amendment was moved by the noble Baroness, Lady Faithfull. If it is to be withdrawn, I think it must be withdrawn by the mover.
§ Amendment, by leave, withdrawn.
§ 5.47 p.m.
Lord EVANS of CLAUGHTON moved Amendment No. 95:
Insert the following new clause:
§ "Houses classed as fit properties
(. Houses previously classed as fit properties when included in Compulsory Purchase Orders under Part III of the Housing Act 1957 shall for the purposes of Rehabilitation Orders under section 114 of the Housing Act 1974 be treated in the same manner as houses previously classed as unfit under Part III of the 1957 Act").
The noble Lord said: My Lords, the words set out in this amendment, and the thrust of it, may not be immediately apparent and it does seem, even by the standard of the amendments and the clauses of this Bill, to be obscure and complex in its wording. Therefore, I will apologise to your Lordships because it might take a couple of minutes to explain the problem. I hope to warm the rather cold heart of the noble Lord the Minister regarding this particular case. It is a matter which has been brought to my attention from the City of Leeds. The problem is that under Part III of the Housing Act 1977 local authorities are empowered to acquire land by compulsory purchase for clearance areas. The scheme under the 1957 Act is that, first, the local authority has to be satisfied that an area of houses is unfit for human habitation and may determine to purchase that area for clearance. Once they have obtained the consent of the Department of the Environment to the compulsory purchase order and have purchased the land, Section 47 of the 1957 Act then imposes a duty on the local authority to abolish all the buildings on the land. Under Section 43(2) of that Act, the local authority was, however, permitted to purchase, by compulsory purchase order again—and I quote:
any adjoining land, the acquisition of which is reasonably necessary for the satisfactory development or use of the cleared area".
This is known in common parlance as "added lands" in local government circles, and may consist of houses which are fit for human habitation. Once the compulsory purchase order is made in respect of added lands, the local authority is then under the same duty to demolish the buildings on that land. Under the Housing Act 1974, Section 114 as amended and replaced by the Housing Rents and Subsidies Act 1975, Schedule 5, further provision is made to allow the local authority to seek a rehabilitation order in respect of the houses in a clearance area. The order is made by the department and releases the local authority from the duty to demolish on terms that they bring the property up to the full standard set out in Section 66 of the 1974 Act. This procedure may be extended to the added lands I mentioned by virtue of Section 114.
§ There has arisen in Leeds a case—and I understand that there have been similar cases in other parts of the country—where the unfit houses have been demolished. This is quite an important case and, as I say, exists in more than one particular circumstance. Unfit houses have been demolished but also certain fit houses which are purchased with added land remain and are usable.
§ The Department of the Environment seem to take the attitude that they cannot accede to a rehabilitation order to save fit houses, as rehabilitation orders can be made only in respect of unfit houses. In my view, this assessment is incorrect, unless the subsection is read as being capable of operating only where houses on added land can be saved along with some unfit houses. The Department of the Environment's logic seems to be based on the assumption that a compulsory purchase order is confirmed only because the added land was reasonably necessary for the redevelopment. If the houses on the added land were to be saved, this would show that they were not reasonably necessary for the redevelopment, should not have been included in the compulsory purchase order, and therefore the original order of the Secretary of State was wrong.
§ This amendment is an attempt to place both added lands and unfit houses on the same footing, so that a local authority can seek a rehabilitation order in respect of all the lands in the compulsory pur- 265 chase order, and thus release itself from the duty to demolish each and every house which is the subject of a compulsory purchase order. I am sure that that very simple explanation of a very complex problem will convince your Lordships, without any further discussion, that what I have said is correct. My Lords, beg to move.
§ Lord MOWBRAY and STOURTON
My Lords, this new clause, like the last one we were discussing a few moments ago, has also come at rather a late stage and is drafted in rather general terms. It might help your Lordships' understanding of a somewhat technical subject if I also explain a little of the background of the rehabilitation order provisions to which the amendment refers, as we in the Government see them.
In the early 1970s, the gradual shift of emphasis away from demolition and clearance of areas of older housing and towards programmes and policies of rehabilitation and improvement culminated in the Conservative Housing and Planning Bill in 1973, and subsequently in what became the Labour Government's Housing Act of 1974. The purpose of the rehabilitation order provisions in the 1974 Act was to give local authorities the opportunity to think again, in the light of the new emphasis on rehabilitation and improvement, about some of their existing clearance proposals for areas of older housing.
Essentially what the rehabilitation order provisions do is to provide a local authority with a power to look at a former clearance proposal, and formally to decide that it no longer intends to demolish the houses within that area, but will embark on a programme of rehabilitation and improvement of either the whole or part of that area. I must emphasise that this opportunity to reconsider applies only to decisions which had been taken before the Act came into force; that is, for houses which had either been acquired before 2nd December 1974, or included in compulsory purchase orders confirmed not later than 2nd March 1975. So far as new acquisitions, whether voluntary or compulsory, were concerned, it was anticipated that local authorities would have full regard to the possibilities of renovation before acquiring dwellings for clearance purposes.
266 There is, therefore, no provision on the statute book which enables a local authority to change its mind in relation to dwellings acquired for clearance after the dates to which I have already referred. This may seem a somewhat rigid position for us to take, but it is important to bear in mind that, so far as fit houses are concerned, the local authority is entitled to acquire them for clearance purposes only if it can be shown that their demolition is essential in order to provide a suitable site for redevelopment. The Secretary of State's confirmation of any compulsory purchase order in relation to fit properties rests on that same assumption, and if local authorities were simply allowed to change their minds and retain fit properties acquired under these powers it would undermine the whole basis on which the Secretary of State had approved their acquisition in the first place.
Despite this, one cannot help but feel some sympathy with the view that it should not be essential to demolish a house which is not unfit and which, because of changes in local policies or programmes, no longer forms an essential part of the redevelopment proposal. That is a problem which needs further examination, though I do not hold out any prospect of finding an easy solution, given the whole basis on which the initial acquisition by the local authority rests. We would need to consider very carefully the position of the original vendor, for example, and to look at the underlying compensation and other issues which inevitably arise.
These are inevitably fairly deep waters and not, I suggest, appropriate for us to set sail on, without an opportunity to think very carefully about our course and about the hazards which might lie in our path. The new clause does not achieve what we take to be its main objective and is, indeed, somewhat capricious in its effect. I hope therefore that, in the light of my acknowledgement that there is an issue worthy of further examination, the noble Lord will agree to withdraw the clause.
§ Lord EVANS of CLAUGHTON
My Lords, I apologise for the amendment having been put down rather late. It should have been put down in Committee. The fact is that in another place they thought that the amendment was appropriate 267 to the Local Government, Planning and Land (No. 2) Bill, but then they found out at a very late stage that it should appear in this Bill. If they had asked me, I could have told them that much earlier.
But I am very grateful to the noble Lord for what he said. I appreciate that this is a difficult problem and that it would be wrong for local authorities to be able capriciously to acquire added land and then rehabilitate it, under the guise of being the compulsory purchase of unfit property. On the face of it, it seems absurd that unfit houses can be refurbished under a rehabilitation order, but not fit houses. This appears to be a paradox whose examination by the Government might he helpful. From what the noble Lord the Minister has said, I suspect that this will be looked at. But I thank him for his consideration and I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 5.58 p.m.
Lord BELLWIN moved Amendment No. 96:
Page 130, line 35, leave out ("section 16 of that Act") and insert ("Schedule (Houses in multiple occupation: means of escape from fire) to the Housing Act 1980").
§ The noble Lord said: My Lords, for the convenience of the House, with Amendment No. 96 I should like to speak to Amendments Nos. 138, 139, 143, 155, 156 and also 147. But, before I do so, I am asked by Hansard to mention that noble Lords might like to speak a little more slowly or nearer to a microphone because of difficulty with the acoustics.
§ Your Lordships will recall that when we considered the Bill in Committee my noble friend Lady Vickers moved an amendment on the subject of means of escape from fire in houses of multiple occupation. At that time I promised that the Government would themselves table an amendment on the same subject, and it is that amendment which we are now considering, together with some minor amendments which are consequential upon it, as well as my noble friend's Amendment No. 147, which she has tabled again.268
§ The Government's amendments bring together existing statutory powers dealing with means of escape, with the major addition that the Secretary of State will be given a power to specify by order particular types of houses in multiple occupation for which local authorities will have a duty. The provisions in the new schedule will give local authorities a choice between different courses of action, although they must consult a fire authority before exercising this choice. They may require the execution of works to provide means of escape, and your Lordships will be aware that elsewhere in the Bill there is provision for the mandatory payment of grant in the case of such a requirement; or they may secure by agreement or by the serving of a notice that some or all of the house should be closed, or they may combine the two procedures as they consider most suitable.
§ I understand from what my noble friend Lord Sandford said in Committee, and from other sources, that local authorities sometimes have difficulty in enforcing the law on means of escape. I should be glad to hear of any troublesome cases. I believe that the new clause will help local authorities and will be welcomed by them, but if any problems with the existing legislation persist the Government will be prepared to consider changes.
§ I am sure that your Lordships will agree that because of the provision to lay a duty on local authorities, this is an amendment which will have far-reaching implications. For that reason it will be necessary for the Government to hold lengthy and careful consultations with a range of interested bodies and organisations to establish whether, and if so how, the scope of the duty to be laid on local authorities by order should be restricted.
§ Within the time-scale of the Bill it has not been possible to carry out the necessary consultations. The approach which we have adopted, involving an order-making power, leaves the question open in order that we can give the closest possible consideration to the views that are put to us without the constraint either of an excessively tight time limit or of a legislative framework which reduces the options open to us.
§ I should like to turn now to the amendment tabled by my noble friend Lady 269 Vickers; namely, Amendment No. 147. This amendment has been tabled before, both here and in another place. On the first occasion my honourable friend the Minister explained that he was not happy with the fact that under the procedures set out in the amendment local authorities could find themselves forced to take action which could be costly and time-consuming, solely—and I stress solely—as a result of a complaint by an HMO resident. As I said when we debated my noble friend's earlier amendment, I do not rule out the possibility of an orchestrated campaign, and this could well lead to the initiative being wrested from the responsible public bodies. The Government really could not allow that possibility.
§ I am also unhappy with the cumbersome apparatus surrounding the business of serving notices and counter notices, as proposed here. I am not convinced that there is evidence of the need for any more than the existing arrangements set out in Sections 14, 15, 17 and 18 of the 1961 Housing Act. In the absence of such evidence, I should be most unwilling to add to the bureaucratic burdens of local authorities and of HMO managers or landlords. Also, my noble friend's amendment does not provide for partial closure where it would be unreasonable to require works.
§ Finally, my Lords, I must mention three minor amendments which are consequential on the main one under consideration. In Schedule 23, the paragraph updating the penalty for contravention of Section 60 of the 1969 Act is no longer needed. In Schedule 25, the repeals of Section 19 of the 1961 Act and Section 60 of the 1969 Act are added. Lastly, Schedule 12 is altered to provide that when a notice under this schedule is served requiring that means of escape be provided, the payment of grant would be mandatory. May I conclude by commending these Government amendments to your Lordships' House. I wonder whether, if she agrees with this, my noble friend will feel able to withdraw her amendment.
§ 6.3 p.m.
§ Lord SANDFORD
My Lords, as one who spoke in Committee on this cluster of points, may I say how welcome this group of amendments is and how 270 much the Association of District Councils welcome them. They are sorry that it has not been possible to deal in the Bill with all the matters that they raised, but I think that the order-making powers which the Government are seeking should enable them to do what is necessary.
There are three things to be welcomed. The first is that the Government have resisted the call which came from a number of quarters but which I think was misguided. It came from, among other places, Church leaders in a statement which they put out on 8th May inviting a duty to be laid upon the local housing authorities to oblige hostels in multiple occupation to come up to certain standards in respect of fire escapes, fire precautions, and so on. This, I think, would have been running into the danger of making the best the enemy of the good. I am grateful—and I believe that the House should be—to the Government for having resisted that pressure. Housing authorities will do their best, exercise their discretion and see that, so far as possible, fire precautions and fire escapes are as good as they can be. The amendment standing in the name of my noble friend Lady Vickers which follows this amendment will, if it is accepted, help in that direction.
One of the things which must be done when the orders are available is to bring into the embrace of this legislation the power of local authorities to deal with fire precautions, fire extinguishers and fire doors as well as fire escapes. It is better to prevent a fire, or to quench it at an early stage, rather than to concentrate on providing for escape when escape is the only thing which is left. For all those reasons, I welcome this amendment and the other ones which flow from it.
My Lords, I was rather taken aback when my noble friend mentioned Amendment No. 147 because I had no idea that he was going to discuss it now. I am very sorry that I had no notice from my noble friend that he was going to deal with Amendment No. 147, for there were a lot of points which I had hoped to put before him. In view of the circumstances, I think he will forgive me if I say that I should like to consider the matter and to come back to it again at Third Reading. There are a lot of points which I think are rather important.
§ 6.8 p.m.
§ Lord HYLTON
My Lords, first I apologise to my noble friend the Minister for the fact that I was not here to hear the beginning of the remarks which he made in moving his amendment. Despite that, may I put to him one question and two comments arising from his Amendment No. 143. The question is this: what precise types of premises will be affected by the new duty? In relation to this, I suggest that it will be vital that the legislation in this Bill is not restricted solely to the large institutions. I would point out that the fire last March in the Kilburn hostel, in which 10 women were killed, was in a three-storey terraced house. It was quite a small house, not an enormous hostel.
My two comments are these. The duty proposed in the Government's amendment does not require local authorities to carry out works in default, as was proposed by my noble friend Lady Vickers in her Amendment No. 147. A power to carry out works in default is of extreme importance and is very much better than a closing order, for this reason: we need every single place in every single hostel to be in operation all the time. It is no good having a lot of hostels with a lot of closed beds in them. So I hope something can be done about that.
Secondly, it is still not clear, I suggest, from the Government's Amendment No. 143 how exactly local authorities are to become aware of unsafe hostel conditions. The amendment moved by my noble friend Lady Vickers made special provision for inspection upon a complaint by a hostel tenant. Obviously this could occur under the Government's amendment, but I suggest very strongly that if it is not to be written into the Bill, then at least it should be encouraged by notices to voluntary bodies, by circular or by any other way in which it can be encouraged. I would ask the Government to take this one question and these two points into very serious consideration.
§ Baroness DAVID
My Lords, I should like to reinforce what the noble Lord, Lord Hylton, has said and to ask the same questions about the kind of premises to which the clause would refer. I should also like to know how they are going to be alerted to the need for action. Have 272 the Government given any attention to the AMA's worry about a possibility of a closing order being achieved, possibly because of precautions being needed, but this being taken advantage of by the landlord in order to get vacant possession? I understand that some landlords in London have been using closing orders to get vacant possession, and there is an anxiety that with paragraphs 3 and 9 of the Government's new schedule this could be done. I should like to hear what the Minister has to say about that. Again, I am very interested in the question asked by the noble Lord, Lord Hylton.
§ Lord BELLWIN
My Lords, the latter point which the noble Baroness, Lady David, raised in many ways highlights the great difficulty that there is in coming forward with something which on the one hand both recognises and sets out to do something about what is a very real problem and, on the other hand, considers the enormous open-endedness and all that flows from that and what it could mean. It is a very difficult one to get just right. I suppose one will not get it just right, but one will get it as right as one can. That is why I said—my noble friend said he was not here when I said it; that is fair enough—at the beginning that what we really must do here is have discussions. We have already had first talks with the local authority associations. As I recall it, the housing consultative council met within the last 14 days or so, when this matter was talked about, and all the local authority associations were involved. Clearly, this is one instance where there will have to be the most careful consultation and discussions with the AMA and the others to pick up the point that the noble Baroness makes and the many others which flow from the very considerable requirement that is being put forward.
I should like to put right an omission I made on Amendment No. 143, which in itself is a minor amendment. There has been a new paragraph 12, which says that the first italicised passage has been deleted and it should now read simply, "Section 15". It has no sinister implications, but I have to put the record right. My noble friend Lord Hylton asked which properties will he made the subject of the new duty. This is exactly the point that I was making a moment ago.
273 Clearly there will have to be discussions with local authorities. The Kilburn tragedy, of course, is precisely the kind of case that must be used as an example to see exactly what flows from it. This in itself has not touched it all off, but every time—sadly it has to be said that this is not the first time—that these tragedies take place it only highlights the enormity of the dilemma, on the one hand, of wanting to make sure that there is proper provision, which is so necessary, and, on the other hand, not getting into a scene whereby one could risk closure of so much accommodation because of what that would mean. No one in your Lordships' House would claim that there is a simple solution. Therefore, we had best arrive at a solution by sitting down, as we intend, and having discussions. I hope that answers the point. In this amendment the Government are making an attempt to take this on board while this legislation is going through. I feel sure that there is great interest—that is the minimal word I can use—in this. People are concerned, and I have confidence that with this amendment and what will flow from the Bill we shall get some action very quickly.
§ Lord GIFFORD
My Lords, before this amendment is finally accepted, may I voice the disquiet that I feel about the amendment and the debate upon it? I think the House needs to appreciate that the law is not being changed one iota by this amendment unless and until the Secretary of State takes upon himself to use the new powers that are given in paragraph 1. What I fear is that these powers will be talked about to some extent and then put on a shelf, as I understand similar powers under the Fire Precautions Act have been, and used only in a very small number of circumstances, perhaps when there are very big institutions involved, and that they will not meet the dangers that the noble Lord, Lord Hylton, talked about, which were exemplified by the Kilburn fire. We ought to have from the noble Lord, Lord Bellwin, a commitment by the Government that these powers will be vigorously used. Even if he cannot give us the detail of what kind of buildings will be specified by them, he should give us an undertaking that there will be vigorous use of these powers, perhaps more vigorous than the local authorities themselves would like to see, so that means of escape from fire can be provided 274 and people are not trapped in ill-provided hostels.
§ Lord BELLWIN
My Lords, by leave of the House, may I say that I do not know that I can or need to add to what I said when I made my opening remarks, which I can assure the noble Lord, Lord Gifford, were very carefully thought through. This was not just a case of having speaking notes and reading things out. I try not to do that. It is a case of looking very carefully into what is said, talking about it, thinking about it and adjusting it where necessary. That is why the words chosen, which will be in Hansard, were chosen very carefully. I hope they gave the impression of concern and urgency as well.
§ 6.18 p.m.
Baroness VICKERS moved Amendment No. 97:
Page 131, line 41, leave out ("£5,000") and insert ("£6,750").
§ The noble Baroness said: My Lords, I beg to move the amendment standing in my name and that of the right reverend Prelate. This amendment is self-explanatory. I set out in detail on the Committee stage, at column 665, the reasons for it. The noble Lord, Lord Mowbray and Stourton, very kindly asked whether I would withdraw it so that, if necessary, it could be discussed further. I hope that he has had a chance to discuss it further. There was one other point in regard to Scotland which he was kind enough to write to me about. In his letter, he said he understood that, in the light of the provision being made in the Housing Bill, further consideration was being given to the situation in Scotland. I should be very grateful if he would let me know whether he has had a chance to do that. I beg to move the amendment.
§ Lord MOWBRAY and STOURTON
My Lords, my noble friend Lady Vickers is quite right. At the Committee stage we said that we would take this away. We had much persuasion and eloquence from all sides of your Lordships' House on this. We have given it further consideration, and I am very pleased to be able to inform my noble friend and your Lordships that, having taken it away, we are content to accept this amendment.
My Lords, by leave of the House, I should like to thank my noble friend for his kindness in accepting this amendment. I believe it will give a great deal of help to many homeless people.
§ 6.20 p.m.
Lord BANKS moved Amendment No. 98:
After Clause 113, insert the following new clause:
.—(1) The provisions of section 24(1)(B) of the Housing Subsidies Act 1967 shall have effect where a person borrows, or two or more persons borrow jointly, from a qualifying lender on the security of a freehold or leasehold estate of the borrower, or of one or more of the borrowers (including an estate held jointly or in common by the borrower, or one or more of the borrowers and one or more other persons) in land in Great Britain, and the following conditions are satisfied:—
(2) The borrower or borrowers may by notice in writing to the lender in such form as the Ministry may direct (in this section referred to as an "Option Mortgage") elect that the loan shall be subsidised in accordance with the provisions of Part II of the Housing Subsidies Act 1967 and the Option Notice shall be treated for all purposes as if it were an Option Notice made under the provisions of section 24 of the said Act.").
§ The noble Lord said: My Lords, I beg to move Amendment No. 98 standing in the names of my noble friend Lord Evans of Claughton, the noble Baroness, Lady Faithfull, the noble Baroness, Lady Phillips, and myself. I must begin by declaring an interest because, as I have explained to your Lordships before, I am an insurance broker being a director of a subsidiary company of a firm of Lloyd's brokers.276
§ I moved an amendment in exactly similar terms to this amendment at the Committee and Report stages of the Social Security (No. 1) Bill. The amendment had—and still has—the strong support of Help the Aged and Age Concern, two leading organisations dealing with the problems of the elderly. The amendment attracted widespread support from all parts of the House, not least from the Government Benches, from which the noble Baroness, Lady Vickers, the noble Lord, Lord Gisborough, the noble Baroness. Lady Elliot of Harwood and the noble Baroness, Lady Trumpington, spoke sympathetically. However, at that time the Government said that the amendment was not relevant to that Bill, and on a Division the amendment was defeated by 12 votes. I tabled it again in Committee on this Bill and the noble Lord, Lord Bellwin, confirmed that this is the right Bill to which to move such an amendment, but I withdrew the amendment at that stage in order to consider the comments which the noble Lord, Lord Bellwin, had made.
§ I imagine that by this time the House will be familiar with the purpose of the amendment so I will restate it only briefly. Elderly people owning their own homes but with inadequate income can supplement their income by raising a mortgage in order to purchase an annuity. Out of the annuity they pay the interest on the mortgage and the balance of the annuity provides the extra income. Those paying tax enjoy tax relief on the mortgage interest, which makes the arrangement much more attractive to them than to non-taxpayers. Indeed, as the situation is at present, the arrangement may not prove suitable for the non-taxpayer. The amendment seeks to extend to the non-taxpayer the option mortgage arrangements available to non-taxpayers raising a mortgage to buy their house. Under this they pay a lower Government subsidised rate of interest on the mortgage. Since elderly taxpayers have been helped in the same way as taxpayers buying their houses, it seems only just that elderly non-taxpayers should be helped in the same way as non-taxpayers buying their houses.
§ I should like now to consider briefly the arguments which have been advanced at various times by the noble Baroness, Lady Young, and the noble Lord, Lord Bellwin, against the amendment. First, 277 it has been argued that there is no general principle that tax relief for taxpayers must be matched by subsidies for non-taxpayers. I agree that that is so but it has been done for house purchase. Recognition of the need to help non-taxpayers has led to the replacement of child income tax allowances by child benefit. In both those cases it was felt that non-taxpayers should be helped as well as taxpayers. It seems to me that there is an overwhelming case for helping the elderly non-taxpayers whom we are now considering.
Secondly, it has been argued that tax relief on loans to purchase life annuities has never been regarded as an instrument of public policy. It was further argued that when in 1974 tax relief on loans was being withdrawn for all but a limited number of purposes, home income plans were exempted only because the noble Lord, Lord Carr of Hadley, who moved the amendment in another place, wanted to protect those who had already taken out such plans. However, the fact is that the exemption covered future as well as existing home income plans and it did become an instrument of public policy. The noble Lord, Lord Carr, cannot be here today, but he has written to me in these terms:
I am delighted that you are going to make another attempt to secure the benefit of the option mortgage for non-taxpaying home owners. This has my full-hearted support.
§ Thirdly, it has been argued that the option mortgage scheme is really designed to encourage home ownership, and that to use it for the purpose proposed by the amendment would be a completely new departure. I see no reason why that should not be so. From time to time we are bound to have completely new departures, and if we find a new purpose for something which was originally designed for another purpose it would be foolish not to use it.
§ Fourthly, it has been argued that the tax relief on the mortgage interest compensates for the tax on the interest element in the annuity. It is argued that they balance out and therefore no advantage is given under the present arrangements to the taxpayer. The interest element on the annuity in home income cases is never more than one-third of the interest on the mortgage, so tax relief is a very decided 278 advantage to the taxpayer. Fifthly, it is argued that if the amendment is passed home income schemes would become more attractive to non-taxpayers than to taxpayers since, it is argued, the subsidy on the interest rate equals the tax relief and the non-taxpayer does not pay tax on the interest element in the annuity. This advantage to the non-taxpayer would be very marginal indeed, for this reason: The rate of interest on the mortgage and the annuity rate are both kept very low in these schemes. Because the annuity rate is low the taxable element in the annuity is very small and is regarded as very largely capital; the tax on it would be even smaller.
§ Sixthly, it is asked whether we should use taxpayers' money to provide extra income for a particular group of old people. In my view there is no difference in principle between tax relief and a subsidy. Both are methods of helping particular groups of people and the Government have already selected elderly taxpayers when making these arrangements. It is wrong to leave out those who need help most; namely, the elderly non-taxpayers.
§ Then it is argued that the average outright home owner spends only 4½ per cent. of his gross household income on housing and therefore that class of people do not require help. But the group we are thinking of are not average; their income is well below average. Most of them live in old houses where the upkeep can be extremely heavy, and in any case as I have already pointed out, the tax-paying home owners are helped.
Finally, there is the question of cost. On 6th May the noble Baroness, Lady Young, said that the Government estimate was that it would cost £10 million a year. My view is that it would cost something like £2.5 million, taking into account the number of these plans taken out so far. Then we have to bear in mind the cost of maintaining people in care if they are unable to continue to live in their own homes because their income is insufficient. On 4th July the noble Lord, Lord Bellwin, said in Committee that the cost was not the kernel of the argument. He said:
I do not at all make my case on that point".
The noble Lord's case depended on the other arguments. However, the House
may feel, in view of what I have said about them, that the other arguments do not really stand up.
I should like to conclude by quoting from a letter which I received the other day from a lady living in the Midlands. She said:
I should like to thank you very much for your support in this and to say that I hope very much that you will continue to fight to remove the obstacle that prevents folks such as myself from taking out a home ownership annuity. What a difference it would make to our lives".
§ My Lords, I beg to move.
§ 6.30 p.m.
My Lords, I would like to support the noble Lord, Lord Banks, as I did on the previous amendment. I think it will be recognised by all parties that when the benefit of this plan was discussed in 1974 the interest on mortgage was specifically allowed for tax relief, which considerably increases the benefit of this plan as not only would this help elderly people who find times hard but, by enabling them to keep their independence and stay in their homes, it would help take the weight of some of them off the public or private sector, and this would provide extra housing. However, although the plan was designed to help those in need, it was really only used for those with large incomes, large enough to pay tax and make use of the available tax relief. As to the large numbers of elderly people on much lower incomes, in the so-called poverty trap, who cannot claim tax relief and thus take advantage of this useful plan, if something similar to the existing option mortgage could be extended to them they could obtain subsidy instead of tax relief, which would put them on a par with their wealthy contemporaries.
The only alternative for many of these elderly people is to sell their homes, but as most of them already live in small, comparatively inexpensive houses they cannot usually buy something else and they have to queue up for heavily-subsidised council accommodation or other accommodation for the elderly. My Lords, this crusade, if I may put it that way, has been going on for three years now, and only recently have the Government—and I am grateful to them—decided which department should be 280 responsible. As I said in a previous debate, when the elderly people made their plans for retirement they had no idea what inflation would do, and that it would wreck their plans and perhaps their lives. I beg to support this amendment.
§ Baroness FAITHFULL
My Lords, I speak as an ex-director of social services who was responsible for administering the Health Services and Public Health Act, which is the Act of Parliament which lays down that a local authority must give assistance and help to the elderly unable always to help themselves. I would like to support this amendment of the noble Lord, Lord Banks, on three counts. First of all, cost. Our difficulty in this country is that we always look at lists of columns separately and not together. This would save the country paying out supplementary benefit to a number of people who otherwise would have to receive supplementary benefit. Secondly, it would save cost in the provision of alternative accommodation for the elderly when they have to leave their homes; and, although figures have been mentioned, I think it has not always been costed, taking into account the cost of an old people's home or wardened accommodation. The cost of keeping someone in an old persons' home now is between £90 and £120 a week. In view of the number of people this Bill would cover, local authorities could save a great deal of money.
On the question of facilities, it is well known in your Lordships' House, so I apologise for saying it again, that facilities for the elderly in this country are woefully inadequate. We have not enough hostels, old peoples' homes or wardened accommodation. Indeed, if we had it, that is not the kind of accommodation that the elderly want. If we have to provide that accommodation, we are providing accommodation which might be necessary, but is not always the kind of accommodation that the elderly like. Thirdly, it is a question of what it is that people want and need. I maintain that they want independence; they want to be in their own homes. They do not want to move away from the communities in which they live; they want to stay in the place they have known. Therefore, I beg to support this amendment.
§ Baroness PHILLIPS
My Lords, I should also like to support this amendment. I feel that the arguments have been so well deployed both by the mover and the subsequent speakers that I will not waste valuable time replying. I would merely say that this proposal must be in line with the Government's thinking, because this is an attempt to assist people, as the noble Baroness who has just spoken so rightly said, to remain in their own homes and not to be a charge on the State. This is a group who would particularly resent that, but who would be quite happy if they could indeed draw an annuity and remain in their own homes for as long as possible.
I am very heartened to see that the amendment states clearly who is concerned—those over 65—so we know precisely who we are talking about. I would also say to the Minister—I know this is something he will accept—that it does not cover a very large number of people. These must be the kind of people we have been thinking about right throughout our consideration of the Bill, and I am sure that the persistence and humanity of the mover of the amendment and those who have supported it will be rewarded. We look to the Minister, as he has already accepted one amendment this evening, to do the same again, for a large number of your Lordships who support it and a small number of people who will benefit.
§ Lord GARDINER
My Lords, while in a sense perhaps biased as president of Help the Aged, I would like to support this amendment. I will not detain your Lordships since the arguments have already been fully advanced. It has always seemed to me that, although sufficient account has been taken of the money that would be saved if this amendment were accepted, in the various fields described by the noble Baroness, Lady Faithfull, in the end all it means is that a fairly small number of people who are too poor to obtain tax relief will be enabled to die in their own homes. One has to take into account in reverse the various aspects which the noble Baroness, Lady Faithfull, has described. I hope very much that the Government may be able to accept this amendment.
It seems to me that we have become an uncaring people. I have no complaint because I am much better off this year 282 than I have been for years owing to Mrs. Thatcher's kind tax reliefs. Exactly what I have done to deserve this I do not know, and how it benefits the country I am not sure, but I am sorry if it is at the expense of the poor, of those who want to bury their dead in decency, who want maternity benefits, and so forth. Here, at least, the Government taking human charity into account, ought, I submit, to accept this amendment.
§ Lord BELLWIN
My Lords, I hope the noble Lords will pay the same detailed attention to what I have to say as they have done to other noble Lords who have spoken because, despite the very emotive tones that have been used in this debate, I believe there are other arguments which in fact show that to do what this amendment suggests would not benefit more elderly people. It would in fact provide benefit to some at the expense of many more elderly people. May I go through the points carefully. I have tried to look, as did the noble Lord, Lord Banks, at what has been said before. I have taken the arguments and tried to think them through logically. This is the fourth occasion on which this amendment has been discussed in this Chamber in the last few months. I listened carefully to the arguments advanced earlier, and I have listened to them again during this debate. While one may indeed have sympathy with the intention that lies behind the amendment, I have to say at the outset that the Government's attitude to the amendment has not changed.
There are two questions to answer. First, should particular members of the group of non-taxpaying elderly outright owner-occupiers receive a direct subsidy from the Government to augment their incomes? Secondly, do they deserve a higher priority than the many other groups in society who make a case for additional help? I suggest that the supporters of this amendment have to build their case around the answers to these questions. With respect, such a case, in my view, has not been established.
I think there are two strands to the argument advanced by the supporters of the amendment: first, the point of principle or of equity. It is said that because taxpaying elderly outright owner-occupiers get tax relief, their non-taxpaying counterparts should receive option 283 mortgage subsidy. The availability of option mortgage subsidy as an alternative to tax relief is exceptional. There is no general principle that tax reliefs should be matched by corresponding subsidies. The option mortgage scheme was devised specifically to encourage house purchase and improvement. The amendment, by contrast, would augment the incomes of elderly home-owners; it would serve no housing purpose at all.
Supporters of the amendment have argued that tax relief serves no housing purpose either, but in this context tax reliefs are intended to prevent someone paying tax on part of his income which is to be paid to someone else as interest on a loan. Since non-taxpayers by definition do not pay tax, there is in this context no case for a corresponding subsidy. The option mortgagors are few in proportion to those who receive tax relief on their mortgages. If this amendment is passed, it is likely that the number of non-taxpayers taking advantage of it would far exceed the number of taxpayers who have life income plans. Those receiving option mortgage subsidy to augment their annuities would greatly outnumber those getting tax relief. That, I submit, just cannot be right. It would be a classic instance of the tail wagging the dog.
The second strand of the argument put by the supporters of the amendment is that of cost. I said at the Committee stage that I would not hazard a guess at the cost of the amendment, and as the noble Lord, Lord Banks, very fairly pointed out, I do not believe that that is the kernel of the argument. On an earlier occasion my noble friend Lady Young mentioned a figure. But if we are talking about cost—and I am not mentioning a figure—the difficulty is that nobody can say how many people might take advantage of the amendment. It would simply represent an open-ended commitment. No one can specify a number. Can a responsible Government really contemplate accepting such an open-ended commitment at any time, least of all at present when public expenditure is severely restrained?
I want to say again that that is not the kernel of the argument. It is a point I feel I must make in fairness to those who made the point before, and because it has 284 relevance, not least in terms of open-endedness. Surely, it cannot really be argued that the particular group of outright owner-occupiers whose incomes would be increased by this amendment are the first priority for additional help or that they are the most deserving of all groups of those in need. If this amendment were passed, I think it would be deeply resented by, among others, people in the rented sector, whose housing costs are far higher. A true comparison with tenants who receive rent rebates would require rebates of some 100 per cent. The average outright owner-occupier spends only 4½ per cent. of his gross household income on housing, while the housing costs of people in rented accommodation are about 10 per cent. after taking account of rebates. The noble Lord, Lords Banks, asked: what about helping the category of people to whom the amendment is directed? But what about helping the non-home-owner, who are also elderly people in many cases?
The noble Lord, Lord Banks, has said that although the option mortgage scheme was introduced as an aid to house purchase, it would be foolish not to use it for another useful purpose if one could be found. That is rather like saying that any method of tax relief or subsidy should be infinitely extendable. That is a principle that no Government could accept. The existence of the instrument must be subsidiary to the merits of the proposal.
Lord Banks also referred to child benefit as an example of assistance available to taxpayers and non-taxpayers alike. But an analogy cannot be drawn satisfactorily between child benefit and option mortgage subsidy for annuitants. The only qualification for child benefit is to have children, and a recipient's financial or housing circumstances are irrelevant. By contrast, an annuitant would need to be the outright owner of a marketable house to have made particular financial arrangements with a particular insurance company before he could benefit from this amendment.
I suggest that the essential point is whether it is justifiable to provide such additional help for people who as a group have very low housing costs and who may not as individuals be in the greatest need compared with other groups. 285 It would not be responsible for Government to fulfil their obligations to all elderly people by selecting for extra help particular members of this particular group. Moreover, I suggest that the Government cannot commit themselves to a new open-ended demand-determined commitment, least of all in these times.
I should like briefly to comment on one or two of the other points that were made. I do not accept the argument of my noble friend Lady Faithfull, when she talked about the facilities for the elderly being inadequate. Of course the facilities for elderly people are inadequate, but the facilities for all elderly people are inadequate, not just for this group. The argument does not help, in my view. The noble Baroness knows the tremendous respect and admiration I have for her knowledge and involvement in matters to do with the social services and the like. But I just do not see how, by singling out this one sector of the elderly, you are being fair in equity to all the others. I also do not take the point made by one or two speakers, that if you do not let them sell their homes in this way, then they will have to go to the local authorities for accommodation with the consequences of them doing that. It does not work that way.
I have several other points in front of me, because I write them all down as they are made and try to answer them. But at the end of the day I do not think there is much point. I accept entirely the great sincerity with which everyone spoke on this matter. I hope that in turn they will accept that I am sincere when I say that we are no less concerned with this than with any other group of the elderly. It is said that in this House if you merely mention the elderly in moving an amendment, a button goes and everyone goes with it. I do not think that that is so. I am convinced that your Lordships on all sides of the House will listen to all the arguments. There is a strong argument for helping all elderly people, but if we have to help them in one way or another let it be done on a basis that affects everyone and goes right across the board. Do not let us do what this amendment tries to do: wish to help a certain category of elderly people at the expense of other people, and thereby give them an advantage which I do not believe is justifiable. If your Lordships 286 will think carefully about this, I hope you will at least concede that there is an argument to be considered. I think the Government are putting the case fairly, having thought about it not for the first time but, indeed, as the noble Lord said, for the fourth time.
§ Lord MONSON
My Lords, I think it is time that somebody from these benches rose to support this amendment. The noble Lord, Lord Bellwin, mentioned priority and cost. I wonder whether your Lordships realise how minuscule the cost of accepting this amendment would be compared to the cost of subsidies to householders by means of tax relief on mortgage interest and subsidies to council house tenants. The combined cost of the latter two; that is to say, subsidies to council house tenants and tax relief on mortgage interest, amounts to no less than 1,330 times the cost of this scheme, if we take the figure suggested by the noble Lord, Lord Banks, of £2.6 million. But even if we take the figure of £10 million suggested a few months ago by the noble Baroness, Lady Young, it is still 346 times the assumed cost of the scheme. Furthermore, if we accept the extremely well reasoned contention of the noble Baroness, Lady Faithfull, the net cost of the scheme would be far lower because of the saving in the payment of supplementary benefit and rehousing costs; so your Lordships will see that the disparity is even greater. I hope, therefore, that you will support this amendment.
§ Lord KALDOR
My Lords, I should like to say a few words on this amendment. I feel that the noble Lord, Lord Bellwin, did not state the case properly when he mentioned the equity argument in connection with the option mortgages. The option mortgage scheme was introduced simply because the mortgage relief was not only anomalous but was regressive in its incidence. The richer you are, the greater the benefit you receive. If the noble Lord consulted his colleague, the noble Lord, Lord Cockfield, who was the author of the tax credit plan, which was very much in the spirit of this amendment, he would put him right on the true nature of the equity aspects involved.
§ Lord BANKS
My Lords, may I say how grateful I am to those noble Lords who have supported this amendment. I think 287 all those who have spoken, other than the noble Lord, Lord Bellwin, have supported it. Of course, I accept the sincerity of the noble Lord, about which he spoke, but I must confess that I thought the arguments which he put forward were precisely the arguments which I had dealt with in my opening remarks. I thought I had shown that they would not in fact stand up. I will not go over them all again, but I think the basic argument on which opposition to this particular amendment has been presented is the argument: Should this particular group have a subsidy? That is the particular group of elderly non-taxpayers. Since a precisely similar group, in exactly similar circumstances, of elderly taxpayers has been selected and people who are better off have been selected and given an advantage and help in order to do this, it seems only right and fair that people at the bottom of the scale who need it most should be given the opportunity. There is no reason to suppose that the numbers involved would be so very large compared with those who receive tax relief. The number of schemes since the idea was introduced seven years ago has been only 3,000, and the figure which I gave was worked out on the basis that there would be 10,000 in a
§ year. So I believe I was being very generous in arriving at that figure.
§ It is said that it would be exceptional to do this; that there is no general principle. Yet it has been done in other cases, and if that is so, why should it not be done in this case, if the merits of the case demand it? There is no question of having an open-ended commitment for option mortgage so that it would be extended to all kinds of other things. It would be extended only if, on some other occasion, the merits of the case seemed to suggest it, as the merits of this case seem to me to suggest it.
§ We return to the fundamental point that if help is given to elderly taxpayers, then elderly non-taxpayers in exactly similar positions should be given the same kind of help as is given in the case of house purchase, and I hope that your Lordships will support this amendment in the Division Lobby.
§ 6.55 p.m.
§ On Question, Whether the said amendment (No. 98) shall be agreed to?
§ Their Lordships divided: Contents, 114; Not-Contents, 85.289
§ Resolved in the affirmative, and amendment agreed to accordingly.
§ Lord SANDYS
My Lords, I think that at this stage it might be for the convenience of the House if the House resumed its discussion of the Bill on Report at eight o'clock, and if in the meanwhile we took the business which is to be dealt with during the dinner hour. I beg to move that further consideration on Report be adjourned until eight o'clock.