§ Order for Second Beading read.
§ The SECRETARY of STATE for the HOME DEPARTMENT (Sir William Joynson-Hicks)
I beg to move, "That the Bill be now read a Second time."
As this is the first occasion during all the years that I have been a Member of the House that I have had the honour of moving the Second Reading of a Bill, I feel sure that the House will extend to me that courtesy and consideration which is always extended to a maiden effort. I want to put before the House the reasons that have induced the Government to consider several important operations in the Law of Landlord and Tenant, and, secondly, to explain as simply as I can the provisions of this Bill. I need not go into the old laws relating to land and land tenures in this country, but I should like to say a word or two about the leasehold system, under which a great deal of the land of this country has been built over and under which, certainly in London, a very large amount of development has taken place. The leasehold system here has endured for very many centuries, and on the whole, though there are difficulties in working, it has, I think, functioned very successfully.
One of its great advantages, of course —and when we are considering inroads in the existing Law of Landlord and Tenant, we ought to be careful that we realise the advantages of the system while considering certain disadvantages—is that under the leasehold system the landlord provides a great deal of capital which, under a freehold system, would have to be provided by the tenant. A tenant builds on a building lease, but he does not have to provide land for the purpose. The landlord provides that part of the capital. Further, if a tenant takes a property, a house or a shop for the purpose of his business, the capital so far as the cost of the land and the cost of the building are concerned, is provided, not by the tenant but by the landlord, and the tenant's capital is available for the purpose of working his business. I do not want to put it too high, but it is, of course, 2302 a co-partnership to some extent between the capital of the landlord and the capital of the tenant which has enabled a large number of tenants to put more capital into their business than otherwise they would have been able to do. The tenant's capital remains at his own disposal. The development of London has very largely been made possible by the leasehold system. Of course, I am not going to dispute for a moment that there are in London and other large cities slum areas which, perhaps, have been developed, I will not say in consequence of but under the operation of the leasehold system. On the other hand, there are other large areas, including all our large squares in London, which have been left untouched under the provisions of this leasehold system, which some on all sides of the House are not prepared to consider as really giving the advantages which I think it has given throughout the last two or three hundreds of years.
I do not want to exaggerate either the advantages or the disadvantages, but there is one series of disadvantages of the leasehold system which thi3 Bill is going to seek to remedy. The leasehold system, when it is worked by an ideal landlord, is very largely an ideal system. A landlord who will not take advantage of the expenditure of the tenant and who will renew a lease when the tenant has built up a business there is the ideal landlord which we in this House all desire to see throughout the whole of the country, but there are, and it is the reason for this Bill, cases where you do find—I do not want to use too harsh an expression—an unscrupulous landlord who is prepared to take advantage of the position of the tenant, in particular when the time comes either for the making of an alteration to the premises or the renewal of his lease; and the object of the Bill is to put all landlords in the same category as the ideal or good landlord of whom many of us have had experience in the course of our lives. I do not say for a moment that there are many landlords such as I have described, but undoubtedly they do exist.
There are restrictions imposed by landlords on the development and improvement of leasehold property which in this 20th century the Government think should not be imposed. There are in many leases covenants forbidding structural 2303 alterations without the consent of the landlord. The landlord retains a power of veto over these alterations. It is no good arguing. There is no tribunal to which you can appeal. In many thousands of leases that I myself have seen there is an absolute veto. Then there is, further, the power of the landlord to take a fine from the lessee before he will permit improvements to be made. Everybody in this House must have had cases brought before him. I can give one instance—I do not want to give it too closely—which was brought to my notice only a week or so ago of a very large house which was taken for purposes of a semi-business character. They wanted to increase the office accommodation, the accommodation of the secretariat, and so forth. There was an open space by the side of the house, and they applied to the landlord for permission to put underground offices under that open space. "Certainly," said the landlord, "I have no objection to that at all, but I shall want a fine of £5,000 and an additional, rent of £150,"and that had to be paid. You may say, if you like, that the landlord is entitled to get the utmost that he can out of his own property or out of the property of which he may be the trustee—if you like, for the public—but at the same time one cannot help feeling that the exigencies of the tenant who desires and finds it necessary to increase the accommodation are taken advantage of from time to time by landlords in that position in order to exact fines or additional rent.
I am not proposing, nor does this Bill propose, to take away all these powers. What the Bill proposes is that on all these questions the tenant may appeal to an independent tribunal. The tribunal may hold, to take the instance I have just quoted, that it is perfectly right and perfectly fair that the demand should be made, and the tenant will have to pay. On the other hand, if the independent tribunal arrive at a different figure; if they think it is right that something should be allowed for the additional advantage to the tenant of making the alteration, the amount of this allowance will be settled by the tribunal and will be binding upon the parties. Then, of course, there is the question of, improving premises when the lease is 2304 running out. It may be that a lease of business premises has only four or five years to run, and that the tenant has a growing business. Growing. business is what we all desire and what the Government desire to encourage. That tenant may wish to put in a new shop-front, to clear out existing arrangements in the business premises and make a general improvement; but he cannot be expected to do it on a lease which has only a few years to run. There is another case in which this Bill will intervene. At present the value of such improvements as are made goes to the landlord: and adds to the value of the reversion. One has known scores of cases of that kind, under leases whether short or long. Whatever the tenant puts in, be it a new shop-front, or electric light, or central heating, or whatever it may be, the value of it inures at the present time to the landlord.
Then again there is the very grave question of the tenant's goodwill, and I am bound to say I have been very much impressed in the course of the preparation of this Bill by the evidence which has been brought to me of the growing value of a tenant's goodwill. A tenant takes a shop property in London or any where else, and by industry, energy and ability builds up a magnificent business in the course of a few years and attaches to that business a first-rate goodwill. It may be that he takes a shop which is one of a number clustering round a great railway station—fruit shops, fishmongers' shops, and so forth. By supplying first-rate material, the man builds up a really valuable goodwill which attaches to that particular site. He cannot move it away; it is a business which he has built up in connection with the passengers going to and from the railway station, and he cannot move his shop and his goodwill elsewhere at he end of the lease. One knows in the City of London the district round Mincing Lane where the tea and coffee and Colonial brokers are. A man may build up a goodwill there, and, if turned out at the end of his tenancy, it is very difficult sometimes for him to get appropriate premises near by. There is no good in his going to the other side of the city; he would lose, temporarily at all events, a large proportion' of his goodwill. In regard to goodwill, what we say is that so much 2305 of the goodwill created by an outgoing tenant as attaches to the premises, and as makes the premises more valuable, should remain with the tenant and should not be confiscated or should not be acquired by the landlord at the conclusion of the lease. Of course, I ought to put in a caveat here. I do not suggest for a moment, nor does the Bill suggest, that all increases of value during the lease should inure to the tenant. Not at all. The landlord is entitled to his share of the general growth of value of the land and the shop property in the particular district.
§ Sir W. JOYNSON-HICKS
The hon. Member will perhaps realise that the question of land values is out of order under the Title of this Bill. It can be discussed on some other occasion, but we are dealing now with what has been a very real grievance in this country for a number of years. It is 40 years ago since a Select Committee was appointed, including many Members of this House, to consider this grievance. I wish to make the matter quite clear. Supposing I took a shop and started a fruiterers' business and built up a goodwill. The rent is £200 a year and at the end of 14 years the lease comes to an end. It is quite true that there is goodwill attaching to the. business—to the premises—which I have built up; but unless that goodwill inures to the landlord, of course I, on quitting the premises, cannot make him pay anything for it. If he says, "I am going to let this shop to another fruiterer who will give me a higher rent for it because of the goodwill which has been left there by you," then we say, that that is not a fair position and the Bill will deal with that. On the other hand, supposing the landlord is able to say to the tribunal, "I am not taking this goodwill at all; I am not going to let this property to a fruiterer but I have let it for £400 a year to a butcher, so that the goodwill of the former tenant does not inure to me," then, under those conditions, the landlord having got no goodwill cannot be made to compensate the tenant for what he really has not acquired at the expiration of the lease.
§ Sir W. JOYNSON-HICKS
Then there is not merely the question of the insecurity of the tenant's goodwill, but there is also insecurity of tenure, which has a very bad effect on the activities of the tenant in the development of the business. The House will see that under Clause 5 where the tenant alleges that the compensation which would be given to him by the landlord, owing to the loss of his goodwill, is not sufficient, he may apply straight away to the tribunal and say that in the circumstances the compensation would not really compensate him. He may go to the tribunal and say, "I want the only compensation which is. of any value to me and that is the renewal of my lease on fair and reasonable terms." He is not able, however, to go to the tribunal and say, "I insist on a renewal at the same rent as I am paying now." Property might have gone up or down in value in that particular district. But he will be able to go to the tribunal and say, "I have built up this goodwill; part of it is goodwill attaching to the premises, part of it is goodwill attaching to me personally. If I have to remove my shop, my showcases and my stock somewhere else, perhaps a quarter of a mile away, I shall lose, not merely the goodwill attaching to the premises themselves, but the goodwill attaching to my own personal name and character as a good, honest, tradesman, because my customers who came to me personally will no longer be able to find me at my new place." He may go to the tribunal and say that, and in those circumstances claim that he is entitled to have a renewal of the lease granted to him.
Then there is the large question of restrictive covenants. Those of us who have had anything to do with leasehold property know how difficult these covenants are in regard to leases. There are covenants against the alteration of user, against the making of improvements, and other matters. All these things are relics of the period when London and other cities were being built up under the leasehold system, but I am bound to say that I think in the 20th century with the need for improving the commercial position of the country, it is desirable, not that these should be ruthlessly done away with, but that they should have certain words imported into them, words which are to be found in leases made by good landlords, though not 2307 in the leases of every landlord. Namely, the words, "Such consent shall not be unreasonably withheld." That is a fair and reasonable proviso and one which the tribunal will be perfectly well able to interpret and deal with.
It may be said, in the first instance, that we are importing a completely new principle into the lay of Great Britain by making these inroads into contracts between landlord and tenant. But the principle of unrestricted freedom of contract as between landlord and tenant has had very serious inroads made into it for many years past by this House There has not been for a long time an unrestricted right such as was contained in many of these leases. For example, the Rent Restriction Acts passed during the last few years have restricted the landlord in certain cases in the right to increase the rent. Then there is the whole series of agricultural Acts. Long before the Agricultural Holdings Acts were brought into force there was a custom in nearly every county in England that-reasonable improvements in the land, made by manures, by seeds, and so forth, should be paid for by the incoming tenant at the expiration of the tenancy. That was the custom of the county in many cases. These were put into an Act of Parliament many years ago and have since been consolidated by several Acts passed through this House. I think it is not too much to say, with those precedents before us, that we are not making an inroad into the law of landlord and tenant in any unfair direction or an inroad which will lead to harsh action against any really good landlord.
The object of this Bill is to protect the tenant against the action of a harsh or unconscionable landlord either in regard to good will or improvements or those restrictive covenants which I have mentioned. I know there are hard cases on both sides, but, as I have said, there are good landlords as well as good tenants. The Bill will provide that a tenant, in the first instance, who desires to make improvements in his shop property shall have a certain right. At present, in the absence of agreement, he has no power to improve at all, if the landlord says "No." The shops to the right and left of him may be improved, because they are under other landlords, and this one shop with a good and increasing and 2308 thriving business cannot be improved because, when the tenant wants to make the improvements, the landlord says "Not at all." Under the provisions of the Bill he may give notice to the landlord. The landlord may consider his application. The tenant may make the improvement and, at the end of the time, the benefit that inures to the landlord shall be paid by the landlord to the tenant—the capitalised value of the improvement. Suppose the improvement for instance has increased the rental of the shop £50 a year. That rental will be capitalised by the tribunal and may be paid by the landlord to the tenant, but with this proviso—that there shall be no greater sum paid by the landlord to the tenant, than the cost of making the improvements at the time of the end of the tenancy. If at the end of the tenancy the landlord had made the improvement, then, whatever the cost of making the improvement might then have been, that would be the limit of compensation which the tenant could get from the landlord.
I think I have explained fairly fully the position with regard to goodwill, and I do not think I need weary the House on that point. If the House agrees with me—and I think there is a consensus of opinion to that effect throughout the country—that improvements, made either with the consent of the landlord or the consent of the tribunal should be paid for by the landlord, I think only a very short step further—indeed it is the same theory—will enable the goodwill attaching to the premises to be paid for. The goodwill is really the placing of an improvement on the site. It is not a concrete improvement like bricks and mortar; it is in the nature of an abstract improvement, but, all the same, it is an improvement of the letting value of the property in question, and if the House agrees with me, as I hope they will, that compensation should be paid, for improvements in bricks and mortar, so I think they will agree that the landlord should pay for improvement in the letting value due to the creation of goodwill attaching to the premises. There is a proposal here, which I believe may be attacked, to limit in the Bill the right to compensation for improvements to those which are made after the passing of the Act. The House may say: "Why not allow a tenant who has made 2309 improvements five or ten years ago to come in under the Act and receive compensation"? To make the position clear, I think I cannot do better than adopt the words of a Handbook which has been recently issued on this subject, which states:It is recognised that existing leasehold contracts have been based on the fact that the tenants' buildings and improvements would become the landlord's property on termination of the lease. There are, of course, many improvements that have been added by the tenants which were not foreseen in the original lease. But such additions may have influenced sales of reversion that have actually taken place, mortgages, payment of Death Duties, etc., and it would be inequitable to make retrospective provisions for compensation.That is an extract from the very valuable book published by the Liberal party, the Brown Book, on the subject of the law of landlord and tenant, and I am sure I shall have the support of the Liberal party so far as this Clause is concerned in my determination to restrict compensation for improvements to those made after the passing of the Act. There is another provision in regard to these improvements. A tenant cannot get compensation for an improvement which is part of a bargain between him and the landlord. That, I think, is quite clear and is right. A landlord lets his property at £100 a year on condition that the tenant puts in a bow front window. That is an improvement which is part of the bargain between the landlord and the tenant, who has got a lower rent in consequence, and he cannot get compensation for that. I referred to the Select Committee which was set up in 1889, and I would ask hon. Members, particularly on my own side, to look at the provisions of its Report. They will find that is was a very strong Committee indeed, composed of such eminent Conservatives as the present Lord Selborne, the present Lord Burn-ham, the late Lord James of Hereford—he was in those days, it is fair to say, a Liberal.
§ Sir W. JOYNSON-HICKS
Well, they are all Conservatives now. May I quote from the provisions of this Report?
§ Sir W. JOYNSON-HICKS
It is the Select Committee on Town Holdings, and the Report was ordered by the House of Commons to be printed on the 12th July, 1889. It is rather interesting to observe that the faults which were found with the leasehold system in 1889, in a Report then presented to this House, are now being remedied by a Conservative Government. They say, dealing with goodwill:It cannot be doubted that cases of hardship do occur in connection with goodwill and that landlords sometimes take an undue advantage of their tenants' position in such cases.I do not want to weary the House with cases, but there are one or two I should like to mention. There is a well-known case, which many hon. Members have doubtless seen, and though I have not caused inquiries to be made into it, I have no reason to suppose it was not correct. There is no objection to giving the name, which is that of John Pearce, restaurant proprietor, who states:Less than 14 years ago I entered into a repairing lease for a ground floor and basement working-class restaurant at a rent of £235 per annum. On applying to the landlord for a now lease, a rent of £600 for 12 years was demanded.Here is another case. In 1905 he took other premises for the same purpose, on a repairing 21 years lease.
§ Sir PHILIP PILDITCH
Has the right hon. Gentleman got what the other side had to say on that first case?
§ Sir W. JOYNSON-HICKS
Perhaps my hon. Friend will listen to the particulars. It is a greater case of hardship than the first. This man took a 21 years' lease and approached the landlord for a renewal, and when he asked for a renewal he found that the premises had been sold over his head to a competitor in the same line of business as himself. A man builds up a goodwill in a property by his energy, by his industry, and by his ability, and he goes, I think reasonably, to ask the landlord whether he will be prepared to grant him a renewal of the lease, not mentioning any terms as to rent, and the answer 2311 is: "I have sold the place to one of your competitors," and, of course, the competitor comes in and takes what goodwill is attaching to it.
§ Mr. J. H. THOMAS
Taking the two cases which the right hon. Gentleman has investigated and quoted, are both of them remedied by this Bill?
§ Sir W. JOYNSON-HICKS
Yes, in both these cases the tenant is enabled to go to the tribunal and say: "The lease is coming to an end"— Mr. THOMAS: Then in these cases it is retrospective?
§ Sir W. JOYNSON-HICKS
Oh, yes, it is retrospective as regards the creation of goodwill. It is only the improvements which are not retrospective, but under the provisions of the Bill, in respect to the goodwill which has been built up, either by the tenant or the predecessor in title he is entitled to go to the tribunal—all must be in the hands of the tribunal—to ask whether in their view there is a right to either a renewal of the lease or to compensation for goodwill. A great deal depends on how this Bill is to be carried out. Many hon. Members want to speak, and I could speak for another hour in regard to the details of the Bill, but those details will be matter for discussion in Committee. The whole Bill depends upon the tribunal which is to decide between the landlord and tenant as to what compensation is to be paid or whether renewal is to be made of these leases. We considered, very long and very carefully, the kind of tribunal that should be set up. I had a deputation from the Leasehold Reform Association, which was seen by my Under-Secretary, my hon. and gallant Friend the Member for Chorley (Captain Hacking), who, I am sorry to say, is unable through illness to be in the House to-day, and who has taken great interest in the provisions of this Bill, and this deputation, discussing the whole matter from A to Z, said towards the end of their interview, "Our main proposal centres upon a tribunal." One of them said:I want to impress this upon you, that no new legislation could possibly be implemented without a Tribunal. This is a sine qua non of the whole thing. There must be a Tribunal.2312 Then we had to consider what form the Tribunal should take. It might have been in the form of a Tribunal established under the Acquisition of Land Act, 1919, of three paid whole-time men who should go round the country dealing with any applications that might be made, but on the whole we came to the conclusion that the other type of Tribunal, similar to those under the Finance (1909–10) Act, 1910, was better, and that we should ask the Lord Chief Justice, the Master of the Rolls, and the President of the Surveyors Institution to establish a panel of 20, 30 or 40 independent men with experience of land and houses and business premises, any one of whom would be selected by the Reference Committee, or adopted by agreement between the parties, to act as the arbitrator in this matter, and if the landlord and tenant do net want to go to the Tribunal and are prepared to have private arbitration between themselves, they may arbitrate outside the provisions of the Tribunal.
§ Sir W. JOYNSON-HICKS
At any time, if the landlord and tenant agree, they can always withdraw the notices, and if that is not clear in the terms of the Bill, it can be made clear in Committee.
§ Sir W. JOYNSON-HICKS
Thank you. That states:Nothing in this Act shall prevent an agreement being made for referring to arbitration under the Arbitration Act, 1889, any matter which under this Act is to be determined by the Tribunal.At the present time, up to the last moment before the Tribunal starts to function, a landlord and tenant may say: "We will take this away from the Tribunal and agree to appoint a sole arbitrator to decide the matter between us." We retain that provision here—up to the very last moment before the Tribunal is going to sit—and. it is very much better to allow the landlord and tenant to come together. They may say: "We have nearly come together, and we will ask Mr. So-and-so to act between us and arbitrate without the necessity of going to the Tribunal."
§ Mr. DENNIS HERBERT
Did the right hon. Gentleman say that the parties could agree on the arbitrators to be selected from the panel?
§ Sir W. JOYNSON-HICKS
Yes, I certainly think they can. If there is a panel of 20 or 30 arbitrators, and the landlord and tenant both say: "We should like Mr. So-and-so to be our arbitrator," they can go to the Secretary and say: "Will you please arrange for Mr. So-and-so to be the arbitrator?" If that is not clear in the Bill, it is quite a minor point, and I am sure I can put a provision in the Bill in Committee to make it quite clear. It is a very technical Bill, and I apologise for having taken up rather a long time in explaining it, but I have tried to explain it on general principles, leaving the actual conditions and details for consideration in Committee. This is not a party Bill. It is a Bill which the Government, after full consideration, considers to be one which will remedy a great many of the grievances which tenants, particularly of business premises, are under to-day. I may be attacked from both sides. Some hon. Members opposite may say: "We want something far better than this." On the other hand, some hon. Members upon my own side may say: "You are making an invasion into the old laws of the land." [interruption.] There are, perhaps, hon. Members who regard the law of landlord and tenant and the rights of the landlord as sacrosanct, but really there is nothing sacrosanct nowadays— apparently, not even the 39 Articles!
I want to appeal particularly to my hon. Friends on this side of the House. We are living in the 20th century, and not in the 18th. If hon. Friends of mine will look through the provisions of this Bill, they will see we have been very careful indeed that no hardship shall be inflicted on the good landlord. If any of my hon. Friends can show me that any hardship is inflicted on the good landlord, then, I will say at once, I am quite prepared to consider Amendments to the Bill in order that the good landlords shall not be penalised, shall not be damnified. The sole object of this Bill is to remove a grievance which has been felt by tenants for a great many years past—a grievance which has come before this Government and previous Govern- 2314 ments. I believe that the provisions of this Bill, fairly administered as they will be under the provisions of the Tribunal we have very carefully set up, and with the restrictions and the limitations contained in the provisions of the Bill, will go a very long way indeed to remove many of those grievances. I was very pleased two days ago to receive a communication from the Town Tenants' Association. They said quite frankly in that circular that there were certain things in the Bill which they would like reconsidered in Committee. I have a letter to-day from the Land Union of a somewhat similar character, mentioning that there are things which they would like to see altered in Committee. I am prepared, and His Majesty's Government are prepared, when this Bill goes upstairs, to consider Amendments to improve the Bill. I do ask Members on all sides of the House to say this evening, when the vote comes to be taken, that this is a real and genuine effort to remove a real and genuine grievance, and to give me at least a Second Reading of the Bill.
§ Mr. DALTON
I beg to move, to leave out from the word "That," to the end of the Question, and to add instead thereof the wordsthis House, being desirous of removing the evils inherent in the present leasehold system and whilst welcoming a Measure dealing with certain of these evils in relation to business premises, regrets that the Measure is so drawn as to preclude its application to other premises.We have seen the Home Secretary this afternoon in a new role, moving for the first time in his career the Second Reading of a Bill. He made an appeal for a patient hearing in his maiden effort, and I think we may say that that request has been met, at any rate, on our side, although on the benches behind the right hon. Gentleman there seems to be some evidence that when this Bill gets into Committee it will encounter certain difficulties on the ground that it goes too far for some of those Members. We have seen not only the Home Secretary in a new role this afternoon, but we have also seen this Government in a new role. We are accustomed to see this Government in what we may perhaps call, without offence, a reactionary role. I will not particularise that description, although I could do so. This afternoon we have 2315 seen the Government making themselves responsible for a Bill which is to introduce some changes, presumably in the public interest, in the law of private property—to use the Home Secretary's own phrase, making certain inroads into the law of landlord and tenant. When I see this new attitude, I am reminded of the saying:When the Devil was sick, the Devil a monk would be.We see support slipping away from the Government in various directions, and we see this afternoon an effort being made to retain, at any rate, the support of certain sections of the community, notably the trading, ahopkeeping and tenant interests in business premises, but I am afraid when those interests for whom this Bill is primarily designed have had an opportunity of examining it rather more closely, they will see that it is a very small, a very niggardly and very unsatisfactory satisfaction of what we on this side regard as their just claims. The present leasehold system, as the right hon. Gentleman admitted, is apt to give rise to very great injustice. The right hon. Gentleman himself used the word "confiscation," a word we are accustomed to hear used against us at general elections in the propaganda of hon. Members opposite. The Home Secretary this afternoon admits that at the present moment confiscation is going on with regard to improvements made by tenants under the present law. The present law, as I think he will admit, permits landlords to confiscate the fruits of the past labour and past enterprise of their tenants, and it also permits them sometimes to hamper and to penalise the future enterprise and future labour of those same tenants.
Non-party organisations such as the Town Tenants' League have been protesting against this state of affairs for a very long time, and I myself am sorry to find that this Bill does not go a good deal further in meeting the injustices of which they very rightly complain. I have a quotation here from the same source from which the right hon. Gentleman quoted—the Leasehold Reform Association—a quotation about cases of injustice with which I will not trouble the House. I have a number of quotations which have a special bearing on particular cases 2316 when we come to Committee points. We all receive large numbers of communications which emphasise the deficiencies and injustices of the present system, and, as far as my hon. Friends and myself are concerned, we are most anxious to do all we can, and to support this Bill in so far as it does remove genuine injustice practised upon the tenant by the landlord. But we think it only right to point out—and for that reason we have drafted our Amendment—that there is a very large number of injustices of a similar character to those which this Bill seeks to remove, which will not be removed unless the Bill be amended in very much ampler measure than that to which I am afraid the Home Secretary will consent, in view of the closing passages of his speech, in which the prospect was held out to the die-hard elements of his own party that Amendments might be expected in Committee to enable their votes to be secured for the Bill, which, of course, would have exactly the opposite effect from that which we on this side of the House would desire to see.
It would not be in order, I know, to dwell upon other aspects of the law of landlord and tenant which are not included in this Bill, but I think I may be permitted to comment, in passing, on one or two of them. There is nothing in this Bill to amend the law with regard to landlord and tenant which will give any satisfaction or protection to the large number of tenants who at present have a precarious protection under the Rent Restrictions Act, which expires at the end of this year. That, in our view, is a very urgent matter, and we are sorry that the Bill is not drafted on such broad lines that it would be in order for us to move Amendments later, so as to extend that protection. Further, there is nothing which makes any provision for the added value of premises, due to the work of the general body of the community, to be brought within the purview of the Treasury. There is no provision for acquiring for the community, as distinct from the tenant, those increases in value which are due to the work and activity of the community. There is a very strict limitation in this Bill to premises used for business purposes. That is only one section, although an important section, of the class of cases which I think should be protected against the ravages and confiscation of landlords.
2317 When I say "confiscation," may I remind the House that it is the word used by the right hon. Gentleman himself?
Passing to some of the points with which the right hon. Gentleman dealt in his exposition of the Bill, has he rightly apprehended that the feeling is widespread, at any rate on the benches on this side of the House that the refusal of any compensation for improvements made before the passing of this Bill is a very grave defect in the Measure? It shows a tenderness for vested interests, in support of which the right hon. Gentleman was only able to quote the Liberal Brown Book. Well, that is not Scripture for us. We have the prospect of many cases which exemplify the grievances which he has explained, many leases running out in the course of the next few years, and the result of this Bill being passed, if it be passed in its present form, will be that landlords will be actually encouraged to confiscate the improvements of their tenants in the sure and certain knowledge that that act of confiscation will be the last allowed. The Bill says that landlords will not be allowed to confiscate improvements made after the coming into force of the Act, but they will be allowed to confiscate the value of improvements which arise through the falling in of leases after the coming into force of the Act, although the improvements may have been made 10 or 20 years ago, or even as recently as the last few months. In so far as there are at the present time cases of hardship, in so far as there are shopkeepers and traders who have made great improvements in their property in the last few years, if they are looking for some security and safeguard in this Bill against having all the value of those improvements diverted into the pockets of their landlords in a few years' time, they will look in vain.
I hope it will be in order to endeavour to take out this very serious limitation from the Bill. It is said, of course, that this would be retrospective legislation. I do not know what general principle the right hon. Gentleman would lay down about retrospective legislation. As far as my own feeling goes, there is no general principle at all. I remember a few years ago the Government resorted to retrospective legislation in regard to landlord and tenant in the case of certain Scottish landlords who had not been able to serve legally correct notices on the 2318 notice day, and who had that right given back by a Bill passed by the Conservative Government. When we come to the Trade Union Bill, no doubt we shall hear justification put up from the other side, when Clause 2 of that Bill is under consideration, for a very serious case of retrospective legislation. On principle, therefore, I do not think the Home Secretary can object to retrospective legislation, and I hope he will listen equally to the claim on this side for the removal of this limitation to improvements made after the commencement of the Act, and that he will listen to it no less sympathetically than to the demand made on the other side for changes in the opposite direction.
With regard to the granting of new leases, I am very interested to see the principle established of the setting up of a fair rent court as between urban tenants and urban landlords, and power given to the tribunal to fix the terms of new leases, and to fix the rent at which the new leases should be granted. I expect that opposition to that proposal will develop from behind the right hon. Gentleman, but I hope that he will stick to his guns, and insist upon this very valuable Clause, particularly the condition that goodwill is not to be taken into account by the tribunal in fixing new leases. I wish to pass to another very severe limitation which, I hope, he will endeavour to remove. That is the limitation to business premises in Clause 12. A large number of tenants who are professional men have just as real grievances in kind, if not in degree, as the traders and occupants of business premises in the narrower sense. There is a large number of doctors, of dentists, of solicitors and other such professional people who are just as liable to surfer from confiscation by their landlords of the goodwill that they have brought by their practices as of the improvements they have made to their premises when their leases fall in. Particularly in the poorer parts of London there are a great many solicitors and doctors who have built up considerable practices. When their leases come to an end, they must either be turned out on the streets or, in the alternative, be compelled to pay a grossly excessive rent by the landlords, who are aware of the amount of goodwill that has been created around those practices
2319 There is another class who also fall outside this Clause, and those are the people who sub-let residential flats. That, after all, is business, although not perhaps in the strictly legal sense of the term. I fail to see why persons of that kind who, after all, in many cases are making some slight contribution towards settling the housing problem, should not be given just the same protection as is given to business premises in the narrower sense. The same argument applies, of course, when we come to Clause 14, and the principle that consent is not to be unreasonably withheld is to be implied in future leases. That should be secured to professional people and not restricted to owners of business premises. I do not want to go into what are really Committee points, but there is just one observation I should like to make about the tribunal.
§ Sir W. J0YNS0N-H1CKS
Part II of the Bill is not confined to business premises. Part II relates to all premises.
§ Mr. DALTON
I am glad that the right hon. Gentleman has pointed that out, but it is still true that Part II, in a restrictive sense, only applies to leases granted after the commencement of the Bill, and my observations there are, I think, quite in order. But I was going on to say a word about the tribunal The tribunal under the Bill is to be composed of three persons; the Lord Chief Justice, the Master of the Rolls, and the President of the Surveyors' Institution.
§ Mr. DENNIS HERBERT
That is not the tribunal. That is the Committee which is to appoint the tribunal.
§ Mr. DALTON
Yes; that is so These gentlemen have to appoint a panel of persons from whom, strictly speaking, the tribunal will be selected, but the persons who select this panel are these three people. It has been suggested to me, and I hope the right hon. Gentleman will take this into account, that the President of the Surveyors' Institution, although of course he has certain obvious claims to be a member of this body, is not the only person who has those claims. It might quite well be that on this type of body 2320 there should be certain representatives of the Auctioneers and Estate Agents, of the Incorporated Association of Architects, and of other such people. As things stand now you have two lawyers and a surveyor. I think there is a fear in some quarters that the result of that may be that the panel will be rather restricted to lawyers and members of the Surveyors' Institution. I dare say that is not the intention in appointing it, but would it not be better rather to widen the membership and to bring in one or two other people with qualifications such as I have indicated, so as to secure that the members of other associations will have an equal opportunity of exercising their knowledge? A further point with regard to the tribunal is this. Would it not be worth while considering whether a simpler and more economical administration could not be got by allowing the County Court to deal with these cases, and by allowing a County Court judge to act as a tribunal in certain circumstances? You appoint this Committee. Then this Committee has to appoint the tribunal, and it seems to me that there is a strong case on the ground of efficiency and of economy of administration for adopting a simpler plan.
I have dealt with the views taken by my hon. Friends on the general principles of the Bill, and I have also dealt with one or two points which will better be considered at a later stage in detail. The principle that we apply to this Bill is that, so far as the value of the premises is increased by the work and the enterprise of the tenant, then that value ought to inure to the tenant, but in so far as the value is increased by the community and the general activities of the community, then that value ought to go to the community. In neither case ought this increase of value to inure to the landlord. That I do not expect the right hon. Gentleman to accept, but I am setting forth the general attitude taken by my colleagues and myself towards the Bill. The Bill leads us a little way towards carrying out the principle that the tenant should reap the advantage of his own work and enterprise. But it carries us no way at all towards the wider and larger principle that the community should secure the increase of value brought about by the general activities of the community, and that neither 2321 the tenant nor the landlord should get them. It is for that reason that we have put down the Amendment which stands in the names of my right hon. Friend the Member for Derby (Mr. Thomas) and myself and other Members and that Amendment I beg to move.
§ Mr. MacLAREN
I beg to second the Amendment.
I want to congratulate the Government on having learned to transgress their canons of historical Conservatism. This Bill is of great significance. I never thought myself that I should ever sit in this House and hear a Conservative Government pressing forward a Measure which will undoubtedly have the effect of clipping the wings of the landlord and landlord class in this country. Those of us who have taken an interest in this question, as the Home Secretary rightly says, have for years past in London realised that the leasehold system has been leading to all sorts of disgraceful conditions. While it is quite true that perhaps it has preserved a few open spaces, it is none the less true that large blocks of slum areas in London to-day are in existence because of the leasehold system. We have had brought before us lately the experience of business men who, owing to speculators gambling in sites, have had very serious injustice inflicted upon them. Serious injustice has been done to honest business men, and it is no doubt very largely because of that appeal to the Government that the Bill has been brought in. The Mover of this Amendment said that perhaps it was with a view to a wider appeal to the country that the Government had brought in this Bill. That may be so. The one thing that concerns us, or rather those of us who take an interest in this matter, is that at last something is going really to be done to deal with these iniquities. As the Bill stands before us there are any amount of opportunities for criticism. I must confess that, in this little paragraphin respect of any improvement made be-fore the commencement of this Actno compensation shall be paid, rather a drastic principle is laid down, and I hope that in the Committee stages of the Bill we shall set some wider consideration with regard to improvements which have been effected by the tenant.
2322 I quite agree with the Home Secretary when he says that compensation should not be exacted for improvements which. have been created or effected in pursuance of agreement, but I think, in cases where improvements have been effected by the tenant owing to the exigencies of his business, that some consideration ought to be had with regard to such improvements. The Home Secretary advances the argument that in practice it would not be fair owing to the fact that, perhaps, the previous owners had been surcharged on death duties and other duties in respect of those improvements. I go further, and I hold that all improvements that have been effected by tenants, not in pursuance of any standing agreement between landlord and tenant, ought to be taken into review when compensation is under consideration.
Now I come to the question of goodwill, and I notice that the Home Secretary based much of his argument on this great question. If the House will forgive me, I should like to try and make clear the three values that exist upon any site. There is the site value, or the land value; then there is the improvement value; and then there is what one might call the patronage value, or the value attached to the business because it is run on certain lines. But this Bill is drafted on the assumption that whatever value there is in the site is merely the value attaching to the improvement. There is a sort of hazy mixed idea in regard to the site value. Let me take a case where the lease is running out and the tenant suddenly finds that, in order to renew the lease, he has to pay a very large increase on his rental and perhaps a premium. In that case the tenant sometimes thinks he is a victim of some untoward circumstance, but we know that in cases where the landlord appropriates the site value, the landowner in many cases is only asking from the tenant the real actual site value for the site which the tenant is using, and the tenant very often protests against having to pay this increased rental on the ground that some of this value is really attached to what he terms his goodwill. I have often wondered if any judge or group of legal students have ever thought it worth their while to sit down and clearly define what "goodwill" really means, because in 2323 this Bill we are dealing with goodwill and yet I know of nothing more vague.
Take the arguments adduced by the Home Secretary this afternoon. What is now termed or looked upon or taken in a valuation as goodwill is 90 per cent. site value, and is not to be termed goodwill at all. It is the lease value. The Home Secretary, in his very pleasant speech this afternoon, spoke of a certain man who was running a business and passengers were passing to and fro to the station. He said that, if this man was taken from his site and placed in another site which was to his disadvantage, he lost the goodwill. In another passage in the speech he said that the landlord was entitled to an increase in the site value, but without following that up the Home Secretary said that goodwill was an abstract value attached to the site or the improvement in the site, having in the back of his mind that this value in some way or another is attached to the site. It is really 90 per cent. site value, but tenants faced with an increased demand on the p rt of the landlord very often consider that the landlord in making this demand, is taking into account the goodwill value, and this Bill is framed upon that conception because the Bill is drawn in such a way as to arrive at some valuation of what goodwill really is. I do not envy the tribunal set up to work out valuations of goodwill and to allocate them. These three values will have to be clearly denned. Any Bill which is to be effective in the larger sense of the word in dealing with this problem, must define clearly what goodwill really is—a difficult task—must clearly define what site value is, and define what improvement value is, so that we may know exactly where we are when these questions arise between landlord and tenant.
Another point in the Bill is that compensation shall not be paid in respect of flats and premises not used for business purposes, but surely, on the basis of the arguments adduced by the Home Secretary, and as pointed out by my hon. Friend the Member for Peckham (Mr. Dalton), goodwill may attach to a professional man just as it does to shopkeepers and to business men. [HON. MEMBERS: "No!"] Oh, yes. In law it is strictly laid down that professional 2324 men have their goodwill, just as well as any other person, when it comes to assessing Probate Duty and other things, and on the passing of property from one person to another.
§ Mr. MacLAREN
It is not the site value in his case—well, there may be a site value, but whatever the particular value may be that the draughtsmen of this Bill had in mind when they were speaking about this vagary called goodwill, that same value is attached to the professional man, and therefore he is entitled to as much consideration as the man running a shop.
§ Sir W. JOYNSON-HICKS
What was referred to as goodwill is the value of the goodwill created by a passing purchaser who goes into a particular shop to buy when he is going home, whereas I think the hon. Member will agree with me that there is no site goodwill attaching to a lawyer. [Hon. MEMBERS: "Oh!"] There is a personal goodwill attaching to both cases. Personal goodwill may attach to a fishmonger who is known to sell good fish, or personal goodwill may attach to a lawyer who has built up a business, but there is not site goodwill. May I give a personal recollection? I was in business as a lawyer for many years, and only once in all those years did one casual person who came in do so merely because he saw a lawyer's plate on the door; and he offered to give me a parrot as a fee!
§ Mr. MacLAREN
I am sure that if the right hon. Gentleman were to retire from office and enter business again he would have a larger clientele than when he entered the House. The point made now emphasises the point I have been trying to put before the Committee. You cannot conceive of goodwill without having in your mind somewhere or other an attachment to a particular site. Take the case of the professional men in Harley Street. A man may wander along Harley Street and knock at a door, not feeling quite sure who is behind the door, but he goes there because the doctors in that street have a particular reputation, or are supposed to have. We know perfectly well that it is the fact that they are in Harley Street which endows 2325 them with the thing which we call goodwill. The man is attached to the site and the site to the man. On the Home Secretary's own showing, this thing goodwill which attaches to a man may suddenly disappear when he passes from one place to another; that is to say, he cannot extract from the community anything proportionate to what is termed goodwill he moment you remove him from a specific site. Therefore, I still hold that the site has some relationship, a very great relationship, and, in fact, a greater relationship than is conceded in the Bill, to the particular value which we are pleased to term here as goodwill. Therefore, whatever it may have been that was at the back of the draughtsmen's mind, it must adhere to a professional man just as much as to a man occupying business premises.
I will leave other points which are somewhat hypercritical and a little meticulous to the Committee stage of the Bill, but I hope that when we come to the Committee stage we shall be treated to something more clear and specific as to what is meant by goodwill. Searching one legal book after another I have endeavoured to get a clear definition of goodwill, but though it has been the subject of one action after another, this thing called goodwill is still vague and indefinite. It is, nevertheless, the crux, the solar plexus, of this Bill. However critical we may be of the Bill, and however much we may think it falls short of the Measure which the right hon. Gentleman ought to be submitting—I should not be in order if I were to suggest what might be done if this problem were tackled in a drastic manner—I think everyone will support the Home Secretary in going on with the Bill that he has in his mind. It has been long overdue.
When I think of what is going on in London; when I know how speculators have been running about and sending their touts and agents round to find out where leases are likely to fall in and when I recall the manœuvres of certain financial companies in London supporting certain people in buying up these sites and crushing decent and respectable tradesmen out of their premises, I feel that if the people of London knew what was going on they would not be so much concerned about affairs in China or 2326 Russia as about the need for drastic steps being taken to deal with this London problem. That being so, I wish to congratulate the Government on at least attempting to do something with this very serious problem, and when we get the Measure in Committee we hope it will be possible to improve it; but even then it will be far short of what some of us would do if we were in the privileged position of the Government of today. I support the Amendment and hope the Bill will commend itself even to those to whom the Home Secretary appealed. It was a very touching appeal and a most appropriate appeal. He reminded them that we are not in the 18th century. That was a very harsh thing to say of his supporters behind him, for many of them, I daresay, still think in terms of the 18th century; but we are in the 20th century, when vested interests will have to give way to the general well-being of the community.
§ Mr. D. HERBERT
Some hon. Members know that occasionally it is my duty to put forward the views of the council of the Law Society, and that being the case I think it is right to say that on this occasion I am doing nothing of the kind. The Council take the view, I think quite properly, that it is not their busi-ness to offer observations or suggestions in regard to the Second Reading of a Bill of this kind; but when it gets into Committee I have no doubt they will be anxious to put before the Committee any information drawn from the practical experience of lawyers which may be useful. I am as fully sensible as any hon. Member on either side of the House of the hardships from which tenants suffer both in respect of improvements and goodwill. Ever since I first stood for Parliament in 1918 I have advocated the relief of tenants from certain hardships under which they occasionally suffer. It is perfectly true that I should not go anything like so far as hon. Members opposite, but, speaking for myself, I do hope that hon. Members on my side of the HOUSE will not attach too much importance to abstract arguments about the sancity of contracts, and so on. I am bound to admit, and I think everyone on consideration must admit, even though some may regret it, that Parliament, if it does its duty properly, must interfere in these days to prevent certain injustices which 2327 would be perpetrated in the name of sanctity of contract unless the Legislature were to intervene.
I do not want to describe it as "opposition," but my "dislike" of this Bill is founded upon a genuine opinion that it will fail in its object. The first reason for that view is expressed in the notice which I have put down on the Order Paper, namely, that I believe it will lead to insecurity of tenure, and to an increase of rents and will create difficulty in obtaining business premises on lease. The owners of such premises will only be willing to sell and not to let on lease, and to a large number of what one may term the small shopkeeping community that will be a misfortune, because they do not want to lock up their capital—perhaps they have not got it to lock up—in the purchase of their premises. May I, as shortly as I can, endeavour to justify the theory which I have just put forward? The unfortunate point about this Bill is that it does not direct legislation to dealing with the bad landlord, which is what we want to do, but directs legislation towards all landlords and tenants, whether good or bad. The result is that the best landlord in the country—I am speaking mainly of business premises which are the only premises covered by Part I, and I have no particular quarrel with Part II of the Act—is subject to it, and therefore, he has to consider what is going to happen when a tenant under such a landlord wants to make improvements. The tenant will before this legislation is passed go to his landlord and probably get an equitable arrangement, but if this Bill is passed in anything like its present form it is very doubtful whether he could adopt that course, and he will probably say, "I feel obliged, although I am very friendly with my landlord, to proceed strictly, because I am going to spend a lot of money here." The landlord on his side will say, "My tenant may change and I cannot stop him now assigning his lease to someone else. I have a good tenant now but I may have a bad one before the end of the tenancy. The law gives me certain protection against tenants' claims for improvements," and therefore in the case of good landlords and tenants who get on well, you will find in theory and in practice that what I have described is 2328 going to be the result. First of all, the result will be increased legal expenses. Another point is going to be this. The landlord will say, "This matter is going to be in the hands of a tribunal, and there are certain powers under which certain things may be given by that tribunal to the tenant. I am going to be faced at the termination of the lease with the probability that I shall have to pay out a large sum of money for which I am supposed to get the benefit. Whether I shall get it back by re-letting is a matter nobody can be quite certain about, but what is certain is that I shall probably have to pay that sum of money."
§ Mr. HERBERT
Compensation for improvements may be paid in cases where the tenant has no power whatever to get a renewal of the lease, and compensation may have to be paid at the end of the lease.
§ Mr. HERBERT
The landlord is put to a certain amount of expense. He has to go through a good deal of trouble carrying out all this procedure, and he has to find a capital sum of money at the end of the tenancy. What will a good business landlord do under these circumstances? What will a good business landlord who is not harsh and who is not a philanthropist do? He will do one of two or three things. First of all taking advantage of this Act he may say, "I will not let my shop property for more than one year less three days and then this Act will not apply to me at all." He will say to the tenant. "I am trying to be a good landlord, and if you want to make improvements, I would like to make arrangements with you and and meet you fairly, but the uncertainty as to what may happen to me under the tribunal is such that I prefer to keep out of all this particular piece of new legislation, and I will only let the premises to you for a period of one year less three days."
§ Mr. HERBERT
I am not at all sure that it would not be very good business. At any rate that is one thing the landlord might do. The second is that he would 2329 be much more likely to say, "I do not feel quite certain I am going to come off so well here, and at any rate I have not much money on hand, and I will effect an endowment insurance policy for £1,000 payable at the end of 21 years, and I will put the premiums on the rent." Therefore in this way we may run the danger of a general increase of rents. Apart from those cases, the present owner of shop property may say, "Well, I will not be the landlord of shop property anywhere; I will only sell my property and I will not let it." So far as I am concerned I should only be too glad to see business men of any class owning their own business premises, but a very large number of the smaller class of shopkeepers would look upon it as a disaster if they had to buy their premises instead of taking them on a lease. We have had a good example of this in the recent housing shortage where poor people have been obliged to buy, because owners would not let, and these are the dangers which I see from the point of view of the shopkeeping tenants who will be affected by this Bill. That is why I think I am right in saying that the piece of cake which the shopkeeper thinks he will get under this Act will go to dust and ashes in his mouth.
I think in the end you will find the whole class of tenants who are concerned under this Bill will be in a position of greater hardship than they were before I have already admitted the grievance under which some of these people suffer, and I have put forward my objections to this particular Bill. I agree that it would be quite reasonable for the Home Secretary or anybody else to say in reply, "What is your remedy?" I am prepared to give it. The Law of Property Act of 1925 contains a Section which institutes a reform of the law as affecting landlord and tenant, and it gives simple and effective relief against a tenant's liability to do internal decorative repairs to a house or other building. Section 147 of the Law of Property Act, 1925, is simplicity itself for under it the tenant may apply to the Court for relief, and if the Court is satisfied that the notice given is unreasonable it may, by order, wholly or partially relieve the lessee from liability.
I was prepared if my right hon. Friend had postponed this Bill a little longer, or Had asked for advice or suggestions from a small Committee of Members of this House who are interested in this business 2330 to have put forward a proposal which I now make. It is to the effect that I am prepared to submit to him, I will not say a draft Bill, but instructions to a Parlia mertary draftsman to prepare a simple Bill, to enable any tenant who alleges that he has suffered from a certain definite grievance, including making of improvements and loss of goodwill, to apply to the Court for relief, and giving the Court power to grant him relief either by way of damages or compensation, or by a renewal of the lease, and perhaps giving the landlord the option as to which it shall be. I suggest that that would be far simpler legislation. It will be far more effective against the bad landlord and it would leave the good landlord and his satisfied tenant uninjured by hampering and unsatisfactory legislation.
May I say a word or two in regard to the tribunal under this particular Bill"? That is a matter of great importance from several different points of view. In the first place, I never approved of the policy under which we are so constantly setting up new tribunals. A tribunal, from the very meaning of the word, means a Court or a Judge. These new-fangled tribunals set up consist generally of one or more men with no judicial training. It is the pride of this country that we have Courts which are counted throughout the world as being the finest Courts of Justice in any civilised land, and that reputation is entirely due to the fact that our Judges are men trained to decide the questions put before them judicially and fairly, after taking all the evidence into consideration. Surely any hon. Member of this House, if he had some really serious case or quarrel in which some particular kind of property was con cerned, and if he had confidence in his case, would far rather go to one of the Courts of our country where the Judge could hear the case assisted by the evidence of witnesses, or by assessors as is the case in the Admiralty Court. Surely any man would sooner go before a Judge assisted by assessors like that than a mere specialist who has never been trained to weigh evidence or decide conflicting evidence.
§ Mr. HERBERT
He may be a lawyer, but I should prefer that particular type of lawyer who has been raised to the 2331 Bench. I am not going into any details as to the constitution of the tribunal, and I do not intend to discuss matters which can be more properly dealt with on the Committee stage. There is, however, a very serious objection to this particular form of tribunal. I have no doubt that it was in the mind of the draftsman of this Bill—it was in the mind, at any rate, of the Council of the Surveyors' Institution, on whose Report this Bill seems to be very largely based, and, incidentally, the Brown. Book of the Liberal party, which the right hon. Gentleman has quoted is almost word for word the same as that Report—the idea, I believe, was that the tribunal should consist of a surveyor. There is undoubtedly a sort of idea running through this that the tribunal which is to decide these questions should be a tribunal of experts, or an expert, on the value of property. That, if I may respectfully say so, is a perfectly wrong idea. The proper position of that man is to act as an assessor to a trained Judge, and, surely, in the Courts of which we are so proud, we can deal with this matter with the assistance of assessors in special cases. Surely, that is the right way to do it. I do not know whether the Home Secretary has noticed or paid much attention to a proposal in this Bill which astonishes me more than anything I have ever read in any Bill promoted by a Conservative Government. The tribunal set up by the Bill is to be the sole authority on questions of fact; the decision of the tribunal on questions of fact is to be final—you cannot go beyond it. On any question of law, there is a right of appeal to the High Court, but on a question of law only. The Bill provides, however, that although there is an appeal to the High Court on. a point of law, the unfortunate litigant who fails there —the first time the case has ever come before a Judge or a Court of law—has no appeal whatever. The decision of the High Court is to be final, and any appeal to the Court of Appeal or, in big cases, to the House of Lords, is completely shut out. That may be a Committee point, but I venture to suggest that it shows the way in which this Bill has been prepared by, if I may respectfully say so, the wrong people, or, at any rate, by only one of the different classes of people who ought to be concerned.
2332 I have no particular anxiety to divide against the Second Reading of this Bill, but I honestly believe that, when it comes to be dealt with in the Committee stage, my right hon. Friend and those associated with him will find the difficulties of making it workable and satisfactory so enormous, as regards Part I, that they will find it probably better to withdraw Part I altogether, and substitute something else for it. As one who feels most thoroughly in sympathy with the victims of harsh landlords, and who is anxious not to throw burdens on other tenants who have good landlords, I most earnestly appeal to the Government to consider whether it would not be better to adopt some such alternative as I have suggested, of a very short method of procedure indeed, under which any tenant who for certain reasons may be aggrieved could apply to the Court for relief, and could get that relief.
§ Mr. ELLIS DAVIES
The right hon. Gentleman who moved the Second Reading of this Bill pleaded for the consideration of the House because it was the first Bill of which he had moved the Second Reading. I hope it will not be presumption on my part to congratulate him on the very sympathetic and Liberal spirit that pervaded his speech; but I am sorry I cannot add that his explanation of the Bill is quite as extensive as his sympathy or his Liberalism. Before I deal with the Bill, I should like to say a word with regard to the position he took up on the question of assisting lessees. I do not know whether the right hon. Gentleman is prepared to disregard the sanctity of contract. but it is rather late in the day, even for hon. Members on the other side, to talk much of the sanctity of contract in any Bill dealing with property.
§ Mr. HERBERT: I am not quite sure whether I caught the hon. Member's remark, but I said nothing about being in favour of relying on the sanctity of contract. I expressly said that I hoped that sanctity of contract would not be the argument relied upon on this side of the House against the Bill. I said I recognised the right of Parliament to interfere with harsh contracts in proper cases.
§ Mr. DAVIES
I would go a good deal further, and would remind hon. Members on the other side who may be disposed 2333 to place reliance on the sanctity of contract as affecting the provisions of this Bill that they themselves, in 1918, in the interests of the landlords and against the interests of the Church, interfered with the common law right of the parson to receive the full value of his tithe; and, curiously enough, while the tithe values in Wales were allowed to run up to £130 per £100, they were stabilised, in the interests of the landowners of this country and against the interests of the Church, at £109. I think that hon. Members, if they consider the provisions of this Bill, small, meagre and innocuous as they are, ought to have no doubt in their minds as to whether or not this House should consider the interest of the lessee, the interest of the man who spends money on the property, rather than the interests of the lessor and the landlord. There is one thing that I welcome about this Bill, and that is the admission by the Government that the tenant is entitled to the value of his improvements, and also to the value of the goodwill which he has created. After all, that is not a new principle. It was embodied 20 years ago in the Town Tenants (Ireland) Bill, and I never quite understood why the shopkeeper in Dublin or Belfast was entitled to the value of his unexhausted improvements while the same right was denied to the shopkeeper in London or Liverpool.
This Bill is disappointing. I think it does not quite carry out the promise that was made in the King's Speech; in any event, it does not fulfil the hope that was raised by the statement made in the King's Speech. It does not enable the lessee, for instance, to claim the enfranchisement of his property. It does not affect a building lease; it does not affect the houses of professional men. I do not quite understand why, for instance, the doctor is not to have the right to claim goodwill in respect of the premises which he occupies. I belong to another profession, that of the right hon. Gentleman himself, and I am not disposed to think he is far wrong in saying that the solicitor, as a rule, is not entitled to goodwill in respect of the premises which he occupies; but the doctor's connection is much more personal than that of the lawyer, and for that reason I think he ought to be included within the scope of the Bill.
2334 May I make one reference to what has been already said with regard to the bad and the good landlord? If I may say so, I speak with a good deal of experience, gained during the last 15 years in the City of London, and I do not hesitate to admit quite frankly that, so far as the larger estates are concerned, the tenants have very little to complain of The terms upon which leases are renewed are, I think, in most cases unexceptionable. My experience has been very varied and extensive, particularly during the last 12 years, and it goes to show that the larger estates are conducted on terms which are fair to the tenant, but which, at the same time, must of course be such as to protect the interests of those for whom the trustees are generally acting. There has, however, arisen, in the City of London in particular, a class of men, and in some cases companies, who deal in the fag-ends of leases, who buy leases which are about to expire, and who insist upon terms from their tenants that are crushing and crippling. In fact, this is undoubtedly a form of legalised blackmail, and it is one of the evils with which I think this Bill ought to deal. There is another difficulty, and it is this: There is in almost every lease a proviso that improvements cannot be effected without the consent of the landlord, and I think I can venture to appeal to the solicitors in the House to confirm me when I say that, in a very large number of cases, advantage has been taken of that Clause to exact exorbitant fines and to enforce conditions which are absolutely unfair to the lessee.
It may be asked, and I think with a good deal of force, "Where does the community come in?" I think that that was the suggestion made by one of the Labour Members. It is in the interests of the community that nothing should be done to discourage the progressive man in business, the man who is prepared to risk his capital in improving his property, to develop the industry in which he is engaged, to provide more work, and to assist trade in his particular district. We all admit that the man who has improved his property ought to be allowed the benefit of the improvement he has made. I think the hon. Member for Watford (Mr. D. Herbert) has already referred to the Agricultural Holdings Act. I would remind the House that that Act already contains a provision which not 2335 only entitles the tenant to compensation for improvements, but entitles him in certain eases actually to remove a building which he has put up on his farm, unless the landlord is prepared to take it over. Not only is he entitled to do that in cases which are outside his agreement, but he is actually entitled to claim compensation where he has merely complied with the terms of his agreement; and for the life of me I cannot understand why the town tenant should be treated in a worse way than the agricultural tenant is treated at the present time. While we all admit the evils of the present system, how does the Bill propose to meet them? I have said that it is innocuous; I have said that its provisions are meagre and unsatisfactory. There is nothing in the Bill which is going to help the existing tenant. No one who occupies premises at the present moment will be entitled under this Bill to claim a single penny piece for any improvement that he has effected. It is not retrospective, and consequently, as I have said, it falsifies all the hopes of present tenants.
§ 6.0 p.m.
§ Mr. DAVIES
I am dealing for the moment with improvements; I will come later to the question of goodwill, and I am very glad to have the assurance of the right hon. Gentleman that goodwill does come within the first part of the Bill, although it is not quite clear. Take the position in the future. The tenant will not be allowed to claim any compensation for improvements in the future if the landlord is remodelling the property, or if he intends to change the user of the property. That is not encouraging to the man who makes improvements in his property; that is not the way to suggest that he should put in a new window or that he should add to the size of his premises. Not only that, but in future—I am not dealing with past improvements—unless the tenant obtains the consent of the landowner or the Tribunal, he can claim nothing by way of compensation for any expenditure of his on the premises. Take, again, the question of goodwill. At present, a man who has built up his business is absolutely at the mercy of the landlord. It is especially so at seaside resorts and in 2336 new districts in London. Short leases are granted, a lucrative business is built up, and at the end of the lease the tenant is put to the choice of either losing his livelihood and starting anew or paying an exorbitant rent. I will give one instance which was brought to my attention within the last few weeks. A man took a shop and worked hard and succeeded in establishing a good business. He was paying a rent of £90 a year and when the lease expired he was asked by the landlord to pay a rent of £270 or to quit the premises. May I use the same phrase again. It is what I call legalised robbery. It is imposing upon the tenant a crippling burden which he cannot bear, and at the same time we pretend to be helping industry in our own country.
Then it is suggested that the tenant is entitled to goodwill. But it seems to me that what the right hon. Gentleman is giving with one hand, he is taking away with the other. Take, for instance, the conditions upon which the tenant can get a lease if he is dissatisfied with the compensation offered for his goodwill. He can be denied his right to a lease if a relative of the landowner wishes to have the property. He can be denied his right to the goodwill or a renewal of the lease if the landowner gays he merely wants to remodel the property. He can be denied his right to renewal if the landlord satisfies the Court that he wants the property for a scheme of development. As a lawyer, the Home Secretary must know that that net is so finely drawn that it will be practically impossible, especially for a smaller man, to get outside it. These conditions as to the renewal of leases make the protection he offers them purely illusory. Our complaint is not against the good landlord. I have said what my experience has taught me during the last 15 years in this City. What we have a right to do, and ought to do, is to protect the tenant against the bad landlord, against the cupidity and cruelty of the man who buys up the fag-end of a lease merely to get possession legally, but I think quite immorally, of the value of the improvements extending over a long period of years, and to get possession of a business to which the tenant may have devoted practically the whole of his life, but which in the course of things must come 2337 on the market. I ask the right hon. Gentleman to consider whether something further cannot be done to strengthen the Bill, because I can see nothing wrong, even in the interests of the community, in giving a tribunal established by the Government power to determine the terms and conditions upon which the tenant of business premises shall be entitled to a renewal of the terms and conditions of the lease.
§ Sir W. PERRING
I desire, not only personally, but on behalf of the retail traders of the country, for whom I speak, to express our great thanks to the Home Secretary for introducing this Bill, and I sincerely hope that it will have a unanimous Second Heading. While I realise the great advance which this Bill foreshadows in the attempt to protect tenants of business premises in some measure in the future, I am conscious that the safeguards to the landlord are very extensive and very real, and all our hopes and aspirations are not fulfilled in the Bill. The hon. Member for Watford (Mr. Herbert) suggested that the Home Secretary should have a Bill drafted embodying provisions for compensation for a tenant who is refused renewal. As I understand the Bill, those provisions are already in it, and when he says the Bill would involve the tenant in heavy legal charges, if he has to face one of two evils, I think he will prefer the legal charges and security of tenure. If experience goes for anything, we believe that the fact of this Bill being on the Statute Book will induce the landlord to avoid legal proceedings and to come to terms with the tenant. There is no necessity for him to pay a single penny to the tenant if he likes to meet him on fair terms, because while this is not a Bill, according to the title, to give security of tenure first, it gives security of tenure by a round about method, by giving him compensation for disturbance. But the first procedure is to make a claim for compensation, and the landlord then has power, by giving notice, to renew the lease, and, as I read the Bill, if the tenant refuses that offer he is put out of Court and will not get compensation. The tenant cannot have it both ways any more than the landlord.
We desire security of tenure for tenants of business premises first and foremost 2338 and we are not asking for compensation, because in nine cases out of 10 the tenant-knows he cannot get suitable premises in the immediate vicinity. Like others who have spoken, I feel with regard to existing contracts that some form of Amendment should be introduced in Committee so that when the tribunal is fixing the rent for the renewal of a tenancy, some regard should be paid to improvements made by the tenant before the passing of the Bill. The buying up of the fag-end of leases is one of the evils the tenant has suffered and will suffer from in the future. We live in an age when business and commerce require that business premises should be improved and made more attractive. If the tenant fails to keep abreast of the changing times, if he fails to put in those improvements in his shop front or internal arrangements which will meet the demands of the public for better facilities and for more attractive shopping, he will lose his business, and. incidentally, when the tenancy comes to an end, his claim for compensation with regard to the goodwill may be prejudiced. Therefore, I feel that where in the last five or 10 years of his tenancy the tenant has carried out improvements with the concurrence of his landlord, even before the passing of the Act, regard should be paid to that in the rent of the renewed tenancy.
With regard to Clause 5, the landlord enjoys a form of protection which rather exceeds that to which he is entitled. For instance, he enjoys the advantage, first of all, of serving on the tenant a request that he should fake up the tenancy or lose his goodwill. But be enjoys something more than that. Where the compensation is small, and the tenant realises that it is less than what he conceives to be his right, he can go to the tribunal and say the compensation is insufficient, and desire a renewal of the tenancy. The landlord, who may have bought up the fag-end of the lease, can go to the Court and say he wants the premises for his own purposes, for his son or his daughter, or some person who has been living with him. That is a very elastic Clause which will require serious consideration and Amendment in Committee. That is an advantage to which I do not think he is entitled. We have heard that it is recognised on all sides of the House that the sanctity of contract can be disturbed by 2339 Parliament. If that be the case, there is no objection to proceeding one stage further and dealing with holdings and tenancies entered into before the passing of the Act. I cannot see any distinction between recognising the principle that Parliament has a right to its judgment. in the light of present conditions of trade, to deal with tenancies entered into before the passing of the Act as against tenancies entered into afterwards. The Home Secretary said we were not living in the 18th century, but the fact that we are Jiving in the 20th century has accentuated the difliculties of the 18th century, and what has happened since the War an the efforts that have been made to push up the value of property in London have made the tenant's life almost unbearable. When it is asked, "what claim has the general community to a share in the improvements of property as against the landlord and tenant?" anyone who has studied the rateable value of London or any large provincial city and realises the enormous increase as the result of the improvement of business premises, and the effect of these improvements in providing services for the working-class community generally, must realise that the shop-keeping classes and the business community of London and the provinces have made contributions to the general community through the rates which they have had to pay. I want to dispel the idea that all the benefit goes to the landlord or the tenant and to assure hon. Members that the increased rentals which will accrue as a result of this Bill and as fixed by the tribunal will produce a sum of money which the general community will share.
This Bill contains provisions which, I think, are taken out of the new Law of Property Act, and which have something to do with giving power, more or less, to over-ride the restrictive covenants in leases to-day. The restrictive covenants in leases to-day have the effect of bringing ruin upon the shopkeeper who desires to carry out improvements which are essential. The landlord enjoys the advantage in this Bill of being able to say-to the tenant, in preference to giving him compensation or the opportunity of buying the lease, "I will sell the freehold." The landlord has the choice of 2340 saying, at a moment suitable to himself, "I will sell to the tenant, because I think the moment is opportune and I can get a good price." The same privilege should be extended to the tenant in this sense, that where the landlord decides to sell to a man who desires to buy up the fag end of the lease, he should not be allowed to sell to that third party before he has given an opportunity to the sitting tenant to buy at the market value. The landlord loses nothing so long as he gets the market value, and in that case the first claim should be given to the tenant as against the third party.
Within the last three months I have had personal experience of a case where the landlord was going to sell to a third party, and it came by chance to my own notice. I immediately went to the landlord and said: "I was the first tenant of these premises. I came into them when you built them, and I have made whatever goodwill there is in the business." He was so ashamed when I faced him fair and square that he finally sold to me at the price that he had been offered by the third party. The landlord suffered no injustice. I had a very short lease, five years. Had the third party obtained possession of the freehold, I should have been a very big sufferer although I have built up the business. I want to safeguard the traders in this country against things of that kind. So long as the tenant is prepared to pay the fair market price for the hereditament, the landlord should not lie able to sell over his head. I would quote a ease in Paddington where a neighbouring competitor with a large business bought the freehold over the head of a sitting tenant. The sitting tenant could not come to terms and he had to give up the premises and go into a neighbouring thoroughfare and build up a big business. The premises which he had to give up have never recovered the business position which they enjoyed under the old tenant, because the new tenant was not as good a business man as the original tenant. I will not mention names, but the case is common knowledge to anyone in the district.
When hon. Members talk about goodwill and site value, I would say to those who speak about site value that the first tenant of these promises when he went into the next street took his site value 2341 with him into the new street. There was no site value left behind; it was a disturbance. Had it not happened to a firm which was a powerful concern, with a large financial backing behind them, the dispossessed tenants could not have done what they did, namely, buy up an extensive property in a neighbouring street and establish themselves there, where they are still enjoying the very goodwill which they had built up in the neighbouring street from which they had to remove. That example shows that there is no site value in the way it has been expressed by certain hon. Members; there is personality, business ability and the reputation of men of business. It was the case of a firm whose name is known almost all over the civilised world; certainly, you can scarcely go to any part of the world without finding that its name is known. In that case we had a glaring attempt to get the goodwill, but it failed; but in a large number of other cases of people in a less fortunate position they will lose the goodwill for the small pittance which may be fixed by the Tribunal.
When the trader goes before the Tribunal, he has to make out his case, and he will have a hard case to prove what is goodwill and what is not goodwill in regard to the tenancy and in regard to the value of the premises. He will establish his case with a considerable difficulty, at any rate his whole case. Therefore, I feel that in the Committee stage of the Bill some effort should be made to give far greater safeguards to the tenant than he enjoys to-day, inasmuch as security of tenure is the first and foremost aim of the tenant and not compensation. It does not seem fair to say that the tenant will not buy his goodwill, because he cannot afford it. Those who are intimate with the exchange of property during the last five years, know full well that there has been an enormous amount of property in London and the provinces which has changed hands, where the landlord has sold his freehold to the tenant and the tenant has been glad to buy it, although he has had to borrow money to finance the transaction. Therefore, when it is said that the tenant cannot buy the freehold, those who use that argument are speaking without knowledge of what has transpired in the last five years in the transfer of business premises in London and the provinces. I 2342 urge that when the Bill goes to Committee we should make some provision for the tenant when he is in a position to carry out a transaction of that kind that he should have first refusal of the freehold, and thereby be able to protect himself and not be dispossessed by the landlord who, for some reason best known to himself, prefers to let the property go to a third party.
I hope that hon. Members who may have old prejudices and who my find it difficult to change old ideas and who are opposed to this Bill, will realise that we are living in an age when everything is in the melting pot, and when we must have some regard to equity between landlord and tenant in exactly the same way that past Measures have sought to establish equity between farmers and their landlords or have sought to give equity as between employer and workman in regard to compensation claims arising out of their occupation or otherwise.
§ Sir WILLIAM BULL
I think it is apparent to the House that all parties are agreed that something should be done for the ill-treated tenant; but I should like to say something in regard to the flaws in the Bill. In the first place, I am very much alarmed in regard to the kind of tribunal to be set up. It seems to me that you are going to encourage everyone to go to this tribunal. I suppose the Home Secretary has considered how many tribunals will be necessary. It seems to me that with the large number of leases that are now falling in the number of tribunals will have to be twice the number of County Court Judges. I am also very doubtful in regard to the form of the tribunal, and I would like to support the hon. Member for Watford (Mr. D. Herbert) in his suggestion that we should leave the Courts open to all the tenants who feel aggrieved. There are these cases of grievance, but I think the number is not very large, and, if they would go to the Court, and the Judge could have an assessor to consider these particular questions, it would be far better than setting up a new class of tribunal. Some of us have had experience of the tribunals set up during the War. They are not bound by any laws of evidence, and they are not always composed of skilled 2343 persons who weigh evidence, and I cannot consider that they are a satisfactory tribunal for intricate cases of this sort.
§ Sir W. BULL
I am a lawyer, but I hope I am none the worse for that. However, hon. Members must take what I am saying with all the prejudice they like to attach to it. i am not speaking as a lawyer but as a humble legislator, and giving my experience in these matters. I do not think the House realises to the full the benefit we have received from the leasehold system in this country. We have maintained a common-sense institution, and this leasehold system has really built up all our large towns. Those who have travelled in America and Canada, where the leasehold system is practically unknown, must have been struck with the sort of toothless appearance of the new cities which have grown up. We find one man building a fine marble palace for his private house or for a bank, and next door the land has been let for a shack or a wooden motor house, and for years it remains like that, because the owner is standing out in the hope that the surrounding neighbours will build large properties, and he will be able to sell at a big price.
There are drawbacks to the freehold system as against the leasehold system. Although the leasehold system in the hands of bad landlords may be bad, there is a great deal to be said for it. Take great estates like the Westminster estate and Cadogan estate. I understand that on the Cadogan estate there has never been a dispute between landlord and tenant for the past 100 years. They lay down their terms very fully and fairly on the system of concurrent leases, whereby security of tenure is secured to the tenant, and it works absolutely smoothly. I believe in the majority of cases when leases come to an end satisfactory arrangements are made. On the other hand, I admit that there are grievances which ought to be settled. The law says that there is no wrong without a remedy, and why one should not go to the ordinary courts of the land in these cases I cannot conceive. It seems to me that they are well adapted to meet these cases.
2344 I will deal with one or two other points in the Bill. A very large sum of money is invested in ground rents, and I am not sure what effect this Bill will have upon those securities. A large number of building societies, trade unions and insurance companies are very large investors in ground rents. It may be that millions of money may be floated into the air if this Bill is passed, and nobody be benefited at all. Let me mention a case of the mortgagee of a lease, a widow, whose sole possession is the mortgage of leasehold premises. Suppose it is awarded by one of the courts that she has to pay for the goodwill. In addition to the money lent on the property, she has to pay for the goodwill. Where and how is she to find the money?
§ Sir W. BULL
Supposing in the future a landlord says "There is no reason why I should grant a further lease," and only grants a lease for a year. Will the tenant be better off? I do not think so. It will be quite within the power of the landlord to grant a lease for a year and a few days. I do not think enough consideration has been given to these points, and in my opinion a very much shorter Bill would have been much better. I am not going to oppose the principle of the Measure. I know cases where very great hardship had been suffered by tenants, and while Government interference in this matter may be right I am not at all sure that they are going the right way about it.
§ Sir JOHN POWER
We have listened this afternoon to a good many speeches on this subject based more or less on theory, with the exception of that of the hon. Member for North Paddington (Sir W. Perring). I claim to have had as much experience in business premises as any Member in the House, and the objection I have to this Bill is that it will impose hardship on certain classes and will not relieve the hardships of the tenants. If you go back to the beginnings of any business premises you will find 2345 that the first thing which happens is that money has to be borrowed from somewhere, or somehow, for the building to be erected. No building of any size goes up without borrowed money in some shape or form. The more difficult you make the conditions of the freeholder, or long leaseholder, the greater will be the bill. The great attraction which this class of property has to the investor is that once you have settled your lease, a repairing lease of 7, 14, or 21 years, you have no more trouble. You sit there and are content with a very modest return on your capital. It is about 5 per cent. This Bill, without relieving the hardships which we all agree exist, takes away from the landlord his security and, if he is a landlord possessing a considerable amount of business premises, he will be in continual litigation or argument with his tenants.
This Bill will be a perfect godsend to surveyors and lawyers, and I can well see that any landowner will have to live with a lawyer in one pocket and a surveyor in the other. All this is going to cost money. These gentlemen will fight for you splendidly, but they have to be paid, and the landlord will have to recoup himself for the continual expense that he is put to by charging a higher rent It will be passed on, you may be quite certain of that. It will affect the whole of the financing of the building of business premises. It will stop the flow of capital into that industry. We have heard a great deal about the part played by shop-keepers in building up trade, but something is to be said for those people who provide these premises in which they can build up that trade. If this Bill in its present imperfect form passes into law the whole of the mortgages on this class of property will have to be reconsidered by those institutions which lend money in this way. Insurance companies, banks, who deal with negotiable securities before lending money, and various provident institutions will all have to reconsider their position. They will have to call in mortgages or reduce them, because they will never know the moment they may be called upon to submit to some charge being placed on the premises, which, I presume, from my reading of the Bill, will be a first charge and come before their mortgage. All this will mean great difficulties in the erection of fresh buildings, and it is going to hit the 2346 tenant just as much as the shortage in houses has hit the ordinary community of the country. The landlord is held up in this Bill as being unscrupulous. That is the word I think the Home Secretary used—
§ Sir W. JOYNSON-HICKS
I am sorry to interrupt the hon. Member, but I very distinctly said that the great bulk of the landlords of this country were good landlords.
§ Sir J. POWER
I am glad to have had that correction from the Home Secretary. I did not understand him in that way. What is the landlord going to do when he has all these disabilities put upon him? It may be that some form of insurance against risk of loss under this Bill may be devised, and the landlord may be able to protect himself in that way, but it is going to cost money, and that charge will eventually be passed on to the tenant. The landlord, when he grants a lease in the future, will have to consider very carefully his position. He may impose a premium, he may ask for a lump sum of money, in order to protect himself. He may ask the trader to buy the freehold of the premises and refuse to grant a leasehold. I have heard it said that traders do not object to buying the freehold, but I submit that that is absolutely wrong except in a few minor and isolated cases. One of the largest financial and commercial concerns in the City of London possesses an option from me to-day to buy their premises at 5½ per cent., which is the average rate of interest a landlord is content to obtain on his investment. They have never exercised their option, nor are they likely to do so, because they say, "We have to pay our shareholders a much larger dividend than 5 per cent., and we cannot afford to lock up our capital in your freehold building. We are a commercial concern not property owners. We know nothing about it. We hire the buildings, pay our rent, and that is all we want to have to do with them."
That is the attitude which may be taken up by the great mass of traders if they are required to invest their capital in buying the freehold of their premises. There are few traders who can afford to lock up a large sum of money for that purpose. We heard from the Liberal Benches a speech which consisted of a long repetition of the things which this Bill does not do. May I submit to the House that, one 2347 of the things the Bill does is to take the control of his property out of the hands of the landlord and place it in the hands of the tribunal. Another thing it does is to decide for a landlord in what way he shall invest his capital. A tenant approaches his landlord to make certain alterations, which are entirely conceived for the benefit of his own business. The landlord says, "I do not wish to invest any more money in the property," for reasons of which he may be a good judge. The tenant says, "Do not you; then come along to the tribunal." He serves a notice on his landlord, and the landlord has to employ a solicitor and surveyor and pay witnesses to fight the case which, presumably, he may lose. The tribunal, I understand, is an infallible tribunal, as according to the Bill there is no appeal from these infallible gentlemen, who after all are just ordinary men.
Let us assume that the Tribunal decides that the tenant is to go on with his improvements. He does, and at the end of the lease he requires compensation. Again, the infallible Tribunal decides that he has made improvements on the premises which are of a certain rental value, and the landlord has to pay. The landlord pays, but the question whether they are really an addition to the letting value of the premises or not is something that lies on the lap of the gods. No one knows except the Tribunal. It is presumably possessed of second sight. Compensation for improvements that may be awarded by the Tribunal can never be justified until the landlord is successful in finding a fresh tenant. There is such a thing as a change of fashion. One of the principal things the Home Secretary appears to have in mind is that of shop fronts. I have had a good deal of experience of property, and, if he thinks shop fronts which suit one tenant will suit another, he is greatly mistaken.
Let me say something about the question of goodwill. We have heard a great deal about goodwill and, of course, a trader being merely human will say, if you ask him who created the goodwill, "I did!" Such is the confidence of the human being in his own ability to do everything that he claims all success as being gained by reason of his own personal effort. I do not think that is so.
2348 It will not bear examination. I could give you a few instances from my own experience of the things which go to make up success. Take some premises which I let some time ago at a very low rent, at a sheer loss to myself. Not that I intended it would be a loss for ever, only for a period of years. I was engaged in the creation of a new district. I had to get people there. I advertised the place. I approached various business people in order to induce them to become tenants of mine, and I let the places at a very low rent in order to get them to come. I got them to come. One of the tenants was the Post Office, and I lot them a building worth considerably more than £1,000 as rent for £500. I would have let them had it for less if they had asked. I wanted to get people there with a view to my ultimate benefit. I looked to the future. They came, and I let all the shop premises I had there.
These leases are now falling in. Am I to have no reward for my enterprise? Am I to be the one who is to suffer? Goodwill can be made up in many ways. In the first place, it is said that goodwill is the entire creation of the trader. There are other ways in which goodwill can be created. One way is by the opening up of new communications, new railways, new tubes, in a certain district which will bring people to the locality. Another way is the establishment of large works and successful trading concerns in a neighbourhood, and so create trade there. Goodwill can be built up in many ways. It may be built up by the enterprise of the landlord, and it may be built up—and this is a most important point—by the natural growth of the population. As the population grows and more buyers come into a locality so there is a greater chance of trading. All these advantages the trader claims as his alone. But why should not the landlord have a certain share in what has been created largely by his initial enterprise? In all my experience I have never had a dispute with a tenant either over improvements or over goodwill.
If this question of goodwill is to remain in the Bill as it is, I submit this for the consideration of the House? The trader says he suffers by being asked for a larger rent after a certain term of 2349 years. Let us take the other side of the question. Suppose that a trader occupies a shop at a low rent, and then one of the various circumstances that I have mentioned changes the character of the neighbourhood and makes the shop an extremely valuable one, worth hundreds a year more than the tenant has paid. Is there any reason why there should not be a proviso in the Bill that the landlord have the right to have his rent reconsidered? What is sauce for the goose is sauce for the gander. There are some hard cases, I believe, among the tenants, hut they are very few in comparison with the great mass of cases, and the great mass of landlords are fair and just men. It is a great mistake to put upon a huge class of the community, such as the landlords are, disabilities of this kind. I am quite prepared to give my support to such suggestions as have come from my hon. Friends on this side of the House, in order to provide a remedy for abuses on the part of landlords, but I am not prepared to support any Bill that will frighten the investor out of this industry just at a time when the counry is beginning to recover, or a Bill that will raise the rate of interest on mortgages and raise the rent to the tenant and leave him much worse off than it finds him.
§ Sir HENRY SLESSER
While everyone on this side of the House supports the principle of the Bill, there is one point to which I would draw attention and which has already been mentioned by the hon. Member for Peckham (Mr. Dalton) and by the hon. Member for Watford (Mr. D. Herbert). That is that many of us feel that it is an unfortunate thing that in all this class of legislation it should so often be found necessary to set up special tribunals to deal with special cases. I submit that the ordinary Courts of the land are perfectly competent to perform all the functions which are required under this Bill. My hon. Friend the Member for Peekham has already suggested, and the proposal is urged from this side of the House on behalf of the poorer tenant, that suitable cases should go to the County Court—cases possibly involving compensation up to £500. In the County Court such cases could be dealt with cheaply. If you are to exclude, as we hope you are, from the purview of the tribunal all those smaller cases, it is 2350 obvious that you do not any more need the tribunal to deal with the larger cases; you can sweep it away altogether.
It is actually provided here that there is an appeal to the High Court from the decision of the tribunal on any question of law. Any hon. Member is an optimist who thinks that in the working of this Measure for some time it will not be possible for one side or the other to provide a point of law on which it is possible to appeal. It would be found for many years that points of law will be discovered to upset the decisions of the tribunal. If that be so, the great bulk of these cases are going to the Courts on appeal, just as so many cases now go from the arbitrator. So that really if, which I doubt, the tribunal in the first instance were cheaper than the High Court, it certainly will not be cheaper than the County Court in the smaller cases, and you will, in fact, in every case where there are questions of law involved, have two hearings. That will increase the expense. I am particularly anxious to make this point, because I feel that if once we can per suade the Government to give up this bad habit of setting up all these special bodies presided over by persons who are not necessarily competent to understand evidence or to give a judicial decision, we shall accomplish a good deal.
it costs a certain amount of money to maintain a competent series of Court?, and why should they not do the work of deciding these various litigious matters. This new body is certainly going to cost money. It is an unnecessary body. Surely the Judges already in existence can deal with these matters. Such an arrangement would be cheaper for the State. The proposals of the Bill will be more expensive for the individual concerned, and above all they will be far more complicated. I never can understand the views expressed by some hon. Members that because a lawyer is presiding over a Court and deciding a point of law he is not a competent man to do it. If I wish to be carried in a train I feel happy if I am driven by a competent engine driver, and if I want a point of law decided I prefer to have the evidence sifted and a decision given by a competent lawyer. That statement does not require any apology from anyone. Under Clause 18 the persons appointed may not be persons who are necessarily ex- 2351 perienced in the sifting of evidence. Whether they are so or are not, surely we had better have people to do this work who are specially trained in this particular class of work.
I hope that the right hon. Gentleman in charge of the Bill will consider the point and consider whether we should have this new body at all. This is not a Committee point but a point that goes to the heart of the Bill. We should all feel much more confidence in the efficacy of the machinery of the Bill if we knew that the very difficult and complicated matters that have to be decided under it were sent to persons who are trained and have everyday experience of ascertaining just those matters which are here concerned. The Bill deals with facts, with the application of knowledge of conveyancing law and the law of real property, all of which are matters upon which a Judge is fully competent to give a decision. Seeing that we have the people who can do this work properly and efficiently, I hope that the Home Secretary will meet us and in the Committee stage substitute for the proposal of the Bill the High Court in the larger cases and the County Court in the smaller cases.
§ Sir PHILIP PILDITCH
The hon. and learned Gentleman who has just spoken has confined himself to the one point of what I may call the professional aspect. As it is fresh in the memory of the House I would like to say a word or two upon it. I wonder whether the hon. and learned Gentleman has any idea of the number of cases that must come before any tribunal that is set up under the Bill. I should think they would be counted by many thousands in the course of the year, and his suggestion that the County Court, which is already overburdened and finds it extremely difficult to do the immense amount of work thrown upon it by the Rent Restriction and other Acts, should have this further burden laid upon it, strikes me as beyond the bounds of possibility. The hon. and learned Gentleman refers to the proposal as though it were a reflection on the judgment of the House. But for some years past under the Agricultural Holdings Act and the Rating Act which has just been passed, the provision of a cheap and expeditious tribunal to settle the hundreds and 2352 thousands of small cases as well as big ones has been found to be the only way out of what would have been an insuperable difficulty. There will be the settlement of dilapidation cases, as well as questions of improvements and goodwill. If the hon. and learned Member will think of what such cases will be in the course of one year, I am inclined to believe that he will come round to my view that some such proposal as that in the Bill is essential. There is a provision for a reference to the Law Courts where the matter to be decided is a matter of law. The tribunal will not be local. It will be dispersed all over the country. It may consist of 30 or 40 or 50 men, lawyers and others accustomed to this class of matter. They will form a tribunal which is best suited to consider the innumerable cases to be dealt with under the Bill.
As to the Bill generally, I look upon it with a good deal of sympathy, but I approach it with a great sense of difficulty. It will revolutionise the law of real property with regard to urban areas. The proposals of the Bill are of an intricate and complicated character, and as it was printed less than a week ago and has not yet received the attention which all those who are interested in the matter ought to have given to it, it is hardly surprising that in the discussion so far it has been obvious that there are very few Members who have been able to grasp the full significance of the Bill's proposals and what they will lead to.
I have listened very carefully to the speeches made from the opposite side of the House, all asking my right hon. Friend for more. My hon. Friend opposite Sir W. Perring, and my hon. Friend behind him, Mr. Ellis Davies asked for a little more even than the Labour party desired. They all agree, however, in one thing, and in one thing only, so far as I can gather, that improvements which have been effected before the passing of this Bill ought to have been taken into account in giving compensation. I thought that what the Home Secretary said clearly disposed of the difference between that class of improvements and the improvements effected since. The reason is that, in regard to improvements already effected, third parties have entered into obligations and liabilities. It would be absolutely contrary to all principles of law and justice 2353 that that particular kind of improvement, in which not only the two parties concerned but innocent third parties are involved, should be brought under these provisions. Moreover in the case of improvements already made, the owners could not have the protection of the Tribunal as to whether the improvements should have been permitted. My right hon. Friend is justified for that reason in keeping that class of improvement out of this Bill.
I sympathise fully with the objects of the Bill, which are two-fold—first to give a measure of security to the tenant who suffers a loss of improvements or goodwill, which his landlord can take away from him. That comes under Part I. The second part, which is very important and which was ignored a good deal by many of the speakers on the other side of the House, refers to tenancies of all kinds of property and effects very serious changes in the general law of real property. Personally, I am in entire agreement with the Home Secretary on the Bill as far as it effects improvements. If he is going to embark on changes of the law at all and to take the risks involved by the disturbance created by these radical changes—and there is a strong feeling that by doing so he will create a great deal of insecurity among the holders of real property of this kind, not only among freeholders but among lessees, assignees and others—then I do not think there is much to be complained of in the suggestion he makes as to improvements. I am not going to quarrel either with what he proposes in the second part of the Bill with regard to giving the tenants greater assistance as to permission to assign and change of user. There is nothing at all unreasonable in the Clause he proposes that such permissions shall not be unreasonably withheld. In these aspects, I think there are matters affecting both sides on which something might be done in Committee.
I am not going to object to those two aspects of the Bill, but I would like to say a word as to the question of goodwill as dealt with in Clauses 4 and 5. I am not altogether clear as to what it means or as to how it will work out. But I would like first to point out to the House, and to my right hon. Friend the Home Secretary, the full significance of the 2354 changes he proposes. I quite agree that there are bad landlords. I have seen very few landlords who have acted unfairly to their tenants in my experience, but there are some, and, if we can only manage to check and curb the bad landlord while leaving the good landlord free to the process of economic events, we shall be pursuing the right course. I am rather afraid, however, that my right hon. Friend has allowed himself to believe that the number of bad landlords is larger than it really is. I do not believe that all the matters that are described as grievances are really grievances at all. Nothing was more common in the 1920 Select Committee on business premises than to have stated instances of what appeared to be grievances because the rent at the end of a lease was largely increased. But when one examined that grievance a little further it often proved to be a case in which there had been several intermediate tenants between the granting of the lease and the increase of the rent, and each one of them had paid a premium for his lease, including the holding tenant, and the figures indicated that what a tenant thought was a grievance was no grievance at all.
My right hon. Friend quoted an instance of what he apparently thought was a grievance, but, as a matter of fact, it was no grievance at all. The alleged grievance was that a tenant took a tenancy at £235 a year and expended £2,000 upon it, and that his landlord I hereupon put the rent up to £600 which was reduced to £500. It looked as if that was a grievance, but it was not. I made it my business to see both parties, both of whom I happen to know. The facts were that both the rents included rates, and, whereas when the lease was first granted the rates amounted to £75 from a rent of £235, when the new lease was granted the rates had risen to £215 a year. In both cases they were paid by the landlord, and, when you deduct the £70 in one case and the £215 in the other you will find that the ratio of increase was very much smaller than was alleged. It was also found that the expenditure the tenant alleged he had made was not made by him; it was made before the lease was originally granted and before he came into the property. All the other tenants in the block of seven shops, of which this, being a double shop formed 2355 two, had been let, without dissent, to the sitting tenants at £300 per annum each. I not only know, but I respect both parties to this dispute. They are both of them bona fide. The tenant is a man who has made his own way in the world and he was really under the impression that he had suffered a serious grievance. Hearing both sides and when I spoke to him again, I think he really saw there was nothing in the nature of a serious grievance.
It is frequently the case that matters, which look like grievances on the surface, are not grievances at all. We have had grievances mentioned on other discussions on this subject years ago and there were similar discussions as to whether the alleged grievance was a grievance or not. Having said that, I admit that there are grievances, that you do come across the ruthless landlord, and that you do that most frequently in the case of the speculator who goes in for short leases. That I sympathise with those who suffer in this way is shown by the fact that I succeeded in getting an alteration of the law made in the last two years. I brought in a Leaseholders Protection Bill in 1924, which provided that no person should be allowed to serve a schedule of dilapidations, which is the way the screw is put on, until the last three years of the term. Although it did not pass in that form, it was embodied in Section 147 of the Law of Property Act, 1925, and is now part of the law of the land. I do sympathise in these cases, and I do wish, if it be possible, for the disentanglement of the issue between the good landlord and the bad landlord. If you are going to pass this Bill, pass it in such a form as will affect only the bad landlord and will allow the good landlord to work out his salvation with his decent tenant without too much interference.
I would like to say a few words, and I shall be as brief as possible, on the question of goodwill. The right hon. Gentleman, in his opening remarks, said that compensation for goodwill would only be payable when benefit actually enured to the landlord. If that be the meaning of the Bill, and its effect, I, for one, shall have no quarrel with it. It is fair, if the goodwill is taken from a man and the man who takes it away, namely, the landlord, benefits by it, that 2356 he should pay something for it and that the amount should be settled by the proper tribunal. I am not quite so sure that Clauses 4 and 5 will effect that. There are many cases in which the goodwill may be lost to a tenant without the landlord benefiting at all—for instance, by the re-development of property when a lease comes to an end. I would like my right hon. Friend to tell me this. If he finds that his words do not carry out what, as I understand it, is the intention of the Bill, namely, that the compensation to be paid by the landlord for goodwill shall only be paid when he has benefited by the goodwill—
§ Sir W. JOYNSON-HICKS
My hon. Friend is entitled to ask a question. If he will look at the words of Clause 4 of the Bill, he will see that it is quite clear. It says that the tenant of a holding shall be entitled to compensation for goodwillif he proves to the satisfaction of the tribunal that by reason. of the carrying on by him or his predecessors in title at the premises of a trade or business goodwill has become attached to the premises the benefit of which will in the absence of arrangements to the contrary enure to the landlord.
§ Sir P. PILDITCH
I am very glad to hear my right hon. Friend say so. I will not pursue it in detail, because it will become a long and detailed point. If the Bill, as I expect it will, reach higher regions, I shall be able to say what is in my mind.
I would like to ask the Home Secretary where is the equity of the provision in Clause 5 whereby, when the tribunal has settled the compensation to be paid under Clause 1, one of the parties is to have the right of throwing over that decision and requiring something different. I cannot help thinking that the most serious and inequitable consequences may flow from this provision, and that both parties should be placed on equal terms in this matter. What appears from the Bill in its present form is that the tenant may say, "We shall go to the tribunal and settle the question of what I am to get for the goodwill." Then, both sides having gone to the tribunal, and the tribunal having given its decision, apparently my right hon. Friend gives one of the parties—it happens to be the tenant—the right to say, "No, I do not want it, and I will not have it."
2357 Then that party asks for the other form of compensation which this Bill allows. I see no objection if the sauce for the goose is also to be the sauce for the gander. If you give the landlord the same opportunity, I see no reason to object.
The point as to whether the Bill gives the same thing in the case of the landlord can be discussed in Committee, but I think it is a point for serious consideration.
In the early part of my speech, I defended against the ex-Solicitor-General the tribunal which it is proposed to set up, but I am bound to say that, as far as I can see, in connection with urban property, no landlord, no lessee, no under-lessee, no assignee, no occupying tenant, no one at all who has anything to do with urban property—will be, from the cradle to the grave, out of the hands of this tribunal, whatever tribunal may be set up. This goes to the root of the Bill. This is doing away with the ordinary method of supply and demand in regard to urban property, and placing it in the hands of a tribunal.
Under Clause 5, if the landlord proves that the premises will, in a certain time, on any of the grounds mentioned, be required, the tribunal is called in to say on what terms the new lease is to be granted. If the landlord did not know at the time—and he could not know in many cases—how can the tribunal tell?
I will not pursue that line of thought. There are nine or 10 different sets of cirumstances in which property owned by a landlord and in the possession of a tenant, will have to be put into the hands of the tribunal, and nobody connected with this kind of property will, for the future, feel that he has the management and control of his own actions in regard to that property. He will always be in the hands of a tribunal, whether it be the High Court and possibly the House of Lords—as the ex-Solicitor-General suggested—or the tribunal which is to be set up under this Bill, and which is the much more practical method. But, from beginning to end, every transaction concerning urban property is going to be put into the hands of somebody other than the two parties originally concerned. These are also points which can be discussed in detail in Committee.
2358 Instead of thinking that the Bill does not go far enough, I think it goes to-the edge of where it ought to go and, possibly, a bit too far, or a good deal too far. I am not going to vote against it. I am going to vote for it, because I think that upstairs, in the give-and-take of the Committee room, we shall be able to hammer out a fair solution of some of the difficulties which I see in connection with it. I am going to do so, because I, for one, am prepared to take the serious risks which will be involved in the passage of the Bill. Most of those who have to do with property consider that this Measure, like the land duties of 1910, will mean a serious fall in the value of urban property, not because of any particular provision, but because of the accumulation of them taken together. That will set up uncertainty in the minds of people who do not know the details of the Bill. But it is quite possible, in the actual working of the Bill, if it is carried out on reasonable lines, that that tendency may be overcome and that things may resume their normal position.
The Government are asking the House to take a great risk in this matter, but I think it possible that the end the Government have in view may be worth the risk. I understand they are aiming at peace between landlord and tenant throughout the country. Wherever you find a sense of injustice felt by a large section of the community, even though it be exaggerated, it is necessary to deal with it; and wherever you can remove a grievance, even if it is a fancied grievance, even if it is only partly justified, and partly sentimental or imaginary, it, is desirable to do so. From that point of view, though I think the Bill contains serious dangers I shall support the Government in it. If the object of the Government be attained it will, as I say, have been worth the risk. I, therefore, support the Second Beading, but, as I have told my right hon. Friend, I hope to have the opportunity of meeting him in the Committee room upstairs on some of the points which I have indicated here.
§ Mr. R. MORRISON
I think the House ought to congratulate the hon. Member who has just spoken upon this courage in taking the great risk which he proposes to take by voting for this very dangerous Bill. The hon. Member 2359 has painted a doleful picture of what is going to happen under this Bill, and I was waiting to hear him finish his declamation against the Bill by alleging that the Home Secretary in his propaganda against Moscow, had himself become dominated by Moscow and that this Bill was really inspired by Moscow. He did not go to that length, but he threatened the Home Secretary with serious trouble when the Bill is in Committee. This appears to be a day for experts, and it is, therefore, with some timidity that a mere layman ventures to intervene in a Debate which up till now has been largely between lawyers and landlords. A number of both are still waiting to take part in the Debate, and as considerable differences appear to exist in the Conservative party on this subject, I think it only fair that they should have an opportunity of ventilating those differences. Therefore I do not propose to detain the House very long.
The right hon. Member for Hammersmith (Sir W. Bull) was worried as to the safety of trade union funds invested in freehold property. It is delightful to feel that the spirit of peace is growing so rapidly that some of our friends opposite are beginning to worry about the safety of trade union funds. I was particularly interested in the speech of an hon. Member below the Gangway who said that he spoke on behalf of the retail traders, and who conveyed to the Home Secretary the thanks of the retail traders for the Bill. I am not saying anything offensive, I hope, if I express the opinion that the retail traders who are pleased with this Bill are very easily pleased. Some subsequent remarks incline me to think that the hon. Member's own private opinion was that the Bill left much to be desired. It has been a sight for the gods this evening to see the Home Secretary in a Conservative Government assuring his friends that this Bill will not hurt the landlords. Another thing which has given me great satisfaction today is to hear the declaration, out of the mouths of certain Conservative Members, that there actually exists such a thing as a bad landlord.
The Bill seems to be a weak substitute for the Town Tenants Bill, which was introduced briefly on a Friday afternoon by my hon. Friend the Member for 2360 Grimsby (Mr. Womcrsley). It would be too much to expect the Government to deal drastically with landlords and landowners, but, if I am in order, I should like to contrast the timidity of the Government in approaching land and property owners with the spirit in which they attack trade unions and working-class organisations. This Bill, as the Home Secretary told us, is the result of 40 years' agitation, and the march of events has compelled the Government to act. My complaint is that having been compelled by the march of events to act, they propose to do as little as possible. One of the London evening papers this week summed up the situation in this way:The question is only taken up now by the Government because, over a large part of the West End of London and the Westminster, Howard de Walden, and Padding-ton Estates, leases are falling in every day, and in five or six years will descend in an avalanche upon the ground landlords.The Bill makes some concession to the tenants, but we complain that while it does so, in Clause 2 these concessions are largely nullified.A tenant shall not be entitled to compensation under this Part of the Act—(a) in respect of any improvement made before the passing of the Act.The Bill of the hon. Member for Grimsby was retrospective, and, in so far as that feature has been left out, this is a much weaker Bill. May I give another example of the weakness of the Bill? Clause 3 states that if the landlord proves that he has offered to execute an improvement himself, in consideration of a reasonable increase of rent, the tribunal shall not give a certificate, but the Town Tenants Bill was much more specific on this point, and laid it down that the landlord may execute improvements and charge the tenant a sum not exceeding 5 per cent. per annum on the outlay. In some quarters it is said that at last there is an opportunity for the tenant to secure a new lease. The hon. Member who spoke for the retail traders said that they wanted security of tenure and not compensation. As far as I understand the Bill. the tenant can certainly ask for a new lease, but the dice is so loaded against him that his chances of getting it are almost hopeless.
First of all, he has to prove that he is a suitable tenant, and secondly, he has 2361 to prove that compensation would not meet the loss he would suffer if he removed. He may prove these things, and even that there is no alternative accommodation available, but even then he will still be a very long way from being granted a new lease. If the landlord requires the property for himself, for his son, for his daughter, or for some person residing with him, not a relative, if he says he intends to pull down the property, if he tells the Tribunal he intends to remodel the property or proposes to carry out a scheme of development, and if he gives any other reason, showing that the granting of a new lease would not be consistent with good estate management, the tenant cannot get a new lease. In addition to all this, if the landlord offers to sell to the tenant, that is another reason against the grant of a new lease. Apparently, there is no question of whether the tenant can afford to buy it. What I want to say to hon. Members who are optimistic about this Bill is, as the hon. Member for North Paddington (Sir W. Perring) said in effect, that he would be a poor landlord who would not be able to prove at least one of these reasons.
My objection to the Bill is, first, that there are in it too many ways out for the landlord, and, secondly, that it does nothing at all for urban residential property. It is a pity, when the Government are evidently going to be slated by some of their friends for having dared in some slight way to interfere with landlords, that they did not go so much further as to make it apply to urban residential property. In the part of North London in which I live, we have had great difficulty in the last few years in a certain respect. We have had cases occur frequently where one individual or firm has bought up the freehold of a whole street of houses, houses of about £600 to £800, and then immediately thereafter has served the tenants of all the houses with schedules of dilapidations running into £200 or £300—an absolutely impossible sum for them to pay—and when they have been unable to pay it, they have been put in the position of buying out their own freehold at an extortionate price, which the hon. Member for North Paddington described as legalised blackmail. We have had that over and over again. I have asked questions, as have other hon. Members, 2362 as to why something could not be done with people who make a living in that way, and I am sorry that this Bill will leave these tenants, so far as I understand, where they are. If the Bill does pass its Second Reading, I hope that in Committee the position of the tenants will be considerably strengthened.
§ Lieut.-Colonel Sir GODFREY DALRYMPLE-WHITE
We have listened to a very interesting series of speeches, representing a great many points of view. We had one from my hon. Friend the Member for Spelthorne (Sir P. Pilditch) which was, I confess, a different style of speech from what I had expected from him, because he has very often blocked Bills dealing with this subject in the House. Then we had an interesting speech from the hon. Member for Watford (Mr. D. Herbert), and I agree with him in feeling some apprehension that there should be no appeal either for landlord or for tenant, I gather, from, this Tribunal. The hon. and learned Member for South-East Leeds (Sir H. Slesscr) objects to the constant setting up of fresh tribunals, and there is a good deal to be said for the point of view that these matters could be dealt with by the County Courts and Law Courts, but I think the hon. Member for Spelthorne showed quite clearly that the amount of work would be prohibitive and that it probably could not be done.
What I really rose to do was to thank the right hon. Gentleman the Home Secretary and the Government for their courage in bringing forward this Bill. It-has meant a lot of courage on their part. I have known their difficulties, and for this reason, that ever since I came into the House, now 17 years ago, I have been interested in this movement. and I know well how very difficult it was until about four or five years ago to find support on these benches for anything even distantly approaching a reform of leasehold tenure. Many Members had never been approached by their constituents, and knew nothing about the matter. Then there was a large percentage who imagined that it was some dreadful revolutionary proposal to introduce anything to do with leasehold tenure. To those. I used to point out that the late Lord Curzon, who was a Member for my constituency from 1S86 to 1897, when he went to India, was always a strong supporter 2363 of what in those days was known by the generic term of leasehold enfranchisement, and I used to point out that whatever my hon. Friends might think of Lord Curzon in one respect or another, they could not accuse him of being a revolutionary nor even of being a Socialist. May I mention that Lord Curzon wrote one of the best treatises on this subject I have personally ever seen?
There was a certain number of Members on our side of the House who had studied the subject very deeply and thoroughly and who knew their case, who opposed it because they thought—and I am now dealing with what I call the question of full leasehold enfranchisement, and not the actual question modified, and I mention it because hon. Members opposite want us to go to the extreme—that it would not be in the best interests either of municipalities or of future tenants themselves. They rightly said that if you had nothing but the small landlords, with a house or two apiece, many of them would be likely to be much harder to deal with than the big landlords. But whatever may be thought about the question of full leasehold enfranchisement, I myself, though we have had no direct negalive to the Bill to-day, cannot see how anyone can demur to the Bill that we have got to-day from that point of view. It is mainly confined to business premises. and, as the Home Secretary has said, it is not an attack on the good property owner, the good landlord. It will, I hope and believe, help to curb the bad landlord, and I cannot conceive of anyone wishing to defend him. He does exist. The hon. Member for North Tottenham (Mr. R. Morrison) said it was a revelation to him to hear anyone on these benches admit that there was such a thing as a bad landlord. He evidently thinks we are all landlords, but some of us are tenants and may have suffered from the bad landlords. However, putting aside a little joke of that sort, of course we know, and have always admitted, that there are black sheep in every fold. I do not know if there are any in the fold opposite, but in most folds there are.
On this question of business premises, I have known eases in ray own constituency where a trader had built up a most flourishing trade and goodwill, where the lease expired, and where the 2364 terms that ware then asked were nothing more or less, as an hon. Member has said, than blackmail. If hon. Members on the Labour benches think that is an argument for nationalisation and doing away with private property, I would remind them of what we see of the nationalisation of land in practice at the present time. I refer to what are known as Crown Lands, where everyone who has studied that question knows that increases of rent on the falling in of leases are higher than anywhere else. I am very glad to see—and I am sure the Home Secretary will correct me if I am wrong—that Crown Lands and Gov-eminent lands and buildings do come under this Bill.
§ Sir G. DALRYMPLE-WHITE
They will be subject in future to the same restrictions as privately-owned land and buildings. The introduction of a Bill such as this has become much more urgent within the last few years than it was before, on account of the rise of the great multiple stores. I am informed that some of these great stores have their secret agents-they may be estate agents or any body else—who are on the look-out, and when they can find any trader who has built up a good business and goodwill, and whose lease is shortly falling in, they report to their employers, the large stores, and the large stores then, by weight of money, freeze out the unfortunate trader. The question of full leasehold enfranchisement, for which hon. Members opposite are asking, presents very great and difficult problems. Perhaps those problems some day may be overcome, but until then I cannot understand anybody actually opposing so moderate and fair a Bill as this, and I hope that the tenants and certainly the traders of the country will show, not necessarily by their votes, their gratitude to the Government for bringing in this measure of reform.
§ Mr. HAYDN JONES
I know of no question that has been the subject of more Bills in this House, from all parts of the House, than that of leasehold en franchisement, but they have all suffered the usual fate, having been given a First Beading and then buried alive. To-night we witness the Government of the day introducing a Measure to deal 2365 with the question, which private Members have considered a burning question for many years. I congratulate the Home Secretary and the Government on their courage in introducing the Bill, and, if I were to criticise them at all, I should say, what other hon. Members have already said, that it does not go far enough. It is not comprehensive enough. I am quite at a loss to know why the provisions of the Bill are confined to places of business. Surely the leasehold dwelling-house deserves equal consideration, if not greater. In my constituency no question exerts greater interest than the leasehold question, and that is not to be wondered at when I say-that in the largest town in my constituency all the houses have been built upon leasehold sites. The Home Secretary has referred to the inquiry on Town Holdings by a Select Committee which reported, I think, in 1889. I will, with the permission of the House, give the evidence tendered to that Committee by the Reverend T. J. Wheldon in respect of the town of Blaenau Festiniog. The witness said that the population of the town was 11,264, that its chief industry was quarrying, that the district began to be largely developed in 1858 or 1859, and that in 1888, 30 years later, 4,000 workmen were employed at the quarries. The witness described the town in these words:It is situated in an upland valley which is in the form of an amphitheatre. Precipitous rocks surround it and the debris falls down, and has fallen down for ages in some portions. The lower portion must have formerly been a lake or mountain tarn. Part of it is bogland, or was bogland. Other portions that are a little higher elevated are drier.A great number of houses have been built actually on the rocks inasmuch as it was thought the grazing land although it was hut mountainous grazing land, was too valuable for human habitation. The houses were pressed to the rocks, and the foundations, many of them have been carved out of the rocks.The workmen had no facilities from the landowners.May I say in passing that the landowners, or most of them, were interested in the quarries, and derived their wealth mainly from the quarries. Yetthe workmen had no facilities from the landowners to get land for building houses. They could get no freehold—none whatever—so that practically the whole village is built on leasehold.2366 There are, or were at any rate, in 188S, 54,489 houses in the parish. Of 472 of them the rent was above £8, the gross rental £5,903 and the average £20 2s. 6d. each. There were 2,017 houses below £8, with a gross rental of £13,023, averaging £6 10s.Of the total houses in the parish,' 2,052 were built either directly by, or directly for working men, and almost all of them are inhabited by working men. Taking a low estimate, the better class of houses have cost at least £300 each.And that at a time when building was very much cheaper than it is to-day. The total sum invested in that class would come to something like £141,600. The second class house was built at an average cost of £130. The amount invested in those would not be less than £202,210, and the total sum spent in house building in the parish would be no less than £403,810, all on leasehold sites and practically all by working quarrymen. In addition to the dwelling houses, chapels, school rooms and all buildings for religious purposes had to be built on leasehold sites. The average ground rent of the £300 house was at least £2, and the average ground rent of the second class house £l. The total ground rents in respect of the workmen's dwellings amounted to £2,961 per annum. They cover an area of 77 acres, and I wish to stress this point, that the land would be scarcely worth 7s. 6d. an acre as agricultural land, but the ground landlords, as a result of the erection of houses by poor working men, receive £39 an acre for that very land. The leases contained no provision for renewal and extension, not even when improvements were made. The length of the leases varied from 21 to 99 years, the average being 60 years. Faced with these onerous conditions, the working men erected their dwellings, borrowing the money from building societies and paying what was then the high rate of interest of 5 per cent.
It was hard enough that these poor men should he compelled to build their own houses at their own cost. It was still harder that they had to build on a leasehold plot of land or rock and very hard that they had to pay the landowner 104 times the rent he was receiving from it as agricultural land. But the cruellest blow of all for the poor working man is to find that on the expiration of the lease he has either to give up his house 2367 or pay a very large sum for the renewal of the lease. I would like to give the House one or two examples of what the landlords are asking for these leasehold houses. Here is one. I will not name the leaseholder. He applied to his landlord for the freehold reversion of his house quite recently. The ground rent is £l and the lease has 16 years to run. The house fronts a back road, and' is some distance from the main road. The price asked for that house was £240 2s. 6d., and the landlord has contributed nothing in any shape or form towards the erection of the house. Here is another example. A market hall has been built in this town on a site for which the nominal ground rent of 5s. is being paid. There are still 40 years of the lease to run and the price asked is £223. As a final example, public offices of the urban council, including a library, were built. The ground rent payable is £5 per annum. There are 27 years' lease unexpired, and the price asked for that is £400.
Is it to be wondered that my constituents are keen upon a Measure of leasehold enfranchisement? The leasehold system, in my opinion, has a crippling effect upon the building industry. A reform of this obsolete system would be the most effective method of providing houses for the working classes, and I appeal to the Government through the right hon. Gentleman to widen the scope of the Measure so that it will include leasehold dwelling houses, and not be confined, as at present, to business premises. Let the leaseholder be vested with the right to have his lease renewed, or the option of buying the reversion of the freehold at a reasonable sum, and, failing agreement, to be determined by a tribunal such as the right hon. Gentleman has provided in the Bill. I urge very strenuously the right hon. Gentleman to make this Bill a comprehensive one, and not to confine it to business premises as at present.
Several hon. Members have referred in the course of the Debate to the exclusion of professional premises from the scope of this Bill, and I wish to urge that the provisions should apply-to such premises, more especially to the professional premises of doctors. There are two classes of doctors who are concerned. First, there are the consultants, 2368 who are particularly resident in London, and who largely inhabit one part which happens to be the Division which returns to Parliament the Attorney-General, who is supporting this Bill, I hope the right hon. and learned Gentleman may recognise that a very large body of his constituents are disturbed by the proposals; it has been said that there is no more tender tie than that which binds a Member of Parliament to his constituents, and he may perhaps reconsider the matter in this light. The way in which the present law acts I may, perhaps, illustrate by giving the ease of a surgeon who takes a house for a short period, who establishes a great reputation and at the end of 14 years, we may suppose, is faced with the necessity either of removal or of renewing the lease. The landlord perfectly well understands that it is a very damaging thing for that man to remove from the neighbourhood, and the lease immediately goes up to an extortionate value. This Bill is going to increase that problem very much. Leases are going to-be more difficult to obtain under the provisions of this Bill unless it be made to apply to professional premises. The Inland Revenue regards a doctor's house as business premises, and it seems very unfair not to regard it as business premises for the purpose of this Bill. Another class, perhaps, more hardly hit is that of the general medical practitioner, and I have before me a copy of a resolution which contains the plea of the general practitioner:That this meeting of…General Medical Practitioners urges the Government to make provision in the new Leasehold Reform Bill for security of holding for general practitioners who have been in many instances compelled to build on leasehold premises in order to comply with the requirements of the National Health Insurance Act with regard to waiting room accommodation, etc., and to prevent ground landlords acquiring without compensation the goodwill of the practice which they have had no part or lot in creating.Members of the medical profession are too busy to take much part in politics. They are a silent profession, and, I think, in gratitude for their habitual self-effacement, the Home Secretary ought to extend the provisions of this Bill to professional men.
§ 8.0 p.m.
§ Mr. HARDIE
I represent a Scottish constituency, and I soon discovered when I came down here exactly what was meant by the leasehold system. I then knew 2369 what was meant by all the devilry that could be invented by humanity, one against the other. I think if one could get down to the foulest depths of deceit and injustice, one would find that the leasehold system is about the worst of these. The Home Secretary says that the landlord provides the capital in the form of land. I have yet to meet a human being, landlord or duke or anyone else, who can provide one grain of sand, and I thought that the Home Secretary, seeing that he goes deeply into religious matters, would have understood that the land is not provided by the landlord at all. The land is here for the generations' as they come and go. It is simply legalised theft on the part of the landlords to seek to take the place of the Almighty and say that they own the land. When a lease falls in, they say that they have the almighty power to allow no human being to build a house there, or, if they have allowed him to build a house, when the lease is at an end they take the whole thing. If you were doing that in the ordinary way of life you would find the Home Secretary acting through the law and getting a man seven years in gaol. The hon. Member for North Paddington (Sir W. Perring), who represents an interest in trade, gave an illustration of what he called goodwill, and said that, if he had worked up a business and his landlord wanted to increase his rent, he could shift round the corner and take his goodwill with him. But you never find a case like that. If the tenant, in such a case, goes round the corner and starts another shop with what he calls his goodwill, the increased rent that the landlord wanted is paid by the next tenant. Therefore, it is simply a question that the community has increased and the site value has increased. No argument can get rid of that.
The business premises in all the biggest towns are suffering from this tax or blood-sucking which is practised upon industry and upon the men who rent the business premises. You get cases of shopkeepers who at first can scarcely sleep at night for thinking about their business, who go down to their shops in the morning and clean the windows and have everything put in good order to attract trade, and, when they become a little more successful, the landlord come along and says, "Oh, he is doing well, I will put £10 upon his rent because of his 2370 industry." In Glasgow, Manchester, London and Leeds, in all the main thoroughfares this is what is taking place because of the increased population. No matter how the man who has a business improves it; though he even spends money on structural work, he knows that, despite all he may do, he cannot meet the demands of the landlord. I could give thousands of illustrations. A man starts a business, and he pays a rent of, say, £100 for his premises; he cannot pay the increase which the landlord demands, and the premises are cut up into perhaps four quarters, and a tenant will have to pay £1,000 for a quarter whereas he only paid £100 at the beginning for the whole place. This kind of swindling is going on all over the big towns, and it was not included in the discussion about the increased cost of living. I put a question to the President of the Board of Trade not long ago, asking if the Food Council took into consideration the amount of increase in the cost of living that was due to increase of rent, especially of the premises of distributors, such as grocers, but, of course, I was told that I could get no answer to that. My experience of this House is that you never can get an answer to anything that is really essential to the question that is being discussed. To-day we are dealing with a factor in relation to business premises that is bound to have an effect upon the cost of living.
We see that landlords have taken fright because of the growth of the working-class movement in this country and are selling out if they can, and when they cannot sell out, they are forming small limited companies. You saw in the papers this morning the case of a highly-titled gentleman who is engaged in escaping the legitimate taxation of his country by forming a company of this kind. Supposing you take a good-going public-house for an illustration—and I am a prohibitionist—and place a very attractive barmaid in the bar, it might be said that that was a form of goodwill because the barmaid was attracting a crowd to that particular house and that if she left it would mean that she would take the trade to another place. But how silly it is to use any argument on the basis of what is called goodwill. It is not goodwill at all; it is simply a question of social wealth growing from the increase of the population. All that the landlord has to 2371 do is to wait for an increase. I do not know what the hon. Gentleman the Member for Wimbledon (Sir J. Power), was driving at, but he gave certain illustrations which would seem to me to show that he has, to say the least of it, a dual character; He told us how he ensured that' people can get places in which to live and carry on business. He asked us whether he was not entitled to recompense himself for such Christian action. He Has to do nothing as a landlord; all he has to do is to simply wait on the increase of the population in that area, so that, the greater the number of people who live there, the greater the number who would be buying from the shops, and he was expecting to rob these industrious people while he contributed nothing to the increase he was to take in the form of rent. Yet I suppose he claims to have a moral sense. He went further, and he said that if this Measure was carried through it would stop landlords capital from flowing into industry. I would like to know where land flows into industry. Labour of hand and brain flowing on to the land can produce wealth, but I cannot understand, as I say, how land can flow into industry.
Then we were told that if this Bill passed it would frighten men out of this industry. The: landlords' industry! Where do they make it? Where is the industry that produces the land that the landlord says is his? Our people are much too intelligent to be misled by stupid statements like that. The hon. Member for Wimbledon seemed to think that he had been specially born to fill the position of a landlord and proprietor, and that people would die or they would not' get houses but for him. He represents a place which, I am always told, is described as the bank clerks' dormitory. The word "dormitory" seems to fit the whole of that area, because all the people there must be sleeping to have a Member who talks such rubbish. Then we have the illustration which was given by an hon. Member from these benches in relation to what is happening in Wales, but that story is repeated all over wherever the leasehold system exists. Poor people build their own houses, but they cannot call them their own because the landlord will demand more than the price of the house. Is there any human 2372 being wh6 can justify that form of theft? I cannot understand why this thing has been allowed to go on so long.
§ Mr. HARDIE
The hon. and gallant Gentleman says, "Hear, hear!" I am surprised to find him, an Irishman, sitting on the Tory Benches when so much of the history of his native country is concerned with a certain kind of landlordism. I have investigated some of the cases in the area in which I am compelled to live, and I find that a man who has a shop finds that there are two powers acting against him. He has the landlord waiting for an increase of rent, and the man who represents the multiple concern waiting to see if there is any possibility of taking a small slice of shop next to him and in some way cut him out, so that he can eventually get the shop over the man's head. The hon. Gentleman the Member for North Paddington seemed to be quite happy in the thought that he was a member of a concern that did this kind of thing to the individual.
§ Mr. WOMERSLEY
The hon. Member for North Paddington is not present, but I would like to say that that was not his view. He represents entirely the view-that is expressed by the hon. Gentleman who is speaking now.
§ Mr. HARDIE
When a question was put by an hon. Member opposite in regard to that, the hon. Member for North Paddington never made any effort to contradict what I am saying now. However, I do not want to misrepresent any hon. Member of the House, and apparently there has been a misunderstanding. The fact remains that the large multiple house is always sitting nearby when a man is building up a business, in order to take it from him. The right hon. Member for South Hammersmith (Sir W. Bull), a lawyer, said quite frankly that the reason he spoke on the Bill was because a tribunal is to be set up. Evidently the business of lawyers is getting a little slack; he sees a little more business going away from them and is anxious to retain it. I would not mind if he expressed himself in that way, we could then understand his position, but what are we to understand when a man says he will vote for the Bill but will make an exception 2373 in that particular? The truth is that we are up against two interests. We have the landlords fighting for their hand and the business men fighting for theirs, and the men in between are left without any consideration. This Bill is not all that it might have been, even to judge by the admissions made from the Tory benches. It has astounded me to hear them admitting that all sorts of evil things exist. If we had made those allegations from these benches we should have been met with cries of "No, no," and yet they have been admitting what kind of characters landlords can be. I think this Bill can be improved in a great many ways, and, if assured on this point, I would give it my support.
§ Mr. WOMERSLEY
I was responsible for introducing last year what was known as the Town Tenants Bill, and on behalf of the Town Tenants' League, the National Chamber of Trade, and other organisations of retailers, I should like to say how much we welcome the present Bill of the Government. I notice that to day speakers belonging to my own party have all said they realise the need for some legislation dealing with the relations of landlord and tenant, but when I introduced my Bill I had the unfortunate experience of being told by many Members of my own party that I was neither more nor less than a Socialist. I repudiated that charge very hotly, because all my political life I Lave been fighting the Socialist party with my coat off, and sometimes with my vest off, and I hope to continue to do so. I was told, also, that my party was the party which defended the rights of property. My answer to that was that I did not for a moment recognise the great Conservative party as standing for the unrestricted rights of property. Property has its duties as well as its rights, and I said my party had always recognised that fact.
I wish to congratulate the Government on introducing this Bill, because if we go into the history of this movement it will be realised that to the business man it has been a case of "Hope deferred maketh the heart sick." For years past business men have been asking for this reform. The Town Tenants' League was formed as far back as 1906. I remember that in the very early days of that League certain Members said, "It is no use approaching the Conservative party in 2374 this matter, we must go to the Liberal party; they are the people who will give us a Bill to remedy these grievances." Accordingly the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), who was then in office, was approached. In 1913 he met a deputation from this League, and told them he was very sympathetic and would see what he could do for them, and the League said, "At last we are going to get something done." The Prime Minister of that day, now Lord Oxford and Asquith, also declared himself favourable to the reform and said he was going to do something to help, but I am sorry to say that is as far as we got; and it has been left to the Conservative party to produce the measure of reform for which business men have been asking for so long.
The late Mr. Walter Long, as he was in those days, expressed himself rather emphatically about this particular matter when he was approached. I notice that not many Members of my own party are here to listen to me to-night, but I hope they will read the OFFICIAL REPORT in the morning. Many of them have said how much they approve of certain provisions of the Bill and that they are going to vote for the Second Reading; but I am a little afraid we may have a good deal of trouble with them in Committee, and I hope the Home Secretary will deal with them effectually there. Mr. Walter Long advocated a Measure somewhat on the lines of the present Bill. He said he approved of the tribunal system as the fairest way of dealing with questions between landlord and tenant. What I want the House to note are these words of hisMake that tribunal wholly independent of either Government or party or of the public Refer these cases to them, and then if there be injustices, if there be avoidable hardships, if there be anything done by any unwise or unjust landlord imposing impossible conditions upon his tenants, let it come before a tribunal of this kind, and I, speaking as a landlord myself, and one who has never been prepared to abandon our rights or forsake our cause because it happened to be unpopular, I care not what you submit to that tribunal; so long as you have a tribunal which answers in every respect to the conditions I have laid down, then I am prepared to abide by its decision.Mr. Walter Long declared that it was time something was done for the town 2375 tenants. When the Town Tenants Act was passed for Ireland many of us said "If a thing is good enough for Ireland, why is it not good enough for England?" The Irish Act has worked satisfactorily. Here I should like to refer to a subject which was mentioned by the hon. Member for Watford (Mr. D. Herbert). He appeared to be doubtful whether the tribunal proposed in the Bill would be really satisfactory, and began to tell us of the terrible costs which would be incurred. In the Irish Act it is laid down that any dispute shall first be submitted to arbitration and, failing a settlement by arbitration, shall then go forward to a County Court Judge. Though I have not got exact figures, I am assured by friends of mine in the other island that not 5 per cent, of cases have reached the County Court; which proves that when there is an Act of Parliament to untie the hands of the tenant and place him on an equality with the landlord with whom he is trying to negotiate a lease, there is absolutely no necessity to go to law at all—except in a few cases. The landlord, knowing that he is bound to abide by the ruling of the Court if the case goes to Court, does the reasonable thing, makes a fair offer to the tenant, and there is no need for further action.
Some time later a Select Committee on business premises reported in favour of a temporary measure. The view at that time was that when the shortage of business premises which occurred during the great boom in trade after the War was over, there would be no need for such an Act of Parliament to be placed permanently on the Statute Book. The idea prevalent at that time was that there was a temporary shortage of business premises, and it did not matter for a year or two what they did. The experience of the business man since that Committee sat is that instead of the evil growing less it has grown greater. More capital has gone into the distributive side because capitalists found that they could get a higher rate of interest in that business instead of the manufacturing business. There has been a great demand for shops. We have seen the pernicious work of certain land agents who were the biggest opponents of my Town Tenants Bill who have been making a lot of money by finding out good businesses, making inquiries in all 2376 sorts of underhand ways as to the length of the leases, and then approaching multiple business companies, saying, "I know where there is a jolly good business which I can get hold of."
§ Mr. WOMERSLEY
I will supply the hon. Member with quite a number of cases at my convenience. I have not time now to quote those cases, but I will quote a good case later on.
§ Mr. WOMERSLEY
The statement I have made I can substantiate, and nobody knows it better than the hon. Member. This question has been tackled in France, and in that country an Act has been put into force very much on the same lines as the Bill now before the House. Therefore, this is not an evil entirely confined to this country or to Ireland. With regard to cases of hardship, I will just give one typical instance. Since I introduced the Bill on this subject last year I have had not hundreds but many hundreds of letters pointing out very hard cases which I can bring before any hon. Member of this House who cares to see the original letters. The instance I will quote is only a typical case of what is happening. This is the case of an ex-service man, who wrote:In 1916 I took a 5mall shop which cost £98 to build. It is really only a shack with a tin roof on it but it was let to me at a rental of £30 I took the shop on a lease at £60 a year and with the rates the cost came to £101 per annum. The lease was granted on the condition that in the event of the ground landlord wanting the place three months notice was to determine the tenancy but it protected me as regards the rent. I had to maintain the structure but when I applied for a renewal of my lease I received the following letter. 'In reply to your letter of yesterday's date we are prepared to submit to the trustees an offer of £120 per annum for a lease of 10 years for your shop.'I do not want to give the name of the landlord, but I have it here for anyone to see. The landlord stipulated that he was prepared to do a little towards repairing the roof if the tenant consented to pay £120 a year rental. That place cost only £98 to build, it was let for a 2377 number of years at £60 a year, and now the landlord wants £120 a year for it. Of course, it was quite impossible for this man to earn a living under those circumstances. He had built up that business, which did not exist there before he took the shop, and I ask the House is it a fair thing in this year of our Lord for this man to suffer in this way. There are a few things in the Bill we ought to ask for in the direction of strengthening it. I am surprised that many of my hon. Friends on the Labour benches have not mentioned the point that this Bill does not apply to tenancies of less than 12 months, because this will crowd out a large number of small shopkeepers, such as newsagents and tobacconists, who will be very hardly hit by this Measure if it is not amended, and on behalf of whom I wish to put in a word to-night.
I hope the Home Secretary will see if something cannot be done on behalf of these small traders. If a Clause can be inserted to give them the benefit of this Act, it will cure two evils, one of which has already been pointed out by the hon. and learned Member for Watford (Mr. D. Herbert), who said that in the future the landlords would resist any attempt to obtain a lease extending over 12 months, and they would grant tenancies of 12 months, less three days, so as to bring them outside this Bill. I do not attach much importance to that, but I hope the Home Secretary will deal with tenancies under 12 months, and then he will be able to kill two birds with one stone and two evils at once. There are other small matters which I think ought to be amended in this Bill, and some of them Have been pointed out by previous speakers. I hope we shall have an opportunity in Committee of dealing with them in a fair and equitable way all round. All the time I have been engaged on this great question in my journeys throughout the country, and I have made some very long journeys with that object in view, I have never had a word to say against good landlords. I admit that there are good landlords, and that there is something to be said even for the leasehold system. In my own town a large portion of it has been built up on land belonging to the Heneage family, who have proved to be the best people in the world to do business with. If there were 2378 many others of the same kind, then there would be no need for us to protest.
There are others who have helped considerably to lay out in a proper and beautiful manner the land they own. I have nothing to say against that type of landlord, but we have many landlords in this country who are not giving us a fair and square deal. I should not vote for any Measure which would inflict hardship on the good landlords, because in curing one evil I do not want to create another. I think this Bill is fair and equitable between the landlord and tenant, and it ought to receive the whole-hearted support, not only of my own party, but of the other two parties in the House. Underlying this there is a question of public policy apart from the personal interest which will be affected in connection with the tenants, landlords or property agents. We recognise the root fact that it is a question of public policy, and it is against the best interest of national life that any man should be confronted with a possibility of having to close his business, realise his stock, and take out his fixtures which, however elaborate they may be, are worth very little in the open market, simply because his lease has expired or somebody else wants his place of business, or some greedy landlord sees the opportunity of getting an increased vent. It is because I believe that this Bill is going to provide a fair and square remedy for these grievances that I shall support the Second Reading, and I hope it will receive the unanimous support of this House.
§ Mr. RYE
I do not for a moment suggest that there are not bad landlords. I do not think that anyone who has any knowledge of the subject of land tenure would suggest that every landlord is a good landlord. But the point I wish to emphasise is this: If we are going to bring in a Measure of this kind, which in effect is going to take the control of property out of the hands of the owner and place it in the hands of a tribunal, we must have evidence as to the number of cases in which hardship has been done to the tenant—where the landlord has either let the premises over the head of the tenant to a rival firm, or has refused to grant a renewal, or has charged rent based in part upon goodwill. I put it to the House that we must have evidence of that before we take this very drastic step. I want the House to under- 2379 stand, and it has been pointed out by the hon. Member for Spelthorne (Sir P. Pilditch) and by the right hon. Gentleman the Member for South Hammersmith (Sir W. Bull), and also by the hon. Member for Wimbledon (Sir J. Power), that this Measure, if placed on the Statute Book, is going to mean a decrease in capital values, and also a retardation of building and reconstruction of business premises. We have, therefore, in this House to consider what harm will be done if we adopt any Measure which admittedly will bring about the dangers to which reference has been made by several speakers, including the hon. Gentleman who spoke last.
I venture to suggest to the House that the real, material question is, Is there a sufficient number of cases of hardship to justify the House in bringing in this Measure? We have, so far, had no evidence that there is. The Government have not the recommendations of a Select Committee. For some reason which I do not understand, the Government have not set up a Select Committee to inquire into this question; and there has been no recommendation of a Royal Commission; so that, whatever evidence the Government may have obtained, it has been on ex parte statements, and the Solicitor-General, who, I understand, is going to wind up the Debate, knows better than I do how unsatisfactory ex parte statements are.
§ Mr. RYE: Certainly.
§ Mr. RYE
The Report of the Committee on Business Premises was made in 1920, seven years ago. I am dealing with the present position, and am pointing out that the Government have not appointed a Select Committee or a Royal Commission, and, therefore, any inquiry that they made before deciding to bring in this Bill must have been on ex parte statements, coupled, no doubt, with information and advice given to them by surveyors, who may or may not have been experts in connection with shop property. We do not know their names; the Home Secretary did not tell us; but 2380 I belieye—no doubt I shall be contradicted if I am wrong—that one of the chief advisers of the Government is a gentleman who is very well known in connection with the purchase and sale of landed estates, but who has no particular knowledge of dealing in shop premises. At all events, whoever has advised the Government, they have not had any public inquiry. I want, therefore, to ask-—I should have asked the Home Secretary, but unfortunately he is not in his place at the moment—where this information was obtained from which was considered sufficient to justify this very drastic departure.
The right hon. Gentleman has certainly not got it in his own constituency, because I have made inquiries of a leading agent in Twickenham, and he does not know of any cases of the three kinds that I have cited. Nor will such information be found on application to the leading agents in the constituency of the Attorney-General, because I have letters from two leading agents in St. Maryle-bone, and they do not know of these cases. It will not be found in Birmingham, where the Foreign Secretary and the Minister of Health come from, and it will not be found in Manchester or Bristol. I know, of course, that there are cases, and I am not going to dispute it, but I am discussing the quantum, in comparison with the harm that will be done if this Bill be placed on the Statute Book. I made inquiry of several estate agents of standing, some of whom I knew in London, others of whom I knew in the suburbs; and, not being satisfied with the information I got in that way, I went to the Surveyors' Institution and asked them to tell me the names of the leading estate agents in certain of the big provincial towns. I have in my hand 22 letters that I have received in reply from the various agents, and I propose to read to the House extracts from those letters. I am not going to say that that is final, but I am going to state that the reports I have received—[HON. MEMBERS: "Ex parte, of course!"]—as to the fact that they did not know many of these cases—
§ Mr. RYE
I have been engaged in business in the West End of London for 35 years, and have had considerable experience in dealing with both landlords and tenants, and I can only call to mind two 2381 of these cases to which reference has been made. In one case a building lease was granted of a block of old and dilapidated property, subject to the benefits of existing leases. I do not think that even the hon. Member for Grimsby (Mr. Womersley) would say that it was very wrong to let premises on building lease when the property was old and worn out. The other case was that of a block in Wardour Street, where a lease was granted, admittedly over the heads of the tenants, subject to the benefit of the existing leases. I do not think, myself, that that was right; I think the landlord should have given the tenants an opportunity; but in the end very little harm was done, because only one tenant was displaced, in order to enable a very large draper to extend his premises. Renewals were granted to the remaining tenants, so that in fact the sitting tenants, with one exception, were not turned out. I have a letter from Messrs. Farebrother, Ellis and Co.—
§ Sir H. SLESSER
The hon. Member will admit that those letters are as much ex parte as the evidence on which the Government prepared their Bill.
§ Mr. RYE
With this difference, that we do not know who gave the evidence to the Government, and we do know the names of the writers of these letters. This firm—a firm of very high repute—say:As far as we can remember, we have not, fortunately, had a client who has even attempted to blackmail his tenants, nor should we countenance anything of the sort.I asked the specific question, "Do you know any specific cases in which any tenant has been blackmailed?"
§ Major CRAWFURD
Is it conceivable that any professional man would say that one of his clients had blackmailed his tenant?
§ Mr. RYE
I cannot recollect the terms of my letter to that particular firm, but I can give the actual words of one that I wrote to another surveyor of high repute. He says this:You addressed to me the following question: Have I known a case (a) where a landlord has let premises over the head of his tenant and to a rival firm; (b) where he has refused to grant a renewal at the end of the lease; and (c) where rent has been charged based in part on goodwill? I have thought the matter over very care fully since the receipt of your letter, and I admit I have never in the course of my experience met with either of these three cases.That is a very clear statement indeed. I have another letter from a very important firm in the City of London of very high standing to whom I put the same question.We know of no case in our experience which has occurred in recent years where the landlords have (a) let the premises over the heads of the tenants to rival firms and (b) refused to grant renewal at the end of the lease, of course unless the premises have been required for demolition and in a few cases for occupation by the owners; and where rent has been charged based in part on goodwill.That again is a very clear statement. I have another letter from a very well-known firm in the West End. They say:I have been in business for the past 35 years and have never known a case whore a landlord has demanded and obtained a rent attributable to the value of the goodwill.Here is another:I have found that in my long experience as an agent, landlords are only too willing to keep good tenants and to renew their leases at a fair market value and sometimes the rentals are below what could be obtained from the public, but of course I have come across a few isolated cases where landlords have been approached and offered such exceptional terms that they have been tempted to grant leases without giving the occupying tenants an opportunity to offer the same figure, but those cases have been very rare.I will give another.I cannot recall a case where a landlord has turned out an old tenant to make way for re-letting to some other party. I know of very few cases where a landlord has blackmailed his tenant and insisted upon payment of a rent in excess of the market value. There are, of course a few individual cases which I could call to mind but generally the landlord is anxious to retain a tenant with an established business. In my experience it is also rare to find a landlord letting premises over his tenant's head.2383 That is clear enough. Here is another, from a well-known agent:I have had no cases where I could definitely say any portion of the rent obtainable is attributable to the value of the goodwill.I have another in Marylebone.We have heard a case of a landlord of business premises letting over the head of a sitting tenant and to a rival firm. We have never encountered any case of rent being charged for premises based in part of the tenant's goodwill. On the contrary we have experience in several instances of tenants being granted renewal of business premises at a fair rent and immediately making a considerable profit at the expense of the landlord by assigning or under-letting.All through I find this in London, in the suburbs and in the provinces. I have one letter from a well-known firm in Newcastle. I do not know them, but I am told by the Surveyors' Institution that they are the largest firm in Newcastle. They say:We have never refused to grant a renewal of the lease of business premises nor have we let premises over the heads of tenants to persons carrying on a similar business nor demanded rent based partly on goodwill. This not only applies to my firm but to every firm of repute that I know of in the North of England. I have never once heard it suggested in my business career that tenants have been dealt with in that way at Newcastle. Of course in other districts there are landlords who treat tenants harshly but I believe those are very exceptional cases.I decline to assume for a moment that these agents are either incompetent or have no experience or are untruthful.
§ Mr. MORRIS
Did you ask them what the rents were before the renewals were made or what they were when the renewals were made?
§ Mr. WALLHEAD
Does not the hon. Member see that he is asking these firms to admit in some sense that they were the agents of injustice?
§ Mr. RYE
I refuse to admit that any firm of repute would make an explicit statement to that effect. I do not happen to be a member of that profession but I refuse to believe in my own profession that if specific questions were put, deliberate lies would be told. Those gentlemen do not know of many cases. There are, of course, eases, but the whole question is the number of them. Are they sufficient in number of justify this legislation? Reference has been made by several speakers to the Report of the Select Committee on Business Premises, in which the Parliamentary Secretary to the Ministry of Health took part. They said that the great majority of landlords had not acted harshly to their tenants.
Now I want to come to the question of the damage that is going to be done if the Bill is put on the Statute Book. In my opinion there is bound to be a reduction in values. That must be obvious to everyone. If to-day you have property which is not restricted in any way, it cannot be of the same value in future if restrictions are placed upon it. Now I want to quote from this Report under the head of "General Effect of Evidence":Witnesses of great experience in dealing with property have impressed upon the Committee the importance of avoiding any provisions which may discourage the investment of capital in the erection and reconstruction of premises.That was the considered Report of the Select Committee. They went on, under the heading of "Conclusions":In deciding as to whether legislation should be of a temporary or permanent character, and as to what precise form it should take. Your Committee consider that as a general principle a minimum of State restriction is to be desired. There is no question that building operations have been deterred by the Rent Restriction Acts, and such must be the effect of every Measure which operates to deprive an owner of reaping the full economic benefits accruing from his property.Under Clause 21 the real problem is how to meet the present difficulty without deterring builders and owners from embarking on the task of building reconstruction and without deterring capitalists from financing such operations. It is clear that there will be no builders 2385 and no mortgagees if the State applies restrictions on the right of owners to claim economic rents and to dispossess tenants upon the expiration of their tenancies. This is to-day the cardinal objection to giving large statutory rights of compensation for disturbance or improvements and establishing fixity of tenure. That was the Report of the Committee of 1920 and yet to-day, in face of that, and with the knowledge that property must be reduced in value and that there will be a stoppage in the building of business premises and that it will retard the reconstruction of such premises, the Government, without any expert views that we know of, without any Commission's Report, without any recommendation, ask the House to accept this very drastic Measure. The hon. Member for Grimsby made a reference to the Irish Act. He said that Ireland had their Town Tenants Act of 1906 and if Ireland had it, why could we not have one? I would remind him that there is a considerable difference between the Irish Act and the present Bill. Under the Irish Act, there was no right of renewal. There is given the right to renew under Clause 5 of this Bill.
§ Mr. WOMERSLEY
I did not want to interrupt, but this is a very important point. It is laid down in the Irish Act that no compensation for improvements shall be given if the Court consider that the landlord had offered a new tenancy. If the landlord offers a new tenancy there is no compensation under this Bill. The tenant cannot claim a new tenancy if compensation is offered him. It is the same in the Irish Act.
§ Mr. RYE
I am rather afraid that the hon. Member, although he is right in what he says about the Irish Act, has not read this Bill. Had he done so and appreciated it, he would see that the tenant, under Clause 5, if he is not satisfied with the compensation, and does not consider it adequate to pay for his removal and disturbance, can demand from the landlord a renewal, and in certain events the Tribunal can grant a renewal. Therefore, I am right in saying that there is a very considerable difference between the Irish Act of 1906 and the Bill under discussion. There is this further difference. In regard to compensation for improvements, under the Irish Act allowance is made for the time of 2386 the enjoyment of the improvement. Something had to be taken off the compensation for improvements for the time during which the tenant of the Irish premises had enjoyed those improvements. That is not in this Bill. Compensation for unreasonable disturbance under the Irish Act is not to apply to contracts existing at the passing of the Act where the rent is under £100 a year. That is not in this Bill. Furthermore, I would like to draw the attention of the House to what Lord Bryce, who was then Chief Secretary for Ireland, said during the Debate on the Irish Bill. He said that he thought it was ridiculous to say that a Bill passed for Ireland was certain to be extended to England. It was not probable, and it would not happen unless and until similar conditions existed in England. Are the conditions in England to-day the same as they were then in Ireland? There is a considerable difference.
I want to refer to a statement made by the Home Secretary. He explained why this Bill, as far as compensation for improvements went, would not extend to leases granted before the passing of the Bill. He quoted from a Liberal Brown Book, and said that as such premises had been purchased, mortgaged, and otherwise dealt with, it would not be reasonable to give compensation for improvements, as that would affect those who had dealt with the property. That is the very reason why premises that were lot before the passing of this Bill should not be liable to pay compensation for goodwill. There cannot be any distinction, because the premises which are to be subject to a claim for compensation for goodwill also have been dealt with. They have been sold on the faith of the existing lease, and they have been mortgaged and have been generally dealt with. The Home Secretary cannot, therefore, defend Clause 4 in regard to the payment of compensation for goodwill. On these and other grounds no case has been made out for Part I of the Bill. Part II of the Bill is quite right in principle, and, subject to certain alterations to be made in Committee, no one could seriously object to it.
We have to ask ourselves whether in our desire to prevent the bad landlords, who are in a small minority, from getting the better of tenants, as undoubtedly has been done, and will be done again, we 2387 shall do something which, will penalise the good landlords, take away from them the control of their own property, reduce values and retard the building or reconstruction of business premises. That is the real question which the House has to consider, and unless the House is satisfied that the cases of hardship are so many and so prejudicial that it is imperative to pass such a Bill, I do not think it would be right for us to accept this Bill in the present state of Part I. For that reason, I am unable to accept it.
§ 9.0 p.m.
§ Major CRAWFURD
I think the House will have been very interested in the speech of the hon. Member for Loughborough (Mr. Rye). I was very interested particularly in his reading of the extracts from the opinions of people who, apparently, are not ex-parte. witnesses. I have had considerable experience of this question, not from the standpoint of the hon. Member, but I am afraid in a capacity which he will regard as very biased. Some 13 or 14 years ago, I and those with whom I am now and with whom I was then politically associated, instituted an inquiry into land conditions, and so far as the urban side of the inquiry was concerned, I was very largely responsible. We published a volume which the hon. Member may or may not have read in regard to the urban land conditions in 1913. We recognised that we approached the question from the point of view of a political party, and, although we were not likely to tell lies, we did realise that we would probably have a certain amount cibias. Therefore, we reduced our facts. Even now, if the hon. Member will read that volume he will see plenty of cases of the kind to which he has referred: cases which can be investigated.
I do not say for a moment that the authorities which the hon. Member has quoted have deliberately misrepresented facts, but just as the bowl which is constructed in order to reach the jack, naturally turns over one way, so it is inevitable that people who are chiefly employed by the owners of property must have a natural bias in that direction. The hon. Member says, and I think he says truly, that the majority of landlords are good landlords. Let us accept that, for the sake of argument. It may be perfectly true. I could take hon. Members.
2388 when the House has risen, to parts of London where the evidence of good landlordism is there for all to see, side by side with the evidence of bad landlordism. Let me point out to the hon. Member that that applies to all classes of the community. Laws are passed not for the majority, but for the exceptions. The majority of people keep their contracts; the law of contracts is for those who do not. The majority of us do not steal; the laws against theft are for those who do. Surely, it is no argument against this Bill to say that a large number of landlords will never come up against its provisions.
The hon. Member says that this Bill will lead to a reduction in values. Let me put to him this question. Is it right that the trader who creates goodwill should be penalised on that account? Let me give him the kind of case I mean. Hon. Members opposite are perhaps on the approach of the Easter holidays sitting in a West End club and they suddenly realise that the time has arrived for them to buy a new hat. What do they do? They do not look up a hatter. They just get up, leave the club, and their steps almost automatically take them to one of a half a dozen shops where they have been accustomed to buy their hats. The reason is that the people in these establishments have created a goodwill which impels people to go there. It is created by their business instinct, their courtesy, their promptitude and their rectitude, and when the lease of these premises comes to an end is it right that the landlord should be able to exact a higher rent, partly because of the fact that somebody else coming in, who desires to use the same premises for the same purpose, is prepared to pay a higher rent because he has not had to build up and establish a business there all through the past years? If the hon. Member is going to say that there will be a reduction in values because of these provisions, surely he has admitted that part of the value of these premises is derived from this unjust exaction. And if these exactions are unjust there can be nothing wrong in making them impossible in the future. What the hon. Member means by a "full economic value" I do not know.
§ Major CRAWFURD
I thought the hon. Member said that people had been accustomed1 to get the full economic value.
§ Major CRAWFURD
The face of London is scarred by inequalities and injustices perpetrated under the leasehold system. I could show them to the hon. Member. I am not going to suggest that these injustices have all been perpetrated by landlords. There are people who have been in the position of occupier and tenant who have used their position in order to exact more than was their due from an increase in values. For instance, there is a large hotel in the middle of London which to-day exists in a truncated design from the original one because one of the tenants, whose interest was bought out, stood out for a price which it was quite impossible to pay. There is another large business premises in Oxford Street where, owing to the enormous value of the licence of some licensed premises, was compelled to put up its establishment lopsided. There is another case of a small street running from one of the best London squares to another thoroughfare where every tenant of a large block of flats is put to inconvenience to-day because some people who were in possession of ancient lights tried to exact money in the same way.
On the other hand, you have scores of streets in London in districts where there has been good landlordism and districts where there has been bad landlordism; and you can see the effect of these two things. Where you have had good landlords who have dealt fairly with their tenants, and have been prepared to grant them renewal leases in good time before the lease was due to come to an end—a very important matter—on fair terms, in almost every case you have good property well kept. I do not in the least mind quoting such estates. One is the Grosvenor estate, and the other is the Cadogan estate. There you see the effects of comparatively good landlordism. You walk across to the North and you will find other estates where the houses are rotting and falling in, where there 2390 is the worst kind of tenant, simply because the landlord has not seen fit to look after his land properly and grant a renewal of the lease.
My complaint is not that the Bill is going to destroy the value of property but that it is like other Government legislation which has been described else-where as "feeding Cerebus on bird seed." I do not go as far as that. I think the one thing a business tenant, and also the occupier of house property, wants is certainty. I am not one of those who believe that certainty is best acquired by leasehold enfranchisement. I agree that there is a good deal to be said for the leasehold system when it is properly used, and what is most to be said in its favour is that a good many leasehold estates are well planned. I know that this planning has been accompanied by what I would call something in the nature of restrictions. The landlord's solicitor and architect, and surveyor, are always to be employed and you must not use the land for this purpose and for that. These are commonplaces of the leasehold system, but you can say that the better landlords under the leasehold system have planned their estates well. I do not think leasehold enfranchisement is the solution of this question, because by leasehold enfranchisement you simply exchange one landlord for another. What you want to do is to regulate the relations between all landlords and all tenants, so that no landlord can ever do injustice to a tenant and no tenant can ever exact more than he has a right to from land values. Therefore all these questions of land tenure, which are very difficult and which it would be much better to argue simply on their merits without bringing in the interests of this person or that, can best be solved when they are dealt with on certain fundamental principles. One is this.
It seems to me to be wrong that it should be left to the landlord of land or property to say when a tenancy or lease is to come to an end. I know at once the consideration which comes to the hon. Member's mind. He would say, "After all it is the landlord's property and his interest in it is the greatest." I contest that statement. If you have a shopkeeper on a 7, 14 or 21 years' agreement, the interest which that shopkeeper has acquired in those premises 2391 they are his livelihood and the livelihood of those dependent on him, is as great as the interest of the landlord, who very likely never sees the place from one year's end to another. I would have liked the Government to have said boldly what they have said partially in Clause 5. I am not clear whether Clause 5 does or does not give the right to renew. I think it does not. It does not give, I think, an absolute right to renewal.
§ Sir W. JOYNSON-HICKS
It does not give an absolute right, but it is in the hands of the tribunal to decide. If the tenant alleges that the compensation to be provided under Clause 4 is not sufficient and he ought to have renewal of the lease, the question of renewal goes to the tribunal, which has to decide whether or not the allegation is correct.
§ Major CRAWFURD
I am grateful to the right hon. Gentleman. Then I say that the Government would have done better to have made Clause 1 of Clause 5, and to have laid down the general proposition that the tenant has absolute right to renewal of his tenure unless it would conflict with the public interest; by that I mean unless it is quite clear that the land may be and should be used for some better, more remunerative or more suitable purpose, and that the particular tenant could not afford to take his part in that movement. It seems to me that the interest of the business community cannot possibly be satisfied and their rights cannot be satisfied until they have that security of tenure based upon the right of renewal with certain exceptions. Then I want to ask another question. I think that the hon. Member who spoke last did make certain exceptions to his condemnation of the Bill with regard to Part 2. May I quote him a case?
It is a case of some years ago, the case of a man who set up a drapery business somewhere in the North of London. I am not. able at the moment to give full particulars, because I am speaking from memory. This man prospered, and he acquired the premises next to the first shop that he occupied. His business expanded still more. At a certain time he made a hole in the wall that divided the two premises in order to have a communication between two departments. He was doing wrong; he was breaking a 2392 clause in his lease. But what he did passed unnoticed for some years, and it did no one any harm. It helped customers in wet weather to go under shelter from one department to another. One day the agent of the owner happened to come into the shop, and he said, "Hallo, this door was not here before." The reply was, "No, it was made four years ago." The landlord sent in a demand for a fine and an increased rent, and because the tenant would not pay it he was compelled, after action in a court of law, to replace the wall as it had been before, although he had given an undertaking that if at any time he gave up the premises he would reinstate the wall. The judge who heard the case was so impressed with the monstrous nature of the claim that he refused to allow the landlord his costs.
Mark what happened. In the course of nature the owner of this business died, and he left it to his two assistants, who carried it on for some years, and then said, "We must have this door," They went again to the landlord, but before the landlord would waive his right to object to the improvement, he made them pay an additional rent, I think it was of £50 or £70 a year, and a fine of £200, and they had to pay the costs of the original law suit between the landlord and their predecessor. Is it possible that people can complain if a Bill is brought in by a Conservative Government to stop cases of that kind?
§ Major CRAWFURD
I will give the hon. Member another case. It is the case of some large premises which were at a corner site in Piccadilly. A professional firm occupied some offices in the building, renting them from an intermediate landlord, who held from the ground landlord, which was a large corporation. When the term of the tenancy came to an end, or was nearing its end, these tenants were served with a notice of dilapidations. They were surprised at the receipt of this notice, because it was common knowledge that the buildings were coming down. The notice represented the amount which it would cost to put the premises in the state in which they were at first. The tenants wrote to 2393 the intermediate landlord, and said: "We are very surprised at receiving thi3 notice, because we hear that the premises are coming down." The landlord replied: "Yes, we know they are, but we have been compelled to serve you with this notice of dipalidations because we, in our turn, have had such a notice served on us by the superior landlord." Rather than pay that blackmail these particular people did the repair themselves, and a week after their workmen went out the housebreakers came in and the building was brought down. I shall be very glad if this Bill will remedy that sort of thing.
§ Major CRAWFURD
I am glad that we have the hon. Member with us so far. Even then I am not sure that the Bill does cover that case completely.
§ Major CRAWFURD
I think that everyone who has the interest of traders at heart will welcome this Bill as an instalment. I deplore that the Bill has not gone much further and included house property. I also deplore the fact that it has not gone further in giving the trader and occupier of premises an absolute right of renewal, subject, of course, to the decision of a tribunal. I make one appeal to the right hon. Gentleman. I think that the principle which is introduced into the Bill is the right one—the principle of what is in effect a land court to settle these questions. I have been convinced for years that that is the right principle. I can find nothing in the Bill at the moment which would safeguard this, but I would urge the right hon. Gentleman to give this tribunal the character which will alone make it effective, and that is that it shall be cheap, expeditious and readily accessible to all those who may wish to appeal to it, because it is quite clear that if the small shopkeeper has hanging over his head the threat of an appeal from a court of this kind, with a possible loss of money, he will be deterred from going to the tribunal and the landlord will be able to make use of that fear. With these exceptions, at any rate as a first step—it is only a first step, because the Bill will have to be followed 2394 by others—I and those who are associated with me will vote for the Second Reading of the Bill.
Lieut.-Colonel Sir MERVYNMAN-NINGHAM-BULLER
I wish to make it perfectly clear, first of all, that I am in absolute agreement with all sides of the House in support of the intention of the Bill, the intention to remove the abuses of the present system and the injustices which undoubtedly do occur, though they do not occur in such a number as is always imagined. But when I examine this Bill I am forced to the conclusion that it goes a long way beyond anything necessary to achieve that purpose. The results of the Bill will be found to be possibly more serious and far-reaching than is evident at first glance, and in their effort to remove certain abuses the Government very likely will create fresh ones. Undoubtedly the result of the Bill will be great disturbance to, and difficulties in, the administration of estates, and it will not facilitate their administration on the lines on which they have hitherto been conducted. What is the main feature of the Bill? I think it is that it transfers the responsibility and management from the existing owners and landlords of properties to a body of officials. That is rather a drastic measure, and we are well entitled to ask whether the result obtained by the present system warrants such an extreme step.
If we examine the results of the present system, I do not think they are altogether unsatisfactory. If there were widespread evidence of maladministration of estates; if the building of business premises were stagnant and making no progress and if investments and the valuation of these estates were to stand still or to diminish or, further, if the harshness applied to tenants were such that there was a lack of tenants applying for leases, then there might have been a very strong case for the Government removing the control to a very large extent from the owners to the tribunal of officials suggested under the Bill. I maintain that experience has been the very opposite to that, and that on the whole the urban estates in this country have been well administered. There are exceptions, I know, but they are a minority. It is evident to everybody that building on and improvements to estates are going 2395 on at a very rapid rate in all the leading cities in this country and that our cities will very well bear comparison with the business cities of any other country in the world.
Again, under this system there has been created a feeling of security which has made this a very favourite field for sound investment. I would point out that when leases become vacant there is generally no lack of tenants to apply for them. That is not evidence of any widespread harshness of treatment to tenants. What becomes, in these circumstances, of the case of the Government for transferring in a large degree the control of these properties from their owners to the tribunal? Are we quite sure that in all cases the decision of the tribunal will be Any more for just treatment than the present conditions? What are the conditions now? If a lease is vacant, the terms are settled by negotiation between the owner and tenant, and if the tenant does not approve of the conditions he is at liberty to decline them. Under certain conditions under this Bill, a tenant may find himself bound to accept a lease for a term of years at a price which is unknown to him until the decision is made by the tribunal. We have heard a good deal on a certain Committee upstairs about the blind booking of films but the blind booking of leases is an entirely new departure and yet that is what is going to happen in certain circumstances under the Bill as at present constituted. I do not know that that is a procedure which will altogether commend itself to the tenant.
I want to say a word, too, about the question of goodwill. Goodwill is an extremely hard thing to define, hut I think all of us are willing and anxious to treat the tenant fairly in regard to that question. I must point out one result of the Clause regarding goodwill under this Bill. Ground rents and the termination of leases have been a very popular and sound form of investment, and a vast number of people in this country have money so invested at the present time. One of the reasons for the popularity of this form of investment has been its security. Now, if any individual buys a ground rent or the termination of a lease, the position is quite different. He is to be faced with 2396 an unknown liability for compensation for the capitalised value of the goodwill and for improvements. That alters the nature of these investments altogether. It is an instance of the deterioration of values which will take place under this Bill. That, again, is bound to affect the position of those who have lent on mortgage on such property. Though the Home Secretary, in introducing the Bill, dealt very fully with many of its Clauses, I did not notice that he made any reference whatever to the financial results on property and investment and mortgages, which undoubtedly will be affected by the Bill. That is a matter of some importance, and should not be overlooked.
Further, as regards goodwill, under the Bill you find one position which I think is really rather remarkable, and that is where a tenant applies for compensation for goodwill the matter is referred to the tribunal and the decision of the tribunal is binding on the landlord but is not binding on the tenant. Surely, in common justice and without any desire to be harsh to tenants, if he claims goodwill, the decision of the tribunal should be equally binding on both parties. I really fail to Bee why, after compensation is given to the tenant for goodwill, he should have the right of an option to demand a new lease. He is already compensated for failing to get a new lease, and I do not see where the justification for demanding a new lease comes in.
I have had a good many years' experience as trustee in the administration of estates, and it has always been my experience that an old-established tenant invariably gets preference over any other tenants when a lease falls in. I am prepared to admit that is not the case in all estates; I wish it were. It is a sound policy from the point of view of estate management. There is such a thing as the goodwill of an estate, and where an estate has a reputation for maintaining tenants over a long period of years, sometimes generation after generation, and has a reputation for treating them well, when it has a lease to: dispose of you may be perfectly certain that there will be plenty of applicants and good-class tenants, and that will inure to the good of the estate.
Another point about the Bill is that I am extremely doubtful as to how far 2397 it can work if passed in its present form. The difficulties of administering an estate will be very largely increased. May I give one example; I could give many, but I do not want to weary the House by discussing them in detail. Take the example of premises which are let by a ground landlord to a man who becomes an intermediary landlord and sub-lets possibly the ground floor to another tenant. The difficulties of the Bill really only begin when you realise that in many cases there is not one landlord and tenant only, but two, three or more intermediary landlords. In this case, under the Bill, the ground landlord lets the premises to another man, called the mesne landlord, who sub-lets the ground floor to the tenant. At the end of the tenancy the tenant applies to the mesne landlord for compensation for goodwill. The mesne landlord probably is not in a position to offer the alternative of a new lease and he is faced with the necessity of paying the tenant the amount required for goodwill. Within two months only of the expiration of the lease, he can transfer that claim to his superior landlord, that is the ground landlord. The ground landlord has one month in which he can inform the mesne landlord that, instead of paying him the amount of the goodwill, he is prepared to give him an extension of the lease on terms determined by the tribunal, and one further month is allowed to the intermediary landlord to say whether he will accept that offer or not. But by this time the lease has expired and you have this extraordinary position—that the lease has expired before ever the matter has gone to the tribunal for decision. That is a state of chaos and uncertainty which is not desirable and which will not lead to the good and efficient management of estates. I give one example but several more could be given.
When all is said and done the tribunals are really the deciding factor in this Bill. The tribunal in each particular case only consists of one man from whose decision there is no appeal and when one examines the various problems which have to be settled by that one individual—who might, I think, be termed a referee rather than a tribunal —one finds that the decisions which he has to make are so numerous and complicated that a vast number of these referees will be required. They will of 2398 necessity, require to have many qualifications. The Bill does not tell us what qualification they are to possess and the Home Secretary says he thought 40 or 50 of them might do the work, but I think in practice many more will be found necessary. They have to settle the compensation for improvements, to determine the increase in the letting value caused by improvement, to settle damages for breach of covenant or agreement, to certify proper improvements, to settle the capitalised value of goodwill, to settle the amount of the terminal rent, to settle the compensation under Clause 5, Sub-section (3), to settle the terms of the surrender of the lease, to settle the amount of dilapidation and other matters. These are heavy and onerous duties to place on one man. In many cases notice is not given to the tribunal until six months or, in some cases, three months before the termination of the lease. All these cases would involve the examination of papers and witnesses and if is quite conceivable that in many cases the lease will have lapsed before the decision of the tribunal becomes known.
May I give one instance to show that a vast number of such men will be required? It is a common practice on estates to arrange matters so that the leases of three or four or five adjoining premises fall in at the same time. That is done in case it should be found necessary or advisable to rebuild, and to put up one big building on the space formerly occupied by several small buildings. When that lakes place, you will have, in the one place, five different tenants all able to make applications, all able to refer matters to this one tribunal. Even supposing the tribunal has no other matters in hand at all, and presumably he will have other cases, he has only a short time in which to go through all these points and make his decision upon them. The lease may have terminated, or almost terminated, before the landlord or the tenant knows his position, and that will make estate management exceedingly difficult. The last speaker expressed the view that the landlord should not at any time be able to determine when a lease is to end. I will point out one reason why. except in some cases, it is advisable that the landlord should be able to determine the end of a lease. The growth of our large cities has taken place on these lines—first, you have a number of 2399 small buildings, and then, under good estate management, it is arranged that the leases of adjoining premises should fall in at the same time, so that when the growth of the town warrants it, it is possible to deal with these adjoining premises all at once and perhaps replace three small buildings by one good building.
It is on those lines that great improvements in our leading towns and business centres have taken place. If it is to be made impossible for a landlord ever to determine when a lease shall expire, it will put a check on the development and improvement of our towns. I think it is in the interest of the community that the building and improvement of our towns should be constant, regular and permanent. The questions to be settled by these tribunals are so serious that it would be more satisfactory if they could be referred to a tribunal of three men rather than a tribunal of one. I realise that many will be required to deal with existing problems, and that it is only by multiplying the number that you will get something which will be more satisfactory and sounder in the nature of a tribunal, but I trust that this Bill will be considerably changed in Committee. I am no less desirous than anybody else of helping to produce some Measure which will stop the maladministration of estates and the harsh treatment of tenants, but great care must be taken that, in attempting to bring that about, we are not damaging other people and other interests and depreciating values. Possibly in our efforts to do good in one direction we may do harm in many other directions. As I am anxious to see these evils remedied, I am prepared to vote for the Second Reading of the Bill; but unless it is materially altered in Committee, I shall find it somewhat difficult to support its Third Beading.
§ Mr. MAXTON
I am one of the few Members of this House who have listened with care and interest to this Debate practically from its beginning to the present stage. Considering that this is one of the Government's great first-class Measures of social reconstruction it has been rather pitiable to see the very small attendance during its discussion to-day. Those who heard the Foreign Secretary 2400 defend the Government's Chinese policy yesterday will remember that the only really strong point which he made in defence of the Government was that the party opposed to him spoke with two voices on the matter. The Foreign Secretary's defence of his Chinese policy was that this party had two minds in criticising it. If it be a terrible offence to have two voices in a party, what must be the position of the right hon. Gentleman the Home Secretary, because there have been about six voices behind him in this Debate and up to date not one of them has been in agreement with him. He is a voice crying in the wilderness.
§ Mr. MAXTON
I know that some have said they are going to vote for the Second Reading, but they are all doing it with regret and under compulsion. I rise mainly to give the right hon. Gentleman a little encouragement and support, not for his Bill, but for the peroration to his speech in support of the Bill. He appealed to the hon. Members round about him to try to remember that we are living in the 20th century and not in the 18th. I agree with him that that exhortation was very necessary, though he was probably putting the date a little late when he put it in the 18th century. Perhaps he should have asked them to get out of the Middle Ages into modern times. But having supported him in that appeal to his followers, I want to appeal to him to try to get out of the 19th century and into the 20th. This Measure is an attempt to deal with what was the feud of the 19th century. From 1800 up to 1900 the struggle on the part of the landlord to survive against the rising commercial classes went on, and this is only the tail end of that struggle, but the real struggle to-day is not between those two sections at all. The right hon. Gentleman's speech to-day is an attempt to get complete class solidarity. He is endeavouring to get the old landed gentry in this country to give away a few of their minor privileges in order that unity can be obtained between them and the commercial classes. That is very important, in face of a rising working class.
This Bill is complementary, supplementary to the Trade Union Bill that was introduced the other day. With one 2401 hand the Government set out on a plan to smash the rising working classes, and with the other hand they endeavour to consolidate their own forces. They say: "Let us stop this squabble between the landed interests and the commercial interests; let us be united to crush the working classes in their demand for something better." As I said, the right hon. Gentleman is living in the nineteenth century. This Measure will not interest the working classes of this country at all. It has not interested the party on these benches. It has not even interested hon. Members opposite to any serious extent. I notice that the hon. Member for llford (Sir F. Wise), who can follow the driest of debates in this House with the most active interest, has only maintained his tenacious place on the benches opposite by sleeping most of the time —[Laughter] —and the hon. Member for Cambridge University (Mr. Withers), who has also an intellectual interest in this academic subject, has only wakened up just now when the laughter came. He does not yet appreciate quite what is being discussed, and there is a look of wonder still on his face. I can assure hon. Members opposite that their lack of interest is the first occasion on which they have been really representing the workers who sent them to this House, because the working class of this country are absolutely uninterested in this Measure.
What is it? Here we have a body of landlords, and a body of commercialists who are running business on their land. At the end of certain periods of time, varying in different circumstances, the man of business is removing from the premises or being removed. Weighing up the results of 18, 20 or 25 years' effort on a particular site, he finds that he has made perhaps £20,000. The landlord realises that he has made it too, and in years past the landlord has said: "I am going to have a big share of this loot that has been acquired by this commercialist who has premises on my land." The landlord has confiscated the property of the commercialist. The right hon. Gentleman opposite used that word "confiscated" as describing the attitude of the landlord, and I am prepared to accept his word. That has been the attitude of the landlords towards the commercial people who have had to use their land. The right hon. Gentleman has 2402 denounced it in connection with business premises, and I have heard other hon. and right hon. Members opposite denounce the theft and robbery that were carried on by the owners of land who bad mineral resources under the soil. That is denounced by those persons who are actively interested in coal mining, and I have heard it denounced by agriculturists also. Always when his particular Measure is being debated, the particular type of landowner is denounced, but the general landowner is always approved.
The good landlord has been referred to. I think it was in Ireland that they had the adage some time ago that there were no good landlords except dead landlords, and I am inclined to believe that that is the right view to take. Here they have the two of them. The landlord has been confiscating what the commercialist claims has been the result of his effort, his capacity, his initiative, his enterprise. I, like the right hon. Gentleman, am very strongly against one man confiscating the property of another. I think it is an absolutely wrong principle that any one individual should be able to rob any other individual or any group of individuals The only body of persons which has the right to confiscate the property of others is the State—[Langhter.] Where is the humour of that? On Monday next we shall listen to the various methods by which the Tory Government propose to confiscate the property of individuals. There will be Income Tax, there will be Death Duties, there will be a hundred other things, all of them methods by which the State confiscates the property of individual citizens. Every State has always had that right, and always will have it. Admitting that sometimes it is only 4s. 10d. in the £ and that it might be 20s., that is only a difference of degree, not of principle. The only people who have the right to confiscate are the organised citizens through the State, and I object to confiscation by a landlord or by a commercialist.
What right has a commercialist to confiscate anything? The hon. and gallant Member for West Walthamstow (Major Crawfurd) talked about a drapery business somewhere, in which a man had made good by his enterprise and initiative, and the landlord came along and demanded a share of the loot, but Was it this man 2403 who had made the profit out of that business? Was this the person responsible for producing the wealth? I heard grievous complaints from the owner of a his; warehouse about the voracious demands of the ground landlord, of how, when he was making some extension, this man was prepared to steal from him what had been the result of his enterprise, his initiative, the risks he had taken; and in that same warehouse that same firm dismissed a woman who had worked for them for 20 years as a dressmaker, because she was getting £2 a week, and they had others who could do the work for 30s., confiscating what was her means of existence, taking away from her the contribution that she had made to the success of that business. Everyone knows in these days that the success of any commercial enterprise does not depend upon the figurehead who has put the capital into the business. The person who has put the capital into the business may be away in the far ends of the earth. The persons who really create a goodwill for that business, and who create success in that business, are the various shop assistants, the shopwalkers, the people who receive customers in a courteous way when they come in, who do their best to see their needs are met: the assistants who serve the goods over the counter, the weavers who weave the cloth.
All those people go to create goodwill. The landlord has been in the habit of taking the whole lot in the past, or as much as he could impose upon the commercial man without absolutely putting him out of business. This Bill is proposing to divide the loot between the two of them, and I am suggesting that neither the one nor the other has any right to it. What compensation are the shop assistants going to get for creating the goodwill of the business? What compensation are the customers going to get? After all, the customers are the persons who really decide whether a business is going to be a success or a failure. What compensation is the community going to get? The community does not come into this at all. Everyone knows that any reconstruction of a town means the redistribution of the prosperity of various persons. I had some other figures the other day about the change made in the value of property by the creation of 2404 certain London bridges and the changes that are likely to take place by the creation of other bridges, new roads, new halting places for trams,, the new circulatory system. It makes a difference to the shopkeeper who happens to have a shop at a place where the omnibuses stop. All these things go to the creation of goodwill, and here in this House we are seriously settling what proportion the landlord and the business man are to have in the value that is created. I am putting it that neither the one nor the other has any right to any of it, that it is the community generally, the customers, the workers who have the claim to the additional value created by their labours and the goodwill of the common people.
I had some statistics the other day which go to show that only 13 out of every 100 people of this country, when they die, leave any property of which it is worth the while of the Income Tax Commissioners to take any notice; 87 out of every 100 people die without any property, and this Bill is only of value and interest to the odd 13. I suggest it is too late in the day, in the twentieth century, to take up the time of this House of Commons in discussing how different sections of the capitalist class in this country are going to divide between them the results of their exploitation. The problem before this country to-day, and before this House now, is when are the governors of this country going to see that the working classes, who create the wealth of the organised community, are going to have their fair share of the results that they produce? I am going to vote against this Bill, not because it does not go far enough, but because t is based on an absolutely wrong principle.
§ 10.0 p.m.
§ Mr. ATKINSON
I should like to say a word or two about the Bill before the House, and I only want to call attention to two points. One is suggested by a case that has been put forward to-day. A grocer is carrying on business in a certain shop. His 2! years' lease expires next year. He has approached his landlord to see if he can count on his lease being renewed. His landlord has told him that he has just sold the shop to a purchaser. He then goes to the purchaser to see if he will grant him a renewal, but the purchaser declines, because 2405 he says he intends to open a shop there himself when the lease expires. The purchaser is a wealthy co-operative society. Under Clause 5 it would be quite impossible for the tenant to get a new lease granted to him, as the landlord can prove that the premises are required for occupation by himself. It seems to me that it in a flaw in the Bill that a man who buys a shop over the head of another man becomes a landlord requiring the premises for occupation for himself, and, therefore, cannot be compelled to renew the lease to the man who may have been there for 21 years. The other point is this—and we were asked to point out any case of injustice that occurred to us, and it seems to me this is a case of injustice—when you are dealing with compensation for goodwill, the landlord cannot be compelled to pay compensation if he is ready to grant a new lease, but when you are dealing with compensation for improvements, he has no such advantage. And note that a landlord can be compelled to submit to improvements to which he objects, improvements which he does not want, and for which he cannot afford to pay; yet when the lease or tenancy expires he can be tailed upon to pay for these improvements, although he may be perfectly willing to grant a new lease. It seems to me the height of injustice to put that upon the landlord.
Let me give another illustration of a ease which came to my notice—the case of a woman—a widow—who had been left with two or three small houses and a little shop, which she or her husband had let to a tenant for some years. The tenant assigned it to multiple-shop owners, who proceeded to improve the shop, put in a big window, and improved the inside, and spent a good deal of money upon the shop. Probably those are all improvements which would be authorised by this tribunal as reasonable and improving the letting value of the premises. Then the tenants give notice to quit; the shop does not pay. Under this Bill, they will be able to apply for the then value of these improvements. The widow may be perfectly content to renew the lease. She cannot pay; she has not the money. Is it right that you should, under any Bill, be put in the position of having to submit to your 2406 property being improved against your will, beyond your financial resources, and then, although you are perfectly ready to grant a new lease on the same terms, or on any terms the tribunal think fair, you are not to have that option, but must sell your property under a forced sale. I submit that is a case of injustice.
I have heard one or two Members tonight speak on the assumption that this privilege, which applies in the case of compensation in respect of goodwill of escaping the payment of compensation if you are ready to grant a lease, is present when dealing with compensation for improvements. If I am wrong, I shall be put right, but I can see no such option in the Bill, and it seems to me that is a case which wants reconsideration. I am somewhat concerned at the question of costs, and I was wondering if the Home Secretary would consider the wisdom of applying to these tribunals the rules laid down under the Act which governs compensation for compulsory purchase by corporations where only one expert witness is allowed on either side. It should also provide for the making of sealed offers, so that landlords who are prepared to pay a fair sum could make an offer in writing. The offers could go to the arbitrator in sealed envelopes, and, if the award was more than the offer, the landlord would have to pay the costs. But the tenant might be put in the same position, and his offer put in a sealed envelope, so that there could be a fair awarding of costs, and people who were reasonable would not be made to suffer. I would also suggest that the wisdom of limiting the number of witnesses should be seriously considered, because, where four or live or six expert witnesses are called on either side, the cost would be very heavy.
I am entirely at one with those hon. Members who have expressed regret that this Bill is limited to business premises. The Bill is intended to protect tenants of business premises from being exploited at the expiration of their tenancies, but that applies just as much to tenants of houses as to tenants of shops. The tenants of houses are faced with the problem of the cost of removing, and it becomes a fine calculation for them how much it is worth while for them to pay to be saved that expense. I am speaking from bitter experience; when I 2407 say that a landlord usually makes an exact calculation of how far he can safely go in that matter, and I should like to see provision made for forbidding premiums or other fines being exacted from sitting tenants. The sitting tenant is in such a position, to put it bluntly, that he can be blackmailed, and it should be illegal to demand such premiums from him.
§ Mr. THOMAS
The Home Secretary, in presenting the Bill this afternoon, asked for the indulgence of the House for a maiden effort, and I think he will agree, whatever compliment there may be in introducing for Second Beading any particular Bill, that, after having sat patiently throughout this Debate, his reception, so far as this Bill is concerned, has been somewhat of a mixed character. Until the last speaker, I was asking myself when was there a Bill introduced at 3.45, a first-class Measure—in fact, one of those Measures upon which the Government are prepared to stake their reputation at the next election—towards which the House was so generally indifferent? In the main, the speeches from the Government Benches could be summarised something like this: Yes, we believe that it is wise to deal with the bad landlord; we are all against the bad landlord; we have pledged ourselves to penalise him, but in our experience there is no such thing as a bad landlord, and we are to prove it when we get into Committee on this Bill. Curiously enough, the Home Secretary gave two good illustrations. He justified his Bill on two concrete eases, of which he himself used the words, "These were eases of absolute confiscation." It is the first time, I think, that there has been an admission from that side of the House that confiscation could be associated with any other party than those of us on these benches, but, at all events. it is something to note and something that, of course, will not be lost sight of in the future.
But when the right hon. Gentleman had told us of those two eases of confiscation, when he had said, in substance, that that was the kind of case we are entitled to deal with, that it was the bad landlord we wanted to bring to book, I ventured to interrupt him and to ask whether this Bill dealt with those two cases, and he frankly admitted that it did not. In 2408 other words, while the ease for the Bill is the great injustice of confiscation, immediately the one test is applied that ought to be applied, namely, whether this Bill deals with that particular abuse, the answer is "No." The right hon. Gentleman, of course, said the Bill will not deal with those two particular cases, but it will prevent similar cases in the future. He said the reason why they do not intend to deal with those particular cases is a two-fold one, first, because they believe that the only authoritative body that has spoken with regard to confiscation and legislation of this kind is the Liberal party.
§ Mr. THOMAS
I am quite sure I would not ask you to do so, but in this case the right hon. Gentleman the Home Secretary says the real reason why we are unable to deal with the particular cases he had in his mind was because of the authoritative statement in the "Brown Book" issued by the Liberal party. I would remind him that the country will be able to judge as to the sincerity and honesty of the Government's intentions in that, connection by the examination of another Bill. The right hon. Gentleman says, "We do not intend to make this Bill retrospective." Why is that? Not because of the authoritative statement issued by the Liberal party, but because, in our judgment, it would be unfair to the landlord to tear up existing agreements. Yet in a few weeks' time there is to be some other Minister at that Box, not making a maiden speech, but introducing a Bill, asking for a Second Heading for it, and, as the working classes are involved, every existing agreement is thrown out and retrospective legislation is introduced. That is just the difference. It is a great mistake to assume that the evil with which we are now dealing is peculiar to London. There are many more cases in the cities and towns and even villages of this country than in London. It is equally a mistake to assume that it is only the rich landlord or the rich tenant or the rich business man who is concerned in this question. I know perfectly well that that is not true. Every working man who, through his co-operative society or his trade union, and by his 2409 own thrift and energy, has become the owner of his own little house has a legitimate grievance in the narrow lines on which the Government are dealing with the question. And I challenge the statement that the working man who owns his own house is not as a good a citizen, even a better citizen, than any others in the country.
Then there is the case of the professional man, for example, the doctor. A doctor in a village or a town requires a motor car to meet the needs of his business. He builds a garage to house it. For his own convenience and at his own expense he puts up a garage, and when the time comes for the renewal of his lease, not only can the ground landlord increase the rent, but the doctor does not get a copper towards the cost of the garage which he has put up. Yet for all practical purposes a doctor is as much a business man as anyone included in this Bill. Let me take the case of the working man owning his house. A business man may spend £100 or £1,000 or £10,000 on the development of his business premises or shop, but you cannot calculate in pounds, shillings and pence the work which the ordinary working man owning a house puts into it and which has the effect of increasing its value. Take the position in South Wales where in places lake Newport, Cardiff and Swansea, property is, in the main, almost entirely leasehold. A working man taking an interest in his garden may build a small greenhouse adjacent to his house. When the time comes for the renewal of his lease there is no compensation for him such as is provided in the Bill for the business man.
It is because of these anomalies and injustices that we have put down the Amendment which I am supporting. I have here particulars of a typical case which was sent to one of my hon. Friends sitting behind me and has just been handed to me:I would like to draw your attention to the proposed amendment of the law relating to leasehold business premises. I occupy a small house and shop at Houghton, in which I have been for 25 years. I have had two leases. When the last one expired five years ago I was only granted a quarterly tenancy. The property has now been sold, and I have received notice to quit from the new landlord. I cannot obtain a suitable shop, and if I have to go I shall 2410 lose my business, which has taken all these years to build up. Surely I am entitled to compensation as a leaseholder. It is because I think compensation should be given to tenants in a similar situation that I ask you to do your best.I submit that that is a typical kind of case which the Home Secretary had in mind when he said that there were good landlords and bad landlords. He knows the injustice which is there set out, and I think it is admitted that injustice is not touched by this Bill.
§ Mr. THOMAS
If it is, then we are delighted, because that is the kind of abuse we want to remedy. As we read the Bill there is nothing to deal with an injustice of that kind. These may be in some instances Committee points, but the difficulty we feel on this side of the House is that the Bill is so drafted that we are limited even during the Committee stage. It is because of these injustices which should be removed that we do not look upon this Bill as the last word on this subject. We do not look upon it as being complete in every detail. Nevertheless, we welcome the fact that at last this Government has mustered up courage to deal with this longstanding evil. It is because they are making an attempt of this kind that we certainly intend to do our best to improve the Measure in the direction indicated by our Amendment on the Paper.
§ The SOLICITOR-GENERAL
It is not surprising that a Bill which deals with a long-standing problem and makes new proposals should have raised interesting questions upon which a diversity of opinion has been expressed. Many suggestions have been made to which the Government will give the greatest consideration, and I hope I may be allowed to say that many of the suggestions made will be received with more than consideration but with favour, and with an intention to put them into the Bill unless upon further reflection some objection is seen. The hon. Member for London University (Dr. Little) suggested that doctors' goodwill should be made the subject of compensation. Another suggestion was that there should be some Amendment in reference to a right of appeal to the tribunal. Those are purely 2411 questions for the Committee stage, and I say on behalf of the Government that we have not the least desire to reject any reasonable proposals for making the Bill more effective for dealing with those evils which most hon. Members recognise as existing. I was left in a little doubt, after the speech of the right hon. Gentleman the Member for Derby (Mr. Thomas), as to whether or not he is in favour of the Bill. He was good enough to hand me the letter which he read to the House, and I gather that his opinion is that the Bill should be improved so as to extend the benefits it confers on some people to a larger class of persons. That, I should have thought, is a reason for voting in favour of the Bill, so that an opportunity may be afforded of extending the Bill.
§ Mr. THOMAS
Certainly, if the Solicitor-General says the Bill is so drafted that it would be in order to move those improvements, then, certainly, I welcome it.
§ The SOLICITOR-GENERAL
I cannot give an undertaking that every Amendment that will be moved will be in order. The right hon. Gentleman would not expect me to give such an undertaking. All I can say is that, if he thinks the Bill is a good one so far as it goes, I should have thought that would have been a reason for voting in favour of the Bill, instead of assenting to an Amendment for its rejection. The hon. Member for Burslem (Mr. MacLaren), who seconded the Amendment, expressed a somewhat similar opinion about the Bill, and it was not a little surprising that he concluded by supporting the Amendment for the rejection of the Bill. The only hon. Member, I think, who has expressed an unhesitating opinion in favour of the rejection of the Bill, by an announcement of his intention to vote against the Bill, was the hon. Member for Bridgeton (Mr. Maxton). His reason was peculiarly interesting in view of the last speech. His statement was that this Bill would not interest a single member of the working classes. But a moment later the right hon. Gentleman the Mem-for Derby was telling us that every working man who is the proud owner of a cot will presumably find something in this Bill to interest him, in the hope that it does extend to his case.
§ The SOLICITOR-GENERAL
Something in the Amendment to interest him; but, before you can get an Amendment, I suppose you will want a Bill. Perhaps, before I have finished the observations I have to make, the right hon. Gentleman, and hon. Members behind him, will have made up their minds whether they think the Bill is worth proceeding with or whether they think it should be rejected. There was some comment or criticism from the benches behind me as to the absence of sufficient evidence on which to base a Bill of this character. The hon. Member for Loughborough (Mr. Rye) invited the Government to set up a Royal Commission to inquire into the existence of the alleged evils. He read a number of letters from firms of indisputable eminence, the first of whom stated that they had never had a client who blackmailed a tenant. That firm was one that is very well known to us all, the firm of Farebrother, Ellis and Company; but I think the hon. Member will agree that landlords of the class with which this Bill will so largely deal do not generally go to firms of that eminence for assistance in their designs, but to people of less eminence in their profession. I should have thought that the facts upon which the Government have introduced this Bill had been proved beyond controversy. The Report which my right hon. Friend the Home Secretary read, the Report of the Town Holdings Committee—pronounced, it is true, in 1899—stated that:As regards goodwill, the Committee have come to the conclusion upon the evidence that, though (here are such cases. as a rule the value of the tenant's goodwill is not concerned in fixing the rent on renewal, nor is it ordinarily used to extort more than the fair value of the premises. On the other hand, it cannot be doubted that cases of hardship do occur in connection with goodwill, and landlords sometimes take an undue advantage of their tenants' position in such cases.That was in 1889. I should have thought the experience of all of us would have confirmed that opinion, and it has been in fact confirmed by the report of a committee which sat seven years ago on business premises, the findings of which include the statement that in a substantial number of cases tenants have been compelled to submit to what appears 2413 to be an unconscionable increase in rent in order to retain possession of their business premises, and in a number of cases they have been dispossessed of business premises without being given any option to retain them on fair terms.
§ The SOLICITOR-GENERAL
I do not know what the hon. Member means. That paragraph is No. 4, and I have read every word of it.
§ The SOLICITOR-GENERAL
The hon. Member really cannot ask the Government to decline to bring in the Bill on the ground that bad landlords are greatly less in number than good landlords. They may still be a sufficiently large class to impose hardships which are worth consideration by this House.
§ The SOLICITOR-GENERAL
Now the hon. Member is riding off on quite a different point. His appeal to the Government was to set up a Royal Commission to see whether there were any cases of hardship that were worth dealing with.
§ The SOLICITOR-GENERAL
The hon. Member, shall I say, reproached the Government with not having set up a Royal Commission. If I have established by inquiries which have been set up that 2414 there are cases that require to be dealt with, his appeal to the Government, or his complaint that they have not set up any Royal Commission, becomes of singularly little point.
§ The SOLICITOR-GENERAL
I really cannot follow the hon. Member. It was done in 1880 and another Commission was set up in 1920, and the Government are now dealing with a set of facts which no one pretends are different from those that existed in the year 1920. There being, I think, substantial agreement now as to the evils that require to be dealt with, there is a complaint that the Bill will deal also with good landlords. As an hon. Member on the Liberal benches pointed out, that is a criticism that might apply to any Act. Those who come within its reach will be affected by it. Those who do not come within its reach are not affected by it. It is only four years ago that this House—not this Government, but a Government of a similar colour—passed the Agricultural Holdings Act, which embodied and added to provisions which have been universally accepted as advantageous both to the landlord and to the tenant. It set up a tribunal not very, different from the tribunal which this Bill is sotting up, by which the relations between landlords, even between good landlords and bad landlords, should be regulated by the decision of a third party, if necessary. I have never heard that hardship has been imposed upon good landlords by the operation of the measures contained in that Act. I cannot see very much difference between a proposal which says, as that Act does, that where a tenant has put a valuable piece of machinery into the premises, he shall be allowed to take it away at the end of his tenancy and a proposal that says that, where he puts something on the premises which cannot be carried away but which is valuable to the landlord, he shall be paid 'air compensation for what he has left behind him. I think the principle of the Bill has been accepted by every party and every Member in the House, and if it was not for the slight novelty of the proposal as applied to business premises I do not believe anyone would have been so bold as to criticise it as bearing harshly upon the good landlord, whom we all respect.
2415 Clause 4, the next Clause, deals with the question of goodwill. I cannot help saying that I think there has been a good deal of misconception about goodwill. I think the hon. Member for Burslem asked how goodwill could be defined. I may offer him a definition, which I do not pretend is my own, because I think it is one which is familiar to most people who have ever had to deal with goodwill. Goodwill is the probability that the customer will resort to the old premises. Goodwill has nothing to do with the value attaching to a particular locality for particular business. Mincing Lane is important to produce brokers, Harley Street to doctors. Long Acre to coach builders, but that has nothing to do with goodwill. A refreshment house to which carmen and travellers are in the habit of resorting because they know they will find a refreshment house there, has a goodwill; so has a tobacconit's or a barber's and other premises where a particular business is carried on.
Hon. Members who read this Bill will find that there is nothing in it about the value of premises which are equally valuable for all persons who use them. Clause 4 only deals with the value of goodwill which attaches to premises by reason of the trade or business that is being carried on in those premises by that tenant, and where that tenant or the people who carry on the business of that tenant find those premises more valuable for that trade or business, there is something properly described as goodwill which this Bill says is the subject of compensation between the landlord and the tenant. I do not suggest that goodwill is quite so easy to deal with as a tangible asset, like a new building; it is more elusive, more difficult to value; but is there any reason why we should not attempt to value that which so many small people find to be valuable for their prosperity and well-being, and which they have created by their labour?
Are those hon. Members opposite who have moved the rejection of this Bill going to tell me that there is no such goodwill as that of which I have been speaking? Of course there is. The Government believe that as between a reasonable and fair-dealing landlord and tenant the landlord will not desire that the goodwill should be separated from the man 2416 who has created it. It may be that there are other classes of property or creations of work and labour which ought to be the subject of compensation; but are hon. Members going to be so foolish, if I may respectfully use the word, as to reject a good proposal because it is not coupled with another good proposal? Clause 4 does what is fair between the good landlord and the good tenant, and it is only the bad landlord who will be dragged before the tribunal to which some hon. Members have such an objection.
§ Mr. MacLAREN
I maintain that in what is termed goodwill, there is something, if properly analysed, which is 90 per cent. site value and which has nothing to do with what is called patronage value or goodwill.
§ The SOLICITOR-GENERAL
I have tried to help the hon. Member to analyse and define goodwill and to distinguish site value from true goodwill. I hope my definition has assisted him. I do not think that the gentlemen of experience who will form these tribunals will find any difficulty in valuing or defining that which the hon. Member finds so difficult to appreciate. The next objection was directed to the tribunal. The hon. and learned Member for South-east Leeds (Sir H. Slesser) expressed the regular lawyer's opinion in favour of the High Court of Justice, where learned lawyers can be briefed to appear before the eminent people on the bench.
§ The SOLICITOR-GENERAL
Again, the lawyers will haw their chance and opportunity. The hon. and learned Member knows that when claims for compensation are brought before a Judge of the High Court, his first task will be to say: "How can I try this case so full of detail? It must be referred to the surveyor," and instead of the direct procedure of the Bill we shall have this roundabout course, which will result in the parties having to pay more costs for the employment of legal and other gentlemen, who will assist them to obtain a result which can be more easily and more quickly obtained by the procedure we propose in the Bill. This is not the first time that a tribunal of this sort has been set up. In the Agricultural Hold- 2417 ings Act, 1922, an almost similar tribunal was appointed, and in the Law of Property Act, 1925, of which the hon. Member below the Gangway said he was the proud father, or one of the proud fathers, we find an individual who is the Judge of the Hight Court or the County Court to be appointed by the Committee. One criticism was raised which, I think, is a reasonable one, and that is that appeals on points of law will go only to a Judge on first instance. It is suggested that there should be a right to go to the Court of Appeal. The Home Secretary thinks, and I agree with him, that it will not be unreasonable on the Committee stage, if the matter is further pressed and debated, to amend the Bill by allowing an appeal to the Court of Appeal if the Judge thinks it a case in which leave to appeal should be given. Hon. Members will realise that the amounts will be very small in most of these cases, and it is not desirable to encourage litigious persons, and Judges can be trusted to give leave of appeal in any case where a genuine and difficult point of law is raised worthy of further consideration.
§ Mr. HERBERT
May I ask the hon. and learned Member whether he considers these matters between landlord and tenant are of so much leas importance than others that they should not be dealt with in this way, or does he suggest that he would be in favour of abolishing all appeals to the House of Lords, and get rid of that tribunal altogether?
§ The SOLICITOR - GENERAL
The hon. and learned Member knows that there are a large number of cases which cannot go to the House of Lords. There are appeals from the County Court which raise questions of great importance and value. They go to the Court of Appeal, and must stop there. The whole of the jurisdiction exercise by the War Compensation Court, in which literally millions of pounds have been assessed as pay- 2418 able to those persons whose property has been interfered with, cannot go to the House of Lords, except in most exceptional circumstances, and when the Court of Appeal gives leave to appeal. It is really impossible to suggest) that every piece of litigation that is ever initiated goes to the House of Lords.
§ Sir H. SLESSER
In every case where leave is given by the Court of Appeal in these exceptional cases affecting millions of pounds, there ought to be a decision given by the highest Court of the land. I stopped at the Court of Appeal.
§ The SOLICITOR-GENERAL
I do not for a moment express a final opinion. I have not the authority to do so. Hon. Gentlemen opposite may propose in Committee an Amendment which will allow these appeals to go to the House of Lords, but I am bound to say, having regard to some of the criticisms I have sometimes hear about revenue cases and the cast af carrying revenue cases to the House of Lords— Mr. HERBERT: That is not fair.
§ The SOLICITOR-GENERAL
Having regard to what is sometimes heard about the great cost of litigation, I should have thought it would have been sufficient to have had the determination of four eminent Judges as to the point of law which may be involved. Of course, if the Committee think otherwise, and if the weight of argument in the Committee is in favour of a prolonged further appeal to the House of Lords, I am not going to suggest that there may not be something in the arguments worthy of consideration. I only express my opinion at the moment for what it is worth. The rest of the Debate has been taken up with the expression of fears as to the consequences if this Bill is passed. We are all familiar with the fears expressed by nervous persons when novel changes are made in their habits. That those fears are likely to prove well-founded I rather doubt. I find that one of the fears is that the landlord will not let any premises on leases, but will let them on terms three days less than a year. I do not know whether that is business; I am not a business man. I 2419 should have thought that if landlords let their property for a term of three days less than a year, and did it over and over again, they would find their business rather troublesome and not very profitable. Whether they would get as good a rent for such unsatisfactory terms as they would if they let the premises in the usual way, I take leave to doubt, and if there were frequent changes of tenancy they would probably lose a great deal in rent, and the losses would probably be greater than the compensation they would have to pay at the end of a 21 years' lease.
§ Mr. HERBERT
I would ask the hon. and learned Gentleman whether he knows the history of Ireland under which exactly what he has been ridiculing has happened, and lands were let for only 11 months? The result was the necessity for the compulsory purchase of the landlord's interest.
§ The SOLICITOR-GENERAL
I cannot claim to be acquainted with the whole of the history of Ireland, but because it happened in Ireland I should have thought was very insufficient reason for saying that it was certain to happen here. The next criticism of the Bill was that it did not deal with rent restriction. That was the criticism of the hon. Member who moved the rejection of the Bill. Admirable though the Bill is, it cannot deal with everything. There is a place for everything and everything in its place. The Minister of Health stated a few days ago that the Rent Restriction Act would not come to an end until next December, and that he would make a full statement before June as to the intentions of the Government. I think that is much more satisfactory than trying to put a Bent Restrictions Bill into a Bill dealing with an entirely different subject. The same hon. Member expressed the opinion that the Bill ought to be retrospective, and my right hon. Friend the Member for Derby seemed rather attracted by that criticism We have sometimes heard Mr. Speaker rebuke hon. Members for delivering speeches which have been in their pockets for two or three days. If I may say so, the right hon. Gentleman has apparently drawn on his speech for the Bill which will be debated very shortly, namely, the Trade Union Bill, and has given us one portion of that speech. There was a 2420 reference to the Trade Union Bill, as to its retrospective character, but that appears to have very little bearing on this Bill. If the Trade Union Bill is bad because it is retrospective, it can hardly make this Bill bad because it is not retrospective. I can understand the suggestion that the Bill ought to deal with existing premises. That is one well worthy of consideration.
§ Mr. THOMAS
If the Home Secretary's argument against retrospective legislation in this Bill holds good, it must be bad in the next Bill.
§ The SOLICITOR-GENERAL
I should call that a non sequitur. No doubt, the right hon. Gentleman will explain his views at some length when we come to that Bill. At any rate, I think the view that it is better or. the whole in this Bill, which is admittedly novel, not to deal with improvements which have already been made is a wise one. I would call the attention of the House to the fact that the Bill does deal with existing leases. It is not only the lease made after the Bill which is to be dealt with; the Bill does touch existing leases. What it does not touch is improvements which have been made at the present time, and one of the reasons for that. is, no doubt, that the machinery has not existed for allowing the landlord to object to improvements in the way in which it is proposed he shall be allowed to object under this Bill. However that may be, the Government decided that the Bill must be drafted in its present form. If any hon. Member his really good arguments to present, he will find the Government prepared to consider arguments to a Bill which, as the Home Secretary said, is not a party Bill It was not introduced as a party Bill, and the criticisms which have been made from the benches behind me show that my hon. Friends did not regard it as a party Bill but one in regard to which I should have hoped all parties would hare been glad to make their contributions instead of moving its rejection because it did not exactly agree with some of their preconceived ideas.
I only want to refer to one more criticism. The hon. Member for Wimble don (Sir J. Power) described himself as a person of great experience in housing and property. He described the happy condition of the landlord before the Bill 2421 was produced, as a gentleman who had been able to sit down and draw a moderate profit from his property in the past, and he complained that this happy state would be disturbed by the Bill. The right hon. Gentleman the Member for Derby described this Bill as an attempt to draw from the old landed gentry of this country some of their increments. I suppose I may regard my hon. Friend as a representative of that class, and I regret that he should be disturbed. I hope he will find that his satisfaction in connection with the property he told us he administers will be unaffected, because be will find that this Bill will assist his tenants to know their rights—the right to get compensation for what they have clearly done, instead of seeing the landlord walk off with it all. My hon. Friend the Member for Spelthorne (Sir P. Pilditch), who has a great interest in this matter, will be able to put his proposals before the Committee, some of them in the shape of criticisms not on the lines of the Bill, but we shall be glad of his assistance as of that of any other hon. Member who will be good enough to give it to us. We hope the Bill will be fair in its incidence, and will be successful in its aims—to enable the good landlords to feel that they and their tenants have always acted according to the conception which Parliament has formed of their duties and to help the bad landlords to awake to a keener sense of those duties which they ought earlier to have recognised.
§ Mr. HERBERT
May I ask one question? The hon. and learned Member has said that the Government will welcome suggestions. Are we to understand that the Government would be prepared to give favourable consideration to the suggestion which I made that the whole of Part I should be simplified by defining grievances and allowing the Court to give relief in those cases where grievances are proved?
§ on mortgages and reversions and the very important consequences of this Bill in that respect? This is a matter to which he omitted to make any reference.
§ The SOLICITOR-GENERAL
I apologise to my hon. Friend for not having dealt with that question, which, I think, was not raised very much. It was mentioned by one hon. Member who expressed the opinion that this Bill would have an unfortunate effect in regard to mortgagees. I should have thought that there was no real hardship, because the underlying hypothesis is that the property has become more valuable in consequence of the improvements which have been effected upon the property. I should have thought that if the property became more valuable, the charge upon the property would, at any rate, not lessen. With reference to the question of my hon. Friend the Member for Watford (Mr. D. Herbert), I ought to have referred to the offer which he made, I understand, earlier in the Debate, that he was prepared to give instructions to the Parliamentary draftsman suggesting a different scheme in Part I of the Bill. and what he thought was a better one. The Home Secretary said earlier that he would be prepared to consider any alternative suggestion, and if the hon. Member will favour us with his proposals he may be assured of really sympathetic consideration for them, if we think they are an improvement on the proposals contained in the Bill.
§ Mr. SPEAKER
The hon. Member has asked four or five questions already, after a speech lasting half an hour. Really these questions are all irregular.
§ Question put, "That the words proposed to be left out stand part of the Question."
§ The House divided: Ayes, 240; Noes, 83.2425
|Division No. 81.]||AYES.||[11.0 p.m.|
|Acland-Troyte, Lieut.-Colonel||Balfour, George (Hampstead)||Bowater, Col. Sir T. Vansittart|
|Agg-Gardner, Rt. Hon. Sir James T.||Barnett, Major Sir Richard||Bowyer, Captain G. E. W.|
|Albery, Irving James||Barnston, Major Sir Harry||Bridgeman. Rt. Hon. William Clive|
|Alexander, E. E. (Leyton)||Bethel, A.||Brittain, Sir Harry|
|Alien, J. Sandeman (L' pool, W. Derby]||Betterton, Henry B.||Brooke, Brigadier-General C. R. I.|
|Amery, Rt. Hon. Leopold C. M. S.||Blades, Sir George Rowland||Broun-Lindsay, Major H.|
|Applin, Colonel R. V. K.||Blundell, F. U.||Brown, Ernest (Leith)|
|Apsley, Lord||Boothby, R. J. G.||Brown, Brig.-Gen. H.C.(Berks, Newb'y)|
|Atkinson, C.||Bourne, Captain Robert Croft||Buckingham, Sir H.|
|Burgoyne, Lieut.-Colonel Sir Alan||Hennessy, Major Sir G. R. J.||Peto, G. (Somerset, Frome)|
|Burman, J. B.||Hills, Major John Walter||Phillpson, Mabel|
|Butler, Sir Geoffrey||Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.||Pilcher, G.|
|Cadogan, Major Hon. Edward||Hogg, Rt. Hon. Sir D.(St. Marylebone)||Pilditch, Sir Philip|
|Campbell, E. T.||Holt, Captain H. P.||Pownall, Sir Assheton|
|Cassels, J. D.||Hope, Capt. A. O. J. (Warw'k, Nun.)||Preston, William|
|Chadwick, Sir Robert Burton||Hopkins, J. W. W.||Radford, E. A.|
|Chamberlain, Rt. Hon. N. (Ladywood)||Horlick, Lieut.-Colonel J. N.||Raine, W.|
|Charteris, Brigadier-General J.||Horne, Rt. Hon. Sir Robert S.||Rees, Sir Beddoe|
|Clayton, G. C.||Hudson, Capt. A. U. M. (Hackney,N.)||Reid, Capt. Cunningham (Warrington)|
|Cochrane, Commander Hon. A. D.||Hume, Sir G. H.||Reid, D. D. (County Down)|
|Cockerlil, Brig.-General Sir G. K.||Hurd, Percy A.||Remer, J. R.|
|Colfox, Major Wm. Phillips||Hurst, Gerald B.||Rentoul, G. S.|
|Cope, Major William||Hutchison, Sir Robert (Montrose)||Richardson, Sir P. W. (Sur'y, Ch'ts'y)|
|Couper, J. B.||Inskip, Sir Thomas Walker H.||Roberts, E. H. G. (Flint)|
|Courtauld, Major J. S.||Jackson, Sir H. (Wandsworth, Cen'l)||Roberts, Sir Samuel (Hereford)|
|Cowan, D. M. (Scottish Universities)||Jacob, A. E.||Ruggles-Brise, Major E. A.|
|Cowan, Sir Wm. Henry (Islingtn. N.)||Jephcott, A. R.||Russell, Alexander West (Tynemouth)|
|Crawfurd, H. E.||Jones, G. W. H. (Stoke Newlngton)||Salmon, Major I.|
|Croft, Brigadier-General Sir H.||Jones, Henry Haydn (Merioneth)||Sandeman, N. Stewart|
|Crooke, J. Smediey (Deritend)||Joynson-Hicks, Rt. Hon. Sir William||Sanders, Sir Robert A.|
|Crookshank, Col. C. de W. (Berwick)||Kindersley, Major G. M.||Sanderson, Sir Frank|
|Crookshank,Cpt.H.(Lindsey,Galnsbro)||King, Captain Henry Douglas||Sandon, Lord|
|Curzon, Captain Viscount||Kinloch-Cooke, Sir Clement||Scott, Rt. Hon. Sir Leslie|
|Davidson,J.(Hertt'd, Hemel Hempst'd)||Lamb, J. Q.||Shaw, H. G. (Yorks. W.R., Sowerby)|
|Davidson, Major-General Sir J. H.||Lane Fox, Col. Rt. Hon. George R.||Shaw, Lt.-Col. A. D.Mcl.(Renfrew,W.)|
|Davies, Ellis (Denbigh, Denbigh)||Little, Dr. E. Graham||Skelton, A. N.|
|Davies, Maj. Geo. F. (Somerset,Yeovil)||Lloyd, Cyril E. (Dudley)||Smith, R. W. (Aberd'n & Kinc'dine, C.)|
|Davies, Dr. Vernon||Loder, J. de V.||Smith-Carington, Neville W.|
|Dawson, Sir Philip||Looker, Herbert William||Smithers, Waldron|
|Dean, Arthur Wellesley||Lougher, Lewis||Somerville, A. A. (Windsor)|
|Dixey, A. C.||Lucas-Tooth, Sir Hugh Vere||Sprot, Sir Alexander|
|Edmondson, Major A. J.||Luce, Major-Gen.Sir Richard Harman||Stanley, Col. Hon. G. F. (Will'sden.E.)|
|Edwards, J. Hugh (Accrington)||Lumley, L. R.||Stanley, Lord (Fylde)|
|Elliot, Major Walter E.||Lynn, Sir R. J.||Stanley. Hon. O. F. G. (Westm'eland)|
|Erskine, Lord (Somerset, Weston-s..M.)||MacAndrew Major Charles Glen||Storry-Deans, R.|
|Erskine, James Malcolm Monteith||Macdonald. R. (Glasgow, Cathcart)||Streatfeild, Captain S. R.|
|Evsrard, W. Lindsay||McLean, Major A.||Stuart, Crichton., Lord C.|
|Fairfax, Captain J. G.||Macmillan, Captain H.||Sueter, Rear-Admiral Murray Fraser|
|Falle, Sir Bertram G.||Macquisten, F. A.||Sykes, Major-Gen. Sir Frederick H.|
|Fermoy, Lord||Maitland, Sir Arthur D. Steel-||Tasker, R. Inigo.|
|Ford, Sir P. J.||Makins, Brigadier-General E.||Thom, Lt..Col. J. G. (Dumbarton)|
|Forrest, W.||Malone, Major P. B.||Thompson. Luke (Sunderland)|
|Foster. Sir Harry S.||Manningham-Buller, Sir Mervyn||Thomson, F. C. (Aberdeen, South)|
|Foxcroft, Captain C. T.||Margesson, Captain D.||Thorne, G. R. (Wolverhampton, E.)|
|Fraser, Captain Ian||Mason, Lieut.-Colonel Glyn K.||Tryon, Rt. Hon. George Clement|
|Fremantie, Lieut.-Colonel Francis E.||Metier, R. J.||Vaughan-Morgan, Col. K. P.|
|Gadie, Lieut.-Col. Anthony||Merriman, F. B.||Wallace, Captain D. E.|
|Ganzonl, Sir John||Meyer, Sir Frank||Ward, Lt.-Col.A.L. (Kingston-on-Hull)|
|Garro-Jones, Captain G. M.||Milne. J. S. Wardlaw-||Warner, Brigadier-General W. W.|
|Gates, Percy||Mitchell, S. (Lanark, Lanark)||Warrender, Sir Victor|
|Gault, Lieut.-Col. Andrew Hamilton||Mitchell, Sir W. Lane (Streatham)||Waterhouse, Captain Charles|
|Gilmour, Lt.-Col. Rt. Hon. Sir john||Moore, Lieut.-Colonel T. C. R. (Ayr)||Watts. Dr. T.|
|Glyn, Major R. G. C.||Moore, Sir Newton J.||Wells, S. R.|
|Goff, Sir Park||Moore -Brabazon, Lieut.-Col. J. T. C.||White, Lieut. Col. Sir G. Dairymple-|
|Grace, John||Morris. R. H.||Williams, Com. C. (Devon, Torquay)|
|Grant, Sir J. A.||Morrison; H. (Wilts. Salisbury)||Williams, C. P. (Denbigh, Wrexhaml)|
|Grattan-Doyle, Sir N.||Nall, Colonel Sir Joseph||Williams, Herbert G. (Reading)|
|Greaves-Lord, Sir Walter||Nelson, Sir Frank||Wilson, R. R. (Stafford. Lichfield)|
|Greene, W. P. Crawford||Neville, R. J.||Windsor-Clivc. Lieut.-Colonel George|
|Grenfell, Edward C. (City of London)||Newman, Sir R. H. S. D. L. (Exeter)||Winterton. Rt. Hon. Earl|
|Grotrian, H. Brent||Nicholson, O. (Westminster)||Wise, Sir Fredric|
|Hall, Lieut.-Colonel Sir F. (Dulwich)||Nuttall, Ellis||Wolmer, Viscount|
|Hall, Capt. W. D.A. (Brecon & Rad.)||Oakley, T.||Womersley. W. J.|
|Hammersley, S. S.||O'Connor, T. J. (Bedford, Luton)||Wood, E. (Chest'r. Stalyb'ge & Hyde)|
|Hannon, Patrick Joseph Henry||Owen, Major G.||Woodcock, Colonel H. C.|
|Harland, A.||Pennefather, Sir John||Worthington-Evans, Rt. Hon. Sir L.|
|Harrison, G. J. C.||Penny, Frederick George||Wragg. Herbert|
|Harvey, G. (Lambeth, Kennington)||Percy. Lord Eustace [Hastings)||Young, Rt. Hon. Hilton (Norwich)|
|Headlam, Lieut.-Colonel C. M.||Perkins, Colonel E. K.|
|Henderson, Capt. R. R.(Oxf'd, Henley)||Perring, Sir William George||TELLERS FOR THE AYES.—|
|Henderson, Lieut.-Col. V. L. (Bootle)||Peto, Sir Basil E. (Devon, Barnstaple)||Commander B. Eyres Monsell and|
|Adamson, Rt. Hon. W. (Fife, West)||Beckett, John (Gateshead)||Charieton, H. C.|
|Adamson, W. M. (Start., Cannock)||Bondfield, Margaret||Cluse, W. S.|
|Alexander, A. v. (Sheffield, Hillsbro')||Broad, F. A.||Clynes, Rt. Hon. John R.|
|Ammon, Charles George||Bromley, J.||Compton, Joseph|
|Baker, Waiter||Brown. James (Ayr and Bute)||Connolly, M.|
|Barnes, A.||Buchanan, G.||Dalton, Hugh|
|Barr, J.||Buxton, Rt. Hon, Noel||Day, Colonel Harry|
|Batey, Joseph||Cape, Thomas||Gardner, J. P.|
|Gillett, George M.||Lowth, T.||Snowden, Rt. Hon. Philip|
|Graham, D. M. (Lanark, Hamilton)||Lunn, William||Spoor, Rt. Hon. Benjamin Charles|
|Grenfell, D. R. (Glamorgan)||MacDonald, Rt. Hon. J. R.(Aberavon)||Stephen, Campbell|
|Griffiths, T. (Monmouth, Pontypool)||MacLaren, Andrew||Sullivan, Joseph|
|Grundy, T. W.||March, S.||Sutton, J. E.|
|Hall, F. (York, W.R., Normanton)||Maxton, James||Thomas, Rt. Hon. James H. (Derby)|
|Hall, G. H. (Merthyr Tydvil)||Montague, Frederick||Thurtle, Ernest|
|Hardie, George D.||Morrison, R. C. (Tottenham, N.)||Tinker, John Joseph|
|Hartshorn, Rt. Hon. Vernon||Mosley, Oswald||Viant, S. P.|
|Hayes, John Henry||Naylor, T. E.||Watson, W. M. (Dunfermline)|
|Henderson, Right Hon. A. (Burnley)||Oliver, George Harold||Watts-Morgan. Lt.-Col. D. (Rhondda)|
|Hirst, G. H.||Palin, John Henry||Wellock, Wilfred|
|Hudson, J. H. (Huudersfield'O||Pethick-Lawrence, F. W.||Westwood, J.|
|Jenkins, W. (Glamorgan, Neath)||Richardson, R. (Houghton-le-Spring)||Wheatley, Rt. Hon. J.|
|John, William (Rhondda. West)||Robinson, W. C. (Yorks,W.R.,Elland)||Whiteley, W.|
|Jones, T. I. Mardy (Pontypridd)||Salter, Dr. Alfred||Wilson, R. J. (Jarrow)|
|Kelly, W. T.||Short, Alfred (Wednesbury)||Young, Robert (Lancaster, Newton)|
|Kennedy, T.||Slesser, Sir Henry H.|
|Kenworthy, Lt.-Com. Hon. Joseph M.||Smith, Ben (Bermondsey, Rotherhlthe)||TELLERS FOR THE NOES.—|
|Lansbury, Gtorge||Smith, Rennie (Penistone)||Mr. Allen Parkinson and Mr. Charles|
|Lee, F.||Snell, Harry||Edwards.|
Bill read a Second time, and Committed to a Standing Committee.