§ Order for Second Reading read.
§ 3.38 p.m.
§ The Secretary of State for the Home Department and Minister for Welsh Affairs (Sir David Maxwell Fyfe)
I beg to move, "That the Bill be now read a Second time."
This is a complicated Bill because it deals with a technical subject, but the principles underlying the Bill are fairly simple and I shall explain them as clearly as I can.
The subject is far from being a new one to the House. The Bill follows pretty closely the White Paper on Leasehold Property, which was published a year ago and debated last April. Twice in the last three years the House has considered temporary legislation on leaseholds. A standstill Act was passed by our predecessors in 1951 and we extended its period of operation last year.
This Bill contains our proposals for permanent legislation to replace those temporary Acts. I should like, again, to record our gratitude to the Leasehold Committee who, originally under Lord Uthwatt and, after his death, under Lord Justice Jenkins, examined the subject with tremendous thoroughness. The Committee was appointed by our predecessors, but the present Government owe a great debt to it. We have not accepted all the recommendations, but the Report is the foundation of the Bill.
I should like to begin with Part I of the Bill, which deals with ground leases of houses. The object here is to give the protection of the Rent Acts to the ground lessee who is living in the house. He is not protected by the Rent Acts at present, because they do not apply where the rent is less than two-thirds of the rateable value, and with almost all ground leases the rent is below this level.
We discussed in the debate on the White Paper why the Government chose this solution instead of leasehold enfranchisement. I do not want to cover the same ground again; but I should like to suggest, as I suggested then, that the 1754 subject is best considered from the practical point of view rather than on the basis of abstract principles, whether, on the one side, the morality of the leasehold system or, on the other side, the sanctity of contract, and so on.
The majority of the Leasehold Committee came down against leasehold enfranchisement. The minority, consisting of the right hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas)—may I be allowed to say that I am very sorry to hear that he is not well and is unable to be with us today; we shall miss very much his contribution to the debate—and the hon. Member for Oldham, West (Mr. Hale) put forward an enfranchisement scheme. It was a moderate scheme and was worked out in considerable detail. We are grateful to them because it was by examination of that scheme that we found out where the difficulties lay.
It was these practical difficulties which led us to decide against leasehold enfranchisement. I emphasised what they were and I want to summarise them in a sentence or two again. First, the cost to the tenant; second, the difficulty of fair apportionment where a variety of properties are concerned; third, the exclusion of late purchasers; and fourth, where the leasehold property concerned is comprised in estates consisting of some, or, in some cases, very many, houses there are at least three serious difficulties. First, the covenants in the leases protecting the amenities of all houses in the estate; second, the compensation to the landlord for severing a part of his estate which must fall so heavily on the first purchaser; third, the harm to public interest by the prevention of desirable redevelopment. The fifth difficulty that has to be faced is the great reduction in the scope of the scheme by the necessary exclusion of publicly-owned estates—estates owned by local authorities, New Town Corporations and Crown Agencies.
When I explained the difficulties in opening the debate on the White Paper, I said that I should like to hear the answer to them: I should still like to hear the answer. In that debate we were told that the difficulties did not matter, and that they were not major difficulties, but we were not told the way round them. The right hon. and learned Member for 1755 Leicester, North-East finished his speech by saying that the Labour Party,unfailingly come down in favour of the tenant."—[OFFICIAL REPORT, 30th April, 1953; Vol. 514; c. 2387.]It would not help the tenant to introduce a scheme which did not really work. Indeed, although we were told again and again that the party opposite favoured enfranchisement, I came away from the debate without learning how they propose to achieve it. In fact, it was clear and manifest that several of the speakers who argued for enfranchisement were not arguing for the proposals of the minority of the Leasehold Committee. They wanted something much less favourable to the landlord.
Moreover, it seemed to follow from their speeches that if the right to enfranchise were granted at all, it should be granted to every ground lessee, whether he is in occupation or whether he has sub-let. The two hon. Members to whom I have referred, in their Minority Report, suggest confining it to the ground lessee who is living on the premises. That was the position. We shall see as the afternoon goes on whether it has altered today, and whether anyone is prepared to give an answer to these difficulties which are now over a year old. They have been stated fully and clearly in the White Paper to which I have referred.
I want to say this again—and I shall try to follow up my own suggestion—that I am sure the most productive approach to the problem is to concentrate on what the tenant needs now. Surely his greatest need at the present time is the right to stay in his home when his lease comes to an end. And this need is common both to the lessee whose grandfather built the house a century ago and to the lessee who has only recently taken an assignment of the lease.
It is this right we are giving him; and I believe that if the Bill is passed and there is time for its effect to be felt, many of the supporters of leasehold enfranchisement will come to see that we have gone a long way to meet them. This then is what Part I of the Bill does for the occupying ground lessee. When his lease comes to an end he is to be entitled to stay on as a statutory tenant under the Rent Acts, provided his house is not too large to be within the ambit of those Acts.
1756 I think that everyone realises that the terms of the normal statutory tenancy under the Rent Acts are very different from those of a ground lease. This is particularly so as regards repairs: a ground lease places a much greater repairing responsibility on the tenant than the average statutory tenancy. It follows that the terms of the ground lease have to be very largely re-written, and it is this which accounts for much of the complexity of Part I of the Bill.
Perhaps I ought to outline the machinery which the Bill sets up. The ground lease, instead of ending automatically on a particular date, will run on until the landlord brings it to an end by notice. In his notice he must explain to the tenant his rights under Part I.
§ Mr. David Grenfell (Gower)
Does that mean that in every single case no tenancy can expire without notice by the landlord?
§ Sir D. Maxwell Fyfe
I think that it is three months. I should like to check up, and I will let the right hon. Gentleman know. Speaking offhand, it is three months. He must not only give the notice, but the notice must explain to the tenant his rights under Part I of the Act. That is, I think, an important piece of machinery.
The landlord must also include in his notice his proposals for the new statutory tenancy—unless he intends to apply to the county court for possession, in which case he must give the tenant warning of that fact. I am sorry, but it is better than I thought. The three months applies to a later stage. I am sorry if I misled the right hon. Gentleman. Under Clause 4 (2) of the Bill:A notice under the last foregoing subsection shall not have effect unless it is given not more than twelve nor less than six months before the date of termination specified therein.
§ Mr. Leslie Hale (Oldham, West)
I understand that the notice can be given to expire on the term date. In other 1757 words, that notice can normally be given to expire on the very date the lease normally comes to an end.
§ Sir D. Maxwell Fyfe
I should not say that that would normally apply, because there are other considerations in the Bill. I accept that that can be done, but my point is still a good one: that there has to be a notice in order to deal with the matter. It does not come to an end by effluxion of time.
The next point that the landlord must also include in the notice is proposals for the new statutory tenancy, unless he intends to apply to the county court for possession, in which case he must give the tenant warning. The grounds on which he can apply for possession are not only those which would entitle him to a possession order under the Rent Acts, which, as the House knows, are stringent and in the tenant's favour, but also—and this is the new point which the House will want to consider—that he needs the premises for immediate redevelopment.
We thought it right to include this additional ground, because the houses in question will almost all be nearly 100 years old; and if the landlord genuinely intends to redevelop and can proceed at once—it is only immediate redevelopment that qualifies—it would be against the public interest to stop him. I point out to the House, however, that the landlord has only the one chance. When the statutory tenancy has started, he cannot get possession on the ground of desiring to redevelop any more than any other landlord of Rent Act property. We do all that we can to encourage the two parties to settle by agreement the terms on which the tenant is to stay. If there is a dispute, it will go to the county court.
I should like to deal briefly with two of the principal matters to be settled: namely, repairs and rents. Dilapidations are, we all know, one of the leaseholder's great bugbears. It is the schedule of dilapidations which has, as much as anything else, led people to press for enfranchisement. I think we have found a fair solution to this problem, but it has not been easy to decide what to do. Under a ground lease, the tenant is fully responsible for repairs. If we followed the letter of the existing law, I suppose we would say that the ground lessee could not have a new tenancy unless he 1758 had complied with his obligations under the old tenancy. But we recognise that this would deprive many people of the protection that we want to give them.
On the other hand, I do not think it would be right to disregard the tenant's contractual obligations altogether. After all, many ground lessees have bought their leases at a price that reflected these obligations. So the line we take in the Bill is that the tenant is relieved of his responsibilities under the ground lease, but the landlord can, at the end of the ground lease, carry out what we call "initial repairs," and he can recover the cost from the tenant to the extent that the repairs are needed because the tenant has failed to carry out his obligations under the ground lease. The tenant can pay either in a lump sum or by instalments. How much should be done in the way of initial repairs and how the tenant should pay are questions which can, if necessary, in default of agreement, be argued before the county court. The tenant cannot be made to pay for more than is needed to bring the house into good repair.
"Good repair" is a key phrase, which I have borrowed from my right hon. Friend the Minister of Housing and Local Government, for it appears in his Housing Repairs and Rents Bill. It is defined in the same way in both Bills. Under the Housing Bill, the house must be in good repair if the landlord is to be entitled to his increase in rent. In my Bill, good repair is the upper limit for the initial repairs for which the tenant can be made to reimburse the landlord.
In some cases, the parties may decide that they can put the house into reasonably good condition without going as far as this upper limit, but even where the maximum of initial repairs is carried out it is still likely—I should think, almost certain—to be less than the very high standard enforceable under the repairing covenants of any ground leases. The tenant will to that extent be let off his obligations.
I should like here to compare the tenant's position under our scheme with his position under the law as it stands. At present, when a ground lease ends, the tenant has no right to stay on. What is more, he is liable before handing over the house to repair it up to a high stand- 1759 ard—perhaps a good-as-new standard. In the Bill, we give the tenant the right to remain in his home, and also substantial relief from his repairing liabilities.
I now turn to the rent to be paid under the statutory tenancy. It will be based on the condition of the house after the initial repairs are done, and it will be related, of course, to the repairing and other covenants of the statutory tenancy itself. I have considered this point a great deal, because when the White Paper was before the House a number of hon. Members suggested that the basis on which the rent should be fixed ought to be denned more precisely; and I have tried to apply my mind to that.
Some of those who made suggestions wanted the rent to be linked with values current at some time in the past, even 1914. I am quite sure it would be wrong, apart from the difficulty of assessment, to create tenancies based on values long out of date. Other Members felt that the courts would need more guidance. The danger of that is that if we make the formula too precise, it immediately becomes rigid. We want to leave the parties a reasonable chance of settling the terms of the tenancy between themselves.
What they settle—for example, the allocation of repairing responsibilities—between them is bound to affect the rent. I feel just as strongly, after the reconsideration which I have given this matter, that a rigid rent formula would take away this flexibility. I think that if we tell the court to arrive at a reasonable rent in the light of the covenants and condition of the house, that is as much guidance as they need.
Part I deals also with sub-tenants of ground lessees. If I may put it in the horrible shorthand of my former profession, it reverses with certain exceptions what is known as the Knightsbridge judgment. The effect of that, if I may try to put it shortly in other terms, is that under the law at present, if a ground lessee sub-lets to a sub-tenant who is protected under the Rent Acts, the sub-tenant loses his protection when the ground lease comes to an end. That is what we are changing. The result will be that in most cases the sub-tenant continues to be protected against the head landlord after the ground lease has expired. Apart 1760 from any differences on other points, I think the House will be unanimous on this improving of the effect of the Knightsbridge judgment.
§ Sir D. Maxwell Fyfe
Certainly. The Bill maintains the protection of the Rent Acts. Under the Knightsbridge judgment, it was outside the Act as soon as the ground lease came to an end. We reverse that.
§ Mr. Raymond Gower (Barry)
Would my right hon. and learned Friend be kind enough to clear up one small point? Presumably, if the landlord fails to give the requisite notice, the leaseholder will hold over under the terms of the lease. If so, the landlord will have to exercise some other remedy under the existing law—for instance, a period of reasonable notice—to terminate the existing lease. Will the leaseholder then possess similar rights should the lease be terminated subsequently?
§ Sir D. Maxwell Fyfe
If he does not give notice before the date when the lease would have ended, it goes on, but, of course, he can then still give the 12 months' notice later. There will be the same rights. He cannot invade the rights of the lessee by not giving notice at the earliest point.
I expect that it will be Part I which will attract most attention in the debate, but I ask the House not to overlook Part II, which provides security of tenure for business tenants. Part II applies to all occupying business and professional tenants, whatever their type of tenancy, whether they pay a ground rent or a rack rent, and whether the tenancy is for a term of years or is a weekly or other periodical tenancy. Valuable as Part I will be to the people whom it affects, Part II is perhaps even more important because its effect will be felt so much more widely.
The proposals in Part II were generally welcomed in the debate on the White 1761 Paper. There is nothing really novel about them. It was as long ago as 1927 when a Conservative Home Secretary took the first step and introduced the Bill which became the Landlord and Tenant Act, 1927. In the 27 years which have passed, a number of criticisms have emerged of the workings of the Act, and these were received and tabulated by the Committee which inquired into the matter.
§ Mr. Turner-Samuels
The point is that the Landlord and Tenant Act, 1927, has been quite ineffective.
§ Sir D. Maxwell Fyfe
I shall point out the defects which I consider ought to be changed and shall suggest alternatives. The hon. and learned Member should remember that in 1952 there were no fewer than 550 proceedings under the Act, and, therefore, although I certainly agree that the time has come to improve it, one cannot say that it has been unused and entirely unhelpful. However, what happened—I want to make the point clear—was that it fell short of what Parliament intended when it passed the Act. Clearly, it is incumbent on us to propose amendment.
I want to explain how the Act proceeded, because that will show at what point amendment must be directed. Under the Act, if the letting value of premises in the hands of the landlord has been increased through the tenant carrying on a business there, the tenant is entitled to compensation when he leaves. The second stage is that if that compensation does not cover his loss through leaving, he is, by and large, entitled to a new lease instead of compensation.
Thus, the basis of the Act is that the tenant must first establish a right to compensation before he can claim a new lease. The essential condition is that the letting value must have been increased through the presence of the tenant. That increase in letting value is known by another horrible phrase which has been much used, "adherent goodwill."
The theory of this is simple enough. It is that if the landlord gains through the presence of the tenant, he either pays compensation or renews the lease. That sounds very attractive, but, in fact, the Leasehold Committee found that there were a number of great difficulties.
1762 The first is that it is very hard to establish and measure adherent goodwill. Value is created by a number of different factors apart from the physical characteristics of the premises. It is one thing to say what the premises are worth, but it is very rarely possible to prove how much of that figure has been contributed by the tenant's business.
Secondly, the claim can never succeed if the premises are to be demolished by the landlord or if he lets them for a different and more valuable purpose.
Thirdly, there are many types of businesses which, by their nature, do not create adherent goodwill; but the need for security of tenure on the part of the tenant of the premises who is carrying on the business may be just as great.
Therefore, the Committee thought, and the Government entirely agree with them, that in view of these difficulties it would be wrong to keep adherent goodwill as the essential condition and that a new approach must be found.
The Committee gave us three different schemes; one in its Interim Report, another in the Majority Final Report and a third in the Minority Report. I hope that no member of the Committee will be violently outraged by the fact that we have not adopted any of these schemes as a whole, but we have followed them all in putting the emphasis—this is the important point—on renewal of the lease rather than on compensation
The essence of our scheme can be put this way. We say that if at the end of the tenancy the landlord needs to occupy the premises himself for his own business or to pull them down and rebuild, the tenant must leave and the landlord is perfectly entitled to refuse a new tenancy. If, however, the landlord is going to relet the premises anyhow, then we say that the sitting tenant has a prior right to remain, provided he has been a satisfactory tenant. But if he stays on he must pay a fair and up-to-date rent; there is no question of freezing rents at a past level.
I believe—whatever our political views, we must all, surely, be glad to share the belief—that what we are doing is to put into a statutory code the practice which a reasonable and good landlord would naturally follow. We encourage the parties to proceed by agreement. If they cannot agree on the grant of a new 1763 tenancy, or on its terms, the court adjudicates. Normally it is the county court, but large cases would go to the High Court.
I need not go into more detail about the machinery at this stage, but I ought to mention that the scope of Part II is a good deal wider than the 1927 Act. Part II covers not only the tenants of shops, offices and factories but also professional men and bodies such as charities, trade associations and learned societies. The Leasehold Committee pointed out that these need security of tenure just as much as commercial firms, although for different reasons.
It is a corollary of our scheme for security of tenure that if a new tenancy is refused because the landlord requires the premises for his own purposes, the tenant should be compensated. The compensation is to be the amount of the rateable value or, if the tenant's business has continued in the premises for 14 years or more, it is to be twice the rateable value.
This basis is, I admit, rough justice, and one may call it arbitrary. It has been criticised for giving too much to some tenants and too little to others. But up till now no one has suggested a better basis for compensation. Believe me, if we hear some constructive proposals today, I shall be very pleased to consider them.
I have tried to explain to the House that the basis of compensation under the 1927 Act was adherent goodwill and I have also tried to explain why that is unsatisfactory and why I am sure we must get rid of it. Another conceivable basis is the loss which the tenant suffers through having to leave, which would include loss of goodwill and the cost of removal of the various items covered by the compensation for disturbance which a tenant receives when his premises are compulsorily acquired. I think it would be placing too great a burden on the landlord, who is taking his own premises for his own use, to make him pay compensation on this basis when anew tenancy is consequently refused.
The rateable value basis appeals to me, first because it enables the parties to find out what is due without taking expensive professional advice and without litigation. It seems to me that when 1764 they go into the lease both of them will understand exactly and clearly what has to be paid at the end. What we are setting out to do, which I think is reasonable, is to give the tenant something to help him to re-establish his business elsewhere.
As I have said, the amount is double if the business has been carried on for 14 years because, in general, removal is a harder blow for the long-established business and I do not want it to be that. But it does not follow from this that the business which has only been going for two or three years should get nothing. I should have thought that security was important for the young business which is being built up, and if so, compensation should be payable when the tenancy comes to an end.
Now I come to Part III, which deals with compensation for improvements—
§ Mr. Hale
Before the right hon. and learned Gentleman leaves Part II, there are two points which are much in my mind. Incidentally, I am grateful for Part II, it is important and it will be a good thing for occupiers of small business premises.
My first point is with regard to the curious provisions for contracting out. I gather that one can contract out of compensation much more easily than out of security under Clause 38. My second point is that Clause 41 (3, b) now brings in business premises in respect of which, subject to a vast variety of exceptions, a man has been in occupation for six months. Is the right hon. and learned Gentleman satisfied that the 1951 Act is sufficient to carry on protection, and that it will not be possible in the intervening period for business tenants to be deprived of the protection of these provisions by action taken now by the landlord?
§ Sir D. Maxwell Fyfe
I do not think so, but I will look carefully into the way it has struck the hon. Gentleman, especially in view of his vast experience and the work he did on the Leasehold Committee. I say that quite sincerely, as I am sure he appreciates. Indeed, all I have said about the work of the Committee is felt most sincerely by everyone in the House.
Broadly, people can contract out of the compensation if it is not more than five 1765 years, because that envisages that when the landlord is expecting his premises back in a short time, it is reasonable to contract out of compensation; but people cannot, broadly, contract out of the security provisions. That is the approach we have made and we try to apply common sense. It applies generally, but of course there are certain fields to which it does not apply, such as agriculture and licensed premises, because they are covered by statutory codes at the moment into which we think it would be a pity to make an inroad. Apart from that field of exceptions, however, the idea is to cover everybody.
§ Sir Patrick Spens (Kensington, South)
On that point, would my right hon. and learned Friend deal with the exception in Clause 41 (1, c), which I gather is where a person carries on the business of keeping a house for subletting and is taxed accordingly but none the less will not be given the benefit of this Bill? Thatis causing great anxiety amongst a large number of people, so will my right hon. and learned Friend say something about it?
§ Sir D. Maxwell Fyfe
I am under the impression that in the case of someone letting flats or offices, where the person concerned has only a small letting office on the ground floor of the building and is carrying on the business of letting the premises there—that is, the premises are, so to speak, the stock in trade of the business—he is in a different position. I am prepared to discuss that but it would make a better Committee point than an interruption of my speech.
§ Mr. Turner-Samuels
There is a further point on that which the right hon. and learned Gentleman might want to consider. Take the case of a large house which, during the lease, has been converted into five or six flats. Would those provisions apply in that case?
§ Sir D. Maxwell Fyfe
I should like to look into the point of where the exact frontiers come in the case of the exception quoted by my right hon. and learned Friend the Member for Kensington, South (Sir P. Spens). It would be more helpful if we discussed that in Committee, but I will certainly consider the point. In general, I think the right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice) will agree that 1766 it is not a practice to be encouraged to throw out legal opinions on the construction of a Clause in the middle of a Second Reading speech, but I am none the less grateful for having had the point put to me.
Part III deals with compensation for improvements and again we meet the Landlord and Tenant Act, 1927. The House will remember that under that Act the outgoing tenant of business premises is entitled in certain circumstances to compensation for an improvement which he has carried out, provided that it has enhanced the letting value of the premises. In Part III we seek to amend these provisions in various ways recommended by the Leasehold Committee and I do not think anyone will quarrel seriously with what we are doing.
The Leasehold Committee also recommended that these compensation provisions should be extended to improvements in residential premises, but we decided against this. The reasons are set out in the White Paper, but if I may put them in a sentence, we think that residential premises are in a different category from business premises and that improvements in residential premises are a very different thing.
I said that the test under the 1927 Act was whether there was an increase in the letting value. Compensation is not payable unless the improvement has increased the letting value of the premises. I do not think that this test really fits residential improvements. One point on that is that residential improvements are so much more a matter of personal preference than of economics; an improvement that appeals to one tenant may not appeal to another. And so I think it is difficult to ascertain at all reliably what increase in letting value has been produced. The other point is that I do not think it is fair to the landlord who intends to live in the premises himself later on—there are bound to be many such—to oblige him to pay for an improvement which he may not want and may not be able to afford. Again, I ask the House to remember the infinite variety of human taste.
I now come to Part IV of the Bill. The point to which I want to direct the attention of the House, because it is a difficult one and is of some interest, is the position of the Crown and the way 1767 in which we have tried to treat the Crown for this purpose. There are several amendments to the general law of landlord and tenant. I shall refer to one or two a little later, but I should like to deal first with the application to the Crown.
As far as Part I of the Bill is concerned—that is, the Part dealing with ground leases of houses—the Crown is in the same position as under the Rent Acts. The tenant whose immediate landlord is the Crown is not protected against the Crown. On the other hand, where there are three parties, the Crown as landlord, a tenant and a sub-tenant, then the sub-tenant is protected against his immediate landlord. I am not claiming any credit for or making a defence of that, because that is the Rent Acts position today, and it follows as a result of applying to occupying ground lessees the Rent Acts generally, including the Act which we all associate with my hon. Friend the Member for Lewisham, North (Sir A. Hudson)—the Crown Lessees (Protection of Sub-tenants) Act, 1952.
When we come to business premises—that is to say, to Part II of the Bill—the Crown is bound; but Clauses 54 to 57 introduce certain modifications in relation to the Crown. Here we draw a distinction between the Commissioners of Crown Lands and the Duchies of Lancaster and Cornwall, on the one hand, and ordinary Government Departments, on the other. I believe that to be right. Crown Lands and the Duchies hold their land for investment, just like a private landlord, and they are treated under Part II in exactly the same way as private landlords.
Government Departments are in rather a different position. They are not landlords at all to any great extent. Where they do let property, it is either, first, because the property is not for the moment needed for the purpose for which it has been acquired, or secondly, because the letting is itself the means of carrying out the Department's statutory functions, as in the case of the factories erected by the Board of Trade in development areas. I ask the House to note that, because it is very important. It might be called the philosophic basis of the treatment of the Crown which I have suggested. There are cases where the 1768 letting is necessary for us to carry out statutory functions, and I think that factories in development areas are very good examples.
In either type of case the security of tenure scheme which we are putting forward must not be allowed to damage the public interest by preventing the Department from obtaining possession where it needs it in order to carry out its business. As a principle, I hope that that will commend itself to the whole House. Whether I have worked it out properly in the Bill is another matter. For the reasons which I have stated, Departmental landlords are given a special right to refuse a new tenancy of business premises where a Minister certifies that to be necessary. Local authorities and certain other public bodies are given somewhat similar rights, provided again that a Minister certifies that possession is required.
I considered this problem very carefully because I had very much in mind that there must be no favouritism of Government Departments. I am sure that I take the whole House with me in having had that in mind. I believe that the safeguards which I have included in the Bill are essential for the good functioning of Government in the country, but I have been careful to try to keep them to a minimum. It is worth mentioning here that Government Departments receive no special treatment in the matter of compensation. I think that that bears out the approach which I have indicated. Where land is required by a Department there must be a procedure for the Department to obtain it, but that does not affect compensation. If it gets it the Department receives no special treatment in the matter of compensation.
Under Part II the private landlord must compensate when the tenant is refused a new tenancy on certain grounds. A Government Department must compensate, on the same basis, where it refuses a new tenancy on comparable grounds. Moreover, Government Departments must give tenants the same length of notice as must a private landlord under Part II, except where a Minister certifies that early possession is needed for reasons of national security.
I should like to mention a group of the Leasehold Committee's recommendations, all dealing with covenants in leases. We 1769 have not accepted some but we have accepted others. I start with what I am sure must have given the hon. Member for Oldham, West one of his greatest headaches, as it has given me. It is the problem of securing a code of standard covenants in leases. I should like to put my difficulties to the hon. Member and tell him why I come to this position. I am sure that I shall have his sympathy, if not his agreement. The suggestion was that covenants were to be embodied automatically in all leases and tenancy agreements unless they were expressly excluded. I give it to anyone at once that in the White Paper we said that the Government had accepted this proposal in principle, but with reservations. We have given a great deal of thought to it since and we have decided not to include it in the present Bill.
I think that the Leasehold Committee had repairing covenants mainly in mind. They wanted to ensure that in every tenancy responsibility for repairs was clearly allocated among the parties. A code of standard covenants is an attractive way of achieving this, but there are great inherent difficulties. The first is the question of how far we are to allow the parties to contract out. That stands out a mile. If one did allow that, the code would be soon a dead letter. It would soon be a dead letter if the whole thing could be excluded by a few words in a tenancy agreement or a sentence in the last page of a rent book. If contracting out were too easy, it would become a matter of common form.
Ought we, then, to say that all the ground covered by the code must be covered in every tenancy agreement in some way or another? That is, ought we to say that, while the parties would be free to allocate between one another where the responsibility of repair would lie, there must never be any responsibility for repair left unallocated? That would make the parties assume a much greater responsibility for repairs than they would do at the present time. I do not know how one could let an old house which might be quite useful for the storage of certain things and allocate all the responsibilities of repair.
§ Mr. Hale
If the right hon. and learned Gentleman will allow me, may I say that he is very interesting on this point and that no one claimed the monopoly of 1770 wisdom on this matter on either side? It was obviously a very complex subject and I hope that the right hon. and learned Gentleman will not be too devastating in his analysis of the objections to the proposal. It should be borne in mind that in almost every business lease the small tenant is obliged to conform to a code made by the big landlord. He is told that he can take it or leave it. We felt that there was something to be said for a standard for the whole of the community rather than only for some big landlords.
§ Sir D. Maxwell Fyfe
I think that when I finish the hon. Member will see that I am being anything but dogmatic about it. I did feel that I owed it to the House, and especially to my colleagues who have been on the Committee, to put the difficulties as they appeared to me as frankly as I could. Going back to my point as to whether we ought to allocate all repair responsibilities in every case, I will take the case of the old house that may be rented for storage as illustrating one of the difficulties.
This is not a party point at all. I think Parliament would prefer to impose these liabilities by an express obligation rather than by an indirect method. Broadly, that is the sort of line that we have tried to take in the Housing Repairs and Rents Bill. That Bill does not affect the contractual liabilities of the parties but it says that the landlord is not entitled to an increase in rent unless he keeps the house in good repair. I think that broadly it is better to lay down obligations of that sort in housing legislation than in a Landlord and Tenant Bill.
There is also the point, which I am sure the hon. Member will remember, that the Committee itself was doubtful whether its code should apply to Rent Act houses. If we leave out the Rent Act houses, I am not sure that the code is necessary for properties of other kinds, but I want to make clear that I am not rejecting the idea. That is why I indicated to the hon. Member that he should be of good cheer. I think we must defer consideration of it and I hope I have pointed out the difficulties with sufficient frankness for the House at any rate to have sympathy with me, if it does not agree with me about it.
1771 The other point which gave me difficulty is that of covenants against assignments, subletting, making of improvements and change of user. My professional colleagues, who have shown such extraordinary patience, will know that there are two kinds of these covenants. Sometimes, for example, the tenant covenants that he will not assign the tenancy without the consent of the landlord and the law at present says that in such a case the landlord's consent must not be unreasonably withheld.
The second type of covenant is the absolute covenant by the the tenant that he will not assign at all. One of the recommendations of the Committee was that we should do away with the absolute covenant and it was suggested that it should be converted into a covenant not to act without the consent of the landlord. We accepted that recommendation with reservation, as stated in the White Paper.
It is interesting to see, as we go on with discussions, how far our experience has been changed. One of the objects of a White Paper is to try to test public opinion. A great many professional and other organisations, and also individual members of the public, sent us their views on the White Paper and this proposal about covenants in leases attracted more criticism than anything else.
There were various arguments; a perfectly reasonable one was that the landlord might have let the premises to a particular individual or for a specified purpose at a relatively low rent. If he did that he was entitled to be certain that the benefit of the tenancy at the low rent could not be assigned to someone else and that the premises could not be used for a much more valuable purpose. The argument which I think impressed me most was that the right to impose an absolute covenant is essential for good estate management. The House will remember the background which I have been considering, the Board of Trade with its factories in development areas. The same point was put to me by some colleagues in relation to the property which they administer. Again, I came to the conclusion that the criticisms had substance and decided not to include that proposal in the Bill.
§ Mr. Turner-Samuels
But if the consent is not to be unreasonably withheld, that would be an element taken into consideration. As it now stands, everything is cut out and there is no opportunity of assigning at all with an absolute covenant.
§ Sir D. Maxwell Fyfe
I must ask the hon. and learned Member to believe that that same profound consideration has occurred to me and I have argued quite a variety of cases with various interested people on it. They felt that very strongly and I felt that there was enough equity in their consideration to leave it out. Again, that is a point which we can pursue in Committee and I shall be very glad to hear the hon. and learned Member develop his objections. I thought I ought to state the reasons and the history to the House.
I come now to the recommendations we have accepted. Clause 49 of the Bill, as suggested by the Committee, extends the scope of the Leasehold Property (Repairs) Act, 1938, dealing with repairing covenants. I think the House will agree that it extends it considerably and wisely. Clause 50 carries out another of the Committee's recommendations by widening the scope of Section 84 of the Law of Property Act, 1925. That is a Section which provides machinery for inquiring into, and if necessary causing to disappear, restrictive covenants which have become obsolete. I always found it very useful machinery in the old days and we have widened it.
Another proposal is concerned with the jurisdiction of the court when the question arises of whether the landlord has been unreasonable in withholding consent. At present the case can only go to the High Court. The Committee suggested, in connection with covenants against improvements, that the county court should have concurrent jurisdiction, and that is secured over a rather wider field by Clause 51.
I must apologise to the House for spending so long on these technical details. There remains only a final point that I wish to make about the Bill as a whole. Time and again in preparing the Bill we came up against a difficult decision. Where exactly were we to strike the balance between the legitimate interests of landlord and tenant? We have done our best throughout to be fair to both. But there is a temptation to go 1773 so far in the pursuit of absolute fairness that one produces a system too complex to be workable. These provisions will affect great numbers of transactions and they will defeat their own ends if they are too complicated.
In saying that, I hope no one will take me as discouraging suggestions for Amendment. It would not be much good if I tried to discourage them, but in any case I want to make clear that that is not my intention. Obviously there is a great fund of knowledge on this subject in this House. Our four colleagues who served on the Leasehold Committee must have accumulated an immense store of learning in the course of their labours. Many others have had experience of this subject in its various aspects either in this House and in our constituencies or professionally. Though I am sure there are many points on which, in the light of that knowledge and experience, the Bill can be improved, I am equally sure that its principles are sound, and that in this difficult and controversial field we have found a solution which is reasonably practicable.
§ 4.40 p.m.
§ Sir Frank Soskice (Sheffield, Neepsend)
I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof:this House declines to give a Second Reading to a Bill which makes no provision for leasehold enfranchisement.I should like at the outset to say to the right hon. and learned Gentleman the Secretary of State for the Home Department that I am sure the House is grateful to him for his painstaking exposition of the purposes of this Bill. We on this side of the House recognise at once that the right hon. and learned Gentleman has given a great deal of thought to the matters which he has embodied in his Bill. We accept at once, and recognise with gratitude, that the Bill contains a great deal which is of value and which accords with the views of my right hon. and hon. Friends about the proper relationship between landlord and tenant.
On Second Reading of a Bill of this magnitude and complexity, it is impossible to go over many points which can be dealt with better in Committee; and I conceive it to be the best service I can render the House, in speaking on behalf of the Opposition, to deal with those 1774 matters of principle which seem to us to require discussion at this stage in the life of the Bill.
Though recognising, as I say, that the Bill contains much of value, nevertheless there are some aspects which very gravely disappoint hon. Members on this side of the House. The first one with which I want to deal is that raised by the Amendment, the question of leasehold enfranchisement. I start my argument by citing a passage from the White Paper and ask, having cited it, whether the Government accept what is there expressed. Paragraph 12 of the White Paper, which the right hon. and learned Gentleman says is being principally implemented by the present Bill, reads:The majority of the Leasehold Committee were opposed to the introduction in any form of Leasehold Enfranchisement, their opposition being based mainly"—and I emphasise the word "mainly"—on ground of principle, such as the rights of property, the sanctity of the original contract, and the undesirability of providing by statute for compulsory acquisition of property by private individuals without regard to the public interest.There is an objection of basic principle. The right hon. and learned Gentleman has not said a word about basic principles in his speech this afternoon.
I should like to know whether the Government accept that there is a basic principle in the way of the acceptance of our proposal, or whether they depart from what is said in the Majority Report of the Leasehold Committee, and reject the view that there is any objection of principle to leasehold enfranchisement. The objection of principle is most easily answered if it is persisted in by the Government. Sometimes the expression "sanctity of contract" is a little over dramatised for political purposes. But if it is accepted—as I think we all accept—that it is a great and important principle that contracts should be honoured, that must apply to contracts entered into by parties on an equal footing one with another, each free to enter into the contract or not as they choose, and when no over-riding public interest intervenes.
If it is said that there is an objection in principle on the ground of the "sanctity of the original contract"—and those are the words used in the White Paper in the quotation I have just read—I think it apposite and proper to remind 1775 the House that, when we are dealing with leasehold enfranchisement, we are dealing with interests in land which in no possible circumstances can be said to originate from any contract between equal parties on a fair basis.
What we are dealing with is the interest of ground lessees mainly under 99-year building leases entered into originally in the middle of the last century between, on the one side, a working man, and, on the other side, a landlord who, by the accident of inheritance or birth, had a monopoly in vast tracts of land generally wholly undeveloped—the working man having an obligation to provide a house for his family on that very land which was near his work. A house is not a thing which you can do without. If you have a family you have to have a house. To apply the expression "sanctity of contract" to a contract which, in effect, the landlord could impose upon the working man is a mere perversion of language. That is the problem.
If it is said that, after all, this happened nearly 100 years ago, I would reply that that is a very two-edged argument to use. The facts with which we are dealing at present are that in large tracts of this country, particularly in South Wales, these building leases are now running out. The result is that families who may have lived in houses for years and are paying a very low ground rent—families whose houses may have been equally occupied by their predecessors in title or in lineage—find themselves at risk of being thrown out with the expiry of their leases, unless they are rescued at the last moment by the provisions of the Government's present Bill. Therefore, it is an urgent and a pressing need with which the Government must deal when it approaches the situation of this very large number of people to whom I have referred.
It is no consolation to those people to say that, after all, it is a question of "sanctity of contract," when their possession of what they regard—and are morally entitled to regard—as their home is threatened by the exercise of a right depending on a phantom title, 100 years old, which is devoid of flesh and blood and simply armed with legal teeth. That is the problem, and I would ask, do the Government adhere to the view, mainly relied upon by the majority report 1776 of the Committee, that there are objections of principle founded on the "sanctity of contract"? Or do the Government, as I apprehend, throw over that consideration lock, stock and barrel and recognise it as being completely empty and without foundation? If they do, and I hope they do, the only obstacle in the way of obtaining some form of leasehold enfranchisement is the series of what I respectfully would suggest are very slight difficulties which the right hon. and learned Gentleman enumerated in his speech.
It was said—rather slightingly, I thought—in the Majority report that the demand for leasehold enfranchisement was, on the whole, in the country as a whole, comparatively slight. I do not know whether that is the view which has influenced the right hon. and learned Gentleman, but if it is I would ask him to have a word with some of my hop. Friends who represent constituencies in Wales. Then he will realise that the demand is extremely keen, as it is in the North as well as various other parts of the country, but particularly in Wales. He will realise the demand is particularly keen and that there is an intense feeling behind it that families who have lived for years and generations in houses which they have considered their own should be given the opportunity to become the lawful owners, without the threat hanging over them of the exercise of this century-old title which has little reality except in law.
If the House accepts that there are these people in this predicament, and that there are these people in very large numbers, and that there is this keen and intense feeling which animates a desire for a right of leasehold enfranchisement, it is the duty of the Government not simply to be lukewarm, not to pooh-pooh their proposals and desires, but to approach the solution of these problems with something of a determination to find an answer to them. That is what the attitude of the Government should be in this matter.
The Government say that there are difficulties and, on the whole, that there is no particular desire for leasehold enfranchisement. I would point out, that, in the first place, the Government have accepted it in principle for Scotland. I do not know why they should not accept 1777 it for England. Secondly, their own proposals to give security of tenure to the occupants of ground lessees themselves involve a considerable inroad—and rightly—upon this so-called "sanctity of contract" which invests with a particular holiness these century old rights. Thirdly, it is a well-known Ministerial exercise, without which few Ministers could survive in their offices, to construct a kind of obstacle course of difficulties which they represent as insuperable; and that is not the right way of approach to this extremely serious social problem.
What are the obstacles which are suggested, and what is the remedy which we propose? The obvious and main difficulty clearly is the price at which the tenant, the ground lessee, should be entitled to acquire the property, if he is to acquire it, when, or at or about the time when, the ground lease runs out. Obviously, when one is still some considerable time away from the end of the lease the value of the reversion has not become enhanced—and does not become enhanced—by the prospect that the landlord will soon regain the tenement. At that stage, I think that, by common consent, it would not be unreasonable to provide that something in the way of the capitalised value on a certain basis of the ground rent would not be an unreasonable amount for the tenant to pay.
The real difficulty arises when one approaches the terminal period of the ground lease—the last 15 or 20 years of it—when year by year the market value of the reversion increases by reason of the fact that the prospect of the landlord regaining the tenement at the end of the lease comes nearer and nearer. When we get to the last year the prospect of getting possession is so immediate that the value of the reversion is not far short of the value of the freehold. The difficulty is to try to find what is the proper price for the tenant to pay during that terminal period.
The right hon. and learned Gentleman said that he would expect the Opposition to say what, in terms, were their proposals to meet that problem. I do not propose to tie myself down irrevocably, on behalf of the Opposition, to any particular proposal in order to answer that problem. Two, at any rate, stand out as possible ones. One is the one which the Government themselves have 1778 adopted for Scotland which, I think, is approximately a 30 year capitalised value of the ground rent whenever the lease is bought out by the tenant. That is one proposal. I do not necessarily recommend it, but it is one which the Government have accepted and it obviously requires further consideration.
Another proposal is one which I do not think the right hon. and learned Gentleman and his colleagues have yet fully considered. They have not mentioned it in its fullness. It is the one which appears in the recommendations of my two hon. Friends who signed the Minority Report of the Committee. It is the suggestion, which I put before the Government for consideration, that the tenant in the terminal period should be entitled to buy the freehold not at the full market value of the reversion. That would probably be far beyond his purse, anyhow, and in point of fact it would be giving him no advantage because no doubt he could buy his freehold reversion at the market value without any legislative intervention by the Government. He should not have to pay that full market value but he should have to pay a value assessed, broadly speaking, on the principle which I will outline.
It should be what the market value of the reversion would be if we assume a sitting tenant protected by the Rent Acts and, not only that, but a sitting tenant protected by the Rent Acts both in the matter of security and in the matter of rent. In other words, when we get to this terminal period what we should say is what would be the market value of the reversion of a particular house if we assume that the house is occupied by a rent protected tenant who had come into the house before 1914 or before 1939, as the case may be, and had thereafter occupied the premises at what would have been a protected rent supposing he had come in on those dates.
Supposing he had come in in 1912, the standard rent as at that date would have been assessed. One can find out what that standard rent would be by asking what the rent of similar properties in the neighbourhood would have been. One can find out what would have been the rent that the tenant would have been paying supposing he had come in in 1912 and the lease had been granted before that date. Then, from that time onwards, that would have been his standard rent 1779 and it would have been susceptible of augmentation only in terms of the Rent Acts.
When asking what should be the proper price that the tenant should pay for the reversion in its concluding stages, we should say, the market value of that reversion upon the assumption that the tenant had lived there at a protected rent and with tenure protected from 1912. Obviously that would give a figure which would be very much less than the ordinary market value of the reversion. I put that suggestion before the Government. It was a suggestion made by my hon. Friend the Member for Oldham, West (Mr. Hale) and my hon. and learned Friend the Member for Leicester, North-East (Sir L. Ungoed-Thomas). So far as I know, it has not been fully considered by the Government; at any rate, I have seen no valid criticism of it, which would show that there was a basic objection to the assessment of the value of the reversion on something like those lines. I suggest that that is the basis on which possibly the problem of compensation might be approached.
That really is the basic difficulty, such as there is. The other difficulties enumerated by the right hon. and learned Gentleman really are very trashy in comparison with that. What were they? The cost to the tenant; of course, that depends on the compensation. If the suggestion that I have made, or the suggestion that the Government themselves adopted for the purpose of their Scottish provisions, is approved, then that difficulty goes. What remains? There is the amenity covenant. A little goodwill can get over that difficulty. The occupation of the house, if the public interest so requires, could be made subject to compliance with an amenity covenant. That might be an answer.
Then there is the question of severance. What compensation, if any, should the tenant pay to a landlord who has a terrace row of houses which are subject to building leases? If he should pay any compensation, I would only say so should a tenant of a terrace house who is at present given security of tenure under the Government's proposals. The Government have made no suggestion that that tenant should be under any obligation to pay compensation to the owner 1780 of the terrace. It is very questionable whether, as a matter of ethics and justice between the two, the occupier, who has become the freeholder of that same house in the assumed circumstances, should pay compensation for severance. If he should pay fox severance, then, equally, just as in the case of the evaluation of the reversionary price, there can be some kind of formula and some figure of compensation, which should be moderate and reasonable and such as is within the limits of the purse of the owner.
I would put it seriously to the right hon. and learned Gentleman that to try to erect that as an insuperable obstacle which cannot be overcome by the exercise of good will and common sense is running away from the problem. If he thinks that there is no problem then he should have said so. If he thinks there is an objection in principle, then he should have said so. But he is running away from saying that, and I am quite sure that the right hon. and learned Gentleman would not have committed himself to what really is an extravagant statement attributed to the majority Members of the Committee in paragraph 12 of the White Paper. So it really is a question of overcoming these difficulties.
The prevention of desirable development is another difficulty instanced both in the Report and by the right hon. and learned Gentleman. That is a very tenuous objection. There is no reason to suppose that development in parts of the country where the system of freehold tenure is operative is in any worse situation than development in parts of the country where the system of building leases have become widely spread. There is little reason to suppose, and little evidence to be culled from the past in support of the view that, because a particular house occupier has been changed from a long lessee into the owner of the house, it can have any real effect upon the development of general housing schemes in the neighbourhood.
§ Sir D. Maxwell Fyfe
If that is so I should like to ask the right hon. and learned Gentleman this question. If it is his view that the leasehold system is of such small importance in securing 1781 good town planning why did the Government of which he was a member introduce it in the new towns?
§ Sir F. Soskice
But the new towns are the landlords, and it is a very different thing when we remember that the private landlord, whose principal object is to make profit—[Hon. Members: "Oh."] Yes, unless it happens to be a private landlord like the Bournville Estate Company, or something of that sort. But one is a public authority in control of development; the other is a private owner who develops in order to turn the result to his ownprofit. It may be the case that a particular individual does have views as to development which coincide with public interest and public amenity, but I put it to the right hon. and learned Gentleman that to assume that it is axiomatic that that is the case in every instance is very far from the mark.
§ Sir D. Maxwell Fyfe
The right hon. and learned Gentleman was putting to me a point about freehold development and leasehold development in connection with town planning authorities, and I asked him, on that, a question which I thought was very relevant. If it is his view that the two can be equated, why did the Government of which the right hon. and learned Gentleman was a member select leasehold development for the new towns? I submit that that is a very pertinent point.
§ Sir F. Soskice
For the reason that I have given. Town planning has been brought under public control, and, indeed, the whole of this argument is rather academic. It might have been true at one time to say that, if there were developers animated by the same purposes as the Bournville Estate Company, a non-profit making concern, there would have been better large-scale development. But that is all past history since it has become an accepted part of our legislation that town and country planning is to be regulated by a public authority under statute.
§ Mr. Desmond Donnelly (Pembroke)
If my right hon. and learned Friend will forgive me, perhaps I may add something to what he has said. Surely there is an additional reason which the Home Secretary will appreciate. The background to 1782 the new towns is the example of Letch-worth and Welwyn Garden City. The original conception of Letchworth and Welwyn, as envisaged by the pioneer Ebenezer Howard, was a central landowner who would not only exercise town planning control through his leases, but would also recoup betterment for the public good. The leasehold system in those towns is an integral part of the financial set-up, which will bring money to the benefit of the inhabitants of these towns, as the values of central areas increased.
§ Mr. R. Fleetwood-Hesketh (Southport)
May I be permitted to say that I represent a town which was laid out between 1820 and 1840, and is still regarded as one of the best examples of town planning in England?
§ Sir F. Soskice
If I may possibly supplement what I have said, I should like to quote from a passage in the Majority Report which does not bear out the conception that this system of building leases conduces in any real sense at all to the improvement of the town planning layout. It is paragraph 53 of the Report, which appears on page 138 and it says:The minority who favoured leasehold enfranchisement for leaseholders with a substantial interest comprised all the Liberals on the Committee, and stated that the building lease system of 99 years or so was proved: —(1) To have been maintained by private Acts of Parliament framed on the lines of ecclesiastical custom and family settlement avowedly in the interests of the landowners. (2) To have led to bad building. (3) To have imposed vexatious and harassing covenants on lessees. (4) To have kept property in insanitary and dilapidated condition at the "fag-end" of the lease. (5) To have charged lessees with exorbitant fees and law costs. (6) To have separated ownership and occupancy and to have brought in being a number of intermediate interests of middlemen and ultimately of house jobbers. (7) To have inflated rack rents on both houses and tenements.I have read that paragraph word by word, because it is some evidence at any rate to show how the system worked out before we had the town and country planning legislation, which really is the proper repository of the public interest in the matter of amenity development and proper layout of town planning.
I put to the House that that objection also is a particularly tenuous one. It has not worked out in fact to produce better town and country planning. Certainly, no reason is given, and if there is any 1783 better planning where the building lease system applies in any part of the country it has not been shown, but there is considerable evidence in the opposite direction. In any case, the thing is out of date because public authorities are responsible for the layout of town and country planning so that that goes. If I have correctly enumerated the objections raised, I think that is all—
§ The Solicitor-General (Sir Reginald Manningham-Buller)
I wonder if I have correctly got the reference in the Leasehold Committee's Report. The right hon. and learned Gentleman said paragraph 53, but the one he read does not coincide with the one in the Report.
§ Sir F. Soskice
That is the Committee's Report, and I read out to the House the words:The minority who favoured leasehold enfranchisement for leaseholders"—
§ The Solicitor-General
I understood that the right hon. and learned Gentleman said he was reading from the Majority Report.
§ Sir F. Soskice
I was reading from the Final Report and I prefaced what I was reading with the words:The minority who favoured leasehold enfranchisement….I thought that was reasonably clear.
The final objection is even more tenuous, and it is that which reposes in the words which I noted from the Home Secretary's speech about the reduction in the scope of leasehold enfranchisement from the exclusion of public authorities. If that is the real reason I would simply say to the right hon. and learned Gentleman that even if all these public authorities which he had in mind were excluded, there would still be very large areas, particularly in Wales, where any provisions, which the Government introduce giving the right to leasehold enfranchisement, would be operative and would be greatly to the benefit of those in whom the right was vested.
Finally, on that, may I say this. All we seek to press upon the Government is to implement in the provisions of the Bill 1784 the right to buy the freehold—not the obligation to buy but the right to buy, and if the right would be exercised in only a comparatively few areas of the country, as the right hon. and learned Gentleman suggested, what of it? If it comes to the rescue of some families who are at the present time in the predicament which I have described and which is referred to over and over again in the Minority Report, it will still be an extremely valuable provision. In point of fact, the right hon. and learned Gentleman's apprehensions are really unfounded, because, even if public authorities, development corporations and all the rest were excluded, the right would still be exercisable, and I feel sure would be exercised, over very large stretches of the country and by very large numbers of families who live in these houses, which they are morally entitled to consider their own, and which, as a fact, they undoubtedly do consider to be their own.
§ Sir F. Soskice
Personally, I would. I am not tying myself to any particular scheme, but, looking at the arguments both ways, I should have thought that the people who ought to be helped by the scheme are those people who have been actually occupying lessees under long leases which are about to run out, and occupying houses which they consider to be their homes and actually to belong to them, except for a legal fiction, the origin of which stretches far away back into history to a legal accident of 100 years ago. Those are the people—
§ Several Hon. Members rose—
§ Sir F. Soskice
I am sorry, but I must get on with my speech. I know that the right hon. and learned Gentleman was interrupted in his speech and that he gave way, but there are a number of important matters which must be dealt with in Committee. All I want to do on Second Reading is to sketch in broad outline what is the scheme which we ask the Government to consider and, after consideration, to approve with the help of the expert advice at their disposal but not at ours, and have embodied in the Bill.
1785 How it comes about is in this way. The Government have rightly given security of tenure to long leaseholders whose leases are about to expire. In so doing, in the opinion of myself and I am quite sure of my hon. and right hon. Friends on this side of the House, they have done right and abundantly right. All that we are asking them to do is that, having gone that far, they should include in their proposals one other giving the leaseholders security. They have given them security in the form of rent protected tenancies. Why should they not, if these very minor difficulties can be overcome, as they certainly can, instead of only giving a protected tenancy to the holders if they want one, say that they should be entitled, at a price to be fixed in accordance with a formula on the lines which I have suggested, to become the freeholders of the houses in which they and their forebears have lived. That is all that we suggest in regard to leasehold enfranchisement.
§ Mr. Ralph Assheton (Blackburn, West)
I want to challenge the basis of the right hon. and learned Gentleman's argument here. He said a short time ago that there was no reason to suppose that the leasehold system had resulted in any town planning superior to that of the freehold system. Is he not aware that those towns which were laid out under the leasehold system, like Eastbourne and Southport, are infinitely better towns than have been built up under the freehold system?
§ Sir F. Soskice
The right hon. Gentleman knows perfectly well that I am talking about building leases granted about the middle of the last century, during which there was large-scale development during the industrial revolution in this country, which leases in large numbers are now falling in, particularly in Wales and in other areas of the country. The right hon. Gentleman knows quite well that those are the cases to which I am referring, and it is because of the predicament in which ground lessees under these leases stand that we press the Government to go what is only a little step further and say to these lessees that if, instead of being statutory tenants, they prefer to become freeholders, as they can under the Government's proposals for Scotland, they shall be allowed to do so— 1786 also in England and Wales. That is all we are asking them to do.
§ Mr. Assheton rose—
§ Sir F. Soskice
I am sorry, but I really must get on.
That is, broadly, the request we are making to the Government, and we feel very disappointed that the Government, for what seem to us to be wholly unsatisfactory reasons, which have been advanced both in the White Paper and by the right hon. and learned Gentleman, have hesitated to go further. They should not have been so timid about it, and they should not have stopped, for reasons which could easily be circumvented, at doing what is the real substantial measure of justice which is due to these tenants who hold these building leases which are now falling in.
Having said that in support of the Amendment which I have moved, may I turn from that to the provisions of the Bill itself? The Government have already gone a long way in giving security of tenure. They offer it to residential tenants under Part I of the Bill, but there, again—and this is not a Committee point, but a point of substance and importance, which I must press upon the right hon. and learned Gentleman at this stage—he is giving residential tenants security of tenure, and has provided in his Bill that tenants may stay on under the terms of the lease until and unless the landlord serves upon them a notice proposing a statutory tenancy. If the landlord does that, the terms of the statutory tenancy have either to be agreed between the parties or settled by the county court, including the provisions as to the rent.
I put it to the right hon. and learned Gentleman that the Bill contains a serious defect in the provisions to which I have referred as to rent. The right hon. and learned Gentleman, in his speech today, said that he felt that it was in the public interest to leave the definition of rent in a very unprecise form. He felt that a rigid formula would be undesirable, and so he left the provisions as they appear in Clause 9 (4). The basic objection that I have and which I put to the Minister about that provision is that the rent, as it is there provided for, will almost certainly be fixed by the county court judge at the ordinary market rent, indepen- 1787 dently of any protection under the Rent Acts.
I hope that the right hon. and learned Gentleman will follow me. What he has provided is that the court should have regard to the state of repair of the house as it would be if the initial repairs had been carried out, and the Clause goes on to say:…and the rent determined by the court shall be the rent which, irrespective of the personal circumstances of the parties, in its opinion would be a reasonable rent for the dwelling-house on a letting in that state of repair and on those terms.I hope that the righthon. and learned Gentleman will place himself in the position of the learned judge who has to interpret that formula. What other rent would the learned judge adopt as a rent falling within that formula except an ordinary market rent? What does that mean? It means that a tenant whose forebears have been occupying the house at a ground rent that may have been £2 or £5 a year may suddenly find himself at the conclusion of the lease, no doubt with security of tenure, but at a rent which may be anything from £1 to 30s. or even £2 a week.
That is really giving with one hand and taking away with the other, and I assure the right hon. and learned Gentleman that a provision in that form certainly will not meet the sense of injustice which these people, who are threatened with eviction, feel at the moment. They are told that they can stay, but, instead of staying on in what they regard as their own property at something like the same rent or something just above it, they are told that their rent may be 10, 12 or even 15 times as much, which very likely they cannot afford to pay.
I would pass from that to refer to the important provisions of the Bill which provide that repairs which are due to the tenant's failure to comply with a repairing covenant may be carried out by the landlord, and that the cost of those repairs can be recovered by the landlord from the tenant either in instalments or by a lump sum. Suppose the repairs come to £150 or £200, as may well be the case with old property. If one tries to work the formula which the right hon. and learned Gentleman has embodied in his Bill, namely the repairs necessary to put the house into a good state of repair, the cost may work 1788 out at something like £150, or some figure in that neighbourhood.
If the tenant, who has theretofore lived in the house on payment of a ground rent, finds himself obliged not only to pay 30s. for his rent but on top of that to pay a lump sum which may be £150, or instalments which may be £5, £10 or £15 a month, on top of the rent, the protection that is being offered to him may be completely illusory. He is offered security of tenure, but at a price which he cannot pay. The danger that the price of leasehold enfranchisement might be beyond his means was one of the objections urged against leasehold enfranchisement. The right hon. and learned Gentleman is putting, in a different form, equally upon the tenant who is supposed to have security of tenure, an equally difficult burden for him to carry.
§ Mr. Hale
I am not quite clear on these points, on which I always speak subject to correction. It appears that the tenant will have not merely to pay the rent and pay by instalments the amount of repairs, but that the rent will be on the basis that the repairs have been done before the rent is assessed; so that there will be an instalment, plus the cost of the repairs.
§ Sir F. Soskice
Yes. The learned judge has to consider what would be a reasonable rent payable for this house, supposing the initial repairs had been carried out. It may be that the house after 100 years, is in a state, not exactly of dilapidation, but in which it could be said that it is far from being in a good state of repair. The learned judge has to picture that house in a good state of repair, and then to ask himself, "What is a reasonable rent for that house?" Obviously, he will say to himself, "I have no guidance here. I can only fix what is a reasonable rent. The Act gives me no authority to limit the rentby reference to any protection which the Rent Restrictions Acts provide in regard to rent. I must see what is the market rent for such premises in a good state of repair."
What is the situation in which the tenant may find himself? What will happen if that tenant becomes unemployed or ill? He has still to pay these sums of money. Thinking, as he is entitled to think, that in the Bill there is protection for him in the matter of his 1789 tenancy, he will find that protection taken away from him because it is accompanied by an obligation to pay sums which, very likely, will be wholly beyond his means.
What do we say in reply to that? The Government have said in their White Paper that they want to remove an anomaly. In paragraph 34 of the White Paper the Government say:The Leasehold Committee were unanimous in proposing that this exclusion should be abolished"—the exclusion being the exclusion from the protection of the Rent Acts of houses let at less than two-thirds of the rateable value—the Majority, because they thought it an unjustifiable anomaly, and the Minority because, in addition, they considered its abolition a pre-requisite for their scheme of leasehold enfranchisement.That is the view which the Government have accepted, the view of the whole Committee, that the exclusion of these tenancies at less than two-thirds of the rateable value outside the provisions of the Rent Acts was an anomaly; so that what the right hon. and learned Gentleman is seeking to do is to remove that anomaly and to bring them in.
If he does so, not merely should he provide the tenants with security of tenure but he should also give them the advantage of the limitation of rentals to be charged that the Rent Acts enjoin. We say that he should not leave the matter of rent at large, to be fixed, as it almost certainly will be fixed, on a basis of open market rent. He should ask himself, looking at the tenant in that house, "Suppose that at all times the tenant and his predecessors had been protected tenants, what rent would they be paying?" That is the rent which should be fixed under the terms of the Bill as the rent payable by the tenant whose tenancy is to be continued as a statutory tenancy in consequence of a landlord's notice.
I want to pass from that point to say one word or two on Clause 15, which reverses the Knightsbridge Estates decision. The right hon. and learned Gentleman was asked by one of my hon. Friends. "What rent will the tenant who is given protection by Clause 15 have to pay?" The right hon. and learned Gentleman answered, I should have thought rightly, if I may respectifully say so, "It will simply be the protected rent he was 1790 paying when everybody was under the impression that he was already entitled to protection under the Act before the Knightsbridge decision was given." If he has to pay a protected rent after the ground lease expires, is it not wholly anomalous, supposing that the ground lessee himself continues as a protected tenant, that the ground lessee should have to pay the fullmarket rent? It is impossible in logic to reconcile these two, and to explain what is a clear—involuntary, no doubt—discrimination. The right hon. and learned Gentleman shakes his head. Perhaps he will explain where I am wrong.
§ Sir F. Soskice
Later on, we shall have the advantage of a speech from the hon. and learned Gentleman the Solicitor-General and we are looking forward to enjoying the full fruits of it. I am sure that one of the fruits will be a clear exposition of the error into which I have fallen.
It seems that the Knightsbridge tenant will have to pay a protected rent, but that the ground lessee who holds on will have to pay the full market rent, as a reasonable rent to be fixed by the court. At the least, it is putting a most unfair burden on the judge to ask him, without any guidance and at large, to fix upon what he thinks is a reasonable rent. It makes his position most unenviable. He may decide upon a market rent in a case in which other people may think it should have been a protected rent. That position of the learned judge, left unprotected under the terms of the Bill, is one which should not be put upon him.
I have dealt with matters arising out of Part I of the Bill, and I would couple them again with an expression of my recognition of the thought that the Government had given to drawing the provisions of the Bill, which has nevertheless, in my submission, the defects which I have pointed out. I am sure that the righthon. and learned Gentleman will carefully consider what I have said, as he always does, whether he thinks my points bad or good, and I hope he will see his way to altering the provisions as to rent and substantially reducing the burden of the cost of initial improvements, which are at present put upon the shoulders of the tenant.
1791 With that, I pass to business premises and the provisions in Part II. About them I want to say much less, because I find much less to quarrel with. The scope of Part II is extremely wide. It covers—indeed, this is almost a frightening phrase with which I certainly do not want to frighten the Government—any activity carried on by a body of persons, whether corporate or incorporate.That covers almost everything. I suppose it covers factories, and would cover the activities of non-profit earning bodies. I suppose it was intended for that, but it is very wide. The Government have been very courageous in adopting these terms in the provisions of their Bill, accepting as they do the view that the paramount consideration is the tenant's right to occupy. He is the person who is in the premises, the person who is living there, as distinct from the landlord, who has simply an investment interest. I am not going to cavil at what the Government have done in regard to this matter.
The only other thing I would say is that, unless I have misunderstood the effect of Clause 30 (1), it is a bar to the tenant's claim for a new lease, first, that alternative accommodation is available; secondly, that the landlord requires to demolish or reconstruct the premises; and, thirdly, that the landlord intends to occupy the premises for the purpose of carrying on a business of his own.
I hope that during the Committee stage we shall further investigate the suggestion that these are unjustifiable bars in the way of the tenant's claim to have a new lease of the premises in which he makes his living. That, I suggest, is a case where the investor's interest is preferred—and unjustifiably preferred—to the interest of the person who lives there and who makes his living on those premises. I ask the right hon. and learned Gentleman to consider that.
One word with regard to the question of compensation which can be said to approach a matter of principle and to transcend detail. It is a bar to the tenant's right to compensation for goodwill or to compensation generally—because it is not named as compensation for goodwill—(1) that the tenant has not sought to renew; (2) that he is in breach of covenant; (3) that he is unsatisfactory as a tenant; (4) that he has declined an 1792 offer of suitable alternative accommodation; and (5) that he has failed to exercise a reasonable contractual option for renewal.
I put it to the right hon. and learned Gentleman, and to the hon. and learned Gentleman who is going to reply, that when one is considering compensation on this very modest scale for what is accrual value in the premises, or what is at least assumed to be a loss to the tenant—either a gain to the landlord or a loss to the tenant, these bars to his right to seek compensation are wholly irrelevant.
Why should the landlord reap the advantage of an added increment in the value of the premises just because the tenant has not sought renewal? This has nothing to do with it, and I ask the right hon. and learned Gentleman to strike out of the Bill these provisions, or, at any rate, to give the matter further consideration so that we may hear a stronger case in favour of them in Committee than we have heard so far. It seems irrelevant that they should enable the landlord to obtain a monetary advantage for reasons which have nothing to do with the circumstance which give rise to the tenant's claim.
Finally, I propose to say a few words about one or two other Clauses. I am very doubtful whether the right hon. and learned Gentleman's description of the provisions as to quantifying the computation of the rateable value or double the rateable value under Clause 37 is, as he describes it, rough justice, or whether I should not adopt the expression used by an hon. and learned Gentleman who was once a Member of this House, "just roughness."
That provision for quantifying can bear nothing but a hit and miss relationship to the actual loss suffered by the tenant through disturbance. He goes out and suffers loss, and—although I can see the reasons which the right hon. and learned Gentleman deployed on the score of certainty—simply to give the tenant the rateable value, or, in some circumstances, double the rateable value seems a very jejune effort to compensate him for what may be a serious loss.
As the right hon. and learned Gentleman himself realises, it will work wholly differently in the case of different tenants. Some tenants will suffer a large loss, and 1793 others none at all. Again, there will be bad tenants and good tenants who will yet get the same compensation. Therefore, that is a provision which wants looking into again in Committee.
Those are the general remarks that I have to make about the right hon. and learned Gentleman's Bill. I do not want to seem ungracious or ungrateful in not paying my tribute to the obvious thought which he has put into the Bill. Having gone so far, I hope that the right hon. and learned Gentleman will recognise that in many respects he has stopped short. The Government accept as a matter of principle that it is the duty of Parliament to come to the rescue of tenants of long leases and to come to the rescue of tenants of business premises.
As to the tenants of business premises, the Government have acted in a way at which, subject to the suggestions I have made, I could not cavil. They have acted very fairly towards them. But in the case of residential tenants they have given them what is little better than a fictitious certainty of tenure, because they have burdened them with payments which, in many cases, they will not be able to pay, and also have stopped short where they should have followed the example of the right hon. and learned Gentleman and his colleagues in their Scottish provisions, and given them not only the right to become statutory tenants but also the opportunity of owning their home in the true sense. The objections which the right hon. and learned Gentleman has advanced are of a comparatively ephemeral nature which can certainly be overcome, and I hope he will give further thought to the matters I have raised.
§ 5.36 p.m.
§ Sir Edward Boyle (Birmingham, Handsworth)
I think that anyone who has listened to the very interesting speech of the right hon. and learned Member for Neepsend (Sir F. Soskice) will be at a loss to understand why the Government of which he was a Member failed to bring in a Measure of leasehold enfranchisement between the years 1945–51, because every single argument which he has advanced this afternoon applied just as strongly during those years as it applies today.
§ Sir F. Soskice
Has the hon. Gentleman not heard it said over and over 1794 again that during the years 1945–50 we probably did much too much owing to the arrears of social reforms left over from the previous period? I have never heard it suggested that we did not do enough.
§ Sir E. Boyle
I agree with the right hon. and learned Gentleman that there was too much legislation in those years, not all of it valuable. But, on his own principles, it seems to me very difficult to defend the failure of the last Government to introduce this legislation during those years.
I was going on to say that nearly all of the arguments which he advanced this afternoon were getting out of date in the early years of the present century. If he wishes to see them answered even more conclusively than they are answered in the White Paper, I strongly recommend that he should read a short book on Liberalism by Mr. Herbert Samuel, as he then was, which was published as long ago as 1902.
I think that the present Government can take some congratulation for the fact that our proposals are based on the findings of a committee which sat since the war. Time after time, we have repeated these proposals as our policy, both at the Blackpool Conference in 1950 and since then in this House, and I honestly suggest that our proposals are more in line with the needs of the present day than is a policy which was completely discredited 50years ago.
§ Mr. Barnett Janner (Leicester, North-West)
Does the hon. Gentleman recollect that Mr. Lloyd George, who was then the Leader of the Liberal Party, advocated leasehold enfranchisement at the time to which he referred a moment ago?
§ Sir E. Boyle
Mr. Lloyd George was not the Leader of the Liberal Party in 1902, and it is only fair to say that Mr. Herbert Samuel was a friend of Sidney and Beatrice Webb. It so happens that the Webbs would have supported the views of my hon. and right hon. Friends on leasehold enfranchisement, rather than those of hon. Members opposite, as the hon. Gentleman the Member for Widnes (Mr. MacColl) pointed out in his very convincing speech when we last debated this subject. I am sorry that the hon. Member, who takes such a very sound view of the question, is not with us this afternoon.
1795 The hon. and learned Gentleman read paragraph 12 of the White Paper and then asked whether the Government agreed with it. Quite honestly, the answer can be found in a completely straightforward way in paragraph 16 of the White Paper, where the right hon. and learned Gentleman will find these words:Whether, and (if so) at what point and in what circumstances, this special interest may be held to give to the occupying ground lessee a right(denied to the occupying rack-rent tenant) to enlarge his proprietorial interest by compulsorily acquiring the freehold against his landlord's wishes are no doubt more controversial questions, and the Government are very far from conceding that occupying ground lessees possess such a right as a matter of principle. Their examination of the scheme proposed by the Minority of the Leasehold Committee has, however, led them to the conclusion that the practical difficulties of application, quite apart from any objections of principle, are likely to prove fatal to the devising of any workable and worthwhile scheme.That is a perfectly legitimate method of argument. Hon. and right hon. Members opposite feel very strongly about this, but we say that we are not going to rely simply on arguments of principle, and we point out that the consequences of what they want to do would not be nearly so straightforward as they themselves imagine. They would be fraught with far more difficulties than they think and in this debate we are quite entitled to take our main stand on practical grounds.
There is, however, one point of principle upon which I take my own stand and which I should like to make absolutely clear. I believe the building lease system to have been a valuable one. I hope that system will be maintained in this country, because I believe that it has enabled a very large number of private people to obtain residences or business premises without having to sink money in a freehold.
I have no respect for the wholly fraudulent argument that those who do not uphold leasehold enfranchisement are not on the side of those who wish to own their own homes. On the contrary, the leasehold system has enabled countless people, who could not otherwise have done so, to own their ownhomes, and it is my fundamental objection to any scheme of leasehold enfranchisement that 1796 has so far been proposed that I do not think it could be introduced without dealing the leasehold system a lethal blow. For my own part, I have no special knowledge of this subject, but I represent a dormitory area—an urban suburb. I have had to answer questions about this, and I have always tried to put the case for the Government's proposals as clearly and fairly as I could.
I was very interested indeed to hear what the right hon. and learned Gentleman said today about the financial aspect of the Opposition's proposals. They are, of course, identical with the description given of them in paragraph 17 of the White Paper. It is important to make that clear, because when we last debated this subject the hon. and learned Gentleman the Member for Leicester, North-East (Sir L. Ungoed-Thomas) said more than once that we did not understand what their proposals really were. Here I would like to say how sorry I am that the hon. and learned Gentleman cannot be with us today, because he always makes very valuable contributions and I, for one, listen with great interest to him.
§ Sir F. Soskice
I shall be glad if the hon. Member would allow me, in my intervention, to express my recognition of what he has just said, and what the right hon. and learned Gentleman said, with regard to my hon. and learned Friend. I should like to thank them cordially on his behalf.
§ Sir E. Boyle
The former Attorney-General made it perfectly clear this afternoon that his proposals are that the leaseholder who wishes to enfranchise should pay what the market value of the reversion would be if there was a sitting tenant protected by the Rent Restrictions Acts. That was not, I think, the scheme of leasehold enfranchisement envisaged in the last debate by more than one hon. Gentleman opposite, and I have very few constituents who would wish to enfranchise on those terms.
My experience when answering questions on this subject at election times, is that there are many people who would like to be able to hold their leases in perpetuity, and some would like to be able to compensate the landlord for the capital value of the ground rent and enfranchise on those terms, but I do not 1797 believe there are a large number of people who wish to enfranchise on the terms described by the right hon. and learned Gentleman. I think it is also worthwhile pointing out that, in paragraph 17, the White Paper makes it quite clear that this proposal would entail a comparatively large sum of money being paid by just the class of people on whose behalf hon. Members opposite often speak—miners living in South Wales. They would have to find a large capital sum, and I am very sceptical as to how many would wish to do so.
I know that my next point will provoke a howl, but I shall make it nevertheless. I do not believe that we should assume that the Rent Restrictions Acts, in their present form, will remain on the Statute Book indefinitely. Nor can I understand anybody reading this White Paper and thinking that the difficulties of any system of leasehold enfranchisement which are described in it are minor ones. Having listened to the last debate, having re-read very carefully what was then said by the hon. and learned Gentleman for Leicester, North-East, and having listened, as I did, with the closest attention to the right hon. and learned Gentleman this afternoon, I do not believe that they have done justice to the difficulties described in the Government's White Paper.
Let me just deal with one or two examples where I feel the case is particularly strong. There is, first of all, this question about the public interest when large estates would be severed. Surely, the point is this—and it is described quite clearly at the bottom of page 8 of the White Paper—that it would be the duty of the local planning authority to decide whether enfranchisement in any given case was contrary to the public interest or not. It might well turn out, in many cases, that an enfranchisement would have taken place early in the duration of the lease, and that only at the end of the duration of the lease, when other leases on the same estate were also falling in, would the local planning authority discover their mistake in allowing the earlier case of enfranchisement.
I can see the task of local planning authorities being made very much more difficult if proposals such as those suggested by the other side were carried out. Secondly, I believe that the proposals of 1798 hon. and right hon. Gentlemen opposite would not work out fairly and equitably as between one landlord and another and one tenant and another—it is difficult enough to hold the balance fairly between landlord and tenant—but nothing could be worse than to carry out some scheme which would seem unfair to two people who felt themselves similarly placed.
I do not propose to develop these points further, because I think they are made absolutely clear in the White Paper, and I have no doubt that my hon. Friend the Solicitor-General will be replying later. Having read the White Paper and the last debate, and having some constituency experience of these problems, I believe that the Government's proposals are about as fair as could be devised in the present circumstances. They will give security to the leaseholder at a time when alternative accommodation may not be available. I, personally, commend the proposals to the House, and shall be very glad to do all I can—although I know it will not be much—to help the Bill through its later stages and to see it put on the Statute Book.
§ 5.50 p.m.
§ Mr. Desmond Donnelly (Pembroke)
We have listened to two speeches from the other side of the House this afternoon. One was from the hon. Member for Handsworth (Sir E. Boyle) and the other from the Home Secretary. The Home Secretary spoke with his customary charm and Platonic partly political manner, and talked at considerable length about the details of the Bill; but the hon. Member for Handsworth put up a much more convincing case than that of the Home Secretary when he was discussing the principle of leasehold enfranchisement. I thought that the Home Secretary was particularly weak on that point.
The argument of the hon. Member for Handsworth was that the building lease system had served a very useful purpose in enabling people to build homes which they could not otherwise have done, because it enabled them to put the capital into the building and not necessarily into the land. I should like the hon. Member to look a little more closely at the figures of such a transaction. The houses which we are discussing today are, primarily, those which were built at just 1799 over the halfway period of the 19th century. At that time money values were very different from what they are today.
An average small building plot could then be purchased for £20 or £25, when building was at the density which was normal in industrial towns. The average ground rent demanded where the freehold was not sold initially to the developer was somewhere between £1 and £2 a year. The £20 or £25 required for the purchase of a plot represented only a small proportion of the initial capital cost of building the house. I should not have thought that that amount was a very great deterrent to somebody who proposed to build his house. It did not represent a very substantial factor in the question whether or not development took place.
The basis of the hon. Member's remarks was that the development would not have taken place had it not been for the fact that people had been able to lease the land instead of having to purchase the freehold. But the leasehold system did not come into existence through a benevolent attempt to secure development. As my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice) pointed out—in what, if I may presume to say so, was a quite remarkable speech; one of the best statements on leasehold enfranchisement which we have heard in this House for a very long time—it was due to the fact that large numbers of land owners had a monopoly of the land in areas where development was taking place.
We cannot approach this problem either from the technocratic attitude of the Home Secretary, who dealt with a small number of technical objections, or from the legal problems which are involved. As the Minority Report rightly pointed out, this is an issue which one must approach fundamentally from one's particular political standpoint. It is essentially a political issue, which can be re solved only by political decision. One's approach is entirely dependent upon one's own personal experience and the broad political views one holds. It is essentially a Liberal policy—
§ Mr. Donnelly
My hon. Friend will probably realise that I am speaking from the Liberal Bench this afternoon. It is 1800 regrettable that not even one Liberal has attended this debate to advocate his view on what used to be one of the central planks of the Liberal Party programme, and which enabled them to win every seat in Wales in the 1906 General Election. Not one of them is here to advocate the cause which once made their party great.
This issue arises out of the land monopoly which existed in the 19th Century. We have been discussing the question of leasehold enfranchisement for a long time. In his quotation from paragraph 53 of the Minority Report my right hon. and learned Friend gave evidence of the adverse effect which the leasehold system has had.
Now let me go back as far as the famous Royal Commission on the Housing of the Working Classes, 1884–85, when a Supplementary Report, signed by Cardinal Manning, Lord Carrington and a number of other people, said:The system of building on leasehold land is a great cause of the many evils connected with overcrowding, in sanitary buildings, and excessive rent. This appears to be conclusively proved by the evidence of Lord William Compton, Mr. Boodle, the agent of the Marquess of Northampton, Mr. Vivian, of Camborne, and by the incidental evidence of other witnesses….Those of Your Majesty's Commissioners whose signatures are appended to this supplementary report are of opinion that the prevailing system of building leases is conducive to bad building, to deterioration of property towards the close of the lease, and to a want of interest on the part of the occupier in the house he inhabits….Those are the views of that famous Royal Commission, and they are in direct contradiction to the views expressed by the hon. Member for Handsworth.
The attitude of mind with which he approached this problem was made only too clear by the remarks of the Home Secretary. When he was discussing the question of dilapidations, with a great air almost of benign benevolence—at which he is so good—he mentioned that he was using the phrase of the Minister of Housing and Local Government in referring to a house being in good repair. He said that was the upper limit to be demanded. Still talking about dilapidations, he said that good repair was a material factor in the assessment of the rent, and that the rent would be based upon the condition of the house after the repairs had been done. All that means is that the tenant is being asked to put 1801 his house into good repair; he is being asked to pay for it, and then he is being asked to pay for the good repair into which he has put it. Then the rent is assessed. In effect, he is being asked to pay for his own increase in rent.
§ Mr. Hale
My hon. Friend should inform the House of the full magnitude of this question. First, the tenant does the repairs; secondly, the landlord says that the house is not in good repair; thirdly, the tenant pays by instalments after the landlord does the repairs; fourthly, the rent is assessed on the basis that the tenant has put it in good repair, and fifthly, the landlord, under the appropriate Housing and Rents Measure, is then qualified to put the rent up once again.
§ Mr. Donnelly
Yes, and then remember the remarks of the hon. Member for Handsworth, who says that the Rent Restrictions Acts should be repealed.
Fundamentally, the landlord's interest in leasehold property is the question of how much he will get out of it. Fundamentally, the tenant's interest in the house which he occupies is the question of how much happiness he will get out of it. Fundamentally, there is a conflict of interest in those two approaches.
§ Mr. Donnelly
I am not concerned, any more than my hon. and learned Friend was, with the individual who acquires a leasehold house and then sublets it. I am concerned with the person who has a direct lease from the freeholder, and whose home it actually is.
I should have thought, in view of the discussion we have had today, that it would have been generally agreed, despite the hon. Member for Handsworth, that this is fundamentally a bad system because there is a conflict of interest, and that it should be our aim to try to do away with the system, if that is possible. We quite agree that we are saddled with this system, and that is why we are prepared to agree to measures of protection for people when their leases fall in. At the same time we must dispense with the 1802 system. We have got to have something which breaks the ring, so to speak. That is the reason why we are advocating leasehold enfranchisement. It is no good having the one without the other, no good having the Government's protection unless we have leasehold enfranchisement provisions as well, because it is the leasehold enfranchisement provisions which make the other tolerable and enable us to create a land tenure system in which this sort of thing will not happen again. Otherwise, this sort of thing can go on happening. Now let me deal with the objections.
The right hon. and learned Gentleman the Home Secretary said that what we ought to do is to concentrate on what a tenant needs now, the right to stay in his own home. I think that that is a most charming utterance from a chief spokesman of the political party that believes in a property owning democracy. Is this the complete abandonment of all the proposals for people to purchase their own homes? It is the negation of any suggestion that people feel any personal desire for the ownership of their own homes.
The right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), in a brief intervention, said that the leasehold system had produced valuable town planning schemes and that it enabled land owners to secure some measure of uniformity of design and in the standard of layout and so on. He ought to bear in mind that in the 19th Century there were no town planning powers of any kind in existence, and the only way in which one could exercise any control of development was through central ownership of the land. In the Town and Country Planning Act, 1947, adequate powers of control over development are provided. The powers are, indeed, as some people may say, too wide. The right hon. Gentleman, with his advocacy of Adam Smith that he produces from time to time, would be one of the first to say that the Town and Country Planning Act, 1947, is almost an encroachment on the liberty of the individual.
The other point the right hon. Gentleman ought to consider, too, fairly carefully is that in the 19th Century it may have been that there were good schemes promoted by individual landlords in certain upper class areas such as Bath and 1803 Regent Street, London, and so on. What we are concerned with here is where the landlord has ignored the social considerations involved because he was solely concerned with the profit motive. That is the industrial development in South Wales and Lancashire. The answer to him is that it is no good the right hon. Gentleman's coming here and saying that just because a few landlords were good we ought to ignore the adverse effects of the developments which have taken place under the leasehold system in all the other parts of the country.
The Home Secretary produced in addition to his central objection, five individual objections which we had already heard from him in the debate on 30th April last year. The first one of those was that any proposal for enfranchisement would be a heavy financial hardship on the tenants, that they would not have the money for it. If the right hon. and learned Gentleman looks at the Minority Report which my hon. Friends produced he will see that they said that side by side with any proposals for enfranchisement was the consideration of how they should be financed. There are also many agencies now, the Small Dwellings Acquisition Act, building societies and insurance companies, by which people can borrow sums of money to purchase the freehold of their property.
The other particular points that the right hon. and learned Gentleman produced, such as the adverse effect of the severance from the landowners, the problem where more than one dwelling was embodied in one particular lease, are all technical points that could all be dealt with in the Committee stage of any Bill produced for leasehold enfranchisement; technical points rather than points of basic principle. I should have thought that none of those five points the Home Secretary produced was a really essential administrative obstacle that would prevent us from progressing any farther with any leasehold enfranchisement proposals. I should have thought that those five points might well have been made within the general policy of the Places of Worship (Enfranchisement) Act, 1920, to which my hon. Friends drew attention in their Minority Report. In paragraph 47 they say this:The following example will illustrate the scope of the Act: —In 1823 A lets a building 1804 plot to B for 99 years under a building lease subject to a ground rent and an obligation to build a house costing not less than £x and to yield up the property with the house in good repair at the end of the lease. B sublets to chapel trustees for the remainder of the 99 years less one day and the trustees build a house for occupation by their minister. In 1918 A's reversionary interest is sold to C who pays his price in the expectation that in 1922 he will obtain not only the ground but also the house free of the lease. In 1920 the Act is passed and the trustees can then enfranchise—they can enlarge their leasehold interest into a fee simple estate at a price from which the value of tie house is excluded.If it was possible to do that in 1920 with that property, it is possible to do it in a much wider form in relation to the leases of all dwelling houses.
Now let me make a concession. I quite agree that some injustice will be involved to people who are in the position of Mr. C., but whatever one does about this complex problem some injustice will be done to someone. What we are seeking to do is to create an administrative setup that will enable us to dispense with the system in future. As I have said, I do not think it can be done until we introduce leasehold enfranchisement.
The Royal Commission of 1884, in the Supplementary Report signed by those 10 members that I have already mentioned, came down in the end by saying this quite firmly:Legislation favourable to the acquisition on equitable terms of the freehold interest on the part of the leaseholder would conduce greatly to the improvement of the dwellings of the people of this country.They themselves advocated leasehold enfranchisement, and it is from that period that the demand for leasehold enfrancisement actually began.
I think it is only fair to say in passing that there was an additional Memorandum by the Marquess of Salisbury in which he called the proposal for the enabling of the holder of a long lease to force the freehold, "wholly objectionable, wholly novel." Of course, that was to be expected of the Marquess of Salisbury of the day. He was the very gentleman of whom Joseph Chamberlain said, "He toils not, neither does he spin." But that Marquess is already celebrated in the political history of the party opposite.
That demand for leasehold enfranchisement, which the Royal Commission of 10 members put forward, to which the Marquess objected and which began 1805 about that period, was one of the central principles upon which David Lloyd George founded his political career. In his first political speech in the Caernarvon Boroughs bye-election in 1890, which returned him to this House, he included this sentence:The leasehold system is most oppressive and unjust. It is a stain on the laws of the country, and it is the duty of every Member of Parliament to do his utmost to remove it from the Statute Book.Those were the battles of 60, 70 and 80 years ago, and the fact that we are still having to argue about them today is an illustration of the fact that the party opposite has not changed. It is the same political party, with many of the same names in the leadership and many of the same interests, some of which have been advocated here this afternoon. My hon. Friend the Member for Oldham—
§ Mr. Donnelly
I am sorry; I mean my hon. Friend the Member for Oldham, West. I always wish to differentiate between him and the hon. Member for Oldham, East (Mr. Horobin). I am not interested in the latter because I hope for a change in the representation of the Oldham, East constituency at the next election. In the course of his brief intervention my hon. Friend gave some illustrations of the effect of this Bill on tenants and of the way in which rents would be increased.
Perhaps I may, in conclusion, give some indication of the effect of the Bill on the position of the landlord, as opposed to that of the tenant; and herein lies my personal interest in the problem. As many hon. Members know, the town of Pembroke Dock is the classic example of the leasehold system in this country. There we have a town which was built around a naval dockyard at the beginning of the 19th Century. All the land belonged to one landowner, a man called Brigadier-General Sir Frederick Charlton Meyrick. There we see, not a landowner interested in enabling the workers in the dockyard to build their houses and in removing from them the burden of having to purchase the freehold of the land, as the hon. Member for Handsworth would have us believe, but a landowner deliberately using the monopoly he had of the land in the area—poor scrub land—in order to compel the dockyard workers to 1806 undertake long building leases which would eventually fall in and, together with the houses Which the dockyard workers had built, would revert to the estate company.
In that town there are something like 1,730 leasehold houses. In Pembroke Dock itself, 75 per cent. of the houses are still leasehold. If we take £3 a year as an average ground rent—and I have deliberately put the figure high—the 1,730 houses would yield a gross income of £5,190. Under the general system which the estate company was pursuing before the introduction of the Bill, and under the general system of re-leasing where the leases have fallen in, the company has been asking an average ground rent, for the renewal of the lease, of £20 a year. Whereas the previous gross income was £5,190 at £3 a year, at a rent of £20 a year, when the leases fall in, the new gross income would be £34,600, which is a very substantial difference.
Under the proposals which the Government have brought forward, where landlords will be able to obtain the full rack rent—and again I have deliberately taken a low figure for the rack rent—the average rent per house would be £40 a year—15s. a week. At £40 a year the 1,730 houses would yield a gross income of £69,000. The income would rise from £5,190 to £69,000.
Why, this is the biggest wage claim in British history. There are banner headlines if the railwaymen ask for 5s. a week more, or if the Electrical Trades Union asks for a few pence an hour extra, but here is one landlord asking for an increase of £64,000 a year. He does not do a stroke of work to earn this. He never built one of those houses or paid for a single brick or a stone or for the mortar which went into them. Like the Marquess of Salisbury to whom I have referred, he toils not neither does he spin; and yet he is asking and getting an increase of about £1,600 a week in his gross income. This is the full measure of this preposterous proposal which the Government have brought forward.
§ Mr. Gower rose—
§ Mr. Donnelly
I have given way to the hon. Member several times, and I do not wish to detain the House by doing so again.
1807 I think this is a very good example by which the nation may realise—if the newspapers are prepared to give it the same sort of headlines as they gave to the railwaymen's wage claim—that the new look of the Tory Party is only a façade.
In the last analysis, this House and the people of the country have to decide which side they are on—on the side of one limited section of the community who are seeking to utilise their land monopoly to increase their own personal incomes, or on the side of people who are seeking to achieve security in their own homes by ownership. There is a deep, innate, emotional desire on the part of people to own their own homes which the Home Secretary entirely ignored in his speech. We have to decide which side we are on. When that situation is made quite clear to the people of this country they will appreciate the monstrous extent of the proposals which the Government have introduced.
§ 6.18 p.m.
§ Mr. Ralph Assheton (Blackburn, West)
I did not intend to speak on the Bill when I came into the House, but one or two observations have been made which I wish to challenge, and perhaps I may therefore be allowed to intervene for a short time.
The hon. Member for Pembroke (Mr. Donnelly) is clearly no friend of landlords, and I make no secret of the fact that I am a landowner myself. I come of a family who have owned land for many hundreds of years; I am not ashamed of it, nor am I ashamed of the record of my family or of a great many of my neighbours and fellow landowners. I am very proud of them.
May I call the hon. Member's attention to a great deal of the good which is inherent in the leasehold system? I may say that my own property is not let under the leasehold system, in the sense which we have been discussing it. There are, of course, many illustrations in this country with which the hon. Member must be familiar of the splendid development done under the leasehold system—development which would not have been done half as well under any other system.
My hon. Friend the Member for Southport (Mr. Fleetwood-Hesketh) intervened to describe what has been done in South- 1808 port. That is a very good example. It was the hon. Member's great-uncle who laid out, designed and largely built Southport, and a wonderful bit of town planning it was. He was a Member of this House; he sat on the benches opposite. After developing Southport, he went on to develop Fleetwood. I believe he came a financial cropper over that and lost all he had made in the development of Southport, but that does not alter the fact that a great piece of work was done in the development of Southport. The same can be said of the development by the Duke of Devonshire at Eastbourne, which is one of the best bits of town planning in the country, or, indeed, in the world. The same can be said of the development of the Grosvenor Estate. I am a tenant of the Grosvenor Estate, so that I have an interest as a tenant as well as an interest as a landlord.
§ Mr. Hale
I thank the right hon. Gentleman for permitting me to intervene on what is an important point. Very few of the textile workers are tenants of the Grosvenor Estate. As for Southport, the problem which confronted Lancashire was the problem which put well-to-do occupants of houses as far as possible away from the place where they were making their money and huddled together all the people who were working in the industry, and all the buildings in the industry, in a very over-crowded area in Oldham and Blackburn.
§ Mr. Assheton
I do not wish to engage in class war with the hon. Member. I should like to continue, if I may, the argument I was trying to make. I was coming to the development of the Grosvenor Estate. The Amendment put from the other side of the House is an Amendment to do away with the leasehold system, and I am trying to show to the House that there are some virtues and merits in the system.
I am a tenant of the Grosvenor Estate, and I do not in the least want to become the freeholder of the house in which I live. I am happy to say that I have a long lease of it, which I renewed at considerable expense, and I do not want to become the freeholder for this reason: I do not want all my neighbours to become freeholders. I am glad to think that the area is well-protected by useful covenants in the lease under which I benefit, and I think that it is a benefit to the community that this should be so.
§ Mr. Turner-Samuels rose—
§ Mr. Assheton
I am sorry that I cannot give way.
I was saying that I have no desire to become the freeholder because I think that we leaseholders benefit greatly from these covenants in the lease. The right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice), who spoke from the Opposition Front Bench, said that nowadays, under the Town and Country Planning Act, there was so much power in the hands of the planning authorities that it was no longer necessary to have the protection of covenants such as those under which I benefit—or, as hon. Members opposite seem to think, suffer. I do not agree with them.
Although I do not think that the powers under the Town and Country Planning Act are by any means satisfactory, I am not, as the hon. Member for Pembroke seems to think, a great opponent of town and country planning. I am extremely keen on it. I object to a great deal of the economic planning which hon. Members opposite like to indulge in, but I think that town and country planning is an essential thing. We have to plan physical things. But I have seen developments taking place in the country since the war which are an absolute proof that the Town and Country Planning Act does not work properly. Under the Town and Country Planning Act many developments have taken place which no first-rate landlord would ever have permitted, and I think that there is a great deal to be said for the leasehold system.
When we come to the proposal that we should have leasehold enfranchisement, what do we find? I do not think that it is a possibility to begin with. Take the case of my house on the Grosvenor Estate. Supposing I become the freeholder of it.
§ Mr. Assheton
It is £125 a year, but that question is not relevant to the argument. Suppose I become a freeholder of that house. It may be that at the next election or some other time I shall be excluded through circumstances from continuing to enjoy the membership of this House, and I may not want to continue to live there. I may want to let the 1810 house, thereby creating a new landlord and a new leaseholder.
The system of owning property and renting it to some one else is inherent in the existence of property. We cannot do away with it. This Bill is to remedy certain defects which have arisen in that system. There are two things which, I think, the Government ought to do. They ought to protect the people of this country from foreign foes and they ought to protect the weak against the strong. It is on that basis that a Bill of this sort is being introduced. It is a pure illusion to think that we can abolish the leasehold system. We cannot abolish that system and, if we did abolish the system, it would grow up again and increase once more.
Apart from the fact that we cannot abolish it, I think that many of the arguments in favour of abolishing it are quite unsound. To begin with, the advantage to redevelopment of a large area by leases falling in at the same date is tremendous. I think that all town planning people would agree with that. That is one of the greatest advantages of the leasehold system.
There has been a lot of talk on the other side of the House and by some hon. Members on this side about the jerry-building which took place between the wars. Those jerry-built houses were not leasehold houses. Good landlords will not allow jerry building on their estates. They insist on the property being well constructed. Therefore you do not find jerry building on leasehold estates—no, sir, it is done on the freeholds.
Another point to remember is this. It is frequently suggested that the landlord is going to inherit unearned increment which has accrued without his having "toiled or spun," to use the expression of the hon. Member for Pembroke. But the occupier himself has no more right to that unearned increment, if there is any, than the landlord. I suggest that a large number of the reasons which have been advanced to prove that the leasehold system is unsatisfactory are very unsound reasons.
By the Amendment on the Order Paper, the Opposition wish to reject this valuable Bill simply on the grounds that it is not accompanied by a measure of leasehold enfranchisement. If the House will accept the suggestion I have put forward that it is impossible to abolish the leasehold 1811 system, then I think the Amendment must fall to the ground. I hope that when the Amendment has once been defeated the Government will then be able to speedily proceed with this Bill.
§ 6,27 p.m.
§ Mr. David Grenfell (Gower)
I am very happy indeed to be given an opportunity of speaking on this subject. It is the subject nearest to my heart at my present time of life. I have lived in poverty stricken parts of South Wales in the old days, and I have seen the splendid efforts made by the people themselves. I took a modest part when I was very young indeed in the advancement of Socialism, and I confess to this House that I was occasionally almost chided by my parents for venturing to talk of such a creed.
At the age of 11 or 12 I realised that there was much preventable poverty and social misery in those valleys. I have given myself to the study of these problems, including the study of the industry to which I owe almost everything I have. I have had a lifetime of experience and hard work with the most gallant people whose domestic circumstances and personal idiosyncrasies I know very well indeed. I am very proud of having had the opportunity of knowing my fellow men as well as I do.
I have been transported to this House after many vicissitudes. I worked abroad when I was young and I have seen a good deal of modern industrialism at close quarters. I would say that perhaps the greatest handicap and the most persistent obstruction to progress that I have known has been due to land monopoly. The people do not own much land. In most of the countries to which I have been and on the Continent of Europe the people in the mass are described as proletarians, and there is no recognition of their wonderful qualities. I am very proud of this country. I am Welsh and I have never concealed it; I speak of it with pride. I would not want to alter my relationship with the people whom I know best. I think that South Wales serves us for the purpose of this debate as well as any part of Britain.
I should never be an expert of London geography, and neither do I know the temperament of the people of London as I know the temperament of the people 1812 in the industrial areas. I have travelled up and down the Welsh valleys, visiting places of employment and going underground to meet the men on the spot. I know South Wales, and I think that it is perhaps the best example we have of the problems which we have to solve. One of those problems is the housing of families so that they can rear their children to have future families and try together to build a better and constantly improving society, We are a far better people than we were when I recall the environment and outlook of people of my boyhood days.
Our education is better. We have trained a new generation of people. All this entailed, as the first essential, the building of good homes. Then we had to build schools, and then churches, and every time we took a step in the direction of providing housing accommodation, there was the landlord obstructing the way, never ceasing to take advantage of the leasehold system. Probably it has grown to a more settled, more tyrannous monopoly over the life of people in Wales than in any other part of the country.
Following my parents and two or three generations of people who worked hard, I live in a house which I call my own with as much right as anybody calls anything his personal property. I worked very hard for it, but the land where I live is not in my name. I do not have the original title to it. I am a tenant on sufferance and on conditions, and the conditions in my case are that I pay £3 2s. 6d. for a strip of land just big enough to hold a single-fronted house and a little garden hutch behind.
I pay £3 2s. 6d. for land which I have seen shown on ancient maps, less than 100 years old, as waste or common land, worth nothing at all. Now, 20 houses are paying about £3 2s. 6d. each on every acre of land, or somewhere about £75 an acre, for land that is worth nothing. Nobody claimed this land originally, and when people had to move out into the suburbs and make their homes as best they could, they had to go to the landlord. The landlord readily fell in with their plans and gave them the lease.
I have no complaint on this. I said so in my memorandum to the Uthwatt Committee. My hon. Friend the Member for Pontypool (Mr. West) and I are the 1813 only two Members of the House who took the trouble to go to that Committee. We were cross-examined, and I was proud of the way I came through it. I really was not badly wounded by the legal luminaries.
One can put this case anywhere. In these days, we have fewer people per house than in the old days. In the old days, the average was six or seven persons per house, but today it is less than four persons. About 25,000 houses are needed to house the 100,000 working-class population whom I represent. I know how they live. I pay tribute to them for how well they live. What a wonderful fortunate country it is to find people of their own volition and conviction setting up standards for themselves.
This is not a gestapo or dictatorship country. We have allowed ourselves a great deal more liberty than some working people have been able to obtain. We pride ourselves in living in our own houses, and we pay without complaint. I do not bother very much about this £3 2s. 6d. that I pay every year—I shall pay it and then I shall go, and somebody else will then take up the lease and it will go on for the remainder of the 999 years. One thing which is certain is that I shall not be here to see it end.
By means of this ground rent, a small body of people are commercialising their private fortunes as they never did before. They have joined together to exploit the public more efficiently than at any other time. The building of these houses has become altogether immoral and is a disgrace in a country like ours. I want the House to try to right this thing as far as possible. What I say today is the same as the evidence I submitted to the Uthwatt Committee, not as a final word in the plan of salvation, but as a contribution toit. To everybody who is pledged by his own signature, of his own volition, to pay ground rent, I say that the youngsters who grow up to take the place of the old ones must get emancipation sometime. Why should I surrender my children and their children to the obligation to carry on this payment ad infinitum?
I am quite agreeable to the proposal that we should be allowed to buy this land freehold. Having paid the ground rent for 20, 30 or 40 years, our proposal 1814 is that we pay an amount equal to 25 years' annual rent of the land and then get the title deeds and use the land for our own purpose and the purpose in which we share it with others.
It would wrong no one to get a Measure of emancipation passed by the House. The people are suffering an iniquitous burden upon personality, life, intellect and everything else. Set the people free. Let them pay the 25 years' purchase. I should gladly see this House do that before I go away from it, and I give the promise that I shall be haunting the House unless this is done before I go away from here. This is a standing disgrace upon Parliament. I gladly enter my word of caveat, my opposition, to the iniquitous system, and I ask the House to put it right.
§ 6.38 p.m.
§ Mr. Raymond Gower (Barry)
We who sit for Welsh constituencies, whether on this side of the House or the other, have a peculiar regard and affection for the right hon. Member for Gower (Mr. Grenfell). If he speaks with emotion on this problem, I quite understand it, because this form of tenure has a particular incidence in South Wales which it does not have in other parts of the country. Nevertheless, I cannot quite understand the tactics of the Opposition in regard to the Bill.
As I understand it, the part of the Bill which deals with business premises has been warmly commended, not only by the right hon. and learned Member for Neepsend (Sir F. Soskice), but also by the hon. Member for Oldham, West (Mr. Hale). They both expressed the view—the hon. Member for Oldham, West in a short intervention, and the right hon. and learned Member for Neepsend rather more fully—that the part of the Bill dealing with business premises was an extremely valuable contribution to the law affecting leaseholds.
With regard to residential properties, around which most of the debate has centred, the position, as I understand it, is this. Under the strict letter of the separate leases, the leaseholders, on the termination of their terms—whether 60 or 99 years or longer—would be obliged to yield up possession. The position of the leaseholder was modified by the temporary Act which the previous Government put upon the Statute Book, and the 1815 need for the first part of this Bill is because of the lapsing of those temporary provisions.
The Opposition say, in effect, that it cannot give a Second Reading to this Bill because it does not include some provision for what is vaguely described as enfranchisement. The effect of a successful vote by the Opposition against this Bill because of the failure to include such a provision would mean that the leaseholder on the termination of his lease would be in a far worse position than if this Bill were passed, the temporary provisions of the previous Government having lapsed. In other words, he would return to the position he was in before the temporary Measure was passed by the Opposition when in office.
The failure of this House to approve the Second Reading of the Bill would place the leaseholder of residential premises in the weakest possible position in which he could find himself, a position, whether he had occupied the property or not, of having to yield up possession of his holding on the termination of his lease.
§ Mr. Arthur Skeffington (Hayes and Harlington)
But would not one consequence of that be that if this Bill were defeated the Government would resign, there would be a new election, and the leaseholder might get increased protection?
§ Mr. Gower
That may be a personal point of view, but the first consequence of the rejection of this Bill would be that the position of the leaseholder would be worsened. It is another question whether or not an alternative Government, if they took office, would do what they neglected to do when they were in office before.
§ Mr. Gower
I would not generalise about lessors or lessees in that way. I would say that if this Bill is not given a Second Reading the position of the lessee holding of a poor less or would be the worst possible, whereas if this Bill is passed the lessee will have some advantages beyond those to which hitherto he has in law been entitled. He will have 1816 the option of making an application for a protected statutory tenancy, and that is something to which he is not entitled now and, indeed, has never been entitled.
§ Mr. Janner
I am interested in the hon. Gentleman's argument. He represents in this House a town which I know very well. I wonder if he would relate his arguments to what the people in Barry want, how that town was built, what is the leasehold position there, and whether enfranchisement is wanted or not.
§ Mr. Gower
I shall come to that later. I am quite willing to face up to those matters, but unfortunately it is not what the people of Barry or the people of Leicester want which determines the course a Government adopts, but what the elected representatives of the whole British Isles require, otherwise it would only be the people who pay taxes who would be entitled to vote on questions of taxation. That is a somewhat out of date doctrine for the framing of legislation.
If hon. Members on the opposite side of the House imagine that I am unsympathetic to the idea of some change in the law, I can say that at the 1950 conference of the Conservative Party I tried to get a motion passed which would have the effect of changing the law on leaseholds, not in the same way as is proposed by the Opposition today, because I have very grave doubts whether, if a leaseholder were given the right of purchase, he would in many cases care to spend the large capital sum involved, and in other cases whether he would have the resources available for that purpose.
The proposal which I tried to persuade members of my party to approve was one under which the court, in appropriate cases the county court, and in other cases the High Court, might be given the power, with proper safeguards, to approve a renewal of the lease, particularly during the time when housing was in such desperately short supply.
I feel that whatever are the views of the House on this topic, it is incumbent on us to give the Bill a Second Reading, because whatever the first part of the Bill may or may not do, it certainly improves the position of the residential lessees, and it may be fairly described as the biggest advance by permanent legislation in doing something for the residential lessee. There 1817 has been no step in the past by any Government, whether Liberal, Conservative or Labour, of any permanence to assist any lessee. This is the first act of the kind.
I do not subscribe to the views of hon. Members opposite that the leasehold system is a bad system. The hon. Gentleman the Member for Pembroke (Mr. Donnelly) described it in these terms; he said, "This is a bad system." He went into great detail about houses which had been erected in the last century in industrial areas, but let us remember that it is this system which is used widely not only by private landowners and by public authorities, but also in some degree by local authorities.
I know that in Cardiff, where I live, it is quite common for the City Corporation to lease land to persons for the purpose of building if it does not intend to use the land for the erection of council houses. It is a convenient system not only for the private developer but for the local authority. In some cases a council would not wish permanently to alienate its land, but it may be prepared to grant a lease for a reasonable period.
It should not be imagined that changes in the law would affect only a few developers. That may have been the position 60 or 70 years ago, but the problem today is more involved than the right hon. and learned Gentleman the Member for Neepsend implied in his speech. Today the ownership of freeholds is widely dispersed. I can think of several instances where the best form of investment for church organisations has been deemed to be freehold, the best form of investment for insurance companies has been freehold property, and any step taken by this House which would violently affect the value of freeholds would be prejudicial to the Government itself, to Government investments, to the investments of local authorities, to the investments of great banks, to the investments of churches and chapels, to the investments of trade unions, the Co-operative Society and the insurance companies in which many hon. Members in this House have life policies. That is why I say that this is a very involved issue.
Having said that, I want to ask my right hon. and learned Friend some pertinent questions on the position as it affects Wales. It has been said tonight that 1818 a right has been given in Scotland for lessees to purchase. I have not familiarised myself so much with the Scottish legislation as with this, but why, if it is possible in Scotland, can it not be possible in Wales? Is Wales always to be behind Scotland? I know we are well behind Scotland in the matter of Parliamentary time; I know that we do not occupy a day of the week in Parliamentary Questions, but is it always to be said that different laws can be designed for Scotland while, if there is a peculiar social problem in Wales, special attention cannot be given to Wales? I say that more as a Welsh Member than as a Conservative Member.
In his appraisal of this position, would my right hon. and learned Friend say what would be the effect of the different suggestions made by right hon. and hon. Gentlemen opposite? And I want to emphasise here that the proposal of the right hon. and learned Gentleman the Member for Neepsend was completely different from that of the right hon. Gentleman the Member for Gower. The one spoke of payment of a sum which was to be based directly or indirectly upon the value of a house deemed to have a tenant in it, whereas the right hon. Member for Gower spoke of 25 years' purchase.
Those things are hardly reconcilable in practice, and I want to know for the guidance of the House which is the official view of the Opposition? Does the Opposition advocate some value to be assessed as the right hon. and learned Member for Neepsend suggested, or does it advocate the more traditional method mentioned by the right hon. Member for Gower and, I believe, approved by the hon. Member for Pontypool (Mr. West)?
I should like my right hon. and learned Friend to say whether either of those proposals would have a revolutionary effect upon the value of freeholds all over the country or could some modification be made in certain cases? Is it possible that in future we might contemplate in certain cases, provided that the leasehold term has not become too short, giving a right to a court of law to grant a renewal of lease in extraordinary circumstances? Those which I have in mind are some of those which the hon. Member for Pontypool had in mind, and also the hon. and learned Member for Leicester, North-West (Mr. Janner) when he intervened— 1819 a town where there is hardly anything but leasehold property. Those might be deemed to be extraordinary circumstances not to be governed by the general law for ordinary towns.
Does my right hon. and learned Friend think that this has been considered fully? My reading of the position is that while great thought has been given to the possibility of the leaseholder some day having the right of purchasing his freehold, less attention has been devoted to the possibility of conferring upon a court a right to renew the lease for a short or long period of years in suitable circumstances.
Furthermore, I should like to know, on the basis of the leasehold position as we understand it, whether hon. and right hon. Gentlemen opposite are of opinion that the system should be completed abolished, as the hon. Member for Pembroke suggested? If they do not think that, how can enfranchisement be compatible with new leases being granted freely throughout the country where it may not be possible for large numbers of people to purchase the freeholds?
I may comment that I have noticed that the consequences of Measures of this kind which are passed by the House are not always those which we foresee. For instance, one of the less noticed effects of the Rent Restriction Acts, which I have observed in many parts of the country, is that they have increased the number of owner-occupiers. That is a good effect. The reason for it is that when a tenant, or his successor, leaves a rent-controlled house the owner, instead of re-letting, sells it—
§ Mr. Gower
I would not say shame. I am glad to see that the result has been that the proportion of owner-occupiers has increased in recent years. So the effect of this Bill may not be what we imagine. It must result in a measure of greater security for occupying lease holders, and it may be that after due consideration we shall be ready for another step forward—
§ Mr. Gower
The Opposition will be guilty of inconsistency if they press their 1820 Amendment, because the effect of it would be to prejudice the leaseholder whom their Amendment is apparently designed to help. Therefore, hon. and right hon. Gentlemen opposite should not press their Amendment but should give this Bill a Second Reading, since it is designed to help the residential leaseholder in Part I and, as they admit, it will help the leaseholder of business premises in Part II.
§ 6.56 p.m.
§ Mr. M. Turner-Samuels (Gloucester)
The hon. Member for Barry (Mr. Gower) was obviously in difficulty over this Bill. It was apparent that he was being pulled one way, as he admitted, as a Welsh Member of Parliament and that he was being jerked, rather more strenuously I thought, in the other direction by party considerations. I could not follow either the sense or the seriousness of the point made by the hon. Gentleman as to what would happen if this Bill were not passed. I thought that the intervention which announced to the hon. Gentleman that in those circumstances there would probably be a General Election, followed by an entirely new Measure in which greater justice would be served, was not only an answer to him but would be a boon to the people whom this Bill is supposed to cover.
I would also like to point out to the hon. Gentleman that his remark that enfranchisement seems to be the only point of objection from this side of the House is wrong; that is by no means the only objection. Indeed, my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice) referred to a number of points and criticisms under Parts I and II of the Bill and I propose to refer to some more.
I listened, as we ail did, with great respect and attention to the opening speech of the Home Secretary. If the validity of his case had been as agreeable as its presentation, there would have been much more value in it. It will be obvious on reading the Bill and appreciating its implications that this is a vague and discriminatory Measure which is bound to lead to many anomalies. I do not blame the right hon. and learned Gentleman for this situation any more than I blame the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton). They are the inheritors, not 1821 the instigators, of the system with which we are dealing at present.
Can one imagine a more untenable proposition than the one which the right hon. Member for Blackburn, West tried to make when he seriously observed that a tenant is no more entitled to increment value than a landlord? Surely he is informed enough to know, first of all, of the enriching progress of time and, secondly, that upon the land which the ground landlord holds has been erected a very valuable building which has gathered value with the years. If one compares in juxtaposition the two values between the landlord and the tenant, it is perfectly clear that the landlord is running away with an asset which rightly belongs to the tenant.
The right hon. Gentleman said rather naively, though perhaps not as naively as it sounded, that he is quite satisfied with being a lessee of the Grosvenor Estate. I have no doubt that he is and that he occupies a very desirable house or flat there. He says that he is quite satisfied because he is under perfectly good terms and he has nothing of which to complain. But I think that there is another reason why his enthusiasm lags a little about becoming the landlord and the owner of those premises. I should have thought that the cost of acquiring them would be so huge that that would be another item in the category of reasons for his being satisfied with the position as it stands at present.
I am quite sure that the Home Secretary, who is a very reasonable person in these matters, will agree that the first point that one observes in this Bill is that it only embraces houses that are of a rateable value within the Rent Restriction Acts. All other houses are excluded from its provisions. That is a cardinal factor and it is causing the greatest anxiety in every industrial area where long leases are falling in. I should like to add to an observation which the Home Secretary made, because it is very pertinent to an illustration which I shall give. He said, and I agree heartily with him, that the tenant's greatest need is his right to stay in his home at the end of the lease.
There is surely no room for discrimination in that proposition. Not only should that, and does that, apply to tenancies of the character which this Bill embraces 1822 but it must equally, if not with stronger reason, apply to houses which are outside it. I illustrate that proposition with a case from the City of Windsor. There a house was bought in 1944 at a time when there were still 11 years to run. The original lease was for 84 years. The property was rated at £105 and, therefore, is outside this Bill. When acquired it was in a seriously dilapidated condition. The owners were the Commissioners of Crown Lands. The present tenant spent £2,000 on the house and he turned it into five flats, installing bathrooms, kitchens, a hot water system, and so on. The result is that this property has increased its value by 75 per cent.
The lease expires next year, but the Crown Agent has categorically refused to renew or to extend the lease. He insists upon a sale at a very high price, and he excludes from the price the gardens which he proposes to cut up into five building plots. The result of the high price that is being asked is that the present tenant is absolutely unable to pay it, and he is not protected by the provisions of this Bill.
§ Mr. Arthur Colegate (Burton) rose—
§ Mr. Turner-Samuels
Let me finish.
There is no doubt that this is a typical case. I submit that it is an outrage on all sense of fairness and fair dealing. It is a sheer piece of exploitation by the landlord—the Crown Agent at that—of a valuable asset created by the tenant, who is now subjected to this shocking form of deprivation. I am entitled to say, therefore, that this Bill condones two very serious matters. First, it condones the fact that there shall be no compensation in these cases for substantial improvements of property. Secondly, it condones what is sheer confiscation of a tenant's profits which the tenant's expenditure has created.
§ Mr. Turner-Samuels
No, I will not.
What has become of the Tories' missionary zeal for a "property-owning democracy?" This Bill kills that piece of political cant stone dead. What it does is to re-confirm the property-owning republic which is made up of vested interests upon which the Tory Party shamelessly relies for its political machine 1823 and funds. That is why there is no provision in this Measure for leasehold enfranchisement. I want the Home Secretary to note the very serious point indeed, to which there will be serious reaction in the country, that if a house of the type that I have mentioned is outside this Bill there is no compensation whatsoever for improvements. And if the improvements have enhanced the value of the property and the tenant has to give it up, the tenant is left in the position of getting nothing at all. Any fair-minded person would say that that is completely inequitable.
I should like to say a few words about Clause 9, with regard to the fixing of the term of the statutory tenancy. Apparently the principle is to be that there shall be either an agreed rent or that the matter shall go to the county court judge to decide what in the opinion of the court…would be a reasonable rent….But anyone who reads the Clause will discover at once that the guide to the county court judge is completely vague. It is bound to lead to anomalies and inequalities. It is like the old measure of the judge's foot which we lawyers hear about so much when we are studying our equity.
Each judge may give a different decision on this question of what the rent should be. I ask the right hon. and learned Gentleman why the rent should not be fixed on the rateable value. I ask him to think about that, and then, in Committee, perhaps we can deal with the matter, because a reasonable rent would be a rent that would be payable had the premises been rent restricted. But there is no provision whatsoever for that.
§ Sir D. Maxwell Fyfe
I am most interested in this. Is it in the hon. and learned Member's mind that there is provision in the Rent Act that if the rent is not fixable in the ordinary way as a first letting after the relevant period, one goes to the rateable value? I am speaking from recollection.
§ Mr. Turner-Samuels
However that may be, here the difficulty is left absolutely at large. Every county court has its own exclusive territory and, normally, the case is not reported in the All England Reports, as the right hon. and learned Gentleman knows. There is 1824 usually no report of county court cases, and therefore there can be little or no uniformity and no guidance to county court judges as a body as to what are the principles on which they are to act I do not say there is no difficulty in solving this problem—of course there is difficulty—but I do ask the right hon. and learned Gentleman to have this matter looked at again. I am sure he will agree with me on this, whether he agrees with me or not on the other part of my speech. It would be most unfortunate if, in different parts of the country, on the same elements of this problem, different decisions were arrived at.
I wish to say a word about repairs by the lessee. I ask the right hon. and learned Gentleman also to look at this provision again. I may be wrong, but I am not at all satisfied that the Bill requires the lessee at the expiration of the lease to do only such repairs as are reasonable having regard to the age of the property, its location and all the other circumstances. Those are the elements which I think it most important here to be looked into. In his speech, the right hon. and learned Gentleman said that all the tenant has to do is to bring the house into good repair. The house may be a property that has sustained most extensive dilapidation. In that case bringing it into good repair might be a very costly process and might go far beyond what the facts ought to require in justice.
§ Sir D. Maxwell Fyfe
I am sorry to interrupt the hon. and learned Member. He has been very helpful in dealing with practical points but I am very anxious that this should be made quite clear. Bringing the property into good repair is the ceiling of the matter. It is quite possible, under the Bill, for the landlord and the tenant to agree that the house requires something less than that, in which case the tenant will only have to pay the lesser amount. We have tried to cover the point and, if the hon. and learned Member is in any doubt about us covering it, I shall be very glad to look at the words. But that is the intention and we agree with him on the point.
§ Mr. Turner-Samuels
I am sure it is the intention and I should like the right hon. and learned Gentleman to look at it 1825 again, because I am not satisfied about it. The matter is left too much at large and is not precisely defined. I agree that there has to be a certain amount of flexibility because we are dealing with different properties in different circumstances, but a most onerous burden can be cast on a tenant in a matter of this kind. In my submission, the Bill should make it indubitably plain that the tenant is protected.
I wish to say a word about business premises. Again, I have an illustration from my area, which covers Gloucester and Bristol. There are 2,000 grocers who are really disturbed by the provision of subsection (2) of Clause 37, dealing with cases where the landlord regains possession of the property. In such cases, the compensation payable, as the right hon. and learned Gentleman has pointed out, is twice the rateable value of the holding if the tenant and his successor have occupied the premises for 14 years for business. In any other case it is the rateable value. The right hon. and learned Gentleman said he thought that was very fair and that he had looked at all suggestions and that seemed one which could be accepted because two years was a simple form of calculation. But may I put this to him? If two years is a matter of simple calculation, so also are four years equally a simple matter of calculation. The test is whether it is fair. There is no quarrel about the method of calculation or that the rateable value in a multiple ought not to be adopted. What is complained of is that the two years and one year respectively will not only lead to injustice but to substantial injustice because it is not nearly enough compensation.
I would point out what the right hon. and learned Gentleman must know, that non-renewal of the lease in the case of business premises means a loss of the retailer's livelihood. Secondly, it means a serious capital loss because the retailer is unable to sell his business as a going concern. The right hon. and learned Gentleman knows that the normal value of goodwill is a two years' purchase of the profits of the business. I think one can say with absolute safety that that certainly would exceed the rateable value. After all, we are here dealing with the goodwill which has been built up for 14 years or more—a very substantial asset.
1826 I wish to refer to two of the exceptions in reference to the right of the business tenant to renewal of his lease, which are dealt with in Clause 30. The two exceptions are: first, where the landlord can offer alternative accommodation and, secondly, where the landlord wants the premises for his own business, either wholly or partly. He does not need to require the premises wholly, but may only want them partly, nevertheless he will be entitled to the whole property. As regards alternative accommodation, that is a very vexed and doubtful question. If it is to be laid down categorically, the point at once arises as to whether a man who has built up a business in one area or district or street is not inevitably to be under a disability in having to go elsewhere, wherever it may be.
Apart from the general vagueness of the matter as regards alternative accommodation, on the second point, namely, where the landlord wants the premises for his own business, I wish to ask what that means. What sort of business does it include? Does it include the same business as the tenant's? If it does, it is rather like turning such a tenancy into a Naboth's Vineyard and certainly provides an intolerable opening for sharp practice. Here we are giving the landlord an opportunity of taking what might be a very valuable business, built up by the tenant or his successor with goodwill and reputation over many years, and, be it noted, of taking the whole property maybe to carry it on as the same business for his own profit to the deprivation of the occupying tenant. That cannot be right.
The question of leasehold enfranchisement was very fully dealt with by my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice), whose excellent speech must have greatly impressed the whole House. I should like to point out to the Home Secretary that there is warm support for that proposal from the Trades Union Congress, the Liberal Party and the Labour Party. All the commissions and committees that have dealt with this matter have, with one exception, been in favour of it. There have been many Private Members' Bills on it that have had a Second Reading. Furthermore, most countries have abolished the leasehold system altogether.
In those circumstances, it is perfectly clear that the Bill must have the closest 1827 and most careful scrutiny in Committee if anything like justice is to be done. I strongly urge the Home Secretary to pay heed, as I am sure he will, to the criticisms that have been made. If the Bill is amended in those respects it may very well be a very good Bill indeed, but as it stands it is not, and both because of many of its present provisions and because of its omissions I shall accordingly vote for the Opposition Amendment tonight.
§ 7.22 p.m.
§ Mr. Ronald Bell (Buckinghamshire), South)
The return of the right hon. and learned Member for Neepsend (Sir F. Soskice), though welcome in itself and for himself, deprives me of the opportunity of congratulating the hon. Member for Oldham, West (Mr. Hale) on the unusual fluidity of the Front Bench opposite below and above the Gangway which I noticed just now. I should have liked to be able to congratulate the hon. Member on crossing that formidable gulf—[An Hon. Member: "Which side is the hon. Gentleman on?"] It is quite true that I am in the middle of the gulf at present.
The hon. and learned Member for Gloucester (Mr. Turner-Samuels), in the course of his remarks, touched upon a great many points, some of which I should like to deal with before passing on to more general considerations of the Bill and the Amendment. The hon. and learned Member referred to a case in his constituency of a house with a rateable value of £105, the tenant of which had spent £2,000 on internal alterations and repairs and then turned it into five flats, and then, at the end of the 11-year lease, had to give it up without any compensation.
I would say to him that it is really quite extraordinary, on a Bill such as this, to put up a case like that. We in this House do not know the terms on which the land was let to the tenant. It is not uncommon for property which is in a bad state of repair to be let to a tenant on a very low rent or upon the term that he puts it in repair or spends a sum of money on repairs. It may easily have been a term of the agreement in this case; one does not know, and, therefore, one cannot possibly form judgments based on such partial knowledge.
§ Mr. Turner-Samuels
Surely the hon. Member would agree that in this case there has been a large expenditure by the tenant, who has converted what was one dilapidated house into what is now a good property of five flats and is of considerable value. But the tenant can get no compensation whatever. There was only 11 years of the lease to run. Does the hon. Member really think that it is fair that the landlord should take that property over, lock, stock and barrel, without any compensation whatever being paid?
§ Mr. Bell
It may be perfectly fair, for three reasons which I will give the hon. and learned Member. First, it may be fair because the tenant took it over upon terms very much of that character. It was, as the hon. and learned Member said, in a very bad state of repair. The tenant presumably took it over on terms that he should spend some such sum upon it.
Secondly, he bought the last 11 years of the lease knowing perfectly well that after 11 years had elapsed he would have to return the property to the landlord. He went into the transaction with his eyes open, knowing exactly what he was doing and he got what he bought. He bought it for investment, as the hon. and learned Member's argument shows. He turned it into five flats and sublet, and presumably worked out that it would pay him.
Thirdly, and this is where the hon. and learned Gentleman's argument was related to the main discussion on the Bill, he said that property of this kind should be included in the terms of the Bill whereas it is not because the Government have adopted the Rent Act scale. Property valued for rating at £105 in a provincial city like Gloucester is quite substantial property. Anyone can see that from the amount spent on redecoration and alteration.
The hon. and learned Member, like myself, comes in contact pretty frequently with these cases in the courts, and he will know as well as I do that not much property of the kind that is let or rented falls outside the Rent Restriction Acts. The limit is £100 rateable value in London and £75 in the provinces. The house in Gloucester to which the hon. and learned Member referred is £30 outside the limit, which covers all small and medium-sized property.
1829 Why should the provisions of a Bill like this extend to larger property, occupied as a rule by quite wealthy people, people who always act with legal advice and fully understand the nature of the bargain into which they are entering? It is unnecessary for a Bill of this kind to extend beyond the limits of the Rent Acts. The point which the hon. and learned Member has made on that example is a bad one.
The hon. and learned Member then referred to the provisions of Clause 9. I was rather astonished that he should refer to that Clause because there could not be a better example of how far the Bill goes in favour of the tenant than that Clause. Suppose a lease with repairing covenants in it expires. Do not let us get lost in the belief that when a long lease expires the man who holds it is probably the man who took it up 99 years ago. That is most unlikely. It is not very likely that it is in the same family.
§ Mr. Hale
If the hon. Member is opposed to the hereditary devolution of property there are many on this side of the House who completely agree with him, but surely it is very remarkable that the son of the person who built the house should have no claim to its occupation while the son of the owner of the land should continue to have his claim on the land on which it was built.
§ Mr. Bell
The hon. Gentleman has put forward an extraordinary contention. I certainly did not put it forward. I do not wish to answer it in full. If I did so I should be leaving the hon. and learned Member for Gloucester, which I am loth to do, and coming on to some matters of more general import with which I wish to deal later. I certainly did not say anything of that kind.
What I said was rather the opposite, that not only was the lease unlikely to be in the ownership of the man who took it 99 years ago but was also unlikely to be in the same family, except in a small minority of cases. Therefore, we should be deluding ourselves if we based our view on any such family principle. These long leaseholds are usually in the hands of someone who has acquired them within the last 20 or 30 years, and they have repairing covenants in them. The Clause says that the terms of the repairing covenant can be disregarded. There is to be in place of it a newconception—it is also in the Housing Repairs and 1830 Rents Bill—"good repair," which is quite definitely a lower standard than that contained in most leases.
In other words, this House is proposing, through this Bill, to interfere very sharply indeed with the contract between the parties, greatly to the detriment of the landlord and to the advantage of the tenant. It is the most extreme example in the Bill of the amount of what I would call social policy which is contained in the Measure. No Clause goes further in favour of the tenant and against the landlord than does this one. Not only does it whittle down the standard of repairs, but it goes further, and says that whereas under the contract the tenant is under an obligation to do those repairs, under this Bill the landlord must do them, if he wants them done, and he can recover the cost by instalments from the tenant. Under this Bill, therefore, it is the landlord who, at the termination of the lease, must find the capital to carry out tenant's repairs, and indeed something less than tenant's repairs.
I wish to refer to another point dwelt upon by the hon. and learned Member. It is the question of the rent to be agreed by the county court. I agree with the hon. and learned Member that it is desirable that rent should be standard over the whole country. If we are to have a reasonable rent fixed, by all means let it be known that it does not depend upon local vagaries. But the hon. and learned Member will not achieve that result by relating it to the rateable value. There are few matters in which there are greater local vagaries than in the assessment of houses for rating. In the future, when all houses have been reassessed by the Inland Revenue, his proposal may merit more serious consideration, but it would be a rash prophet who would say when that process will be completed.
§ Mr. Bell
I agree, but it is not easy to achieve uniformity in this world. We have to try to achieve it by statutory definition and hope that the vagaries of human nature in individual judges will not be too severe. Or we may do what the hon. and learned Member suggests, and base it upon rateable value, in which case we know that we shall get vagaries. I prefer to rely upon a system which may 1831 result in vagaries rather than upon the ingenuity of the hon. and learned Member who has discovered a system under which we know there will be local vagaries and inequalities.
I come now to some more general matters which were touched upon by other hon. Members including the right hon. Member for Gower (Mr. Grenfell). Incidentally, I always thought the right hon. Member to be a Cornishman, but he has described himself this evening as a Welshman. I cannot agree with a lot that he and some of his hon. Friends have said on this subject. This Bill, which I fully support, is being brought forward to meet present circumstances. If we examine it we find it to be a triumph of history over logic.
A good many hon. Members have described particular conditions in their own areas and I am in no position to challenge what they say. But I know of other areas where the leasehold system has worked to great advantage. Southport has been mentioned, and in the City of Cardiff, an area which I know very well, the Marquess of Bute and his predecessors produced, under the leasehold system, one of the finest examples of urban development to be found anywhere in the world. It is quite a wonderful example of what may be done under the leasehold system.
I appreciate that there are corresponding disadvantages with that kind of contemporaneous development, because it may and is often the case that many leases fall in together, which creates a local problem. I do not dispute, therefore, that there are circumstances at present which justify a Measure of this character. But let us get it clear in our minds that the leasehold system is one of the most beneficial elements of the English land law. Not all leases are building leases.
The application of the lease system has had some good as well as some bad results. It is a way in which a man can buy the use of land and property for a certain time, and it is a very convenient system for those who do not wish to buy the freehold. Examples have been given of where it was convenient to be a leaseholder rather than a freeholder, and the fact is that if we abolished the leasehold system, as has been advocated by several hon. Members, we should have to invent it again in a matter of years.
1832 What this Bill does for the future of English land law is to say that there will be freehold and there will be leases for not more than 21 years. That in itself is rather drastic. No one will issue a lease in the future for 30 years, obviously, because it would carry with it all the consequences of Part I of the Bill. In future, neither landlord nor tenant will be capable of entering into the sort of contract which would pass the use of land for 22 years. We are wiping out all that flexibility. Because of the social evilsor advantages of the leasehold system it may be that that should be done, but I should like to have second thoughts about it.
I prefer to consider this Bill as something dealing with a problem of the time and I am sorry that for the moment it is linked with the Rent Acts. One day, when the Rent Acts are dealt with, we shall have to reconsider this Bill because of that connection, and I associate myself with my hon. Friend the Member for Handsworth (Sir E. Boyle) when he says that we must not accept rent restriction as a permanent feature.
Until we have lost it we do not realise how useful to rich and poor alike is a free balanced market in real property—something we have not had in this country since 1913. The lack of it is creating ever growing problems.
When my right hon. Friend the Minister of Housing and Local Government was introducing his Bill he explained the difficulties experienced by anyone trying to run the Rent Restriction Acts. They started by a freeze which did no great injustice when put on in 1916, but as each year has passed personal injustices here and there to the tenant or to the landlord have obviously grown. If we petrify another section of the land law, that relating to long leases, as time goes on I think we shall begin to see what we lose by that rigidity just as clearly as now we see what disadvantages we have incurred in the past by the possibly excessive use of existing facilities.
I am sorry to see hon. Members opposite hitching their wagon to this question of leasehold enfranchisement. They are making a mistake. As a party politician, perhaps I ought to be glad to see my opponents making a mistake and I ought to castigate them for it. But from the point of view of English land law it would be a pity if, for political reasons, 1833 we did a permanent detriment by suggesting that property should be either bought outright or taken on very short leases.
This is not the policy of the party opposite in relation to many other matters. In the new towns they plumped for the leasehold system, I think with great justice, as a general system. In the Colonies the party opposite is strongly in favour of leasehold.
§ Mr. Hale
Perhaps the hon. Member was not here when my hon. Friend the Member for Pembroke (Mr. Donnelly) dealt with the whole question of the difference in policy between a leasehold by the State with reversion to the State where we are recouping a development value and a leasehold by an individual; but so far as the Colonies are concerned I have no idea what the hon. Gentleman is talking about or what he has in mind. If he can refer us to one statement on the subject he will be calling my attention to something new. Generally speaking, we are in favour of the rapid and beneficial development of land everywhere and of making that land available to the great mass of the people.
§ Mr. Bell
I was present when the hon. Member for Pembroke (Mr. Donnelly) made his impassioned attack upon the landlords, but I do not think that that related at all to what I am saying now. I am merely pointing out that the party opposite have attached importance to the long lease system in new towns. It still is my belief that the general attitude of hon. Members opposite has been that colonial Governments should retain a good deal of land ownership and use the long lease system. I accept that the hon. Member for Oldham, West and his hon. Friend the Member for Pembroke may see a vital distinction between leases granted by the State and leases granted by individuals. However, I am not sure that that distinction will stand up to most of the arguments put forward 1834 today by hon. Members attacking the long lease system.
I have a feeling that if long leases are granted by the State their attitude to the covenants at the end of the leases will be very different. We shall not hear so much about washing out the covenants at the end of the leases. They would be enforced down to the last iota. I criticised the example given by the hon. and learned Member for Gloucester on many other grounds, but I noticed that it was one where the landlords were the Commissioners of Crown Lands, so it was held on behalf of a State Department. It was the Department which was enforcing the terms of the lease, and be it remembered that local authorities do not very much likeselling land in freehold. They do not even very much like giving tenancies. In my legal experience I have rarely come across even a tenancy granted by a local authority. They give revocable licences. There is a great deal of political inconsistency in the argument put forward from the benches opposite.
So far as the general advantage of the country is concerned, I must say that the effects upon the convenience of the nation that would ensue from leasehold enfranchisement would be disastrous. Hon. Gentlemen opposite have not yet faced up to all the implications of this matter. The right hon. Gentleman the Father of the House spoke about 25 years' purchase. That is very different from what was said at the Despatch Box by the right hon. and learned Gentleman the Member for Neepsend. He spoke, if I am correctly advised, of a purchase of the reversion at a sitting tenant valuation. That is utterly different.
The proposals of the Father of the House are much more equitable, but also a little impractical. I do not think they would ever have much social impact or much effect. The proposal of the right hon. and learned Member for Neepsend simply amounts to confiscation. That is always one way. The proposal of the hon. Member for Pembroke also amounted to confiscation, because at the end of the contractual tenancy under the present law the landlord is entitled to possession.
§ Mr. Hale
I am sorry if I am to be interrupted. The hon. Member for Buckinghamshire, South (Mr. R. Bell) gave way. I have heard the hon. Member for Leicester, North-West (Mr. Janner) speak on this subject on three occasions already. I have never spoken on it, but for two and a half years I have worked very hard. I have never been called in debate. If the hon. Member says, "Oh" when an hon. Gentleman gives way—
§ Mr. Deputy-Speaker (Sir Rhys Hopkin Morris)
Order. I thought the hon. Gentleman was rising to intervene in the speech of the hon. Member for Buckinghamshire. South (Mr. R. Bell).
§ Mr. Hale
I rise because the hon. Member said something about my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice), who so far, has made the ablest speech on this topic. He made it with great clarity and his only reference to this matter was when he was challenged by the Home Secretary as to his particular proposals. My right hon. and learned Friend read out as one of his proposals the precise wording of the Minority Report setting out the proposals for enfranchisement made by the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) and myself. If the hon. Member for Buckinghamshire, South has read that Minority Report he has the particulars and he will find that he has misrepresented; and if he has not read the Report he ought not to have spoken for as long as he has on the subject without familiarising himself with the facts.
§ Mr. Bell
It is in my recollection, too. I was present not only for the greater part of the speech of the right hon. and learned Gentleman the Member for Neepsend but also for the speech of my hon. Friend the Member for Handsworth (Sir E. Boyle), who raised this point. He 1836 had a slight dispute with the right hon. and learned Gentleman as to the actual words, before they eventually agreed on the words which were those which I have read out. Therefore, I think that I am correctly representing the right hon. and learned Gentleman.
§ Mr. Bell
When the Opposition put down a reasoned Amendment on Second Reading on the ground that a Bill does not contain a reference to a certain matter, one certainly expects to hear a few suggestions about how it should be dealt with. I should have thought that that was the least we were entitled to. I thought that this was the principal suggestion. It amounts to a form of confiscation.
It is all very well to go back 100 years into history, but that is not the position. We are dealing in most cases with a man who has bought within about 25 years. The reversion is something which has a known value—the vacant possession on a certain date. Now we are cutting that down quite sharply.
§ Mr. Bell
Of course. The difference between the value of vacant possession and possession with a sitting tenant enjoying the protection of the Rent Acts is very considerable. Therefore, the proposals which have been put forward by the Opposition amount to a form of confiscation. One could solve many knotty problems if one chose to decide that one part of society need not have justice but could be swept aside and told, "Take this and go away, and do not let us hear any more from you." That is all we have heard from the Opposition.
There is one other point which I wish to address to my hon. and learned Friend the Solicitor-General. It concerns the provisions in Part I of the Bill, under which a tenant can remain in possession at the termination of the long lease approximately on the terms of the Rent Acts. In general, I do not quarrel that in the circumstances of the time, but it 1837 will be hard on one class of case, and that is when a landlord has bought the reversion intending to provide a home for himself.
It is not merely property companies which will be hit by this sort of legislation, for they usually manage one way or another. I am much more concerned about the private landlord, who is usually an ordinary sort of man and only a landlord because he has bought a reversion in property. I remember that when I was doing free legal advice work after the war a letter was written to me by a man who said rather sadly, "Surely the Rent Acts do not apply to me. I am not a landlord; I am an ordinary working man." The fact is that many landlords are individual people.
In the case of a man who has bought a reversion with, say, seven years to run, intending to provide a home for himself, under the Bill he will have to go through the procedure under the 1933 Act of claiming possession of the property for his own use and occupation. Under the Rent Acts he has to prove that he reasonably requires the property for his own occupation, and he does not get possession if the tenant can prove that the balance of hardship will be on the tenant's side.
That is fair enough in respect of ordinary Rent Act weekly or monthly tenancy properties, but it is a hardship to be imposed on a man rather suddenly in peace-time by a statute like this after he has paid money on a proper valuation for what he thinks is guaranteed vacant possession in not many years' time. I suggest—it is a detail which can be dealt with in Committee—that one should require him to prove that he reasonably requires the property for his own use and occupation but that he should not be put to the peril of the balance of hardship rule under the Rent Acts.
Subject to those comments about matters of detail, I commend the Bill to the House in the light of the circumstances of the time, although I somewhat regret the violence which the Bill does to the law of contract. However, the Bill is a fair attempt to deal with an extremely difficult problem.
§ 7.54 p.m.
§ Mr. Arthur Skeffington (Hayes and Harlington)
It would not be unfair to say that the hon. Member for Bucking- 1838 hamshire, South (Mr. R. Bell) seems to have been concerned not only about the form of law, in which I am sure that many other hon. Members will be interested, but also very much with the position of the landlord. He has put as ingenious a defence for the freeholder's position in leasehold as one is likely to hear, although I found it rather difficult to follow his argument when he said that if one had the kind of enfranchisement advocated by my hon. Friend the Member for Pembroke (Mr. Donnelly), it would be confiscation. After all, the hon. Member for Pembroke was dealing with houses which were actually built by working men or their fathers on leasehold land. The freeholders never had the house. I fail to see how even a lawyer can say that it is confiscation when we want to prevent the return to a freeholder of something which he has never had: which he never owned: which had always belonged to someone else.
Unlike some Measures which we have had from the Government, the Bill is, at least, not wholly unsatisfactory, particularly in relation to business premises. For a long time I have been interested in this matter and gave evidence before the Departmental committee. Some of the worst hardships which have existed for a very long period, and for which there was practically no real protection at all in the case of the small shopkeeper and businessman, will be remedied by the Bill. The 1927 Act was of very little real practical worth in the courts, as will be known by anyone who has ever tried to invoke its aid. Shopkeepers could find themselves minus their premises and business.
One must be fair about this. I feel that the proposals relating to business premises are a very distinct advance, and we have to be thankful for them. During the Committee stage we must look at the compensation proposals and the terms upon which a freeholder can get business premises back, for there are still too many loopholes which result in the scales still being weighted in favour of the free holder. Nevertheless, the provisions constitute a real improvement.
In the case of residential property it is clear that a very great cleavage exists between the two sides of the House, as was the case on the Departmental committee. I noticed that "The Times" today said that only two members of the 1839 committee favoured enfranchisement. One certainly had on the committee the same clear difference in principle which has been demonstrated in the House today. The Government's White Paper makes it clear that there was a difference in principle, although the Home Secretary did not make it at all clear in his speech.
The White Paper states on page 4:The majority of the Leasehold Committee were opposed to the introduction in any form of leasehold enfranchisement, their opposition being based mainly on grounds of principle….In its White Paper, the Government argued the case for the landlords rather in the way it has just been put by the hon. Member for Buckinghamshire, South. Paragraph 8 states:As regards the first question, it would be harsh indeed on the landlord to require him not only to submit to the compulsory acquisition of his property by his lessee, but also to accept a price much less than his interest is worth.I do not understand the words used in those sentences, because one so often deals with building leases relating to property which has, in fact, never been the freeholder's at any time. How one can deprive him of it or give him less than the market value of something he never had I do not understand. This is clearly a political division on principle.
I commend to the House and to leaseholders throughout the country the following words of the Minority Report, which was signed by two hon. Members:…the conclusions of the Majority Report are based on fundamental tenets of the rights of landlords"—very much like the speech by the hon. Member for Buckinghamshire, South—'which we do not share. On the contrary, we consider that nowadays, in general, the landlord's interest is an investment or financial interest whereas the tenant's interest is for use and occupation….The Report continues—it is very much on the lines of our Amendment:In our view, the time has come to recognise that, in general, tenants have a more special and specific interest in their homes and business premises than their landlords and to express this interest in terms of legal rights.One of the difficulties about leasehold reform has always been that residential leaseholders are scattered, and in the main are poor people. That was one difficulty which Lord Justice Uthwatt 1840 found in getting sufficient evidence of the evils of this system from various areas throughout the country. Nevertheless, on my own calculations, there are between 300,000 and 400,000 properties involved. At the moment, they are being protected by the Temporary Provisions Act, passed by the last Government and their fate will be determined by the present Bill. It was one of the things which the Labour Government did. I do not want to answer too many debating points from the other side, but the last Government did set up the Committee at the request of Members of this House, and it passed the Temporary Provisions Act, which was the only Government Measure passed for many years to deal with this problem.
There have always seemed to me to be three major grievances arising from the leasehold relationship between freeholder and tenant which I would not have thought a modern democratic community would permit. First of all, there was the virtual handing over to the freeholder not only of the land—one could understand that—but of a house built by somebody else and sometimes by the leaseholder's ancestors. That seems quite unjustifiable, and not all the rhetoric or sophistry that we have heard from the other side can make that right in any circumstances.
It is astonishing that outside some parts of the British Commonwealth this system does not exist. How have other countries been able to develop without this system, which we say has so many anti-social consequences and is so unjust to many people? Until the late Government passed the Temporary Provisions Act, people were being thrown out into the streets. I could give the House example after example, not only from Wales but from South London, and even from the constituency of Dulwich, of people who were thrown out, for the simple reason that they had come to the fag end of their leases or had broken covenants which were often harsh and unjust. That aspect of the matter will be slightly modified by the Government's proposals, although the proposals do not go nearly as far as we on this side of the House want.
We have had no answer why one or other of the proposals for leasehold enfranchisement could not be considered and were not practical. If one does not 1841 like the system of purchase of the capital value over a number of years there is the possibility of extending leases for a much longer period. The Home Secretary has not considered them at all. Perhaps we might have some line from the Solicitor-General on this point when he winds up the debate.
The second grievance is the special one of the provisions in the covenants about dilapidations. Hon. Members must know of the fantastic schedules which have been given to individuals when a lease has run out, which the individuals concerned could not possibly meet without most serious financial embarrassment. Here the Government's Measure will give some relief. It is fair to point out that if the landlord is to be allowed to increase the rent, plus repayments for repairs done, there is going to be a very serious weekly economic burden to be borne by the tenant. This will be bound to have repercussions on the economy of the country and a further cause of wage demands. Taking into account other difficulties between landlord and tenant, the difficulty seems to be a very pregnant one. We have heard nothing said about it so far, but the burden may be very heavy. However, dilapidation schedules, which now are perfectly valid, will be things of the past, and that will be all to the good.
I was very sorry that the Home Secretary said that even from the rather cautious acceptance of some proposals of the Committee on the subject of covenants there had been a retreat. Many of the conditions which have been put into contracts of this kind have been an intolerable interference with the liberty of the individual. I am surprised to find them being defended by hon. Gentlemen on the other side. They are quite out of keeping with the spirit of the times. There is all this nonsense about amenity contracts and amenity conditions; if they are necessary they are a matter for the town and country planning authorities and of the local authorities, because there is some public responsibility and some means of redress.
If a local authority puts forward a condition in regard to development and it is felt to be unfair, there can be an appeal to the Minister. The matter can even be raised in this House. When it is put into a contract between two individuals, unless it is so monstrous that a court of 1842 law can intervene—and even then it is extraordinarily difficult to get action—it can often be so unfair as to be an intolerable interference with the freedom of the individual.
Let me show how far this sort of thing can go. There was a case in Paddington of a young lady lodger. She went to the rent tribunal to get protection, because her landlady had asked her to leave the premises. The landlady said that she was perfectly satisfied with the tenant but she held a lease which had just come to an end and the condition of renewal was that all single ladies should go. She had only one in the house, and she had to go. The Chairman said: "If we give the lodger protection, your lease can be terminated. It is a pistol to our head, and we do not like it. That kind of thing is quite improper." One knows of other things equally indefensible, such as the dentist who was not allowed to put a name-plate upon his house. He was a young man, bombed out during the war from his surgery. He tried to carry on. Within five days of his name-plate appearing on the property he was told that he must take it down or else action would be taken in the Court.
I know of older people whose families had gone away, and who tried to sub-let in order to give shelter to other people. In one case the bailiff sees a new gas stove going in. He noses round and finds that the house is being divided up for three or four families, and he says: "Unless notice is given to the tenants and the gas stove is taken out, we shall go to court and get possession." I could give many other instances of unjust covenants.
I am surprised that the Government have been so timorous in this matter. I know there are other hon. Members who want to speak so I will conclude by saying that the whole relationship between the freeholder and his tenant under leasehold law seems to be feudal. I think it springs directly from the old feudal relationship. We are one of the last civilised countries in the world to have it, and I hope that it will soon disappear. An hon. Member opposite talked about his party conference at Blackpool. I am glad to think that in "Challenge to Britain" we have given a declaration to our own country of what we shall do about leasehold law. We stand for enfranchisement. I am certain that the 1843 constituents of Dulwich, where there are many leaseholders, will be watching with interest what their Member does on the Opposition Amendment.
§ 8.8 p.m.
§ Mr. Robert Jenkins (Dulwich)
I was rather interested to hear from the hon. Member for Hayes and Harlington (Mr. Skeffington) that he knows so much about my division. I happen to know that he is connected with the London Leasehold Association and takes a considerable interest in the subject. He has done a good deal, incidentally, for the leaseholders of London.
I made a speech and some suggestions to the Minister in the debate which took place on the White Paper. I shall ask the Home Secretary to reconsider the points which I then made, and one point in particular which I am going to repeat tonight. Since the time when that debate took place I have had an opportunity of consulting quite a number of land agents for large ground landlords and ground landlords themselves. In each of these cases they have been good ground landlords—they have made mistakes, no doubt—and have treated their tenants extremely well.
The Financial and Explanatory Memorandum says:the principal objectof the Bill is to provide security of tenure for certain tenants occupying residential premises under ground leases…".Quite frankly, speaking as a Member of Parliament who represents a constituency in which more people than in any other London constituency are living as tenants of ground landlords, I would say that, generally speaking, my constituents have been treated extremely well.
But one outstanding complaint which these tenants make, apart, perhaps, from niggling, irritating insistence upon the carrying out of the clauses of their tenancies from time to time, is that, as their leases come to an end, they do not feel able to make the necessary outside and inside repairs during, maybe, the last seven or eight years, because they know that in any case they will be faced with dilapidations at the end of the period.
Therefore, as the lease of such property comes to an end, the property itself becomes more dilapidated, and more and more of it goes into the category with 1844 which my right hon. Friend the Minister for Housing and Local Government is seeking to deal in his Housing Repairs and Rents Bill. That being so, is there another way, other than the way which the Government have placed before the House in this Bill and the suggestion of the Opposition that there should be complete leasehold enfranchisement? Incidentally, I should be interested if, perhaps, the hon. Member for Oldham, West (Mr. Hale), if he speaks tonight, could explain to me out of his great knowledge of the English language and the encyclopaedias the definition of the world "enfranchisement." As far as I am concerned, it means just freedom.
The Opposition do not want the Bill read a Second time because it does not contain anything about leasehold enfranchisement. I do not want to make a debating point out of this, but, as far as I can see, the Government have gone a considerable way in leasehold freedom, inasmuch as they have provided for certain tenants occupying premises under ground leases to have the legal right to remain in the premises which they now occupy. But that is not enough. The Bill is a good Bill, and I was very pleased to hear the complimentary things said about it by the hon. Member for Hayes and Harlington.
I represent between 3,000 and 4,000 such tenants, and I live in another area of London in which large numbers of people are living under the same conditions. What such tenants want is security. In my view, it is not sufficient for the Government to bring forward this Bill which merely gives them security on a day-to-day, a week-to-week, or a year-to-year tenancy. It is true that it is going to clear away worries and anxieties from the minds of those whose leases have only three or four years to run, and for whom it would be impossible to find alternative accommodation. But, as this is the first step which has been taken for many years—if it has ever been dealt with before in an Act of Parliament—to deal with this problem, it seems to me that the Government should have advanced one step further.
This afternoon my right hon. Friend the Home Secretary said that he was putting into the Bill a code which is normally followed by good landlords. In other words, he is insisting in this Bill that what 1845 has been done by good landlords throughout the country shall be done compulsorily after the Bill becomes an Act. With regard to the extension of lease, my investigations have gone fairly far since I spoke in the last debate. I find that in London one ground landlord with about 360 houses has voluntarily offered 40 to 60 years extensions of lease to his tenants—in good time and before their anxieties were increased too much. Those leases are on very good terms, satisfactory both to the tenant and to the ground landlord, and I understand that good ground landlords in other places are doing the same thing. An increasing number, by virtue of the fact that leases are coming to an end at a fast rate every year are offering their tenants extensions on advantageous terms.
The Conservative Party for many years has said that it believes in the principle of personal house ownership, and it stands for a progressive increase in the number of people living in their own houses. When a man wishes to buy a long lease of, say, 40 or 50 years, he can go to an insurance company, a building society or the local authority and get a substantial advance. It becomes personal property of some value.
I believe that a man owning a lease of that length really believes that he owns the house, and I put it to my right hon. and learned Friend very strongly that, at some time before this Bill becomes an Act of Parliament, further consideration should be given to make it compulsory on landlords to give an additional alternative, as the lease nears its end, not only of the sitting tenant having the right to pay a fair rack rent, but the right to purchase either by an increase in ground rent or by a reasonable premium, which could be determined in the county court in the case of dispute.
The sitting tenant should, in fact, be allowed to take on, with proper safeguards, a 40, 50 or 60 years lease according to the condition of the property. In that way, at least for 40 or 50 years, in many thousands of cases this problem would be staved off and would relieve the anxiety of those people whom all Members of the House are anxious to help.
I sit for a constituency—though this is not a constituency speech—with a very large number of lessees of ground landlords and, having discussed the matter 1846 with them and with a number of ground landlords during the last few months, I feel that the Government should give further thought to this matter. They should go one step further towards the objective of hon. Members opposite. They should give one more alternative to the tenant, as a result of which there would be an advance in leasehold reform which would have substantial effects for many scores of years to come.
§ 8.20 p.m.
§ Mr. Barnett Janner (Leicester, North-West)
I listened with very considerable interest to the speech of the hon. Member forDulwich (Mr. Robert Jenkins), and I hope that the Government will take note of his suggestions, although they do not go nearly as far as my hon. Friends would like. The hon. Member was floundering in waters which were not sufficiently strong to hold him up. He said that because a person has had a long lease of a certain property he should not be turned out at the end of his tenancy, or, at least, he should be given full security of tenure.
He could have gone a step further and said that this Bill not only does not do what he wants but provides that at the end of a long lease the person concerned will become a statutory tenant under the Rent Acts. The Third Schedule of this Bill says that if:…suitable alternative accommodation will be available for the tenant at the date of termination of the tenancy…he can be pushed out of his home, no matter how much he wants to stay. Then if:…the tenant or a person residing or lodging with him or being his sub-tenant"—leave aside the tenant part of this—has been guilty of conduct which is a nuisance or annoyance to adjoining occupiers…he can be turned out. Further, if the:premises comprised in the tenancy, and consisting of or including the relevant premises, are reasonably required by the landlord for occupation as a residence for himself or any son or daughter of his over eighteen years of age or his father or mother…the tenant can be turned out.
The position with regard to the holder of a long lease is entirely different from that of a tenant who is holding over on a short tenancy and has become a statutory tenant. First, the Government are depriving of their homes a large number of persons who have a moral right, if 1847 not a legal right, to consider that they should be safe in their homes. All that they are being given as an alternative is a statutory tenancy of the house from which they can be turned out in the same way as a statutory tenant can be turned out under the Rent Acts, in certain contingencies. That is obviously wrong in regard to this matter.
The interesting thing about practically all the speeches which have been made by hon. Members opposite is that they have been based on wrong assumptions. I do not say that that has been done wittingly. I have been taking part in enfranchisement movements for something like 40 years, and I shall give the House the reason for that in a moment. Hon. Members opposite have been basing their contentions on assumptions which are entirely wrong.
The hon. Member for Handsworth (Sir E. Boyle) stated that the Liberal Party in 1902 were against leasehold enfranchisement. In reply to the hon. Member for Dulwich (Mr. Robert Jenkins), it is not very difficult to understand what enfranchisement means. It is a very simple word. It has not been used for the last few years merely. It was used 50, yes, nearly 100, years ago, and has been accepted as meaning enfranchising people by removing the chains from them—that is practically what it means—in respect of their homes.
I would ask the hon. Gentleman, if he will be good enough to do so, to pick up "Towns and the Land," which was written much later than the time to which he referred. I think it was 1923.
§ Mr. Janner
Let me quote that to show how even at that time what we are asking for today was being asked for by the party to which the hon. Gentleman referred. It said:Subject to certain restrictions in the public interest the leaseholders of dwelling-houses shall have a right of compulsory enfranchisement on applying to the leaseholds tribunal.1848 That is what Mr. Lloyd George and his party said long after what was said in the quotation the hon. Gentleman gave. It said the conditions should be that:Enfranchisement of the property would not conflict with public interest or with the intentions of public authorities regarding the use of the land affected. That the tenant owns the building lease of the premises, or alternatively, a lease for a total term of not less than twenty-one years. That the property in question is wholly or primarily residential, and is occupied by the lessee who seeks to enfranchise it, or has formerly been occupied by him and is at present tenanted by some member of his family or by a sub-tenant on a short-term agreement.That was in 1923 to 1925. At that time the reasons which were put forward for that were that in Wales in particular incidents had occurred that are also referred to in this volume. It would be of use to the hon. Gentleman to refresh his memory about that, so that he could see why it is essential today, as it was essential 50 years ago, 60 and 70 years ago, that leaseholds should be enfranchised.
Typical of a large class in all parts of the country is the case of a North Wales quarryman who, when starting his own home, bought the 60 years' building lease of his house on a mortgage which he paid off by degrees in the following years. Now, in approaching old age, this house represents his only capital as a home for himself and his wife, or as a gift he can pass to his children, or as a property he can let to secure an income. It is a vanishing security. Just when he is most helpless the lease will fall in and his investment will disappear, to be replaced by a bill for dilapidations. It is idle to assert that he knew all this at the outset. A home is a necessity. It is not an optional form of investment, and a home could only be secured by him on terms of that 60 years' building lease. The conditions under which he was compelled to make his bargain were intrinsically unfair.
§ Mr. Janner
I know that. I was answering the point made by the hon. 1849 Member for Handsworth. I was giving him chapter and verse, to illustrate to him that I was not just making it up. It was what the party to whom he referred felt at that time. You, Mr. Deputy-Speaker, I think, will remember that at that time a resolution of the Bethesda Urban District Council represented the feeling in a district where the sense of grievance against the leasehold system was particularly strong. It set out very clearly the ground of the complaint. In 1908, six years after the date mentioned
§ Sir E. Boyle
The hon. Gentleman keeps referring to me. I do not want him to detain the House by making ail these references for my benefit. If he will send me the references I will look them up for myself.
§ Mr. Janner
Yes, I know, but my case is that what was contained in those arguments prevails today. The hon. Gentleman raised this matter. Now I am able to pin him down by arguments he himself did not take the precaution or trouble to follow. This applies today; it is precisely the argument we are using today.
They passed this resolution:that the ground rents charged in almost all cases are much above the agricultural value of the land at the time the lease is granted, and it is unjust that the hard earning of the leaseholder, and his improvements should lapse on termination of the lease to the freeholder who has in many cases already benefited to the extent of hundreds per cent. on the original value of the land…That resolution was approved by 77 English councils and 56 Welsh councils of that time, and not a single council to whom it was sent dissented from it.
References were made to the type of house involved. That was at a time when those houses were beginning to fall into decay. The figures at that time, so far back, were these: out of 2,489 houses in the Festiniog parish, working men inhabited 2,052. They had themselves built no fewer than 1,500. The total cost of these buildings was £403,810, to which might be added, as spent upon public buildings, British and Board schools, chapels and school rooms, on leasehold land, a further sum which would bring the total expenditure on leasehold land up to £452,810.
The ground rents on the larger class of houses, costing £300, would average £2; and the ground rents of the smaller, costing £130, would average £1. The 1850 total ground rent during the 60 years of the average lease would amount to £177,660 and would arise from 77 acres of land which, before building took place, was not worth 7s. 6d. an acre, although the rent which each acre fetched as building land was £39. That was the position then, and it is the position today.
Let me turn to the next hon. Member opposite who spoke—the right hon. Member for Blackburn, West (Mr. Assheton). He quoted the example of Southport. Later there was a speech by the hon. Member for Buckinghamshire, South (Mr. R. Bell), who comes from Cardiff; of all places in the world, a man from Cardiff speaks against leasehold enfranchisement!
§ Mr. George Thomas (Cardiff, West)
I do not object to what my hon. Friend says, as long as he makes it perfectly clear that the hon. Member in question does not represent Cardiff.
§ Mr. Janner
I know that, but it is another matter. I know Cardiff very well.
Let us see what Southport people have to say about this. This comes from "Our Fight for abolition of the present leasehold laws," by Mr. Mark Simm, Secretary of the Southport Leasehold Reform Association, who had this to say about the beautiful Southport example which has been given this afternoon:The curse of the present leasehold laws are the claims of avaricious landowners, who persistently refuse to sell land for building purposes, and as the landowners have neither the initiative nor the ability to build houses, the people had to make the best of conditions prevailing, namely, the 99 years lease. The scandal of the system is now causing considerable distress to thousands of leaseholders in Southport. Of the 23,178 dwelling houses, 904 houses and shops and 815 shops in Southport, two-thirds are leasehold. So, unless the present laws are altered, the landowners are going to rake in thousands of pounds, without so much as raising a finger.That is what the Southport people are saying; those are not my words. That is the answer to hon. Members opposite who quote Southport as an ideal place to illustrate the disadvantages of leasehold enfranchisement.
Let me go a step further. Another hon. Member who spoke was the hon. Member for Barry (Mr. Gower); he comes from South Wales, which so many of my hon. 1851 Friends know very well, as, indeed, I know it very well, too. What happened at Barry? The town of Barry was built up about 60 years and more ago, on waste land. They built docks at Barry. Since those docks were built that land has become very profitable and the leases of the houses which were put up there on waste land will in a few years all be falling in.
§ Mr. G. Thomas
Is my hon. Friend aware that the hon. Member for Barry (Mr. Gower), like the hon. Member for Cardiff, North (Mr. Llewellyn), at the last Election, were both in favour of leasehold enfranchisement?
§ Mr. Janner
Of course they were, because they know that that is the only way out of the difficulty. They live in the district where there is this problem.
§ Mr. Janner
Let me finish my argument.
In Barry the houses more or less surround the dock, and the leases are falling in in the same way as at Pembroke dock, as the hon. Member for Pembroke (Mr. Donnelly) pointed out. The result will be that practically the whole town will be left with rent-controlled tenancies, at what rent?—at a rental that is a rack rent, and many of the people concerned have thought all along that the houses they occupied were their own homes.
That is the problem and it is a very serious one. It is no good hon. Members saying that it only applies to some parts of the country. That does not alter the situation. If the hon. Member for Barry says, "Yes, Barry ought to be regarded as an exceptional place; we are only taking those places where leaseholds exist." London is not so "hit," to use a common expression, in that regard. I have received particulars from London as well. Let us take the main centres. The fact is that the Amendment we have put down is an Amendment which ought to be accepted readily by all people who have the slightest conception of what the leasehold system is like.
I am going a step further than some of my hon. Friends. Some of my hon. Friends say that the purchase price should be higher than one based on the ground rents. I am in doubt about that. Quite frankly, I think that 25 to 30 years' purchase would be quite enough, 1852 but we can argue that at a later stage. The fact is that the principle of enfranchisement is the only one that can possibly be applied to a proper solution of this leasehold problem. I hope that the right hon. and learned Gentleman will think this matter over again. He thinks that he is going some distance. The hon. Member for Dulwich thinks that he ought to go further—namely, to grant tenancies of 40 or 50 years. Why not go the whole hog; what is wrong in doing that?
I put it to the Minister, because he is a reasonable man: Is it right that if people have spent the whole of their fortunes on building on a piece of land, which was worthless and on which ground rent for 90-odd years has been paid, their successors should, at the end, be told, "You and your predecessors have toiled for the person who had that piece of land which was worthless, and today you have to pay him what is practically a rack rent for the rest of your life"? That is not good enough, or the proper thing to do.
I appeal to the right hon. and learned Gentleman, who is interested in Wales—and because Wales is particularly interested in this problem—to do something about it. He will have a very "rough house" if he does not do something about it. It is a problem which the Liberal Party have tried to deal with and the Labour Party have tried to deal with, and one which individual Members representing Welsh constituencies have to deal with. I hope that, even at this late hour, he will change his mind. I do not ask him to cross the Floor of the House—that would be too much to ask, although perhaps at sometime or another he will see the wisdom of doing that. All I ask him to do at present is to consult his friends and see that this Amendment is accepted.
§ 8.40 p.m.
§ Mr. Graham Page (Crosby)
I am sure that the hon. Member for Leicester, North-West (Mr. Janner) will forgive me if I do not follow him into Festiniog and Southport and the depths of history of enfranchisement—I am not equipped to do so—but so far as the immediate history of the term "enfranchisement" is concerned, there is no doubt that confusion has been caused in the minds of the public about the belief of hon. Members opposite.
1853 People believe that Members opposite, in talking about enfranchisement, want to give the ground tenant something for nothing; that it means a complete gift of the land to the tenant. [Hon. Members: "No."] It may be a wrong belief, but it has undoubtedly got about that that is being put forward by hon. Members on the other side.
Today, we have had from the right hon. and learned Member for Neepsend (Sir F. Soskice) a clear exposition of the alternative which is put forward to the Bill. We do not seem to be very far apart in practice on the two sides of the House. The proposal put forward by the right hon. and learned Gentleman was, I understand, that we should treat the ground tenant as a statutory tenant; that he should have the right to purchase the reversion, not at the vacant possession value, but as if there were a statutory tenant in possession. The right hon. and learned Gentleman wishes to give that to the ground tenant as a right.
What the Bill intends is that the ground tenant should have, not the right, but exactly the same opportunity. The Bill will convert the ground tenant into a statutory tenant, and he is then in the position to say to his landlord, "I am a statutory tenant here. I will purchase as a statutory tenant in possession. You cannot oblige me to pay the vacant possession value of the property, but I will offer you the value of the property as with a statutory tenant in possession." And so in practice it comes down to the same thing, except that we differ as regards the right of the ground tenant to force the landlord to sell the property to him, which I understand to be the enfranchisement as put forward by hon. Members opposite, and, as in the Bill, the opportunity for him to make the offer to the landlord for the same value.
Many ground tenants would not wish to take the offer of enfranchisement as put forward by the right hon. and learned Member for Neepsend. It would involve that they would have to borrow from a building society, and the repayments of building society mortgage capital and interest, plus general rates, would amount to more than—certainly as much as—the statutory rent which is to be fixed by the Bill.
§ Dr. Morgan
If what the hon. Member says is true, the man would be paying for 1854 his own house later on. He would be making a contribution towards ownership of the house and not necessarily of the land.
§ Mr. Page
I am dealing with the proposition put forward by the right hon. and learned Member for Neepsend. Other propositions, I gather, are put forward by hon. Members opposite, but I am assuming that the proposition of purchase by the tenant, as if there was a statutory tenant in possession, is as it were the official alternative that is put forward to the Bill. It is that alternative with which I desire to deal.
§ Mr. Grenfell
What hon. Members on this side want to do is to enable those people all over the country who have built and paid for their houses to be able to own them. They built them at their own expense.
§ Mr. Grenfell
He has paid for the house and he has built it. What he wants is an entitlement to it.
§ Mr. Page
I am quite aware he built it some 99 years ago, though the actual tenant now did not build it but some predecessor in title did. Very frequently this matter is argued on the basis that the present ground tenant is the man who built the house 100 years ago. I should say there is only one in100 or, indeed, even one in 1,000 related in any way to the man who originally built the house.
§ Mr. Page
I know some of the properties in South Wales, and I know very many properties in London, particularly in Islington, which is covered with ground leases. I know there is hardly a single tenant in those dwellings who is in any way related to the man who built the houses. That argument, although it may apply in some cases, is not general. Usually one is dealing with the person who is paying the ground rent.
May I return to the point put forward by the right hon. and learned Gentleman the Member for Neepsend. He referred to Clause 9 to discover what would be 1855 the standard rent of this new statutory tenancy, which the ground tenant will hold after the expiration of his lease. On the amount of that standard rent the value of the property depends, and also the amount which the ground tenant would have to pay for enfranchising his property or, in other words, purchasing it from his ground landlord.
The right hon. and learned Gentleman feared that Clause 9 would produce an exorbitant rent. I think his fears are unfounded. The Clause refers to…a reasonable rent for the dwelling-house on a letting in that state of repair…I think that it must follow that a reasonable rent is that which is the rent for houses in the particular neighbourhood in which it is situated, which, of course, will normally be statutory tenancies with standard rents. Although this Clause needs tidying up in Committee, the intention is that the ground tenant will become the statutory tenant at a rent which is similar to those of houses under the Rent Acts in the neighbourhood.
So the ground tenant will get the opportunity of purchasing at a non-vacant possession value as opposed to the alternative suggestion of having a right to purchase at that value. I wonder if the right hon. and learned Gentleman the Member for Neepsend would agree that it would be fair, if the tenant is to be given aright to purchase at that figure, that the ground landlord should have a right to force the tenant to purchase at that figure? It seems only fair that each should have the same rights because there will be many landlords who will not wish to be saddled with a statutory tenant at the end of the ground lease. I have in mind the type of landlord who has purchased a few ground rents late in life, perhaps as a form of pension, thinking they will fall in at about the time he wants to retire. I am sure that hon. Members have come across that type of person and investment. Under this Bill such a man will be saddled with a statutory tenant, and if that statutory tenant is to be given the right to choose whether he will stay on or be enfranchised and purchase it, surely it will be reasonable to give the landlord a similar right to oblige the tenant to make up his mind whether he remains as a statutory tenant or takes over his home?
1856 Further, arising from this proposition, if the tenant is given the right to purchase at the non-vacant possession value, he is given the difference between that value and the vacant possession value, because he can move out of the house the next day and sell it with vacant possession. Would the proposers of this alternative make some restriction on the selling price for a period of time?
§ Mr. Page
If enfranchisement is to take place on the lines put forward today, there is no doubt that we should be giving the ground tenant the difference in value between the non-vacant possession value and the vacant possession value of the property and, as far as I am aware, it has not been said here today whether it is intended under those circumstances to put any restriction on the sale price of the property.
Now may I pass to the provisions in the Bill concerning business premises. In this respect the Bill goes far beyond the Final Report of the Leasehold Committee, and it is clear from the speeches today that both sides of the House are in fair agreement upon this part of the Bill. As hon. Members know, the present state of the law, so far as compensation or goodwill is concerned, is unsatisfactory; that it has been necessary, as the law stands, for the business tenant to prove not only the loss of what is frequently termed "cat" goodwill but also the loss of "dog" goodwill—the customers who follow the person rather than the place—before he is able to obtain the renewal of his lease. He had to prove both those types of loss first, and that gave him the right to renewal of his lease. If I read it correctly, the Final Report suggested that the alteration in that part of the law should be that the tenant should have a new lease if he proved that otherwise the value of his business as a going concern would be substantially diminished.
1857 The present Bill goes far beyond that. It gives the business tenant an absolute right to a new lease, subject to certain conditions. That seems to me to be not only fair as between landlord and tenant but for the public good, because security of tenure is so necessary in business development. In general, I feel that this Bill offers a satisfactory answer to questions which are of the utmost complexity and which raise the most difficult social problems. It is for these reasons that I hope that the Bill will receive a Second Reading.
§ 8.57 p.m.
§ Mr. Granville West (Pontypool, West)
I am very sorry that it has been necessary for me to rise now, but the Solicitor-General must have time to reply to the debate. It is necessary for me to put forward a view that perhaps has not been stressed from this side of the House. Some of my hon. Friends have been most anxious to participate in this debate and the House would have welcomed their contributions. My hon. Friend the Member for Oldham, West (Mr. Hale), who sat on the Leasehold Committee, could have given much valuable information to the House on this complex problem.
§ Mr. Hale
This is the fourth long debate through which I have sat from start to finish to try to avail myself of that opportunity. I am not in the least critical of that. Quite the contrary, because so much has been said with which I agree that there has not been much left that I could have added. I interrupt my hon. Friend only because otherwise his words might be interpreted in Oldham as meaning that I had not been here.
§ Mr. West
My hon. Friend knows the great respect which we have for him and I assure him that there was no suggestion at all that he had not been present at our debates on this topic.
It is clear that the issue upon which the debate has ranged today has shown a fundamental conflict between each side of the House. The debate has been concentrated on leasehold enfranchisement, but that does not mean that other provisions in the Bill which have not been debated at great length are not important, and, indeed, not subject to some criticism. I feel that I should deal for a short time with certain of the provisions in Part II of the Bill.
1858 I know that the Bill recognises the prima facie right of the business tenant to a renewal of his tenancy. That, of course, is an advance on the position under the Landlord and Tenant Act, 1927. But while the Bill gives a prima facie right of renewal, it extends the grounds upon which the tenant may be denied that right. There are now some eight grounds in the Bill upon which the business tenant can be denied his right of renewal. This is a worse position than that which existed under the Landlord and Tenant Act, 1927. There is one provision under which all that the owner of the property has to do is to say, "I want the property for my own purpose. I want to start a business there." If he went to a court and opposed the tenant's right of renewal he would succeed in his opposition.
I had a letter today from a constituent of an hon. Member opposite dealing with this very point. He is a man in business who has taken a great interest in the White Paper published by the Government and has considered the proposals it contains. He said:I am deeply interested in the subject as it vitally affects the livelihood of myself and family. Having read the White Paper, recently issued, in the earnest hope that something had been proposed to put right an injustice which seemingly is about to happen to me, I feel it my duty to bring to your notice a matter in which the White Paper proposals apparently fail to give protection to the tenant.I cite my own case: I am leasing business premises which I have held for 30 years. I apply for a new lease which the landlord is prepared to grant (at an exorbitant figure). I submit what I think is a fair offer and am prepared to go to arbitration if offer is refused.The landlord refuses to accept my offer or go to arbitration stating that, unless I accept his figure, he will take the premises himself…or, alternatively, reconstruct and develop them.Is it right that I should be held to ransom in this way?That is no exception; it is the kind of thing which operates and, unfortunately, is the general practice of many landlords. I think the Uthwatt Committee, who issued their Interim Report on Tenure and Rent of Business Premises desired that there should be a code of conduct set up. They said in paragraph 51 of the recommendations:Legislation designed to impose on a minority the code of conduct already in substance observed by the majority must leave no loophole for evasion, for those it seeks to 1859 hit will certainly try to devise ways and means of avoiding it. The measure must necessarily be sweeping in its application although by reason of its character—which is to enforce a kind of 'professional code' for property owners the moral standards of good landlords—it will be effective only for tie minority of landlords.It is that minority of landlords which impose considerable hardship on the business tenant.
I turn to the question of compensation under the Bill. In their Report the Leasehold Committee set out their proposals. Under the Landlord and Tenant Act provisions were laid down for the payment of compensation for the loss of goodwill. In paragraph 21 of the Leasehold Committee's Report it is stated that:Compensation should be assessed on the basis prescribed by the 1927 Act…by reference to 'adherent goodwill'…It then sets out a certain exception.
What does this Bill propose? The Home Secretary said that the proposals were rough justice. I was going to say that it was a rough and ready method. I think we all agree that it certainly is rough on the business tenant. Take the case of the gentleman who wrote to me. He has been in business in those premises for 30 years. If his landlord succeeds by saying that he wants to take the premises himself because the tenant will not pay an exorbitant rent, what compensation will the tenant get? Because he has been there for 30 years he will get twice the amount of the rateable value. Had he been there for only 14 years, or less, he would have had an amount equal to the rateable value.
Is there anyone who suggests that a man who has carried on a business for 10, 13 or 14 years, who has devoted himself to his business, and built up a substantial business, has not acquired a very valuable goodwill attaching to that business? How can anyone say that an amount equal to the rateable value would adequately compensate that man for being deprived of his property and his business?
Let us take another case. A man may have been in occupation of business premises for 20 years, and a speculator comes along, one of those people who do not comply with the moral code which the Uthwatt Committee would like to see set up, and six years before the ex- 1860 piration of the lease he buys the property. He does so because he wants to have the business. He refuses to grant a renewal and says, "I want the premises to carry on a business there myself." Under the terms of the Bill, he can carry on precisely the same business as that which the tenant has been carrying on for 20 years. He can acquire all the benefits of the goodwill, and all he has to pay is an amount equal to twice the rateable value. These are matters which will have to be considered in great detail if this Bill receives its Second Reading.
Then there is another provision in the Bill which deprives a man who has carried on a business for some years, and who desires to retire from business at the expiration of his lease, of entitlement to compensation because he does not apply for a renewal of the lease. Although the premises have had attached to them adherent goodwill the benefit of which the landlord is gaining, the unfortunate business tenant is entitled to no compensation.
§ Mr. West
That is so, as I tried to demonstrate earlier.
Then there is the question of contracting out, to which attention will have to be given. I realise that there may be a genuine, if remote, case in which a landlord has premises which he proposes to occupy himself but for certain reasons he is not able to do so for a period of about five years. He therefore finds a person who quite genuinely, though I say equally remotely, will be prepared to carry on a business in these premises for a period not exceeding five years until the landlord is ready to take possession.
In those circumstances the landlord is entitled to require the tenant to contract out with regard to the compensation provisions. I regard this as a most dangerous feature of the Bill because what is likely to happen in future is that it will be used not only in these remote if genuine cases, but landlords will refuse to grant leases for longer periods than five years so that they can insist upon the tenant contracting out of the compensation provisions of the Bill, small as they are.
I suggest that upon those aspects of the provisions relating to business premises there is much to be desired, and as was said in the "Solicitors' Journal," 1861 it seems quite clear that if this Bill gets a Second Reading it will need to be very substantially amended before it receives the Royal Assent.
I wish to deal with certain matters relating to residential properties. The first matter with which I wish to deal concerns repairs. The provision regarding repairs is weighted in favour of the ground lessors. No provision whatever is made in this Bill in respect of improvements which the tenant himself has carried out. I have listened to what the Home Secretary said in this regard, but we are dealing with residential property, much of which is very old, where there were no bathrooms installed originally; where grates have been renewed and electric light installed, together with other amenities.
All of this is of advantage to the landlord if he takes possession of the property. Although such improvements increase both the capital and the letting value, no compensation is to be paid to the tenants in respect of them, and no allowance will be made against the cost to the tenant of repairs which the landlord can undertake under the terms of this Bill. In my opinion it would be much fairer if those improvements were taken into account and set off against any amount for initial repairs, with the balance paid by instalments, perhaps by an addition to the rent.
The next matter which causes us concern is what is meant by the expression "reasonable rent." The right hon. and learned Gentleman gave me to understand that "reasonable rent" meant a reasonable rent in relation to the general value of the property to any tenant who might desire it in the open market. It is not to be a reasonable rent in relation to comparable property protected by the Rent Restrictions Acts. Were that so, many of our objections would disappear. If the expression "reasonable rent" means the current market rent which can be obtained from any tenant taking the vacant property, I feel that there will be an extraordinary position arising where tenants will be required to pay substantially more than is paid by tenants of comparable houses protected by the Rent Restrictions Acts.
In discussing Clause 15 the right hon. and learned Gentleman made it clear, following an intervention of mine, that 1862 sub-tenants will continue on in the premises when the tenancy of the lessee terminates, and will be protected by the Rent Restrictions Acts, both as to tenure and as to rent. What is the situation if the lessee who himself has bought the property—which perhaps his predecessors have built, remains in the property? He has to pay what is called a reasonable rent which may be the current market rent. But if the subtenant, who may have paid a restricted rent for some time is in the property, he has protection which is denied to the lessee. I consider this unjust and unfair. So far as that provision is concerned, it amounts to a landlord's charter. This Bill is said to be of benefit to the tenant, but it favours the landlord.
We have had many references during this debate to the sanctity of contract and we have heard something about good planning. It is clear that those arguments, which have become almost traditional in the defence of the leasehold system, are now disappearing. If there is to be an argument that the sanctity of contract no longer exists, we need only look at the proposals of the Government. They are now saying, "There is nothing in the sanctity of contract because we ourselves are proposing to vary the contract and the covenant with regard to repairs and the giving up of possession."
Some hon. Members have talked as though the agitation for leasehold reform and enfranchisement was something recent. They have tried to suggest that in its origin the leasehold system has done much for the good development of the country. I wonder why it is that for over 60 years there has been an agitation for leasehold enfranchisement. I wonder why it is that there have been Royal Commissions to investigate what were the evils of the leasehold system if it has, in fact, rendered such good as many hon. Gentlemen opposite seem to think.
No fewer than 18 Parliamentary Bills have been presented to try to deal with the problem. There have been Select Committees and Royal Commissions and there was the Leasehold Committee set up by the Labour Government to try to find a solution to this problem which has existed for over 60 years. What is the solution to this vexed question? Obviously, it must be the solution which my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice) put to 1863 the House and which is indicated in the Amendment. I wish more hon. Gentlemen opposite had been present when my right hon. and learned Friend spoke.
He has been able to gather in two converts to our side. There is the hon. Member for Barry (Mr. Gower), who started by denouncing leasehold enfranchisement because, he said, it would strike at the very foundations of the security of the banks, the insurance companies and the big institutions. He said that if we were to have leasehold enfranchisement for the ordinary working man so that he might own his own property under a freehold system, that would strike at the very roots of investments and securities of the big vested interests and that those interests must be preserved. To preserve them the working man must be denied the security of the freehold of his house.
Then there was the hon. Member for Dulwich (Mr. Robert Jenkins), who put a very strong case to his right hon. and learned Friend the Home Secretary. There is no doubt that hon. Gentlemen opposite who have the leasehold property in their constituencies know that a real problem exists. The hon. Member for Dulwich knows, as does the hon. Member for Barry. They know the evil consequences of the leasehold system. That is why they have been trying to urge their right hon. and learned Friend to amend the Bill to meet the needs of many of their constituents.
Sanctity of contract and the arguments in support of it have now disappeared. Nobody who has studied the problem has ever considered that there was any strength in the argument for it. On an earlier occasion I referred to the circumstances in which many working people have been compelled to take building leases to get land upon which to build their houses. They were denied the opportunity of getting freeholds. I have told the House of some of the onerous covenants which have been imposed upon building lessees, not because they freely negotiated the contract but because they had either to take it or leave it. They wanted a house in which to bring up their family and so they were driven to accept the conditions which the less or imposed. As my right hon. and learned Friend said, there is an absence of morality in many of these cases, and 1864 that being so, there can be no suggestion whatever that in those cases there should be any consideration at all given to the sanctity of contract.
My hon. Friend the Member for Pembroke dealt with orderly planning and development, a subject referred to on the occasions of our earlier debates when it was said that the responsibility for planning and development now falls upon local authorities and town and country planning committees. It is no longer in the power of the private landowner to decide how a certain plot or area of land shall be developed; he has to have the consent of the planning committee, and the committee has regard to the public interest.
Having regard to all the matters which have been dealt with in the course of the debate, to the unsatisfactory features of the Bill and to the fact that it makes no provision whatever for remedying the great evil which exists by giving the lessee an opportunity of enfranchising his property and acquiring the freehold, I hope that my hon. Friends will divide against the Bill.
§ 9.22 p.m.
§ The Solicitor-General (Sir Reginald Manningham-Buller)
I am sure the House will agree that once again we have had an excellent and interesting debate on this subject. It is perhaps inevitable that in debates on this subject there should be some repetition of the arguments which were advanced in the debate on the White Paper. Indeed, the right hon. and learned Member for Neepsend (Sir F. Soskice) went so far as to reiterate the arguments advanced in the debates on the Select Committee which reported in 1889.
When we had the debate on the White Paper I disclosed at the outset of my speech such interest in these matters as I had, and I must do so again. I am a trustee and a beneficiary of a trust which owns leasehold property. I do not think the trust is a ground landlord of any residential property. So far as I can find out, Part I will not affect the trust at all, but Part II will affect it, as it will affect every landlord and every tenant of shops, offices and business premises throughout England and Wales.
If I were asked which was the most important part of the Bill and the Part which would have the most important consequences, important 1865 though Part I and the other Parts are, I should say without any hesitation that Part II is by far the most important. It is perhaps a pity that more was not said about that Part during our debate today. It has been generally well received. Certain criticisms have been advanced of parts of it by the right hon. and learned Gentleman and the hon. Member for Pontypool (Mr. West), but the hon. Member for Oldham, West (Mr. Hale) and other hon. Members opposite indicated their general broad approval of Part II. I am sorry that we were not able to hear the hon. Member for Oldham, West expound his approval in one of his usual speeches.
§ The Solicitor-General
When I said "broad," I was not meaning anything personal. I did not want in any way to appear to commit him not to put forward arguments or suggestions on the Committee stage, which, no doubt, he will be attending.
It is a pity that we did not spend more time on this Part of the Bill, because it is desirable that its provisions should receive the widest publicity, so that tenants may take advantage of them. In moving the Second Reading, my right hon. and learned Friend drew attention to the defects which have appeared in the operation of the Landlord and Tenant Act, 1927. That was an Act which was passed with the best intentions, but I do not think that anyone could say that it has worked well.
The difficulty was to determine whether there was any adherent goodwill and, if so, what was its value. It was difficult to say whether that value was less than the loss of goodwill suffered by the tenant who had to move out. In many cases that resulted in very prolonged and complicated litigation. That Act did not result in every tenant who suffered a loss through having to move obtaining any compensation. By no means every tenant could show that there was any adherent goodwill.
This Bill makes an entirely new approach, and I do not think that the right hon. and learned Member for Neepsend, appreciated that fact. It is a 1866 new approach in several respects. First, it extends the scope, covering a much wider field. Doctors, professional men and solicitors—and it is of the utmost importance that some solicitors should have their offices close to magistrates' courts—all come in under Part II.
The hon. Member for Oldham, West drew attention to the fact that the scope of Part II is wider than that of the interim Act passed by the late Socialist Government and replaced by one passed by this Government. He is quite right in that respect, and we should welcome any suggestions which he might put forward to enable us to bridge the gap and so protect those who are outside the scope of the interim Act and may be in danger—I do not know whether they will be—before this Bill reaches the Statute Book.
§ Mr. Hale
I undertake not to interrupt again, but if the hon. and learned Gentleman will say, here and now, that if evidence of grave abuse in this connection were produced it might affect the mind of the Government on the Committee stage, that warning might stop the sort of abuse which I had in mind, and which I indicated.
§ The Solicitor-General
If we saw developing any signs of abuse of the sort which the hon. Gentleman mentioned, we should explore every avenue open to us to stop it. We do not want the object of Part II defeated before it reaches the Statute Book. Under Part II, if a tenant has shown himself to be a good one, he will have the right to renewal, and a greater right than anyone else to the tenancy of those premises. But that is no more than what is already done by good landlords. They recognise that a sitting tenant has the first claim to the renewal.
This part of the Bill seeks to convert bad landlords into good ones, in this respect. One thing which it will do is to prevent the purchase of the landlord's interest towards the expiry of the lease of business premises—of a factory, for instance—and the purchaser calculating what sum the lessees will be prepared to pay to avoid having to move out, and demanding that sum, which may bear no relation to the current contemporary rent. I think it will stop that sort of thing. Of course, if there is no renewal and the tenant is made to go, and he goes through 1867 no fault of his own, then the Bill provides that he is entitled to compensation. If he leaves on his own account, if he does not want a renewal, if he has shown himself to be a bad tenant, then he will not be entitled to compensation. So not only does this Part of the Bill seek to improve bad landlords, but it gives considerable incentives to tenants to be good tenants.
The hon. Gentleman the Member for Pontypool criticised this Part of the Bill. He said—I could not agree with him, I am afraid—that a tenant under this Part of the Bill would be in a worse position than under the 1927 Act. I do not think that is true. We shall examine it, no doubt, in Committee, but I really do not think that is the case. Then he put forward the position of a man who wanted to retire at the end of his lease. If he does not want a renewal and goes out he will not get compensation, but if he wants to retire he would be a wise man just to dispose of his interest before the end of his lease so that his successor, if he wanted to carry on the same business, would step into his shoes for the purpose of the renewal. In that way he would get value.
The reasons for allowing contracting out for that limited term have been explained by my right hon. and learned Friend. I personally do not share the opinion expressed by the hon. Gentleman that that contracting out provision is likely to lead to landlords refusing to grant leases for longer than five years. I really do not think there is any risk of that. Good landlords are just as keen to get good tenants as good tenants may be to get good landlords, and if they come together they usually like to stay together. So I do not really think that is a serious risk.
The scale of compensation has received some criticism. We shall explore that in Committee. It is arbitrary. It may be said that some other bases are more logical, but there really are strong objections to them. The hon. and learned Gentleman criticised the basis put forward in the Bill because he said it bore no relation to the accrual of value to the landlord or to the loss to the tenant. It does not, I quite agree. It is not intended to. The Landlord and Tenant Act, 1927, largely broke down because of the difficulty of trying to assess what was the value of the 1868 adherent goodwill, and whether it in fact existed. We found that did not work, and it would be an error, I think, to take that course again, a course that was productive of much litigation, to the benefit of lawyers.
§ The Solicitor-General
It certainly has served a useful purpose, and advantage has been taken of it, but defects have appeared, and one of the effects has been the difficulty in assessing whether there was any adherent goodwill and in determining what value it had. It would be a mistake to introduce that element into this new proposal.
Under this proposal the scale is related to the rateable value. It is true it is not related to the loss that a tenant may suffer. That loss will vary, probably, in every case. There may be removal expenses, there may be loss of profits difficult to assess, and there may be the difficulty of valuation, and probably litigation.
There is this further factor that has to be borne in mind. It is not in the national interest that proper redevelopment should be held up because the price the landlord has to pay to secure vacant possession at the end of the tenancy is too great. One has to have regard to that. The advantages—the very real advantages—of the rateable value basis are these: it is simple and it is certain. Both landlords and tenants know what sum the landlord will have to pay and the tenant will receive. Each can make his plan accordingly. They will not have to wait month after month until the result of lengthy litigation is known.
It is quite true that it may not compensate the tenant for all the expense to which he is put in having to go at the end of the tenancy. In a great many cases the 1927 Act does not do that. What is also true, however, is that this basis gives some compensation to the tenant who is made to go. It might be that a few tenants would get more under the 1927 Act, but it is certainly true that a great many will benefit under these provisions which would get nothing under that Act.
1869 The hon. Member for Pontypool referred to the Bill as a landlords' charter. I do not think that sort of observation is justified. Let us see what the Bill does—this so-called landlords' charter. First of all, it deprives the ground landlord of residential premises of the legal right to vacant possession on the expiry of the ground lease on or after 24th December, 1954, or on 24th December, 1954, if the lease came within the 1951 Act as extended. It depreciates very considerably the value of his reversionary interest, as one of my hon. Friends has pointed out.
Secondly, the Bill very considerably restricts the right of a landlord to get possession of business and professional premises at the end of the lease. Thirdly, it increases a landlord's liability to pay compensation to tenants for improvements. Fourthly, it restricts the landlord's power to enforce repairing covenants.
I suggest that this catalogue suffices to dispose of the charge that this is just a landlords' charter. It is nothing of the sort. The truth is that we have tried to strike a fair balance and to do justice between landlord and tenant, and I believe that we have broadly found the right answer to these complicated problems and that, when it understands what the Bill seeks to bring about, the country will agree with us in that.
I come to what has been the chief subject of the debate today and the main criticism of the Bill. There has been very little criticism of the content of the Bill, but the party opposite intend to vote against it, so they say, not on the ground that anything in it is radically wrong—they welcome many parts of it—but on the ground that it does not contain any provision for leasehold enfranchisement. I want to deal with that argument and, I hope, to deal with it fairly.
May I summarise the argument for leasehold enfranchisement quite shortly? I think it can be put as follows: that in particular parts of the country, and notably in South Wales, the granting of ground leases in the past has been an abuse of power by the landlords of that time, an exploitation by them of the monopoly they then had of the land available for building. That is the argument repeatedly put forward from the benches opposite, and it is the argument which has been repeatedly put forward 1870 in the last 60 or 70 years. It is said that although these leases were entered into voluntarily, nevertheless, as there was no other land available, they were harsh and unconscionable and the parties to those leases should not be held to them.
I say, in the first place, that I think it is a great mistake to argue from the particular to the general. I believe that the leasehold system generally has been of tremendous advantage to this country. I believe, too, that the building lease system has been a very great asset in the development of this country, certainly with regard to office buildings and things of that sort. The only criticism that has come forward of the building lease system, as I understand it, is where that system relates to residential premises.
§ Mr. Grenfell
May I put it in one sentence: that the builder of the house has put everything he possesses into mortgaging the future of himself and his family, and he is not safe in his own house.
§ The Solicitor-General
I am coming to that point which the Father of the House has made, I think, more than once, with the utmost clarity, in a moment. I want to try straight away to narrow the controversy. I have listened to the arguments throughout the whole of this debate, and the attack is not on building leases generally. What is said is that building leases granted last century in relation to residential premises are wrong—that the contracts then made were harsh and unconscionable.
If I may digress for a moment to deal with the argument put forward by the Father of the House, I would say, first, that there is a great misconception widely held about the nature of a ground lease. That, I think, is recognised by most people. There has been no suggestion that the premium paid for a lease years ago should be returned when the lease comes to an end. The agreement to put up a building—I am speaking generally—at the commencement of the lease is really a form of premium which falls into the landlord's possession only when the lease comes to an end. There is nothing inherently wrong, in my view, in a building lease in principle. It is only in particular cases of building leases, particulary in South Wales, where it is said that it is harsh and unconscionable that the 1871 occupier should be required to leave the premises. Views may differ about what was agreed between people so many years ago.
I would say to the right hon. and learned Gentleman that I was very astonished indeed to hear his light observations with regard to the sanctity of contract. I was very astonished to hear him speaking of contracts in that way. I do not for one moment suggest that this House should not interfere in some contracts that are made, but to say that a whole series of contracts should be torn up because a few particular cases may be shown to be hard or wrong would, I think, be unjustified. He referred to the title of some of these ground leases as a century old title with little reality except in law. I thought that was where the reality was expected to be. He referred to the title as a phantom title. It is the title under which the occupiers have occupied these houses since the leases were granted. While I do not suggest for one moment that this House should not interfere where it is shown that the contract is harsh and unconscionable, we ought, surely, to be careful how we interfere with contracts which have been voluntarily entered into.
§ Mr. Grenfell rose—
§ The Solicitor-General
May I continue, because I am dealing with the argument of the right hon. and learned Gentleman. The right hon. and learned Gentleman then went on to ask: where did we stand on a matter of principle? He accused us of not saying. It is set out in the White Paper in paragraph 16. It is said there:the Government are very far from conceding that occupying ground lessees possess such a right as a matter of principle.The right hon. and learned Gentleman went on to deal with the difficulties. Here again some of his observations surprised me. He talked about the difficulty with amenity covenants and brushed that on one side, saying that a little goodwill would get over it. He said that the difficulties about severance were very real. He did not show the way round them. All he said was that a little goodwill and commonsense would deal with that.
With regard to the difficulty that desirable development might be prevented, the right hon. and learned Gentleman argued 1872 that there was no difference between development of freeholds and development where there are leaseholds. I well remember our arguments on the New Towns Bill and the Town and Country Planning Bill in 1947, when we pressed that there should be a possibility of someone getting a freehold in a new town or in a blitzed area, and how the party opposite strenuously resisted those suggestions on the ground that the leasehold system was desirable to enable proper development to take place.
Assuming that the argument is in some cases correct that the earlier lease entered into was harsh and unconscionable and an abuse of power, that, surely, could only be a basis for interfering in that agreement, voluntarily entered into, where the ground lessee or his descendant is the actual occupier of the premises. But the Final Report of the Leasehold Committee, after all the investigations, said thatsuch factual information as we have been able to obtain from South Wales and other localities where the leasehold system is predominant, suggests that relatively few ground leases of working-class dwellings are now held by the actual occupants…The Committee said that the majority of the occupants held on weekly tenancies from intermediate landlords.
I think it must be the fact that in the majority of cases either the original ground landlord has changed or the ground lessee has changed, or both, or the ground lessee has sublet. If any of these changes have taken place, they have taken place on the basis that the ground lease will end on the stipulated date—that must be accepted; the price paid for the reversionary interest will have had regard for that, and the price paid by the original ground lessee has had regard to that. It seems to me that in those cases it would be wrong to contend that because of the original injustice, assuming there to have been an original injustice, the bargains subsequently made between the successors of the ground less or and of the ground lessee, made on the basis that the lease will come to an end on a particular date, should now be upset and the balance tilted against one of the parties to the bargain.
In that respect, we would not be seeking to alter the contract originally made, which is assumed to be unjust, but seeking to alter contracts subsequently made not 1873 on account of that injustice, if it existed, but on the basis that the lease ends on a particular date.
§ Mr. Grenfell
A person undertakes a contract to build a house and to provide a place in which to live. If that house is no longer available for the person to live in, the purpose has temporarily not been served. There is a large proportion of people who build a house and do not outlive the lease; they transfer to mansions in the skies, as all good colliers do. But when the person is alive and has built a house at his own expense, and has made all his arrangements for carrying on his duties as a citizen and a lover of his country, there is no sense whatever in putting him at the mercy of the person who owns the title to the land.
§ The Solicitor-General
I am afraid I have endeavoured to meet the argument on that, and there is no point in my repeating it now. I want to cover in the few minutes left to me a number of other points which were raised in the course of the debate.
The right hon. and learned Gentleman criticised the proposals about initial repairs. He said that that task cast too great a burden on the new statutory tenants. We will have an opportunity to discuss that in Committee, but he must recognise that the Bill does not cast a new burden on those tenants. It is casting a reduced burden. The liability for the repairs will almost certainly at the end of the ground lease be something considerably in excess of the amount of those initial repairs.
Then the right hon. and learned Gentleman tried to draw a comparison between the results of the reversal of the Knightsbridge decision and the position of the statutory tenants here. Surely no proper comparison can be drawn. The sub-lessee in the Knightsbridge case will be the sub-lessee at a rack rent. I do not see how we can draw any valid comparison between that position and the position of a ground lessee on a ground rent.
It is very inaccurate in my submission for the right hon. and learned Gentleman to suggest that all this Bill proposes to give is a fictitious certainty of tenure. That may read very well, but it is misrepresentation. What I should like to ask even now is this, what kind of lease- 1874 hold enfranchisement do the party opposite propose. Nothing has been said of what they really propose in any debate we have had on this subject. The right hon. and learned Gentleman did not commit himself on that matter. He studiously avoided doing it. [Hon. Members: "Why should he?"] I am entitled to ask and the country is entitled to ask the party opposite, Do they support the proposals put forward in the Minority Report or not? It is a perfectly easy question to answer.
The Minority Report was signed by two of their members. They did not answer that question in the last debate and they refused to do it today, but one thing is clear beyond all doubt, in that Minority Report it is proposed that the landlord will get not only the capital value of the ground rent, but also a fair market value of the reversion with a protected sitting tenant. I know that that does not appeal to the Father of the House. Many advocates of leasehold enfranchisement strongly oppose that, including the hon. Member for Leicester, North-West (Mr. Janner).
If the party opposite support that Minority Report, which will disappoint the enthusiasts of leasehold enfranchisement, they should make it clear. If they do not make it clear, they should make clear what they mean by the words "leasehold enfranchisement." If they fail to do that they are laying themselves open to the charge that they are seeking to obtain votes by false pretences.
This Bill gives security to ground lessees of residential property within Rent Act limits. It gives the right of renewal in certain circumstances to tenancies of shops, offices and business premises. It provides for compensation if a good tenant is made to go. The party opposite in their 1951 Election manifesto said this:We shall give security to householders and shopkeepers by leasehold enfranchisement and other changes in the law.This Bill gives security to many householders and shopkeepers and the party opposite propose to vote against it, against the security which it proposes, just because no leasehold enfranchisement proposals are contained in it, leasehold enfranchisement proposals which would benefit relatively few tenants. Because, for valid reasons, this 1875 Bill does not contain that, by their votes they seek to deprive the vast mass of tenants throughout the land of the benefits of this Bill which I commend to the House.
§ Question put, "That the words proposed to be left out stand part of the Question."
§ The House divided: Ayes, 288; Noes, 264.1879
|Division No. 24.]||AYES||[9.56 p.m.|
|Aitken, W. T.||Finlay, Graeme||Lennox-Boyd, Rt Hon. A. T.|
|Allan, R. A. (Paddington, S.)||Fisher, Nigel||Lindsay, Martin|
|Amery, Julian (Preston, N.)||Fleetwood-Hesketh, R. F.||Linstead, Sir H. N.|
|Anstruther-Gray, Major W. J.||Fletcher-Cooke, C.||Lloyd, Rt. Hon. G. (King's Norton)|
|Arbuthnot, John||Ford, Mrs. Patricia||Lloyd, Maj. Sir Guy (Renfrew, E.)|
|Ashton, H. (Chelmsford)||Fort, R.||Lloyd, Rt. Hon. Selwyn (Wirral)|
|Assheton, Rt. Hon. R (Blackburn, W.)||Foster, John||Lockwood, Lt.-Col. J. C.|
|Astor, Hon. J. J.||Fraser, Hon. Hugh (Stone)||Longden, Gilbert|
|Baker, P. A. D.||Fraser, Sir Ian (Morecambe & Lonsdale)||Low, A. R. W.|
|Baldock, Lt.-Cmdr. J. M.||Fyfe, Rt. Hon. Sir David Maxwell||Lucas, Sir Jocelyn (Portsmouth, S.)|
|Baldwin, A. E.||Galbraith, Rt. Hon. T. D. (Pollok)||Lucas, P. B. (Brentford)|
|Banks, Col. C.||Galbraith, T. G. D. (Hillhead)||Lucas-Tooth, Sir Hugh|
|Barber, Anthony||Gammans, L. D.||McAdden, S. J.|
|Barlow, Sir John||Garner-Evans, E. H.||McCallum, Major D.|
|Baxter, A. B.||George, Rt. Hon. Maj. G. Lloyd||McCorquodale, Rt. Hon. M. S.|
|Beach, Maj. Hicks||Glover, D.||Macdonald, Sir Peter|
|Beamish, Maj. Tufton||Godber, J. B.||Mackeson, Brig. Sir Harry|
|Bell, Philip (Bolton, E.)||Gomme-Duncan, Col. A.||McKibbin, A. J.|
|Bell, Ronald (Bucks, S.)||Gough, C. F. H.||Mackie, J. H. (Galloway)|
|Bennett, F. M. (Reading, N.)||Gower, H. R.||Maclay, Rt. Hon. John|
|Bennett, Dr. Reginald (Gosport)||Graham, Sir Fergus||Maclean, Fitzroy|
|Bevins, J. R. (Toxteth)||Gridley, Sir Arnold||Macleod, Rt. Hon. Iain (Enfield, W.)|
|Birch, Nigel||Grimston, Hon. John (St. Albans)||MacLeod, John (Ross and Cromarty)|
|Bishop, F. P.||Grimston, Sir Robert (Westbury)||Macmillan, Rt. Hon. Harold (Bromley)|
|Black, C. W.||Hall, John (Wycombe)||Macpherson, Niall (Dumfries)|
|Boothby, Sir R. J. G.||Harden, J. R. E.||Maitland, Comdr. J. F. W. (Horncastle)|
|Bossom, Sir A. C.||Hare, Hon. J. A.||Maitland, Patrick (Lanark)|
|Boyd-Carpenter, Rt. Hon. J. A.||Harris, Frederic (Croydon, N.)||Manningham-Buller, Sir R. E.|
|Boyle, Sir Edward||Harris, Reader (Heston)||Markham, Major Sir Frank|
|Braine, B. R.||Harrison, Col. J. H. (Eye)||Marlowe, A. A. H.|
|Braithwaite, Lt.-Cmdr. Sir Gurney||Harvey, Ian (Harrow, E.)||Marples, A. E.|
|Bromley-Davenport, Lt.-Col. W. H.||Harvie-Watt, Sir George||Marshall, Douglas (Bodmin)|
|Brooke, Henry (Hampstead)||Hay, John||Maude, Angus|
|Brooman-White, R. C.||Head, Rt. Hon. A. H.||Maudling, R.|
|Browne, Jack (Govan)||Heald, Rt. Hon. Sir Lionel||Maydon, Lt.-Comdr. S. L. C.|
|Bullard, D. G.||Heath, Edward||Medlicott, Brig. F.|
|Bullus, Wing Commander E. E.||Henderson, John (Cathcart)||Mellor, Sir John|
|Burden, F. F. A.||Higgs, J. M. C.||Molson, A. H. E.|
|Butcher, Sir Herbert||Hill, Dr. Charles (Luton)||Morrison, John (Salisbury)|
|Campbell, Sir David||Hill, Mrs. E. (Wythenshawe)||Mott-Radclyffe, C. E.|
|Carr, Robert||Hinchingbrooke, Viscount||Nabarro, G. D. N.|
|Cary, Sir Robert||Hirst, Geoffrey||Neave, Airey|
|Channon, H.||Holland-Martin, C. J.||Nicholls, Harmer|
|Churchill, Rt. Hon. Sir Winston||Hope, Lord John||Nicholson, Godfrey (Farnham)|
|Clarke, Col. Ralph (East Grinstead)||Hopkinson, Rt. Hon. Henry||Nicolson, Nigel (Bournemouth, E.)|
|Clarke, Brig. Terence (Portsmouth, W.)||Hornsby-Smith, Miss M. P.||Nield, Basil (Chester)|
|Cole, Norman||Horobin, I. M.||Noble, Cmdr. A. H. P.|
|Colegate, W. A.||Horsbrugh, Rt. Hon. Florence||Nugent, G. R. H.|
|Conant, Maj. R. J. E.||Howard, Gerald (Cambridgeshire)||Oakshott, H. D.|
|Cooper-Key, E. M.||Howard, Hon. Greville (St. Ives)||Odey, G. W.|
|Craddock, Beresford (Spelthorne)||Hudson, Sir Austin (Lewisham, N.)||O'Neill, Hon. Phelim (Co. Antrim, N.)|
|Crookshank, Capt. Rt. Hon. H. F. C.||Hudson, W. R. A. (Hull, N.)||Ormsby-Gore, Hon. W. D.|
|Crosthwaite-Eyre, Col. O. E.||Hulbert, Wing Cdr. N. J.||Orr, Capt. L. P. S.|
|Crouch, R. F.||Hurd, A. R.||Orr-Ewing, Charles Ian (Henden, N.)|
|Crowder, Sir John (Finchley)||Hutchison, Sir Ian Clark (E'b'rgh, W.)||Orr-Ewing, Sir Ian (Weston-super-Mare)|
|Crowder, Petre (Ruislip—Northwood)||Hutchinson, James (Scotstoun)||Osborne, C.|
|Cuthbert, W. N.||Hyde, Lt.-Col. H. M.||Page, R. G.|
|Darling, Sir William (Edinburgh, S )||Hylton-Foster, H. B. H.||Peake, Rt. Hon. O.|
|Davidson, Viscountess||Jenkins, Robert (Dulwich)||Perkins, Sir Robert|
|Deedes, W. F.||Jennings, Sir Roland||Peto, Brig. C. H. M.|
|Digby, S. Wingfield||Johnson, Eric (Blackley)||Peyton, J. W. W.|
|Dodds-Parker, A. D.||Johnson, Howard (Kemptown)||Pickthorn, K. W. M.|
|Donaldson, Cmdr. C. E. McA.||Jones, A. (Hall Green)||Pilkington, Capt. R. A.|
|Donner, Sir P. W.||Joynson-Hicks, Hon. L. W.||Pitman, I. J.|
|Doughty, C. J. A.||Kaberry, D.||Pitt, Miss E. M.|
|Douglas-Hamilton, Lord Malcolm||Kerr, H. W.||Powell, J. Enoch|
|Drayson, G. B.||Lambert, Hon. G.||Price, Henry (Lewisham, W.)|
|Dugdale, Rt. Hon. Sir T. (Richmond)||Lambton, Viscount||Prior-Palmer, Brig. O. L.|
|Duncan, Capt. J. A. L.||Lancaster, Col. C. G.||Profumo, J. D.|
|Duthie, W. S.||Langford-Holt, J. A.||Raikes, Sir Victor|
|Eccles, Rt. Hon. Sir D. M.||Leather, E. H. C.||Rayner, Brig. R.|
|Erroll, F. J.||Legge-Bourke, Maj. E. A. H.||Redmayne, M.|
|Fell, A.||Legh, Hon. Peter (Petersfield)||Rees-Davies, W. R.|
|Remnant, Hon. P.||Stevens, G. P.||Vaughan-Morgan, J. K.|
|Renton, D. L. M.||Steward, W. A. (Woolwich, W.)||Vosper, D. F.|
|Roberts, Peter (Heeley)||Stewart, Henderson (Fife, E.)||Wakefield, Sir Wavell (St. Marylebone)|
|Robertson, Sir David||Stoddart-Scott, Col. M.||Walker-Smith, D. C.|
|Robinson, Roland (Blackpool, S.)||Storey, S.||Ward, Hon. George (Worcester)|
|Robson-Brown, W.||Strauss, Henry (Norwich, S.)||Ward, Miss I. (Tynemouth)|
|Rodgers, John (Sevenoaks)||Stuart, Rt. Hon. James (Moray)||Waterhouse, Capt. Rt. Hon. C.|
|Ropner, Col. Sir Leonard||Studholme, H. G.||Watkinson, H. A.|
|Russell, R. S.||Summers, G. S.||Webbe, Sir H. (London & Westminster)|
|Ryder, Capt. R. E. D.||Sutcliffe, Sir Harold||Wellwood, W.|
|Sandys, Rt. Hon. D.||Taylor, Sir Charles (Eastbourne)||Williams, Rt. Hon. Charles (Torquay)|
|Schofield, Lt.-Col. W.||Taylor, William (Bradford, N.)||Williams, Gerald (Tonbridge)|
|Scott, R. Donald||Teeling, W.||Williams, Sir Herbert (Croydon, E.)|
|Scott-Miller, Cmdr. R||Thomas, Rt. Hon. J. P. L. (Hereford)||Williams, Paul (Sunderland, S.)|
|Shepherd, William||Thomas, Leslie (Canterbury)||Williams, R. Dudley (Exeter)|
|Simon, J. E. S. (Middlesbrough, W.)||Thomas, P. J. M. (Conway)||Wills, G.|
|Smithers, Sir Waldron (Orpington)||Thompson, Kenneth (Walton)||Wilson, Geoffrey (Truro)|
|Smyth, Brig. J. G. (Norwood)||Thompson, Lt.-Cdr. R. (Croydon, W.)||Wood, Hon. R.|
|Snadden, W. McN.||Thorneycroft, Rt. Hn. Peter (Monmouth)||York, C.|
|Soames, Capt. C.||Thornton-Kemsley, Col. C. N.|
|Spearman, A. C. M.||Touche, Sir Gordon||TELLERS FOR THE AYES:|
|Speir, R. M.||Turner, H. F. L.||Mr. Buchan-Hepburn and Sir Cedric Drewe.|
|Spence, H. R. (Aberdeenshire, W.)||Turton, R. H.|
|Spens, Rt. Hon. Sir P. (Kensington, S.)||Tweedsmuir, Lady|
|Stanley, Capt. Hon. Richard||Vane, W. M. F.|
|Acland, Sir Richard||Deer, G.||Hynd, H. (Accrington)|
|Adams, Richard||Delargy, H. J.||Hynd, J. B. (Attercliffe)|
|Albu, A. H.||Dodds, N. N.||Irvine, A. J. (Edge Hill)|
|Allen, Scholefield (Crewe)||Donnelly, D. L.||Irving, W. J. (Wood Green)|
|Anderson, Frank (Whitehaven)||Dugdale, Rt. Hon. John (W. Bromwich)||Isaacs, Rt. Hon. G. A.|
|Attlee, Rt. Hon. C. R.||Ede, Rt. Hon. J. C.||Janner, B.|
|Awbery, S. S.||Edelman, M.||Jay, Rt. Hon. D. P. T.|
|Bacon, Miss Alice||Edwards, Rt. Hon, John (Brighouse)||Jeger, George (Goole)|
|Baird, J.||Edwards, Rt. Hon. Ness (Caerphilly)||Jenkins, R. H. (Stechford)|
|Balfour, A.||Edwards, W. J. (Stepney)||Johnston, Douglas (Paisley)|
|Barnes, Rt. Hon. A. J.||Evans, Albert (Islington, S.W.)||Jones, David (Hartlepool)|
|Bartley, P.||Evans, Edward (Lowestoft)||Jones, Frederick Elwyn (West Ham, S.)|
|Bellenger, Rt. Hon. F. J.||Fernyhough, E.||Jones, Jack (Rotherham)|
|Bence, C. R.||Fienburgh, W.||Jones, T. W. (Merioneth)|
|Benn, Hon. Wedgwood||Finch, H. J.||Keenan, W.|
|Benson, G.||Fletcher, Eric (Islington, E.)||Kenyon, C.|
|Beswick, F.||Follick, M.||Key, Rt. Hon. C. W.|
|Bevan, Rt. Hon. A. (Ebbw Vale)||Foot, M. M.||King, Dr. H. M.|
|Bing, G. H. C.||Forman, J. C.||Lee, Frederick (Newton)|
|Blackburn, F.||Fraser, Thomas (Hamilton)||Lee, Miss Jennie (Cannock)|
|Blenkinsop, A.||Freeman, John (Watford)||Lever, Harold (Dheetham)|
|Blyton, W. R.||Freeman, Peter (Newport)||Lever, Leslie (Ardwick)|
|Boardman, H.||Gaitskell, Rt. Hon. H. T. N.||Lewis, Arthur|
|Bowden, H. W.||Gibson, C. W.||Lindgren, G. S.|
|Bowles, F. G.||Glanville, James||Lipton, Lt.-Col. M.|
|Brockway, A. F.||Gooch, E. G.||Logan, D. G.|
|Brook, Dryden (Halifax)||Gordon-Walker, Rt. Hon. P. C.||MacColl, J. E.|
|Broughton, Dr. A. D. D.||Greenwood, Anthony (Rossendale)||McGhee, H. G.|
|Brown, Rt. Hon. George (Belper)||Grenfell, Rt. Hon. D. R.||McInnes, J.|
|Brown, Thomas (Ince)||Grey, C. F.||McKay, J. (Wallsend)|
|Burke, W. A.||Griffiths, David (Rother Valley)||McLeavy, F.|
|Burton, Miss F. E.||Griffiths, Rt. Hon. James (Llanelly)||McNeil, Rt. Hon. H.|
|Butler, Herbert (Hackney, S.)||Griffiths, William (Exchange)||MacPherson, Malcolm (Stirling)|
|Callaghan, L. J.||Grimond, J.||Mainwaring, W. H.|
|Carmichael, J.||Hale, Leslie||Mallalieu, E. L. (Brigg)|
|Castle, Mrs. B. A.||Hall, Rt. Hon. Glenvil (Colne Valley)||Mallalieu, J. P. W. (Hudderfield, E.)|
|Champion, A. J.||Hall, John T. (Gateshead, W.)||Mann, Mrs. Jean|
|Chapman, W. D.||Hamilton, W. W.||Manuel, A. C.|
|Chetwynd, G. R.||Hannan, W.||Marquand, Rt. Hon. H. A.|
|Clunie, J.||Hardy, E. A.||Mason, Roy|
|Craddock, George (Bradford, S.)||Hargreaves, A.||Mayhew, C. P.|
|Coldrick, W.||Harrison, J. (Nottingham, E.)||Mellish, R. J.|
|Collick, P. H.||Hastings, S.||Messer, Sir F.|
|Corbet, Mrs. Freda||Hayman, F. H.||Mitchison, G. R.|
|Cove, W. G.||Healey, Denis (Leeds S.E.)||Monslow, W.|
|Crosland, C. A. R.||Henderson, Rt. Hon. A. (Rewley Regis)||Moody, A. S.|
|Crossman, R. H. S.||Herbison, Miss M.||Morgan, Dr. H. B. W.|
|Cullen, Mrs. A.||Hewitson, Capt. M.||Morley, R.|
|Daines, P.||Holman, P.||Morrison, Rt. Hon. H. (Lewisham, S.)|
|Dalton, Rt. Hon. H.||Holmes, Horace||Mort, D. L.|
|Darling, George (Hillsborough)||Holt, A. F.||Moyle, A.|
|Davies, Rt. Hn. Clement (Montgomery)||Houghton, Douglas||Mulley, F. W.|
|Davies, Ernest (Enfield, E.)||Hubbard, T. F.||Murray, J. D.|
|Davies, Harold (Leek)||Hudson, James (Ealing, N.)||Nally, W.|
|Davies, Stephen (Merthyr)||Hughes, Cledwyn (Anglesey)||Neal, Harold (Bolsover)|
|de Freitas, Geoffrey||Hughes, Hector (Aberdeen, N.)||Noel-Baker, Rt. Hon. P. J.|
|O'Brien, T.||Shinwell, Rt. Hon. E.||Usborne, H. C.|
|Oldfield, W. H.||Short, E. W.||Viant, S. P.|
|Oliver, G. H.||Shurmer, P. L. E.||Wade, D. W.|
|Orbach, M.||Silverman, Julius (Erdington)||Wallace, H. W.|
|Oswald, T.||Silverman, Sydney (Nelson)||Warbey, W. N.|
|Padley, W. E.||Simmons, C. J. (Brierley Hill)||Watkins, T. E.|
|Paling, Will T. (Dewsbury)||Skeffington, A. M.||Webb, Rt. Hon. M. (Bradford, C.)|
|Palmer, A. M. F.||Slater, J. (Durham, Sedgefield)||Weitzman, D.|
|Pannell, Charles||Smith, Ellis (Stoke, S.)||Wells, Percy (Faversham)|
|Pargiter, G. A.||Smith, Norman (Nottingham, S.)||Wells, William (Walsall)|
|Parker, J.||Snow, J. W.||West, D. G.|
|Parkin, B. T.||Sorensen, R. W.||Wheatley, Rt. Hon. John|
|Paton, J.||Soskice, Rt. Hon. Sir Frank||Wheeldon, W. E.|
|Peart, T. F.||Steele, T.||White, Mrs. Eirene (E. Flint)|
|Plummer, Sir Leslie||Stewart, Michael (Fulham, E.)||White, Henry (Derbyshire, N.E.)|
|Popplewell, E.||Stokes, Rt. Hon. R. R.||Whiteley, Rt. Hon. W.|
|Porter, G.||Strachey, Rt. Hon. J.||Wigg, George|
|Price, J. T. (Westhoughton)||Strauss, Rt. Hon. George (Vauxhall)||Wilcock, Group Capt. C. A. B.|
|Proctor, W. T.||Stross, Dr. Barnett||Wilkins, W. A.|
|Pryde, D. J.||Summerskill, Rt. Hon. E.||Willey, F. T.|
|Pursey, Cmdr. H.||Swingler, S. T.||Williams, Rev. Llywelyn (Abertillery)|
|Rankin, John||Sylvester, G. O.||Williams, Rt. Hon. Thomas (Don V'll'y)|
|Reid, Thomas (Swindon)||Taylor, Bernard (Mansfield)||Williams, W. R. (Droylsdon)|
|Reid, William (Camlachie)||Taylor, John (West Lothian)||Williams, W. T. (Hammersmith, S.)|
|Rhodes, H.||Taylor, Rt. Hon. Robert (Morpeth)||Wilson, Rt. Hon. Harold (Huyton)|
|Richards, R.||Thomas, George (Cardiff)||Winterbottom, Richard (Brightside)|
|Roberts, Albert (Normanton)||Thomas, Iorwerth (Rhondda, W.)||Woodburn, Rt. Hon. A.|
|Roberts, Goronwy (Caernarvon)||Thomas, Ivor Owen (Wrekin)||Wyatt, W. L.|
|Robinson, Kenneth (St. Pancras, N.)||Thomson, George (Dundee, E.)||Yates, V. F.|
|Rogers, George (Kensington, N.)||Thornton, E.||Younger, Rt. Hon. K.|
|Ross, William||Timmons, J.|
|Royle, C.||Tomney, F.||TELLERS FOR THE NOES:|
|Shackleton, E. A. A.||Turner-Samuels, M.||Mr. Pearson and Mr. Arthur Allen.|
Question put, and agreed to.