§ Order for Second Reading read.
§ 11.29 a.m.
§ Mr. George Thomas (Cardiff, West)
I beg to move, That the Bill be now read a Second time.
When an hon. Member is successful in the Ballot for Private Members'Bills, it is astonishing how many good causes are brought to his notice. Pressure—quite legitimate pressure—is brought to bear upon him as to the subject which he should select for his Bill; but, as a son of the Principality, there was not much difficulty in selecting the subject to which I wished to call attention. The Bill which I submit for Second Reading is of major public importance over a wide sector of the country.
I want at once to declare my interest. I never thought the day would dawn when I would have to declare a financial interest in any issue at all, but it so happens that my own home in Cardiff is held on a building lease for 99years, a few years of which have run out, and I shall be a beneficiary when this Bill reaches the Statute Book.
I am anxious at the beginning to express my deep appreciation of the support and co-operation of right hon. and hon. Friends of mine in the preparation of the Bill. Whenever a Private Member's Bill is prepared, there is always an unseen host of people who very kindly co-operate with the Member concerned. I am particularly grateful to my hon. and learned Friend the Member for Leicester, North-East(Sir L. Ungoed-Thomas), who has given me the benefit of his legal experience. I am grateful to everyone who has helped.
This is not the first time that a Private Member's Bill has sought to get to the Statute Book a Measure granting leasehold enfranchisement. I follow a long line of worthy witnesses in this regard. The Final Report of the Leasehold Committee, set up by the Labour Government, and on which served my hon. Friend the Member for Oldham, West (Mr. Hale), as 1618 well as my hon. and learned Friend the Member for Leicester, North-East, tells us in paragraph 43 thatThe Leaseholders (Facilities of Purchase of Fee Simple) Bill of 1884 …was the first of a long series of unsuccessful attempts to place the principle of compulsory purchase on the statute book.In paragraph 51, the Report explains thatOnly the first three, out of nearly twenty Bills dealing with the principle, survived even as far as the Second Reading stage. The first, in 1884, came within a few votes of securing its Second Reading, but the next two were easily defeated.The Leasehold Committee gives a little of the background as to the reasons advanced in support of an enfranchisement in those early days. We are told:Enfranchisement would give small proprietors an interest in maintaining and improving their holdings, would encourage in them a sense of domestic and civic responsibility and would 'remove a powerful stimulus to Socialism (and) conditions likely to bring about revolutions.'Those are not my reasons for advancing this Measure today.
I happen to come from a part of the world which has a major interest in this subject. The Crown Lands of Cornwall and Devon and on the outskirts of London, the greater part of the Metropolitan area of London, the County Palatine of Lancaster and the whole of South Wales all have a direct and major interest in the question of leasehold enfranchisement, Those who know the political history of Wales will know that in 1906 the Liberal Party swept the Tories out of Wales on the issue that the land belonged to the people. The then David Lloyd George assured us all that he would grant enfranchisement if it were possible.
The City of Cardiff is especially affected by this system. Two great financial corporations hold us in their grasp. WesternGround Rents Ltd. and the Tredegar Estates own a considerable proportion of our city. Two hon. Members opposite are associated with Western Ground Rents and I shall refer to them presently. [HON. MEMBERS: "Which two?"] The hon. and learned Member for Northwich (Mr. J. Foster) and the hon. Member for Bury St. Edmunds (Mr. Aitken), who have a direct interest and have told the House on many occasions that they have this interest in Western Ground Rents. 1619 will know that the finance corporation wields tremendous power.
In 1947, I think it was, the B.B.C. in Wales wanted me to debate the subject of leasehold enfranchisement, and the Western Ground Rents company was able to prevent me from getting on the air. The hon. and learned Member for Northwich would know more about that than the hon. Member for Bury St. Edmunds, because it was he who conveyed to me the objection of Western Ground Rents to any such debate being held.
The hon. Member for Bury St. Edmunds made some criticism of me during the Second Reading of the Leasehold Property (Temporary Provisions) Bill, which was introduced by the Labour Government. He then charged me with giving figures concerning Western Ground Rents which were inaccurate as to the extent of its property-owning in the City of Cardiff. I confess that I had made the mistake of believing that the figures published in the "Daily Express"in May, 1938, when the transaction took place, were to be relied upon. After all. the "Daily Express"was not without indirect connections with Western Ground Rents. But I readily accept the hon. Member's figures. He is on the inside: he knows better.
The hon. Member's figures of properties in Cardiff which would be affected by the Bill are as follows: 11,000 houses in Cardiff owned by that corporation: 4,150 properties owned by Tredegar Estates; in the Grangetown ward alone, 951 houses. No detailed statistics are available to me concerning the public houses, cinemas, churches and chapels which are on the list of properties owned by these corporations. When the transaction took place, the "Daily Express"said that there were 1,000 shops and 250 public houses included in the sale of part of the City of Cardiff by the Marquess of Bute to Western Ground Rents.
As the leases fall due, exorbitant ground rents are being imposed. In one little street—Catherine Street—in Cardiff, for tiny cottage property Western Ground Rents demanded a £500 lump sum for the renewal of a lease to a family that had lived in the property for over 50 years.
§ Mr. Thomas
Iam not denying that it was running out, but those people, who bought the house a long time ago and had paid ground rents all along, had paid for it, and they felt that every moral consideration would describe the process by which Western Ground Rents had taken their property from them as legalised blackmail.
In Cowbridge Road, Canton, Cardiff, there is a tiny little shop for which the ground rent is £4 a year and the leaseof which, I think, runs out next year. The finance corporation—in this case, Tredegar Estates—says that it will renew the lease at £350 a year.
§ Mr. Thomas
Yes, instead of £4. Western Ground Rents has no direct interest in Cardiff other than this money question of the profits which accrue to this concern. It has done nothing at all to increase the value of the property in the City of Cardiff. It isinterested only in taking away the wealth of Cardiff, and it is left to the people of that city to create its wealth, in which they have an interest.
Cardiff is not alone in her misfortunes. Let us consider the case of Pembroke, for 96 per cent. of the town of Pembroke is owned by one ground landlord. Hon. Members opposite who are interested in Western Ground Rents will realise now that there are times when I talk of other ground landlords—and this is one of them, for it is not Western Ground Rents down there. My hon. Friend the Member for Pembroke (Mr. Donnelly) has brought to the House and stated in public shocking examples of leases of 50 years, where people who bought their home when they married have had it filched away from them in their old age by these corporations.
§ Mr. Ronald Bell (Buckinghamshire, South)
When the hon. Gentleman says that they bought their home, what does he mean? Does he mean that they bought the residue of the lease?
§ Mr. Thomas
Well, the hon. Member talks—and we will leave it there. All that I am sure of is that the people who buy their homes believe that they belong to them.
Perhaps I can give the illustration of a little piece of land which I lease from Cardiff Corporation, for which the Corporation will receive, over 90 years, a sum of £1,000; but at the end of that period the Corporation will expect the property on top of it as well. People in Pembrokeshire have had this happen not in 99 years but in 50 years.
There are cases, too, in London—or perhaps I had better first finish with South Wales. In Aberdare and Mountain Ash—
§ Mr. Thomas
Yes, Swansea, Llanelly, and the whole of South Wales is in a state of revolt against this system. The result is that we cannot find a Tory down there who will defend it—not in public, at any rate.
§ Mr. Thomas
The hon. Member for Cardiff, North is on record as being in favour of enfranchisement, and no doubt he will say so today, Mr. Speaker, if he has the good fortune to catch your eye.
§ Mr. Thomas
In that case, I welcome the hon. Gentleman's support.
My hon. Friendthe Member for Rhondda, East (Mr. Mainwaring), who will second the Motion, will no doubt give his own illustrations from my native valley of the Rhondda, but it is impossible to find any part of South Wales where this injustice does not rankle in our breasts.
In London there is a very powerful non-political organisation, the London 1622 Leaseholders'Association, with an energetic secretary to whom I personally am greatly indebted. This movement has been established because throughout London there is the same burning injustice as that which exists in South Wales. The hon. Member for Hamp-stead (Mr. H. Brooke), who now serves in the Treasury, told us in an earlier debate that a thousand houses in the borough of Hampstead alone are owned by leasehold estates. In Lewisham and Windsor, in Dulwich and Paddington, in St. Pancras and Holborn, there are great slices where these finance corporations own the land and are exploiting it.
I have inevitably received a lot of correspondence about this Bill, but I will quote from only two letters. One is from Newport, Monmouthshire, and the other is from Grantham. The letter from Grantham reads:A case was brought to my notice a few weeks ago of a man who, after war service, bought a leasehold house, the only one he could get, with 25 years unexpired. He is now compelled to change his town of employment and finds he cannot sell this house, even at a great loss, because no prospective purchaser can obtain a mortgage on the 20 years balance of lease. He has appealed to the ground landlord, to whom he pays £2 15s. a year ground rent, for reasonable enfranchisement.He has not had any satisfactory reply. The letter gives a lot more details about the property. I read it only to illustrate that the present leasehold system imposes an unfair handicap upon people who wish to move from one part of the country to another.
The second letter is from an elderly lady in Newport, Monmouthshire, and it reads:The lease of my house expires in 18 months and I am being asked £750and all legal charges for the freehold. I pay £3 15s. per year ground rent. They therefore want 200 years' purchase price for me to have the freehold. I am a widow and have lived in this house 58 years.There is something amoral and cruel about a system which allows an elderly person like that to be robbed of her home.
The Landlord and Tenant Act, introduced by the present Government last year, is quite inadequate to protect the householder from the grasping hands of the finance corporations. When the lease runs out, he is now guaranteed security of tenure at an economic rent. From paying a ground rent of £6 a year, he 1623 may well find that he has to pay a rent of £16 a month. That is not at all an exaggerated illustration. If he cannot afford the rent—the new inflated rent—there is no security for him, because he will have to leave.
The 1954 Measure is a landlords' charter. The morality of capitalism apparently discounts human considerations. The human aspect does not seem to count. The fact that family associations with a home mean much has not entered into the Government's considerations.
In its very first Clause the Bill establishes the right to enfranchisement for tenants except those in one category—those whoacquirethe tenancy in consideration of money or moneys'worth within 10 years of the end of the term for which the tenancy was granted.There are speculators, and I am not interested in speculators, big or small; I am interested in the man who is living in his own home and who wants to stay there.
Clause 5 deals with the terms of payment, and they are not ungenerous to the landlord. The provision of 20 times the average annual ground rent is compensation which, in the opinion of all of us who prepared the Measure, gives justice to the ground landlord and justice to the tenant.
§ Mr. Thomas
In Clause 6 the authority of the courts is established to determine questions of disagreement where the lease concerned a property which is part of other premises. It also establishes the right of the court to permit the tenant to pay the enfranchisement fee by instalments. If the tenant changes his mind after giving notice that he intended to purchase the freehold, he is entitled to do so, provided that he satisfies the court that it is not reasonably practicable for him to continue with his purchase; but if he exercises this right within three years of the end of the tenancy, the right of enfranchisement will thereafter lapse.
Clause 9 gives to tenants of Crown or Government property the right to enfranchisement. This Clause will be received with special welcome in Windsor and Greenwich, Camborne and Falmouth, and Cornwall and Devon. During my recent visit to Cornwall I found that 1624 everyone Ispoke to about Crown property paid a tribute to the Crown Estate as being a very good landlord. They all recognised that it was a good ground or estate landlord. There may have been others who thought differently, but I did not meet them. But even thoseto whom I spoke asked me to do my best to obtain for them the right to buy the freeholds of their own homes. Local authorities will be exempt only where they require leases for the exercise of distinctive public functions which have been laid upon them by statute.
The usual argument put forward against a proposal of this sort is that the principle of the sanctity of contract must be honoured and recognised in this country—
§ Mr. Thomas
That does not come within the terms of the Bill.
A contract which is entered into almost under duress is recognised by everyone as not having the moral sanction of the rest of the community. Where there is a monopoly in the ownership of land there is no equality among the parties negotiating the contract. I could not buy the freehold of land in the City of Cardiff upon which to have my home built. Like everyone else, I was obliged to buy a piece of land through the leasehold system.
§ Mr. R. Bell indicated dissent.
§ Mr. Thomas
The hon. Member shakeshis head. If he can tell the hon. Member for Cardiff, North (Mr. Llewellyn) or myself where in Cardiff we can buy the freehold of land, we shall be very pleased.
§ Mr. Thomas
My hon. and wealthy Friend will buy it.
An unfortunate effect of the present system is that it sets neighbour against neighbour. In the little mining village of Treharris in South Wales the leases of some mining cottages were due to fall in and the ground landlord sold the leases of five of them to one ofthe tenants who, in turn, by the charges he imposed upon his neighbours, exploited them. It is not only the big people who can behave badly. This system has a bad effect upon individuals. 1625 At the last Election the Conservative Party talked about a property-owning democracy, but they forget to say who was to own the property. They have since introduced legislation which has taken away from the little people the right to own their own homes. Security of tenure is granted upon the basis that a rent must bepaid as though the person paying it had never bought the property in the first place. All the advantage is given to the finance corporations. I am hoping that the House will give a Second Reading today to a Measure which seeks to give enfranchisement rights to people throughout the country.
The Amendment which has been tabled indicates that the present system is fair and practical. It is because of my experience and knowledge of my constituency and other parts of the Principality that I submit this Bill for Second Reading. In itself it will give new hope to people who are thrifty and thriving, who are proud to own their homes, and who ought to have encouragement.
§ 11.55 a.m.
§ Mr. W. H. Mainwaring (Rhondda, East)
I beg to second the Motion.
I feel sure that hon. Members on both sides of the House will join me in congratulating my hon. Friend the Member for Cardiff, West (Mr. G. Thomas) on the manner in which he has introduced the Bill. I am sure we all agree that he has not overdrawn the picture in any degree.I only wish that it were possible for me to bring to this House the atmosphere of East Rhondda and all the other mining valleys in Wales, to enable hon. Members who are not acquainted with the area to realise the tremendous heartaches and anxieties whichburden the lives of the people there.
I can say without exaggeration that during this generation all the houses and property of the Rhondda will pass to one corporate interest or another. A hundred years ago the Rhondda was practically a virgin area. In those days 99 years was deemed to be an ample period of time during which to exhaust all the natural resources, and it was thought that the pit in question having by then exhausted its resources, the village would be of no further use and the area should beabandoned as derelict. It was upon that basis that each colliery company, as it 1626 began its new sinkings in a virgin area, also leased from the land owners all the available land for building, and in course of time each workman or official of the company was invited to take up a small parcel of land upon which to build his house.
That is how the Rhondda, as a township, grew up. It is no mean township. In proportion to its area and its population it has contributed more to the wealth of this nation than any other part of the country. In those days the people thought, "Ninety-nine years is a long time, and in any case we shall not be affected." Since those days there have been further developments. Due to the passage of years and other factors individual colliery companies have disappeared, and their industrial interests are now vested in the National Coal Board, which today holds the intermediate leases of thousands of these houses. I must say that it has indicated its readiness to co-operate in any practical plan to secure the freeholds for the individual householders.
We are familiar with the wonderful Shakespearean play "The Merchant of Venice."In it there is a Jew, who is a great villain, but we shall expect to hear hon. Members opposite tell us that he had a contract. What of the Jew? Was he a villain? "Did he not have a contract"? Portia, at any rate, conceded the contract, but no more. If learned Members of this House were asked to judge it. I wonder what they would say about the slim reasoning of Portia. Eventually the court, impressed more by sentiments than by legal argument, decided against the old Jew. I do not know whether my judgment is as sound as that of some legal luminaries, but I believe there are only two classes of lawyer in the world, the good and the less good.
§ Mr. Leslie Hale (Oldham, West)
I hope my hon. Friend will forgive me for interrupting him to point out that his hon. Friend the Member for Cardiff, West (Mr. G. Thomas) paid a tribute to the lawyers who drafted the Bill and gave their services so that it could be introduced. Perhaps my hon. Friend would reflect for a moment in his historical observations and recall that every struggle for liberty, in this country from Pym onwards, from Lincoln in America, 1627 and from Gandhi in India, as well as in Russia, was fought by lawyers.
§ Mr. Mainwaring
No doubt that interruption was intended to give me some respite, but it was not required.
As I was saying, the court was impressed by the case put up, and decided against the Jew. That was in the realm of human sentiment. In a play one cannot expect conformity with all the conditions of real life.
Leasehold contracts were entered into at various periods from 99 years ago. Since then, the leases have in large numbers of cases been transferredto others. Let us concede all the factors for and against these contracts. All parties to them should have been aware of all the conditions. The Jew in this case—I do not mean it offensively—in other words, the landowner, must be admitted asentitled to literally all that is in the contract. Is there not something more to be said about these contracts? Cannot this House be called upon to determine a point of equity and justice in relation to certain cases? It is a frequent occurrence in the experience of all of us that the courts decide that in a particular Act or deed justice has not been done, and they decide to adjust the matter.
In this leasehold question we are dealing with just such an issue. Was the contract a just one when entered into? Is it just today, in the light of modern conditions? Can it be regarded as just in anything? Let us look at the matter from another point of view. About 99 years ago, or a smaller period, a land owner entered into a contract. No one will contend that heundervalued his land. Throughout the intervening period he has regularly received the rental agreed upon. Now comes the time when the reversionary rights fall due. Is there anything wrong in our asking this House to express its view about the justice of the terms of the contract? Hundreds of thousands of people are affected.
Two or three weeks ago, when we were discussing a Welsh question, there were divided opinions, but there are no divided opinions about the matter we are discussing today. No hon. Memberfrom Wales would dare to stand in this House and oppose the Bill.
1628 Think of the circumstances in which this land was acquired for building purposes. It was associated with the industrial development of the country. The landlord profiteered at the expense of the nation throughout this period. Is there not at element of justice in our plea that the land owner should now take heed and consider our simple proposal that the freehold should be made available to the tenant?
I join with my hon. Friend the Member for Cardiff, West in giving unstinted credit to some of the land owners in my area. They have acted very generously. On the other hand, that is not true of all land owners. I was able quite recently to advise nearly 700 leaseholders in one part of my division to accept what I considered to be reasonable terms that had been agreed with their ground landlords. I only wish it had been possible to do the same in other cases, but I fear there is very little hope.
A curious historical development of this problem is that we do not frequently meet the land owners with whom we are dealing. [An HON. MEMBER: "We can see them in this House."] It may be so. There is another side of it. Some of the estates were held by an individual or a family at one time, but that is no longer so. The modern representatives of the estate may be ten people or a score, scattered over the countries of the world, as I know from my experience. In such a situation it is impossible to dicuss the contract with these so-called land owners, because we are dealing with a collection of people widely separated one from the other. The result is that we are constantly dealing with accredited agents.
Why should these questions be so full of difficulty? If we were honest the difficulties could be sweptaway quite simply. There are too many persons interested in maintaining this situation and not giving expression to real opinions and convictions. The proposition in this short Bill holds out advantages even to the landlord. First of all, from the date of the lease, he receives the agreed rentals. Secondly, when the reversionary right becomes operative, in how many cases does the landowner get real value? Has any hon. Member thought about this side of the matter? I speak of the ordinary workman's, owner-occupied cottage. The value of the property is exceedingly 1629 problematical in a large number of cases. The reversionary rights depend upon several factors, including the condition of the property.
As the result of the last Act of Parliament dealing with this problem, new fears have entered into the households of people who occupy these houses. Do not think that the last Act conferred benefits upon the people; quite the reverse. It has brought added dangers and fears to them. Now it brings sleepless nightson top of the fears. There is no evidence of a general desire, even by land owners, to acquire premises that become vacant under reversionary rights. Rather is there ample evidence of a desire to run away from reversionary rights and to dispose of them inother ways.
The very Act to which I refer will increase that tendency, because to the land owner the property may not be an unmixed blessing once it is taken over. The rent has to be fixed and agreed upon, and the property thereafter has to be maintained. Only those resident in mining districts or well acquainted with them know what that may mean.
What course is available to the land owner? He can, of course, accept the reversion and all it may mean. He can also dispose of the property as quickly as possible, or he can agree to sell the freehold. I contend that the sale of the freehold is an advantage to him as compared with the leasehold position. In the one case, under the leasehold, he has his rent for a given term of years, but if he sells the property and capitalises the rent he has an income for an unlimited period of years. I dare say that that is well understood by those in this House who are interested in this kind of speculation in property.
Proof that this is understood by land owners is found in the growing practice among them to sell outright the whole of their interest to financiers. This sale of estates to financiers is spreading all over the country. Here we are now dealing with a modern Shylock. Whatever charges may be levelled against individual land owners now and in the past, they are as nothing compared with those that can be levelled against the financing companies. Here, indeed, we are faced with usury at its very worst, naked and unashamed.
1630 The Amendment which it is proposed to move asserts that recent legislationconfers upon residential tenants of leasehold houses security of tenure on a fair and practical basis …Where do the sponsors of this Amendment get this idea that the last Act dealing with this matter, which was passed in this House, gives to the individual holder of a lease:security of tenure on a fair and practical basis"?It is for that reason that they propose to decline to give a Second Reading to this Bill.
I know of several instances of estate owners disposing of their interests to private finance corporations. They operated in Rhondda. In every case these transactions between the land owner and the financier take place at a price much lower to the financier than ultimately to the individual householder. I know of estates that were transferred by a land owner in bulk at a rate of from sixteen to eighteen years'purchase, and I have seen those great finance companies offering the properties to the individual householders at from forty to forty-five years' purchase. That is why I call this practice rotten and unashamed usury at its worst. There is not in these transactions between the land owner and the financier on the one hand, and the financier and the tenant on the other, one scrap of human feeling, nor a conception of what is just and equitable.
I appeal to the best in this House. I know of no greater occasion than when this House sincerely attempts to deal with a vital matter. Is it possible for the House to do that today? Here is a human problem. There is nothing of more importance to this country at the moment than this matter. This situation has grown up within the conditions in which our country became great and powerful. Here is an opportunity for us, if we will, to agree that something not only need but should be done to adjust matters, and give to the suffering tortured people throughout this land some easement in their minds and enable them to face the future with a little less fear than that which burdens them now in their everyday lives.
§ 12.17 p.m.
§ Mr. W. T. Aitken (Bury St. Edmunds)
I intend to intervene only briefly in this debate, as this problem has been thrashed out pretty thoroughly over the past few years. The hon. Member for Cardiff, West (Mr. G. Thomas) spoke with great sincerity, and I felt that his references to the debate on the Leasehold Property (Temporary Provisions) Act, 1951, were almost in the nature of an apology to Western Ground Rents for his past inaccuracies.
I have a dual personal interest in the hon. Gentleman's references, and he has referred to both of them. He blamed the "Daily Express" for the inaccuracy of his information. It would be a happy thing if I could say that in 1938 when the story was published about the transaction to which he referred the "Daily Express" was the only newspaper which had that story at that time. But exactly the same story was in the "Daily Herald" the "Daily Mail," the "Daily Telegraph," the "News Chronicle" and other newspapers.
I have a very clear recollection of the announcement in the Press. The only major inaccuracy in the statement—and it appeared in all the newspapers—concerned the number of houses actually taken over by Western Ground Rents. Anybody who knows anything about newspapers will have appreciated quite clearlythat that story was obtained from a news agency. It was obviously based on some investigations by an agency or an individual journalist in Cardiff and sent out to all the newspapers
That was the only major inaccuracy in the story. I suppose it is only natural that the hon. Gentleman should blame the biggest and best edited newspaper, and the one which is extremely well informed on Socialist affairs in the House, for all his inaccurate statements. I accept that human frailty, and I am glad to assume that in 1938 the "Daily Express" was the only newspaper the hon. Gentleman was in the habit of reading.
§ Mr. Hale
The hon. Gentleman started to say something and did not finish his sentence. He said that he was going to declare a personal interest. I was not a member of the Committee, and I do not know what happened upstairs. Would he say what his interest is? If he is a director of Western Ground Rents 1632 and if he has got a direct financial interest in this matter, I should have thought that his duty to the House was to declare it in the fullest sense. Indeed, he might even consider whether in the circumstances it is desirable that he should take the lead in opposing a Measure dealing with a matter in which he has a direct personal interest.
§ Mr. Aitken
As for the unfinished sentence, I think it will be agreed that an unfinished sentence is not an infrequent occurrence in this House. The only reason I want to intervene is that the hon. Member for Cardiff, West also raised this point and mentioned my position, and I thought that I should declare thatnot only am I a director and a shareholder of Western Ground Rents but I am also a managing director of a subsidiary activity of the "Daily Express," so that I have this dual interest.
May we get back to the 1950 debate on the Leasehold (Temporary Provisions) Bill? The hon. Member for a good many years has very sincerely carried out a campaign for leasehold enfranchisement, but he has made a good many misstatements, and I found it necessary in that debate to tick him off for telling a lot of inexactitudes about the real nature of the leasehold situation in Cardiff. It is a very good thing that this debate is being held now, because surely it is clear that, whatever we feel about leasehold enfranchisement and leases in Cardiff, there is no real urgency aboutthe matter, because in Cardiff there are very few leaseholds falling in.
§ Mr. Aitken
I am mainly concerned with what the hon. Member said about the situation in Cardiff. Several hon. Members have got the impression that this is a desperate situation and that the people there are worried about leaseholds falling in. That is not the case.
§ Mr. Callaghan
Will the hon. Gentleman tell the House when he was last in Cardiff, and how many visits he has paid 1633 to Cardiff in the last ten years to test the accuracy of his statement?
§ Mr. Aitken
I have been to Cardiff on many occasions. I was there during the war, and I have been there since the war. In the last three or four years I have been to Cardiff at least a dozen times.
MayI get back to the general thesis? I have no doubt that all this will be thoroughly discussed this afternoon, but there is one thing which I should like to take up with the hon. Member for Cardiff, West when he talks about these landlords. Who are these landlords, and why are there so many landlords who are now finance corporations and not individuals? One reason is death duties. Owners of big estates have to sell them or lose their property. That is why many of them sell out to finance corporations. Who are the real owners of these leasehold ground rents? They are often pension funds, both trade union and industrial, and insurance companies and other investing institutions big and small. It is a favourite investment of trade unions, of industrial societiesand of insurance companies.
There are literally hundreds of thousands of people in this country of very humble means, and those with great possessions too, who have an interest in the leasehold system. If the hon. Member's Bill becomes law, it will be a tremendous blow to very large numbers of these institutions, and particularly to pensioners, because it is their favourite investment. They are the landlords. They have bought these ground rents at prices which take into consideration the reversion. They must have done so. because the system for investing money is the same as buying and selling stocks and shares. Whether we approve of that or not, it is the existing system. So long as those conditions exist, the people buying these things accept it and base their savings on it, and if it were to be terminated I think that they would feel that they ought at least get fair compensation for their holdings.
§ Mr. Mainwaring
Is the hon. Gentleman now stating his agreement with the proposition which I made, that we are now no longer dealing with the landlord class at all but with a group of finance corporations?
§ Mr. Aitken
I think that is happening more and more. I agree with the hon. 1634 Member that in many cases it is often better for the tenant if the individual landlord is on the spot so that one can see and deal with him. But the situation is that these landlords have to sell their properties or otherwise be caught for death duties.
§ Mr. Callaghan
As the hon. Gentleman has brought up this question of shareholdings, can he tell us what the facts are about the shareholdings of the Marquis of Bute? He is reputed to be the largest single holder in Western Ground Rents and has given Western Ground Rents some millions of pounds. Can we have the facts?
§ Mr. Aitken
I gladly answer that he has no interest in Western Ground Rents at all. In the beginning he did have a mortgage [Interruption.] Are we discussing this Bill or not. First the hon. Gentleman says that I should not be discussing something in which I am personally interested, and now he is pressing me to do so. I do not think it is very relevant to go on discussing my own personal interest in the matter. I have dealt with that.
What I want to leave in the hon. Gentleman's mind is that the leasehold system is something which has existed for many years. If it is tampered with or drastically altered without a great deal of care, it could be the cause of financial chaos in this country. Not only will it cause immense difficulties for all kinds of people, but from the point of view of his own party he ought to consider carefully what their policy is on this matter.
When the hon. Gentleman's party were in power they were in the habit of creating leaseholds all over the country. It was found to be a convenient system. What the hon. Gentleman for Cardiff, West has suggested is that it would be very nice if people could get their freeholds for practically nothing. He has himself explained that he had a personal interest in this matter too, but surely he was not under the impression that he was buying something that was a freehold property.
§ Mr. G. Thomas
I would have much preferred to have been able to get the freehold in Cardiff, but it was absolutely impossible.
§ Mr. Aitken
I quite agree with the hon. Gentleman. I think that it would have been much more desirable from his point of view. I think people should realise that if they want to buy freehold the landlord is usually very willing to sell, and provided he purchases from the landlord when the lease has a good many years still to run he is then often in a very strong position to bargain. It is really when it comes to the end of the lease that the landlord comes in for criticism from the hon. Gentleman. Who is that landlord? He is not the chap who has benefited from 90 years of industrial development, as has been stated. He is the finance company, the pension fund or the insurance company which bought the property quite recently with the idea of getting the value of this reversion. That is a different kind of landlord. Allthat he has done is to buy something now producing a yield to future value just as he would make any other kind of investment. The difference between this transaction and buying stocks and shares is that he has paid the other chap for the benefit of the leasehold and the ground rent. What does he do with it?
§ Mr. Mainwaring
I should know very well what to do with it. It is the financial landlord who buys the estate.
§ Mr. Mainwaring
The fact which we are up against is this. The financier agrees with the estate owner to purchase the whole of that estate, and he does so on a limited number of years'purchase. Then, in turn, he exacts from the poor individual leaseholder twice or three times as much as he paid. Please do not think that is an exaggeration.
§ Mr. Aitken
I should like proof before I accept part of the hon. Gentleman's statement. Anyone who buys something in bulk always buys it cheaper than if he bought it in penny packets. The hon. Gentleman raised this issue as a very serious moral issue. It is not a moral issue at all but simply a question of what is practicable. If the previous Government or this Government were converted by the hon. Member's arguments—and he never converted his own Government—the only possible way in which they could do it would be by buying the reversions at their real economic value. If the 1636 Government are prepared to do that, I think that it would be the only good argument for leasehold enfranchisement.
To my mind, it really would be a most appalling mistake for any political party to carry through a project advocated in the Bill because the chaos caused would be a disaster for all sorts of institutions which are not relevant to the objectives which the hon. Gentlemanhas in mind. One can always pick out cases and say that so and so has been badly treated by his landlord, but, as the hon. Gentleman knows, there are many landlords both private and institutional who treat people quite well. In all these circumstances, Ishould be very surprised indeed if this Government or any other Government could ever agree to a Bill of this sort going on the Statute Book.
§ 12.30 p.m.
§ Sir Patrick Spens (Kensington, South)
I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:this House, having in mind legislation passed in the last Session, which confers upon residential tenants of leasehold houses security of tenure on a fair and practical basis, declines to give a Second Reading to a Bill which proposes an inequitable and ineffective solution to a problem already satisfactorily dealt with otherwise.I speak again on this subject which is one on which I have spoken more times during the last Parliament and this Parliament than on any other. I have also listened to more speeches on this subject than on any other, and I cannot help noticing that sitting opposite to me are a large number of hon. Members who served on Standing Committee D when we considered the Bill, which is now an Act, that was brought in last Session.
Of all the discussions which have taken place on leasehold enfranchisement, I think that in the discussion which we had on the first day of that Committee, when the case was put forward by the two hon. and learned Gentlemen who had been Law Officers in the Labour Government, and by a number of other hon. Members, it was put as forcibly and as completely as it possibly could have been. None the less, it still did not convince me. Not unnaturally, the claim for leasehold enfranchisement comes from Wales where, I believe, it started in the 1880s, and from there it spread generally over the country, 1637 and has since been renewed on many occasions.
If I may give a personal experience, I remember that at the very beginning of my legal training in 1907 and 1908, I went to one of the great City firms of solicitors to learn something about that side of the profession. Those solicitors acted for Lord Carrington, afterwards the Marquess of Lincolnshire, who was the Liberal Minister of Agriculture in Sir Henry Campbell Bannerman's Government, who wished to find out whether it would not be a good thing to introduce leasehold enfranchisement for the agricultural land of this country.
One of the first jobs that I was ever given to do was to communicate with many hundreds of farmers all over the kingdom to find out whether or not they desired to have the right to enlarge their then yearly tenancies into freeholds. As no such Measure was ever introduced into the House by that Liberal Government, it is obvious that the answer of this type of tenant was against any such idea. None the less, of course, it has been the plan of the Liberal Party and also, I think, of some sections of the Labour Party, some of whom, in their early days, professed the Liberal faith, to press for leasehold enfranchisement as a general principle. But, of course, that is not what this Bill does, and I will come to that afterwards.
All that one can say about leasehold enfranchisement as a general principle is that, not only in this country, but wherever British law has gone, the leasehold principle has been found useful. Likewise, it has been found useful right down the centuries in this country. It is being used today, in one form or another, all over our Colonial Empire. The suggestion that the leasehold system should be brought to an end is a very serious one, and one which would obviously have to be taken up by any party only after the most careful consideration.
§ Mr. Mainwaring
There is no suggestion that the leasehold system should be brought to an end, but only that there should be facilities for the individual to purchase the freehold.
§ Sir P. Spens
That would be a very serious alteration to the whole of the leasehold interest, as it now obtains here, 1638 and throughout the whole of the Dominions. It would be a much simpler matter to put into draft leases, as I managed to do times without number in my own conveyancing days, a right of first refusal if the landlord decided to sell. But to give the tenant a right of purchase at any other than the proper market value is almost an impossible condition to put into any lease without seriously damaging the whole leasehold system.
It has to be realised, of course, and I have always realised it, that here our generation were up against the fact that the whole bulk of the long leases under which the country was developed during the time of William IV and in the early years of Queen Victoria, were liable to come to an end, and they have been coming to an end during these twenty or thirty years. As I have said before in this House, I have always believed in the long leasehold system.
What was the situation? It was that we had landlords with agricultural land receiving a small agricultural rent in respect of that land. Then came the demand forhouses, either because the industrial towns were growing or because, as in the case of Wales, industrial towns had to be created on account of the minerals that were being discovered and worked, and so forth. Houses had to be provided. The workmen themselves could not provide them. They had not the money wherewith to do that.
When people say, as they constantly and loosely do—indeed, one hon. Member has already said it today in this Chamber—that it was the predecessors of the persons living in the houses today who actually built the houses, they are, for the most part generally wrong. The system was that someone had first to persuade a landlord to let his agricultural land, which many landlords did not want to do. Then someone had to be foundto build the houses. It was done in this way. The landlord let the freehold to a builder on a 99-year lease at a small ground rent, which was two, three or four times the ordinary agricultural rent. It was the builder who built the house and paid for the whole block of houses and the ground rent he paid to the ground landlord. Having built the houses he then let them to people to live in them—
§ Sir Lynn Ungoed-Thomas (Leicester, North-East)
I am sure we do not want any dispute on fact on something which is perfectly simple and well-known to us all. The right hon. and learned Member for Kensington, South (Sir P. Spens) will recognise that if the builder let the house, as contrasted with the land, he had an occupational rent. We are not concerned with the occupational rent.but with the ground rent. We are concerned merely with ground rent. There are cases, as has been indicated, where the ground landlord sold to the tenant.
§ Sir P. Spens
One gets the ground rent, and an improved ground rent, but, of course, there were cases—in Wales more than elsewhere—where the builder sold to the tenant. Equally, there were cases, for instance in my area in Kensington, where the freeholders were wealthy enough to put up the houses themselves. In some cases they let them on long leases, which are now falling in, and in some cases they sold them.
§ Mr. Charles Doughty (Surrey, East)
Is not my hon. and learned Friend in error in saying that they sold the houses? They sold the leases, which is something quite different.
§ Sir P. Spens
We have every variety. Sometimes they have built the house and sold the freehold. Sometimes they entered into long leases. We have every sort and kind of operation. What we are concerned with now are persons who are in residential possession today of houses which have been let for twenty-one years or more, originally. That is the only section we are dealing with here; indeed, we are dealing with a much smaller section in this Bill.
As to leasehold enfranchisement generally, if it is to be pleaded for it must be pleaded for altogether. We cannot possibly give a right to one small section and not to everyone. Speaking from my experience, since we passed the Act last Session letters of complaint I have received have, of course, been from tenants of houses which did not come within that Act and do not come within this Bill. If we give a right we must give it to everybody.
1640 The hon. Member for Cardiff, West (Mr. G. Thomas) talked all the time about leasehold tenants as if this Bill applied to everyone. Of course, as I am sure he well knows, it applies only to a very tiny section of the population—exactly the same section of tenants to which Section 1of the Act passed last Session applies. Those are persons in occupation of houses which would be controlled under the Rent Acts had their rents not been so small. That is the only section with which the House is dealing today. All this general talk about leasehold enfranchisement—into which, I admit, I have myself entered—is really not directly concerned with the very small extent to which this Bill goes. If the hon. Member for Rhondda, East (Mr. Mainwaring) and the party opposite were to establish the principle for that very small section, that would be the thin end of the wedge. No doubt they fully appreciate that and, therefore, press it.
Admitting the difficulty—it is a great difficulty—that these long leases would all come to an end more or less at the same time, and at a time when housing conditions were extraordinarily difficult, something obviously had to be done about that very small section of persons. What was the fair and proper thing to do? The fair and proper thing, surely, was to say, "You people happen to have been tenants under a system by which you pay a very small rent so that you are not protected by the Rent Acts. Therefore, the right thing to do is to do what we did for other persons we wanted to protect," and give them the protection of the Rent Acts. I hate the Rent Acts—
§ Mr. Barnett Janner (Leicester, Northwest)
Would the right hon. and learned Member please explain the difference between the type of tenancies covered by the Rent Acts and those intended to be covered by this provision? There is a very substantial difference.
§ Sir P. Spens
I am talking generally. Hon. Members opposite say we should give this tiny section of tenants this very special privilege of a legal right to buy the freehold. I say that that is utterly unfair. If we did that surely we ought to give that right to other tenants of protected premises.
All of us know of families which have been living in protected tenancies since the provisions were made in 1914. 1641 Families have been living in protected tenancies for at least 40 years. Surely it is unfair to give this little section the right to buy their freeholds and not give it to all protected tenants. The fair and proper thing to do is what the Government did last year—to put these tenants in exactly the same position as protected tenants and say, "You shall have the protection of the Rent Acts on fair terms."
I know that the hon. Member for Leicester, North-West (Mr. Janner) thinks the 1954 Act is a hard Act from that point of view, but that is the law. Speaking generally, I say that it is much fairer to make these tenants protected tenants than to give this little section the right to buy the freehold.
§ Mr. Mainwaring
I will give the right hon. and learned Member an example. In a road of 100 houses there is one owner-occupier. Was it unfair to the other 99 to give the single owner-occupier the right to purchase his freehold? What has it to do with the 99? They do not want either the lease, the freehold or the house.
§ Sir P. Spens
We could argue this for a long time, but put the question the other way round. Supposing that of the hundred tenancies all are protected under the Rent Acts except one, because he happens to be a tenant under a long lease and will be turned out by the landlord at the end of the lease. We have put the odd one in the same position as the whole of his neighbours. We think that is the right thing to do, but hon. Members opposite do not agree.
Why should this special privilege be given to this group of tenants? The proviso to Clause 1 recognises that they must have been there for at least ten years. That is very arbitrary. Why ten years? It is like the question that arose on the Act passed last Session—why twenty-one years? Ten years is very arbitrary and must act most unfairly among different people. Those advocating leasehold enfranchisement put forward a different solution on every single occasion. The full value of the reversion as being the fair sum to offer has gone. Now it is a twenty years' purchase of the ground rent. That may be fair in one case and unfair in another case. There cannot be a standard yard- 1642 stick for the right to purchase which will not work out with the greatest unfairness between different persons.
Then, again, if the right is given to purchase all down to the freehold—to purchase the superior interests to the actual occupation tenancy of the property—there may be three, four or five superior landlords to buy up. I gather that the tenant has to pay only one sum of money and that those entitled to superior interests have to fight for the division of that money between them. Whether the idea is that it should be paid into court in some way, leaving the superior interests to fight for it, I am not clear.
The truth is that it is an impracticable scheme and, in my view, will not work. The Bill is drafted on the basis of the hard cases, and there are hard cases as I know very well, but I am sure that this is not the solution. It is drafted also on the basis that landlords in the main are unkind. I do not believe that. The bulk of the landlords of this country desire their property to be kept up and they desire good tenants for it. The result is that the good landlord, the insurance company, the person who buys from the individual who has to sell to save himself death duties or, much more generally, because he cannot afford to maintain that part of his property which falls on him—roads, and so forth—desires to maintain the estate in good condition with good tenants.
Mr. Speaker, I ought to say here that I am a director of an insurance company and am frightened, therefore, about what has happened in this House. Of course, being a director, I am also a shareholder in my director's qualification, but I think we are probably as much tenants as landlords, so that we are fairly impartial, I hope.
As my hon. Friend has said, the ordinary landlord of that kind is always ready to negotiate with good tenants as regards the future. Every day the tag-ends of the last ten, fifteen or twenty years of these long leases are being surrendered to landlords, and the tenants are being given the option of either purchasing or having another long lease at an agreed rental. As a rule, of course, this is higher than when the lease was granted a hundred years ago because, apart from everything else, the value of money has changed. If, in addition and 1643 as is generally the case, the landlord has had to do a great deal of work on the premises, it is not unreasonable that the tenants should have to pay a higher ground rent than the one they have been paying, and few tenants in these days resent that.
Therefore, I believe, and I feel strongly, that the best way of dealing with the difficult problem of the falling in of these leases, is what we did last year; that is to say, to give the tenants the advantages of the protection of the Rent Acts, provided that, in their own interests, and in the interests of the country, the houses shall be put into reasonable repair. That is an essential provision.
I realise that the provisions of the Act of last Session can be abused, that it can be made difficult for tenants, but we have to look at the national interest. It is useless to go on building houses if we are to allow all the old houses to fall into disrepair, and there is nothing which needs more looking into than the end of these long leases. The old theory of the 99-year lease was that the house went back to the landlords at the end of that period. He then renovated it, brought it up to date, if it were still standing. Of course, a large number of these houses were not expected to stand for more than a hundred years. That was one theory of the 99-year lease.
The other theory in justification of the system was that they would go back to the landlords, whom our ancestors vainly imagined would be as well-off a hundred years later as they were in those days, and would be able to afford to do the renovation. Of course they are not, so we have had the intervention of the insurance companies, the finance companies and all the other investors, who have become ground landlords.
By and large, I believe that the system works, and is still necessary because long leases and building leases are being granted today just as much as ever, although the subject matter of those building leases is much more offices and shops and buildings of that kind than residential premises. The system is necessary for the country, and I believe that the right solution is the one we adopted last year. At any rate, I remain completely unconvinced that the solution is leasehold enfranchisement.
§ 12.58 p.m.
§ Mr. Arthur Skeffington (Hayes and Harlington)
We on this side are grateful to the hon. Member for Cardiff, West (Mr. G.Thomas) for carrying on the leasehold fight by means of his Private Bill. The House is grateful to the hon. Member for many services in the past and is indebted again to him today. I was glad that he referred to some of the voluntary associations which have been carrying on this fight. He mentioned the London Leaseholders Association, and I am glad he did so, because the work of trying to protect the interests of occupying leaseholders is a thankless and unrewarding one, it has always seemed to me to be in the nature of a rather heroic endeavour.
I can remember, when the Uthwatt Committee was investigating this problem, how all the property interests were well mobilised to see that their views were put properly before the Committee, but because leaseholderswere scattered all over the country it was difficult to get their evidence. I remember Lord Uthwatt saying to me, "One of the difficulties is that we know there is injustice but we have trouble in getting sufficient evidence before us." So the work of such associations as the London Leaseholders Association is very much to be praised.
The Amendment refers to recent legislation and, because of it, suggests that this Bill is unnecessary. The obvious answer is that hon. Members do not sacrifice the good fortune of the Ballot to bring forward a Private Member's Bill unless a real injustice exists. That is the proper comment that ought to be made. Nobody in his senses would waste this precious opportunity unless there were something really substantially wrong that ought to be put right.
My view—I think it is also the view not only of occupying leaseholders but also of members of the public who have been able to study the problem—is that the Government missed a very great opportunity when the Landlord and Tenant Act was passing through the House in not granting a measure of enfranchisement at any rate to some genuine classes of leaseholders, if I may so distinguish them from those who might be merely speculative investors in leases. If 1645 the Government had done so we should have known that, though the slogan:Wise national housekeeping by a Conservative Government will reduce your cost of living.might not be true, the other slogan, "A property-owning democracy,"might be proved to be partly true; but I am afraid that the country has got little satisfaction from either slogan.
It is an unfortunate fact that this is largely a party matter. Generally speaking, right hon. and hon. Gentlemen opposite have always come down in favour of what I can only describe as an archaic, feudal and utterly unfair system. In the debate on the White Paper, the hon. Member for Handsworth (Sir E. Boyle), who has now been translated to higher office, said:I believe the building lease system to have been a valuable one. I hope that system will be maintained in this country …"—[OFFICIAL REPORT, 27th January, 1954, Vol. 522, c. 1801.]The hon. Member went on to say why he did so. The hon. Member for Buckinghamshire, South (Mr. R. Bell), who will no doubt be addressing the House later, also said:I must say that the effects upon the convenience of the nation that would ensue from leasehold enfranchisement would be disastrous."—[OFFICIAL REPORT, 27th January, 1954, Vol. 522, c. 1840.]I hope very much that we shall be able to hear in some greater detail than we did on that occasion where the disaster would lie.
§ Mr. Llewellyn
The hon. Member has been making the point that this is a party issue, but earlier he mentioned the view of the Leasehold Reform Association. I have a letter here in which the Association says:… we do not regard the question of leasehold reform as a party issue …
§ Mr. Skeffington
I would comment on that by saying that the London Leaseholders' Association, although it has many individual Conservative members, has for three years been searching for a Conservative Member of Parliament who will publicly say that he is committed to the principle of enfranchisement. If the hon. Member is prepared to offer himself as a candidate for a vice-presidency of the association on the terms of enfranchisement on the basis of 20 years' purchase or the granting of leases for 999 years, I 1646 should be very happy to make his application known to the secretary.
§ Mr. Llewellyn
I am sorry to interrupt the hon. Gentleman a second time, but, as he appears to be unacquainted with the facts about this matter, I would point out to him that the secretary for many years of the Leasehold Reform Association in South Wales sent me a mesage of support at the General Election.
§ Mr. Skeffington
I am glad to think that in South Wales the position is very much better than it is in London.
§ Mr. Skeffington
I can, however, only restate the fact that in London we have been unable to find a Conservative Member of Parliament who is prepared publicly to support the principles of leasehold enfranchisement. I am sorry that that is the case, because we have many Conservative members and I do not like an organisation to appear to be supported merely by Liberal and Labour Members of Parliament. Perhaps what I have said may induce some hon. Gentlemen opposite who are less timid than others to come forward.
However, it seems on the evidence of the debate on the White Paper, on the evidence that we had in Committee and from the speech to which we have just listened from the right hon. and learned Member for Kensington, South (Sir P. Spens), that the Conservative Party in general, like the Bourbons, has learnt nothing about this problem despite the completely changed conditions of the 20th century and the ideas on the nature of contracts and the different responsibilities which now ought to be exercised by public authority rather than as a result of bargains between individuals. The Conservative Government and Conservative Members of Parliament in general still take an entirely old-fashioned view about what I can only describe as this feudal system of land relationship.
It really will not do for the right hon. and learned Member for Kensington, South and other hon. Members opposite to pretend that this is only a mild injustice and that it does not really provoke very much interest. If that were so, the House would not have had no fewer than 16 previous attempts—my hon. Friend's attempt is the seventeenth—to 1647 deal with the matter by means of a Private Member's Bill. Indeed, it is on the record that Royal Commission after Royal Commission, even before 1900, strongly expressed views against the leasehold system which show what people thoughtof it when it might have had greater justification because of the absence of many of the factors which now exist. We find the most representative commissions and committees condemning in general the system of building leases. I wish to refer, briefly, to two Commissions which put this point of view emphatically and unambiguously.
First, there was the Royal Commission on the Housing of the Working Classes in 1884, of which Cardinal Manning was a member. Ten of the 15 members, including Cardinal Manning, said this in their final Report:The prevailing system of building leases is conducive 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; and that 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.That was said by a very representative Commission in 1884, and one of the signatories to the Report was Cardinal Manning.
§ Sir P. Spens
Lord Salisbury dissented. The hon. Member has not read the dissenting opinion, which is supposed to represent the contending view at that date, although, of course, there is no reason why he should do so.
§ Mr. Skeffington
I am grateful to the right hon. and learned Gentleman. I do not desire to mislead the House. There may have been dissentients, but 10 of the 15 members took that view and I should have thought that that was a fairly strong and representative opinion.
There was also the Select Committee on Town Holdings. In its Report in 1889 it said:by ensuring security of tenure Leasehold Enfranchisement would encourage improvements to property, especially by business tenants … would promote habits of thrift among members of the working classes; and the community would benefit by an increase of freeholders.Those are two views which were expressed more than 50 years ago. It is astonishing 1648 to me to find in this House in 1955 these obsolete social views being expressed and defended by hon. Members for one reason or another.
The Amendment refers to recent legislation which it describes as "fair and practical."My hon. Friends and I think that the Landlord and Tenant Act, 1954, in so far as it deals with residential property, is still not fair, and, indeed, there may be some considerable question as to how far it is practical. The Bill does not say anything about the arrangements under the Landlord and Tenant Act for business premises. We must agree that in the case of business premises a very considerable advance was made. However, we are not dealing with business premises today, and presumably the Amendment refers only to that part of the Landlord and Tenant Act which deals with residential premises.
What, then, are the three outstanding defects, even after the passing of the Landlord and Tenant Act, 1954, as far as residential property is concerned? If the tenant is lucky, and if in the best combination of circumstances certain things occur, he can become for certain purposes only—that is important—a statutory tenant. That does not in fact mean any considerable modification of the existing leasehold system. The occupying leaseholder's house, which perhaps was built by his forefathers or someone else, still goes to the freeholder. There is a delay, but the house still goes to the existing owner of the freehold. The leaseholder becomes only a statutory tenant and presumably there may be one transfer of tenancy upon his death to a near member of his family under the Rent Acts. But after that, the house goes at once to the freeholder who has never spent a penny piece on maintaining it. He gets a house not built as a result of his activities, but of those of other people. I cannot raise much enthusiasm for a system which merely delays—I will not say the return, because it has never belonged to the freeholder—the gift of the house back to the freeholder.
Of course, the occupying leaseholder may well not become the tenant, because if the landlord can prove that he wants the site for re-development, then the occupying leaseholder, when his lease is up, is out in the street. In the majority of cases of property over a 100 years old 1649 it will be much to the economic advantage of any landlord to say that he wants it for re-development. So that provision in the 1954 Act does not have a great deal of substance. In any case the tenant can still be got out under any of the other conditions which operate under the Rent Acts. Thus even in the best circumstances the position of the tenant is not very substantially improved. Even worse is the fact—and here the Government have been guilty of deception, because nobody on this side who read the White Paper thought this would be the position—that, although the occupying lessee becomes the statutory tenant, he does not have the protection of the Rent Acts for the rent he pays.
Much to our surprise, when we came to a detailed examination ofthe Bill in Committee, we found that the tenant could stay on, not at a controlled or statutory rent, which would have been considerably more than the ground rent, although one can make a case for that, but at the market rent. If the occupying lessee and the freeholder cannot agree, the matter goes to the county court and the directions to the county court judge are to fix the market rent. This means that if a man whose lease is up can stay on because the landlord does not prove that he wants the premisesfor redevelopment, he has to pay the market rent. Those with small incomes—and there are old-age and other pensioners in many of the leasehold properties, because it was a system by which they could get a house 30 or 40 years ago—will not be able to pay the market rent. The association to which I have referred, and of which I am a president, already has examples where people cannot stay on because they cannot afford to pay the market rent. This causes considerable injustice and hardship.
Thereis a further injustice. Even if the leaseholder can become a statutory tenant he still has to pay for dilapidations. It is perfectly true that the monstrous schedules of dilapidations which used to be served by many freeholders are no longer possible. One no longer would be able to get a court to accept that the polishing of a lavatory seat, which I have seen demanded in schedules, is absolutely necessary, nor that the tenant ought to sandpaper gas pipes, which I have also seen required by a schedule. Nevertheless, with old 1650 property, even if it has been maintained as well as most people can maintain this sort of property, an expenditure of £300 in London and elsewhere is not out of the way. So in addition to paying the market rent, the tenant will then have to pay for dilapidations, by instalments it is true, but the market rent plus instalments for a debt of £300 or £400, may amount to a very heavy burden. We already have evidence, because the Act is beginning to operate, that there are a number of small income lessees who just cannot pay the market rent plus instalments for repairs.
The right hon. and learned Member for Kensington, South was cautious in his support of the Landlord and Tenant Act, although he made it the substance of this Amendment. He cannot derive very much satisfaction if he looks at the matter not, as is only natural for him, as a property owner, but from the point of view of a tenant. These are the first great injustices which we perpetuated by recent legislation, and it is one reason I want the system altered.
Another defect concerns restricted covenants. It was hoped that it would be possible for the Government to consider some kind of model contract between the parties, but that suggestion has been rejected. In the 20th century it is quite wrong that restrictions which are still commonly put into leases should, in general, for residential property of this kind, for small houses, be a bargain between the two parties. If they are necessary in the interests of good development of an area, they should be drawn up by the proper authority, the local authority, or under the sanction of Parliament. They should not be fixed by a bargain made between parties who are often unequally represented and certainly have unequal power when the contract is made.
I do not want to weary the House with a large number of examples, although they continually arise. There was a recent example in Maida Vale where the freeholders made a man take down a nameplate which was six inches by three inches because it was against one of the clauses in his contract. It seems to be a quite unwarrantable interference with the liberty of the individual. There was a case in South-East London where there was a large leasehold house owned by a doctor whose family had all married 1651 and left. Knowing that many people were desperately in search of accommodation, it was sensible for him to let the upper portions. Unfortunately, the freeholders' bailiffs saw a gas stove going into the house. The moment that they found the house was being sub-let they ordered the gas stove to be immediately removed and told the doctor that if he persisted he would be taken to court, and there is no question but that on the terms of his lease the freeholders had every right to do that and could have turned the doctor out of the house.
I know of two cases where estate owners have taken the parties to court because they had been sub-letting in a large house. There was no question of overcrowding, but simply because subletting was contrary to the contract. Then one gets a type of interference which I call the Paddington type, and I have referred to it before. It was the case of a lady with a lease in Paddington. The lease came to an end in 1953 and was renewed only on condition that she gave a single lady lodger, who was a very respectable woman, notice to quit. The lodger naturally took the case to the Rent Tribunal for security of tenure and the chairman of the tribunal said this:So to please them,"—that is the freeholders—a perfectly good woman is to be considered undesirable, and we are faced with the fact that if we give her the protection of the Rents Act we deprive the landlady of her lease.That kind of sanction and that sort of power is not one that should be left in the hands of private individuals in the 20th century. If there are to be arrangements about the numbers and types of people who should occupy a house, they should be fixed by a public authority which is responsible to the electorate and where these matters can be subject to public opinion.
The right hon. and learned Member for Kensington, South talked about the usefulness of the leasehold system. It is an astonishing fact that outside this country and one or two of the Colonies—though I am glad to say that in some Colonies there is no leaseholding—there is no part of the world where this feudal system of land holding operates. It is only in Great Britain, and in some of the Colonies where this iniquitous system has 1652 been followed, that one finds it at all. It is not to be found in Europe or in North or South America. It is something which is peculiarly traditional to ourselves—a kind of feudal ownership of land.
We hope that it will not be very long before public opinion forces an alteration. We on this side—and I hope that we will be joined by the hon. Member who got support from one of the associations in South Wales—take as our point of view that which was expressed by the signatories of the Minority Report which considered these questions. That report says:… the conclusions of the Majority Report are based on fundamental tenets of the rights of landlords which we donot share. On the contrary …and this is the part of our case—that in the changed social conditions there ought to be a new attitude on the part of the Government—… 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 …in our view, the time has come to recognise that, in general, tenants have a more special and specific interest in their homes …than their landlords and to express this interest in terms of legal rights.I am glad to see that the Opposition, in their policy statement "Challenge to Britain", have made it clear that a method of leasehold enfranchisement will certainly be introduced by the next Labour Government if the House should be unwise enough not to give a Second Reading today to this most desirable and just Measure.
§ 1.23 p.m.
§ Mr. David Llewellyn (Cardiff, North)
I should like to start by correcting a false impression which I have given to the hon. Member for Hayes and Harlington (Mr. Skeffington) and the hon. Member for Cardiff, West (Mr. G. Thomas). The last thing that I would wish to have suggested is the one which I am afraid I did suggest, and that was that I had official backing from the secretary of the Leasehold Reform Association of South Wales. The hon. Member for Cardiff, West interjected, "I did not get one,"and that at once suggested that I had claimed a great deal more than I had intended.
In fact, the message of support which I had was from someone who was for twenty years secretary of the Leasehold 1653 Reform Association of South Wales. I should not have implied—and I apologise for it if I did—that I have in any way either invited or obtained the official blessing of the Leasehold Reform Association of South Wales. I should like to make that clear because I would not, on the few occasions when I address the House, wish to mislead it.
The hon. Member for Cardiff, West has rendered a good service to this House in that he has enabled many aspects of the leasehold problem to be put forward. I for one had not realised how limited the scope of the Bill would be in terms of the number of beneficiaries until my right hon. and learned Friend the Member for Kensington, South (Sir P. Spens) intervened.
As I listened to the hon. Member for Cardiff, West and the hon. Member for Rhondda, East (Mr. Mainwaring) I could not help thinking that, although their oratory was directed against this side of the House, one was really listening to the echo of an indictment of their own party and of the insensitiveness of their leaders when they were in power to the pleas which they themselves put forward.
§ Mr. Skeffington
I am not interrupting the hon. Gentleman to get my own back, but he spoke of the insensitiveness of our leaders. Does not he agree that what happened under the Labour Government was that a number of representations were made as a result of which a Departmental Committee was set up and that when that Committee reported, in order to get a balanced Bill, temporary legislation was introduced.
§ Mr. Llewellyn
In replying to the hon. Gentleman's kindness, I will not seek to deprive him of any of the details of which he reminds me. Throughout the period from 1945 to 1951 tactics of delay on this problem, which assumed classical proportions, were so successful that leaseholders in London, Cardiff, and elsewhere should bear them in mind—as the hon. Member invited me to bear them in mind—as they examine the claims of hon. Gentlemen opposite to political piety in this connection.
On one occasion the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) said, "Why look into the crystal when you can read the book?" For a 1654 few minutes I want to direct the attention of the House to some significant chapters in the story. It was on 20th December, 1945, when many hon. Members were pressing conscientiously for reform from their own Government, that the then Attorney-General said in this House that he saw no need for further inquiry into the law affecting the owners of small dwelling houses. I suggest that that got the third Labour Government off to a rather bad start in this respect. On 20th March, 1946, Sir Charles Edwards, who was a much loved Member of this House, suggested a form of enfranchisement in a Parliamentary Question, and the Attorney-General replied:I do not think that such a restriction on freedom of contract would be in the public interest."—[OFFICIAL REPORT, 20th March, 1946; Vol. 420, c. 380.]
§ Mr. Llewellyn
I am a man of fairly moderate speech. That is the hon. Member's adjective.
On 8th May, 1946, the hon. Member for Cardiff, West, who has been an earnest advocate of leasehold enfranchisement, was told by the then Attorney-General that he could afford no priority for leasehold enfranchisement. On 12th March, 1947, the then Prime Minister told the House, notwithstanding the eloquence of the hon. Member for Hayes and Harlington, that no useful purpose would be served by a Royal Commission.
It was not until 23rd February, 1948, that the members and terms of reference of the Leasehold Committee were announced. In June, 1949, came the Interim Report. In the same month, on 27th June, the then Solicitor-General told the House that the Government proposed to defer a decision until the Committee's Final Report. Then we come to 24th July, 1950, when the sands of the Government were running out. There we find the then Attorney-General not yet in a position to make a statement and saying that the memoranda of evidence before the Committee would not be published.
I pause in this saga of delay to challenge once again the wisdom of this decision, which has since been confirmed. 1655 We learn, for example, from paragraph 65 of the Majority Report that:The Government Departments concerned are unanimously opposed—usually for reasons of management and planning—to any measure of enfranchisement …In page 161, for those who care to check on these Departments, are given the names of the ten Government Departments concerned. In paragraph 66 of the Majority Report, we are given the gist of the evidence that was given by the trade union movement, and in paragraph 83 of the Minority Report that evidence is given in more detail.
I should like to quote from that paragraph to my hon. Friends and to the House:We quote from the evidence of the Trades Union Congress referred to in the Majority Report: 'After all, for most self-respecting people, the home (at all events if a good one) and all that it stands for represents their most cherished material possession. Upon the bricks and mortar, the piece of garden ground and the beauty, warmth, comfort and convenience of the place, may depend the greater part of the happiness of the family life. This is a factor in the building of human character'.To that view I completely subscribe.
If we are allowed to know the general view of the Departments who opposed leasehold enfranchisement when the Labour Government was in office, why are we not allowed to know the details on which that view was based? Equally, we are told the views of the various property-owning bodies, professional associations, and so on, but why can we not examine the basis of those views as given by them and not by their opponents?
§ Mr. Hale
The difficulty that wehad to face in taking evidence was a very real difficulty and one which goes to the root of the whole problem. Of course, there were organisations of property owners and companies, who could employ counsel; there were all sorts of opportunities to express the landlords' view. There was no organisation of tenants. These little individual tenants were stretched out in various villages all over the country.
This affects the political question, too. The dilemma of the hon. Member, who speaks with courage and sincerity, I have no doubt, is that unfortunately, in this House of 615 constituencies, 500 have no 1656 concern with this matter. They do not have it in their constituency, so there never has been the concerted political pressure which one gets on a political problem. It must come from constituencies like that which the hon. Member represents; that is why the responsibility upon him is rather acute.
We did have difficulty in obtaining evidence from tenants, not because it did not exist, but because the miner in the Rhondda Valley has no organisation for coming before a Select Committee of this House.
§ Mr. Llewellyn
What the hon. Member says is very plausible. In so far as it was difficult to get evidence, I sympathise with the many small people who often find it difficult, if only for financial reasons, to co-operate, but I do not think that the hon. Member is quite seized of the point I was making. What I am anxious to get is the evidence of those bodies which can afford to pay counsel and which probably did so. Why can we not have that evidence? It seems to me quite monstrous that the leaseholders and people of the country have been denied the evidence on which both the Majority and the Minority Reports reached their conclusions.
A case in point is that of the Parliamentary Committee of the Co-operative Congress. We do not have even a general, let alone a specific, idea of the evidence which was given.
§ Mr. Hale
I do not want to dispute what the hon. Member is saying; there is a great deal in it. I should like to see the evidence published, but there are many Departmental Committees, and I imagine that there are questions of cost. I cannot remember the evidence on the particular point—I cannot remember which Government Departments were opposed; but the hon. Member knows the view of the minority.
§ Mr. Mainwaring
Would it not be equally valuable for us to be told the real grounds upon which the Government Departments decided to oppose the idea?
§ Mr. Llewellyn
I agree; that is the point I have been making. It is important that the House should have that information. I am not at all satisfied 1657 with the explanation, "This was a Departmental Committee, and the precedents are this or that." There are indications throughout the Majority and Minority Reports of the tone and trend of evidence given by certain bodies. It seems to me absolutely wrong that the whole of that evidence, as it has been revealed in part and even quoted in part, as I have indicated, should not be given.
On the question of cost, I can give the hon. Member for Oldham, West (Mr. Hale) the information he wants, because I asked for it at the time. The cost of publishing the evidence would have been £1,200, which I do not regard as excessive. In the same yearthere was a little trouble about Bristol Rovers football club and, if my memory was correct, that report was published at a cost of £235. The money would have been well spent and a lot of us would have been better equipped to know what we are talking about in detail were the evidence available.
I return to the question of the delay, which, as I have indicated, is now assuming quite classical proportions. It was not until 6th December, 1950, that we had in the House the Second Reading of a Bill whichhas come to be known in South Wales and elsewhere as the "Lease Freeze Bill."Its scope, of course, was extremely limited. The hon. Member for Bury St. Edmunds (Mr. Aitken) gave figures to the House which have been mentioned today of the two great property-owning companies, one of them with 11,000 houses. I do not think the figures have been challenged since. Of the one company's 11,000 houses, 167 ground leases were due to fall within the next 16 years, and in the case of the company owning 4,150 houses, 56 leases were due to fall within five years. I quote these figures to hon. Members opposite to illustrate, first, the limited extent to which the Labour Party, then in power, tackled the leasehold problem—
§ Mr. Callaghan
The hon. Member has described the gradual salvation of the Labour Party, the way in which, due to the efforts of my hon. Friend the Member for Cardiff, West (Mr. G. Thomas) and others, it emerged from a period in which it did not understand this problem and returned a flat negativeto the problem, to the point where it gradually set up a committee, then 1658 finally put legislation on to the Statute Book and now has declared itself officially in favour of leasehold enfranchisement. Can the hon. Member give a similar saga of conversion for his own Government?
§ Mr. Llewellyn
If I were to start on this interesting subject of conversion, I might embarrass hon. Members opposite considerably, for I might start on leasehold and end up in Committee Room 14.
§ Mr. Llewellyn
I will answer the hon. Member further. He has referred to a process of conversion. That seems to me to be a very adequate confession that, at any rate, he and his hon. Friends were not in a state of grace in 1945 when they secured such a substantial majority.
§ Mr. Llewellyn
I should like to leave the question of conversion. I do not feel particularly in need of any conversion on my own part.
The figures which I have given of the ownership ofproperty in Cardiff also illustrate the concentration of property in too few hands which affronts my own conception of a property-owning democracy. Looking back over the past years, I really do not know of a better commentary on the Labour Party's performance in power than was given in the General Election address of the hon. Member for Rhondda, East in 1950. I have given him notice of my intention to make this quotation, which is not up to the hon. Member's usual standard of oratory.
This is what the hon. Member for Rhondda, East put into his 1950 election address:The Labour Party has had the problem under active consideration for some time and plans are formulated to deal with this outworn condition of past property relations.That is not really up to the hon. Member's usual form, and I suggest that it indicates the degree of anxiety which existed in his mind five years after the Labour Party came to power when he wrote his election address and sought to renew his mandate.
§ Mr. Llewellyn
I can well believe that.
Before I deal with the central problem of the Bill, I want to say a word or two about its proposals, and, first of all, a word about this yardstick of twenty years' purchase. This is, of course, contrary to the recommendation made in paragraph 111 of the Minority Report of the Leasehold Committee. Of course, that does not necessarily make it wrong.
It is contrary to the Bill which was drafted by the leasehold reform associations, in which the period was twenty-five years. It is contrary to the period of twenty-five years suggested by the right hon. Member for Gower (Mr. Grenfell) at the Labour Party Conference in 1947. I point that out because I am sure that the hon. Gentleman did not arrive at this figure without serious mathematical consideration, and I must remind him of the evidence in the teeth of which he has flown.
§ Mr. Llewellyn
It was put forward. Ihave read the discussions very carefully, and I am glad that I am carrying the right hon. Gentleman with me on this. It was also put forward at the Labour Party Conference in 1947, and the right hon. Member for Ebbw Vale gave such a cryptic answer to it that I should not like to say whether or not he was in a state of grace.
§ Mr. G. Thomas
Is the hon. Gentleman in a state of grace to support twenty or twenty-five years as the period of enfranchisement? That can be altered any day. That is dealing with Committee points.
§ Mr. Llewellyn
I do not think that we can dismiss a point of this magnitude as merely something to be discussed during a Committee stage which may never be reached. It is very important that something should be said about it now. I am not going to shirk any question which hon. Gentlemen put to men, but my own view is that the period of twenty years could produce serious inequities.
§ Mr. Grenfell
The hon. Gentleman does not know Wales well enough. Whenever computations have been made, they have been on that basis.
§ Mr. Llewellyn
The right hon. Gentleman is not quite seized of the evidence of people who were in Wales even less recently than he was. After all, these leasehold reform associations have a long history of knowledge of the problem, and they think that the period should be twenty-five years. The right hon. Gentleman himself was telling the Labour Party Conference in 1947 that it should be twenty-five years.
§ Mr. Llewellyn
All right, a difference of five years. I will not quarrel further about that.
My next point is that, in some cases, 20 years'purchase could result in great injustice to the ground lessee. The right hon. Gentleman shakes his head, but I do not think that his information is as up to date as mine. Ground leases are being negotiated in Cardiff every day of the week at grossly inflated ground rents because of the scarcity of freehold land. I am sorry that my hon. Friend the Member for Bury St. Edmunds is not here. It is difficult for many tenants who wish to buy the freehold to do so. My correspondence is occasionally studded with letters from people who want to buy the freehold at the start, and who are not permitted to do so. To have an arbitrary rule of 20 years' purchase in these cases could result in a tenant making a very bad bargain indeed.
The hon. Member for Cardiff, West has been rather twitting me as to the difference between 25 and 20 years. But the hon. Gentleman wrote something in "Tribune" on 6th December, 1946, part of which I fully endorse. He outlined some very interesting proposals, and then said:These proposals I frankly regard as an interim measure. When the land is finally nationalised, the freehold should be compulsorily available at a price settled by tribunals for all dwelling-houses.That is why I say to the hon. Gentleman that on this I stand virtually—exempting the provision about the nationalisation of the land—where he stood in 1946.
§ Mr. Llewellyn
Perhaps I am, but, if I am coming along, then the hon. Gentleman should be very careful not to subtract even by five years from his wisdom in 1946. If, of course, nationalisation is the ultimate goal, then this Bill is only an anaesthetic before the major operation.
I now turn—because I am not sure about this—to Clause 9 (2) which seems to me to exclude that part of my constituency in which, although I say it myself, the hon. Member for Cardiff, West is privileged to live for many reasons not associated with myself. It seems to me that the hon. Gentleman is really guilty of a considerable degree of altruism, because I do not think that he will get any benefit at all from this Bill.
What I do not understand is why, merely because certain sections of the people live on land which has been acquired by the local authority, they should be deprived of a right of enfranchisement. The same thing applies to the—
§ Mr. Thomas
I am sorry to interrupt the hon. Gentleman, but I do not want him to go too far in ignorance. He is not right in his reading of it, and that will be explained a little later in the debate.
§ Mr. Llewellyn
I am always willing to accept correction. In that case, I have misunderstood the provision. I am very glad that I have, because I think that it would be absolutely wrong to exclude those people living on land owned by the local authority from enjoying a right which others would certainly enjoy.
I am glad of the opportunity to speak on an occasion like this, because I am pledged in my constituency to support leasehold enfranchisement on fair terms. I have never made any secret of that. But it would be open to me today to say that the terms put forward are unfair. Indeed, I cannot subscribe to an arbitrary rule of thumb of twenty years' purchase. I wish to make that quite clear. I suppose that if I were so minded I should then be able—if I wished to argue on those lines—to throw overboard the principle. But, as far as this debate is concerned, I am concerned only with the principle. 1662 It may not apply to future debates, but it applies to this one.
It is the first time in five years in this House that I may have the chance later to vote for a principle in which I sincerely believe. Therefore, I will end by saying very briefly why, in fact, I believe in it. First, I believe in it because I hold that the building lease system concentrates property, and, therefore, power over people and their lives, in too few hands, and hands which are very often absentee hands.
Secondly, I believe in it because the building lease system has produced a bad landlord-tenant relationship—that situation is inseparable from the uneven terms upon which the original parties met—and, thirdly, I believe in it because, at its worst, it has been a source of cruelty, and even at its best it has been a cause of anxiety to ground lessees.
I am very sorry that my hon. Friend the Member for Bury St. Edmunds is not here. It is absolutely ridiculous to say that if the ground lease is coming to an end in twenty or thirty years'time the tenants do not care. It is often at that very time that they begin to care most. In many cases they are then becoming old, and are beginning to worry about the future of their children. It is also very often extremely difficult for them to get rid of their houses at that time. I do not see very much point, therefore, in patching up the building lease system.
I very much doubt whether new 99-year building leases should be allowed. I see no reason why they should cause any more happiness in the future than they have caused controversy and unrest in the past. I also believe that, subject to certain safeguards, ground lessees should enjoy the right to enfranchisement at a valuation to be fixed by a tribunal.I know that these views will not be acceptable in all parts of the House, but they are by no means novel views for a Conservative in South Wales to hold. They were held forty years ago by Lord Ninian Crichton-Stuart, whose death in action robbed this House, Glamorgan and the country of a great man, and they are still widely held today. For those reasons I hope shortly to have the opportunity to cast my vote in favour of the Bill.
§ 1.52 p.m.
§ Mr. David Weitzman (Stoke Newington and Hackney, North)
The hon. Member for Cardiff, North (Mr. Llewellyn) made some atonement in the latter part of his speech for the remainder of it, which was devoted to a condemnation of the Labour Government for not dealing with this problem themselves. It is an extraordinary thing that whenever we are considering a Measure which seeks to deal with an injustice hon. Members opposite who criticise or oppose it spend much of their time in saying, "Why did not your Government, when in power, deal with the matter?" That is no answer to the problem. It may be that the Labour Government was considerably at fault in not tackling this matter at an early date, but we are not dealing with that question now.
This is a Private Member's Bill, which a private Member, has put before the House in a very fine spirit, and we are now trying to examine it dispassionately to see whether it seeks to remedy a real injustice. If it does—and the hon. Member has admitted that it does—what does it matter that in years gone by this Government orthat Government failed to remedy the injustice? What good does it do for one side or the other to give long lists of quotations saying, "When you were in power why did not you do this or that?" Surely the right thing to do is for everyone to recognise the injustice and to see that it is put right.
§ Mr. Llewellyn
The hon. and learned Gentleman is quite right. As I indicated, the important thing is to get the injustice put right, but what he and his hon. Friends have no right to do is to approach the problem in a spotless sheet, saying, "Look at the cleanliness of our record," when it is extremely bad.
§ Mr. Weitzman
I have been a member of the Labour Party for more years than I care to remember, and I have always advocated leasehold enfranchisement. Hon. Members of whatever party who hold that view are entitled to put it forward, and it is no answer to our plea that an injustice should be cured to spend a great part of one's speech in saying, "Why did not your Government do this, that or the other?" I am very glad that the hon. Member agrees that a great 1664 wrong does exist and ought to be remedied. But it is not only the hon. Member who recognises it; the Government have also done so. That is why they brought forward what has now become the Landlord and Tenant Act of 1954. They said, "Something has to be done in order to remedy the position."
It is all very well for the right hon. and learned Member for Kensington, South (Sir P. Spens) to say that this is only a small problem, and that it does not require thedrastic reform which we are endeavouring to make by means of the Bill, but the Government themselves in 1954—by Part I of their Measure—said, in effect, "We recognise how wrong it is that persons who have been in possession of houses for many, many years; who have been paying ground rent all the time, and have come to regard their houses as their own should, at the end of their leases, face the possibility of being deprived of that property and turned out into the streets."
We are, therefore, concerned, first, with the fact that the injustice existing should be recognised—and that has been recognised—and, secondly, with the question whether the Act of 1954 remedies that injustice. If it does not, it is obvious that something along the lines of the provisions of this Bill should be done about it. I therefore propose to see whether the 1954 Act remedies the position. It is possible in a few words to show how utterly unfair are the provisions of that Act, and how very little they contribute to the solution of this problem.
I shall take a typical case of a constituent of mine who has a ground lease and is paying a rent of £10 a year under it. When the lease comes to an end, under the provisions of the Act he has the right to become a statutory tenant, in which event he will have to pay the market rent. If the tenant and the landlord cannot agree about this, the matter has to be determined by a county court judge. The rent to be paid may well be £2 or £3 a week, or even more. I am now dealing with a constituent in a London constituency, and I say that a rental of £2 or £3 a week for a house of this kind would be quite usual.
The matter does not end there, because in place of the liability for dilapidations which formerly rested upon the tenant he has now the task of putting the house into 1665 good repair. That will involve him in a considerable sum of money for what are called in the Act "initial repairs." He can pay for these by instalments, but my constituent may have to foot a bill of about £200.
Therefore, in addition to his rental of £2 or £3 a week he has to pay by instalments the amount for these repairs. Imagine a workman, an old-age pensioner or other person of limited means in occupation of one of these houses. Formerly it was his home, in which he or his parents had lived for many years. They paid a considerable sum to purchase the lease. They paid for many years a ground rent of £10 a year. Now, in order not to be deprived of his home, the tenant has now to pay £2 or £3 a week, together with the instalments for initial repairs, making the total sum payable £3 or £4 per week or more.
Is it not obvious that the difficulty created in some cases will be enormous? I know instances where it is impossible for persons to pay the sums now demanded of them. It is said that the tenant has been given security of tenure, but that is completely illusory. If this is the situation in London, in the North of England, in South Wales and in other parts of the country, how can the Government say that by the Act of 1954 they have cured the injustice which they themselves have recognised?
Examination of that Act will demonstrate without question that the manifold wrongs have not been righted in any way. Perhaps I ought not to say "in any way," because there are fortunate people able to stay in their houses on the terms that I have mentioned. There are many others who find it impossible to do so and who will be deprived of their homes and forced to seek accommodation elsewhere. The injustice remains and must be dealt with in some way.
I looked again at the arguments put forward during the debate on the Measure which was passed in 1954, to see what were the objectionsofficially put forward against leasehold enfranchisement. The objection put in the forefront was respect for the sanctity of contract. I do not propose to go into that point in detail. Is not the short answer to that objection simply that under the provisions of the Act of 1954 the Government recognise that they themselves had to 1666 interfere with the sanctity of leasehold contracts?
They themselves agreed that it was necessary to make definite alterations in the contract originally made between landlord and tenant. They imposed upon the landlord the liability to accept the former ground-tenant as a statutory tenant, which was entirely contrary to the original contract. How can it lie in the mouth of anyone to say that leasehold enfranchisement should not be adopted because it interferes with the sanctity of contract?
Another objection was based on the cost to the tenant. The tenant might not be able to afford the sum required. There is provision in the Bill for payment by instalments of the sum required from the tenant. Therefore, that objection should not arise. Even if it did. the Government could make provision for the tenant to borrow money to enable him to purchase the freehold. I do not want to repeat what has been said already, but I should have thought the Government would welcome the Bill. Again and again reference has been made to the slogan of Government supporters about a "property-owning democracy." What better opportunity is there for the Government to show their belief in that slogan than by adopting the Bill?
Another objection was that there are covenants prohibiting amenities which will affect all the houses on the estate. One of my hon. Friends has dealt with that point. If amenities ought to be preserved in modern times—there is room forcriticism of the sort of amenity contained in some of the leasehold covenants—it would be a simple matter to insert a provision so that in a proper case such amenities can be preserved.
A further point was interference with the right of public development; in other words, if the tenant purchased the freehold and a public authority desired to develop the property it would find it in the hands of the tenant, which might prevent development. The hon. Member for Cardiff, North referred to Clause 9 (2) of the Bill. As I read the subsection, it deals with that very point, so no such objection can be sustained.
One can only come to the conclusion that the objections are trivial. They are Committee points and, given good will on 1667 both sides and the desire to solve these problems, there should be no difficulty in disposing of them. An injustice exists and is recognised by everyone. It is no answer to say, as did the right hon. and learned Member for Kensington, South (Sir P. Spens), that the problem is small. There are many thousands of cases all over the country. These unfair conditions are there even though they may not exist among the constituents of the right hon. and learned Gentleman. They do exist in many other constituencies.
I say that the Government themselves recognised the need to remedy this state of affairs. I have shown that they failed completely to do so in the provisions of the Act of 1954. Something must be done now. I have sought to examine the objections to the Bill and to leasehold enfranchisement, and have shown them to be capable of being easily overcome and of minor character. If there is substance in them, they can be dealt with effectively in Committee. Surely, after these long years of controversy, when a Measure of this kind has been brought forward again and again, we ought at last to recognise that something ought to be done to remedy this position. I therefore hope that the House will give the Bill a Second Reading.
§ 2.10 p.m.
§ Mr. Ronald Bell (Buckinghamshire, South)
The hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) said repeatedly in the course of his speech that an injustice existed which was recognised by the present Government in introducing the 1954 Measure. That is quite untrue. What was recognised by the introduction of that Measure in 1954 was the existence of a practical problem the nature of which was described very competently indeed by my right hon. and learned Friend the Member for Kensington, South (Sir P. Spens).
The fact is that in certain parts of the country the system of development by long leases was concentrated to a considerable degree in certain years of the last century, and there is a tendency—which can be exaggerated, but which does exist—for those leases to fall in during the presently current years. That creates a special problem because these years following the second of two great world 1668 wars are years of general housing shortage and, therefore, a considerable volume of turnover of occupation might create hardships in certain areas and among particular classes of tenants.
I think it was made quite plain during the Second Reading debate that that was the governing consideration. Indeed, while the hon. Gentleman was speaking, I glanced through the opening and closing speeches for the Government in that debate, and it is quite clear that that is so. Therefore, that part of the hon. and learned Gentleman's argument falls to the ground. There was a particular problem which required some action to be taken, and the appropriate action was taken in the 1954 Act by giving to those people the same sort of protection as is enjoyed by other people who are suffering also from the post-war housing shortages.
§ Mr. Bell
No. On the contrary, I said quite plainly that I did not agree there was injustice. It is the attempt of hon. Members opposite to argue with emotional words that vitiates their argument. They will not look at this matter fairly and weigh the merits on both sides, without emotional considerations. If they did, they would not talk about injustice, and still less about admitted injustice.
Much of the emotionalism of hon. Members opposite is based upon a well-known confusion of law and fact. They talk about people having bought a house and then having it taken away from them later on by a rapacious landlord. Of course, for the purpose of a debate like this they use the word "home." One may rent a house by the week; it may be one's home, but it does not alter the fact that one has taken it on a weekly tenancy. In fact, there is no such thing as buying one's home or house apart from the land on which it stands. There cannot be a sale of one and a lease of the other. No such thing is or has ever been known to our law.
Every argument based upon that distinction is completely fallacious from beginning to end. There is either a lease of both the house and the land on which it stands, or else a sale of both the house and the land on which it stands. The 1669 very expression "ground rent"is itself a well-known misnomer. It is merely a low rent, and the 1954 Act, which was not using popular and misleading language but had to use correct language, described it as a lease at a low rent.
The great variety of cases which arise under this leasehold system are well enough known to those who take an interest in the matter. The two main categories are those where a house and land are let on a long lease at a rack rent, that is to say, at a fullrent. The other kind is where a tenant and landlord agree together that they will not take that sort of letting but a letting with an initial payment and a low rent. That kind of arrangement is often called a letting at a ground rent, though of course theterm is inaccurate. It is a letting where the payment for use of the building is split up into an initial payment and then a rent which, on account of that initial payment, is lower than it otherwise would be.
It is because that kind of arrangement exists that hon. Members opposite are able here and outside to talk in this confusing way about a man having bought his home and then years later his family being turned out of the home by some wicked injustice, just because some of the rent is paid by a lump sum at the beginning. What it really comes to when hon. Members opposite talk about injustice is that they are referring to arrangements whereby an advantage to an original tenant has become forgotten in the passage of time, and they are dealing with the closing stages of the transaction when the balancing advantage to the landlord is beginning to mature.
I speak in this matter without any financial interest, unless it be the same as that of the hon. Member for Cardiff, West (Mr. G. Thomas) who moved the Second Reading Motion. The only property in which I have any remote sort of interest is one of those same leasehold houses in the hon. Member's constituency in Cardiff. One bought that sort of house years and years ago as a leasehold house and paid less in consequence. When I say that one bought it, I mean that one bought the lease. I was falling into the very error which I was just discussing. One bought the use of it for 90 years or 70 years.
§ Mr. Ivor Owen Thomas (The Wrekin)
Are we to understand that the hon. Gentleman is seeking to justify a landlord taking over not only his land on which the house stands but full possession and ownership of the house which was not built by him but was built by somebody else and was then occupied by tenants? Is he saying that when the lease of such a house comes to an end the landlord has not only a legal right but a moral right to requisition the land and the house which he probably never had a part in building?
§ Mr. Bell
The hon. Member's intervention only shows at some length that he has not understood my argument and that, not having understood it, he does not agree with it. The word "owner"is only loosely used in relation to a person who has bought the use of a house for a fixed term of years. I myself referred to him inadvertently as the owner, but that expression has no accuracy at all.
§ Mr. Thomas rose—
§ Mr. Bell
No, not even that would serve in the case of the hon. Member.
The fact is that people, knowing what they were doing and wanting to do it, bought the use of a house and the land on which it stands for a term of years. For that they paid less than they would have had to pay if they had bought the freehold of the house and land, and certainly in Cardiff they have been at liberty throughout the years, if they wanted, by a reasonable offer, to buy the freehold of the land and the house in which they lived.
§ Mr. Granville West (Pontypool)
Could the hon. Gentleman give the House a single instance of any plot of land which has been built upon under the leasehold system, the market value of which as a freehold at the time the lease was entered into was a 99 years' rent plus the cost of the house which was built upon it?
§ Mr. Bell
I do not know what the hon. Member is talking about. Of course, land starts as a bit of bare land, as a rule, and an agreement is entered into. The agreement can be in so many different shapes that to generalise about it is absurd.
My right hon. and learned Friend described some of the ways in which this can happen. One way is for the landlord to lease the land at its rental value as a building site to a builder for 99 years. The builder then builds on that land a house which, as the hon. Member well knows, then becomes a part of the land and follows the land both as to its use and as to its ultimate reversion. The builder then sells to an intending occupant the right to use that house and land for, shall we say, the remaining 95 years of his term, and the intending occupant buys it, knowing the price, knowing the unexpired term of the lease. Bearing in mind that the average expectation of life is about 70 years, and that he is not likely to be there when the lease falls in, he, a free person, decides to make the purchase on those terms at that price.
That is the real point. People do not expect to live 99 years after buying leasehold houses. We are always now dealing with people much remote in devolution of interest, and almost always very much remote in relationship from the original seller and the original buyer, if the leasehold exists for 99 years.
§ Mr. West
I am grateful to the hon. Member for giving away again. I think it is of the utmost importance to understand exactly what is his case. I understand that now he is suggesting that the land, in the case that he is quoting, was let to the builder at its full market value at that time. Then it was developed by the builder. The burden of our case is that it is manifestly unjust that the land owner, having had the full market rent for his land, should not only have the full market rent for it, but should have the capital cost of the erection of the house as well.
§ Mr. Bell
As the hon. Member knows perfectly well, in these building leases it was always one of the terms of the lease that the builder should erect houses on the land. In other words, the rent was 1672 fixed by reference to the fact that a builder would erect houses on the land and, therefore, in the fullness of time the freehold of those houses would rest in the original vendor.
That was one way in which this was done. Another way, of course, would be for the landlord himself to build houses on the land and then let them for terms of years. I do not think that even the hon. Gentleman can argue in that case that there is not a perfectly clear bargain as between the original lessor and lessee, and no one can complain of what was done.
There has been a great deal of talk about monopoly value. I am not going to job back a hundred years; let us use the last 50 years, which will cover the point. I would say that in the last 50 years in the areas with which I am familiar anyone who had wanted to buy the freehold of his long leasehold house, say in Cardiff, has been able to do so at the market value of the reversion. I do not know personally—but, as the hon. Member for Cardiff, West knows, I am not uninformed about this because I know the area—but I have never heard of any case where it was refused. In our own case, if we had felt inclined at any time we could have bought the freehold reversion at the appropriate market value.
I do not see why people should grumble at the bargain they have made, or the decision which they make from year to year as to whether they will employ their resources in buying the freehold reversion or in some other way which they consider at the time more profitable. These are matters which people can decide for themselves. Let us get this plain in our minds. We are not dealing in this case with the original lesson and the original lessee. As the years pass, and the lease begins to run out, the buyer of the residue of the lease is not buying 99 years any longer. He is buying 70, 50, 40 or 35 years, and each time the price comes down because the lease is running out. The value of the original initial payment made at the beginning of the long lease is amortised between the different occupants of the house as time passes and the occupants change.
If at this late stage in the leasehold system—and we know that a large number of these leases are approaching 1673 maturity—we introduce leasehold enfranchisement of this kind, we are benefiting only the people who came in late in the day at correspondingly reduced prices, if "prices"is the right word to use to describe the right to pay a smaller rent for 20 or 40 years. Those people have lost nothing under this system.
That being so, what is the true nature of the proposals that the hon. Member for Cardiff, West is putting before us? It is really quite simple. There has been a lot of emotional talk about it, especially by the hon. Member for Rhondda, East (Mr. Mainwaring), but there is nothing emotional in this. It is just plain arithmetic. If one had tried to buy the freehold reversion of the leasehold land with 50 years to run, let us say in 1905–6, one would have been offered it on 20 years'purchase. If there were perhaps only 35 years to run and World War I had intervened and the value of money had dropped by half and the low rent fixed 99 years ago had lost half its value, one would expect then, owing to the smaller residue lease and the drop in the value of the fixed rent, to be asked about 40 or 50 years' purchase.
Another 30 years passed and there were perhaps only 20 years left. The Second World War intervened and the value of the old 99 years fixed rent has dropped again. The hon. Member for Cardiff, West mentioned one case of £3 10s. a year. Let him remember how much that was worth 70 years ago. Does he still expect the reversioner—and by this time the house may have changed hands some three times over—to sell the freehold reversion within 20 years of the maturity of the lease for 20 times the fixed rent of 70 years ago? Of course, that does not make sense.
What the hon. Gentleman's Bill does, in effect, is simply this: it tries to force on to the freehold reversioner the obligation to sell, regardless of the length of time which has passed or how near is the reversion, at 20 times the money rent which was fixed 99 years earlier, with no regardfor the change in the value of money in the 99 years—and we all know how great that has been. That is the basic injustice of the Bill.
The hon. Gentleman gave instances of what he described as scandalous injustices by landlords who demanded not 20 years' purchase but 50 years' or 100 years' pur- 1674 chase, or whatever it was. The reason, of course, is mainly the decline in the value of money; and, secondly, that these are offers made when the leasehold interest has almost run out and the original bargain is itself beginning to mature, so that one is dealing almost with the question of buying a brand new lease for 100 years or a brand new freehold without any tenant's right left in it.
That is what the hon. Member proposes—to fix a 20 years' purchase, regardless of the time unexpired. It does not make any difference under the Bill whether there are 70 or 20 years to run. It does not make any difference under the Bill when the ground rent was fixed and what has happened to the value of money since then. Whatever the circumstances, it is to be 20 years' purchase.
But if we do that, we are proposing to abolish the leasehold system in so far as it consists of leases made for more than 21 years. As I said on Second Reading of the 1954 Act, the idea of that Act was that we were reducing the land law of this country to two alternatives—the outright sale of the freehold and leases for not more than 21 years. If hon. Members think that is a good idea, presumably they can do it, but personally I do not think it is a good idea. Moreover, I think it is highly regrettable that, when we are discussing a proposal of that nature for all of the future, the argument should be bedevilled by this high emotionalism about whether unconscionable bargains were made 100 years ago not only between people who are dead but between people whose children are dead, too.
If we abolish the leasehold system in this country, I believe we shall have to invent it again, because it is a convenient and useful device. People do not always want to buy the freehold of properties. I agree that leases for periods up to 21 years meet most of the needs of people who want to buy the use of property without buying it outright, but they do not meet all the needs. There is a demand for longer leases than that, and if hon. Members want proof of that assertion they can look at the new towns, which were started under the last Government and which decided, as a question of policy, that they did not want freeholds but leases, and long leases at that. There has been great agitation for long 1675 leases in Colonial Territories. There are all sorts of considerations on which it should be legally possible to buy the use of land and houses for more than 21 years whilst still having to find a stake which falls short of the value of the freehold, and the land law of the country ought to provide for that need.
I think that any responsible Government in office will always believe that. The hon. Member for Stoke Newington and Hackney, North, who is no longer in his place, asked my hon. Friend the Member for Cardiff, North (Mr. Llewellyn) a question when he pointed out that the Socialist Government of 1945–50 did not introduce leasehold enfranchisement. Incidentally, I do not altogether agree with the views of my hon. Friend the Member for Cardiff, North on this subject.
The point I want to make is that no Government of any party has introduced it. The hon. Member for Cardiff, West referred to David Lloyd George sweeping the Conservatives out of Wales in 1906 by promises of leasehold enfranchisement. Indeed, the Liberal Party scored a great victory in 1906 and had a huge majority not only in Wales but in the whole country. For 10 years from 1906 the Liberal Party swamped this House. Did it introduce leasehold enfranchisement? It may have swept the country with it in the election campaign of 1906, but in 10 years of an overwhelming majority it never introduced leasehold enfranchisement.
Moreover, we had Labour Governments in 1924 and 1929, although we know their lack of a majority in the House. The Labour Party had a vast majority in 1945 for five years, but it did not introduce leasehold enfranchisement.
§ Mr. Bell
But the Labour Government dealt with the subject by the Leasehold (Temporary Provisions) Act. In 50 years in this country, while this has been a live issue, no party in office has been willing to abolish the leasehold system. The nearest we have ever come to it—and I viewed it with hesitation myself—was the 1954 Act introduced by the present 1676 Government, which to some extent makes it unlikely that leases will be entered into in future for more than 20 years. As the hon. Member for Cardiff, West will recall, on Second Reading I expressed considerable anxiety about whether that was the sort of land law which this country ought to have.
Of course, it can be said that these general considerations are sound in themselves but are overruled by the human aspects. Some hon. Members may feel that the argument is valid but that there are human considerations which sweep it aside. They may feel that we should abolish these long leases because great individual hardships arise from them.
May I quote a little from the winding-up speech of my right hon. and learned Friend the present Attorney-General in the Second Reading debate of the 1954 Act? He reported that the Final Report of the Leasehold Committee, set up by the last Government,after all the investigations said that 'such 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…My right hon. and learned Friend went on: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."—[OFFICIAL REPORT. 27th January, 1954; Vol. 522, c. 1872.]Those various possibilities pretty well exhaust the whole category. The fact is, as the hon. Member for Cardiff, West knows, that the number of ground lessees under long leases of poor dwellings in actual possession is trifling. I agree that in the case of higher-value dwellings, middle-class houses for instance, the number is considerable, but these are the sort of people who, by education and training, well understand the nature of their bargain and what they are doing and, from year to year, decide whether or not it is worth buying the freehold of their leases. There is no hardship where people of education enter into bargains which they understand.
I do not believe that this great human problem exists apart from the provisions 1677 of the 1954 Act. There was a hardship arisin out of particular circumstances, but that has been dealt with, and as for what is not dealt with in the 1954 Act, I say that the hardship in its incidence is confined to a quite trifling number of people. That, I am sure, is true. In most cases those houses are now occupied on weekly tenancies. The Bill suggests that a quite extraordinary degree of injustice should be inflicted; regardless of everything it is to be 20 times the old rent, fixed 100 years ago.
We should remember that, although we may point to a few individuals who are directors of these financial companies—and I am not fortunate enough to be of their category—the money comes from a variety of sources. I should not like to ask my hon. Friends the size of their managing equity in Western Ground Rents, but I think it is very small. We all know what happens nowadays. The vast bulk of the money—probably 95 per cent.—is put up by insurance companies and pensions funds on mortgage.
§ Mr. Bell
All kinds of people put up the money. Pensions funds include trade unions. The insurance companies and the various trade union funds and other pension funds do not want to be bothered with estate management. Some insurance companies do it directly but most of them do not want to bother. The managing equity is usually very small. Ninety-five per cent. of the money is put up, as we allknow, by pension funds and insurance companies. Are we not being a little artificial when talking about landlords four times removed? The landlords are amorphous bodies spreading widely into the community. This proposal of the hon. Member for Cardiff, West is arbitrary and in 19 out of 20 cases it is grossly unfair. It would amount to confiscation of pension funds.
Now I am not going to follow the hon. Member in his examination of the past. As the hon. Member for Cardiff, West knows, as a Scot I could deliver a long speech on what the Bute family has done for Cardiff.
§ Mr. Bell
I think I know in this case which comes first—the chicken or the 1678 egg. The family built the Bute Docks, developed the coalfield and brought down a fine body of Scotsmen who built up Cardiff to what it is. I will not develop any further an argument which might embarrass the hon. Member for Cardiff, West.
I think this Bill is designed as a manifesto and is not a practical Measure. I say with assurance to the hon. Member that I think he has exaggerated the problem and raised into a great moral issue what in fact in 1955 is nothing more than a practical consideration on account of which we should be terribly unwise on the ground of out-of-date emotionalism—I am not going to argue the merits, because it happened a long time ago—to impose a permanent and serious injury to the land law of this country.
§ 2.42 p.m.
§ Mr. Percy Morris (Swansea, West)
The hon. Member for Buckinghamshire, South (Mr. R. Bell) has trifled with words in several important respects. He suggested that my hon. and learned Friend the Member for Stoke Newington and Hackney (Mr. Weitzman) was describing the position inaccurately when he saidthe Government recognised an injustice which had to be dealt with and introduced the Act of 1954. The hon. Member prefers to call that a problem, but an injustice always creates a problem and. whichever word he prefers, the position remains.
§ Mr. Morris
In this case, injustice creates a great problem in the experience and lives of many people of this country.
Secondly, the hon. Member charged previous speakers with having introduced an atmosphere of emotionalism. It would be much more to his credit if he showed a little appreciation of the grave human problems involved in the matter. I think that my hon. Friend the Member for Cardiff, West (Mr. G. Thomas) was particularly restrained, more restrained than usual. He spent his time in proving chapter and verse the injustices experienced by people in the City of Cardiff and throughout Wales. The hon. Member for Oldham, West (Mr. Hale) said that a similar position obtained in about 115 other constituencies.
§ Mr. Bell rose—
§ Mr. Morris
The hon. Member spoke for quite a long time and will not begrudge me a few minutes. He said that it is a trifling matter to these people with long leases. If he will read—
§ Mr. Bell
May I interrupt the hon. Member as he is referring to me? First of all, the charge of emotionalism was mainly directed to the hon. Member for Rhondda, East (Mr. Mainwaring). Secondly, I did not say it was a trifling matter to the people concerned, but that it was trifling in its incidence in that it relates to so very few people.
§ Mr. Morris
That is the point with which I was going to deal.
My hon. Friend the Member for Rhondda, West (Mr. Iowerth Thomas) said last year, in Standing Committee D, that he had gathered statistics from only 26 local authorities in South Wales and found no fewer than 104,000 owner occupiers in that small area. Does the hon. Member for Buckinghamshire, South regard that as a trifling number? That affects the well-being of several thousand people and is indicative of what happened not only in South Wales, but in several other parts of the country.
The hon. Member for Buckinhamshire, South made no reply to the suggestion by hon. Members that these leases are now falling into the hands of financial speculators whose main concern is to make money regardless of what happened to the people involved. Evidence was produced in Standing Committee D relating to Pembroke:There are 1,731 houses originally held at a ground rent of £3 a year and yielding an income of rather more than £5,000 a year.The practice adopted in Pembroke Dock as the leases were running out was to grant a renewal at about £20 a year. That in itself would have provided … well over £30,000 a year over a short period of years, but since this Bill has been before this Committee … Houses are to be let at figures like £60 and £70 a year ignoring any repairs payments which tenants will have to make. That gives a figure of about £100,000 a year, not to be reached immediately but over a period of years.—[OFFICIAL REPORT, Standing Committee D; 18th March, 1954; c. 202–3.]How does the hon. Member think that people losing their homes react when they find that a small group of people are to amass a fortune although they have done nothing in respect of the property?
1680 My hon. Friend the Member for Cardiff, West said that he had an interest in this matter and declared it. I have to do the same. I ask the hon. Member for Buckinghamshire, South if he thinks there is any emotion about this. His hon. and gallant Friend the Member for Arundel and Shoreham (Captain Kerby), sitting beside him, knows quite well that in the County Borough of Swansea scores of houses were razed to the ground during the war. One of those houses happened to be mine. With the aid of the War Damage Commission, that house has been reconstructed and opportunity was taken to improve and modernise it through the expenditure of quite a considerable sum of money.
Shortly, that lease will expire and a very much improved and modernised house will go back to the ground landlord who at the moment declines to offer a renewal of the lease on any terms but is flirting with the idea of granting a renewal at about sixty to seventy years'purchase of the ground rent. How would the hon. Member for Buckinghamshire, South react if he were faced with a situation of that kind? Does he regard that as equity and giving someone a reasonable opportunity?
The hon. and gallant Member for Arundel and Shoreham would not dare to make the speech in West Swansea which his hon. Friend made here this afternoon for the simple reason that he knows that is not equity. Does the hon. and gallant Member want to say that he would do so?
§ Mr. Morris
I quite agree. He knows how acute the position is. He says, "Certainly not," because he appreciates the position which prevails in South Wales. That position must be dealtwith. Why do not the Government recognise what my hon. and learned Friend the Member for Stoke Newington and Hackney, North rightly described as a grave injustice? There is no emotion about it. These are the cruel facts of experience, and that is why thehon. Member for Cardiff, North (Mr. Llewellyn), despite his reservations, said he was prepared to support the Bill.
1681 The position in South Wales has been thoroughly and adequately ventilated. I do not want to engage in tedious repetition, but I want tourge upon the Government to recognise that in dealing with this, they are dealing with a very grave injustice so far as we are concerned. It is felt keenly by men and women who have devoted many years of their lives to industry and who, having bought their homes, maintained and improved them, are seeing them taken away now or, if not taken away, are having to pay excessive rents.
§ Mr. Doughty
The hon. Gentleman has referred to excessive rents and grave injustice. I hold in my hand the 1954 Act which says nothing about excessive rents or grave injustice. It speaks of a fair economic rental. The hon. Gentleman said he had a similar experience. He might like to read this Act if he has not done so. I will go through it with him with pleasure, but I assure him that he can retain the occupancy of his house merely by paying a fair economic rent, and if he cannot agree with his landlord what that is, the courts will be delighted to assist him.
§ Mr. Morris
Nothing defines more clearly the difference between that sideof the House and this side of it than when the hon. and learned Gentleman talks about a fair economic rent. The definition of "fair" is the very thing that divides us. As I have pointed out, the position in respect of South Wales has been fully ventilated. When men are asked to pay fifty, sixty or seventy years' ground rent or an excessive rent, it is asking too much. We cannot stand it and we do not propose to put up with it any longer.
§ Mr. Doughty
I want to understand the hon. Gentleman's argument, in case I intervene later in the debate. Is he saying that a fair economic rent is an excessive rent?
§ Mr. Morris
No, a fair economic rent would not be an excessive rent. The difference is in the definition of a fair economic rent between that side of the House and this side.
§ 2.52 p.m.
§ The Attorney-General (Sir Reginald Manningham-Buller)
I have listened to nearly every speech in this debate, but I had the misfortune not to hear the speech of my hon. Friend the Member for Cardiff, West—
§ The Attorney-General
I am much obliged, I must get the points of the compass correct; I mean my hon. Friend the Member for Cardiff, North (Mr. Llewellyn).
Having heard this debate and so many debates previously on this subject, and having spoken so often on it myself, I feel inclined this afternoon to follow the judicial example of saying "I have nothing to add," particularly in view of the excellent speeches made by my right hon. and learned Friend the Member for Kensington, South (Sir P. Spens) and by my hon. Friend the Member for Buckinghamshire, South (Mr. R. Bell).
Once again, I would like to put forward the view of the Government on the proposals contained in this Bill; proposals which are, in almost all material respects, but not in all, similar to the proposals we discussed in Committee in the Landlord and Tenant Act, 1954. These were also discussed in the debate on the White Paper and were touched upon when wewere debating the temporary Act introduced by the previous Government.
As I have done on all those occasions, I must again disclose such interests as I possess in this matter. So far as I can ascertain, I am not interested in any reversion on any residential property, but I am a trustee of an estate which has property of different types on ground leases and also, to some extent, I am a beneficiary of that trust. Although I have said that often, I say it again today in case the hon. Member for Oldham, West (Mr. Hale) thinks I have not disclosed it sufficiently.
When the hon. Gentleman the Member for Cardiff, West (Mr. G. Thomas) moved the Second Reading of the Bill, in his usual attractive fashion, though with not quite the same degree of exuberance which one normally expects from him, what is now becoming almost a 1683 hackneyed subject sounded, at least temporarily, refreshing. It has been an interesting debate to listen to, despite the fact that the arguments have so closely resembled those advanced in all our previous discussions.
Hon. Members on both sides of the House have to make up their minds on one thing first, whether the leasehold system as a whole serves a beneficial purpose—not only the leasehold system in relation to residential property but generally. This Bill seeks to criticise only one relatively small portion in relation to the area covered by leases, what one might call the leasehold territory. However, we have had criticisms from the hon. Member for Hayes and Harlington (Mr. Skeffington) of the entire leasehold system.
I would suggest, therefore, that the first point we have to be clear about is whether the leasehold system as a whole is a good thing or a bad thing. Despite the criticisms advanced today, in my personal view the leasehold system has been tremendously advantageous to the development of this country, and I agree with my right hon. and learned Friend the Member for Kensington, South that it would be a great mistake if anything were done to injure the flexibility—which is important—and the efficacy of the leasehold system.
If we start with that approach, the controversy between those in favour of this Bill and those opposed to it is narrowed to a certain small margin. Yet listening to the speeches, I am not sure whether hon. Gentlemen opposite start with that approach, and we ought to have it made clear whether this is the first attack on the entire leasehold system or whether it is acceptance of the leasehold system as a good thing, but an attempt to remedy what appears an injustice to the minds of some people. First, therefore, it is important to get clearly established the basis on which the approach is to be made.
Because this Bill is confined only to that narrow field, and as the hon. Gentleman in moving the Second Reading dealt solely with the narrow aspect of long leases of residential property, whilst saying, I think, that the leasehold system as a whole was excellent, I will confine my observations to replying to points 1684 bearing on long leases of residential property. I would say to him that I do not believe that acceptance of the Bill in its present form would not inflict serious injury and damage on the whole of the leasehold system, which, in my belief, is worth preserving.
If I may summarise it to show that I am trying to meet the case, the attack has taken three distinct lines. I do not seek to put them in order of importance; I put them in order merely to separate the points. One ground was that the granting of the original lease—maybe 90 years ago; at any rate, a long time ago—was a harsh and extortionate bargain driven by a rapacious landlord who was exploiting the shortage of building land.
The second line of attack advanced in support of the Measure is that as the tenant and his family, his father and, it may be, his grandfather, have lived so long in the premises which they regard as their own, and which may have been built with their money, it would be harsh and unconscionable if they were called upon to quit at the end of the long lease or to pay a modern economic and fair rent for the building according to present-day conditions.
Then there is the third general argument put forward, which, I think, I can put in this way, "In any event, why should the landlord or his successor get at the end of the lease the building which was put up not by the landlord or his successor but by some tenant?" I will seek to answer as shortly as I can—1 know that the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) desires to say something on the matter and I do not wish to stand in his way—those three main contentions before I come to the particular defects in the Bill. I do not want to take up time today in discussing what are purely Committee points, but there are defects in the Bill which are more than pure Committee points. However, before I come to them, I will seek to deal with the three main arguments put forward which I have summarised.
On the first, namely, that some of these contracts entered into years ago were entered into unfairly, I would say that views may differ upon that but it is at least difficult now to ascertain which of the old leases was harsh and unconscionable, and I do not think that the 1685 most enthusiastic advocate for leasehold enfranchisement would seriously suggest that all of them were. Nevertheless, let me assume for the purpose of the argument that some of those leaseswere entered into unfairly—
§ Mr. Grenfell
Was it not recognised not only on the tenant's side but also on the landlord's side, that the leasehold system had an enormous number of defects, as is shown by the arrangement for commutation on the basis of certain multiples of the annual payments?
§ The Attorney-General
I do not think that that establishes in any sense a defect in the leasehold system. It merely establishes the system's flexibility in the way in which one can use it for one purpose or another. It does not establish that the system is defective.
Let us assume for the moment that a percentage of the oldbuilding leases on residential property were leases which can properly be regarded as harsh and unconscionable. I would say in passing, that it is not right to represent that the Government's argument in all these debates has ben based primarily on what we lawyers call sanctity of contract. It has not been based primarily upon that. We have said before, and I repeat it, that we in this free country of ours ought to pay great regard to contracts which people of full age voluntarily enter into, but that does not mean that the law ought not to, does not and will not interfere, should the contract be entered into under duress or should it be regarded, after it is inquired into, as truly harsh and unconscionable.
I want to make that clear, particularly in view of the observations of the hon. and learned Member for Stoke Newing-ton and Hackney, North. He was wrong in saying that the main objection to leasehold enfranchisement is sanctity of contract. It is not. However, let me assume that some of the old leases were within the description of harsh and unconscionable contracts. What has happened since then? This is a point that the hon. and learned Gentleman must face. Both tenants and landlords and the successors of both have contracted on one basis and one basis only, and it is a basis really independent of the nature of the original contract.
1686 The successors have made their bargains on the basis that this particular lease of this land with the building upon it is to end at a particular date. They have paid their prices for assignment of the lessor's interest, or for an assignment of the lessee's interest on the basis that that lease is to end. It becomes the substratum of the contract however harsh and unconscionable it may have been originally. It follows from that that this proposal of leasehold enfranchisement—
§ Mr. Grenfell
The particular lease may end, but the leases on building properties have two or three lives and in determining the period of tenancy after two lives the lease may be broken. There was no fixed date of termination.
§ The Attorney-General
That is one form of lease, a lease for lives. I am dealing with what is the more common form, particularly in connection with building leases, and leases which will frequently be affected by this Billif it reaches the Statute Book, namely, leases for a long period of years; that is, over 21 years.
The point that I am trying to make is important and it is that where transactions of that sort have taken place, the Bill will not hit anyone who is in any way related to the original landlord. It will not affect tenants who are related to the original tenants, but it will affect their successors. Bearing that in mind, it has always been the view of the Government that in making any alteration of the law on landlords and tenants it was absolutely imperative to try to strike a fair balance between the interests of landlord and tenant.
One could not morally justify a confiscatory provision affecting the present landlord on the ground that the original contract was harsh and unconscionable, especially when the tenant of the present landlord may have entered into his contract on the basis that the lease would end at a certain time. So I suggest that in approaching this problem one could rule out the argument that the original contract was harsh and unconscionable, because it cannot at all affect the present situation in the vast majority of cases. That factor ought not to affect our opinions of how fairly to deal in the present situation with the rights of landlords and tenants under these long leases. 1687 The hon. Member for Cardiff, West said that he was not interested in speculators but in the man living in his own home who wants to stay there. But the Bill goes far wider than that. If I read the Bill correctly—and I hope he will recognise this point and may decide not to proceed with the Bill—it provides a very wide open door for speculators to make money out of selling the freehold.
Let me explain how it would work. The Bill is not in the least related to a tenant occupier. The Bill speaks of tenants. It speaks of tenants generally, so that if it received its Second Reading, the Bill would mean that the tenant of the freeholder would have the right of getting his lease enfranchised on 20-years' purchase. The Leasehold Committee Majority Report clearly stated that the vast majority of these tenants of the freeholder have themselves let on weekly tenancies. The Bill does not give the right of leasehold enfrancisement to any of the weekly tenants, but it does give it to the tenants who have become landlords in their turn.
All the Bill would do in that situation would be to transfer the freehold from one landlord to another at a price not related in the least degree to its real value. The new landlord would be able to sell the property at its true value, subject of course to the weekly tenancy, and so have a very profitable speculation. I do not believe for one moment that that is what the hon. Member for Cardiff, West wants, but that, in my submission, is what his Bill would do. On that ground, it would be very wrong to give it a Second Reading.
I come to the second line of attack, namely, that if the tenant's family—his father, grandmother, and so on—have lived there for very long they oughtnot to be required to quit now. That has an appeal to all of us. We have, by the Act passed last year, provided for security for tenants whether they come in that category or whether their residence and that of their families has been for a shorter period. That Act may be criticised, as it has been today, for not going far enough—but it certainly went a great deal further than anything done by the Labour Government in this respect.
1688 I regret that when we were the Opposition and put forward our proposals for giving this security of tenure to tenants in this position, during the debates on the Labour Government's Leasehold Property (Temporary Provisions) Bill, they were not accepted and implemented. If they had been, then some of those who did not come within the protection of the 1954 Act would have secured protection which they have not been able to obtain. Therefore, all the force in the second main line of defence has gone. If it is a question of eviction, there is a security now in the 1954 Act. Certainly, it must be conceded that, however much it may be criticised, there is a considerable degree of security given by that Act.
Therefore, one is left, on the question of principle, with the third point on which the attack is based. Why should the reversioner get the house which he himself has not built? I am trying to meet the arguments fairly and frankly.
§ Mr. J. Griffiths
I should like the Attorney-General to say whether he justifies that on the ground of equity.
§ Mr. Griffiths
I hope that the right hon. and learned Gentleman will not suggest that equity would not be a proper ground.
§ The Attorney-General
Being a common lawyer, I should be the last person to make any reflection on those who practise in the courts where they deal with equity.
When the advocates of leasehold enfranchisement put forward their case, they always contrast the ground rent payable at the end—it may be £2 or £3 15s. a year such as we had referred to today—with the modern economic rack-rent upon premises. When they refer to what the original tenant had to pay people never take into account the obligation that that original tenant incurred by undertaking, as he did, to build a house on the terms that the landlord would have it at the end of the lease.
No one has suggested in this debate that there is anything immoral or inequitable upon a tenant agreeing to take a lease and pay a premium for it. If 1689 he pays a large premium, the rent may be low; if he pays a low premium, the rent may be higher. Nobody has suggested that there is anything wrong in a voluntary arrangement of that sort, and it has not been suggested that the premium should be returnable at the end ofthe lease.
When we come to consider the true nature of a building lease, I suggest to hon. Members opposite that the obligation to build a house or factory, or whatever else one likes, entered into by the building lessee, is no more and no less than a deferred premium. Of course, there could be the case that the owner of the freehold builds the houses and lets them at a rack rent, and no one suggests that that would be unconscionable.
There might be the case where the owner of the freehold says, "I do not propose to build myself. I want £x rent." The tenant may say, "That rent is too high. I prefer to have a long building lease at a low ground rent with the obligation to put up a building, incurring the capital cost of putting up a building of my own design." One of the advantages of the leasehold system is that it is flexible and can meet all varieties of cases.
I suggest respectfully, for I know that hon. Members opposite feel strongly on this matter, that when they come to criticise the leasehold system and building leases in particular, it is not right simply to have regard to the ground rent. One has to bear in mind the obligation which the original tenant has taken upon himself; it is an obligation not only to pay the ground rent, but also to incur that liability—to spend that amount of money—upon the premises, so that the building in itself is truly to be regarded as a form of deferred premium comparable really with the premium which may be paid at the outset of the lease.
I would say to the right hon. Member for Llanelly (Mr. J. Griffiths), who asked me whether I could justify what I said in equity, that in the ordinary case I cannot see why such a voluntary contract could be regarded as inequitable. It is only in cases in the valleys—and, I think, in other parts like that in Wales—where it is suggested that it is inequitable because of the original monopoly of land.
§ Mr. Griffiths
My father wanted to build his own house. He had ambitions 1690 to own his own house. It was not unrelated to the fact that that was part of his security in life and that nobody would be able to turn him out of his own home. That was not unimportant in those days. But he could only lease the land—nobody would sell it; it all belonged to one landlord. In due course, it will go back to that landlord. Why should it go back to that landlord? Is it on the grounds of equity, as the right hon. and learned Gentleman is trying to justify?
§ The Attorney-General
I dealt with that kind of case in the earlier part of my speech. I was saying that one cannot justify the Bill on the ground that the original bargain, made, perhaps, 80 or 90 years ago, was harsh and unconscionable. I was dealing earlier in my speech on the assumption that some of those arrangements were harsh and unconscionable. But in the argument which I am developing about building, I am dealing not in relation to a particular contract that might be regarded as harsh and unconscionable, but with the true nature, as I see it, of a building lease, no matter whether for a factory or a shop, or shop premises or residential property.
I have dealt as shortly as I can with the main thesis which has been advanced. The Bill, as I read it, is not confined to building leases where the tenant or his ancestor built or maintained the house. It would give no relief to the actual weekly tenant, but it would enable his landlord to get the value of the freehold. That reason against leasehold enfranchisement was advanced a long time ago in the Report of the Royal Commission on the Housing of the Working Classes.
In the passage of that Report which the hon. Member for Hayes and Harlington was asked to read, and to which he did not refer, Lord Salisbury described leasehold enfranchisement asa measure for enabling the holder of a long lease to force the freeholder to sell his freehold to him at an arbitration price. This measure, which is objectionable and wholly novel in principle, appears to me to have little to do with the housing of the poor. It has not been shown in evidence that any considerable number of the working classes, especially in overcrowded localities, hold their tenements on long leases. As far as this class of house is concerned, such a measure would have no other effect than to put the house farmer in the position now occupied by the ground landlord. On the other hand, such a proposal would entirely arrest the grant of building leases: and the supply of new houses for the working 1691 classes in suburban districts would be very materially checked.That was said in 1885, and I would say that this present Measure would, as Lord Salisbury then said, put what he called the "house farmer," and what I would call the immediate landlord, in the position now occupied by the ground landlord, in which he could speculate and get a great deal of profit from the freehold.
There are many practical difficulties with which this Bill does not even purport to deal. It provides for an arbitrary price payable to the landlord which, in many cases, would be unrelated to the value of the reversion. Its true nature is confiscatory and not compensatory. The exclusion of the late tenant by the proviso in Clause 1 would create a large number of anomalies. The difficulties which would arise, and to which we referred in our earlier debates regarding amenities and severance, are not sought to be solved in the Bill.
It is all very well to say that it only requires good will and things of that sort to get over such difficulties. But it is interesting to note that right from the start of our debates on the Landlord and Tenant Bill, 1954, we drew attention, time and time again, to those difficulties which are very great. No real solution of them has been put forward by the advocates of leasehold enfranchisement. On more than one occasion this suggestion has been airily dismissed by saying that with good will these difficulties could be overcome.
In my view, unfortunately, they are substantial objections, and, for the reasons that I have given in yet one further speech upon this subject, I ask the House to reject the Motion.
§ 3.25 p.m.
§ Mr. David Grenfell (Gower)
I feel justified in saying a few words on this subject because of what I regard as a wrong perspective adopted by the right hon. and learned Attorney-General. He looks at the problem from the other end of the telescope. I look at it from the end to which the lessee has to accustom and accommodate himself to look, not from the point of view of the owner or of established privilege, but only of the merits of the case. I wonder whether some hon. Members opposite live in the 1692 same world as I do. Every day throughout my life I have been aware of this question of leasehold enfranchisement and the general social problem arising from it.
Not a word has been said by hon. Members opposite about the tremendous efforts which have been made by people with very limited resources—without liquid resources of any kind—to grind out in the mill of circumstances the material with which to build homes for themselves. This is a problem that begins with the small man, who has to move about according to circumstances—one day in a coal-mining area and the next in a sea-port area. The mobile population of this country has to create its own circumstances, or adapt itself with considerable skill to the circumstances in which it finds itself.
So far as this is a Welsh problem, it derives 100 per cent.from the industrial developments which have taken place in the tremendous area which is the centre of Welsh production and which has brought so much fame and power to Britain. There has long been a South Wales coalfield area, but there was not always a coal-mining industry. As a first step to make sure of the production of one's industrial resources one must bring in people to do the work. What is true of the development of the South Wales area is also true of other parts of Britain and a hundred development centres all over the world, in countries that once were new but now are old.
In South Wales the coal seams came out of the foot of the valleys and upon the slopes of the mountains. They showed themselves to passers by. It was soon recognised that here was a tremendous reservoir of power which could help in the development of the new industrial society that far-sighted men envisaged many years ago. One does not need to go back very far—merely the length of an ordinary lease of 99 years. When I was young we never referred to a lease as being one of 99 years, but as one of three lives or generations, and it is during the length of those three generations—less than 100 years—that the South Wales coal industry has been built up from nothing.
The pits were sunk, the headings were driven, and the railways and the roads were built. Many unreal references have 1693 been made to the homes of the people. The people made their own homes. There were no homes in the Rhondda Valley 100 years ago, and in Aberdare there were just a very few sheep. The people who came in had to find accommodation for themselves and their families. They owned no land or capital. They had only their powers of labour, and they gave that in exchange for the right to use the land and the materials.
One sometimes hears the phrase "a hive of industry."I remember the time when there were three-shift systems in theSouth Wales coalfields. There were three shifts of men changing over at the pits, and those three shifts also kept the beds occupied for 24 hours a day. In these terrible conditions of congestion the men played a creditable part in enabling that 1.000 square miles to make a greater contribution to Britain's fame at home and ubroad than any other 1,000 square miles in the world.
That is the origin of the leasehold problem, which is far more extensive in South Wales than it is in some of the other coalfields. It affects a large number of people, and if everybody who is opposed to leasehold enfranchisement had done work which is as useful as these men have done, I should be very happy. They are skilled and independent people, who are proud of their trades and,for men of small means, are willing to accept tremendous responsibility. They showed this in building houses which they could not guarantee to realise by sale or by any other means, and they have spent all their lives in paying for them week by week. They pay interest on their capital and for transport, as well as for their living conditions, food and clothing, right up to the coal mines.
Here is a story of which we can all be very proud. We may have been placed at a disadvantage in having never been able to acquire freehold possession of land, but we have hazarded our lives and we have taken leases which lasted for three generations of 33 years each—the 99-year leases. We have paid our ground rents, and paid for the materials, the roads and the schools. All these have been derived from the willingness of the individual small man to accept his responsibility and make his contribution to social welfare.
1694 I wish I had time to tell the House more of this story. The Attorney-General is a wonderful lawyer. Sometimes, in spite of myself, I admire the way in which he walks around things. I do not think his intentions are entirely dishonest. I ask him and the House to have another look at the leasehold problem. Do not deny to the self-respecting, small man his right to buy his house, like everybody else. In the Bill we say that we will pay the premiums and the ground rent but we will reserve the right to buy the land on which the house has been built by the payment of a lump sum equal to 15 years' contribution. We are asking for a square deal, and I hope that the House will give it to us.
§ 3.33 p.m.
§ Sir Lynn Ungoed-Thomas (Leicester, North-East)
To illustrate the widespread nature of this problem I, too, as I have done before, declare an interest in this matter. I have been the leaseholder of a long lease which I think will long survive me. Counteracting that, I have an interest under a trust under which I think the trustees own some ground rents or other. I hope that they may be considered as cancelling each other out and leaving me in a more or less independent position.
Members of this House are grateful to my hon. Friend the Member for Cardiff, West (Mr. G. Thomas) for bringing this matter before the House again for consideration, and to him and to my hon.Friend the Member for Rhondda, East (Mr. Mainwaring) for their vigorous speeches; and we are also grateful for the very sincere statement which we have just had from the Father of the House, my right hon. Friend the Member for Gower (Mr. Grenfell). He, with my hon. Friend the Member for Hayes and Har-lington (Mr. Skeffington) and my hon. Friend the Member for Pontypool (Mr. West), contributed very much to the evidence which came before the Leasehold Committee. In that, they did great service to the cause of leasehold enfranchisement.
I came to the study of this problem with no predilection in favour of leasehold enfranchisement and rather inclined to be opposed to it, because I could foresee very well, as lawyers are apt to foresee—and I was a little frightened, as lawyers are apt to be—the difficulties 1695 that might arise in applying it. It was only after going through the evidence which we had obtained and arguing the matter out in Committee over a period of two or three years, that I felt myself driven to the conclusion that, firstly, here was a real biting problem, secondly, that if it was humanly possible, one had to find a solution to it, and thirdly, that there was a solution to it, and that solution is leasehold enfranchisement.
Therefore, I have come in favour of leasehold enfranchisement not from any a priori predilection or anything of that sort, or from any theoretical conclusion, but as a practical solution to a very grave practical problem. My own party has not always been in favour of leasehold enfranchisement. It recognised that here there was a problem to be considered and to be met for which a practical and not a theoretical solution had to be found, and for that reason my party set up the Leasehold Committee.
The party considered the Report of the Leasehold Committee, and whilst considering the Report and in order to have an opportunity to go into it fully, we extended by the temporary Act the life of the ground leases then in being. The Report was not made until June, 1950. Soon after that we extended the existence of ground leases to enable us to consider the problem and, if the Government came to the conclusion that leasehold enfranchisement should be adopted, to bring in a Measure for leasehold enfranchisement. We put in a mark-time provision which saved the position of ground leases during the remainder of the lifetime of the Labour Government.
Unfortunately the Labour Government were defeated, and because of that we have had this ridiculously inadequate Act of 1954, as a result under which there is no benefit at all to the ground lessees in dealing with the particular problem which afflicts them. Therefore, for the hon. Member for Cardiff, North (Mr. Llewellyn) and the right hon. and learned Gentleman the Attorney-General to suggest that there has been some dilatoriness here on the part of the Labour Government is a ridiculous travesty of the facts.
§ Mr. Llewellyn
Will the hon. and learned Gentleman say why the Labour 1696 Government wasted three years before setting up a Committee?
§ Sir L, Ungoed-Thomas
The Labour Government were employed in doing a great deal of things during those years. If any Conservative Government at any time had done so much for the areas in which these leasehold enfranchisement dwellers live, if they had done as much for the coal miners of South Wales as nationalisation has done, they might be in a position to talk.
§ Mr. Doughty
After hearing what the hon. and learned Gentleman said, I could not resist referring to the Labour Government's action in relation to long leases. All they did was to pass the Leasehold (Temporary Provisions) Act, and there was no suggestion of any permanent solution. That was left to this Government.
§ The Attorney-General rose—
§ Sir L. Ungoed-Thomas
May I first finish my astonishment at one intervention before becoming more astonished at another intervention? The hon. and learned Gentleman appreciates perfectly well that beforea Bill could be drawn up and brought before this House it would need some consideration, and that consequently the best thing that could possibly be done was to make a mark-time Act to save the position of existing ground lessees. The Report, as I have stated, if the hon. and learned Gentleman had followed me, was not made until June, 1950, just before the last Election. The Leasehold (Temporary Provisions) Act was brought in not very long afterwards, and while the Labour Government were considering the position we were defeated and the Conservative Government came in. There is, therefore, no cause for complaint from any reasonably-minded person.
§ The Attorney-General
Let me make this point clear, that when the Socialist Party introduced the Leasehold (Temporary Provisions) Bill some time had elapsed since the Final Report had been produced, and there was a good deal of time between the passage of that Act and the end of the Labour Government. Is it not right that at no time prior to that 1697 Election had the party opposite declared themselves in favour of leasehold enfranchisement?
§ Sir L. Ungoed-Thomas
I dealt with all the times when I had them before me on Committee stage. I dealt with every single date involved, and there is no doubt that in June, 1950, the Report was made and the Leasehold (Temporary Provisions) Act was brought in shortly afterwards. During the rest of the short time, until we were defeated, we were considering the position and the recommendations made in these Reports. We came down as a party in favour of leasehold enfranchisement.
One reason why I am grateful for this debate today is that, as a result of the statement of the Attorney-General and others on his side of the House, it has become perfectly clear—as the hon. Member for Cardiff, North, was good enough to admit—that the difference between the Government and ourselves on this issue is a difference of principle upon leasehold enfranchisement.
§ Sir P. Spens
Did the right hon. and learned Gentleman's party come down on the terms of this Bill for leasehold enfranchisement or on the terms of the Minority Report, because they are very different?
§ Sir L. Ungoed-Thomas
I would deal with all this if I had the time. My party is in favour of the principle of leasehold enfranchisement. My party is also supporting this Bill in the Lobby. That does not mean that it is not open to any hon. Member to produce Amendments which might be adopted, even by my own party, in the Committee stage of the Bill. Therefore, the right hon. and learned Gentleman really cannot run away from it by suggesting that we are bound by every single provision of this Bill. I invite him to vote for the principle of the Bill, and any reasonable accommodation which it is possible to give on the Committee stage we will gladly consider.
May I come to the principles involved? The first and fundamental principle and that which distinguishes this Bill, and the principle embodied in this Bill, from that of the 1954 Act is that which my hon. Friend the Member for Oldham,West (Mr. Hale) and myself ventured to state in the Minority Report. The 1698 Report refers to the proposals for extending security of tenure by some kind of rent restriction provision, such as the Government introduced in the 1954 Act, and it said this:These proposals"—such proposals as are contained in the 1954 Act—are designed to provide some measure ofsecurity of tenure of dwelling houses at rack rent whilst avoiding unfairly inflated rack rents as the price for renewal. The complaint of the ground lessee, however, is that his house falls to the landlord at the end of the lease and that it should remain his, subject to the landlord being paid for the land. That is the problem that has to be met.That is the essential problem of the ground lease system—the problem of securing to the tenant the house which is on that ground, which he or his predecessors have built, in which he and his predecessors have lived and which he regards as morally his own.
The hon. Member for Buckinghamshire, South (Mr. R. Bell), who is no longer in his place, said that a problem is not created by an injustice. That was an extraordinary thing to say. His was one of the coldest, most legalistic and unsympathetic speeches that I have ever heard in the House. Of course a problem is created by an injustice. It is very easy for the hon. Member for Buckinghamshire, South and, indeed, for the Attorney-General—as I thought he did in a good deal of his speech—to rely upon legal matters and to say, "The law says this and therefore it must be so."
But the whole of the problem which is being created here arises because the law is objectionable. We should not be here if the law itself secured justice. This is the question: is there social injustice here or not? It is no answer to that problem to say, "The law says that there is no legal injustice."The first point to be considered, therefore, is: is there social injustice or is there not?
The evidence produced before the Leasehold Committee established overwhelmingly the social injustice which was involved. This is significant: even on the opposite benches, hon. Members who have intervened in the debate and who have any direct knowledge of the social conditions in South Wales under the leasehold system, and who know at first hand the effect on the lives of the 1699 people living in houses under ground leases, are in favour of leasehold enfranchisement. Of course, we have the other interests—the vast preponderance of interests ranged on the other side—in favour of the landlords.
The argument, in so far as it is a legalistic argument, such as was put forward at its highest by the hon. Member for Buckinghamshire, South, is founded upon sanctity of contract, and it is in answer to the argument founded upon sanctity of contract that we say that there is no sanctity in a contract which in its foundation is founded in inequity.
My hon. Friend the Member for Pontypool asked a question about the difference in price between freeholds and these long leaseholds. The evidence before us was that there is no discernable difference in price between a 99 years'lease of the property and the freehold of the property. That has been stated again and again and I have never seen it effectively gainsaid anywhere. In other words, what the landlord is doing in granting a 99 years' lease is to get the equivalent of the whole of the freehold price of the property and, at the end of the lease, to get the house as well.
This, of course, is a divorce by the landlord between the land which he owns and the social responsibility which he ought to accept. We are not objecting to occupational leases, and when the Attorney-General made great play about asking whether we were objecting to occupational leases, and whether we were attacking the whole leasehold system, he knew as well as anybody that we were not and that it is not contained in the Bill. We are concerned with and limiting ourselves to the ground lease system. What has happened in the ground lease system is that the landlord has contributed nothing at all towards the development of the land but, nevertheless, retains his grip on the land.
I am sure the Liberals, or National Liberals opposite, will not object to the evidence of the Land Inquiry Committee, nor I am sure will the Attorney-General object to the evidence of Sir Frederick Pollock, who the right hon. and learned Gentleman and all of us know is one of the greatest lawyers of 1700 this century. This is what the Land Inquiry Committee said regarding the ground leases system:Speaking generally the introduction of the system has only proved possible where landowners were few and acted in actual or tacit combination. Its parents are the monopoly of the landlord and the necessity of the tenant and its creation has aggravated all the evils of land monopoly.Sir Frederick Pollock said:It is evidently absurd to speak of freedom of contract in relation to such a system.I am perfectly content to rely on that evidence as establishing, as it would to the satisfaction of any reasonable person, that this system of ground leases is founded in inequity and an unconscionable bargain. There is no sanctity in the contract upon which it is based.
The matter has become even worse in the course of years because, as the hon. Member for Bury St. Edmunds (Mr. Aitken) very fairly said, individual landlords are more desirable from every point of view—more desirable, that is, than the big financial corporations. We have gone a step further since the founding of this system. We do not now have individual landlords with individual attachment to property. We now have vast financial corporations speculating in homes and lives of the people.
The hon. Member for Bury St. Edmunds gave the case away when he said, "We are very willing to sell the freeholds." He has no attachment to property in Cardiff as such. Cardiff is nothing to him except as a pot of speculation. It is the source of investment from which money is sucked out. That is what Cardiff means to financial corporations which speculate in the land there. We have the absentee landlord system in its worst form—its most impersonal form—in which of necessity the landlord is the least interested of any form of landlord in the property involved.
§ Mr. John Foster (Northwich)
Does the hon. and learned Member apply the same strictures to miners' pension funds which buy ground leases?
§ Sir L. Ungoed-Thomas
I apply the same strictures to any organisation which sets out to do as Western Ground Rents does in Cardiff. Of course anyone may invest in anything. The trade unions are in favour of leasehold enfranchisement. I am not casting personal asper- 1701 sions on the hon. and learned Member for Northwich (Mr. Foster), or on his hon. Friend the Member for Bury St. Edmunds. I hope I shall never cast personal aspersions on either. But it is of the essence of the organisation and of the system represented by Western Ground Rents that we have this impersonal relationship and this absentee landlordism at its worst.
The 1954 Act does not deal with the ground lease problem which I have indicated. As my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman) said, it provides at the end of the lease for the payment of a market rent. It refers to it as "a reasonable rent."If the Attorney-General wishes to see all the arguments on that point, he will see that it was discussed at length in the Committee on the 1954 Landlord and Tenant Act. It is not a reasonable rent in the sense that it takes into consideration the personal circumstances of the tenant and the history of the property, or anything of that sort. In fact, the personal circumstances of the tenant are expressly excluded in the Act from being taken into consideration in arriving at the rent for the property. I say this of the 1954 Act: it will not be operated because it will not be worth while for the tenant, where the landlord is unwilling, to go to the expense of court proceedings in order to force him to provide a market rent for the property.
Take the effect of the 1954 Act on two houses next to each other in one village, both old, poor houses occupied by working men. The first is protected by the 1923 and other Rent Restriction Acts and the rent is based upon the pre-1914 rents. Next door is an identical house built by the occupier, lived in by him and by his father and grandfather before him. At the end of the ground lease the ground lessee with a bigger interest in the property than the first tenant I mentioned
§ —who is merely an occupational lessee—by the grace and favour of the Conservative Government, has to pay the full market rent for the identical kind of house for which the first tenant pays a pre-1914 protected rent. That is a travesty of justice to the ground lessee, and to say that this Government have done anything for him is a rather cruel and cynical joke.
§ We have put in this Bill a provision for 20 years'purchase. That is open to consideration and amendment by the Committee and, as the right hon. and learned Gentleman the Member for Kensington, South (Sir P. Spens) said fairly, it was not a provision contained in the Leasehold Minority Report, but it does not lie in the mouths of the Conservative Party to take an objection to it. They themselves have provided for enfranchisement in their Leases (Scotland) Act, and have enacted that ground leases in Scotland which have one, two or three years to go are to be treated as though they had 30 years to go.
§ All we are saying here is that the same kind of arrangement should be made with regard to leases within this Bill. The Bill which we put before the House for consideration is based upon the leasehold enfranchisement principle. We have considered details time and again in this House and there is no time now to deal with detailed points. What we are concerned with, is the principle of leasehold enfranchisement. We, as a party, come down firmly in favour of leasehold enfranchisement and I have no doubt that the party of the landlords will come down on the opposite side.
§ Mr. G. Thomas rose in his place and claimed to move, That the Question be now put.
§ Question put, That the Question be now put:—
§ The House divided: Ayes 87, Noes 38.1703
|Division No. 46.]||AYES||[3.59 p.m.|
|Albu, A. H.||Burton, Miss F. E.||Delargy, H. J.|
|Anderson, Frank (Whitehaven)||Butler, Herbert (Hackney, S.)||Dodds, N. N.|
|Attlee, Rt. Hon. C. R.||Callaghan, L. J.||Donnelly, D. L.|
|Bacon, Miss Alice||Castle, Mrs. B. A.||Edwards, W. J. (Stepney)|
|Beattie, J.||Chetwynd, G. R.||Evans, Albert (Islington, S.W.)|
|Bellenger, Rt. Hon. F. J.||Collins, V. J.||Fienburgh, W.|
|Beswick, F.||Corbet, Mrs. Freda||Fletcher, Eric (Islington, E.)|
|Bing, G. H. C.||Dalton, Rt. Hon. H.||Follick, M.|
|Bottomley, Rt. Hon. A. G.||Davies,Rt. Hn. Clement(Montgomery)||Gaitskell, Rt. Hon. H. T. N.|
|Bowles, F. G.||Davies, Stephen (Merthyr)||Gibson, C. W.|
|Broughton, Dr. A. D. D.||Deer, G.||Grenfell, Rt. Hon. D. R.|
|Griffiths, Rt. Hon. James (Llanelly)||Lindgren, G. S.||Probert, A. R.|
|Grimond, J.||Lipton, Lt.-Col. M.||Proctor, W. T.|
|Hale, Leslie||Llewellyn, D. T.||Reeves, J.|
|Hall, Rt. Hn. Glenvil (Colne Valley)||Mainwaring, W. H.||Skeffington, A. M.|
|Hamilton, W. W.||Mallalieu, E. L. (Brigg)||Sorensen, R. W.|
|Healy, Cahir (Fermanagh)||Marquand, Rt. Hon. H. A.||Sparks, J A.|
|Holman, P.||Mellish, R, J.||Stewart, Michael (Fulham, E.)|
|Hudson, James (Ealing, N.)||Mitohison, G. R.||Taylor, John (West Lothian)|
|Hynd, H. (Accrington)||Morgan, Dr. H. B. W.||Thomas, Ivor Owen (Wrekin)|
|Isaacs, Rt. Hon. G. A.||Morris, Percy (Swansea, W.)||Ungoed-Thomae, Sir Lynn|
|Janner, B.||Mulley, F. W.||Wallace, H. W.|
|Jeger, George (Goole)||Noel-Baker, Rt. Hon. P. J.||Weitzman, D.|
|Jeger, Mrs. Lena||Orbach, M.||West, D. G.|
|Jenkins, R. H. (Stechford)||Owen, W. J.||White, Mrs. Eirene (E. Flint)|
|Jones, Rt. Hon. A. Creech||Padley, W. E.||Williams, W. T. (Hammersmith, S.)|
|Jones, David (Hartlepool)||Pannell, Charles||Woodburn, Rt. Hon. A.|
|Kerby, Capt. H. B.||Pargiter, G. A.|
|Key, Rt. Hon. C. W.||Parkin, B. T.||TELLERS FOR THE AYES:|
|Lewis, Arthur||Plummer, Sir Leslie||Mr. G. Thomas and Mr. Watkins.|
|Baxter, Sir Beverley||Harvey, Ian (Harrow, E.)||Pitman, I. J.|
|Beach, Maj. Hicks||Heald, Rt. Hon. Sir Lionel||Redmayne, M.|
|Bennett, F. M. (Reading, N.)||Heath, Edward||Rees-Davies, W. R.|
|Braine, B. R.||Hornsby-Smith, Miss M. P.||Robertson, Sir David|
|Brooke, Henry (Hampstead)||Hughes Hallett, Vice-Admiral J.||Russell, R. S.|
|Buohan-Hepburn, Rt. Hon. P. G. T.||Jones, A. (Hall Green)||Stuart, Rt. Hon. James (Moray)|
|Crookshank, Capt. Rt. Hn. H. F. C.||Legh, Hon. Peter (Petersfield)||Taylor, Sir Charles (Eastbourne)|
|Crosthwaite-Eyre, Col, O. E.||Low, Rt. Hon. A. R. W.||Thornton-Kemsley, Col. C. N.|
|Crowder, Sir John (Finchley)||Lucas, P. B. (Brentford)||Ward, Miss I. (Tynemouth)|
|Doughty, C. J. A.||Lucas-Tooth, Sir Hugh||Williams, Rt. Hn. Charles (Torquay)|
|Drewe, Sir C.||Macleod, Rt. Hn. Iain (Enfield, W.)|
|Foster, John||Manningham-Buller Rt. Hn. Sir R.||TELLERS FOR THE NOES|
|Fraser, Hon. Hugh (Stone)||Moore, Sir Thomas||Sir Patrick Spens and|
|Gough, C. F. H.||O'Neill, Hn. Phelim (Co. Antrim, N.)||Mr. Ronald Bell|
§ Whereupon Mr. Speaker declared that the Question was not decided in the Affirmative, because it was not supported by the majority prescribed by Standing Order No. 30 (Majority for Closure).
§ Mr. Frank Bowles (Nuneaton)
On a point of order. I was in the Chamber when the Question, "That the Question be now put," was put, Sir. When you said, "I think the Ayes have it," not a single voice was raised in opposition. I therefore put it to you, Sir, although I did not raise it during the Division, that the Ayes had it.
§ It being after Four o'clock, the debate stood adjourned.
§ Debate to be resumed upon Friday next.