LETCHWORTH GARDEN CITY CORPORATION BILL (By Order)

HC Deb 20 March 1962 vol 656 cc290-347

Order for Second Reading read.

Motion made, and Question proposed, That the Bill be now read a Second time.

7.4 p.m.

Lord Balniel (Hertford)

I think that it would be most useful to assist the House in giving consideration to the Bill if I outlined as briefly as I can something of the history which has led to the introduction of this Bill.

As long ago as 1894 a book was written which was to revolutionise the outlook of town planning in this country and abroad. The book was "Garden Cities of Tomorrow" and was written by the late Sir Ebenezer Howard. In 1903, in order to put into practice the principles which were enunciated in that book, the late Sir Ebenezer Howard formed his Garden City Company Limited, of which, incidentally, the president was the late Lord Salisbury, and one of the most prominent members was a former Member for Hertford, Mr. A. J. Balfour.

The company acquired some 5,000 acres of freehold land in a rural part of Hertfordshire in the parish of Letch-worth. The purpose of the company was to build a garden city in Letchworth, and ultimately this garden city, which won international esteem, was built. A sister foundation, Welwyn Garden City, lying within my own constituency, followed, and later Letchworth Garden City was to become the forerunner of the new towns built since the war, except that they were built with public finance as opposed to private finance.

The foundation of the company rested on two basic principles, first that the town was to be created for the benefit of the community itself; and the second, almost a consequential, principle was that the investors should receive only a limited return and that any increment or profit over that limited return should be used for the benefit of the town itself and of the townspeople. The company, until very recently, adhered, both by its method of development and by the written articles of association, firmly to these two principles. In developing the town, it has retained the freehold intact so as to preserve unity of development, so as to preserve the integrity of the town, and so as to provide amenities which in a whole town's development cannot easily be provided when there is multiple ownership.

But the actual building development has taken place on the leasehold system, and when encouraging business people to come and settle and build in Letchworth Garden City, and in encouraging private individuals to come and settle and build in Letchworth Garden City, it has always been made clear that the leases, when they were renewed or extended, were to be assessed only at their site value, that is, excluding the value of any property built on the land. It was on this understanding that businesses and individuals were encouraged to come to Letchworth, and it was on this understanding that they built in Letchworth.

Also, in adhering to this principle which I have just mentioned, that the investors should receive only a limited return for their investments, it was written into the articles of association that there should be a limitation of dividend of 5 per cent.; and it was also written into the articles of association that there should be an obligation to apply, in the words of the article, any balance of profit after such payment as aforesaid"— that is, the 5 per cent.— to any purpose which the Company or its Directors may deem for the benefit directly or indirectly of the town or its inhabitants. So here one had a picture of how the dividends were to be limited to 5 per cent. and any profit over that 5 per cent. should be applied for the benefit of the townspeople themselves. Really, what they were doing by limiting this dividend to 5 per cent. was trying to create the concept of this company as a trustee for the inhabitants—and not as a speculative landlord.

Also the articles of association looked forward to the time when development shall cease, when the assets shall be distributed, and the company shall be wound up. The articles of association lay down that, first, the capital shall be repaid to the investors and then a bonus dividend not exceeding 10 per cent. shall be paid to the investors, but that anything else shall be ploughed back for the benefit of the townspeople or of the town itself.

It has been the very bedrock of this company's existence, it has been inherent throughout its existence since its foundation in 1903, that when development ceased, when it was wound up, this freehold, kept intact from its very earliest day, should be transferred to a public body.

A Bill somewhat of this nature would have been introduced or presented to the House even if the events of the past few months or years had not taken place. This assumption that the freehold of a town should pass to a public body acting as a trustee for the community has been absolutely basic to the existence of this company since 1903. Perhaps here I should quote as an example a resolution which still exists, passed by the company on 15th September, 1949.

It reads: That the stockholders approve in principle the ultimate transfer when the development of Letchworth is substantially completed, on the Company's undertaking to the local authority or other suitable public body, subject to satisfactory terms being then agreed. This concept of transferring a town when substantially completed to a local authority was, of course, then following the provisions of the New Towns Act, 1946. But it is no longer Government policy that whole towns should be owned by local authorities, and this is not proposed in this Bill. What is proposed is that the transfer should take place to a corporation analogous to corporations which we set up only three years ago for the running of new towns.

From 1903 to 1956, in developing the town, the company adhered to these principles. People were induced to spend money on their leaseholds in the knowledge that the freeholders were limited to a return of 5 per cent. There was no inducement at all to the company to rack rent their properties. The lessees must have spent many thousands of pounds in the clear understanding that their leases would be renewed, having regard only to the value of the site clear of any buildings.

Then about this time a series of events took place which made the company vulnerable to take-over bids and, rightly or wrongly, in order to defeat a particular take-over bid, the company removed the limitation of 5 per cent. on dividend. This obviously made the company a great deal more attractive to the shareholders, and it resulted in that take-over bid being resisted. But it also made the company a great deal more attractive to subsequent take-over attempts.

This change—the removal of limitation on dividend—would have been undreamed of in earlier years. It was a departure from the principles of the company. Also it was legally impossible until the passing of the Companies Act in 1947, because until then a court order would have been required before any change in the articles of association could have been made. We therefore have the picture of a situation where this House, by its own legislation, made this company vulnerable to take-over bids, and in August, 1960, speculation began to take place. Ultimately the voting control of First Garden City Limited passed to The Hotel York Limited. That company, in gaining voting control of the company, gave a clear undertaking.

In a letter from the chairman of The Hotel York Limited, dated 19th November, 1960, it was stated that: In the event of the offer being unconditional it would be the intention of York, of which I and my family are the controlling shareholders, to ensure the future of Letch-worth as a unified estate in accordance with the principles upon which the town has been developed since its foundation by your Company in 1903. This was a very clear and very definite undertaking which must have had a substantial influence on the shareholders.

Mr. Ellis Smith (Stoke-on-Trent. South)

Who signed that letter?

Lord Balniel

The chairman of The Hotel York Limited.

But it became clear very soon that the company under its new control was abandoning the principles upon which the town had been founded and upon which it had been managed. Urgent action was necessary if the unity of the town was to be preserved and the interests of the leaseholders were to be protected. Letchworth District Council in July, 1961, gave notice to the public in the national and the local Press of its intention to promote a Bill, and it gave an indication of what the contents of the Bill would be.

The purpose of this Bill is to vest the estate in a public body. This is in no way a doctrinaire argument between public ownership and private ownership. The purpose of the Bill is to honour and give effect to the declared intention of the company which has been relied upon by thousands of leaseholders. Let me be quite frank. The purpose of the Bill is also to frustrate the efforts of those who are now seeking to glean a rich harvest from the townspeople by dishonouring the intentions of the company.

The Hotel York Limited has acquired a controlling interest in First Garden City Limited, but when one acquires a controlling interest in any concern, and more particularly when one obtains almost a monopoly control of property involving 25,000 people, surely one also assumes the obligations, responsibilities and duties of that body. In spite of the undertaking which was given, freeholds have been sold and selected lessees have been offered the freehold reversion of their properties at prices based on the assumption that the lessee's improvements belong to the freeholder.

The Bill has the unanimous support of all political parties in Letchworth. I believe, and I speak from my knowledge as a Member for one of the Hertfordshire constituencies, that it also has the overwhelming support of most of the population in Letchworth.

I think that I should now turn to the most important provisions of the Bill. It establishes a corporation, somewhat similar to the corporations which have been established to run the new towns. The corporation will acquire the assets of the company and fair compensation will be paid. The corporation will be bound to manage the estate as a unified estate in accord with the principles on which the company was founded.

Part I is fairly straightforward. Clauses 1 to 4 give the title, the incorporation of the Land Clauses Acts in so far as they apply and the interpretation of various phrases. Part II lays down the method by which the corporation shall be established for the management of Letchworth Garden City and also its constitution.

Clauses 5 and 6 create a public authority, to be known as the Letchworth Garden City Corporation, composed of six members—four of whom shall be appointed by the Minister of Housing and Local Government, one by the county council and one by the district council. Clauses 7 to 10 contain the detailed provisions for the membership of the corporation.

With Clause 11 we come to a very important part of the Bill. It lays down the objects of the corporation. The first paragraph gives the corporation powers analogous to those given to the Commission set up under the new Towns Act, 1959. The second paragraph provides that the corporation shall be guided by the same principles as those which animated the original company—the first being that the town shall be managed as a unit and the second that in the renewal of ground leases regard shall be had only to the site value clear of any buildings; in other words, that the benefit of improved values shall go to the lessees.

Part III provides for the transfer of the undertaking, which, if the Bill is acceptable to the House, will take place on 1st January, 1963. Clause 15 determines the method of compensation. It lays down that if agreement cannot be reached between the corporation and the company a sum shall be paid, determined by the Lands Tribunal, as if the estate were sold in the open market between a willing seller and a willing buyer, on the basis that the estate is to be valued as an entity and managed in accordance with the principles followed by the company since 1903.

This method of valuation is crucial to the Bill. It was on this basis that Hotel York Limited obtained control of the company, and if it were the intention of Hotel York Limited to honour the undertaking which it gave in gaining control this basis of valuation must surely be acceptable to it. I do not deny that there could be an alternative method of valuation—the break-up valuation of the estate—which could have been used, but since, in winning the confidence of the shareholders, the company disclaimed the intention of breaking up the estate, it would be unreasonable to use that basis of valuation for compensation.

Clause 16 makes the corporation responsible for acquiring what are called the "included interests". These are those parts of Letchworth Garden City which have been sold since 20th July, 1961. I appreciate that the Clause has caused some concern to some of my hon. Friends, and I agree that the House should be most zealous in examining retrospective legislation of any kind. The 20th July, 1961, was the date on which the urban district council formally gave notice that it intended to promote the Bill, and also announced the Bill's intentions. Any sale which has taken place since that date—and there have been very few—has taken place in the clear and certain knowledge that it would be brought within the scope of the Bill.

I understand the worries of my hon. Friends, but I think that they will understand that some protection of this kind was necessary; otherwise it would have been possible for the freeholder to sell off the entirety of the estate, either while the Bill was being prepared or while it was passing through Parliament.

The other important Clauses are the financial ones, the most important of which would appear to be Clause 26, which gives the corporation power to borrow, in the open market, money for the running of the town and to compensate the company. Clause 29 gives the local authorities power to borrow money in order to make loans to the corporation, and Clause 32 gives the corporation power to precept the local authorities in the event of there being a deficiency in the running of management costs in the town.

I apologise for having wearied the House for a long time in introducing the Bill. Its history is rather long and intricate, and it contains 42 Clauses some of which are fairly complex. But although the history is long and intricate and the Bill itself is rather complicated, its purpose is very simple. Its purpose is to save a noble ideal which has been sustained for sixty years, which has developed a flourishing town of 25,000 people, and has brought a considerable measure of happiness and contentment to the townspeople. The Bill seeks to prevent that noble ideal from being smashed by purely commercial considerations. The purpose of the Bill is to honour the undertakings given by the company, time and time again in the past sixty years, and to protect the interests of thousands of leaseholders who have relied upon those undertakings.

I commend the Bill to the House, in the belief that it has the support of the overwhelming mass of the population of Letchworth Garden City and in the hope that the House will not today stand aside and allow a noble ideal to be destroyed. In that hope and with that belief I commend the Bill to the House for Second Reading.

7.28 p.m.

Dr. Barnett Stross (Stoke-on-Trent, Central)

After the speech of the hon. Member for Hertford (Lord Balniel) there is very little I need say. I shall not detain the House for many minutes. First, I congratulate the noble Lord upon the lucid way in which he presented his case. It is true that we are not discussing any issue involving the merits of public ownership v. private ownership. We are thinking in terms of the benefit of unified ownership of this large area of land on which 25,000 people have built their homes and 100 factories have been built so that the people shall work in them.

The benefits are of two types. There is obviously the economic aspect, so well put by the noble Lord—the future benefit of the town as a whole—but there is a second benefit which is just as important, namely, the method of town planning which is achieved by this technique.

It is true that since the war this principle has been upheld, both in urban redevelopment schemes and in the creation of our new towns. The only monopoly that we are considering is a monopoly specifically created by a large group of people who gradually went to Letchworth and took advantage of the promise made to settle there.

The second thing we may consider is the destruction of this communal monopoly—if I may use that term—and its replacement by a private monopoly of the land of the entire town. This private monopoly has already shown its intention of placing no limit to its desire to exploit any advantage it has.

The third point must influence us, but it has been dealt with already by the noble Lord. It is that, when the takeover bid was made, a specific promise was given that there should be no departure from the original intention, dating back to 1903. The noble Lord did not go into detail, but I will take a few moments to recall what has happened within the last seven or eight months.

In July, three plots of land were sold—10 acres for £50,000, two acres for £6,500 and two acres for £7,000. This land had been bought originally for £40 or less an acre and was worth that price right up to 1938, when further land was bought. In November, 1961 selected lessees were written to and offered freehold reversion of their properties—at a price. I agree that this, again, is a complete denial of the policy of the original company—a policy which, we must stress, has never been rescinded and which York Hotel Limited promised to uphold when it made this take-over bid.

There is, however, another point, something which I think is worse. So far, we have merely had a breach of a solemn promise, but this last point is the use of a Minister's name to give an impression to shareholders and to the public which was completely unfounded.

On 10th February, 1962, the director of this company which succeeded in seizing Letchworth wrote to every shareholder and alleged that the Minister of Housing and Local Government, on 30th September, 1960, had stated that he would have no objection to the three resolutions passed by the original company in 1949 being rescinded. This lady concluded: This was confirmed in writing on 23rd November, 1960. She meant the then Minister.

The right hon Gentleman's letter is public property. I have a copy of it here. This lady's statement was, I think, the most odious statement to make in his name, because it was quite untrue. I will read what the right hon. Gentleman said, and if he wishes to contradict me he can quickly do so, for I see that he is present for the debate, although he is now Chief Secretary to the Treasury.

The right hon. Gentleman's letter refers to the three resolutions. The first resolution was an offer to be as helpful as possible in the further development of Letehworth, so that the Greater London plan could be successfully implemented. The Minister's comment upon that was: This seems to be a wholly admirable resolution… The second resolution asked the Minister for a list of names from whom the directors would appoint two further directors. The right hon. Gentleman said that this was not necessary and that the company could rescind that resolution if it wished. He felt sure that the Government could trust the company to carry out the original intentions.

The third resolution is the important one. I will read out what the right hon. Gentleman's letter said about this one: The third resolution approved in principle the ultimate transfer, when the development of Letehworth is substantially completed, of the Company's undertaking to the local authority or other suitable public body. This followed the provision in the New Towns Act, 1946, envisaging the transfer to local authorities of new towns when substantially completed. That provision has been repealed. There has been substituted a provision for the setting up of a Commission, appointed by the Government, to own and manage the assets of the new towns when their development is substantially completed. The ownership of whole towns by local authorities no longer represents the policy of the Government. Now we come to the last and most important paragraph in the right hon. Gentleman's letter, in which he gives his views: Nevertheless, I realise that in the circumstances of Letehworth it might be desired by the general body of Letehworth citizens that there should be some assurance that the interests of the founders should continue to govern the development of the town. Therefore while I would not think that that resolution in the original terms would be appropriate today and I would not in any way regret its being rescinded, I can conceive that a resolution expressing determinations, by some means or other, to maintain the original objects of the Company for the benefit of the town would be appropriate in its stead and would be generally welcomed. How could that be considered to mean what this lady, the managing director of the take-over company, said it meant to every shareholder and to the public at large? How could this justify her words that the Minister had no objection to the resolution being rescinded?

We have heard about the purchase price that is to be offered by negotiation and agreement or by arbitration if these fail and it is more than handsome. This Bill means for the citizens of Letchworth an imposition of an extra 1s. 3d. rate for some years to come. They voted on this. There was a town's poll and 25 per cent. voted—a very high figure indeed for this sort of thing. By seven to two, they agreed to accept this burden in order to be rid of the danger of their garden city being destroyed.

Before I sit down, I want to quote a sentence in an article in the Economist of last week. Referring to this 1s. 3d. rate which the citizens of Letehworth must now bear, the article said: However unfair this may have seemed to leaseholders, they have accepted the burden by a vote of seven to two in a recent town poll; and parliament's reaction may well be much the same"— I hope that it will be the same, by ten to one— in the hope of preserving intact this monument to town planning on which much of Britain's new-town building, with all its prestige, has been based. Nowhere have I seen any reputable newspaper or columnist suggesting that the Bill is not well founded and should not be supported by this honourable House. I sincerely hope that the majority for it will be overwhelming. Wrong things have happened. I personally cannot see any objection to people pursuing private gain, but it should not be done with even a shadow of misrepresentation when so much is at stake. I hope that, when we go into the Division Lobbies, we shall see that the House overwhelmingly supports the citizens of Letchworth.

7.40 p.m.

Mr. Speaker

Mr. Mawby. I am calling the hon. Gentleman to move his Amendment, if he so desires.

Mr. Ray Mawby (Totnes)

I do not wish to move the Amendment, and the reason I put it down was to make certain that this Bill was debated. It raises large issues, and I believe that I am quite correct in speaking against the Motion, That this Bill be read a Second time, and I shall give my reasons for putting the Amendment on the Order Paper.

I believe that this is a very important Bill, and that it is one in which—

Mr. Charles Pannell (Leeds, West)

Why did they not put up an important Member for a start?

Mr. Mawby

With reference to what the hon. Member for Leeds, West (Mr. C. Pannell) has just said, I am a very unimportant Member, but I believe that I am a Member of Parliament with just as much right as anybody else to raise what I believe are points which have concerned me since first seeing this Bill. I hope that the House will give me the same treatment which has been accorded to the other speeches which have been very well delivered and to the point. I hope that my rambling will at least show some semblance of what I feel about the Bill.

I see this Bill as an effort by an urban district council to nationalise or municipalise what, as far as I can make out at present, is an ordinary property company. Therefore, as I see it, it ought to have the opposite point of view put to the House. It is interesting to recall, when talking about the original intention of the company when setting up this garden city, that its original intention, when it started off with very good ideals, was to raise the capital necessary on fixed-interest mortgage debentures. In fact, on that basis it failed to obtain the capital needed. Therefore, it raised it by ordinary share capital, and naturally when one raises risk capital one must make certain that there is a reasonable return to the shareholders to make sure that they will invest. Therefore, from the very beginning this has not been truly a trust but it has been a company. Nevertheless, in its original articles of association it restricted itself in many ways which an ordinary property company would not normally do, and it is important that we should work on that basis.

Mr. John Diamond (Gloucester)

Would not the hon. Gentleman agree that the method by which the capital was raised has no relevance whatever in considering the objections of the organisation? If they are concerned with those objects, and he has said they were the objects of a trust, that is not in the slightest degree invalidated by the fact that the capital was raised in one form or another.

Mr. Mawby

The important thing is that, as far as I can see, the original articles of the company never set this out to be a trust as such. In fact, the company had written its articles in such a way that it was a property company, with special additions, I agree, but basically to make certain that there were shareholders prepared to risk capital in investing in this company. I believe that this is an important point that ought to be made at the very beginning.

As my noble Friend the Member for Hertford (Lord Balniel) has pointed out, development has proceeded right from the word "go" on the leasehold system, and one sees that there was good reason for the development of the leasehold principle at that time, which was mainly to ensure that town planning of the estate was rigidly controlled by the company. In the absence at that time of town planning by the local authorities, the company, being the ground landlord, could itself control the development of the town, and was not leaving it to develop in a slap-happy way, because town planning arrangements were not then in being.

Therefore, one can see in the first reasons for setting up the company and working on the leasehold system the basis on which it could make certain that it could, as a company, effectively control the development of the town along the lines on which the company felt it should develop. Of course, there have been many changes since that time. For instance, the gas and electricity undertakings of the company have been nationalised, and, therefore, the company is no longer completely in control. Secondly, a rigorous system of town planning has been instituted by legislation, and, at the present moment, I would doubt if the company has very much say in how the town shall further develop, because, in fact, planning permission must be obtained from a public authority, whose duty it is to see that the statutes are carried out in the proper planning of the town. Therefore, the basic reason for operating the leasehold system has mainly gone, because the planning side has been taken over by the planning system, whereby the local authorities have very strict control over the development of buildings of any kind.

By this time, or by the time the town planning system had developed, the principle for which the company was formed was, in my opinion, accomplished, but then the urban district council asked the then Minister of Town and Country Planning if he would take over the company under tthe new towns procedure. At that time, considering the political colour of the Government in office, one would naturally expect an urban district council to ask that that should be done, but, in fact, it is now general knowledge that the Minister of the day, now Lord Silkin, decided otherwise and that the company was not to be taken over.

Mr. W. A. Wilkins (Bristol, South)

He was more impartial than the hon. Gentleman.

Mr. Mawby

That may be quite true. In fact, I would not be speaking if I were impartial. It is because I hold a view about this Bill and because I am partial that I am making this speech.

Mr. J. T. Price (Westhoughton)

Read your brief.

Mr. Mawby

Does the hon. Gentleman wish to interrupt?

Mr. Price

I say that the hon. Gentleman is speaking because he holds a brief, not because he holds a view.

Mr. Mawby

It is rather extraordinary that hon. Members opposite should suggest that because I can put two words together I am reading from a brief which someone else has provided. That is completely wrong; in fact, I am making a speech which I have spent a long time preparing. If hon. Gentlemen opposite feel that it is a brief, then I am making more progress than I had hoped I would make, because apparently I am making a better job of it.

The main point that I want to make here is that while the Minister of Town and Country Planning at that time decided that he would not take over the company under the new towns procedure, nevertheless he did ask the directors of the company if they would make certain changes; in other words, whether they would pass a number of resolutions, which are now well-known to the House, because the hon. Member for Stoke-on-Trent, Central (Dr. Stross) has read out the resolutions that were moved at that time.

The resolution which really matters is the third, which reads: that the stockholders approved in principle the ultimate transfer when the development of Letchworth was substantially completed of the undertaking to the Local Authority or other suitable public body subject to satisfactory terms being then agreed. With the other two, that resolution was passed.

If, as has been said, the principle was inherent in the company's articles, why did the Minister at the time have to twist the arm of the company to pass a resolution which would only repeat what was said to be inherent?

Mr. Jeremy Thorpe (Devon, North)

I have listened to the argument of the hon. Member with great care and attention. At one stage he said that he did not find it surprising, bearing in mind the colour of the then Government, that the local council should have approached the Minister with a request to take over the company. I agree with him so far that doctrinally there were reasons for supposing that the Minister would be disposed to that action. Does he, therefore, not agree that it is all the more significant that a Labour Minister of Town and Country Planning should not have been willing—in fact should positively have opposed—to agree to the taking of this company into public ownership? Does he not think that coming from a Labour Minister that is a fair indication of the benefits of private enterprise as worked under this system?

Mr. Mawby

That may well be true. What I am saying is that there was a point at which the Minister was tending to suggest to the directors that they must pass these three resolutions if he was to leave them alone. That is hearsay, and I do not know if it is correct. I was not here at the time, but it is obvious that the fact that the then Minister suggested that the company should pass these three resolutions apparently means that he was not seized of the idea, which has been put forward earlier, that it was inherent in the company's articles that the company should ultimately be transferred to the local authority.

The hon. Member for Stoke-on-Trent. Central mentioned the letter written by my right hon. Friend who was then Minister of Housing and Local Government and is now Chief Secretary to the Treasury to Mr. Edge, who was then the company chairman. This letter is interesting. Incidentally, I should like to take up with the hon. Member for Stoke-on-Trent, Central a slight misrepresentation. I think that he was referring to a circular which was sent to the company's shareholders. I know that he did not intend to make that innuendo. This is a circular dated 10th February, 1952. It was being suggested that because the contents of the letter were not divulged to the shareholders a decision different from that expected by the chairman of the company was taken. I think that in her letter the chairman is trying to show that if the letter had been shown to the shareholders at that meeting the decision might have been different.

Dr. Stross

It is certain that the Minister's letter would have influenced shareholders against the take-over bid, or, rather, would have made them strongly in favour of keeping to the original intention dating back to 1903, for the Minister himself advised that that should be so.

Mr. Mawby

That may be true. I only wanted to clear up the misunderstanding. The chairman was making the point for a reason entirely different from that which the hon. Member had in mind.

Referring to the request that he should nominate two directors of the company, my right hon. Friend said in his letter: Certainly I as Minister would not wish to press the names of particular persons, nor would it embarrass me if the resolution were rescinded. I feel sure that the Government can count on the co-operation of the Company, without such special arrangements. In the light of that, if it is desirable for the company to be taken over, will my right hon. Friend be very unhappy about having to nominate members of the corporation? This is a Bill promoted by a local authority and gives the Minister power to appoint members of the corporation. In the light of what was said in the letter—

Mr. Scholefield Allen (Crewe)

The hon. Member is referring to 1962. As he is a supporter of the Bill, we are anxious to hear his explanation of the letter written by Mrs. Amy Rose in August, 1960, when she gave an undertaking to ensure the future of Letchworth as a unified estate in accordance with the principles upon which the town has been developed since its foundation by your Company in 1903. I hope that the hon. Member will deal with that, because it is the most significant thing in the whole letter.

Mr. Mawby

No doubt the hon. and learned Member will be able to make his own speech. I am not here to support either the promoters of the Bill or Mrs. Rose. What I want to point out are the dangers inherent in the Bill. This is a subject which can be raised only in Committee when the lady herself can be questioned, but I cannot represent the chairman of a company with which I have no contact and in which I have no shares. What her view was and why she took that view at that time are questions which are nothing to do with me.

The third point in my right hon. Friend's letter, on the subject of the third resolution, was: This followed the provision in the New Towns Act, 1946, envisaging the transfer to local authorities of new towns when substantially completed. That provision has been repealed. There has been substituted the provision for the setting up of a Commission… In the light of that, if it is desirable that the company should be taken over, why have the Government not taken the initiative and included the company under the New Towns Commission?

The next point is the fact that the Bill seeks to continue the leasehold system in perpetuity. That is Inherent in the Bill, and it is important that we should consider this factor. It ignores the fact that the main need for a leasehold has gone. Planning is now controlled by legislation and not by the company. This also denies any right of the leaseholder to negotiate the purchase of the freehold and is against the principle of the property-owning democracy. Even some hon. Members opposite are on record as supporting this principle. I will quote only one very recent statement. The hon. member for Cardiff, South-East (Mr. Callagham) said this in a supplementary question to my right hon. Friend the Minister of Housing and Local Government and Minister for Welsh Affairs: We welcome what the Minister has said about hardship. This concerned leaseholds. The hon. Gentleman continued: Would the right hon. Gentleman be willing to take into consideration in this matter that there is almost a universal demand in South Wales that leaseholders should be free to purchase the freehold of their property? Will he also take this into account before making a statement of policy and, if he is willing, introduce legislation?"—[OFFICIAL REPORT, 6th March, 1962; Vol. 655, c. 184.] This view is held by one of the Labour Front Bench spokesmen. I have no doubt that the hon. Gentleman holds this view because he believes that it is true.

If this is so, why should this desire be restricted to the people of South Wales? Are the people of South Wales different people? It may be argued that people will be happy to submerge their desires if their landlord is a public corporation. I very much doubt it. Not everyone is completely happy as a tenant of public corporations. The fact that people become tenants of corporations is no reason why they should no longer have the right which the hon. Member for Cardiff, South-East suggested that everyone wished to have, namely, the right to be able to negotiate if they so desire to purchase their freehold and become freeholders.

Mr. Philip Noel-Baker (Derby, South)

Did not the people in Letch-worth go there on the understanding that this arrangement would endure for all time?

Mr. Mawby

That may be so, but it is not reflected in the number of people who, I understand, have already applied to purchase their freeholds. This is a very important point.

If there are complaints—I believe that this is the general view of many hon. Members—that this is a monopoly landlord, I should give the facts. There are in fact 76 freehold plots totallying 694 acres which are not owned or controlled by the company. On that area and in those buildings are 5,825 ratepayers who are not company tenants in any sense of the word.

Mr. Diamond

May I say to the hon. Gentleman that I am in favour of the Bill and have been supplied with information by the Letchworth Corporation? May I ask him who supplied him with his detailed information about the number of plots, which are freehold, which are leasehold, and so on?

Mr. Mawby

This again is the argument which comes up time after time—I believe it is a wrong argument—that when a man is attacked by a lion he has no right to defend himself. This is completely wrong. [HON. MEMBERS: "Answer the question".] I will say where I got my facts from. I obtained my facts from the Parliamentary Agents who are representing the petitioners to the Bill. I do not believe that I have done anything wrong in obtaining this information. I believe that the Bill should be considered. Therefore, I have taken a great deal of trouble to find what information I could. It is right and proper that an hon. Member should obtain this information. This is what I have sought to do. These are facts which I am stating. They have been provided to me and, as far as I know, they are accurate. If anyone can dispute them, I shall be happy to argue with them.

The main point I want to make is that there are 5,825 ratepayers who are not company tenants. This is certainly not a monopoly company. The argument that a monopoly should be treated differently is wrong. I understand that in 1958 the urban district council compulsorily acquired 198 acres of residential land and 20 acres of industrial land, which again goes to refute the suggestion that this is a monopoly company.

Under Clause 32 (2) the corporation may issue a precept to the district council to make up any deficiency there may be in the operations of the corporation. I understand that the financial adviser to the district council has estimated the cost to the ratepayers. Naturally this is an approximate figure, but I have no doubt that the figure is as accurate as he can get it. He says that the amount the ratepayers would have to pay would be equal to an average rate of 1s. 3d. in the £ for the first three years, reduced to 6½d. in the £ for the next three years, after which there would be a credit. This is presumably based on an assessment of the amount of compensation to be paid. This is a matter which will be decided later if the Bill goes through.

What puzzles me is this. I understand that the first lease falls in in forty years' time. The urban district council, which is promoting the Bill, has laid it down that the corporation will carry on this company as an entity. If that is so, presumably the income will remain the same for the next forty years. How on earth can there be a reducing rate burden if the company continues to earn the same amount for the next forty years until the first lease falls in, after which the modern day rental for the lease can be negotiated?

Sir Eric Errington (Aldershot)

Has my hon. Friend any information as to the present rent roll of the company?

Mr. Mawby

No, I have no idea of the rent roll. If the first lease falls in in forty years' time and the estate is to be kept as an entity so that no capital can be made by selling anything, presumably the rents will remain the same until new leases can be negotiated. How can the company begin to make a profit in six years' time? This is the question which puzzles me. Is there any answer to it?

There is power in Clause 11, amongst other things, to dispose of land. I only hope that the corporation will not start disposing of land, because the whole point of the Bill is to keep the estate in its entirety. This would be one way in which the income of the company could be increased.

Parliament must be very careful before it sanctions retrospective legislation. This is an extremely important point, because my noble Friend made it obvious—he did not seek to hide the fact—that if the Bill is passed its powers will extend back to June, 1961. He said that, if the notice had been issued and if the Bill was not retrospective, the company could have sold the freeholds in the meantime. The very fact that he believes that the company could have sold the freeholds in the meantime presupposes that the company is, as my opinion tells me, a normal property company. This disposes of the main arguments which have been advanced in favour of the Bill.

The promoters have gone out of their way to say that the Bill is unique. I believe that it could create a very dangerous precedent. Once we accept the fact that a public authority can by compulsion become a ground landlord, we open the door to many authorities taking the view that this may be a way out of their leasehold problems. I can well imagine hon. Members opposite feeling that this is a good way of pushing the door open because, once the door is open, they can then push it a little further open. I would, therefore, suggest to my hon. Friends that they should think very seriously about the precedent which could be established by the passing of this Bill.

If any apology is needed, I apologise for the time that I have taken up in putting what I believe are views which ought to be put concerning the Bill.

8.11 p.m.

Mr. Ede (South Shields)

I am one of the few Members of the House who is older than the idea adumbrated by Ebenezer Howard. I remember that in 1898, when I was 16 years old, I was given a copy of his book, with the advice that I should read it. I read it.

In 1898, it was a revelation of what could be done at a time when the housing of the working classes, sometimes alluded to as the housing of the labouring poor, was beginning to attract attention. It was about that time that the Royal Commission, on which the then Prince of Wales served, was reaching its conclusions and making its report. It was the conception of the idea that there could be built up a community, representing all classes, living in corporate association in an effort to avoid the creation of further slums, which at that time disgraced not merely the great cities, but many of the small towns.

In 1902, I gave a lecture on the subject with a Conservative Member of Parliament in the chair. I think that it was the only time a Conservative Member of Parliament has been in the chair at any meeting I have addressed. So impressed was he with the idea that when, a year later, I went up to Cambridge, he gave me a sum of money, with his good wishes for my success. Unfortunately, his sum of money was not sufficient to pay for a three-year course in Cambridge in that day. I owe it to his memory to speak tonight in favour of the Bill because it preserves the spirit which appealed to the imagination of such people as could be impressed in the year 1898. All that has happened since springs from the work of Ebenezer Howard.

It is true that a few employers—W. H. Lever and Cadbury's—had something of the same idea in the kind of benevolent atmosphere of the nineteenth century liberal capitalists. They did a great work and the towns that they built remain to this day as wonderful memorials of the attitude that they adopted. That was somebody outside creating a community of people working for one firm. While I have never decried what they did, Ebenezer Howard produced the idea that not a capitalist but the people living on the land should create a community. Both sides of the House have benefited from the pioneer work done by that man.

I regret to see that an effort is now being made by certain financial interests to depart from the principle on which this town was established. I want to remind the hon. Member for Totnes (Mr. Mawby) that the people of Letchworth are going into this with their eyes open. After all, seven to two are very good odds in most public polls—much better than Orpington, because these people are building on facts and not on woolly imagination.

These people, realising the benefit of living under this system, are willing to incur a rate of 1s. 3d. in the £ for a start, steadily diminishing. How many of us in public life, who have served years on municipalities, have ever known our constituents to come along and say, "Put up the rates by 1s. 3d."? I wonder how much of the result at Orpington was due to the fact that rates are going up, and that some people—I do not agree with them—think that revaluation will double the rates. I cannot see how that can be done.

At this time, when most of the people in this town are not great capitalists but people who have to earn their living every day, and to whom rising rates are always a great source of anxiety, they have volunteered, having lived under the system, to pay 1s. 3d. in the £ for three years, so that this town may continue.

I welcome the speech made by the noble Lord the Member for Hertford (Lord Balniel), because it seemed to me to breath the original spirit of 1898, which was really the first great public response to the position that had been given to the housing of the working classes by the acceptance of the Prince of Wales to sit on the Royal Commission. I do not want to go into the implications of that and whether it would not have improved the Prince of Wales to have been appointed to a similar post many years before.

There was in that ideal of 1898 a quickening of the public conscience in these matters and, most important, there was the first conception of the modern town as a corporate community like the great towns of England of the Middle Ages giving a new spirit to the task of living together and promoting the joint interests of all concerned.

I should be false to everything I have been brought up to believe in if I did not ask tonight that the Bill should go forward, enshrining the hopes of a community founded and fostered on the principles which its provisions set forth.

8.21 p.m.

Sir Eric Errington (Aldershot)

I shall deal with two points only. My hon. Friend the Member for Totnes (Mr. Mawby) referred to the memorandum given to shareholders on 15th September, 1949. This memorandum arose specifically as a result of the Town and Country Planning Act, 1947.

Lord Silkin, who was then the Labour Minister, was prepared to say that the company was the best vehicle to help in the planned completion of the town, subject only to the three matters to which reference has already been made, the most important being the third item in his letter, namely, the approval in principle by the shareholders of the ultimate transfer, when the development of Letch-worth was substantially completed, of the company's undertaking to the local authority or other suitable body, subject to satisfactory terms. The reason for that was that the development value under the 1947 Act became vested in the State and not, as heretofore, in the inhabitants of Letchworth.

In parenthesis, I must say that in 1948, the statutory undertakings, on being nationalised, were compensated for expenditure of £1,370,000 by £1,681,000, which meant a gain to the company of £300,000 or so. The next important event after that was that, in consequence of the Town and Country Planning Act, 1954, the State abandoned the claim to development value, which meant the restoration of the full equity to the shareholders and not to the townspeople. It was for this reason that the company became vulnerable to a take-over bid.

With hindsight, one can say that a step should have been taken by the company to avoid this outcome, but, in fact, this was not done and the various concerns which have sought to take over the company have taken advantage of the fact of the development value resting with the shareholders, and not, as was intended and as should have been secured, with the citizens of Letchworth.

The second matter to which I wish to refer is the question of retrospective legislation. There was a public meeting of the interested parties in Letchworth on 1st December, 1960, and at that meeting a resolution was passed setting out the views of 8,536 inhabitants of Letchworth Garden City. Those views clearly showed that they considered that the company ought to continue to be a trust for the benefit of the community. From that date, it was also made quite clear that the local authority intended to promote a Private Bill.

I do not see how it was possible for the local authority to do anything but give the notice of 20th July, 1961, that it would include a Clause providing for the acquisition of interests disposed of subsequent to that date other than in the normal course of business. It was the only thing Which would prevent the company as now controlled "jumping the gun". Indeed, when one looks at what happened on 25th July, 1961, only four days afterwards, one finds that three parcels of land were sold, one at £5,000 an acre, one at £3,250 an acre, and one at £3,500 an acre, making a total price of £63,500 for 14 acres of land which was bought for £560.

I do not consider that this Bill is necessarily retrospective, in view of the notice which was given, but if ever retrospective legislation was justified it is justified on this occasion.

8.27 p.m.

Mr. R. W. Sorensen (Leyton)

Unlike my right hon.—and venerable—Friend the Member for South Shields (Mr. Ede), I cannot go back to 1898 with remembrance of reading Ebenezer Howard's book Garden Cities of Tomorrow, but not many years later I remember securing a copy and being inspired by the outline of the future which that very humble but wonderful man embodied in his book.

For the last fifty years, I have been domestically associated, directly or indirectly, with the urban district of Letchworth. I say that because one should, I suppose disclose one's interest in matters on which one speaks in the House. My interest is not a financial one, but is, I frankly confess, entirely idealistic. I do not apologise for it. Ebenezer Howard was one of the pioneers who gathered around him people of more than one party, but who felt that he stood for something better and different from the cities and dwelling places of the Britain of his day.

I was very much impressed by the speech of the noble Lord the Member for Hertford (Lord Balniel). After all, he is a well-known Conservative. No one can accuse him of having Socialist tendencies. The hon. Gentleman appreciated that Letchworth represents a voluntary attempt to serve the common need, so surely there can be some kind of common association in this matter between hon. Members of both sides of the House. Equally, no one can despise the efforts made by the pioneers in the past and of those who, today, voluntarily implement this conception of a town built up by and for the citizens themselves and to and for which they are commercially responsible. In that way, they are nourishing a sense of social idealism which is all too rare nowadays.

I would like to know just what is the real intention for opposing this desire on the part of the citizens of Letchworth? They are aware of all the objections that have been raised, of the financial burden they may have to bear but, despite that, they have agreed—and I mean those citizens who are members of all parties and of none, Conservative, Labour and Liberal and, presumably of the other parties which may be represented in Letchworth—that the Bill will help to still further implement the intention and purpose of Ebenezer Howard some years ago.

During those days when I visited Letchworth I saw few houses. The place was notorious for being a kind of mecca for cranks, including myself. That notoriety has long since gone and today about 25,000 people—some of whom being relations, I see fairly frequently—represent an ordinary cross-section of the population. I hope that there still are some cranks there, but that they have taken their due place amid the larger whole.

At one time all kinds of experiments were taking place in Letchworth. The sister of our late and good friend Lord Perthick-Lawrence initiated a rather remarkable institution which he called the Cloisters. As a theological student, I went there for a rest at the end of term only to be yanked out of my bunk the first day at 6 a.m. and compelled to do drill on the lawn, learn the arts of pottery and weaving, and to gambol to the tune of the country dance, "Rufty Tufty."

That sort of thing is symbolic of those days, but Letchworth has now developed into a more prosaic community. It represents some implementation of the ideals which some of us had in our younger days. I ask hon. Members whether they really want to see this destroyed or injured. It may be that only 25 per cent. of the population voted and that 75 per cent. of them were indifferent. But that is fairly normal, for the 25 per cent. are those who really count. It is the minority who are more conscious than the majority of the ideals and purposes which inspire and permeate the rest. I am persuaded that the 25 per cent. who took the trouble to vote were those who stood for the conscience and vision of Letchworth as a whole.

Can we really say to those who now inhabit Letchworth and who have this residual idealism of the past that they should not have their wishes fulfilled? I have to ask myself just what is the intention of those who oppose the Bill, not merely in this House, but outside it; in particular, of York Hotel Limited. Can we say that such opposition has any kind of residual idealism about it? I am sure that the manager and shareholders of that company would agree that the firm's primary purpose, if not its sole aim, is financial. That is, of course, what activates large numbers of similar organisations.

I urge hon. Members to compare that with the First Garden City Limited. Can one deny as between the two that there is something more laudable about the second than the first? Therefore, those who oppose the Bill and seek to prevent it being passed are endorsing that purely mercenary intention. In saying that, I alone declare it to be mercenary, for the representatives of the company to which I referred would be the first, I am sure, to say that what I have said is true.

Thus, particularly in these days of sometimes rather menacing, if not sinister, take-over bids, we should do something to preserve this element of practical idealism which was initiated so many years ago. Today, though small compared to the larger new towns that have grown up around London, perhaps this area seems to be less significant now than then. It is, nevertheless, the pioneer of what is now taking place.

For these reasons, I most earnestly ask the House to support what I have called the residual idealism not only in the Bill, but in the support given to it by the citizens of Letchworth.

8.35 p.m.

Sir Lionel Heald (Chertsey)

Like the hon. Member for Leyton (Mr. Sorensen), I feel that I ought to begin by explaining why I have any concern with this matter. I have no direct concern whatever with Letchworth. I am concerned only for two personal reasons.

The first is that I have always been an admirer of Ebenezer Howard. He was, after all, a remarkable character. I do not know whether it is generally appreciated in the House that Ebenezer Howard was employed for twenty years as an official shorthand writer in the House of Commons by Messrs. Gurney. So he must have exercised great patience sometimes. He then worked in the Law Courts, again as a shorthand writer, until he was 70. He had to do that because he had to keep himself going. But he still found time to create this remarkable project. He was also associated with another great character, Sir Ralph Neville, who was afterwards a distinguished judge. Sir Ralph Neville was the first chairman.

It is entirely misleading to regard Letchworth as involving any question of political principle. It is quite different from any other case that I have ever had to consider in this field, having learnt something in the past about compulsory purchase and all those matters and the Town and Country Planning Act, 1954, with which I am afraid I must have bored a number of people on a number of occasions when I was responsible for it.

Letchworth is an entirely exceptional achievement. It succeeded only after tremendous initial difficulty. It was the forerunner of garden cities all over the world. In America and other places there are cities which have been built on its model. In fact, I think it true to say that Letchworth was the first British town to be planned as a whole since the time of the Romans. In those circumstances we ought very carefully to examine the foundation of the opposition.

I ought perhaps to have said that, in addition to knowing a good deal about Ebenezer Howard, I have a very good friend whose father was the financial manager and secretary of the corporation for many years, and I have had the advantage of a considerable amount of information from him.

The basic principle of Letchworth was always that when fully developed it should be transferred to a public body, retained as a unitary freehold and managed on behalf of the residents. That principle was always maintained, and reiterated time and time again at annual meetings, in public speeches and on all sorts of occasions, and Letchworth was built up upon it.

In August, 1960, when speculation took place in the shares the company and the council were perturbed by the dangers which they thought threatened Letchworth, and, as we have heard, they got together. But they were overtaken by the offer which was made from the Hotel York. It has been quoted, and there is no need to quote it again, but it is essential that we should bear in mind the very formal nature of that document: In the event of the offer becoming unconditional "— it is not a casual letter— it would be the intention of York, of which I and my family are the controlling shareholders, to ensure the future of Letchworth as a unified estate in accordance with the principles upon which the town has been developed since its foundation by your company in 1903. That almost suggests that it was drafted by a lawyer.

On 22nd November, 1960, a circular was issued to the shareholders. Part of it has been read, but there is another passage which ought to be read. This is what the board said to the shareholders on that date: A substantial number of people hold shares in the company. They believe in the garden city ideal, and their concern will not only be with financial considerations but with the maintenance of the ideal which has been upheld by successive boards of directors to the best of their ability for fifty years. That was in everybody's mind at the time when the chairman of the Hotel York made the offer, and no doubt it was made knowing that people would be concerned and in order to reassure them.

It is a remarkable fact that the chairman of the company at the annual general meeting in 1961 categorically stated that there was no intention of selling any freeholds. The present chairman was also at the meeting. After the meeting the former chairman resigned and was succeeded by the present chairman. The meeting was not informed of that.

It soon became obvious that very drastic changes were contemplated. In June, 1961, the company stated its intention to sell freeholds, and it did so, as was said by my hon. Friend the Member for Aldershot (Sir E. Errington). On 21st July, 1961, three plots were sold—two acres for £6,800, two for £7,000 and ten for £50,000. When someone recently asked how this could be reconciled with the statement upon the faith of which the shareholders parted with their shares, I understand that it was stated that the company no longer regarded the undertaking as binding. Indeed, it does not, to judge from a number of statements which have been made. When we ask why that is, my hon. Friend who opposed the Bill replies that it was then discovered that 600 acres had been sold and that, therefore, this put an end to the whole thing. Hon. Members may regard that as a somewhat makeshift excuse.

My hon. Friend made some statements which were not of a very informative character, but I have the details—636 acres out of 4,000 acres. There had been sales to the Letchworth U.D.C. for the purpose of housing and there had been 200 acres for the purpose of a town development scheme. In 1920, 6 acres were purchased for cemetery purposes; one wonders whether that is thought to be sufficient to vitiate the whole undertaking. Hertfordshire bought 61 acres, the gas works 7.5, the water undertaking 3 and the Post Office 0.6 acres, a total of 636 acres.

One may ask whether the company did not know about that when it made its offer. Could it not have been ascertained with the least inquiry? Is not this a flimsy excuse? One wonders what would be the answer if one of the shareholders were to take legal proceedings on the basis of the formal document which I have read. I should not like to give legal advice on that. Perhaps other people have considered it or might do so. If, however, there was a case of a moral obligation, one would think that that would be it.

It is said to be a great matter of principle to oppose the Bill. I do not believe it for a moment. I do believe, however, that there are other principles which may be involved, to whichever party we belong. The keeping of promises, good faith, fair dealing and truthfulness are principles which all of us in this House are anxious to encourage.

What I have said, I have said on information which I believe to be accurate and which is available to anyone in this House. I cannot prove it. The proper way to deal with this matter is for it to go to a Committee of this House, which can hear evidence and hear witnesses cross-examined, on oath if necessary, and arrive at the facts. That is what will happen if we give the Bill a Second Reading. If we do not do so, we shall connive at an arrangement by which—

Sir Kenneth Pickthorn (Carlton)

We do not examine anyone on oath.

Sir L. Heald

I know that my hon. Friend is concerned about the matter. I am looking forward to hearing a most brilliant oration from him.

If we strangle the Bill at birth, one thing that we shall be doing is allowing the whole matter to be hushed up when it should be fully inquired into.

8.47 p.m.

Sir Kenneth Pickthorn (Carlton)

I have no intention of being brilliant and I have no intention of being long. I have no connection of any kind with Letchworth, with the York company, with Mrs. Rose, or with any of them. I know nothing about the Bill. [An HON. MEMBER: Hear, hear."] That is very helpful to me. I was just about to say that it is quite extraordinary, when there is a debatable matter before the House, to see the extraordinary hatred with which most hon. and right hon. Members opposite regard debate. The spokesmen for the view which they hold have been heard with the greatest attention and with the utmost courtesy by all of us throughout.

Before I could get up at all, my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) did his best to be funny, as he thought, at my expense in anticipation. All I know about the Bill is, I repeat, that I have read it and I have read what might be called the brief against it. Hon. and right hon. Members opposite were anxious to bully or stop hon. Members on this side from speaking on the ground that they had a brief. They had to get some information and even arguments from somwhere. Facts and arguments would not be useless to some hon. Members opposite. What I know about the Bill is the little that an amateur can find out by reading it quickly, and the case as put by the Parliamentary Agents for it. That is all I know about it, apart from what I have heard this afternoon, to which I want to make one or two references.

I often attain brilliance, but I am not very much accustomed to congratulating myself on my moral superiorities, or even my moral efforts, but I hope that I am not less sensitive than those who may happen to take the opposite view from me to politics or about the Bill. I hope that I am not less sensitive than them to matters of principle—and, incidentally, the rather odd anomaly of Conservative principle, ideals, spirit and imagination. I hope that I preserve these things as clearly as the average Member of Parliament and I hope that I am as much attached to them. I am particularly fond of the name Ebenezer and also the name Howard, and I do not particularly dislike the names Cadbury and Fry—who were not altogether unconnected with this occasion. But what has all that got to do with it? It has got nothing whatever to do with the matter before the House.

With respect to my right hon. and learned Friend the Member for Chertsey, he almost said that we ought not to have a Second Reading debate on this sort of thing and that it could be dealt with properly by a Committee [HON. MEMBERS: "No."] I am within the recollection of the House. [HON. MEMBERS: "No."] I heard his words and he very nearly said that. He certainly gave me that impression—that we were not to strangle this piece of idealism on the Floor of the House, which was what we should be doing if we refused to pass the Bill, and that the proper way to consider it was to send it upstairs. I think that I am quoting his words fairly exactly. [HON. MEMBERS: "Yes."] Then why make noises at me if I say it over again?

What is it that this debate is about? The right hon. and learned Gentleman the Member for Chertsey—I am sure he is right, and it strengthens my argument, though perhaps he will correct me again if I am mistaken—said that any shareholder could have taken proceedings. That is what he said, if I understand him aright.

Sir L. Heald

No. I did not say that. The hon. Gentleman must not do that. I was very careful to say that I was not expressing an opinion.

Sir K. Pickthorn

I am very sorry. But the right hon. and learned Gentleman must not tell me that I must; not do that. [HON. MEMBERS: "Withdraw."] I am trying to make an argumentative speech. Only one has yet been made from this side, and every effort was made to make that one impossible, or at least extremely difficult.

What is it about? I had thought that there was a question of proceedings. I apologise to the right hon. and learned Gentleman if in any way I gave the impression that he gave a legal opinion which he did not give, but I understood him to say, "Why did not any of the shareholders take proceedings?".

Sir L. Heald

No.

Sir K. Pickthorn

I can continue with the argument whether the answer to that one is "Yes" or "No". Either way the argument can be continued.

If no proceedings can be taken, then I suppose—and again I may need assistance, if I am wrong about this—that that makes it clear that there is no legal objection to what is being done.

Sir L. Heald

I did not say they could not.

Sir K. Pickthorn

I am not referring to the hon. and learned Gentleman now.

Mr. Archie Manuel (Central Ayrshire)

The hon. Member does not know where he is.

Sir K. Pickthorn

If there are no legal proceedings—and I really do not wish it to be thought that the right hon. and learned Gentleman had said that there could be legal proceedings—then it seems to me fairly plain that what we are arguing about is whether something should now be done to give legal rights to somebody who, at that time, had not got them and to take away legal rights from somebody who, at the time, had got them. That is the question before us.

I am very sorry that we have not had the views of my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith). I hoped to hear his legal explanation of this. Let me give the House mine, not because I think it authoritative, but because I hope that the Ministerial speech, which will be based upon legal advice, will correct me if I am giving the House the wrong impression.

This is what seems to me, speaking as a layman, the legal point. Mrs. Rose bought legally a piece of legal property which was not at that time legally guaranteed against rents involving a factor for the buildings upon it. That is what she bought. Now a Bill has been promoted by an interested party—by an extremely interested party a Bill has been promoted—to take away from her not all that she bought, but some of what she bought and to give what is called compensation.

One of the evils of all the things of this sort is that the word "compensation" has very nearly got to the point of losing all meaning. Once upon a time, if somebody took from me my hat or my bicycle everybody assumed that compensation for it meant that the State could force that person to give me something which made good the loss. Compensation, more and more, comes to mean anything which the State with its control of all capital and all income may choose to dole out to somebody who has a grievance and whose grievance would otherwise be intolerable.

The compensation which this lady is to get is to be not for all she bought, but for what she sold and bought minus one considerable factor in its value. This is what it seems to me the Bill is about and what this debate is about, and that seems to me not a matter for a Select Committee to decide. It seems to me that the right hon. and learned Member for Chertsey told us that no political principle was involved here. Surely the fundamental political principle—but they had higher objects—upon which almost all States are founded—and were founded until the Russian and the Chinese Communist States—was that they were there to defend people in the holding and exercise of their legal rights.

Now we are here proposing to diminish that legal right and we were told that there could never be a case like it again. Never again? We are all adjured more than once that this is a great work of imagination. Is there anybody in the Chamber who cannot imagine there ever being again a case where A has bought something from B in which afterwards it is decided by some gentlemen's agreement, or if one looks at the higher morality, and not the mere legalism or what not, "We never ought to have sold, all that and, therefore, we shall now take it away from A and give him 'compensation' for that part of the value which we think it was proper to deal with and not the other"?

This is this case, and if the right hon. and learned Member for Chertsey cannot imagine any such case arising again he is less imaginative than any lawyer I have ever met before.

Sir L. Heald

I did not say that, either. I did not say a word of that.

Sir K. Pickthorn

If my right hon. and learned Friend will leave HANSARD alone until tomorrow morning—

Sir L. Heald

I will.

Sir K. Pickthorn

—and then read it carefully, he will see how nearly I have reproduced him, I assure him.

Sir L. Heald

I never thought of doing that before. That is my hon. Friend's idea that one goes and alters HANSARD.

Sir K. Pickthorn

Everybody else does. I was not suggesting that my right hon. and learned Friend ought to alter HANSARD. What I was suggesting was that in a cooler mood, not having read it before, he should read what the reporter thinks he said and then see whether I was wrong.

For all I have to say to the contrary, Letchworth Garden City may be the noblest enterprise of man. For all I have to say to the contrary, it may be the last chance of defending what is left of human virtue and human hope. For all I have got to say to the contrary, also—althongh I think it is a mistake, if one can possibly avoid it, to use the opportunity of debate in the House to cast aspersions upon persons outside it—the Hotel York Company may be the most deleterious company and its managing director—[Interruption.]

Mr. Ellis Smith

Order. This is a Private Bill.

Sir K, Pickthorn

I know that.

For all that I know to the contrary all these things may be so. But I submit that they have nothing to do with the fundamental question. We cannot interfere with the whole nature of the relationship between the Legislature and land holdings, leases, freeholds, and so on, simply on the ground that we like Ebenezer Howard and that we do not like Mrs. Rose, or on the ground that there are many gentleman's agreements, explicit and implicit, which should have prevented her from doing something.

It is upon that basis that I think that this was a matter eminently suitable for debate on Second Reading, and that I hope that the House will refuse to give the Bill a Second Reading.

9.1 p.m.

Mr. Jeremy Thorpe (Devon, North)

I seek to intervene with very great brevity, if only to indicate that the Bill enjoys support from all quarters of the House. I want to add my congratulations to the hon. Member for Hertford (Lord Balniel). What the right ban. Member for South Shields (Mr. Bde) meant when he said that the spirit of 1898 had been recreated was that the same principles which had motivated the founders were motivating the noble Lord in the second half of the twentieth century with great relevance and great cogency. One of the first founders was the late Lord Salisbury, and it is interesting to note that this Bill has been introduced by one who, by marriage, is that late Lord Salisbury's great nephew.

I should like to deal with a few points which have been raised by the hon. Member for Totnes (Mr. Mawby) and the hon. Member for Cambridge—

Sir K. Pickthorn

Carlton.

Mr. Thorpe

Yes, I am sorry. I believe that Cambridge was his former constituency. I apologise to the hon. Member for Carlton (Sir K. Pickthorn). I hope that throughout my speech I shall be as brief and as calm as he was throughout his.

I listened to the speech of the hon. Member for Totnes with great care, and it seemed to me that he was concerned with three points. It may be that there were others, but the points to which he seemed to attach most weight were, first, that retrospective legislation was wrong—which subject was also mentioned by the hon. Member for Carlton: secondly, that this was a form of municipalisation or nationalisation, and, thirdly, that this was a situation in which there was not a trust—as had been suggested by other hon. Members—but a perfectly ordinary company.

The hon. Member for Carlton also advanced the argument that this was a situation in which A had purchased from B and A was being deprived of his legal rights in order that B—or those who had an interest in B—might be given legal rights which they did not previously enjoy. Those were the main arguments put forward by those who oppose the Bill.

It is of great significance that someone of the legal experience of the right hon. and learned Member for Chertsey (Sir L. Heald)—a former Attorney-General—somebody with a lifelong experience of local government, such as the right hon. Member for South Shields, and someone with a great experience of property matters, such as the noble Baronet the Member for Aldershot (Sir E. Errington)—

Sir E. Errington

I am not a baronet.

Mr. Thorpe

I apologise. I can assure the hon. Member that one is less likely previously to baronetise an hon. Member opposite than to fail to address him as such when he is one. All those hon. Members have spoken in support of the Bill, and I only hope that if there is a Division those hon. Members who wish to vote and have not had the advantage of hearing the debate will be told by other hon. Members who have heard it of the stature of those hon. Members who have spoken before myself, and of the arguments that they have put forward.

The Times put the situation very well in an article on 15th February which said: Not one penny was ever put into the Company with the idea of making large monetary gains, and those people and industries which came to Letchworth were attracted there very largely by the promise which these principles, stated again and again in the Company's publications, held out.… It is against this historical background that the future of Letchworth is to be considered. It would indeed be a matter for dismay if purely commercial consideration were to prevail. I do not say that up to the time of the purchase there was a trust, but I believe that the investors were in a quasi-fiduciary relationship to the company. I know that that is not a phrase of which the hon. Member for Shipley (Mr. Hirst) approves, hut it was in the nature of a trust, and those who invested did so with the knowledge that there would be a limitation of dividends and that the benefit would subsequently go back to the community as a whole.

Therefore, up to the time of purchase we are dealing with something which, if not a trust in the sense that the Chancery Division would hold there to be if there were a trustee, was a company whose shareholders invested in the full knowledge that they were investing in a particular type of economic concern and that a particular treatment would be given to their money. If the hon. Member for Totnes does not accept that, certainly the purchasing company recognised it through its undertaking, which has been quoted several times and was last quoted by the right hon. and learned Member for Chertsey and which seems to me of very great significance.

When the Hotel York Limited was inducing shareholders to part with their shares—and we are not dealing with just an ordinary commercial undertaking in which the only interest is the commercial gain of the would-be sellers of their shares—it went out of its way to give an indication that the principles upon which the company had been founded in 1903 would remain sacrosanct. Why did it do that? The reason was, in my view, that the Hotel York Limited recognised that it was dealing with a commercial undertaking which had very special characteristics.

That is my answer to the hon. Member for Totnes when he says that we are dealing with an ordinary land company. It may be that the Hotel York Limited is an ordinary company, but it was not purchasing an ordinary company. It induced the shareholders to part with their shares recognising that this was a special trust or that there was a quasi-fiduciary position with the regard to the company and its shareholders. Therefore, I do not think that we are here dealing with municipalisation or with nationalisation.

I do not believe that there is a political principle involved which would divide the House on this Bill. This is an issue of a rigid principle that persons have been induced to part with their shares on an undertaking which has been breached—and breached very shortly after purchase. If there is an interest that one should declare, I should say that politically I have very great sympathy with the objectives of Ebenezer Howard. I have always believed in the principle of taxation of land values. I believe it to be a way of returning to the community the benefit which the community has given to the land held by an individual. To that extent, I find myself politically involved in this issue.

The hon. Member for Totnes says that this is a form of municipalisation or nationalisation. It is nothing of the sort. It is an attempt to set up the sort of corporation which was intended by the founder and every subsequent shareholder, and which was the declared intention of the Hotel York Limited, which, by making that undertaking, induced persons to part with their shares. It has nothing to do with nationalisation or municipalisation.

The hon. Gentleman then asked why the Government have not taken over this corporation. I suggest for the same reason that the Labour Government were disinclined so to do in 1948—that they felt that here was a company of a very particular type which was doing an extremely good job of work. I think it is very interesting to note that a Labour Government, which would certainly be far more amenable to any idea of taking over the corporation than the party opposite, or, indeed, my own party, given the facts in 1949, should have said, "We prefer to leave the corporation carrying on as it is." I think that is very significant, and, in a sense, the Government of the day having given their blessing to the continuation of this corporation, subject to the three conditions mentioned, I believe that the present Government have a moral obligation to do all they can to see that this corporation continues.

Then the hon. Gentleman asked about the retrospective nature of this transaction. Again, I think that has been dealt with by the right hon. and learned Member for Chertsey, when he reverted to the statement made in the spring of 1961 that they were certainly put on their guard, and that, in the event of a sale, they must realise that they had before them the prospect of a Private Bill.

Now I come to the hon. Member for Carlton, who, with great force, made the point about denying legal rights to one person and giving them by Act of Parliament to another. The right hon. and learned Member for Chertsey expressed, and I think the hon. Member for Carlton accepted it, no legal opinion at all whether or not the action of this company, having regard to its undertaking relating to the 1903 principle, was or was not actionable. My own view is that, if not actionable, if it does not constitute "obtaining by false pretences", if it is not misrepresentation, if it is neither of these things, it is certainly very questionable indeed, and, candidly, I hope that a shareholder could consider the possibility of testing this matter and seeking a declaration in the courts.

Sir K. Pickthorn

I should like to answer that, but I will not, because I see that the hon. Gentleman's boast that he would be briefer than me has failed. His fourteen minutes are up.

Mr. Norman Dodds (Erith and Crayford)

He has said something, anyway.

Mr. Thorpe

If the hon. Member for Carlton will himself check HANSARD tomorrow, provided that both he and the right hon. and learned Member for Chertsey have individual copies, he will see that he spoke for nearly twenty-five minutes. I make no complaint of that, but I have a little more time to go. I can assure the hon. Member that the proof is not out until about midnight.

Mr. Diamond

The hon. Member for Devon, North (Mr. Thorpe) is on a most important point, on which we might all wish for some enlightenment, but I understand that he cannot give a legal opinion on the facts now. Nevertheless, would he not agree that if he were asked for advice on what was the best way of achieving the purpose of the community, he would say that individual shareholders seeking damages or something through the courts would not achieve it and that the only way is by promoting a Private Bill?

Mr. Thorpe

I am very grateful to the hon. Member for Gloucester (Mr. Diamond). This is perfectly correct. While this may be a remedy for an individual shareholder, it would not be possible to create a corporation, such as was envisaged in the original foundation in 1903 and such as was sought by the urban district council in 1948, without a Bill being introduced.

What the right hon. and learned Member for Chertsey meant was that this was a valuable subject for a Second Reading debate, but that we could get down to the real details of what happened only if there were a power of cross-examination and calling witnesses before a Select Committee, which would inevitably follow if the Bill were given a Second Reading.

We are dealing with what was a great social experiment. I believe that if the shareholders had been told that the purchasing company was going to breach the undertaking which it had given—that the principles of 1903 would be respected—they would never have parted with their shares. They were not interested in mere commercial gain. If they were so commercially minded, it seems strange that they should have voted for such a large increase in the rates.

I believe that they have done the right thing by petitioning the House to have this grievance arighted. It is right that we in the House should see that a very grave injustice is put right. For those reasons, I should like to see this corporation set up. I believe that the Bill is the only way whereby that can be done, and I very much hope that the House will overwhelmingly vote to give the Bill a Second Reading.

9.16 p.m.

The Minister of Housing and Local Government and Minister for Welsh Affairs (Dr. Charles Hill)

It may be convenient if I briefly express the Government's view of the Bill. We have had an admirable debate in which the facts and the arguments have been plainly put, and we are all under a debt, I am sure that all hon. Members will agree, for the speech of my noble Friend the Member for Hertford (Lord Balniel).

Clearly, important issues are involved both for Letchworth and Hotel York, and there are some issues of a general nature. The crucial question is whether sufficient reason has been given to deny the promoters of the Bill a detailed scrutiny in a Select Committee of the complex issues involved. In my view, no such justification for such a denial has been made, and, without presuming to comment now on the many complex issues involved, I offer to the House the Government's view that the right course is to send the Bill to a Select Committee where, through cross-examination and in other ways, it can receive the close examination which the importance of the issues deserve.

9.18 p.m.

Mr. Michael Stewart (Fulham)

We are all very glad to hear the advice which the right hon. Gentleman has given to the House.

Mr. Geoffrey Hirst (Shipley)

Of course they are.

Mr. Stewart

I said that we were all very glad.

Mr. Hirst

No.

Mr. Stewart

All what the scholars call nemine contradicente, except for the hon. Member for Shipley (Mr. Hirst).

I am sure that we can all join in congratulating the noble Lord the Member for Hertford (Lord Balniel) on his speech. It was an admirable speech, both in manner and content, and he brought out what is cardinal to the whole argument—the principles which have underlain Letchworth Garden City from the time of its foundation.

I do not propose to weary the House by rehearsing the arguments. What the principles were has been made clear enough—it was to be unified ownership and there was to be limitation of dividends and, linked with that and as a result of that principle, the increasing value of the land due to development was to accrue to the community in Letchworth as a whole.

We shall all take the view that those principles were good. Whatever views one might hold about political and economic matters in general, I think that we would all be prepared to say that it is a good and praiseworthy thing to be able to get people to get together and invest their money in a company from which the return will be a good deal less than from an ordinary commercial transaction and in which they invest in order to be able to bring into existence something like the Garden City of Letchworth.

I understand and respect the misgivings felt by the hon. Member for Totnes (Mr. Mawby). I shall address myself to them. The hon. Gentleman questioned whether the company in its original form could be described as a trust. Neither he nor I is a lawyer. We will not bandy legal terms with each other. However, I think he will agree with me that a company which from the start clearly did not appeal to the ordinary natural motive of an investor to get a good return on his money but put that only in second place and put in first place the development of a garden city is a company of a very different kind from the ordinary commercial company. Whether it is called a trust or not, it is very much in a class by itself. I am not sure that the word "unique" is fully justified, but very nearly.

This is the kind of company we are dealing with. It is partly because we are dealing with a company which had that original intention that the hon. Gentleman's fears of this Bill creating a precedent are not well founded. There are very few enterprises, if any, whose origin was in nature similar to the origin of First Garden City Limited, Letch-worth. It is because it had those origins that the Bill is now before the House. It could not be quoted as a precedent for interfering with the operations of ordinary commercial companies.

Another reason why the Bill cannot be regarded as creating a dangerous precedent was brought out by the right hon. and learned Member for Chertsey (Sir L. Heald). This is the very grave and serious breach of faith committed by Hotel York Limited, on the question whether it would preserve a unified estate. In how many cases in future will the House ever have laid before it such clear and undoubted evidence that a breach of faith was committed, something in which in the interests of the good repute of commercial transactions and private enterprise as a whole it is desirable that the House should intervene? This is another reason why no precedent will be created by the Bill.

Nobody disputes that there was such a breach of faith. Once again I shall not attempt to advance legal arguments. I am not qualified to do so. Whether any of the shareholders have a right of legal action or not, any ordinary, decent person will say that for a body to declare plainly and emphatically that it intends to preserve the estate as a unified estate and then almost the moment it has the estate in its hands to behave in exactly the opposite manner is a contemptible and dishonourable transaction, whether it is illegal or actionable or not. This is another factor which makes this situation unique.

A third thing which makes it unique is the point so well brought out by the noble Lord the Member for Hertford about the exceptional position of the lessees at Letchworth. I commend this consideration to the hon. Member for Carlton (Sir K. Pickthorn). Their rights, the rights they had excellent reason to expect, will be very gravely interfered with if something like the Bill does not proceed.

Sir K. Pickthorn

They are not legal rights.

Mr. Stewart

I will come to that point later.

Sir K. Pickthorn

The word "excellent" is not quite fair. The point is whether they are legal or non-legal.

Mr. Stewart

The lessees had every reason to suppose that they were in a certain position. One aspect of the position was this. If they wanted to make extensions or alterations to the property which had been erected on the land they had leased, they had to obtain the consent of the company. It was always the practice that in deciding whether to give or withhold consent the company simply considered sound planning considerations and the welfare of the estate. The granting or withholding of this consent can be used as a lever to get more money out of the lessees. But that is what is happening to them now that the property has passed into the hands of Hotel York.

Large number of people have become lessees at Letchworth on a clear understanding, going back for many years, that they were not to be treated on these purely commercial principles. That foundation of all their enterprise is to be taken away. That is not found normally in commercial transactions of this kind and in arrangements for ownership of land. This factor also makes this situation unique. I would ask the hon. Member for Totnes to weigh these matters up and to recognise that the Bill cannot really be represented as a dangerous precedent. The circumstances with which it deals are totally unlike any others with which the House make conceivably be asked to deal.

We all believe that the principle that inspired the creation of the First Garden City Ltd., was a good principle. We should like to see that principle maintained. The only reason I think the House has been asked to pass this Bill is because something of this sort seems now to be the only way in which those principles can be maintained.

As the hon. Member for Devon, North (Mr. Thorpe) pointed out, the matter was considered in 1949. Can we preserve these principles without a sort of a public take-over of Letchworth Garden City? Lord Silkin rightly decided that if the principles could be maintained without interfering with the status of the company—it was a unique status, not completely private enterprise and not taken over by a public body—it should be done. That was the basis of the arrangement that he reached with the company.

If it were possible today to maintain the original principles of the Garden City without legislative arrangements, I believe that all of us on both sides of the House would be glad to do so. It might involve perhaps for the more zealously partisan on both sides some sacrifice of ideas on which they were keen but we should be glad to meet on that common ground.

Now, as a result of the actions of the Hotel York, we are put in a position in which we cannot preserve the original principles, which I believe commend themselves to everybody in the House, without a Bill of this kind. That is why I am sure the Minister is right to say that we should certainly take the first step of giving it a Second Reading. I think, too, that when the Committee come to consider the details of the Bill they will find that, by and large, it is a workable Bill. I do not think that the Minister would have given the limited and Second Reading approval which he gave—I am trying to represent him accurately—if he had thought that in those parts of the Bill which touch on local government, the actual appointment of the commission and the relation between the commission and the local council, if there was anything unworkable or bad in principle. I commend that again to the hon. Member for Totnes who had doubts about those aspects of the Bill. I believe that it is an equitable Bill.

I should like to say a word on the question of compensation. The Hotel York is to get for it a sum of money which will be in its full, fair value on the understanding that it was going to treat the estate in a way that it said that it would treat it. Could anything be fairer? What worries the hon. Member for Carlton is what, if he will allow me, I will call the pound of flesh argument. He says, in effect, "Never mind whether they broke a gentleman's agreement or not". The sole question that matters to him is, had they a legal right?

Sir K. Pickthorn

Not that matters to me but that matters to the law, which is not the same thing.

Mr. Stewart

When the hon. Gentleman was dealing with this part of his argument he reminded me of an undergraduate who has attended the first of a series of lectures on political science and has allowed the subject matter of the first lecture to dominate his mind without considering that there may be other matters to be brought into the argument. He argues that the foundation of all civilised States has been respect for legal rights. I leave with the hon. Gentleman this thought. If any State finds itself so unable progressively to alter its law that it does not keep in touch with honesty, with justice and with the needs of the time, that State perishes. To say that respect for the law is all without asking oneself whether the law concerns itself with equity and justice is to take an elementary, incomplete and half-baked view of the matter.

I believe, therefore, that for the preservation of the principles which, I believe, commend themselves to the whole House, a Bill of this kind is necessary. It is a workable Bill. It is a fair Bill. It is a Bill in the interests of reputable commercial transactions as a whole. The clear demonstration to the business world that the kind of thing it is proposed to do to Letchworth Garden City cannot be done will be salutary and will, I believe, be welcomed by everyone in the business world who wishes to maintain standards of fair and honourable dealing. The House ought to be prepared to say that there are some things in this country which money cannot buy.

9.32 p.m.

Mr. Geoffrey Hirst (Shipley)

I have to ask for your indulgence, Mr. Speaker, and that of the House, because I have laryngitis. For the same reason, I shall speak for only a few minutes and not say as much as I had earlier hoped to say.

I support what was said by my hon. Friend the Member for Totnes (Mr. Mawby). In spite of all that I have heard, I feel that there is at stake a principle which I still hold dear. It is not a matter of who founded the company, what the terms of the company were, what the terms afterwards were or what the circulars were. If there is anything wrong in all these matters disclosed at a later stage—my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) drew attention to them—there are legal interests to deal with them. This is not the place to put that sort of matter right.

I believe that the suggestion that a Bill would be promoted was made before the York Hotel people acquired control. I believe that that is correct. If it is, a great deal of the argument I have heard this evening falls to the ground. It is built upon a prejudice, rightly or wrongly, and I agree with my hon. Friend that it does not matter in the least who these people are. I am not in the least interested in whether they are good or bad people. It does not interest me a bit. [HON. MEMBERS: "Oh."] That has nothing whatever to do with the argument about whether we should give power to someone, in effect, to municipalise a private company.

An enormous amount of prejudice has been built up about the company. It may be right, but the prejudice is there. I am informed that the proposal to bring forward the Bill was actually on the stocks, so to speak, before the York Hotel people acquired control of the company. If that is correct, as I believe it is, the prejudice is thrown right out of court, quite apart from being rather indecent, anyway. That puts that squarely on the point.

I do not share the argument advanced by my noble Friend the Member for Hertford (Lord Balniel) about retrospection. I cannot understand the argument about it being undesirable and that people must protect themselves, or that they might have to sell this, that or the other. If they have a legal right to sell those things, is it not right that they should do so? If they have, why should we say that it is right for someone else who has an eye on it to take powers to make sure that this does not happen?

What sort of Socialism, or what else is it, that is being advanced by that argument? I really do not know. If it was right at the time when it was done to sell some of that property, then, obviously, it was right to do it. I have personally voted against every part of retrospective legislation in this House from whatever quarter it has come, and on that ground alone I will continue to do so.

9.36 p.m.

Mr. Martin Maddan (Hitchin)

I very much welcome this debate so that we can see just what the Bill is about but, also, what it is not about. First, however, the majority of hon. Members will want to pay honour to Ebenezer Howard and will not want to bury his ideas. We want to set the seal of achievement on his pioneering work. He was a man of extraordinary intuition and judgment and he synthesised several different social approaches to the problems of his day, particularly the problem of the standards of housing since the days of the Industrial Revolution. His ideals have, in fact, been translated into three-dimensional reality, namely, Letchworth.

Ebenezer Howard was an inventor and not a theorist and Letchworth's importance is not in its minutiae, but in the great idea that lies behind it. It was founded sixty years ago to prove that idea and I want to read to the House some words of Sir Frederick Osborn who, in 1944, showed how these ideas had stood the test of time and the cross-examination of public controversy. He wrote: All its essential elements stand: moderate sized industrial and trading towns in close contact with a surrounding agricultural countryside, each a healthy, well-equipped and coherent community; zoning of areas within each town for ready access between homes, work-places, shops and cultural centres; limitation of density to safeguard light, gardens and recreation space, but not exaggerated to the pitch of urban diffusion; civic design aiming at harmony rather than standardisation; planned internal and external communications; and unified site-ownership coupled with leaseholds, reconciling public interests with freedom of choice and enterprise. It is the validity of that idea which we are discussing tonight. Ebenezer Howard's work was not, in fact, wholly original. It may be apposite to say that it was foreshadowed by that many-sighted technician of 400 years ago, Leonardo da Vinci. He proposed to end the congestion and squalor of Milan by building ten cities with a population of 30,000 inhabitants with complete separation of pedestrian and horse traffic and with gardens attached to the municipal irrigation system. But Ebenezer Howard was the first person to do anything about this idea.

We have already heard about Howard's book, Garden Cities of Tomorrow and it is perhaps worth recollecting that Lewis Mumford wrote of Howard: Howard's mind was the English mind at its best, always in touch with the practicable, always in sight of the ideal. In writing his book Howard included these words, which are very relevant to the point tonight: …by buying the land before a new value is given to it by migration, the migrating people obtain a site at an extremely low figure, and secure the coming increment for themselves and those who come after them… It was to forward these ideas that Letch-worth Garden City was founded in 1903, and the principles of the book were specifically referred to in the memorandum of association, in the third article. It was founded as a social experiment and not as a financial speculation.

Therefore, First Garden City never was an ordinary property company. I ask my hon. Friends who have been opposing the Bill to consider this. The fact that it was not an ordinary property company has always been realised and reaffirmed. For instance, in 1904 we had this in a memorandum to shareholders: The Garden City Company … is not entering into a land speculation; it has no desire to reap for itself the profit which will accrue from the conversion of agricultural land into building land and from mere building land into the site of a well-developed town, and it has carefully deprived itself and its successors of the power to do so. That was the spirit, and those were the terms, in the days of the founders.

In 1909, a booklet was issued which reiterated this and added: As to surplus profits … they will go to the lessees and tenants in one way or another. In 1913, there was a circular to manufacturars which referred to the balance of profits being devoted to the benefit of the town or its inhabitants. In 1951, there was a further booklet, and I will read some extracts from it because these are the undertakings which caused manufacturers and residents to go and live and work in Letchworth. The first is: The principal object of the company is to create a town for the benefit of the community. The second is: … there is no incentive (as in ordinary land development schemes) for the company to work the leasehold system to the detriment of the residents… The third is: The company's position is therefore that of trustee rather than that of private landlord. Therefore, we can see quite clearly that it is quite impossible to say that First Garden City was an ordinary property company. No ordinary property company ever issued literature of this sort.

I now want to come nearer to the present time. I come to 1960. On 21st September, the chairman wrote to the stockholders in these terms: the principle of the company's undertaking ultimately being publicly owned has been inherent throughout the whole life of the company and such principle was ratified again in 1949. On 7th October, the chairman said at an extraordinary general meeting: I have only one thing to say and that is that I do not consider that First Garden City is an ordinary property company. On 22nd November, the chairman wrote again to the stockholders and said: Your board regards the preservation of the town as a single entity in one freehold ownership as essential in the interests of the company. In view of statements of this character, I cannot see how it can be said that First Garden City was or is an ordinary property company.

I turn now to the 1949 resolutions which have been much discussed. My hon. Friend the Member for Totnes (Mr. Mawby) said that the then Minister of Town and Country Planning, now Lord Silkin, stated that he had to twist the arm of the company to get these resolutions out of the company, in particular the resolution approving the principle of the ultimate transfer to a public body.

But when the then chairman of the company, Sir Eric Macfadyen, sent a memorandum to stockholders about the resolution he said: …resolution (3) comprises a formal affirmation of the intention that the town of Letchworth shall eventually pass into public ownership: an intention which has been implied through the history of the company. Your directors consequently recommend without reservation the adoption of resolution …(3). I cannot see how this could possibly have been written if the then Minister had been twisting the company's arm.

But tied up with the whole intention of ultimate public ownership has always been the peculiar Letchworth leasehold system. I think that it is worth reiterating just what that system is. It has always operated in a way so that when a lease comes to be renewed or extended—and very many have been—account is taken only of site value and no account at all is taken of the value of buildings built upon it at the expense of the lessee. In this way lessees at Letchworth feel that they are, in fact, as safe as freeholders.

This is very important to those who worry whether the Bill strikes against a property-owning democracy. They have the added advantage that the general amenity is strongly protected by the positive measures arising from the whole freehold being held by one owner. That brings much more positive protection, if I may say so, than town and country planning legislation. I dare say that many hon. Members know of freeholds held by individuals, house freeholds, where suddenly, in the back garden, bungalows or new houses can be built and density increased, to the detriment of the neighbours. But at Letchworth there is an added protection against this.

It is also true, as my hon. Friend the Member for Aldershot (Sir E. Errington) said, that the 1949 resolutions altered the winding-up provisions. As he said, the 1947 Act had vested development value in the State. Therefore, the town could not have that development value any more. According to the resolution, shareholders were to have the right to the net assets on winding-up.

But in 1954 the 1947 Act was reversed, but at that time the company did not reinstate its original winding-up provisions. This was the beginning of a leakage which went on for some time and led to a certain state of affairs to which my hon. Friend the Member for Totnes referred. First of all, in 1956 the limitation on annual dividends was removed, and, in fact, a bonus issue was made. There were two reasons for this. The first was to defeat an intended take-over at that time. The second was to counter the effects of inflation on all the shareholders who had invested their money long ago. These were the reasons for this action in 1956.

In 1957, the winding-up provisions were amended in favour of the town. At that time, as things stood, if the company had been wound up the town would have got nothing; but a new provision was made that the town would benefit to the extent of at least 10 per cent. of the assets on winding-up. It has been said that it is peculiar that this resolution of 1957 was not opposed. The reason for this was that it was part of a rapprochement by the company to reinstate some of the town's rights which it had lost in those days since 1954. Peace, however, was not achieved by these moves to avert the onslaught of further outside pressures.

I turn now to what my hon. Friend the Member for Shipley (Mr. Hirst) said about everything which had been said in this debate in favour of the Bill being bunk because already there was consideration of a Bill being promoted before Hotel York came on the scene. The situation was that in September, 1960, the Raglan Group, who had become shareholders, demanded that First Garden City should be run as an ordinary property company. They were at least straightforward about their intentions. Their intentions were, however, defeated.

But this alarmed the people of Letchworth and the Urban District Council entered into conversations with the company to see whether something might not be done to implement the principle of ultimate transfer to a public body. This was done to try to stabilise the position.

It is true, therefore, that something was afoot in a tentative way before Hotel York came on the scene, but this in no way invalidates what has since been said. In fact, as my hon. Friend the Member for Aldershot said, it was after Hotel York had taken control that a public meeting was demanded by a private citizen in Letchworth and was very fully attended. It was only at this meeting that the council formally announced its intention to promote a Private Bill. Had it been able to reach agreement with the company, it might have been that no Private Bill would have been necessary. Hotel York came on the scene, however, overtaking these conversations.

We have heard of the offer that the chairman of Hotel York made in her letter to shareholders and I will not repeat it. It is, however, clear that Hotel York, as the controlling interest of First Garden City, regards First Garden City as an ordinary property company. This has been agreed by my hon. Friend the Member for Totnes.

I wish to read one extract from the latest annual report, dated 13th March of this year. This annual report makes it perfectly clear. It states: The vast majority of the present shareholders have invested in this company to obtain the maximum income on their investment, and it is the Board's policy to act in the interests of these shareholders". This much is clearly admitted.

The change of policy had already become clear from the following events. The first is the annual general meeting on 16th February last year, at which Colonel Post, who was on the board in pursuance of the 1949 resolution, revealed that he had been asked to resign. He did not do so at that time, but several months later he did. I understand that he felt it impossible for him effectively to promote the interests of Letchworth any more. His resignation was followed in June, 1961, by the resignation of the only local director, Mr. Bennett. In October, 1961, Mr. Edge, the former chairman, resigned after thirty years on the board. Clearly, something was afoot.

In July, 1961, as we have been told, 14 acres of freehold were sold off, thus driving a wedge into the principle of the unified estate. In November, 1961, selected lessees were offered the freehold of their property. This, clearly, would have driven in the wedge further, but, as far as I know, nobody has accepted. If people did accept, under the Bill they might have had the freehold reacquired from them at fair market value under the Land Compensation Act, 1961. The real reason why they did not accept it, I believe, as has been mentioned in the debate, that the price asked of them meant that they would pay again for that for which they had already paid, namely, the buildings on the land.

It is not at all surprising that the lessees prefer the maintenance of the original leasehold system, because in the Letchworth system the usual disadvantages are absent but the standards of amenity of the town as a whole are ensured. I have no doubt that the people of Letchworth prefer this system. It is the basis on which residents, traders and manufacturers came to Letchworth and invested their money.

The fourth change of policy arises from the fact that leases contain covenants whereby, if there is a change in the use of the land or an extension is to be built, say, to a block of flats, the permission of the company has to be obtained. In this way, the standards can be maintained. This method has never before been used to extract further ground rent.

I want, however, to mention one example. One lessee, whose ground rent was £70 a year, wanted to change the use of his land and was told that he could do so provided he paid an additional ground rent of £5,000 per annum. I think that that figure is enough without my quoting any more.

I will not go through the various Clauses of the Bill, but I do want to refer to Clause 16 which, it has been said, is retrospective. I think it important to understand what this Clause is about. It is not mandatory, but it does allow the corporation to acquire land sold by the company since 20th July in accordance with the public warning given on 20th July, and the provision was to prevent the estate from being dissipated under the eyes of Parliament, as it were, while we were still discussing this Bill. It is not mandatory upon the corporation, but I understand that if both First Garden City and the new freeholders who got the 14 acres so wish, as far as the promoters are concerned they will in no way insist upon the operation of this Clause. I hope that that will satisfy any hon. Members who have any lingering doubts about the retrospective provisions of this Bill.

I will now say what this Bill is not. This was mentioned by the hon. Member for Totnes. It is not municipalisation. Control of the corporation is taken out of the hands of the urban district council. It is not nationalisation, but rather only an implementation of the company's inherent intentions. It is not contrary to the ideals of a property-owning democracy. It protects the interests of the lessees. It is not unfair to shareholders, because it will, in fact, compensate them on the very basis of the raison d'etre of the company. As to the retrospective Clause, so-called, if there is any retrospection I am certain that what I have just said should relieve any doubts.

The case of Letchworth is unique. The hon. Member for Fulham (Mr. M. Stewart) dealt with this. It is very different from all the others, including Welwyn Garden City and Hampstead Garden Suburb. There is no other such town with a population anything like approaching 30,000 in which there is a virtual monopoly of the freehold. The Bill neither follows precedent, nor can it set a precedent. It must be judged upon its merits, and that is the spirit in which my constituents look to the House tonight.

The issue is not simply one of public enterprise versus private enterprise. Ebenezer Howard and those who supported him certainly believed in private enterprise, and they believed that in Letchworth it could be devoted in a specific way to fulfilling the public good. I believe—and I commend this to my hon. Friends—that harm is done to the private sector by any failure to stand by publicised intentions for the public good. The intention of the Bill is to remove a whole town from the mercy of speculators and to secure strong and continuous management divorced from political influence.

That the Bill should be given a Second Reading tonight is due to the memory of Ebenezer Howard, Neville, Lever-hulme, and the many hundreds who subscribed money for an ideal, as well as to

the many thousands who have come to live in and build the town. It is to keep faith with those who pioneered Letchworth, and those who made the garden city what it is today, that I ask the House to give the Bill a Second Reading.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 246, Noes 13.

Division No. 131.]	AYES	[9.59 p.m.
Ainsley, William	Fitch, Alan	Lewis, Kenneth (Rutland)
Albu, Austen	Fraser, Thomas (Hamilton)	Loveys, Walter H.
Allason, James	Gaitskell, Rt. Hon. Hugh	Mabon, Dr. J. Dickson
Allaun, Frank (Salford, E.)	Galpern, Sir Myer	MacArthur, Ian
Allen, Scholefield (Crewe)	Gammans, Lady	McCann, John
Aitken, W. T.	Gibson-Watt, David	MacColl, James
Awbery, Stan	Ginsburg, David	Mclnnes, James
Balniel, Lord	Glover, Sir Douglas	McKay, John (Wallsend)
Batsford, Brian	Goodhart, Philip	Mackie, John (Enfield, East)
Baxter, Sir Beverley (Southgate)	Goodhew, Victor	McLarent, Martin
Baxter, William (Stirlingshire, W.)	Gough, Frederick	McLeavy, Frank
Beaney, Alan	Grant-Ferris, Wg. Cdr. R.	Macleod, Rt. Hn. lain (Enfield, W.)
Bell, Ronald	Gresham Cooke, R.	Mallalieu, E. L. (Brigg)
Bence, Cyril	Grey, Charles	Manuel, Archie C.
Bennett, J. (Glasgow, Bridgeton)	Griffiths, David (Rother Valley)	Mapp, Charles
Biffen, John	Griffiths, Rt. Hon. James (Llanelly)	Marples, Rt. Hon. Ernest
Biggs-Davison, John	Gunter, Ray	Marsh, Richard
Blackburn, F.	Hale, Leslie (Oldham, W.)	Mathew, Robert (Honiton)
Blyton, William	Hall, Rt. Hn. Glenvil (Colne Valley)	Matthews, Gordon (Meriden)
Bottomley, A.	Hamilton, William (West Fife)	Maydon, Lt.-Cmdr. S. L. C.
Bourne-Avton, A.	Harris, Reader (Heston)	Mendelson, J. J.
Bowden, Rt. Hn. H. W. (Leics. S. W.)	Hart, Mrs. Judith	Millan, Bruce
Boyle, Sir Edward	Harvey, Sir Arthur Vere (Macclesf'd)	Mills, Stratton
Braddock, Mrs. E. M.	Harvey, John (Walthamstow, E.)	Milne, Edward
Brockway, A. Fenner	Harvie Anderson, Miss	Mitchlson, G. R.
Brooke, Rt. Hon. Henry	Hastings, Stephen	Moody, A. S.
Broughtort, Dr. A. D. D.	Heald, Rt. Hon. Sir Lionel	More Jasper (Ludlow)
Brown, Alan (Tottenham)	Henderson, John (Cathcart)	Moyle, Arthur
Brown, Rt. Hon. George (Belper)	Hendry, Forbes	Mulley, Frederick
Brown, Thomas (Ince)	Herbison, Miss Margaret	Nabarro, Gerald
Bullard, Denys	Hill, Dr. Rt. Hon. Charles (Luton)	Nicholson, Sir Godfrey
Burden, F. A.	Hill, Mrs. Eveline (Wythenshawe)	Noel-Baker, Rt. Hn. Philip (Derby, S.)
Butler, Herbert (Hackney, C.)	Hill, J. (Midlothian)	Nugent, Rt. Hon. Sir Richard
Butler, Mrs. Joyce (Wood Green)	Hill, J. E. B. (S. Norfolk)	Oram, A. E.
Callaghan, James	Hilton, A. V.	Osborn, John (Hallam)
Campbell, Gordon (Moray & Nairn)	Hobson, Sir John	Owen. Will
Carr, Robert (Mitcham)	Hocking, Philip N.	Pannell, Charles (Leeds, W.)
Castle, Mrs. Barbara	Holman, Percy	Pannell, Norman (Kirkdale)
Chataway, Christopher	Houghton, Douglas	Parkin, B. T.
Clark, Henry (Antrim, N.)	Howell, Charles A. (Perry Barr)	Pavitt, Laurence
Cliffe, Michael	Howell, Denis (Small Heath)	Pearson, Frank (Clitheroe)
Corfleld, F. V.	Hughes, Emrys (S. Ayrshire)	Peel, John
Costain, A. P.	Hughes Hallett, Vice-Admiral John	Pentland, Norman
Craddock, George (Bradford, S.)	Hughes-Young, Michael	Percival, Ian
Critchley, Julian	Hunter, A. E.	Peyton, John
Crosthwaite-Eyre, Col. Sir Oliver	Hutchison, Michael Clark	Pitt, Miss Edith
Cullen, Mrs. Alice	Hynd, H. (Accrington)	Plummer, Sir Leslie
Darling, George	Hynd, John (Attercliffe)	Prentice, R. E.
Davies, Ifor (Gower)	Irving, Sydney (Dartford)	Price, J. T. (Westhoughton)
Davies, S. O. (Merthyr)	Jay, Rt. Hon. Douglas	Pym, Franels
Deedes, W. F.	Johnson, Carol (Lewisham, S.)	Rankin, John
Dempsey, James	Johnson Smith, Geoffrey	Rawllnson, Peter
Diamond, John	Jones, Rt. Hn. A. Creech (Wakefield)	Redhead, E. C.
Dodds, Norman	Jones, Dan (Burnley)	Redmayne, Rt. Hon. Martin
Dugdale, Rt. Hon. John	Kelley, Richard	Rhodes, H.
Ede, Rt. Hon. C.	Kenyon, Clifford	Ridsdale, Julian
Edwards, Robert (Bilston)	Kerr, Sir Hamilton	Rippon, Geoffrey
Edwards, Walter (Stepney)	Kershaw, Anthony	Roberts, Albert (Normanton)
Elliott, R. W. (Nwcastle-upon-Tyne, N.)	Kirk, Peter	Robertson, John (Paisley)
Errington, Eir Eric	Lawson, George	Robinson, Kenneth (St. Pancras, N.)
Evans, Albert	Leather, E. H. C.	Rodgers, John (Sevenoaks)
Fernyhough, E.	Ledger, Ron	Rogers, G. H. R. (Kensington, N.)
Finlay, Graeme	Lee, Miss Jennie (Cannock)	Ropner, Col. Sir Leonard
Fisher, Nigel	Lewis, Arthur (West Ham, N.)	Ross, William
Boyle, Charles (Salford, West)	Taverne, D.	Warbey, William
Shaw, M.	Taylor, Bernard (Mansfield)	White, Mrs. Eirene
Shepherd, William	Taylor, Frank (M'ch's'tr, Moss, Side)	Whitelaw, William
Silverman, Julius (Aston)	Temple, John M.	Wigg, George
Skeffington, Arthur	Thomas, George (Cardiff, W.)	Wilkins W. A.
Slater, Mrs. Harriet (Stoke, N.)	Thomas, Leslie (Canterbury)	Willey, Frederick
Slater, Joseph (Sedgefield)	Thomas, Peter (Conway)	Williams, LI. (Abertillery)
Small, William	Thomson, C. M. (Dundee, E.)	Williams, W. R. (Openshaw)
Smith, Ellis (Stoke, S.)	Thornton, Ernest	Willis, E. G. (Edinburgh, E.)
Sorensen, R. W.	Thornton-Kemsley, Sir Colin	Wilson, Geoffrey (Truro)
Spriggs, Leslie	Thorpe, Jeremy	Winterbottom, R. E.
Steele, Thomas	Tiley, Arthur (Bradford, W.)	Wise, A. R.
Steward, Harold (Stockport, S.)	Tilney, John (Wavertree)	Woof, Robert
Stewart, Michael (Fulham)	Touche, Rt. Hon. Sir Gordon	Woollam, John
Stodart, J. A.	Turner, Colin	Yates, Victor (Ladywood)
Strauss, Rt. Hn. G. R. (Vauxhall)	van Straubenzee, W. R.	Zilliacus, K.
Studholme, Sir Henry	Wade, Donald
Swingler, Stephen	Walder, David	TELLERS FOR THE AYES:
Symonds, J. B.	Walker-Smith, Rt. Hon. Sir Derek	Mr. Maddan and Dr. Stress.
NOES
Cooke, Robert	Hiley, Joseph	Talbot, John E.
Curran, Charles	Marlowe, Anthony	Taylor, Edwin (Bolton, E.)
Dance, James	Pickthorn, Sir Kenneth	Williams, Paul (Sunderland, S.)
Duncan, Sir James	Pott, Percivall
Hicks Beach, Maj. W.	Roots, William	TELLERS FOR THE NOES:
		Mr. Mawby and Mr. Hirst.

Bill accordingly read a Second time, and committed,