§ 8.30 p.m.
§ Dr. J. Dickson Mabon (Greenock)
I beg to move, in page 1, line 11, at the end to insert:and there shall be substituted the following subsection:—This Amendment represents a moral victory over the Government in the Standing Committee inasmuch as the Chairman, by his casting vote, although defeating the Amendment, allowed us to discuss it again. I am sure that the Under-Secretary of State regards it as a favour that the Chairman has done us in allowing us to have second thoughts about these proposals.'(6) Where the Sheriff under subsection (3) dismissses an application under this section he may make an order for the payment by the landlord to the tenant of compensation for improvements made by the tenant, not being a trade or other fixture which the tenant is entitled by law to remove; and for goodwill built up at the premises concerned for a period not less than five years prior to the termination of the tenancy'".
The advantage which we have over the Committee stage is that we have heard the hon. Lady's defence of her rejection of the Amendment. I do not want to labour this too much, because we hope that she has had second thoughts about it. She based her argument against the Amendment on the ground that none of the Committees—the Taylor Committee, the Guthrie Committee and the later Committee—on Scottish leases made recommendations of this kind.
The hon. Lady is unfair, no doubt unintentionally, in that these Committees were all discussing the protection of shopkeepers and the relationship between tenant shopkeepers and landlords in respect of the Scottish custom of short, one-year leases. There would be some sense in her argument and the Committees' comments if that were the context of our discussion. First of all, however, it was the intention and hope of the Act which we are seeking to make permanent to encourage landlords to offer longer leases to tenant shopkeepers. 901 As my hon. Friend the Member for Kilmarnock (Mr. Ross) said in Committee, there is some evidence that this is a growing practice—perhaps not growing as rapidly as we wish, but, nevertheless, a growing practice. If that is true, and I think it is, obviously it is an argument for accepting the Amendment, which is taken straight out of the law of England—and we give credit to our English friends—and is relatively modern.
As the hon. Member for North Angus and Mearns (Sir C. Thornton-Kemsley) said, it is not only good law but workable and just law, and in its permissive nature it allows negotiation between landlord and tenant. There is nothing unjustly mandatory on either landlord or tenant. One can hardly complain that this would be a difficult Amendment to administer if it were part of the Act.
I have no doubt that my hon. Friends want to make further comment on the case which we are promoting tonight. We are glad to see in their places the hon. Members for Aberdeenshire, West (Mr. Hendry) and North Angus and Mearns, both of whom spoke in favour of the Amendment in Committee. I see here none of the hon. Lady's hon. friends of that occasion, and perhaps it is an indication that she intends to change her mind.
The case for compensation seems almost too clear to need restating, but if a tenant shopkeeper has occupied premises for a minimum of five years—the term in the Amendment—clearly he has developed some goodwill and should be compensated for the loss of that goodwill if, by the landlord's decision, he has to leave. The landlord makes this decision either to profit himself in selling the shop or to profit some other shopkeeper or to let the shop at a higher rent or to give it to one of his family. For whatever motive, he profits. We suggest in the Amendment that he ought to share this advantage with the outgoing tenant, who loses his livelihood, at least in respect of these premises.
There is the difficult question to which the hon. Member for North Angus and Mearns referred to assessing the loss by virtue of improvements made by the tenant shopkeeper in order to promote his business and to give a better service 902 to his customers. I do not deny that this is a very difficult question, particularly if the incoming shopkeeper is to use the premises for some other purpose. But the hon. Member for North Angus and Mearns rightly said that he had had long experience of this in England, and it is a matter on which there ought to be some agreement between the landlord and the tenant. This can be worked out with justice to both parties.
I hope that the hon. Lady, having had an interval of reflection on this matter, will give us a much more satisfactory reply than she gave us in Committee
§ Mr. Forbes Hendry (Aberdeenshire, West)
As the hon. Member for Greenock (Dr. Dickson Mabon) said, I spoke in sympathy in Committee with an Amendment along the lines of the one we are discussing. I still have the greatest sympathy with the spirit underlying the Amendment. I thought it monstrous that a tenant should be put out of his shop without any sort of compensation, although that shop may have formed the livelihood for himself and his family for several generations.
During the Easter Recess I have been considering our discussions in Committee upstairs and have given the matter a great deal of consideration. I have also been in communication with my noble Friend the Under-Secretary on the subject and I would like to pay tribute to the courtesy she has shown me when replying to my proposals and questions.
It must be remembered when considering an Amendment of this kind that there must be a great many safeguards because the custom in Scotland is totally different from that in England. It is not normal in Scotland for long leases to be given and, bearing this in mind, I tried during the Recess to draft an Amendment which would produce what the hon. Member for Greenock has in mind but also containing the necessary safeguards. In trying to adapt the existing law of England on this subject to Scottish circumstances I became involved in an Amendment which, by my drafting, ran to nine foolscape pages—and even then I was not satisfied with it.
I am satisfied that if the principle of the Amendment before us could be introduced, with the necessary safe- 903 guards, it would be a good thing, although its introduction must necessitate, as with agricultural Measures, a great deal of thought and negotiation not only with landlords but also tenants so that a fair new branch of the law is produced, for we are considering a completely new branch of Scottish law.
For this reason I have, with the greatest regret, decided—after the consultations and thoughts I have had—that I cannot support the Amendment as it stands, although I appeal to my noble Friend to set up a committee to investigate the law on this subject. The Lord Advocate has referred to this matter on previous occasions and is familiar with the difficulties surrounding it. I urge my noble Friend to initiate an inquiry to see whether it would be possible to produce a change in the law of Scotland which would be fair to shopkeepers in all the circumstances involved and, at the same time, provide the necessary safeguards. With great regret, I am unable to support the Amendment.
§ Sir Colin Thornton-Kemsley (North Angus and Mearns)
The hon. Member for Greenock (Dr. Dickson Mabon) and the hon. Member for Kilmarnock (Mr. Ross) have done a service in tabling this Amendment. They rendered a service in Committee upstairs when they moved a similar Amendment. As the hon. Member for Greenock pointed out, I supported an Amendment along these lines in Committee and I still feel that the principle behind it is a good one. However, there is a great deal more than this aspect of compensation regarding the tenancies of shops in Scotland which requires to be done if the small shopkeeper is to receive justice. This is only one aspect of the matter.
I had hoped, in Committee, that had hon. Members carried an Amendment along these lines my noble Friend the Under-Secretary would have been persuaded to take action with her colleagues to introduce a code which would give justice to the small shopkeeper in Scotland and thereby do something to persuade him of the desirability, in his own interests, to enter into long leases instead of being content, as he so often now is, to hold his shop from year to year or, perhaps, to hold 904 it on tacit relocation, as it is known. He should be persuaded that a long lease from the landlord would be of great advantage to him and it should be shown that we need the right framework of legislation to enable proper compensation to be given.
I realise, however—like my hon. Friend the Member for Aberdeenshire, West (Mr. Hendry)—having had time to reflect on the matter during the Easter Recess, that this kind of legislation is not as easy as it may at first appear. It would involve a great deal of drafting of a fairly considerable Act of Parliament. I think that it would be necessary to incorporate something like Sections 1 to 4 of the English Landlord and Tenant Act, 1927—which are fairly long Sections—and there would have to be special applications to meet our Scottish position.
I like the principle behind the Amendment and I recognise that the Amendment seeks to do justice to the man who is holding a fairly long tenancy—and the House should thereby be quite clear that this provision applies, by and large, only to the large shopkeeper, because the small man in Scotland does not generally have a long lease. One attractive feature is that the action would be left to the sheriff to decide. I still like the Amendment, I think that it would do justice, and that it might be better if it could be carried, but I must recognise that, at this stage of this present Parliament, to legislate piecemeal in so large a field would not be sensible or wise nor, in the long run, would it do what I am sure both sides of the House want it to do, which is to get a code that does justice to small and large shopkeepers in Scotland.
I therefore hope that what has so far been said about this Amendment, and what will be said about it, will encourage those who sit in the next Parliament—when I shall not have the privilege of sitting with them—to remember the small shopkeeper, and to bring forward comprehensive legislation to cover a subject that is not at all easy, and requires quite a long Act of Parliament to deal with satisfactorily.
§ Mr. William Ross (Kilmarnock)
I had hoped that we would have heard whether or not the Government intended to accept the Amendment. The debate 905 has so far been very disappointing. We have an Amendment, ably moved by my hon. Friend the Member for Greenock (Dr. Dickson Mabon) and supported in practically everything that is relevant about it by the hon. Members for Aberdeenshire, West (Mr. Hendry) and for North Angus (Sir C. Thornton-Kemsley), who, for reasons best known to themselves, have managed to provide for themselves formulas to prevent them voting against the Government.
The hon. Member for Aberdeenshire, West did his somersault a little better on the Floor of the House than he did in Committee. He speaks of the long weeks of work he had working out a new Schedule or a new Clause or Clauses that would fit the occasion, but he could have saved himself that amount of work by a very simple device. When he spoke on this same Amendment in Committee he said that he was extremely worried about his hon. Friend's attitude, that he was convinced that there was justice in the proposed Amendment, and that he did not see any intrinsic objections to it. He then voted against the Amendment.
Had he just kept his mouth shut—just sat on the fence—the Government would have been defeated in Committee, because his hon. Friend the Member for North Angus had far more courage of his conviction on that occasion and voted with the Opposition. The result was 7 votes for the Government and 7 votes for the Opposition, and, of course, the casting vote of the Chairman had to leave the matter open for further consideration.
I did not ask the hon. Member for Aberdeenshire, West for his support on that occasion, but had he then evinced the tug of war going on within himself, and the failure to make up his mind, he would have left the Government in the position of having to do the rethinking and drawing up the new Clauses to meet a situation that had arisen because the Committee had accepted the principle of the thing. Indeed, as the hon. Member knows quite well, we could have dealt with this on Report even had it taken another three Clauses to achieve the effect that is desired.
906 8.45 p.m.
I disagree that this provision applies only to large shopkeepers. It applies equally to small shopkeepers. The cases which I quoted in Committee were cases of three or four fairly small shopkeepers. Few of them are left in the high streets of our towns these days, and if a certain Bill goes through I dare say that there will be fewer still. The point is that shopkeepers in Scotland tend to hold leases from year to year. There is no formal contract between landlord and tenant. They carry on year after year on the basis of what we call "tacit relocation". Various Committees have considered the position where someone comes along and forces up the rent exorbitantly or tries to get shopkeepers out by presenting them with a situation in which they are asked either to pay a price which they cannot afford or to cleat out.
We provided a valuable safeguard which has continued for fifteen years despite the fact that it was originally intended to last only a short time. It was a valuable principle which the party opposite were also glad to use in relation to hardships under the Rent Act. The same principle of protection was applied in an interim Measure dealing with rent hardships. But in the most recent inquiry into the position under the statute, with a determination whether or not it should be carried on for a further period, the Shearer Committee—and the Shearer of that Committee is now the Lord Advocate—decided that there were changed circumstances. There was a new Rating and Valuation Act applying in Scotland which itself might lead to changes in tenure. This is what is happening and this is why the noble Lady's arguments in Committee were so much nonsense.
The reason is that the Committees which hitherto have made decisions on this matter including the Guthrie Committee on Scottish Leases, which the noble Lady cited at considerable length and which I propose to deal with, having refreshed my memory, dealt with the old tenure occupation lease as applied to Scotland, that is to say, the year-to-year lease. This is not relevant to the position which now arises and for which we hope to legislate.
We are now having the English system coming into Scotland. In fact we are 907 having English property-holding companies coming into Scotland and they want to safeguard themselves in the matter of higher rents and still higher rents at certain terms during the tenure of much longer leases. We are having leases of five years, ten years and even longer but with breaks at particular times to enable a further increase of rent. The shopkeepers whom we are seeking to protect, therefore, are shopkeepers who have a reasonabe security of tenure. The Guthrie Committee said in paragraph 98(3) thatNormally a tenant would not embark on expensive adaptations unless he had reasonable security of tenure in terms of his lease, and it is not desirable that he should be able to exercise a statutory right to do so, without such security, at the cost of his landlord.If the right hon. Gentleman the Minister of Power wishes to intervene, I will very gladly give way. I am sure he is full of interesting knowledge on this subject. However, the point is that the finding of the Guthrie Committee was related to the circumstances of tenure of leases at that time, and the Committee specifically stated it saw no reason for inroducing a provision to give compensation for improvements or loss of goodwill in relation to leases which did not in themselves afford sufficient security for the tenants to embark upon improvements or indeed to expect compensation for goodwill. This Amendment states that the provision in relation to compensation for improvements or for goodwill shall not apply except in the case of continued occupation for at least five years.
It is possible to pick holes in the drafting of the Amendment, though I am perfectly sure, if the Government would only accept the principle of the Amendment, that even now there is time to put that right in another place, but I do not think there is anyone who will think it anything other than monstrous, to use the words of the hon. Gentleman the Member for Aberdeenshire, West, that a shopkeeper, large or small, shall at that particular time during the holding of a lease be faced with the position of being turned out without any compensation either for improvements which are not trade fixtures or for goodwill.
I think it is reasonable to assume that, if we are going to have this English 908 system imported into the Scottish system of tenure of leases, be they for shops or anything else, we should import also the protections which are available to English occupants. I think it was the hon. Gentleman the Member for Aberdeenshire, West who rightly said in Committee that that part of the English law is working well, and he stated, I think quite rightly, that the existence of the legislation meant that there were negotiations which led to agreement. I am perfectly sure that the same thing would apply to Scotland once we were to give similar protection.
I would ask the hon. Lady to shed from her mind those cases to which this does not apply, and not to argue about things which are not in the Amendment. First of all, there is nothing rigidly fixed. It is entirely up to the sheriff to use his discretion whether or not there is a case for compensation, and it is up to the sheriff to determine, on the basis of equity, what the amount of that compensation should be, if he decides to go further with the case. Secondly, we are leaving out of account those fixtures which are purely trade fixtures. So I hope we shall hear nothing about that from the hon. Lady. Thirdly, we have this stipulated time. The Amendment would not apply to cases of tenure of less than five continuous years.
I hope that this time the Government will see their way to accept this Amendment. They were not, the last time, saved by the bell; they were saved by the lack of follow-through of the hon. Member for Aberdeenshire, West. I had some very much stronger words for his behaviour on that occasion, but I will spare him, though I must confess myself terribly disappointed in the hon. Gentleman. I really did think he was going to continue his persuasion of the Government to do the right thing about this. He says, "Oh, well, we must leave it to the next Government." We have a saying in Scotland that chance is a great thing. Well, we have got a chance now, and I think we should be very foolish to throw away the opportunity which this Bill presents, and that we should take advantage of this opportunity to do the right thing by the small shopkeepers.
I say quite frankly that the hon. Lady, in Committee, did not furnish any reasonable argument at all against the Amendment. The arguments related to 909 the Reports of those previous Committees were quite irrelevant, because what we are dealing with now is a changed situation in relation to occupancy of premises. If she does not grasp that, then, of course, she has not even begun to understand what we are talking about. I am perfectly sure that it is this point which was certainly appreciated by the hon. Gentleman the Member for North Angus and Mearns. I sincerely hope that the hon. Lady will give us some indication tonight that the Government are thinking about this again, and are prepared to accept the Amendment, or at any rate, certainly prepared to use the opportunity afforded by this Bill to put this matter right.
§ The Joint Under-Secretary of State for Scotland (Lady Tweedsmuir)
When we narrowly escaped defeat in Committee by the casting vote of the Chairman, I quite expected hon. Members opposite to put down the same Amendment again. Of course, I realise that there was feeling on both sides of the Committee that something should, if possible, be done on these lines.
I can assure the House that I have given a great deal of thought to this problem, and, as my hon. Friend the Member for Aberdeenshire, West (Mr. Hendry) rightly said, the more one examines it, the more one realises how very much greater and complex is the problem than it first appears. I think that the experience of my hon. Friend the Member for North Angus and Mearns (Sir C. Thornton-Kemsley) has been very valuable, because he voted in favour of the Amendment, but, after giving greater consideration to it, like my hon. Friend for Aberdeenshire, West, he came to the conclusion that this was a much more complicated matter than it first appeared.
I am not at all naturally against the principle which is behind the Amendment, but I shall once again recommend to the House that it should not be accepted. I realise that a great deal has been done in its drafting to try to eliminate the difficulties, which are very well known. It does not apply to trade or other fixtures and it tries, first of all, to apply compensation for general improvements to premises and also for 910 goodwill established in a tenancy of not less than a period of five years.
My hon. Friend the Member for Aberdeenshire, West referred to the Landlord and Tenant Act, 1927, and, of course, I examined that Act. The rights which are similar to what it is hoped to achieve are contained in Sections 1, 2 and 3, and they cover no fewer than three pages of the Statute Book.
§ Lady Tweedsmuir
The hon. Member for Kilmarnock (Mr. Ross) says "So what", but whether, in the 1949 Act, we wish to have three further pages on a subject of this complex nature I very much doubt, and I shall try to show why.
First, the 1927 Act in Section 1 confers a right to compensation and makes provision for determining the amount of the payment. Section 2 places some limitations on a tenant's right to compensation in certain cases. Finally, and most important, there are in Section 3 provisions regarding the giving of notice to the landlord of intention to make an improvement, regarding the landlord's right to object, and the determination of disputes arising therefrom, and, finally, a provision debarring the tenant from claiming compensation unless he has complied with the requirements as regards the giving of notice. I do not think that the wide discretion given to the sheriff in this Amendment could adequately cover all the many points which there are in this extended Section of the 1927 Act.
I have quoted very briefly those three Sections of the 1927 Act to demonstrate that the conferring of a right to compensation for improvements is not by any means an easy matter. There are a lot of questions which have to be dealt with, including the method of determining the payment, the types of improvement that are to qualify, and the need to give the landlord an opportunity of objecting or of undertaking the improvement himself. All these matters have also to be considered in relation to the system of tenure which is in force.
The hon. Member for Greenock (Dr. Dickson Mabon) thought that long leases 911 were now becoming much more the general practice. I have tried to find out as far as I could in the time available whether that really is so, and I cannot say that there is any evidence of a widespread increase in the number of longer leases. It occurs in some cases, but not in a widespread manner.
I have also considered the agricultural Acts, which are equally complicated, but I do not think that they are entirely relevant to the particular position of shop tenancies. However, I should like to return to what happened under the Landlord and Tenant Act, 1927, when some experience had been gained of its provisions for compensation for loss of goodwill on termination of a tenancy. As in the case of compensation for improvements, the provisions were very complicated and apparently were not a great success. At any rate, they were very severely criticised in the final Report of the Leasehold Committee which was presented to Parliament in 1950. That Committee found that the difficulty of proving goodwill was such as to be an almost insurmountable obstacle to the success of claims under the Act. This view was accepted, and in due course the sections of the 1927 Act dealing with compensation for goodwill were repealed by the Landlord and Tenant Act, 1954.
The 1954 Act is, I think, much the most relevant to the situation which hon. Members wish to improve. The Act discards the concept of compensation for loss of goodwill and instead provides for payment of compensation related to the rateable value of the property when the tenant is unable to obtain from the court an order for the renewal of the lease. Briefly, compensation is payable if the court is precluded from renewing the lease because the landlord has proved that he wishes to let the premises as part of a larger unit, or that he intends to redevelop the premises, or that he intends to occupy them himself; and compensation is not payable where the lease is being terminated because the tenant has failed in certain of his obligations. These English provisions for both types of compensation are, no doubt, well suited to the particular conditions in England and Wales, where there is certainly a much 912 longer practice of longer leases. Whether they would be equally suitable if applied to the quite different system of shop tenure which still prevails in Scotland is at the very best a matter of doubt.
That is why I must advise the House against accepting the Amendment. I am not saying that we should rule out for all time the possibility of giving a right to compensation on the termination of his tenancy to a shopkeeper. I am, however, saying that it would be wrong to take this step now without much more careful consideration than is possible under the proceedings on this Bill—for instance, of the possible effect on the contracts that are made between landlords and tenants of shop premises, and I also think that we need a very careful assessment of the results of introducing into their negotiations a new factor in the form of a statutory right to compensation.
Therefore, I do not feel that in this short Bill, which is meant to perpetuate an excellent Measure which has proved its worth for 14 years, I could possibly accept the Amendment.
§ Dr. Dickson Mabon
If I may speak again by leave of the House, I should like to comment on this speech of the noble Lady. I am very disappointed. Particularly in view of what was said by the hon. Member for Aberdeenshire, West (Mr. Hendry), I thought that the noble Lady was going to tell us that she was about to set up a successor to the Guthrie Committee, the Taylor Committee, and others which have gone before, to look into the problem.
This has been the burden of our complaint. The Scottish Office has failed to grasp the wider implications of the situation surrounding the Measure, which does not solve the fundamental problems. What the hon. Lady says merely returns to the point that the Government have not yet seen fit to appoint a committee to go further into the question, otherwise her position would be quite unassailable. However, she gives no assurance that the matter will be pursued further by the Government. She leaves it to the hon. Member for North Angus and Mearns (Sir C. Thornton-Kemsley) to try to find a solution in the next Parliament. Is is a sad reflection on the Government that we should be in that position.
913 We have had the old argument on the principle of unripe time. No one disagrees with the principle of the Amendment. Indeed, everyone has blessed it. The hon. Lady agree with it in principle, but she was not specific. It is all the more sad, therefore, that we have been unable to get a suitable formula and it is extremely disappointing that the Scottish Office is not willing to appoint a Government committee to look into the matter further. This is an imortant Amendment and although I realise its defects I feel that it should not be withdrawn.
§ Amendment negatived.
§ [Queen's Consent, on behalf of the Crown, signified].
§ Bill read the Third lime and passed.