Commons Sitting of 7 March 1967

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
MESSAGES FROM THE QUEEN

  INCOME TAX
  The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
  I have received your Address praying that the Double Taxation Relief (Taxes on Income) (Canada) Order 1967, be made in the form of the Draft laid before your House.
  I will comply with your request.

  INCOME TAX
  The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
  I have received your Address praying that the Double Taxation Relief (Taxes on Income) (Singapore) Order 1967, be made in the form of the Draft laid before your House.
  I will comply with your request.

  IMMUNITIES AND PRIVILEGES
  The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
  I have received your Address praying that the Double Taxation Relief (Taxes on Income) (Trinidad and Tobago) Order 1967, be made in the form of the Draft laid before your House.
  I will comply with your request.

ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    Civil Service Pay Research Unit
    Mr. Gardnerasked the Chancellor of the Exchequer if he will publish the findings of the Civil Service Pay Research Unit in order to provide a comparison of pay and conditions between private employment and the norm accepted by the Civil Service National Whitley Council.
    The Financial Secretary to the Treasury (Mr. Niall MacDermot): No, Sir. Much of the information received by the unit is available only if treated as confidential.
    Mr. Gardner: Will my hon. and learned Friend accept that this was intended to be a helpful Question? Would not he agree that the very important finding of this unit would be helpful in setting an objective standard by which we could decide precisely who were the lower paid workers?
    Mr. MacDermot: I accept what my hon. Friend says about his intention, but the difficulty about publication is that the usefulness of this work depends on retaining confidentiality.

    Inland Revenue (Staffing and Working Methods)
    Mr. Hooleyasked the Chancellor of the Exchequer if he is satisfied that the staffing and working methods of the Inland Revenue are adequate to meet all the demands of economic and social planning especially in the field of personal taxation; and if he will make a statement.
    Mr. MacDermot: The Inland Revenue has been staffed to carry out the work which Parliament has directed it to do. Working methods are kept under continuous review to meet changing requirements.
    Mr. Hooley: Will my hon. and learned Friend confirm that changes in taxation which are necessary on social grounds will not be held up on the plea of administrative difficulty?
    Mr. MacDermot: That is rather a wide proposition. Administrative factors are

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    often very important in deciding what alterations one can make to the tax position, but I assure my hon. Friend that social considerations are very much taken into account when considering taxation proposals.
    Mr. Iain Macleod: Would not the hon. and learned Gentleman agree that it is desirable that all forms of taxation should be operated by the fiscal departments, and as we had a most serious departure from this last year with regard to the Selective Employment Tax, can he say when the normal Department will regain control of this tax?
    Mr. MacDermot: The right hon. Gentleman will understand that I cannot make any statement on that at this stage.

    International Monetary Fund (Loan Repayments)
    Mr. Winnickasked the Chancellor of the Exchequer what loan repayments will be made during 1967 by Her Majesty's Government to the International Monetary Fund.
    The Chancellor of the Exchequer (Mr. James Callaghan): The Government will repay in full by 2nd December, 1967, the drawing of £357 million taken in December, 1964. The balance outstanding has already been reduced to £311 million as a result of drawings of sterling by other countries from the Fund, and this figure may be reduced still further by similar drawings during the year.
    Mr. Winnick: Will my right hon. Friend say whether, in certain circumstances, the remainder of the debt for 1967 will be delayed, and can he give target dates for the other loan repayments to the International Monetary Fund?
    Mr. Callaghan: No, Sir. I see no prospect of delaying the payment of the first instalment. It will be very much to the credit of this country when the repayment is undertaken in full. The second drawing is repayable some time between 1968 and 1970.
    Mr. Hordern: Has the right hon. Gentleman made any estimate of the proportion of Government portfolio investments which might be needed for this repayment?
    Mr. Callaghan: I am not able to make any statement about that today.

    Rhodesia (Sanctions)
    Mr. Goodhewasked the Chancellor of the Exchequer (1) what was the total cost to Great Britain, including loss of trade, loss of invisible earnings, loss of sterling balances, subsidies to Zambia, military and naval policing, and all other measurable effects, direct and indirect, of the Government's sanctions policy against Rhodesia, in the first full year;
    (2) what he estimates will be the total cost to Great Britain, including loss of trade, loss of invisible earnings, loss of sterling balances, subsidies to Zambia, military and naval policing, and all other measurable effects, direct and indirect, of the Government's sanctions policy against Rhodesia for the first full year following the implementation of the United Nations resolution on mandatory sanctions.
    Mr. Wallasked the Chancellor of the Exchequer what has been the effect on the British economy of sanctions against Rhodesia.
    Mr. Hugh Fraserasked the Chancellor of the Exchequer if he will now publish a White Paper showing the cost to this country of Rhodesian sanctions bearing in mind military costs, loss of trade and invisibles, emergency loans, and, taking 1964 as the norm, increased import prices and cost of foreign exchange for raw material substitutions.
    Mr. Callaghan: I would refer the right hon. and hon. Gentlemen to the Answer which my right hon. Friend the Prime Minister gave to a Question by the right hon. Gentleman, the Member for Streatham (Mr. Sandys) on Tuesday, 21st February.—[Vol. 741, Cols. 1433–8.]
    Mr. Goodhew: But is it not patently absurd for right hon. Gentlemen opposite to continue to try to pretend that they can separate the cost of the sanctions policy from their total attitude and policy against Rhodesia, and will they now come into the open with the House and say how much it is costing the country, instead of writing it up in the Commonwealth and trying to play it down here?
    Mr. Callaghan: That seems to be largely a matter of opinion, but if the hon. Member reflects he will see that it is impossible to measure the effect on the balance of payments arising out of sanctions as distinct from the whole illegality of the action. I ask any Member who disputes this to reflect how it is possible to determine what effect there would have been on the cost of copper under certain alternative circumstances, and how one is supposed to enumerate that in the balance of payments. That is why I have consistently given the House of Commons the effect of the loss of exports and the direct effect on the Exchequer.
    Mr. Wall: Surely the Chancellor must be able to make an estimate. He must have some idea of the cost of Rhodesian U.D.I., directly and indirectly, on the British economy. Cannot he give the House an approximate figure. Is it £100 million a year, or more?
    Mr. Callaghan: On a number of occasions I have given the House the direct cost to the Exchequer. [Interruption.] The hon. Gentleman asks for both the direct and indirect cost. As to the indirect effect, there are so many alternative assumptions which can be made that in my view no reliable estimate can be made, but if I had to make a guess I would guess at a figure somewhere between £50 million and £100 million.
    Mr. Fraser: Surely whatever the Chancellor may say in this House, this sum has been worked out by his Department. Surely he can tell the House what that sum is. I have given details to him not of copper but of other things.
    Mr. Callaghan: That is putting the same question in a different way. I have nothing to add to what I have already said.
    Mr. Whitaker: Will my right hon. Friend bear in mind the possibility of suing the Rhodesia Front and its supporters for the cost of their action?
    Mr. Callaghan: That is a different question from the one I answered.
    Mr. Sandys: How is it that the Chancellor says that he cannot give an estimate, when the Prime Minister was able to give an estimate of about £100 million
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    for the total cost to Britain, at the Commonwealth Prime Ministers' Conference last September?
    Mr. Callaghan: I have already said that it is not possible to give a reliable estimate of that. If the right hon. Gentleman has any evidence perhaps he will produce it and tell us where he got it.

    Petrol Tax and Car Registration Fees
    Mr. Ogdenasked the Chancellor of the Exchequer what was the annual amount received from petrol tax for the years 1960, 1961, 1962, 1963, 1964 and 1965; and what was the annual amount received from car registration fees for the same years.
    Mr. MacDermot: With permission I will circulate a table of figures in the OFFICIAL REPORT.
    Mr. Ogden: Can my hon. and learned Friend say how much it would cost the Inland Revenue account to register one car?
    Mr. MacDermot: Not without notice.
    Following in the table:

    Estimated revenue from tax on road fuel

    Estimated revenue from vehicle excise duties on cars

    £ million (figures for Great Britain)

    1960

    …

    342

    71

    1961

    …

    383

    83

    1962

    …

    431

    100

    1963

    …

    461

    111

    1964

    …

    529

    122

    1965

    …

    663

    147

    Mr. Ogdenasked the Chancellor of the Exchequer what would be the loss to the Exchequer if the annual registration fee was reduced from £17 10s. per annum to £2 10s. per annum; and how much per gallon would have to be added to the present tax on petrol in order to recoup such a loss
    Mr. MacDermot: £145 million and 8d. per gallon.
    Mr. Ogden: I do not ask my hon. and learned Friend to anticipate his right hon. Friend's Budget, but I suggest that he has sufficient information in these two Questions to form the basis of a reasonable reform in April.
    Mr. MacDermot: I do not know whether my hon. Friend appreciates that,

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    since commercial and industrial vehicles use more petrol than private vehicles, what he is proposing would represent a substantial shift in taxation from private motoring to industrial costs.

    Board of Customs
    Mr. Peytonasked the Chancellor of the Exchequer if he will introduce legislation to enable the Board of Customs to be amalgamated with or taken over by the Board of Inland Revenue.
    Mr. MacDermot: No, Sir.
    Mr. Peyton: Is the hon. and learned Gentleman aware that if this suggestion were adopted the Commissioners of Customs and Excise might contract the desirable habit of repaying money to which they have no entitlement? Will not he examine Customs procedures, especially with regard to bonding and returnables, because their inflexibility tends to produce both inefficiency in trade and injustice?
    Mr. MacDermot: If the hon. Member has anything to support his wild allegation I will consider it. The case that he has in mind—which I know he has been discussing with the Chief Secretary—is not one in respect of which I accept his point of view.
    Mr. Peyton: In view of the most unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment.

    Tobacco (Taxation)
    Dr. Winstanleyasked the Chancellor of the Exchequer if he will introduce measures to provide a financial inducement to cigarette smokers to change to the smoking of pipes or cigars.
    Mr. MacDermot: As this is a budgetary question, no comment can be made now.
    Dr. Winstanley: Is the Financial Secretary aware that a transfer from cigarette smoking to the smoking of pipes and cigars could result in a future saving of thousands of lives every year? Secondly, will he accept my assurance that it would be an easy matter to impose a stamp duty on each packet of cigarettes while
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    making an overall reduction in tobacco duty, so as to maintain the revenue at the same level?
    Mr. MacDermot: The hon. Member's latter suggestion is not as simple as he thinks. This matter was raised in the debate on last year's Finance Bill. I can assure the hon. Member that my right hon. Friend has taken note of what he has said.
    Dr. John Dunwoody: Does not my hon. and learned Friend agree that 30,000 deaths a year in this country from lung cancer form a strong argument for changing tobacco taxation? Will not he assure the House that he will consult his right hon. Friend the Minister of Health before the final Budget proposals are brought before the House?
    Mr. MacDermot: My right hon. Friend has already taken note of this and will consider the matter with my right hon. Friend the Minister of Health.
    Sir G. Nabarro: Will the hon. and learned Gentleman resist these blandishments to use the tax system for a purpose for which it was never devised, namely, to warp consumer choice? Will he leave it to consumers to decide what they smoke?
    Mr. MacDermot: If the hon. Member will read carefully what I have said I think he will find that I have neither accepted or resisted the blandishments.
    Mr. Shinwell: Does my hon. and learned Friend realise that if he took some tax off tobacco it would have a remarkably calming influence on hon. Members?

    Economy (Reflation)
    Mr. Channonasked the Chancellor of the Exchequer what proposals he now has for reflating the economy.
    Mr. Dickensasked the Chancellor of the Exchequer if he will make a statement on the reflation of the economy.
    Sir C. Osborneasked the Chancellor of the Exchequer in view of the lack of confidence now felt in many sections of trade and industry and the depressed balance sheets being reported, when he proposes to take steps to reflate

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    the economy; what will these steps be. how long they will take to become effective; and what effect they will have on his plans to strengthen sterling.
    Mr. Callaghan: I cannot anticipate my Budget statement.
    Mr. Channon: Does that reply mean that the Chancellor hopes to make some progress towards this end in his Budget statement?
    Mr. Callaghan: No, Sir. It means that I cannot anticipate what I shall say on 11th April.
    Mr. Dickens: Notwithstanding that reply, does my right hon. Friend accept the view of the London and Cambridge Economic Service that the loss to the British economy in 1967 caused by the Government's policy of deflation will amount to £1,000 million, in terms of lost output? If so, does not he agree that this is a most shortsighted and socially undesirable way of solving a phoney balance of payments crisis?
    Mr. Callaghan: No, Sir.
    Mr. Hordern: Does the right hon. Gentleman look for a fall or an increase in productivity this year?
    Mr. Callaghan: An increase in productivity.

    Public Schools (Tax Rebates)
    Mr. Juddasked the Chancellor of the Exchequer what tax rebates have been made to public schools in each of the years 1960, 1961, 1962, 1963, 1964, 1965 and 1966; and what is the estimate for 1967.
    Mr. MacDermot: I regret that this information is not available.
    Mr. Judd: Does my hon. and learned Friend agree, if it were necessary to have to agree, that by no stretch of the imagination can these exclusive institutions be described as charities and that the Government should give early priority to defining the meaning of a charity in law?
    Mr. MacDermot: That is a separate question, not for my right hon. Friend. It would be an invidious task for my right hon. Friend to have to pick and choose between different charities.
    Mr. Evelyn King: Whatever may be the social arguments, is it not abundantly clear on financial grounds that these schools save the taxpayers far more than the schools could ever get in rebates?

    Registered Charities (Christmas Cards)
    Mr. Juddasked the Chancellor of of the Exchequer what plans he has to exempt registered charities from Purchase Tax on Christmas cards.
    Mr. Rowlandasked the Chancellor of the Exchequer whether in order to enable printing contracts to be placed in good time for next Christmas he will reduce Purchase Tax now levied on Christmas cards sold by charitable organisations.
    Mr. MacDermot: I would refer my hon. Friends to the reply given to the hon. Member for Belfast, South (Mr. Pounder) on 21st February, to the effect that such a reduction would result in unfair competition with other Christmas cards which have to bear the tax.—[Vol. 741, c. 241.]
    Mr. Judd: Does not my hon. and learned Friend agree that, in view of the important work done by charities in promoting a sense of social responsibility and in practical social work, there is a need for an urgent review of this tax, and its elimination altogether?
    Mr. MacDermot: For the reason that I have given I do not think that this would be acceptable. Where charities enter into trading activities, most people would expect them to trade on an equal basis with those with whom they compete. Their profits are free of tax.
    Mr. Rowland: Instead of protecting commercial Christmas card operators, would it not be better if the Treasury reviewed this matter in the light of the economic squeeze which has made life very hard for charities for the last few months?
    Mr. MacDermot: I do not think that charities are suffering in this way. It is not a matter of protecting other traders, but protecting the Revenue.
    Mr. John Hall: In view of the fact that the Chancellor told me previously

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    that he has received no representations from manufacturers or retailers protesting against the system which gave preference to charities, will not he reconsider the question and at least consider repaying to charities, in the form of a grant, the difference between the tax as it now stands and the tax that he proposes to impose?
    Mr. MacDermot: The principle involved is an important one. It cannot be confined to Christmas cards. If this concession were to be made there are many other fields in which charities could turn to trade, and trade on terms which meant that they did not compete fairly. The suggestion that the hon. Member is making would mean concealing what would still exist—discrimination in favour of charities.

    Civil List Act, 1952
    Mr. Frank Allaunasked the Chancellor of the Exchequer whether he will introduce legislation to secure the posponement of any increases payable under the Civil List Act, 1952 until the end of the period of the wages standstill and severe wages restraint.
    Mr. Callaghan: No, Sir.
    Mr. Allaun: Is it not both unfair and provocative that thousands of men taking home less than £13 a week should be denied a small increase, when an 18-yearold schoolboy can have his income doubled to £30,000 a year?
    Mr. Callaghan: I do not think that that is the position. The Civil List Act of 1952 laid down quite clearly in Section (2) what were to be the payments to the Duke of Cornwall, and it is that legislation which is now being fulfilled.

    Tax System (Simplification)
    Mr. St. John-Stevasasked the Chancellor of the Exchequer what plans he has to simplify the tax system.
    Mr. MacDermot: I would refer the hon. Member to the Answer my right hon. Friend gave on 17th January to the hon. Member for Folkestone and Hythe (Mr. Costain)—[Vol. 739, c. 6]—and to my speech in the debate on 27th January.
    —[Vol. 739, c. 2006–20.]
    Mr. St. John-Stevas: Would not the Treasury be well advised to start a pro-
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    cess of simplification with the abolition of the grotesque and inequitable Selective Employment Tax and so save us the trouble of abolishing it when we return to power?
    Mr. MacDermot: That is hardly a very good example, because the Selective Employment Tax is one of the simplest and cheapest taxes to collect.
    Mr. John Hall: Would not the hon. and learned Gentleman agree that the Chancellor of the Exchequer, in introducing his first Budget, said that it was his intention to simplify the tax structure? Would he not also agree that any accountant or secretary will tell him that the taxation system has never been more complicated than it is now and that it is most important to arrive at an accurate assessment of tax liability?
    Mr. MacDermot: Most accountants would tell the hon. Gentleman that the introduction of Corporation Tax has enormously simplified company taxation.

    Public Office Rules (Revision)
    Mr. John Hallasked the Chancellor of the Exchequer if the revision of the Public Office Rules has now been completed; and when a Statutory Instrument will be made.
    Mr. MacDermot: Yes, Sir. The Statutory Instrument bringing the new Rules into operation should be laid before Parliament at about the end of next week.

    Bank of England (Blocked Gold Reserves)
    Mr. John Wellsasked the Chancellor of the Exchequer what countries, Governments, former Governments and similar groups have blocked gold reserves in the Bank of England; and what sums are involved in each instance.
    Mr. Callaghan: None, Sir.
    Mr. Wells: Is the right hon. Gentleman saying that the former Baltic States have no gold reserves located in the Bank of England?
    Mr. Callaghan: The gold which was owned by the former Baltic States was vested in the Custodian of Enemy Property in 1941 and the House gave legislative effect to that in 1951.

    Decimal Currency
    Mr. Rowlandasked the Chancellor of the Exchequer how many representations he has now had from members of the public and from trade organisations expressing a preference for a decimal currency based on a £1 unit and expressing a preference for a 10s. unit.
    Mr. Callaghan: Since the issue of the White Paper on 12th December last I have received 355 representations on decimalisation from members of the public and trade organisations. Of these 44 were in favour of a £, and 153 of a 10s. major unit.
    Mr. Rowland: Would my right hon. Friend agree that these figures and the Gallup Poll published last week invalidate his statement on 31st January that the general public, on the whole, prefer the £? In view of this, would he agree that, if his argument is strong enough—I should like to support it if it is—it would be better to leave it to the free judgment of all the Members of the House of Commons?
    Mr. Callaghan: This is a matter in which it is the clear duty of the Government to give a lead to the House on the best system. I am looking forward to the debate on the issue. When it comes, it will then be for the House to make up its mind, but the Government must advise their supporters to support—[HON. MEMBERS: "Oh"]—one cannot flop around on an issue like this with a free vote. It is the Government's duty to give a lead to their supporters, and this lead has been given.
    Mr. lain Macleod: Would the right hon. Gentleman accept from me that, in all parties and on both sides of the House, this is a matter of very great concern indeed, and that, as far as I at least am concerned, it has nothing whatever to do with party politics—[Interruption.]—nor for the Chancellor of the Exchequer, I accept that. But, because this is so, would he please not make up his mind in advance of the debate which we are to have in this House, and would he take the opinion of the House into consideration before final decisions are made?
    Mr. Callaghan: As far as I know, there is no means of dragooning anybody into a Lobby, but it is the Government's job
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    —[Interruption.]—if there is, we are singularly unsuccessful at it. It is the Government's job to say what the policy should be and it is for the Government's supporters to support the Government, the choice having been made.
    Mr. Crawshaw: Has my right hon. Friend received any representations over the last week as a result of certain incidents in this Chamber last Thursday? Is he aware that many hon. Members on this side, for various reasons, are very anxious that he should make a cast-iron case for the choice which he has made?
    Mr. Callaghan: I have been waiting since 1st March last for the opportunity of doing that, and I am looking forward to the debate very much indeed.
    Mr. Iain Macleod: Would the right hon. Gentleman accept that, in a matter like this, which will affect this country perhaps for 1,000 years or so, it is vastly more important to make the right decision than to make an early decision? As this is not in any political party's programme, would he not treat this on a different basis from the ordinary discussions in the House and genuinely consult the House of Commons on this matter?
    Mr. Callaghan: It is very late for the Opposition to raise this question. I announced the proposal to decimalise on the £ over a year ago. There was not even a cry from anybody—
    Mr. Lubbock: Oh, yes, there was from me.
    Mr. Callaghan: Except for the hon. Gentleman—I will give him that. But he is not, in name, yet a member of the Conservative Party.
    I published a White Paper in December. Again, apart from the hon. Gentleman and a few others, there was very little protest. The protest started on the day that the Bill was introduced. This is not a hurried decision, but a decision which has been talked about now since 1963. It is the duty of the Government to give a clear lead to their followers and the House on this matter and not to shilly-shally around and say, "We do not mind whether it is one or the other." We do. I am confident that the case for the £ is very strong.
    Mr. Lubbock: Does the right hon. Gentleman agree that the figures which he has given this afternoon show that four times as many people are against the Government's decision as are in favour of it? Will he publish a list showing the important organisations—such as the Consumer Council, the C.B.I., the Trades Union Congress and the Institute of Chartered Accountants—who are opposed to the Government's proposal, so that members of the public can make up their minds on the basis of the expert advice which has been given?
    Mr. Callaghan: We are going to debate all this, but it is a dangerous assumption that it is the people who are in favour of the Government's decision who write to the Government. On the whole, I find that it is those who are opposed to such a decision who write and not those who are in favour of it.
    Mr. Michael Foot: If my right hon. Friend thinks that he has such a strong case on this matter, why does he not rely solely on his powers of persuasion?
    Mr. Callaghan: What the hon. Gentleman is challenging is the normal basis on which business in this House is done on both sides. There is nobody on that side of the House who would stand up and offer a free vote, if he were in my place here, on an issue of such importance. I would say to my hon. Friend that I have not the slightest doubt that, when he hears the argument, he will come in willingly, freely, hand-in-hand and arm-in-arm with me.
    Sir T. Brinton: Is not the reason for the Government's obstinacy about this free vote, as in the case of the Ombudsman, that they have already taken administrative action which has committed them to taking a wrong decision?
    Mr. Callaghan: It is a matter of opinion and I should like to remind you, Mr. Speaker, that we are going to debate this issue. I would say to the hon. Gentleman that the decision is, in my view, the correct one. Administrative decisions—[HON. MEMBERS: "Answer."]—I am about to answer. Administrative decisions have, of course, been taken —[HON. MEMBERS: "Oh."]—and a number of companies, based on the decision announced by the Government over 12 months ago, have already entered into
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    particular commitments on this matter. That seems to me to be a matter of elementary prudence and common sense on their part.
    Sir S. McAdden: On a point of order. Is it not a gross breach of order for any member of the Government, no matter how exalted, to attempt to instruct you, Mr. Speaker, in your duties?
    Mr. Speaker: I did not understand the right hon. Gentleman to be trying to instruct me. If he had attempted to do so, it would have been an attempt in vain.

    Balance of Payments (Immigrants)
    Mr. John Hallasked the Chancellor of the Exchequer if the National Institute of Economic and Social Research has yet completed its study of the effect of the large-scale inflow of immigrants on Great Britain's balance of payments.
    Mr. Callaghan: I understand that the National Institute expects to report in about 12 months.
    Mr. Hall: Would not the right hon. Gentleman agree that that is a rather long time to wait? Would he not further agree that this is a very important problem, particularly in view of his reply to me on 22nd November, in which he accepted that problems were involved arising from the effect of this on our balance of payments?
    Mr. Callaghan: The National Institute has told me that it is undertaking a very deep-ranging study which will cover the general economic effects as well as the specific balance of payments effects of immigration.

    Selective Employment Tax
    Mr. Alasdair Mackenzieasked the Chancellor of the Exchequer if he will make a statement as to the cost of administering the Selective Employment Tax as it affects agriculture and other industries entitled to a refund.
    Mr. MacDermot: The cost of administering refunds to the private sector is about £375,000 in a full year, and about a third of this is for refunds to agriculture. The cost of collection cannot be separately identified.
    Mr. Mackenzie: Does the Financial Secretary recognise that this imposition

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    is a waste of time and money? Would not he agree that it would be better to abolish this tax entirely, certainly for those industries which are given the refund?
    Mr. MacDermot: As I said in answer to a previous Question, it is not a waste of time and money. This tax, including the cost of paying the refunds, is an unusually cheap tax to administer.
    Mr. Deanasked the Chancellor of the Exchequer whether he will announce the results of the studies he has made of the effects of the Selective Employment Tax on those parts of the country with the smallest proportion of employees engaged in manufacturing industry.
    Mr. Callaghan: I cannot anticipate my Budget statement.
    Mr. Dean: Does the right hon. Gentleman realise from the figures he has already given that those parts of the country least able to pay are bearing the biggest burden? Will he give an assurance that he will put this right at an early date?
    Mr. Callaghan: The hon. Gentleman will understand from my original reply that I can give him no assurance, and that he can draw no deductions from my original Answer.

    Income Tax Returns (Accountants' Fees)
    Mr. Ronald Bellasked the Chancellor of the Exchequer why the fee of an accountant for preparing the Income Tax return of a taxpayer is not allowed as an expense against the income which is declared in the return.
    Mr. MacDermot: Because it is an expense which is unrelated to the earning of the income and is a personal outgoing for which the law does not give relief.
    Mr. Bell: Does the hon. and learned Gentleman realise that the Government have made the Income Tax laws so complicated that very few taxpayers are now able to make a return of Income Tax without the assistance of an accountant? That being so, is this not really an expense which is pertinent to the income being returned?
    Mr. MacDermot: No, Sir. I do not agree, and many taxpayers do make their own Income Tax returns.
    Mr. Patrick Jenkin: Is it not a fact that taxpayers who are in business are allowed to set off the expenses which they incur in preparing their tax returns? Would not there be a saving of time and expense to the Exchequer if this concession were allowed to all taxpayers?
    Mr. MacDermot: In the case of business and professional men, it is only because it would not be practicable to divide an inclusive accountant's fee into the part relating to the preparation of the accounts and the part that would not be deductible because it related to personal income that this exception is made.

    Savings Stamps
    Mr. Kenneth Lewisasked the Chancellor of the Exchequer whether he will reinstate the 6d. denomination of savings stamps for the benefit of young savers.
    Mr. Callaghan: No, Sir. The abolition of the 6d. stamp was necessary to reduce the very high administrative costs of the savings stamp scheme. I am confident that young savers will soon acquire the habit of collecting their sixpences until they can afford one of the new 2s. stamps.
    Mr. Lewis: Is the right hon. Gentleman aware that the very young saver gets the saving habit only because his parents teach him the habit? Is he aware that many parents cannot afford to provide their children with the money to buy these 2s. saving stamps, as a result of which a great disservice is being done to the National Savings Movement? Does he also recognise that this is causing a complication in the make-up of the 15s. savings book?
    Mr. Callaghan: I do not think so. This matter was thoroughly discussed with the National Savings Movement before the abolition took place. One factor was that more than 90 per cent. of the stamps were cashed before they were converted into securities. It was, therefore, felt that this was an administrative saving that could be made without harming the movement.

    Taxpayers (Investments)
    Sir G. Nabarroasked the Chancellor of the Exchequer whether he is aware that Her Majesty's Inspectors of Taxes respectively at Willesden, Cheltenham and Stratford, E.15, have requested from taxpayers lists of investments at 6th April, 1965, contrary to Treasury instructions and not required by Statute; and, as this practice represents unwarranted and illegal intrusion into private monetary affairs of investors, whether he will issue a general direction to all tax inspectors forbidding such practices in connection with capital gains duty.
    Mr. MacDermot: If the hon. Gentleman will let me have particulars of the cases to which he is referring, I will look into them and consider whether any reminder should be issued that there is no statutory requirement on taxpayers to supply this information.
    Sir G. Nabarro: While thanking the hon. and learned Gentleman for that invitation—and I will submit the evidence to him at once—may I ask him to recall that months ago the First Secretary assured the House that the Treasury was not conniving at inspectors of taxes breaking the law by demanding these details, which are personal and private to the taxpayer? Will he make it abundantly clear that no taxpayer has any statutory obligation to divulge these details?
    Mr. MacDermot: I think that the hon. Gentleman is under a misapprehension. No question of breaking the law arises. Not even civil servants need statutory authority to ask questions. The only thing that would be wrong—and I will consider the matter from this point of view when I see the evidence which the hon. Gentleman says he will give to me—would be inspectors suggesting that there is an obligation on taxpayers to provide this information. However, many taxpayers find it convenient to give it, and I do not see why we should stop them from doing so.
    Mr. Hordern: Do the inspectors point out on every occasion that taxpayers have no obligation to answer such questions?
    Mr. MacDermot: I will look into that matter when I have had the opportunity of studying any examples which may be given to me.
    Sir G. Nabarro: In view of the most unsatisfactory nature of the hon. and
    1248
    learned Gentleman's Answer, I give notice that I will raise this matter on the Adjournment as soon as possible.

    United States Securities
    Captain W. Elliotasked the Chancellor of the Exchequer what was the value of the United States securities owned by British nationals when these were compulsorily acquired by the British Government during the last war; and what is the value of these securities today, including the proceeds of sales already made.
    Mr. Callaghan: The value of United States securities acquired by Her Majesty's Government from British nationals during the war was about £163 million. Many of them were sold during the war and in more recent years. Securities to the value of £316 million held in liquid form were transferred to the first line of reserves in February, 1966. The value of those which remain is approximately £180 million.
    Captain W. Elliotasked the Chancellor of the Exchequer whether Her Majesty's Government have completed the sales of British-owned United States securities.
    Mr. Callaghan: No, though much the greater part of the portfolio is now in liquid form.
    Captain Elliot: Would not the right hon. Gentleman agree that the increase in the value of these securities as well as being most satisfactory is rather startling? Would not he consider that if he needs money to repay loans, it might be better to use these assets as a security to raise a loan instead of using the proceeds as if they were current earnings?
    Mr. Callaghan: I agree that it would be an alternative proposition. I have followed what I thought was an excellent precedent set by my predecessor, and I do not feel that it would be right for me to depart from it at this stage.

    New Commercial Buildings (Depreciation)
    Mr. Templeasked the Chancellor of the Exchequer what would be the estimated cost to the revenue of allowing depreciation at the rate of 10 per cent. per annum to be written off for new commercial buildings.
    Mr. MacDermot: The cost would rise annually to about £160 million a year, assuming current rates of expenditure.
    Mr. Temple: Is not the Financial Secretary aware that, in view of the enormous increase in building material stocks at present, this might well be a very good way of using an investment grant? If he cannot give an investment allowance, will he consider giving an investment grant for commercial buildings?
    Mr. MacDermot: That is an entirely separate question and one which the hon. Gentleman should address to my right hon. Friend the President of the Board of Trade.

    International Liquidity
    Mr. Newensasked the Chancellor of the Exchequer what progress has been achieved within the Group of Ten towards an agreement on the present international liquidity problems, as a result of the recent discussions on this subject.
    Mr. Callaghan: Welcome progress has been made in the joint talks between the International Monetary Fund Executive Directors and the Group of Ten Deputies. Two further meetings have been fixed for April and June.
    Mr. Newens: Is not my right hon. Friend disappointed at the slow progress that is being made towards solving the real problems that are involved? Can he forecast any real advance being made during the course of this year?
    Mr. Callaghan: I am, of course, disappointed that faster progress has not been made, but when dealing with international problems and when a number of countries have to be carried along at the same pace, one must temper one's disappointment with realism. As to future prospects for discussing this matter, two meetings have been fixed and they will show whether, when we get to Rio de Janeiro in the autumn, there are any likely prospects of agreement.
    Mr. Bruce-Gardyne: Does the right hon. Gentleman still expect to get agreement on a contingency plan in time for the I.M.F. meeting? Does he believe that this will be much more than a scrap of paper in view of the attitude of the
    1250
    creditor countries about the use of credit facilities?
    Mr. Callaghan: If heads of agreement were reached before September, then I would certainly feel, the nations having put their hand to them, that they intended that it should be more than a scrap of paper—otherwise we would all be wasting our time. As to future prospects, I think that the two meetings which are to be held will show us more clearly just what the prospects are.

    Industrial Investment and Production
    Mr. Sheldonasked the Chancellor of the Exchequer what action he is taking to increase industrial investment and industrial production.
    Mr. Callaghan: A temporary increase in the rates of investment grant was announced by my right hon. Friend, the President of the Board of Trade, on 1st December last. The reduction in Bank Rate on 26th January, the fall in interest rates generally, and the special aids given to the development areas should also be helpful to industrial investment, and hence to the prospect for industrial production.
    Mr. Sheldon: Is my right hon. Friend aware that in the last six months the Index of Industrial Production has fallen from 135 to 131 and that investment this year is not expected to be better than 10 per cent. behind last year and that, despite the many burdens which my right hon. Friend has to bear, the House expects him to accord the highest priority to investment and output of industry in this country?
    Mr. Callaghan: I entirely agree with my right hon. Friend.
    Sir G. Nabarro: Right hon. Friend?
    Mr. Callaghan: He will soon be my right hon. Friend. He will certainly be right hon. before the hon. Gentleman is. I agree with my hon. Friend's general philosophy on this matter and it is for this reason that special aids have been given for investment. We must ensure, however, that there will be a reasonable return on capital when an investment has taken place and that there will be a market for the product; and the Government's policy on this matter has been clearly stated.
    Mr. Hirst: Does the Chancellor of the Exchequer appreciate that even special aids when not—as I think they are—wrongly directed, will not affect this issue as long as industry and commerce do not see any reasonable sign of consumer demand? They will not be bribed merely into producing.
    Mr. Callaghan: The Government's policy is not to have a general consumer reflation. It is to encourage investment through greater exports, which, I am very glad to say, is already taking place, and through increasing investment in particular ways that will enable healthy growth to follow.
    Mr. Harold Walker: Would not my right hon. Friend agree that his report is an indictment of the private manufacturing sector of the economy, and will he not seek to utilise the resources of the State, including the Industrial Reorganisation Corporation, to offset the weaknesses of private manufacturers?
    Mr. Callaghan: I do not think that it would be possible for the State to undertake all the private investment that I expect manufacturers to do. I do not think that it is an indictment of them if they look cautiously ahead at market prospects and decide what their future will be, but it should be the aim of all of us, on all sides of the House, to ensure that when we have a healthy period of growth the markets will be there.
    Mr. Hordern: Is the Chancellor of the Exchequer aware that the Index of Industrial Production is rather below what it was at the end of 1964? Are we to look forward to another 100 days of dynamic Government?
    Mr. Callaghan: The Index of Intrial Production is not the most reliable of the indices we have to provide. I remember that once during my predecessor's term of office it was revised by four points in two months, in an upward direction on that occasion, but clearly we need an increase in industrial production, and it is towards that that the Government's policy is directed.

    Personal Savings
    Mr. Boyd-Carpenterasked the Chancellor of the Exchequer what proposals he now has to encourage private savings.
    Mr. Callaghan: I am glad to say the level of personal savings remains high. I would, of course, like to see this level even higher, and am always willing to consider ways of increasing it.
    Mr. Boyd-Carpenter: Can the right hon. Gentleman assure the House that he is actively considering such further steps, in view of his own observation last year that the higher savings were, the less the need for tax?
    Mr. Callaghan: Yes, Sir. The right hon. Gentleman has in his time gone through a period similar to that through which I am passing at this moment.

    Earned Incomes (Taxation)
    Mr. Boyd-Carpenterasked the Chancellor of the Exchequer what percentage of his earnings above £5,000, £8,500, £10,000, and £15,000 a year is retained after payment of income tax and surtax by a married man with two children and no unearned income; and what are the comparable figures for a similar man after payment of direct taxation in the United States, France, West Germany and Japan, based on information he derives from international organisations.
    Mr. MacDermot: It depends on how much extra earnings he has. I will, with permission, circulate a table in the OFFICIAL REPORT.
    Mr. Boyd-Carpenter: Does the Financial Secretary accept that economic harm is done to the country's competitiveness if rates of personal taxation remain higher than those on comparable people in competing countries; and that, indeed, once we were in the Common Market these rates would be impossible to maintain?
    Mr. MacDermot: No, Sir. I think that the right hon. Gentleman's proposition is much too wide, and perhaps he had better wait until he sees the table.
    Mr. Newens: Is my hon. and learned Friend aware that many wage earners are receiving incomes not sufficient to keep their families at subsistence level? Is it not more important to turn attention to that type of person before turning to the more highly paid executives?
    Mr. MacDermot: We shall take all relevant matters into account, but I agree

    1253
    with my hon. Friend that our prime object is to get fairness in our tax system.

    PERCENTAGE OF ADDITIONAL EARNINGS (UP TO £100) RETAINED AFTER PAYMENT OF INCOME TAX AND SURTAX, OR THEIR EQUIVALENTS

    Level of earnings

    United Kingdom*

    United States†

    France

    West Germany‡

    Japan§

    £5,000

    …

    …

    …

    …

    63·3

    62·1

    78·4

    61·7

    42

    £8,500

    …

    …

    …

    …

    43·3

    47·3

    71·2

    54·7

    36

    £10,000

    …

    …

    …

    …

    26·25

    41·6

    60·4

    52·9

    36

    £15,000

    …

    …

    …

    …

    16·25

    37·6

    53·2

    49·8

    30

    Notes:

    * Excluding the effect of the 10 per cent. surcharge, and assuming the children are both under 11.

    † An equivalent rate of $5 = £1 has been assumed to allow for the substantially higher cost-of-living in the United States. The figures shown relate to California. The tax deducted includes Californian income tax which is partly deductible for Federal income tax; it also includes the proposed 6 per cent. Vietnam surcharge on Federal income tax.

    ‡ The scale rises continuously, and so the percentage remaining relates only to small increases in earnings above the levels given.

    § An equivalent rate of 1,010 Yen = £1 has been taken. The figure allows for Prefectural and Municipal Inhabitants Income Tax, not deductible for the National Income Tax.

    Foreign Exchange (Estimated Saving)
    Mr. Barnettasked the Chancellor of the Exchequer if he will give an analysis of the estimated saving of £100 million in foreign exchange forecast on 20th July, 1966, together with a comparative analysis of the savings to date.
    Mr. Callaghan: I would refer my hon. Friend to the Answer I gave to the hon. Member for Belfast, North (Mr. Stratton Mills) on 22nd February. —[Vol. 741, c. 319–20.]
    Mr. Barnett: Does that reply mean that there will be a saving of at least £100 million in 1968–69; that this will be the real net saving, and not be offset by increases elsewhere?
    Mr. Callaghan: The figures that were published in the Defence White Paper, which I gave in my earlier reply, show that defence savings will build up to an annual rate of about £75 million by the end of 1967–68.
    Mr. Stratton Mills: Will the Chancellor of the Exchequer remind the House that the Answer to the Question to which he refers shows that the saving during 1967–68 would be only £70 million, some £30 million short of what the Prime Minister promised on 20th July?
    Mr. Callaghan: That is the figure I gave of the savings I could see at this moment building up during 1967–68.
    Mr. Barnettasked the Chancellor of the Exchequer what is his estimate of
    Following is the Table:
    the saving in foreign exchange in 1966–67 and 1967–68, respectively, from the restriction of foreign travel allowance for holidays to £50 per head and if he will give an assurance that when the restriction ends in November, 1967, he will revert to the practice previously in force.
    Mr. Callaghan: It is estimated that the exchange control measures taken in July, of which travel restrictions were one, will save about £50 million a year in foreign exchange. A decision about the next travel year will depend on the balance of payments prospects generally, and on experience of the present arrangements.
    Mr. Barnett: I had understood that this restriction was to last only 12 months. Does this reply mean that it could last longer? Is not my right hon. Friend aware that this restriction is giving a totally false impression of Britain abroad, and would he perhaps reconsider the Answer he has given?
    Mr. Callaghan: No, Sir. I see no reason to reconsider the Answer I have given, which is that the decision for the next travel year will depend on how well we do on balance of payments generally.

    RHODESIA
    Mr. Biggs-Davisonasked the Prime Minister what new efforts he has made to solve the Rhodesia problem.
    The Prime Minister (Mr. Harold Wilson): I would refer the hon. Member

    1255
    to the many Answers to Questions on this subject given by my right hon. Friends and myself in recent months.
    Mr. Biggs-Davison: While recognising that the Prime Minister has many problems on his mind, may I ask him whether he is now able to answer the question he failed to answer on 21st February when I asked him a supplementary question, namely, whether the Government, being unable to take on South Africa, are contemplating the use of force against Rhodesia?
    The Prime Minister: I was not aware that I had failed to answer the question. The answer is that we are certainly not contemplating and certainly do not intend to use force.
    Mr. Bellenger: In view of the many grave complications that are bound to arise—for example, in the repudiation of debt guaranteed by the British Government and other matters—can my right hon. Friend say whether an initiative will be taken at some time, or is it to be left to the United Nations?
    The Prime Minister: Debts are a separate question. There has been a whole succession of defaults by Rhodesia on international borrowings. As to the United Nations, as my right hon. Friend knows, it was through the United Nations that the resolution on mandatory sanctions was obtained, and this will have its effect on Rhodesia.
    Mr. Sandys: Since the Prime Minister has told us that the estimate of the cost of the Rhodesian crisis which he gave to the Commonwealth Prime Ministers has proved too high, why does he so doggedly —[Laughter.]—refuse to give us the revised figure? Is this not another example of his contemptuous attitude towards Parliament?
    The Prime Minister: No, Sir. My contempt was to the right hon. Gentleman for his failure to tell us where he got that document from; and also to the fact that he has systematically tried to represent my statement to the Commonwealth Prime Ministers as being the cost of sanctions when it was the then estimate, which was never withdrawn, of the total cost to us of what Rhodesia has involved us in. With regard to a revised estimate we do not have final figures, but if the
    1256
    right hon. Gentleman cares to put down a Question I will certainly do my best to give him the up-to-date figure for 1966.
    Mr. Faulds: Can we have an assurance that the necessary contingency planning has been made if at the end of the day we have to snuff out Smith and his rebel clique by military means?
    The Prime Minister: I have already made it plain that the right way to solve this problem, after the very serious efforts we made in December to do it by discussion, does not include the use of military force.

    EUROPEAN ECONOMIC COMMUNITY
    Mr. Winnickasked the Prime Minister if he will make a progress report on his visits to the European Economic Community countries; and if he will now make a statement of the Government's future intention on joining the European Economic Community.
    Mr. G. Campbellasked the Prime Minister if he will make a statement on the situation resulting from the visits he has so far made to European capitals on the question of the United Kingdom joining the Common Market.
    Mr. Channonasked the Prime Minister whether it is now the intention of Her Majesty's Government to apply to join the European Economic Community.
    Mr. St. John-Stevasasked the Prime Minister whether he will make a statement on the progress of Her Majesty's Government's policy towards the European Economic Community.
    The Prime Minister: I have at this stage nothing to add to the reports I have already given the House on the visits of my right hon. Friend the Foreign Secretary and myself to Rome, Paris, Brussels, Bonn and The Hague.—[Vol.739, c. 643. Vol.739, c.1765. Vol.740, c.769. Vol.741, c.1427. Vol.742, c. 267.]
    Mr. Winnick: Does my right hon. Friend agree that a majority of people in this country are neither fanatically for or against our entry but believe that we should go in if suitable conditions can be

    1257
    negotiated, and will he agree also that there are certain matters, such as the free movement of capital, which will need a good deal of negotiating before our entry?
    The Prime Minister: I agree that there is a considerable body of opinion, the majority of opinion in this country, which thinks that we should enter the European Economic Community if the right terms can be obtained. The purpose of our visits is to learn more about the sort of conditions which could be obtained. Certain aspects of the question of the free movement of capital raise one of the difficult questions which I have told the House still remain unsolved.
    Mr. G. Campbell: Although the visit to Luxembourg still has to be made, has the Prime Minister now enough information to decide what to do next, and will the Government take a decision upon the next move soon?
    The Prime Minister: As I have told the House, as soon as the complete round of visits is over it will then be for the Government to consider their next step. I agree with what I think is at the back of the hon. Gentleman's mind. I have said more than once that it is essential to maintain the momentum of what we have started.
    Mr. Channon: I agree very much with what the right hon. Gentleman has just said about maintaining the momentum, but does he think that after his visit to Luxembourg he will be able to make a statement in the House on the Government's decision before the Easter Recess?
    The Prime Minister: I doubt that it will be before the Easter Recess. The whole House will recognise the serious importance of any decision of this kind. It is certainly our intention to get down to this question as quickly as possible after we, my right hon. Friend the Foreign Secretary and I, have been able to evaluate the results of our visits. A decision will not be delayed a day longer than is necessary, but it will be recognised that, while we desire to maintain the momentum, momentum depends on other people as well.
    Mr. St. John-Stevas: Will the Prime Minister show some courage and brave the yelps and sharp nips of his—[HON.
    1258
    MEMBERS: "Oh."]—it should have been hyenas—the yelps and sharp nips—[Interruption.]
    Mr. Speaker: Order. We must get away from the metaphors and come to the question.
    Mr. St. John-Stevas: —the nips of his metaphorical Friends below the Gangway and take a decision on entering the Common Market now?
    The Prime Minister: I have already answered the question about what we shall do in coming to a decision after returning from Luxembourg. As for the rest of that laboured supplementary question, the hon. Gentleman's standing outside the House—I say this quite seriously—is so great in other matters that it is unfortunate that he believes that he is also a Parliamentary wit. If he goes on like that, he will never reach half that level.
    Sir G. de Freitas: In any consideration of our obligations to the Commonwealth, which are very real, will my right hon. Friend take into account that yesterday it was announced that Kenya, Uganda and Tanganyika were once more opening formal negotiations for association with the Six, thus following the example of Nigeria?
    The Prime Minister: Yes, Sir, that is very important for dealing with an important area of Commonwealth difficulty, although, as the House recognised when negotiations were on foot four or five years ago, there are other very important Commonwealth problems particularly in the area of the temperate countries in relation to their food exports to Britain.
    Mr. Turton: After the Prime Minister's past protestations of the need to safeguard the Commonwealth, will he now give an undertaking that before he reaches a decision on this matter he will have consultations with the Prime Ministers of the leading Commonwealth countries, such as Australia and New Zealand?
    The Prime Minister: As the right hon. Gentleman knows, my right hon. Friend the Commonwealth Secretary is on the way back from Australia and New Zealand and has discussed these matters

    1259
    there. I assure the right hon. Gentleman that we shall do everything reasonable in the matter of consultation with Commonwealth countries as well as with the E.F.T.A. countries, whose interests are concerned.

    MINISTER OF LABOUR (SPEECH)
    Mr. Stratton Millsasked the Prime Minister if the public speech of the Minister of Labour in Glasgow on 12th February on an incomes policy represents the policy of Her Majesty's Government.
    The Prime Minister: Yes, Sir.
    Mr. Mills: Has a final decision been made to retain some form of statutory control over incomes?
    The Prime Minister: As the hon. Gentleman knows, negotiations with the T.U.C. and the C.B.I. have been continuing for some time. I met the T.U.C. representatives last week on the eve of their meeting of trade union executives. Discussions will, of course, continue with the T.U.C. about what is needed to supplement its voluntary scheme, on which, I am sure, the whole House will wish to congratulate the T.U.C., by other means particularly while the scheme is getting under way.
    Mr.Park: Will my right hon. Friend agree that the voluntary approach as proposed by the T.U.C. is much more constructive than the continuance of punitive legislation, and will he accept that the possibilities of success of this voluntary approach would be gravely endangered if the Government were to seek to introduce new legislative powers?
    The Prime Minister: It is not quite so simple as the antithesis between purely voluntary means and purely statutory means. We have always taken the view that the policy could never succeed by statutory means alone. Indeed, the great success of the last six months of last year was due above all to the voluntary co-operation given to the Government. At the same time, we have doubt about whether, particularly in the early months when there will be a number of claims which have been postponed awaiting settlement, when the new machinery is getting into operation, it can function
    1260
    successfully unaided. That is the basis on which we are having discussions with the T.U.C.
    Mr. Heath: When will the House be told what the proposals are? They are being discussed very widely outside and conveyed to the Press. Cannot the House of Commons be told what the proposals are and also be allowed to debate them?
    The Prime Minister: I know that the right hon. Gentleman appreciates the great importance of achieving a successful and effective policy in this field. I saw in the gossip columns of The Times yesterday that he has now made this plain. [HON. MEMBERS: "Get on with it."] I think it rather important that the right hon. Gentleman should make clear where he stands on this. As regards the discussions themselves, having regard to the nature of the matter, the right hon. Gentleman, as a former Minister of Labour, will know how important it is that we continue to discuss even if these things do reach the light of day. As regards a statement in the House and a possible debate, I thought that the right hon. Gentleman had said a little time ago that he would propose an economic debate on the first available Supply Day. We shall be very glad to go into these questions with him on that occasion.
    Mr. Ashley: Will my right hon. Friend bear in mind that, although the vote of the trade union executives in support of a voluntary prices and incomes policy is to be welcomed, there were nearly one million votes cast against that voluntary policy. In view of this, is it not necessary for him to retain some powers of delay under Part II of the Act rather than Part IV when it finishes in August?
    The Prime Minister: As I said last week, not only the decision to have a continuing incomes policy but the surrender of sovereignty by individual unions to the T.U.C. was a historic decision which all of us must welcome. The only doubt arising, I think, relates to the treatment of minorities who seek their own selfish interests and also to the early period when, as I say, there will be all the delayed wage claims in the pipeline. This is why we feel that it needs some supplementation, and that is what we are discussing with them.

    THE PRESS
    Mr. Frank Allaunasked the Prime Minister what steps he proposes to prevent the further shrinking of newspaper control into fewer hands; and if he will consider subsidising the supply of newsprint to the less highly profitable newspapers.
    Mr. Bostonasked the Prime Minister if, in view of the report of the Economist Intelligence Unit's inquiry into the newspaper industry, a copy of which has been sent to him, he will now undertake to appoint an official inquiry into the industry.
    The Prime Minister: I would refer my hon. Friends to the speeches made by my right hon. Friends the President of the Board of Trade and the Minister without Portfolio in the debate on the Press on 8th February.—[Vol. 740, c. 1663. Vol. 740, c. 1776.]
    Mr. Allaun: Has no action at all followed the recent debate, since when the price of newsprint has gone up by £2 a ton? Does my right hon. Friend propose to do nothing before further closures take place?
    The Prime Minister: I said in January, and my right hon. Friend said in February, that this must in the first instance be a matter for the newspaper industry itself. There is effective machinery for discusison, with representation from both sides. If they have any propositions to put to the Government, we shall consider them. I said in January also that there seemed to me to be no reason why any existing newspaper should have to close in present circumstances.
    Mr. Boston: Will my right hon. Friend take it that, while we accept the paramount need to ensure Press freedom, many of us feel that further closures would themselves impair Press freedom? Has he completely ruled out the possibility of help for the Press from public sources, with adequate safeguards, if necessary?
    The Prime Minister: The feeling of both sides of the House in that debate was, as I said in January, that there are grave dangers in any kind of public intervention in this way, however carefully
    1262
    one were to erect safeguards against possible abuse. There seems to be no reason why any newspaper should close down. If one were in danger of so doing, if the industry or the newspaper concerned approached the Government, we would then consider whether it was possible to give help while maintaining adequate safeguards.
    Mr. Thorpe: Is the right hon. Gentleman aware that the newspapers themselves are the last to want State subsidies and State help? Will he agree that the E.I.U. Report, which was commissioned by the industry, coupled with the recent successful talks with The Guardian, are a step in the right direction, and is not the further fact that the Newspaper Proprietors Association and the trade unions are getting down to talk about the whole future of the industry the most hopeful feature? Is it not much better to carry on letting them run their own affairs?
    The Prime Minister: There has been considerable progress since the turn of the year—I refer particularly to The Guardian discussions and what is now going on—but I think that one danger which all of us feel is that, while newspapers would not want to approach the Government or anyone else for help, sometimes things go on till the very last moment without anyone knowing that a paper is likely to close down, and it closes down, as on a famous occasion, between one edition and the next. This would be deplored by the whole House
    Sir A. V. Harvey: Will the Prime Minister give an assurance that, in the event of Lord Thomson trying to take over the Sun, he would not condone it?
    The Prime Minister: Any question of take-over within the newspaper industry is now, in terms of laws passed in the House, one on which my right hon. Friend the President of the Board of Trade can refer the issue to the Monopolies Commisison to see whether there would be undesirable concentration of ownership.
    Mr. Alfred Morris: Does my right hon. Friend feel that a proper balance is being achieved in the allocation of Government advertising in the Press?
    The Prime Minister: That matter is continuously being reviewed. It is the duty of those responsible for placing

    1263
    Government advertising to see that it is done in accordance with the best commercial practice, in terms of the best yield in advertising readership for the money spent. We are examining that carefully all the time, and if it were possible to make improvements in the system I would be very anxious to see that it was done.
    Mr. Murray: Is it not possible for my right hon. Friend to look again at a levy on Press advertising or newsprint? Before he listens to the voices opposite about the freedom of the Press, will he ask some of the former eight editors of the Daily Mail about it?
    The Prime Minister: The question of proprietorial intervention is not raised by the first part of my hon. Friend's question. My hon. Friend will know that while there have been proposals for levies on advertising, similar to what is already done in commercial television, it is very difficult to draw the line between the big, medium-sized and small papers; and some small local papers which are so essential to local services and the functioning of our democracy might be the first to suffer if that policy were adopted.

RAILWAYS (FREIGHTLINER TERMINALS)
The Minister of Transport (Mrs. Barbara Castle): Mr. Speaker, with your permission, and that of the House, I wish to make a statement.
As the House will know, I have during the last week been holding intensive discussions with the National Union of Railwaymen on the opening of freightliner terminals to all road haulage vehicles. The dispute between the National Union of Railwaymen and the Railways Board over open terminals was a longstanding one which had prevented the full use of freightliner services, and the opportunity to discuss it further arose when the Union asked to see me on 16th February about the completion of the Transport Holding Company's acquisition of the Tartan Arrow Company.
I am happy to be able to tell the House that, in the light of the discussions and of the assurances given, the N.U.R. Executive withdrew its objection to open terminals and agreed to co-operate in the full expansion of the freightliner network.
1264
It is a primary aim of my policy to exploit to the full the railways' ability to transport large flows of freight in containers with maximum efficiency; this will be a vital element in developing the new railway.
The Railways Board will shortly be putting forward for my approval proposals for the investment of about £7 million in Stage 2 of the freightliner project. Expenditure of this order could not have been economically justified without open terminals. The Board will also be seeking my approval for further investment in cartage vehicles to service the freightliners, and this is expected to total about £2 million. With the establishment of open terminals, I confidently expect that these proposals will prove to be soundly based.
I am anxious that the railway workshops should share in the benefits of the expansion of the freightliner network, and I have just approved the setting up of a modern and efficient container production line which will enable the Derby workshops to manufacture up to at least 4,000 containers a year. The removal of the present restrictions on the Board's powers of manufacture which I shall propose in my forthcoming Transport Bill will also help to ensure that the railway workshops in general, on whose modernisation about £17 million has been spent in the past few years, are used to their fullest extent.
As I said in the House before Christmas, the British Railways Board and the Transport Holding Company have already taken the first steps to create an integrated freight system by establishing joint machinery to promote interworking in the parcels and sundries field. As a further step towards integration it has now been agreed between the Railways Board and the Transport Holding Company that the Board will take a 50 per cent. holding in Tartan Arrow, and so become joint owners with the Transport Holding Company.
The Board and the Holding Company will make an immediate start on securing the mutual benefits to be derived from joint ownership of Tartan Arrow even before the legal formalities are completed. Discussions will cover means of integrating the use of trains and job opportunities. There will be full consultation with all the unions concerned.

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The Chairman of the Railways Board has reaffirmed the assurances already offered to railwaymen that there will be no redundancies among cartage or other railway workers as a result of the opening of the terminals to private hauliers and that earnings will be suitably safeguarded. The Board will shortly be starting discussions with the trade unions with the aim of translating these assurances into an agreement which will meet specific points raised by the N.U.R. Executive.
The service planned by Tartan Arrow will be starting between its own depots at London and Glasgow next month with one train daily in each direction. The Railways Board also intends to add further trains to its own London-Glasgow service in the near future as traffic expands with the establishment of open terminals.
In these ways we shall continue to work towards the fullest use of freightliners. I look forward to the continuing expansion of this traffic, in which I am confident that all sections of the railway industry will share.
Mr. Peter Walker (Worcester): Is the right hon. Lady aware that we on this side of the House are very relieved that at last all these terminals will now be opened to the majority of lorries wishing to deliver goods to them instead of just the minority in public ownership? At this moment, are all the terminals open to all free enterprise lorries, or will there be need to await the detailed agreements which the right hon. Lady mentioned? Has the Transport and General Workers' Union now changed its former position of agreeing to their drivers' delivering to only three of the terminals for an experimental year? Will it now allow its drivers to deliver to all the terminals?
Can the right hon. Lady also assure the House, as I gather that there is some delay in the programme due to a shortage of containers, that before the railway workshops' production line comes into operation private enterprise will be used to provide such containers if necessary? Does she now believe that the original estimates in the Beeching Report that with open terminals £100 million invested in the freightliner train project could reduce the railways' deficit by as much as £50 million a year?
Mrs. Castle: I am glad that the hon. Gentleman shares my delight at our success in opening the terminals. The agreement to open the terminals came into operation automatically. The National Union of Railwaymen's Executive was speaking on behalf of the whole membership.
On the hon. Gentleman's second question, one of the unions in Manchester—not the Transport and General Workers' Union—had some difficulty about allow-in B.R.S. vehicles to use the terminals, but the Transport and General Workers' Union is certainly not raising any objection to the decision.
The hon. Gentleman raised so many points that I have forgotten his third.
Mr. Walker: Containers in workshops, and the other was on the Beeching point.
Mrs. Castle: The Railways Board is expanding its manufacture of containers as rapidly as possible and is confident that shortages will have been met by the end of April.
The hon. Gentleman's fourth question was about the Beeching investment programme. As I have said, I shall shortly have before me the request for the second stage of investment, £7 million plus £2 million on cartage vehicles. We must wait and see what the response is to the use of the terminals in the new situation before we consider the investment for the third stage.
Mr. Ron Lewis: Is my right hon. Friend aware that we congratulate her on her personal success in ending the dispute? Many of us know that it would not have been possible to have had a solution except in the context of her policy for integrating road and rail freight traffic, thus offering a new deal to the railways and the railwaymen.
Mrs. Castle: I am grateful to my hon. Friend for those remarks. I think that he is quite right. As I have said time and again, the railwaymen had legitimate anxieties and fears which it would not have been possible to meet except in the context of my wider policy.
Mr. Bessell: Is the right hon. Lady aware that we on the Liberal bench welcome her statement? We congratulate her upon her success in the negotiations, which is part of the realistic programme she has adopted towards British

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Railways, and which we thoroughly applaud. Has she any idea of the amount of increased tonnage that the agreement is likely to result in British Railways carrying?
Mrs. Castle: I am grateful to the hon. Gentleman for his kind and generous remarks. It is impossible for me to say what increase there will be in tonnage as a result of the present agreement. All we can say is that the way is now open for a rapid expansion of the tonnage which can be carried by our freightliners. I am sure that the Railways Board is determined to go out and get as much business as it can.
Mr. J. T. Price: Is my right hon. Friend aware that her statement will give unqualified pleasure to every hon. Member on this side of the House—which is something in these days? Does not she agree that the removal at long last of the artificial restrictions on making the fullest use of our national resources in the railways, both in rolling stock and in the new design to relieve the enormous congestion on the roads, plus her desire to give greater freedom to the railway workshops, will increase the morale of the industry and of all of us on this side who have advocated this policy for so long?
Mrs. Castle: I thank my hon. Friend. I know that he will agree—I am sure the whole country agrees—that in our railway system we have a valuable national asset which must be used to carry an increasing share of the traffic which threatens to congest our roads. Therefore, this agreement marks an important break-through.
Mr. Fortescue: Is the right hon. Lady able to tell the House what element of subsidy there is now in the charges made by British Railways for transport by freightliners?
Mrs. Castle: I would not accept that there is an element of subsidy. British Railways are anxious to earn as much money as they can.
Mr. Mapp: While congratulating my right hon. Friend in a very broad sense in taking the political poison out of this subject, may I press her more strongly about the capital investment she mentioned, totalling £9 million? Is this based
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on a market survey of the next five years or does she expect the railways to take their courage in their hands and look forward in terms of 10 years, in which case the investment is not by any means enough?
Mrs. Castle: I would not like my hon. Friend to think that this stage will be the final stage of investment in the freightliners. On the contrary, I am hoping that, when the stage 2 investment comes into play, leading to the opening of eight more terminals, we shall begin to get manufacturers accustomed to using the freightliners and that this will merely be paving the way for still more investment in future, which I shall certainly welcome and accept if it can be economically justified.
Mr. Ridley: Since the right hon. Lady is making the railways go into the manufacture of containers, will she allow private enterprise to go into the running of railways?
Mrs. Castle: I did not think that it was ever the policy of right hon. and hon. Members opposite to take away from the nationalised industries the manufacturing powers they already possessed. What I propose to do, however, is to expand those powers so that the railways can compete fully and fairly with private enterprise for the home market and in the export trade.
Mr. Francis Noel-Baker: Is my right hon. Friend aware that railway workshop men throughout the country, not least in Swindon, will wish to join us in congratulating her and thanking her very warmly for what she said about the workshops? Can she give an unqualified assurance that they will be given a fair crack of the whip in container manufacture and in all other work when her legislation goes through?
Mrs. Castle: Yes, I can. It has always been the basis of our policy that the railway workshops must be able to manufacture and produce commercially. There is no intention of having any subsidy here. I am confident that, with modernisation, the workshops will be able to compete fully and fairly. Indeed, I visualise the manufacture of wagons in the workshops increasing from the present figure of 280 a year to more than double

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—about 600 a year—and container production in Derby, Glasgow and Horwich reaching 6,000 containers a year compared with 1,500 at present.
Mr. Patrick Jenkin: When the right hon. Lady is framing her Transport Bill in relation to these manufacturing powers, will she consider the wisdom of introducing provisions for the availability of figures comparable with those that were introduced by the Minister of Power into the Iron and Steel Bill? Unless these figures are available regularly, we cannot take her assurance that these are intended to be fully commercial ventures.
Mrs. Castle: I appreciate that it is important to have separate costing of workshops. I do not think that the railwaymen want a hidden subsidy here. My purpose is to enable the railwaymen to hold up their heads. They do not want to get any hidden or secret advantage. The exact way in which we shall interpret that concept in the new Bill is being discussed in detail with the C.B.I. and the unions.
Mr. Manuel: Is my right hon. Friend aware that every hon. Member on both sides of the House with the well-being of British Railways at heart will heartily and sincerely congratulate her on the agreement she has attained? Is she further aware, however, that if hon. Members opposite had continued in
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office, there could have been no decision to go ahead with liner train terminals until there had been full agreement with the unions, and that this would have held us back for many years?
Mrs. Castle: I think that it is true that the railwaymen—the N.U.R., in particular—had many fears and anxieties as a result of years during which our railway system was allowed to run down under unqualified commercial considerations and during which "integration" was a dirty word. Now they know that they are to collaborate with a policy that will give railwaymen a fair deal.
Several Hon. Members rose—
Mr. Speaker: Order. We must move on.
Later—
Mr. Baxter: On a point of order. I regret very much that I was not called —and it is quite in order that I should not have been—but I would have liked someone to pay tribute to my right hon. Friend the Member for Hamilton (Mr. Tom Fraser) for the work that he has done in respect of the project which we have been discussing.
Mr. Speaker: An ingenious point of order, which the House has taken in good spirit, I think.

ORDERS OF THE DAY

  LEASEHOLD REFORM BILL
  Order for Second Reading Read.
  Mr. Speaker: Before I call on the first right hon. Gentleman to speak, may I remind the House that many hon. Members have vital constituency interests in the Bill before the House this afternoon. I appeal to hon. Gentlemen whom I call to be reasonably brief in their speeches. I hope that the House will take note of what I am asking.
  3.50 p.m.
  The Minister of State, Ministry of Housing and Local Government (Mr. Frederick Willey): I beg to move, That the Bill be now read a Second time.
  I am entitled to anticipate that this Motion will be generally acceptable to the House. Just a year ago, the House unanimously welcomed—although some Members opposite expressed their approval in somewhat niggardly terms—the proposals contained in the White Paper as a basis for legislation. This Bill is based on the White Paper.
  Just before the last General Election, the Conservative Party took the course which the Monday Club has described—and I am sorry that the Monday Club should regard it as regrettable—of
  "jumping on the bandwagon of leasehold enfranchisement".
  Indeed, at the last General Election, the Conservative Party declared that it would
  "legislate to allow ground leaseholders to buy or rent their houses on fair terms except where the property is to be redeveloped."
  I emphasise that any such action must depreciate the landowner's interest. We know that the Conservative Party would not shrink from that consequence. We have the precedent of the Landlord and Tenant Act, 1954. That Act has been a complete failure. It has not stemmed the continued demand for leasehold reform. The Conservative Party admitted this at the last election, and do so today. The 1954 Act allowed the leaseholder to continue in occupation, but only under the terms of a statutory tenancy and only at a rack rent.
  The tenant got no real security, he was forced to pay a rent for occupying his own house, and was often faced with
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  onerous dilapidation claims. But, at the same time, the Act drastically depreciated the value of the landowner's interest. For example, a freeholder's interest which had previously been worth £1,500 as a result of the 1954 Act was depreciated to £550; a freeholder's interest of £4,000 was halved to £2,000. Hon. Members opposite are the last people in the world who can complain of leasehold reform depreciating the value of the landlord's interest.
  But all this was quite pointless, because no one was satisfied—neither the landlord nor the leaseholder. Certainly, no one today would claim that this particularly stupid legislation has provided a solution to the leasehold problem, and, clearly, there is still a need for reform.
  What I think is equally clear is that the need for such reform is urgent. A great many leasehold estates were built in the second half of the 19th century— particularly in South Wales and in some English industrial areas. The houses had to be built near the pit, or near the mill or factory, and landowners used their monopoly power to allow only leasehold development. Now, in growing numbers, these leases are drawing to an end, and the leaseholders are experiencing the full harshness of the leasehold system.
  When I looked at the leasehold problem, another factor struck me very forcibly. Nowadays practically everyone buys his house on mortgage. With a good many years to run, a purchaser of a lease will pay virtually a freehold price. But, as he pays off the mortgage, so also the lease runs its course. What happens when he reaches the end of the mortgage term? The owner-occupier finds that after he has discharged the mortgage he will have an interest which is far less valuable than it was when he bought it. Indeed, he may find it difficult to sell, because a subsequent purchaser may not be able to get a mortgage—and we should not forget that the 1962 White Paper told us that there may be mortgage difficulties whenever a lease
  "has about 30 years or less to run".
  The owner-occupier buying on mortgage finds himself caught—the victim of the leasehold system. This is now a matter of urgency, because this is the reality now facing many owner-occupiers who bought their houses when they were particularly scarce, on setting up home immediately

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  after the war. It is callous to say that they did so with their eyes open. In the first place this is not true, and in the second place, houses were scarce and they had no choice.
  Thirdly, when we talk of leasehold, we should not receive ourselves that we are talking about a relic of the bad old Victorian days. A large number of houses now being built are being provided on leasehold terms at a price which is little, if anything, less than a freehold price, and subject to ground rents which very often are quite substantial.
  In Greater London, for many years now, about half of the total development of private housing estates has been on leasehold terms. Again, this is largely because houses are still scarce and the house purchaser has really no alternative. Again, against this exploitation, I am sure it is right to protect owner-occupiers by giving them the right to purchase the freehold at a fair price.
  But quite apart from any question of exploitation, supposing that some house purchasers prefer to buy on leasehold terms, because it may be slightly cheaper, what we are considering are people's homes, and I cannot see any reason why owner-occupiers should not be able to purchase greater security—should not have the opportunity later of buying the freehold on fair terms.
  Mr. Alfred Morris (Manchester, Wythenshaw): While everyone accepts my right hon. Friend's skill and perseverance in bringing in a most important Measure of this kind, may I ask whether, during his speech, he will be spelling out what he means by fair treatment? Can he give any example of what would be the terms for the average type of property?
  Mr. Willey: My hon. Friend has anticipated what I will refer to in my speech.
  I can fairly assume, I am sure that my hon. Friend does, that both the need for leasehold reform and the urgency of that need are established. Equally, I am convinced that the pattern of that reform—leasehold enfranchisement and the extension of the leases—is now generally accepted. The Labour Party has been committed since 1951 and—in spite of
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  the Monday Club—the Conservative Party since the last General Election.
  Faced, then, with the urgent need for leasehold reform, all past experience points to the conclusion that no real solution will be found unless we rectify the fundamental injustice of the leasehold system. This fundamental injustice arises because under the leasehold system the landlord is entitled—indeed, has the impertinence to take—free of charge the house and improvements created and maintained wholly by and at the expense of a succession of leaseholders.
  This is nothing but legal confiscation. What is demanded is a radical change of the law. What is needed—and this is just what—
  Mr. James Dance (Bromsgrove)rose—
  Mr. Willey: Mr. Speaker has said that a large number of hon. Members wish to take part in the debate, and I would rather open the debate and allow hon. Members to participate later.
  I have been told—and, no doubt, I will be told again this afternoon—that what the Bill is doing is wrong, because it divides the realty; it separates the buildings from the land. But it is not the Bill that does this; it is the leasehold contract itself.
  Put very simply, this is how leasehold —this remarkable contract peculiar to English law—arises. The landowner puts this remarkable proposition. He says, "I will let you build a house on my land, but I will not sell you the land. What I will do is to lease you the land. I will give you a long lease and it will be at a ground rent—that is, a rent for the land alone."
  Traditionally, we have a pattern of 99-year leases and we know that there is no difference—or at most only a nominal difference—between the price of the leasehold and the freehold, and, as the 1962 White Paper tells us, these contracts were entered into
  "in the belief that the buildings to be created would not last longer than a century and the property would then need to be redeveloped".
  But what the law says is that the house—the buildings—the bricks and mortar—become part of the land. So, at the end of the lease—at the end of the 99 years—the landowner gets back not

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  only the land, which he has leased to allow someone else to build a house upon, but also the house itself, although it is still habitable and enjoyed as his home by the leaseholder. So the leaseholder and his successors who, at their own expense have built the house or bought it, and have maintained and improved it, lose it; and it is their family home. What we are saying in the Bill is that this is outrageously unfair, and we are altering the law.
  The Bill provides qualified leaseholders with two basic rights. We say to the landowner, "You leased the land so that the leaseholder could build a house on your land and live in it and enjoy it as his home. As it turns out, at the end of the lease, the house is still habitable, still a comfortable home. Therefore, we think it right and proper that you should go on leasing the land to the owner-occupier of the house."
  If we do this, what are fair terms?
  Mr. Dance: Surely the right hon. Gentleman must give way.
  Mr. Willey: Admittedly, not the original ground rent: it would be unfair to compel the landowner to continue it. But, equally, it is fair to extend the lease at a modern ground rent for the land—for the site—indeed, what it would fetch today.
  We also say this. In the circumstances of this remarkable contract—in the circumstances of the leasehold arrangement —where the landowner allows someone to build a house on his land, renounces all interest in his land save that of "a long term fixed investment interest"—to use the words of the 1962 White Paper —surely then it is fair that the leaseholder — the owner-occupier — should have the opportunity to buy from the landowner the freehold of the land upon which his house has been built.
  Mr. Dance: The Minister must give way.
  Mr. Speaker: Order. If the right hon. Gentleman does not give way, mere repetition will not make him do so.
  Mr. Willey: If a property-owning democracy makes any sense, social justice requires that the owner-occupier should have the opportunity of obtaining
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  the basic fundamental security which the owner-occupier prizes most, the freehold, with all the liberty and responsibility that goes with it.
  The Bill, therefore, gives the qualified leaseholder two rights. First, for those who do not want to enfranchise or find it financially inconvenient, the right to a 50 years' extension of the current lease. This is provided in Clauses 14, 15 and 16 and affords the leaseholder security of tenure. Of course, in some cases, any extension of the lease must necessarily depreciate the value of the landowner's interest insofar as at present it reflects the vacant possession value of the house. But I would remind the hon. Member for Crosby (Mr. Graham Page) that when we debated the White Paper, speaking for the Opposition Front Bench in the shadow of the General Election, he said that the extension should be for "a substantial and definite term".
  Because we regard the occupying leaseholder as continuing to own the building, the landlord is entitled to no more than a fair ground rent, a modern ground rent, reflecting the site value, subject to its use by the leaseholder, and after 25 years it will be reviewed and, if necessary, brought up to date.
  Secondly, we provide—and it is now generally agreed that we should do so—for enfranchisement. This is dealt with in Clauses 8 to 13. Necessarily, these Clauses deal with incumbrances, rent charges, covenants and mortgages, but Clause 9, which provides for the price of enfranchisement, is the most important.
  As we said in the White Paper, where there is no development value
  "the fair price for enfranchisement will be the value of the freehold interest of the site, subject to the lease and its extension for 50 years."
  This will ensure that the value of the buildings on reversion is completely excluded.
  As I said in the debate on the White Paper, the fairest solution is the most obvious.
  In most cases consideration of development value will not arise and, of course, it is usually significant only towards the end of the lease. But if a site has any development value which would give it greater value than that of a site for the particular house, then the

  1277
  freeholder is entitled to that value—that is, its value subject to the lease, its value at the time the leaseholder negotiates the purchase of the freehold.
  Not only does Clause 9 provide a fair solution; it provides also a simple solution. By dealing with the extension and enfranchisement together, the effect is to limit the landlord's reversionary interest to the value of the site only: the value of the buildings on reversion is completely excluded. But equally the provisions of the Bill will never expropriate from the landowner any of the reversionary value of the land.
  In any particular case, it should not be difficult to work out what the price of enfranchisement will be. Usually, it will
  be negotiated by the parties without difficulty. But a variety of circumstances can affect any particular case, and
  it is not easy to give examples which can be taken as representative. However, with this reservation, it may be helpful, as my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) said, if I give the House a few examples to illustrate the effect of the Bill.
  In South Wales, in the case of a house with vacant possession value of £1,500 with an unexpired term of five years at a low ground rent, the price of enfranchisement might be about £230. In the case of a house with vacant possession, value of £2,000, with 23 years to run at a ground rent of £2, I worked out the price of enfranchisement at £105. In the Midlands, a house with vacant posession value of £2,750, with 50 years unexpired at a ground rent of £10, might be enfranchised for about £200. In London, a house with vacant possession value of £7,500 with 21 years to run at a ground rent of £20, the cost of enfranchisement should be about £800.
  In giving these examples, I emphasise, first, that the leaseholder may, of course, look to the building societies for assistance, and, secondly, that vacant possession value is very much affected by occupancy. Possession is not only nine-tenths of the law; it can also amount to a considerable slice of the vacant possession value.
  I have mentioned qualified leaseholders. The qualifications are defined in the early Clauses of the Bill.
  The leaseholder must hold a lease originally granted for more than 21 years
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  at a ground rent. This is provided in Clauses 3 and 4. The leaseholder must be occupying the house, or part of it, as his residence and must have done so as a ground-rent paying leaseholder for the last five years. This is provided in Clauses 1 and 2.
  The fact that a house is being used partly for business purposes or is partly sublet does not of itself take the house outside the Bill. The essential criterion is that the house is still capable of occupation as a single dwelling even though at the time it may be occupied separately. For instance, a son-in-law may be living in a house and occupying the top floor with a separate bathroom, but the owner-occupier will still benefit from these provisions unless he has blocked off the staircase and provided an outside staircase.
  Sir John Langford-Holt (Shrewsbury): The Minister used the words "the original lease". Does this apply to the original lease of the building or the original lease by the present occupant of the building?
  Mr. Willey: It applies to the original lease of the building.
  Mr. S. C. Silkin (Dulwich): My right hon. Friend has given examples of the likely cost in various circumstances of buying the freehold. I fully appreciate the difficulty of trying to do that in the abstract. Clause 9 imports into
  the calculation the term "the house and premises". Can my right hon. Friend explain this? Is the effect of this that what would otherwise be a speculative investment is transformed into a well-secured one and that the consequence is to add substantially to the number of years purchase—the multiplier—which would otherwise be the correct one?
  Mr. Willey: I am not seized of the point made by my hon. and learned Friend. If he is fortunate enough to speak during the debate, that is a matter which might be dealt with when my right hon. Friend the Secretary of State replies.
  Mr. Leo Abse (Pontypool): Will my right hon. Friend give way?
  Mr. Willey: I would rather not, because a large number of hon. Members wish to speak and my right hon.

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  Friend will, I am sure, adequately and competently reply to the debate.
  Clause 1 of the Bill expands the provision of continuous occupancy for five years to include a total of five years out of the last seven years. This is to avoid hardship to families who, for instance, may have been compelled to go abroad for a while. The house must be within the rateable limits of the Rent Act, and the Bill does not include flats and maisonettes. The purpose of the Bill is to rectify by legislation the leasehold contract where it causes the greatest hardship. Therefore, the Bill is limited to residential long leases. It is not concerned with leases for business purposes or leases held solely for investment.
  The Bill is concerned with the person who holds the lease of the house in which he lives as his home and who has probably had little alternative but to live in a leasehold house. Within residential leases, therefore, we have drawn a line by reference to the value of the house so that the Bill identifies those in real need. We have accepted the limits recently adopted for rent control, and this is probably right. The Bill will exclude little more than 1 per cent. of the total number of houses, but I know that in some places—for example, Cambridge—the proportion of houses over the rateable limit is higher than elsewhere. No doubt this is something which we can pursue further, in Standing Committee.
  Clause 2 excludes flats and maisonettes. Most flats are let at a rack rent and would not in any event fall within the scope of the Bill. We have, however, excluded flats for practical reasons—for example, the difficulties of flying freeholds. As the House knows, the Wilberforce Committee has reported; the Government are preparing legislation to implement the Report and this may well make it possible to bring flats within the scope of leasehold reform.
  Clause 5 provides that the leaseholder exercises his right to enfranchise or extend his lease by service of a notice on his landlord. This Clause contains the useful provision that the benefit of such a notice is assignable with the lease. If, therefore, a leaseholder is selling his house because he has to move, perhaps to take employment elsewhere, he can sell his house and move without having to
  1280
  wait until he completes the whole transaction of enfranchisement and extension.
  The Government's pledge to leaseholders whose leases expired before the Bill
  could be introduced is made effective by Clause 34. Leaseholders whose leases expired after 8th December, 1964, but who have remained in possession of their houses are given the same rights as present leaseholders under the Bill, provided that they exercise their rights within three months of the Bill being passed.
  It may be that for one reason or another a lease may expire without any leaseholder having exercised his right to enfranchise or extend the lease. In such a case, Clause 39 provides that the leaseholder will have the benefit of the fair rent machinery under the Rent Act.
  Having dealt with the leaseholder, I now turn to the rights of the freeholder. These are dealt with in Clauses 16, 17 and 18 of the Bill. Clause 16 provides that the 50-year extension is a once-and-for-all extension and enables the landlord to protect himself by having included in the extended lease a statement to this effect.
  Where the leaseholder has not enfranchised, Clause 17 gives the landlord, provided he can show that he genuinely intends to redevelop the property, the right to get possession either at the start of the 50-year extension period or at any time during it. The Clause, however, provides for the leaseholder to be compensated for the loss of his extended lease. Consequentially, Clause 38 of the Bill takes away the landlord's present right under Part I of the Landlord and Tenant Act, 1954, to recover possession from the leaseholder for redevelopment without giving the leaseholder either compensation or alternative accommodation.
  Mr. Graham Page (Crosby): The Minister was very helpful earlier in giving examples and figures. Has he any examples of the compensation which a man would have to pay to buy back his own house in such a case as is dealt with in Clause 17?
  Mr. Willey: The developer would buy back the house at the value of the house. That is plain and straightforward.
  The landlord, if he acquired his interest before the publication of the White Paper, is also entitled, under Clause 18,

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  in the last year of the lease—I have chosen this period solely on practical grounds—to resist enfranchisement or extension on the grounds that he wants the house for occupation by himself or his family when the lease expires and that he would be caused greater hardship by being refused possession than would the leaseholder.
  If the county court decides in favour of the landlord, he, of course, will have to pay compensation for the value of the leasehold interest as it would have been if the 50-year extension had been granted—that is, in round terms, the bricks and mortar value.
  As we said in the White Paper, the Bill makes special provision for well-managed estates where enlightened management often makes a real contribution to their distinctive character. It would be unfair to deny leaseholders on these estates the right to enfranchisement, but, equally, it would be unfortunate unnecessarily to disrupt the benefits of comprehensive estate management.
  Clause 19 therefore provides machinery to ensure that the benefits of a well-managed estate are not lost even though individual leaseholders decide to buy their freeholds. After a certificate for a particular
  estate has been granted by the Minister, the Clause provides for a scheme of management being settled by the High Court. Although, in the first instance, the initiative must be with the present freeholder, the Clause provides for the responsibility for the scheme subsequently being taken over by a local authority or by a specially constituted body so that the scheme should not be prejudiced by a lack of interest by the freeholder following widespread enfranchisement.
  The principle of a qualified lease-holder's right to enfranchise or extend his lease still holds good where the landowner is a local authority or any other public body. Special provision, however, is made for special cases.
  By Clause 28, the Minister is empowered to veto enfranchisement or extension against a local authority or other public body, including universities and statutory undertakers, by certifying that the property will shortly be needed for
  1282
  redevelopment. It would be stupid to allow the leaseholder to enfranchise where he is shortly afterwards compulsorily to be bought out for redevelopment. The leaseholder, however, will, of course, receive compensation to the value of his leasehold interest with the 50-year extension; that is, bricks and mortar value.
  Clause 39 allows a local authority, a new town authority and some other public authorities to retain, by restrictive covenant, any development rights on the land where the leaseholder exercises his right of enfranchise, and Clause 30 ensures that new town and expanding town authorities are able to attach preemption covenants in order to ensure that the houses continue to be occupied by people from the part of the country for whose overspill problems the new or expanded town is built.
  Although the Bill does not bind the Crown, nevertheless the Crown Estates and Duchies and Government Departments who are freehold owners of houses let on long leases will act in accordance with its provisions, and Clause 33 contains provisions enabling the Crown to comply with the Bill and making it possible for a leaseholder to enfranchise for a landlord who has bought the freehold from the Crown. The Crown Estate, however, will retain control over houses of special architectural historical or amenity value, and Clause 32 preserves the inalienability of certain land held by the National Trust.
  In one respect the Bill goes beyond the scope of the White Paper. Clause 39 stops a new racket by making long tenancies at rack rents—that is, ordinary tenancies—subject to the Rent Act, 1965. This is to protect the tenants against a growing and blatant evasion of the Rent Act. Some landlords, especially in London, but also elsewhere, usually landlords of cheaper and poorer property, ordinarily let on weekly or monthly tenancies, have discovered the device of letting the property for 22 years or more, often at high and sometimes escalating rents, and outside the protection of the Rent Act. They will no longer escape, but will be subject to the Rent Act. This provision will act retrospectively and will apply to long tenancies at rack rents whether they were granted before or after the Bill.

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  The Bill is being criticised as bringing windfall profits to leaseholders, and a lot of offensive things are being said about owner-occupiers. But we are only dealing with residential long leases, and it seems to be forgotten that the family which sells its home will have to obtain another.
  Again, the Bill is being criticised as prejudicing redevelopment. But we should not assume that the present leasehold system is wholly advantageous to development. Many of the leasehold areas are twilight areas marred by almost wanton neglect because the freeholders are not interested in development and the occupiers have not sufficient incentive to maintain their homes in good condition.
  We must also recognise that often development has been carried out not where it was most desirable but where it could be carried out cheaply because, as the leases fell in, the landlord obtained free of charge properties which someone else had built. Good substantial, well-maintained buildings have often been pulled down long before it was necessary. But, admittedly, the provisions of the Bill may make redevelopment more difficult and less profitable for freeholders on some estates. This is the price of a social reform urgently needed.
  The Bill is a measure of social justice and reform long overdue giving hundreds of thousands of people the security and pride of home ownership. It will bring relief to a quarter of a million leaseholders in Wales and a million leaseholders in England—of which, incidentally, I am one; although, as I have a 999 years' lease, I am not especially interested in enfranchisement and certainly not in an extension.
  As I have said so often, one of the most striking features of British politics is the tenacious hold that landed interests have had on the Tory Party. Conservatives believe in a property-owning democracy, but only where real power rests with the property-owning company and the landowner. On the contrary, we believe that the first priority is with the home and the family. That is why the Bill redresses grievances long endured and brings security and fairness to the leaseholder who owns his house under the leasehold system.
  4.25 p.m.
  Mr. Anthony Barber (Altrincham and Sale): I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  "this House, while accepting that ground leaseholders should be permitted to buy or rent their houses on fair terms except where the property is to be redeveloped, declines to give a Second Reading to a Bill which seeks to provide leasehold enfranchisement on confiscatory terms."
  At the last General Election, the Conservative Party, to which the Minister referred at the end of his speech, stated clearly and unequivocally its policy on leasehold enfranchisement, and I do not doubt that some hon. Gentlemen opposite will use every means to distort the proposals which we then made and distort the criticism of the Bill which I shall make today. Certainly, the Prime Minister will if he has anything to do with it. Therefore, it is right at the outset that I should place on record the proposals on which the Conservative Party fought the last election.
  They were that a ground leaseholder of residential property holding a lease originally granted for more than 21 years and who has occupied the house as his residence for at least the last five years should have three choices towards the end of his lease. I should like to list the three alternatives which we proposed should be open to the ground leaseholder. The first was the right to a statutory tenancy. If the leaseholder so wished, he could opt to remain in the house as a statutory tenant under the provisions of the Landlord and Tenant Act, 1954, in which case he would pay a new full market rent.
  The second alternative was the right to a new lease, and by that we meant that a leaseholder could choose to negotiate a new long lease for a fixed term and negotiate a new ground rent and premium. In such circumstances, the courts or the Lands Tribunal would have power to fix a fair price for both the ground rent and the premium in the event of disagreement between the parties.
  The third alternative was the right to buy the freehold. But here we said, unlike this Bill, that the price to be paid should reflect the bricks and mortar value of the house as a house.
  Mr. William Hamling (Woolwich, West): Why?
  Mr. Barber: I shall come to that in a few moments.
  Once again, the courts would be available in the case of disagreement about that price.
  As this Amendment shows, we stand by those proposals, but, for reasons which I shall elaborate in a moment, I believe that those proposals were reasonable and fair and that the proposals in the Bill amount to nothing short of confiscation.
  First, I should like to make a few general points. I am sure that the Prime Minister would agree that it is no longer true that a dog is a man's best friend. During the past few days, we have had a fascinating insight into the working of the Labour Party—
  Mr. Speaker: Order. The right hon. Gentleman will relate his remarks to the Second Reading, I hope.
  Mr. Barber: Mr. Speaker, I was going on to say that this is highly relevant to the confiscatory provisions of the Bill, for this reason. In purely party political terms, there was no need for the Government to do what they are doing in the Bill, which is to pander to the Left wing's pathological hostility to the landlord. I see right hon. Gentlemen shaking their heads in disagreement, but, after all, it was the Leader of the House who said when he was Minister of Housing and Local Government:
  "I have a natural prejudice against landlords."
  This is precisely what comes out in the Bill. I hope that the right hon. Gentleman will laugh at a quotation I am now going to make, because there was a highly illuminating article in yesterday's Financial Times. It contained one paragraph which would have made, if I may say so with respect, even the most insensitive Minister wince. I will read the paragraph to the right hon. Gentleman and perhaps his right hon. Friend might like to comment on it when winding up the debate tonight.
  The paragraph said:
  "When the White Paper on Leasehold Reform first appeared, officials at the Ministry of Housing were privately apologetic. This, they would explain, was a fudged-up piece of electioneering: nothing so disastrously damag-
  1286
  ing would ever seriously appear as a piece of legislation."
  Then comes the punch-line:
  "They misjudged their Ministers."
  Indeed they did.
  Dr. David Kerr (Wandsworth, Central): It was a great tribute.
  Mr. Barber: The right hon. Gentleman, like myself, is a member of the Bar. I can only say that he will go down in history for two achievements, for having devised in the Land Commission Act legislation which is regarded by even the most erudite lawyers as gibberish, and for having, in this Bill, flouted the basic principles of equity as a political sop to his colleagues.
  To give the ground leaseholder the legal right to buy the freehold is an arguable proposition, but there can be no argument at all in favour of leasehold enfranchisement on terms which are confiscatory as is the case in this Bill. After all, this is not merely my personal opinion or the opinion of a few Conservative Members of Parliament. It is the widely expressed view of one reputable commentator after another in the Press, as the right hon. Gentleman knows. That is true. One could quote a whole series of them. The Times said this:
  "This is, bluntly, confiscation."
  That has been echoed by leader writers
  in every reputable newspaper. I know of no reputable commentator who has said that the compensation terms are fair.
  I certainly agree that where the public interest is in conflict with private interest there are occasions when the public interest must predominate, and this may mean legislation. For example, ever since 1915 Rent Acts have been passed by Governments of all political opinion, National, Conservative, Labour and Coalition. The Conservative Party was also responsible for the Landlord and Tenant Acts of 1927 and 1954.
  Mr. David Winnick (Croydon, South): And 1957.
  Mr. Barber: Does the hon. Gentleman wish to say something?
  Mr. Winnick: Can the right hon. Gentleman tell us whether, if the Tories were returned to power, which is hardly likely, they would bring back provisions of the 1957 Rent Act?
  Mr. Barber: The hon. Gentleman has not been listening to what I have been saying. The point I have made is that under successive Governments of varying political persuasion Rent Acts have been passed, some of which were palatable to some hon. Members and some to others.
  But the blunt fact is that the Conservatives, just as did the Labour Government, the National Government and the Coalition Government, passed Acts which affected the level of rents and which also affected the sanctity of contracts. That is true. Indeed, as I went on to say, the Conservative Party was also responsible for the Landlord and Tenant Acts of 1927 and 1954. The right hon. Gentleman will find few people, who have had experience of the 1954 Act, who would agree with him that it has not been successful within the limited aims which it set out to achieve.
  The House will recall that those Acts gave protection, first to business tenants with long leases and then to both business and residential tenants. And, of course, there are the various Measures which give local councils powers of compulsory purchase for redevelopment, and so on. But—and this is of vital importance—it is no light thing to interfere with contractual or private rights. There must be a clear case for doing so, and one which will stand up to examination and be capable of being defended on the most objective criteria.
  It was precisely because we, on this side of the House, believe that the Land Commission Bill is a totally unnecessary and unjustified interference with individual rights that we opposed it at every stage, and intend to repeal it at the first opportunity.
  How should we approach this question of leasehold? I accept that in some parts of the country, notably in South Wales, practically all house property is on a leasehold basis. There is no real freedom of choice for the prospective home buyer as between leasehold and freehold, and, therefore, there is probably not a great deal of difference between leasehold and freehold prices. In other parts of the country this is, of course, not so, and it is right that we should keep the problem in perspective.
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  There is a second factor, which is the growing desire of people to own their own homes, and, what is even more important, their ability to do so. The right hon. Gentleman, in his concluding remarks, castigated the Conservatives for their views on property. He seemed to suggest that we were not interested in home ownership. That seems a strange sort of implication to come from the right hon. Gentleman because, under the Conservative Government between 1951 and 1964, the number of home owners was doubled to reach nearly 8 million.
  That was a tremendous achievement. The right hon. Gentleman and his Friends in the Ministry of Housing and Local Government can sit there smiling, but I believe that it is one of the tragedies of Socialism that ever since the Labour Government took office, as a deliberate act of policy—and let us make no mistake about this—the number of homes built for sale has been falling each year—
  Mr. Winnick: No.
  Mr. Barber: The hon. Gentleman says "No", but let me give him the figures. In 1965, the number built was 4,000 down on 1964, and last year the number was nearly 13,000 down on 1964. Those are facts.
  Taking those two factors together, the special problems in certain areas like South Wales and the growing desire for home ownership, we accepted at the last election that there is need for further legislation on the question of leashold. But in our
  view that legislation should be built on the principles of the 1954 Act. I will tell the House why.
  That Act, as hon. Gentlemen who are familiar with it will recall, provides that when a long lease comes to an end the leaseholder should be entitled to a new tenancy at a market rent unless the ground landlord can satisfy the courts either that he genuinely proposes to redevelop or that his personal need for the property is greater than that of the leaseholder—in other words, the proof of greater hardship. Any proposal for leasehold enfranchisement should have been founded on an extension of that Act of Parliament.
  Dr. David Kerr rose—
  Mr. Barber: I do not intend to continue to give way. I want to complete my speech.
  Towards the end of his lease the long leaseholder would normally have an opportunity of buying the freehold. I have stated what I believe ought to have been done. Before I come to the compensation terms in the Bill, I want to say—I will give way to the hon. Gentleman.
  Mr. David Weitzman (Stoke Newington and Hackney, North): Under the 1957 Act a leaseholder, at the end of his lease, has to pay what the right hon. Gentleman calls a "market rent". Why should a man who has paid the ground rent of £5 a year for a considerable number of years, for his own house which he has maintained and improved, have to pay a market rent at the end of that period? Why?
  Mr. Barber: I propose to deal, in a few moments, with the suggestion that the bricks and mortar belong to the leaseholder and that the land alone belongs to the landlord. This is basic to the whole of the right hon. Gentleman's Bill. That is something which I shall be dealing with in a few moments.
  I would say to the party opposite that we all know that in the ideal—and I use that word in its best sense—Communist State virtually all property is shared and private ownership is forbidden. Whatever the merits may be of such an ideal society, it is a fact of life that in this country the ownership of property and the sanctity of contract are not features which can be lightly cast aside without very serious consequences.
  I know that there are many hon. Gentlemen opposite who genuinely would like to see the country becoming a nation of council house tenants. This is a concept which we on these benches utterly reject, but the principles of the Government ale obvious from their action, and I have already given the figures.
  Mr. Winnick: If what the right hon. Gentleman alleges is true, that we want this to become a nation of council tenants, can he explain why we are bringing in the mortgage subsidy scheme to help people to become owner-occupiers?
  Mr. Barber: There is not much sign of the Government bringing in such legislation. I am basing my argument on
  1290
  the facts, and I shall give them to the hon. Gentleman.
  I have already told the House that the number of houses built for sale in 1965 was 4,000 down on 1964, and that the number built last year was 13,000 down. That is the reality of the Labour Government's housing performance, and what I want to see are not only more homes for owner-occupiers, but also positive encouragement to make available all types of homes for renting. Council houses fulfil an essential need, but so does the private landlord, and we shall never encourage the private building of homes to rent if it is known that a Labour Government will come along with legislation which amounts to confiscation.
  Dr. David Kerr rose—
  Mr. Barber: No. This is not some legal nicety, or the opinion of a latter-day Forsyte. It is a matter of great social consequence for all those citizens who are inadequately housed or who have no homes of their own. There is not one hon. Member in the House who does not want to increase the nation's stock of houses, but, equally, there is no one here, including the right hon. Gentleman the Minister of Housing and Local Government, who can deny that despite the fact that in October, 1964, there were 434,000 houses under construction, in 1965 and again in 1966 the Government failed to reach their stated target of 400,000 houses.
  The Minister of Housing and Local Government (Mr. Anthony Greenwood)indicated dissent.
  Mr. Barber: The Minister indicates his dissent. Would he like to intervene? Obviously he does not, because he knows that that is true.
  Mr. Ivor Richard (Barons Court)rose—
  Mr. Barber: No. I said that I would give way to the right hon. Gentleman.
  Mr. Abse: As the right hon. Gentleman is expressing his concern about the number of houses to let and those that are to be built for sale, will he explain why, with his interest in home ownership, he is putting forward a plan which in Wales will mean that 250,000 people will become tenants in their own homes? Is this his idea of increasing home ownership?
  Mr. Barber: I am sorry, but the hon. Gentleman has got it all wrong. I said that under the Conservative Government the number of home owners doubled, whereas under the Labour Government it has been falling.
  Mr. Hamling: On a point of order. Mr. Deputy Speaker, are we discussing the Leasehold Reform Bill or not?
  Mr. Deputy Speaker: We are having a Second Reading debate on the Bill.
  Mr. Barber: I am grateful to you, Mr. Deputy Speaker. I was making the point to the right hon. Gentleman that in both years the Labour Government failed to reach their target. The right hon. Gentleman shook his head, but he refused to get up and intervene.
  Mr. Greenwood: I was waiting for the right hon. Gentleman to deal with the matters contained in the Bill.
  Mr. Barber: Now we know that the righ hon. Gentleman accepts what I said, and it is a good thing that we have that on the record.
  One of the reasons for the length of the housing queue is the Labour Government's doctrinal hostility to the private landlord, which we have heard today from the interventions of hon. Gentlemen opposite. This results in a consequent discouragement of the building of houses to let other than by local authorities, and it is this deep and ingrained hostility to the private landlord which has led the right hon. Gentleman in this Bill to include provisions which amount to no less than confiscation, as has been said by many people outside the House.
  The Bill is based on a White Paper which we debated on the very day when the General Election was announced, and I might mention, in passing, that it is not without significance that when it is necessary to publicise an election bribe the Government can afford one day's debate on the White Paper and one day on the Bill, but when the election is over and the whole House wants to do just that again on the issue of decimalisation, the Leader of the House condemns the proposal as a nonsense.
  To return to the White Paper.—[HON. MEMBERS: "Hear, hear."]—I was going to ask hon. Gentlemen opposite to stop yapping as I thought that that might be
  1292
  more appropriate. It is an interesting reflection on hon. Gentlemen opposite that when I quote their appalling housing figures—[HON. MEMBERS: "Get on with it."] We are considering housing, and I have every right to give my views about the record of hon. Gentlemen opposite.
  Mr. Abse: On a point of order. Mr. Deputy Speaker, is it not widely outside the whole question of the leasehold system to be discussing these irrelevant housing figures? May we have some direction to ensure that the issue which the right hon. Gentleman is so vehemently dodging is discussed, namely, the leaseholders who are now to have this great right to secure their own property?
  Mr. Deputy Speaker: It is well known that the Second Reading of a Bill provides very wide scope for debate, and my view is that everything said by the right hon. Gentleman so far has been in order.
  Mr. Barber: Once again, I am grateful to you, Mr. Deputy Speaker. It is significant that hon. Gentlemen opposite seem to think that these appalling housing figures are irrelevant to the nation's needs. We on these benches take a different view.
  There are a number of references in the White Paper to equity, and I must say that with reference to the proposals in the Bill the term "equity" is really an abuse of the English language. It is becoming a growing habit of the Government, when they are doing something particularly obnoxious, to talk vaguely about fairness and the public interest, no doubt in the hope that the general public will accept what Ministers say at their face value, even if their back benchers do not. But what objective observer can seriously pretend that it is equitable that ground landlords should have their property confiscated in this way?
  As I said earlier, I accept that leaseholders should have the chance to buy their freeholds, but it is precisely because this affects the ground landlord's rights that we consider it to be of the utmost importance that the price paid should be fair. Of course, one can see the political reasoning behind the Government's decision on compensation. Indeed, it is patently obvious. There are many more leaseholders than there are ground landlords, and so, says the right hon. Gentleman, "Let us bash the landlords and

  1293
  glean some cheap popularity with the leaseholders". Equity for the minority is irrelevant, on the simple Wilsonian thesis that the only thing that matters in politics is votes.
  The right hon. Gentleman has admitted that under the Bill the landlord is to receive no compensation at all for the house which he owns. The right hon. Gentleman nods assent, so it is true that under the Bill, whether people agree with this or not, the landlord is to receive no compensation at all for the house which he owns. I believe that this is monstrously unfair, and that this is what I mean by confiscation. The right hon. Gentleman knows in his heart that this is what it is. He has attempted to wrap it up in a principle which simply does not bear examination.
  The Government's case for basing the price of enfranchisement solely on site value rests on the wholly false argument that the house belongs to the leaseholder. What the leaseholder has bought is not the house itself, but the right to live in it for the period specified in the lease. Dr. Denman, Head of the Department of Land Economy at Cambridge University, has put the position succinctly. He says:
  "Leaseholders buy leaseholds, interests in property limited in time, and have to pay for them accordingly. Land-owners who buy freeholds subject to leases pay prices which reflect the value of their expectations to enter into vacant possession of the premises (building and land) at the end of the lease."
  That is a factual statement of the present position.
  I hope that the House will note the contrast between the confiscatory price that the ground landlord will receive on enfranchisement and the full market price which the landlord will have to pay if he successfully resists enfranchisement because he needs the house for his personal occupation—the "greater hardship" ground. My hon. Friend intervened to ask if the right hon. Gentleman would give some figures. If he can give figures on one side of the balance sheet he can give them on the other. We are entitled to have more details.
  Whereas the leaseholder will be able to enfranchise for a few hundred pounds, if the landlord successfully resists enfranchisement he will have to pay
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  thousands of pounds. [HON. MEMBERS: "Hear, hear."] That is the reaction of hon. Members opposite. They say, "Hear, hear." This system is utterly unfair. I do not know to what extent the Government and hon. Members opposite have realised that there is nothing to prevent the leaseholder, having obtained the house at a rock bottom price, from promptly selling it and making a quick profit.
  Mr. Dance: Does my right hon. Friend not agree that whereas 99 years ago the ground rent may have been fair and practical, for the past 20 years the tenant has been enjoying virtually a peppercorn rent, and the landlord should get some compensation for that?
  Mr. Hamling: He is to get it under the Bill.
  Mr. Barber: I gave way to my hon. Friend only because he tried three times to intervene in the speech of the Minister and was refused.
  Mr. Hamling: Get on with the Bill.
  Mr. Barber: As even the hon. Member for Woolwich, West (Mr. Hamling), in his ignorance, must know, many of the ground landlords concerned are charities, pension funds and small persons. Where is the justice in robbing them in this way? This is barefaced robbery. The Minister may contend that if the price of enfranchisement took account of the house as well as the site some leaseholders might have difficulty in finding the money. That may be the case.
  Mr. Willey: The right hon. Gentleman will have heard the figures that I gave and the effect of the 1954 Act. Was that barefaced robbery?
  Mr. Barber: The right hon. Gentleman has not stated the position under that Act, namely, that market price is the governing factor. This is all that we are asking to be inserted in the Bill. The Bill contains no market price; the bricks and mortar pass without any consideration. That is the difference between the right hon. Gentleman and myself. It is all very well for him and other hon. Members opposite to laugh when I refer to charities, but there are many charitable estates. That fact cannot be lightly brushed aside.
  Mr. Willey: The figures that I gave were market prices. As a result of the 1954 Act the freehold of the market price of £4,000 became valued at no more than £2,000.
  Mr. Barber: I am sure that the right hon. Gentleman will accept from me that all I want inserted in the Bill is a provision that market prices should be paid as in the 1954 Act for what belongs to the landlord—no more and no less. The right hon. Gentleman knows that the principle which he has enshrined in the Bill will not stand up to examination.
  Mr. Emlyn Hooson (Montgomery): The right hon. Gentleman is deploying his argument with care, but does not he agree that it would be unfair to call upon the leaseholder to pay for the bricks and mortar when his father may have built the house?
  Mr. Barber: In many cases the house was originally built by the owner of the land, and in those cases the Bill will operate in a grossly unfair way.
  The right hon. Gentleman may contend that if the price of enfranchisement took account of the house as well as the site some leaseholders might have difficulty in finding the money. I accept this. I therefore suggest two ways in which the Government could help the leaseholder to buy. First, the Government should bring in the mortgage option scheme now instead of waiting until April, 1968. The Government can afford large and indiscriminate subsidies for council house building but nothing to help home buyers until April, 1968. That is wrong.
  Secondly, the Government should bring in right away a scheme to help with the initial deposit. We have always realised that this was an essential corrollary to any plan for easier mortgage payments. Those are the right ways to help leáseholders who find it difficult to pay. The compensation provisions are obviously inequitable, and the fact that the Bill adversely affects only a minority of citizens makes it even worse. To bully a class or group of people whom the Government regard with disfavour is the worst type of discrimination.
  We shall wish to consider many matters of detail in Committee but I want to mention two of great importance.
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  The first concerns the question of redevelopment, to which the right hon. Gentleman referred, and the second concerns good estate management. There are many excellent estates. Clearly, unless there are substantial safeguards, these estates will suffer. Clause 19 gives some cause for hope, but why should the Minister have complete discretion in the matter? What is required is more objective criteria than are at present laid down in the Bill.
  Having laid down these objective criteria the Government should leave the decision to the High Court in each case. There is no need for the right hon. Gentleman or his successor to place himself in the position of deciding whether or not schemes for the retention of management powers should go forward to the High Court.
  On the question of redevelopment the Bill enables the ground landlord to resist, through the courts, a 50-year extension of the lease on two grounds—either that he wants to occupy the house himself or that he genuinely intends to carry out redevelopment. But he can resist enfranchisement only on the ground that he intends to occupy the house; the general intention to redevelop is no defence against enfranchisement. This is illogical. Perhaps the right hon. Gentleman will explain why the defence of redevelopment is available in the case of the leaseholder who wishes to obtain a further lease but is not available to the landlord against the leaseholder's wish to purchase the freehold.
  It would surely be more reasonable if the various options available to the leaseholder under the Bill were restricted to the latter part of the lease—say, the last seven or 10 years. I cannot see why, in equity, they should be available at any time during the lease, as the Bill provides. I say this because it is usually only when the lease is beginning to near its end that the ground landlord can be expected to contemplate the question of redevelopment, which we on this side—and I think the right hon. Gentleman himself—regard as of major importance.
  There are many other matters which we shall wish to consider in Committee. I have spoken for rather longer than I intended, because of several interruptions from hon. Gentlemen opposite—
  Mr. Hamling: The right hon. Gentleman asked for them.
  Mr. Barber: I was grateful for them. They gave me an opportunity of replying to hon. Gentlemen opposite.
  I can sum up our attitude in two sentences. We stand by our declared policy of leasehold enfranchisement. We are opposed to confiscation.
  5.1 p.m.
  Mr. E. Rowlands (Cardiff, North): Many Bills which pass through this House affect the individual, the family and the community, but none so immediately as this Bill, which affects all three possibly more directly than anything else which we have put through the House since the General Election. I think, after listening to the right hon. Member for Altrincham and Sale (Mr. Barber), that I now know why there is only one Tory seat in South Wales. If the right hon. Gentleman, who spoke at a businessmen's club in Cardiff recently, had left the club and talked with some of the leaseholders in South Wales, he would have been wiser than he appeared to be this afternoon.
  I must declare a direct personal interest. I am a leaseholder. I declare an interest, too, for nearly all my constituents and for South Wales. If I had been objectively listening to the right hon. Gentleman and had not been a Member for a South Wales constituency, I would not have understood the point of this reform. I should have known a lot about some bogus figures concerning housing, but nothing about the leasehold system or its effect on many thousands of people, particularly in South Wales—
  Mr. Barber: Which of the figures which I quoted were bogus?
  Mr. Rowlands: The whole thing was bogus, because the right hon. Gentleman did not put it in perspective.
  The Bill discusses this reform in the language of lawyers. I should like to discuss it in language which would
  be understood by my constituents and to explain the feelings and the anguish which many have expressed while waiting such a long time for this Bill. What does it mean in real terms to people in South Wales? The leasehold system has meant, increasingly, insecurity, uncertainty, worry and concern among leaseholders as
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  to what they will do in 10 or 15 years when their houses—as a result of Tory Party policies anyway—revert to the landlords.
  This is a householder's problem, the problem of almost every householder in South Wales and in my constituency. Such streets in my constituency as Merthyr Street and May Street are small streets of old terraced houses which are nevertheless firm and solid and worthwhile living in. They have been owned and occupied perhaps for generations by the same family. They were built during the housing boom 70 or 80 years ago as a direct result of the Industrial Revolution in South Wales.
  Every year, these householders pay what seems a small and insignificant ground rent. No one denies that this rent is small. I have examples of rents as low as £ a year, sometimes £2 10s. and sometimes the astronomical figure of £5 a year on the older property. That sum is nothing. If that were all, we should have no leasehold problem in South Wales. If it meant that they could carry on paying a small ground rent for any length of time until the house was uninhabitable we should have no problem. But behind this small sum is a situation which has worried householders, and those in South Wales particularly.
  As everybody knows, the leases have only a short term to run. The majority of leases in the central area of my constituency—and in the centre of most other South Wales urban areas—have only 10 or 15 years to run, and in many cases the time is down to five years. Some have already fallen in. Those are the few harsh examples of what could befall the rest of the community under the leasehold system.
  As a result, many householders have felt deep concern. They have been covered in the sense that they are safeguarded and cannot be tossed immediately out of their own houses. Nevertheless, they have drawn mortgages on these houses which they have been paying off. Now they are told by the right hon. Member for Altrincham and Sale that they do not own the houses, the bricks and mortar, on which they have been paying mortgages. I have a mortgage and I was surprised when he told me that I did not own my house. I shall write to ask my

  1299
  landlord to pay my mortgage as well, because that will be a great relief to me, though I doubt to him.
  Of course, not only is the problem a question of security of tenure of a householder who thought he owned his house. It is also a problem of buying and selling houses in central areas like that of Cardiff. Very few building societies or local authorities will give mortgages on these houses. As the right hon. Gentleman said, the leaseholder has a traditional way out which has existed for some time. It as been there for many years; he can always write to the ground landlord to ask to purchase the freehold.
  My files are full of little notes returned by ground landlords in response to such leaseholders in South Wales. They are curt notes saying that it is not the policy of the company or the estate to sell the freehold. These notes dash the hopes of thousands of leaseholders. Even when an offer is made to what would be regarded in South Wales as a contradiction in terms, a generous landlord, the price is hefty.
  The right hon. Gentleman did not mention the prices for some of the older properties at the moment. I know of some vacant property which is not worth more than £1,500 to £2,000 outright, for which leaseholders have been asked anything up to £800 for a lease with five years to run. I know of one price of £1,000. Is this the price which the right hon. Gentleman wants the average householder to pay? [An HON. MEMBER: "No."] I think that he does. He did not contradict me.
  Even when the ground landlord has been, theoretically, generous in offering renewal to the leaseholder whose lease is running out, the leaseholder has not only had to pay a modern ground rent, which we all accept is reasonable, but also a heavy premium. Again, the right hon. Gentleman reaffirmed that if the Tory Party were in power they would still maintain the premium—
  Mr. Barber: I said no such thing. I laid down three alternatives. One was leasehold enfranchisement. If the hon. Gentleman and his constituents will read tomorrow what I said, they will find that that is so.
  Mr. Rowlands rose—
  Mr. Hamling: Is my hon. Friend aware that if the Tories were in power they would do nothing?
  Mr. Rowlands: I am sure that the right hon. Gentleman said this, and I shall send him a copy of HANSARD tomorrow to confirm it. He said that the leaseholder can either be a tenant in his own house, although he has bought it, or can renew the lease with a premium and a modern ground rent. The right hon. Gentleman definitely included premiums. Will the right hon. Gentleman get to his feet and repeat what he said?
  Mr. Barber: I am sure that the hon. Gentleman does not want me to repeat everything I said, particularly since my remarks were set out in our policy at the last election. In my speech I set out three alternatives, one of which was leasehold enfranchisement—which, after all, is the purpose of the Bill.
  Mr. Abse: By premium.
  Mr. Barber: No. I referred to leasehold enfranchisement and gave the details. My hon. Friends and I stand by the proposals which we made at the last election.
  Mr. Rowlands: Being a fair-minded man, I will put another question to the right hon. Gentleman and will willingly give way if he wishes to reply. One of his alternatives was the renewal of the lease on a modern ground rent with a premium. Did he say that?
  Mr. Hamling: This is their second option.
  Mr. Rowlands: Obviously, the right hon. Gentleman does not wish to answer my question. Certainly, we would not be having any form of leasehold reform had the Conservatives been returned to power at the last election. One can thumb through OFFICIAL REPORTS from the 1880s and occasionally find reports of private hon. Members attempting to introduce a measure of leasehold reform. On three occasions during the recent 13-year period when the Conservatives were in power private hon. Members—including one hon. Gentleman opposite—tried to introduce a reform of the leasehold system. My right hon. Friend the Member for Cardiff, West (Mr. George Thomas), who is now a Minister, has campaigned

  1301
  in the past in Wales for this reform, and I pay tribute to him. I know that my right hon. Friend would have loved to have been here for this debate.
  The Conservatives have not so much ignored the possibility of leasehold reform but have positively and bitterly opposed it, just as we have seen them doing this afternoon. They have opposed it in the most intemperate language. Indeed, when the House debated the White Paper—although I was not an hon. Member at that time—the right hon. Member for Altrincham and Sale spoke of it as a "moral outrage". Phrases such as "legalised theft" were used, and when I first read the remarks I thought that the right hon. Gentleman was speaking not about leasehold reform but about the leasehold system.
  Mr. Hamling: Is my hon. Friend aware that hon. Gentlemen opposite are frightened to vote against this reform?
  Mr. Rowlands: Perhaps the right hon. Member for Altrincham and Sale will confirm that. Certainly they back down at the last moment at the conclusion of the debate on the White Paper. Of one thing we can be certain; had the Conservatives won the last election we would not be getting this reform. There would have been no sign of it had they had their way. This is one reason why they have been unable to make a breakthrough in South Wales and why they lost one of their two remaining seats there at the last election. If they wish to make any headway in South Wales they will have to stop defending the system of ground landlordism which has existed for so long.
  This is an all-important Bill for the future of South Wales, Wales generally and many parts of the country where this problem of leasehold has been of major concern. Clauses 1 and 9 give important rights. Clause 1 gives the leaseholder the right to purchase the freehold; and no longer will the ground landlord be able to return the sort of curt notes to leaseholders which I described earlier. Clause 9 establishes the important right of a fair price being asked. This will not be an exaggerated market price but a fair price. In South Wales one has little alternative than to purchase a leasehold property. This Clause ensures that the price makes a just distinction
  1302
  between the land on which the house is built and the house itself, the house probably being bought on a mortgage or having been paid for by the leaseholder.
  Another important right makes it possible for a leaseholder who cannot afford to pay any price for the freehold to have his lease extended by 50 years. This is an important additional option and it is right and proper that it should be included in any system of leasehold reform. However, I hope that my right hon. Friend will explain why, once a person has chosen to extend his lease by 50 years, that rules out his successor having the opportunity of opting to purchase the freehold. Why must this be a once-and-for-all choice? Since an elderly person might choose to extend his lease by 50 years but may then pass the property to his son or might sell it, ought not his successor to be entitled to the same right of purchasing the freehold?
  A large number of houses in Cardiff are old and are divided into three flats with a common staircase. The leaseholder might reside in the ground floor flat while his tenants live above. The rents and rateable value of the three flats together could exceed £200 a year. Does this rule out the possibility of the leaseholder who lives on the ground floor from enfranchising? If so, we will have to consider this £200 rateable value limit in detail in Committee.
  Finally, I plead with the Government to persuade local authorities, banks and others to make available as much money as possible to ensure that as many people as possible are able to enjoy the rights conferred on them under the Bill. It is important that the vast majority of leaseholders, particularly in areas such as South Wales, have the opportunity of benefiting from the Bill. Many of these leaseholders are elderly and it will be difficult for them to raise even the quite smallish sums which will be required for enfranchisement. I trust, therefore, that the local authorities and banks will be generous.
  We must ensure that the rights conferred by the Bill on leaseholders are used to the maximum advantage and as quickly as possible. Although I see no chance of the Tories being returned to power, we must ensure that there will be

  1303
  no possibility of them introducing amending legislation which would damage the rights contained in the Measure. Many thousands of leaseholders will wish to take immediate advantage of the Bill. It is an advantage which they deserve and I therefore wholeheartedly support the Measure.
  5.15 p.m.
  Mr. John Boyd-Carpenter (Kingston-upon-Thames): Like the hon. Member for Cardiff, North (Mr. E. Rowlands), I must, before taking part in the debate, declare my two somewhat conflicting interests. As the House knows, I am a director of a property company. I am also the holder of a long lease which, owing to the ineptitude of the Inland Revenue, is at the moment above the rateable value laid down in the Bill.
  The hon. Member for Cardiff, North spoke with the feeling and emotion which one expects from a Welsh hon. Member on this subject. The trouble with the emotion
  which he and some of his hon. Friends have expressed is that it has confused what is actually being sought to be done by the Government in the Bill. As I understand it, the issue is not whether or not there should be measures of leasehold reform, but whether this is a fair and acceptable Measure. It is to that aspect that I propose to address my remarks.
  In considering the principle of this Measure, I would ask the House, first of all, to reflect on some very wise words in the Jenkins Report. The Jenkins Committee was, as the House will remember—and I say it with the utmost respect to the right hon. Gentleman—the last independent outside body to review the approach to this subject. It stated:
  "While freedom of contract should certainly be subject always to public policy, private property should only be taken for the benefit of the community as a whole—never for private advantage, and on terms of full compensation for the freeholder."
  The essence of this Bill, and this is why it seems to me to raise very serious questions of principle, is that—as The Times so rightly described it, when it was published, in an article headed "An Unfairly Drawn Bill"—it amounts to the expropriation of one citizen for the benefit of another. That seems to be an objectionable principle, and a principle none the
  1304
  better for the fact that the Prime Minister was able to gloat the other day about what he thought would be the favourable response of a million leaseholders.
  The objection in principle is fortified by one practical point. Where one has had for a very long time both parties to a lease, and their successors in title, dealing with the matter on the basis that the lease is an interest in house and land for a definite period, coming to an end on a predetermined date—and we have in the case of most long leases a whole variety of transactions undertaken on the basis that this is an interest limited in time—and then later in the process we intervene by Statute and so wholly alter the relation of the parties, we create a whole mass of unfairnesses and anomalies.
  This is where, I think, the right hon. Gentleman went wrong in his repeated references to the leaseholder having built the house. In many cases that is not true, as my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) has said. It is not so in most of the great London estates, but it is true in the case of some others. But even where it is so, the house was built by the original leaseholder knowing perfectly well the basis on which it was done, that basis being the possession of house and land for a precisely stated period to which he agreed.
  But the right hon. Gentleman must accept that when we talk of these long leases, and the example of the 99-year lease is perhaps the one we are most discussing, this is not now the concern of the original leaseholder. The lease has changed hands many times, perhaps by inheritance—although I gather that some hon. Gentlemen opposite do not approve of that—but more often by purchase, with the purchase price reflecting the fact that a shorter and shorter interest was being bought.
  The right hon. Gentleman tried to deal with this in the White Paper debate when he stated
  "… but also to the house which has been built on his land, even though he has neither provided nor maintained it. That is legal confiscation. The leaseholder is expropriated. He is left with nothing, even if the house which he or his predecessors have paid for still has many years of useful life."

  1305
  My hon. Friend the Member for Gloucestershire, South (Mr. Corfield) then intervened to ask:
  "Can the right hon. Gentleman explain how that amounts to confiscation in a case where the lessee has himself purchased the lease at a price which reflects the fact that it will come to an end at a certain date?".
  To that the Minister unbelievably replied:
  "I would ask the hon. Gentleman to read the White Paper again. One has to take an historic view of both the freehold and leaseholds interests."—[OFFICIAL REPORT. 28th February, 1966; Vol. 725, c. 905.]
  The right hon. Gentleman was simply not applying his mind to the point put to him.
  It is not only possible, but happens many times that people buy the fag-end of a lease—the last six or seven years at the end of a lease—at a very moderate price. In fact, part of the Minister's argument was that such a lease was very difficult to sell and could be bought very cheaply. Yet he comes here with a Bill, not to give to the mythical and long-since-dead builder of the house these rights, but to give them to someone who has bought, at a modest sum, that fag-end of a lease—
  Mr. Hamling: Not in London.
  Mr. Boyd-Carpenter: It happens every day in London, and it will happen even more frequently if this Bill goes through.
  The right hon. Gentleman must address himself to the fact that these transactions have gone on during the lifetime of the lease, again and again, everyone knowing the basis on which they were done, and it is really quite outrageous to say that the person who happens to have got a lease quite cheaply shall be presented with these valuable rights which, as my right hon. Friend so rightly said, having acquired under the Bill he will be able to sell on the free market the next day for the full price—
  Mr. Willey: The right hon. Gentleman will remember that I said that it is not the White Paper or the Bill that provides the distinct interests, but the leasehold contract itself. This is a very real difficulty, because they are parallel interests. What happens on the leasehold side has nothing to do with what happens on the freehold side, although they are contemporaneous interests. If one is thinking of the leaseholder's interest one has only
  1306
  to look at the leasehold side, and the fact that one leaseholder sells to another leaseholder has nothing to do with the freeholder, just as a freeholder can sell to a freeholder without the leaseholder being aware of the transaction. Why I speak of the historic view is that one has to look at the whole interest and say, "Here is a leaseholder", and provided one takes the historic view, with the land being made available at a ground rent—it is only if one does that and accepts what the contract is—dividing the property in this way —that one can reach an equitable settlement.
  Mr. Boyd-Carpenter: I do not think that that argument helps the Minister very much. If I understood his lengthy intervention aright, it is that he is more concerned to penalise the freeholder than to help the leaseholder. He must face this. What merit is there in presenting someone who bought the fag-end of a lease perhaps six years ago for a very modest sum—presenting him, at the cost of the freeholder—with a freehold that he can sell on the market tomorrow? Can the right hon. Gentleman say how he justifies that?
  Mr. Willey: I certainly can. I gave the example of a leaseholder buying on a mortgage. It may well happen—though it will not happen in the future—that he has bought the lease mid-term, and when he comes to the end of his mortgage he has paid for the house, but he finds himself with something far less valuable. Perhaps someone buys it from him for less than he paid, but that has nothing to do with the freeholder who may be a freeholder who has held the lease for 50 years or who has held the lease for 5 years.
  Mr. Boyd-Carpenter: The right hon. Gentleman makes matters worse. He is running away every time from my example of the fag-end of a lease, whether on mortgage or not What he is doing, and I do not think that he challenges it, is to say that someone who bought for a few hundred £s the fag-end of a lease in London is now to be presented with the right to sell it freehold on the market tomorrow if he likes.
  Mr. Willey: What I have done is to define a genuine leaseholder occupying his house. If the right hon. Gentleman wants to challenge that, he can do so. The basis of the definition is the five

  1307
  years' continuous occupancy, or the five years out of seven years. That is the definition of the genuine home owner, and he is the person who will benefit from this legislation. If the right hon. Gentleman pursues his argument that person will be excluded from the benefits of the Bill.
  Mr. Boyd-Carpenter: First, I would exclude this person at the fag-end of a lease. But the point goes not only to the exclusion of such a person; it goes to the fallacy of the whole principle of the Bill. The person with the fag-end is the most vivid illustration. I shall now finish that illustration, if I may.
  Six years ago, this person bought the end of a lease of a valuable house in London for a few hundred pounds. Let us take the example of the house to which the right hon. Gentleman referred.
  Mr. Hamling: Will the right hon. Gentleman give way?
  Mr. Boyd-Carpenter: Certainly not. I am in the middle of an argument.
  Mr. Hamling: The right hon. Gentleman is frightened.
  Mr. Boyd-Carpenter: The hon. Gentleman flatters himself if he thinks that I am frightened of him.
  Mr. Hamling: The right hon. Gentleman is frightened of the truth.
  Mr. Boyd-Carpenter: I am engaged in an argument with the Minister. Although the hon. Gentleman may rightly think that his right hon. Friend is not doing very well—
  Mr. Hamling: No.
  Mr. Boyd-Carpenter: —I am still entitled to continue the argument with the right hon. Gentleman, to whom I have already given way twice. I am sure that the hon. Gentleman will understand that that is fair.
  Let us take the right hon. Gentleman's example. Such a person can then sell that house on the market for £7,500, the price which the right hon. Gentleman himself said was its vacant possession value. How does he justify that?
  This goes back through the chain of the lease, which has been bought in the
  1308
  knowledge that a thing of less and less value was being bought each time. This is the complaint against the right hon. Gentleman. He is at this stage intervening by what is, in effect, retrospective legislation in a whole series of transactions over many years solely to benefit the person who at present happens to be the owner of, perhaps, a few years of the lease. The right hon. Gentleman does not seem to understand the muddle into which he is putting everyone.
  Mr. Willey: In fairness, perhaps the right hon. Gentleman will give the House a figure. He has used the example of a house with vacant possession value of £7,500, with 21 years to run. What does he put as the market value freehold interest?
  Mr. Boyd-Carpenter: I thought that the right hon. Gentleman was giving vacant possession value. I am not prepared to make the calculation on my feet. It is a great deal more than the figure of £800 which the right hon. Gentleman gave. Does he challenge that? Is it a great deal more?
  Mr. Willey: No.
  Mr. Boyd-Carpenter: The right hon. Gentleman says that he is giving market value for the freehold interest.
  Mr. Willey: The right hon. Gentleman is a member of a property company. He can give us his estimate of the market value freehold interest.
  Mr. Boyd-Carpenter: I shall gladly tell the right hon. Gentleman if he will undertake to accept my estimate and put it in the Bill.
  Let the right hon. Gentleman consider another illustration of the muddle which will be created by this truly retrospective Bill. The owner of prospective reversions has died in recent years. For Estate Duty purposes, his estate has been assessed on the value of his prospective reversions. They have a value at the date of death which has been the value for Estate Duty purposes, on the assumption that the law continues as at present. If the Bill becomes law, however, that will turn out to be a wholly false basis because the larger part of the value, as the right hon. Gentleman says, will have been taken away. Are the Government prepared to reopen all those cases in

  1309
  which Estate Duty has been paid on that basis so as to repay to the heirs of that man the duty which has been paid on the basis of values which the Government have subsequently destroyed? This is another example of the difficulty in which the Government put themselves by a Measure of this kind.
  It would be bad enough to deprive great property companies and great landlords of their rights by this sort of action —[Laughter.] I am sorry that hon. Members laugh. It is the mark of a civilised society that one does not transfer the rights of one citizen to another by expropriatory legislation. One relies on taxation, if one wishes so to do, to deal with disparities of wealth. One does not proceed on the Robin Hood principle of transferring one man's property to another.
  It is very much worse morally when the people robbed are pension funds, including the funds—if hon. Members opposite care to inquire—of certain trade unions, of charities, educational charities—
  Mr. Weitzman: Widows and orphans?
  Mr. Boyd-Carpenter: It is all very well for the hon. and learned Gentleman to sneer at widows and orphans—
  Mr. Weitzman: Will the hon. Gentleman give way?
  Mr. Boyd-Carpenter: In a moment. If the hon. and learned Gentleman cares to sneer at widows and orphans, he should remember that this is just the kind of investment which is very often made for widows and orphans.
  Mr. Weitzman: I hoped that, by making that remark, I would induce the right hon. Gentleman to give way, because I wanted to point out the fallacy of his argument. If the cases he has given show that it is wrong to adopt the course taken by my right hon. Friend, why did the Tory Party, in the 1954 Act, give statutory protection to a leaseholder whose lease comes to an end? If the right hon. Gentleman's argument is right, it is equally wrong to do that.
  Mr. Boyd-Carpenter: I shall not be tempted to give way again to the hon. and learned Gentleman, since he has indicated that he obtained my concession by a
  1310
  trick. It does him little credit, but I shall answer him none the less.
  The point which the hon. and learned Gentleman is, apparently, incapable of apprehending is that, under the 1954 Act what was given to the holder of a lease at the end was security of tenure—it was necessary in the conditions of housing shortage at that time, accentuated as they have been since then by the mismanagement of the present Government—given at a market rent, the full rent. If the hon. and learned Gentleman cannot understand the difference between expropriation of a capital asset and the grant of a tenancy at a market rent, he seems doubtfully qualified for the prefix "learned".
  This is the objection. It is wrong in principle so to transfer to other citizens rights in property, whether the transfer be from property companies and great landlords or from pension funds, widows and orphans or any of the many admirable people who own reversions.
  The hon. and learned Gentleman's intervention has induced me to go further and remind the House of another fairly common category of person, the person in our public service, for example, who knows that he is to retire at a certain date. He buys the freehold reversion of a long lease so that he will have the ground rent while he is still at work and possession of the house to retire to when his work comes to an end. There are a good many such examples in our South Coast towns. What is the right hon. Gentleman doing to that man? He says to him, "When you retire, if you are to obtain possession of the house to which you plan to retire, the rights in which you have bought from a certain date, you shall have it only if you first can persuade a court that your hardship is greater than that of the occupant, and, second, on payment of compensation for a 50-year lease which you have been compelled to give him". Does the right hon. Gentleman think that that is giving a square deal?
  I want the House to realise what happens once one embarks on expropriatory and confiscatory legislation of this kind. One does a great deal of injustice.
  The wrong principle of the Bill is shown up by the exceptions. If this is
  simple justice, if it is right, as the hon.

  1311
  Member for Woolwich, West suggests, to bash the landlords because they have bashed the tenants—
  Mr. Hamling: Not half!
  Mr. Boyd-Carpenter: —it is interesting to know that that is the hon. Gentleman's attitude—if that is right, why do we end this great principle at £200 a year in the country and £400 in London? Why is it not applied to flats? The right hon. Gentleman knows that the £400 and £200 are Rent Act figures.
  Mr. Elystan Morgan (Cardigan): Does the right hon. Gentleman appreciate that, at the date of the last debate, there were in Wales only 799 houses above the £200 and £400 limits and only 110,000 in the whole country? The number of houses leased in that category must be very small indeed.
  Mr. Boyd-Carpenter: That seems a most curious reason. The Bill does not deal solely with Wales; it deals with England and Wales. I am trying to test the validity of the right hon. Gentleman's principle. If it is such a right principle as he suggests that if the leaseholder built the house and it is, to use his own phrase, "legalised confiscation", for the landlord to resume possession at the end of the period of rent, why is it not legalised confiscation if the annual value is £210 a year?
  Mr. Willey: As I said, we are intervening by legislation to rectify a contract and doing it in the cases of greatest hardship. The right hon. Gentleman is persuading me that this is a matter we should look at again.
  Mr. Boyd-Carpenter: I have long since abandoned any hope, during the Land Commission debates, of any capacity to persuade the right hon. Gentleman of anything, particularly anything that happened to make sense. He must realise that those questions test, I think decisively, the validity of his principle.
  The Rent Act limits were genuinely designed—I think wrongly, for I think that they were placed too high—to cover the areas where there was shortage and where it was necessary to protect tenants, or would-be tenants, from the effects of the housing shortage. They had nothing to do with transfer of a capital asset, a
  1312
  capital asset which can be resold. Therefore, one is left in great doubt whether the right hon. Gentleman believes in this convenient principle, if he does not apply it right across the board.
  Why is it that at £210 a year in the provinces that great principle that the present law provides for legalised confiscation comes abruptly to an end? Why does it not apply in the case of flats? The right hon. Gentleman said something about flats in his speech, and I hope that his right hon. Friend will clear it up in his reply. Did his indication that flats might be brought into this category because of other legislation dealing with the Wilberforce recommendations concern an Amendment to be introduced into the Bill or subsequent legislation?
  Mr. Willey: I am obliged to the right hon. Gentleman for allowing me to continue the discussion. That would not be a matter for this legislation because we must await the legislation promised pursuant to the Wilberforce Committee's Report.
  Mr. Boyd-Carpenter: Then flats are outside this great principle under present legislation.
  Mr. S. C. Silkin: I think that the right hon. Gentleman's point is the only one I have heard from him so far with which I entirely agree. May I take it that he and his right hon. and hon. Friends would join with hon. Members on this side of the House who put down an Amendment to remove the rateable value limits from the Bill and also to include flats?
  Mr. Boyd-Carpenter: If the hon. and learned Gentleman agrees with me, I must be wrong, because no one has been more wrong than the hon and learned Gentleman in this matter. Because I thought that he was not in the House I did not mention earlier that he has written an article of which he knows that I am aware—and he is aware of mine on the same subject—in which he makes the flat-footed statement that the leaseholder built the house.
  He knows that the purpose of what I am doing is to test the validity of the Government's principle and not to see whether anything can be patched up out of this hotch-potch of a Bill. I do not want to extend the mischief effected

  1313
  by the Bill an inch further than the Minister wishes. But I am entitled to point out—and I think that it is some embarrassment to the Minister—that his own principles are put in doubt by drawing that line of demarcation.
  I am sorry to have detained the House for longer than I had expected, but it was because I gave way to many interventions. I hope that I did not incur the displeasure of the Chair. I must now come to the point of development and redevelopment.
  I hope that the Minister realises the damage he is doing to redevelopment. As I understand the Bill, if when the leases fall in the freeholder wants to redevelop an estate, he must first grant a lease of 50 years to the leaseholder and then get back the lease and compensate the leaseholder for it. That means that on top of the high cost of building today —the right hon. Gentleman knows that it has never been higher—a redeveloper will have to pay a large fine for every house he takes in for redevelopment—the value of the 50-year lease. I hope that the right hon. Gentleman realises the damage he is doing to redevelopment in that way.
  He is making it inevitable that redevelopment will not take place except where it is thought that colossal rents can be demanded for the redeveloped property. That is a recipe for the creation of slums. One can see in parts of London, such as Islington and Southwark, fine houses that have gone back to slums through not being redeveloped. The Bill is a further blow to redevelopment, and if he is remembered for nothing else the right hon. Gentleman will be remembered as the creator of slums.
  Mr. E. Rowlands rose—
  Mr. Boyd Carpenter: I cannot give way again or I shall incur the grave displeasure of the Chair, and I want to finish.
  The Bill seems to me to be designed for Party political purposes. As my right hon. Friend said, it has had a thoroughly bad reception. It has been unanimously
  condemned by the serious Press and the professional bodies. It flies flat in the face of the considered recommendations of the Jenkins Committee.
  1314
  The Prime Minister may be right, and it may be popular with the million leaseholders. It is easy to make oneself popular with people by handing over other people's property to them. But I wonder whether one does make oneself quite so popular in that way and whether the Prime Minister, not for the first time, has not underrated the quality of the people with whom he is dealing. There may be many among those million leaseholders who will regard it as a pretty shabby thing that another citizen, not necessarily better off than themselves, should have his property removed by legislation and handed over to the leaseholder.
  I think that the citizens of this country do not like that kind of thing. To start removing the property of what may be thought to be an unpopular minority and transferring it to other citizens is a dangerous step for a Government to take. It is an unhappy precedent, recalling things that happened in other countries in our lifetime. It is a desperately unwise step, but it may serve its purpose in connection with the forthcoming elections. The Government may buy votes with it, but they will do so at a very high price and the price of their honour.
  5.48 p.m.
  Sir Barnett Janner (Leicester, North-West): This subject has been before the House for 30-odd years within my recollection. The speech of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has shown that the Tory Party stands where it has stood at all times on these issues. Did they really think that the pernicious—
  Mr. F. A. Burden (Gillingham): On a point of order, Mr. Deputy Speaker. Is it possible to get the hon. Member for Woolwich, West (Mr. Hamling) either to speak more quietly, or to rise if he wishes to intervene, rather than to continue a running conversation when an hon. Member is speaking?
  Mr. Deputy Speaker (Sir Eric Fletcher): It is desirable that all interventions should be made from a standing and not a sedentary position.
  Sir Stephen McAdden (Southend, East): Further to that point of order. Am I right in believing that no hon. Member is allowed more than one speech in

  1315
  a Second Reading debate? As the hon. Member for Woolwich, West (Mr. Hamling) has been talking incessantly, may I take it, Mr. Deputy Speaker, that you will not call him?
  Mr. Deputy Speaker: Interventions do not rank as speeches.
  Mr. Hamling: Further to that point of order. I was replying to a question from my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman).
  Sir B. Janner: After that interesting and enlightening set of interventions, may I resume my speech?
  What hon. Members opposite have not yet realised is that their view of leasehold reform is not acceptable to the country. They should have learned that from the result of the General Election. Anybody in this country who is older than about 30 can remember the agitation carried on by the late Mr. Lloyd George. Everybody knew that people were beginning to reiterate "God gave the land to the people and not to the landlords".
  Everybody began to talk about the fact that when large plots of lands and estates had been given away interests in them were created artificially. They said if anything belongs to the people it is the land on which they stand. The distinction between the land itself and what is built on the land is substantial. In other words, what a person puts into the land he is entitled to get a return for it, but what he does not put into the land is not his but is something created by somebody else.
  What we are doing today is trying to put the position into its proper perspective. I do not deny that there is bound to be trouble and difficulty for some people. Every piece of legislation brings difficulties to somebody. But it is no good anyone suggesting that this proposal has not been on the cards for many years. It has been known that when a Labour Government came into power it would introduce leasehold reform of this nature.
  Who can complain? The people who speculated on the fact that leasehold reform might not be introduced? Are they entitled to say that although a majority of the country were in favour of lease-
  1316
  hold reform, they did not believe that it would ever come about, took a chance on this and therefore are entitled to complain about the Bill? The right hon. Gentleman believes that the transactions which took place were based on the fact that leasehold reform would never come about, although even the Tories pretended that they would introduce it. I hope that he will remember that when considering the difficulties. We did not create the difficulties. The Tory Party created them. They have led people to believe that this would not happen. The country was not prepared at the last election to accept that belief. We debated this subject only a few days before the election. It was not pushed under the carpet. It was a live and important proposition which was put to the country, and the country accepted our view.
  Mr. Burden: A great many propositions were put to the country at the last election on which the Labour Government have completely scuttled.
  Sir B. Janner: I am talking about this subject. I know that hon. Members opposite are trying every device to avoid the issue, but they should not try that with me. I am too old a politician for that. It is like water off a duck's back. But I am far from being too old to argue my case.
  Let us discuss this matter on its merits. There are difficulties, some people will suffer and some will lose. But after 60 years of the Rent Acts, to say to the country that the sanctity of contracts is such that it must under no circumstances be interfered with is sheer nonsense. We then have to deal with the position which was created because the social conscience of the country said that there are certain contracts relating to tenancies and occupation of land which are contrary to the public interest, and although some people will suffer by not getting higher rents, although they expected to get them, nevertheless, we must deal with the matter.
  How can it be suggested that we must not alter the circumstances relating to property? Every piece of legislation alters something and almost invariably contracts, either written or unwritten, are in existence in regard to the subject matter. Are we to take the correct step, in spite of the difficulties which may arise, or shall we remain in the same

  1317
  bad condition in regard to land about which I, for my part, and many hundreds of thousands of people have been complaining year in and year out for many years?
  Mr. Peter Hordern (Horsham): Is it the hon. Member's proposition that any contract which is made, and which is subsequently found by a Government in their view not to be in the public interest, can be broken at any time?
  Sir B. Janner: No. The hon. Member must not put words into my mouth. I have never said that and never would. I said that if it is in the interests of the community as a whole, if it has been put to the community, as this issue was put to the community, and if the community have returned a Government which included leasehold reform as a substantial part of its programme, particularly in Wales, then, irrespective of the harm which may be done to some individuals, the Government are right to introduce that reform. We are doing what we can to mitigate that harm as far as possible, and I will explain how.
  This is an extremely interesting matter. I am President of the British Association of Leaseholders, and for 30 years I have felt that the leasehold system is a blot on the country. Men and women who have built houses, and established their homes in them, have subsequently lost them under the leasehold system. I could give illustrations from the Welsh valleys. What happened there? Often the land had no more value that that of agriculural land. [HON. MEMBERS: "Less."] I prefer not to exaggerate. Some of the land is worth something for agricultural purposes. But in the main they did not use that land. They occupied land which was not worth even that amount, and there they established villages and towns because people were building there and were creating values for that area. Consequently, the landlords are not only not entitled to the building, I am not sure that they are entitled to any increase in value which has accrued to the site as a consequence of the development.
  Mr. Ednyfed Hudson Davies (Conway): In many areas land was not only valueless but was land which had previously belonged to the whole society as common land but had been taken over
  1318
  by the ground landlord under the Enclosure Acts.
  Sir B. Janner: I have a limited time at my disposal and I do not want to incur your rightful wrath, Mr. Speaker, by speaking for too long. This is a wide subject and perhaps another hon. Member will deal with the question of common land. I want to deal with another point. I would ask the right hon. Gentleman to look at this from that point of view. Sanctity of contract? Yes, as long as it does not interfere with public good. There must come a time when some change must be made which, in spite of contracts, must affect the tenants. Again, is it not reasonable for any one to say that it has not been in contemplation that the strict sanctity of contract in respect of land cannot be upheld since 1915 if against public interest. It has worked.
  I know the position in South Wales very well. What nonsense it is for people to talk about this being a struggle to make profits out of it by the tenant. Do they understand what a home is? Do they not know how many tens of thousands of people have realised that this Act will come into force and have looked upon their houses as their homes? Do they not know that these people would regard it as robbery if these so-called market values are imposed? What is so wrong with a landlord being told:
  "Look, you may have made a mistake and miscalculated; you did not think that leasehold reform would come in, but it has. What is your interest? Your interest is in the site."
  [Interruption.] Yes, I know the expression "de solum jusque ad caelum". That should not mean it is for God. The house is definitely different from the land.
  I would like to raise a question of duress. If a man who has to find a home near his work and has to rent a piece of land and is told that he himself must build the house on it for the landlord to take possession of eventually, is it believed that he would want to do that? He was forced to do it, although the land was worth nothing, and the contract into which he was entering was a contract obtained by force.
  Perhaps I have spoken with more emotion than I should, but I know the position and I know what these families are suffering from. I know that in the

  1319
  London area there is to a great extent the same problem. I would like the right hon. Gentleman to look at this again. For my part, I would tell the House that I am not happy as to whether we are not giving away more than we should. Let my right hon. Friend go down to South Wales and ask what the people there feel about it. This is a Measure which, when it protects people who come within, the same limits of the Rent Act, allows for some argument. Supposing that these people were allowed to stay on for 50 years, at a controlled rent, does the House not think that that might have been an alternative which could have been introduced so that the landlord would not have been any better off?
  He would have been in just the same position as he is being put in now; possibly he is in a better position now than he would have been in those circumstances. He bought the land if he did not inherit it—which happened in many cases—because he thought that vacant possession would come and he would edge in on this. Perhaps some would say "Good luck" to him if he gets away with it, but he is being stopped, and if the landlord sits down and works it out he will find that the case for the Bill is a reasonable one. He suffers, but he does not really deserve to feel aggrieved, because he knew that the country would have leasehold reform whether he or anyone else was against it, since he knew that the Tories could not exist as a Government because of their inefficiency and the way in which they mishandled the country's affairs.
  6.5 p.m.
  Mr. Hugh Rossi (Hornsey): I find myself in substantial disagreement with a great deal that has been said on both sides of the House from both Front Benches. Before I develop my argument, I have to declare three interests. The first is a professional interest. A close concern over the years with the problems of landlord and tenant has led me very firmly to the view that the anomalies and inequities of our leasehold system can be cured only by compulsory enfranchisement.
  My second interest is a personal interest. I am also a leaseholder, but like
  1320
  the Minister, my lease is of such a length that it is not of very immediate concern to me whether I acquire the freehold. Like my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), the rateable value of my property is such that it could not concern me in any event under the Bill as it now stands.
  The third interest that I have is a constituency one, and it is this interest which I desire to argue this evening. Hornsey is an inner area of London, which saw its greatest development between 1880 and 1900, at the turn of the century. This is the story of much of Greater London. The sudden expansion was due to the great industrial growth which took place, and to the increasing facilities of transport and commuting, brought about by our growing railway system.
  The development to provide the accommodation for people flooding into the towns was brought about by the leasehold system. It was a system admirably suited to what was required in those days. It advantaged all the parties to the contract. The landowner was assured of an income over a period of 99 years, far greater than he would have received per acre if he had continued to use the land for arable or pastoral uses, without any of the vagaries of the season to take into account. The builder was able to set about his business of building and selling houses without the capital outlay that would have been involved in acquiring the land—
  Sir B. Janner: The hon. Member should know, and should be good enough to say, that it would have cost him practically nothing to buy the land.
  Mr. Rossi: In terms of present-day money, yes, but in terms of those days, it might have been a substantial amount. It also advantaged the house purchaser, because all that he was concerned to do was to pay the builder his profit for building property. He was not concerned with the capital payment for the land, spreading his ground rent over a great number of years into the future. For the purchaser there was this considerable advantage, which the hon. Member would surely recognise—he had a guarantee that the amenities of his property would be preserved by restrictive covenants

  1321
  imposed for the benefit of the whole estate. This was really important in days when town planning did not exist. Do not let us decry the leasehold system as something which has fulfilled no useful function in the history of the development of our cities.
  If conditions had remained the same, if the parties to the original contract had remained the same, it would be extremely difficult to argue today in favour of enfranchisement. After all, the leaseholder paid his price willingly and openly—
  Mr. Hamling: No.
  Mr. Rossi:—for the use in those days of land and property over a period of years in the knowledge that ultimately that property would revert to the owner. But—and this is the big reservation, the big proviso—neither the parties to the contract nor social conditions have remained the same over the years. We must consider the leasehold system in the light of both those considerations. This requires an historical approach, as the Minister indicated.
  I should like to take two aspects of the interests in property—the freehold and the leasehold. On the freehold interest, changes in family fortunes and the incidence of Estate Duty led to the break up of large estates. Between the two world wars large estates were sold to insurance companies and trust funds, and there was a recognised value for the freehold reversions. The price was normally calculated at between 20 and 25 times the ground rent. Therefore, a £10 a year ground rent would be purchased for about £250, which represented to the trust fund or insurance company a 4 per cent. return on its invested capital.
  When those estates were coming on the market, the leaseholders were not, unfortunately, given the opportunity to buy at these prices, because it was far more convenient to the landowners to sell blocks of 20 or 50 leasehold properties rather than engage in 20 or 50 individual transactions. Therefore, the leaseholder was by-passed and he lost the opportunity to buy his freehold.
  Then we come to post-war circumstances, when it became the policy of insurance companies and trust funds to move into equities—into stocks and
  1322
  shares. This was made much easier by legislation which widened the powers of investment of funds of this kind. In more recent years—and here I speak from what I have seen in my constituency—insurance companies and trust funds and the Church Commissioners have been selling to leaseholders at about 40 to 50 times. the ground rent. One might say that this was equitable and fair, because the jump from 20 to 40 times the ground rent represents the decline in the purchasing power of the £ and they were recouping to themselves their original capital.
  However, they found that their market at these prices was limited, in the main, to the leaseholder, because as an investment a freehold reversion was not very attractive. There was a great flurry of activity in this matter 10 or 15 years ago. The freeholders sold as many freeholds as they could to the leaseholders. A residue of leaseholds was left in their hands because some leaseholders were not wise; they passed up this second opportunity. An option on the residue was given in the London auction market to the gentlemen who inhabit that institution. In the main, these gentlemen are speculators waiting to move in for the kill as soon as the leaseholder finds that he is forced to buy the freehold for one reason or another. That, as I see it, is the way in which freehold interests have devolved in my constituency since their creation about 99 years ago.
  Similarly, the leasehold interest has changed hands a great number of times, but not as between investors, people looking for a safe deposit for their money and a reasonable return on their capital, but as between people looking for homes and roofs to put over their heads and the heads of their families. As the pressure of population grew on the centres of our towns, as the competition to buy these houses became more and more fierce, the wasting nature of the leasehold interest tended to be disregarded in the purchase price paid for the property. Because of the social conditions which have appertained in the post-war period, people have paid considerably more for their leasehold interest than it is worth in the nature of a wasting asset.
  Surely our concern is to take note of these social conditions and to ameliorate the situation where we can by legislation. For this reason, I am wholeheartily in

  1323
  support of any Measure—I do not necessarily say this Measure—which would ensure to the leaseholder the ability to buy the freehold of his property.
  There has been talk about the sanctity of the contract, and it has been said that to give the leaseholder the power to buy the freehold against the will of the freeholder is a breach of that principle. But what does this concept really mean? It means that when two adults have freely entered into a contract the law will ensure that the bargain between them is enforced. This principle must be right, because otherwise there would be complete chaos in every activity.
  Sir B. Janner: I am listening with considerable interest to what the hon. Gentleman is saying, but he will remember the words in the 1915 Act to which I referred:
  "any agreement to the contrary notwithstanding".
  Mr. Rossi: I appreciate that. Perhaps the hon. Gentleman would let me develop my argument on this matter.
  The common law recognises circumstances in which contracts apparently freely entered into can, nevertheless, be set aside, since it would be inequitable to enforce them becausee of the measure of agreement between the parties; they were not completely ad idem. There are elements of misrepresentation and duress. The courts cannot consider duress caused by social circumstances, but we as legislators can, and this is our function today as I see it.
  However, while I believe wholeheartedly that relief must be given to the leaseholder and that he must be protected against the speculators who are waiting ready to move in for the kill, it would be wrong of us to propose that the terms of enfranchisement should be such that, in turn, we create an injustice against somebody else. It must be our function to try to hold the balance fairly and equitably between all the parties concerned.
  As I see the problem, there are two points in time in the life of a lease when difficulties can arise. The first and most obvious is at the end of the lease. To some extent, the 1954 Act has mitigated the situation by enabling the leaseholder to claim a statutory tenancy. The
  1324
  initial repairs that the leaseholder is required to carry out following the covenants as to the condition in which he must keep his property have, however, in my view, broken down much of the value that would otherwise be contained in that right.
  Time and time again I have seen schedules of dilapidations wielded as instruments of terror against leaseholders at the end of long leases, with the result that they have been dispossessed by the promise of the freeholder to tear up his schedule and forget about it. This situation is completely wrong and should not be allowed to continue. One way of curing this difficulty is to enable the leaseholder to buy in the interest that places him in this position.
  The second point of time at which the speculator normally moves in for the kill is at the 30-year point, when there are about 30 years to run on the lease, and the owner of the leasehold property cannot sell because no buyer is able to obtain a mortgage for 15 or 20 years with only 30 years to run on the property. The leaseholder is, therefore, obliged to go cap in hand to his freeholder and say, "Sell me the freehold so that I can dispose of my house and move to another part of the country because my job compels me to do this." At this point in time, again great injustices arise because freeholders take advantage of this situation.
  I recognise these injustices and I wish to see them cured, but not by another injustice being superimposed. I hope that the Government will be sufficiently fair about this matter not to mar what is otherwise an enlightened social Measure and have it dubbed as a cynical popularity-seeking Measure and to discard fair dealing and all morality in the process. I ask the Government to look again at the formula which they lay down for the purchase of the freehold interest.
  We have had great talk today on who owns what, who owns the land and who owns the building. All the argument has revolved around these concepts. I would like to put forward a pair of alternatives. I do not regard the freehold interest in the same way as has been spoken of today, for the historical reasons which I have been at pains to give at length.
  The ownership of a freehold interest in the circumstances of a 99-year lease

  1325
  is obviously no more than an investment. It is regarded as a safe place in which to put one's capital to give oneself a given return. Therefore, if one looks at the matter from that point of view, one of two things can he said. The first is that the freeholder should be paid such sum as, invested at a modern rate of return —say, 7 per cent.—would produce to him the ground rent that he is at present receiving, with some adjustments to provide for the fact that when he bought he did so with the view of a lease running out—something in the nature of a dated stock.
  If one could combine a formula with both those factors, it would be possible to arrive at a fair price mechanism without becoming embroiled in arguments about who owns what, merely regarding it, as the freeholder has always regarded it, purely and simply as an investment for his capital.
  The other way of dealing with the matter would be to look to the capital sum which the freeholder originally paid. This would require a disclosure on his part. One would then apply a multiplier to that sum based on the amount by which the purchasing power of the pound had fallen since he first invested his money in that type of investment.
  That would result in the freeholder getting back his original capital at its present-day purchasing price. If he were to be given back his money in full, he could not be heard to complain that he had been expropriated; he would have been given back what he had originally put in. What the speculator would be losing would be the profit which he had hoped to make at the expense of the householder. To that extent, I weep no tears over him. We should, however, take away from the Bill any suggestion of expropriation and we should look to a formula that would produce a situation in which the freeholder cannot say that he has lost his money as a result of measures that this House intends to take.
  Mr. S. C. Silkin: I agree 99 per cent. with everything that the hon. Member has said. On the first of his two alternatives, however—that of the lessor who has in mind that when the lease comes to end he will be able to realise an asset—would not the hon. Member agree that that is precisely what he would be getting as the result of the provisions of the Bill, because
  1326
  he would be getting the value of the land for redevelopment purposes?
  Mr. Rossi: I had considered that aspect, but I was, with deference, putting forward my alternatives because they remove us at once from the argument of who owns what, a somewhat fruitless and pointless argument, and provide an alternative method of calculation which would bring about equity between the parties. Either of the methods which I have suggested has the virtue of simplicity.
  On the proposals as put forward by the Government, the leaseholder and the freeholder cannot escape having to employ professional valuers to apportion the open-market vacant-possession price of the property between the leasehold interest and the freehold interest at any given point in time. Anyone who has had any dealings with this matter knows that valuers, like experts, often disagree. One sees it in compulsory purchase. There can be endless and tedious argument, calculations and, possibly, litigation about the value of a house and property.
  Ultimately, the only answer is that the value is what someone at any given point in time is prepared to pay for it. There is no absolute criterion in valuation. This is why valuers fall out and disagree. It is like the fair rent basis under the new Rent Act. We know how much difficulty and heartache there is about this. People who think that they will get a very low rent find that a "fair rent" means something different. They are disadvantaged because they go before the rent officer or panel and find that the other side has a better valuer than their own. This kind of situation and the expense of employing these people will be inevitable in using the methods proposed by the Minister in the Bill.
  If it is considered that the proposals which I have put forward are practical, fair and equitable, the Treasury can easily produce a table which can go into a Schedule in the Bill giving the multiplier to be applied to the price originally paid by the freeholder for his investment so that he gets back today's purchasing power of his original investment.
  I put forward these suggestions seriously because I am unhappy with the proposals contained in the Bill. It will be seen that I have argued for the Bill,

  1327
  against the compensatory aspects of the matter and against some of the speeches which have come from this side, and, at this point in the debate, I do not feel able to support either side, having very strong and firm views of my own.
  6.30 p.m.
  Mr. Robert Davies (Cambridge): I hope to be reasonably brief, and my task is made a good deal easier by the fact that the hon. Member for Hornsey (Mr. Rossi) conceded at the outset of his speech that the anomalies and injustices of the leasehold system could in his view be cured only by compulsory enfranchisement, and also by reason of the fact that he did not follow his right hon. Friends the Member for Altrincham and Sale (Mr. Barber) and the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) in their doctrinaire criticism of the principle upon which the Bill is based. So far as I can see, the alternative method of assessing compensation which he advanced is not very greatly different from the figure which would be derived from the appropriate Clause in the Bill as it now stands.
  I welcome the Bill. It will be of great benefit to hundreds of thousands of families and will remove from them the very real fear of being dispossessed of their properties or, alternatively, the insult of remaining in their own homes as tenants, which was the effect of the 1954 Landlord and Tenant Act. It is a Bill for which the Government have a clear mandate and for which the Labour Party has argued for the past 15 years.
  I welcome it in particular because it will be of considerable benefit to many of my own constituents. Something like 6 per cent. of the houses in Cambridge are leasehold, many of them recently built, and something like 10 to 12 pet cent. of all owner-occupied houses in Cambridge. The freeholds frequently are institutionally owned by colleges, though not always Cambridge colleges, and perhaps these are some of the charities to which the right hon. Member for Kingston-upon-Thames referred, because certainly they are charities. In the case of one very large area of land which is one of the remaining areas of building land in the city, the freehold is owned by a London teaching hospital.
  I accept entirely the principle upon which the Bill is based. It was chal-
  1328
  lenged by the right hon. Member for Altrincham and Sale and by the right hon. Member for Kingston-upon-Thames that the freeholder owns the land and the occupying leaseholder is morally entitled to the ownership of the building which has been put and maintained on the land. In fact, those words appear in the White Paper, and I cannot understand the objections which have been raised to that principle or to its implementation. But I will refer to some of these matters in the course of what I have to say.
  Reference has been made to the Report of the Jenkins Committee. As I understand it, one of the objections is that this change in the law would undermine the sanctity of contract in that the effect of the contract entered into originally will not be the same when the Bill becomes law. In my view, in many if not in most cases the parties to the original contract were not on an equal footing. It was not a free contract between equals, and it would not be inequitable to restore a balance which did not exist at that time. On the contrary, it would be inequitable not to restore the balance.
  After all, the leaseholder, who put the house on the land originally, acquired it from his father or bought it, was activated by need. The freeholder was activated, if not by greed then by a sense of gain or because it was a wise investment. That puts the parties on a very different footing. Very often, the leaseholder seeking to acquire the lease was not free to choose to do otherwise if he wanted to build a house, because the landowner was frequently in a monopoly position, owning all or most of the land. At present, there is often no option whether or not to choose to buy a house built on freehold land, and that is largely the case in my constituency at the present time. There is a great shortage of building land in the City of Cambridge, and the most readily available modern houses are built on leasehold land the freehold of which belongs to St. Thomas's Hospital. That has not reduced their price. The price of those houses is as great as that of comparable freehold houses.
  If it is suggested that the Bill would affect the original contract, would interfere with the terms of that contract and, therefore, affect the sanctity of contract, I would point out that it was also the

  1329
  case with regard to the 1954 Landlord and Tenant Act. I see that the right hon. Member for Altrincham and Sale accepts that.
  It has also been suggested by the right hon. Member for Kingston-upon-Thames that this involves retrospective legislation in that it affects retrospectively the expectations of the parties to the terms of the original contract. That was a point which was made in the minority Report of the Jenkins Committee. But the Bill applies to the present and future, and not to the past. It refers to the past only in the sense that all legislation may refer to the past, but it does not follow that, because the present is partly determined by actions and agreements made in the past, the present and future ought to be unalterable.
  It is like tax legislation. The incidence of a new tax may be affected by actions and agreements made by individuals in the past and, therefore, it will be different according to those past actions. It does not mean that a tax is retrospective because its incidence will be different according to the actions taken in the past. I do not accept the Amendment which has been tabled, which is based on the assumption—indeed, the terms make it quite explicit—that at the end of the lease the house should be regarded as the property of the landlord. In my view—and this is a clear choice of how one regards this matter—the principle on which the Bill is based is absolutely right and therefore is does not involve expropriating the landlord to pay him the full value—indeed, the market value—of the land on which the house is built. Therefore, I consider that the Bill is wholly fair and equitable to all parties, and that it would be most inequitable not to change the law as it now stands.
  But I have considerable doubt whether it is fair or equitable to exclude from the right to enfranchisement the owner-occupiers of houses with a rateable value of over £400 in greater London or £200 elsewhere. The principle on which the Bill is based, that the land belongs in equity to the landowner and that the house belongs in equity to the occupying leaseholder, holds good equally in the case of houses with a rateable value of up to £200 and those with a rateable value over that amount. If it holds good in the one case, equally it holds good in the other. I see no reason why owner-occupiers of
  1330
  leasehold houses with a rateable value of over £200 outside London should be expropriated, if one accepts the principle that this is what will happen with this ceiling, without compensation at the end of their leases.
  If, as I believe, the present law is inequitable in the case of a rateable value of under £200, it is no less inequitable in the case of a rateable value over that figure. Indeed, the expropriation in the case of houses of higher rateable value would be greater. I see no reason for any ceiling whatsoever, nor can I see anything special about the 1965 Rent Act limits when those limits are applied to leasehold enfranchisement or the right to extend a lease.
  It is true that throughout the country as a whole only 1 per cent. of leaseholders will be excluded from enfranchisement or the right to extend their leases. I understand that the figure is 1½ per cent. in greater London. If it is argued that therefore this exclusion does not really matter, then, if it does not matter, why have any ceiling at all? It does matter, however, because although this may be the national average, as the Minister of State said when opening the debate, there are cases where the percentage is very much greater than 1 per cent., and indeed such is the case in my own constituency.
  In Cambridge the effect of the £200 limit will be quite serious in many cases. This arises from the fact that the cost of renting accommodation and of buying houses in Cambridge is very high, perhaps due indirectly to the presence of the university and colleges. Consequently, rateable values are correspondingly high. As a result, about 17 per cent. of leasehold houses in Cambridge are over the ceiling of £200 rateable value. A higher proportion of leaseholders than the national average, and a higher proportion than in Greater London, will be denied enfranchisement or the right to extend their leases. Indeed, I understand that it is a higher proportion than in any other place in the country.
  I would find it very hard to justify this to those of my constituents who occupy houses—not very big ones—with a rateable value of over £200. One good lady wrote to me. Her house, which is not particularly large, belongs to one of the colleges—I believe it is Trinity

  1331
  College—and has a rateable value of £202. I suppose that she could knock down the garage and reduce it to £200, but I cannot see why she should do that. There is no justice in it that I can see, and I hope the Minister will reconsider it.
  Many of my constituents believe that they already suffer from the fact that the size of the city is restricted in the supposed interest of the university and colleges. One consequence of that is that there is a shortage of building land. The price of accommodation is very high, hence high rateable values and this exclusion. It would be regarded as double injustice if the houses of leaseholders were now to revert to the colleges, many of whom own the freeholds, since leaseholders are put in this position because of the alleged interest of the university and colleges. I hope that the Minister will be prepared to reconsider this in Committee and will enfranchise those leaseholders also.
  Finally, I am concerned about the provision in Clause 28 enabling the university and colleges, and also boards of governors of teaching hospitals, to frustrate the wish of leaseholders to purchase the freehold of their houses or to extend their leases by obtaining a certificate from the Minister that the property will shortly be required for development. This would have most unfortunate effects in Cambridge if not properly applied, and would create a good deal of resentment. I hope I will be told, by either the Minister or the Parliamentary Secretary, what considerations the Minister will have in mind in deciding whether or not to give such a certificate.
  More precisely, what does "shortly" mean in the Clause? In other words, how long before the end of a lease can such a certificate be given? Will it be at the end of the lease, or could it be some years before the original lease terminates? What does "development" mean? Does it mean any permitted development under town planning, even if it were only investment, or does it mean, as I hope it does, only development for some public purpose, for example in pursuance of the activities of the university, the colleges, or hospitals concerned?
  If the leaseholder were frustrated in his wish merely to enable a university or col-
  1332
  lege to develop land for putting shops on it, then this would not go down at all well in my constituency, and I can see no justification for that. I hope that the interest of leaseholders will not be sacrificed to the university or colleges, as commercial developers, putting up shops or offices, and I hope that the Minister can give some reassurance on this point, which is of considerable concern to some of my constituents.
  I should like to make a similar point in regard to Clause 29, which enables a college or university, when selling the freehold or extending the lease, to reserve the right of future development subject to the consent of the Minister. I should like to know whether this is development of any kind or development which is germane to the pursuance of the objectives of that institution?
  Again, I hope very much that this right of veto, or retention of the right of future development, will only be exercised with the consent of the Minister if it is in the interest of the development of the university or college, and will not be exercised merely in the interest of future commercial development. I hope that the Minister will consider this point in committee.
  6.50 p.m.
  Mr. Emlyn Hooson (Montgomery): I follow the hon. Member for Cambridge (Mr. Robert Davies) in his argument that there is really no reason in principle for the exclusion of houses with a rateable value of £200 or over elsewhere, or £400 in London. The argument advanced in an intervention by the hon. Member for Cardigan (Mr. Elystan Morgan) that only 1 per cent. of the houses in the country will be affected by this exclusion is no reason whatsoever for their exclusion. If the principle of the Bill is right, and I am convinced it is, there is no reason whatever for importing a restriction which only has relevance to the Rent Acts.
  I hope that if the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) did nothing else—and I hope he did nothing else—he at least convinced the Minister of the rightness of not maintaining this exclusion, and from the Minister's reaction I thought that I saw signs that he was prepared at least to reconsider the matter.
  Mr. Roland Moyle (Lewisham, North): I hope that the hon. and learned Gentleman will think that the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) also did something useful in urging the inclusion of flats and maisonettes in the Bill.
  Mr. Hooson: I accept that, and I am glad that the hon. Gentleman mentioned it. I did not think that the right hon. Member for Kingston-upon-Thames actually advocated this. He brought it in as a sidewind, saying that because they had not been included this was a reason why the Bill as a whole should be thrown out.
  I think that this is the third debate on leasehold reform in which I have taken part since I came into the House slightly less than five years ago, and I think I am right in saying that no fewer than 25 Bills have been introduced into this House since 1887 in an attempt to deal with this problem. Whenever such a Bill has been introduced, whether by the Government or by a
  private Member, it has provoked the most tremendous attacks. It is astonishing how the landed interests find means of attacking any Bill, whatever its nature, and however moderate, to reform the law on this subject. They always find a means of attacking it, and so far they have always attacked leasehold reform very successfully.
  It is said that it is difficult to reform leasehold law. Of course it is. Whatever principle of reform one adopts when one starts interfering with our land law, one runs into difficulty, but this is no reason for running away from the problem. Basically we are dealing with an injustice which has been embodied in the law. Land law particularly is a reflection on the social structure of the time, and one finds that in the 19th century the law was manipulated, changed, and modified by the then ruling class to satisfy certain social aspirations and concepts.
  Mr. Martin Maddan (Hove): Of the Whigs.
  Mr. Hooson: Of the Whigs, and of the Tories, and no doubt it will be changed in time to suit the purposes of the Socialists.
  It is said that the land law of a country reflects its social structure. When
  1334
  I hear the argument hat one must not touch leaseholds, that one must not have the emancipation, the enfranchisement, of leaseholds because of the sanctity of contract, I really wonder, as I hope an enlightened lawyer, what we are coming to.
  This ghost was laid low many years ago. One has only to read the great judgments of Lord Wright or Lord Atkin in which they considered the circumstances in which the principle of sanctity of contract could be set aside or modified in the interests of the community at large. In these great judgments in the 'twenties those learned judges set out the principles to be considered when this kind of social amelioration was proposed by legislation and affected the sanctity of contracts.
  What kind of equality of bargaining was there when some of these leases were entered into? At one stage during the speech of the right hon. Member for Altrincham and Sale I thought that he was almost arguing that there was a case for separate legislation for Wales. It seemed that at one stage he conceded that the position in South Wales was markedly different from that in London and elsewhere. It may be, I know not. All I do know is that my experience of leaseholds is confined to Wales, and certainly there no one could possibly suggest that in the nineteenth century there was anything like equality of bargaining power between the landlord and the leaseholder,
  The truth is that the landlords owned a great deal of the land. People moved into the valleys and towns of South Wales in search of employment. They had to work or starve, and the only way in which they could obtain a house was to agree to take it on a lease. It was not that they entered into a bargain openly and freely. It was the only "bargain" open to them. They had to take it or go away and starve. There was a virtual monopoly in the holding of land. The monopolists called the tune, and there was nothing that the prospective leaseholder could do about it. In these circumstances, it is not only justifiable for this House to intervene; the House has a duty to do so to put the matter right.
  Looking back on it, especially I think in South Wales and North Wales, in the

  1335
  Llandudno and Bethesda areas, it is equally true to say that our land law saw to it that the landlord had a permanent interest in the land and the ending of the lease was to his benefit because he took over the bricks and mortar as well. This was unjust. When the right hon. Member for Altrincham and Sale argued that the basis of the compensation proposed by the Government was unfair, he forgot to say that he could make that criticism only if the initial bargain was just and fair. What we are trying to do by this Bill is to put right a wrong which has persisted for decades.
  I think that the right hon. Member for Kingston-upon-Thames is right to this extent; that when there is reform one cannot achieve complete fairness for everybody. Somebody is hurt to some degree or other. This is highly regrettable, but it occurs, and all that the House can do is to try to see that the hurt is as small as possible, and that it is distributed as fairly as possible. I think that the question we have to answer is which is the greater injustice—to prevent the enfranchisement of leases, or to allow the enfranchisement to take place on these terms knowing that some people will be hurt to some degree or other?
  I thought that the speech of the hon. Member for Hornsey (Mr. Rossi) was in marked and enlightened contrast to the speech of the right hon. Member for Altrincham and Sale, and indeed that of the right hon. Member for Kingston-upon-Thames. It was one of the most interesting speeches that I had ever heard in this House in a debate on leasehold reform. His proposals as a basis for compensation are at least deserving of study. He did not convince me of their rightness, but he clearly had thought about them, and they deserve closer study in Committee.
  The right hon. Member for Kingston-upon-Thames took the example of a man who had bought the fag-end of a lease and would therefore benefit from the Bill. But, the line has to be drawn somewhere. Wherever it is drawn, it can be argued that someone will benefit unfairly; that someone will get a windfall and benefit from a general principle although his individual circumstances are such that perhaps he ought not to derive that benefit. However, I think that even the
  1336
  right hon. Member for Kingston-upon-Thames will concede that the line has to to be drawn somewhere. Where would the Conservative Party draw that line? This really is a basic question.
  Mr. Boyd-Carpenter: If the hon. and learned Gentleman had been here he would have heard my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) say where—at market price.
  Mr. Hooson: With the greatest respect, I was here throughout that speech and I heard the three alternatives put forward by the right hon. Member for Altrincham and Sale. But he did not deal with the fact—and the right hon. Member for Kingston-upon-Thames has not dealt with it—that in Wales many leaseholders either built their houses or inherited them generally from parents who had built them. Is it to be said that the only fair basis for enfranchisement of their leaseholds is that they should buy what they built? That seems completely wrong.
  The hon. Member for Hornsey was correct in saying that most landlords regard the purchase of ground rents as an investment. If they are decent landlords they regard them as a long-term investment. If they are speculators, of course, they regard them merely as matters of speculation. In Wales we have been more concerned with the original bargain.
  I understand that the main burden of the argument of the Opposition is that it is difficult to reform. If we reform we are bound to cause some injustices. That is conceded, but that is no argument against reform. This reform has to be tackled; it is long overdue. There was a basic injustice in the original law. We do not want to perpetuate that injustice simply because various transactions have taken place in the meantime on the basis of the original legal position.
  Many Bills concerning this subject have been given a Second Reading, but they have not become part of our statute law. I hope that the Government will ensure that this Bill—which may be amended considerably in Committee—does become law. It is vitally important that it should.
  7.2 p.m.
  Mr. Roland Moyle (Lewisham, North): It is a great pleasure to follow the hon. and learned Member for Montgomery (Mr. Hooson). Whatever criticisms we

  1337
  may sometimes have of the Liberal Party it is fair to say that it has a long tradition of embattlement against landed interests. I am glad to see that the light is still burning brightly, and that the hon. and learned Member is doing his best to keep it alive. I notice from the debates on leasehold reform that it is a tradition to declare one's interest. I have to tell the House that unless the Bill is passed there is some prospect that in 900 years from next 7th July I and my family will be facing eviction from our present establishment. I can bear the prospect with such fortitude that it is unlikely to cloud my judgment of the issues before the House. However, I am contemplating moving into another house shortly. That has only the fag-end of 80 years remaining of a 90-odd year lease. Perhaps I ought to declare that interest, too.
  Before I entered the House I was employed in industrial relations. In those days I often thought that the relationship in our society which caused the greatest amount of
  tension was that of employer and employee. Since I became a candidate and subsequently a Member of Parliament and have held my advice service and surgery in my constituency, I have come across a more significant relationship which causes a much greater degree of tension, namely, the relationship of private landlord to private tenant—on all fronts—including the private tenant rack-renting a flat or the leaseholder renting from a freeholder, which is the main subject of our discussion this afternoon. When that relationship goes wrong, as it often does, it affects the whole warp and woof of life. It causes more unhappiness than the relationship between employer and employee, possibly because it affects women more than men, in the first instance, and women may not be so capable of subduing their feelings of injustice from which they suffer day by day in the permanent framework of their lives. In last Sunday's Press a book was being reviewed by a learned gentleman who indicated what he thought was the profound effect on human emotions and developments of the desire to acquire territory. It may be that the acquisition of a house in which to live is a reflection of this fundamental human instinct. If so, we are playing with a very dangerous element in human nature when we con-
  1338
  sider the supposedly humble problem of housing our population.
  In the long run, therefore, we must try to get rid of the relationship between the private landlord and private tenant. We must cease to regard houses as things like ice creams, to be bought and sold, or taxi rides, and to treat them with a much greater degree of respect. I regard the Bill as a contribution to the removal of the private landlord-private tenant relationship. Many of my constituents have been waiting for this Bill to be introduced, and are waiting for it to be passed, rather like a parched man hopes to find water while crossing the desert. It is no exaggeration to describe their attitude in that way.
  The agitation for leasehold reform is not of recent origin. As the hon. and learned Member for Montgomery reminded us, it goes back over many years. It must be admitted that hon. and right hon. Gentlemen opposite have played their part in pushing forward the pressure for reform that we have today. I want to be fair about this. It was their repeal of the Labour Government's planning legislation which caused the increasing inflationary rise in house prices throughout the 1950s and in the early 1960s. The average leaseholder likes to regard his house as does the average freeholder. The price he has paid for his property is probably the same as that paid by the average leaseholder. The average leaseholder wants to put into his house—at least in the early part of the lease—the same care as does the average freeholder. He wants to look after it and he takes a pride in it. If he wants to sell it he wants to get the same price as his freehold neighbour. The bitter experience of many of my constituents in this respect was that they were unable to partake of any advantage from the rising prices of houses for sale to the same extent as are their freehold neighbours.
  It was this permanent factor in the situation that caused the immediate impact of the leasehold problem in my constituency. It is possible to take a high, moral tone in this matter. We all have our reservations about exploiting the inflationary rise of the market, but it was necessary in the 1950s and the early 1960s to keep up with that inflationary rise in house prices if we wanted to have a

  1339
  proper chance of buying another house when we moved from our existing one.
  The general objections to the leasehold system are well known. There is the payment of ground rent, for which most landlords do nothing at all. On this point I find myself in some disagreement with the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). He tried to demonstrate that the passage of this Bill would increase the number of slums in our towns and cities, but I find that the existing law helps greatly to create slums in my constituency. Many tenants of what might technically be called "flats"—often rooms split into two by a piece of plywood with a cooker on the landing outside—come to me and say that the landlord or landlady is a leaseholder and refuses to do anything to improve the property because the lease will fall in in a few years, and they have no permanent interest.
  These tenants have to suffer because of the iniquities of the leasehold system. This not only affects the relations between the freeholder and the leaseholder but carries on throughout society and affects the relationships of the tenants—
  Mr. Hooson: Would the hon. Gentleman not concede that there might be something in the right hon. Gentleman's point about the extension of 50 years as opposed to the enfranchisement?
  Mr. Moyle: There might be, but my point is that the existing law contributes directly to the creation of slums—
  Mr. E. Rowlands: Would my hon. Friend also point out that, in many leases, there is a provision which makes the leaseholder pay money to the Crown landlord if he wants to improve, add to or alter his house? I know of cases in which a fee of £40 has to be paid before he can make this improvement.
  Mr. Moyle: I am grateful to my hon. Friend. I know his constituency well and know that he is well versed in the leasehold law. This is a problem which I, too, have come across.
  This is often not just a question of a lease affecting a house or a group of houses. In parts of my constituency, in Blackheath, there is a number of Regency houses, the leases of which would fall in at different times. However, on the other
  1340
  side of the constituency, where houses were developed in the 1920s or before the First World War, it is not only a case of one street in which the leases would fall in at one time but of whole groups of streets on one estate which were developed at the same time.
  Here again, we face the question of the balance of the bargain between the freeholder and the leaseholder. Much has been said about the unfortunate circumstances in the nineteenth century, in which the leaseholder was forced into a bad bargain, but that is still going on, at least in my area. If a person wanted to buy a house in my constituency, there would be very little choice of the sort of house. If he went househunting at the right time and a freehold house was available, he could buy it, but if, on another occasion, only a leasehold house was available for sale, he would have to buy that.
  A careful study of the property columns shows no difference at all in the purchase price asked for the two types of house. Here again, therefore, the iniquities of the situation in the nineteenth century are being carried into the buying situation of the twentieth century; the problems of the leasehold system and the injustices which people suffer will probably be carried into the twenty-first century, because 99-year leases are being created now under the same sort of commercial conditions as affected the bargains of the nineteenth century—
  Mr. Hamling: Would not my hon. Friend also agree that, in the Blackheath part of his constituency, the fact that leases fall in at unequal times means that the development is piecemeal and haphazard?
  Mr. Moyle: This occasionally happens, though there is great social pressure from the people in Blackheath to secure an overall and balanced development and to maintain their amenities. To digress, we have an excellent residents' association which looks after these matters.
  There is a lack of security in the leasehold system, which especially affects the situation when the lease is nearing its end. There is also the question of the sanctity of contract, which is not one of those immutable scientific laws. This needs to be said, in view of some of the remarks made by hon. Gentlemen opposite. It is

  1341
  not like Boyle's law, which always operates at normal temperature and pressure; nor like Archimedes' principle—though I cannot quite remember what Archimedes' principle is at the moment—but the sanctity of contracts is not that sort of a principle. It is a legal principle which should apply in the circumstances for which it was made, in which two parties can come together in positions of relatively equal commercial strength. That is an entirely different position and one could have a different argument about it.
  I am glad to see that, in my right hon. Friend's reform, the emphasis is not on houses. I have said that we ought to get away from the idea that houses are like ice cream or taxi rides, for buying and selling. The emphasis of this reform is on homes and this is the important thing. This is where it appeals to people's sense of justice.
  This happens because the sub-tenant, who is actually resident in the house, has the right of enfranchisement, as opposed to the tenant, who is not resident. There are some attractive provisions in Clause 7 which would provide that, if the person who
  has the right of enfranchisement dies, that right passes to his next-of-kin who has lived in the house for a considerable time and becomes the tenant. This emphasises the principle of homes as opposed to buying and selling purely properties and commodities.
  There are one or two defects which should be reformed. I should like to see the delimitation of the leases to be affected by this Bill, which at present relates to all those over 21 years, amended to read "21 years and over". This would marginally include a large number of leases which, at the moment, are just marginally excluded and are causing a great sense of injustice.
  I lay myself open, in saying this, to the criticism that those just below 21 years may develop the sense of injustice, but I think that 21 years is a very popular length of time for a lease to be granted. That reform would please many people without doing much harm.
  Like most hon. Members, I felt at one point that the right hon. Member for Kingston-upon-Thames was going to urge that flats and maisonettes should be included in the Bill and I was bitterly disappointed when he did not. I follow his
  1342
  general argument, but would give his logic a different twist, and say that the Bill ought to be extended to include flats and maisonettes.
  I follow his logic in another respect, but take a different route. I believe that the Rent Act limits of rateable value ought to go and all leasehold houses should be included in the enfranchisement provisions.
  I understand that it is very difficult, on principle, to bind the Crown Estates, but the Minister ought to think again and find a way in which the obligations which other freeholders are being asked to accept should be accepted by the Crown Commissioners as a matter of law and not just of convenience.
  If it is left as a matter of convenience, there will always be a doubt in the mind of a purchaser of a leasehold house from the leaseholder of the Crown Commissioners that the latter would be able to step in and thwart the right of enfranchisement, and that this would affect the leasehold price. I should like the Minister to reconsider this matter thoroughly.
  I have devoted very little time to a consideration of the speech of the right hon. Member for Altrincham and Sale (Mr. Barber), because I began to wonder during his speech whether he and I had lived in the same community all our lives and were fellow countrymen. I found no point of contact between his remarks and what I believe to be the feelings of the vast majority of people. He made great play with the fact that the law was being altered. It is, fundamentally so. But he cannot get it into his cranium that the ordinary people of Britain feel a deep-rooted sense of injustice about the existing law. That being so, the law must be altered to conform with what they believe to be a just situation.
  This is not a Socialist or minority view. It is the view of the overwhelming number of my constituents, most of whom have had direct personal experience of the operation of the leasehold laws. This is a fact of life from which the right hon. Member for Altrincham and Sale appears to be completely cut off.
  By far the most distinguished contribution from the benches opposite came from the hon. Member for Hornsey (Mr. Rossi), although my right hon. Friend

  1343
  should be wary of being distracted by his blandishments. After all, this is the best leasehold reform Measure we have and in view of the long history of frustration which movements to this end have undergone, my right hon. Friend should take his courage in both hands and drive straight through with the Bill—subject, of course, to accepting the suggestions which I have made for improving it.
  I listened with distress to the confession of the hon. Member for Hornsey that his house was outside the rateable value limit for enfranchisement under the Bill. I heard the same information being given by the right hon. Member for Kingston-upon-Thames, although I regret that, in view of his contribution, I did not feel the same distress as I felt for his hon. Friend the Member for Hornsey.
  Mr. Boyd-Carpenter: Does the hon. Gentleman mean that he would not support any Amendments such as his hon. Friends have been talking about to raise the limit?
  Mr. Moyle: I was coming to that and would say that if the hon. Member for Hornsey would do what the majority of the electorate has already done—and put his fate in our hands—he could rest assured that we would give him the right to enfranchise his house.
  7.23 p.m.
  Mr. Gwynfor Evans (Carmarthen): I am glad to be speaking following the helpful speech made by the hon. Member for Lewisham, North (Mr. Moyle), and I was pleased to note that he has some connection with the country with which I am most concerned. In that country we have been waiting for a very long time indeed for the alleviation of an old injustice, and, bearing in mind the length of time during which this social injustice has been continuing, it is fair to say we should have had this legislation not this year or last year but 20 years ago.
  It is some reflection on our constitutional position and political arrangements that this Measure was not introduced sooner. The injustices arising from the leasehold system have been more acutely felt in Wales than elsewhere in these islands. In Wales we have a widespread form of house-ownership. Over the years, our menfolk have built their own homes and the custom of owning one's own
  1344
  house is considered by everybody to be a good one. Home ownership strengthens family ties and it enables the home to be handed on to future generations and provides some independence in the face of the over-shadowing power of the State. The White Paper recognised, though not adequately, the injustice of the situation and stated that while the land belonged in equity to the landowner, the house belonged in equity to the occupying leaseholder.
  Contrary to what some hon. Members have said, I believe that this principle is eminently fair and reasonable and, as far as the Bill goes in sticking to this principle, I welcome it warmly; and if there is a Division tonight I will vote with the Government. However, it is disappointing to note that this principle is not actually written into the Bill and I feel that the courts will be able to disregard it.
  Even such provisions that are made in the Bill come too late for some of the areas where this injustice is felt most acutely; where contraction of old industries—something which has for long been foreseen—has been allowed to cause migration, unemployment and depopulation and where the Government have failed to secure condition to bring about alternative employment.
  Many hon. Members have recently been to the Rhondda. One cannot help being depressed as one moves through the valley streets and sees the vast number of houses lying empty and for sale. This is an area which has 9·1 per cent. unemployment. The population has fallen to just over half what it used to be in a very short space of time and people are still leaving at the rate of 800 a year. One wonders how much this Measure will do for leaseholders in this area. What is the value of the Bill when assets like this are declining so sharply? How can it be valuable to people on the dole who wish to buy their freeholds?
  We must recognise, however, that for those who are in a position to buy their freeholds the Bill will be of considerable help—but they will have to pay what is said to be a fair price and one must consider whether the basis of the compensation is fair. I gather that the price will be based on value of estate in fee simple, subject to a tenancy, but this

  1345
  appears to leave much to be desired because it follows that the longer the tenancy has to run the lower the price the tenant must pay for enfranchisement. Most of the leases in Wales were negotiated more than 40 years ago. In this situation, tenants will be at a grave disadvantage compared with newer areas which have been developed since the war, of which there are comparatively few in Wales.
  Where a tenant cannot afford to buy the freehold, the only alternative is to apply to a 50-year lease. That being so, let
  us consider the position. At any time after the granting of this 50-year extension the landlord may, at any time during the extended period or within 12 months before it begins, apply to the court for an order to resume possession for purposes of redevelopment. Thus, these leases could be terminated at any time during the 50-year period for the benefit of landlords. The Conservatives do not appear to have much room for complaint since this is as much a landlords' charter as it is a tenants' charter.
  Mr. E. Rowlands: The hon. Gentleman states that the lease could be terminated after it had been extended, the leaseholder having chosen to opt for the 50-year extension. Surely that extension is binding and cannot be terminated.
  Mr. Evans: I would be glad if the Minister would confirm that to be the case. I understand that if the property is required for redevelopment the steps I outlined could be taken. That is why this provision defeats the whole purpose of the Bill and there seems nothing to prevent speculative landlords from taking advantage of it.
  In areas where such large estates as Plymouth Estate and the places at which Western Ground Rents operate, one can at once see what a precarious provision the 50-year extended lease could be for the tenant. Perhaps even more important is the case of many estates where the price of the freehold of the properties, which are nearing the end of their terms of lease, will not be, say, five years plus 50 but, rather, five years with a likelihood that landlords will put in an application to the courts under Clause 17 to increase the price of the freehold. In that situation, therefore, I believe that the leaseholder may be unfairly expected to pay not only the price of the land
  1346
  but the development value also. As the Bill stands, all the landlord need do is to put in an application not more than 12 months before the end of the current lease and the value of the freehold to him will be virtually the value of the land with a lease of not more than 12 months left. That could be a way of getting more than a just price, yet the purpose of the Bill is to preserve the people's right to treat their house as their own.
  The Bill could also be a licence for extortion. In view of the age of many of the properties in Wales, the provision could be self-defeating unless radically amended—
  Mr. Hooson: There is substance in what the hon. Gentleman says, but would not his point be met if instead of having an option of enfranchisement or the extension to a 50 years lease there was a simple provision for enfranchisement of the leasehold?
  Mr. Evans: That may be so; it is largely a matter of drafting to see how that end could be reached. I doubt very much whether it is in the mind of the Government to allow that situation to exist.
  The Bill provides another way for big landlords to exploit tenants. Clause 9(3) provides that the interest of the landlord in neighbouring property shall be taken into account in assessing the price payable. The site value, if it is to be fair to tenants, should be its value for housing untrammelled by other considerations. Again, Clause 15(2) can cause widespread concern in Wales if its purport becomes known, because it is too favourable to ground landlords and the larger property companies. The new ground rent is to be the letting value of the site. In areas where the economy is declining that provision can have little meaning, but in areas where there is development of town centres—Cardiff, Newport, Barry, Swansea, Merthyr Tydfil, Llanelli, and others—will the leaseholders be charged a ground rent based on the site value for office, commercial or industrial development? If that is so, could not that rent be prohibitive? Consideration of this point in Committee may lead to some adequate amendment.

  1347
  If my interpretation is right, it seems possible that there is one law for the private landlord and another—
  The Secretary of State for Wales (Mr. Cledwyn Hughes): The hon. Member is wrong in what he has just said about Clause 15. I would ask him to look more carefully at subsection (2,a) of that Clause. He must study the Bill more carefully before making these sweeping statements.
  Mr. Evans: The Minister will be able to reply later.
  As I see it, there appears to be one law for the private landlord and another for the public landlord, and this question crops up in connection with the Bill's application to local authorities and new town corporations. The 21-year lease has been mentioned, and one knows that the wording of the Bill may possibly exclude local authorities because under the Local Government Act, 1933, a local authority is prohibited from granting a lease in excess of 21 years. Perhaps the Minister will comment on that side. I should be glad of an assurance that leases granted by local authorities since 1933 are not outside the purview of the Bill. It appears from the wording that they may be, but—
  Mr. Alan Williams (Swansea, West): To the best of my knowledge that is not so, because the authorities in Wales are at present, as ground landlords, giving leases for 99 years.
  Mr. Evans: There is the point that even in the case of leases made since 1933 the right of enfranchisement is restricted by the power given to local authorities to say that the property will shortly be required for development. These are points to be looked at from the standpoint of the tenant to see whether this Measure can be so amended as to ensure adequate treatment of the present situation in Wales.
  7.35 p.m.
  Mr. Ednyfed Hudson Davies (Conway): We are considering the Second Reading of a Bill that will remove not only an injustice but an iniquity. This is a moral measure as well as a legislative one. The Government are fulfilling a pledge and this is a very proud day for many hon. Members who have for several decades
  1348
  been working hard to this end. I am delighted to see some of them on the Government Front Bench. They are to be congratulated on their work.
  Leaseholds have to a very considerable extent been a Welsh problem and we should pay some tribute to the Western Mail and the Liverpool Daily Post for their very devoted efforts in agitating for reform.
  The Minister of State for Commonwealth Affairs (Mr. George Thomas): And the South Wales Echo.
  Mr. Davies: Yes. I thank my hon. Friend for that addition.
  It is most appropriate that my right hon. Friend the Secretary of State for Wales, who has been involved in the preparation of the Bill will wind up this debate.
  I want to go back to a speech made by David Lloyd George part of whose constituency I now have the honour to represent. He made it several years before he was elected to Parliament in 1890, while addressing the Caernarvon County Council. He was advocating leasehold enfranchisement then and urged its adoption on the grounds that it was not a question that affected one political party but the community at large.
  He said that Caernarvonshire is as badly affected as any part of Britain and he pointed out, to illustrate the urgency of the problem, that the whole of the town of Port Madoc was built on leases of only 60 years and that the majority of the houses had been built by workmen for themselves.
  "Yet as a result of the present iniquitous system all the fruits of their initiative and enterprise will fall into the lap of the ground landlords who have not spent one penny piece on the property. The whole system is nothing short of legalised robbery."
  That speech was made nearly 80 years ago but it could equally appropriately have been made in this House today, because that condition of legalised robbery has continued up till now.
  I do not want to go into details or examples, but when I intervened earlier, the hon. Member for Birmingham, Hall Green (Mr. Eyre) seemed to take objection to my mentioning that in some cases the land owners had in the first place acquired the land at no expense at all to

  1349
  themselves through Acts of Enclosure. I have one such example in my constituency, where almost half the whole town of Llandudno was built on such land. After an Act of Enclosure in 1843, 957 acres of common
  land were acquired by the freehold parishioners of the parishes of Eglwysrhos, Llandudno and Llangwstennin. What most of the parishioners did not recognise at the time was that the share of common land that they would get would he in proportion to the amount of land they owned within those parishes. As a result, the prime movers in the enclosure—and Lloyd Mostyn was Member of Parliament for Flint at that time—the Mostyn family, acquired 832 acres of the total 957 acres, since the Mostyns were the largest landowners.
  Mr. George Thomas: What was his party?
  Mr. Davies: They then had the problem of what to do with the land they had acquired. It was relatively valueless as it was then, a good deal of it being marsh ground. Eventually, of course, it became the land on which the town of Llandudno was built. This was the time of the development of seaside resorts. When the sale of the land first began in 1849, it was the intention initially that it should be sold outright, but the agent of the Mostyn family firmly advocated that the land should be disposed of leasehold and not freehold.
  The researches of a journalist and local historian of Llandudno, Ivor Wynne Jones, have failed to reveal that there was at that time any intention to benefit from acquiring property at the end of the period of lease. There was a down payment and a rental over 75 years and it seems that the estate at that time would have been content with this. However, the estate was managed by a succession of shrewd agents, and the terms on which further leases were granted were tightened up considerably. In some cases, for example, it was stipulated that if there were to be any alterations to property built on the land the plans for such alterations should be drawn up by the estate and payment made to the estate for them. It was also stipulated that fire insurance should be taken out only with an insurance company for which the estate was agent. The owners were getting it every way.
  1350
  The leases were initially for 75 years, as I have said, and then for 99 years and in some cases 999 years. Many have been expiring in recent years, and outrageous sums have been asked for the freehold, with the result that householders have had to negotiate extensions of lease on terms which were most unjust and unfavourable for them.
  There is an instance which should
  be mentioned and it will be well known to many hon. Members. It has nothing to specifically with domestic property, but it is an example which clearly shows the attitude of many landlords. There was a chapel, the English Baptist Chapel of Zion, in Llandudno built on leasehold land. The lease expired. The chapel trustees found it very easy—they were quite surprised—to renew their lease for a short period on apparently quite favourable terms. But, at the end of the short period of extension, there was no reprieve and they found that, by the short extension which they had accepted, they had disqualified themselves from certain protection which they would previously have had as trustees of a place of worship.
  That extension of lease expired on Christmas Day 1965. The members of the chapel were not allowed to enter to conduct their Christmas or New Year services in the chapel. They were locked out and within a few days the benches were being taken out of the chapel so that it could be converted into office property.
  That is the kind of thing which has been happening under the existing law based on the principle that when someone leases land for a period, at the end of the period he gets back not only the land but the property built on it as well. It is that principle which is attacked by the Bill, and that is why I welcome it. I welcome particularly that the Bill is retrospective to 8th December, 1964 the date on which it was first announced that a Bill would be introduced.
  I am a little unhappy about some of the exclusions. I am not very happy that the Bill's provisions are confined to domestic properties. If we accept the principle that, at the end of the period of lease, the landowner has a right only to the land and not to the property built on the land, I do not see why the principle

  1351
  should vary according to the kind of property built on the land. I very much hope that the Minister will look carefully into the question again.
  Like several of my hon. Friends, I am somewhat unhappy also about the rather arbitrary limits of £200 rateable value in the Provinces and £400 in London. If we accept the principle, I do not see why any limit should be set in that way. The same applies to flats. I take the point that there are difficulties in the case of flats and maisonettes which make it inconvenient to include these properties in the present Bill. This Bill is designed to tackle the most serious problem first, but it is important to bear in mind that the problem of flats and maisonettes will also have to be tackled. When the Government act on the Wilberforce Report on Positive Covenants, that will be an excellent opportunity for dealing with this other problem and I very much hope that this is done.
  The Bill is perfectly fair to ground landlords. At the end of the period of lease, they will have a return on the current value of the land, not its original value but its value now, a value which may have become inflated not by any action of theirs but by the growth which has taken place in the area and by what society has added to it. Their just claims are fully taken into account in the Bill.
  I remember having to speak on this issue several times during the last election campaign, and phrases which were used then, and which I attacked, were used again today by the right hon. Member for Altrincham and Sale (Mr. Barber) in his opening speech. It was said that the Conservative Party advocated reform based on the principle that people should be able to buy or rent their own houses for a fair price or at a fair rent. There is no such thing as a fair rent or a fair price for a house which is already one's own. That phrase is iniquitous, yet it is still used in the House, and hon. Members opposite unashamedly speak of a fair price or a fair rent for property which is already a man's own.
  I very much hope that the Opposition will not have the effrontery to divide on the Bill tonight. If they do, they will most certainly lose face in the country in a way in which they have seldom done on any issue before.
  7.47 p.m.
  Mr. Reginald Eyre (Birmingham, Hall Green): The hon. Member for Conway (Mr. Ednyfed Hudson Davies) made a strong case with his historical description of the acquisition of common land near Llandudno. Perhaps one may point out that the leaseholders who subsequently came to occupy those lands and conducted prosperous boarding houses there provided very happy holidays for hundreds of people from Birmingham, and they succeeded in making quite a decent profit out of providing that service.
  Almost everyone with a practical working knowledge of the leasehold system as operated in Birmingham and other areas about which we have heard favour a proper and responsible measure of enfranchisement. Here I should declare an interest as a solicitor and as a director of companies holding both leasehold and freehold properties.
  The argument most strongly advanced against leasehold enfranchisement is that based on sanctity of contract. I have a good deal of respect for the principle of sanctity of contract, but I feel that it can be applied and imposed in pure and undiluted form only where the parties to the contract have had a full and free choice as to the nature and extent of the contract into which they have entered. It must be recognised that no such free choice has been available to thousands of leasehold home owners in the Birmingham area and elsewhere because in many such districts the would-be owner-occupier has had no practical choice but to buy a leasehold house in order to provide a home for his family.
  That being the situation, we have to bear in mind the difficulties which have arisen in leasehold home ownership. Many of those difficulties have been mentioned in the debate today. The first is that leasehold homes begin to decline in value as the remaining period of lease falls below 60 years.
  Secondly, when the unexpired portion of the lease comes down under 40 years, leasehold houses become very difficult to mortgage and sales and transfers are hampered. In industrial areas that considerably hinders the widespread acceptance of another very important principle, namely, the encouragement of home ownership. A serious problem is developing in parts of Birmingham and

  1353
  other industrial cities. In districts such as Small Heath and Alum Rock in Birmingham, houses that are good for many years of life are being neglected because the leases have fallen below 30 years unexpired. Therefore, there are falling standards of housing which could be avoided.
  For all those reasons, I strongly favour reform. But in all cases the freeholder can and should be adequately and fairly compensated for the loss of his investment. It is precisely on that ground that I fall out with the terms of the Bill, because it cannot be right or honest to deprive a freeholder of his estate without proper compensation. I am compelled to deny the validity of the "bricks and mortar" argument of the Minister. It is a plausible theory, and it is certainly votewinning, but I am convinced that examined against the facts it is unjust.
  To try to establish that, I want to
  quote just one example from my own knowledge. Some years ago a relative of mine in Birmingham bought a fairly substantial leasehold dwelling house which had a
  lease of 28 years unexpired. The price was pretty low because of the difficulty of sale which I have mentioned. It was the equivalent of about one-quarter of the cost of building a similar property at that time. Now the lease of the property has been reduced to about 12 years and under the Minister's formula the leaseholder will be entitled to buy the freehold quite cheaply, with the result that the present value of the house will immediately be trebled. That is a considerable bonus to be immediately handed to the enfranchising leaseholder. The owner-occupier will make a considerable profit at the expense of the freeholder.
  Anxious as I am to see people fully owning their own houses, that principle is obviously not right or just. It cannot be right or equitable to use the power of the law in that way. With fag-end leases such as I have described, the Robin Hood bonus given to one citizen at the expense of another will be considerable.
  In any event, in thousands of cases where the leases are longer, and the immediate bonus will not be so great, it will be as though the Government had taken £50 or £60 out of one man's pocket and transferred it to the pocket of another. That doctrine may be popular with some who benefit this time, but the
  1354
  principle is ugly and could later be used to undermine the rights of small individuals everywhere.
  Looking ahead, I think that there are sound and practical reasons why the temptation of that aspect of the Bill should be resisted. Under the terms of the Bill, the Land Commission again rears its head. It is made clear that on the sale of the freehold the levy will be payable on the underlying development value of the site upon which the enfranchised house stands. Ministers and the population in general will be surprised by the number of transactions in which development value will exist and where the levy will be payable. The Minister has quoted 10 or sometimes 15 per cent. as the percentage of private house transactions that will be affected. But I think that he will find that the percentage where development value exists and levy will be chargeable is higher.
  The freehold will be acquired by the occupying leaseholder on the basis of nominal compensation, but the payment of the levy will be calculated on the basis of the full market value of development relative to the freehold reversion at that date. There is immediately a conflict. There is nominal compensation for the freeholder, but a market value calculation of some kind in respect of the Land Commission.
  Remembering the Land Commission's very wide powers of compulsory acquisition, we should insist on full compensation in all transactions where there is compulsory acquisition by the Land Commission or local authorities. If we think that that is right in principle in that kind of transaction, we should not accept a breach of the principle in this Bill. If we do not stick to principle, in time owner-occupiers may find themselves riding on a Land Commission tiger.
  Fair compensation should always be payable in all land transactions, and the Bill fails to measure up to that standard. I was very attracted by the argument of my hon. Friend the Member for Hornsey (Mr. Rossi) in his second alternative, when he suggested that the price paid to the freeholder should be related to the price paid and should be examined and made good against the historical fall in the value of money because that would

  1355
  be a way of calculating compensation which, it could not be denied, would be fair. It would avoid the almost theological dispute as to the way in which we are to calculate the value of freehold reversions.
  Despite what the hon. Member for Conway said, the present-day function of freeholders cannot be brushed aside. It is not a matter of just getting hold of marshland and making it available for development. One of the consequences of inadequate compensation to freeholders will be that no new housing development will be carried out on a leasehold basis. Therefore, new house prices are bound to increase in the Midlands by £200 or £300, or even more in certain circumstances. That consequence will be immediate, because no part of the land cost will be carried by the freeholder as in the past.
  The proposals for future management of comprehensively managed estates put forward by the Minister are imaginative, but I fear that they will be unworkable. In those circumstances, the problems of the good quality estates will be better met by the 50-year extension only.
  I hope that the Minister will seriously reconsider the limitation on the right to enfranchise. It seems an unnecessary restriction to limit it to £400 rateable value in London and £200 in the provinces. There will be some startling cases of hardship near the boundary of London where one house with a rateable value of £390 will be entitled to enfranchisement and just across the road another house with a rateable value of £210 will be deprived of the enfranchisement by that rather false ruling. False distinctions between neighbours should be avoided. I therefore hope that the Minister will wipe out that unjustifiable distinction and extend the Bill's operation without limitation by reference to rateable value.
  8.0 p.m.
  Mr. Julius Silverman (Birmingham, Aston): I am glad to follow the hon. Member for Birmingham, Hall Green (Mr. Eyre), because he began by outlining Birmingham's problem in franchise and leasehold reform. He recognises that there is a problem and in that respect I support his argument. In my
  1356
  constituency and in other parts of Birmingham there are many thousands of leasehold houses.
  The problem arises, as the hon. Gentleman said, over the "fag-end" of a lease. As the hon. Member for Hornsey (Mr. Rossi) said, there are two aspects. The first is when the lease comes to an end. The second is when it reaches the 30-year stage—the period remaining. There are a large number of houses like that in Birmingham. I agree that not many of the leases in Birmingham are coming to an end, as is the position in Wales, but a large number have a residue of about 30 years to run.
  The problem here is that such a house becomes unsaleable except at a very low figure. This is not because of the increased value of the reversion but because of the difficulty of getting a mortgage for such a limited period. The consequence is that the leaseholder finds himself in possession of a wasting asset which cannot be sold. That is not only bad for him but is bad for public policy as a whole, because, if houses are unsaleable, twin evils arise—we do not get the mobility of labour through the mobility of house occupiers and we tend to get a perpetuation of under-occupation because an owner often has to live in a house which is too large because there is no prospect of selling it.
  The Bill will remedy both these evils to a very large extent and on behalf of thousands of Birmingham leaseholders I welcome it. I cannot agree with the hon. Member for Birmingham, Hall Green on the issue of compensation. I believe that the compensation provided for in the Bill is fair. But what is fair compensation? One will never get complete agreement between a freeholder and a leaseholder. No doubt the freeholder who is unable to exact everything that he could exact in a market that is entirely in his favour will consider that he is being deprived of his rights. This is where we get the word "confiscation" being used in the Amendment. But it is nothing of the sort.
  Let us take the case mentioned by the hon. Member for Birmingham, Hall Green—that of a property bought at about one-quarter of its value. It means also that it was sold at one-quarter of its value. Why? It was not because the reversion was worth three-quarters of the

  1357
  value. The cause of the difficulty lay in getting a mortgage. The fact that the owner-occupier—the leaseholder—gets a windfall does not necessarily mean, however, that the landlord is being deprived of a similar amount of money or that he is being treated unjustly. Under the present system, when the 30-year period is reached, the leaseholder sees his asset wasting but it does not necessarily follow that the landowner's asset is appreciating to the same extent.
  Mr. Eyre: The point I was trying to make was really in reply to the Minister of State's assertion that one should look historically at the course of the lease. One of the consequences of that is that the leaseholder—the purchaser—did get a bargain. This should be borne in mind in determining what is fair compensation at the end of the lease.
  Mr. Silverman: I do not think the same applies to the historical argument. My right hon. Friend was dealing with long leases, such as those in South Wales, which are now expiring. There, one goes back to the history of how the property was built, the circumstances of the time, how it has probably been in the same family for generations, and so on. I do not think that one can always apply an historical basis to this subject. Therefore, we have to determine what is a fair value, and I believe that the basis for leasehold properties as set out by the Bill is fair. Bearing in mind that we do not wish a leaseholder to be deprived of his right to obtain a saleable property, the price is fair, assuming that both parties should be in an equal position to negotiate—which, unfortunately, they are not.
  Certainly, as far as Birmingham leasehold properties are concerned, there is no element of confiscation here in the real sense, except, of course, always that the person who does not get his pound of flesh out of the market probably does not think that he is getting fair compensation. But I do not accept that. On the other hand, it can be a windfall to the tenant. But what about that? Not only is it a windfall to the tenant but I am sure that it is in the interests of public policy. It will benefit thousands of my constituents and many others in Birmingham and I therefore welcome the Bill and hope that the basis of compensation set out will be maintained.
  8.7 p.m.
  Mr. Harold Gurden (Birmingham, Selly Oak): It is appropriate that a number of Welsh and Birmingham hon. Members should be taking part in the debate. A very large number of properties in Birmingham are under leasehold, just as many properties in Wales are.
  I am pleased that the Government have introduced this Bill. I had a fear at one stage that it might go the way of many other promises by the Labour Party, but I congratulate the Government on bringing in the Bill. I am delighted that it is here, although I disagree with some of the provisions. We have now reached the stage in this long-drawn-out argument over so many years that those of us who want to see this reform will accept almost anything in the form of a Bill in this direction.
  Nevertheless, it is a fair criticism that the Bill is not right in many respects and ought to be adjusted in Standing Committee. The opponents of the Bill are worried by the breach of the sanctity of contract and the confiscatory provisions, as they have called them. Certainly, to some extent, these things worry me but I agree with those who have said that we cannot have this reform without some injustice. That is a fair view. It has been said from both sides. Nevertheless, it is worrying when one sees so much legislation being introduced which breaches fair contracts which have been made between people.
  I certainly would not vote against the Bill, although I hope that some of these provisions will be put right. I would not vote against it because, ever since I came here, I have pledged my constituents that I would support leasehold reform, and I was glad to take part in discussions that led to my party giving the same pledge. I would also not vote against the Bill because, clearly, the Conservative Party is pledged to encourage home ownership and there certainly could not be proper home ownership without leasehold reform. Home ownership must mean freehold. How else in places like Wales and Birmingham could a person be a home owner unless such a Bill is brought in? It is unfortunate that there is a predominance of leasehold property in certain areas, particularly Birmingham.
  If there were the opportunity for people to choose between freehold or leasehold,

  1359
  then the case for the Bill would be weakened. There is nothing wrong with the right to let, either weekly, monthly or yearly tenancies or by agreements for 99 years. What is wrong is that the would-be home owner has had no option but to take leaseholds in certain areas. What is questionable is the Socialist Party's intention to provide the opportunity for true freehold home ownership for all. The Birmingham City Council have followed this principle of giving everyone the opportunity, including municipal tenants, to become home owners in the real sense. At present the Socialist Party on Birmingham City Council are opposed to this and are trying to stop it.
  Mr. Julius Silverman: The hon. Gentleman surely knows that the case of the Socialist Party on the City Council is that these sales will prejudice the position of people on the housing register and that the homeless "Cathy's" and others will have to wait for a much longer period for houses on the register if these houses are sold.
  Mr. Gurden: The hon. Gentleman always puts up this case, but I do not accept it and the argument goes on. What is quite clear, and what he has not refuted is the fact that these people are prevented from becoming home owners in Birmingham, and I understand that this has the support of Socialist Members of Parliament. This cuts right across what has been said today, that the Socialist Party are trying to help people to become real home owners. I do not accept that this is what they want.
  What causes this trouble about leasehold versus freehold is the shortage of houses. Here we shall have to recognise, sooner or later, that the shortage of houses is mainly caused by control. So long as we perpetuate the amount of controls that we have, and certainly rent control, we shall have this shortage. One does not have to show in detail how this works out, because one can see how controls of any sort affect supply and demand.
  I want to turn to a Clause of the Bill which I think is very wrong. Several Members on both sides of the House have objected to this £200 and £400 limit on the rateable value. If I thought that the
  1360
  Government would adjust this I would be very happy, and even consider voting for the Bill, because this is a very serious point. This and another provision are extremely important. I cannot believe that the Government will give way on this. They have specifically put into this Bill this arbitrary figure bearing no relationship to the principle.
  The Minister of State, Welsh Office (Mrs. Eirene White): Perhaps the hon. Gentleman heard my right hon. Friend say that this was a matter which perhaps deserved further consideration?
  Mr. Gurden: I am very pleased that the Minister has intervened, because those of us who watch the progress of Standing Committees must recognise that the Government do not give way. They make all sorts of pleasant noises, but when it comes to the crunch, they will not give way. Out comes the Whip to get the hounds into the pen.
  Mr. Barber: The hon. Lady has made a very important statement which will affect the value of much property in this country. I should like to be absolutely clear. Is she saying that the Government are seriously considering extending the limits beyond £200 and £400? This is very important.
  Mrs. White: My right hon. Friend said at an earlier stage of the debate that this was a matter which should be further examined. He gave no commitments. I want that to be clear.
  Mr. Gurden: This is a purely political move. This Clause is inserted purely to suit the Socialist Party, the idea being that there must be more people living in houses which have a rateable value of £200 who would be more likely to vote for the Socialists. There cannot be any other intention, however one looks at this. There is no other logical explanation. I am sorry that the Government have put this in and it is one of the main reasons why I will not vote for the Bill tonight.
  I want to deal with provision for the maintenance of a decent estate. How can covenants be properly enforced? Within my constituency, leaseholders have been allowed to buy the freehold, some of them many years ago. We see the difficulty, almost weekly, of people trying to enforce these covenants against their

  1361
  neighbours. It is practically impossible and often means expensive litigation, for which people are not prepared to pay. I see no provision in the Bill for the protection of an estate and its amenities.
  I have only to give the example of the Bournville Estate to gain agreement on both sides of the House. Supposing that people in Bournville were allowed to buy their freeholds. We should soon see the beginning of the end, and the beginning of a slum area. There is a provision for the Minister to determine whether a wellmaintained estate may remain on a leasehold basis, but this does not go far enough.
  There are many very small areas with probably a dozen or two houses or just a few streets, which need to be protected or else they would begin to be slums. This is another reason why I cannot vote for the Bill tonight, but I would certainly not vote against the Bill giving us leasehold reform. It is very desirable in Birmingham and I know that many of my hon. and right hon. Friends feel the same way.
  8.20 p.m.
  Mr. David Weitzman (Stoke Newington and Hackney, North): For many years leasehold reform has been an important plank in the Labour Party's electoral programme. In his statement on 8th December, 1964, the Leader of the House, then Minister of Housing and Local Government, announced the Government's intention to introduce legislation and, in particular, promised to protect leaseholders whose lease expired after 8th December that year. That promise is, I am glad to say, redeemed in the Bill.
  The need for reform has been recognised for many years. In opening the discussion on 28th February, 1966, on the White Paper, which was the prelude to the Bill, the Minister reviewed the position over the years and he quoted from the supplementary Report of Cardinal Manning as long ago as 1884. It may he important to remember the words which were quoted:
  "…legislation favourable to the acquisition on equitable terms of the freehold interest on the part of the leaseholder would conduce greatly to the improvement of the dwellings of the people of this country."—[OFFICIAL REPORT, 28th February, 1966; Vol. 725, c. 904.]
  I am sorry that my hon. Friend the Member for Birmingham, Small Heath
  1362
  (Mr. Denis Howell) has departed, because on 7th December, 1962, he introduced a Bill for leasehold reform and the then Conservative Government through the right hon. Member for Leeds, North-East (Sir K. Joseph), who was then Minister of Housing and Local Government, opposed it on the ground that there was sufficient portection for leaseholders on the expiration of their leases in the Landlord and Tenant Act, 1954. It is true that the right hon. Gentleman went on to say that compulsory enfranchisement could be considered only on the basis of market value and—I ask the House to note these words—only when the landlord did not want to develop.
  We discussed the White Paper on 28th February, 1966, when the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who spoke today as a back bench Member, reiterated that policy. Today the right hon. Member for Altrincham and Sale (Mr. Barber) said that the Government's White Paper had been put forward before an election. I remind him that his party did not have the guts to go into the Lobby and vote against the White Paper, which was the prelude to the Bill. Was that because it was afraid that the electors might know what its attitude was?
  That there is a necessity for some measure of reform is clearly beyond doubt. Even the hon. Member for Hornsey (Mr. Rossi) and other hon. Members on the side opposite have agreed with that. The debate has been monopolised by voices from Wales and Birmingham. The voice of London should also be heard, because the problem in London is acute. I know that the hon. Member for Hornsey put his side of the case.
  Mr. Rossi: I am a London Member who has spoken.
  Mr. Weitzman: I recognise that the hon. Gentleman represents a London constituency. With respect, I represent a much more important part of London.
  Mr. Rossi: Oh, yes?
  Mr. Weitzman: In the area of Finsbury Park, which is very close to the hon. Member's constituency, there are many hundreds of houses, whose occupants hold the remainder of a 99-year lease, in which exactly the conditions described

  1363
  by the Minister exist. Houses have been built, maintained and improved by the lessee, and all the ground landlord has has done is to receive regularly his ground rent, and, but for legislation, he would be entitled at the end of the lease to turn out the lessee and his family of what is rightly regarded as the family home and to take possession.
  It is manifestly unjust—and I do not think that anybody could disagree with this statement—that a landlord should be entitled, at the end of a lease, to assume possession, free of charge, of all the buildings and improvements created wholly by and at the cost of a succession of lessees irrespective of the value of those buildings and improvements. Obviously that was the state of affairs which provided a strong incentive to people to neglect the maintenance of the property, particularly over the last few years, and must inevitably lead to the creation of slum property.
  Many attempts were made to remedy that situation. It is interesting to recall that in one of the debates on a Bill for leasehold enfranchisement it was argued by its supporters that enfranchisement would give small proprietors an interest in maintaining and improving their holdings, would encourage in them a sense of domestic and civic responsibility and—mark these words—would remove a powerful stimulus to Socialism and conditions likely to bring about revolution.
  Perhaps that commends itself to right hon. and hon. Members opposite in support of the Bill. For the Conservative Party, the objection then was—and I hope that the right hon. Member for Altrincham and Sale will listen to this—that it was wrong in principle to interfere with the free exercise and development of capital and property. Even the Conservative Party has moved a long way from the enunciation of that principle. It recognised the obvious injustice and sought to allay it by the provisions of Part I of the 1954 Act.
  But clearly that was no solution to the problem. When the right hon. Member for Kingston-upon-Thames was speaking, I made an intervention. He was talking about cases in which people obtained leases, together with buildings, and paid something for them. It was suggested that there was injustice. He said that this
  1364
  was wrong and that there was an element of confiscation in what we were doing. If what we are doing is wrong, what the Conservative Party did in 1954 was wrong on the same principle because in recognition of the injustice it attempted to allay it by the provisions of the 1954 Act.
  My right hon. Friend the Minister has referred to what has happened to the value of properties and how their value has been reduced. The point is that there was no general security of tenure under the 1954 Act. The lessee who previously paid a small ground rent—£5 a year or a nominal sum—was called upon to pay for his own house, which he had maintained and improved, a market rent which often he could not afford to pay. He still remained liable for dilapidations. Even the Opposition now recognise that that is not good enough and they have moved from that position.
  My hon. Friend the Member for Leicester, North-West (Sir B. Janner) said something about the attitude of the Tories being the same as it always was. It is not. Even the Tories changed—[An HON. MEMBER: "Not much."]—from their declaration by the passing of the 1954 Act that it was a question of the protection of capital and property. Now, they recognise that the 1954 Act is not sufficient.
  The view of the Tories was expressed by the right hon. Member for Kingston-upon-Thames when he gave their policy on 28th February a year ago. This represents the advance which the Tories have made. The right hon. Gentleman said:
  "We therefore think it right to build on these past policies of ours, and to go further."
  That shows movement.
  "We think that the ground leaseholders occupying residential property towards the end of his lease, where the landlord has no definite plans to redevelop or to occupy himself, should be given the option either of a lease at a rent fixed by the courts or to buy the property at a fair market price."—[OFFICIAL REPORT, 28th February, 1966; Vol. 725, c. 926.]
  That shows how the Opposition have advanced. They do not now attempt to set out the long-exploded argument about the sanctity of contract. That has clearly gone. It has gone in the legislation of the Rent Act and of the Moneylenders Act, which show that sanctity of contract is not a basis which can be put forward. The

  1365
  public good must override it. Nor do the Tories now put forward the last-ditch argument about sacred rights of capital and property. That has gone.
  The Opposition agree that there should be a right to a lease or a right to enfranchisement. It is true that they would make it subject to the landlord having no definite plans to redevelop or to occupy the property himself. The Bill gives the landlord the right to resist a claim for enfranchisement or extension of lease on the ground that the house is for his own occupation and that he would suffer greater hardship if he did not have it. There are provisions in the Bill which preserve the benefits of comprehensive estate management.
  What, therefore, is the objection by the Opposition on which they will divide against the Bill? It presumably relates to the terms of compensation. The Opposition say that enfranchisement should be at a fair market price. We agree. Certainly, it should be at a fair market price, but a fair market price for what? There have been many attempts to find a reasonable basis for the purchase of the freehold. I think that the Government have chosen a very good one.
  As my right hon. Friend the Minister has said, clearly, in the way that leasehold property has developed, the land belongs in equity to the land owner and the house belongs to the occupying leaseholder, who has built the house and maintained and improved it. The landlord is entitled to a fair market price, but he is entitled to that fair market price for the land and for nothing more.
  Similarly, if a lease is granted for 50 years, the landlord is entitled to a fair market ground rent for the land, disregarding the building upon it. It follows, therefore, that if a landlord defeats a claim for enfranchisement, he should pay compensation to the tenant by way of a fair market price for the building upon it. This is a simple, logical and fair way of doing it.
  For the right hon. Member for Altrincham and Sale to sit there and grin about this and, after one has thought about the history of the Tory Party and the way that they have gone from stage to stage driven by the logic of events to give in, to talk now about confiscation is about the most ridiculous thing I have ever known.
  Mr. Barber: The reason why I was laughing was because at that very moment I was reading the headlines from The Times,
  "This is bluntly confiscation",
  and from the Financial Times,
  "However much the Government dislikes private landlords, it cannot pretend that it is just to confiscate their property."
  [HON. MEMBERS: "Speech."] Be quiet. Stop yapping. This is not only my view. It is also the view of many people who try to look at the matter objectively.
  Mr. Weitzman: The right hon. Gentleman is in very good company, having a couple of papers which support him. I could give a number which do not support him.
  Mr. Barber: Name one.
  Mr. Weitzman: I could name a good many. Let not the right hon. Gentleman read out from newspapers paragraphs or headings. Let him face the logic of the matter. After all, he has been a prominent member of the Tory Party for many years, during which time I have had the pleasure of seeing him across the Floor of the House putting forward views with which I strongly disagree. He is a nice, reasonable, cheerful individual, but he must look at the position logically. To say that this is confiscation is ridiculous.
  I have pointed out the logic of the matter and the way in which the Tory Party has moved step by step to a recognition of the fact that the injustices which the 1954 Act attempted to cure have not been removed. It has not allayed the position at all. Instead, it has made it worse. They themselves have recognised it and moved further from it.
  As I understand it, they agree that there should be leasehold enfranchisement or the grant of a new lease. I agree entirely that it should be on the terms of a fair market price, but a fair market price for the land to the landlord in the case of enfranchisement, and a fair market ground rent to a lessee on the grant of a lease. Viewed from that standpoint, it is quite unanswerable.
  There are two further points which I want to refer to shortly. As I read the Bill, if a leaseholder opts for a lease of 50 years, he has no right thereafter to

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  claim enfranchisement. I do not understand that. I do not see why he should not have a claim thereafter.
  Secondly, I note that, in accordance with their promise, the Government have given the right of enfranchisement in the case of a lease expiring after 8th December, 1964, where the lessee has remained in possession. I know that there must be some limit, but there are many leaseholders with leases which expired before that date who became statutory tenants under the 1954 Act. They have suffered an injustice, and I hope that perhaps in Committee further consideration will be given to their position.
  I welcome the opportunity which the Government have taken in the Bill to close the gap where, by creating a tenancy of 22 years at a rack rent, a landlord was able to escape the provisions of the 1965 Rent Act. I am particularly pleased about that, because such tenancies were created in my constituency, and I was able to bring them to the attention of the Minister. I am glad that that position has been rectified.
  I welcome the Bill and I hope that it will have a speedy passage on to the Statute Book.
  8.37 p.m.
  Mr. Martin Maddan (Hove): It may be welcome to hon. Members if I strike out over rather different territory and in a different direction from that followed by other right hon. and hon. Gentlemen who have spoken. However, before I do that, I should like to address a few comments to the major proposition in the Bill as a whole.
  Perhaps I might start by saying that I am a leaseholder in London, and I find that considerable benefits arise from being a leaseholder in that the landlord who manages the estate requires every leaseholder to maintain very good standards. I recommended my hon. Friend the Member for Birmingham, Selly Oak (Mr. Gurden) to become a neighbour of mine—I told him I would refer to this—and I might not have done that had I known that he would be able to buy his own freehold and no longer be required to observe the regulations imposed by the landlord.
  The fact is that there are well-managed estates where the leasehold system im-
  1368
  proves the quality and standard of the property. There are also badly managed estates where the leasehold system causes them to deteriorate and become slums. One of the problems which the right hon. Gentleman has had to face in drafting the Bill—and it is a problem which he has not solved—is how to differentiate effectively between different types of estate, though I appreciate that he has made an effort under Clause 19.
  I now pass on to the new terrain which I promised, and I should like right hon. and hon. Members to consider a landlord who has always adhered to and perhaps pioneered the principle that the land belongs to the landlord and the bricks and mortar belong to the lessee. In cases of estates of that character, this Bill is really completely irrelevant, because they have always worked on the basis which the right hon. Gentleman says he now wants to impose on other leasehold estates.
  Mr. Willey: In the case of Letchworth, which I believe the hon. Gentleman may have in mind, he ought not to use the word "always". It was necessary to intervene by legislation.
  Mr. Maddan: The right hon. Gentleman is quite right that it was necessary to intervene by legislation in the case of Letchworth, but that legislation was timely and the principle was maintained, and has been maintained, since the inception of that garden city in 1903. It is not right that, without discrimination, all leasehold estates should be covered by the terms of the Bill.
  The right hon. Gentleman mentioned Letchworth and, looking around the House, I see many hon. Members who were not here in 1962 when we dealt with the legislation to which he referred. I was at that time the hon. Member for Hitchin. I propose to read from the Letchworth Garden City Corporation Act, a handsomely bound volume which was presented to me by the Letchworth Urban District Council. In the purposes of the statutory Corporation which now manages
  the Letchworth estate, there is enshrined, in Section 11, the principles on which this estate has always been managed. It says that it is to be managed
  "as an entity in accordance with the principles upon which the Letchworth Garden City was founded and has been managed until the end

  1369
  of the year nineteen hundred and sixty and, in particular, in the extension or renewal of ground leases, shall have regard only to the increased value of the land clear of the buildings (if any) situated on the land and of any improvements to the surface made by the lessee."
  That is a little better than the principle of the right hon. Gentleman, because it includes improvements to the surface of the land which, as someone said, should be taken into account. Therefore in such cases it seems inappropriate for the provisions of the present Bill to apply.
  The founders of Letchworth Garden City
  were inspired by Ebenezer Howard who wrote a book called "Garden Cities of Tomorrow", which was published about 1894. What he wanted to do was to deal with some of the problems which hon. Members on both sides of the House at that time saw arising from abuses of the leasehold system, and his venture, which saw the light of day when a company was incorporated in 1903, was supported by many distinguished members of the Tory Party such as the then Lord Salisbury and A. J. Balfour, and Neville and the then Lord Leverhulme. At the heart of the whole intent was the principle that as the value of the ground—not the houses, but the ground, because that was what the company was interested in—increased as it developed, the increase in the value of the ground should go to the community as a whole for its benefit and not to individual lessees and not to a commercial company operating as a commercial landlord.
  Section 32 of the Act provides that
  "any balance may in whole or in part be devoted to the provision of traffic facilities, lighting, drainage, markets, libraries, baths, or otherwise "—
  and this is a nice turn of phrase—
  "for the embellishment of the undertaking of the Corporation, the provision of means of education, recreation or amusement for the people or for any other purpose which the Corporation may deem to be a requisite public service."
  In those circumstances, whereas the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) described how, as he saw it, the Tory Party had progressed up to a certain point, I am inviting him and his hon. Friends and his right hon. Friend to progress with me a little further. I hope that in Committee the right hon.
  1370
  Gentleman will find it possible—I know that there are difficulties, but I know that they can be got round—to maintain this more advanced position which is enshrined in the Statute from which I have been quoting, and which provides an example of the sort of estates about which I am talking.
  The right hon. Gentleman mentioned Letchworth, and I think that it is a good example with which to continue. The effects of the Bill on the Corporation, which was set up by Statute to give effect to those principles, will be very deleterious, for several reasons. For example, when compensation was awarded by the Land Tribunal to the former commercial undertaking to which the right hon. Gentleman referred—and this compensation had to be paid by the Corporation, and was backed by the ratepayers of Letchworth—the Lands Tribunal took into account the fact that when the leases of houses with large gardens fell in the land might be redeveloped by the Corporation at rather higher densities, and therefore in the amount of money which the Letchworth Corporation had to pay to the old private company there was the assumption that in due course the Corporation would benefit from this redevelopment. Under the Bill, if nothing is done about it, that chance of reaping further revenue will be removed, and yet the Corporation will have the obligation to service with interest the money which it has had to borrow to pay the compensation to the old Garden City Company. This is the first bad effect which the Bill will have on Letchworth.
  Secondly, there is the question of the extension of leases. At the moment many people who have leases of perhaps 40 or 50 years to run ask the Corporation for an extension and this is readily granted and, in computing the amount of ground rent for the remaining period, an average is taken of the existing ground rent and the ground rent for the future and it is this which becomes the ground rent throughout the period. This has the effect of bringing forward money into the Corporation's coffers at a time when the Corporation needs it. Under the provisions of the Bill people will no longer seek to extend their leases. They will wait until just before the last year of the lease and then decide what to do, and

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  therefore that source of increased revenue to the Corporation is likely to dry up.
  Another factor which will be hard on Letchworth arises from Clause 28(6) which is concerned with short-term development. If this provision is implemented the amount of compensation paid to individual householders, if there is a town centre redevelopment, will be considerably in excess of what would be paid to people under existing leases.
  The Corporation has been in the habit of managing its leases so as to have similar termination dates for whole areas, as a matter of policy and good estate management, with a view to suitable redevelopment. Nothing in the Bill could possibly apply to give the Letchworth Corporation the opportunity to control future development as has been its practice in the past.
  I think that I have shown that there will be many harmful effects, arising from the fact that Letchworth is already in a more advanced position than that which the right hon. Gentleman visualises arriving at by the Bill. It is worth adding that the residents of the town will individually suffer from the break-up of a unified estate.
  I have already mentioned that in my view a good, well-run estate can benefit all residents. This has been the case with Letchworth. It is much better that a central body should decide what areas should be redeveloped at higher densities rather than that it should be done higgledy-piggledy and piecemeal by various people who acquire freeholds and decide, perhaps, to build bungalows in their gardens. The town will also suffer financially, because surplus funds of the Corporation were to be devoted to the benefit of the community as a whole.
  If, under the provisions of Clause 19, Letchworth were to be regarded as a comprehensively-managed estate, a problem would still arise. As my hon. Friend the Member for Selly Oak said, the incentive to landlords to apply the provisions of this Clause will be very small when they no longer have an interest in the full reversion at the end of their leaseholds. My hon. Friend described how, if anything were to be done in respect of Birmingham, it would be by litigation between neighbours which is unlikely to be under-
  1372
  taken. Therefore, the whole concept of a unified estate goes.
  Some people may object and say, "There is a town all in one leasehold ownership, and people should have a right to buy their freeholds." That is an attractive proposition, but it so happens that Letchworth is contiguous to two other towns—Hitchin and Baldock—so it has no monopoly position. It is worth recalling how, before the Letchworth Act was promoted, the town voted in a statutory town poll. There were 3,183 for the present system and 903 against, which is more than three to one. It is clear that the residents as a whole are strongly in favour of the present system.
  When the provisions of the Bill reach the Statute Book, if they are in anything like their present form, Letchworth Garden City Corporation will find itself with a jumble of leases interspersed with residential freeholds. It will have industrial and commercial freeholds and the freehold of flats and maisonettes. There will also be some private houses, but the whole concept of a community, enshrined in the Statute from which I have quoted, will be broken. All the ratepayers of the town will be the losers, unless something is done to prevent it.
  I want to refer to some statements which have been made, which I hope will help to convince the Minister that the problem of this type of estate must be dealt with. The Letchworth Garden Corporation Act had all-party support, not only in Letchworth but also in Parliament. The hon. Member for Hitchin (Mrs. Shirley Williams), whom I am glad to see present, as I said I would be referring to this matter, wrote in a letter which appeared on Friday 25th September, 1964, in the Hertfordshire Express:
  "The Labour Party, which strongly supported the Letchworth Act, recognises the unique nature of the town and will preserve it."
  That was a statement about the Labour Party, so I am certain that the right hon. Gentleman will do everything possible and will not be too put off by procedural difficulties, which I know we can deal with, to preserve the position which I have mentioned.
  The right hon. Member for Fulham (Mr. M. Stewart), who was then the

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  Opposition spokesman for these matters, referred in the Second Reading debate on the Letchworth Bill to
  "…the original principles, which I believe commend themselves to everybody in the House…"—OFFICIAL REPORT, 20th March. 1962; Vol. 656, c. 334.]
  I trust, therefore, that, if I am selected —as I hope I shall be—for the Committee on the Bill and move Amendments to this effect, they will not only receive sympathetic consideration but will be positively welcomed.
  8.56 p.m.
  Mr. Evan Luard (Oxford): I will be brief, as I do not want to enter into the great debate on the purposes and principles of the Bill, which have already been more than adequately defended by the Minister and other hon. Members on this side of the House. I want to raise mainly two detailed points of particular interest to my constituency. The first has been mentioned several times already—the limitation on the rateable value of those properties which will qualify for enfranchisement.
  I can see no rhyme or reason for the distinction between these properties above rateable values of £400 in London and £200 in the provinces and those below. The simple point surely is that if it is right and just that certain leaseholders should be able to buy up their freeholds under the Bill, it is right and just that others should also be able to do so. Otherwise this will justifiably be regarded as a case of one law for the rich and another for the poor, or perhaps, more accurately in the present case, one law for the poor and another for the rich.
  I am glad to see the Minister present, as I have had some correspondence with him on this point. Although he has put the argument in favour of this distinction most persuasively and informatively, I am afraid I have not been convinced. He basically used two arguments. The first was that the Bill simply incorporates the provisions of the Rent Act of 1965. This is not an argument at all. I can see no reason why the considerations which made a limitation necessary in that Act are relevant to this Bill on a totally different subject.
  His second argument was simply that he is intervening to break a legal contract and that he can feel justified in doing so only if there is a strong ground
  1374
  in equity. But surely the grounds in equity are precisely the same for a leaseholder of a larger property as for a leaseholder of a smaller one. If both bought the building on the property over the years by payment of rent, this would be true in both cases. I seriously ask him to reconsider this whole provision, as he will otherwise leave many householders feeling themselves deprived of the right which has been granted to others.
  This matter affects my constituency considerably because a large proportion of the property in the area is above the rateable value of £200 laid down in the Bill. Various estimates of the number of such properties have been made, the lowest being well over 200 out of probably 1,000 or more. This means that more than 20 per cent. of the properties will be adversely affected. Another estimate suggests that about 600 houses will be affected. Certainly the occupants of many properties in my constituency will feel a sense of injustice because of the £200 limit.
  The next point is the distinction made in the Bill between London and the provinces in this matter of rateable values. It may be true that the average rateable value in London is twice that of certain other parts of the country, but it is not true of Oxford. As has been pointed out, the same can be said of Cambridge and a number of other constituencies where average rateable values are high. In parts of Oxford rateable values are higher than in parts of London and this emphasises the injustice of this provision.
  One of the most unjust aspects is that the provision penalises precisely those leaseholders who have done the most by adequate care and attention to maintain the value of their property. They would have raised the rateable value of their property thereby and they are now to be penalised and deprived of their right of enfranchisement.
  Mr. S. C. Silkin: Is my hon. Friend aware of a case in my constituency, where, by extending his garage, an occupier's property is above the £400 limit, he having made this improvement at his own expense?
  Mr. Luard: That shows how unjust this provision can be in certain cases. Injustice

  1375
  will also be felt by people living just outside the borders of London whose property has a rateable value which puts them outside the benefit of the Bill, although they would benefit if they were in London.
  The second point I wish to raise concerns Clause 28, which also affects most of my constituents in Oxford. That Clause is the provision by which public authorities will be exempted from the Bill, if they obtain a certificate from the Minister to the effect that the property is required for development. Subsection 5 states:
  "This section applies …to any university body, that is to say, any university, university college or college of a university…"
  In Oxford, by far the greater part, probably nine-tenths, of the leasehold property in the City is owned by the College and would come within that provision. Thus, it would be possible for that property to be exempted if it could be proved to the Minister that it was needed for "development" purposes.
  I have raised this matter privately with the Minister and he has assured me that the provision applies only in respect of property required for the normal purposes
  of a particular institution or authority; that is, education in the case of colleges or universities. It is important that this should be made clear in the Bill because, as at present drafted, the provision is ambiguous—it might refer simply to development in the sense of property development by the authority concerned, and while my right hon. Friend may say that he personally would apply this to mean only for the purposes of education, in the years to come he will be succeeded by other Ministers who may give the provision a completely different interpretation. It is, therefore, of the utmost importance that this matter should be cleared up and made completely incontrovertible in the wording of the Bill.
  At the very least, even if he is not ready to amend the Bill, I hope that he will make an explicit statement, either this evening, or in Committee, or subsequently, in order to make clear that the word "development" as it is used in the Clause refers only to development for the purposes of the particular authority concerned and specified in the Clause.
  1376
  We have heard argument from the benches opposite about confiscation being implicit in the Bill. I would like to have been able to take up this point which has not been sufficiently emphasised in this debate. This legislation is not perfect, it will cause certain injustices in certain cases. But it is not realistic to talk of confiscation. This seems to be based on the assumption that properties are to be given away from the existing freeholders to the leaseholders. The provisions of this Measure do not make that possible in any shape or form.
  That argument totally ignores the very large appreciation in the land value of properties that has taken place over the 99 years, or whatever period it may be, that the leaseholders have been in occupation. In very many cases this appreciation is something that leaseholders have very much to bear in mind. They will not get these properties for a song. This is true in my constituency and in many others, because most are situated in large urban areas where great appreciation has taken place. In most cases the leaseholder will have to pay a considerable price to acquire the property, and that implements the fairest kind of principle—probably the fairest, though not perfect—that could be applied in the circumstances.
  For these reasons I accept that this is a good Bill. But it could be much better still if the Minister would make the various changes I have suggested.
  9.7 p.m.
  Mr. Graham Page (Crosby): The Minister declared an interest when he said that he had a 999-year lease, but added that this was so remote that he probably was not affected by the Bill at all. I am not so sure. This Minister, whose office is dead, but he will not lie down, keeps popping up on the Government side with Bills that are far from welcome either to Members of the House or members of the public outside. We welcome him, but not the Bills he brings. Perhaps the understatement of the week was made by the hon. Member for Oxford (Mr. Luard) just now when he said that this Bill is not perfect. It certainly is not; there are many respects in which it is far from perfect.
  As the right hon. Gentleman declared his interest, may I, too, in accordance

  1377
  with the traditions of the House, declare my interest in the subject matter of the Bill. I am a member of the committee of a housing association, a director of a building society and of a trust property company which owns no long leasehold houses, and in each I have no more than the necessary qualification shares for directorship. Perhaps, having regard to what my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) said, I should also declare my interest as a solicitor. We solicitors are reputed to make a lot of money out of the right hon. Gentleman's Bills when they become Acts. I can assure him that all we get are a lot of headaches. I should also perhaps declare an interest, having regard to what the hon. Member for Cambridge (Mr. Robert Davies) said, in that I am a governor of St. Thomas's Hospital.
  I want first to make as sharp and clear as I can the dividing line between Government and Opposition. It is not now whether or not there should be leasehold enfranchisement; it is upon what terms there shall be leasehold enfranchisement.
  We on this side believe in home ownership, but even in priority to that we believe in the home, that is to say, that no man shall be arbitrarily evicted from the house which he has made his home. In applying that principle, the Conservative Government in 1954 gave the occupying ground tenant at the end of a ground lease a controlled tenancy. I do not object now that such a tenant will become a regulated tenant under this Bill, if he takes no steps for enfranchisement. I think that that is probably the right course to take now. In effect, it is to give, as we did in 1954, a right of residence for an indefinite period. It is no great step to proceed, from that recognition of the right to a home, to the alternative—the right to home ownership, a right to buy out the ground landlord, to buy the right to live rent free and own one's home.
  That is the sort of leasehold enfranchisement which we recognise on this side of the House, and on that basis we have tried to think out the correct scheme to give those rights to the ground tenant. My right hon. Friend the Member for Altrincham and Sale (Mr. Barber) spelt out the Conservative policy. He said
  1378
  that, first, we recognise the desire and the ability of people to own their own homes. In following up that recognition, we say that the person who has made the long leasehould house his home shall have a right to choose in what capacity he remains there, whether as a regulated tenant at a fair market rent settled by rent officer or rent assessment committee, as a ground tenant at a modern ground rent, or as a freeholder. Those are the choices which we would give the ground tenant at the end of the ground lease.
  The first, to remain as a tenant at a rack rent, contains an element of compensation in the fair market rent itself. If the tenant chooses the second or the third, to continue as a ground tenant or to become the freeholder, he deprives the present freeholder of an existing right to possession of the house at the end of the lease, and he should pay for what he takes or for what he is given by Statute.
  Briefly, the proposal would be compulsory acquisition of existing rights at their existing value. The conditions of this would be that the right should not be exercised against a genuine need for development. It should not be exercised against a genuine need of the freeholder to use the house as his own residence or that of a member of his family if it would be a greater hardship for him to be kept out of possession than for the tenant to be turned out. The right should be exercisable only during the last few years of the lease and, as in the present Bill, by a person who has been in residence for a substantial period.
  There are other corollaries, such as that the tenant should be credited with the cost of improvements and, as my hon. Friend the Member for Hornsey (Mr. Rossi) said, should not be penalised by dilapidation claims. There must be adequate building society loans, supported by the Government if necessary, as in the previous scheme for loans on older properties. There must be assistance with the deposit, namely, the Conservative scheme for grants towards savings made for the payment of that deposit. Those are the sort of conditions on which we would grant leasehold enfranchisement.
  Leasehold enfranchisement is no new idea in proposals for property reform. Until I listened to the Minister today I would not have thought that anyone

  1379
  would really want to destroy leasehold tenure altogether. As my hon. Friend the Member for Hornsey said, development on a leasehold basis has been of the greatest advantage to the community in the past. There is no reason why we should destroy it. Yet the Minister said of leasehold: "This remarkable contract." He seemed to try to justify the Bill by railing at leasehold tenure as a whole. If he is expressing the Government's view on this, it is strange that he should leave leasehold for everyone other than what I call the "five-year residence" qualifying tenant. He leaves it also for those above a certain rateable value.
  Let us have some certainty about that. Are the Government really dithering about the rateable value limit, or are they fixed on it? Dithering in this debate will have grave effects on the value of properties and transactions between parties at the present time. We should know definitely when the Minister replies whether the Government are wavering on the limit or whether it is firm.
  I said that leasehold enfranchisement is no new idea. But two things in the Bill are new—first, the fiction that the bricks and mortar morally belong to the leaseholder, and secondly the complete disregard in the Bill of transactions which have taken place on the basis of existing law. Many hon. Members opposite have said that they think that the existing law is unjust. But people have acted upon it.
  Until the publication of the White Paper which we debated last February, if anyone intended to disturb existing relationships and property rights which had been acquired with money, he would not have thought of doing so without compensation for the rights lost by one party to another. But the Bill disregards that and while hon. Members are entitled to hold the view that the present law is unjust, it is far more unjust not to recognise that people have acted upon it and acquired rights for money under the existing law.
  Of course, any changes in the law of property are bound to produce anomalies and complications. We saw that in the Land Commission Bill, but this Bill also has its fair share of those anomalies and complications.
  Sir Harmar Nicholls (Peterborough): Disasters.
  Mr. Page: Indeed, perhaps disasters, as my hon. Friend says. The reason is that it is based on the monstrous immorality that five years' residence in a house results in a compulsory gift of that house to the resident. [An HON. MEMBER: "He has paid for it."] The Government seek to give him something he did not purchase.
  Mr. George Thomas: What did he purchase?
  Mr. Page: The Minister tried to justify that sort of policy with the argument that the leaseholder originally built the house on the plot—whether it was the existing leaseholder or his predecessor in title I do not mind. That seems to be the argument on which the Minister bases his advocacy of the Bill, but it is not carried out in the Bill.
  The Bill grants a right by compulsory acquisition in respect of leases of 21 years and one day. It is ridiculous to talk about a leaseholder building a house on land on which he has a lease for only 21 years and one day. No one would be as crazy as that. While that remains, the right hon. Gentleman cannot justify the confiscation of the freeholder's property in the house on the ground that the tenant built it. That is a false argument altogether.
  I take as simple a case as I can. It is is a very ordinary case, of which there must be tens of thousands throughout the country. I will take the figures of examples which the right hon. Gentleman gave. He said that there were small houses in Wales at low ground rents and gave the example of one with five years to run with a present vacant possession value of £1,500. The value of the leasehold interest, I suppose, when paid a year or so ago, with only five or six years to run, would be only a matter of a few hundred pounds. So the existing ground tenant in a property of that sort would have paid, say, £200 or £300 to get into the house. He would now pay the enfranchisement price of £230 according to the right hon. Gentleman. The whole thing would have cost him about £500—and, when the Bill became an Act, he can serve notice on the landowner and flog the house the next day for £1,500.
  The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Arthur Skeffington): This is very interesting. Will the hon. Gentleman tell the House what would be the comparable figure for the scheme he was putting forward just now? Let us assume that there was no development and that the lessee could enfranchise.
  Mr. Page: Indeed, the lessee would be entitled to the property at market value, subject, of course, to the length of the term which he still has in his lease. I cannot give figures unless I know the length of the term for the lease. [Interruption.] I will give round figures.
  On the basis of 20 years to run, the freehold reversion in a lease would be worth about one-third of the vacant possession value. Therefore, the market value of the leasehold interest would be two-thirds. So, for a £2,000 house with a 20-year lease to run, one would expect it to be somewhere around £700 or £800 and the remainder would be the market value of the reversion. [HON. MEMBERS: "Now we know."]
  Mr. Speaker: Order. There is a choir of interruptions. Can we have a solo?
  Mr. Page: Let me enlarge on this. I take the second example, a lease with 23 years to run and vacant possession value now of £2,000. The right hon. Gentleman said that the enfranchisement price would be £105. So the qualifying tenant—the five-year resident—could acquire the house for £105 and, I repeat, next day could "flog" it for £2,000. So he acquires it for £105 and sells it next day for £2,000.
  In a burst of morality and equity—words which have treacled through the White Paper and oozed into the debate—hon. Members opposite will probably say, indeed have almost said, "Good luck to him if he can do it. Let him take it off the wicked landlord for £105 and "flog" it for £2,000".
  This will be called in future "flogging Freddy's freeholds" and if the freeholder is a large charity, or college, or teaching hospital or trust fund or insurance company, this is quite impersonal. It is voteless and it does not matter if the money is taken from that source. But perhaps any hon. Member who has a life policy with profits might think of the harm he is doing himself through depriv-
  1382
  ing insurance companies of some of their investments.
  I ask hon. Members to pause to think how a freehold of that sort, in a house on a ground rent, has most probably been
  acquired by the person from who it is now to be taken. It is most likely, if it is a single owner, that the landowner will not be the same person as the original lessor, and the ground tenant will not be the same person as the original lessee. The freehold reversion may have been bought, say, ten years ago as an investment or possibly, as my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said, for the purpose of occupation by the purchaser.
  If the owner bought it about ten years ago, he would have paid about £500 for the reversion. Taking into account interest lost over the 10 years on his £500 invested and the ground rent received, it might have cost him a total of £650. He receives £105 and, on the right hon. Gentleman's figures, he will therefore lose £550 while the tenant makes a handsome windfall of £1,900.
  Mr. Hooson: The hon. Member has surely overlooked the fact that the landlord receives the ground rent in the meantime?
  Mr. Page: I have not overlooked that fact at all. I have taken it fully into account if the hon. and learned Gentleman will look at my figures, in talking about the interest from the £500, and setting off a small ground rent against it. This windfall, which the right hon. Gentleman is inventing in this Bill, is most unfair to the Home Secretary who is trying to curb the immorality of gambling clubs. It is not right that the Minister should begin this sort of racket.
  This is a disgraceful and cynical disregard of rights of property which have been acquired. The most extravagant point is that the bonus for the tenant and the robbery of the landowner occurs when the landowner is an individual who holds one freehold property. If he is a big estate owner the landlord can claim development value under Clause 9(3). He can claim:
  "such addition as may be just to take account of any additional value"
  due to his owning the additional land.
  That is, he can claim from the tenant the development value due to his being able to marry a number of plots together.

  1383
  I am strongly advised that in South Wales this may bring the price to the tenant up to the price for plot and bricks and mortar. The plot vacant, when married with neighbouring plots, may be as valuable as a plot with a 99-year-old terraced house standing on it. The Government are kidding many leaseholders in this Bill. Some of the big estate owners will receive under Clause 9(3) fair compensation as they should. Why should the single owner be the one selected for expropriation in this way?
  Mr. Elystan Morgan: Does the hon. Gentleman realise that under the Housing Act, 1957, valuers have had to make valuations of site value, and in South Wales and many other parts of Wales site value is sometimes valued at £50, £60, £70?
  Mr. Page: Yes, but when one site can be married to a lot of others it becomes more valuable. This is what I am advised by valuers.
  Furthermore, the landlord, in Clause 19 can obtain the approval of the Minister to a scheme to convert his ground rents into a management fee. It is the same thing, only I suppose that this is the method of the Government's buying off the opposition from large estates. Yet the single owner will have no such benefit. He loses his ground rent and his £2,000 house and gets only
  £105 for them—and the Minister talks about morality and equity.
  If the landlord is a public body, it receives certain benefits denied to the individual. It can retain the development value of the land. Thus, throughout the Bill the Government have shown favouritism towards some lucky ground tenants and some large landowners, and gross unfairness to the ordinary individual ground landlord, robbing him of what is justly and legally his. The final insult comes in Clause 18. If the ground lessee wants the house, he gets it, land and building, for £105. If the true owner wants his own house for his own home, he has to pay £1,900 for it.
  This is not justice, and it cannot be justified in any way. The Conservative plan holds the balance fairly between the parties concerned, taking care not to obstruct development so that we can produce modern dwellings. We would give the residential long leaseholder the
  1384
  right during the last few years of his ground lease to continue in his home as a long leaseholder or as a freeholder, as he may choose, upon paying compensation for the loss suffered. These are fair terms to both sides compared with the gross injustice of the Bill.
  9.31 p.m.
  The Secretary of State for Wales (Mr. Cledwyn Hughes): It was almost a year ago when my predecessor in office, my right hon. Friend the Member for Llanelly (Mr. James Griffiths), concluded the debate on the White Paper on Leasehold Reform, which we introduced at that time. Then, hon. Members opposite, although they described the White Paper variously as a "spiv's charter" and an "act of confiscation", did not vote against it. Tonight,' on a pretext, they are voting against the Bill, notwithstanding the fact that it reflects the White Paper almost in its entirety. The country must judge the motives of right hon. and hon. Members opposite. At a rough estimate, they have had nearly 20 opportunities since 1884 to take some practical action on leasehold reform, and this they have signally failed to do. Tonight, on a technicality, they try to take yet another step backwards.
  The purpose of the Bill is to achieve a permanent and lasting reform of the leasehold system in that sector where history has shown that there has been much injustice and distress. It is not, therefore, concerned with leasehold interests held purely for business use, nor with those held purely for investment. It relates to the man who holds the leasehold interest in a house because he lives there and because it is his home. The Bill confers the benefit on the tenant, not on a company or a body of trustees.
  In a very important respect—and this is a point worth making at this stage of the debate—the Bill improves on the White Paper because it allows the tenant to assign his rights in the property to an intending purchaser. This would allow a man, for example, living in London in a leasehold house to move to South Wales or to the north of England or elsewhere to take up a new job without having to wait for the process of transfer to take place. This is a considerable advance on the White Paper.
  A number of points have been raised in the debate with which I should like

  1385
  to deal. If I leave anyone out, I hope that it will not be taken as a discourtesy it is a question of time.
  The right hon. Member for Altrincham and Sale (Mr. Barber) raised the question of rateable value limits. In order to identify those who particularly need the protection of the Bill, and for no other reason, we have adopted a distinction based on the rateable value of a house. A little over 1 per cent. of the houses in England and Wales have a rateable value above these limits. In Wales there are estimated to be fewer than 800 houses excluded by these limits. My hon. Friend the Member for Cardiff, North (Mr. E. Rowlands) asked whether the £200 limit would rule out a man whose house is above that limit because it is divided into flats. It would exclude such a house, although I should have thought that cases of this sort are likely to be very rare in Cardiff and confined to rather more expensive property. It is important to note that if the division into flats is such as to make it impracticable to use the property as a single dwelling, it will be outside the Bill on those grounds.
  Mr. Barber: The point which I sought to make was that there had been one or two suggestions from the Government Front Bench during the debate to the effect that the £200 and £400 limit might be altered. This would obviously have a significant effect on the value of the property concerned. The House should therefore, be told specifically whether the Government will be prepared in Committee to consider arguments to alter these limits.
  Mr. Hughes: The Government are always prepared to listen to arguments, but these are the limits which we have set and to which we adhere. Clearly, there will be considerable discussion about this, however, in Committee, which is where the detailed argument should take place.
  My hon. Friend the Member for Lewisham, North (Mr. Moyle) asked whether 21-year leases should be included in the Bill. The answer is in the negative. Twenty-one year leases are often granted at rack rents. To apply the Bill to them would mean making rights under it available to people who can hardly be said to have paid for the value of the bricks and mortar in the house.
  1386
  The Bill's definition of a long lease is just about right. In any event, it is based on precedent.
  During the debate we have heard a great deal from the Opposition about confiscation. That is the substance of their Amendment. Our view is that any talk of confiscation of the landlord's interest is nonsense. If anybody is having his property confiscated, it is the leaseholder and not the landlord. The Bill puts matters right. If anyone is concerned about the depression in the market value of freeholds as a result of the Bill, he should reflect on the effect which the 1954 Act, conceived by right hon. and hon. Members opposite, had on the value of reversionary interests. As my right hon. Friend the Minister said in opening the debate, that Act achieved the wonderful result of pleasing practically nobody.
  The hon. Member for Hornsey (Mr. Rossi) made a thoughtful and constructive speech and put forward two interesting alternative suggestions about the price of enfranchisement. I have no doubt that he will develop those arguments in Committee.
  My hon. and learned Friend the Member for Dulwich (Mr. S.C. Silkin) spoke about the premises going with the house and asked whether this affects the price as given in Clause 9. The answer is that the premises are merely the garden and garage let with the house and occupied with it. The price naturally covers those items as well as the house. The freehold interest has to be valued as secured by the presence of the building.
  The right hon. Member for Altrincham and Sale asked why rights would be available to the leaseholder long before there is any question of the lease running out. The answer is that this would defeat one of the main objects of the Bill, which is to enable the leaseholder to escape from the leasehold system before it has had time to work its effect. In South Wales, for example, building societies are unwilling to lend money on leases with less than 40 years left to run. I regard the leasehold system in its present form as unjust and I can see no justification for postponing the leaseholder's remedy.
  My hon. Friend the Member for Cardiff, North, asked why, once a leaseholder has chosen to extend the lease

  1387
  rather than enfranchise it is to be a once-and-for-all choice binding on his successors. There is nothing to prevent a leaseholder holding an extended lease from enfranchising under the Bill if he does it before the original term date, and he will have made up his mind well before then.
  The hon. Member for Carmarthen (Mr. Gwynfor Evans) made what I thought was a rather carping speech. His knowledge of Welsh people is limited if he is not aware that the Bill has had a tremendous reception in the Principality. He asked how Clause 17 works. That Clause enables the landlord to recover possession of the property for redevelopment either on the original term date or during the 50-year extension period, but only if he compensates the leaseholder for the value of the extension or such part of it as is left.
  Again, the right hon. Member for Altrincham and Sale asked in his opening speech why the Minister is allowed to decide whether a scheme of control for a well-managed estate should be put to the High Court. That is a reasonable question, and the answer is that it is because this is a limitation of the rights conferred by the Bill, and it is for a Minister to take the responsibility of deciding whether there is a prima facie case for doing it. In addition, it would be extremely difficult to draw up criteria on which a court could make a proper judgment.
  My hon. Friends the Member for Oxford (Mr. Luard) and the Member for Cambridge (Mr. Robert Davies) asked about Clause 28. They wanted to know in what circumstances a certificate will be given under Clause 28 in relation to freeholds owned by universities and teaching hospitals. The Clause is concerned primarily to prevent nonsenses arising such as would happen if a leaseholder enfranchised and his house was purchased compulsorily shortly afterwards. Consequently, certificates will be given under the Clause in circumstances similar to those in which it would be proper to confirm a compulsory purchase order. "Shortly", in this context, means a few years at the most; the kind of period in which it would be appropriate to purchase land compulsorily in advance. Clauses 28 and 29 will operate only in
  1388
  the case of redevelopment for public purposes; that is, for university or hospital redevelopment in the cases with which my hon. Friends are concerned.
  My hon. Friend the Member for Lewisham, North asked whether the Crown Commissioners should be bound by Statute. To put the Crown under legal obligations to part with a freehold interest in land at the instance of a subject would be a complete novelty in our law. This evening, I can give the House a complete assurance that the Crown will conform fully with the principles of the Bill.
  I should like to say a word about the date of commencement. We have adopted the appointed day procedure for Part I, because it will be necessary for rules of court to be prescribed for county courts to follow in the exercise of their jurisdiction under the Bill. That procedure normally takes two or three months. In any case, a qualified leaseholder whose lease expires between Royal Assent and the appointed day will still be able to exercise his right under the transitional provisions of the Bill.
  I must say something about the problem as it affects Wales. Over many decades, there has been a deep and bitter feeling in Wales about leaseholds. If it is such a good system as many right hon. and hon. Gentlemen opposite have tried to make out, why should there be that deep and bitter feeling in the Principality?
  Let us look very briefly at the past. The hon. and learned Member for Montgomery (Mr. Hooson) in a very good, radical speech—one of the best which he has made in the House—spoke about the past. For Welshmen, this is an historic debate. The present leasehold situation in Wales is the creation of the second half of the last century. It took root in Wales, particularly in the industrial areas, because most of the land was held by large family estates which regarded it as a continuous source of investment income. These owners, not content to make fortune after fortune from the minerals underground, wished to profit also from the needs of the workers and the immense population explosion that was engendered by the coal and steel revolution in South Wales. In Glamorgan alone, where this is an acute problem today, the population increased from 318,000 in 1861—over 100 years

  1389
  ago—to 1,120,000 by 1911, an increase of 253 per cent.
  These workers, who came from rural Wales and from many parts of England, had to have homes, and the landowners could not miss the opportunities which the leasehold system gave them of profiting from this need. We have heard this evening about well-managed estates. The landowners were not concerned to set up well-managed estates. To them the leasehold system offered opportunities of disposing of useless mountain-sides at tremendous profit. Ground rent of £2 a year was charged for building plots. This may not sound exorbitant, but over 99 years it produces far more than the landlord would dare ask in a lump sum, and at 20 houses to the acre, with a ground rent of £2 a year, total receipts of about £4,000 over 99 years did not represent a bad return. It was a very good return for nothing.
  On top of that, they had their reversionary rights. If we look at the evidence given before the Select Committee on Towns and Dwellings in 1886, we see how the land, by no effort of the landlord, increased in value. My hon. Friend the Member for Conway (Mr. Ednyfed Hudson Davies) made a very good speech, and he will know, from his own experience, about such development in North Wales. The Rev. T.J. Weldon of Blaenau Ffestiniog told the Committee that in the village, and in surrounding villages, the owners of the land would not sell the freehold. Quarrymen and shopkeepers were obliged to build on leasehold land, and out of about 2,500 houses in Ffestiniog parish, the local quarrymen themselves built 1,500 on leasehold plots. The total ground rent for all the houses in the village during the 60 years of the average leases amounted to more than £175,000, which arose from about 77 acres of land which, before building took place, was worth less than 7s. 6d. an acre. [An HON. MEMBER: "Confiscation."] This is the Welsh background: This is what makes this Bill historic. [HON. MEMBERS: "Hear, hear."] It was under these conditions that owner-occupation grew in Wales, both in the industrial north and among the much greater populations of the industrial south.
  In 1884 the Medical Officer of Health for Merthyr Tydvil, Mr. Thomas Jones-
  1390
  Dyke, told the Royal Commission on the Housing of Working Classes that the cottages of the Welsh mining population were generally built on 99-year leases. Mr. Dyke said that the new houses then being built had been put up by private individuals taking leases from the owners of the land.
  Is it any wonder that there has been a growing sense of grievance against the leasehold system, and that, throughout Wales, there has been pressure for reform for many years? There is another instance, from the urban district council of Bethesda represented by my hon. Friend the Member for Conway. It is now nearly 60 years since the Bethesda Urban District Council passed a resolution championing the right of compulsory enfranchisement for leaseholders. It declared that the ground rents charged in almost all cases were much above the agricultural value of the land at the time the lease was granted, and that it was unjust that the hard earnings of the leaseholders and their improvements should lapse on the termination of the lease to the freeholder who had in many cases already benefited to the extent of hundreds per cent. on the original value of the land.
  That this sense of grievance was not unjustified is clear from a number of independent investigations. In 1884 the Royal Commission on Housing of the Working Classes, while not recommending universal leasehold enfranchisement, admitted that
  "the evidence laid before us shows that there is a widely spread sense of injustice among lessees. This feeling probably is particularly strong in cases where working men and others build their own houses and, where being unable to obtain land, they are practically compelled to build on leases for short terms."
  In 1921, the Report of the South Wales Regional Survey Committee which was set
  up to examine the housing situation in the coalfield area said:
  "Owing to the very limited area of suitable building land, combined with the fact that the prevalent system of tenure is leasehold, and that the land belongs to a comparatively small number of large landowners, the land monopoly is a very close one, and the ground rents and purchase prices charged in past years have been exceedingly high. For land acquired for school purposes in Glamorgan and Monmouthshire, the local education authorities have had to pay sums ranging from £300 to £1,700 or more per acre, and for housing purposes ground rents on a

  1391
  similar scale have been charged to individuals, the land being let on lease for 99 years."
  I am sorry to have to say this, but very few landlords in Wales have shown any positive estate management. In recent years most of the estates have been crudely liquidating their property as they have had occasion to raise capital. There is little doubt that most of the companies now holding leases consider their property ownership in Wales as an investment and as a matter of financial management. On this question of estate management about which we have heard so much, there is no estate management company which will take the pride in its homes which the individual owner occupier will take, and this I know from my personal experience of the lessees of Wales.
  The Labour Party has worked very hard for a very long time in this field, and so many of my colleagues have taken part in this fight that it is hard to single out any individual. To say that the Bill has anything to do with an election or a by-election is a grotesque distortion of the truth. This Government and this party have been working for this Bill throughout the whole of this century, but I am sure that it is right to mention the important part played by my predecessor the right hon. Member for Llanelly in getting the White Paper solution to the problem worked out, and perhaps I might also be allowed to pay a tribute to my former colleague at the Welsh Office, now the Minister of State for Commonwealth Affairs, who collected the petition which was signed by more than 40,000 people in Cardiff.
  Mr. George Thomas: Sixty thousand.
  Mr. Hughes: My hon. Friend's arithmetic is always better than mine.
  It is also appropriate this evening to refer to our late colleague, Mr. Iorwerth Thomas, the former Member for Rhondda, West, who worked so hard to draw attention to the hardships caused by this leasehold system in his own valley and in the valleys of South Wales. But, as I have said, so many of my hon. Friends from South Wales' constituencies have taken part in this fight that I can hardly mention them all.
  Nor has the battle been fought by the
  Labour Party alone. There have been other just men associated with this
  1392
  reform, some of them associated with the party opposite, and I pay tribute to them. I recognise the contributions made by the hon. Member for Barry (Mr. Gower). I want to refer also to Alderman A.F. Dolman of Newport, who made a report to members of the Council of the Wales and Monmouthshire Conservative and Unionist Association. He made a very important contribution in his report.
  The right hon. Member for Altrincham and Sale made great play of what the newspapers had said about the Bill—and especially what the Financial Times had said. My general impression is that the Bill has been welcomed by large sections of the Press, but I want to quote to the right hon. Gentleman what the The Times said when he was a Minister in the last Government, namely, that the Conservative Government had adopted as one of its objectives the theme of "a property owning democracy"—a slogan which today strikes one as more foolish than it was then. The Times went on to say that
  "it may not unfairly be said that if the Government's policy is truly a property owning democracy, then it must will the means to the full implementation of that policy. Not until the house-owner is free from the difficulties and hardships of the leasehold system can it be said that the Government has taken all the steps which it reasonably could take to implement its own policy."
  It is sheer political hypocrisy for the Opposition to say what they have been saying today, after 13 years of opportunity and Government.
  It is interesting to take up the claim made by hon. Members opposite that they would be for the Bill if enfranchisement could be carried out at a fair price without compulsion. In 1961 a study was made of some of the prices asked for freeholds, or renewals of leases with about 10 years to run. The study revealed that many figures proposed by ground landlords were so high that they could not be regarded as minor differences of opinion about the economic future of the premises.
  A householder in Tonypandy was asked by his landlord to pay £650 for his lease when the valuation officer of the Inland Revenue had put the "fair price" at £200. In Cardiff the asking price was six times the "fair price" and in Llandeilo it was five times the "fair

  1393
  price". In the case of a house with a nine-year lease to run at Porth, where the ground rent was 10s. a year, the freeholder refused an offer of £250 for the freehold.
  The debate has demonstrated an important thing—the tremendous gulf that exists between the Tory Party and the Labour Party. We have heard more doctrinaire speeches from that side of the House today than for a long time. References have been made to the sanctity of contract. The party opposite is more interested in the sanctity of property than the sanctity of contract. Hon. Members on this side of the House are concerned with the sanctity of men and women.
  Many measures of reform will come before the House during the life of this
  Parliament. This is as it should be. We are a Government and a party of reform. But for Wales, where about one-third of all houses are leaseshold—a much higher proportion than in England—this Measure has a special significance. For Welshmen, this is a day of achievement, a day on which an ancient wrong is righted and an inveterate grievance removed. By a coincidence, it is almost 83 years since a similar Bill had its Second Reading in this House, on 20th March, 1884. It was defeated by 118 votes to 104. On this day, 83 years later, I have confidence that this House will give the Bill a Second Reading.
  Question put, That the words proposed to be left out stand part of the Question:—
  The House divided: Ayes 319, Noes 197.

  Division No. 283.]

  AYES

  [10.0 p.m.

  Abse, Leo

  Darling, Rt. Hn. George

  Ginsburg, David

  Allaun, Frank (Salford, E.)

  Davidson, Arthur (Accrington)

  Gordon Walker, Rt. Hn. P. G.

  Alldritt, Walter

  Davidson,Jamea(Aberdeenshire,W.)

  Gower, Raymond

  Allen, Scholefield

  Davies, Dr. Ernest (Stretford)

  Gray, Dr. Hugh (Yarmouth)

  Anderson, Donald

  Davies, G. Elfred (Rhondda, E.)

  Greenwood, Rt. Hn. Anthony

  Archer, Peter

  Davies, Ednyfed Hudson (Conway)

  Grimond, Rt. Hn. J.

  Armstrong, Ernest

  Davies, Harold (Leek)

  Gunter, Rt. Hn. R. J.

  Ashley, Jack

  Davies, Ifor (Gower)

  Hamilton, James (Bothwell)

  Atkins, Ronald (Preston, N.)

  Davies, Robert (Cambridge)

  Hamling, William

  Atkinson, Norman (Tottenham)

  Davies, S. C. (Merthyr)

  Harper, Joseph

  Bacon, Rt. Hn. Alice

  de Freitas, Rt. Hn. Sir Geoffrey

  Harrison, Walter (Wakefield)

  Bagier, Gordon A. T.

  Dell, Edmond

  Hart, Mrs. Judith

  Barnes, Michael

  Dempsey, James

  Haseldine, Norman

  Barnett, Joel

  Dewar, Donald

  Hattersley, Roy

  Baxter, William

  Diamond, Rt. Hn. John

  Hazell, Bert

  Bellenger, Rt. Hn. F. J.

  Dickens, James

  Healey, Rt. Hn. Denis

  Benn, Rt. Hn. Anthony Wedgwood

  Dobson, Ray

  Heffer, Eric S.

  Bessell, Peter

  Doig, Peter

  Henig, Stanley

  Bidwell, Sydney

  Donnelly, Desmond

  Hooley, Frank

  Binns, John

  Driberg, Tom

  Hooson, Emlyn

  Bishop, E. S.

  Dunn, James A.

  Horner, John

  Blackburn, F.

  Dunnett, Jack

  Houghton, Rt. Hn. Douglas

  Blenkinsop, Arthur

  Dunwoody, Mrs. Gwyneth (Exeter)

  Howarth, Harry (Wellingborough)

  Boardman, H.

  Dunwoody, Dr. John (F'th & C'b'e)

  Howell, Denis (Small Heath)

  Booth, Albert

  Eadie, Alex

  Hoy, James

  Boston, Terence

  Edelman, Maurice

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Boyden, James

  Edwards, Rt. Hn. Ness (Caerphilly)

  Hughes, Emrys (Ayrshire, S.)

  Braddock, Mrs. E. M.

  Edwards, Robert (Bilston)

  Hughes, Hector (Aberdeen, N.)

  Bradley, Tom

  Edwards, William (Merioneth)

  Hughes, Roy (Newport)

  Brooks, Edwin

  Ellis, John

  Hunter, Adam

  Broughton, Dr. A. D. D.

  English, Michael

  Hynd, John

  Brown,Bob(N'c'tle-upon-Tyne,W.)

  Ennals, David

  Irvine, A. J. (Edge Hill)

  Brown, R. W. (Shoreditch & F'bury)

  Evans, Albert (Islington, S.W.)

  Jackson, Colin (B'h'se & Spenb'gh)

  Buchan, Norman

  Evans, Gwynfor (C'marthen)

  Jackson, Peter M. (High Peak)

  Buchanan, Richard (G'gow, Sp'burn)

  Evans, Ioan L. (Birm'h'm. Yardley)

  Janner, Sir Barnett

  Butler, Mrs. Joyce (Wood Green)

  Faulds, Andrew

  Jay, Rt. Hn. Douglas

  Callaghan, Rt. Hn. James

  Fennyhough, E.

  Jeger, George (Goole)

  Cant, R. B.

  Finch, Harold

  Jenkins, Hugh (Putney)

  Carter-Jones, Lewis

  Fitch, Alan (Wigan)

  Jenkins, Rt. Hn. Roy (Stechford)

  Castle, Rt. Hn. Barbara

  Fitt, Gerard (Belfast, W.)

  Johnson, Carol (Lewisham, S.)

  Chapman, Donald

  Fletcher, Raymond (Ilkeston)

  Johnson, James (K'ston-on-Hull, W.)

  Cloe, Denis

  Floud, Bernard

  Jones, Dan (Burnley)

  Coleman, Donald

  Foley, Maurice

  Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

  Concannon, J. D.

  Foot, Sir Dingle (Ipswich)

  Jones, J. Idwal (Wrexham)

  Corbet, Mrs. Freda

  Foot, Michael (Ebbw Vale)

  Judd, Frank

  Craddock, George (Bradford, S.)

  Ford, Ben

  Kelley, Richard

  Crawshaw, Richard

  Forrester, John

  Kerr, Mrs. Anne (R'ter & Chatham)

  Cronin, John

  Fowler, Gerry

  Kerr, Dr. David (W'worth, Central)

  Crosland. Rt. Hn. Anthony

  Fraser, John (Norwood)

  Kerr, Russell (Feltham)

  Grossman, Rt. Hn. Richard

  Freeson, Reginald

  Leadbitter, Ted

  Cullen, Mrs. Alice

  Gardner, Tony

  Ledger, Ron

  Dalyell, Tam

  Garrett, W. E.

  Lee, Rt. Hn. Frederick (Newton)

  Lee, Rt. Hn. Jennie (Cannock)

  Norwood, Christopher

  Skeffington, Arthur

  Lee, John (Reading)

  Oakes, Gordon

  Slater, Joseph

  Lestor, Miss Joan

  Ogden, Eric

  Small, William

  Lever, Harold (Cheatham)

  O'Malley, Brian

  Snow, Julian

  Lever, L. M. (Ardwick)

  Oram, Albert E.

  Spriggs, Leslie

  Lewis, Ron (Carlisle)

  Orbach, Maurice

  Steele, Thomas (Dunbartonshire, W.)

  Lipton, Marcus

  Orme, Stanley

  Stewart, Rt. Hn. Michael

  Lomas, Kenneth

  Oswald, Thomas

  Stonehouse, John

  Loughlin, Charles

  Owen, Dr. David (Plymouth, S'tn)

  Strauss, Rt. Hn. G. R.

  Luard, Evan

  Padley, Walter

  Summerekill, Hn. Dr. Shirley

  Lubbock, Eric

  Page, Derek (King's Lynn)

  Swain, Thomas

  Lyon, Alexander W. (York)

  Palmer, Arthur

  Swingler, Stephen

  Lyons, Edward (Bradford, E.)

  Pannell, Rt. Hn. Charles

  Symonds, J. B.

  McBride, Neil

  Park, Trevor

  Taverne, Dick

  McCann, John

  Parker, John (Dagenham)

  Thomas, George (Cardiff, W.)

  MacColl, James

  Parkyn, Brian (Bedford)

  Thomson, Rt. Hn. George

  MacDermot, Niall

  Pavitt, Laurence

  Thornton, Ernest

  Macdonald, A. H.

  Pearson, Arthur (Pontypridd)

  Tinn, James

  McGuire, Michael

  Peart, Rt. Hn. Fred

  Tomney, Frank

  McKay, Mrs. Margaret

  Pentland, Norman

  Tuck, Raphael

  Mackenzie, Gregor
  (Rutherglen)

  Perry, Ernest G. (Battersea, S.)

  Urwin, T. W.

  Mackie, John

  Prentice, Rt. Hn. R. E.

  Varley, Eric G.

  Mackintosh, John P.

  Price, Christopher (Perry Barr)

  Wainwright, Edwin (Dearne Valley)

  Maclennan, Robert

  Price, Thomas (Westhoughton)

  Wainwright, Richard (Colne Valley)

  McNamara, J. Kevin

  Price, William (Rugby)

  Walden, Brian (All Saints)

  MacPherson, Malcolm

  Probert, Arthur

  Walker, Harold (Doncaster)

  Mahon, Peter (Preston, S.)

  Pursey, Cmdr. Harry

  Wallace, George

  Mahon, Simon (Bootle)

  Randall, Harry

  Watkins, David (Consett)

  Mallalieu, E. L. (Brigg)

  Rankin, John

  Watkins, Tudor (Brecon & Radnor)

  Mallalieu,J.P.W.(Huddersfield,E.)

  Redhead, Edward

  Weitzman, David

  Manuel, Archie

  Reynolds, G. W.

  Wellbeloved, James

  Mapp, Charles

  Rhodes, Geoffrey

  Wells William (Walsall, N.)

  Marquand, David

  Richard, Ivor

  Whitaker, Ben

  Marsh, Rt. Hn. Richard

  Roberts, Albert (Normanton)

  White, Mrs. Eirene

  Mason, Roy

  Roberts, Goronwy (Caernarvon)

  Whitlock, William

  Maxwell, Robert

  Roberts, Gwilym (Bedfordshire, S.)

  Wigg, Rt. Hn. George

  Mayhew, Christopher

  Robertson, John (Paisley)

  Wilkins, W. A.

  Mellish, Robert

  Robinson,Rt.Hn.Kenneth(St.P'c'as)

  Willey, Rt. Hn. Frederick

  Mendelson, J. J.

  Robinson, W. 0. J. (Walth'stow, E.)

  Williams, Alan (Swansea, W.)

  Millan, Bruce

  Rodgers, William (Stockton)

  Williams, Alan Lee (Hornchurch)

  Miller, Dr. M. S.

  Roebuck, Roy

  Williams, Clifford (Abertillery)

  Milne, Edward (Blyth)

  Rogers, George (Kensington, N.)

  Williams, Mrs. Shirley (Hitchin)

  Mitchell, R. C. (S'th'pton, Test)

  Rose, Paul

  Williams, W. T. (Warrington)

  Molloy, William

  Ross, Rt. Hn. William

  Wilson, William (Coventry, S.)

  Moonman, Eric

  Rowland, Christopher (Meriden)

  Winnick, David

  Morgan, Elystan (Cardiganshire)

  Rowlands, E. (Cardiff, N.)

  Winstanley, Dr. M. P.

  Morris, Alfred (Wythenshawe)

  Ryan, John

  Winterbottom, R. E.

  Morris, Charles R. (Openshaw)

  Shaw, Arnold (Ilford, S.)

  Woodburn, Rt. Hn. A.

  Morris, John (Aberavon)

  Sheldon, Robert

  Woof, Robert

  Moyle, Roland

  Shinwell, Rt. Hn. E.

  Wyatt, Woodrow

  Mulley, Rt. Hn. Frederick

  Shore, Peter (Stepney)

  Yates, Victor

  Murray, Albert

  Short,Rt.Hn.Edward(N'c'tle-u-Tyne)

  Neal, Harold

  Silkin, Rt. Hn. John (Deptford

  TELLERS FOR THE AYES:

  Newens, Stan

  Silkin, Hn. S. C. (Dulwich)

  Mr. Charles Grey and

  Noel-Baker, Francis (Swindon)

  Silverman, Julius (Aston)

  Mr. George Lawson.

  Noel-Baker,Rt.Hn.Philip(Derby,S.)

  Silverman, Sydney (Nelson)

  NOES

  Alison, Michael (Barkston Ash)

  Bryan, Paul

  Deedes, Rt. Hn. W. F. (Ashford)

  Allason, James (Hemel Hempstead)

  Buchanan-Smith,Alick(Angue,N&M)

  Dodds-Parker, Douglas

  Astor, John

  Buck, Antony (Colchester)

  Doughty, Charles

  Atkins, Humphrey (M't'n & M'd'n)

  Bullus, Sir Eric

  Douglas-Home Rt. Hn. Sir Alec

  Awdry, Daniel

  Burden, F. A.

  Elliot, Capt. Walter (Carshalton)

  Baker, W. H. K.

  Campbell, Gordon

  Errington, Sir Eric

  Balniel, Lord

  Carlisle, Mark

  Farr, John

  Barber, Rt. Hn. Anthony

  Cary, Sir Robert

  Fisher, Nigel

  Batsford, Brian

  Channon, H. P. G.

  Fortescue, Tim

  Bell, Ronald

  Chichester-Clark, R.

  Foster, Sir John

  Bennett, Dr. Reginald (Gos. & Fhm)

  Clark, Henry

  Fraser,Rt.Hn.Hugh(St'fford & Stone)

  Berry, Hn. Anthony

  Clegg, Walter

  Galbraith, Hn. T. G.

  Biffen, John

  Cooke, Robert

  Gibson-Watt, David

  Biggs-Davison, John

  Cooper-Key, Sir Neill

  Giles, Rear-Adm. Morgan

  Birch, Rt. Hn. Nigel

  Cordle, John

  Gilmour, Ian (Norfolk, C.)

  Black, Sir Cyril

  Corfield, F. V.

  Gilmour, Sir John (Fife, E.)

  Body, Richard

  Crawley, Aidan

  Goodhart, Philip

  Bossom, Sir Clive

  Crosthwaite-Eyre, Sir Oliver

  Goodhew, Victor

  Boyd-Carpenter, Rt. Hn. John

  Crouch, David

  Grant, Anthony

  Braine, Bernard

  Crowder, F. P.

  Grant-Ferris, R.

  Brewis, John

  Cunningham, Sir Knox

  Hall, John (Wycombe)

  Brinton, Sir Tatton

  Dalkeith, Earl of

  Hall-Davis, A. G. F.

  Bromley-Davenport,Lt.-Col.SirWalter

  Dance, James

  Hamilton, Michael (Salisbury)

  Brown, Sir Edward (Bath)

  d'Avigdor-Goldsmid, Sir Henry

  Harris, Frederic (Croydon, N.W.)

  Bruce-Gardyne, J.

  Dean, Paul (Somerset, N.)

  Harris, Reader (Heston)

  1396

  1397

  Harrison, Col. Sir Harwood (Eye)

  Macmillan, Maurice (Farnham)

  Rodgers, Sir John (Sevenoaks)

  Harvey, Sir Arthur Vere

  Madden, Martin

  Roots, William

  Harvie Anderson, Miss

  Maginnis, John E.

  Royle, Anthony

  Hastings, Stephen

  Marples, Rt. Hn. Ernest

  Russell, Sir Ronald

  Hay, John

  Marten, Neil

  St. John-Stevas, Norman

  Heald, Rt. Hn. Sir Lionel

  Maude, Angus

  Sandys, Rt. Hn. D.

  Heath, Rt. Hn. Edward

  Maudling, Rt. Hn. Reginald

  Scott, Nicholas

  Heseltine, Michael

  Maxwell-Hyslop, R. J.

  Sharples, Richard

  Higgins, Terence L.

  Maydon, Lt.-Cmdr. S. L. C.

  Shaw, Michael (Sc'b'gh & Whitby)

  Hill, J. E. B.

  Mills, Peter (Torrington)

  Sinclair, Sir George

  Hirst, Geoffrey

  Mills, Stratton (Belfast, N.)

  Smith, John

  Hobson, Rt. Hn. Sir John

  Miscampbell, Norman

  Stodart, Anthony

  Hogg, Rt. Hn. Quintin

  Mitchell, David (Basingstoke)

  Stoddart-Scott, Col. Sir M. (Ripon)

  Holland, Philip

  Monro, Hector

  Tapsell, Peter

  Hordern, Peter

  Morgan, Geraint (Denbigh)

  Taylor, Sir Charles (Eastbourne)

  Hornby, Richard

  Morrison, Charles (Devizes)

  Taylor, Frank (Moss Side)

  Howell, David (Guildford)

  Mott-Radclyffe, Sir Charles

  Teeling, Sir William

  Hunt, John

  Munro-Lucas-Tooth, Sir Hugh

  Temple, John M.

  Hutchison, Michael Clark

  Murton, Oscar

  Turton, Rt. Hn. R. H.

  Iremonger, T. L.

  Neave, Airey

  van Straubenzee, W. R.

  Irvine, Bryant Godman (Rye)

  Nicholls, Sir Harmar

  Vaughan-Morgan, Rt. Hn. Sir John

  Jenkin, Patrick (Woodford)

  Onslow, Cranley

  Vickers, Dame Joan

  Jennings, J. C. (Burton)

  Orr, Capt. L. P. S.

  Walker, Peter (Worcester)

  Jones, Arthur (Northants, S.)

  Osborn, John (Hallam)

  Walker-Smith, Rt. Hn. Sir Derek

  Jopling, Michael

  Page, Graham (Crosby)

  Wall, Patrick

  Joseph, Rt. Hn. Sir Keith

  Page, John (Harrow, W.)

  Walters, Dennis

  Kaberry, Sir Donald

  Pearson, Sir Frank (Clitheroe)

  Ward, Dame Irene

  Kerby, Capt. Henry

  Peel, John

  Weatherill, Bernard

  Kershaw, Anthony

  Percival, Ian

  Webster, David

  Kimball, Marcus

  Peyton, John

  Wells, John (Maidstone)

  King, Evelyn (Dorset, S.)

  Pounder, Rafton

  Whitelaw, Rt. Hn. William

  Kirk, Peter

  Powell, Rt. Hn. J. Enoch

  Wills, Sir Gerald (Bridgwater)

  Kitson, Timothy

  Price, David (Eastleigh)

  Wolrige-Gordon, Patrick

  Lancaster, Col. C. G.

  Prior, J. M. L.

  Wood, Rt. Hn. Richard

  Legge-Bourke, Sir Harry

  Quennell, Miss J. M.

  Woodnutt, Mark

  Lewis, Kenneth (Rutland)

  Ramsden, Rt. Hn. James

  Worsley, Marcus

  Longden, Gilbert

  Rawlinson, Rt. Hn. Sir Peter

  Wylie, N. R.

  Loveys, W. H.

  Rees-Davies, W. R.

  Younger, Hn. George

  McAdden, Sir Stephen

  Renton, Rt. Hn. Sir David

  MacArthur, Ian

  Ridley, Hn. Nicholas

  TELLERS FOR THE NOES:

  Maclean, Sir Fitzroy

  Ridsdale, Julian

  Mr. Francis Pym and

  McMaster, Stanley

  Robson Brown, Sir William

  Mr. Jasper More.

  Bill read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  BUSINESS OF THE HOUSE
  Ordered,
  That the Proceedings of the Committee of Ways and Means may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. McBride.]

  WAYS AND MEANS
  Considered in Committee.
  [Mr. SYDNEY IRVING in the Chair]

LEASEHOLD REFORM (BETTERMENT LEVY)
Motion made, and Question proposed,
That, if provision is made by any Act of the present Session to enable tenants of residential property to acquire the freehold, then any conveyance of a reversionary interest required to be made for that purpose shall for
1398
the purposes of Part III of the Land Commission Act 1967 be treated as a conveyance on sale or assignment on sale of that interest, and the price payable for the interest shall be treated as consideration payable in respect of the disposition of the interest, and betterment levy shall be chargeable accordingly.—[Mr. MacDermot.]
10.14 p.m.
Mr. Graham Page (Crosby): To use the example we have been using in the last hour or so, does this Resolution really mean that a man who has been deprived of a £2,000 house, compulsorily, for £105 will now have to pay a betterment levy on part of that £105? Is this really so? If it is, what happens when the tenant sells? What is the base value when the tenant comes to sell? Is the base value the consideration of this transaction. £105, and, if he sells the property for £3,000, does he pay development value levy of 40 per cent. on the difference between £105 and £3,000? We ought to have an explanation and not let this Resolution go through on the nod.
The Minister of State, Ministry of Housing and Local Government (Mr. Frederick Willey): Obviously, the hon. Gentleman is confused. He has exerted

1399
himself strenuously in replying to the Second Reading debate from the Opposition Front Bench and he has not got this matter clear. It is consequential on Clause 25(2) of the Bill.
It was anticipated in the White Paper. We explained that, if there was development value, the development value would attract the levy. The levy is a universal charge, and it is right and proper that any development value realised should attract the levy. The whole principle of Part III of the Land Commission Act which the hon. Gentleman and I have discussed exhaustively is that development value which has already borne levy will not bear the levy again.
Mr. Graham Page: The right hon. Gentleman has not answered my question. This only goes half way. What is the next stage? When the tenant sells, we have to discover a base value and a market value on the sale in order to arrive at the net development value on which betterment levy is charged. On the sale what is the base value?
According to the Schedule to the Land Commission Act as it stands, it will be £105. So the tenant selling, after he has acquired the property compulsorily, would have to pay on the difference between £105 in my example and what he may sell the property for, perhaps £3,000 or £4,000.
Mr. Wiley: I can only repeat that the hon. Gentleman is confused. The example I gave in which the figure of £105 came was a case which did not involve development value at all.
Sir Harmar Nicholls (Peterborough): The right hon. Gentleman ought to try to answer my hon. Friend's question. If he does not understand the Resolution which he has put to the House, he ought to say SO. [HON. MEMBERS: "Do you?"] I confess that I do not understand it. But at this stage, before we pass the Resolution, we are entitled to a clear explanation. I add the further question: if a tenant acquires ownership under the Bill, does he have to pay Capital Gains Tax if he sells at the other figure later on?
Mr. Anthony Barber (Altrincham and Sale): This is an important matter. My hon. Friend's question was crystal clear and simple. We ought to have had an
1400
answer from the Minister, but, as we have very important business to transact before we rise this evening, we shall return to the matter in Committee.
Mr. Willey: I respond at once to the right hon. Gentleman's invitation. I have explained that I cannot answer the hon. Gentleman's point because he referred to a case which did not involve development value at all. Obviously, he was not informed. We have published explanatory leaflets about Part III of the Land Commission Act, and I recommend hon. and right hon. Gentlemen to read them before they raise the matter again.
Question put and agreed to.
Resolution to be reported.
Report to be received Tomorrow; Committee to sit again Tomororw.

NATIONAL INSURANCE ACTS 1946 AND 1948 (AMENDMENT) [MONEY]
Queen's Recommendation having been signified—
Resolved,
That, for the purposes of any Act of the present Session to amend the enactments providing for benefits out of the Industrial Injuries Fund in respect of industrial diseases, it is expedient to authorise the payment out of moneys provided by Parliament of any increase in the sums which, subject to the provision made by section 61 of the National Insurance (Industrial Injuries) Act 1965 for reimbursement out of the said Fund, are so payable under the said section 61 or that section as applied by—

(a) section 3(5) of the Workmen's Compensation (Supplementation) Act 1951; or

(b) section 4(1) of the Pneumoconiosis and Byssinosis Benefit Act 1951; or

(c) the corresponding provision of any Act of the present Session repealing and re-enacting the said section 3(5) or 4(1),

being an increase attributable to any provision of the first-mentioned Act of the present Session for securing that, where the extent of a person's disablement resulting from pneumoconiosis, or from pneumoconiosis accompanied by tuberculosis, would, if that person's physical condition were otherwise normal, be assessed under the said Act of 1965 at not less than fifty per cent. or be determined in accordance with a scheme under one of the other Acts afore-mentioned to be of comparable gravity, and the pneumoconiosis is accompanied, or further accompanied, by emphysema or chronic bronchitis, the effects of the emphysema or chronic bronchitis may be treated as if they were effects of the pneumoconiosis.—[Mr. MacDermot.]

PRICES AND INCOMES (LIMB-FITTERS)
10.21 p.m.
Mr. Maurice Macmillan (Farnham): I beg to move,
That an humble Address be presented to Her Majesty, praying that the Temporary Restrictions on Pay Increases (20th July 1966 Levels) (No.1) Order 1967 (S.I, 1967, No. 98), dated 30th January 1967, a copy of which was laid before this House on 30th January, be annulled.
This matter was first raised by my hon. Friend the Member for Richmond, Surrey (Mr. A. Royle) in an Early Day Motion taken up in an Adjournment debate on 18th November, which was replied to by the then Parliamentary Secretary to the Ministry of Health, the hon. Member for Gloucestershire, West (Mr. Loughlin). At Question Time on 5th December, in reply to a Question from my hon. Friend, the Minister of Health said:
"An agreement has been reached between the employers and the union, and the limb fitters have today resumed normal working."—[OFFICIAL REPORT, 5th December, 1966; Vol.737, c.926.]
Again in reply to my hon. Friend, after the Order which we are debating was made, the Minister said:
"Work is proceeding normally at Roehampton and no special measures are necessary."—OFFICIAL REPORT, 6th February, 1967; Vol.740, c.200.]
I think that the fact that that is so is due only to the restraint of the limb-fitters and their union, A.S.S.E.T. In the previous Adjournment debate, criticism—perhaps regret would be a more accurate word—was expressed on both sides of the House about the go-slow of the limb-fitters. My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) perhaps expressed the view of the whole House when he said:
"I have the greatest sympathy with the union over having what I understand was very nearly a firm agreement frustrated by the accident of a few days".—[OFFICIAL REPORT, 18th November, 1966; Vol.736. c.902.]
In this debate, both sides of the House will have even more sympathy with the union and the limb-fitters because they have been frustrated not by an accident but by the deliberate policy of the Government, using the D.E.A. and the Prices and Incomes Act to over-rule what
1402
amounted to a firm undertaking given to the union by the Minister of Health and the Government, preventing the employers honouring their undertaking to the union concerned.
I must express the admiration of this side of the House for the restraint being shown by the union and the limb-fitters in the face of extreme provocation. Perhaps it would be for the convenience of the House if I briefly recapitulate the events and the facts in this distressing case.
In all, about 180 limb-fitters are concerned. They are all members of A.S.S.E.T., which has been negotiating wages and conditions on their behalf for over 20 years. Out of the total, 170 fitters are concerned with fitting artificial legs and 10 deal with arms and hands, and 60 per cent. of them are employed by Messrs. J.E. Hanger and Co. Ltd., which is the largest of some eight firms working for the Ministry under contract.
It is extremely skilled work. Their job is to translate the doctors' prescriptions into artificial limbs, and it requires considerable personal qualities as well as great technical skill. I understand that the normal apprenticeship for the manufacture of artificial limbs is five years and that it takes six years or more after completing the apprenticeship to acquire sufficient skill to become a fitter.
So great is the contribution made by the limb-fitters to the well-being of their patients that many of the private patients who go to them do not, I understand, obey the rules imposed on the National Health Service of necessarily seeing a doctor first except for purely mechanical repairs. The fitters had a rise of £50 a year in March, 1964, and again in March, 1965, which brought them to the present level of £1,368 a year, or just over £26 for a 37-hour week. I come now to the melancholy chronicle of this dispute, not between the union and the employers, but between the limb-fitters and the Government.
On 15th March, 1966, A.S.S.E.T. approached Messrs. J. E. Hanger and Co. Ltd., as the major employer whose lead is followed by the other firms in the industry, and submitted a claim for £250 a year rise. The first meeting between the union and the management took place on 18th April, 1966, leading to an

1403
offer by the firm in June to negotiate increases if A.S.S.E.T. accepted the proposals for increased efficiency. Finally, an agreement was reached on 9th August, 1966, for an interim rise of £100 a year, to be paid retrospectively to 1st May, 1966. I quote a letter written by the union to the management:
"I am writing to confirm the understanding we reached today on the desirability of taking whatever steps are open to both of us to improve productivity, efficiency, and economic work within your establishments…Accordingly, we propose to recommend to our members, in line with the theme of our talks, that they become party with you to a special Working Party on Efficiency and Productivity."
We thus had, on 9th August, an agreement for an interim rise of £100 a year and an agreement to enter into a special working party on efficiency and productivity.
It was this agreement that the company was initially prevented from honouring because of its voluntary adherence to the Government's prices and incomes policy. On 24th August, there was a meeting at which the company stuck to its position that no payment could be made until 1st January, 1967, when the standstill period became the period of severe retraint. As a result, on 2nd September, 1966, the limb-fitters started to work to rule. During the course of this dispute there were various meetings, in which A.S.S.E.T. produced a formula for a six-months' pause between May and November, 1966, which was unacceptable.
Finally, on 2nd December, 1966, agreement was reached on the firm offer to pay the £100 increase from 2nd January, 1967, and to hold further discussions on methods of improving efficiency. It was the formal acceptance of this agreement on 5th December, 1966, that enabled the Minister of Health to make an announcement to the House that normal working had been resumed. It was at this point that the Minister, having welcomed this agreement as a fairy godmother and given his blessing, was replaced by the demon king in the person of the D.E.A., who on 9th January, 1967, referred the agreement to the Prices and Incomes Board.
This was too much for the patience even of the firm, who rightly rejected the Government's request and began pay-
1404
ing the £100 a year increase from 1st January, 1967. On 13th January, 1967, the Secretary of State gave notice of his intention to make an Order under Section 29 of the Prices and Incomes Act. Despite representations from the union and from the firm, that Order was made on 29th January and came into force the next day.
It is this Order that we are praying against tonight, and I hope that we shall have the support of hon. and right hon. Gentlemen in all parts of the House for I cannot find any valid reason why this Order should not be annulled. On an examination of the conduct of the union, the firm and of the Government, any sane judgment of the events must lead those of us who feel this way into the Lobby against this Order.
I can find no valid reason why this Order should be supported, but I can anticipate some of the arguments which the hon. Gentleman the Parliamentary Secretary will put forward. No doubt we shall hear of the importance of maintaining the integrity of the prices and incomes policy. This surely comes within the terms of one of the two White Papers, either on the stand-still, or the period of severe restraint. It is surely reasonable to regard this as a special case. It concerns very few people, 180 of them, and a rise of £100 a year—£18,000 less tax. Surely this is something which can hardly create a precedent and which can hardly lead even this Government into difficulties.
The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley): It would be a convenience to the House if, when he says that the claim comes within the terms of the White Paper, the hon. Gentleman would draw the attention of the House to which part of the White Paper he means.
Mr. Macmillan: If the hon. Gentleman will wait for me to develop my argument, he will find that he has plenty to answer.
I would refer the House to the remarks of my right hon. Friend the Member for Kingston-upon-Thames, who referred to this in an Adjournment debate and said:
"…we are within six months…of the period of absolute freeze, and we then begin the period of what is called severe restraint.

1405
If I understood it aright, that is a period in which advances may be made in some cases."
It is my plea to the House that this is a case in which an advance should be made. If it is the worry and concern of the Government to maintain the prices and incomes policy, they should think a little about the integrity of their own statements and of the implications of what they have said in this House. The then Parliamentary Secretary to the Ministry of Health, in the previous debate on the Adjournment, said:
"…the only thing we can hope for is that, as a result of the debate today, the appeals which I shall make before I finish will evoke a response."—[OFFICIAL REPORT, 18th November, 1966; Vol.736, c.895–902.]
They did evoke a response, and the Minister welcomed the settlement and the end of the work-to-rule.
But what happened then? No hint had
been given by the Minister to this House nor by the Ministry to the firm that the agreement was not acceptable to the Government. Very suddenly, the Department of Economic Affairs stepped in, and I am rather sorry for the Minister of Labour and the Parliamentary Secretary, who have been landed with the task of defending this dishonourable and arrogant disregard of the spirit, if not the letter, of the implied pledge given by the Minister.
Another argument which may well be
brought forward is that there would be unfairness to others who have been affected by similar Orders. I have a list of one or two. Laundry and dry-cleaning charges were frozen. An Order banning any pay increase in the case of Thorn Electrical Industries was in force on 2nd November. Then there were the newspaper, printing and distribution workers, the Metropolitan Police draughtsmen, the Rockware Glass workers and a lot more. I cannot believe that the unions or the people affected by those Orders would resent in any way an exception being made in the case of 180 limb-fitters who have been treated so shabbily.
There are those who have had a rise, some without a productivity agreement and some with. There are the senior bank staffs, bakery workers, wholesale grocery and provision workers, local authority white-collar workers, railway-
1406
men, municipal busmen, gas workers, doctors and a whole range of others. If these can get a rise sanctioned, it is going too far to make an example almost of the limb-fitters.
I understand that 284 proposals for increases in pay to take account of increases in productivity, and which were to take effect in the period of severe restraint, had been submitted to the Ministry of Labour by 16th February. I understand, further, that 89 cases had been examined up to 16th February this year and that 73 of these had been allowed as complying with the provisions of the White Paper and 16 were stopped. The case of 180 limb-fitters is one of those which has been stopped.
The question of productivity is of particular importance, because it is not only concerned with output or economy or the more efficient use of resources. The words "productivity" and "increased efficiency" take on a new meaning, because the case in question is concerned with the well-being, the happiness and the efficient and effective treatment of the disabled.
It is fair to say that part of the reason why the limb-fitters, members of A.S.S.E.T., are so dissatisfied with the treatment which they have been given is that they are not happy with the treatment which they are able to give and with the circumstances that surround their working conditions and the organisation under which they work. They treat 400 patients a week, which means that each fitter has very often to deal with more than one patient at a time. It is a factor which did not matter so much when most of the patients were ex-Servicemen, but it is one which is becoming more important now that there are more amputees among elderly people who have lost limbs as a result of disease rather than accident and who perhaps are a little more sensitive about group treatment.
Mr. Eric Ogden (Liverpool, West Derby): Is the hon. Gentleman saying that ex-Servicemen should be treated differently from civilian amputees?
Mr. Macmillan: The hon. Gentleman has misunderstood me. I was saying that a number of youngish ex-Servicemen of the same age are less likely to mind having their lower limbs exposed when other people are present than middle aged or

1407
elderly ladies. It is a very simple argument and not one carrying the connotation which the hon. Gentleman is seeking to give it.
Mr. Ogden: Read HANSARD.
Mr. Macmillan: Other difficulties which they are facing but which I need not develop tonight concern the division of responsibility, the whole question of procedure, the amount of time spent waiting, the difficulty of dealing with the ambulance services, and so on.
It is widely admitted by the Ministry, by Messrs. Hanger and the other firms concerned, by the medical authorities and by the limb-fitters and their union, that there is much room for improvement to remove these somewhat difficult and, in some cases, unpleasant conditions for all concerned. It is that as much as a wage increase which is being threatened by the Government.
The wages index is up by one point only between December, 1966, and January, 1967, largely due to an increase in the minimum earnings of the engineering industry. The Government, quite rightly have allowed that increase and others, but they are not allowing this one to a numerically insignificant, tiny group of technicians, and they have chosen this one on which to stand firm. It is one which, on any commonsense judgment, could have been an exception to any rule, however rigid in other ways. It is the rigidity which they are showing which is arrogant and cynical. Not only does it affect the reward of a small number of devoted and skilful men, but, by ignoring the improvements which will come with the increase in the salaries of the limb-fitters—improvements which both sides have undertaken to negotiate—it is refusing to ease the burden on the disabled and to increase the comfort with which they and the injured are treated.
Mr. Deputy Speaker (Mr. Sydney Irving): Mr. Hugh Jenkins.
Mr. Anthony Royle (Richmond, Surrey): On a point of order, Mr. Deputy Speaker. In view of the fact that much of this debate affects in great detail the running and management of the National Health Service, is it not a disgraceful contempt of the House that there
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is no Minister on the Front Bench representing the Ministry of Health?
Mr. Deputy Speaker: Order. This is for the Government and is not a point of order for the Chair.
10.43 p.m.
Mr. Hugh Jenkins (Putney): Seldom have we seen a more dramatic conversion than has taken place this evening in the attitude of hon. Gentlemen opposite to trades unions and their members. Nothing so dramatic has taken place since Saul became Paul on the road to Damascus. It is new to hear from hon. Gentlemen opposite a record of what has occurred here. I hope that my hon. Friend the Joint Parliamentary Secretary has taken note of it, because it was an entirely accurate record, taken in large part from a hand-out issued by A.S.S.E.T.
Mr. Maurice Macmillan: That is true, but I checked it with a speech made by the then Parliamentary Secretary to the Ministry of Health, and it tallied in every detail, except for a minor point about when the dispute started. I wish that the hon. Gentleman or some other representative of the Ministry were here to listen to the debate.
Mr. Jenkins: I am not criticising the hon. Gentleman for taking note of a trade union publication—I am praising him for doing it. I am certainly saying that this is an unusual development, but of course it is a welcome development because conversion, however belated, must always be welcomed. We must give thanks for this.
But I would not have known, to listen to the hon. Gentleman the Member for Farnham (Mr. Maurice Macmillan), that the Motion to which he referred—the Early Day Motion put down by his hon. Friend the Member for Richmond, Surrey (Mr. A. Royle)—was not exactly in the highly encouraging terms which he has been able to use tonight. I am delighted that the situation has now changed, and that hon. Members opposite see that there has occurred here something which in my view is a miscarriage of justice.
Many of the 180 limb-fitters live in my constituency. They work at the limb-fitting centre attached to Queen Mary's Hospital at Roehampton. They are of the finest type of British craftsmen, and they are a great deal more

1409
than that, as I shall show. I will say something of their work in a moment, but I should also like to say that these responsible men also contribute to the community in their leisure time. Some serve on local authorities as aldermen or councillors; some serve in other ways, such as youth leaders. One of the chief fitters recently received an honour which was recognised as a tribute to the group as a whole. So we are dealing here not with a bunch of irresponsible persons but with a very responsible group of people.
To lose a limb is a disaster which only the strongest of personalities can survive undamaged, and many of those who undergo this loss remain in a state of great distress. This is why the limb-fitter is more than a craftsman, even more than a technician. He has to be a psychologist of great delicacy and skill, for he is handling men, women and children; he is literally handling the maimed.
Let me ask the hon. Gentleman who is going to reply to the debate what more responsible work is there than that? Who deserves higher esteem, and who should be more richly rewarded?
There are, of course, rich rewards in this field, but they do not go to these men. They go to their employers who are contractors to the Ministry of Health and most of whom are wholly-owned subsidiaries of the International Vokes Engineering Group. But the cost of increases in these men's wages does not fall on their wealthy employers; it falls on the Ministry of Health.
The employers have negotiated the sort of agreement that any contractor might envy, in which, if they increase wages they get the increase back from the Ministry of Health. It might be thought that this would work to the advantage of the men, but it has not because the Ministry has influenced the employers to the contrary.
What these men—and their union—say is this. Their skill and the duties which they perform are under-valued both in status and remuneration. The reasons for that are to be found in the ambivalent attitude which the community brings to those who are maimed.
At one time doctors were butchers, dentists were barbers and opticians were quacks. All these have succeeded in making the jump into professional status
1410
because they treat the community as a whole. The limb-fitters have failed to do so because their skill is confined to an area which, on the whole, the community does not want to know about.
If we all needed the attention of limb-fitters they would be the highest paid and most esteemed professional people in the community. They would not be employed by contractors, nor forced to work in factory-line conditions. The limb-fitter—or prosthetist as they would like to be called-receives a doctor's prescription, examines the patient, measures, discusses, orders the limb and then keeps with the patient until there is satisfaction, or if there is no satisfaction he still stays with him because there is no where else to go. This is an important factor, because the limb-fitters and the limbless men form, together, a community of interest and a strong bond. Many limbless people signed petitions in support of the claims of the limb-fitters.
The attempt made in the Press to drive a wedge between the limbless people and these men was thoroughly discreditable.
Sir Harmar Nicholls (Peterborough): This is an occasion when my hon. Friends and I agree with the hon. Member. Will he suggest that the Government Whip tries to get a Member representing the Ministry of Health here? The hon. Member has referred to the Ministry of Health twice, and to the part that it has played. He ought to ask for a Minister from that Ministry to be present.
Mr. Jenkins: I hope to persuade my hon. Friends on the Front Bench not to oppose the Prayer, or at least to give some undertakings in connection with it. They are capable of listening to what I am saying and also, if not of changing their minds themselves at least of advising their right hon. Friends to change theirs.
As I have said, the relationship between the limb-fitters and the limbless is akin to that between a doctor and his patient. These men must be highly qualified not only in the technique of their job but also in anatomy, and must be able to translate their skills into forms acceptable to a crippled old person. a deformed child, or a young woman who may feel that life is no longer worth living. This is a very high quality of skill. Some of these men have been abroad to lecture,

1411
and people from other countries come to Roehampton to learn how this job is done.
This is a sphere in which this country stands high, but the conditions in which these men have to work in Roehampton leave much to be desired. There are the children crippled by thalidomide, whose limbs have constantly to be changed as they grow up. New responsibilities are constantly being required of these men by our times. At present each man is required to handle far too many patients. This has led to a situation in which each one tries to deal with several patients at once—as though a dentist had six chairs and had to run from one to the other. That is a fair comparison with what occurs at Roehampton.
In March last year the men decided, through A.S.S.E.T., to make an endeavour to achieve a substantial improvement in their position and status. If they are compared with skilled technicians and engineers they are underpaid by at least £250 a year, and the extra qualities and skills they require are not required by technicians in other fields.
There are about 700 craftsmen at Roehampton, and 50 limb-fitters. The 50 limb-fitters are the most skilled of all. They are the top of the pyramid. This claim is not on behalf of the 700 craftsmen; it is only on behalf of the 50 limb-fitters at Roehampton, or the 180 in the whole country. The freeze was not on when this claim was made. The increase of £100 a year was an interim settlement, instead of the substantial settlement which the men wanted, but the freeze went on and the management did not honour the agreement. After a further abortive meeting the men started to work to rule on 2nd September.
To understand this decision is not to approve it, but it can be easily understood when one considers the objections the men have made for years about the conditions under which they have to serve patients at Roehampton. They rightly object to the Ministry of Health's appointments system, which subjects patients to long waits and forces the men to deal with as many as six patients at a time and sometimes more. Their disappointment over the claim was the last straw. Some hon. Members will have seen an
1412
article in the New Statesman by a limbless man objecting to the abuse that had been poured on the limb-fitters, and pointing out that they were protesting not only on their own behalf but on behalf of their patients, who are subjected to scandalous conditions at Roehampton.
I warmly endorse the conclusion of that article, which is that the men should be employed by the Ministry of Health and not by a private contracting firm, and should be given the status and pay which their skills justify. In all other advanced countries, the conditions which the Roehampton
men enforced by working to rule are the normal practice. Some patients welcomed the individual attention which they received for the first time, while others naturally resented the long waits, some even having to go home and return on another day.
A further meeting with the union took place and eventually a settlement was agreed of £2 a week from 1st January, 1967. The settlement was announced in the House by
the Minister of Health, with no suggestion that it would not be honoured. That was on 5th December, and the agreement was honoured, but, in January, the Minister of Labour referred this completed agreement to the Prices and Incomes Board, and the First Secretary topped the whole thing off by making an Order preventing the further payments of the increase, after they had received it for four or five weeks. This is the Order now before the House.
These men are being subjected, if not to victimisation, at least to gross mistreatment by the Government. The reason that the Government have acted in this deplorable manner is threefold. First, they are affected by the hostile propaganda against these men by the Press. They have allowed their proper sympathy with the limbless to be channelled into hostility against the limb-fitters. Some hon. Members have been similarly affected.
Second, the case is seen as a challenge to the prices and incomes policy. Third, they resent the non-co-operation of A.S.S.E.T. and its General Secretary, Clive Jenkins, and are determined to show him who is boss. I know this to be the case because the question of whether or not the limb-fitters deserve the increase is the last thing which Members of the

1413
Government refer to in speaking of this matter. They are not concerned with justice, but just want to win.
I am not content that my constituents should be treated in this way. The case illustrates that the Government do not have the mechanism to run a fair wages policy. These men have been selected for this treatment because the case came to public notice. Meanwhile, other unions—and indeed A.S.S.E.T. itself—have negotiated increases which are currently being paid. At least 41 negotiated by the same union as in this case are being paid. In many cases, I am sure, these increases are no better or more socially justified than this increase, but simply have not been noticed. The machinery is not there to notice them.
But there is no justice or reason in penalising those whose work is in the more important and sensitive areas and allowing those who do less publicly important work to receive increases. This case illustrates that the Government do not know what they are doing. My right hon. Friends the Ministers of Labour and Health and the First Secretary are like three bulls thrashing about in the delicate, complex and multifarious china shop of industrial negotiations. They are doing infinite harm.
They are not motivated by a determination to make drastic readjustments. In the remuneration of the various sections
of the community in a fairer and more Socialist direction. If they were, they would get full support and incidental injustices would be tolerated. But they are not doing that. They are doing the opposite. The tendency seems to be that the more wealthy are becoming wealthier, whereas those who deserve most from the community are not getting their desserts. The "spivs" are thriving.
This is not what the Government should be doing. It is because I know that these men should not be further harassed but should be allowed to receive the increase which their employers are willing to pay that I shall not be able to support the Government in the Lobby tonight. I urge my hon. Friend to throw his brief away and to recognise that it is not always the back benchers and the trade unionists who are wrong. The Government, too, can make mistakes. Let my hon. Friend have the grace to recognise
1414
that this is one of them and announce that the Order will be withdrawn.
It would be a great day not only for the limb-fitters but for the Government if they could but say that. But if they persist in their error, it would be wrong for those of us who see that they are mistaken to emulate their myopia by supporting it in the House. If we tolerate small injustices like this—which is easy—we shall encourage the Government to larger errors; if we do that we shall do them a great disservice. For their own good, it is desirable that my right hon. Friend should be prevented from inflicting this injustice on a very long-suffering group of people as well as on the limbless. I fear that if the Government are obdurate, there will be art explosion of righteous indignation at Roehampton in which the chief sufferers will be those who have suffered too much already.
I therefore appeal to the Minister to have the courage to change his mind. I do not necessarily urge any of my hon. Friends to do what I feel that I must do tonight. I shall take this action because I know these men personally, because I know their case personally and because they are my constituents. I strongly believe in their case. However, each hon. Member must use his own judgment. For my part, I urge my hon. Friend to change his mind and concede to the limb-fitters this belated and inadequate recognition of their true worth to the community. But if he will not do that, then I regret that I will not be able to follow him into the Division Lobby tonight.
11.1 p.m.
Mr. Anthony Royle (Richmond, Surrey): I congratulate the hon. Member for Putney (Mr. Hugh Jenkins) on having made an excellent speech. He is showing great courage and the whole House admires the support which he is giving to his constituents. I hope that he will go a step further and not just abstain but vote with us against the Government. My hon. Friend the Member for Farnham (Mr. Maurice Macmillan) skilfully detailed the background to this Order, as did the hon. Member for Putney, so that there is no need for me, at this late hour, to go into the history from the beginning.

1415
I first became involved, and raised the matter in an Adjournment debate on 18th November last, after my local newspaper in Richmond had been asked, at an early stage in the affair, not to print the details of the dispute that was then taking place in view of the damage that the publicity might do. As a result of that request, I became involved. The limb-fitters were working to rule at that time. They had started working to rule on 2nd September and that had caused a great deal of distress to many disabled people, as the House already knows.
It has also been pointed out that very few people were involved in the actual dispute. At the limb-fitting centre in Putney only about 28 men were involved and I believe that, with one exception, and he is a constituent of mine, all of them are constituents of the hon. Member for Putney. Only 170 to 180 men in total throughout the country were involved.
I shall never forget the appeal which was made by the then Minister at the conclusion of the Adjournment debate which I initiated. The then Parliamentary Secretary to the Ministry of Health stated:
"I would ask the general secretary of A.S.S.E.T., whose great humanity and understanding I know, to influence, in the name of humanity, the ending of this dispute. I would appeal to the fitters at the centre, whatever dispute they may have with the Government and their economic policy. 'Please see to it that the patients who rely on you and us do not suffer in the way in which they are suffering now'".—[OFFICIAL REPORT, 18th November, 1966; Vol.736, c.901]
That appeal was made by the then Parliamentary Secretary. I am glad to see that the present Parliamentary Secretary has joined us. I thought it strange that he was not in his place at the beginning of this debate, but I have no doubt that there is a certain amount of feeling between the Ministry of Health, the Department of Economic Affairs and the Ministry of Labour regarding the handling of this case.
The Parliamentary Secretary to the Ministry of Health (Mr. Julian Snow): I assure the hon. Gentleman that I am, neither physically nor temperamentally, a blushing violet. I had hoped that he would have done me the courtesy of understanding that I had other work
1416
to do. I thought that I was well within my duty in leaving this matter in the competent hands of my hon. Friend the Joint Parliamentary Secretary to the Ministry of Labour, who has the Departmental responsibility.
Mr. Royle: Far be it for me to argue with the hon. Gentleman. I am sure that he is aware that his duty to the House of Commons comes before all other duties. At any rate, I am glad to see him in his place now. Following the Parliamentary Secretary's appeal, a settlement in this case was finally agreed on 2nd December, and a great deal of work was done by the present Minister of Health to bring about that settlement.
The settlement was for an increase of £2 a week to take effect from 2nd January of this year. The employers were willing to backdate that award to 1st May, 1966. I well remember the Minister of Health announcing this to the House, and the cheers with which that announcement was greeted, and which greeted the success of the Ministry of Health and the forbearance and cooperation which the limb-fitters and A.S.S.E.T. displayed in reaching that agreement with Messrs. Hanger and the Ministry.
Then what happened? The Department of Economic Affairs immediately started to meddle. The matter was first referred to the Prices and Incomes Board, and then the Secretary of State produced his freeze Order, which we are now discussing. Why have Ministers in the Department of Economic Affairs been so dogged in dealing with this dispute in such a cruel and unnecessary way? Only 180 men are involved in the whole of the country—28 at the limb-fitting centre at Roehampton. The cost, as already mentioned by my hon. Friend, is small—£360 a week or about £18,000 a year. It is a very small amount.
On 9th February last my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), in a supplementary question to the Secretary of State, asked:
"Is not the total amount involved absolutely trivial in terms of the national economy or in relation to the amounts at stake in respect of electrical contractors and the agricultural workers? As these men are specially skilled men, limited in number, who do a vital job of work for disabled people is it not very petty

1417
to invoke this great instrument with criminal penalties to stop the increase which their employers want to give them"?—[OFFICIAL REPORT, 9th February, 1967; Vol.740, c.1809.]
I think my right hon. Friend summed up the situation very well.
Mr. Alexander W. Lyon (York): In the cases which the hon. Gentleman has mentioned there were references to the Prices and Incomes Board before the increases were announced. All that is being asked of the limb-fitters is that they should have awaited the report of the Prices and Incomes Board. Why is it so disgraceful to ask them to wait those few more weeks, perhaps, before the report comes out?
Mr. Royle: The hon. Member says that all that is being asked of these limb-fitters is that they should wait longer, but this case has been going on for eight or nine months. They have already been waiting eight or nine months because of the freeze. These men have been treated shabbily for months, and the hon. Member's attitude is typical of the attitude of the Government Front Bench.
I have spent a lot of my life in the insurance industry—in Lloyds of London—and one thing I have always been taught there is that one's word is one's bond. When a Minister on behalf of Her Majesty's Government gives his word in respect of an agreement that has been perfectly fairly reached round the table with the trade union and then goes back on it it is a disgraceful action. This is what has happened. It is a shabby and dishonourable action on the part of Her Majesty's Government.
We have already seen that the then Parliamentary Secretary to the Ministry of Health has now been switched to another Ministry. Otherwise, his personal position must have been very difficult. I wonder at the personal position of the Minister of Health. After all, his honour was committed in reaching that agreement with the limb-fitters, yet he still remains as Minister of Health. I think that in view of the action taken by his colleagues in the Department of Economic Affairs the right hon. Gentleman should look very carefully at his own position.
In the Adjournment debate last year, I attacked the behaviour of the limb-fitters in working to rule, and I gave details of the distress being caused to
1418
many disabled people as a result of that work-to-rule. I now consider that the limb-fitters have behaved with great restraint. I say that frankly tonight. In the early days, they should not, in my view, have worked to rule. However, they then reached agreement with the Ministry of Health, an honourable agreement, and they have now been let down by the Government. These skilled men have behaved with great restraint over the last few weeks since that agreement was reached.
There are few hon. Members on either side of the House who would not feel extremely bitter if, having reached a fair and honourable agreement with their employers round the table and having gone away thinking that that agreement had been finalised, they then found that, as a result of action taken by other Departments, the agreement which they thought had been achieved was whisked away from in front of them.
I shall not detain the House longer because I know that there are others wishing to speak. I hope that there will be many hon. Members opposite, apart from the hon. Member for Putney who has already shown his courage tonight by defying the Government Whips, who will do as they know they should and join us in the Lobby to vote down this disgraceful Order which should never have been put before the House of Commons.
11.11 p.m.
The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley): In conformity with the precedent set by my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) in a previous debate on one of these Orders, I begin by declaring my interest. I am a member of the Association of Supervisory Staffs, Executives and Technicians I hope that that declaration of interest, as well as clearing my position with the House, will give particular validity to my first insistence, namely, that it is monstrously wrong to suggest that the Government are in some way taking a special delight in pursuing prices and incomes Orders against that union.
The simple fact is that the Government are obliged by their policy to preserve the workings of prices and incomes policy. They are obliged by their policy to conform to the regulations in the White

1419
Paper. It is a statistical consequence that those unions which choose to breach
those proposals most frequently are the ones against which most Orders are made. The relationship between the Government and A.S.S.E.T. is no more and no less than that.
What has been said this evening about the quality of workmanship, the importance of the job and the level of skill and training necessary before a man can become a qualified limb-fitter is not in dispute across the Floor. These things are not in question. There is no argument there in which it is appropriate for us to indulge. The Government accept entirely all that has been said about the men, all that has been insisted upon about their work, the special obligations they have to undertake and the special responsibilities with which they are charged. That is not what we are debating.
We are debating whether there should be a breach of the incomes policy, whether there should be a calculated breach, a capricious, random and arbitrary breach. It is no good—
Mr. John Biffen (Oswestry): Will the hon. Gentleman reflect on the use of the words "calculated and capricious"? A.S.S.E.T. itself has proudly said that there are many other instances in which the policy has been infringed. Why have no Orders been made in those instances?
Mr. Hattersley: Not only A.S.S.E.T. but other people, the hon. Gentleman among them, often proudly say—though whether pride is the appropriate emotion is a matter for dispute—that the policy has been breached. They always state it in the general and never in the particular. On those occasions when hon. Members have announced in the House—Acrow was a case in point—that there has been a breach, examination has proved that in fact there was no breach. If A.S.S.E.T. has evidence about breaches on which it is prepared to give chapter and verse, not only is it its duty to give the evidence but it would make its case a good deal more convincing if it was prepared to do so.
Mr. Biffen rose—
Mr. Deputy Speaker: The Minister is not giving way so the hon. Member must not persist.
Mr. Hattersley: The hon. Gentleman the Member for Farnham (Mr. Maurice Macmillan), in his opening speech, suggested that this was acceptable under the Government's prices and incomes policy. He said that the White Paper would allow this to go forward. I interrupted him in the hope that he would give the House details of that contention. I felt that the debate would be conducted with dispatch and clarity were he prepared to point to the White Paper and say in which terms, paragraph, clause and line this increase, negotiated with the Roehampton workers, could be allowed under the terms of the Government's policy. Unfortunately, he was unable to give a specific example. Those hon. Members who have talked this evening about the necessity and propriety of allowing this increase have made no case at all for suggesting that it could go through under the terms of the White Paper or the Government's policy.
Sir Robert Cary (Manchester, Withington): Although this might not be in line with the White Paper, for the most humane reasons such as this surely the Government have a discretionary power to breach the policy.
Mr. Hattersley: I am obliged to the hon. Member. He has conceded my initial point.
Mr. Norman Atkinson (Tottenham): Will my hon. Friend give way?
Mr. Hattersley: Not until I have answered this point. The argument is about whether there should be an arbitrary and capricious breach of policy. Hon. Members have been arguing that the policy would allow this to go through. The hon. Gentleman the Member for Manchester, Withington (Sir R. Cary) is arguing that an exception should be made. This is what I want to discuss. Nobody has given chapter and verse under which the increase could be allowed under the incomes policy.
Mr. Atkinson: On this question a breach was made for the medical profession with whom the limb-fitters work very closely. The medical profession

1421
had increases on 1st October, 1966, which was exactly midway through the freeze period. The Government took the decision to increase their rate, why is it not possible to do it for the ancillary workers?
Mr. Hattersley: If my hon. Friend will do me and the House the courtesy of reading the White Paper he will see that the Government will approve existing commitments and allow them to go forward. The doctors' increase was an existing commitment within the terms of the White Paper. This is not. This commitment was not entered into in any form or final sense until the last week of August. There is a distinction between those commitments entered into before 20th July and those entered into afterwards.
I can only say to hon. Members who want a special exception to be made in this case that the incomes policy as it stands would not allow it and I want to suggest why the Government believe that such an exception should not be made.
It is a monstrous misrepresentation to suggest that my right hon. Friend the Minister of Health somehow announced that this payment could be made. The hon. Member for Richmond, Surrey (Mr. A. Royle) actually asked a question of my right hon. Friend and he has therefore a particular obligation to quote accurately and clearly the answer he got. On 5th December my right hon. Friend did no more than tell the House what the position was. He said that agreement had been reached and that normal work had been resumed. He did not say that the agreement was within the scope of the Government's policy. He merely made an announcement of the fact that agreement had been reached.
Mr. A. Royle rose—
Mr. Deputy Speaker: The hon. Member is not giving way.
Mr. Hattersley: I will gladly give way to the hon. Member when I have finished the point I am making. The Minister of Health would be the first to say that he was in no way in a position to say that this agreement was in conformity with our economic policy.
Mr. A. Royle: I am grateful to the hon. Gentleman for giving way. I never said anything of the sort. I mentioned
1422
in my speech that his right hon. Friend the Minister of Health announced to the House that a settlement had been reached and the dispute was therefore finished. The settlement reached was the agreement to pay an extra £2 a week. The hon. Gentleman knows that as well as I do.
Mr. Hattersley: But then the hon. Gentleman went on to say that since my right hon. Friend made that announcement he was in some strange way under an obligation to resign—because he had announced a fact, because he had told the House of the position as it was at Roehampton at that moment. In fact he did not give his blessing to it or say that it was in conformity with Government policy; he simply announced what the position was at that time.
Mr. Maurice Macmillan rose—
Mr. Hattersley: I must get on. I want to come on to some of the other points that were raised.
Mr. Macmillan rose—
Mr. Deputy Speaker: Order. If the House is to use the time to the best advantage it would be better if it listened quietly to the Minister.
Mr. Hattersley: I now turn to some of the other things the hon. Gentleman said, such as the scorn he poured on the Order because it concerned only a small number of men. I disagree with that judgment, and agree much more with the point of view of the right hon. Member for Enfield, West (Mr. Iain Macleod) when he discussed another Order in the House on 13th December. In his view it was immaterial whether the number of workers affected was 30,000, 120 or only one. The important point was whether it was right in terms of equity, justice and Government policy that it should go forward.
I am happy to discuss the equity and propriety of the Order, but I want to get it clear that some of the points made are totally extraneous to the considerations of Government policy. It may well be—and the Government in no way contend anything other—that in terms of equity and justice and all the criteria laid down by the hon. Gentleman that the limb fitters of Roehampton are underpaid. It may well be that the claim that

1423
A.S.S.E.T. initially made on their behalf for a pay increase of £250 a year is justified in all abstract terms.
Because the Government were not sure what payment was justified, and because they wanted a guide and yardstick, they properly referred the claim to the Prices and Incomes Board. That was the intention of that reference. Had the union been prepared to allow the reference to go through in the normal way the unhappy events that followed need not have been brought about. I can give an assurance that, even though the Order is now in force, if the Prices and Incomes Board produces a report which says that in terms of Government economic policy, in the terms of the prices and incomes policy, that award or part of it should go through, the Government will use their powers to withdraw the Order and allow the payment to go on.
The Government are committed to and bound by whatever recommendation the Board may make. It is a great pity that the union and men were not prepared to allow that reference to take its natural course and await the report. I reiterate and make clear to all those right hon. and hon. Gentlemen—
Mr. Terence L. Higgins (Worthing): Do I understand that the Government will do whatever the Prices and Incomes Board recommends?
Mr. Hattersley: What I said was that if the Prices and Incomes Board tells the Government that the award, or part of it, or any aspect of it, is possible within the terms of Government prices and incomes policy we shall implement that recommendation.
Mr. Higgins: Did the hon. Gentleman not say that the Government were bound by whatever the Prices and Incomes Board said?
Mr. Hattersley: I have given the assurance, and I give it again, that if the Prices and Incomes Board tell the Government that part or all of the award is acceptable within the prices and incomes policy then on this specific occasion we shall be bound by that recommendation. That is why the Government viewed with great regret the original refusal of the union to have its claim adjudicated in that fashion. That is why the Government so regret the
1424
undoubted suffering, hardship and friction which came about as a result of the work to rule. That is why we were forced to make this Order, which does not limit the remuneration for ever to the levels before 20th July, but simply imposes a standstill, a pause, a period for reflection during which the Prices and Incomes Board can deliberate.
Sir Harmar Nicholls: How can the hon. Gentleman suggest that the Government have no discretion in this sense while, at the same time, saying that, in this special case, they will bind themselves to what the Prices and Incomes Board says? If it is that they can make an exception in that sense, why cannot they use their discretion to withdraw the Order?
Mr. Hattersley: I will say it again because I am sure that the hon. Gentleman will want to quote it against me. It is worth saying a third time. If the Board says that this award or part of it is compatible with the prices and incomes policy, then of course we will allow it to be honoured. I have said no more and no less than that. It is not a matter of discretion but of interpretation, of holding the line, not breaking it. It is a matter of asking the Board to see where the line is and applying that line as the Board draws it.
Hon. Members who have spoken have said, and others no doubt feel, that compassion requires the Government to break all their rules in this case. But the Government have their obligations not to go forward in what I would describe as an arbitrary fashion. We have obligations to every section of the community in equally socially important industries with an equally high social content, but where the workers have been prepared voluntarily to co-operate with Government policy.
The hon. Member for Farnham is wrong in saying that the comparison is between this Order and others made to enforce our policy. The real comparison is between these men and those sections of the economy where no Order was necessary—between these men and the police, between these men and the firemen, between these men and the teachers of handicapped children, between these men and all who may have had wage limitations imposed in a sense and who

1425
have accepted the situation in a much more real sense.
We have a special obligation to such people, and compassion and social justice require us not to withdraw this Order and thereby break the line of the incomes policy. There is an even more important point. If the great social policies, in which we on this side believe, are to be put into operation, if we are to have the compassionate services of which my hon. Friend the Member for Putney (Mr. Hugh Jenkins) spoke so eloquently, we can only have them in a healthy economy and a prosperous society. It is the judgment of the Government that such a society in a sense is dependent on the prices and incomes policy.
Mr. Maurice Macmillan: What about the special relationship of the Minister of Health in this matter? The hon. Gentleman attempted to say that the Minister had given no sort of undertaking in this matter. Surely the whole role of the Ministry of Health over this
is totally different from other, similar cases because the Minister himself was, in some sense, a party to the agreement, since the employers are contractors for the Ministry and the Ministry and the Government have prevented the contractors from meeting the original claim and reaching agreement sooner.
Mr. Hattersley: My right hon. Friend the Minister of Health is no more responsible for the actual level of remuneration and cost charges at Roehampton than any other enterprise is responsible for the costs and charges of its contractors. The prices and incomes policy is the collective responsibility of the Government. It is wrong to suggest that the Minister of Health commented or wished to comment on the validity and propriety of this award in terms of the Government's economic and prices and incomes policies.
Question put:—
The House divided: Ayes 153, Noes 226.

Division No. 284.]

AYES

[11.29 p.m.

Alison, Michael (Barkston Ash)

Fortescue, Tim

Macmillan, Maurice (Farnham)

Allason, James (Hemel Hempstead)

Foster, Sir John

Maddan, Martin

Astor, John

Gibson-Watt, David

Maginnis, John E.

Awdry, Daniel

Giles, Rear-Adm. Morgan

Marten, Neil

Baker, W. H. K.

Gilmour, Sir John (Fife, E.)

Maude, Angus

Balniel, Lord

Goodhew, Victor

Maxwell-Hyslop, R. J.

Barber, Rt. Hn. Anthony

Gower, Raymond

Maydon, Lt.Cmdr. S. L. C.

Batsford, Brian

Grant-Ferris, R.

Mills, Peter (Torrington)

Bennett, Dr. Reginald (Gos. & Fhm)

Grimond, Rt. Hn. J.

Miscampbell, Norman

Biffen, John

Gurden, Harold

Mitchell, David (Basingstoke)

Biggs-Davison, John

Hall-Davis, A. G. F.

Monro, Hector

Birch, Rt. Hn. Nigel

Hamilton, Michael (Salisbury)

More, Jasper

Black, Sir Cyril

Harris, Reader (Heston)

Morgan, Geraint (Denbigh)

Body, Richard

Harrison, Brian (Maidon)

Morrison, Charles (Devizes)

Boyd-Carpenter, Rt. Hn. John

Harvie Anderson, Miss

Mott-Radclyffe, Sir Charles

Boyle, Rt. Hn. Sir Edward

Hastings, Stephen

Munro-Lucas-Tooth, Sir Hugh

Braine, Bernard

Heath, Rt. Hn. Edward

Murton, Oscar

Brinton, Sir Tatton

Heseltine, Michael

Neave, Airey

Bromley-Davenport,Lt.-Col.SirWalter

Higgins, Terence L.

Nicholls, Sir Harmar

Brown, Sir Edward (Bath)

Hirst, Geoffrey

Nott, John

Bruce-Gardyne J.

Hobson, Rt. Hn. Sir John

Onslow, Cranley

Buchanan-Smith, Alick (Angus,N&M)

Hogg, Rt. Hn. Quintin

Osborn, John (Hallam)

Campbell, Gordon

Holland, Philip

Page, Graham (Crosby)

Carlisle, Mark

Hooson, Emlyn

Page, John (Harrow, W.)

Cary, Sir Robert

Hordern, Peter

Pearson, Sir Frank (Clitheroe)

Chichester-Clark, R.

Howell, David (Guildford)

Peel, John

Clegg, Walter

Hunt, John

Percival, Ian

Cooke, Robert

Hutchison, Michael Clark

Peyton, John

Cooper-Key, Sir Neill

Irvine, Bryant Godman (Rye)

Pounder, Rafton

Cordle, John

Jenkin, Patrick (Woodford)

Powell, Rt. Hn. J. Enoch

Crawley, Aidan

Jopling, Michael

Prior J. M. L.

Crosthwaite-Eyre, Sir Oliver

Joseph, Rt. Hn. Sir Keith

Quennell, Miss J. M.

Crouch, David

King, Evelyn (Dorset, S.)

Ramsden, Rt. Hn. James

Crowder, F. P.

Kirk, Peter

Rees-Davies, W. R.

Dalkeith, Earl of

Kitson, Timothy

Renton, Rt. Hn. Sir David

Dance, James

Knight, Mrs. Jill

Ridley, Hn. Nicholas

Dean, Paul (Somerset, N.)

Legge-Bourke, Sir Harry

Rodgers, Sir John (Sevenoaks)

Deedes, Rt. Hn. W. F. (Ashford)

Lewis, Kenneth (Rutland)

Roots, William

Doughty, Charles

Longden, Gilbert

Rossi, Hugh (Hornsey)

Elliot, Capt. Walter (Carshalton)

Loveys, W. H.

Royle, Anthony

Errington, Sir Eric

Lubbock, Eric

Russell, Sir Ronald

Eyre, Reginald

MacArthur, Ian

Scott, Nicholas

Farr, John

Maclean, Sir Fitzroy

Sharples, Richard

Fisher, Nigel

McMaster, Stanley

Shaw, Michael (Sc'b'gh & Whitby)

Smith, John

Vaughan-Morgan, Rt. Hn. Sir John

Winstanley, Dr. M. P.

Stodart, Anthony

Wall, Patrick

Wolrige-Gordon, Patrick

Stoddart-Scott, Col. Sir M. (Ripon)

Walters, Dennis

Worsley, Marcus

Taylor, Sir Charles (Eastbourne)

Weatherill, Bernard

Wylie, N. R.

Taylor, Frank (Moss Side)

Webster, David

Younger, Hn. George

Teeling, Sir William

Wells, John (Maidstone)

Turton, Rt. Hn. R. H.

Whitelaw, Rt. Hn. William

TELLERS FOR THE AYES:

van Straubenzee, W. R.

Wills, Sir Gerald (Bridgwater)

Mr. Francis Pym and

Mr. Anthony Grant.

NOES

Abse Leo

Freeson, Reginald

Murray, Albert

Alldritt, Walter

Gardner, Tony

Neal, Harold

Allen, Scholefield

Garrett, W. E.

Noel-Baker, Francis (Swindon)

Anderson, Donald

Gordon Walker, Rt. Hn. P. C.

Noel-Baker,Rt.Hn.Philip(Derby,S.)

Archer, Peter

Gray, Dr. Hugh (Yarmouth)

Norwood, Christopher

Ashley, Jack

Grey, Charles (Durham)

Oakes, Gordon

Atkins, Ronald (Preston, N.)

Hamilton, James (Bothwell)

Ogden, Eric

Bacon, Rt. Hn. Alice

Hamling, William

O'Malley, Brian

Barnett Gordon A. T.

Harper, Joseph

Oswald, Thomas

Barnett, Joel

Harrison, Walter (Wakefield)

Owen, Dr. David (Plymouth, S'tn)

Benn, Rt. Hn. Anthony Wedgwood

Hart, Mrs. Judith

Padley, Walter

Binns, John

Haseldine, Norman

Page, Derek (King's Lynn)

Bishop, E. S.

Hattersley, Roy

Palmer, Arthur

Blackburn, F.

Hazell, Bert

Parker, John (Dagenham)

Blenklnsop, Arthur

Henig, Stanley

Parkyn, Brian (Bedford)

Boardman, H.

Hooley, Frank

Pavitt, Laurence

Boston, Terence

Houghton, Rt. Hn. Douglas

Pearson, Arthur (Pontypridd)

Boyden, James

Howell, Denis (Small Heath)

Pentland, Norman

Braddock, Mrs. E. M.

Hoy, James

Perry, Ernest G. (Battersea, S.)

Bradley, Tom

Hughes, Roy (Newport)

Price, Christopher (Perry Barr)

Brooks, Edwin

Hunter, Adam

Price, Thomas (Westhoughton)

Broughton, Dr. A. D. D.

Hynd, John

Price, William (Rugby)

Brown,B0b(N'c'tle-upon-Tyne,W)

Jackson, Colin (B'h'se & Spenh'gh)

Probert, Arthur

Brown, R. W. (Shoreditch & F'bury)

Jenkins, Rt. Hn. Roy (Stechford)

Randall, Harry

Buchan, Norman

Johnson, Carol (Lewisham, S.)

Reynolds, G. W.

Buchanan, Richard (G'gow, Sp'burn)

Johnson, James (K'ston-on-Hull, W.)

Rhodes, Geoffrey

Cant, R. B.

Jones, Dan (Burnley)

Richard, Ivor

Chapman, Donald

Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

Roberts, Albert (Normanton)

Coe, Denis

Judd, Frank

Roberts, Goronwy (Caernarvon)

Coleman, Donald

Kelley, Richard

Roberts, Gwilym (Bedfordshire, S.)

Concannon, J. D.

Kerr, Dr. David (W'worth, Central)

Robinson,Rt.Hn.Kenneth(St.P'c'as)

Corbel, Mrs. Freda

Lawson, George

Robinson, W. 0. J. (Walth'stow, E.)

Craddock, George (Bradford, S.)

Leadbitter, Ted

Rodgers, William (Stockton)

Crawshaw, Richard

Ledger, Ron

Rogers, George (Kensington, N.)

Crossman, Rt. Hn. Richard

Lestor, Miss Joan

Rose, Paul

Cullen, Mrs. Alice

Lever, L. M. (Ardwick)

Ross, Rt. Hn. William

Dalyell, Tam

Lewis, Ron (Carlisle)

Rowland, Christopher (Meriden)

Davidson, Arthur (Accrington)

Lomas, Kenneth

Rowlands, E. (Cardiff, N.)

Davies, Dr. Ernest (Stretford)

Luard, Evan

Sheldon, Robert

Davies, G. Elfed (Rhondda, E.)

Lyon, Alexander W. (York)

Shore, Peter (Stepney)

Davies, Ednyfed Hudson (Conway)

Lyons, Edward (Bradford, E.)

Short,Rt.Hn.Edward(N'c'tle-u-Tyne)

Davies, Harold (Leek)

McBride, Neil

Silkin, Rt. Hn. John (Deptford)

Davies, Ifor (Gower)

McCann, John

Silkin, Hn. S. C. (Dulwich)

Davies, Robert (Cambridge)

MacColl, James

Slater, Joseph

de Freitas, Rt. Hn. Sir Geoffrey

MacDermot, Niall

Small, William

Dell, Edmund

Macdonald, A. H.

Snow, Julian

Dempsey, James

McGuire, Michael

Spriggs, Leslie

Dewar, Donald

McKay, Mrs. Margaret

Steele,Thomas (Dumbartonshire,W.)

Dobson, Ray

Mackie, John

Swingler, Stephen

Doig, Peter

Mackintosh, John P.

Symonds, J. B.

Donnelly, Desmond

Maclennan, Robert

Taverne, Dick

Dunn, James A.

McNamara, J. Kevin

Thomas, George (Cardiff, W.)

Dunnett, Jack

MacPherson, Malcolm

Thornton, Ernest

Dunwoody, Mra. Gwyneth (Exeter)

Mahon, Peter (Preston, S.)

Tinn, James

Dunwoody, Dr. John (F'th & C'b'e)

Mahon, Simon (Bootle)

Tomney, Frank

Eadle, Alex

Mailalieu, E. L. (Brigg)

Tuck, Raphael

Edelman, Maurice

Mallalieu,J.P.W.(Huddersfield,E.)

Urwin, T. W.

Edwards, Rt. Hn. Ness (Caerphilly)

Manuel, Archie

Varley, Eric G.

Edwards, Robert (Bilston)

Mapp, Charles

Wainwright, Edwin (Dearne Valley)

Edwards, William (Merioneth)

Marquand, David

Walden, Brian (All Saints)

Ennals, David

Mayhew, Christopher

Walker, Harold (Doncaster)

Evans, Albert (Islington, S.W.)

Mellish, Robert

Wallace, George

Evans, Ioan L. (Birm'h'm, Yardley)

Millan, Bruce

Watkins, David (Consett)

Faulds, Andrew

Miller, Dr. M. S.

Watkins, Tudor (Brecon & Radnor)

Fernyhough, E.

Milne, Edward (Biyth)

Weitzman, David

Finch, Harold

Mitchell, R. C. (S'th'pton, Test)

Wellbeloved, James

Fitch, Alan (Wigan)

Molloy, William

Wells, William (Walsall, N.)

Fitt, Gerard (Belfast, W.)

Moonman, Eric

Whitaker, Ben

Fletcher, Raymond (Ilkeston)

Morgan, Elystan (Cardiganshire)

White, Mrs. Eirene

Ford, Ben

Morris, Alfred (Wythenshawe)

Whitlock, William

Forrester, John

Morris, John (Aberavon)

Wilkins, W. A.

Fowlor, Gerry

Moyle, Ronald

Williams, Alan (Swansea, W.)

Fraser, John (Norwood)

Mulley, Rt. Hn. Frederick

Williams, Alan Lee (Hornchurch)

1428

1429

Williams, Clifford (Abertillery)

Woodburn, Rt. Hn. A.

TELLERS FOR THE NOES:

Williams, Mrs. Shirey (Hitchin)

Woof, Robert

Mr. Charles R. Morrison and

Winnick, David

Yates, Victor

Mr. Ernest Armstrong.

Winterbottom, R. E.

ADJOURNMENT

Resolved, That this House do now adjourn.—[Mr. Harper.]

Adjourned accordingly at twenty minutes to Twelve o'clock.