Lords Amendment: No. 1, in page 2, line 6, at end insert:
(2) In this Part of this Act references to a leasehold house shall not include a house situated on land belonging to a landlord which is an institution, organisation or trust established for charitable purposes.
§ 4.38 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Arthur Skeffington)
I beg to move, That this House doth disagree with the Lords in the said Amendment.
The Amendment from the other place goes to the very heart of the Bill. It concerns a vital policy issue and I cannot disguise that, were it to be accepted, 1525 it would go to the very fundamental purpose of the Bill. It would deprive a residential occupying lessee from the benefits of the Bill, not because he had himself done something which would put him outside the scope of the Bill, not because he was unworthy or deserved any less justice than anyone else, but simply because he had the misfortune, first, to hold the property on leasehold tenure and, second, to have it from a charity. Such a proposition is totally unacceptable to the Government.
The differences among those who would like to treat this category of land-lord in a different way are well known. They do not go to the merits of charities at all. The issue is whether, in a general Act of Parliament, it is possible to single out one group of tenants or landlords and give them exceptional and different treatment.
We canvassed these arguments very fully in Committee on 11th May, and in this House on Report on 20th June, when a new Clause having a somewhat similar effect was moved and withdrawn. I do not think, therefore that I will be held to be discourteous if I do not recapitulate all the arguments which were raised on those occasions, and indeed when the Amendment was discussed in another place.
The broad position is that the Government say, and said in the White Paper containing their policy statement for leasehold reform, that it wasquite indefensible, if justice is to be done as between the freeholder and occupying leaseholder, that at the end of the term, the law should allow the ownership of the house to revert to the freeholder without his paying for it so that he gets not only the land but also the house, the improvements and everything the leaseholder and his predecessors have added to it.That is the general proposition.
I understand that to a degree at any rate, that proposition is accepted by all parties in the House. We are told that all parties accept the need for reform, and accept enfranchisement as one of the methods of achieving it. I remember one hon. Gentleman on the Opposition Front Bench, both here and upstairs, saying that all members of his party were enfranchisers, and I am sure that this would be found to be true of the Liberal 1526 Members, were any of them present to intervene in the debate.
If that is the case, if it is a general proposition that the law has to be further amended—and this is perhaps only a larger and more radical reform than that which took place in 1954, and earlier in 1927—one has only to state it to see how difficult it would be to take out a large body of leaseholders from that proposition.
I said just now that if the Amendment were accepted it would knock the heart out of the Bill. As far as we can estimate, about 1 million—and possibly more—leasehold houses will be affected by the Measure, and I think it is true to say that at least 300,000 people are occupying leasehold houses owned by charities of one kind and another. It would therefore be a novel principle to say that because of the character of the landlord, which is not in question, or because of what he does with the funds which may arise from his leasehold investment, there can be different treatment for him in general legislation.
That was not recommended by the Departmental Committee which heard many representatives of the charities and the property owners. No one suggested that special treatment should be given to charities. It was not a course which was followed in the 1954 Landlord and Tenant Act. Indeed, as has been said from this side of the House on a number of occasions, the effect of the 1954 Act on the investments of charities and others might have been even more marked as a result of this Measure. There was no suggestion that there should be an exception. Charities were not excluded under the Rent Act. They were not excluded from the betterment levy in respect of their investment land. At this stage it would be a novel departure, not hitherto recognised in English law, to exclude them; and, at the same time, to do so would deprive a considerable body of leaseholders of the benefits and protection of the Bill.
I have, unfortunately, had the misfortune to represent two constituencies in which there have been some leasehold interests, and I can assure the House, if it needs an assurance on this, that where leaseholders are at the end of their term, or where they are suffering from the 1527 vexations and frustrations which they feel under the leasehold system, it matters little to them if the landlord is a property company, or a charity. I therefore must reaffirm the line which the Government have taken from the beginning, namely, that they cannot possibly accept the Amendment, and if it is pressed to a Division I must ask the House to disagree with it.
§ 4.45 p.m.
§ Mr. James Allason (Hemel Hempstead)
I am sure that the Government would not wish to tax charities, if for no other reason than that to do so would make them even more unpopular than they know they are at the moment. The question is whether, by this Measure the Government are taxing charities, and with great skill the Parliamentary Secretary omitted that consideration.
The question is whether the terms of compensation laid down in the Bill are fair. If they were, there would be no suggestion that there was any necessity to exempt charities, but all the arguments that we have heard show that charities will lose substantial sums of money through the operation of the Bill. There is no doubt that the terms of compensation are unfair.
When this Measure was considered on Report, the hon. Lady the Minister of State, Welsh Office, said:… we were influenced to a degree by some of the wealthier members of the Socialist Party who were shocked when they discovered the enormous tax free capital gains which they were liable to make under the Bill if the limitations were removed entirely."—[OFFICIAL REPORT, 20th June, 1967; Vol. 748, c. 1532.]The right hon. Lady was referring to the rateable value limitations, and because of the enormous tax free capital gains which were to be made under the Bill the Government restored the rateable value limit.
The effect is that they have abolished "enormous tax-free capital gains" and have substituted "substantial tax-free capital gains". This apparently, is the new Socialism—a present from the Government of up to £10,000 to the tenant, at the expense of the landlord. This is good Socialism, but if the figure is above £10,000 it becomes enormous, and, therefore, is abolished.
Whatever view hon. Gentlemen opposite may hold about substantial tax-free 1528 gains at the expense of a landlord, surely no one would support substantial tax-free gains at the expense of a charity? I object to this when it involves a landlord, but when a charity is involved I think that the provision is doubly objectionable.
The Joint Parliamentary Secretary said that the House had accepted the need for enfranchisement. I do not think that the House has accepted the need for all the provisions to which he referred. The House has agreed to enfranchisement on fair terms. The hon. Gentleman went on to say that there could not be any exceptions to these provisions, but this is precisely what the Bill does. It provides for exceptions, for instance when redevelopment is required by local authorities, by the Commission for New Towns, by nationalised industries, by hospital boards, and by universities. In such cases the tenant will lose the benefit of enfranchisement which the hon. Gentleman said must be granted to all tenants. He cannot ride that horse.
I think that it would be better if the hon. Gentleman were to reconsider the position with regard to charities. The object of the Bill was to deal with cases of hardship. Nobody has managed to quote an example of hardship involving charities. They are recognised as good landlords. They do not oppress their tenants, and I think, therefore, that it would be reasonable to exclude them from the Bill.
§ Sir Barnett Janner (Leicester, North-West)
I cannot see that the argument put forward by the hon. Member opposite has any relevance to the points made by the Minister. I do not know whether the House realises that the question of leasehold reform has been on the cards for many years. For 20, 30, 40, or more years everybody has known that at some stage or another it was intended to introduce this reform, although perhaps not in precisely these terms.
Everybody knew it—charities included. Consequently, anything which they acquired within the last 50 or 60 years should have been acquired with the knowledge that at some time the law would be amended so that the tenant could not be dispossessed. I should have thought that that was obvious to anyone who was negotiating a deal—certainly in Wales.
1529 I cannot see why charities should be exempt from the provisions of the Bill and why an individual should be turned out of his home because the landlord happens to be a charity. I do not think that the House would want to carry out an uncharitable act in respect of an individual who happens to be in possession of the premises in order that a charitable act may be done in respect of somebody else, for another purpose.
The Lords Amendment would defeat the objects of the Bill. It is a wrecking Amendment, and in the circumstances the Government are right not to concede the point which the Opposition have attempted to make, but which cannot reasonably be made in favour of the Amendment.
§ Mr. Percy Grieve (Solihull)
I hope that the House will agree to the Lords Amendment. I do not agree with the Parliamentary Secretary that the Bill has almost universal approval in the House. Had the Bill given proper compensation and not unfair compensation for the enfranchisement of leaseholds it may well have had the approval of almost everyone in the House, but the criticism which has constantly been made by hon. Members on this side of the House is that the compensation given is grossly unfair. This is exemplified by the fact—it is well known; case after case has been cited in our debates—that those who enfranchise their leases will make considerable capital gains.
§ Sir B. Janner
I ask the hon. and learned Member to excuse me for leaving, for purposes of which he is aware.
§ Mr. Grieve
Considerable capital gains will be made by those who enfranchise their leases. The matter that we are now debating is the question whether those capital gains should be made by ordinary private individuals at the expense of charities. This is a question which the House must answer. Are we to benefit citizens financially, on a large scale, at the expense of charities? My hon. Friend the Member for Hemel Hempstead (Mr. Allason) said that he was sure that the Government would not wish to tax charities, but the record of the Government in that respect is singularly bad.
During the last two years we have had example after example of attempts by 1530 my hon. Friends to remove taxation from charities, all of which attempts have been strenuously resisted by the Government. We have had example after example of taxes imposed upon charities which the Government have insisted in maintaining. Only after a lengthy debate on Amendments moved by hon. Members on this side of the House were charities relieved from Selective Employment Tax. I believe that it was in July when we sought to exempt charity Christmas cards from taxation and were resisted strenuously by the Government. They maintained taxation on those cards.
I do not often find myself in complete agreement with the observations of Socialist Ministers, or even ex-Socialist Ministers, but I was very impressed by what Lord Shawcross said in another place, and found myself in complete agreement with it. He said that nothing so confiscatory as this Bill had been put on the Statute Book since the reign of Henry VIII. That is so. The Bill taxes charities; it benefits private citizens at the expense of citizens. The Amendment is designed to exempt charities from the ill effects of the Bill and I hope that the House will accept it.
§ Mr. S. C. Silkin (Dulwich)
On more than one occasion in our debates on the Bill I have declared my interest, and it is only right that I should do so once again on the Lords Amendment. As a lessee of a trust for what are called charitable purposes in law I am directly affected by the provisions of the Amendment. By a most extraordinary and no doubt wholly unintended coincidence the noble Lord who introduced the Amendment in another place happened to refer to the very road in which I live as an instance of the evils which would be incurred if the Amendment were not accepted.
I can well understand the argument that charities should benefit from the taxpayer. I can understand the argument that, on occasions, charities should benefit from the contributions of ratepayers in the areas served by those charities—and I would like to see a somewhat better definition of a charity than exists at the moment, in order to give proper effect to that principle—but I cannot understand the arguments of those who suggest that charities should benefit not only from the taxpayer and the ratepayer but also at 1531 the expense of the lessees from whom they draw their incomes.
§ Mr. Grieve
Does the hon. and learned Member not agree that the vice of the Bill is that it benefits certain individuals in the community and not the whole of the community, at the expense of another set of individuals in the community, namely, the owners of leasehold houses?
§ Mr. Silkin
The hon. and learned Gentleman is inviting me to debate the question of compensation. I am sure that I should be ruled out of order, Mr. Deputy Speaker, if I complied with that proposal in a debate on this Amendment.
Since the Dulwich College Estate—which is in my constituency and which was made so much of in the other place as an example of the type of estate covered by the Amendment—has been in issue, however, it is only fair to say that the policy of that estate—and no doubt of most well-managed estates—is that when houses have reached the end of their leases, although by no means necessarily the end of their lives, they should be demolished and redevelopment should then take place.
In other words, estates of that kind expect to secure their income out of the redevelopment value of the land. The compensation provided by this Bill is precisely the redevelopment value of the land. This point has been made again and again, but it has never been adequately reviewed. I return to the point that I was making before I was interrupted and it is quite simply that if one says that a charity is to be treated in a different way from other freehold lessees holding residential leasehold property, what one is really saying is that a lessee who happened to be a lessee of a charity should subsidise his freeholder in a way which other lessees are not required to do by the Bill.
I cannot see any conceivable justification for such a division, and some of the justifications that have been made in another place and elsewhere have been quite extraordinary. It has been said, although what this has to do with charities I do not know, that if the Bill goes through without the Amendment proposed and 1532 adopted in another place, which we are now discussing, the green areas of my constituency would gradually deteriorate into slums.
I must say that it is a fine comment upon the people who live in my constituency, in particular upon the Dulwich College Estate. I wonder whether they would be gratified to hear that suggestion made about their own future sense of duty and their sense of amenity by the noble lord who introduced the Amendment in another place.
There is no ground whatever for treating charities in any different way from other freeholders when one is dealing, not with taxation matters, but with matters between one citizen and another. For that reason I hope that the Government will stand firm and will not accept the arguments that have been put forward on the other side.
§ Mr. John Peyton (Yeovil)
We are accustomed to hearing extraordinary arguments adduced from time to time. [HON. MEMBERS: Hear, hear."] Those which we have heard from the hon. Member for Leicester, North-West (Sir B. Janner)—I am sorry that he is not in his place—were of the oddest. He castigated this Amendment on the basis that it was a wrecking one. In our view the fact that an Amendment is wrecking, when aimed at a Bill of this kind, is a positive virtue. The hon. Gentleman's second argument was even odder. He said that everyone had known for a long time that there was a possibility of legislation.
If everyone is to conduct their affairs in such a way that they must treat themselves as being on notice of certain legislative possibilities once some crackpot politician or political party of unsound judgment has delivered its ideas on the subject, when divorced from office, then there would be even more paralysis in the country than there is at present. It is a most extraordinary argument for the hon. Gentleman to put forward. It is a strange notion, and I do not think that it could come from any source other than a Socialist one.
Our objection is that this Bill is aimed at dealing with the oppressive landlords and it is a reflection of the remarkable utterances which came from the right hon. 1533 Gentleman, who unfortunately is Leader of the House, when he said "I have a prejudice against landlords." It is an odd thing to come from the lips of a Minister who was contemplating legislation. It devalued—not that that was necessary or effective for those of us who are more in touch—but for the general public it must have immensely devalued his every utterance on this subject, for which he had Ministerial responsibility.
It was a plain admission that he was a prejudiced witness. There is no charge against charities that they are unfair or vicious landlords. They are known to be good and fair landlords, who take a long-term view of the interests of their property and certainly would not wish to have the reputation of having bullied or deprived their tenants of their fair rights.
As my hon. and learned Friend the Member for Solihull (Mr. Grieve), rightly said, if there were fair terms available to charities for loss of their rights I dare say that a lot of the objections which we are now expressing would fall to the ground. But there are not fair terms available. My hon. Friends have been absolutely right in expressing their indignation at the way in which the Government have callously and carelessly overridden the rights of charitable organisations.
It seems that they prefer the integrity of their own wretched Measure rather than violate it by a degree of justice. I find this shocking, regrettable and even surprising, even though it comes from a Government which has shown an addiction to dogma rather than to good justice.
§ Mr. A. P. Costain (Folkestone and Hythe)
I wish to support my hon. Friend the Member for Hemel Hempstead (Mr. Allason) in resisting these proposals. I would also like to declare an interest. I am the trustee of a large charitable organisation, some of the income of which depends upon ground rents. I am quite astounded by the arguments put forward opposite. The Front Bench opposite seem to be saying that this cannot be done because there are too many houses involved.
The hon. Member for Leicester, North-West (Sir B. Janner) made a short speech and then left, on the basis that his mind 1534 was made up. He argued that the tenants might be dispossessed of houses by a charitable institution. It is highly unlikely that a charitable institution would want to dispossess. Such institutions are among the best landlords.
The hon. and learned Member for Dulwich (Mr. S. C. Silkin) raised an extraordinary argument, that the charitable organisation which had bought these properties, as a reasonable and safe investment, should have them confiscated and they should be given away to the sitting tenant for a lower price. The hon. Member is saying that he ought to have the benefit of the charity's property.
The Government seem to be hell-bent on attacking charities. I have come to the conclusion that charities are a form of private initiative and private enterprise, and the Socialist Party is against this, whatever it is. Charities must fall because of a doctrinaire approach. We will have difficulty in persuading the Front Bench opposite of its folly, but I hope that my hon. Friends, and our friends in the country will take every opportunity of showing the Socialists how wrong they are.
§ Mr. Skeffington
If I may speak again, with the leave of the House.
There has not been general disagreement with my major proposition, that when one is enacting a national law it would be novel and almost without precedent to stipulate a category of landlords who should be better treated, and a category of tenants who will be worse treated because of the nature of their tenure. This proposition remains true and has only to be stated for its practical force to be seen. This is coupled with the fact that there was no suggestion in the report of the departmental committee in 1950 or in the 1954 Landlord and Tenant Act that charities which were adversely affected then, as they may be now, were to be exempted. That must remain, under all Governments, a general proposition.
The hon. Members for Hemel Hempstead (Mr. Allason) and Yeovil (Mr. Peyton) did not think that the case could be generally made out that charities were worse landlords than any other group and I am sure that this is the intention of the charities themselves. However, it was pointed out in Committee that many 1535 of those conducting the business of charities, by the very law under which they operate, have sometimes far less discretion than does a private company because, generally, they are charged with getting the maximum return on the funds invested.
When I was associated with one of the bodies mentioned today and in another place and was an officer of one of the relevant associations, we had innumerable examples of those acting on behalf of charities being forced to take a line of action which at any rate went to the utmost rigour of the law. No one was blaming the individuals—those were the circumstances in which they operated—but this is not grounds for saying that, because an organisation is a charitable body, therefore it must behave in a certain way, better than anyone else, and deserve better treatment, because experience is that things do not work out like that.
Another argument put forward related not to exempting charities but to whether or not the compensation is right. If there is to be a leasehold enfranchisement scheme, the basis for it in paragraph 11 of the White Paper was that the land belonged to the landowner, but that what was on it belonged to the leaseholder, and that is the formula in the Bill. There is no grounds for suggesting that this is inequitable or unfair to any category of landowners, when one considers all transactions.
But all these arguments boil down to this—what we are trying to do in this legislation, I thought with the general agreement of the House, is to provide that 1 million people will have the opportunity of regarding their homes as their own, because they can have the compulsory right of purchasing the freehold or extending their lease. This is all that the Bill does and, at this stage, to attempt either another basis of compensation, as is implicit in many of the arguments put forward today, or to exempt this substantial body of tenants would be to knock the heart out of the Bill. Therefore, I hope that the House will express its strong disagreement with the Amendment.
§ 5.15 p.m.
§ Mr. Graham Page
I am sorry that the Parliamentary Secretary has so firmly 1536 rejected any sort of compromise on this provision. He said that we were talking about 300,000 houses out of the 1 million-plus which will be affected by the Bill. I am surprised by the size of that figure and would not have thought that so many houses were held by charitable landlords or landlords and charities, but perhaps the definition of a charity has been extended rather wide, in view of that figure.
However, if it is true that 300,000 houses are involved, that shows how much of the funds given to charities is to go into the pockets of unintended beneficiaries under the Bill. These houses are to be sold at less than market value: this cannot be denied. The evil which the public, with approval, see this Bill as combating and remedying—although I think that it would be remedied in other ways—is to prevent the extortionate demands upon tenants at the fag ends of their leases. No one wants that and no one can accuse Dulwich or Bourneville of acting in that way. I was shocked at the Parliamentary Secretary's side swipe at the administration of charity landlords. They have been the finest landlords in the country and have produced estates of which we are very proud.
Second, compensation is not, under the present law, market value and, therefore, the Bill will be taking away an asset of the landlord. Some hon. Members may think that there is ethical justification in the case of the private landlord, that he deserves all that is coming to him. But when the landlord is a charity, from whom are we taking that asset and that money? Not from the landlord, but from the beneficiaries of the charity, like Alleyn School, Dulwich College, the picture gallery at Dulwich—[An HON. MEMBER: "Who wants to keep that up?"] There may be strength in that remark, but it is a matter of opinion. I am on sounder ground, perhaps, in talking about the ancient traditions of the schools there, whose income and capital will be very greatly reduced.
In Bourneville, the beneficiaries are the tenants themselves. This is an organisation such as we know in the housing society and housing association world. One may say that this is just a grand share out among the beneficiaries, but there are many rack rent tenants on those 1537 estates and there is the question of good management of the estates and of their proper future development.
The hon. and learned Member for Dulwich (Mr. S. C. Silkin) said that it was nonsense to talk about enfranchised estates slipping into slums. It may be nonsense in regard to individual houses, because probably a tenant who has acquired his freehold or an extended lease will devote greater time to his house and keep it well, but it is the common amenities which will deteriorate. The Bill does nothing to solve the problem of estates with common amenities, except under Clause 19, but, as I said of that Clause before, "Thank you for nothing".
No one will take the responsibility under Clause 19, not even the charities—
§ Mr. S. C. Silkin
The hon. Gentleman says that no one will take advantage of that Clause. Is he giving an undertaking that the Dulwich College Estate will not do so?
§ Mr. Page
No, I hope that the Dulwich College Estate will seek other ways of doing it, perhaps through this House. I certainly hope that the Estate will be preserved, despite the Bill. I am sure that no one thought of charities being deprived of these substantial sums, both of capital and of income, when they read the White Paper or even when they saw the draft Bill.
Of course, the solution might have been to allow tenants of charities to have extended leases, but not the freehold. The solution might have been to give proper compensation. In that case, the position would not have been so bad for the charities.
The Parliamentary Secretary has made great point of what he called a general proposition that this was a national law, that all tenants should be treated alike and that tenants should not be deprivileged or suffer disadvantage merely because they were tenants of a certain landlord. The hon. Gentleman has not read on in the
§ Bill, because that is exactly what Clause 29 does.
§ Why, under Clause 29, is a local authority allowed to deny a tenant the right to enfranchise and yet a charity is not? Why is a commission for the new towns entitled to deny enfranchisement and a charity is not? Why is any university body, university college or the university itself allowed to refuse enfranchisement and a charity is not?
§ Why is a regional hospital board, a hospital management committee or the board of governors of a teaching hospital in a better position that the governors of Dulwich College, or that charity or teaching institution? Why can those bodies deny a tenant the right to enfranchise? Why should a nationalised industry be allowed to refuse enfranchisement if a charity is not? To wind up this list, why should a harbour authority and a statutory water undertaker be allowed what a charity is not allowed?
§ This completely pulls the rug from under the hon. Gentleman's feet whet he puts forward his general proposition that every tenant must have the right to enfranchise and that we must not make any distinction. Yet there are those distinctions in the Bill.
§ It would have been right and proper for the Government to accept the position and say, "We never intended this to happen when we produced the White Paper. We never intended to deprive these charities of their capital and income in this way and we are prepared, if they satisfy the Minister that they are running the estate well, that they have plans for proper development and are treating their tenants properly, to let them go on and refuse the tenant enfranchisement." The Government are simply being obstinate in saying that they want the Bill as a national law applying to everybody.
§ Question put, That the House doth disagree with the Lords in the said Amendment:—
§ The House divided: Ayes 207, Noes 127.1541
Lords Amendment No. 2: In line 31, at the end insert:
(5) Notwithstanding anything in subsections (1) to (4) of this section, this Part of this Act shall not confer on the tenant of a house any right by reference to his occupation of it as his residence if the house forms part of an estate which on application made by the owner to the High Court either before the appointed day for this Part of the Act or within not more than three months thereafter is certified by the High Court as an estate held under statutory enactment or trust deed the purpose of which is to maintain the entity of the freehold estate and that on the date of application to the High Court the owner of the estate was required to have regard only to the letting value of the site (without including anything for the value of buildings on the site) in granting to a tenant of a house and premises an extension or renewal of an existing long tenancy at a low rent:
Provided that in the event of the conditions not continuing to apply to the estate the High Court on application by the Minister of Housing and Local Government or the Secretary of State shall be empowered to cancel the certificate and thereupon this Part of this Act shall apply to the estate as from the date of cancellation of the certificate.
In default of agreement between the owner of the estate and a tenant of a house held on a long lease at a low rent as to the letting value of the site of the house and premises the provisions of section 21 of this Act shall apply as if it were rent to be fixed under section 15.
§ Mr. MacDermot
I beg to move, That this House doth disagree with the Lords in the said Amendment.
This Amendment, which was carried in the other place, is identical with one 1542 which was moved unsuccessfully by the hon. Member for Hove (Mr. Maddan) in Committee.
The Amendment was avowedly designed to exclude Letchworth from the Bill. It has, however, been framed in general terms, as it had to be, to avoid turning the Measure into a hybrid Bill. The result of this is that the benefits of the Bill would be taken away from leaseholders in any estate which, on an application by the owner to the High Court not more than three months after the appointed day, could be shown to be held under a statutory enactment or trust deed, the purpose of which is to maintain the entity of the freehold estate, and which involves a requirement on the owner to have regard only to the letting value of the site if he grants an extension or renewal of an existing long tenancy at a low rent, without, however, invoking any requirement on him to extend or renew such a lease.
This goes far too wide, particularly in including estates held under trust deed. It would be quite possible for an ordinary landlord to execute such a trust deed, and thereby avoid the provisions of the Bill as to enfranchisement, without even being under any obligation to renew or extend leases. The defect of the Amendment is inherent and irremediable because it was drafted both to be wide enough to bring in Letchworth and also to be wide enough to be of general application and not a local measure purporting 1543 to be a general one. Any attempt to narrow it would be liable to exclude the Corporation or to hybridise the Bill. The dilemma is inevitable in any attempt to meet, by general provision, some situation which is thought to be unique.
Having said that, I wish to make it clear that I personally have some sympathy with the objects of the movers of the Amendment. But even if it were possible in this Measure—which, for reasons I have explained, it is not—to exclude Letchworth, I do not think that that would be a satisfactory solution to the problem. It is clear that there is, to say the least, a substantial body of leaseholders in Letchworth who are anxious to obtain the benefits of enfranchisement. They would resent it very much if they were deprived of the advantages of the Bill; and I see no reason why they should be.
On the other hand, Letchworth Garden City is something quite unique in our social history. It pioneered an idea which has an important part in the philosophy of the Labour Party and which, I think, is accepted by some hon. Gentlemen opposite. It is the idea that the profit arising from the development of land is something which was created by the community and which should, at least in part, return to the community.
At the time of Ebenezer Howard the only practical way of achieving that was by adaptation of the long leasehold system, but many people now feel that this way of achieving that object is something that has become somewhat out of date. It has been overtaken by other changes in the law, including, in particular, this Measure to grant leasehold enfranchisement.
On the question of the development of land—or, as people in Letchworth call it, the "incremental value"—belonging to the community, there would be no problem if Letchworth Corporation were a local authority because it could then, on enfrachisement, reserve its development rights under the provisions of Clause 30(1). However, there is no point in our seeking to give a similar power of reservation to Letchworth Corporation under this Measure because that Corporation has no power of compulsory purchase which would enable it to ensure that it 1544 could make use of the reservation. Without the reservation being in the hands of a body having powers of compulsory purchase, a solution of deadlock could result, with nobody being able to carry out the redevelopment.
It looks, therefore, as if the right course might be for the Corporation to transfer its freehold interest in the leasehold houses to the urban district council, as, I believe, it has done in the case of those properties which are let by the council at a rack rent and which make up about half the population of the homes of Letchworth. Legislation would, I believe, be needed to achieve this effect, but I think that everybody agrees that whatever solution were adopted for Letchworth, some sort of amending private local Bill would be required to achieve the object.
I am merely putting forward the suggestion in the hope that it may prove a constructive one. As to what form that legislation might be, it would, of course, have to be drafted to meet the situation resulting from this Measure and deal with the case of tenants who had already served notice under the provisions of the Bill but in whose cases the freehold interest had not been transferred.
There is some time available, as I assume that the Letchworth Corporation most certainly, whoever else may or may not do so, will be likely to sponsor a scheme under Clause 19 in order to preserve the necessary machinery of control by covenants to maintain the character of the estate, and to provide for suitable monetary contributions by the enfranchised leaseholders to the amenity services which continue to be provided under such a scheme. If the Corporation were to do this it would give time to promote the necessary Private Bill legislation. I believe that by this means it would be possible for Letchworth to preserve both the entity of the town and the incremental value, as they term it there, for the community, while still granting enfranchisement to the leaseholders.
I have also received representations in the matter from the Bourneville Trust, which is a somewhat comparable body but with not quite precisely the same problems. I do not want to go into this in any detail, but if that Trust, on reflection were to consider that it would 1545 not receive sufficient protection under a Clause 19 scheme it might like to consider the possibility of doing something similar in the way of private legislation.
For the reasons I have indicated, Mr. Deputy Speaker, I must advise the House to disagree with the Lords Amendment.
§ Mr. Martin Maddan (Hove)
We are grateful to the Minister for a concise and clear explanation of the purpose of this Lords Amendment and of why the Government do not accept it. That rejection is not entirely watertight. I feel that the Lords Amendment could provide the basis of a very satisfactory solution had it been the wish of the Government to accept it and, perhaps, make some slight amendment to it.
We have discussed the case of Letchworth in this House on Second Reading, in Committee, and to a certain degree on Report. When those of us who are interested in the realities of Letchworth now take into account the preservation of the character of the town and the interests of the ratepayers as a whole—who, not only the leaseholders, have taken on the burden of underwriting the compensation provisions determined only recently under the Letchworth Garden City Corporation Act—when we take into account all these things, we feel, though reluctantly, that in view of the opinion expressed by the Minister and in view of the advice that he and the Government Whips will no doubt give to his colleagues, we should do what we can to preserve the interests of the town of Letchworth and of its individual people, and in these circumstances go along the lines that he has suggested. Before leaving the matter like that, however, it is necessary and right to make one or two observations.
Dealing with the previous Amendment the Parliamentary Secretary very much emphasised that it would be wrong to separate tenants into different categories merely because the landlords were of one character or another. That is not the case in Letchworth where it is the tenants rather than the landlords who have the particular characteristic that they have the right and practice, if I may put it in a sort of shorthand form, to have leases renewed or extended without taking into account the value of the bricks and 1546 mortar they may have put on the land. Letchworth, therefore, is a unique case.
The hon. and learned Gentleman said that a substantial body of these leaseholders in Letchworth want enfranchisement and, of course, there are some leaseholders who do want it. How substantial that body is is open to a great deal of question, because in the campaign that has gone on there has been misrepresentation of the facts of the case and of the policies and actions of the Corporation. There have been petitions and counter-petitions, and I am sure that, with their experience, hon. Members will not be surprised to hear that various citizens signed both in the confusion and argumentation that has gone on. We therefore have to give some weight to the fact that there are leaseholders who want to enfranchise, but we should not be taken away by the idea that this body of opinion is very substantial.
A further point is that the Bill as now drawn excludes houses of over £200 rateable value, or £400 in London. Tenants of such houses may not enfranchise themselves. If we are to drive a coach and horses through the principle of the Bill in this way, it seems very reasonable that there should be a little phaeton driven through it in respect of Letchworth. If there is to be private legislation, the necessary Bill, for reasons that the Minister has given, will have to be drawn up with speed, because if Parliament does not consider such a private Measure quickly there is a danger that the whole entity of Letchworth will disintegrate, and it will be no good coming along after that because it will be quite impossible then to turn the clock back.
The Minister's proposition, which is an interesting one, is that the freehold of the leasehold houses now belonging to Letchworth Garden City Corporation set up under the 1962 Act should be transferred to the urban district council. This is the first time I have thought about or heard of this proposition, but it may point which way. Nevertheless, at this hour on a Tuesday afternoon, at only one or two minutes' notice, I would not like to say that this is necessarily the best way, and certain questions come to my mind.
1547 When the 1962 Act was before Parliament, the sponsor, the urban district council itself, was very keen that the ownership of the freehold should be taken out of party politics; that it should not become a sort of football to be kicked about at every municipal election. The Corporation was therefore established to become the landlord, with the chairman and the three members to be appointed by the Minister, one member by the Hertfordshire County Council and one only by the urban district council. That was the urban district council's own proposal, because although it wanted a voice in the Corporation it did not want to fulfil the role of landlord.
The Minister's idea is a neat one, in that it fits in with legislation as we presume it will be enacted, but I am wondering whether it would be possible in those circumstances for it to become by custom, or formal agreement, the practice for the management of those leaseholds, although the freehold was actually vested in the urban district council, to reside with the corporation. I do not think that the leaseholders or the other ratepayers in the town—the people contributing to the rates whether they live in council houses or whether commercial or industrial property—would wish to see the freehold of the leasehold houses become subject to party political argumentation at election times and in the council chamber.
These are only preliminary observations on the Ministers' suggestion, which is an interesting one. I regret that he has not seen fit to go on the lines of the Lords Amendment, but on the ground that half a loaf is better than no bread, and that if the Letchworth Council is to promote a Private Bill we want it to do so in an atmosphere of as much unity in this House as possible, I do not want to dispute too much the principle of what the Minister said. We must, of course, have regard to the details and keep our eye on the objective, which is to preserve the entity of the town and to retain its incremental value for the benefit of the community as a whole.
The Minister has put forward this as an idea. I did not actually hear that he committed himself to supporting it, as he or one of his colleagues might be required to do if a Private Bill were to 1548 come before the House. We all know that the Government Front Bench attitude may be of great importance, to say nothing of the services of the Ministry. I hope that before we conclude the debate on this Amendment the Minister will be allowed to go a little further in clarifying these points.
§ Mr. S. C. Silkin
I had not intended to detain the House at all on this matter, particularly in view of the fact that my hon. and learned Friend the Minister,—whom I take the opportunity of congratulating on achieving his new office—has made such an overwhelming case in favour of excluding this Amendment and the hon. Member for Hove (Mr. Maddan) has not really sought to displace it, but I want to say a few words because of what was said in the last section of the speech of the hon. Member. I hope my hon. and learned Friend, even if he were able to do so, will not give any commitment as to future legislation. Clearly this is a matter which needs to be very carefully considered by all sections of the community in Letchworth, not merely the urban district council but the many people who have taken the view that it is right to include the lessees of the corporation within the provisions of this Bill.
No doubt quite unintentionally, the hon. Member for Hove expressed himself in a somewhat misleading way when he referred to the lessees of the Corporation of Letchworth as having the right to obtain an extension of their leases. They have no such right. Indeed that is the whole point which the Minister was making, as I understood, in his opening remarks on this Amendment. If they had not only the right, which they now enjoy, the lease having been extended, to hold their property at a modern ground rent, but also the right to have the leases extended, there would be a very different situation. They have not got that right. They can be turned out. My information is that on a number of occasions the existing occupier, the lessee, has been turned out of the property he has occupied in Letchworth.
The hon. Member spoke about misrepresentation, and I rather gathered that he was not confining his comments to one side or the other. Certainly some of the remarks that were made at the time when the Amendment was accepted 1549 in another place could well have given the general public the view that Letchworth was wholly united in wanting to be excluded from the Bill. This was expressly said by some. Therefore I think it only right to say what happened thereafter. Those who believe that Letchworth should be entitled to the benefit of the provisions of this Bill like every other community, having heard that said, approached me and said, "We do not think this is true. What should we do about it?" I said, "There is only one way of finding out. That is to go round canvassing house by house with a perfectly fair and open statement of what your intentions and wishes are and to ask people whether they are willing to sign that statement or not".
The Minister has the result of that canvass in his Ministry. I think it right that the figures should be known. According to the corporation, there are 2,632 leasehold properties which the corporation holds. No doubt some of those are not in the eligible category, being above £200 rateable value. No doubt some of the lessees would not be eligible by reason of length of residence as yet. One has to make allowances for these factors, but a house-to-house canvass over a relatively short period of time has produced the result that of those properties the occupants of 1,663 say they are in favour of Letchworth being included in the Bill. If my arithmetic is right, that is 63 per cent., which is a very much higher figure than is ever achieved in Letchworth local council elections.
This is a matter of considerable importance. It is right that it should be known, I applaud the fact that the citizens of Letchworth, or rather, the lessees at Letchworth, clearly take the same view ac my hon. and learned Friend in seeking the removal of this Amendment.
§ Mr. Maddan
I know that the hon. and learned Member for Dulwich (Mr. S. C. Silkin) will not want to rest too much on that, because he probably is also aware that many of those who signed the original petition then signed what we might call the counter-petition.
§ Mr. Silkin
I can only give the facts as I have given them. The number of people who signed this petition was 2,779 and each signature has been very carefully checked against the electoral register 1550 in order to ensure that there has been no duplication of any kind. The document which they have signed, which I have seen, makes it abundantly clear. Anyone who reads it knows what he is signing.
§ 6.0 p.m.
§ Sir Lionel Heald (Chertsey)
I support my hon. Friend the Member for Hove (Mr. Maddan). I am one of those who have for some years done all they can to help the Letchworth ideal when the matter has arisen in the House. I came here today with the idea that I should support the Lords in the Amendment, but, having listened to the Minister of State, I believe that his argument is clear and should be accepted. If it is, I hope that we can rely on his giving at any rate sympathetic consideration to the point of view advanced by my hon. Friend. We know that the hon. and learned Gentleman cannot give an undertaking today, but those of us who have had to deal with these matters know that, when difficult legislation of this kind involving private legislation becomes necessary, the attitude of the Department and of the Minister is of the highest importance.
I personally would be quite satisfied if we could feel that the Minister of State would give it sympathetic consideration. If I am not intruding improperly by suggesting it, I suggest that, if the Minister of State and my hon. Friend the Member for Hove got together, a good result would be obtained. From what I have heard, I am given to hope that perhaps it would be better if the hon. and learned Member for Dulwich (Mr. S. C. Silkin) were not to take part in that amicable effort. It is important that, if possible, we should enable a satisfactory arrangement to be arrived at in repaid to Letch-worth, having regard to its history. I therefore hope that we can be told by the Minister of State that the considerations put forward by my hon. Friend the Member for Hove will be given open-minded consideration.
§ Mr. Graham Page
The Amendment and the Government's opposition, yet sympathy, towards it put us in a rather curious position. The Letchworth Corporation is operating under a Statute. The Statute had exactly the same intentions as the Bill—the protection of the 1551 tenants on that estate and the relief of hardship at the end of leases. It provided that the Coporation should be entitled to re-let only at the value of the site, without regard to the value of the bricks and mortar on the site. This is a statutory management body, approved recently by the House.
In the Bill compensation is based upon the assumption that there is a fifty-year lease, an extended lease—that is, upon the assumption that the tenant has, without purchase, the full value of the house. The corollary to that is that, if the tenant is granted a fifty-year lease, he will have as good as a freehold. He will have something of which he can dispose at a price at which he might sell the freehold. Therefore, if there were some arrangement of this sort, as indeed there is in the statutory responsibilities of Letchworth, the tenants do not suffer if they are granted such an extended lease—a fifty-year lease or a 99-year lease.
Although it may be that on some occasions at Letchworth, for some reasons of development, a tenant has been asked to vacate at the end of his lease, I understand that in the great majority of cases the extended lease is granted, so the tenant suffers nothing under this provision, as compared with the tenant of any other landlord under the Bill. Nor, for that matter, will tenants of property held upon a similar trust.
The Minister of State called the attention of the House to that part of the Amendment which refers to bodies holding an estate on a trust similar to the statutory obligation under which Letchworth holds. The Amendment provides that this must be certified by the High Court to be a trust similar to the statutory obligations of—we have called it Letchworth, although Letchworth is not mentioned in the Amendment.
I would have liked to have seen the Amendment accepted. I offer my sincere congratulations to my hon. Friend the Member for Hove (Mr. Maddan) on his tenacity over this matter throughout the passage of the Bill. From Second Reading, through the Committee stage, through Report and Third Reading, he has put forward this case most cogently. It seems that perhaps he is now in sight of reward. He has been skilful in de-hybridis- 1552 ing the Amendment. [Laughter.] If the hon. and learned Gentleman can invent the word "hybridising", I am entitled to invent the word "de-hybridising". My hon. Friend managed to get the Amendment in order at each stage of the Bill.
If others were to take advantage, by the creation of trusts of this sort, of a general Amendment to the law, why not? I do not think that tenants would suffer, as compared with tenants under the Bill.
However, the Minister of State has suggested that this could be done by private legislation. I am still a little doubtful about what the suggestion is. The hon. and learned Gentleman made the strange statement that the estate can save itself by cutting its own throat, by selling or disposing of its property to the local authority. I do not see how it saves the Corporation to get rid of its property to the local authority. This just shows the extraordinary results of legislation of this sort, which we on this side have said all along was not properly thought out before its introduction.
Another strange suggestion made by the Minister of State was that the Letchworth Corporation should adopt the fiction of accepting a scheme under Clause 19 so as to hold matters up for a year and get the Bill in. [Interruption.] I am sorry if I misunderstood the Minister of State, but that is what it sounded like from this side. If this is a good suggestion, why on earth was not it made before? It is not as if my hon. Friend the Member for Hove has not put this forward many times. Over the past few months this proposition has been known to the House. The Government have known that the Letchworth Corporation was worthy of some particular consideration. Why has not this been proposed before so that the Corporation was able to prepare a Bill before 17th November?
§ Mr. S. C. Silkin
The hon. Gentleman should be fair to my right hon. Friend the former Minister, who said on many occasions that this was a matter for a Private Bill.
§ Mr. Page
Perhaps my recollection is at fault. If that was said by the former Minister, I withdraw what I have said. The suggestion was certainly not put forward in the form in which it is now put forward, which I understand to be 1553 some type of assurance from the Government that they will give a fair wind to private legislation of this sort. If it is legislation which enables this estate to continue to be managed and developed by this Corporation, and not just disposed of to the local authority—I do not believe that would do any good—that may be the right thing to do.
I repeat that I would have liked the Amendment to have been agreed to. After all, it was proposed from the Government benches. It was supported by hon. Members of all parties. I should have thought that it was an Amendment worthy of being agreed to. We are now told that this must all be done by private legislation. Provided that we can have an assurance that the Government will give a fair wind to such private legislation and that it will be legislation which will enable the Corporation to continue in office, we on this side would not press the Amendment but will hope that the matter will be dealt with in private legislation.
§ Mr. MacDermot
Mr. Speaker, I ask leave to speak again. I am grateful to hon. Members on both sides for their reception of the suggestion which I have made as to how this matter might be dealt with. It is correct, as my hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin) said in his intervention, that it was made clear, both in Standing Committee by my hon. Friend the Parliamentary Secretary and my noble Friend the Parliamentary Secretary in the other House before the Recess, that this was a matter which could and should be dealt with by private legislation. The proposal which I have put forward today, I wish to make clear, is purely a personal proposal of my own as a result of the discussions which I have had with quite a large number of people in recent weeks about this problem. I saw the hon. Member for Hove (Mr. Maddan). I also had a useful discussion with my hon. Friend the Minister of State who is the Member of Parliament for the area concerned, the hon. Member for Hitchin (Mrs. Shirley Williams) who, by reason of her office, is somewhat silenced but who I know takes a keen interest in this matter and has been very helpful to me. I am very glad to see her here during this debate.
1554 I have also discussed the problem with representatives of both the two sides in the recent dispute—if that is the right word to use—about the question of enfranchisement in Letchworth. I have put forward the suggestion that I have in the hope and belief that we may end the somewhat divisive effect which this Bill has so far had upon Letchworth and restore the unity which I am sure everyone would agree is in the best interests of Letchworth Garden City.
If I can seek to make clearer the points that I have not made clear enough in my proposal, firstly I am not suggesting—it is entirely a matter for Letchworth—that I see any reason why Letchworth Corporation should cease or should destroy itself, as the hon. Member put it. I am merely suggesting that the freehold of the land should be transferred to the council. After all, this has already been done in respect of a large part of the estate, namely, the part where there are rack rent tenants. This has not destroyed either the unity or the character of the estate. If it was agreed between the corporation, the council and the citizens of Letchworth that that was the best solution, I see no reason why the corporation should not continue to manage the estate, I suppose legally acting as agents for the council but continuing in practice to manage, as it has done, hitherto.
My reference to Clause 19 was not to suggest that an application should be made as a fiction in order to gain time, assuming that enfranchisement does take place. I would imagine that it would be necessary for Letchworth to have a Clause 19 scheme. Apart from anything else, I see no other way by which the enfranchised leaseholders would contribute, as I imagine they would all agree they should do in the future, to the cost of the common amenities from which they will continue to derive benefit. That can be provided for under the Clause 19 scheme. I was assuming that, on any basis, there would be such an application. I was merely pointing out that because of the standstill effect of such an application, there would be some time. The suggestion I made was not one which would be defeated immediately by an application taken by the 1555 leaseholders the moment the Bill came into effect.
I turn, therefore, to the questions that I was asked as to the Government's position. Of course, there can be no question of Government initiative in this matter. The initiative must come from Letchworth, and no one is committed to the proposal that I have put forward, as I said, personally in my own name. None of the people I have seen are committed to it. From the conversations I have had with some of them, it is my belief that it might prove a basis for agreement, and I hope it will.
Naturally, if it does, I shall continue to give it as good a wind as I can and such help as I can, and I may say that I would not have put it forward to the House today if, on the first consideration of it that has been possible within the Department, it was thought by the Department that there were any inherent obstacles to the solution on these lines. If I can personally be of any assistance in the matter I shall be very glad to be so. I cannot commit the Government in advance, but I can offer my own personal good will in the matter and I certaintly do that.
§ Question put and agreed to.