HC Deb 09 February 1993 vol 218 cc888-903

1. In this Schedule— conservation area" means an area for the time being designated under section 69 of the Planning (Listed Buildings and Conservation Areas) Act 1990; landholding" means a group of properties adjoining or in close proximity to one another and whether or not separated by other properties, each of which has been for a period in excess of 20 years prior to the coming into force of Part I of this Act under the control of one landlord whether or not subject to one or more tenancies; listed building" has the meaning given in section 1(5) of the Planning (Listed Buildings and Conservation Areas) Act 1990; and references to the Secretary of State are references to the Secretary of State for National Heritage.

2. The Secretary of State may, in consultation with the Historic Buildings and Monuments Commission for England (commonly called English Heritage) and in accordance with the provisions of this Schedule, designate a landholding situated in England as a heritage area for the purpose of this Act and the Leasehold Reform Act 1967.

3. The Secretary of State shall not designate a landholding as a heritage area—

  1. (a) except upon an application made within twelve months beginning with the coming into force of Chapter I or Chapter II of Part I of this Act; and
  2. (b) unless he is satisfied that the landlord has, by advertisement or otherwise as the Secretary of State may require, given adequate notice to persons interested, informing them of the application for designation and inviting them to make representations to the Secretary of State for or against the application within 28 days of such notice being given,
and before designating a landholding as a heritage area the Secretary of State shall consider any representations so made within that time, and if from those representations it appears to him that there may be grounds for refusing the application, he shall afford to those opposing the application, and on the same occasion to the applicant and such (if any) as he thinks fit of those in favour of the application, an opportunity to be heard by a person appointed by him for the purpose, and shall consider the report of that person.

4. Subject to paragraph 3, a landholding shall be designated by the Secretary of State as a heritage area if—

  1. (a) it or a substantial part of it was contained within a conservation area at the coming into force of Part I of this Act;
  2. (b) at least one-fifth of the area covered by buildings forming part of the landholding measured on plan comprises listed buildings;
  3. (c) the landlord has undertaken to comply with a code of estate management practice in relation to the landholding; and
  4. (d) in his opinion the landholding is—
    1. (i) of outstanding architectural or historic interest, and
    2. (ii) its continued existence with one landlord and management in accordance with the code of estate management practice will make a material contribution to its preservation or the enhancement of its character or appearance.

5. For the purposes of paragraph 4, a code of estate management practice in relation to a landholding shall—

  1. (a) specify the management arrangements and leasing policy (including the length of leases granted and policy on renewal) and give practical guidance as to their operation; and
  2. (b) be no more onerous or restrictive in its impact upon tenants as a whole than the policies and practices adopted in relation to the estate in the period of five years prior to the application for designation.

6. A failure on the part of any person to comply with any provision of a code or estate management practice for the time being approved under this Schedule shall not of itself render him liable to any proceedings but in any proceedings before a court or tribunal—

  1. (a) any code of estate management practice approved under this Schedule shall be admissible in evidence; and
  2. (b) any provisions of any such code which appears to the court or tribunal to be relevant to any question arising in the proceedings shall be taken into account in determining that question.

7. The Secretary of State shall be under a duty, so far as it appears to him practicable from time to time, to keep under review the management of heritage areas and to consider any matter which is the subject of a representation (other than one appearing to him to be frivolous or trivial) made to him by or on behalf of a person appearing to him to have an interest in that matter.

8. The Secretary of State shall be under a duty to take into account whether there has been any failure to comply with a code of estate management practice in determining whether to revoke or renew a designation.

9. The Secretary of State may at any time if it appears to him desirable to do so—

  1. (a) revoke the designation of a heritage area or substitute for a landholding so designated a part of that landholding if, in either case, it appears to him that the criteria for designation are no longer met; or
  2. (b) modify or replace a code of practice applicable to a heritage area.

10. Prior to taking any action under paragraph 9, the Secretary of State shall give reasonable notice of his intention and afford an opportunity to persons interested in the matter to make representations.

11.—(1) Without prejudice to paragraph 9, the designation of a landholding as a heritage area and any renewal of designation shall cease to have effect ten years after the date of its designation or, as the case may be, renewal unless application is made prior to that date for its renewal.

(2) The provisions of this Schedule other than paragraph 3(a) shall apply in relation to any renewal of a designation as they apply in relation to an initial designation.'.

7.45 pm
Mr. Ainsworth

Unlike the other new clauses and amendments that we have discussed today, new clause 15 does not seek to examine the fundamentals of leasehold reform. My right hon. and hon. Friends have eloquently made the case on behalf of those who are worried about the wider implications of leasehold reform. However, the new clause does not seek to deal with them.

It is a modest new clause, which serves a modest but important purpose. It reflects some specific concerns raised by English Heritage and the Historic Houses Association. It involves a technical adjustment to ensure that an existing right is permitted to continue unimpaired under the Bill.

To endure that our national heritage does not suffer as a consequence of inheritance tax through the forced sale and break-up of important properties, assets of outstanding historic or architectural interest can, under existing arrangements, as reflected in section 26 of the Inheritance Tax Act 1984, be exempted from such tax if they are made over to a non-profit making body. They can also be designated by the Treasury under section 31 of the same Act, with the result that they can be conditionally exempt from inheritance tax. At present, the leasehold enfranchisement provisions of the Bill will, or could, undermine that important protection.

The exercise of enfranchisement rights over a part of an estate which has been given conditional exemption from inheritance tax might be deemed by the Inland Revenue to break the undertaking to maintain the character and integrity of the whole property. Through no fault of his own, the owner could be faced with paying tax on not only the value received for the disposal but the value of the whole estate which had previously been exempted.

That could also work the other way round, to the detriment of heritage properties, by preventing action which is necessary to preserve historic buildings in good order. For example, a major heritage property in Warwickshire is currently governed by a body of trustees which is granted exemption under section 26 of the Inheritance Tax Act 1984. The trustees are short of funds to ensure the good repair and upkeep of an important heritage building. They have come up with a scheme to convert the top floor of the principal building into flats and to sell them on long leases. Only be selling them on long leases will they be able to raise sufficient money to make the exercise worth while.

However, the trustees wondered what the Bill's consequences will be for their inheritance tax exemption, and they have stalled. Already, as a result of the proposals, an historic building of major national importance is not getting the much-needed money for its upkeep. Without the new clause, the funds may never be forthcoming. New clause 15 would avoid such pitfalls by excluding designated properties from the application of part I of the Bill. It would also specify a limited period of one year during which designation may be sought for potentially elibible properties. During that time, and until the Treasury has made its decision, anyapplications to enfranchise will be frozen.

The number of estates which would benefit from the clause is small. I understand that only about 60 estates are currently designated for inheritance tax exemption, but each one is of vital national importance through its contribution to our heritage. In each case, the consequence of the Bill could—I do not exaggerate—be catastrophic. The new clause does nothing to undermine part I of the Bill, but it permits the continued safeguarding of our heritage, an aim of which I hope all hon. Members would approve.

I cannot believe that it is the intention of the Minister for Housing and Planning to jeopardise the integrity of our most important heritage buildings, so I hope that he will look favourably on new clause 15. It would have been impossible not to note a certain gloom among Ministers this afternoon. By proposing a helpful new clause, I hope to give my hon. Friend the Minister the opportunity to cheer himself by being helpful in return and to cheer the House by his acknowledgement of the merits of new clause 15.

Mr. Peter L. Pike (Burnley)

The hon. Member for Surrey, East (Mr. Ainsworth) said that there was gloom among members of the Government Front Bench, but it is not so much gloom as their being squeezed to make a few concessions to prevent some of the worst excesses of Conservative Back Benchers trying to press some amendments much further than the Government wished. We certainly saw some manoeuvring to ensure that that did not happen.

To some extent, the new clause falls into the same category as some of the issues that we debated earlier, in that it is basically misleading. This new clause, in particular, is spurious. It tries to wreck the Bill's objectives. The Minister has said repeatedly that the Government wish to enable as many people as possible to exercise the right of enfranchisement. The new clause is another attempt to increase the categories of people who cannot take advantage of the proposals. My hon. Friend the Member for Leeds, West (Mr. Battle) tried to go in the opposite direction with the previous new clause by proposing to extend the right of enfranchisement. We clearly have different objectives.

The Minister claims that the Government have sought to give enfranchisement to people with leasehold tenure of property, but we claim that we are trying to do more than the Government, and certainly more than Conservative Back Benchers. I have no sympathy with the argument that certain properties should be excluded from the provisions on the basis of the heritage. We do not intend to support the new clause if there is a Division on it.

I have a copy of a letter written to the Minister on 25 November by Roderick Barr. He says: I am amused when I hear the argument that freeholders are the guardians of the heritage. We have received only one cursory visit from the Estate's representative in 8 years. Preserving the heritage has in practice been done by Islington Council's planning officers and English Heritage (the houses are Grade II listed), and paid for out of the pockets of long leaseholders, such as myself. Nor does the estate seem to be a particularly good landlord to those tenants who still 'rent' (as opposed to 'own'). If you walk around the square it is immediately obvious from the condition of the houses which are owned privately on long leases and which are still rented out by the Estate; only the owner-occupied houses are well maintained. The letter shows that it is usually not the landlords of such properties who are likely to maintain the heritage and character of estates: it is the owner-occupiers who have a vested interest in ensuring that their properties are maintained.

The Government have used that argument to an extent about the sale of council houses. One reason why they advocated the sale of council houses was, they said, that tenants who became owners would invest money in their properties. Our argument on that was that properties should be available for rent by those who had to rent and by those who chose to rent. The argument that landlords are better at protecting the heritage is not valid.

The Duke of Westminster has been mentioned a number of times in our debate today. His new stately home, Eaton hall in Cheshire, cannot be envisaged as an asset to our heritage. It is of a modern design and even in 200 years' time, if it is still standing, it will not be listed by a future Labour Government—[Interruption.] Indeed, we might have been in office continually for 200 years by then, and we should have been able to make the changes that we wanted.

A letter from the Minister was printed by The Spectator on 31 October 1992: Sir: John Martin Robinson ('When reform means ruin', 24 October) forecasts dire effects from our proposals for leasehold reform. But has Dulwich Village become squalid as a result of the 1967 reforms? Has Pimlico decayed or improved since enfranchisement? I am convinced that the speculation somewhat extravagantly expressed in his piece is unfounded. I hope that the Minister will confirm that that is still his view and that he believes that there is no reason why we should include a provision in the Bill to prevent people from enfranchising on the false basis that that would better protect the heritage. I hope that the Minister remains strongly of that view.

Another letter in The Spectator of 7 November 1992 was from Paul Barnes of London, N1: The claim that it is only the leasehold system that can preserve the character of parts of central London is ridiculous. No other countries apart from England and Wales have a leasehold system and yet the character and grandeur of cities like Paris, Rome and even Edinburgh are well retained. You only have to look at Bath or York, where the property is mostly freehold, to see that areas can be conserved without the leasehold system. That view is at the root of our debate.

Mr. Roger Evans

I suggest that the difference in Rome, in Edinburgh and in the other examples is that systems of law other than the English system enable some form of social, communal control over the alteration to and development of property for the public good. It is the classic lack of such protection with English freehold property which is the cause of the difficulty.

Mr. Pike

The letter also referred to Bath and to York, which are not affected by different systems of law. If the hon. Member for Monmouth (Mr. Evans) had been a Member of Parliament when the Greater London council was being abolished, he might have been convinced that the GLC played a better role in protecting our heritage.

Much of the legislation introduced by previous Governments to protect our heritage has largely been eroded by this Government's actions since coming to office in 1979. With a Tory Government, profit and short-term gain tend to be of greater interest than protecting our heritage, whether buildings or our industrial heritage. The Government's record in this respect is not a great credit to them. The hon. Member for Monmouth is mistaken in his view.

The estates have not played a good role in protecting the heritage over the years. Articles were written about the demolition of Paradise row in 1906. Lord Cadogan's estate took steps to destroy parts of historic Chelsea because it wanted to make money out of the developments that would be possible once the heritage had been destroyed.

There are many similar examples over the years. Late one night, the House debated a Bill that would have removed certain protections for the Grosvenor buildings along the River Thames. The Bill would have removed restrictions that limited how those properties could be developed.

Mr. Peter Ainsworth

Even if the hon. Member for Burnley (Mr. Pike) is correct about the way in which estates have looked after their properties over the years—many of us would disagree—I cannot understand why he seems to suggest that we should not protect national heritage properties today.

Mr. Pike

The hon. Gentleman must accept that I do not argue for a moment that we should not protect the heritage. In Committee, we talked about management and other schemes to ensure that the character of buildings would be protected. I referred to many areas of character, such as the new towns and certain villages, which have been protected over the years by agreements about their character. The hon. Gentleman will be aware of many examples of freehold properties being acquired by the people living in them, but one could still take sensible steps to protect the character of buildings.

Opposition Members would not advocate a Bill that allowed the devastation of some of the character of London. Many hon. Members will be gravely concerned about some developments that have taken place in recent years. I am sure that, if they could, hon. Members would think again before they destroyed buildings to make way for new developments in London and many other parts of the country. For example, in Burnley there is no way that we would allow the market hall to be destroyed.

8 pm

The Minister has been to my constituency on more than one occasion. He will accept that our poor, old houses that lack style and need money spent on them—even if we could get it from the Government—have character because they are built with stone. That character is worth preserving— in fact, our stone buildings are a unique feature of north-east Lancashire.

In more modern times, on 26 January 1962, an article in The Daily Telegraph stated:

Extensive rebuilding is planned in Chelsea by the Cadogan Estate on land it owns in Sloane Street, Pont Street, Sloane Square, and Lower Sloane Street." At that time, the estate was seeking planning approval from London county council. One must accept that it was not ownership that prevented buildings from being destroyed, but, in many cases, local authorities' refusal to grant planning permission. I cannot imagine the new clause preserving our heritage. Like the hon. Member for Surrey, East, I certainly do not wish our heritage to be destroyed; I wish it to be protected. The new clause was moved not with that intention. I cannot say that the hon. Member for Surrey, East is misleading the House, but he is taking us along a false path if he believes that his new clause is the best way of preserving the heritage. Whatever the hon. Gentleman thinks. the prime intention of the new clause is to prevent people from enfranchising. The Bill will remove certain people's rights to exercise the right which the Bill, in theory, is supposed to give them.

Sir Jerry Wiggins

The wishes of the hon. Member for Burnley (Mr. Pike) are most commendable, but I fear that he completely misreads the situation, particularly in great cities such as London. Amendment No. 19 has been tabled by my hon. Friend the Member for Staffordshire, South (Mr. Cormack). He apologises for not being with us this evening; he is suffering from the unfortunate illness of mumps. I am sure that my hon. Friend will have our sympathy; his heart is very much in this matter.

The amendment defines heritage areas as those which are wholly or substantially within a conservation area with at least one-fifth of the area covered by … listed buildings where the landlord has undertaken to comply with a code of estate management practice and the land holding containing the heritage area is of outstanding architectural or historical interest and its preservation or enhancement would be secured by management by

one landlord … in accordance with a code of estate management practice". The way to preserve estates with their historical aspirations already so successfully preserved is by exempting the small number concerned. My hon. Friend the Member for Surrey, East (Mr. Ainsworth) acknowledges that we are talking about not a large number of estates but a few particularly special ones.

Section 19 of the Leasehold Reform Act 1967 is not enough. I cannot see that section 19 can be amended by stiffening its provisions when, by its very nature, the success of section 19 depends on the spin of the roulette wheel as to how many leaseholders apply to enfranchise. The statutory controls are not enough. It is necessary to find a stronger weapon to ensure the continuation of great national monuments.

It might be argued that the new clause might provide a loophole through which the owners of an ordinary estate could jump and avoid the so-called benefits which are assumed to be achieved by the Bill. I am talking about exempting the extraordinary, the great and the nationally important; there are only a few.

A landlord who might secure benefits, if the clause were to be included in the Bill, will be subject to a code of estate management practice, which will have to be approved by the Secretary of State. Such a code will specify the management arrangements, and I understand that the proposal is that the Secretary of State for National Heritage would be responsible for that provision.

We in this country have good protection from the destruction of distinguished buildings and from the making of insensitive alterations to such buildings, but there exist some areas of enormous value which, al though they are subject to statutory controls, need more powerful protection. By that I mean the discipline and benefit of leasehold controls.

Hon. Members are pressed for time, but I quote briefly from a book written by a man named Malcolm in 1810 about the squares of London and how they came to be a great feature of our capital city. From their auspicious start, the squares have been the envy of the world. Malcolm wrote:

the exertions of our fathers in the general improvement of houses and streets, have left us with little to do. Repairing-leases contribute greatly to the handsome appearance of the houses, everything is in order. Even the Labour Government in 1966 went some way to recognising the benefits of leasehold. Their White Paper entitled "Leasehold Reform in England and Wales" states: There are some comprehensively managed leasehold estates where enlightened management contributes greatly to the well being of the residents by maintaining the character of estates. It would not be fair to deny leaseholders on such estates the right of enfranchisement, but it would be equally unfair to the other residents on the estate if the exercise of this right prevented the benefits of comprehensive management from being any longer effective. I remind the House that that comes from a Labour White Paper. It goes on: The Government propose that if the estate is recognised by the appropriate Minister as a well managed estate, enfranchisement will be subject to an agreed scheme for continued estate management, with suitable provision for determination in the event of disagreement. That was the view of the then Labour Government.

That Government pressed on and enacted section 19 of the Leasehold Reform Act 1967, which has had mixed success. The scheme of management arrangement has proved to be workable only where it has been administered by a trust with the primary aim of securing long-term preservation of an area or where only a small proportion of it could be enfranchised.

It simply cannot be right that we risk national monuments in the lottery of enfranchisement. I hope, therefore, that, through amendment No. 119, we might provide national monuments with better protection, provide a better and more practical solution than section 19 of the Leasehold Reform Act, provide a fair deal to tenants, although not enfranchising their leaseholds, support the statutory powers of conservation areas and listed buildings, and prevent avoidance by others who seek a loophole.

It is easy to be wise after the event. There will be no going back on this matter. Once the great estates of London and elsewhere have been broken up, they will never be put back together. The example of Bournemouth springs to mind, but there are bound to be many others. We shall lose the cohesion, good management—of which there can be no question—the architectural appearance and one of the great attractions of our national capital.

Mr. Roger Evans

In support of what my hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin) has just said, I add a further argument. The hon. Member for Burnley (Mr. Pike) failed to analyse ownership, public intervention or timing, all of which are relevant to the issue of whether heritage is to be preserved. Amendment No. 119 is specifically designed to deal with that problem in the context of the legislation.

If one adopts the blunderbuss approach, as the hon. Member for Burnley did, to say that the previous Duke of Westminster destroyed Butterfield's masterpiece of Eaton hall in the 1960s is unarguable. No one would let the present duke do anything like it. At the same time, the atrocities that the late Lord Cadogan proposed in the 1960s for Chelsea would nowadays be regarded as the dark ages, but there must be some carefully qualified value judgments.

If the hon. Member for Burnley looked, for example, at a video of the film "Passport to Pimlico", he would see that there is something in the argument that the Duke of Westminster's withdrawal from the southern part of his estate has not been associated necessarily with the degree of social control that leads to improvement.

I am prepared to concede fully that possibly public intervention in certain circumstances leads to improvements of the environment. I am prepared to say that Southwark council, under Labour control in the 1970s, did some excellent work until it ran out of resources or will. I would even go so far as to say that the historic buildings section of London county council had a unique distinguished record for preserving the environment and the valuable parts of it. I would go so far as to concede that, in the sales of council houses, covenants were not imposed to protect the environment sufficiently. That has happened.

What we are talking about in the context of the Bill and amendment No. 119, in particular, is that certain parts of our country are especially distinguished with the richness of their architectural history and value to the environment. The failure of English freehold law has existed since the statute quia emptores—that one cannot impose a positive obligation on a freehold purchaser, whether it is to paint a front door or to turn up in armour on horseback for 40 days a year.

It may have been a good policy at one time, but the fact that it has been the case since the middle ages has meant that, for example, one can scarcely buy a freehold flat in England. One can buy a freehold flat in Scotland. That is why England developed differently under a different code of law. In Paris, one can control the development of Baron Hausman terraces because one needs a permit from the prefect. It is different in England.

8.15 pm

The issue with which we are dealing in the amendment is a peculiar product of England's architectural history and legal heritage. My specific concern is the essential weakness in clause 62 for estate management schemes. My hon. Friend the Minister rightly values the importance of such schemes. I am sure that he will join me in wanting to see such schemes encouraged, rather than deterred.

The danger inherent in the legislation is that there is no incentive for a landlord who is getting out because he has been enfranchised, to insist on a scheme. Amendment No. 119 suggests that there would be a positive requirement for estate management schemes in specific areas of heritage value, which should be designated as such by the Secretary of State for National Heritage. That is an extremely valuable aspect to reassure those of us who are concerned about the heritage aspects of the Bill.

I underline another peculiar anomalyofEngland—cathedral closes vested in deans and chaplains. For centuries, they have been exempted from the law of mortmain. In other words, they can accumulate land and pass it on from one to another. Until recently, corporations could not do that. Their powers of mortgaging have been limited so they could not go bust or bankrupt, and their powers of leasing are still controlled by section 2 of the Ecclesiastical Leases Act 1572.

We have here an example of a unique time capsule where an urban environment has been maintained in perpetual succession to an exceptionally high standard over many centuries. One of the great disappointments of the noble gothic cathedrals of France is that they are utterly devoid of anything similar. They may be jewels in their own right, but they have been wrecked by revolution and confiscation from the social and environmental context in which they were set.

What I am suggesting to my hon. Friend the Minister is simple: we do not have a tradition—

Mr. Raynsford

What about Chartres?

Mr. Evans

Chartres is not as fine as Wells or Salisbury. The rich canons of Chartres were all despoiled at the revolution, for understandable social reasons. The dean and chapter of Barchester in England have always been beneficent.

Mr. Peter Ainsworth

Will my hon. Friend consider the plight of the abbey of Cluny in that context?

Mr. Evans

I endorse the fate of the abbey of Cluny. It was one of the tragedies of the French republic after the revolution. We have seen it from Mont St. Michel to the burial place of the Plantagenets. The revolutionaries turned their finest monuments into prisons, dungeons and casernes. That is not the English tradition.

I may have chided my hon. Friend the Minister earlier for his intellectual brutalism with the rich tapestry of the English law of leaseholds. Undoubtedly, under the legislation he has no intention of damaging heritage. The heritage issue has entered the argument only because others have raised with the Minister the question whether there may be in the context a threat which is peculiar to England and the English position.

I ask my hon. Friend to consider amendment No. 119 as a practical means not to hinder the process of enfranchisement but simply to ensure that all this takes place on proper terms so that public interest in our heritage is protected. The only requirement of the amendment that is likely to have a practical effect is that there should be agreed an estate management scheme.

Mr. Pike

Does the hon. Gentleman accept that, if he is absolutely serious about what he is saying, it is possible that something would not be classified as a heritage area under the new clause within the period of 12 months or because the situation existed at the start and therefore could be disposed of? In five or 10 years' time, such an area may be regarded as heritage because people's views change over time.

Mr. Evans

I am sorry; I disagree entirely with the idea that permissive aesthetics is a time problem. Since the 1960s, we have seen the rise of public conscience and consciousness on the issue of heritage. In the past two decades, that consciousness reached a much higher level than it had been since 1914. I do not accept that the level of consciousness will go up and down.[Interruption.]The sedentary intervention from the Labour Front Bench and stupidity on a vital issue of national heritage is a reflection of their lack of concern to analyse the issue seriously and consider its impact. It may well be a sign of ignorance, but I shall say no more.

The point at stake is that it is feasible to set up a safeguard that the new clause introduces. The Minister may wish to reconsider the precise terms of the safeguard. I respectfully agree with the hon. Member for Burnley, and I am a little surprised that those who drafted the new clause included such a tough time limit as 12 months. I do not see why the time limit could not be extended. The new clause deals with that particular problem.

If my hon. Friend the Minister would give way on the substance of the argument for amendment No. 119, he would do so to the universal approbation of the conservation lobby, the delight of his Back Benchers and the enlightened opinion on conservation and architectural matters in the United Kingdom generally. I conclude, Mr. Deputy Speaker, on a minor matter: the Bill has forgotten Wales, and Welsh heritage should be mentioned specifically in such provisions.

Mr. Fishburn

Although I hope to catch your eye later in the debate, Mr. Deputy Speaker, on a number of amendments to widen the net of leasehold reform, as I believe that leasehold reform should be available to the maximum number of people, there is no doubt that there is something germane in the heritage argument. It depends on where we draw the line.

Since the Leasehold Reform Act 1967, there has been a tremendous improvement in the squares in my constituency where people enfranchised themselves—because they have bought their own houses, they have put money into those houses and into the squares. One of the great changes in London over the past 20 years has been that, where house owners have enfranchised themselves, they have improved whole swathes of London. That has been all too visible in Kensington and north Kensington.

However, there is a narrowly drawn argument for protecting the heritage which was persuasively put by my hon. Friend the Member for Surrey, East (Mr. Ainsworth) and those who argued for the cathedral closes. I hope that my hon. Friend the Minister will realise that, if we are confident about leasehold reform affecting the largest number of people, we should be confident about excluding specific areas where the heritage for historical reasons would be hurt.

Sir George Young

Everyone who has spoken in the debate is united by concern for our heritage; what may divide us is the best way of achieving that objective.

I was grateful to my hon. Friend the Member for Surrey, East (Mr. Ainsworth), among others, for putting the case so plausibly. He said that he detected some gloom on the Government Front Bench and I cannot think why he reached that conclusion. Morale is high and we are enjoying a refreshing and constructive debate with our hon. Friends on the Back Benches; the only shadow is the Minister of State's voice, which is approaching the end of its lease.

About an hour ago, my hon. Friend the Member for Monmouth (Mr. Evans)called me an intellectual Jacobite. He has now called me an intellectual brutalist. It is not my objective to vandalise Britain's heritage; on the contrary. However, I detected some inconsistency in his argument. First, he argued that our heritage is safe in the hands of the interests that now own it—indeed, he said that it was safe only in their hands and could not be trusted to anyone else —but he went on to say that one could not rely on those interests to implement estate management schemes and that somehow their commitment to heritage would evaporate if they were confronted with the option of introducing an estate management scheme at no cost to themselves. Either they have our interests at heart, in which case they would implement estate management schemes, or they do not, in which case we can rely on the leaseholders.

At the heart of the debate is the point that was touched on by my hon. Friend the Member for Kensington (Mr. Fishburn)—whether the only way of safeguarding our heritage is to insist that sensitive buildings remain in single ownership or whether one can rely on the interests of leaseholders to safeguard and even enhance that heritage.

New clause 15 and amendments Nos. 1 and 2 would exempt from enfranchisement properties which the Treasury has designated under the Inheritance Tax Act 1984 as conditionally exempt from inheritance tax. There is concern that if the properties are enfranchisable there would be serious implications for some estates. The concern is first that the disposal of part of an estate could trigger a review by the Inland Revenue of the conditional exemption. In short, if the estate is being broken up, is there any case for continuing the exemption? Secondly, there is the concern voiced by my hon. Friends the Members for Weston-super-Mare (Sir J. Wiggin) and for Monmouth that the coherent management of the estate would be lost. I suspect that those issues are likely to be of greatest concern to rural estates and the example given was not in one of our cities.

Amendments Nos. 116 to 199 would exempt from the rights to enfranchise properties falling in heritage areas proposed by a new schedule—both flats and higher-value houses coming within the scope of enfranchisement under the Bill. I expect that those provisions would be of greater importance to some of the urban estates, although there might be wider application as well.

I shall now deal with the point made by my hon. Friend the Member for Surrey, East about inheritance tax. Exemption from liability to inheritance tax is, of course, a matter for my colleages at the Treasury. I understand that it is granted in respect of outstanding historic buildings or landscapes, so that the estate does not have to be broken up in order to meet the tax liability. The exemption or designation is usually conditional on undertakings being given to maintain, repair and preserve the estate, and on public access being granted.

When there are disposals from an estate that has been or is being granted conditional exemption, the Inland Revenue will quite properly want to review whether designation remains appropriate. Enfranchisement is as much a disposal as any other sale. It will be necessary to pay any inheritance tax due on the proportion of the estate which is being sold, but that is only right, as the former freeholder will have the cash to meet the tax liability.

I turn to a point on which I may be able to help my hon. Friends. Each case will need to be examined on its merits, but I see no reason why, in general, the sale of the freehold through enfranchisement should necessarily lead to designation being removed from the rest of the estate. After all, enfranchisement can take place only where the property has already been demised by way of a long lease. My hon. Friend was concerned that disposal of one part of an estate might automatically lead to designation being removed from all of it. Of course, one would need to discuss it with the Inland Revenue, but there is no particular reason why the entire benefit of designation should be lost if any proportion of the estate were enfranchised.

The sale of a freehold will not result in the break-up of an estate in the same way as the sale of the contents of a house can separate paintings of sculpture, for example, from their context. The buildings will still be there, in the same relationship to each other, whoever owns the freehold.

Conditional exemption from inheritance tax does not prevent the freeholder from selling long leases for a premium as long as the terms of those leases are in keeping with the conditional exemption. If they are, there should be no reason why the leaseholder should not enfranchise. It would not be right for the freeholder to benefit from such sales and also benefit, at the leaseholders expense from his inability to enfranchise.

Where designation depends on standards of maintenance, or on access rights, it should be possible for the former freeholder to ensure that these obligations remain on the former leaseholder through an estate management scheme. I shall say more about that later.

Amendments Nos. 116 to 119 would provide a much wider exemption covering areas which my right hon. Friend the Secretary of State for National Heritage would be required to designate as heritage areas. Designation would apply if an area is within a conservation area and is of outstanding architectural or historical interest. The suggestion is that these areas can be effectively managed and will retain their architectural and historical merit only if the existing leasehold arrangements are left unchanged. That cuts right across our desire to keep exemption from leasehold enfranchisement to an absolute minimum and keeping them on the face of the Bill. It could drive a coach and horses through the Bill, giving the Secretary of State, for National Heritage the power to exempt any properties he sees fit.

I wish to make two preliminary points. First, it is possible to have areas of fine architecture or historical interest without the leasehold system. One has only to look at Paris or Edinburgh to see evidence of that. There are other means by which standards can be maintained. Listed building control and the designation of conservation areas spring to mind. If those need strengthening, that would be a separate issue.

Secondly, times can change. I suspect that some of the opposition to enfranchisement when it was debated in 1967 was on the basis that the break-up of the London estates would prevent redevelopment, rather than that it would harm the heritage. I do not want to dwell too long on this point, other than to observe that the Leasehold Enfranchisement Association has circulated to hon. Members press cuttings concerning the demolition of a number of London squares by one of the great estates earlier this century.

However, the key issue is whether it is necessary that estates should continue in single ownership if they are to be managed effectively and leaseholders be denied the right to enfranchise. I do not accept that, as a general proposition, landlords are necessarily better at management or more likely to care for and preserve a historic building than the leaseholder who lives in it. There are many cases, as my hon. Friend the Member for Kensington said, in which leaseholders have restored and cherished historic buildings on an estate, often with their own resources and perhaps to a higher standard than the freeholder would have done.

Indeed, it has been argued that the leasehold system acts against the proper care and maintenance of property. If a leaseholder of a house knows that he has only a short-term and diminishing interest, he clearly has less incentive to plan for the long-term care of the property.

8.30 pm

I believe that our proposals on estate management schemes are the answer to the problems mentioned by my hon. Friends. Our proposals will allow the freeholder to continue to exercise influence over the use, maintenance and redevelopment of property, even though the leaseholder has enfranchised. Provided that they meet the conditions set out in clauses 62 and 63, there is no reason why freeholders should not apply for such schemes to cover their estates.

Estate management schemes are intended to allow the landlord to retain powers of management over houses or flats which become enfranchised. The terms of an estate management scheme can deal with the redevelopment, use or appearance of the property. They can empower the landlord to carry out work to maintain or repair properties. They can impose obligations in respect of property used in common.

More than 100 estate management scheme applications were approved after the 1967 Act was passed. I believe that they have been effective in areas such as Dulwich and Hampstead in preserving the quality of the area. For example, there is a scheme in operation in Belgravia, where several houses have enfranchised under the existing Act but are generally indistinguishable from other houses in the street which have remained under the control of the original landlord.

Leasehold valuation tribunals will have to approve estate management schemes and consider the reasonableness of what is proposed. In considering applications, they will have regard to the past development and present character of an area and to architectural and historical considerations, as well as to the circumstances generally. Such schemes are likely to enhance historic areas and cathedral closes, which were mentioned so movingly by my hon. Friend the Member for Monmouth. We are also considering suggestions to amend our proposals, and we are in consultation with local authority associations with a view to giving local authorities the power to promote estate management schemes.

It would not be right to frame exemption from enfranchisement in terms of the application of tax law. Leaseholders' rights should not depend on the taxation circumstances of the freeholder. Nor is it necessary that those who live on the great estates need be denied the chance to own their freehold. The Government's view is that leaseholders are fully capable of caring for the buildings in which they live and that the system of estate management schemes provides adequate safeguards where in the general interest there must be coherent management of an area as a whole.

Sir Jerry Wiggin

I realise that my hon. Friend is coming to a conclusion, but nothing has been said about the attitude of English Heritage to the Bill and the effects that it might have on heritage areas. Rumour has it that English Heritage has a strong view that the Bill will be damaging for the heritage but was firmly told by the Department that it was one of the Department's agencies and should behave itself. Perhaps my hon. Friend could clarify the position.

Sir George Young

When my hon. Friend the Member for Surrey, East moved his new clause, he said that he had been in contact with English Heritage, so it is legitimate to assume that he articulated some of the points that English Heritage had made to him. The Government's view is the one that I have just set out. We do not believe that the only way to safeguard our national heritage is to grant the exemptions. We believe that there are other ways of achieving the goal that we all share.

Mr. Pike

The Minister said that there would be some consultation with local authorities about management schemes. There is no reason why English Heritage could not also be involved in that discussion. Will the Minister assure us that it will be involved? We support the concept of estate management schemes and the widest possible discussion on them.

Sir George Young

I do not believe that English Heritage is pressing for those powers at this stage. The local authority might be involved if, for the sake of argument—this would be an exception—neither the existing freeholder nor the new freeholder wanted to promote an estate management scheme. It might then be sensible for the local authority to be able to do so. That would be a case of last resort. The estate management scheme costs the freeholder nothing because the costs are recouped through the leaseholders.

If the freeholder had a continuing commitment to the country's heritage, it would be odd if he failed to promote an estate management scheme, especially if he did not have to fund it. We are considering the possibility of a safety net. We are talking to local authorities about whether they would welcome such a power if, in unusual circumstances, no one else was interested in promoting a scheme. I hope that the House will not feel it necessary to press the new clause to a Division.

Mr. Ainsworth

I was clearly mistaken earlier when I saw furrowed brows on the Government's Front Bench and took them to betoken gloom. They clearly betokened pensiveness. I am grateful to my hon. Friend the Minister for his thoughtful response to the new clause and amendments. In view of the words that he has just spoken and the undertakings that he has given, in the hope that he will continue to liaise with both the Department of National Heritage—it is good to see my hon. Friend the Under-Secretary of State for National Heritage in his place listening to the debate—and with the Treasury—it was good to see my right hon. Friend the Chancellor of the Exchequer listening to the debate, too—and so that I may see what further progress can be made in safeguarding heritage buildings in the context of the provisions of the Bill, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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