LOW RENT TEST: EXTENSION OF RIGHTS

HC Deb 30 April 1996 vol 276 cc918-53

'. Schedule [Low rent test: extension of rights] (which makes provision for conferring an additional right to enfranchisement in relation to tenancies which fail the low rent test and for introducing an alternative to the low rent test in the case of the right of collective enfranchisement and the right to a new lease) shall have effect.'.—[Mr. Gummer.]

Brought up, and read the First time.

The Secretary of State for the Environment (Mr. John Gummer)

I beg to move, That the clause be read a Second time.

Madam Speaker

With this, it will be convenient to discuss the following: Government amendment No. 152.

(4) Where this Part of this Act applies as if there were a single tenancy of property comprised in two or more separate tenancies, then, if each of the separate tenancies falls within subsection (2) above, this section shall apply as if the single tenancy did so.

(5) The power to make an order under subsection (3) above shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament."

2.—(1) In consequence of paragraph 1 above, the Leasehold Reform Act 1967 shall be amended as follows.

(2) In section l(3A)(b) (extension of rights not to apply to existing lettings by charitable housing trusts), after "1A" there shall be inserted ", 1AA".

(3) In section 3(3) (provision for aggregation of successive tenancies), after "this Part of this Act" there shall be inserted ", except section 1AA, ".

(4) In section 9(1C) (price payable by tenant on enfranchisement by virtue of section 1A or 1B), after "1A" there shall be inserted ", 1AA".

(5) In section 9A(1) (compensation payable where right to enfranchisement arises by virtue of section 1A or 1B), after "1A" there shall be inserted ", 1AA".

(6) In section 32A(1) (b) (extensions to right to enfranchisement not to apply in relation to existing tenancies of property transferred for public benefit), at the end there shall be inserted "or if section 1AA above were not in force".

(7) In section 37(4) (treatment for the purposes of Part I of tenancy granted to continue as a periodical tenancy after the expiration of a term of years certain), after this Part of this Act" there shall be inserted ", except section 1AA, ".

(8) In Part II of Schedule 3 (procedural provisions), in paragraph 6 (which makes provision about the contents of a tenant's notice under Part I), after sub-paragraph

(1) there shall be inserted—

"(1A) Where the tenant gives the notice by virtue of section 1AA of this Act, sub-paragraph (1) above shall have effect with the substitution for paragraph (b) of—

"(b) such particulars of the tenancy as serve to identify the instrument creating the tenancy and show that the tenancy is one in relation to which section 1AA(1) of this Act has effect to confer a right to acquire the freehold of the house and premises;"."

(9) In that Part of that Schedule, in paragraph 7(4) (admission in landlord's notice of tenant's right to have freehold to be binding on landlord, so far as relating to matters mentioned in section l(l)(a) and (b)), for "mentioned in section l(l)(a) and (b) of this Act" there shall be substituted "relevant to the existence of that right".

Right to collective enfranchisement

3.—(1) Chapter I of Part I of the Leasehold Reform, Housing and Urban Development Act 1993 (collective enfranchisement in case of tenants of flats) shall be amended as follows.

(2) Section 5 (qualifying tenants) shall be amended as follows—

1. (a) in subsection (1) (which defines a qualifying tenant as a tenant of a flat under a long lease at a low rent), for "at a low rent" there shall be substituted "which is at a low rent or for a particularly long term", and
2. (b) in subsection (2)(c) (which excludes from the definition a tenant under a lease granted in breach of the terms of a superior lease which is not a long lease at a low rent), after "rent" there shall be inserted "or for a particularly long term".

(3) After section 8 there shall be inserted— Meaning of "particularly long term

8A.—(1) For the purposes of this Chapter a long lease is for a long term if—

1. (a) it is granted for a term of years certain exceeding 50 years, whether or not it is (or may become) terminable before the end of that term by notice given by or to the tenant or by re-entry, forfeiture or otherwise,
2. (b) it is for a term fixed by law under a grant with a covenant or obligation for perpetual renewal (other than a lease by sub- demise from one which is not for a particularly long term),
3. (c) it takes effect under section 149(6) of the Law of Property Act 1925 (leases terminable after a death or marriage), or
4. (d) it is a lease which—
1. (i) is or has been granted for a term of years certain not exceeding 50 years, but with a covenant or obligation for renewal without payment of a premium (but not for perpetual renewal), and
920 921
2. (ii) is or has been renewed on one or more occasions so as to bring to more than 50 years the total of the terms granted (including any interval between the end of a lease and the grant of a renewal).

(2) A long lease which does not fall within subsection (1) above shall nonetheless be treated for the purposes of this Chapter as being for a particularly long term if it is a long lease by virtue of paragraph (c) or (d) of section 7(1).

(3) Where this Chapter applies as if there were a single lease of property comprised in two or more separate leases, then, if each of the separate leases is for a particularly long term, this Chapter shall apply as if the single lease were for such a term."

(4) In section 13(3)(e) (particulars to be included in initial notice which relevant to whether person a qualifying tenant), in sub-paragraph (ii), for "a lease at a low rent" there shall be substituted "at a low rent or for a particularly long term".

Right to new lease

4.—(1) Chapter II of that Part (individual right of tenant of flat to acquire new lease) shall be amended as follows.

(2) In section 39(3) (provisions of Chapter I which apply for the purposes of Chapter II), at the end of paragraph (c) there shall be inserted ", and (d) section 8A, ".

(3) In section 42(3) (particulars to be included in notice by qualifying tenant of claim to exercise right), in paragraph (b) (iii), there shall be inserted at the end "or, in accordance with section 8A (as that section so applies), a lease for a particularly long term".

5.—(1) In Chapter VII of that Part (general), section 94 (Crown land) shall be amended as follows.

(2) In subsection (3) (disapplication of restriction imposed by section 3(2) of the Crown Estate Act 1961 on term for which lease may be granted by Crown Estate Commissioners), in paragraph (a), for "at a low rent" there shall be substituted "which is at a low rent or for a particularly long term".

(3) In subsection (4) (power to shadow statutory rights), for "at a low rent" there shall be substituted "which is at a low rent or for a particularly long term".

(4) For subsection (12) there shall be substituted— (12) For the purposes of this section "long lease which is at a low rent or for a particularly long term" shall be construed in accordance with sections 7, 8 and 8A.".'

And the following amendments thereto: (a), in line 9, leave out from 'tenancy' to 'is'.

1. (b) in line 14, leave out from beginning to end of line 34.
2. (c) in line 47, leave out from beginning to 'this'.
3. (d) in line 82, leave out from beginning to end. Government amendment No. 153.

Mr. Gummer

The new clause and amendments deal with the qualifying condition for enfranchisement rights, either under the Leasehold Reform Act 1967 concerning houses or under the Leasehold Reform, Housing and Urban Development Act 1993 concerning flats. I have a particular interest in that area, both as Minister responsible for London and because reference was made in debate to the particular, and some would say peculiar, circumstances of rural areas such as the one that I represent.

The policy has been to give enfranchisement rights to leaseholders who might be regarded as owner-occupiers. That policy lies at the heart of the discussions: how does one distinguish between those who are leaseholders, as one understands that term, and those who may be leaseholders in the sense that they hold a lease but who have been paying a proper market rent as tenants would? In such cases, the lease is a matter of convenience between them and the landlord. It may well have been chosen by either side, or by both sides, at some past date.

Two tests establish whether the leaseholder is an owner-occupier. First, there is the length of the lease, which should generally be more than 21 years. Secondly, the tenant must pay only a nominal ground rent rather than a market rent. If those two conditions are satisfied, except during the final years of the lease, the tenant is likely to have a greater financial stake in the property than the landlord.

There has always been a low-rent test. It was a mechanism for distinguishing between the real leaseholder—I use the word "real" in the sense of the person whom we understand to be the leaseholder—and someone who has a lease but who is a tenant in all other respects. The form differs slightly according to the circumstances, but it generally requires that the rent should be less than two thirds of the rateable value of the property. The purpose of the test is to distinguish in the way that I have suggested.

There are always arguments about how one establishes such a figure, and discussions at every stage have sought to arrive at a sensible position regarding leasehold enfranchisement. There were heated discussions about the principle—and particularly about the mechanisms by which one establishes that principle.

An amendment was carried in Committee, to remove the low-rent test. That decision was based not on the idea that renting tenants should be given enfranchisement rights, but on the fact that the low-rent test has caused difficulties in practice. In other words, I do not think that people sought to give enfranchisement to those who manifestly were not, in common parlance, leaseholders of the sort that we are describing. They felt, perfectly reasonably, that the present mechanism for distinguishing between the two types of leaseholder is faulty and occasionally leads to anomalies and sometimes to downright hardship.

There are leases where the rent is technically above the low-rent limit, but is closer to being a nominal ground rent than a rack rent. In some cases, that has arisen by accident, perhaps because properties were not revalued for rating purposes between 1973 and the end of the rating system in 1990, although ground rents crept up slightly in line with inflation. In other cases, some landlords intentionally set rents slightly above the limit. The discussions in Committee were directed at those very people. That is why I accepted the arguments in Committee for reform.

4.15 pm

The test currently excludes some tenancies, which, on any reading of the previous legislation, should enjoy enfranchisement rights.

Mr. Raynsford

Will the Secretary of State now tell the House how many such tenancies exist?

Mr. Gummer

I cannot say exactly how many there are, but later in my speech I shall tell the hon. Gentleman the precise percentage of tenancies that the measure is intended to cover. I am sure that he will be happy about that, but he must listen to my proposal.

Mr. Ashby

Does a long lease at a rack rent exist? In my understanding, there is no such thing.

Mr. Gummer

I have to tell my hon. Friend, for whom I have great respect, that on this occasion, he is wrong. He must not believe that because I cannot tell him how many elephants there are in Africa, there are no elephants in Africa. That is not a reasonable argument. There are such leases. To put it simply, if there were not, my hon. Friend would have no worries, as everything that he seeks would be achieved. There are such leases and it is only reasonable to deal with them equitably. In the same mode in which I have approached the whole issue, I am seeking merely to achieve equity. That seems perfectly reasonable.

Mr. Ashby

On equity, does my right hon. Friend consider it right that there should be different forms of long lease? Is it not fair for one group of long leaseholders to be treated the same as the other? That is equity.

Mr. Gummer

If my hon. Friend had followed the argument, he would know that that depends on the nature of the leaseholding. If, to all intents and purposes, a long leaseholder is an owner-occupier who pays a ground rent, that is one class of leaseholder. Other long leaseholders pay a full tenant's rent. They are not leaseholders in the sense that he and I understand it or those to whom many of my hon. Friends, including my right hon. Friend the Member for Chelsea (Sir N. Scott) and my hon. Friends the Members for Fulham (Mr. Carrington) and for Kensington (Mr. Fishburn) referred—leaseholders who, for one reason or another, are excluded from the enfranchisement legislation. My proposal relates to those people.

Mr. Raynsford

The Secretary of State will be aware that the Leasehold Enfranchisement Association has enormous experience of enfranchisement. It has represented leaseholders for many years and has done stalwart work to advance enfranchisement. Mrs. Joan South, the secretary of the Leasehold Enfranchisement Association, wrote to me as follows: In our organisation we have never come across a single 'long' lease that has anything like a market rent. If the Secretary of State cannot tell us how many such properties exist, will he accept the verdict of the Leasehold Enfranchisement Association that it is a chimera, not reality?

Mr. Gummer

I wish to make three points to the hon. Gentleman. First, I have made my way through complicated legislation on a whole range of matters, including all the detailed problems of agricultural tenancies and the like, and I have learnt that anyone who suggests that circumstances cannot arise is usually wrong. Such complications need to be considered extremely carefully, and one needs to recognise that even those with experience may well find that their experience is almost entirely with people who see themselves as long leaseholders of the sort with which the Bill is concerned. Therefore, it is perfectly reasonable that those who never have seen themselves as long leaseholders and have always seen themselves as full-blown tenants who happen to have a long lease would not be in touch with the organisation to which the hon. Gentleman referred. I do not find that surprising.

Mr. Raynsford

Will the Secretary of State give way?

Mr. Gummer

I wish to give the hon. Gentleman the three reasons, because it is important to face them.

The second reason is as follows. Let us say that I am entirely mistaken. If so, no harm is done because those few people who may be in that position will find themselves properly protected, and those who are not—I am told by the hon. Gentleman that they are the vast majority, and my hon. Friend the Member for North-West Leicestershire (Mr. Ashby) said that there are only three or four in the first position—

Mr. Raynsford

There is none.

Mr. Gummer

However small the number is, I do not find it possible to believe that they will be disadvantaged. It is possible for a reasonable relationship between landlord and tenant to be entered into, in which the landlord decides that he would like to have a long lease and gives a long lease in permanence to a tenant, who is then responsible for renovations and who pays the full market rent—not a ground rent, not even a pseudo-ground rent, nor even a bit above ground rent—as a tenant. That is all that we suggest, and I cannot see that that is a disadvantage.

My third reason is that it is very important that we should recognise that there are other areas, outside the centre of London, which are thus affected. Some of those areas are in the country and, for large estates in particular, it is part of how they operate to have long leases for proper tenants who are seen as tenants. Happily, continuity still reigns in many of those estates and the long leases are seen as a means of maintaining continuity. I would therefore like to protect those people in particular, and I think that there is no disagreement about them across the Floor of the House.

Mr. Raynsford

As the Secretary of State will know from studying our amendments, we accept entirely the position on rural areas. We shall debate later an amendment that makes provision for that, because there are genuine problems that we are keen to address. As for the notional existence of long leases at a market rent for which the Secretary of State is making special provisions and creating a new 50-year test in new clause 21, there is no evidence for them. The Leasehold Enfranchisement Association says that it has no evidence, but it has brought substantial evidence of people who will be disadvantaged by the 50-year test that the Secretary of State proposes. Would not it be sensible to reconsider?

Mr. Gummer

The hon. Gentleman must listen to me when I come to the 50-year test. In contradistinction to the views that he has put forward, those who represent the landlords suggest that there are significant numbers in the long-lease category. All I say to the hon. Gentleman is that it would be better, when considering such matters, to consider them from the point of view of equity. I was brought up to believe that if one person was accounted just, he should not suffer for all the 90 and nine who were not. If that is the case, we should have a system that includes even a small number of cases. My hon. Friend the Member for North-West Leicestershire has said that there are only three or four cases—I believe that all the evidence points to many more—but even if that were so, we should take account of them.

Perhaps it would be better sometimes for people to have the confidence of a long lease even if they were full-blown tenants. To exclude or discourage that option would be a pity. The hon. Gentleman has not so far objected to the principle, but fears the 50-year term. I shall come to that aspect in a moment. I want to establish that we are trying to enfranchise real leaseholders and that it is not unreasonable to distinguish between them and tenants who have a long lease. That distinction is not new, but is found in both the previous substantive pieces of legislation, which introduced a low-rent test to make the distinction. It would be odd if we were suddenly to discover that provision is not needed because no such tenants exist. Landlords believe that they do and have cited examples, so it does not seem unreasonable to make appropriate provision—and to examine the disadvantages of doing so.

Sir Teddy Taylor (Southend, East)

Lest my right hon. Friend be discouraged by constant criticisms and questions, people such as myself complained in respect of the 1993 legislation that while good landlords, such as the Duke of Westminster, were being protected by enfranchisement, a large number of retirement leaseholders in properties built by companies such as McCarthy and Stone and others were excluded. It appears that the Government are now proposing that long leases for retirement leaseholders will have the same advantages as other leases. Does my right hon. Friend agree that as that is the case, the Bill is a major step forward and will give rights to tenants who were previously unfairly excluded?

Mr. Gummer

My hon. Friend is absolutely correct. I have considerable sympathy with the need to enfranchise retirement leaseholders. There are a number of retirement developments in my constituency—as I share with my hon. Friend the clement weather and pleasurable areas of East Anglia, to which many people go to retire and to whom a protected lease is important. I hope that my hon. Friend agrees that there is a distinction between the person who buys accommodation but on a lease, for the obvious reasons in such circumstances, and the person who has a long lease but pays a normal tenancy rent. Everyone has sought to make that distinction year after year. Labour has produced the entirely novel concept that such tenants do not exist. If that is so, why did Labour suggest such a distinction in its legislation and support that distinction in later legislation?

Dame Elaine Kellett-Bowman (Lancaster)

Does my right hon. Friend agree that the Duke of Westminster is one of the finest landlords in the country? He is marvellous at maintaining his properties and does not charge exorbitant rents. The duke went to great trouble some years ago to ensure that he was allowed to keep properties in London to let to people described as working-class tenants—which he does at considerable financial cost to himself.

Mr. Gummer

My hon. Friend is right to point out that we must be careful not to suggest that the word "landlord" equates with a bad landlord. There are many good landlords in London, but they are not helped by the activities of the kind of person for whom the Bill is primarily designed. There are bad landlords and freeholders, and many of them have recently entered the business. They view their involvement not as a long-term commitment to a part of a city, as do the Westminster or Cadogan estates, but as a means of providing income in ways never envisaged by the freeholding system.

That is why I personally took the decision that this part of the Bill should include protection. As the Minister responsible for London, I could see how damaging the absence of such protection could be. All that I am trying to introduce is equity. We need to protect people from the activities of poor landlords—or downright bad landlords—but in a way that respects the excellence of the good ones, not least because there is much to be said for encouraging them. One of the problems from which the nation as a whole has suffered is the way in which landlords have been discouraged because there has not been a distinction between the good and the bad. That is what I am trying to do in the new clause.

Mr. Ashby

I understand what my right hon. Friend is trying to do, but does he not accept that he is turning existing laws upside down? Why not introduce a paragraph into the schedule, perhaps in another place, to say that, where the rent on a long lease approximates to the rent, so that a rent officer would establish that, such a test would be absolutely fair, because that is a rack rent? We could say that, if it was within 20 per cent. of a rent that a rent officer would fix for the premises, it would be excluded from enfranchisement. That would deal with the matter.

4.30 pm

Mr. Gummer

We have tried all sorts of mixes and they have not stood the test of time. Therefore, I think that my hon. Friend will see—if I am allowed to proceed a little, on the mixture of things that I propose—that what we propose is a helpful way in which to deal with the problem that he sees.

Some leases of more than 25 years have rack rents, and in those cases the tenant's stake has never been anywhere near as significant as that of the landlord. Some landlords, to whom my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman)—who is still with us but, rather confusingly, has moved to another seat—referred, wish to let properties for rent. They want to give tenants a substantial period of security, and there is no reason why they should not do so. Indeed, there is every reason to make that possible. So it is a question not only of their present number, but of the possibility of having them in the future. Those leases run for 25 to 35 years at market rents, and we need to recognise that we have responsibilities on both sides.

I want to try to take seriously the argument on which the hon. Member for Greenwich (Mr. Raynsford) previously justified enfranchisement, taken from the 1966 White Paper, that the land belongs in equity to the landowner and the house belongs in equity to the leaseholder. That equity would not apply where the rent is a market rent. The Government's new clause, offered as an alternative to the current clause 95, allows tenants with leases of more than 50 years to qualify for enfranchisement rights, irrespective of the rent paid. The first thing that we do is remove the need for a low-rent test when one has such a lease. That applies both to houses and to flats. Those tenants will have to pay a fair market price if they wish to exercise their rights, on the same basis as houses and flats that became enfranchiseable as a result of the 1993 legislation.

Why 50 years? The fundamental purpose is to make the distinction that we have agreed needs to be made. Most leases are for 99 years or more. When we say 50 years, we are referring to the original length of the lease, not the time that it has to run. Leases were so long—99 years or more—because that was the only way in which people could get a mortgage. Properties would not have been mortgageable if they had had a shorter lease. Therefore, conventional mortgages were almost impossible to obtain on properties when the length of the lease was less than 60 or 70 years. If freeholders wanted to sell a property that had what one would call a proper lease, the lease was bound to be for such a length. Our amendment means that the great majority of leaseholders would no longer need to be concerned about the low-rent test.

The hon. Member for Greenwich—quite reasonably—is concerned about numbers. The great majority of leases of 50 years or less—the percentage is in the high 90s— constitute a specialist market: because they are not mortgageable in normal circumstances, they are usually sold only to cash buyers or to those who can raise bank finance. Such leases are found on some London estates, and sometimes in rural areas, where they are granted as part of a management strategy for looking after a farming estate. The terms vary considerably. Some will be at low rents, while in other instances the figures will be much closer to the full market rent. They are often granted where property is very expensive, and a shorter lease more similar to renting than full ownership may suit some purchasers.

The hon. Member for Greenwich has tabled amendments to my new schedule that would allow all leases of more than 21 years to enfranchise. The issue between the hon. Gentleman and me therefore concerns a relatively small number of leases with a length of between 21 and 50 years when granted. I accept that the hon. Gentleman does not now wish to extend the arrangement to the countryside, recognising that there are special circumstances there. Let me point out, however, that many of the considerations that make both of us not unhappy with what happens in the countryside—I am trying to put this in as unbiased a way as possible—could apply in towns. I think that that ought to be so, and that it would be better if such an arrangement were more widely used.

Mr. Raynsford

Like me, the Secretary of State will have received representations from the Country Landowners Association. It specifically points out that arrangements in the countryside essentially revolve around agricultural arrangements. Where are those arrangements likely to be replicated in London?

Mr. Gummer

I was trying to suggest that what the arrangements essentially revolve round is the need for continuity felt by many estate owners. I do not think that that need for continuity is to be found only in agricultural contexts. I do not disagree with those who want what some large landowners have—the ability to let, not sell, an albeit limited number of properties to real tenants at market rents. Letting such properties on a long lease will confer the continuity that owners of historic estates want in regard to tenants: they are looking not to one generation or even two, but back to many generations and forward to many more. I do not see why we should consider that inequitable; I think that it is rather a good idea, and I do not want to exclude it. Although I am a member of the Country Landowners Association, I am not bound by its view that all the arrangements must revolve around agriculture, horticulture or Welwyn Garden City.

Mr. Raynsford

I accept, inevitably, that we are not bound by the CLA's views. I am simply trying to establish—and I invite the Secretary of State to agree with me—that there is a fundamental difference between the circumstances applying in rural and agricultural communities and those applying in cities. I remind the right hon. Gentleman that, in its evidence to us, the CLA states: The reasons that surround the letting of houses on farms and estates on long leases are very different from the position in urban areas, where the leasehold system is widespread and akin to a business in its own right. Does the right hon. Gentleman accept that?

Mr. Gummer

I do not know why the hon. Gentleman wants to fall out with me. What the CLA has said is perfectly reasonable, but I suggest that what I have said is also reasonable. I have said that the existence of additional reasons why the arrangements are necessary in country areas does not mean that one aspect that is important in the country—continuity, and the wish for continuity that is so much part of long-established estates—should not be replicated in similarly long-established estates in the centre of London. I do not think that there is any difference between us in that regard: I think that my view is perfectly reasonable.

Ms Glenda Jackson (Hampstead and Highgate)

The ability of the great estates in London to maintain continuity, which is so important to them, is entirely dependent on the financial contributions of their leaseholders. Such continuity surely denies equal continuity to leaseholders and their being able to pass on, in the words of the Prime Minister, what they own to their own. Such an ability is at present denied to leaseholders.

Mr. Gummer

The hon. Lady must not have been present for all my speech or she would have heard me address precisely that. She and I disagree on almost everything on this earth, and I am right in almost every case. She must accept it from me that it is no good coming into the House, gathering together her prejudices, and assuming that I have said what I have not said. I have in fact said the opposite to that which she assumed, and I am sorry that what has so far been a reasonable debate has been changed by her.

Ms Jackson

rose—

Mr. Gummer

I will not give way to the hon. Lady if she cannot debate reasonably. We are trying to discuss a fundamental issue. I have spent about 25 minutes trying to explain a crucial issue, and it is not helpful to the House to go over it again.

The real question is the 50 years and whether it is a sensible figure. I am trying to be as helpful as I can to my right hon. and hon. Friends and to Opposition Members. I took the 50 years from the tax legislation, so it is a natural break point, although I accept that it is not as significant as 21 years is in landlord and tenant legislation. It was suggested on Report during the passage of the Leasehold Reform Act 1967, but I am not absolutely wedded to it.

My right hon. Friends the Members for City of London and Westminster, South (Mr. Brooke) and for Chelsea, and my hon. Friends who represent some other constituencies in central London, may wish to argue for a slight change. I shall happily look at any evidence. Although I would not say that the matter concerns no areas outside central London, it concerns almost entirely the centre of London, because only there were such shorter leases with real leaseholders possible. Elsewhere, the mortgageability of the place demanded a longer lease and there were fewer people who could buy relatively expensive properties on a cash basis.

Mr. Matthew Carrington (Fulham)

I am particularly pleased at my right hon. Friend's flexibility on the 50 years, which is important. I think that he recognises that the 50 years is an arbitrary figure and that it might be better if it were slightly lower. Whatever it should be, it should be pitched so that it enables the maximum number of people to benefit from the legislation. That could mean 45 years, so I am very grateful that my right hon. Friend has expressed his willingness to be flexible and to consider changes.

Mr. Gummer

As I said, I should like to look carefully at the examples. In setting the period at 50 years, we are dealing with up to 90 per cent. of cases. I am very happy to say to my hon. Friend that I do not want to exclude people. I am trying to do what previous legislation has sought to do, but—many of us feel—has not achieved. I am trying to find a way in which one can make a distinction between the leaseholder who is in our sense a real leaseholder, the sort of person to whom the hon. Member for Hampstead referred—

Ms Glenda Jackson

And Highgate.

Mr. Gummer

—the sort of person to whom the hon. Member for Hampstead and Highgate (Ms Jackson) referred. If she had been present, she would have heard that I was trying to distinguish, as Labour as well as Conservative legislation has tried to do, between such real leaseholders and the sort of person who is affected by a long lease in a wholly different way, because he is a full-time tenant in the sense that he pays full rent, and the lease is long because it gives continuity and stability.

I want to meet the concerns of my hon. Friend the Member for North-West Leicestershire, so I hope that he will be happy with what I have done. I do not think that there is any longer any disagreement about rural areas.

If the House accepts the amendments, some consequential amendments will have to be made. In particular, there will need to be an opportunity for landlords to apply for estate management schemes, to cover properties that become newly enfranchised as a result of the changes. The Government will bring forward the necessary amendments in another place. I shall be able to consider at that time any suggestions made by my right hon. and hon. Friends and Opposition Members.

I hope that the House recognises that, in the proposals and with the flexibility that I am offering, I have sought to reach a reasonable solution on a very complicated matter. I have sought in a spirit of compromise to find an answer. I took issue with the hon. Member for Hampstead and Highgate because the accusations that she flung at me were exactly the opposite of what I said. I want to enfranchise all those who are real leaseholders, precisely for the reasons that she raised. I do not want to consider all landlords as bad landlords. Nor do I want to ignore landlords who have shown themselves to be not only poor. but thoroughly bad.

As the Minister with responsibility for London and because I recognised the concern, I was the one who proposed the change to the Bill. I hope that the House will accept that the compromise will meet the overwhelming range of worries, and at the same time the good freeholder, who does his job properly—the good landlord who has proper tenants and wants them to have a long lease—will be protected in equity.

4.45 pm

Mr. Ashby

It would be churlish of me if I were not to say how grateful I am that the Government have tabled the new clauses and the new schedule, following as they do the decision in Committee. The Committee was very good, interesting and genial, and there was much agreement in it. On the other hand, we give with one hand and we take away with another. I find that very worrying.

As a deselected Member, who cannot expect to be in the next Parliament, I feel much freer to talk about political matters than others. I am conscious that we are talking about people who often own fairly expensive property and may well be expected to prop up a Conservative majority in a future Conservative Government. It struck me that not only would it be wrong for the Government not to agree in principle with my point, but they would shoot themselves in the foot if they did not. I want to put that warning across.

We are talking about abolishing the low-rent test. I hope that my right hon. Friend the Secretary of State will listen to me, as I hope to be constructive. The new clause goes only half way. It follows the wrong line of reasoning. Leases of 21 years and above have always been accepted—it is enshrined in principle and in law—as long leases, and that is all that we have to think about and maintain.

I am not one who would knock a landlord. Increasingly, through the policies of my right hon. Friend and the Government, the rented sector is expanding. It is a very buoyant sector, and I support it unreservedly. There is absolutely no reason why anybody should not establish that he wants to grant someone—if a nice family, whom he has known for a long time, wants to live in a property permanently—a long lease of 25 years at a rack rent. There is no reason why he should not do that for 30 or 40 years, or why he should not let it pass to the children at a rack rent.

One would have to find several things in such a lease, such as regular rent reviews, and one would expect the rack rent or the rent being paid to be slightly—not a long way—behind the market rent. The rent might be five or 10 years behind, according to rent reviews, which is to the advantage to the tenant of a long lease. There will undoubtedly also be such features in the long lease as provisions covering maintenance and alterations to property, allowing the tenant to make certain alterations. Many of those leases would cover derelict property, expecting the tenant to bring it up to standard before he starts paying rent. One finds such situations with a long lease, and we should be wholly supportive of them.

My right hon. Friend the Secretary of State is trying to examine and to deal with the matter, but he is starting at the wrong end of it. He is putting 50 years on to the lease and turning the law upside down. That is absolutely the wrong way in which to go about it, and I beg him to consider the matter again.

The matter is complicated, but it is not beyond the wit of all the officials sitting in the Box over there to produce clauses that will describe precisely and exactly the type of tenancy that my right hon. Friend the Secretary of State wants to protect. He will know that that is a possibility, because a paragraph in new schedule 2 could introduce the provision that it would be a defence to an enfranchisement for a freeholder to allege that it is a tenancy not covered by the low-rent test but a proper tenancy at a market rent.

The freeholder would be able to give evidence of rents for property on either side of his property and for similar properties in the area. The same type of procedure would be adopted as that for the application for enfranchisement. He would be able to produce such evidence and show that it might not be quite the market rent, but it may be within 20 or 30 per cent. of it. He would be able to show that it is not a tenancy that falls within the type of tenancy to be franchised. That is the way in which to go about this matter.

What we are doing is talking percentages—possibly 90-plus percentages—on the basis that some landlords have been talking about tenancies that match what my right hon. Friend the Secretary of State has talked about, but, "No, we cannot produce any numbers." The hon. Member for Greenwich (Mr. Raynsford) referred to the Leasehold Enfranchisement Association. We cannot throw aside such people, as has been suggested, and say, "These people do not know what they are talking about." These people—such as lawyers—are knowledgeable about the property market.

I have never come across a tenancy such as that described by my right hon. Friend the Secretary of State. I have no doubt that such tenancies could be created—anything can be created in a legal document—but they are not the norm. It is no good legislating for a handful of people when there will be so much inequity for the majority. As I said in my intervention, one must be equitable about this. We cannot treat one lot of people differently from another. One cannot say, "I am going to give it to you, but I am not going to give it to you."

People have written to me about the issue. Having, in Committee, voted on the matter with the Opposition, I have had many marvellous letters from people. It was heartening to receive such letters—only to find that those people's hopes will be dashed. I feel that we are letting people down—our own people and all sorts of people. I believe that we are absolutely wrong about this issue.

I am glad to hear that my right hon. Friend the Secretary of State is flexible about the 50-year issue, but I beg him to be more flexible—or I beg him to be inflexible. I beg him to examine what is a long lease, which is 21 years, and then to redefine the exclusions and say, "These long leases are not covered by this section." He is absolutely right that it would be totally inequitable if we were to allow enfranchisement in cases in which there is a landlord who is genuinely trying to help people and genuinely letting property at close to the rack rent. As I said, the rent will be close and will not be absolutely up to the market rent because, by its very nature, it will be a few years behind.

Let us protect leaseholders. Why not table new clauses to protect them? I beg my right hon. Friend the Secretary of State not to play around with the issue—because this is playing around. When one gives something with one hand and takes it away with another, one creates real enemies and a great deal of unhappiness. We found that to be true on a number of occasions. Legislation that comes into effect in two or three years' time gives time for opposition to mount. It would be wrong, and totally inequitable, to give with one hand and to take away with the other.

My right hon. Friend the Secretary has my agreement entirely on his reasoning, but I beg him to re-examine the issue. I ask him to go back to the standard that we all now accept: it is equitable, just and right that a 21-year lease is a long lease. We must maintain that period; we cannot take it away. There will be cases when there is a form of lease that should be protected from enfranchisement, and that is what we must protect. Let us get down to it and define that, because the schedule and new clauses do not.

Mr. Raynsford

I am pleased to follow the hon. Member for North-West Leicestershire (Mr. Ashby), who spoke movingly about the problems that will be created if the Government's new schedule is passed without amendment, and who also has done a great service to leaseholders by his brave decision to support in Committee our amendment to remove the low-rent test.

In speaking to this group of new clauses and new schedule, I should like in particular to explain why we have tabled the amendments (a) to (d) to new schedule 2, about which I should say two things immediately.

First, Mr. Deputy Speaker, I am grateful to you and to Madam Speaker for allowing the starred amendments to be debated today. The Government gave us an undertaking that they would table their amendments to appear on last Thursday's Order Paper, to allow us time to prepare our amendments to them. That of course was necessary because of the amendments' immense complexity, as all hon. Members understand about leasehold amendments. Unfortunately, the Government—for reasons beyond the Minister's control—were not able to honour that undertaking. Therefore, the new schedule appeared too late for us to be able to table amendments to it that would be in order without being starred. I am grateful to the Minister for Local Government, Housing and Urban Regeneration—who is not in the Chamber—for agreeing that we should approach Madam Speaker, asking that those amendments be taken today.

Secondly, I should explain to the House that, I am afraid, the gremlins have got at schedule new schedule 2. If hon. Members study it closely, they will discover that, in the numbers down the left-hand side, there is a gap of seven rather than five lines between numbers 10 and 15. Any assiduous hon. Member who is trying to follow where our amendments to the new schedule should fit in will, therefore, find himself in some difficulty if he follows the numbers as printed. I advise hon. Members to assume that the right line comes two before the number printed, from number 15 onwards. I hope that that will be helpful to hon. Members in understanding the technical details, although I shall explain in much more detail why, in our view, the amendments are essential.

5 pm

We are dealing with one of the crucial—indeed, one of the defining—issues that the House must resolve if leaseholding enfranchisement is to proceed as an effective policy for the benefit of the hundreds of thousands of leaseholders who long to own the freehold of their homes. In theory at least, there is political unanimity on the merits of the policy of enfranchisement. The then Labour Government introduced the Leasehold Reform Act 1967, which gave large numbers of leaseholders in houses the opportunity to buy the freehold and so, in many cases, to avoid the fear of homelessness on the expiry of their lease. The Act was unquestionably a great success.

The present Government introduced the Leasehold Reform, Housing and Urban Development Act 1993, which aimed to give similar rights to leaseholders in flats to buy the freehold of their homes collectively. When he moved the enfranchisement provisions in Committee, the then Minister for Housing and Planning, who is now the Secretary of State for Transport, spoke of the inherent problems of the leasehold framework. I should like to quote his words because it is important that the House should be aware of the Government's policy, as stated in 1992. He said: there are two substantial disadvantages with leasehold tenure. First, a lease is a wasting asset. The value of the leaseholder's interest declines inexorably as the term expires. At times of rapidly rising house prices, such as the 1980s, that decline may have been offset by inflation, but in the longer term the value of a leasehold flat falls. That poses a particular problem for the majority of people who must buy their flats with a mortgage. Leasehold as a form of tenure sits uneasily with today's financial regime for funding owner-occupation. Lenders normally insist that the unexpired term of a lease is at least double the length of the mortgage, so that there is adequate security throughout its term. However, that means that leasehold properties become increasingly difficult to mortgage—and hence to sell—once the lease becomes less than perhaps 60 years. So a 99-year lease, which might have cost the same as a freehold, may be tradeable for only 20 or 30 years before its value begins to fall quite sharply. There is a market for fag-end leases in central London among cash buyers, but that is not typical. Secondly, control of the property remains with the freeholder. That is a particular problem with flats. Although those living in the flats will have effectively paid for the building and are responsible for all the costs of upkeep and insurance, they are in the hands of a freeholder who has only a small residual interest. Increasingly, freeholds and reversionary head leases are coming into the hands of speculators and people with short-term interests who seek to maximise returns. They do not have the long-term interests in the property and the tenants shown by the best of the remaining old-style paternalistic landlords. Those problems are at their worst where direct conflicts of interests occur between the freeholder on the one hand and the leaseholder on the other.—[Official Report, Standing Committee B, 10 November 1992; c. 31–32.] Having spelt out the inherent disadvantages, the Minister made it clear that the Government's policy was to move away from leasehold as a form of tenure.

In a subsequent sitting of the Committee, the Minister said emphatically: The Bill is carefully structured so that not everybody has the right to a new lease. Its purpose is to move away from leasehold as a form of tenure, and that is why its thrust is towards encouraging enfranchisement rather than leasehold extension."—[Official Report, Standing Committee B, 12 November 1992; c. 73.] That was a clear commitment to leasehold enfranchisement. At that stage, it was expected that the Government would introduce a commonhold Bill to create the new tenure of commonhold, which would be similar to the Australian strata title system, under which people living in flats could own their home individually and the whole block collectively, thereby getting out of the landlord-tenant relationship which has proved a bugbear in much of the leasehold system.

Sadly, that Bill has not yet materialised, despite considerable pressure from many hon. Members on both sides of the House and the efforts of the hon. Member for Hastings and Rye (Mrs. Lait), who introduced a private Member's Bill earlier this year with the objective of achieving commonhold. She had the misfortune of seeing it talked out on Second Reading by hon. Members on her own side of the House.

While there has been no progress on commonhold, the hopes for extensive enfranchisement which arose from the 1993 Act have generally been disappointed. The Secretary of State conceded in an earlier intervention that the number of people enfranchising was fewer than had been hoped for. Only a limited number of leaseholders in flats have to date successfully negotiated the process of enfranchisement and acquired the freehold of their home. That does not reflect a lack of interest on the part of leaseholders. On the contrary, to my knowledge, hundreds of thousands of leaseholders would love to buy the freehold of their home, but are frustrated by the many obstacles that stand in their way.

Some of the obstacles are financial and based around the valuation arrangements, the costs of pursuing an enfranchisement claim and other such matters. The hon. Member for North-West Leicestershire highlighted some of those problems in Committee. Some of the obstacles relate to the complex rules which govern who may and who may not qualify, of which the low-rent test is one. We shall deal with others later today.

The low-rent test is one of the most objectionable obstacles. It is, as I shall seek to demonstrate, unnecessary. It is arbitrary in its impact and it has caused serious injustices. That is why in Committee, we moved successfully, with the support of the hon. Members for North-West Leicestershire, for Belfast, North (Mr. Walker) and for Christchurch (Mrs. Maddock), amendments to abolish the low-rent test. Our success in that and other amendments has struck a vital blow for leaseholders. It is fundamental that that progress should not be undermined today, as it will be if Government new schedule 2 is passed unamended.

Let us examine in detail the low-rent test. In effect, there are three tests; it is not a single test. The first test covers leases initially granted before April 1963. The ground rent must be less than two thirds of the letting value for the leaseholder to qualify to enfranchise. The second test covers leases granted between April 1963 and April 1990. The ground rent must be less than two thirds of the rateable value. The third test covers leases granted since April 1990. In order to qualify, the ground rent must be less than £250 outside London and £1, 000 a year in London.

I suspect that simply by describing the hugely complex arrangements, I have helped to advance my case for their abolition. The figures are arbitrary and their impact is capricious. They provide ample scope for reluctant landlords to frustrate the wishes of their leaseholders to buy the freehold. Let me give just one example, which I quoted in Committee. It involves a lady who wrote to me early this year in the following terms. She is a leaseholder living at 78 Cadogan place in London. Her name is Mrs. Loder Dyer. She said: I wrote to the Prime Minister in 1992 when his Government's Leasehold Reform, Housing and Urban Development Bill was being considered by Parliament. At that time leaseholders such as myself were assured that we would be able to buy our freeholds. This has proved well nigh impossible. I acquired my long leasehold house on the Cadogan Estate in 1949. It was requisitioned during the war and was derelict. To restore, improve and maintain it over many years has been a great personal and financial sacrifice, particularly since my husband died. The Cadogan Estate refused to renew my lease. Their solicitors wrote it 'would be the appropriate course for them to institute possession proceedings' against me at the end of the lease which would force me out of my only home. They know I have no statutory security of tenure because I'm disadvantaged by London's high rateable values. As soon as the Leasehold Reform Bill became law in 1993, I had to exercise the only statutory right open to me by giving notice to my freeholders of my intention to acquire the freehold of my home. They would not admit my claim, obstructing me calculatingly on the sole point that my annual ground rent of 100 was not a low rent. They knew, in the case of leases granted between 1939 and 1963, I would have to prove that the ground rent is not more than two thirds of the letting value at the start of the lease. This has been the most tortuous and time consuming task for me and my experienced advisers. I have been forced to go to the County Court on legal aid to establish the letting value. Despite having one of the acknowledged experts in such matters, the Judge completely failed to understand the complexities of how to ascertain the letting value of a lease granted over forty years ago. I now have no other recourse but to seek justice in the Court of Appeal. In a further attempt to obstruct me my freeholders are seeking to raise arguments not previously relied on by them. The huge financial costs and the distressing personal effect upon me has severely impaired my health. My lease is a long lease at a low rent. It should fully qualify under the legislation. I am still no nearer achieving my vital legal right. I must earnestly seek your help that steps will be taken to remove this disastrous anomaly. In case anyone should believe that that is just one hard case, let me also give the House—

Mr. Ashby

There are hundreds.

Mr. Raynsford

The hon. Gentleman is right, but let me give the House the benefit of one of the country's leading experts on the subject: chartered surveyor Mr. Man-Johnson, partner in Man-Johnson and Stevens, who wrote to me at the same time and whose evidence I also quoted to the Committee. He wrote as follows: I have no hesitation in saying that section 4(1) of the Leasehold Reform Act 1967 is extremely difficult to interpret in any particular case. It affects only leases starting before April 1963, so the valuer is put to proof as to the letting value of a property more than 33 years ago. Frequently I find that the County Court has serious problems in understanding the valuation aspects of a case, and more often than not, the matter goes to appeal. He then cited a series of cases and concluded: Although most of these mistakes were put right on appeal, many lessees fall by the wayside. I have just settled two cases where the claims were lodged 18 years ago in February 1978, and the lessees have lived under the threat of Court action and uncertainty throughout the interim … From time to time, I am instructed to advise on doubtful cases under section 4(1); only too frequently I am obliged to include words in my report such as 'I am certain that the rent at the start of the lease was indeed low within the meaning of the Act, but I am far from certain that I would be able to prove it in Court.' The section works in a capricious manner, and in my opinion it often does prevent proper claims under the Act from getting through the qualifying process. The low-rent test, therefore, is complex, arbitrary and capricious in its impact. Its result is serious injustices, not to mention appalling costs to leaseholders who have to try to argue their case through a variety of different channels.

So why is that arcane provision there in the first place? The Secretary of State rightly and reasonably said that a Labour Government put it in the 1967 Act and asked why it was there. We contend that it is a product of history for which there may have been justification in 1967, but that it has continued long after there ceased to be any justification for its continuation. The purpose of the low-rent test and the justification offered by the Government for its retention is that it is designed to distinguish leases from tenancies. A lease is sold at a premium and, in consequence—so the argument goes—there is a low ground rent. By contrast, a tenancy is let without a premium at a correspondingly higher rental.

Twenty to 30 years ago, when all tenancies were subject to Rent Acts controls, some tenancies may have been granted—indeed created—by landlords on terms designed to evade those Acts' provisions. As such, those terms could, without a low-rent test, have been confused with a lease. We accept that, but times have changed. Most tenancies are now let on assured shorthold tenancies and no landlord is going to offer a tenancy for a period lasting more than 21 years when he can get a market rent by letting on an assured or assured shorthold tenancy—the latter requiring a term of no more than six months—so the situation in which the test was incorporated in 1967 no longer applies. If there ever was a case for the low-rent test, it has certainly passed. Remember that, to qualify, leaseholders must demonstrate that they have a lease lasting 21 years or more—that is the key distinction between a lease and a tenancy. That is properly recognised as the fundamental distinction.

5.15 pm

In case anyone still has any doubt on the issue, as my final piece of evidence on this point, let me call the Lord Chancellor's Department. In framing its proposals for the introduction of commonhold, which, as I have explained, was designed to provide an alternative tenure to leasehold, the Lord Chancellor's Department considered whether there was a need for a low-rent test. Its conclusion in 1990, when it published a consultation on commonhold, was that a low-rent test would not be appropriate and was not necessary. It was unambiguous about it. It found no need for a low-rent test to distinguish commonholds from tenancies, even though it envisaged people being able to convert to commonholds from leaseholds. The same logic applies to leaseholds. If the Lord Chancellor's Department six years ago said that there was no need for a low-rent test, surely the Department of the Environment can come to the same conclusion.

The low-rent test is a complex anachronism. It is not necessary, yet it causes serious problems and injustices, blocking the way to leasehold enfranchisement for all too many leaseholders, so why are the Government not supporting the Committee decision to abolish the low-rent test? It is simply because, as in 1987 and 1993, the Government are hamstrung: unfortunately, their supposed commitment to leasehold reform is countered by the pressure from the large landed interests, which remain utterly resistant to the concept of leasehold reform. Unfortunately, they continue to exercise far too great an influence on the Government's policies. Some people suspect that that is because the Government—or the governing party—are in too many respects financially dependent on some of those interests.

The resistance of those landed interests made the Landlord and Tenant Act 1987, supposedly designed to safeguard leaseholders, unworkable. As we will discuss in subsequent debates, to our knowledge, no one has been able to benefit from the provisions of part II and part III of the 1987 Act, which are supposed to give protection to leaseholders against bad landlords, because the procedures are so complex and tortuous. There is so much scope for costs to mount against the leaseholder that leaseholders have not been able to make use of it. Landlords have found it an easy device to get around.

There was similar resistance on the part of the big landowners in 1993 as a result of the Leasehold Reform, Housing and Urban Development Act, which was designed, as the Minister at the time, now Secretary of State for Transport, said, to give enfranchisement opportunities to 750, 000 leaseholders. The vast majority have not been able to do so because, again, the big landowners nobbled the Government and, through a series of amendments, created legislation that is so riddled with anomalies and so full of loopholes that it is virtually impossible for all except the bravest and the most determined leaseholders to get through it.

If the Government push through their proposed new schedule 2, it will be one more surrender to the big landed interests, and will set up yet another obstacle to enfranchisement when, ostensibly, the low-rent test obstacle is being removed.

Mr. Gummer

The hon. Gentleman said that parts II and III of the Landlord and Tenant Act had never been used. I do not think that he is right on that. I thought that I would ask when it was last used. I am sure that he will be pleased to know that, only last week, in the Wandsworth county court, a group of tenants was able to acquire compulsorily its freehold under part III. I do not see why he should be unhappy about its use. It is true that I want to make it rather easier to use, but it is used already.

Mr. Raynsford

I am delighted to hear that, but I said what I did because on two previous occasions-in 1992–93, when we were debating the Leasehold Reform, Housing and Urban Development Act 1993, and again in Committee on the Bill now before us—I put it to Ministers that we had no evidence of cases successfully coming through under the 1987 Act, and they could not give me chapter and verse.

I am sorry that the right hon. Gentleman's colleagues could not provide the evidence, and I am delighted that he can provide it now. However, I am sure that he will accept that, none the less, the legislation has proved largely ineffective. If it is not ineffective, why does he propose to change the procedure, with a leasehold valuation taking the place of the court in relation to the transfer of management, which we shall discuss later?

Mr. Gummer

No one suggests that the 1987 Act is effective enough, but in this debate, in which it is easy to overstate certain matters, we must get the balance right. I thought that the hon. Gentleman strayed somewhat into the realms of fantasy when he talked about the relationship between myself, for example, and the great landed interests. I found what he said amusing, and enjoyed it, but it did not have much connection with reality or truth. I am merely suggesting that accuracy is important here.

Mr. Raynsford

I am happy to tell the Secretary of State that I entirely accept the need for accuracy. I have tried to be scrupulously accurate, and I immediately accepted his statement that there had been some use of the 1987 Act. However, I have explained that I had no knowledge of that use because his colleagues had not been able to provide me with chapter and verse.

Mr. Ashby

Will the hon. Gentleman give way?

Mr. Raynsford

May I finish my answer? Then I shall happily give way to the hon. Gentleman.

The 1987 Act promised a great deal and failed to deliver. So did the 1993 Act. When the Secretary of State tries to persuade the House that landed interests have no influence, will he explain the input of the British Property Federation to new schedule 2?

Mr. Ashby

Will the hon. Gentleman accept that, in response to my inquiries I, too, have found that the 1987 Act has hardly been used at all? It is incredibly difficult to use, although I am delighted to hear that, in ornithological terms, one swallow has made the summer.

Mr. Raynsford

The hon. Gentleman makes a valid point.

At this stage, perhaps we should consider the two main effects of new schedule 2. First, it will exclude a limited number of properties in rural areas let as part of agricultural arrangements on terms involving long leases, but with no premium payable. As we have already established in earlier exchanges, the Country Landowners Association has made a case for the exemption of such properties. We understand that there are not many of them—perhaps 200 or 300 in the whole country. Nevertheless, the CLA's case for their exclusion is valid, and our amendments (a) to (d) would provide for the exclusion of such properties on the face of the Bill.

The second feature of new schedule 2, however, is very different, and creates an entirely new obstacle by establishing a 50-year qualifying period during which the low-rent test would still apply. Leases of 50 years or less will remain subject to the low-rent test. There is no justification for that arbitrary new test. The Secretary of State himself has conceded that 50 years is an entirely arbitrary limit. By contrast, 21 years is well established as the period that defines the distinction between a lease and a tenancy. I have yet to hear any convincing argument for adding a further test of whether the lease was for a period of 50 years or longer.

Indeed, the British Property Federation, whose representatives probably spent much time with the Secretary of State and his officials—

Mr. Gummer

indicated dissent.

Mr. Raynsford

They certainly spent time trying to talk to me about the subject—and they could not provide any convincing justification for the period of 50 years.

We are considering a Government new schedule that would create an entirely new test that would significantly disadvantage individuals with leases shorter than 50 years. It would be capricious and arbitrary in its impact, just as the existing low-rent test has been. No justification has been advanced for it. The Secretary of State himself cannot produce figures to justify it. We do not know how many people may be affected. However, we do know that, if the new schedule is agreed, it will create criteria that will deny to many leaseholders the opportunity to enfranchise, and will provide yet another opportunity for freeholders to seek to frustrate leaseholders' hopes.

As evidence, I can do no better than refer to the case to which I alluded earlier—that of Mrs. Loder Dyer, who found herself blocked from enfranchisement by the low-rent test. The abolition of that test at last offered her the chance to buy her freehold, for which she had longed for many years. Imagine her horror when she discovered that new schedule 2 would dash her hopes yet again.

Mrs. Loder Dyer wrote to me on 26 April, and the House should know the terms in which she wrote: Dear Mr. Raynsford, Re: Low Rent Test—Housing Bill Mrs. Joan South of the Leasehold Enfranchisement Association telephoned me yesterday evening to notify me of the Government's intentions to amend the low rent test, namely to confine it to those with leases of 50 years or less. This is a catastrophe and it is quite unjustifiable. I have a 45¾ year lease and therefore will again be discriminated against by this Government. There are many others in a similar position to me who stand to lose their homes as they have no statutory protection. I attach for your convenience a copy of my original letter to you which you kindly read out to the Standing Committee"— that is the letter that I have already read to the House— I sincerely hope that there will be some means open to you to persuade sufficient Conservative and Opposition MPs to examine their consciences on this matter when a vote is taken.

That is precisely what we shall do. The Secretary of State said earlier that if even one person suffered an injustice, that would be wrong and unacceptable, and that we must not create such a situation. Yet he proposes to cause injustice to that woman and to many other people, on the basis of no evidence, no figures and no justification whatever, simply relying on a hunch that a 50-year test is somehow appropriate.

That move will merely create one more unreasonable, unjustified anomaly in legislation that has for too long been bugged by unreasonable anomalies and arbitrary distinctions of that nature, which have created injustices. Our amendment to the new schedule, while accepting the rural exemption—the change suggested by the Country Landowners Association—for which there is justification, would remove the arbitrary and unjustified 50-year test that the Government seek to introduce, which will discriminate so unfairly against people such as Mrs. Loder Dyer.

Mrs. Loder Dyer is not alone. The Leasehold Enfranchisement Association tells me that there are many others. The hon. Member for North-West Leicestershire, too, knows that. As a result of his brave vote in favour of leasehold enfranchisement earlier this month, he has had a big mailbag. Many leaseholders would suffer a serious injustice if the Government did not accept our amendments (a) to (d) to new schedule 2, and I therefore hope that the House will stand up for their interests, rather than leaving them to be betrayed again.

By voting for our amendments, the House can demonstrate that it is determined to bring justice at last to all the leaseholders whose hopes have been so cruelly disappointed in the past. If Conservative Members, knowing as they do that what we are advocating is right, none the less decide to support the Government in the Lobby, they will demonstrate in the clearest possible way that they are prepared to subordinate the interests of their leaseholder constituents and the interests of justice to the short-term interests of political expediency, and to pressure from the party Whips.

That would be wrong, and if Conservative Members do it, we shall have no hesitation in ensuring that leaseholders, of whom there are many throughout the country, are well aware of the fact that tonight they voted to deny leaseholders the justice that they deserve. I hope that that will not happen. I hope that Conservative Members who know the justice of our argument will join us in saying to the Government that leasehold reform must go through.

We cannot go on with shabby compromises that create more obstacles and problems, and that ultimately deny the object that all of us say that in principle we support— leasehold enfranchisement. If that is to become a reality, we have to sweep away the anomalies and loopholes that provide easy opportunities for the enemies of enfranchisement to block the way of leaseholders. Our amendments are just; the issue is simple.

Mr. Ashby

Would not the right way to deal with this be for the Government to accept the amendments and, in another place, add a clause that clearly defines the sort of tenancies that my right hon. Friend the Secretary of State has been talking about?

Mr. Raynsford

The hon. Gentleman, perfectly reasonably, seeks a compromise. I put it to him that the right compromise, which we have adopted, is to move the amendment to new schedule 2. Where there is a genuine reason, such as the rural tenancies, for an exemption, we are prepared to accept it, but something that is based on conjecture and speculation, such as the arbitrary figure of 50 years—which he knows is unjustified—cannot remain in the Bill.

We would be irresponsible to allow the Bill to proceed when it contains measures that we know in our hearts to be wrong. Our amendments are right. They are a compromise and accept the need for justifiable safeguards. I sincerely hope that all hon. Members who are aware of the significance and importance of the issue will, in Mrs. Loder Dyer's words, examine their conscience when they vote. I hope that they will vote with us in favour of amendments (a) to (d).

5.30 pm

Mrs. Maddock

It must be clear to the Secretary of State that there is cross-party support for dealing with leasehold enfranchisement, which was not properly tackled in 1993. In Committee, there was all-party support for the view that we had to get it right this time.

The problems have been around for several years. We have been incredibly well briefed by those who want real change and to get it right. The hon. Members for Greenwich (Mr. Raynsford) and for North-West Leicestershire (Mr. Ashby), and the right hon. Member for City of London and Westminster, South (Mr. Brooke), brought their expertise to bear in Committee. I asked the Minister to take account of all the lobbying and discussions that had taken place, and, if he could not accept our amendments then, to try to settle the matter once and for all and to get it right on Report.

Many people have suffered greatly in trying to deal with what can only be described in many cases as a legislative nightmare. In Committee, I pleaded with the Minister to turn those nightmares into sweeter dreams. I am disappointed that today we have nightmares only slightly less worse than those that we had before. The Government amendments and new clauses are not in line with the will of the Committee, which had all-party support. They attempt to reverse the vote in Committee.

Mr. Gummer

Does the hon. Lady agree that to say that a nightmare is only slightly less worse when our proposals apply to well over 90 per cent. of cases is to overdo the perfectly reasonable case that she is putting forward?

Mrs. Maddock

I still believe, having been advised by others with experience in the matter, that there will continue to be many nightmares. That is shown by many of the eloquent examples that have been given today. We have all had letters from people whose nightmares will continue if the Government's proposals are passed.

The Government have made two attempts to get this right. First, in Committee, we had to wait for their proposals, and had little time to discuss them. On the second attempt, the Opposition had to plead with Madam Speaker to ensure that we got amendments tabled for today. This is the third attempt. The Secretary of State said that, when it goes to another place, there will be other attempts to change the Bill and get it right.

There is plenty of evidence from individual groups caught up in the problems of leasehold enfranchisement to allow Government to get the legislation right. The Secretary of State has had helpful suggestions from many hon. Members today. I cannot understand why it is so difficult to get it right. It simply requires the political will.

The plea of the hon. Member for North-West Leicestershire summarised the Committee's cross-party view that we should keep the 21-year period. By all means let him come back with exclusions, but can the Secretary of State please propose better exclusions and get it right? There is plenty of evidence to allow him to. He has a Department to deal with it. I hope that he will listen carefully today. We may be successful in the Lobby. I cannot emphasise enough the cross-party support outside the House for getting it right, keeping the 21 years and ending the nightmare that people will still suffer in dealing with such matters.

Mr. Carrington

I am grateful for the opportunity to participate in this debate. As I was not on the Committee, I have sometimes felt that I have been listening to a quarrel that has been going on for some time, which has continued into Report.

It has been a long battle to get leasehold reform. I am grateful to my right hon. Friend the Secretary of State for the huge advances that he has made in the Bill. I greatly welcome the changes in new clause 21 and new schedule 2. They will go a long way to remedying the problems that face people in trying to get enfranchisement under their existing leasehold. There are still problems, but they involve less the legalities of what constitutes a long lease than what in reality is a long lease and what was recognised as a long lease by the parties when they entered into it. We must get equity between the rights of the leaseholder and the genuine rights of the freeholder.

I have long campaigned for the rights for leaseholders and for their right to be enfranchised, because I well know from experience in my constituency and across London of the great problems that have been caused to leaseholders by the evil practices of a few freeholders. However, they are a small number. It is only right that legislation, which by its nature is retrospective, to allow enfranchisement should recognise that freeholders have certain rights.

It has been suggested that the low-rent test should be abolished, and an amendment to that effect was passed in Committee. That would mean that any lease longer than 21 years would qualify for enfranchisement. We must consider whether, in practice, leaseholders and freeholders signed leases 21 or more years ago with the intention that they were long leases, or whether they recognised that the arrangement between them would come to an end in the fulness of time. There is no question but that, when parties entered into a 99-year lease, it was a surrogate for selling the freehold. However, when it comes down to 21 years, the question is much more clouded.

Fifty years may well be a reasonable compromise. It certainly encompasses most of the abuses. It does not encompass them all, but most of the problems arise with leaseholds created in the late 1950s, the 1960s and the 1970s. They were created in London, when the big mansion blocks were converted from rented to leasehold properties, and in the mass of conversions of terraced property in the 1960s and 1970s. Those are the areas in which there have been the most abuses.

For the most part, those problems will be remedied by the 50-year rule. As I made clear in an intervention, I have doubts about whether 50 years is precisely the right term. I have little doubt that 21 years is probably too short. The balance probably lies somewhere between. Perhaps, as I suggested in my intervention, 45 years would deal with more problems than 50.

The hon. Member for Greenwich—an old sparring partner of mine from years ago—mentioned a case of great injustice faced by a lady who had written to him. Her lease was 45¾ years, so she would benefit if there was a small tinkering of the 50 years down to 45. I have no particular brief for 45 years, and have not done any studies to find out whether that is the right period—it might well be 40 years. I do know, however, that we have to find the right balance.

I urge my right hon. Friend the Secretary of State to look hard to ensure that we get a period that benefits the maximum number of people with the minimum injustice to freeholders, who entered into perfectly reasonable transactions all those years ago in the belief that they would be protected by the law, and that it would not be changed retrospectively.

Examples are important in this context. In London after the war, as many of the properties had been large family houses and were suffering severe neglect and in a poor state of repair, it was not uncommon—I know this from experience, as my parents were looking for a business property in Belgravia and the west end after the war—for landlords to grant leases of about 30 years, on the understanding that the leaseholder would repair and restore the property. Although I do not know the exact addresses, as I was a little boy at the time, I suspect that the landlord was Grosvenor estates.

Those were historic properties, even in those times, and they had to be restored to a condition in which they could survive as buildings and would not need to be knocked down. That meant dealing with dry rot, installing damp-proof courses, putting on new roofs and restoring the fine architectural features at a substantial cost. Consequently, the early years of the lease were charged at modest levels, with the later years being more of a rent. The intention was effectively for a rented period of up to about 30 years, after which the property would revert to Grosvenor estates.

It would be wrong to consider leaseholders who engaged in such arrangements as necessarily entitled to enfranchisement. There were benefits on both sides, and both parties entered into the arrangements understanding exactly what they were doing.

Similar arrangements are still entered into with historic properties. I understand that the National Trust enters into similar arrangements today. It would be wrong if such leaseholders were entitled to be enfranchised in the way that is being discussed.

There is a balance to be drawn. I believe that we are nearly there. My right hon. Friend the Secretary of State has ensured that we are close to remedying most abuses of the leasehold system. It has been a long battle—it was started by the predecessor of my hon. Friend the Member for Kensington (Mr. Fishburn), Sir Brandon Rhys Williams, who sadly died before it could be incorporated into legislation. The battle has been carried forward by my hon. Friend the Member for Kensington and my right hon. Friends the Members for City of London and Westminster, South (Mr. Brooke) and for Chelsea (Sir N. Scott). Some of us have been battling hard for the rights of leaseholders.

I am glad that my right hon. Friend the Secretary of State has gone nearly the whole way towards providing for leaseholders the remedies they need. However, I urge him to reconsider the 50-year period to find out whether it could be fine-tuned. I also urge him to consider, in time, the introduction of commonhold, which would put the icing on the cake for leaseholders and would enable us to move forward to a form of tenure in urban property that would set us right for the next 100 or 200 years in London.

5.45 pm

Ms Glenda Jackson

I shall speak briefly. Unlike the Secretary of State, who was so outraged at what he clearly saw as my audacity in intervening on him when I had not been present to hear the first words that emanated from his lips, I have heard before the arguments that I am hearing this afternoon. I had the privilege to serve on the Standing Committee of the Leasehold Reform, Housing and Urban Development Act 1993, as well as that on this Bill.

I found the contribution of the hon. Member for Fulham (Mr. Carrington) fascinating. He presented a personal story, and charitably told the House that he believed that the arrangement that he had described was equal on both sides. I do not accept his interpretation. I read it as informing my view, that the maintenance of the great estates in London was almost entirely dependent on the willingness of those leaseholders to take on the sort of lease to which he referred, and to furnish out of their own pockets the enormous restorations to which he referred in his example. Indeed, they have had the responsibility for maintaining those great estates ever since, by virtue of the financial contribution to maintenance and repair ordained for them by their freeholder.

The introduction of the 50-year period does absolutely nothing to rectify the overwhelming injustice that so many leaseholders have lived under, and will continue to live under, if the House does not vote for the Opposition amendments. The argument of my hon. Friend the Member for Greenwich (Mr. Raynsford) and that furnished by the hon. Member for North-West Leicestershire (Mr. Ashby) have clarified the situation. The introduction of a different number of years will do absolutely nothing to advance the cause of leasehold enfranchisement. I do not think it an exaggeration to say that it will leave thousands of people in the same uneasy situation in which they find themselves today.

We have heard much talk of equity, land, landowners and freeholders. One of the elements that has been missing from the debate is that we are talking not simply about bricks and mortar, but about people's homes—often family homes in which there has been not only a financial requirement to maintain the fabric, at the behest of the owner of the freehold, but an emotional commitment.

As those of us who are privileged to have families know, their entirely individual histories are enshrined—I hesitated to use the word "enshrined", as it is too extreme and possibly sentimental, and 1 would hate to be either—within the confines of the home. The growth and development of the family and the emotional commitment and sense of continuity, to which the Secretary of State referred, are intrinsic, not only in the people involved but in the physical environment in which they live, raise their children and see them grow and develop their own families.

As I said in my intervention on the Secretary of State, it is a gross injustice that leaseholders are not allowed to pass property on to their families. I repeat: the Prime Minister has said that one of the central planks of Conservative party policy is that people can pass on what they own to their own—but they do not have a sense of what they have physically and economically maintained as genuinely their own.

The amendment moved by the Secretary of State will do absolutely nothing to remove the sense of temporary engagement, no matter how long it may be perceived that people will live in the home. The introduction of 50 years underlines what I believe to be gross inequity—that, in certain situations, leaseholders have absolutely no right to regard their home as their home.

I urge Government Members to vote for the amendment tabled by my hon. Friend the Member for Greenwich. As more than one hon. Member has said this afternoon, the low rent amendment received all-party support in Committee, and it was agreed. It would be quite wrong for the House to ignore that debate.

Many thousands of people, in London and around the country, are looking to the House today to relieve them of the anxiety and the burden of not knowing whether they can claim their home for their own. They are not trying to steal it—often, the properties would not be standing were it not for the financial and emotional commitment of the leaseholders—they simply wish to have the security that surely they have worked for and that they have committed themselves to. They want to know that their home is their home.

This is the second time that this issue has been debated in a short time, not only on the Floor of the House but in Committee. The issue has been meticulously examined, and the arguments, in the main, have been serious. Hon. Members should not allow the Government's newly tabled—and supposedly newly considered—amendments to be part of the Bill, as they would betray many thousands of leaseholders who have genuinely looked to us to speak for them. As we have been given a second opportunity to right a wrong, we should do so tonight.

Mr. Brooke

I spoke to the Bill in Committee, and I will not repeat what I said on that occasion—save to say that I recognised that, historically, there had been advantages in the leasehold principle, and that it had greatly benefited the aesthetic charms of central London and of other towns and cities that grew rapidly in the 18th century.

I acknowledged that, in the last decade of the 20th century, the principle of leasehold utility might have been diminished. I suggested that the opportunity of patient unravelling in the Bill should not be missed. I acknowledged the rights of freeholders and of landlords—I emphasise, particularly good freeholders and landlords—as well as the rights of leaseholders. The patient unravelling that I was envisaging was to take both sets of interests into account.

I said that I would support the Government in Committee—but I thought that the amendments owed more to impatient unravelling than to patient unravelling. I said that I hoped that the issues would be reconsidered by Her Majesty's Government in the interim between Committee and Report. The hon. Members for Greenwich (Mr. Raynsford) and for Christchurch (Mrs. Maddock) interpreted that as a part of all-party support—and I do not resile from the language that they have used. I need to be fair to the Government—they have reconsidered matters, and I am prepared to give them the benefit of the doubt.

The hon. Member for Greenwich concentrated his attack on the 50-year provision. My right hon. Friend the Secretary of State said that there was nothing sacred about 50 years, which is his current best estimate. That is flexibility and good will enough for me. It would be churlish of me to throw back the Government's concessions when they have reconsidered the issue quite significantly between Committee and Report, as I asked them to do.

Mr. Clive Betts (Sheffield, Attercliffe)

Like my hon. Friend the Member for Hampstead and Highgate (Ms Jackson), I had the privilege of serving on the Committee considering the Bill, and of listening to the considerable and intricate arguments on the amendments that were eventually carried. As she said, there was all-party support in Committee. The Labour party supported the amendments that the Government are now seeking further to amend by their new clause.

There was support from the hon. Member for North-West Leicestershire (Mr. Ashby)—to whom my hon. Friend the Member for Greenwich (Mr. Raynsford) has already referred—and he was very brave to make a stand, as a matter of principle, in defence of the rights of many leaseholders who have been substantially disfranchised for many years. He made a stand to ensure that the Bill contained clauses that would give leaseholders the rights they had sought and battled for over the years.

My hon. Friend the Member for Greenwich has referred to the work of Joan South and others struggling to ensure the enfranchisement of leaseholders and to give them their proper rights. Members of the Labour party, Liberal Democrats and Ulster Unionists supported the proposals we brought forward—in fact, many arguments were mounted in favour of our proposals.

The thing that influenced and convinced me most of all—it has been raised again today in our discussions about the Government's new proposals—was the fact that this matter has been before the House on so many occasions. My hon. Friend the Member for Hampstead and Highgate said that, only three years ago, she served on the Committee that looked at exactly the same issue. On that occasion, the Labour party warned the Government that what they were doing was not satisfactory, that it would not give real and proper rights to leaseholders, and that it would not result in leaseholders being able to purchase the freehold of their property.

In 1993, the Government were warned—as they have been on previous occasions—that they were passing words in legislation that would not give the people in question the rights they desired, words that would not change the fundamental relationship between leaseholders and their freeholders, and words that would not enable leaseholders to buy the freeholds that they desired. When we came to discuss these issues in Committee, it was all too apparent that the Government had not learnt the lessons.

I am most disappointed that, when we had had that debate in Committee, and had had amendments carried which would for the first time give real rights, exercisable rights, to the people fighting this campaign over many years, such as Joan South, the Government were not able to accept them but have come forward with another form of words.

I was not convinced by what the Secretary of State said. When my hon. Friend the Member for Greenwich challenged him to show how anyone had benefited from the exercise of the previous legislation, only one case was presented. As the hon. Member for North-West Leicestershire said, it is a bit like one swallow making a summer, and does not prove the Government's case.

I listened with interest to what the hon. Member for Fulham (Mr. Carrington) said about the 50-year rule. He said that he saw no argument why the 50-year rule was necessarily applicable. A 45-year rule, a 40-year rule or a 35-year rule might equally be introduced. It is possible to argue in favour of any number of years, but those arguments would be based on hunches—on Ministers feeling that it might be the right thing to do.

The Secretary of State has made no convincing case that any research has been done, or empirical evidence collected, to show that 50 years is the right period. I still have not heard from the Secretary of State, or any Conservative Member, any evidence to show that 50 years is the right period. We are asked to vote for a Government new clause that provides for a low-rent test based on 50 years; on what evidence are we asked to do so?

6 pm

The House has been asked to overturn the Committee's decision—to overturn an amendment that would have tackled a low-rent test that has effectively prevented leaseholders from exercising their right to enfranchisement for several successive periods of years, following each successive process of legislation. Leaseholders have not been allowed to exercise their rights; they have been frustrated by the wording of successive pieces of legislation. All we have from the Government is yet another form of words, surrounding a 50-year rule, and no Conservative Member has given us any evidence that that 50-year rule is right, fair and reasonable.

Perhaps the Secretary of State will tell us why 50 years is the right period. Why does not he accept that 45 years, or 40 years, is right?

Perhaps the Secretary of State will also write to Mrs. Loder Dyer, and explain how the new clause will enfranchise her, and justify that. I know that it is not always possible to devise legislation on the basis of one case, but in this case it surely illustrates a matter of principle—the matter of principle, the just cause, for which that lady has fought for many years. That just cause was not supported by previous legislation, because the wording was lax and offered a freeholder enough loopholes and possibilities to take her, as she explained, through one court process after another—processes that she could not afford.

The lady finally believed that she would receive her entitlements as a result of the amendments that we passed in Committee, but now, because she has a lease of slightly more than 45 years, the 50-year rule will once again exclude her. What will the Secretary of State say to her? He must convince people like her on grounds of fairness and reasonableness if new clause 21 is to be worthy of being passed by the House tonight.

Mr. Gummer

We have had a useful discussion on this subject.

My hon. Friend the Member for North-West Leicestershire (Mr. Ashby) suggested that there might be a different way of introducing the equity that he was kind enough to suggest was present in the amendment. I have considered the possibility of tying this in the way that he suggests, but I am happy to reconsider it to discover whether there is a way of using his suggestion. I should not like to over-emphasise the possibilities, because I genuinely have considered the issue carefully, but I am prepared at least to talk to him about these things to discover whether I can do anything.

I think I can honourably say that, because I put the measure into the Bill. I did so because I was Minister responsible for London and because, for many years, I had the considerable experience of listening to, among others, my old friend—now sadly dead—Sir Brandon Rhys Williams, who led this battle. He has been supported latterly by his successor, my hon. Friend the Member for Kensington (Mr. Fishburn), and by my right hon. Friends the Members for City of London and Westminster, South (Mr. Brooke) and for Chelsea (Sir N. Scott) and by my hon. Friend the Member for Fulham (Mr. Carrington). That important group of people has pressed that argument upon me, and that is why the measure is in the Bill in the first place.

I am pleased that my hon. Friend the Member for North-West Leicestershire should feel that I have been as flexible as possible, and I am surprised that the hon. Member for Christchurch (Mrs. Maddock) attacks me for being flexible. It is very odd. I am afraid that her party is like that; it always wants it every way. She admitted that two sets of legislation have not got it quite right, but evidently believes that I can now get it absolutely right with a snap of my fingers. The hon. Lady might have phrased that more graciously.

The hon. Member for Greenwich (Mr. Raynsford) was a little unhappy in his attitude to freeholders, as I have tried to achieve a balance, and will continue to do so. My hon. Friend the Member for Fulham made that point carefully, and I was surprised that the hon. Member for Hampstead and Highgate (Ms Jackson) did not recognise what he recognised from experience—that there is something to be said on both sides.

The work that my hon. Friend the Member for Fulham and his colleagues have done was much more graceful, much more concerned with equity, and much more equal than the hon. Member for Hampstead and Highgate was in the rather sad way in which she expressed her view. I found her remark about temporary engagement in housing odd from someone who has opposed, at every step, the ability of council tenants to buy their own homes. She appears to have a very odd inconsistency of opinion.

Ms Glenda Jackson

Will the Secretary of State give way?

Mr. Gummer

No, I will not give way on this occasion. I have given way to the hon. Lady several times.

I was impressed by the comments by the hon. Member for Sheffield, Attercliffe (Mr. Betts), but he repeated what others had said.

I believe that we have achieved a balance. I promise to consider exactly where the line should be drawn, and the issues raised by my hon. Friend the Member for North-West Leicestershire. I hope that the House will feel that I have been as flexible as possible. I again pay tribute to those of my hon. Friends who pushed this in the first place.

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

The House divided: Ayes 289, Noes 287.

Division No. 114]	[18.05 pm
AYES
Ainsworth, Peter (East Surrey)	Channon, Rt Hon Paul
Aitken, Rt Hon Jonathan	Chapman, Sir Sydney
Alexander, Richard	Churchill, Mr
Alison, Rt Hon Michael (Selby)	Clappison, James
Amess, David	Clark, Dr Michael (Rochford)
Ancram, Rt Hon Michael	Clarke, Rt Hon Kenneth (Ru'clif)
Arbuthnot, James	Clifton-Brown, Geoffrey
Arnold, Jacques (Gravesham)	Coe, Sebastian
Ashby, David	Congdon, David
Atkins, Rt Hon Robert	Coombs, Anthony (Wyre For'st)
Atkinson, David (Bour'mouth E)	Coombs, Simon (Swindon)
Atkinson, Peter (Hexham)	Cope, Rt Hon Sir John
Baker, Rt Hon Kenneth (Mole V)	Cormack, Sir Patrick
Baker, Nicholas (North Dorset)	Couchman, James
Baldry, Tony	Cran, James
Banks, Matthew (Southport)	Currie, Mrs Edwina (S D'by'ire)
Banks, Robert (Harrogate)	Curry, David (Skipton & Ripon)
Bates, Michael	Davies, Quentin (Stamford)
Batiste, Spencer	Davis, David (Boothferry)
Bendall, Vivian	Day, Stephen
Beresford, Sir Paul	Deva, Nirj Joseph
Biffen, Rt Hon John	Devlin, Tim
Bonsor, Sir Nicholas	Dicks, Terry
Booth, Hartley	Douglas-Hamilton, Lord James
Boswell, Tim	Dover, Den
Bottomley, Peter (Eltham)	Duncan, Alan
Bottomley, Rt Hon Virginia	Duncan Smith, Iain
Bowden, Sir Andrew	Dunn, Bob
Bowis, John	Durant, Sir Anthony
Boyson, Rt Hon Sir Rhodes	Elletson, Harold
Brandreth, Gyles	Emery, Rt Hon Sir Peter
Brazier, Julian	Evans, David (Welwyn Hatfield)
Bright, Sir Graham	Evans, Jonathan (Brecon)
Brooke, Rt Hon Peter	Evans, Nigel (Ribble Valley)
Brown, M (Brigg & Cl'thorpes)	Evans, Roger (Monmouth)
Browning, Mrs Angela	Evennett, David
Budgen, Nicholas	Faber, David
Burt, Alistair	Fabricant, Michael
Butcher, John	Fenner, Dame Peggy
Butler, Peter	Field, Barry (Isle of Wight)
Carlisle, John (Luton North)	Fishburn, Dudley
Carlisle, Sir Kenneth (Lincoln)	Forman, Nigel
Carrington, Matthew	Forsyth, Rt Hon Michael (Stirling)
Carttiss, Michael	Forth, Eric

Fowler, Rt Hon Sir Norman	Luff, Peter
Fox, Dr Liam (Woodspring)	Lyell, Rt Hon Sir Nicholas
Fox, Rt Hon Sir Marcus (Shipley)	MacGregor, Rt Hon John
Freeman, Rt Hon Roger	MacKay, Andrew
French, Douglas	Maclean, Rt Hon David
Fry, Sir Peter	McLoughlin, Patrick
Gale, Roger	McNair-Wilson, Sir Patrick
Gallie, Phil	Madel, Sir David
Gardiner, Sir George	Maitland, Lady Olga
Garel-Jones, Rt Hon Tristan	Major, Rt Hon John
Garnier, Edward	Malone, Gerald
Gill, Christopher	Mans, Keith
Gillan, Cheryl	Marland, Paul
Goodlad, Rt Hon Alastair	Marshall, John (Hendon S)
Goodson-Wickes, Dr Charles	Marshall, Sir Michael (Arundel)
Gorman, Mrs Teresa	Martin, David (Portsmouth S)
Gorst, Sir John	Mawhinney, Rt Hon Dr Brian
Grant, Sir A (SW Cambs)	Mayhew, Rt Hon Sir Patrick
Greenway, Harry (Ealing N)	Mellor, Rt Hon David
Greenway, John (Ryedale)	Merchant, Piers
Griffiths, Peter (Portsmouth, N)	Mills, Iain
Grylls, Sir Michael	Mitchell, Andrew (Gedling)
Gummer, Rt Hon John Selwyn	Moate, Sir Roger
Hague, Rt Hon William	Monro, Rt Hon Sir Hector
Hamilton, Rt Hon Sir Archibald	Montgomery, Sir Fergus
Hamilton, Neil (Tatton)	Moss, Malcolm
Hampson, Dr Keith	Needham, Rt Hon Richard
Hanley, Rt Hon Jeremy	Neubert, Sir Michael
Hannam, Sir John	Newton, Rt Hon Tony
Hargreaves, Andrew	Nicholls, Patrick
Haselhurst, Sir Alan	Nicholson, David (Taunton)
Hawkins, Nick	Norris, Steve
Hawksley, Warren	Onslow, Rt Hon Sir Cranley
Heald, Oliver	Oppenheim, Phillip
Heathcoat-Amory, Rt Hon David	Ottaway, Richard
Hendry, Charles	Page, Richard
Heseltine, Rt Hon Michael	Paice, James
Higgins, Rt Hon Sir Terence	Patnick, Sir Irvine
Hill, James (Southampton Test)	Patten, Rt Hon John
Horam, John	Pattie, Rt Hon Sir Geoffrey
Hordern, Rt Hon Sir Peter	Pawsey, James
Howard, Rt Hon Michael	Peacock, Mrs Elizabeth
Howell, Sir Ralph (N Norfolk)	Pickles, Eric
Hughes, Robert G (Harrow W)	Porter, David (Waveney)
Hunt, Rt Hon David (Wirral W)	Portillo, Rt Hon Michael
Hunt, Sir John (Ravensbourne)	Powell, William (Corby)
Hunter, Andrew	Rathbone, Tim
Hurd, Rt Hon Douglas	Redwood, Rt Hon John
Jack, Michael	Renton, Rt Hon Tim
Jackson, Robert (Wantage)	Richards, Rod
Jessel, Toby	Riddick, Graham
Johnson Smith, Sir Geoffrey	Rifkind, Rt Hon Malcolm
Jones, Gwilym (Cardiff N)	Robathan, Andrew
Jones, Robert B (W Hertfdshr)	Roberts, Rt Hon Sir Wyn
Jopling, Rt Hon Michael	Robertson, Raymond (Ab'd'n S)
Kellett-Bowman, Dame Elaine	Robinson, Mark (Somerton)
Key, Robert	Roe, Mrs Marion (Broxbourne)
Kirkhope, Timothy	Rowe, Andrew (Mid Kent)
Knapman, Roger	Rumbold, Rt Hon Dame Angela
Knight, Mrs Angela (Erewash)	Ryder, Rt Hon Richard
Knight, Rt Hon Greg (Derby N)	Sackville, Tom
Knight, Dame Jill (Bir'm E'st'n)	Sainsbury, Rt Hon Sir Timothy
Knox, Sir David	Scott, Rt Hon Sir Nicholas
Kynoch, George (Kincardine)	Shaw, David (Dover)
Lait, Mrs Jacqui	Shephard, Rt Hon Gillian
Lamont, Rt Hon Norman	Shepherd, Richard (Aldridge)
Lang, Rt Hon Ian	Shersby, Sir Michael
Lawrence, Sir Ivan	Sims, Roger
Legg, Barry	Skeet, Sir Trevor
Leigh, Edward	Smith, Sir Dudley (Warwick)
Lennox-Boyd, Sir Mark	Smith, Tim (Beaconsfield)
Lester, Sir James (Broxtowe)	Soames, Nicholas
Lidington, David	Speed, Sir Keith
Lilley, Rt Hon Peter	Spencer, Sir Derek
Lloyd, Rt Hon Sir Peter (Fareham)	Spicer, Sir James (W Dorset)
Lord, Michael	Spicer, Sir Michael (S Worcs)

Spink, Dr Robert	Vaughan, Sir Gerard
Spring, Richard	Viggers, Peter
Sproat, Iain	Waldegrave, Rt Hon William
Squire, Robin (Hornchurch)	Walden, George
Stanley, Rt Hon Sir John	Walker, Bill (N Tayside)
Steen, Anthony	Waller, Gary
Stephen, Michael	Ward, John
Stern, Michael	Wardle, Charles (Bexhill)
Stewart, Allan	Waterson, Nigel
Streeter, Gary	Watts, John
Sweeney, Walter	Wells, Bowen
Tapsell, Sir Peter	Wheeler, Rt Hon Sir John
Taylor, Ian (Esher)	Whitney, Ray
Taylor, John M (Solihull)	Whittingdale, John
	Widdecombe, Ann
Taylor, Sir Teddy (Southend, E)	Wiggin, Sir Jerry
Thomason, Roy	Wilkinson, John
Thompson, Sir Donald (C'er V)	Willetts, David
Thompson, Patrick (Norwich N)	Winterton, Nicholas (Macc'f'ld)
Thornton, Sir Malcolm	Wolfson, Mark
Townend, John (Bridlington)	Wood, Timothy
Townsend, Cyril D (Bexl'yh'th)	Yeo, Tim
Tracey, Richard	Young, Rt Hon Sir George
Tredinnick, David
Trend, Michael	Tellers for the Ayes:
Trotter, Neville	Mr. Simon Burns and
Twinn, Dr Ian	Mr. Derek Conway.

NOES
Abbott, Ms Diane	Clelland, David
Adams, Mrs Irene	Clwyd, Mrs Ann
Ainsworth, Robert (Cov'try NE)	Coffey, Ann
Allen, Graham	Cohen, Harry
Anderson, Donald (Swansea E)	Connarty, Michael
Anderson, Ms Janet (Ros'dale)	Cook, Frank (Stockton N)
Armstrong, Hilary	Corbett, Robin
Ashdown, Rt Hon Paddy	Corbyn, Jeremy
Ashton, Joe	Corston, Jean
Austin-Walker, John	Cousins, Jim
Banks, Tony (Newham NW)	Cox, Tom
Barron, Kevin	Cunliffe, Lawrence
Battle, John	Cunningham, Jim (Covy SE)
Bayley, Hugh	Cunningham, Rt Hon Dr John
Beckett, Rt Hon Margaret	Dafis, Cynog
Beggs, Roy	Darling, Alistair
Beith, Rt Hon A J	Davidson, Ian
Bell, Stuart	Davies, Bryan (Oldham C'tral)
Benn, Rt Hon Tony	Davies, Chris (L'Boro & S'worth)
Bennett, Andrew F	Davies, Rt Hon Denzil (Llanelli)
Benton, Joe	Davies, Ron (Caerphilly)
Bermingham, Gerald	Davis, Terry (B'ham, H'dge H'l)
Berry, Roger	Denham, John
Betts, Clive	Dewar, Donald
Blair, Rt Hon Tony	Dixon, Don
Blunkett, David	Dobson, Frank
Boateng, Paul	Donohoe, Brian H
Boyes, Roland	Dowd, Jim
Bradley, Keith	Dunnachie, Jimmy
Bray, Dr Jeremy	Dunwoody, Mrs Gwyneth
Brown, Gordon (Dunfermline E)	Eagle, Ms Angela
Brown, N (N'c'tle upon Tyne E)	Eastham, Ken
Bruce, Malcolm (Gordon)	Etherington, Bill
Burden, Richard	Evans, John (St Helens N)
Byers, Stephen	Ewing, Mrs Margaret
Caborn, Richard	Fatchett, Derek
Callaghan, Jim	Faulds, Andrew
Campbell, Mrs Anne (C'bridge)	Field, Frank (Birkenhead)
Campbell, Menzies (Fife NE)	Fisher, Mark
Campbell, Ronnie (Blyth V)	Forsythe, Clifford (S Antrim)
Cann, Jamie	Foster, Rt Hon Derek
Chidgey, David	Foster, Don (Bath)
Chisholm, Malcolm	Foulkes, George
Church, Judith	Fraser, John
Clapham, Michael	Fyfe, Maria
Clark, Dr David (South Shields)	Galbraith, Sam
Clarke, Tom (Monklands W)	Galloway, George

Gapes, Mike	McGrady, Eddie
Garrett, John	McKelvey, William
George, Bruce	Mackinlay, Andrew
Gerrard, Neil	McLeish, Henry
Gilbert, Rt Hon Dr John	Maclennan, Robert
Godsiff, Roger	McMaster, Gordon
Golding, Mrs Llin	MacShane, Denis
Gordon, Mildred	Maddock, Diana
Graham, Thomas	Maginnis, Ken
Grant, Bernie (Tottenham)	Mahon, Alice
Griffiths, Nigel (Edinbuigh S)	Mandelson, Peter
Griffiths, Win (Bridgend)	Marshall, David (Shettleston)
Grocott, Bruce	Marshall, Jim (Leicester, S)
Gunnell, John	Martin, Michael J (Springburn)
Hain, Peter	Martlew, Eric
Hall, Mike	Maxton, John
Hanson, David	Meacher, Michael
Hardy, Peter	Meale, Alan
Harman, Ms Harriet	Michael, Alun
Harvey, Nick	Michie, Bill (Sheffield Heeley)
Hattersley, Rt Hon Roy	Michie, Mrs Ray (Argyll & Bute)
Henderson, Doug	Milburn, Alan
Hendron, Dr Joe	Miller, Andrew
Heppell, John	Mitchell, Austin (Gt Grimsby)
Hill, Keith (Streatham)	Moonie, Dr Lewis
Hinchliffe, David	Morgan, Rhodri
Hodge, Margaret	Morley, Elliot
Hoey, Kate	Morris, Estelle (B'ham Yardley)
Hogg, Norman (Cumbernauld)	Morris, Rt Hon John (Aberavon)
Hoon, Geoffrey	Mowlam, Marjorie
Howarth, Alan (Strat'rd-on-A)	Mudie, George
Howarth, George (Knowsley North)	Mullin, Chris
Howells, Dr Kim (Pontypridd)	Murphy, Paul
Hoyle, Doug	Nicholson, Emma (Devon West)
Hughes, Robert (Aberdeen N)	Oakes, Rt Hon Gordon
Hughes, Roy (Newport E)	O'Brien, Mike (N W'kshire)
Hughes, Simon (Southwark)	O'Brien, William (Normanton)
Hume, John	O'Hara, Edward
Hutton, John	Olner, Bill
Illsley, Eric	Paisley, The Reverend Ian
Ingram, Adam	Parry, Robert
Jackson, Glenda (H'stead)	Pearson, Ian
Jackson, Helen (Shef'ld, H)	Pendry, Tom
Jamieson, David	Pickthall, Colin
Janner, Greville	Pike, Peter L
Jenkins, Brian (SE Staff)	Powell, Ray (Ogmore)
Johnston, Sir Russell	Prentice, Bridget (Lew'm E)
Jones, Barry (Alyn and D'side)	Prentice, Gordon (Pendle)
Jones, leuan Wyn (Ynys Môn)	Prescott, Rt Hon John
Jones, Jon Owen (Cardiff C)	Primarolo, Dawn
Jones, Lynne (B'ham S O)	Purchase, Ken
Jones, Martyn (Clwyd, SW)	Quin, Ms Joyce
Jones, Nigel (Cheltenham)	Radice, Giles
Jowell, Tessa	Randall, Stuart
Kaufman, Rt Hon Gerald	Raynsford, Nick
Keen, Alan	Reid, Dr John
Kennedy, Charles (Ross, C&S)	Rendel, David
Kennedy, Jane (L'pool Br'dg'n)	Robertson, George (Hamilton)
Khabra, Piara S	Robinson, Geoffrey (Co'try NW)
Kilfoyle, Peter	Roche, Mrs Barbara
Kirkwood, Archy	Rogers, Allan
Lestor, Joan (Eccles)	Rooker, Jeff
Lewis, Terry	Rooney, Terry
Liddell, Mrs Helen	Ross, Ernie (Dundee W)
Litherland, Robert	Ross, William (E Londonderry)
Livingstone, Ken	Rowlands, Ted
Lloyd, Tony (Stretford)	Ruddock, Joan
Llwyd, Elfyn	Salmond, Alex
Loyden, Eddie	Sedgemore, Brian
Lynne, Ms Liz	Sheerman, Barry
McAllion, John	Sheldon, Rt Hon Robert
McAvoy, Thomas	Shore, Rt Hon Peter
McCartney, Ian	Short, Clare
McCartney, Robert	Simpson, Alan
McCrea, The Reverend William	Skinner, Dennis
McFall, John	Smith, Andrew (Oxford E)

Smith, Chris (Isl'ton S & F'sbury)	Tyler, Paul
Smith, Llew (Blaenau Gwent)	Vaz, Keith
Smyth, The Reverend Martin	Walker, A Cecil (Belfast N)
Snape, Peter	Wallace, James
Soley, Clive	Walley, Joan
Spellar, John	Wardell, Gareth (Gower)
Squire, Rachel (Dunfermline W)	Wareing, Robert N
Steel, Rt Hon Sir David	Watson, Mike
Steinberg, Gerry	Welsh, Andrew
Strang, Dr. Gavin	Wicks, Malcolm
Straw Jack	Wigley, Dafydd
Sutcliffe, Gerry	Williams, Rt Hon Alan (Sw'n W)
Taylor, Mrs Ann (Dewsbury)	Williams, Alan W (Carmarthen)
Taylor, Rt Hon John D (Strgfd)	Wilson Brian
Taylor, Matthew (Truro)	Wise, Audrey
Thompson, Jack (Wansbeck)	Worthington, Tony
Thumham, Peter	Wray, Jimmy
Timms, Stephen	Wright, Dr Tony
Tipping, Paddy	Young, David (Bolton SE)
Touhig, Don	Tellers for the Noes:
Trickett, Jon	Mr. Eric Clarke and
Turner, Dennis	Mr. Greg Pope

Question accordingly agreed to.

Clause read a Second time, and added to the Bill.

Mr. Henry McLeish (Fife, Central)

On a point of order, Mr. Deputy Speaker. Tonight, the Government have been defeated in Committee in yet another attempt to increase prescription charges. Surely that decision must be respected. It must be wrong for Ministers to ride roughshod over the clear decision of a statutory Committee of the House. Is it in order for me to ask you to protect the House and the public against the actions of Ministers?

Mr. Deputy Speaker (Mr. Michael Morris)

My job in the Chair is to ensure the safe passage of the Housing Bill, as amended. For the moment, that is my sole concern.

Mr. Hugh Bayley (York)

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Is it a new point of order?

Mr. Bayley

It is on the same matter, Mr. Deputy Speaker.

Mr. Deputy Speaker

I have ruled on that, so we shall move on.