§ 3.9 p.m.
§ Order of the Day for the Second Reading read.
THE LORD CHANCELLOR (LORD SIMONDS)
My Lords, I think my first duty is to say to the noble Lords, Lord Mathers and Lord Greenhill, and to other noble Lords who are interested—more interested, shall I say?—in the Scottish Bill which follows this one, how much I regret that they have been put to any inconvenience. It was through no wish of mine that there was any misunderstanding of this kind. Since I must be here all the time, I should be the last person to put my own convenience before that of other noble Lords who may wish to get away. With that prelude, I beg to move the Second Reading of this Bill. Perhaps the best amends I can make to the noble Lords is to be as short as possible, in order that their time may come sooner.
This Bill which I now move gives effect to the main proposals in the White Paper, Government Policy on Leasehold Property in England and Wales,which was fully debated in this House some little time ago, and that debate gave noble Lords on each side of the House the opportunity of learning something of the other's views. The Bill falls into several Parts, of which the first two are as follows. The first Part deals with a particular kind of tenant, where the tenant holds a ground lease, as it is sometimes called, or a building lease—in any event a long lease; the second Part deals with leases which are not residential leases but business leases. There is nothing to connect the two Parts of the Bill, except that they deal with several aspects of the relation of landlord and tenant. There are other Parts of the Bill which deal with miscellaneous matters which I shall mention shortly to your Lordships.
The first Part of the Bill deals with a class of tenant having these characteristics: first of all, the tenant is in occupation, an occupier of residential premises; secondly, the lease under which he holds those premises is a long lease—and a long lease is defined as a lease for more than twenty-one years. As a matter of practice, one knows that if a lease is for more than twenty-one years 108 it is almost certainly a lease for at least sixty, and most probably for ninety-nine years. The third characteristic is that it is a lease at a low rent, which is defined as a rent of under two-thirds of the rateable value. The fourth characteristic is that the lease would be within the Rent Acts but for the fact that the rent is a low one. It would be within the Rent Act if the rateable value of the property in London were £100 or, in the country, £75. That is the class of tenant with whom we are dealing in the first Part of the Bill.
Let me remind your Lordships of what the position of that tenant is. Clearly, these are the two main features. First of all, when the lease expires the tenant must go out, for, ex hypothesi, he is not protected by the Rent Acts; secondly, almost invariably in leases of this kind there are rigorous covenants, particularly in relation to repair. One of the features of which complaint is sometimes made is that at the end of his lease the tenant is faced with a very heavy and serious bill for dilapidations. That, my Lords, is the law as it at present stands. We are all perfectly familiar with this. Leasehold property passes from hand to hand upon the footing that when the lease has expired the tenant will be under a serious obligation in relation to repairs; equally, it passes from hand to hand upon the footing that in respect of the reversion, when the lease does come to an end, the landlord will be able to enforce the right of repair against his tenant. It is upon that footing that the property is valued as at the death of the tenant or landlord, as the case may be, for the purpose of duty. That being the legal position we find this serious anomaly as between two neighbours. One of them who holds a rack rent is entitled to the protection of the Rent Acts and has security of tenure, except so far as the Rent Acts may provide means for the landlord to resume possession. The other, who is the holder of a ground lease, is not protected by the Rent Acts and although he has just the same need for security of tenure, he has not got it. The main purpose of Part I of this Bill is to provide, with the necessary adjustments, that the occupying holder of leasehold premises under a long lease may have the same security of tenure as his 109 neighbour, whose circumstances I have just described.
Now how is that to be effected? Part I of this Bill makes provision for it in this way. The lease is not to end automatically at what may be called the termination date—that is to say, supposing that, as between the parties under their contract, the lease ends at July 1, 1954, this Bill provides that it shall not end but shall carry on according to its existing terms, unless something happens. One of many things may happen under the Bill. In the first place, neither landlord nor tenant may do anything at all; they may be content to leave things as they are, in which case the long lease goes on according to its terms. But, secondly, the tenant may take the initiative, for although he is in occupation of premises on what are very good terms, probably at a very low rent, it may not be convenient for him to stay where he is—he may want to go. Accordingly, he may terminate the lease by a month's notice. On the other hand, it may be the landlord who wants to put an end to the lease. If he wants to do so, then two courses are open to him: he may give notice terminating the lease and ask for one of two things; he may seek to resume possession upon one or other of the grounds which are stated in the Bill.
Let me say at once that these grounds, with the necessary adjustment, are the same grounds as enable a landlord under the Rent Acts to resume possession—with the addition of this ground: that the landlord may obtain possession if he wants to develop the property. Most of these properties, when the lease comes to an end, are something like 100 years old, and it would be very unfortunate in the public interest if any bar or prohibition were put upon the landlord's redeveloping property of that character. Accordingly, one of the grounds upon which the landlord is to be entitled to resume possession is that he wants to redevelop the land. There are stringent provisions in the Bill, as your Lordships will see, dealing with that question. It is not enough for him to say, "I want to redevelop the property; therefore give me possession." In the event of conflict he has to satisfy the court that that is his genuine intention, and that he has taken steps towards doing so—prepared his plans, probably incurred a good deal 110 of expense in doing so, and so on. In that way the tenant is guarded.
It may be, however, that the landlord does not want to resume possession—that all that he wants is that the tenant remaining on the property should pay a rent which is appropriate to the fact that the property is now the landlord's property. In such a case the landlord serves a notice upon his tenant proposing what we call a statutory tenancy. In that notice he has to set out certain provisions relating to a statutory tenancy. He has to state the rent which he proposes, and also (and this is of great importance) he has to state what are the initial repairs, as the Act called them, which he thinks ought to be done. I will come back to this question of initial repairs. I merely want to call the attention of the House at once to this fact; that, if the rent is not agreed, it will be for the court to determine the figure; and the court will determine the rent by reference, first of all, to all the surrounding circumstances and to what is the market value of the leasehold premises of that kind. Secondly, the court will have to take into account, for the purpose of fixing the rent, what is the state of repair, on the footing that the initial repairs have been done. The court, of course, will also have to fix what are the other conditions in regard to repair, for now we are substituting what we call a statutory tenancy for the old system of ground leases, which are quite different.
As I have reminded your Lordships, the tenant, upon the falling in of a ground lease, is subject to the very heavy burden of repair; and it would be quite wrong—it would be confiscatory of the landlord's rights—if the tenant were to be relieved altogether of his obligations in that respect. Nevertheless, it is thought that there should be some mitigation of that condition, having regard to the changed circumstances since the bargain was made between the landlord and the tenant—by that, I mean, in particular, the greatly increased cost of repair over what the cost might originally have been contemplated to be. Accordingly, the means which have been devised to adjust matters as fairly as possible between landlord and tenant are these. It will be for the landlord to say—and again, if necessary, for the court to determine—what are the initial repairs which ought to be carried out to put the property, not into the state 111 of repair required by the lease, but into what is called a "state of good repair." A "state of good repair" is a state which is defined in the same way as those words are defined in the Housing Repairs and Rents Bill—that is to say (I have not the exact words before me) both as regards structure and decoration and as regards the age, locality and character of the premises.
Those words were very much criticised by certain noble Lords of the Opposition, on the ground that they were too vague, perhaps prejudicial to the tenant and so on. They are the words upon which we insisted in the Housing Bill, and they are the words which are introduced here, very much for the benefit of the tenant. In that I am fortified by the fact that when this matter was debated upon the White Paper, the noble Lord, Lord Silkin, pressed that the words "in good repair" should be construed in reference to the age, environment and all other circumstances, and I only wish that I had remembered that fact and had had that shot in my locker when the similar definition was being opposed in the Housing Bill. That at least is what we are proposing in this Bill. The landlord will determine what are the initial repairs (and in the event of disagreement the court will have to determine it), and when those initial repairs have been done—and they must be paid for by the tenant, for that is his obligation—then the rent will be fixed having regard to the state of the premises with those repairs done and all other circumstances. But the landlord, of course, need not demand that any initial repairs shall be done at all. If that happens, then the rent will be fixed with regard to the state of the property as unrepaired. That, in the main, is the position in regard to the proposals for a statutory tenancy, but of course there will be other conditions which will have to be referred to in the proposals, and in the event of any difference, they will be determined by the county court.
I ought to call your Lordships' attention to a factor very much favouring the tenant, and to which many landlords may object. When once the landlord has decided in favour of a statutory tenancy, then his right to resume possession for the purposes of redevelopment is gone; that is to say, "once a statutory tenancy 112 always a statutory tenancy," and possession can then be resumed by the landlord only for the reasons which the Rent Acts give. I need not remind your Lordships of those reasons; they are so familiar. In fixing the rent—if it should be necessary for the court to fix it—the court will do so in exactly the same way as the tribunal fixes the rent under the Act of 1949, which we owe to the noble Lords opposite. I think I have said sufficient to show what is the position in regard to the ground lessee, as he is sometimes called, and his landlord when the lease falls in, and what is the security of tenure which we provide for such a lessee. In Part I there is another very important but somewhat technical matter. If you will assume the grant of a lease for 99 years by A to B, and then a sub-lease from B to C, then C has security of tenure as against B. But when B's lease itself came to an end, C had no security of tenure against A. That was probably a slip in the original Rent Act which passed unnoticed for many years, but in a case which came before the Court of Appeal, known as the "Knightsbridge case," that omission of the law was uncovered. This Bill, by Clause 16, corrects that anomaly; and, now upon the termination of the head lease, the occupying lessee holds on the same terms from the superior landlord.
I do not want to say anything more about Part I of the Bill, except this. A large part of the criticism of the Bill in another place, and of the criticism of the White Paper, when it was debated in this House, was that the Bill did not endorse the theory of what is known as leasehold enfranchisement. That is a matter, I know, which has for many decades excited the enthusiasm of one Party in the State, certainly for a long time of the Liberal Party. Oddly enough, it was never inscribed on the banner of the Labour Party until, I think, 1951. The position is somewhat curious. It was in 1948, I think, that the late Socialist Government appointed a very strong Committee to deal with this whole question of leasehold enfranchisement and with other aspects of the relationship of landlord and tenant. Oddly enough, as I say, they were not minded then to bring forward any proposal for leasehold enfranchisement, but they appointed a strong Committee to consider that matter and report. The Committee did consider 113 and report, and by a large majority—two members only reporting in favour of any form of leasehold enfranchisement—the Committee rejected it in its entirety. And, curiously enough, it was immediately after that that leasehold enfranchisement became the creed of the Labour Party. That is very puzzling; but so it is.
As I say, I do not think it is any part of my business, in putting forward these proposals which relate to security of tenure of the occupying lessee, to explain why we have not embarked wholesale on a scheme of leasehold enfranchisement; but what I would say is this. Leasehold enfranchisement is a creed which has assumed many and varying forms, but there are two things, in particular, which have to be determined by anyone who puts it forward as a tenable, workable proposition. The first of those two things is this: Whom do you propose to benefit? Do you propose to benefit only the occupying lessee or tenant, or do you propose to benefit any holder of a long lease, even though he sublets, and, it may be, sublets on weekly tenancies to a number of individuals? What do you propose to do? Secondly, what do you propose to pay for the land? On that, there are many theories. There are many people, I think (the noble Lord, Lord Ogmore, will no doubt correct me if I am wrong), particularly in South Wales, who say that the landlord has already had enough; that when the lease comes to an end the freehold should revert to the tenant without any further payment. That is one school of thought. The other school of thought is that there should be no more payment than a capitalised ground rent. The ground rent is often very small, and twenty to twenty-five years' purchase of the ground rent would be a negligible sum. That is another school of thought.
The third school of thought is this. Not only should there be a sum paid for a capitalised ground rent but also something in respect of the landlord's reversionary interest—that is to say, in respect of the freehold interest. I cannot foresee what noble Lords are going to say about the Bill, but if they are going to criticise it by way of complaining that it does not provide for leasehold enfranchisement, I hope very much that they will be able to say to which school of 114 thought they, or any of them, belong. Is it the doctrine of the Party in Opposition that there should be leasehold enfranchisement and nothing paid, or a capitalised ground rent, or a sum which takes into account not only the ground rent but also reversionary interest? I would point out that the two dissentient members of the Committee which reported were in favour of the latter proposal—a proposal which, if it were carried out, would, I think, give little comfort to those in South Wales who are, perhaps legitimately, vocal on this subject.
Those are the proposals in broad outline. I fear that I have already been too long on the first Part of the Bill, which deals with ground leases. The second Part—and in many respects, I think, it is quite as important as the first Part—is an attempt to do what was imperfectly and unsatisfactorily done by the Landlord and Tenant Act, 1927. Your Lordships will remember, at any rate vaguely and in outline, what that Act attempted to achieve. It was intended to compensate, in some measure, tenants who were not able to get renewal of the lease of leasehold premises upon which they carried on their business. It was narrow in its scope, "business being narrowly defined. In fact, it was confined to trade and industry. The first thing that this Bill does by way of amendment of the Landlord and Tenant Act, 1927, is to widen its scope, and to give protection to business, which is defined as includinga trade, profession or employment and … any activity carried on by a body of persons whether corporate or unincorporate.As your Lordships know, if you do not attempt a definition of some kind you are almost sure to land in trouble. Those of your Lordships who have had any experience of the law, know that, in Acts of Parliament and in formal documents, the word "business" has given rise to a good deal of difficulty. It may be as general as when you say, colloquially: "Mind your own business," or it may have a much narrower content. In this case we think it right to give a measure of protection to premises used as business premises in the widest sense, and the Bill is designed to cover also premises used both for business and, in some measure, for residence—as, for instance, 115 a doctor's house, which may be both his residence and his surgery.
The next point about the second Part of the Bill is this. Under the Act of 1927, a tenant could get relief only if he could satisfy the court—if the case went to the court—that, by virtue of his carrying on the business upon the premises in question, the landlord had got what is somewhat curiously called "an adherent goodwill"—that is to say that the letting value of the premises was increased by the user which the tenant had made. Having proved that—a thing very difficult to prove—he had further to prove that the amount of "adherent goodwill" was less than the loss which he would suffer if he removed from the premises. Only then was he, subject to certain qualifications, entitled to a renewal of his lease. That, although it has been of value in some cases, has not generally proved sufficiently satisfactory to the tenant. Accordingly, we have approached this from a different angle, and this Bill provides that, if he wants it, the tenant shall automatically be entitled to renewal of his lease, unless the landlord desires to resume possession and can satisfy one or other of a number of conditions which give him that right. Those conditions are set out in Clause 30.
One of the conditions which give a landlord the right to resume possession is that the tenant has been a bad tenant. Nobody would force a landlord to grant a further tenancy to a man who has been a bad tenant—that is to say, has not observed his obligations, or has continually failed to pay his rent and so on. Then there are other reasons which enable a landlord to have possession, as, for instance, that there is an option in the tenancy agreement which the tenant has refused to exercise. He has had his chance and refused, and there is no reason why the Statute should give him another. Maybe the landlord can offer him alternative accommodation, which offers him the same facilities as he enjoys. Maybe the landlord wants to demolish the premises with a view to redevelopment. Or maybe, subject to certain conditions, the landlord wishes to occupy the premises himself.
If the landlord succeeds in satisfying the court that he has grounds for resuming possession or for not granting a 116 further tenancy, then in certain cases the tenant is entitled to compensation. Obviously, he is not entitled to compensation if the landlord does not renew his tenancy because he has been a bad tenant. There is no reason why a man who has been a bad tenant should get something more than his agreement provides; but if on other grounds the landlord obtains possession and the tenant has to go, then it is right that the tenant should be compensated. Here is the problem: what compensation is he to get? Is it to be the measure of the landlord's profit? That is going back to adherent goodwill, which is unsatisfactory. Is it to be the measure of the tenant's loss? That would be purely arbitrary and would work very hardly upon the landlord, in many cases. It would be fortuitous. Where the landlord grants a tenancy, knowing full well that he himself wants to go into possession after a certain number of years, and he has no reason whatever to expect that the loss of a tenant would be anything substantial, it would be very hard to throw it upon him.
Starting with the assumption that some compensation is desirable, if none of these measures is, as I think, satisfactory, what should be done? Let me say at once that what the Bill provides is arbitrary. To some the amount will seem too much; to others undoubtedly it will seem too little. The Bill provides that compensation shall be measured in this way. If the tenant has been in occupancy of premises for fourteen years, his compensation is to be twice the rateable value of the premises; something which will undoubtedly compensate him for the cost of removal. If he has been less than fourteen years, he is to have an amount equal to the rateable value of the premises. I am quite prepared to say at once that that basis is arbitrary. If anybody can suggest (here I am throwing out exactly the same challenge as my right honourable friend the Home Secretary threw out in another place) a logical, rational way of compensating the tenant, which would be fair as between landlord and tenant, I should be happy to consider it. That challenge was thrown out in another place, and I do not think it was accepted. I know that it is easy to take another figure and say, instead of twice the rateable value, three or four or ten times the rateable value—anything you like. But, on the whole—and we have 117 considered this matter deeply—we think that twice the rateable value for fourteen years and an amount equal to the rateable value for less than fourteen years is fair.
There are various provisions for excluding some of the provisions of the Bill. I do not think I need refer to them, but I ought to mention one point. I told your Lordships that the tenant would have a right, if he wished it, to a tenancy. The question then arises: at what rent? It is to be hoped that the parties will agree; but if they do not, here again they must go to the court—to the county court if the rateable value is under a certain amount, otherwise to the High Court. I would call your Lordships' attention to the fact that the court, in fixing the rent, is to determine it by reference to the amount at which the property may reasonably be expected to be let in the open market by a willing lessor, there being disregarded any effect on rent of the fact that a tenant or his predecessors in title have been in occupation, or of any goodwill created by the tenant himself or of any effect on the rent of any improvement carried out by the tenant or his predecessors in title. I think this is very difficult, and we have sincerely endeavoured to make it as fair as possible between landlord and tenant. I believe that it is a fair measure. So much for Parts I and II. Perhaps I should mention that although the expression "business premises" is a wide and embracing one, necessarily certain kinds of tenancies are excluded—namely, tenancies of agricultural holdings and mining leases, and, of course, tenancies which already have the benefit of the Rent Acts.
I can deal in a few words with the remaining Parts of the Bill. Part III deals with compensation for improvement, and all I need say about it is that in several details it makes a considerable advance in favour of the tenant upon the provisions of the Landlord and Tenant Act, 1927. Part IV, which is described as "Miscellaneous and supplementary" makes very important amendments to the Leasehold Property (Repairs) Act, 1938. That Act, as your Lordships remember, was an extension of, and improvement upon, certain provision of the Law of Property Act, 1925. The main features of the amendment are that, whereas the Act of 1938 applied only to a certain class 118 of house—namely, houses of £100 a year rateable value or less—now it is extended to all houses. It further extends the relief which can be granted to leases of seven years which have three years to run, whereas formerly it was only in respect of leases which had twenty-one years in the original terms, with five years to run. There are other details, which I need not mention, which improve the position of the tenant. There are certain useful modifications of Section 84 of the Law of Property Act, 1925, the section which provides for the release of restrictive covenants, particularly in building estates, where the need for them has gone, owing to changed circumstances.
I think it is important to draw your Lordships' attention to one other feature of the Bill because, as your Lordships know, much land is now held by Government Departments, and in many cases let on lease—I am not speaking here of agricultural land. In regard to land held by Government landlords, the Bill provides that the tenant shall not be entitled to a renewal of his lease if the Minister for certain reasons so certifies, but in regard to compensation the tenant is placed in the same position as where there is a private landlord. But to that situation there is one exception, to which I ought to call attention, and I do so in set terms, because something was said in another place, inadvertently, which may have given a wrong impression, and I should like to put it as nearly exactly right as I can. Under the Bill, where a Government Department prevents a tenant from getting a new tenancy by issuing a certificate under Clause 56 or 57, the general rule which is embodied in Clause 58, is that the landlord Department must pay compensation in the same way and on the same scale as a private landlord. That is what I have been telling your Lordships. Now comes the exception. Where the Board of Trade prevent a tenant of premises provided under the Distribution of Industries Acts, 1945 and 1950, from getting renewal by issuing a certificate under Clause 59, no provision is made for compensation.
The reason, which I hope will commend itself to your Lordships, is that such tenants are different from any other tenants of Government premises. The factories which they occupy have been built at public expense, for letting at rents 119 which give much less than a commercial return on the cost of building. The Government have been prepared to provide factories in these terms in the development areas in order to increase employment in places where more industry is badly needed. It is, however, an understood part of this system that the tenant should provide a reasonable level of employment and not use the premises, for example, for mere storage purposes. Where the tenant fails to play his part, he can be prevented under Clause 59 from obtaining a renewal. In these circumstances, no compensation is payable. In effect, a man who gets a lease of premises in those circumstances and does not play his part is just as much a bad tenant as any other tenant who does not observe the obligations of his lease. However, I want to make it quite clear that the Board of Trade intend to use their power under Clause 59 sparingly, and only against those few tenant firms who have clearly shown themselves to be bad tenants in regard to the employment they provide. They will certainly not use it where a tenant's employment figures are low because of temporary business difficulties, or because he has changed over to highly mechanised production. I thought it right to go into that matter in rather greater length and detail than I did the others, because, as I say, there was some error in a statement made in another place which I desired to correct.
This is a long Bill, and there is a great mass of detail in it. It was carefully scrutinised in another place. We shall, of course, listen to the points of detail which noble Lords may indicate, but, so far as the Second Reading of this Bill is concerned, I venture to suggest to your Lordships that, in principle, and by way of doing justice as between landlord and tenant, and the several relations that I have indicated, it is fair. Accordingly, I beg to move that the Bill be now read a second time.
§ Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
§ 3.54 p.m.
§ LORD SILKIN
My Lords, it has become almost traditional to begin a speech of this kind by congratulating the noble and learned Lord on the Woolsack on the clear way in which he has 120 explained a difficult and technical measure. One would never think from his explanation that this Bill is exceedingly difficult and will, I have no doubt, for many years to come provide ample occupation for members of my profession and that of the noble and learned Lord. While I am congratulating him on his speech, may I also respectfully congratulate the noble and learned Lord on having added to his lustre by becoming not only a noble and learned Lord, but a noble and learned Doctor: we are all glad to know that the University of Oxford has so honoured him.
This is a most interesting Bill to those who have occasion to study our system of jurisprudence, because it does what we pretend we are very keen on not doing: although we always pretend that we are most keen on maintaining the sanctity of contracts, this Bill—and its predecessors referred to in various parts of the Bill—in fact, assumes that it is not fair, in certain circumstances, that contracts should be adhered to, and that it is essential for the State to intervene in order to adjust the relationship between two parties who are deemed to have entered into a contract freely and who are expected to abide by that contract. We have had a variety of examples, particularly in connection with the relationship between landlord and tenant, ever since the end of the First World War. We started off with the Rent Restrictions Acts. We recognised that landlords and tenants could not be left to bargain freely on the question of rents, or on the question of security, and both restriction on rents and security of tenure had to be provided. Then there was the Landlord and Tenant Act, 1927, to which the noble and learned Lord referred, which was an attempt to adjust, in the interests of equity, the relationships between landlords and tenants, and to ensure that the tenant, at the end of his tenure of business premises—narrowly defined, as the noble and learned Lord said—was not left high and dry without some compensation in respect of goodwill which he had acquired during the course of his tenure. There is the Leasehold Property (Repairs) Act, 1938, which is again amended and improved.
An interesting feature about all these earlier Acts to which I have referred is that they have all been found to be ineffective. They were passed—and let me 121 give the Conservative Governments of those days credit for having introduced those measures—with the intention of giving greater equity to one member of a bargain which had been entered into by two parties, who was deemed to be in the weaker position. But in all these cases experience has shown that we have been far too timid, and that, whereas we went into those measures with the best of intentions, they have not been capable of carrying out effectively the purpose for which they were passed. It is my submission that this Bill is in exactly the same category. It is a Bill full of good intentions, with every desire—I say this in all sincerity—to adjust the relationships between landlords and tenants in the interests of tenants who are hard hit by the agreements that have been entered into in respect of those tenancies. If I may venture into the field of prophecy, judging by what is happening to-day, it may be that in twenty-five years' time there will be a Landlord and Tenant Bill before this House for the purpose of endeavouring to make really effective the provisions which we are considering this afternoon.
Before I subject this Bill to what I hope will be an objective examination, I should like to say a word about leasehold enfranchisement. I can only think that the noble and learned Lord, with his great skill as an advocate, has deliberately endeavoured to get noble Lords on this side of the House to commit themselves to statements which he, or whoever is speaking on the Government side, will then be able to defeat. I would gladly "take on" the noble and learned Lord and discuss the question of leasehold enfranchisement, but in view of the way in which this Bill has been drawn I do not think it would be profitable this afternoon. There has been a debate in another place on this subject, and a good deal of the time for the consideration of this Bill in another place was given to the question of leasehold enfranchisement. It is a difficult problem. It is not as easy to reject as the noble and learned Lord gave the House to understand. Committees have investigated this question, and there have been Reports in favour of leasehold enfranchisement, and Reports against it. There was in 1884 the famous Royal Commission on the Housing of the Working Classes, where ten of the members reported in favour of leasehold 122 enfranchisement, one of the ten being Cardinal Manning, and I believe one of the minority was an ancestor of the Leader of this House. But they reported in favour of leasehold enfranchisement On the other hand, a Committee which my noble and learned friend Lord Jowitt set up in 1948—a very strong Committee, I agree with the noble and learned Lord—reported by a substantial majority against it.
I cannot blame the present Government for having accepted readily a Report which they were pre-disposed to accept anyway, and regarding that as an adequate reason for not introducing leasehold enfranchisement. I do not blame them, and I should not have expected otherwise. Nevertheless, the Party to which I belong is committed to the principle of leasehold enfranchisement, and the noble and learned Lord can make what capital he likes out of the fact that, so far, they have not committed themselves to the details. I remember in years gone by, when there was a Labour Government, making exactly that kind of reply to noble Lords who were then in Opposition. In opposing Bills, they were not prepared to provide exact details of the measures they would introduce or state how they would deal with them. They always said that when they were in office it would be their duty to set out exact details of any measure they introduced, and I say the same here.
I do not want to take up more of your Lordships' time in dealing with the question of leasehold enfranchisement. It would be academic to a great extent, because there is no possible chance of persuading your Lordships that this Bill should be amended in order to provide for leasehold enfranchisement. So I want to come to the Bill itself and, as I have said, subject it to, I hope, a not very long, but an objective, examination. The House will remember that the origin of this Bill was the problem which had arisen in South Wales and in many other parts of the country, by reason of the fact that leases of dwelling-houses which had been erected by means of a system of building leases—where leases had been granted for periods of 99 years or there-abouts—were coming to an end, and tenants were naturally apprehensive as to what was going to happen when their leases expired. They were concerned about three things. They were concerned 123 about security of tenure; about the cost of dilapidations with which they might be faced and, of course, about the rent they would be charged if they stayed on. It was because of this concern, this apprehension, which existed in many parts of the country, but particularly in South Wales, that the Committee was set up by my noble friend and leader Lord Jowitt, and eventually reported in 1950. The main purpose of this Bill, therefore, is to provide security of tenure for that type of person; to deal with their problems of dilapidations and rent, and the conditions under which they will continue in occupation. The remaining parts of the Bill, important as they are, were, so to speak, tacked on to the Bill. I think the noble and learned Lord will agree that the main purpose is to provide security of tenure on terms which will be acceptable for tenants.
The first thing that one observes is that the security is limited and conditional. It is the security of a statutory tenant. When the Rent Restrictions Acts come to an end, the tenant will have to go. When they are modified, as they were after the last war, by degrees—the highest rented or rated properties being decontrolled first—corresponding properties coming within the terms of this Bill will be equally decontrolled and the tenants will lose their security. Therefore, as regards Part I of the Bill, security is provisional. We do not know how long the Rent Restrictions Acts are going to remain in force, but when they do come to an end so will the security of those tenants. That is curiously in marked contrast to the security which is given under Part II of the Bill to business tenants. It is true that they get a security for a limited period and then come again—I think it is up to fourteen years and then they can come again— but the provisions relating to business tenants remain in existence indefinitely. The security afforded to them does not come to an end when the Rent Restrictions Acts come to an end, and I should have hoped that it would be found possible to devise some permanent means of providing security for such tenants.
Then there is the question of rent. It is one thing to offer people the opportunity of continuing in their dwelling-houses when their leases expire, but it all depends on the terms and conditions under which that offer is made as to 124 whether it is possible for a tenant to accept. We have to bear in mind that the tenants with whom we are dealing are tenants who have been living in these dwelling-houses at low ground rents, less than two-thirds of the rateable value. They have become accustomed to that rent, and their standard of living has had regard to the amount of ground rent they were required to pay. Then the lease comes to an end and they are offered the opportunity of remaining in possession at a rent which may be ten, fifteen or twenty times as high as they have been paying hitherto. It seems to me that in many cases, therefore, the offer for them to remain in occupation may well be one which they will not be in a position to accept.
I may be asked, what is my alternative. What rent would I suggest? I would certainly suggest one thing, and that is that, in considering what is a proper rent to charge, one should eliminate all questions of scarcity. If, as is the case under Clause 9 of this Bill, it is left to the court to decide what is a proper rent, obviously the court must say that the proper rent is the market rent, what the landlord could obtain from a tenant if the premises were vacant. Under present conditions, however, that is bound to be an inflated rent, inflated by the fact that there is a shortage of accommodation to let and that the landlord can obtain considerably more than the intrinsic value of the premises for letting. But that is not all. A court is also bound, under Clause 9, to take into consideration the condition in which the premises will be when the initial repairs have been carried out by the landlord. The rental value will, therefore, be increased to that extent.
There is a further respect in which the rent will be increased, and that is that, where the tenant has at his own expense made improvements in the premises, the condition of the premises after the improvements have been carried out will be taken into account in assessing what is a proper rent. So that the more the tenant has himself spent in improving the premises, the higher will be the rent he will be called upon to pay hereafter if he desires to remain in occupation. All those are matters which I suggest call for close inquiry in the next stage of the Bill—and I will hope that we shall enjoy many happy and profitable hours in the 125 next stage. I see that the noble Earl the Government Chief Whip is looking at me apprehensively, but I can assure him that we shall need a good deal of time to discuss these matters adequately when we reach the next stage.
There is one other point. I welcome very much indeed the fact that we have a definition of "good repair" which, while it was not very appropriate in another measure, is quite useful in this. It assists the tenant and reduces his liability, but it assists only a tenant who finds himself able to take advantage of the provisions of this Bill. There will be many tenants who will find that, when the court has assessed the rent that they should pay, when the court has assessed how much in addition they have to pay in respect of the tenants' initial repairs and what they will have to pay having regard to the expenditure which they themselves have put into the premises, the rent will be too high for their means and they will not be able to take advantage of the terms of this Bill. In such a case they will lose also the concession which is made in respect of dilapidations. I think I am right in saying—and I hope that the noble Lord, Lord Mancroft, will put me right if I am wrong—that if they find themselves unable to take advantage of the so-called beneficent provisions of this Bill, they will in addition be penalised by being made responsible for the whole cost of the dilapidations; they lose the concession which the noble and learned Lord dangled in front of me, of their being responsible only for good repair instead of the more rigorous provision with which they are under contract to comply.
It is a disappointment to me that the Government have not found themselves able to deal with this vexed question of dilapidations. If the noble Lord who is going to reply wants to talk about sanctity of contract, I agree that he can. People have accepted this provision, and have done so for many years; but I did make the point at the beginning of my remarks that the State has found it necessary to intervene in the interests of equity and adjust these relationships. All the various measures that I have quoted have some reference to the question of repairs and have for their object the lightening of the burden on the tenant. I am disappointed that something has not been done in this measure to lighten the burden of dilapidations on a tenant. They 126 can be an instrument of oppression and extortion—they frequently are. A tenant is lulled into a false sense of security and then, at the end of his tenure, he is faced with a bill for dilapidations that it is quite impossible for him to meet. If only this obligation to put the premises into good repair, having regard to the age, character and so on of the premises, could be substituted for the obligation to carry out the, terms of the stringent leases into Which most people do not appreciate that they have, entered, then I think that the Government would really have done something in the interest of the tenants. I believe that that is one of the most important and vital questions in connection with the relationship between landlord and tenant.
The provisions of Part I are complicated. Most tenants will find it necessary to take legal advice and to get assistance. I see that under Clause 52 of the Bill the jurisdiction of the county courts has been widened and it is possible to go to the county courts instead of the High Court on a number of matters in which previously one could get relief only in the High Court. That is all to the good, but even county courts can be expensive. It makes it all the more necessary, if full advantage is to be taken of this measure with its frequent references to the courts for the settlement of questions, that the operation of the Legal Aid and Advice Act should be extended to the county courts. That is all I wish to say on Part I of the Bill, although I warn noble Lords that we may say a good deal more on the coming stages. I think I have covered what I regard as the main defects of Part I.
Now I come to Part II. Let me say at once that Part II represents a big step forward as against the ineffective provisions of the Landlord and Tenant Act, 1927. It will be generally welcomed by the business community and, may I say, also by professional people like myself, who now feel that we are not likely to be turned out of our premises at the end of our term through excessive demands for rent; we shall have an opportunity of getting proper adjustments of rent. But there are still a number of defects in this measure; there are too many opportunities for landlords to evade their obligation. I want to mention just two of them, but there are 127 others. One relates to Clause 30 (1) (d), where a tenant could have exercised an option but did not. The noble and learned Lord the Lord Chancellor dismissed that matter in a very few words, saying that the tenant had had his chance; that he had not taken advantage of it, and that that was that. But I think the clause will need much closer examination. There may have been good reasons why, at that time, the tenant did not exercise his option; or the option may have been on terms which were difficult—I think the paragraph provides for that. At any rate, it may have been difficult for the tenant at that time to decide whether or not he should exercise the option; or he may not have exercised it on account of an oversight. Very often options have to be exercised within six or twelve months of the date when they become operative, and a good many tenants overlook that fact. Therefore, to make that an absolute bar against the opportunity of getting a renewal is, I think, going too far.
The other provision which I consider defective is Clause 30 (1) (h), which deals with the case where the landlord intends to occupy the holding for the purpose of a business to be carried on by himself in those same premises. I wonder whether it is really intended that it should be possible for a landlord to step in in premises which have been carried on for, perhaps, thirty or forty years by a tenant, to carry on the same business, to take advantage of the goodwill that has been established by the tenant, and to pay him two years' rateable value in compensation. Let me take a very fanciful example. I know that it is the policy of a great many large retail stores to take leaseholds, rather than to acquire a freehold property, with a view to conserving their capital. I think that is sound business, especially where they can earn more with their capital than the capitalised value of acquiring the freehold. Let us take a Woolworth's stores. They may have taken a lease of twenty-one years—I admit that that is fanciful. The landlord can then, at the end of the term, say, "I want to carry on these stores." What is to prevent him, after three months, offering the stores for sale to, let us say, Marks and Spencer, who might be very ready to buy, at an enormous profit to the landlord? There is nothing 128 in this Bill which prevents that at all. The landlord refuses to agree to the renewal because he desires to carry on the business himself; he has carried it on himself, and then he disposes of it at a very nice profit, paying poor Woolworth's two years' rateable value for all the goodwill that they have established. I said that that was a fanciful illustration because I did not want to specify any particular business; but one can imagine hundreds of businesses where that could well happen—where a substantial goodwill has been established over the years; where the landlord takes possession, and perhaps even runs the business and uses the goodwill for himself; but even more, where he disposes of it. I feel that that particular provision will have to be very carefully scrutinised, to ensure that landlords do not take advantage, merely on payment of what the noble and learned Lord called an arbitrary amount, of the efforts which a tenant has exerted for years in building up a business.
On the question of the compensation, I admit that there is a good deal to be said for having something which is not subject to legal decision; which is certain, and where everybody knows what he is going to get at the end of the term. But the amount provided is certainly not generous—I would characterise it as mean. To pay for a goodwill which has been established for more than fourteen years an amount equal to two years' rateable value is quite inadequate. The noble and learned Lord has issued a challenge which I am going to accept. I hope the noble and learned Lord will in due course see on the Order Paper a proposal which will be put forward from this side, which I hope will be equitable and rather more generous than the present basis to those who have built up a goodwill. On the other hand, I can equally see that in certain cases two years' rateable value will be too much to pay. There are cases where there is no particular goodwill attached to the letting at all, where a tenant can equally go elsewhere and will not be hurt very much—all he will suffer will be the removal expenses and the cost of circularising his clients or customers. In those cases the amount provided is quite adequate. The noble and learned Lord is quite right in saying that this is an arbitrary rate, and if it were reasonably generous perhaps there would be something to be said for it; but in the cases 129 that one wants to protect it is highly ungenerous.
There is one further point on compensation—namely, that it is possible for the parties to contract out. I have no doubt that landlords will be quick to appreciate that if they grant leases for less than five years they can contract out of compensation altogether. Why it is necessary to permit of this contracting out I do not understand. Under the Bill as it stands, the compensation where premises have been let for under fourteen years will be one year's rateable value. Why is it necessary to admit of contracting out at all? Is it not quite certain that a great many landlords will not in future grant leases for more than the five years, and that it will become common form to insert a provision that no compensation is to be payable at the expiration of the term?
My Lords, I would point out, also, that in connection with business premises the tenant is entitled to be compensated in respect of improvements—that, of course, goes back to the Landlord and Tenant Act, 1927. If the tenant has carried out repairs to the premises he gets some benefit from it at the expiration of his lease. Why is not the same benefit conferred upon tenants of dwelling-houses? I know the argument: that the tenant has done this for his own purposes; that it may not be of any particular value to the landlord, and that he knew when he did the work that he would get no benefit from it at the expiration of his term. But all those points are equally applicable to the case of business premises. Why is it, then, regarded as right that a tenant of business premises should be compensated in respect of repairs and not a tenant of residential premises?
There is one point in the miscellaneous provisions, Clause 54, with which I must deal. This clause was inserted at a fairly late stage in the progress of the Bill in another place in order to meet the point that landlords might get an order for possession, representing that they needed possession in order to carry out redevelopment and so on, by misrepresentation or concealment of material facts. It provides for the payment of compensation as damages or loss where a landlord has been found by a court to have been guilty of such misrepresentation or concealment of material facts. But there may be other cases where these conditions 130 do not obtain, where a landlord has not been guilty of misrepresentation but has nevertheless obtained possession by representing that he is going to carry out redevelopment, and, in fact, he abandons the project. Having got possession, he is able to sell the premises with vacant possession more profitably. He may have had the intention at the time and, as the noble and learned Lord says, may ever have incurred expenditure for the purpose of carrying out this redevelopment, and then he does not proceed. He finds it may pay him better to sell the premises as they are. Is the tenant then to have no remedy at all? If, for instance, after two years, it is found that the premises have not been redeveloped although the landlord has represented to the court that he needs possession for that purpose, and that they have been sold and are occupied by somebody else, surely the tenant ought to have the same right to get damages as if the landlord had obtained possession by misrepresentation or concealment of facts. This is another matter which will have to be considered in due course.
There is one very strange lacuna in this Bill which purports to give protection to tenants of long leases at low rents where the rateable value is within the rent restriction limit—a very large class. It gives protection to all business tenants but it leaves out altogether tenants of dwellings where the rateable value is higher than the rent restriction limits. I wonder why it should have been just this one class of person who is left out. It may be said that we are giving protection to the people who are least well off, the class of people which is also rent protected. We are also giving protection to people who are very well off, because there is no limit as regards the size of business premises. It will apply to Woolworth's and to enormous industrial undertakings, whatever the rent may be. But if you happen to be living in a house where the rateable value, in London, is over £100 a year or, in the country, more than £75 a year, there is no protection at all. Noble Lords opposite pose as champions of the middle classes, but these are the middle classes. They are left high and dry, and I want to say a word on their behalf even if noble Lords opposite will not.
I am thinking of the person with £1,000 or £1,500 a year, who has to maintain appearances in order to preserve his job, 131 who is living decently in a nice house and is probably paying £20 or £15 a year ground rent. I have that kind of place very clearly in mind. A district such as Dulwich, where I lived for many years, is full of such people, and leases are coming to an end there. Let me say that I have no personal interest though I have a lease in Dulwich which is not coming to an end. Dulwich is full of these people and their leases are coming to an end, many of them in the next few years. The rateable values are possibly in many cases higher than the rent restricted limits, and when their leases come to an end these people will be called upon to pay, instead of £15 or £20 a year, £200 or £250 a year plus rates, plus whatever they may be asked to pay in respect of initial repairs.
I submit that that is a crippling burden on those people, who are probably sending their children to Dulwich College, and so on. Why should they not receive some protection as well? Why should they be forced to go out? Probably they are living in this area for the specific purpose of being near a school, for that is the reason which brought me to Dulwich, to be near a school for my own son. Many people are in that position there. Why should they not have some security of tenure at the end of their term? Are they not as deserving as any other section of the community? I propose in due course to see whether we cannot discuss this matter more fully, to see whether in some way such persons cannot be given the security which is given to persons of lower incomes. I recognise that the easy answer is that this might be equivalent to extending the provisions of the Rent Restrictions Acts, but I do not agree. It need have nothing to do with rent restriction. In some way, somehow, we ought to give these people the security which we are giving to the lower paid tenants and to all tenants of business premises.
I hope I have given to the House an indication of the kind of scrutiny which it is intended to give to the Bill at its later stages; and while I suggest that the Government should be given full credit for their intentions in having introduced the Bill, I do submit, most solemnly, that unless the Bill can be improved along the lines I have indicated and in other ways, 132 it will be a snare and a delusion. It will be something which is held out to a good many people as a measure which is going to be of benefit to them, but they will find that they will not be able to take advantage of it. I want to say once more what I said on another occasion in connection with another Bill: I hope that the discussion here will be not only a full one but a fruitful one. The objections which I have put forward and which other of my noble friends will be putting forward to this Bill are all designed with the object of carrying out the purpose for which this Bill is introduced, of providing greater equity for a number of people who find themselves handicapped in the negotiations that take place as between themselves and a person who is in a superior position. We are endeavouring to adjust the balance, and I say that if together we can make this Bill as near as possible an agreed measure, it will go out as one of the most beneficent Acts that this Government will have carried during their term of office. But if we are going to deal with it in the way that other measures have been dealt with in the past, then all I can say is that noble Lords will be defeating the purpose for which the Bill is introduced, and they might just as well have saved the time of themselves and of other noble Lords in the House.
§ 4.40 p.m.
My Lords, this is certainly a long measure about a very complicated subject, and I should like to join with the noble Lord opposite who has just sat down in thanking the noble and learned Lord who sits on the Woolsack for the very clear exposition which he gave of the complex matters covered in the Bill. My one regret is that, this being a matter of considerable importance, so few of your Lordships seem to be taking part in the discussion. That seems to me to be a pity, because there must be, on both sides of the House and in all Parties, a considerable amount of practical experience, from the point of view of tenant as well as from that of landlord. However, I do not propose to try to make up for the deficiency by delivering a lengthy speech myself. I will be as brief as I can be.
I should, at the outset, like to welcome the Bill very much indeed. To me, it seems to be high time that there 133 should be some long-term legislation on this very difficult question. I think that Her Majesty's Government are to be congratulated on taking the matter up and bringing this measure before Parliament. Lord Silkin cast certain doubts upon the Bill. I think he said that it was rather a timid measure—or something like that. He also prophesied that in twenty-five years' time another measure would come before Parliament. I took it from that that he was saying that this Bill was not as good as it might be, and that we ought to have a measure that would go on indefinitely. I suggest that in matters like this there can be no finality. The noble Lord asked what will happen when the Rent Restrictions Acts come to an end. Surely there is no Party in Parliament which would not do something to replace the Rent Restrictions Acts when they do, in fact, come to an end.
As regards Part I of the Bill, I was interested to hear what the noble and learned Lord who sits on the Woolsack had to say about the question of leasehold enfranchisement. I listened with great interest to the challenge which he issued to noble Lords opposite, and I was glad to hear Lord Silkin reply. I think Lord Silkin said that, in principle, he was prepared to take up the challenge, though he felt that there was not time to develop the point now. My only observation upon that is this. Whilst a great deal has been said on various occasions in another place and also in writing in favour of leasehold enfranchisement, I have yet to hear or read anything which I should regard as a conclusive argument in favour of it. Therefore, I am glad that Her Majesty's Government have come down on the same side as the White Paper and have decided against leasehold enfranchisement.
There are two points with reference to Part I that strike me particularly. The first is that, whatever is done for the benefit of the tenant or the landlord, no obstacle should be set up which might hinder replacement or development of obsolete property, provided, of course, that the landlord really has in mind genuine redevelopment. It seems to me that this part of the Bill provides a reasonable solution of this problem, not only giving security to the tenant, but also helping the tenant in the matter of 134 dilapidations. The noble Lord, Lord Silkin, doubted whether it gives sufficient security to the tenant because, as he said, it does not give any more security than that of a statutory tenant. Surely, no tenant could expect more than that from a measure designed for the purposes of this one. On the other hand, as regards dilapidations, we can all very well recognise that, with the high cost of repairs and maintenance, there must be a number of tenants who for very good reasons—it may be because of costs, or the difficulty of getting work done during the war years or for some other reasons—have not fulfilled their statutory obligations. I think the passages in the Bill whereby tenants are to a great extent relieved under the initial repairs provisions show a reasonable and fair approach to that problem.
Before I leave Part I of the Bill, I should like to make one other point on the question of dilapidations. Lord Silkin expressed certain doubts with regard to this particular provision. He doubted whether it would not be too onerous on the tenants. This led me to think, as he was speaking, that if leasehold enfranchisement had in fact been adopted, the outlook for the maintenance of this sort of property would be even less good than it is under this present Bill, because if the tenants cannot afford to pay the increased rent to cover what the landlords are going to do now, how could they possibly afford to pay for the dilapidations, the cost of which would presumably fall entirely on them if they got leasehold enfranchisement?
§ LORD SILKIN
My Lords, I hope the noble Lord will not mind my interrupting for the purpose of correcting an impression which he seems to have got regarding what I said. I do not think I said that these particular provisions in the Bill as they are now are too onerous for the tenant who remains. What I said was that the tenant who finds that he is unable to take advantage of this measure and has to go because the rent is too high does not even get the benefit of the reduction in the standard of repair and has to carry out the full schedule.
I am grateful to the noble Lord for his explanation, but I do not think I really misrepresented him. I take it that the noble Lord means that 135 if the new rent is too onerous for a certain tenant so that he has to go, in any case he would not have opted for leasehold enfranchisement if that had been possible for him. But suppose he had stayed on. He certainly would not have been able to carry out these dilapidations himself.
Part II is a less controversial part of the Bill but, nevertheless, it is clearly of great importance. It is essential, in these days, to see that the disturbance of business premises is reduced to a minimum. It is particularly important now. If I interpret the Bill aright— and I am fortified in this by what the noble and learned Lord who sits on the Woolsack said—what this Part does is to give to the tenant that degree of legal right which he might otherwise have expected from a good landlord. Surely, no one could ask for any more than that. A good landlord certainly will not complain of that. The poor landlord has no right to complain and the tenant cannot expect any more. If a landlord needs his own premises for his own use or for development, I think it is reasonable that he should have an opportunity of getting possession of it, provided always, as is laid down in the Bill, that he has to pay compensation, even though it may be compensation at an arbitrary level. If, on the other hand, a landlord really wants to re-let and make profit on it, it is equally reasonable that a tenant should be allowed to stay on, provided he has been a good tenant and provided he pays a fair rent under present-day conditions. I do not propose to make any comment on the latter part of the Bill. Once more I would say that I welcome this measure and wish it well in its later stages.
§ 4.51 p.m.
§ LORD DOUGLAS OF BARLOCH
My Lords, it is common ground that some measure is needed to deal with the problem of what is to happen when long leases expire. It would have been interesting if the noble and learned Lord the Lord Chancellor, who moved the Second Reading, had given us some indication of the number of cases likely to arise during the next few years. I imagine that it is likely to be quite considerable. Broadly speaking, there are two alternative principles 136 which might be adopted when dealing with this question. One is to secure to the occupying lessee a continuation of his occupation merely as a licensee, without his acquiring any right of property in the premises. That is the kind of solution which is given in Part I of the Bill. The other alternative is to provide for the occupying lessee some kind of right of property in the premises. These are, of course, very different solutions. In the first case, where the tenant has a mere right of occupancy he has nothing which he can deal with or dispose of in any manner whatsoever, whereas if he acquires a right of property in the premises then he is able to dispose of them as he pleases.
The second solution can take more than one form. It can take the form of what is called leasehold enfranchisement—that is to say, giving to the tenant the right to purchase the freehold of the premises at some price which, of course, would have to be determined; or it may take the entirely different form of giving the tenant an opportunity of renewing the lease either for a term of years or in perpetuity—which again necessitates the determination of the rent which would have to be paid. That problem, however, also arises on the solution which has been adopted in the Bill; it is not evaded in either case. It is interesting to observe that the solution to which I have last referred is embodied in the Bill which has been introduced by the Government for the purpose of dealing with the problem of long leases in Scotland. There the lessee is given the opportunity of retaining the right of property in the premises by having an option to obtain a feu—that is to say, a perpetual tenure of the property. If that kind of solution were adopted, it would render the matter very much simpler than it is under the Bill which is now before us. It would avoid a great many of the complications and uncertainties which are inherent in the solution which the Government have put forward for England. In the first place, it would relieve the uncertainty about the duration of the protection which is contained in this Bill, because as the Bill now stands this rests upon the duration of the Rent Restrictions Acts.
The fundamental principle of this Bill is to extend the kind of protection which is already given by the Rent Restrictions Acts to dwellings below a certain rateable value and having a rent which is more 137 than the minimum figure mentioned in the Bill to dwelling-houses which now fall outside of it. Of course, nobody knows how long the Rent Restrictions Acts are going to continue, but there are good reasons why they should eventually be considerably modified. It might well be that the same kind of process will take place with regard to them as took place between the First and Second World Wars, when the limits of value of the premises to which they applied were gradually reduced until, in the end, the majority of houses which had been subject to control under the original Acts ceased to be so. If that should be the course of events in the future, the Bi11 which we now have before us merely postpones the finding of a solution to the problem of securing a continuation of tenancy to those who hold property under long leases at ground rents. It is probably going to make the solution of the problem more complicated than it would be if it were tackled immediately by means of a solution which would be permanent, so far as one can see, regardless of the future of the Rent Restrictions Acts.
More than that, the method which has been adopted in this Bill will lead to a great deal of dispute and litigation. It will make the county court a forum for determining a great many complicated questions which are not of a legal character at all—questions which are of a purely factual character, relating to the extent of the repair or disrepair of the premises, and to what is or is not a reasonable rent to pay for them. With all respect to the learned judges who sit in those courts, this is not the kind of question which ought to be settled by tribunals of this kind. They are not, as I say, legal questions; they are largely technical questions. If they are going to be dealt with in the county courts, what is likely to happen is that the parties will each produce a number of expert witnesses to give technical evidence about the questions at issue; and those expert witnesses, as is the usual thing in matters of this kind, will differ from each other to an enormous extent. How, in those circumstances, a judge or arbitrator arrives at a solution of the problem is one of those things which is never revealed to us, but we often suspect that it is arrived at by a process, as it is called, 138 of "splitting the difference." All this is a most unsuitable basis upon which to place a measure which will deal ultimately, I suppose, with millions of properties, and which is intended to secure justice and equity as between landlord and tenant. I do not want to detain the House by dealing with matters of more detail—they will have to be scrutinised as the Bill passes through its remaining stages—but I want to say quite clearly that I believe that it is an unfortunate solution which has been adopted, one which will lead to a great deal of uncertainty, a great deal of litigation, and probably a great deal of hardship.
§ 5.3 p.m.
§ LORD OGMORE
My Lords, I shall not detain my noble friend Lord Mathers long from a consideration of the Scottish Bill, because we on this side of the House feel considerable sympathy with him, and we believe it is unfortunate that the Committee stage of the Bill in which he is interested has had to be postponed. However, I feel it desirable and, indeed, necessary, to make a few observations to your Lordships on this highly important Bill, which, although it is regarded possibly as a legal Bill, in the sense that only some lawyers—and I stress the word "some"—can understand it, is in fact going to affect millions of people in this country, in one way or another, over the years, and, therefore, it is a Bill in which the layman should take a considerable interest.
I propose to say a few words on the question of leasehold enfranchisement. I agree with my noble friend Lord Silkin that it is really rather a waste of time to speak at great length on leasehold enfranchisement, but the noble and learned Lord, the Lord Chancellor, has issued somewhat of a challenge to us on the subject; he has twitted the Labour Party and made some reference to the Liberal Party on the fact that neither of them have ever brought in a Bill for leasehold enfranchisement, and that the Labour Party, in 1951, for the first time incorporated in their electoral programme a reference to this subject. Therefore, in the circumstances, as this has been made somewhat of an issue—and, indeed, in some way it is the alternative to this Bill, and, in my view, a better alternative—I feel it is necessary for me to devote some little time to the reasons why the 139 Labour Party propose to bring in leasehold enfranchisement.
The Leasehold Committee which considered this Bill, as the noble and learned Lord on the Woolsack rightly said,' by a majority came to a conclusion that there should be no leasehold enfranchisement. But the minority expressed the view that there should be a right of compulsory enfranchisement, at all events so far as occupying lessees were concerned. There was, as the Government White Paper (Command 8713) says, a considerable difference of opinion as regards the sanctity of the original contract, and as regards the historical background of the whole of the leasehold system. I believe that the minority were right, and that the true method of dealing with this vast problem should have been by leasehold enfranchisement. But I should have gone further than they were prepared to go; I should have gone all the way that the Labour Party officially are prepared to go, and said that not only should the occupying lessee be permitted to enfranchise his leasehold, but the non-occupying lessee should, as well. I have an interest which I must declare, although it is a small one. I am a ground landlord in a small way, but, so far as I can see, I am not affected by this Bill. I am also the intermediate tenant, so to speak, the non-occupying lessee, of various houses in Wales—in fact, it is difficult to own property in Wales without being a lessee; and I am, under Part II, an occupying tenant. So that, although in all cases I have quite a small interest, I feel it only right to mention the fact that I have such an interest. I may say that these interests have not in any way affected my view, because for many years before I had any interest I was strongly in favour of leasehold enfranchisement.
Before the war I was legal adviser to the enfranchisement association in South Wales. We prepared a Bill, which no doubt the noble and learned Lord, the Lord Chancellor, could find in the files, suggesting various ways of carrying out leasehold enfranchisement. We sent a copy of that Bill to the then Prime Minister, Mr. Chamberlain, who was unable to see us on the matter. We also sent a copy to the then Attorney-General, Sir Donald Somervell, who did see us, and met us kindly and sympathetically, 140 but without any result. So that for many years before I had any leasehold or any other property, I was strongly in favour of leasehold enfranchisement. In answer to the noble and learned Lord on the Woolsack, I would say that the reason why the Labour Party did not have in their electoral programme a reference to leasehold enfranchisement was, I believe, that the urgent problem arose in South Wales, and it was from there that the impetus to do something about this matter came. My noble friend Lord Hall, who knows the position in South Wales, and the noble Lord, Lord Aberdare, opposite, will, I feel sure, agree with me that for many years it has been a highly vexed problem in that part of the world.
It arose in this way. On the break-up of the tribal system in Wales—that seems to be going back a long way, but one has to go back a fair way—large areas of land were concentrated in the hands of a very few people. I think it would be doubtful whether many of those people in whose hands the lands were concentrated could show any great title to them, for very often they were the chieftains, the equivalent to the chieftains of the Scottish Clans, and they held the land, if they held it at all, as chieftains of the Clan, and not in any shape or form from individual rights to the lands. There were no individual rights to the land in Wales in those days. You could own or occupy land only as a family; you could not occupy it at all as a stranger. However, when the tribal system was broken up, large areas of land became, as it were, vested—wrongly vested sometimes—in a few hands; and Scottish and Irish gentlemen were able in the course of time to marry some of the heiresses in whom this land became vested and quite a number of Scottish and Irish noblemen and gentlemen became the great landlords in South Wales.
The Industrial Revolution came to Wales much later than to England. It did not really come to its full fruit until after 1825, and by this time some of the big landlords who had obtained by marriage and other means a great deal of land in South Wales had decided that a good method of tying up their land was by letting it in small plots to persons who wanted to build houses. Now the great expansion started about a hundred years ago—about 1850. The result is that it is only lately that this problem has 141 become acute in South Wales. There was not any great anxiety. As I have said, I myself was connected with a leasehold enfranchisement association before the war. Many of us foresaw that this problem would arise acutely in the 1950's, but many people did not; and it was only after the war, when large numbers of these leases were going to tumble in, that in South Wales pressure was brought to bear upon Members of Parliament of all Parties to deal with this particular problem. I remember that Mr. David Llewellyn made it a very strong plank in his electoral programme that the Conservative Party (or, at all events, he him self) were going to urge leasehold enfranchisement if they got back into power. I do not know what will happen to those Conservative Members of Parliament in South Wales—there are not many of them, but those there are—when they next seek election, because they were definitely pledged to leasehold enfranchisement. In fact, I think it is fair to say that in many parts of South Wales if you were not pledged or in favour of leasehold enfranchisement, you stood little chance, whatever your Party was, of getting back at an election.
Now the Government have not dealt with this problem in the way I should have liked. They have not gone in for leasehold enfranchisement. The Lord Chancellor has, as it were, challenged us to suggest a method by which the problem could have been dealt with on the lines of leasehold enfranchisement. I will not spend any time on it, but in order to show that there are methods in which this could have been done I will say that the following is one way and there are others. I am not committing the Labour Party, because they have not as yet come down one way or the other in regard to any particular solution. This is my own. After all, there is no onus on Parties in opposition to state the particular means by which they propose to carry out an object which they think desirable. I would give the lessee the option either of turning his ninety-nine year lease into a 999-year lease, with an adjustment of the rent corresponding to the decline in value of the rent from the time at which the property was originally leased as compared to its present-day value; or, secondly, I would allow him to purchase the property on the basis of twenty-five years' purchase. In South Wales, and the 142 mining districts particularly, there have been quite a number of purchases in recent years, and they have been largely on the basis of twenty-five years' purchase —that is to say, twenty-five times the annual ground rent. Noble Lords opposite may take objection to that, but I have been asked for a suggestion, and for what it is worth I give it, believing that to give the tenant an option in this way would probably do justice to the parties. You cannot insist upon purchase by the tenant, because, of course, he may not have the money to do so and he may not be in a position to burden either himself or the property. The property may be under mortgage with a sum of capital repayment.
The position at the present time is this. The Conservative Party, as my noble friend Lord Silkin rightly said, has had little concern for large numbers of people who are what one might call members of the middle class. For some reason they seem to regard a person who invests in property as being someone for whom one should not have regard or concern, and a person who invests in stocks and shares as being a highly estimable person whom one should safeguard in every possible way. Under this Bill, the one man who is not protected is the man who has capital in the property. The original ground landlord or his predecessors in title had only a piece of land. It may have been rough mountain land which had to be cleared and levelled by the person who built the house, and the lessee had to build the house and invest his capital in it. The only capital the ground landlord had, as I have said, was often a rough piece of ground with very little agricultural value, and a title which he would, perhaps, find it difficult to justify, if he had to.
Now to-day the intermediary lessee—that is to say, either the descendant of the person who invested the large amount of capital in the property or someone who bought from him—is the one person who, under this Bill, is not protected at all. I cannot understand the moral, ethical, or any other justification for this. The ground landlord, whose original piece of agricultural land, or, it may be, mountain land, was taken, and who has had the rent (although the rent has not kept pace with the decline of money values) is going to receive a property and what is in effect the annual value of the 143 property, or possibly even more, according to the decision of the court or the bargain between the parties. An occupying tenant who also has no capital whatever in the property—he is merely occupying it and paying a weekly or monthly rent—is going to have an interest given to him by the Bill. I do not complain about that; I think he should. But I do not see why the only man who has any capital in it, whose predecessors built the premises in which the occupying tenant lives, is the only man who is not only disregarded by this Bill in the sense that he is not able to get any extended lease, but is severely prejudiced by it.
I should like the noble Lord, Lord Mancroft, to tell me what is the position of the unfortunate man or woman, as the case may be, the lessee, who does not occupy the premises but is the intermediary, the intervening lessee—neither the ground landlord nor the occupying tenant. He is the lessee, the unfortunate person whose capital is in that particular property. Throughout the years, as we know very well, many men of small means, particularly at one time though not so much to-day, invested in house property, sometimes in shop property, as a safeguard for their old age and as some form of emolument which their widows would receive upon their death. What is the position of such a man, or the widow of such a man, under this Bill? It is quite obvious that they are going to get no right to any fresh lease, and no right to any compensation under this Bill.
I should like to know what are their obligations. Are the lessees' covenants to be released? Because I can appreciate the position of many poor people, widows and the like, people of very small means indeed, who lose their property, who have no lease but who have to spend large sums upon putting the property into good order and condition. So far as I can see—I stand corrected if the noble Lord will correct me—this is a point which has not been looked at by the Government at all. They have said: "We are going to give the ground landlord a very handsome present." It is true, you may say, that he would have got that anyway, without this Bill; but, after all, this is a reforming Bill. He will receive a handsome 144 present which he would have received anyway. We are even going to give the occupying tenant of business premises a definite interest, maybe a fourteen years' lease, which he would not otherwise have got. If he does not get a lease, then he will have a right to a small amount of compensation from the court—two years' rateable value.
But what of the lessee, what of the poor widow? Does she have to pay out hundreds of pounds to put the property into the condition in which it would be if it had not had about a hundred years of life? Your Lordships know that conditions and covenants in a lease almost invariably prescribe that the lessee shall place the property in good and tenantable repair and condition at the end of the lease. Is this woman or this man, as the case may be, to do that under the terms of this Bill? That is a problem which will affect many thousands of people. I do not think that they have realised this yet, but, when they realise it and when they see their occupying tenant and the ground landlord doing very nicely out of this Bill while they have to spend hundreds of pounds, or, in the case of large properties, thousands of pounds, to put the property into good repair for the benefit of the ground landlord and the occupying tenant of the building, there will be a storm of protest —and I hope there will be, because I think the Government have treated those people very badly indeed.
I was going to say something about the compensation provisions, but my noble friend Lord Silkin has dealt with them adequately—indeed, I thought, very well. The noble and learned Lord challenged us; my noble friend Lord Silkin has taken up the challenge and he will put down compensation provisions at the Committee stage. The noble and learned Lord on the Woolsack asked us whether we could provide a logical and rational way of compensating the tenants. It is difficult in an illogical and irrational Bill to be either logical or rational, but we will come as near to it as we can. Finally, I would ask this question of the noble Lord who is to reply. Clause 42 deals with the exceptions to business and other premises which come under Part II. As the noble and learned Lord said in his speech, there are certain premises, certain holdings, to which this Bill does not apply—agricultural holdings, mining 145 leases and one or two others. Among others is:a tenancy of premises licensed for the sale of intoxicating liquor for consumption on the premises,in other words, a hotel, an inn or a beer-house. There is an exception to an exception, because certain types of hotels and other places where liquid refreshment is sold do come within the provisions of the Bill. They are seasonal hotels, residential hotels, restaurants on State railway stations and so forth. They come within its scope, but, generally speaking, the ordinary hotel, the beer-house, the ale-house and the inn, do not come within it.
I ask this question purely from a point of view of interrogation—I am not criticising. I want to know why it has been thought necessary to exclude hotels and inns from the scope of the Bill. It is true they have a licence and there are certain provisions for compensation if the licence is lost. As your Lordships know, owners of breweries, tenants and so on—I suppose they still do; they certainly did—used to insure against the possibility of losing the licence. But there are still the premises themselves. It is true that if the lease comes to an end there may, or may not, be some provision for compensation for the tenant in respect of the licence, but there still remains the building itself. I should have thought it was desirable that the building, as apart from the licence of the hotel, should have the benefit of Part II of this Bill in the same way as other business premises have. Possibly the Minister will be able to persuade us that this is not so and that, there are good reasons for it, but, at the moment, I must confess I do not see them. That is all I have to say. I am sorry I have detained your Lordships so long, but this is a very important Bill which will affect a large number of people, and I have no doubt we shall consider it at length and in detail on the Committee stage.
§ 5.28 p.m.
§ LORD MANCROFT
My Lords, it now falls to my lot to wind up this interesting debate, and to try to answer some of the points which have been raised in the course of it. I will try to do it as briefly as I can because we have important Business still upon the Order Paper. If I fail to answer many of the 146 more detailed points that have been raised, it is purely because of the time factor and not from any desire to evade the issue. I promise noble Lords that all their points shall be eventually dealt with.
May I begin by saying that, unlike the noble Lord, Lord Ogmore, I have no interest to declare in this matter. I say that advisedly, because the noble Lords, Lord Ogmore and Lord Silkin, have both expressed a desire that I should have an interest in this matter, for I think I am the owner of one of the specific types of leases that are not included in this Bill and which noble Lords opposite wish to see included. I am sorry that my noble landlord, Lord Portman, has had to leave the House, but he asked me to apologise to your Lordships for so doing. He has a medical appointment this afternoon but I think he would have had something to say about this. The reason why this type of house—what I may call (to use Lord Silkin's expression) the "Dulwich" type of house—is not included is not, as was darkly hinted from the other side, that the Government think, on the one hand, the relationship between landlord and tenant is so good that nothing need be done about it, nor that the Government think that the relationship between landlords and tenants of this type of house is so bad that it is past praying for. I can state this personally (it is not often that one has the opportunity to pat one's landlord on the back in public): four generations of my family have been in the same house for which they have cheerfully paid rent to four generations of Lord Portman's family.
The point is that this class of house to which the noble Lord refers is a type of house with a type of owner and a type of occupier who, we feel, can well fend for themselves in open negotiation in a much freer market than is open to those interested in the type of house for which we are now legislating. We are trying to assimilate houses which are not within the Rent Acts to houses of a similar type occupied by similar types of people which are subject to the Rent Acts.
§ LORD OGMORE
I take it that the noble Lord is now dealing with my noble friend's point: that there is no reason why these provisions should be restricted to rental controlled houses. I did not 147 make that point. I am concerned with a different class of tenant, and not with the rateable value of the house.
§ LORD MANCROFT
I hope noble Lords opposite will not mind if I express a little surprise at finding this sudden championship from the Benches apposite of the type of people who live in this "Dulwich" type of house. This cry of grief for the middle classes from the Party which spent six and a half years doing their best to strangle the middle classes seems to me an odd but welcome conversion, and I am happy indeed to hear it.
I think the general attitude of the House has been one of wholehearted support for the intentions of the Bill, for which we are grateful, coupled with reasoned and temperate criticism of the means by which we hope to achieve its purpose. I think that we on this side of the House are justified in claiming that this is a much-needed and, indeed, a courageous measure, which I would ask your Lordships to be good enough to consider, not alone, but in conjunction with the other housing and building measures which the Government are bringing forward. This Bill is but another step forward in a series of measures designed to simplify, to modernise and to humanise the relationship of the citizen with his roof. I should like to echo the sentiments of my noble friend Lord Rochdale, in his very clear speech, when he pointed out that this Bill merely gives a legal right to the tenant to treatment which he would have received from a good landlord in any case. That, I think, covers several of the points which have been raised in the course of this debate. It leads naturally to a corollary, which is that the good landlord must therefore be no worse off than he is now. We have sought throughout this Bill to maintain a proper balance between the landlord and the tenant, and we most seriously suggest that this balance between the landlord and tenant is an important part of our social structure. 148 We feel that any attempt to upset that balance unduly should be resisted.
My Lords, there are three main points to which your Lordships have directed particular attention and with which I should like to try and deal. The first, of course, is the question of leasehold enfranchisement. My noble and learned friend on the Woolsack threw out a challenge to noble Lords opposite; he asked them to clarify their position with regard to leasehold enfranchisement. Noble Lords opposite responded to the challenge, but I am sorry to say that I am still as much in the dark as regards their final attitude as I was before my noble and learned friend threw out his challenge. We know what the Labour Party's official views are—we have been reminded of those. The views of the noble Lord, Lord Ogmore—the South Wales school—were also familiar to us. We have heard his views before. He has repeated them perfectly clearly, and he has developed the "Ogmore plan," which goes a little further than his Party view. I follow, also, Lord Silkin's carefully phrased suggestions, but the trouble with the noble Lord, Lord Silkin, is that he is always in danger of letting common sense run away with him. He seems often to be wrestling with the difficulty of reconciling his own considerable experience and knowledge in these matters with current Socialist dogma. He gave a few coy glances in the direction of leasehold enfranchisement, but he did not actually embrace it with any noticeable enthusiasm.
§ LORD OGMORE
When the Conservative candidates in South Wales supported this dogma, were they also talking with their tongues in their cheek, or were they being honest and foolish?
§ LORD MANCROFT
When the noble Lord says "also talking with their tongues in their cheeks." I was not suggesting for one moment—
§ LORD MANCROFT
I beg the noble Lord's pardon, but he did. I do not say that the noble Lord was speaking with his tongue in his cheek, or being in any way insincere. But I think that this question has, as the noble Lord, Lord Ogmore, says, now become academic. I myself 149 do not propose to enter into the pros and cons of leasehold enfranchisement. I stand firmly by the decisions and arguments in the White Paper.
I believe that we have an absolutely unanswerable case on this matter. I believe that the case is unanswerable on two grounds: first, on the ground of fundamental justice, and secondly, on the ground of practicable workability. In neither case do I believe that there is any argument to be advanced now for leasehold enfranchisement. I was surprised, on the last occasion that we debated this subject, to be told that the feeling in favour of it was much stronger in the country than this House seemed to think—I believe that the noble Lord, Lord Ogmore, told us that at the time. He may well be right there; I do not deny that for a moment: it is a matter of opinion. But I must say, although I have been making political speeches for the best part of twenty-five years (I started in the 1929 Election, on a half-day from school, unknown to the authorities) that I have never once been asked at a political meeting a question about leasehold enfranchisement; nor have I heard it raised, though I have spoken in South Wales. I was asked by friends at the last Election to speak there. I spoke on behalf of three candidates, all of whom lost, and I have not been asked to speak again. But I never received any indication of urgency in regard to leasehold enfranchisement, and I believe that once this Bill is passed into law we shall hear little or nothing of it in the future, because this Bill really achieves a great deal of what was sought to be achieved by those who support leasehold enfranchisement; and I believe that many of the difficulties which were canvassed in those days are now met. I believe that this Bill provides the best of both worlds —namely, security of tenure and justice between landlord and tenant.
Now, my Lords, I turn to the second major point which has been raised, the question of the rent formula in Part I of the Bill. The chief point of criticism made by noble Lords opposite is that the contemporary market rent is going to be too high. They argued that most tenants at present enjoy Rent Acts protection—they are paying rents related to 1914 or 1939 value, or somewhere in between—and that the Part I tenant will not only have to pay a contemporary rack rent, 150 instead of a ground rent, but must also bear the burden of the cost of initial repairs. Noble Lords opposite have argued that the rent should be fixed at, say, 1939 value, or tied to the value of rents of houses of a comparable type and size in the neighbourhood which are subject to the Rent Acts, and which were first let before the war. All this leads up to one thing: to the fact that the tenant should be saved from paying a contemporary rent.
My main objection to that would be that it would upset the balance which, as I have told your Lordships, this Bill is trying to bring about between the interests of the landlord and the tenant. After all, the Bill gives security of tenure to the tenant and to do this it deprives the landlord of the right to vacant possession at the end of the ground lease. I cannot for the life of me see any reason why the landlord should, in view of that, be compelled to accept an artificially low rental, particulary since he proceeded on the justifiable assumption that he would have a right to vacant possession when the ground lease ended, and that he would either be able to sell or to let at a contemporary rent. I quite appreciate that this is a difficult point, but at any rate the price that the tenant will have paid will have been reflected in the fact that his interest was to come to an end on the expiry of the ground lease. We are, as I say, trying to keep the balance between the two, and we think that what we have decided to do is the right thing. There is one other point which I admit does not stem logically from that argument but which I think is important. I feel that it is desirable to avoid creating any more rent anachronisms than we can possibly help. Heaven knows! we have got plenty of trouble, difficulty and complication as it is with rents. At the moment, millions of rents are out of date, and, except in cases of dire need, I think that to add, as some of these proposals would, further rent anachronisms would be most unwise.
I turn to the third point which noble Lords opposite have raised, together with my noble friend, Lord Rochdale—the question of the compensation formula in Part II. There are, as I understand it, two natural limits in any compensation formula like this. There is the loss borne by the tenant and the gain accruing to the landlord. If these were always equal and 151 always susceptible of quantification we should have no trouble; but unfortunately it is not so. The tenant's loss varies according to the goodwill he has been able to build, as the noble Lord, Lord Ogmore, pointed out; the landlord's gain varies according to his intentions—whether he intends to pull the place down or to work in it himself, or to live in it. The Committee on this point recognised the tenant's case for compensation. They were divided, of course, about the basis and, if I remember rightly, they could think of nothing better than the landlord's gain—that is to say the adherent goodwill basis, which proved unworkable in the 1927 Act. I repeat the argument which my noble and learned friend the Lord Chancellor put so cogently in his speech. This is admittedly an arbitrary decision but it is simple and certain. I think noble Lords will agree that, where the amount of the compensation which will be payable in the event of a renewal not being granted is certain and not open to question, agreement between the parties can more easily be reached, and the amount of litigation arising therefrom is likely to be a good deal less. People have a cut-and-dried plan to work to, even though it is admittedly arbitrary.
Arising out of this matter of litigation, I must now direct myself to the point made by the noble Lord, Lord Silkin, about legal aid. This places me in some embarrassment, because if the noble Lord, Lord Silkin will cast his mind back he will remember that, when I myself occupied the Benches behind me, I introduced a Motion drawing the attention of the noble and learned Lord on the Woolsack to the need for the introduction of the second part of the legal aid scheme. I would, on Lord Silkin's behalf, draw his attention once again to that, but I am afraid the noble Lord may give the noble Lord, Lord Silkin, and myself the same 152 answer as he gave to the noble Lord and myself on that occasion. I was convinced that the answer which was given was correct then, and is correct now; but I will, of course, discuss the matter with those who advise the Lord Chancellor and myself, and the matter will be gone into carefully. That, therefore, is the reason why we have come down, for want of any other decision and nobody having suggested a better one, upon this admittedly arbitrary arrangement. It is a matter of judgment whether a sum equal to the rateable value, to which the noble Lord, Lord Silkin, referred, is or is not too low a basis. But let me emphasise that compensation is not designed to recompense a tenant for loss of goodwill; it is intended to relate the loss of his right to a renewal: it is merely a contribution to the cost of setting up elsewhere, and this figure that we have arrived at is, we think, fair and reasonable.
There are a large number of other points upon which, I am afraid, I have not touched—the question of the non-occupier for instance. He is neither better off nor worse off under the Bill, and is not protected. I should like to go into that matter more carefully, if I may. There is also the question about hotels. I have attempted to deal with the three principal points raised, and the three principal points of interest in this Bill. I thank your Lordships for the consideration and kindness with which the Bill has been greeted, and I again recommend it most cordially to the House as a great step forward, as a most helpful and useful attempt to deal with a very difficult problem, and as one more example of the Government's determination to tackle wholeheartedly the problem of the citizen and his house.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.