Lords Sitting of 26 June 1967

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Coventry.
The Lord Glendyne—Sat first in Parliament after the death of his father.
The Lord Hayter—Sat first in Parliament after the death of his father.

IMMIGRATION: ADMISSION OF DEPENDANTS
2.36 p.m.
THE EARL OF ALBEMARLE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what documentary procedures are available to their agents in the countries of origin of immigrants for the purpose of checking the conditions and family relationships of applicants for vouchers and for discovering whether, for example, such applicants have adopted sons or step-sons approaching eighteen years of age who, though unskilled and not themselves voucher holders, would infiltrate our labour market.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE, HOME OFFICE (LORD STONHAM): None, my Lords; because a voucher is issued to a Commonwealth worker without regard to the number or age of his dependants. A person granted a voucher is, however, asked to complete a form (MIG.I) declaring what dependants he may wish to have admitted to the United Kingdom, and this information is kept on record. The children, including adopted children and step-children, of a Commonwealth citizen resident here are not entitled to be admitted without a voucher unless under 16 years of age, and we normally admit those who are older only if they are under 18 and coming with, or to join, both parents or the only surviving parent.
THE EARL OF ALBEMARLE: My Lords, I thank the noble Lord for his Answer, but I wish to ask a few supplementary questions to amplify that information, which is all I have been able to obtain so far. First of all, may I ask the noble Lord whether he is aware that the system at present existing can work only, as one might say, on a tight line through linguistic "know-how", which seems to be missing in this country among our officers—officers from the Department of the noble Lord—and among those who are employed as agents in the various countries of the Commonwealth? That position will continue, of course, unless the Treasury allocate enough pay for a great increase in linguistic officers. There are 600, and only 23 know Urdu or Hindustani. That does not seem to

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help very much in the case of the enormous sub-continent of India. The ports of exit are so numerous, compared with the few ports—
SEVERAL NOBLE LORDS: Order, order!
THE EARL OF ALBEMARLE: May I ask the noble Lord whether he is aware that, as the ports of exit in the Commonwealth are so many compared with the ports of entry in this country, something like a consular service in all those ports of exit would seem to be needed to meet what is required?
LORD STONHAM: My Lords, I am well aware that the existing system works only through what the noble Earl has called "linguistic 'know-how'", but that "know-how" exists. I mentioned in my original Answer the completion of a voucher form. When that is received the voucher holder has to fill in another form stating his dependants. That cannot be completed without linguistic "know-how" on the part of our various agencies abroad; and I have no information that lack of knowledge of Urdu or Hindustani is proving any handicap, either abroad or at our immigration posts in this country.
THE EARL OF ALBEMARLE: But, my Lords, how do we still manage to import 30,000 dependants every year when the vouchers for last year amounted to only about 5,000? The number of dependants is so enormous that it sounds as if the vouchers were granted without sufficient inquiry into the conditions of the families and what was likely to eventuate regarding the number of their dependants coming in.
LORD STONHAM: No, my Lords; I cannot agree with that. Not so long ago the number of vouchers issued was 20,000. It is now down to 8,500; and this has a general relationship to the number of dependants likely to come in. That is why we now ask voucher holders to complete a form stating the number of their dependants. Apart from that, however, we insist on the right of a man who is granted a voucher either to bring his dependants with him or to have them join him after he has settled in this country.
THE EARL OF ALBEMARLE: I thank the noble Lord for that answer. Lastly,
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may I ask him two further supplementary questions on unemployment? Is the noble Lord aware that there were over 17,000 seeking jobs on May 1, 1967? Why are vouchers to the extent of 8,500 still being granted when there is that amount of unemployment? In view of that amount of unemployment, does it not mean that there is unfair discrimination against our own people in regard to the sums of money that go out to these immigrants by way of National Assistance?
LORD STONHAM: No, my Lords; it does not mean that at all, because vouchers are issued only under either heading (a)—that is, when there is a job waiting for that person and he has been applied for by an employer℄or, under heading (b), which applies to doctors, teachers, nurses and so on and therefore does not add to unemployment. The noble Earl may recall that when the P.E.P. Report (which dealt particularly with unemployment) was issued, at a time when the unemployment situation generally was not good, there were only 6 per cent. of immigrants then unemployed.
THE EARL OF ALBEMARLE: I thank the noble Lord.
BARONESS SUMMERSKILL: My Lords, may I ask my noble friend whether investigation is made in the country of origin regarding the dependants of an immigrant for whom he has a financial responsibility but about whom he remains silent?
LORD STONHAM: My Lords, if the immigrant fills in the form and remains silent about dependants, it is unlikely that they will be admitted later if they come to this country. The purpose of filling in the form is to enable dependants to be checked when they come, so that we do not encourage young people to come in who are not dependants.
BARONESS SUMMERSKILL: Is my noble friend aware that he has missed the point? Do we allow immigrants to disregard their responsibilities in their own country with regard to their dependants?
LORD STONHAM: My Lords, we are not in a position to make inquiries as to whether the dependants named on the form are in fact being maintained by their parents.

PETROL PRICES
2.45 p.m.
LORD ERROLL OF HALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will make a statement on the price of petrol.]
LORD STONHAM: My Lords, my right honourable friend the Minister of Power is now examining various proposals for higher prices of petroleum products, including petrol, which have been put to him separately by individual oil companies under the voluntary early warning arrangements. He hopes to complete his examination shortly.
LORD ERROLL OF HALE: My Lords, while thanking the noble Lord for that helpful and informative reply, may I ask whether he can give an indication of when he is likely to be able to make an announcement; and, secondly, whether Her Majesty's Government will give consideration to the excellent proposal in the Sunday Express yesterday to offset any price increase in petrol by a corresponding reduction in the excise duty so as to avoid an increase in the cost-of-living index?
LORD STONHAM: My Lords, with regard to the first question, my right honourable friend is still considering representations. With his great knowledge of this subject the noble Lord will be aware how fluid such a situation is. My right honourable friend has not yet made up his mind about agreeing to any increase, and it is therefore impossible to say when he will make such a decision. As soon as it has been made, he will announce it.
With regard to what the noble Lord described as the "excellent" suggestion made in the Sunday Express article, he will accept from me that all such suggestions will of course be considered by Her Majesty's Government, but he will no doubt have regard to the fact that one penny off the duty on fuel oil will cost the Treasury £29 million, and one penny off motor spirit £14 million. These are not sums that any Chancellor
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Of the Exchequer can conjure up out of thin air.
LORD BYERS: My Lords, surely the figures that the noble Lord has given are for a full year. Are we expecting the Canal to be blocked for a full year?
LORD STONHAM: My Lords, I am most grateful to the noble Lord. I was quoting for a full year because I have not figures for any other period. How long the present situation will last, it is still too early to forecast.
LORD NUGENT OF GUILDFORD: My Lords, is the noble Lord aware that one of the suggestions now current is that if there is a price increase it should be a differential one which would have the effect of throwing the greater part (if not all) of the extra cost on to the price of petrol for the private motorist. Is the noble Lord aware that that kind of solution will be totally unacceptable to the people as a whole?
LORD STONHAM: My Lords, I have already said that it is too early to forecast whether there will be an increase. If one is decided upon, obviously the most convenient method would be an increase on the wholesale prices of the different oil products—all of them. I would add that there is no compulsion on any firm to increase its prices, if an increase is agreed, by the agreed amount or indeed by any amount if it does not wish to do so.
LORD FRASER OF LONSDALE: My Lords, excellent as is the proposal of the noble Lord, Lord Erroll of Hale, from the point of view of saving the customer money, is it not wholly uneconomic and contrary to economic law? If petrol is to be scarce—and that is the premise—then obviously the only way to make it go round will be either to ration it or to raise the price. If you offset the price rise by dropping the taxation, have you not vitiated the whole purpose of the exercise?
LORD STONHAM: My Lords, nothing in what I have said in reply to the noble Lord, Lord Erroll of Hale, indicated to any degree whatsoever approval of the proposal. While I do not wish to discuss the whole matter, certainly what the noble Lord, Lord Fraser of Lonsdale, has said is an important factor.
LORD STRATHCLYDE: My Lords, will the noble Lord say whether, in the event of the Canal's being reopened, he anticipates any great increase in the cost of petrol?
LORD STONHAM: My Lords, this would entirely depend on when the Canal is reopened. The noble Lord will be aware that already freight rates have increased from around 30s. a ton to £7 a ton. There are many other factors in increased cost which are already taking effect. It would depend entirely on when the Canal is opened. But certainly if supplies were readily available as they were before from the Middle East, and could come to us readily, and there was no increase in cost, there would be no possible justification for increasing the price of oil products.
LORD OAKSHOTT: My Lords, can the noble Lord assure the House that when his right honourable friend makes his Statement with regard to the price of petrol he will include a statement with regard to the availability of supplies of oil?
LORD STONHAM: My Lords, I will certainly bring that point to the notice of my right honourable friend, but I cannot over-emphasise the fact that the situation is fluid; it is changing almost from day to day, and there are important factors such as the availability of Nigerian oil and what is going to happen about Libyan oil. It will depend entirely on when my right honourable friend is able to announce a decision about increasing prices of oil products, if increases are to be agreed.
EARL FERRERS: My Lords, can the noble Lord give an assurance that there will be no rationing?
LORD STONHAM: My Lords, it is quite impossible to give an assurance that there will be no rationing. I can give an assurance that no decision whatever has been taken about petrol rationing; but, as noble Lords will be aware, we have taken the precaution of making, or beginning, preparations in case rationing should eventually be necessary.

FOREIGN SECRETARY'S VISIT TO NEW YORK
2.51 p.m.
BARONESS PHILLIPS: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lord Chalfont will be making a Statement on the Foreign Secretary's recent visit to New York.

STRENGTHENING OF MARRIAGE BILL [H.L.]
2.52 p.m.
THE EARL OF BALFOUR: My Lords, I ask leave to withdraw the Strengthening of Marriage Bill standing in my name, which has now for some time headed the list of Bills awaiting a Second Reading in your Lordships' House. I should like to take up a few moments of your Lordships' time by explaining my reasons for wishing to withdraw the Bill. Since the First Reading of this Bill, six events of great significance on this subject have taken place. They are: the divorce debate in your Lordships' House on November 23, 1966; various statements by the noble and learned Lord the Lord Chancellor, to which I shall make a short reference later; discussions between the Law Commission and the right reverend Prelate the Bishop of Exeter and members of his Committee; the publication of the Scottish Law Commission's Report, Divorce, the Grounds Considered; the issue of the Law Commission's working paper on Family Law, Matrimonial and Related Proceedings—Financial Relief, and the publication by the Sunday Times of an opinion poll purporting to show 72 per cent, in favour of divorce for breakdown of marriage.
Leaving out of account any distinction between divorce solely on the grounds of breakdown and divorce with breakdown as an additional reason, I think it is clear that divorce for breakdown is supported by the most reverend Primate's Committee; the Law Commission; the Scottish Law Commission (who, unlike their English counterpart, actually recommend it); an overwhelming proportion of the public, if opinion polls are worth anything, and by the noble and learned Lord the Lord Chancellor, albeit not in his official capacity. May I make some short quotations from some of the

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speeches made by the noble and learned Lord, the Lord Chancellor? In the debate on November 23 last, Hansard reports him as saying:
"I joined the Divorce Law Reform Association before I was married, over forty years ago, and I should not like it to be thought from anything that I have said, or anything I have not said, that I am in any way unsympathetic to this Committee's Report. The one thing that everybody seems to be agreed about is the universal condemnation of our existing law, and it is my hope that to-day's debate may prove to be a basis for some rational reform of our law upon which Parliament can agree."—[OFFICIAL REPORT, col. 262.]
In the debate on the Second Reading of the Matrimonial Causes Bill, on February 14, 1967, the noble and learned Lord said:
"I have heard it said that this change might delay the rationalisation of our divorce law. If I thought that, I should not be putting this Bill before your Lordships' House. I am delighted to hear that the gap in views which separated the committee appointed by the most reverend Primate and the Law Commission is being narrowed, and I am as much in favour as any Member of your Lordships' House of a real rationalisation of our law. … But it is clear, I think, that we shall not see a Bill in that field this year. I see no real reason why we might not see it next year."—[OFFICIAL REPORT, col. 177.]
This statement was picked out and welcomed by the noble and learned Viscount, Lord Dilhorne, and repeated again by the noble and learned Lord the Lord Chancellor in his reply, although he made is clear that such a Bill might be brought in as a Private Member's Bill. In his speech to the National Marriage Guidance Council, a copy of which he was kind enough to send me, he strongly advocated divorce for breakdown, but made it clear that he was speaking as an individual and not in his official capacity.
In view of all that I have said, I cannot doubt that more comprehensive legislation than is envisaged in my Bill will be introduced and passed into law in the comparatively near future—I sincerely hope next year. I also sincerely hope that there will be parallel and contemporary, or even earlier, legislation for Scotland. How splendid it would be if the Putting Asunder Committee and the Law Commission could reach agreement! I should not want to take any action which might conceivably make such agreement more difficult.
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I think, if I may say so, that the noble Earl is acting wisely in asking leave to withdraw this Bill. Discussions in this field are going well, and it is sometimes a mistake to try to rush things. To those who are concerned to see this branch of our law reformed I would only say that I do not think they need be unhopeful.
Bill, by leave, withdrawn.

REFRESHMENT HOUSES BILL [H.L.]
2.57 p.m.
Order of the Day read for the Consideration of Commons Amendments.
LORD BROOKE OF CUMNOR: My Lords, I beg to move that the Commons Amendments be now considered. If this Motion is agreed I shall ask the leave of the House to move and explain the six Commons Amendments en bloc. They are, I think, relatively non-controversial, and that course might conduce to a saving of your Lordships' time.
Moved, That the Commons Amendments be now considered.—(Lord Brooke of Cumnor.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[The references are to Bill [220] as first printed for the Commons]
[Nos. 1–6]
Clause 1, page 1, line 6, after ("avoid") insert ("unreasonable")
Clause 1, page 1, line 7, leave out from ("neighbourhood") to ("may") in line 8.
Clause 1, page 1, line 14, leave out from beginning to ("shall") in line 15, and insert—
("In the event of any contravention of a condition imposed by the licensing authority under this section, the keeper of the refreshment house.")
Clause 2, page 1, line 24, after ("renewed") insert ("(including a direction that no condition is to be imposed)")
at end insert—
("(2) Any party to an appeal under subsection (1) of this section may appeal from the decision of the magistrates' court to a court of quarter sessions.")
After Clause 3, insert the following new clause—
Administration of refreshment house licence and duties thereon
(".—(1) Licences under the Refreshment Houses Act 1860 and the duties thereon shall cease to be excise licences and excise duties respectively.
(2) Section 15(2) of the Finance Act 1949 (application of excise code to management by local authorities of duties transferred to them under that section) and section 15(7) of that Act (orders giving effect to the transfer of the duties) shall cease to have effect in relation to licences under the said Act of 1860 and the duties on those licences.
(3) In section 16 of the said Act of 1860 (list or register of licence holders to be kept in each area) for the words from "at the office" onwards there shall be substituted the words "by the licensing authority, and the authority shall whenever required, give to the clerk to the justices for their area or any part of it a copy or extract from the list or register".")
LORD BROOKE OF CUMNOR: My Lords, with the leave of the House I beg to move that this House doth agree with the Commons Amendments Nos. 1 to 6 en bloc. The first three of these Amendments concern Clause 1. Perhaps I may remind your Lordships that this Bill deals exclusively with places of refreshment which do not sell alcoholic liquor and are open to the public. It does not affect clubs; it does not affect licensed premises in the normal sense.
Clause 1 empowers the licensing authority to fix a closing hour, which is not to be earlier than 11 p.m., if it is satisfied that it is desirable so to do—and I quote the Bill as it left your Lordships' House:
"in order to avoid disturbance to residents of the neighbourhood and to preserve reasonable enjoyment of the amenities of the neighbourhood… "
Amendment No. 1 would insert the word "unreasonable" in front of "disturbance" so that the clause would read:
"in order to avoid unreasonable disturbance to residents of the neighbourhood…."
I think that in another place it was felt that the slamming of a single car door might, technically, be held to be a disturbance. That, of course, was not what was intended, and "unreasonable disturbance" is probably a safer definition, though I dislike using the words "reasonable" or "unreasonable" in Acts of Parliament.
The second Amendment would leave out the second part of the phrase that I have quoted—namely, the words:
"and to preserve reasonable enjoyment of the amenities of the neighbourhood".
I slightly regret this, because I am always sorry if a reference to the preservation of amenities is left out of a Bill. I think,
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however, that there was some feeling among Government supporters in another place that if these words remained in the Bill they might be used as an open invitation to some licensing authorities to close all fried fish shops punctually at 11 o'clock, on the ground that a fried fish shop, by being there at all, did not conduce to the "reasonable enjoyment of the amenities of the neighbourhood". I think I can assure your Lordships that the Bill is not seriously weakened if these words are left out. Indeed, I defended the Bill, on Second Reading and in its later stages, on the ground that it was primarily to stop disturbance and noise that I had brought it forward.
The third Amendment is a drafting one, intended simply to fix the responsibility for any infringement of a condition and to bring the wording more closely into line with the principal Act, which was passed in 1860.
Amendment No. 4, to Clause 2, is really a clarifying Amendment, which puts it beyond doubt that a magistrates' court, on hearing an appeal, would have discretion not only to alter the proposed hour of closing but also to remove that condition entirely.
Amendment No. 5 is an important one. It was suggested in another place that appeal to a magistrates' court might of itself not be sufficient, as in some cases the local magistrates might take a highly parochial view, and that it would therefore be desirable to have a further discretionary appeal to quarter sessions. This is precedented in other similar legislation, and I can see no objection to it whatever.
Finally, Amendment No. 6 inserts a new clause into the Bill. This is of a highly technical character. I understand that if this Bill becomes law the Government intend to consolidate the Refreshment House legislation, which I am sure is desirable, and I am advised that, for technical reasons, it will assist the process of consolidation if this new clause is added to the Bill. What the clause does is to get rid of old statutory requirements, some of them deriving from the 1860 Act, which have become out of date and are no longer applicable. I will gladly seek to explain the technicalities of this new clause to your Lordships, if I am able, but perhaps your Lordships will be prepared to accept it when I say that I

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cannot conceive it possible that the acceptance of this new clause will make any difference whatever to the practical effect of the Bill upon any member of the public. I beg to move that the House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Brooke of Cumnor.)
LORD STONHAM: My Lords, it only remains for me to thank the noble Lord, Lord Brooke of Cumnor, for his clear exposition of the reasons why your Lordships should agree with the Commons in these Amendments. I would confirm what he said with regard to Amendment No. 6. The Government do have in mind introducing a consolidation measure. I commend your Lordships to agree with the noble Lord's Motion. Finally, I should like to congratulate him on having brought this useful Bill to a conclusion.
On Question, Motion agreed to.

LEASEHOLD REFORM BILL
3.4 p.m.
Order of the Day for the Second Reading read.
THE MINISTER WITHOUT PORTFOLIO (LORD SHACKLETON): My Lords, I rise to move that this Bill be now read a second time. First of all, I should like to apologise once again to your Lordships for the fact that my association with Saudia Arabia means that unfortunately I shall not be able to remain for the end of the debate, but my noble friend Lord Kennet will be here and will be replying to the debate.
This is a difficult and complicated subject with which we are dealing this afternoon, and it is no good believing that there are necessarily simple solutions. The leasehold system—that is, the leasing of land for a long term of years for building—is peculiar to England and Wales. So far as is known, it does not obtain anywhere else. In Scotland, of course, a kind of feudal tenure still exists in which owners of land owe feu duties to a superior, but that is not quite the same thing as leasehold tenure. The essentials of the leasehold system are that the freehold owner agrees to let his land at a ground rent for a term of years,
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usually a long term, 99 years or even longer, to a builder or developer who is required by the terms of the lease to put buildings on the land to the satisfaction of the owner. It was under this system that the eighteenth century saw the development of what are now regarded as some of the more elegant parts of our towns—the Cadogan and Grosvenor Estate, Bloomsbury and so on. The merit of the system was that the landlord could ensure control of what was built on the land and of the upkeep of the estate once it was built. He did this by means of the leasehold covenants. Before the days of Town and Country Planning Acts, the leasehold system was, in effect, the only means of securing well-planned and well-maintained urban development, and of securing that estates could be redeveloped in an orderly fashion as the buildings fell into decay.
Financially, leasehold was often regarded as a satisfactory arrangement for both landlord and lessee. The landlord invested his capital, in the form of the land, in return for a moderate rent with the knowledge that at the end of the term his capital would have appreciated, since the land would return to him with the buildings on it and he would be able to relet it or redevelop it on more valuable terms. Long leases were favoured by the landed families as a form of long-term investment with an eye to increasing the family's wealth from one generation to another. It was not a question of a quick return. The lessee, on the other hand, could carry out his development without incurring the capital cost of the land and could recoup his capital expenditure as the development went on by disposing of his houses or other buildings by means of sub-leases.
So much for the merits of the system. But there is a reverse side to the coin. The system could be abused, and was abused, by landlords who held a monopoly of the land in those places where the land had to be developed to cope with the rapid growth generated by the Industrial Revolution. This is what happened in the South Wales mining valleys, and in England, in the Midlands and the North-West. In the late eighteenth and early nineteenth century there was no local authority housing; working people had to provide their own, or

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speculators provided it for them. In South Wales the only land they could get was leasehold land. They had to live near their work; they could not choose to go and live somewhere else where they could get freehold land. In many cases the houses were built by the workers themselves and inherited by succeeding generations. Now the leases are nearing their end and the present generation of occupants feel a sharpening sense of grievance that at the end of the lease the house will no longer be theirs; it will go back to the landlord without any payment by him for the building or all the improvements made by the lessee over the years. It is this feeling and this history which, particularly in Wales, have resulted in the movement for reform of the leasehold system, taking the form of a demand for leasehold enfranchisement.
The demand for reform is not new. It was voiced as long ago as 1884 in a supplementary report of the Royal Commission on the Housing of the Working Classes, in which some members of the Commission, including Cardinal Manning, said that:
"legislation favourable to the acquisition on equitable terms of the freehold interest on the part of the leaseholder would conduce greatly to the improvement of the dwellings of this country".
Since 1884 there has been a series of enfranchisement Bills: there were 14 between 1884 and 1929, but only one reached the Statute Book; that is, the Places of Worship (Enfranchisement) Act 1920, which is amended by the present Bill.
The economics of the leasehold system when it was applied in monopoly circumstances to the provision of working class homes were strikingly shown by evidence given to the Select Committee on Town Dwellings, 1886–1887, by the Reverend T. J. Wheldon of Blaenau Ffestiniog. He said that at Ffestiniog and in the villages near, the owners of the land would sell no freeholds, and that the quarrymen and shopkeepers were therefore obliged to build cottages and shops upon leasehold land. Out of the 2,489 houses in Ffestiniog parish, working men inhabited 2,052, and had themselves built no fewer than 1,500. The total cost of these buildings was £403,810, to which might be added, as spent upon public buildings, British and board
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schools, chapels, and schoolrooms, on leasehold land, a further sum, which would bring the total expenditure on leasehold land up to £452,810. The ground rents on the larger class of houses, costing £300, would average £2; the ground rents of the smaller, costing £130, would average £2 The total ground rent would, during the 60 years of the average lease, amount to £177,660, and would arise from about 77 acres of land which, before building took place, was not worth 7s. 6d. an acre, although the rent which each acre fetched as building land was £39. His conclusion, therefore, was that besides receiving large ground rents during the leases, the landowners would receive property worth a very substantial sum when the short leases expired, and they would also receive such property with all improvements made by lessees and tenants during the leases. Moreover, the landowners would receive those ground rents and buildings without having made any expenditure in improvements.
The fact that, at the end of the lease, a leasehold house becomes the property of the landlord casts its shadow before. Once the lease has passed its halfway mark the value of the leasehold interest begins to decline; it becomes more and more difficult to put a leasehold interest up as security for a mortgage. A man who wants to sell a leasehold house, perhaps because he may have to move to another job in some other part of the country, finds he cannot sell because a would-be purchaser cannot get a mortgage. The leaseholder in fact possesses a wasting asset. That is the other main complaint against the leasehold system. In answer it may well be said: "But leasehold is a form of contract into which people enter with their eyes open; well advised leaseholders will make proper financial provision to counteract the wasting of their asset".
This certainly is true, but it is not all the truth. There is still a kind of monopoly air about the leasehold system to-day. In the Greater London area today something like half the new housing estates are being provided on leasehold terms at considerable ground rents and at prices which are little, if anything, less than freehold prices of comparable property. That they can be disposed of so readily is, of course, a measure of the housing scarcity. It is fair to infer that

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a lot of people buy leasehold because they cannot find anything suitable on freehold terms.
There are, then, a good many things to criticise about the leasehold system, particularly as it has been used to provide houses for working people or others of modest means. Reform has been part of the Labour Party's platform at least since the war. It was the Labour Government under the noble Earl, Lord Attlee, who set up a Committee under the chairmanship, first of Lord Uthwatt, and later Lord Justice Jenkins, to examine the leasehold system and make recommendations. The majority of that Committee thought that leaseholders should have greater security at the end of their leases, but a Minority Report submitted by Mr. Ungoed-Thomas (now Mr. Justice Ungoed-Thomas) and Mr. Leslie Hale advocated giving the leaseholder the right to acquire the freehold. Before reaching any decision on the Committee's recommendations the Government of the day went out of office, and their Conservative successors passed the Landlord and Tenant Act 1954 which enabled leaseholders of houses of the kind to which rent control protection then extended to become statutory tenants at rack-rents at the end of their leases. This was, of course, security on terms which recognised that the house belonged to the landlord at the end of the lease; and it was a qualified security, because if the landlord could convince the court that he required the property for redevelopment, he could get the tenant out without the need to show that suitable alternative accommodation was available to him.
I should like now to explain briefly the. Government's proposals. The Government think that leasehold reform, to be effective, must go a good deal further than this. What they propose in this Bill is to give the leaseholder who occupies the house as his own home a chance to buy the freehold on fair terms, or the chance to extend his lease at a fair ground rent if he does not want to buy the freehold. The terms on which these interests can be acquired represent what in the Government's view should be the equity of the situation between the landlord and the lessee; that is, that where there is a long lease it is fair to regard the landlord's interest as the ownership of the land and that of the lessee as the ownership of the bricks and mortar of his house.
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Accordingly, under the Bill, the qualified leaseholder will pay for enfranchisement a price which should not exceed the value of the site (that is, the land excluding the house), and for extension of his lease a modern ground rent representing the value of the land to-day, again without any element representing the value of the house on the land. How this is to be done I will try to explain briefly when I come to deal with the provisions of the Bill.
Apart from owner-occupation, the principal qualification is that the house must be within the limits to which the Rent Acts apply; that is to say, the rateable value must not exceed £400 in Greater London, or £200 outside. There has been a good deal of argument about these limits during the passage of the Bill through the Commons, but it is the Government's considered view—and it is a difficult decision—that the most reasonable means of applying the reform to the people who need it is to adopt this particular rateable limit.
Interference with contract ought to be kept to a minimum, and plainly there are some people who do not need protection in any form, and who, if there were no limits, would obtain very large windfalls out of proportion to the particular hardship of their need. Admittedly, any limits entail awkward cases of people just over the limit while their neighbours are just below; but these anomalies are outweighed by the anomalies arising from having no limit at all. The obvious limits are those already taken for rent regulation purposes, particularly as the purpose of the Bill in part at least, is to improve occupying leaseholders' security of tenure. It is thus reasonable to link the reform of long leases held on ground rents with the same rateable value limit as now applies to houses let at rack-rents—that is to say, ordinary rents—for that purpose.
The Bill does not apply to flats. There are not many flats let on long leases at low rents, and most of those that are are of recent creation. Nor do the special grievances which have led to the demand for leasehold enfranchisement arise in the sphere of flats. In any event, freehold tenure for flats is an unsatisfactory basis of tenure as the law stands at present, and any thought of enfranchising leasehold flats must await reforms which will overcome these drawbacks. Your Lordships

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will be aware of the Wilberforce Report on Positive Covenants affecting land, and of certain recommendations of the Law Commission about covenants, and legislation is being prepared and is under review on this subject.
Apart from these basic provisions, the Bill contains a number of important clauses such as those designed to preserve the character of the best leasehold estates, even though leaseholders on them obtain their freeholds, and those to make special provision for public authorities who may have acquired reversions for the purpose of their statutory functions. I will now try to deal with them in a more detailed examination of the Bill's provisions. We shall, of course, be going through this Bill in Committee. I apologise it I have to miss out certain important aspects of the different clauses, but I will do my best to give a quick run through the Bill.
Clause 1, of course, is the most important clause in the whole Bill, as it sets out the basic change in the law of landlord and tenant. It provides for a person who lives in a house within the rateable value limits laid down, and occupies it under a long lease at a ground rent, and who has lived in the house either continuously for five years or for an aggregate of five years in a total period of ten years, to have a right to purchase the freehold of the house or have his lease extended by 50 years. The fact of a house being partly used for business purposes, or partly sub-let, does not of itself take the house outside the Bill.
Clause 2 of the Bill indicates what is meant by a "house". It gives a wide meaning to the word to include converted property—for example, a converted mews, a converted barn or oast-housea—purpose-built dwelling and shop combined, and a house which since it was built has been divided into flats. Subsection 1(a) enables a leaseholder to count as a "house" a house which has been converted into flats or maisonettes. He can enfranchise the whole of it if he holds the lease of the house and is living in one of the flats, but the under-lessee of a flat has no right to enfranchise his flat. That is not to say that this would apply to, say, a 12-storey purpose-built block of flats. Subsection 1(b) enables
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a leaseholder living in a house formed out of some old large house by dividing it vertically to count what he lives in as a house, but he has no right over the whole building. If the owner of the house next door is the owner of a long lease he will have rights under the Bill if he qualifies by residence and rateable value.
Clause 3 defines a long lease as a lease originally granted for more than 21 years. This is a fairly standard definition which is found in other legislation. The clause also makes provision for short leases at ground rents granted by way of continuation of long leases to reckon as part of the original long lease for the purpose of the Bill. It also includes in the definition of "long lease" certain leases for less than 21 years with covenants for renewal without premium, provided that there has been at least one renewal. This provision covers certain leases in South Wales.
Clause 4 contains the definition of a ground rent, or "low rent" as the Bill calls it. This is basically the same definition as applies under the Rent Acts and Part I of the Landlord and Tenant Act 1954. Clause 5 contains a number of important general provisions. It provides for the leaseholder's right to enfranchise or extend his lease to be obtainable only on service of a notice in a prescribed form. It also makes a number of other detailed arrangements in connection with the serving of notices. Clause 6 deals with the case where the occupier of the house is either a beneficiary under a trust or a tenant for life under a settlement, and enables the provisions of the Bill to apply to him as if he were an ordinary leaseholder.
Clause 7 enables someone—for example, a widow who has succeeded to the leasehold interest—to reckon any period in which she occupied a house as a member of the former leaseholder's family towards her own qualifying period of occupation. But there are limitations as to how it applies to a member of a family who has a home already of his own. Clause 8 is a fairly technical clause about incumbrances. The point here is that the landlord has to clear off these charges on the house, except rent charges, which might be hard to clear off if attached to other property as well.

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Clause 9 sets out what the qualified leaseholder has to pay on enfranchisement. It is the market value of his landlord's interest in the house, but as if his own leasehold interest had been extended by 50 years in accordance with the provisions of the Bill, if it has not already in fact been so extended. The effect of adding to the existing lease a further 50 years at a modern ground rent is to limit the landlord's reversionary interest to the value of the site only, so that the most that the leaseholder is likely to be called upon to pay in the ordinary case is site value. But the reference to the leaseholder being treated as if he had an extended lease under the Bill, whether he actually has one or not, means that the landlord may be able to get possession during the extension on payment of compensation under the provisions of Clause 17. The effect of this is that where the property has a potential value for redevelopment the landlord's reversion must be taken as the site value for redevelopment, and the price the leaseholder has to pay must reflect that higher value.
My Lords, another important provision of the clause enables a leaseholder to withdraw from the implied contract which has arisen on his serving a notice of enfranchisement, and this could particularly be of importance where, say, the Lands Tribunal ruled that considerable development value attached to the site of a house, and that the price for enfranchisement might therefore be several thousand pounds rather than several hundred pounds, which might be beyond the means of the leaseholder. Clause 10 deals with the question of the covenants to be included in the conveyance of the freehold on enfranchisement. Clause 11 is concerned with rentcharges, and in general provides for rentcharges on the freehold to remain after enfranchisement except in so far as they are greater than the ground rent being paid at the time. Clauses 12 and 13 deal with mortgages on the landlord's interest, and in general provide for these to be wiped off on the leaseholder's applying the enfranchisement price, or part of it, to redeem the mortgage or in some circumstances paying it into court.
Clause 14 is concerned with the extension of leases by a further 50 years. This extension takes the form of a new lease terminating 50 years later than
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the existing lease which it replaces. This clause also contains provisions for the leaseholder to reimburse the landlord for his reasonable costs in granting the extended lease. Clauses 15 and 16 also deal with the extended lease. Clause 16 protects the landlord against the possibility of being called on to grant two 50-year extensions. Clause 17 gives the landlord, providing he can show that he genuinely intends to develop the property, the right to get possession of it, if a leaseholder has not enfranchised, either at the start of the 50-year extension period or at any time during it.
Clause 18, again, is another clause to protect the landlord. It enables him to defeat enfranchisement or extension so as to be able to get possession of the house for use as his own residence, or that of a member of his close family, if he can show that he acquired his interest in it before the date of publication of the White Paper. The leaseholder is entitled to compensation from the landlord equal to the value of the leasehold interest which is lost. One merit of the leasehold system is that under the management of enlightened landlords some estates of a distinctive character and very considerable amenities and a sense of community have been created. These should be preserved, but not at the expense of denying the tenants the rights of enfranchisement under the Bill.
Clause 19 provides machinery to ensure that the benefits of a well-managed estate are not lost even though individual tenants decide to buy their freeholds. Clauses 20 and 21 deal with the jurisdiction of the county court and the Lands Tribunal. Clauses 22 to 27 are all fairly technical and therefore I will not take up your Lordships' time now, beyond saying that Clause 23 is primarily aimed against attempts to contract out of the Bill. But it also deals with contracts made outside the terms of the Bill, and enables the county court to set them aside if it would be wrong for the leaseholder to be bound by them to the exclusion of his rights under the Bill.
Clauses 28 and 29 are concerned with procedure, and Clause 30 enables local authorities, new town authorities and universities to retain the development rights when a leaseholder holding from them exercises his rights to enfranchise. Again, Clauses 31 to 34 are fairly technical.

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Clause 35 implements a Government pledge to leaseholders whose leases expired before the Bill could be introduced. Clauses 36 and 37 are concerned with transitional provisions.
Clause 40 is an important clause. It achieves two things. First, it brings back into rent control long leases granted at full rents, by turning such tenancies into regulated tenancies under the 1965 Rent Act. This was a necessary measure to protect tenants against a growing practice of some landlords seeking to evade the Rent Acts by granting leases, often at excessive rents, for 22 years or more. Statutory tenancies arising under Part I of the Landlord and Tenant Act, 1954, will be regulated tenancies under the 1965 Act rather than remain subject to the separate code for the determination of rent which is laid down in the 1954 Act.
Clause 41 is concerned with houses occupied by ministers of religion, and Clause 42 provides for the provisions in the main part of the Bill about the enfranchisement and extension of leaseholds to come into force on a day to be appointed by the Minister of Housing and Local Government and the Secretary of State for Wales. I am sorry that I have made a quick run through the Bill, but many of your Lordships will be familiar with the proposals and I commend the Bill to your Lordships' House. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Shackleton.)
3.34 p.m.
LORD BROOKE OF CUMNOR: My Lords, I feel quite sure that every Member of your Lordships' House will fully understand if the noble Lord, Lord Shackleton, has to absent himself from much of the debate. He has extremely important personal responsibilities in connection with Aden where, after all, other questions of limited tenure arise, and it was good of him to find the time to explain this Bill to us. Indeed he did his best to gloss over the injustice and the immorality of an unjust and immoral Bill. Let me say at once that the responsibility lies not on him, nor on any present occupant of the Front Bench opposite; it lies squarely on the Prime Minister and the members of his Cabinet, each one of them.
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One must admit one's interests. I can say at once that I have never owned any leasehold property, nor do I own any now. Nor have I ever had any interest in any company owning leaseholds, to the best of my knowledge. So I can look at this Bill without any bias; and I come to the same conclusion on it as all the professional bodies which have made an independent study of the subject, and all the responsible newspapers which have written about it. They have all written that it is a bad Bill. The Times described it as, "a curiously bad Bill".
It is not the first friendless Bill the Government have imposed upon Parliament in this Session. For instance, a few months ago we had the Land Commission Bill, which your Lordships sought to improve by a number of Amendments that the Government insisted on overriding in another place. Then we had the London Government Bill, a piece of electoral cheating, successfully designed to rob 5 million Londoners of their legal right to show their disgust with this Government, in a way that millions of other people outside Greater London did show it at the local government elections last month. Now we have this so-called Leasehold Reform Bill, a complex measure, as the noble Lord rightly said, on which I mean to-day to speak quite briefly but pungently enough, eschewing what are Committee points and highlighting its three main features.
I said that I have never owned any leasehold property. When I was a small boy I did live in a leasehold house. My father bought a house in London with between 20 and 30 years of the original 99-year lease unexpired. When I first heard that this would mean that at the end of 20 or 30 years the house would not belong to us any more it seemed to me to be terribly unjust. I believe that most of those living in leasehold houses who regard the leasehold system as unjust are in the state of ignorance about it which I was in as a small boy. Of course, as I grew older I soon realised that the fact that this house was not ours for ever was offset by the fact that my father had been able to buy it at a much cheaper price than if it had been freehold. Indeed, we should not have been able to afford to live in such a pleasant house if it had not been for the leasehold system.

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If this Bill which is now in front of your Lordships had become law five years after my parents moved into that house, my father could have demanded the right to the freehold which he had not paid for and, thanks to a Socialist Bill, would have netted a substantial untaxed capital gain. It would have been very pleasant for him and for us, but totally undeserved, and glaringly unjust as between him and the freeholder. My Lords, this is socialism in practice. It explains why some of us have given much of our lives to fighting socialism.
The three main features of the Bill which deserve to be highlighted are, first, the right to enfranchise: second, the break-up of well-managed estates which follows from that, and therefore will undo the main welldoing of the leasehold system: thirdly, the theft of the house, which the Bill legalises, before it fixes the terms of enfranchisement. Although the Conservative policy at the last Election was in favour of enfranchisement in certain circumstances, personally I do not believe in the general right of the leaseholder to acquire the reversion compulsorily from the freeholder. In that I am in agreement with the majority of the Jenkins Committee, to which the noble Lord referred—the Committee which, after exhaustive examination, reported 17 years ago on leasehold law. I do believe that at the expiry of a lease the leaseholder, at any rate in areas of housing shortage, should have the opportunity to get security of tenure for a further period at a current market rent, unless the property is run down and near the end of its useful life and ripe for redevelopment.
I agree that there are two problems which need attention under the present law. One is that a lot of leasehold property could do with modernising, but no one will put money into modernising an old house towards the end of its lease unless the landlord will commit himself on what is to happen when the lease expires. Nor, of course, will it he easy to get improvement grants from the local authority unless the house is assured of a long enough life. The other problem, which the noble Lord, Lord Shackleton, mentioned, is that of the leaseholder who needs to move his home towards the end of his lease. He may need to move away to some other part
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of the country, and if the freeholder will not agree to a surrender of it on reasonable terms, what is he to do? He may have difficulty in selling the remainder of the lease, because would-be purchasers of a short lease may not find it easy to raise a mortgage on it. Those two are genuine problems, but they certainly do not justify giving every leaseholder a right of compulsory purchase against the freeholder. These problems can be solved in other ways. Apart from those matters, I do not think that the relatively recent purchaser of a lease needs or deserves any special new legislation in his favour. He has got what he bought, the right to occupy a house for a fixed term of years and, since the Landlord and Tenant Act 1954, the right in certain circumstances to stay on after the terminal date as the tenant at a current market rent.
The people with whom I feel much greater sympathy are the relatively small number of leaseholders whose fathers and grandfathers have been living in the same leasehold house ever since it was first built, or perhaps soon after. The house has never actually belonged to them, but, by passage of time, they have, quite understandably, come to believe that it belongs to them. People like this have generally got a small old leasehold house at a tiny ground rent. But none of the present generation in a family like that had anything to do with the original terms of purchase, which have in fact been forgotten in the family. So they have come to think of the property as completely their own, and it can be a grave shock to them when they discover that what they really own is the right to occupy the house with the land it stands on up to a definite date and no longer. Even if the freeholder offers them, after the expiry of the lease, a new tenancy at a rent maybe below what he could ask from a new tenant in the open market, the new rent is likely to be many times the tiny ground rent they have been paying, and because they did not realise that the old lease would ever come to an end they feel that they are exploited.
I remember more than once discussing this special problem with a universally respected Member of your Lordships' House, the late Lord Kilmuir, who was one of the most knowledgeable and wise people in this country on the subject of

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leasehold, and he used to tell me of his anxiety to find some just step that could be taken to help these people, without embarking on a wholesale right of enfranchisement granted to all occupying leaseholders, for which he could not see there was any case at all. The noble Lord, speaking of this particular problem, I think used the words "a sharpening sense of grievance" in Wales as the leases of small houses come to an end. He omitted to point out that there is no justification for the grievance, except in those cases where a family has been living in the house for a very long time, which of course is by no means the universal rule.
To legislate, as this Bill does, for a right of enfranchisement for all occupiers of five years' standing, whether subject to a rateable value limit or not, not only gives certain lucky people a sudden right of compulsory purchase against other people—and when I say "people", of course one must remember that that includes charities—but is also bound to lead to the fragmentation of leasehold estates.
While the leasehold system, like everything else, has its disadvantages—and I entirely agree that it has—two of its great advantages are that it enables a wise landlord to insist on the maintenance of good standards on an estate and on the preservation of good neighbourhood amenities; and secondly, at the end of the period it facilitates a well-planned redevelopment scheme for the whole neighbourhood by ensuring that all the leases of the old houses run out at about the same time. If the noble Lord imagines that this well-planned redevelopment can just as easily be secured by modern town planning legislation, I can only say that he is very far astray. Clause 19, which of course we shall have to examine carefully, along with other clauses, in Committee, looks to me like a well-meaning but barely effective attempt to preserve something of the first of those assets in a few cases—the continued preservation of amenities. The second asset, the prospect of general contemporary redevelopment of a whole run-down neighbourhood, the Bill blindly smashes, except where the whole neighbourhood consists of properties above the limits of rateable value which the Government have, I think wisely,
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restored to the Bill after a period of dither—wisely, but, of course, contrary to all the logic of the premises on which the Government have based this Bill.
The third and worst main feature of the Bill is that it legalises theft. If enfranchisement is to take place against the will of the freeholder, the compensation terms obviously ought to be arrived at by a formula based on the present-day value of the property right of which the freeholder is being compulsorily deprived. There are, we all know, various possible formulas for that. The Royal Institute of Chartered Surveyors and the other professional bodies have made a detailed study of them. Through one of those formulas one could arrive at approximately just terms of compensation as between a willing buyer and an unwilling seller. I have no doubt that not only private freeholders but, most particularly, the charities which derive their income from leasehold property assumed that any Government proposals for the enfranchisement of leaseholds would base the compensation on some just formula of this kind.
The Bill makes no such attempt. It discards justice. It arbitrarily declares that the freeholder's legal right to an interest in the house is extinguished—just like that. It then reduces the value of his interest in the land by declaring that it shall not be considered as due to revert to the freeholder for another 50 years. By these means, which would land any ordinary party to a contract in gaol for fraud or embezzlement, the Bill arrives at a compensation figure which will ensure that the leaseholder, after he has paid it, and thereby been enabled to acquire the freehold, can forthwith sell his property to a third party at a good untaxed capital profit.
I know that many honourable people joined the Labour Party in the past believing that it was much more honourable than this. They thought that it genuinely sought social justice as between man and man. How wrong they were! A year ago a substantial majority of the electors of this country voted Labour because they had been persuaded that the Labour Party had better qualifications to lead the country through its difficulties than had the Conservatives. This Bill was in the Labour Party programme, and therefore I cannot ask your Lordships to

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throw it out on Second Reading, as it should be thrown out, and something better and more just substituted for it. What we must do is to set ourselves to prise out its major injustices in Committee.
The country now is awake to the effects of the policies of this Prime Minister and of his Cabinet. The local government elections showed that dramatically. The Pollok by-election proved it, the Cambridge by-election will redouble the proof. And the Cabinet will get exactly what they have earned, for they are following up the London Government Act and its electoral cheating with this Leasehold Bill which legalises stealing. I am profoundly sorry for all the honourable members of the Labour Party who are called on by their loyalty to defend what is obviously unjust.

MIDDLE EAST: FOREIGN SECRETARY'S U.N. VISIT
3.53 p.m.
THE MINISTER OF STATE FOR FOREIGN AFFAIRS (LORD CHALFONT): My Lords, with your Lordships' permission, I should like to repeat a Statement which is being made in another place by my right honourable friend the Foreign Secretary, on his visit to New York. Perhaps I should say before beginning this Statement that it is a long one and it will take me several minutes to read.
The Statement reads:
"During the five days that I was in the United States I addressed the Emergency Session of the United Nations General Assembly; I had long and valuable talks in Washington with President Johnson and in New York with Mr. Kosygin and Mr. Gromyko, with Mr. Rusk and M. Couve de Murville, and with the Foreign Ministers and other representatives of almost all the countries directly concerned in the Middle East crisis.
"The main theme of my speech to the General Assembly was to emphasise the urgent need to begin to deal at once with practical problems—the things we could do and ought to be doing now. I spoke also about some of the elements which had to be included in any final settlement. In particular I referred to the provisions of the United Nations Charter which
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call for all countries to refrain from the threat or use of force against the territorial integrity and political independence of any other country. I made it clear also that in our view all States in the Middle East had a right to live in genuine independence.
"Speaking on the lines of my Nottingham speech, I said that territorial aggrandisement as a result of war was contrary to the provisions of the United Nations Charter and that other elements in a final settlement must be a long overdue solution of the refugee problem, the necessity for free and innocent passage through international waterways for the ships of all nations and the urgent requirement for an agreement on arms limitation. All this would, no doubt, require long and difficult negotiation and it is too early to see the outcome. Meanwhile there were certain practical steps which should be taken now. These included nomination by the Secretary-General of a representative, of unquestioned standing, who should go at once to the area and advise on the whole range of problems resulting from the ceasefire. In particular, he could make recommendations for strengthening the work of the United Nations Truce Supervision Organisation and upon the form which a new United Nations military presence in the Middle East might take. There were a range of urgent problems also relating to those who had had to flee from their homes as a result of the war. Not only must they be allowed to return to their homes, but UNRWA and the voluntary organisations must be provided urgently with the means of relieving their distress.
"Apart from these problems I spoke of the urgent need to get the Suez Canal open again and I dealt very firmly with the vicious allegations about British involvement in the fighting. I ended my speech with a solemn warning that if the United Nations made no progress in solving these problems, there was a very real danger that it might go the way of the League of Nations.
"I had been the first speaker to emphasise the need to tackle urgent practical problems now and I was encouraged by the degree of support

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that I received for this from subsequent speakers. The speech was, I think, well received in the United Nations itself and in newspaper, television and radio comment in New York. I gather that it has had a more mixed reception in this country. I must emphasise that we must at all costs avoid falling into the trap of applying a double standard. Would a similar line have been taken if the war had gone the other way—if the Arab Air Force had got in its strike first and if Arab armies had occupied significant parts of the territory of Israel? What would then have been said about the permanent retention of territorial gains made by conquest?
"As for the status of Jerusalem, may I remind the House of the attitude of successive British Governments in the past? The Armistice Agreement between Israel and Jordan in 1949 left the city divided between Israel and Jordan, and this de facto partition persisted until the recent hostilities. But a General Assembly resolution of December 9, 1949, provided that there should be a unified city under international control. Her Majesty's Government, along with most other Western Governments, have always withheld recognition of the claims to sovereignty over Jerusalem by both Jordan and Israel pending a final settlement. For this reason our Embassy in Israel, like those of most other countries, is in Tel Aviv and not in Jerusalem. Our Consul-General in Jerusalem is subordinate neither to the Ambassador in Tel Aviv nor to the Ambassador in Amman but directly to the Foreign Office.
"I therefore went on in my speech in New York to warn the Israel Government not to inject another complication into the situation—which is already more than sufficiently complicated—by purporting to annex the old city. This is not simply a problem of religious administration of the Holy places. It is not simply a problem of access to the Holy places. Of course we are in favour of free access by all—Jews, Christians and Moslems—to their places of worship. The problem is one of sovereignty over territory and the Israel Government would in my view be very
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unwise indeed to attempt to prejudge the form of an eventual settlement. I am not asking for the return of a divided Jerusalem. Nor do I want to forecast what the eventual arrangements may be, except to repeat that any lasting settlement of which they form part must among other things clearly recognise the right of all States concerned to live in true dignity and real freedom.
"I spent the rest of my time discussing the Middle East crisis and bilateral problems with those who had come to New York to attend the Assembly. It would not be proper to go into details of confidential discussions, but the House may take it that I left the three Arab delegates concerned in no doubt about our attitude to their completely unjustified interruption of our oil supplies and to the closure of the Suez Canal. This is an important matter in which we must of course work with our friends who share an interest in getting the Canal reopened. I might add that this interest is not all one-sided; the United Arab Republic itself is a heavy loser as a result of the closure of this international waterway. I also had valuable talks on matters of mutual interest with representatives from areas other than the Middle East.
"As regards the future, much will depend on the outcome of the talks which took place between President Johnson and Mr. Kosygin. I would expect the debate in the United Nations Assembly to continue for at least a week and maybe longer. During this time there will be much discussion on the floor and behind the scenes of the kind of resolution which would command a majority vote in the Assembly. Her Majesty's Government are of course taking a full part in these discussions. It is too early to say what will be the outcome.
"My visit to New York enabled me to urge upon all in the United Nations the vital necessity of tackling the immediate practical problems. I was also able to make clear in my speech and in my numerous private discussions that the main interest of the United Kingdom was in a lasting settlement acceptable to all parties: equitable and justifiable."
That, my Lords, is the Statement.
4.0 p.m.
LORD CARRINGTON: My Lords, I should like to thank the noble Lord for repeating the Statement. I have no doubt that all your Lordships will at once have realised that the Statement is primarily an explanation and justification on the part of the Foreign Secretary to the critics on his own side in another place. I think we can safely leave him to them, for I do not think it would be either fair to the noble Lord, Lord Chalfont, or profitable to your Lordships to question him about some aspects of what the Foreign Secretary has been doing in the United Nations.
I must say that I am disappointed that the Statement does not show Her Majesty's Government taking a rather more constructive view about the two issues upon which we in this House are most concerned: that is, the closure of the Suez Canal and the problem of the refugees. The noble Lord repeated the Foreign Secretary's words that it was urgent that the Suez Canal should be opened, but we have no idea what he is doing about it. He has said nothing about any constructive proposals which he has made for achieving that end. I think your Lordships would like to hear from the Foreign Secretary something more than just a pious expression of the urgent need for opening the Suez Canal. What are Her Majesty's Government doing about it?
Secondly, we should like to hear a little more about what the Government propose to do on the refugee problem. Have the Government taken a lead in offering any money or in proposing to set up any organisation in order to cope with this terrible problem which exists in the Middle East? If your Lordships could be helped on these two matters, we might be a little further forward.
LORD BYERS: My Lords, I, too, am grateful to the noble Lord for repeating the Foreign Secretary's re-interpretation of his New York speech, but is the noble Lord aware that many of us feel that it was unfortunate for the Foreign Secretary to lecture Israel about territorial aggrandisement and permanent retention of territorial gains? Surely it is unrealistic to expect a country which has to fight for its life to give up anything without a guarantee that it will be allowed to live
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in peace in the future. I should like to ask the noble Lord whether there is any sign that the Arab countries are willing to negotiate a reasonable settlement, or even to negotiate at all.
LORD CHALFONT: My Lords, so far as Lord Carrington's comment on the Statement is concerned, he said that he could leave the Foreign Secretary to his critics, and I am equally sure that I can leave the Foreign Secretary adequately to defend himself. Therefore I will confine myself to the two questions which he put. First of all, on the question of the closure of the Canal, as noble Lords will know, the Canal is believed to be blocked physically; but in any case it seems that the attitude of the Arab Governments is—and they have said this—that the Canal will remain closed as long as Israeli forces are on the Canal. We have told the Governments of the United Arab Republic that this is an intolerable situation. We have repeated our view that under the Constantinople Convention this is an international waterway which must give free access to all shipping in times of war as well as in times of peace. As regards taking further action, we must, as my right honourable friend has said, consult all our friends who are in a similar position. We must concert our action about this matter, and before we do anything we first must find out what is the real central and final position of the U.A.R. Governments on it. We are not idle in this matter, but we must do a good deal more by way of discussion and co-ordination before we take any further action.
In regard to refugees, we are keeping very careful watch on the situation and are taking part in the various discussions which go on about the subject in the United Nations. Perhaps I might ask the noble Lord and other noble Lords to be patient until later this week when we shall have a debate on the refugee problem and when I shall hope to set out in full the position of Her Majesty's Government.
As to the question which was put by the noble Lord, Lord Byers, it would be quite wrong of me—and, in the truest sense of the world, impertinent—to try to place any further gloss on what the Foreign Secretary has said in his Statement. It was not a question of lecturing one country in this dispute or of taking

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sides, but simply pointing out the principle that territorial aggrandisement should not be allowed to result in permanent gain—in a case of this sort, that territorial aggrandisement should not result from military operations—and to hope that the final solution would be just and equitable for all concerned.
LORD ROWLEY: My Lords, my noble friend did not answer the latter part of the question put by the Leader of the Liberal Party in this House. Could he give us any indication as to the prospects of peace negotiations between Israel, on the one hand, and the Arab States, on the other? What we have today is a situation of cease-fire, which I should have thought justified the Government of Israel in standing in their present positions until they enter into negotiations. What territorial or boundary readjustments will follow or be the outcome of peace negotiations is another matter. What we have today are speeches at the General Assembly under Article 11, but the real issue depends upon whether there can be peace negotiations leading to a final settlement between Israel and her Arab neighbours.
LORD CHALFONT: My Lords, I am grateful to my noble friend, and he is right in saying that the essence of all this is whether we can get some real, effective, final peace negotiations under way. But I am afraid that I cannot foresee what is likely to happen in the United Nations, which is the forum in which these discussions are being carried out and, in my view, the right forum.
LORD SOMERS: My Lords, I noticed that the Foreign Secretary used the phrase, "If, for example, the Arabs had struck first …" May I ask the noble Lord what proof exists that they did not?
LORD CHALFONT: My Lords, I do not think that the Foreign Secretary was making any value judgments or moral judgments in this case. We know from the now well-documented accounts of the war that the Israeli air force struck at the Arab air force and virtually destroyed it. What he was asking was what would have happened if the reverse had been the case.
LORD BROCKWAY: My Lords, is my noble friend aware that many of us
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greatly appreciate the report which has now been given of what the Foreign Secretary said in the United Nations? Is it not clear that he was the first speaker at the Assembly to put forward a series of constructive proposals dealing with immediate problems and that that was recognised in the subsequent discussions? And is my noble friend also aware that whilst that speech was reported in our Press on two particular controversial points which led to some criticism, many of us strongly endorse the view which he expressed that military action should not determine the peace which, if it is to be enduring, must express principle, and also that Jerusalem, which is so important to the world, should become an international city?
LORD CHALFONT: My Lords, I am grateful to my noble friend for that intervention. I believe it is true that the Foreign Secretary was among the first in the United Nations to put forward proposals for practical steps to solve the immediate problems, and I believe that this action was widely appreciated. I certainly agree—and I believe Her Majesty's Government, and indeed the Opposition also would agree—with the proposition that military action should not be allowed to be the determining factor in a crisis of this sort.
LORD OGMORE: My Lords, on the point as to who started the war, is it not a fact that before the Israeli strike took place President Nasser informed the world that the United Arab Republic intended to exterminate the Jews?
LORD CHALFONT: My Lords, I believe that statements of that sort have been made from time to time in the past, but I think it would be unprofitable now, and indeed rather dangerous, and also, if I may use the word, counter-productive, to go into arguments about who started the war. What we must now do is to see that it remains ended and that a peaceful and just solution is brought about.
LORD BYERS: My Lords, is it not equally counter-productive to prejudge the Israeli action before any negotiations have taken place?
LORD CHALFONT: My Lords, of course it is counter-productive (I am

37
sorry now that I used that word) to prejudge anything in the present situation. If I gave any indication that Her Majesty's Government are doing so, I certainly had no intention of giving that impression. We shall prejudge no issues, but will do all we can to help all the other countries concerned to seek a permanent solution.

LEASEHOLD REFORM BILL
4.10 p.m.
Second Reading debate resumed.
LORD STOW HILL: My Lords, as one who sat for a South Wales constituency when I was a Member of another place, I hope that I may have your Lordships' indulgence if I intervene shortly in this debate on this highly complicated and controversial measure. It is always a privilege to follow the noble Lord, Lord Brooke of Cumnor. I have known him now for, I think, 47 years, since we first met at Balliol. Ever since then I have had an affection and admiration for him, and I greatly enjoyed him—as I am sure the whole House did—in his present mood. But I feel he will accept from me that adjectives and invective are not really a substitute for argument when one is considering a measure of this far-reaching social import.
The noble Lord used words like fraud, embezzlement, theft, immorality, and a great many other expressions of that type. I have heard them before in this context. I frequently heard them used by my own constituents in describing the present leasehold system, and I feel that they will go on thinking that the present leasehold system is immoral and involves the legalisation of theft and fraud, unless some change such as is proposed in the present measure is in fact placed upon the Statute Book.
His criticism centres, I think, if one takes the substance of it, upon the provisions as to compensation in the event of a lessee requiring the lessor—the freeholder—to convey the freehold to him. In the observations that I want to make to your Lordships I should like to centre upon the formula for compensation which has been adopted by the Government. Of course, this is a complicated, far-reaching measure and, as the noble Lord pointed out, many of its aspects will require
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further consideration in Committee. But basic and central to its whole structure is, I suppose, the provision for compensation.
May I make one or two general observations? It is not immoral to alter the incidence of contractual relationships under existing law. It has been done over and over again when Parliament thinks that a contract does not work fairly as between the two parties to it. A notable and striking example, after all, is the whole pattern of the Rent Restrictions Acts dating back to 1915; there is the Moneylenders Act 1927; there is the Restrictive Trade Practices Act 1956. They all have the effect of altering contracts made between citizens, and, of necessity, have the result of conferring upon one party to the contract a benefit which, had the law not intervened, he would not have enjoyed and which would have worked to the advantage of the other party. That is what this measure does.
Perhaps the most striking example of interference in contractual relationships in this particular field is the Landlord and Tenant Act 1954, for which I think I am right in saying the noble Lord had a very considerable responsibility. I am sorry: I gather that I am mistaken, and I withdraw that. His experience is so wide-ranging that I attributed that measure also to him, but I am mistaken and I withdraw that remark. Nevertheless, the noble Lord supported it. He thought that it was a useful measure, and he commended it in his speech to your Lordships this afternoon. But what does it do? It takes away from the lessor the right, which had that Act not been passed he would have enjoyed, of having back vacant possession at the termination of the lease which has been carved out of his interest. It takes away that right from him and in place of that right it confers upon tenants, in circumstances described by that Act, the right to security of tenure at an economic rent.
The Minister of State, speaking in another place about the Bill we are now considering, pointed out the money result of that measure. He took two instances, one of a freehold valued at £1,500 which in consequence of the passing of that Act was worth no more than £550; and another of a freehold which would have been worth £4,000 and the value of which,

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in consequence of the passing of that Act, was halved. The noble Lord did not use of that measure, passed by a Conservative Government, the invective which he thought it proper to use of the measure now before your Lordships' House. But that measure deserves that condemnation just as much as the present measure does, if condemnation is appropriate in the case of either. I would criticise that measure as having gone not nearly far enough.
The difficulty about finding a formula arises from the fact that lessees fall into such widely different classes. The noble Lord referred to the lease of a house which his father had purchased when he was very young, and to the feeling of indignation which he experienced as to its incidence. Clearly, somebody who buys a leasehold interest of 21 years in, say, a fairly expensive residential area in London, within the rateable limit of £400 provided in this Bill, knows perfectly well in 99 cases out of 100 that he is acquiring a wasting asset, and is acquiring it at a price less than he would have to pay if he wished to buy the freehold. That kind of lessee may be said to have a windfall as a result of the provisions of this Bill which applies to him.
But, if I may say so to the noble Lord, Lord Brooke of Cumnor, he very much underestimates what he regards as the importance of the few cases, as I think he called them, of the South Wales lessee under a long building lease of 99 years granted in the latter part of the last century. The noble Lord who introduced the Bill to your Lordships this afternoon pointed to the importance of that problem, and it is because I, as a former Member of another place for a South Wales constituency, so constantly came directly in touch with that sort of problem, that I have ventured to rise to address your Lordships this afternoon. As the Industrial Revolution wore on, and as great shifts of the working population, particularly to South Wales, but not, by any means, exclusively to South Wales, took place in the latter part of the last century, building leases in very large numbers, often of 99 years, were granted by freeholders. Sometimes—indeed, generally—their terms provided that the lessee should construct upon the land the house or premises for which it was let; sometimes the lessor himself undertook that
40
expense. I personally regard that historical incident as of much less relevance in this context than the present result.
What is the present result, which Members of this House who have sat for constituencies in the areas affected will know so well? It is this. Over and over again one finds a family living in a small working-class dwelling, built on land the subject of a building lease now or soon about to run out. The occupants of the house have lived in it all their lives. The present occupant, I dare say, was born in it; so was his father, and so were his forbears. His family have lived in that house for 50, 60, 70 or 80 years, and it is the security which he hopes to pass on to his widow. His children were born in it; and he and his forbears have paid for that house, during the whole of that period, a ground rent of, perhaps, £1. He is not a lawyer: he is, as Shakespeare described Mark Anthony:
"… a plain, blunt man.
That love my friend."
For him, it is really rather a legal quibble that the house, for which for years £1 per year has been paid, does not really belong to him. In substance he thinks it does. He regards it as his home; he has known no other home; and he thinks it outrageous that a property company, or a freeholder, the name of whom he does not know and whom he has never met, has the right, when that lease falls in, perhaps in a few years from now, to come to him and say: "You will either pay me the value of this freehold or you will pay me, instead of £1 a year, an economic rent, which may be 30s. a week, £2 a week, £2 10s. a week, or you will get out". It is on the occasions when that sort of suggestion is made that a man in that position uses precisely the same adjectives as the noble Lord, Lord Brooke of Cumnor, used this afternoon in your Lordships' House in criticising the present measure.
One has to look at these measures from various points of view. I am not suggesting for a moment, as I hope I made clear to your Lordships a little earlier, that all lessees are in that position. Of course they are not. A great many will derive considerable advantage from this Bill which perhaps it may be said they have no strong moral right to look forward to. But I think the noble Lord

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greatly underestimates the feeling, the extent of the feeling and the strength of the feeling in the parts of the country in which these features are discernible, in which this type of lease is about to fall in, if he brushes the whole thing aside in the scathing and contemptuous terms which he used in your Lordships' House this afternoon.
I put it to your Lordships and to the noble Lord himself that he is treating this matter on a rather unrealistic basis. The substance of the matter, the situation which has engendered the strong movement of public opinion—and, I put it to him, public opinion as a whole, not now but for nearly 100 years back—in favour of giving a right to leaseholders to enfranchisement of the freehold, derives from the sort of situation which I have been venturing to describe. Anything less than the provisions of this measure will go far short of meeting the social evil—because it is a social evil if people in those circumstances are likely to be turned out into the street—which I have ventured to describe. It is for that reason, and for no innate wickedness, that the present Government have thought it right to introduce this measure, to which the Labour Party, ever since 1951, have been openly committed.
My Lords, is it confiscatory? One has to look at two situations. From the time that this Bill becomes law (if it becomes law, as I hope it will) a freeholder who carves out of his interest a leasehold term of over 21 years will know precisely the risk that he is running, and he will wish to be paid for it accordingly. Over a period of time prices will no doubt adjust themselves to take account of the new incident which is annexed to a transaction of that sort—that is, the risk that, at the end of the period which he carves out of his own freehold interest, there may be an occupant in the house who has lived in it for not less than five years, and who will in consequence have the right to call for the freehold at the compensation figure provided in this Bill or to ask that his leasehold may be enlarged for 50 years at a modernised ground rent. So if one looks to the future, all one is doing is changing the nature of the transaction centring on the grant of an interest in land for over 21 years.
If one looks at the present, it can be said, "Yes, but it is unfair to lessors who
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have already granted their leases, and who are therefore caught by the provisions of this Bill". Many of them for years past must have known that something like this was likely to find its way to the Statute Book. Ever since 1951, and for decades before that—right back to 1884—the question of leasehold enfranchisement on some terms has been the subject of political controversy. There have been strong voices which have spoken in favour of it, and attempt after attempt has been made to put on the Statute Book some measure which would bring in leasehold enfranchisement. So any freeholder who for years back granted a leasehold interest in excess of 21 years must have known that there was some risk of this sort of thing. But what of those who did not? I would simply say that the great problem has been to find a suitable formula. Any formula other than that or less generous to the lessee than that which I have described would fall far short of meeting the situation which one meets in South Wales, in Liverpool, in London and in other cities, arising out of the falling in of these long-term building leases.
I hope the noble Lord will further reconsider this matter in the light of what I have ventured to put, with great respect, before the House and before him. He really went a little bit too far, I think. He said very candidly that he did not agree with the other members of his Party. They, after all, I think I am right in saying, did not vote against the Government White Paper published in 1965, which set out perfectly clearly the basis on which the present Government proposed to introduce this legislation. I speak subject to correction, but I think I am right in saying that. I think it is generally accepted that the long lessee at a low rent, a ground rent or a rent, as defined in the Bill, of less than two-thirds of the rateable value, ought to have the right either to a prolongation of his lease—and, after all, the 1954 Act went some distance along that path—or otherwise to the conveyance to him of the freehold of the house in which he lives.
I venture to submit to your Lordships' House that this is a necessary measure to meet a real and crying social evil. It is neither immoral, nor is it confiscatory; nor does it involve the legalisation of theft. I would not go the whole way towards agreeing with some people who

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say that the existing system involves the legalisation of theft, but there are a great many people who have said that and who sincerely think it. I hope your Lordships will give this measure a Second Reading.
4.28 p.m.
VISCOUNT GAGE: My Lords, the noble and learned Lord, Lord Stow Hill, rightly said that this Bill covers a variety of circumstances and a variety of interests. I propose to confine my remarks to two different forms of property ownership. One is house property owned by charities and the other is house property owned by housing associations. I happen to be a trustee of a very ancient charity which for many hundreds of years has been developing and redeveloping its property in South Kensington.
A great deal of redevelopment took place as a result of destruction during the war, and we now have a very fine property. Among our tenants we can enumerate several Members of your Lordships' House, which I think guarantees its respectability. It has a considerable rent roll, every penny of which, except what is required for maintenance and administration, goes to charity—to such charities as medical research, old people's homes, young people's clubs and so forth, which I think are generally considered to be very deserving objects. I have never heard a word expressed against the system under which we administer this property. Perhaps one or two people have felt that their rents have been put up too much; but, apart from that, I think it is generally regarded as a very well administered estate.
When this Bill first appeared we thought that we had escaped it, because most of our properties were above the limit. Then we found we had not. That disturbed us a good deal, because we could see our scheme of management being interfered with and our assets diminished. Then we found that a new clause had been put in which gave us some hope of keeping our properties under collective management. A little later on, we found that we had been excluded again. And there it is. I suppose we have been lucky; others have not been so lucky.
I am citing this case only to show two points: first, the almost haphazard way in which we have been at one moment
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excluded, at another included with reservations, and then excluded again—and I suppose that is the result of our having been tagged on to all classes of property-owners such as the ones that the noble Lord cited in South Wales, with whom I do not think we have much connection—and, second, to point to the extraordinary fact that here we are empowering people who are tenants, tenants almost by chance, to acquire charitable assets and, having acquired them, to sell them forthwith at a personal profit which they can put in their pockets. If any noble Lord from this side of the House had made such a proposal and held it to be deserving of the support of this House, I think he and we on these Benches should have been considered to have taken leave of our senses. After the experience I have had in trying to get charitable trusts altered and after discovering the jealous care with which the law looks after the interests of charities, it seems to me extraordinary that we should allow their assets to be used in this way.
Much the same considerations can apply to housing associations. As your Lordships know, these associations, many of which have charitable status, exist only to promote the interests of their tenants. There is no question of a profit being made out of the tenants; they are all covered by the law. In the same way as charitable trusts are supervised by the Charity Commission, these housing associations are supervised by the Registrar of Friendly Societies. This is all admitted in the White Paper, which says:
"Housing associations normally let houses on short leases, so they will seldom have leaseholders qualified under the Bill. But in any case, since housing associations exist only for the benefit of their tenants, it would not be appropriate to give rights against them under this scheme."
Those rights have been given in certain cases. Since an invitation was made in the other place, the National Federation of Housing Associations is at present collating evidence on this point; but as they have over 1,500 societies attached to them, it may take a little time.
At the moment I will cite two cases. One concerns a very old-established association of the highest repute at Bournville near Birmingham, where the chairman himself told me that, under the Bill

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as it is, the whole system of administration under which that trust has been governed for some sixty years will be undermined. The other is a new scheme which is intended to operate near Oxford. It is a large and imaginative scheme, the architect of which happens to be a Member of your Lordships' Horse. It has received general support from the Oxford Corporation and, I think, from the Minister. Now I am told that by reason of this Bill—that is to say, unless some change is made in the Bill—the whole scheme is in jeopardy.
Why should this scheme be put in jeopardy? Why should the old-established scheme to which I first referred have its administration undermined? What is the case for it? Is there any evidence whatsoever to justify it? I was President of the Federation of Housing Associations for some twenty years. I never heard any complaints of that nature. In any large organisation you have a certain number of general complaints; but I have never heard it suggested that we should enable tenants to acquire our properties and sell them at a profit.
My Lords, this is not a Party matter. I know that many noble Lords opposite are just as enthusiastic about charities and about housing associations as is anybody on this side of the House. Indeed, in reference to housing associations, a month or two ago we had a visit from the Minister who addressed our annual general meeting and who gave us a very encouraging talk. I cannot believe that he really intends to prejudice these associations to the degree which is apparently taking place. I hope that this House will live up to its duty of being a revising Chamber, because I do not think that any Bill for a long time has seemed to be more in need of revision than this one.
4.37 p.m.
LORD MITCHISON: My Lords, this is a Second Reading debate. I think that the two points raised by the noble Lord who has just resumed his seat were really Committee points, but it might save him a little trouble if I remind him that on Report in another place the Government answer about the housing associations was that there was
"no doctrinal difference between the two sides of the House on this matter.… There is no provision in the Bill for them for the simple
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reason that we have not been able to find any associations which have long leases at low rents which would bring them within the terms of the Bill; and we have made fairly extensive inquiries."—[OFFICIAL REPORT, Commons, 20/6/67, col. 1451.]
I listened to hear whether the noble Viscount was going to give us such instances; but he did not.
VISCOUNT GAGE: My Lords, I gave two. I think it quite inappropriate to give a large number of long quotations on Second Reading; but I have more.
LORD MITCHISON: That is what is required. If I may, I will continue the quotation:
"I cannot commit my right honourable friend to say that we shall introduce a new clause in another place, because if it is not absolutely necessary there is no point in making the Bill longer."—[col. 1452.]
There is no difference in principle at all. I think if the noble Viscount, Lord Gage, has any instances of the type that were lacking below, and gives them, he may find his way easier than he supposes.
Charities, I think, raise broader issues. This is a Second Reading debate; and the Bill when introduced below was not opposed absolutely on Second Reading. It was opposed on a reasoned Amendment, and the reasoned Amendment accepted that ground leaseholders should be permitted to buy or rent their houses on fair terms except where the property is to be redeveloped. The Opposition would have to refuse the Bill a Second Reading because they regarded the terms as confiscatory. Therefore as I see it, as between the two Parties, at any rate—I am not referring to the noble Lord, Lord Brooke of Cumnor, for he has been fully dealt with by my noble friend Lord Stow Hill on this occasion as on a previous one in 1954—we appear to be agreed that ground leaseholders should be permitted to buy or rent their houses on fair terms except where the property is to be redeveloped. If any noble Lord opposite says anything else, then he is differing from his own Party on this matter.
Why are we agreed on this? Without doubt because there is grave abuse here. I turn from the noble Lord, Lord Brooke of Cumnor, to the same individual when much younger. I think "young Brooke", as he then was, was perfectly right. He saw the injustice of being turned out of what he regarded as his home. My Lords,

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you always get the same point in these debates about housing. One view of a house is that it is a person's home. Some houses can hardly be regarded as that—a very short occupation would hardly make them that—and five years has been taken as a fair time to allow for a house to become a home.
On the other side of the picture, you get questions of investment and expenditure and so on—broadly speaking, questions of property and questions of money; and here the outlook is very different. It is that kind of thing which, in the middle of what I call the grandfathers' war, led to the introduction of rent control and, more important, to its continuation between the wars until the last Act we had a year or two ago. The reason for those Acts was that it was felt to be unjust and inequitable (I use no stronger words) to turn people out of their houses because, for one reason or another, they could not pay some higher rent which the landlord might be demanding. And those measures were extended. They were varied from time to time, but recently they have been confined to cases of not very large houses because it was found that legislation suitable for the average house, if I may so put it, could not always work in the case of a very expensive house.
My Lords, exactly the same thing has happened here, and I think the Government were quite right to go back to what they originally proposed and to confine the legislation they are now considering to average houses. Once you get above the rateable value of £400 in London and £200 in the Provinces, which are the figures in the Rent Acts, you begin to deal, for broadly similar reasons, with different classes of houses, and you get different questions arising. I therefore feel that this should be regarded as legislation which goes hand in hand, as it were, with the provisions for leased houses in the recent Rent Act, and also previous legislation.
It is all very well to talk about being confiscatory and breaking contracts and the rest of it. But rent control, town planning, the Statutes to which my noble and learned friend Lord Stow Hill referred, and another one which a short time ago increased the responsibilities of landlords in the matter of repairs—all
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these things are, in a sense, interference with contracts; and interference with contracts, as I see it, for two reasons. First of all, as in the cases we are now considering, often one party to the contract, or his predecessor in title, had such an advantage that he was able to make an inequitable contract. The second reason is that circumstances have changed and a contract which may have been fair enough at one time has become socially unfair in its operation. It seems to me that when either of these two things has happened, it is the business and the duty of Parliament to interfere.
There is no doubt that the building leases of 99 years in South Wales, and in other parts of the country, including notably London itself, were imposed by landlords for two reasons. They wanted to keep the land in their own hands ultimately, and they knew perfectly well at the time that it was no use expecting the man who wanted the house to buy it in any form. He had not the means. All he could afford was the building lease, putting up the building and the rest of it, and leaving the land in that condition.
But that land, my Lords, has increased enormously in value in a great many parts of the country, and the cost of building nowadays is far heavier than it was 99 years ago—we all know that. The result has been that the whole character of the contract, as I see it, has changed, and that which was imposed originally by force of circumstances and by economic superiority, which enabled the landlord of the day to dictate those terms, has now become a bargain which, unsatisfactory or not at the beginning, is certainly completely unsatisfactory now from every social point of view. It is, therefore, in order that people should be entitled to keep their homes that this Bill has been introduced. There is no dispute about that, as I see it.
Then it is said that the terms are confiscatory. I shall not, in what I hope will be a very few words, go into the extremely complicated and difficult questions raised by this kind of point. Our leasehold system is such that it varies from bargains where there is an unfair economic advantage which has proved to be unfair socially, to bargains about which no criticism of that sort could reasonably be made. Leases are not all black or all

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white. The vast majority of them are grey; and somewhere or other you have to draw the line.
Drawing a line here has been partly in the value of the house, which I mentioned, partly in the need for five years occupation, which I also mentioned, and partly in the character of the lease itself. These are, whatever phrase you like to use, definitely long leases. It is not the whole leasehold system that is under criticism here, it is the long leasehold system, which is not by any means the same thing; and the best point which can be made for the long leasehold system is on the question of development. I entirely agree with the Benches opposite, though perhaps in a different spirit, that Clause 19 is extremely important. This clause concerns well-managed estates. I have looked carefully at the debates, and I think the clause does what is required, but I am sure we ought to consider that very carefully. What is required is to continue the unity of management and development which has been made possible in this way.
The provisions about redevelopment are similar, but in this connection I think less important. Therefore, for the very simple reasons—some of which are not denied by the Party opposite—that there ought to be a right in ground leaseholders, as the phrase goes (it is their phrase) to buy or rent their houses on fair terms, and because I find nothing unfair in the terms put into this Bill, though I agree that it is a matter for detailed and difficult discussion, and even though I agree, too, that it comes down to drawing the line at many points and that those who fall on one side or the other of the line may feel that they have been unfairly treated by that mere fact, I hope that your Lordships will do what should be done and give this Bill an unopposed Second Reading.
May I add this? It is recognised, and has been recognised for years, that this abuse exists. It has been shown, and quite clearly, that the Party opposite recognise that ground leaseholders should be permitted to buy or rent on fair terms. But I call the attention of your Lordships' to the fact that the Party opposite never brought in any measure that effectively gave ground leaseholders this right. The 1954 Bill was a lamentable
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failure, because under it those who wished to exercise their rights found often that they could not afford to pay; and they found, too, that they got not real security of tenure. Unless, therefore, an alternative is suggested in all these cases, I feel bound to say that this seems to me the best that can be done and that it gives effect to an undoubted right in what are necessarily very complicated conditions.
4.50 p.m.
LORD MESTON: My Lords, I do not comment on the desirability or undesirability of land enfranchisement, but I do comment on the deplorable compensation that may be payable to the landlord. In all matters relating to landlord and tenant, one must be fair to the tenant. At the same time, one should be fair to the landlord. So far as I know—and I am always prepared to be corrected—it is not a crime to be a landlord.
Let me get to the point. I have examples here drawn up by an expert in these matters, one who is not actuated by Party politics at all. I will not go into the mathematics of the problem, because unless you have a First at Oxford or Cambridge you are not likely to understand it. What I will do is this. I will give your Lordships two examples, and if the Government wish me to give them copies of the mathematical sums, I will do so with pleasure. I take first the example of a suburban two-storey house with a first floor of two bedrooms, bathroom and usual offices, and on the ground floor two rooms and a kitchen. The freehold, with full vacant possession, would sell at about £4,800. The site is a relatively small one, with a frontage of about 18 ft. It is assumed—and this is important—that the freehold is subject to a lease of 40 years unexpired. The ground rent is £6 per annum. The value of the freehold interest before the introduction of this Bill has been properly estimated at £600. Under the Bill there follows a mathematical sum, with the result that the estimated freehold value under the Bill is £90. That means that the tenant, instead of having to pay £600 for the freehold, will have to pay only £90. If your Lordships think that that is fair to the landlord, I can only say that in my view it is scandalously unfair.
Let me give your Lordships another example. Here we have the same

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premises, but there are only two years of the lease to run. The estimated freehold value before the Bill is £2,815. There follows another classic mathematical sum, which I am sure your Lordships will not understand, with the result that the value of the freehold interest under the Bill is £670; that is to say, the tenant will get the freehold for £670 instead of £2,815. If your Lordships think that that is fair to the landlord, my view is that it is scandalously unfair.
There are two other matters relating to compensation which I should like to mention. These are not cases where the tenant has to pay compensation, but cases where the landlord has to pay compensation. If the landlord successfully proves to the court that he requires possession of the property for the purposes of redevelopment, then he is entitled to possession, but he must pay compensation to the tenant for what is described in the Bill as "the loss of house and premises". The amount of compensation which the landlord must pay the tenant is the value that the lease might realise in the open market if sold with vacant possession.
It may be more accurate if I refer here to paragraph 5 of Schedule 2 to the Bill, which states in terms:
"The amount payable to a tenant … shall be the amount which … the house and premises, if sold in the open market by a willing seller, might … be expected to realise, on the assumption that the vendor was selling the tenancy …

(a) subject to the rights of any person who will on the termination of the tenancy be entitled to retain possession as against the landlord, but otherwise with vacant possession; … but there shall be left out of account any value attaching to the right to acquire the freehold under …"

this Bill. I want to know why the landlord should have to pay compensation in such a case. He cannot be accused of taking property which belongs to himself. He does not want to disturb the community by redevelopment. Probably all that he wants to do is to convert a dwelling house into two or more flats and thereby create more accommodation for the community. It is a holy mystery to me why the landlord should have to pay compensation.
An even more startling liability by the landlord to pay compensation occurs in connection with the landlord's desire to use the house for himself and his family.
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The landlord may resist enfranchisement, or extension of the lease, if he satisfies the court that he reasonably requires the property for occupation by himself or his family. The actual wording of the Bill is
"… he may resume possession of the property on the ground that it or part of it is or will be reasonably required by him for occupation as the only or main residence of the landlord or of a person who is at the time of the application an adult member of the landlord's family."
But here again the landlord must pay compensation to the tenant on the basis which I have already mentioned. Why should the landlord be obliged to pay compensation to the tenant in such a case? The landlord is not resisting the tenant for the reason that he (the landlord) proposes to sell the property to someone else at a large profit. All that he wants is to have a roof over his head and the heads of his family, and to use his own property for that purpose. What has he done wrong? Perhaps the noble Lord, Lord Mitchison, who always smiles so happily, will tell me.
LORD MITCHISON: My Lords, as I am asked the question, may I say that it seems to me not unreasonable to pay compensation for turning a tenant out of his home.
LORD MESTON: My Lords, the landlord is not turning a tenant out of his home. The landlord is giving up his own home. There has been a contract between the parties, which I assume has come to an end, or is about to come to an end, and therefore the landlord is turning himself out of his own home. At all events, it is a complete mystery to me why the landlord should have to pay compensation.
So much for criticism. For the purpose of clarifying my mind on the meaning of this legislation, I should like now to ask a few questions. Where a tenancy is extended for a period of 50 years the rent payable remains the same until the contractual expiry date of the current tenancy. Thereafter the rent is to be:
"a ground rent in the sense that it shall represent the letting value of the site (without including anything for the value of buildings on the site) …"
Now 99 years ago the ground rent may have been £3. What is it to-day—£30? At all events, I want to know who decides

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the amount of ground rent that is chargeable during the extended tenancy after the expiration of the current tenancy. Likewise, at the end of 25 years who determines what the revised ground rent, if any, is to be?
The other question relates to mortgages. The matter is dealt with in Clauses 12 and 13 of the Bill. Let me take a simple example of what may occur. Say that the valuation of the freehold is £3,000. The building society grant a loan of 80 per cent. of the valuation—namely, £2,400. Later, the owner grants a lease for more than 21 years to a tenant. In course of time, the tenant gives notice to enfranchise and the compensation he has to pay to the landlord is, say, £300. Let us suppose, for the purposes of the argument, that £800 is still owing on the mortgage. The deeds are with the building society. The owner has been obliged to part with the freehold to the tenant. Who pays the balance of the loan outstanding to the building society—namely, £500? And who gets the deeds of the property? Noble Lords may have an answer to that question. But at the present time I must say that the matter is not abundantly clear to my simple mind.
I will not speak any longer, but let me revert for a moment to the cases where the tenants have been able to obtain the freehold of properties, one for £90 and the other for £600. The day after obtaining that freehold they can sell these properties on the open market for £3,000 or £4,000. Do your Lordships call that a good policy? Perhaps you do.
5.0 p.m.
LORD SILSOE: My Lords, I must declare a personal interest, first in respect of my house, which is on the noble Viscount's estate, as we have heard, and secondly, because of my official interest as First Church Estates Commissioner. A duty which is imposed upon that office is to manage all the properties of the Church Commissioners; clearly this Bill affects those properties, and therefore I properly declare an interest. I am a little embarrassed, as well, because among my colleagues in the Church Commissioners are five members of the Cabinet, the Attorney General and the Solicitor General, and I do not find myself in agreement with any of them.
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This, I am bound to say in categoric language, is a bad Bill. On the other hand, it is only fair to say that it is nothing like as bad as it was a few weeks ago, and it is getting better every day; and I still have hope that, in some parts, it may be improved still further. I should like to convey, on behalf not only of the Church Commissioners but of eighteen landed estates for which I was the chairman in seeing the Minister on this Bill, our thanks for what has been done so far. I had hoped that I should not be involved in politics, because I took the view until this afternoon that the Opposition were on this Bill as bad as the Government. But I am very satisfied with the conversion of the noble Lord, Lord Brooke of Cum-nor, and I hope that it is followed by his colleagues as well. If so, then I am in politics. The acceptance of the principle of enfranchisement, the suggestion that local authority estates should be fragmented, is not, in my view, sound policy.
I have six points to put about this Bill, and I find myself very much in sympathy with what was said by the noble Lord, Lord Mitchison, who I hope will not leave for a moment, because he does not often hear that from me. Enfranchisement is based on a false premise that land belongs to the landlord and bricks belong to the tenant. That is the fundamental point of this Bill which is wrong.
I will give only two examples to show that. If I may, I will take my own house. In 1946, I took a lease of that house from the charity about which we have heard. I paid no premium, and I paid what was called a rackrent. It is true that I bought a bit of the lease, but I paid for only fixtures and fittings. The lease came to an end and was renewed. Again I paid no premium whatever and I was until last week entitled to buy that property from Smith's Charities—if I may say the name now—at, I believe, £4,000, when the lease was worth £16,000. That is what is going on under this Bill. That has been changed in the last week, and unfortunately for me, the rateable value of my house is above £400; so I have no personal interest.
The second point is that everybody seems to assume that the current way of developing property is by building leases. It is all old-fashioned. It used to be.

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You used to take a bit of grassland, the lessee was given a building lease, and he put in the capital and built the houses. It is still done a little. It is hardly done, however, for redevelopment—a phrase which has been mentioned only twice in the whole debate and which is the key to the whole of this Bill. What happens now is that the landlord puts up the money. I have been lucky enough to be engaged in the redevelopment, first, of the Nash Terraces, then of Carlton House Terrace, then of the Church's Paddington Estate, and finally, in Islington. I am a director of the oldest company, the New River Company. In all those cases redevelopment is being done by the landlord putting up the capital. So, whatever may be the trouble stemming from the last century and leaving behind this unfortunate feeling, with which I have great sympathy, the future of redevelopment has to be faced on the basis that it is the landlord who puts up the capital. He may get back some of the capital by premium, but most of it is landlord invested. So there are two fundamental misconceptions about redevelopment in saying that the bricks and mortar belong to the tenant.
The second trouble is that enfranchisement has been fixed on the basis of a yardstick of rateable value. True, the figure has been picked from the Rent Act and, therefore, has some small reason for it. But take Greater London; if you own a small house of five or six rooms, as I do, in South Kensington, you will find it is above the £400 rateable value. If an identical house was in Dulwich, it would not be above that figure. So we shall be exempt from enfranchisement in the City of Westminster, but we shall have full enfranchisement of precisely the same type of house in another part of Greater London. I have written to the Minister about this matter, and I am sure he will try to help. We must have some flexibility of these figures so that the same class of tenants and the same class of houses are treated the same.
Again, from the 18 estates outside London with which I have been working on this Bill, it is obviously a completely different picture. Take Birmingham—two very well-known and respectable estates—South Devonshire, East-
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bourne and Folkestone. Their problem is not the same. You cannot have one figure for all; there must be some flexibility. As I have said, I have written to the Minister—I will not weary your Lordships with the detail—submitting a scheme whereby this can be done.
The third point is that compensation is not based on market value but on (I am bound to use the word) confiscation terms, as has been said by one noble Lord; yet the landlord who has to buy that same property back next year to get redevelopment going has to pay the whole market value. That seems to be quite iniquitous. Redevelopment, I have said, is probably the most pressing thing and the strongest case for private landed estates. Urban estates require redeveloping. I have now been fortunate enough to be concerned with this activity for the last twenty years, and it goes very well. No powers are required. In the case of the latest one, which we have not yet finished, North of Marble Arch, 200 families have been rehoused without a single law case, without any compulsory powers or anything of that sort. All this can be done under good management.
This is where I agree with the noble Lord, Lord Mitchison, that Clause 19 is a most important part of this Bill; and if the Bill is to work it must be improved. But redevelopment seems to have got into a tremendous muddle in the Bill as it is drafted at the moment. In Clause 39 there is a provision whereby the ordinary power of getting possession on redevelopment given by the Landlord and Tenant Act, is removed. Why, I do not know. Perhaps the noble Lord when he replies will be able to give some reason why it has been taken away.
Clause 17 is a perfectly good clause, saying that if you want to redevelop and a longer lease has been taken you can get back your property. True you have to pay more than you were paid for it, but you get it back. But when you come to the all-important Clause 19 you see there is nothing in the clause except the word "redevelopment", which occurs once, which would enable any enfranchised house to be got back for redevelopment once it is sold. I cannot see any way. I have been told—and I ask for this to be denied if it is not correct—that the Land Commission will not buy such houses. I have been told—and I know this

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for myself—that local authorities will not be interested in spending their money on them. There is no power in the landlord to get such a house back, and I cannot see how the scheme in Clause 19 is going to get back for redevelopment properties which have been enfranchised. It may be said that it would be possible for the scheme to go to the High Court. But the High Court do not make schemes giving compulsory powers; it is not a thing they like. Nor are they at all suitable for this purpose. I suggest that this Bill cannot work unless another fresh look is given to the whole question of redevelopment.
Finally, I turn to the procedure under Clause 19. First of all, one has to go to the Minister and ask for a certificate—I do not think there is any objection to that—but the Minister has to hold a local inquiry it there is any objection. It will take months and years; local inquiries are very expensive, and the present Minister has not the proper staff for them. Then, having done all that, one has to go to the High Court and get a scheme. The Chancery Division at the moment takes two years to get a case on. I have just had one. What on earth are we going to do with development under Clause 19 if we have to go through all this procedure?
I suggest that the Government have now accepted the principle that there are well-managed estates that ought to be preserved. That is accepted in principle. If so, why hold a public inquiry? What is the need of it? We have the Lands Tribunal, which I suggest is a very good tribunal, set up for the very purpose of dealing with matters of this kind. I beg and pray, if this Bill is to go through, which I personally should hate, that there shall be a much quicker and cheaper procedure for getting these matters resolved in some way or other. Those, I am afraid, in one sense are clause points; but this Bill is a series of clauses which are interrelated, and the whole scheme must be looked at as one. I apologise for having spoken for so long, but I have had a good many years in this job and those are my views. This is the worst of many Bills on landed property which I have had to deal with.
5.13 p.m.
LORD ILFORD: My Lords, this Bill has been a most unhappy Bill, in its
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reception by the public, its reception by the Press, and certainly in its reception by the Church Commissioners.
It is, I think, generally recognised that some change in the law of leasehold property is desirable, and that leaseholders should have extended rights at the expiry of their leases which they do not now possess; and, indeed, that they should have a right to purchase their property either during the currency of the lease or at its termination. So there has been a substantial measure of agreement about what was required. It might have been thought that, in these circumstances where as I say, a measure of agreement appears to have been reached, the Government could have produced a Bill which would have commanded some agreement and a measure of support.
But, my Lords, that has not happened. This Bill has met with almost universal criticism, apart from the criticism of its political opponents. It has met with the criticism of the Press, of the professions, and of all those unfortunate persons, like my noble friend Lord Silsoe, who will have to try to work it out. It is said to be complex, prolix, unnecessarily obscure. It has also been said to be unfair and confiscatory. And, indeed, it is all these things. I have seen it described in the newspapers as "The Great Leasehold Robbery", and, a final and concluding comment the other day, "It is a mess". My Lords, it is, I regret to say, all those things.
The trouble with this Bill is that it is based upon a principle which is not really capable of being given practical expression. The White Paper boldly pronounced that the Bill:
"will be based on the principle that the land belongs in equity to the landowner and the house belongs in equity to the occupying leaseholder."
That is a principle which is quite unknown to our law. Our English law holds that that which is affixed to the land, be it a house which is built upon the land or anything else, becomes part of the land, That principle is based upon the very practical consideration that one cannot, in fact, deal with the two things separately: the two things are in fact inseparable and incapable of being dealt with apart from one another. You cannot demolish the house; you cannot alter it; you cannot do anything to it without

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going on the land, which belongs to somebody else. It is because this Bill has been based upon this entirely wrong and, I would suggest, erroneous principle that it has proved to be as complex as it is.
At the General Election the Conservative Party proposed a much more straightforward and simple solution of this problem which would in effect have given the leaseholder a form of statutory tenancy, and I think it is on those lines that the approach to the solution of this problem of leasehold law ought to be directed.
It is, I think, the pursuit of this supposed principle of separate ownership which has induced the Government to extend this Bill to two groups of freeholders to whom the Bill can do nothing but unnecessary harm. My noble friend Lord Gage has mentioned those groups, but I should like to say a few words about the position of charities whose funds have been for many years invested in real estate. No one criticises their standard of estate management, or their consideration for, or their relations with, their tenants. Indeed, one knows of big estates, particularly big estates in London, notably the estate of Alleyn's Gift of God at Dulwich, where the standard of maintenance is exceptionally high and the relationship with the tenants is exceptionally good. I think that that is the case with most charities whose funds are invested in real property.
I myself am a trustee of one such charity in London. I am not aware that any criticism has ever been advanced of our treatment of our tenants. Happily, like the charity of which my noble friend Lord Silsoe spoke, we have been released by the change of mind which was passed over the Bill in the last few weeks. Most of our properties will now lie outside the scope of this Bill. But that is not the case with many charities. There are many charities whose funds are invested in property of precisely the class to which this Bill will apply.
Under the Bill these charities will lose the value of their buildings and receive compensation only for the value of the land. That means that the funds of the societies will be very substantially reduced. The comprehensive management of the estate will become impossible if
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the leaseholders claim enfranchisement, or, indeed, if they claim—as I think they are most likely to claim—a new lease for 50 years. In either of those contingencies the standards of estate management must be interfered with, and indeed the comprehensive management of the estates will become almost impossible. Redevelopment of the whole of the estates of these charities will become difficult, if not impossible. I hope that the Government will see their way to exclude charities altogether from the operation of this Bill. I can see no useful purpose that will be served by including them, and I hope, as I say, that the Government will decide to leave them out.
Let me now say a word about another group of leaseholders to whom somewhat similar considerations apply. I cannot understand why the Government have thought it necessary to include local authorities in this Bill. Local authorities, of course, own a good deal of leasehold property. Some of it they have acquired as a form of investment, although I think it is not a form of investment that is widely used by local authorities. A more usual reason is to secure the comprehensive redevelopment of the authority's area, particularly the redevelopment of the town centres, many of which are held on leasehold terms. Then a great deal of leasehold property has been acquired by the local authorities for the purpose of reconditioning and future occupation. All these objectives, if not actually defeated, will be made much more difficult if leaseholders claim enfranchisement or an extended lease.
True it is that under the terms of the Bill the Minister can certify in certain cases that property will shortly be required by the local authority, and if he does so certify, then the property will be taken out of the ambit of the Bill. It is true, too, that under the Bill the local authority will retain the development rights, so far as they have been established, and there are certain provisions for dealing with houses which have been constructed by the authority, or purchased by the authority for the express purposes of dealing with a particular overspill population. These provisions will certainly be welcome to the local authorities, and will facilitate the operation of the Bill if they are to be included in it. But, my Lords, local authorities

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are not bad landlords, and this Bill is really directed against the bad man. Local authorities become landlords in the discharge of their function as public authorities, and I can see no reason why they should be included in the Bill at all. Here again I hope that, on second thoughts, the Minister will decide that no useful purpose is served by retaining local authorities within the scope of this measure.
I shall be interested to know what are the Minister's reasons for doing this. I cannot conceive of any useful purpose which is served by this proposal, and I shall be interested to hear what value the Minister really attaches to it. This is one of those unnecessary complications which arise from the fact that this Bill is based on an unsound and unreal principle. I hope that at a later stage your Lordships will consider that it is not necessary to extend this Bill to local authorities at all.
5.25 p.m.
THE EARL OF KINNOULL: My Lords, before I begin my speech, I should like to make a request to the noble Lord, Lord Bowles, that he does not retire to tea, as it will be rather disheartening for anyone talking to the Government when there are so few people on the Front Bench.
LORD BOWLES: My Lords, if I may interrupt the noble Earl, I understood from my noble friend Lord Kennet that the noble Lord, Lord Ilford, had indicated to him the points he was going to raise. Therefore as my noble friend had to meet someone very important outside the Chamber, he took the opportunity of doing so while the noble Lord, Lord Ilford, was speaking.
THE MARQUESS OF SALISBURY: My Lords, is it not very unusual that there should be not a single Minister sitting on the Government Front Bench on the Second Reading of this very important Bill? I have never seen such a thing in this House before.
THE EARL OF KINNOULL: My Lords, it is always, I consider, both a privilege and a pleasure to listen to and to marvel at the skill and advocacy of the noble Lord, Lord Shackleton, when he deploys
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his case, even when, as this afternoon, he is defending the most illogical piece of Government legislation. But to-day was a case which, may I say with respect to him in his absence, brought out the best in him. He was perhaps unlucky to be followed immediately by my noble friend Lord Brooke of Cumnor, who demonstrated with such clarity and force the many iniquitous terms which the Government propose to include in this Bill.
The Leasehold Reform Bill is the third major Land Bill which the Government have introduced within the last two years. Like its predecessors it follows on from the White Paper published in 1966, and like its predecessors its main opposition appears to arise not so much from the general principle of leasehold enfranchisement but more on the terms of the working of this principle. To many informed people the author of the White Paper on Leasehold Reform showed an astonishing lack of appreciation of the working of the leasehold system, and it expressed a completely biased and one-sided view. The White Paper almost churlishly made no comment on the contribution which the leasehold system has made over the past 200 years to the management, development and redevelopment of towns and cities throughout Britain, and notably Bath and Bristol. The Government White Paper simply argued that experience had shown that the whole system was proving monstrously unfair to any occupying leaseholders.
This argument only repeated what has been said for many years and what was, of course, analysed and studied by both the Jenkins Committee in 1948 and, later, by the consortium of professional bodies in 1961. On both these occasions, almost surprisingly, if I may say so, the evidence of major hardship suffered under the system was dismissed as "not proven", and in 1961 it was stated by the professional bodies that the dissatisfaction with the system largely arose from the widespread ignorance of leaseholders' rights under the existing landlord and tenant legislation.
Whether or not this is so I, for one, would agree that in certain circumstances, when you have an unscrupulous landlord—and here perhaps I may add in my experience public landlords are a good

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deal more unscrupulous and unbending in their negotiations than private landlords—the present system can cause hardship and does require reform, particularly towards the end of a lease. I would also agree in many respects that although the leasehold system has done much good in the past to assist planning and management of urban areas, the time for enfranchisement has come when householders should be given a chance of purchasing their freehold.
But, having said that, I cannot agree with the astonishingly iniquitous terms proposed both in the White Paper and in this Bill. So far as I am aware, during the many occasions that reform has been discussed in the past not even the most radical supporter has suggested that compensation to freeholders should be anything other than at fair market price. Leasehold investments to most people—except perhaps the Government—are quite normal marketable investments which were considered safe, even for widows and orphans. Their capital value has been long established by a formula devised by the professional bodies with the aid of Parry's tables and complicated equations—a formula which most valuation students like myself have taken many years to understand. Why a new formula should suddenly be announced by the Government which reduces the capital value of leasehold investment by, in some cases, as much as 50 per cent. must be quite incomprehensible to any fair-minded person. The new formula is even more astonishing in its concept when one learns that no proper consultation has taken place between the Government and the professional bodies as to its effect.
The new compensation formula is, in my view, the most serious breach of trust that the present Government have so far devised. It smacks right across the sanctity of contract and the faith people can have in its future. Even if a National Opinion Poll were taken, I am sure it would show that leaseholders consider themselves extremely lucky with the present terms of compensation. Perhaps it was an encouraging chink of daylight to read the other day an article written by a leading Socialist land reformer headed, "Reducing hardships caused by the Leasehold Reform Bill", in which he openly admitted that in some cases
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the terms of compensation would prove harsh. This learned gentleman, Mr. Silkin, went on to suggest a compensation fund should be set up to repay to any hard-done-by freeholder a sum of money which in equity, of course, was already his. This in itself shows, in my opinion, that in the Government camp the seed of justice is beginning to sprout.
Turning from the iniquitous compensation terms under this Bill, which I very much hope will be scrutinised most carefully during the Committee stage, particularly as I am glad to see that the Government cannot hide behind the cloak of a certified Bill, I think that the next most inequitable feature of the Bill is the reimposition of the rateable value limit. It was perhaps not surprising to understand the Government's dilemma in another place over their policy of imposing a rateable limit, because if we accept the principle that the leasehold system is no longer acceptable as a form of modern-day land tenure, including crownholds, then it is quite clear that the benefit should be granted to all leaseholders and not to a chosen few; or, as it is in this case, a chosen majority.
We are told that the rateable limit will affect, as it at present stands, only one per cent. of the one million leaseholders who come under the Bill. This in itself, I suggest, is a strong argument for abolishing the rateable limit. The Government's argument for restoring the limit was curiously vague during the Report stage proceedings in another place, and one can only assume that they feared that if the rateable limit was abolished the Government would be forced in equity to take a further look at the compensation formula.
Much has already been written and said about Clause 19 of the Bill, the relief for a well-managed estate. This in itself is, I suppose, a form of tardy recognition by the Government of the value which exists in the leasehold system. As the clause at present stands, as I understand it, the Minister will be the sole judge of whether an estate is well managed or not. His decision, of course, will affect to a large extent the future value of the area. I wonder whether the noble Lord, when he winds up, could explain exactly by what criteria the Minister will judge whether an estate is well run, and,

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if a new estate owner applies, whether the presentation of a management plan (such as a woodland plan for the Forestry Commission) will be sufficient evidence, particularly if up to that time the previous estate owner had a poor record of management.
A further point occurs to me under Clause 14 of the Bill, which enables a leaseholder to claim an extension of 50 years to his lease. The ground rent is reviewable only after 25 years. It would be interesting to learn from the noble Lord, when he comes to wind up, why the Government have chosen a period of 25 years and not a ten-year period; for this interval, in my opinion, would show a more realistic approach to the value of ground rents.
The two most harmful effects, as I see it, that will arise out of this Bill will be in the first place a general sterilisation of future redevelopment plans by private landlords, and in the second place an increased hesitancy in the housing market, which in turn, of course, will prove harmful to the housing programme. Perhaps one of the strongest arguments in favour of the leasehold system in the past has been the uniformity and ease within which redevelopment could be planned and executed; and the greatest danger to redevelopment in the future lies of course in the result of fragmentation that will surely follow from this Bill. This in turn must lead to the frustration of good planning. On top of this, as I see it, under Clause 14 the power of tenants to elect at any time during their lease whether or not they wish to purchase their freehold will add to the uncertainties of future redevelopment by landlords and may easily cause a falling off in the standard of housing in many areas.
As to the second harmful effect that I suggest the Bill will cause, and has already caused—that is, damage to the housing programme—whatever excuse the Government may plead about these miserable figures for 1966 (in the days of the noble Lord, Lord Mitchison, the excuse used to be mortgages and the lack of bricks), the climate of uncertainty is, in the opinion of most well-informed people, the direct cause of the fact that 13,000 fewer houses were built in 1966 than in 1964. This in itself meant that no fewer than 40,000 people were unable to enjoy in 1966 a good modern house, which one
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recalls was a pledge and hope that had been dangled to them just before the Government took office. This climate of uncertainty has surely sprung from the Government's recent policy and legislation over the last two or three years.
There is, of course, a second and fundamental reason for the static and ever-declining progress of the housing programme, and that is the chaotic delays that occur in planning. Such is the sick state of planning that I recently heard from a number of private developers that it often takes 18 months to obtain planning consent for a house which in itself takes only six months to build. This drag on the progress of the housing programme was recognised by the Government as long ago as 1964, when action was promised, and it must seem surprising to many people that such an urgent piece of legislation on planning should not have had priority over a seemingly less important Leasehold Reform Bill. I hope that the noble Lord, when he comes to wind up, will perhaps explain this strange order of priority, and also give us some information as to the progress of the new planning legislation.
5.40 p.m.
LORD ABERDARE: My Lords, I must begin by declaring an interest. My noble friend Lord Brooke of Cumnor declared that he had no interest either way. I hope that equally I may be allowed no feeling of bias, in that my interests lie on both sides of the fence, in the same way as those of the noble Lord, Lord Silsoe. I am in fact a ground landlord of a number of leasehold houses in Wales, and I am also the owner of a leasehold property in London. I do not think I need speak for long. The case has been admirably made out, first by my noble friend Lord Brooke of Cumnor, followed by others of your Lordships from all quarters of the House, who have called this a bad Bill. There is not much more that I can add to what they have said from their immense experience of this kind of problem.
My noble friend Lord Brooke of Cumnor made what I would humbly call a most excellent speech putting our point of view. He has been followed by a number of my noble friends from this side of the House, all adding from

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their experience to the ultimate condemnation of the Bill. The noble Lord, Lord Meston, spoke from the Liberal Benches and gave some concrete examples of how the Bill would turn out badly in certain cases. In particular, the noble Lord, Lord Silsoe, with his tremendous background of knowledge of this matter, also described the Bill as a bad one.
The noble Lord, Lord Stow Hill, took issue with my noble friend Lord Brooke of Cumnor, and drew attention in particular to the feeling of suffering and the complaints of the leaseholders themselves. He referred particularly to the time when he was a Member of another place and dealt with these complaints from his constituency. I think we must keep this matter in perspective, and I will draw your Lordships' attention to the fact that in 1961 an inquiry was made and leaseholders were asked to bring to the attention of the Ministry any specific instances of alleged hardship.
During the few months following, about fifty cases were examined, and the examination that took place failed to substantiate the suggestion that the terms asked by landlords were consistently and widely oppressive. Some of the offers could fairly be described as generous, having regard to the value of the interest involved. What emerged most clearly from the examination was that many lessees were not well-informed, either as to the nature or the limitations of a long lease or on current property values. I think that needs to be said. I do not think all the blame can be laid on landlords. There are many good landlords, and certainly, speaking for myself, the property concern with which I have to do has always been liberal in its granting of new leases and its sales of freeholds for what we consider to be a fair price.
I would remind your Lordships of the Conservative proposals in this field. They are, to leave to the occupying leaseholder three choices: first, the right to a statutory tenancy, as at present exists under the provisions of the Landlord and Tenant Act 1954; secondly, the right to a new lease freely negotiated with the freeholder, or, in the case of dispute, by the Lands Tribunal; thirdly, the right to buy the freehold on fair terms. It is when we come to the question of fair terms, right at the beginning of this Bill, in
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Clause 1(1), that we find the great difference of opinion that lies between members of the Government and every other quarter of this House.
The noble Lord, Lord Shackleton, in opening the debate, said that there was no simple solution to this problem. But that is really the whole trouble. The reason why there has never been any form of leasehold enfranchisement hitherto has always been the difficulty of finding a fair solution. I would suggest that the solution proposed now by the Government, that the land belongs to the landlord and the bricks and mortar to the leaseholder, is far too simple; it is an oversimplifying solution which causes great injustice. I would again refer to the speech of the noble Lord, Lord Silsoe, on that point, with his great authority and knowledge in this field.
The noble Lord, Lord Mitchison, pointed out that it was no new thing to interfere by passing legislation under the law of contracts, and he pointed particularly to the Rent Acts. But I would suggest that this is a totally different thing: that the Rent Acts were altering the law for the future, whereas the effect of this Bill is almost retrospective, in that a great many transactions have taken place on the basis of the present law which is now to be overturned. The most obvious, of course, is that of estate duty. In many cases estates have paid estate duty, often more than once, on properties where the reversionary value of the house has been taken into account. Now, having paid duty, they are to lose the asset. Equally, there have been sales and deeds of gift, and there was war damage contribution. All of those transactions took place on the basis of the law as we understood it and understand it. Now that is to be arbitrarily overturned for an oversimplifying principle which has been invented by the Government more for its simplicity than its justice. No wonder that one Sunday newspaper described it as "legal gibberish"!
That principle is belied when it comes to the more highly rated properties, where there is to be exemption for properties of a rateable value of over £400 in London and over £200 elsewhere. Here there is certainly one law for the rich and another for the poor. As has been pointed out already in the debate, this will certainly involve a number of anomalies. There

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will be houses where a leaseholder has done a great deal of improvement himself and the house has thereby been up-rated and is over the limit, for outside London, of £200 per annum, whereas the leaseholder who has not taken the trouble to develop his property will not have increased its rateable value. The one who, one would have thought, was the good tenant will not be able to enfranchise; the other will. There will be examples of houses within one estate which for one reason or another are differently rated: one tenant will be able to enfranchise; the other will not.
My noble friends Lord Gage and Lord Ilford have already referred to the anomalies, difficulties and injustices that will arise in connection with charities and housing associations. This Bill gives to individuals rights against other individuals, and this is a new form of legislation. It is surely essential, therefore, that it should be fair. Yet the terms proposed for the acquiring of freeholds are not even as generous as the State it-self offers in compulsory purchase. I have given my own example. I explained, to begin with, how I had a foot on both sides of the fence but am being injured in both feet. I am sure that a Bill that has this effect cannot be a fair Bill. My leasehold properties in Wales are being compulsorily acquired where they come under the Bill, yet I am unable to have the same privilege with my house in London. I cannot feel that this is a fair Bill. It has been condemned from all parts of the House. My noble friend Lord Brooke of Cumnor called it unjust and immoral. I would call it discriminatory and confiscatory.
5.52 p.m.
THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET): My Lords, I also must start by declaring an interest. I am a leaseholder. The noble Lord, Lord Brooke of Cumnor, in opening the Opposition's case against this Bill ranged very wide. I wondered at one moment what Government measures that he disliked he was not going to throw into the balance against this particular one. He threw in also a couple of nouns and a couple of adjectives which I have no doubt will be taken up in headlines of the Daily Telegraph to-morrow—I have no doubt
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that is what they were put there for. I will not answer them in kind, because if I did I should not be taken up by the Daily Telegraph to-morrow, or indeed by any other newspaper. Let us leave it at that.
The substance of Lord Brooke of Cumnor's case was answered with such succinctness and elegance by my noble friend Lord Stow Hill that there is little more I need say about it. He conceded half the Government's case. I refer to the points about mobility of labour and improvements; namely, that if you own an expiring lease you have a virtually valueless property and so you find it difficult to move somewhere else, which is a grave social factor in Wales at the moment; and that local authorities are not allowed at the moment to improve houses with less than a 15-year lease of life ahead of them. This includes many unexpired leases which are thereby held in a state of unfitness, entirely artificially, solely by the existence of the leasehold system. Lord Brooke of Cumnor conceded this part of our case, and then said that these problems can be solved in other ways. I wish I knew how.
The noble Viscount, Lord Gage, and the noble Lord, Lord Ilford, raised the special cases of charities, housing associations and local authorities under this Bill. In relation to charities we have here the same position as we had under the Land Commission Bill which we recently had before us in this House. When one is changing the system, conferring a right, changing the balance of rights, interfering with contract, in this case one has to consider only the status of the leaseholder, not that of the freeholder. We felt that we could no go very far in exempting freeholders from the operation of this Bill according to the nature and the purpose of the freeholder. Charities, as they were in the Land Commission Bill, have stayed, from their point of view, on the wrong side of the fence. It seems to me that a charity holding freehold property as an investment must be treated in the same way as any other person, a legal "person" or an individual person, holding freehold property as an investment. As the noble Viscount, Lord Gage, rightly pointed out, we are all united in our respect and admiration for what is done by charities, including the charities we are talking about. The right way to look at this

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would be to say that in the case of this Bill and the Land Commission, charities might begin to consider whether they should any longer commit a major part of their assets to investments which may be called in question or harmed by the pursuit of social justice itself.
On the matter of the housing associations, the noble Viscount mentioned a couple of cases, which I must admit I did not fully understand from his account of them. The situation is as it was described by my noble friend Lord Mitchison; and if Lord Gage could send me fuller details of cases he thinks he has unearthed which would seem to defeat our shared intention in this respect, I would happily look into them.
As to the question raised by the noble Lord, Lord Ilford, on local authorities, there one finds a slightly different situation. The local authority associations, especially the Association of Municipal Corporations, represented to the Minister that local authorities should be exempt from the provisions of the Bill because there was no evidence that they were bad landlords. But once again this is not the point. One is trying to do something for leaseholders, not simply to punish those who have been bad landlords. The Government considered this matter very closely, but came to the conclusion that as in the case of charities one could not discriminate between leaseholders on the basis of the character of the landlord.
All the same, local authorities are in a special position under the Bill. In Clause 29 they may apply to the Minister for a certificate which will enable them to resist the enfranchisement of any property shortly required for redevelopment under certain compensation provisions; and under Clause 30 they may sell the freehold to a leaseholder subject to restrictions on development, so that if they eventually buy back the property for a public purpose they can do so without paying a price which includes its development value. All this was in the White Paper, and this provision in Clause 30 is something akin to the Crownhold which is now becoming familiar to us under the Land Commission Act.
VISCOUNT GAGE: My Lords, I am glad to hear what the noble Lord has
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to say about his willingness to consider special cases, but I hope that when he quotes these general principles it does not mean that he is going back once again to ceasing to discriminate between properties below a certain rateable value. I hope he is not considering any further Amendments of that sort, and that we are going to stick to the £400 and £200 limit.
LORD KENNET: I am coming in a moment to the question of rateable value, under a separate heading.
The noble Lord, Lord Silsoe, spoke from an almost unrivalled wideness of experience from the landlord's eye point of view, and almost all will attend to him with the greatest openness of mind. He said that it was a fundamental misconception to say that the bricks and mortar belonged to the tenant because redevelopment nowadays was paid for by the landlord. But in this Bill we are rectifying an old abuse. We are rectifying the system where, typically, it was not paid for by the landlord—in the Welsh situation which gave rise to the whole pressure for this change. In future, developers will no doubt consider, after this Bill is law, as I hope it becomes, whether they wish to issue leases with a rent below two-thirds of the rateable value, or whether they prefer to concentrate on developing for rackrent or for sale, in which case the situation will not be changed by this Bill.
The noble Lord also asked me many questions which all really boil down to one: why cannot the landlord get back an enfranchised freehold property for purposes of redevelopment? We are all interested in redevelopment. On both sides of the House we are interested in redevelopment, in the right place and on the right terms. I should like to say a general word about this redevelopment question. We are interested especially in redevelopment in the "twilight" areas where the housing is bad and at the end of its life. Large areas of our great cities are—and we all know it—a national disgrace. This is where we want to see redevelopment. There are pockets of leasehold property in those areas which have not been redeveloped, and should have been some time ago, and we wish to roll this forward.
I make a distinction here between such areas and the areas which are, shall we

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say, typical of the good freeholder. I have in mind certain parts of central London, of which we can all think, where it is obvious that there has been a well-managed estate. What do we mean by "redevelopment" here? I, for one, do not want to see Belgravia redeveloped in the sense of being pulled down and having large glass and concrete slabs put on it. Any opposition to the terms of this Bill which is based on the presumed right, or indeed on the wish, of freeholders to carry out that sort of redevelopment in the well-preserved and handsome central areas of our cities seems to me to be a deleterious opposition from the point of view of our urban landscape. If, on the other hand, one means a redevelopment gutting the difficult old bits of a fine square or terrace and keeping the facade, then that is another matter. I think we should introduce this distinction. I am not sure that the noble Lord, Lord Silsoe, was allowing that distinction in what he said.
LORD SILSOE: My Lords, I mean that they both exist, do they not? For instance, on the Hyde Park Estate the Ministry of Housing said that we were to pull everything down; and we agreed to that. On the other hand, thank goodness! the Nash terraces do not have to be pulled down. There are both types, are there not?
LORD KENNET: My Lords, there are both, and one must not lose sight of the distinction. We have narrowed the discussion to desirable redevelopment, which is of course nowhere near a Nash terrace or the Hyde Park Estate, but the awful stuff in the "twilight" zones of our cities. The Government are not really interested, in so far as this Bill is concerned, in who does the redevelopment, and there is nothing in this Bill which is likely to prevent redevelopment from being carried out. We do not regard the presumed right of the existing great freehold estates to carry out necessary redevelopment as something which should put them in a privileged position vis-à-vis any other possible developer, be it another private developer, be it a local authority, be it a local authority with the help of the Land Commission, be it another private developer with the help of the Land Commission, or indeed be it the original freeholder himself with the help of the Land Commission.
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I turn now to the remarks of the noble Earl, Lord Kinnoull, who asked about the Clause 19 schemes. He asked, particularly, what would be evidence of good management when a freeholder applied for a certificate of good management from the Minister. It is an interesting point, and I should like to consider it and inform myself further; and perhaps we can take this up during the discussion of Clause 19 in the Committee stage. I was also interested in the noble Earl's question about a new freeholder who has just bought an existing freehold estate which is about to be enfranchised. He asked what would be his possible evidence of good management, and whether a mere declaration of intention would be enough. If he agrees, I shall answer him later on this point. The noble Earl also asked: why is 25 years taken as the period for review of the ground rent under the 50-year extension. I understand that it is taken because that is the normal period for reviewing a ground rent, and that the alternative period of 10 years, which the noble Earl mentioned, is the more customary period for the review of rack rents. Then he asked me for news of forthcoming planning legislation. If he had read the Press closely on this matter he would know that a White Paper is to be published the day after tomorrow, and I hope that this will give him all the news he desires.
The pressure for the reform of the leasehold system, as my noble friend Lord Shackleton said, was generated very largely in Wales. The undesirable, old leasehold tenure arose there, because before the issue of the great leases by the Marquess of Bute and other ground landlords in the valleys and in Cardiff, the new workers of the Industrial Revolution who came into those valleys and that city could live only in houses which were the property of the iron masters and the mine-owners. They were virtually tied cottages, tied to an individual enterprise, and they were used by the employers as no more than a weapon in wage negotiations. They were used simply to keep down the demands of the new industrial workers. If they asked for more than they were going to get, they were evicted; and that was that. So those workers turned to the thought of building their own houses. But all the land around belonged to one man, so that, in

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order to gain access to the land on which to build their own houses, they had to take out a lease, which was inevitably in the form which that one man wished. And the form of the lease was that after 99 years they had to give back the land with the house on it.
This Bill, my Lords, is urgent, and it is urgent because of the historical fact that it was in the late 1860s that many thousands of industrial workers in the valleys of South Wales and in Cardiff fled from their original landlords into the arms of the new ground landlords and built their own houses; and those leases are now falling in. I have been down there and have visited a good many towns and streets of this kind of leasehold property. I have seen the really intense social problem which is created by all those miles of streets on leaseholds falling in all at the same time, or within three or four years of each other. Complete communities are either uprooted or faced by the need to find money on a scale on which they do not know where to find it.
For this reason I became convinced, as indeed the Labour Party have been convinced since 1951—it has been coming up on us slowly as we approach the late 'sixties—of the acute need for this legislation on the ground in that place. The need in England is no less real, but it is less urgent because, for historical reasons, leasehold property in England is more scattered. It is possible for a leaseholder to find another house without leaving his native community. In Wales it is not; there is nothing but leasehold. It is true that there are four times as many leasehold houses in England as there are in Wales, but it is the Welsh situation which has dictated the fact that this Bill should be brought in this year rather than next.
I should like to say a word about the rateable value limit which has attracted a lot of attention in the Press. The noble Lord, Lord Aberdare, and the noble Earl, Lord Kinnoull, raised this question with some urgency in this debate. As is well known, the Government have been in some perplexity about this question—and why not? It is an extremely perplexing question. If you have a rateable
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value limit, then you have a border problem. You create friction between the leaseholder who is just below it, and the leaseholder—who may be his neighbour—who is just above it. This is true wherever you have the limit. If the limit were to be raised, you would simply have another set of leaseholders forming a border problem vis-à-vis each other. If it were to be lowered, you would have a third set. Wherever you put the limit, there would be friction at the boundary.
On the other hand, if you abolish the limit you come face to face with the phenomenon of the windfall, which may, in a few extreme cases, be very substantial indeed—so substantial that it seemed to the Government that it was preferable to accept the border problem, to accept the friction between those who just could and those who just could not enfranchise, than to encounter the manifest undesirability of the very large windfall coming to the leaseholder enfranchising at the fag-end of a high-rateable-value lease. This, therefore, is the provision in the Bill which is brought before your Lordships and which I commend to the House.
My Lords, this is a reform of property law. Like all such reforms, it is intensely complicated. It is one of several such reforms going through the House during this Parliament. It was in the Labour Party's Election Manifesto last time, and this is the reason why the noble Lord, Lord Brooke of Cumnor, so properly said that he would not advise the House to divide on it. The two Parties are agreed on the principle that something must be done about the leasehold system. I have not myself fully understood what the Conservative Party would have done if it had won the last Election, but if I understood the noble Lord, Lord Aberdare, correctly I think we are in dispute on the question of compensation, and that alone—that is, how much should the enfranchising lease-holder pay to the freeholder? It is natural—and I make no complaint about it—that the Tory Party should lean towards thinking that the leaseholder should pay rather more towards the well-heeled minority of freeholders. It is natural that the Party to which I am glad to belong should lean the other way and

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should think more, but I hope and believe not improperly more, about the interests of the less well-heeled majority in this matter.
My Lords, the Bill which I commend to your Lordships is, I submit, a well conceived Bill; but in saying that I do not mean to say that I think it is perfect. I hope that between us we shall be able to improve it to a certain extent on Committee stage.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

CONSOLIDATION BILLS
Message from the Commons: That they concur in the Resolution communicated to them in the Lords Message of Monday the 5th instant.

SEA FISHERIES (SHELLFISH) BILL [H.L.]
Referred to the Joint Committee on Consolidation Bills, together with the Report thereupon from the Law Commission.
House adjourned at thirteen minutes past six o'clock.