HL Deb 26 June 1967 vol 284 cc13-29

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, 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 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 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 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. 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 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 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.

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 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. 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.

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.

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 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 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, 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 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.