§ 3.23 p.m.
§ THE MINISTER OF STATE, SCOTTISH OFFICE (LORD HUGHES)
My Lords, I beg to move that this Bill be now read a second time. This Bill deals with a subject which is reasonably fresh in our minds, for it is only a little over three months since this House gave a Second Reading to a Bill on the same subject which was introduced by the previous Administration. That Bill made no further progress because of the Dissolution of Parliament. In the course of the Second Reading of the earlier Bill, I indicated to your Lordships that I welcomed it as far as it went.
My Lords, the Bill which we have before us to-day is, to a considerable extent, based on that earlier Bill, with the important difference that it goes a good deal further in the direction of getting rid of feuduties completely. The main change, which will be found in Clause 5, is the inclusion of the provision for compulsory redemption of feuduty at the first sale of property after the commencement of the Act. The obligation to redeem the feuduty will rest on the seller of the property, as is only fair since he will be getting the money from the sale. Redemption is to be effected by the payment to the superior of a sum of money, calculated by reference to the price of 2½ per cent. Consols, which will produce an income equivalent to the feuduty if approximately invested at current interest rates. This formula, which is the same as that contained in the previous Bill for the optional redemption of feuduties will, we think, be fair to both parties that is, both to the proprietor of the land and to the superior.
This is a major addition to the Bill and will, by itself, greatly hasten the disappearance of feuduties, as I understand that house properties in Scotland are now changing hands on average once 634 every seven or eight years. This is a change which was urged upon the previous Administration by the noble Lord, Lord Balerno, and others, and your Lordships will recollect that I joined with them in advocating that particular provision. So it presents no problem to me to have it included in the Bill at this time. I hope that it will be generally welcomed by your Lordships.
The second important difference between this Bill and that of the previous Administration is that the present Bill seeks to prohibit new feuduties completely, and to abolish completely existing feuduties on redemption. Your Lordships will recall that the previous Bill would, in both cases, have permitted, or would have left in being, a nominal feuduty of one penny if asked. This was done, as I understand it, on the assumption that retention of a nominal feuduty was necessary in order to preserve the feudal relationship between the proprietor of land and the superior. The present Government accept that, primarily for reasons connected with the right to enforce land conditions, this relationship will have to be kept for an interim period until we are able to bring forward further legislation to wind up the feudal system entirely. However, we were not attracted by the "feudal fiction" of the nominal feuduty which seemed to us a needless preservation of an archaic remnant which might conceivably give rise to difficulty and misunderstanding. Therefore, we have drafted the appropriate clauses of the Bill in such a way that a new feu, or a feu in respect of which the feuduty has been redeemed, will still have effect for all purposes other than the payment of feuduty exactly as if a feuduty were in fact being paid. With your Lordships' permission, I shall now go rather quickly through the Bill, touching on some of the main provisions.
My Lords, Clause 1 contains the central provision that no new feuduties are to be created. As I have already indicated, it will still be permissible to feu land, rather than selling it by outright disposition—for example, in order to create feudal land conditions—hut there is to be no feuduty of even a nominal amount. Clause 2 follows on from this provision by extending the prohibition of new feuduties to all other comparable payments from land. Clause 4 contains the 635 important provision permitting any proprietor, entirely at his own option, to redeem his feuduty at any term of Whit Sunday or Martinmas by paying the appropriate amount of redemption money calculated as I have explained already, to the superior.
This clause is on substantially the same lines as the corresponding provision in the earlier Bill, but there is one change to which I should draw your Lordships' attention. It will be recalled that some disquiet was expressed by the noble Lord, Lord Balerno, and indeed, myself, about the fact that under the previous Bill it would have been necessary for the superior to grant a formal receipt and discharge in respect of the voluntary redemption of a feuduty, instead of a simple form of receipt. This probably would have involved the employment of a lawyer, no doubt at considerable expense. The noble Lord, Lord Polwarth, was sympathetic on this point and had already put down an Amendment to meet it at the time when the earlier Bill was lost. The present Bill provides that in every case there will be a simple form of receipt only. This is achieved by subsection (6) of Clause 4, as read with Form 2 of Schedule 1, Clause 5 contains the major new provision of which I have already spoken, with regard to compulsory redemption of feuduty and other similar payments on a sale of property. The remaining parts of the Bill are substantially in the same form as in the earlier version, and I propose, therefore, to be brief.
My Lords, Part II contains the other major provision of the Bill; namely, the prohibition—subject to certain strictly limited exceptions—of future long residential leases; that is to say, of residential leases with a term which may extend to more than 20 years. This is something to which the present Government, like their predecessors, attach particular importance. In a White Paper published by the previous Labour Government in July, 1969, Land Tenure in Scotland—a Plan for Reform, we included as one of our cardinal points the words:The leasing of land for the purpose of building dwelling-houses will only be allowed in special circumstances and subject to the most stringent safeguards.We set out in some detail the social and other difficulties to which long residential 636 leasehold can give rise. Moreover, it is essential to introduce now this prohibition of long residential leases, not simply on the very real social grounds which exist, but also because if it were not done, long residential leasehold could be an obvious means of evading the prohibition of feuduty. Ordinary local authority letting will not, of course, be in any way affected. Long residential leasehold is not at present common in Scotland, and we do not think that it should be allowed to become so. As I have indicated, this Part of the present Bill is on precisely the same lines as the earlier Bill, and I hope, therefore, that it will have the strong support of the noble Lord, Lord Polwarth, and his colleagues.
Part III of the Bill is again on the same lines as the corresponding Part of the earlier Bill. Suffice it perhaps to say that some of the clauses are designed to cut out possible ways of getting round the main provisions of the earlier Parts of the Bill; for example, Clause 10, which prevents the use of a heritable security over a house as a way of imposing a payment as a substitute for feuduty, and Clause 11, which ensures that rights of redemption and reversion cannot be used as a way round the prohibition on long residential leases. Other clauses in Part III bring about certain technical changes in the law, relating mainly to leases; for example Clause 15, which deals with a point which was brought to notice by the Scottish Law Commission and the Law Society of Scotland, by recognising competence of the common commercial practice known as the "interposed lease".
Part IV is largely formal. Perhaps I should draw your Lordships' attention, however, to subsection (2) of Clause 21 under which the Bill will come into operation on September 1, 1974. This will ensure that the provisions of Part I, in particular—that is, those dealing with the prohibition of future feuduties and with the redemption of existing feuduties—come into effect as soon as possible. It will for example, mean that a proprietor will be able to opt to redeem his feuduty at Martinmas of this year.
If I may sum up, the main purposes of this Bill are: first, to prohibit comletely the creation of new feuduties; secondly, to give proprietors the right to redeem completely their existing feuduties 637 on statutory terms; thirdly, to provide for the compulsory redemption of feuduty on the first sale of a property; fourthly, to prohibit the future creation of residential leases for a term of more than 20 years; and fifthly, to deal with various ancillary matters, including changes in the law relating to the registration of leases.
The Bill represents the second stage in the Labour Government's overall programme of land tenure reform, which was adumbrated in the 1969 White Paper to which I have referred, and the first stage of which was carried out in the Conveyancing and Feudal Reform (Scotland) Act 1970. This Bill will effectively deal with feuduties. There remains the other very important and very complex aspect of the future of land conditions, and we shall be giving further thought to this before we come forward with firm proposals. But it is the Government's firm intention to move on, as soon as may be practicable, to complete abolition of the feudal system as such. I commend the Bill to your Lordships as a valuable and long overdue step forward, but it is only another step forward. I beg to move.
Moved, That the Bill be now read 2a. —(Lord Hughes.)
§ 3.33 p.m.
§ LORD MOWBRAY AND STOURTON
, My Lords, I think we must all be grateful to the noble Lord, Lord Hughes, for his extreme brevity and for managing to introduce this Bill in only 10 minutes. As he said, it is very similar to the one we fathered in January, and that fact will obviate my having to go over all the points which he and my noble friend Lord Polwarth covered earlier. However, as the noble Lord pointed out, there are still one or two points which are different from what we did in the past, and in this Second Reading speech I want to draw the attention of the noble Lord, Lord Hughes, to them.
When it was decided to remove the burden of feuduties from new grants of land which were in feu we felt when we were in office that it was essential to preserve the form of feudal holding. To do this we felt that a minimum rate of feuduty should technically be payable, and in this Bill put forward by us such duty in any new deed was to be set at a rate of one penny. This was a technicality and the Bill provided that the one 638 penny should be payable only if asked for. It did, however, preserve the form, in that the element of continuous payment was retained. In this way the normal feudal relationship continued until such time as the system as a whole was abolished.
The Bill which we are now looking at makes one major change by making it statutory that no new deed can impose feuduty at all. In normal circumstances, this would have the effect that the feudal relationship could not exist and in the case of previous deeds could now be ended entirely. This was not our intention when we were in Government, and I think it is probably not the intention of the present Government. To get around the difficulty which they have created in this respect, they have resorted to what one must call a legal fiction by saying in the same clause that… a deed executed afterthe commencement of this Actwhich contains a grant of land in feu shall have effect otherwise as if the grant were subject to a feuduty.In effect, what the Government are doing is pretending that they have not done what they have in fact done. Legal fictions may be acceptable in certain legal systems, but they are normally deprecated in the law of Scotland. By creating pretences of this sort I believe we may be creating a recipe for confusion in the future. I would ask the noble Lord to consider seriously the potentially damaging effect that such a course of action could have on the whole of land tenure in Scotland. I do not want to say any more about this Bill, because I think I have drawn attention to our chief worry on this point.