Lords Sitting of 9 March 1993

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chichester.

Council Tax: Appeals
Lord Eatwell Lord Eatwell asked Her Majesty's Government:
What steps have been taken to expedite appeals against council tax banding.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde): My Lords, the Government have made available an extra £36.2 million in 1993–94 to enable the Valuation Office Agency to deal with council tax appeals. The agency is setting in place systems to ensure that as many appeals as possible are dealt with at an early stage. The Government have also increased the staffing of valuation tribunals and provided them with new computer systems.
Lord Eatwell: My Lords, I am grateful to the Minister for his reply and somewhat reassured. Will he confirm that in the case of successful appeals interest will be paid on sums returned?
Lord Strathclyde: No, my Lords.
Lord Boyd-Carpenter: My Lords, in the light of his remark about expediting appeals, is my noble friend aware that in Hampshire the authorities decline to consider appeals until April or even to make available appeal forms? Is that consistent with the Government's view that these matters should be dealt with speedily?
Lord Strathclyde: My Lords, my noble friend is right to point that out. However, the local authority is correct in that no discussion will take place on banding until after 1st April.
Lord Taylor of Gryfe: My Lords, has the Minster any information as to how many appeals are for upgrading and how many for downgrading of bands?
Lord Strathclyde: My Lords, it is certainly the case that in some parts of the country people are complaining that they are in too low a band rather than too high a band.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that one disturbing aspect is that when one inquires as to what the procedure is likely to be, the authorities do not seem to know what drill they will adopt? They do not know where one should be advised to go.
Lord Strathclyde: My Lords, I am very sorry to hear that from my noble friend because the procedure is clear. In the first instance my noble friend should go to the listing officer and explain his problem. We
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expect most cases to be dealt with at that stage. Cases which are not dealt with after six months will be referred to the valuation tribunal.
Lord Barnett: My Lords, can the Minister say whether interest will be charged on sums underpaid?
Lord Strathclyde: My Lords, that is a matter for the local authority.
Lord Stoddart of Swindon: My Lords, is the noble Lord confident that valuation officers have sufficient staff to deal with inquiries? Is he aware (and if he is not I shall tell him) that I wrote to my valuation officer nine weeks ago trying to obtain information in order to decide whether I should appeal and I have still not received a reply? Indeed, it seems impossible to talk to the valuation officer at all.
Lord Strathclyde: My Lords, valuation tribunals currently employ about 250 staff. The Government's plans allow that total to rise to up to 400. It is our belief that we have provided enough money to ensure that valuation tribunals are fully financed.
Lord Williams of Elvel: My Lords, is it not the case that the Government have made plans to deal with up to 950,000 appeals, equivalent to 5 per cent. of domestic properties? And given that, as the noble Lord, Lord Boyd-Carpenter, pointed out, no appeal is possible until 1st April 1993, does that not mean that there will be considerable delay in the collection of council tax by local authorities? What provision are the Government making to compensate for that delay? How much do they believe local authorities will lose, and will the Government pay interest to the local authorities to make up for it?
Lord Strathclyde: My Lords, it is true that some appeals may take a long time. However, it should be remembered that we are dealing with appeals between different bands and in some cases there will not be a great deal of difference in monetary terms between the bands. All those who wish to appeal should pay the original assessment at the outset.
Lord Cledwyn of Penrhos: My Lords, is the Minister aware that I have received many complaints in my former constituency to the effect that valuations are being made without any examination or survey of the property concerned? How can that be justified?
Lord Strathclyde: My Lords, I venture to suggest that that is another question. However, if it would be helpful I can tell the noble Lord that the valuation process was undertaken most professionally and effectively and I believe that it will lead to a minimum number of appeals.
Lord Williams of Elvel: My Lords, I am sorry to intervene again. Is the noble Lord aware that it is not another question? My noble friend Lord Cledwyn raised a perfectly good point. That factor will affect appeals. Is it not the case that one of the assumptions which the revenue asked the estate agents who were undertaking the valuations to make was that the property was in a reasonable state of repair? How can the estate agent make such an assessment if he does

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not make a survey of the property? That is the point which my noble friend Lord Cledwyn made. Under those circumstances it is perfectly valid that the owner of the property should lodge an appeal.
Lord Strathclyde: My Lords, the point is that the valuation process is taking place along broad bands. Therefore the general state of repair of individual properties will not necessarily count. But, of course, it will be up to individual property owners to appeal if they believe that their banding is wrong.
Lord Gisborough: My Lords, the Minister states that the valuation was done professionally. I have a totally derelict, unimproved and uninhabitable farmhouse. Will he explain why that was placed in the top band?
Lord Strathclyde: My Lords, with a valuation exercise which covers the whole country, it may well be that one or two mistakes will be made. It is for that reason that we have instituted the effective appeals procedure.
Lord Stallard: My Lords, will the noble Lord inform the House how credible are his estimates of appeals? I know that thousands of people in London cannot find out which band their properties are in or what the council tax will be. We are only a few days away from the date when the council tax has to be paid. How does he know how many of those people will appeal?
Lord Strathclyde: My Lords, we have made an estimate of up to a million appeals. That is just a planning estimate. Of course we have no means of knowing exactly how many appeals there will be, but we believe that the figure is about right.
Lord Eatwell: My Lords, the Minister has made clear that the Government have ordained that payments must be made before an appeal can be made. Given that a successful appeal would indicate that the Government had been in error, is it not reasonable that interest should be paid on the forced loan which the Government have extracted from the public?
Lord Strathclyde: My Lords, it may be reasonable, but bureaucratically it would be difficult to implement. The amounts of money involved would be small.

Urban Housing: Redevelopment
2.45 p.m.
Lord Renton Lord Renton asked Her Majesty's Government:
What action they will take to promote the redevelopment of substandard urban housing, by compulsory purchase if necessary, in preference to the development of countryside areas.
Lord Strathclyde: My Lords, government policies already promote the redevelopment of inner city housing and thereby reduce the need to build in rural areas. Planning guidance emphasises the importance
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of reusing urban land for housing development, and mechanisms such as green belts discourage unnecessary encroachment on the countryside. Through housing and inner city programmes, large sums are spent annually to refurbish or redevelop inner city housing to regenerate the areas concerned and reduce pressure for greenfield development. A key task for the new Urban Regeneration Agency will be to tackle derelict urban land and buildings.
Lord Renton: My Lords, I thank my noble friend for that most encouraging reply. However, is he aware that most urban areas, especially the larger ones, even today have many derelict and substandard houses, and considerable amounts of waste land? Will he give an undertaking that such areas will be developed before any open country is encroached upon?
Lord Strathclyde: My Lords, that is precisely one of the reasons behind the setting up of the Urban Regeneration Agency. It is to bring together under one organisation the various government bodies which already consider those issues so that they can be co-ordinated in an effective fashion.
Lord Molloy: My Lords, much of the urban substandard housing was built before it was compulsory to build an internal bathroom and toilet in a property. Nevertheless, the buildings are substantial. If the Government were to liaise with a number of our housing and building contractors to modernise such houses, that could make a large contribution towards resolving the housing problem.
Lord Strathclyde: My Lords, as the noble Lord will know, the Government take seriously the refurbishment of local authority housing and housing association funding. That has been a general thrust of our housing policies for some years.
Lord Ross of Newport: My Lords, does the Minister agree that in order to protect the further encroachment of our countryside and to encourage people back into the urban areas, it is a good idea to look at some of the vast numbers of blocks of offices which exist at present and which are never likely to be occupied? Will the Urban Regeneration Agency be able to use some of its resources to carry out desirable conversions into residential units?
Lord Strathclyde: My Lords, the Urban Regeneration Agency will be able to undertake many tasks. No doubt it will wish to take into account the noble Lord's point.
Baroness Hollis of Heigham: My Lords, the Minister has stated that the Government take seriously the refurbishment of older houses. In that case, will he tell the House why the Government's contribution to renovation grants will be cut next year from 75 per cent. to 60 per cent., thus ensuring that demolition rather than renovation will take place?
Lord Strathclyde: My Lords, the whole point of our programmes for cities is that we are increasing spending. Next year we are contributing about £4

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billion towards urban regeneration. The noble Baroness can pick certain programmes where funding has shrunk, but those funds are made up elsewhere.

Grant Maintained Schools: Financial Management
3.48 p.m.
Baroness David Baroness David asked Her Majesty's Government:
Whether sound financial management is a necessary precondition for allowing a school to opt out of local authority management.
The Minister of State, Department for Education (Baroness Blatch): My Lords, when considering applications for grant maintained status, my right honourable friend takes into account all relevant factors including the school's ability to manage its financial affairs as a grant maintained school.
Baroness David: My Lords, in that case, will the Minister tell me whether the Tory-controlled Surrey County Council will carry the debt of £198,000 which four schools had run up before they became grant maintained in April 1992?
Baroness Blatch: My Lords, it is entirely the responsibility of Surrey County Council to ensure that its schools do not overspend. In fact, schools are not allowed to plan for a deficit and Surrey County Council should not condone it.
Lord Jenkins of Hillhead: My Lords, is the Minister aware that if the Government were a school, they would not begin to meet the conditions for opting out?
Baroness Blatch: My Lords, I believe that this House has much more confidence in governors of schools and would not dare to be patronising about them.
Baroness Young: My Lords, does my noble friend agree that many grant maintained schools manage their financial affairs considerably better than when they were managed under local authorities?
Baroness Blatch: My Lords, my noble friend is right. There is increasing evidence that that is the case.
Lord Parry: My Lords, can the noble Baroness tell the House whether it is now mandatory for teachers to study management studies as part of their course or whether it is intended that they should?
Baroness Blatch: My Lords, it is not mandatory but it is in any case good that teachers should learn the elements of management when training, whether they are managing the classroom, the children or the resources which they have to manage when they are in teaching. It is also good as preparation for posts of responsibility, whether as heads of departments or heads of schools.
Lord Parry: My Lords, will the noble Baroness accept that many of us have great confidence in the
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abilities of teachers but feel that they lack the support they should have in order to discharge their responsibilities?
Baroness Blatch: My Lords, I absolutely agree with the noble Lord, they do. Many of our teachers are natural managers but more could be done in their initial training to make sure that they are properly equipped, not just for teaching children but for managing the process of teaching children.
Viscount Eccles: My Lords, sound financial management requires experience, and quite often training. Can my noble friend assure me that all head teachers are offered such training?
Baroness Blatch: My Lords, I can assure my noble friend that training funds are given directly by government for training not only of head teachers but also heads of department and teachers in order to help them manage their financial affairs.
Lord Glenamara: My Lords, what makes the noble Baroness think that she can manage the schools better than the local authorities who have been doing it successfully for 91 years?
Baroness Blatch: My Lords, I do not believe that we can manage them better than the schools themselves. I believe that it is the schools themselves—their governors, the heads and the staff—in whom we should vest the responsibility for management, not in politicians and, indeed, not in local politicians.
Lord Judd: My Lords, does the noble Baroness agree that there is a loophole whereby a school that opts out of local authority control at the end of the financial year in April can build up large debts to the local education authority which cannot be recovered? If that happens, what would the Secretary of State do to put the situation right?
Baroness Blatch: My Lords, if the local authority is doing its job, it should not wait until the end of a financial year to be aware that a school is overspending its budget. Most local education authorities have provisions in place to see that they monitor the spending of their schools month by month. They are responsible for them and the schools are accountable for the proper management of their funds. To condone deficit planning is simply wrong and therefore the responsibility and obligation would be for the LEA and not for the Government.
Baroness David: My Lords, can the Minister tell me what is the responsibility of the governors in a school under local management? When that school becomes grant maintained, presumably the governors will have total responsibility for any debts they run up.
Baroness Blatch: My Lords, the responsibility of governors, whether in LEA maintained schools or grant maintained schools, is to manage within the budget. Governors in an LEA maintained school are accountable to the local education authority for the proper management of its budget. Governors in a

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grant maintained school, until the funding agency comes along, are responsible to my department for the proper management of their budget.

Maastricht Treaty
2.54 p.m.
Lord Bruce of Donington Lord Bruce of Donington asked Her Majesty's Government:
On what legal advice was Baroness Chalker of Wallasey able to state on 17th February 1993 (HL Deb, cols. 1205–6) that "Maastricht itself introduces no constitutional innovation."
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, as the context of my remark quoted by the noble Lord shows, I was referring to the principle of primacy of Community law over United Kingdom law. Parliament accepted that innovative constitutional principle when it approved the accession of the United Kingdom to the European Community in 1972. That was not changed at Maastricht.
Lord Bruce of Donington: My Lords, is the noble Baroness aware that the Maastricht Treaty itself contains many constitutional innovations, even within the context with which the noble Baroness dealt, and notably in Article 104c, where the Commission, composed of people without any conspicuous qualifications and who are completely independent, is given the right under the treaty to monitor the economic performance of the country and to report on where the country has fallen down and made gross errors? Does not the Minister consider that to be a constitutional innovation?
Baroness Chalker of Wallasey: My Lords, given the number of bodies outside these Houses of Parliament throughout the country and the Community which spend much time monitoring what other people do, reporting upon it and giving spurious recognition to it, I do not believe that this is a constitutional innovation. It is certainly not, remembering what the primacy of Community law is all about. I remind the noble Lord that the primacy accepted in 1972 was subsequently endorsed by the 1975 referendum.
Lord Acton: My Lords, in accordance with the Question, did the Minister take legal advice for the Statement? If she did, is she aware that there are precedents for the Government disclosing the law officers' opinions in accordance with the book by Professor Edwards: The Law Officers of the Crown? Given the importance of the matter, will she publish that legal opinion?
Baroness Chalker of Wallasey: My Lords, like all Ministers, so far as possible I take the appropriate advice, including legal advice, before coming to the House. It is neither normal nor desirable that Ministers, or other Members for that matter, should be faced constantly with questions about the source and nature of their advice. On rare occasions, as in the Statement I made to the House on 15th February,
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with my noble and learned friend the Lord Advocate sitting beside me, I was repeating the Statement made in another place by my right honourable friend. Reference was then made to legal advice, but that is wholly exceptional procedure, taken for the reasons that I explained at the time and it is not the norm.
Lord Hailsham of Saint Marylebone: My Lords, will my noble friend agree that the expression "constitutional innovation" is not a term of art and is therefore not a suitable subject on which to obtain the opinion of law officers? Is that not rather obvious?
Baroness Chalker of Wallasey: My Lords, as ever, my noble and learned friend is absolutely right.
Lord Richard: My Lords, can the noble Baroness help the House and perhaps the country? Will she tell us what are the intentions of the Government following their humiliation last night?
Baroness Chalker of Wallasey: My Lords, that is not a question for me or for this House. What happened last night was that a vote was taken for delay. The passing of Amendment No. 28 succeeds in that purpose, but it does not weaken the Government's determination to ratify the treaty, nor our ability to do so. The amendment passed last night is not a matter of major significance.
Lord Monson: My Lords, the noble Baroness has on at least two occasions assured the House that Article 8 of the Maastricht Treaty imposes no specific obligations upon British subjects in their capacity as citizens of the new European union. That, of course, we accept. However, is she aware that a number of eminent lawyers are of the opinion that Article 8 nevertheless imposes a general duty upon us to act as good citizens of the new union and to behave loyally towards it, even on the inevitable occasions when its broad interests conflict with our own narrower interests? If so, that would certainly amount to a constitutional innovation. Is the noble Baroness in a position to state categorically that that interpretation is incorrect?
Baroness Chalker of Wallasey: My Lords, the reference to "duty" is not a reference to specific duties. Neither the Maastricht Treaty nor any previous Community treaties impose specific duties on individuals. I believe that that is an unnecessary and empty reference. Looking carefully again today at Articles 8 to 8e, what is being done there is to give Community nationals the right to add to their national duties by voting and standing in local elections and European parliamentary elections or entitling them to diplomatic and consular protection by representatives of other Community governments. Citizens of the union will have the right to petition the European Parliament. None of those things are constitutional innovations; they are, I should have thought, an extension of individual citizens' rights.
Lord Rippon of Hexham: My Lords, while accepting and warmly endorsing what my noble friend had to say about the Maastricht Bill, does she agree that the constitutional innovation that worries many

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people is the consistent undermining of local democracy? Can we have as soon as possible an assurance from the Government that they will not seek to overturn the vote that was taken, possibly for the wrong reasons, in the other place yesterday?
Baroness Chalker of Wallasey: My Lords, I believe that it would be wrong to interpret any of the changes brought about by the Maastricht Treaty as undermining local democracy or any other democracy. The important point is that the Maastricht Treaty makes clearer than ever before what should be done and what may be done, if member states agree, by the Community. It also makes sure that there is an opportunity for greater investigation of what goes on. That is why there is a package of non-legislative powers for the European Parliament. I do not believe that extending the right to vote to citizens of Europe in another European country where they are living and registered will in any way undermine the local government of that area.
Lord Kennet: My Lords, following on the last question, does the noble Baroness agree on reflection that although last night's vote may have resulted in delay, it was not a vote for delay but a vote for democracy?
Baroness Chalker of Wallasey: My Lords, I find it very difficult to understand why parties who say they are in favour of the passing of the Bill to ratify the Maastricht Treaty with all possible speed are seeking to make such delay. The delay that will be accorded by that vote is one which will rest with their consciences and be made known to the country.
Lord Elton: My Lords, I should like to ask my noble friend, not for the first time: is it not rash for this House to try to interpret the motives and actions of another place before the legislation reaches this House?
Baroness Chalker of Wallasey: My Lords, I agree with my noble friend. But perhaps I should have said earlier that the Government have no fundamental objection to elected local government representatives sitting on the committee, which was the effect of the amendment last night. What is to be done about it is yet to be decided.
Lord Jenkins of Hillhead: My Lords, is the noble Baroness aware that when the Government get themselves into a position which is dependent upon Opposition parties to get legislation through it would behove them, on a matter which has nothing to do with the essence of the treaty but would, as the noble Lord, Lord Rippon said, somewhat extend local democracy, to show a little sense of striving for consensus and not consistently to display the stiff-necked arrogance which is the characteristic of weak men?
Baroness Chalker of Wallasey: My Lords, as I said some moments ago, there is no fundamental objection to elected local government representatives sitting on the committee. It was, however, felt better that there should be a mix of elected representatives and others
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—for instance, from the development agencies—which would be more practical. The amendment passed last night, if it remains in the Bill, will not allow others from, for instance, development agencies to sit on that particular committee. It is not quite the simple and rather strident suggestion just made by the noble Lord.
Noble Lords: Next Question!
Lord Stoddart of Swindon: My Lords, there is no next question. Somebody shouted out "Next Question". I merely point out that there is no next Question.
Is the noble Baroness aware that some of us are puzzled that she does not think that there is any constitutional innovation in the Maastricht Treaty? Are there not certainly two such innovations? Is it not a fact that under Article 8 Her Majesty will become a citizen of the European Union? That is certainly an innovation, since no monarch since Henry VIII has been a citizen of any organisation who has been the Sovereign of this great nation. Secondly, is it not a constitutional innovation that a state, and in particular this state, can be fined by an outside body for not doing what that outside body thinks that it should do?
Baroness Chalker of Wallasey: My Lords, I am afraid that the noble Lord's question was a little intricate. I remind him of what I said when we had the debate in this House on 17th February. It was to the effect that the fact that the Sovereign may have duties under Article 8 does not alter the Sovereign's position. I said it in rather better words then, but from memory that was exactly the interpretation which had been provided to me. I shall look again at what the noble Lord said because I would not wish to mislead him or other noble Lords in this House.
Lord Bruce of Donington: My Lords, pursuing the original Question on the Order Paper, if the Treaty of Maastricht imposes no innovation at all and is not innovative, why does it impose unspecified duties in Article 8? If the noble Baroness is unable to specify what the duties are, or they are not spelt out in the treaty, why put the word "duties" in the article at all? Is she aware that under Article F of the treaty paragraph 3 states:
"The union shall provide itself with the means necessary to attain its objectives and carry through its policies".
Does she agree that, if its policies are to put into operation unspecified duties, it needs very little imagination to think of the monstrosities that will emanate from the committee?
Baroness Chalker of Wallasey: My Lords, I believe that we went through this matter very carefully on 17th February. I shall certainly look very carefully at what the noble Lord said, as I always do with his questions. I do not believe either that it extends the Community competence, nor do I believe that the unsubstantiated, non-specific duties to which the noble Lord, Lord Bruce of Donington, frequently refers are the ogre that he paints them to be. I will go through what he said again, write to him and put a copy of the letter in the Library of the House.

Business
3.6 p.m.
Lord Hesketh: My Lords, at a convenient moment after 3.30 p.m. my noble and learned friend Lord Fraser of Carmyllie will, with the leave of the House, repeat a Statement that is to be made in another place on the Scottish Office White Paper. It may be for the convenience of the House to know that the Committee stage of the Housing and Urban Development Bill will be adjourned at about 7.30 p.m. for about one hour and that during this adjournment the Third Reading of the British Railways Bill and the Redundancy Payments (Local Government) (Modification) (Amendment) Order will be taken.
Penalty for Murder Bill [H.L.]
Lord Ashley of Stoke: My Lords, I understand that a noble Lord has indicated a wish to speak in Committee. Therefore I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee. —(Lord Ashley of Stoke.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 [Penalty for Murder]:
On Question, Whether Clause 1 shall stand part of the Bill?
Lord Boyd-Carpenter: With due respect to the noble Lord, Lord Ashley of Stoke, it seemed to me that this matter was too important to be allowed to go through on the nod, as he proposed. Therefore, I ventured to give him notice that I thought it should be debated at this stage. The penalty for murder is a unique one. Some of us believe that that is right. Certainly, many of us believe that in present circumstances it would be dangerously unwise to modify it and to inform the public—particularly those who are concerned to commit the crime of murder —that it is no longer to be regarded as a uniquely serious offence.
I do not know, because he has not told us, what the noble Lord, Lord Ashley of Stoke, has in mind in proposing the Bill at this stage. I suggest that he could hardly have chosen a worse time. Murder is far too frequent in one form or another in this country, including murder by terrorists, and consideration must be given to the position of the police. The Committee will be aware that the police are obviously more exposed to personal danger and to the risk of being killed on duty than any other section of society. The police are not only conscious of that but also extremely disturbed at the idea of any modification of the law in the way proposed or, indeed, at all.
I am aware—and if I do not say it no doubt the noble Lord, Lord Ashley of Stoke, will—that nowadays it is rare for the full life sentence imposed on a murderer to be served. Some of us have grounds for criticism of the developing practice of the Home Office, acting on somewhat irresponsible advice, to
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release people convicted of serious crimes of murder after 20 years. However, even when that happens, the sentence still stands. If the individual gives cause for concern or becomes a danger to others, he can be recalled to goal. If he is no longer sentenced to life and sentenced only to a specific number of years in prison, then after those years have expired he cannot be recalled.
Therefore, the question of the unique penalty for murder is a serious one. I believe that your Lordships' House would be subject to criticism from outside if we allowed the measure to go through, as was apparently proposed, simply on the nod. Whatever view the Committee may take—I am conscious that there are differing views in your Lordships' Chamber—it is a matter which must be and should be thoroughly debated. It is quite wrong to attempt to get it through in this way, with the Committee stage suspended.
I venture to remind the Committee of the difficult law and order situation which exists today; of the fact that many criminals are now armed and are prepared to shoot policemen or others who resist. To modify the sentence which can be imposed for murder at this moment would seem to be extraordinarily unwise. I suggest that if the Committee were to accept such a proposal it would expose the House to a certain amount of criticism. In any event, I ask your Lordships to consider that if the penalty is to he modified, the matter should be fully debated and conflicting views taken. A decision can then be made in the light of that. I gave notice to the noble Lord, Lord Ashley of Stoke, that I would try to say something on the matter, and it may be that other Members of your Lordships' Committee will also feel so inclined.
Viscount Astor: I am grateful for the support of the Government's position on the Bill offered today by my noble friend Lord Boyd-Carpenter. I know that your Lordships wish to proceed to the next business shortly. We shall have a chance to debate the Bill at Third Reading next week.
All I wish to say, as I made clear at Second Reading, is that to abolish the mandatory life sentence for this grave offence would, in the Government's view, send the wrong message to the public regarding our determination to deal with violent crime. I believe that it would risk undermining the faith of the public in the criminal justice system as a whole.
Lord Boyd-Carpenter: Before my noble friend sits down, perhaps he will confirm at what hour next week it is proposed to take the Third Reading. Is it proposed that it should be taken late at night, as was done with the Second Reading?
Viscount Astor: That is a matter for the usual channels, but I shall convey the comments of my noble friend to those concerned.
Lord Morton of Shuna: It is unfortunate that the noble Lord, Lord Boyd-Carpenter, suggested that this Chamber has not debated and considered abolition of the mandatory life sentence. To my recollection it was debated at length in 1987 during proceedings on the Criminal Justice Bill. Those debates occasioned the

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setting up of the Select Committee on Murder and Life Imprisonment, of which I had the privilege to be a member. We reported and the matter was debated in this Chamber at length.
It is wrong to suggest that the matter has not been debated. To my knowledge it has been debated regularly at around six-monthly intervals and on several occasions Members of this House have expressed the strong view that the mandatory sentence should go. However, we are not talking about the abolition of the life sentence; it is only the abolition of the mandatory life sentence. It is the abolition of the necessity to impose a life sentence for a mercy killing —the sort of offence where, in the view of the majority of the judiciary of England, such a sentence is clearly wrong.
Firm views to that effect were expressed on the subject both by the present Lord Chief Justice and by his predecessor. Those views have been expressed in this Chamber. It is extraordinary to suggest that the matter has not been before the House. It has been regularly before the House, and views have been expressed. It is entirely proper that the Bill should go through merely endorsing what Members of this Chamber have said on several previous occasions.
Lord Campbell of Alloway: I wish to support every word spoken by the noble and learned Lord, Lord Morton of Shuna. I was a member of the committee. I am astonished by what my noble friend Lord Boyd-Carpenter said. As a matter of record I wish to be associated with everything said by the noble and learned Lord.
3.15 p.m.
Lord Ashley of Stoke: We are always delighted to hear the eloquence of the noble Lord, Lord Boyd-Carpenter. I am especially pleased that he raised this matter today to give us the opportunity of addressing this important issue. I am grateful to him. However, I do not agree with him for the reasons I set out on Second Reading.
The noble Lord, Lord Boyd-Carpenter, is seriously at fault when he says that I have not told Members what I intend. I spelt out what I had in mind in great detail on 8th February this year in what was perhaps too long a speech. The point of introducing the Bill was that I was concerned. I have campaigned in another place on behalf of battered women, arguing that they should be given more justice than they receive at present. I tabled the Bill because a battered woman who has suffered from years of violence and who then kills in reaction to that violence is given exactly the same life sentence as a cold, calculating murderer.
It is preposterous to put the same moral culpability on to somebody who commits a killing of that kind or perhaps a mercy killing as one would put on a calculated assassin or, for instance, the Moors murderer. The same moral culpability through all these murders is preposterous. That is why I want the mandatory life sentence ended.
A distinguished Member of this House, the noble and learned Lord, Lord Hailsham, commented on the
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question of moral culpability. I have not told him that I intended to quote him as I learnt only 20 minutes ago that the Committee was to debate this matter today. He said,
"Murder…consists in a whole bundle of offences of vastly differing degrees of culpability, ranging from brutal, cynical and repeated offences like the so-called 'Moors murders', to the almost venial, if objectively immoral, mercy-killing of a beloved partner".—[Official Report, 8/2/93; col. 481.]
No noble Lord could put it more eloquently than that. That is the situation. There are all these vastly varying degrees of moral culpability. The Minister is quite wrong to stand pat on this ancient ill thought out case of saying that we must stand by the mandatory life sentence. The reason the Government are so cowardly on this issue is that they are afraid of public reaction. They want to be seen as tough. But I am tough. I am a hardliner on brutal crime. I want cool, calculating murderers to have life imprisonment. I feel very strongly and deeply about that. But to give the same sentence to a mercy killer or a brutalised wife is palpable nonsense. I do not want to make a very long speech but that is the nub of my case.
Clause 1 agreed to.
Clause 2 agreed to.
House resumed: Bill reported without amendment; Report received.

Housing and Urban Development Bill
3.22 p.m.
Lord Strathclyde: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Strathclyde.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 [The right to collective enfranchisement]:
Lord Peyton of Yeovil: I have one difficulty on which I should be grateful for the Committee's help. Anxious as I always am to help the Government to get through their business, I am proposing not to move Amendments Nos. 1 and 2 which stand in my name. I understand, having spoken to the noble Earl, Lord Lytton, that he is quite content that I should do so. His amendments will therefore take their ordinary place on the Marshalled List according to their numbers. I hope that that will be acceptable to the Committee.
[Amendments Nos. 1 and 2 not moved.]
Lord Peyton of Yeovil: Anxious as I am, as I have said previously, to help the Government all I can, I do not propose at this stage to move Amendments Nos. 3 to 6.
[Amendments Nos. 3 to 6 not moved.]
Lord Peyton of Yeovilmoved Amendment No. 7:
Page 3, line 25, at end insert ("provided that the relevant date shall in no circumstances be less than three years after a qualifying tenant commenced his occupation of the relevant premises.").

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The noble Lord said: I only wish that my good feeling toward the Government was sufficiently powerful to induce me not to move this amendment, but it is of such importance that the Committee would wish to spend some time considering it.
My difficulty with the Bill, as I said at Second Reading, is that it takes a very broad brush to a very fine problem and as a result makes little sense and less fairness. It gives to all tenants, regardless of their deserts, and it takes away from all landlords, regardless of their merits or their defects. It sets out to alter agreements for the benefit of all tenants and to the detriment of all landlords.
Lord Williams of Elvel: I am sorry to intervene. For the benefit of the Committee, is the noble Lord also speaking to Amendments Nos. 28, 32, 37 and 38?
Lord Peyton of Yeovil: Perhaps I should have made it absolutely clear that all these amendments are grouped together. At a slightly later stage in my remarks I shall deal with the points of other amendments which are grouped with this one.
As I was saying, the purpose of the Bill is to alter agreements for the benefit of tenants and to the detriment of landlords. It makes no reference to the deserts of the one or the defects of the other. It raises questions about the whole future of leasehold tenure. I very much hope that my noble friend will be able to give us the wisdom, albeit at second hand, which he will have been able to derive from the Minister for Housing, as to how he and the Government see the future of leasehold tenure after this Bill has been passed. It would seem to me that potential landlords might be a little reluctant to take any step at all in such a direction, although I had previously understood—I daresay that I was wrong—that the Government regarded the continuation of leasehold as being quite important and as having a contribution to make to our affairs. My plea is that the Bill could have been aimed and should have been aimed at particular landlords and particular tenants.
I was interested—I am sure that Members of the Committee were interested—to read a letter written to the Spectator the other day by the Minister for Housing. It is a great regret that the limitations of our procedures prevent us from having the presence of the Minister for Housing because I regard him as being at least in loco parentis regarding this Bill. It is asking so much of my noble friend Lord Strathclyde to defend a Bill which is perhaps not his. I am sure that he regrets as much as we do that the parent is not here to defend his child.
In his interesting letter to the Spectator the Minister for Housing said:
"It is only reasonable that he [the lessee] should be given the ability and the right to determine the future of"—
mark the words—
"what is effectively his property by buying out the residual interest of the freeholder".
I leave it to the Committee to judge whether that is a fair comment on the contents of the Bill. The Minister for Housing went on to say:
"That is not confiscation. It is liberation".
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In writing those words I really think that the Minister deserves a place by the side of Humpty Dumpty, who said that words should always mean exactly what he meant them to mean —no more, no less.
The Minister himself has said that, when it comes to paying compensation to the landlord who is not a willing seller, it should be measured as closely as possible to the value at which a free market between buyer and willing seller would anyhow arrive. That is a slight gloss on the words that are in the Bill. Any dispassionate examination of those words would prompt many people to say that they are not realistic in any way. There is no free market here. It is a hollow pretence to say that there will be one.
I come briefly to the amendment which I am proposing. It suggests that, in order to qualify for the right of enfranchisement, a tenant should have been in occupation of the premises for a minimum of three years. It may be that the Government will suggest that this is a wrecking amendment. I suggest that the only wreckage is the words in the Conservative manifesto. I am not an avid reader of party manifestos at elections. I do not attach quite the weight to them which others do. But, nevertheless, the manifesto is being bandied about. I shall be grateful if my noble friend will pass on this reminder to his honourable friend the Minister. He needs to be reminded about these matters; namely, that legislation will be introduced to cover houses or flats which had been the principal residence of the tenants concerned for at least five years.
That is a very unobjectionable principle. For the life of me, I cannot understand why it is that the Government took it into their head to take a very big extra leap in this broad, sweeping way involving, as it does, charities, making no distinctions between good and bad landlords or between tenants of merit and others without too much desert.
There is only one other amendment to which I wish to make particular reference, and that is Amendment No. 28 in the name of my noble friend Lord Boardman. That amendment has the merit which mine does not have of conforming entirely with the manifesto pledge. I wish to make it clear—no doubt my noble friend Lord Boardman will echo these words —that in my view his amendment is preferable to mine in that it covers both points. It covers the two points of the time of residence being a qualification and also the other of the property being a main home.
In the broad approach that they have made, the Government are going to let all kinds of people—some of whom are not resident at the present time —into the flats or houses which they are going to be able to acquire on very favourable terms. Not all of them will even be resident in the United Kingdom. I am sorry for my noble friend the Minister. He is under some duty here to repeat to the Committee the explanation which doubtless he has been given by those advising him as to how he should conduct himself in what is for him a very awkward situation.
This amendment does only half of the job. In my view, that is not a fatal defect. The amendment is taking a half step towards a very desirable objective. I hope the Committee will regard it as such even

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though, should it come to a division, the Committee may feel some regret that it is not currently voting on the amendment of my noble friend Lord Boardman, which I am sure the Committee would wish if it had the opportunity to do so, at this convenient hour of the afternoon. I beg to move.
3.30 p.m.
Lord Boardman: Following my noble friend Lord Peyton, I trust that I can make it clear to the noble Lord, Lord Williams of Elvel, that I am speaking primarily to Amendment No. 28, which stands in the name of my noble friend Lord Clark of Kempston, two noble Lords on the Cross-Benches and myself. The purpose of this group of amendments is the same. It is to require that the compulsory power of purchase which the Bill extends, be limited, as the manifesto does, to those who are using the leasehold premises as their private residence.
I first raise one of the fundamental points that this Bill gives rise to. That is, the sanctity or inviolability of a contract which should only be breached by government if indeed there is an overriding public interest that it should be so. It should not be used to frustrate or interfere with a private contract of a well-established legal kind and of long custom, between leaseholders and freeholders. That contract should not be breached or varied by government to force, as in this case, a freeholder against his will to sell to a leaseholder who may have no interest at all apart from that of an investment. The only way in which a contract between the two parties can be breached is if there is a real and genuine public interest that it should be so.
The old example which one quotes is the slavery legislation of 1833. There have been many breaches or interferences with contracts since then, but always on the grounds that there has been a public interest which justified that being done. In 1967, and again in 1974, the then Labour Government introduced leasehold reform, and in each case they provided that the benefit of buying the premises should only be extended to those individuals who were occupying the houses as their main residence. That was generally accepted as a public interest. Indeed, the matter was tested in the European Court of Human Rights. It was held then that it was acceptable, as a social purpose in favour of residents, to then infringe the contract, because it was in favour of those who were living in those houses. To that extent, it did not infringe the European Convention on Human Rights.
In this Bill there is no requirement for leaseholders to be living in the premises and that it should be their main home, in order that they may be granted by the Bill a compulsory right to acquire the premises from the freeholder. Under the Bill, those leaseholders who are given the right to such acquisition can be investment companies, foreign companies and people who are investing because it is an investment. The measure is not extended solely to those who are leaseholders because it is their home.
I am told that in the past 10 years or so in the West End over 50 per cent. of the property transactions have been by foreign companies or foreign
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individuals. But that is not the point that I wish to make. The identity of the people making the acquisition matters not. If they are not residents, my plea is that they should not be extended the special privilege of being able to acquire premises compulsorily from the freeholder.
As I have said, the Labour Government recognised that in 1967 and 1974. They restricted the right of purchase to those who were living in the premises. As my noble friend Lord Peyton has said, the Conservative Party recognised that in their manifesto last year. The whole section is headed "Home Ownership", which is quite rightly extolling the benefits of home ownership. The manifesto makes the commitment to give,
"residential leaseholders living in blocks of flats the right to acquire the freehold of their block at the market rate".
I expect that the Conservative Government will fully uphold that commitment in the manifesto. I would not expect them to go beyond that and to extend that enfranchisement right to leaseholders who have no residence in the flats concerned, no intention of residing there, and who have never done so. That goes far beyond any manifesto commitment and is, I suggest, a breach of the promise to freeholders (implicit in the manifesto) that the Government would limit enfranchisement to those leaseholders whose flat is their principal residence. I believe that the Government are going beyond that. The manifesto itself could not have been clearer. I hope that my noble friend the Minister will be able to explain how he can reconcile the differences between that manifesto commitment and the Bill. I believe that it would be a very real derogation and breach of principle if the Government now proceeded with the Bill without accepting the provisions which are now before the Committee, as principally enshrined in Amendment No. 28.
Of course, I recognise that the enfranchisement of flats presents special problems. The Bill accepts that private residential occupation is an essential precondition for the enfranchisement of houses. The Government have tabled their own amendment stating that in the case of extended leases for flats, residential occupation is an essential requirement. All that I am asking is that that same requirement of residential occupation should be included for the enfranchisement of the freehold of flats in just the same way as it was expressly stated in the Conservative manifesto.
It may be said that the Government are concerned that, if such provisions were included, it would make it difficult for there to be enough people resident in the flats to be able to exercise their right to enfranchisement. That may well be so, but if that is the case, which is the fairest course to take? Is it fairer to say that some residents are unable to enfranchise because not enough of them are living in those flats? I suggest that they should be given the right to an extended leasehold and, under Clause 35, they are given that right. That provision is included in the Bill—and rightly so. However, they should not be entitled to buy unless there are enough of them. I do not think that it would be very helpful or would carry out the

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Government's expressly stated original intentions if the excuse that there are not enough leaseholders to allow them to enfranchise were accepted. I do not think that that is valid. I hope that my noble friend the Minister will not pursue that line but, by his expression, I fear that he is likely to do so.
It may be the case that certain definitions can be improved with regard to the amendments of both my noble friend and myself. Some amplification may well be needed in the case of people who have two homes, both of which are residences. I accept that that may not be entirely clear and I hope that it can be clarified at a later stage.
Perhaps I may make just two further points. The first is that the media have tended to concentrate throughout on saying that our amendments are tabled and our criticisms of the Bill are made for the benefit of the central London estates. Of course, those estates will be severely affected. I would not deny that, but that argument overlooks the thousands and thousands of freeholders who own blocks of flats in other parts of London and throughout the United Kingdom. Since it became known that I have been taking an interest in this, my mailbag has contained a very large number of letters from people who, relatively, will be hit much harder than the big central London estates if the Bill is carried in its present form. I should therefore like to take your Lordships' minds away from the thought that the effects of the Bill will be limited to a few large central London estates. They will not be. Perhaps I should also make it clear (because of the large number of interests that Members of your Lordships' House inevitably have) that I have no interest in any way with regard to any flats and their enfranchisement or non-enfranchisement.
I would have urged the Government to have dealt with the very real problems of the ownership of leasehold flats, such as management agreements and the like, in a somewhat different way. However, that option does not arise at present. The Government have chosen to deal with this matter in a way which causes great injustice to freeholders who are forced to sell to people who have no residency at all. There will be forced sales from one investor to another at a favourable price. We shall discuss prices at a later stage in our consideration of the Bill.
I hope that, in supporting the amendment which has been moved by my noble friend Lord Peyton, the Committee will take account also of the other amendments in this group, and particularly of Amendment No. 28 which requires the compulsory enforcement of sale and enfranchisement to be exercised only by those who are living in that block of flats as their principal private residence, as defined in a later amendment. I hope that the Committee will support the amendment. Better still, I hope that my noble friend the Minister will follow the logic of it and make it unnecessary for us to divide upon it. Either way, I ask the Committee for its support.
3.45 p.m.
Lord Campbell of Alloway: I support this group of amendments, and in particular what I may call the "Boardman amendments", using the "Peyton amendments" as a stepping stone to that objective.
At the outset it is understood that my right honourable friend the Secretary of State has made known his concern and displeasure lest amendments are carried which appear to him to wreck his Bill. I shall be corrected if I am wrong. But your Lordships may think that the due exercise of the revisory role may not be pre-empted in any circumstances by such cautionary observations.
There is no mandate whatever for this Bill as it stands. It calls into question the rectitude of tenets of traditional Conservative values and constitutes a proposal for legislation which is unsatisfactory and wholly misconceived. The extra leap, to which my noble friend Lord Peyton referred, is there in the Bill, but it is not in the manifesto and it is not part of traditional Conservative values.
I shall be brief. The amendments to which I speak are only but one group of the many manifest dimensions of error and injustice tied up ugly in the complex legislative verbiage of the Bill. As the Bill stands without amendment, it is but a muddied mess of populist potage, in particular with regard to the provisions which are concerned with the right to enfranchisement. In this context, I have no interest whatever to declare other than perhaps a putative right to enfranchisement under the Bill as it stands which would be removed if the amendments that I support were to be carried in—and I hope that the Committee will carry them in. If these amendments (which reflect the manifesto commitments of 1966 and 1992, which, by my lights, are wholly acceptable in principle serve in the view of my right honourable friend to wreck the Bill as it stands, then let the Bill be wrecked. Your Lordships may well entertain a contrary opinion, having regard to the merits of the argument.
The merits of the argument are essentially few. They have been canvassed with great eloquence by my noble friends Lord Peyton and Lord Boardman. Essentially, they are these, and I turn first to the home ownership pledge in the manifesto. The Bill is not a home ownership pledge. Secondly, it was never the intention to confer the right of enfranchisement upon a person with many or more than one home. The concept of a principal residence for tax purposes for a person who has more than one home is a matter of election but, having elected for tax purposes, is that election to be treated as binding for the purposes of enfranchisement? The qualification in Amendment No. 37 of a principal private residence as meaning the "main or only residence', is wholly apt, wholly appropriate and wholly requisite in justice to implement the manifesto commitment. I am not—although in a sense it may appear that I am—taking on the Government against their manifesto commitment.
Thirdly, as the Bill stands, the foreign investor who buys up long leases in a block of flats or converted house and sublets through agents, never having set

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foot in the United Kingdom, never having any intention to do so or to make his home in any of those flats, would qualify for the right of enfranchisement. In my book, that is a manifest injustice and one which I shall never support.
Lord Monson: I added my name to Amendment No. 7 because the Bill, as it stands, paves the way for totally undeserved short-term profits to go to totally undeserving people, often at the expense of the beneficiaries of charities. Anyone with £250,000 to spare—nowadays there are any number of people who can readily lay their hands on a quarter of a million pounds without difficulty—be they British, foreigners living in Britain, foreigners living abroad, or companies, whether onshore or offshore, will be in a position, as the Bill stands—assuming that the freeholder receives no more than 50 per cent. of the marriage value—to make a profit of between £38,000 and £47,000. That is before deducting stamp duty and legal costs, but they do not amount to much.
Assuming those purchasers complete the whole process within six months, which should not be difficult, that equates to an annualised return of between 28 per cent. and 37 per cent. Assuming that they are astute and experienced enough to set things up carefully so that they can complete all stages within two months, then their return will rise to between 84 per cent. and 111 per cent. on an annualised basis. How can the Government defend that, and how can the Labour Party and the Liberal Democrats defend such profiteering, often, as I said, at the expense of the beneficiaries of charities?
Lord Coleraine: What a splendid, populist speech my noble friend Lord Campbell of Alloway has just made. We should have enjoyed hearing it at greater length on Second Reading. I have an interest to declare. It is that I am the leaseholder of a flat in a block of eight flats. I shall explain something about the holdings, because that illustrates the difficulties that arise when one introduces amendments such as those we are discussing. The eight flats are all let on long leases. They are all qualifying leases. Two of the long leases are for terms in the region of 125 years. The remainder are for shorter terms. Over the past 10 years, two of my fellow residents have found it possible to reach terms with their landlords and buy their long leases. We have six relatively short leases out of eight. That gives us the right to collective enfranchisement, whether the long leases come in or not.
The longer leaseholders are not interested in acquiring the freehold. They have what they want. Last year we started proceedings against the freeholder to acquire his interest under the Landlord and Tenant Act 1987, because he had not complied with his covenants. The longer leaseholders who were not interested in buying the freehold were not interested in contributing to the cost of that action. That is what would happen if it came to collective enfranchisement. The six short leaseholders would want it, the two longer leaseholders would not.
The flat in which I live is not my sole home. I have lived there for 17 years. It has been my home for 17
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years. Generally I live there four or more days a week. If I, or some other lessee in my position, is struck out of the right to collective enfranchisement in the circumstances set out in the amendments the remaining five qualifying lessees on the shorter leases would find themselves unable to enfranchise because they are only five-eighths of the whole, which is not enough. They would remain able to enfranchise in theory, but they would have no rights under the Bill for collective enfranchisement or for lease extensions.
I do not know what my noble friend Lord Peyton intends to do with the amendment or what will be the effect of voting on it, if it came to a vote. It is plainly defective because it provides that the occupation of the premises is the qualifying factor, and the premises are the whole block, and "occupation" has a certain legal meaning which is not appropriate to the Bill. I wish we were having the debate on Amendment No. 28 because it is to Amendment No. 28 that I would address my few remarks.
There is no principle behind the sole or principal residence test. Like everything else in the Bill, it is a question of the rights of property. Resident and non-resident owners, be they foreigners or of whatever colour, are equally interested in the good management of their flats and the effect of diminishing terms of their leases on the value of their investments. There is no reason in principle why they should not be entitled to enfranchise. The precedent the other way is contained largely in taxation statute, which is not relevant to what is before us today, and in the Leasehold Reform Act 1967, which is not an Act that immediately enamours itself to all those who would use it as a precedent today.
The final point is that to disfranchise non-resident owners would throw the property market into chaos, because once a flat owner had been disfranchised, and the remaining flat owners in his block were enabled to enfranchise, and did enfranchise, the lease of the one who was excluded by the amendment would immediately be of considerably less value. It would not just be of considerably less value in his hands, it would be of less value in the hands of any person who happened to buy it at a later date. It is a foolish amendment. I hope that the Committee will resist it.
Lord Harmar-Nicholls: Perhaps my noble friend will allow me to say that most of his speech was so full of what I would call specialist pleading that it left me disturbed. The only other thing I noted, apart from the words in the Bill, was the absence of a contribution from the Labour Benches.
Lord Hailsham of Saint Marylebone: It will come all right. Do not worry.
Lord Harmar-Nicholls: The Labour Party has made it clear outside the House that this is a Tory squabble: it is a matter for the Conservative Party. If it is, we must take on the responsibility and deal with it. The advice that I would give, if that is not a presumption, to my noble friend and to my noble friend the Minister, is to approach the matter in a practical way. There is no point in making more Second Reading speeches. The principle behind the Bill was settled in

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the other place and on our Second Reading. The principle, I think, although they got away with it, is a clear attack on what I call the sanctity of contracts. The position people are in, they entered into willingly. The sanctity of the contract is being interfered with by statute. That breach of the sanctity of contract is important. The whole of ordered society depends upon the continuance of the sanctity of a contract. However, that argument has been conceded and the other place has given its consent to the Bill as it now stands.
The practical approach is to try to amend the Bill in a way which does not interfere with the principle that was accepted in another place and on Second Reading in this House. We must try to amend the Bill so that it will conform with what the Government claim to be their case. The Government claim that their main reason for pursuing this legislation is because it was in the manifesto. That was not this Government's manifesto; it was that of the Conservative Party. The interpretation of the manifesto by the Conservative Party outside is overwhelmingly at variance with the interpretation put on it by the Government in the words which they have used in the Bill. I believe that the manifesto can be honoured in the way which was intended by the acceptance of Amendment No. 28. That removes the main objection of those who, having accepted Parliament's power to settle the principle, can now get down to making the Bill practical.
I followed closely the debates on the Bill in another place and the Second Reading debate in this House. I had thought that the Government would be eager to accept Amendment No. 28 because it gets them off the hook as regards the most potent parts of the criticism that they are having to face. I do not believe that the Government intended to give the benefit of the preference—they are giving a preference outside the contract that people willingly entered into—to people who are not residents in a property. In order to try to encourage people to buy council houses we did not say that anyone who was not living in a council house could take advantage of the benefits that were being offered. I appreciate that if we also wish to encourage the ownership of flats by people who occupy them Amendment No. 28 provides for that.
The amendment in no way interferes with the general principle and the detail of how the provisions should be applied and worked out. It merely gives an advantage to the residents of flats; in particular, those who have lived in them for more than three years during the past 10 years, and it is an advantage that we want them to have. Without Amendment No. 28 the Bill will allow all kinds of people who cannot begin to claim to be residents to take advantage of its benefits.
A practical approach is necessary from both sides. My noble friends, who may have deep objections to the Bill as a whole, should say, "We think that it is bad in the sense that it infringes the sanctity of a contract. However, it has gone through the other place, it has had a second reading in this House, it exists, and we accept that". As a Conservative who was prepared to accept the Conservative manifesto I demand that the
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Government take a practical approach and, having received concessions from my noble friends on the general principle, admit that the words in the Bill do not represent what deep down they truly wanted.
I hope that there will be no need to take the matter to a vote. However, if I am asked to vote it will be for Amendment No. 28. That amendment, if accepted by this House and eventually by Members in another place, will make the Bill what the Conservative manifesto—not the Government manifesto—intended. It is with the hope that a practical approach will be adopted by both sides that I strongly commend Amendment No. 28 to the Committee.
4 p.m.
The Earl of Lytton: Amendments Nos. 28, 37 and 38 appear in my name and I am grateful to the noble Lord, Lord Boardman, for so eloquently outlining the background to them. I support the amendments but that is not to say that I do not also support Amendment No. 7 standing in the name of the noble Lord, Lord Peyton of Yeovil. I support it but I wish that he had gone a little further.
Before speaking to Amendment No. 28 perhaps I may draw the attention of the Committee to the fact that Amendments Nos. 53 and 67 have not been forgotten about. I propose to speak to them just before or just after Amendment No. 52, which is where I believe they properly belong.
While eliminating any feelings of xenophobia about ownership interests in a block of flats, whether national or international, and any other aspects of the ownership, I wish to draw attention to some of the practical considerations. Furthermore, I wish to leave aside the question of manifesto commitments because I am not bound by the manifesto in question.
There are certain aspects which must be convergent in the context of the Bill. We are talking about people's occupation of their principal private residence and that must be respected. However, that is not universally the case and they need protection from the effects of having to go cap in hand to a landlord who does not want to co-operate. I believe that by reputation many of the better known landed estates in our urban areas are well run. I do not have any axe to grind; I do not act for or against them in my professional capacity as a chartered surveyor. However, it is well understood that some of the estates are considered to be well run.
The occupation of the buildings, their management and the long-term security of those whose interests need to be protected should be convergent. Unfortunately, on any reading I have made of the Bill they are not. If anything, I see those factors to be divergent. There are no provisions in the Bill which insist that the control of a building must be for the benefit of its occupiers.
If the Bill is to operate in a manner consistent with the Government's home ownership philosophy all those factors must come together. I cannot help wondering what interests, other than trading one asset for another, an investor owning one flat in a block will

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have. What interest will there be for a company which owns a flat, other than a commercial interest of which it forms some ancillary function?
So I have to ask the question: are we looking at an interest in somebody's home or are we looking at other interests? The only conclusion I can draw is that if there are insufficient home owners within any particular building and if Amendment No. 28 in particular would impinge on that, the question to be asked is whether we have a quorum of tenants in that situation who have an overriding interest in the property in the first place which therefore would trigger the philosophical principle behind this. If by Amendment No. 28 the Bill should be in some way damaged as regards the breadth of the enfranchisement that might otherwise take place, then I draw attention to an amendment standing in my name, Amendment No. 139. That would give a wider right of extending leases under the Bill.
It seems from what the noble Lord, Lord Coleraine, said, that when long lessees have extended their lease they are not particularly interested in enfranchising. But does that not tell us what market demand really is? Does it not tell us that market demand is in fact for extended leases and the right to extend and freedom from being held to ransom by a greedy landlord?
I should like to think that some owners of the better known estates, particularly in inner London, have not got where they have by being overtly greedy landlords. Other Members of the Committee may have different views, but certainly I have not seen or read anything which casts aspersions on those estates. I would therefore refer to the fact that within the body of amendments some will be proposed that substantially alter the way in which the right to enfranchise will come into being. It is within the gift of this Committee, during its discussions now and later on Report, to be able to tailor amendments that are made at this stage "in the raw" and make sure that they fit with the mechanics that one wishes to see in practice.
Therefore, while I can understand that there may be reluctance on the Government's part to accept Amendment No. 28 they must realise at the same time that there are other matters which represent a safety net for this. It seems to me that it is going to be too difficult to enfranchise. I also consider it a very expensive and long-winded method of dealing with the particular problem of control over a building in which residential occupiers live. A "fall back" must be a sensible and logical corollary—something along the lines of Amendment No. 139, to which I shall speak later.
The noble Lord, Lord Coleraine, talked about the chaos that might ensue from the amendment. I am doubtful whether any such chaos would be less than the chaos which may well ensue if the Bill is left unamended. There are all sorts of anomalies in the way management and freehold ownership can be secured under the Bill which, on close examination, will not necessarily be tied into and inextricably bonded to use and occupation by those residents in that building. For instance, the management, via a management trust—there is an amendment later standing in my name about this—does not have an
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interest in property. It has an interest in the management but it does not have an interest in the property; that is to say, it is not a landed interest. The Bill as it stands would do nothing to make these matters a focal point concerning the interests of the people in that building. Therefore I recommend Amendment No. 28 in particular to the Committee and I am glad to be able to support the amendment in the name of the noble Lord, Lord Boardman.
4.15 p.m.
Lord Finsberg: This debate started with my noble friend Lord Peyton, followed by the noble Lord, Lord Boardman, talking about manifesto commitments. I too was a Minister in a government but much more junior than my noble friend Lord Peyton. When, as a Minister, one had a hand in the drafting of a manifesto, one backed it throughout. I see no reason to change my mind on that.
What are the origins of this particular manifesto commitment? They lie in a day's debate in another place in March before the election. There was very lengthy discussion of enfranchisement and of the principles of commonhold—and I regret that commonhold still has not come forward. On that day the Labour Party was notable for its support of the principle and the Liberal Party was notable for its absence from the entire debate.
I must say that I find this particular amendment a very interesting one. I had a hand in the drafting of the right-to-buy legislation, which gave the opportunity to hundreds of thousands of council tenants to buy the property they lived in. We made very clear two points. First, they should be actually resident and, because they were going to get a substantial monetary advantage by a discount, they would have to abstain from selling for a particular length of time: otherwise, they would forfeit part of the benefit they had got. So I see nothing fundamentally wrong in the principle of saying that the person benefiting should at least have resided in a particular property as principal place of residence for a period. I do not mind whether it is three years or five years. There is a principle here.
At the moment I do not see why one should disregard that. It is perfectly true that in the debate in another place in March this particular issue did not come up. However, I think it is a principle that over the years most people within the Conservative Party have felt that there is an inherent right to ensure that people benefiting should have some sort of tie to the particular property involved.
Again, I had a hand in the legislation that dealt with some of the bad landlords, especially in London, although they do exist elsewhere. One must not overlook the fact that there are bad landlords. The people we tried to get were those bad landlords who were non-residents and sometimes even non-resident in this country. Part of the legislation ensured that even if they appoint managing agents it is now possible to get those particular bad landlords in this country for certain causes. So I do not believe, having looked at the Bill very closely, that there can be anything "wrecking" about this amendment. A

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wrecking amendment may arise later if one tries to take out charities. I shall speak on that as a charity trustee with property interests.
The question of compensation is tied in partly with this amendment. I shall speak later on that. However, I believe that there is a lot in what my noble friend, Lord Harmar-Nicholls said. There is nothing inherently wrong with this amendment. Of course it is defective. How many times have I stood at the Dispatch Box answering debates and saying that an amendment is defective? It does not matter. Defects can be put right by those people who hold most governments to ransom, the parliamentary draftsmen, without whom we would all be lost. Therefore I suggest to your Lordships that the one argument never to accept about an amendment is that it is defective. If the principle is right, the right words can be found.
The Earl of Onslow: I should like to ask my noble friend Lord Coleraine, by how much he would benefit from the enfranchisement of his flat. It seems to be extremely relevant.
Lord Coleraine: The answer is that I have not the least idea. I have tried to set out for the Committee all the circumstances which exist in my block which might ultimately result in my benefiting from enfranchisement.
The Earl of Onslow: It appears that I owe the noble Lord, Lord Williams of Elvel, an apology. On Second Reading I said that he is a Maxwell director. I now know that he is not a Maxwell director but he was a director of the Mirror Group of newspapers when Mr. Maxwell was controlling it and not afterwards. However, I certainly apologise for using the wrong tense.
The basis of my criticism still stands. It seems to me that some people stand to gain large sums of money from this provision. They are speaking on it and will vote on it.
The next point is that there is a charity which belongs to the BP pension fund. That pension fund has its own amount of money. It has a block of flats which is lived in by one American and four South Africans. They are drooling at the thought of enfranchisement. None of them are residents. If this amendment is passed they will receive a large capital gains tax-free benefit and I do not like that.
Lord Williams of Elvel: At this point, at the request of the noble Lord, Lord Harmar-Nicholls, I shall express an opinion from these Benches.
There is one point on which I agree with the noble Lord, Lord Boardman. Leasehold is not solely a London problem. It is important that the Committee should have firmly in mind the following figures. A Consumers' Association survey revealed that of all long-leasehold flats in 1992, only 26 per cent. were in London. Therefore, Members of the Committee are wrong to speak of this as a London problem. It is only a quarter of the problem.
Furthermore, as regards the social class of the head of household, 59 per cent. were of social classes C1 or
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C2. Therefore, we are not talking about the very rich. We are talking about what used to be known as the skilled working class or lower managerial working class. Furthermore, 84 per cent. of ownership leaseholds were conversions, not original buildings. That in itself gives rise to problems.
The last statistic which I shall give to the Committee—and this is where I come to the amendments in the names of the noble Lords, Lord Peyton and Lord Boardman—is that 60 per cent. of all owners of long-leasehold flats were first time buyers. Those people bought a leasehold and then moved on to buy a freehold, as the Consumers' Association found out in its survey.
The Committee will know from what I have said that I shall oppose both the amendments tabled by the noble Lords, Lord Peyton and Lord Boardman. I say that for two reasons. First, both amendments would seriously affect the Bill and seriously reduce the prospects of collective enfranchisement of leaseholds. I shall explain why that is so in a few moments. Secondly, I oppose them because I agree with the noble Lord, Lord Coleraine, that they would both seriously distort the housing market and the market for leasehold flats.
As regards the three-year qualification, the Consumers' Association study undertaken in 1992 said that approximately one-third of owners of long-leasehold flats moved on within three years. If those people were disenfranchised, it would reduce the universe of people who would be able to enfranchise collectively, not just by those people who were thereby disenfranchised but because of the multiplier effect on the other people in their building who would lose qualifying tenants. Unless the Government were prepared to reduce the figure from two-thirds downwards, the scope of the Bill would be seriously reduced. The Committee will be aware that on Second Reading I said that our quarrel with the Government, if we had a quarrel, was not about the principle but about the scope of the Bill. I meant that the scope should be widened rather than narrowed.
As to residency, again the same argument applies. The matter of principle as regards residence has been taken up by the noble Lord, Lord Coleraine. Again, broadly I agree with what he said. Perhaps I may say to other Members of the Committee that it is quite false to use as an analogy the residence qualification as regards the sale of council houses. In that case, discounts were given depending on the length of residence. If Members of the Committee opposite wish to have discounts introduced, that is another matter which Members of the Committee will wish to debate. However, it does not seem to me that they would gain much support from the Minister on the Front Bench. That is a bad analogy.
The main objection is that were the amendment to be passed very few blocks would be able to enfranchise. In the end, the Bill would have an extremely limited effect. I do not regard this as a wrecking amendment. The noble Lord said that there may well be a wrecking amendment at a later stage;

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but I do not regard this as such. However, this amendment would seriously reduce the scope of the Bill and for that reason, we oppose it.
4.30 p.m.
Lord Clark of Kempston: I declare an interest. I am a director of a company which owns flats, but if Amendment No. 28 were passed none of those lessees would be affected because, so far as I know, they are all permanent residents.
Much has been said about the manifesto. Perhaps I may remind Members of the Committee about the manifesto. It states that the Government will give to:
"residential leaseholders living in blocks of flats the right to acquire the freehold of their block at the market rate".
I shall not discuss the market rate. That has been distorted because of the so-called marriage value where the market value is divided between the leaseholder and the freeholder. I shall return later to that matter.
My noble friend Lord Coleraine raised the question of principal residence. It is well accepted, and he knows well, that for capital gains tax purposes one must declare which house is one's main residence. That residence enjoys capital gains tax exemption. Any other house which one might own is subject to capital gains tax. That capital gains tax element is a matter which compounds the unfairness in the Bill.
If an owner of a residential flat is enfranchised and he buys the freehold and the value of the leasehold to the freeholder increases, the amount of money that the freeholder receives is liable for capital gains tax but the amount of money which the principal resident receives is exempt from that tax. That compounds the unfairness of this legislation.
I understand the Salisbury convention that the House never overturns a manifesto commitment of whatever government. I do not believe that Amendment No. 28 spoils the commitment, because later there is an amendment in my name whereby I want whatever valuation is put on a property so that the difference between the leasehold and freehold interests can be seen. I do not believe that that should be taken immediately because it compounds the unfairness of the Bill. Here we are saying to a freeholder that he is forced to sell to the leaseholder at the bottom of the market. Consequently, I believe that we should defer the valuation. We can go through all the rigmarole of qualifying lessees and all the rest of it, but the actual valuation should not be taken in six or nine month's time when the property market is at the bottom.
The manifesto commitment assumed that this was the Conservative Party's extension of home ownership. At Question Time last week I asked the Minister the following question:
" … does my noble friend think the Housing and Urban Development Bill will increase private rented accommodation?"—[Official Report, 3/3/93; col. 663.]
That was a manifesto commitment. My noble friend will well remember that he simply replied, "No, my Lords". If there is a commitment to extend home ownership and the Minister answering says that this Bill will not do so, I am a little concerned.
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My noble friend Lord Boardman has introduced an amendment which my noble friend Lord Peyton has said is a better one; it is deeper and covers all the points. I agree with that. For the life of me, I cannot see why any government of this country should enfranchise people who do not live in this country but who use some of their flats merely as holiday flats. Why should the directors of overseas companies and so on who occupy these flats be given the right to enfranchise their flats? The Government have given way on a subsequent amendment on the extension of leases. If the Government can give way on that point, I cannot see why they will not give way on the question of extension of freeholds.
The Bill has created a tremendous amount of concern within the Conservative Party because in many cases its effects are confiscatory. The other day the noble Lord, Lord Monson, asked whether the Bill would be compulsory as far as tenants and others were concerned. In reply the Minister said:
"My Lords, this Government have no desire compulsorily to require landlords to sell their houses which are let".—[Official Report, 3/3/93; col. 663.]
That is illogical. The Bill is saying to freeholders that they must sell the leaseholds to whoever the tenants may be, whether they live in this country or abroad.
This is a bad Bill. I would have thought that we could fulfil the manifesto commitment made at the last election by altering the Bill. We are enfranchising people who have flats, but we are not allowing to be given away to people who do not live in this country flats that are only their private or sole residential flats. I am not a natural rebel but in these circumstances, unless the Government do give way on Amendment No. 28—
Lord Peyton of Yeovil: I hope that my noble friend will not distinguish too much between Amendment No. 7, on which we could have a vote at a reasonably early hour, and Amendment No. 28. My noble friend Lord Boardman and I are absolutely at one that if we win a vote on Amendment No. 7, it will be a victory for us all.
Lord Clark of Kempston: I am most grateful to my noble friend Lord Peyton because it means that my speech can be that much briefer. He has said exactly what I was about to say. I hope that the Minister does not have at the top of his brief "Resist", because we must carry out Conservative policy and preserve the sanctity of contract which this Bill is about to violate.
Lord Annan: I must declare an interest in that I live in a house of leasehold tenancy. I do not live in a flat. Therefore, I hope to escape the censure of those who think that I may be speaking out of pure self-interest. It should be made clear that there are those on the Cross-Benches who do not agree with the noble Lord, Lord Monson. We do not have £250,000 to spare. Indeed, some of us would be very glad to have £250,000. I believe that the noble Lord, Lord Williams, was entirely right that, if this was passed, a large number of leasehold flat owners would be disenfranchised. If it were accepted, the tenants of many flats, particularly those in a building which contains more than two or three, would find it

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virtually impossible to get enfranchisement. It would need only one tenant to die, fall ill, be absent for several months or to have moved for the application to enfranchise the rest of the tenants to fail. The way I read the amendment is that the three-year test means that the whole process will have to start over again. Directly the tenants have got their act together it needs only one of them to be unable to give consent for the whole process to be postponed until the new tenant has completed a three-year term. By that time another tenant of the block may have moved and another postponement will have to take place; in other words, the fountain of beneficence to the leaseholders will continue to play but the tenants will never get any water.
Baroness Hamwee: We have had much discussion this afternoon about whether or not the provisions of the Bill reflect the Conservative manifesto. The taunt has been made that those on the Opposition Benches are not taking part in that discussion. I am sure the Committee will understand that, to the extent that that is an internal party discussion, we must treat it as a spectator sport. What is not a spectator sport to those on these Benches is the achievement of the best Bill. On Second Reading we said that we broadly supported the Bill and the attempts to deal with the problem of leaseholds as wasting assets, in particular the problem of bad landlords.
This afternoon many comments have been made in defending accusations—which have not been made —that this and other amendments in this group are wrecking amendments. It seems to me that there is an element of "protesting too much" about these not being wrecking amendments. One only needs to listen to some of the introductory speeches to draw one's own conclusions as to whether or not the amendments are intended to wreck or improve. The noble Lord, Lord Annan, has made the point very well that we must look to the best outcome for as many leaseholders as possible. To disenfranchise the large majority of leaseholders, as may happen if Amendment No. 7 or No. 8 is passed, cannot be to the good of the Bill.
There may be questions about the benefits that would accrue to investment companies which have no interest as residents, but those can surely be met through other amendments.
Lord Boardman: I understand that the noble Baroness does not want to become involved in arguments concerning the Conservative manifesto. However, do not even those on the Liberal Democrat Benches believe that the inviolability of contract should be preserved unless a real public interest is involved? If the noble Baroness agrees, where is the public interest in forcing one investor to sell to another investor?
Baroness Hamwee: I believe that I dealt with that point at Second Reading. Like other Members of the Committee I have no wish to make too long a speech but I believe that contract is, by and large, sacred. I
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thought very hard before making my points at Second Reading, but I believe that there is a public interest which overrides that primacy of contract.
As I said at Second Reading, it is not the case that the properties which are the subject of the Bill could have been ignored by a purchaser, who could have bought a freehold instead of a leasehold property. Very often only leasehold properties are available within a price range or a geographical area. I believe that there is a public interest, which this Bill endeavours to address. First, long leaseholds are a wasting asset. Secondly, effective steps should be taken against bad landlords to enable long leaseholders, subject to their bad management, to take steps to preserve their own assets because, in investing in the leasehold, they too have an asset.
I want also to refer briefly to Amendment No. 32. It has been said that it is not a xenophobic amendment. However, it excludes a tenant who is not resident in, or a national of, the United Kingdom. That puzzles me because it seems to me that it must exclude all foreign nationals, even those who are resident in the property in question. Indeed, it may exclude a couple where one spouse is a British national and the other is not. It is therefore understandable that the amendment should be described as xenophobic.
I have no wish to prolong the debate. Many noble Lords have said that they hope there will be a vote at an early hour. However, we seem to have lost some of the audience, perhaps to tea. That is understandable.
Baroness Gardner of Parkes: It is high time that somebody on this side of the House spoke in opposition to the amendments. I know that my noble friend Lord Coleraine did so at the beginning but since then we have heard speaker after speaker putting forward a case in favour of the amendments. The noble Lord, Lord Clark, said that he hoped that the Minister's brief is not marked "resist". I hope that it is.
My noble friend Lord Boardman, and my noble friend Lord Peyton before him, supported the amendment very ably. However, my noble friend Lord Boardman made it very clear in his speech how destructive the amendment would be. He said that 50 per cent. of the property purchased recently in the West End was bought by foreigners. If that is true that would rule out any block which those people occupied and would disenfranchise the other 50 per cent. of occupants.
My noble friend Lord Boardman also suggested that one would get a freehold for nothing. That view has come through clearly. It is quite wrong. The freeholder will receive a fair value for his property. I was rather shocked by the suggestion of my noble friend Lord Clark that valuation might be deferred until a more favourable time. The Bill refers to 50 per cent. of the marriage value: that should be a fair value at any time. Whenever one receives one's money that reflects the true value of the property. The suggestion of manipulating the date of valuation in such a way as to be more favourable to the freeholder is scandalous. However, if I owned a property company perhaps I might think that way.

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We have been asked not to repeat Second Reading speeches so I shall not declare the extent of my interest once again. I have a degree of interest, but it is limited.
The noble Lord, Lord Monson, referred to the wonderful profits which are to be made. I have been trying all my life to make wonderful profits and it is not as easy as the noble Lord implied. I do not accept the figures which he produced, and I have had a number of dealings in property during my years in the United Kingdom. One of the amendments would disqualify me on the grounds of nationality. If I lived in one of those leasehold flats I would be ineligible to apply for enfranchisement as I am not a UK national. I am a Commonwealth citizen and an Australian rather than a UK national. Therefore the amendment would disqualify me.
My noble friend Lord Coleraine made a very interesting speech. The case which he illustrated made it clear that if tenants were offered longer leases which represent good value they would not wish to enfranchise. Surely that is the answer to my noble friend Lord Clark and anyone who has a property interest. If one offers one's leaseholders a longer lease on very good terms they will not wish to enfranchise. That was a most interesting point.
My noble friend Lord Harmar-Nicholls, in his clever way, said that he was being practical. I thought that he was totally impractical, and his intention was definitely to frustrate the purpose of the Bill.
The sale of council houses is not a parallel. As the noble Lord, Lord Williams, said, in that case people were given discounts of 50 per cent. In the case of the enfranchisement of blocks of flats, far from receiving a discount many people will find that they cannot enfranchise because the cost will be too great.
The noble Earl, Lord Lytton, made a very interesting point. He said that management of the building in the interests of the tenants was most important. The Bill does not cover that important point, and I hope that my noble friend will return to it at a later stage. My noble friend also made the point that many people want merely to extend a long lease but are not being offered that facility. In the past few weeks I have been looking for a flat for an Australian friend. In block after block of flats there is nothing available except flats with 35-year leases. There is no possibility of obtaining a mortgage on a 35-year lease. Therefore, purchasers of such properties are very limited.
I agree with my noble friend Lord Finsberg that commonhold would be desirable and I hope that we shall see that provision come into effect. I believe that the amendment is not in the interests of the Bill or in the interests of the people. I support rejection of the amendment.
4.45 p.m.
Viscount Montgomery of Alamein: We have heard some interesting speeches about matters of principle, but we are in Committee. Therefore, I shall deal with the matters raised in this series of amendments on residency qualifications. I find myself in almost total agreement with the noble Lord, Lord Williams of
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Elvel, and the noble Lord, Lord Annan, who addressed themselves specifically to the group of amendments.
It seems to me that if we accept the amendments we would, as my noble friend Lady Gardner said, disqualify a large number of people. That would be quite wrong. For example, many people live in one part of the country and work in another. It is unreasonable that they cannot have a secondary residence and be entitled to the benefits under the Bill. By the same token, surely we should not exclude foreigners in any way. We are becoming increasingly closer to the European Community or at least we are trying to, although one may be forgiven for wondering how long it will take. Many foreigners come to the United Kingdom from Europe in particular, because this is a great manufacturing and financial centre. There is no reason why Europeans from the Continent should not be able to purchase in the same way as UK residents, as mentioned by my noble friend Lady Gardner.
Finally, many people may buy homes for retirement while working elsewhere. I am thinking in particular of people in the services and other professions and diplomats, who are sent abroad for long periods and wish to have a home for their retirement. Are they to be excluded from purchasing under the terms of the amendments? The amendments are wholly inequitable.
Despite the siren voice of my noble friend Lord Peyton, I am sure that the noble Lord, Lord Strathclyde, is quite capable of dealing with the Bill. I hope that he will resist the amendments forcefully.
Viscount Mountgarret: Perhaps I may add my voice in wholehearted support of this group of amendments. My noble friend Lady Gardner of Parkes comes from the opposite end of the earth. Perhaps it will come as a surprise to her that the distance between our views is as great as the distance between our countries. My noble friend Lord Montgomery of Alamein has complained bitterly about the unfairness for people who might be disenfranchised from purchasing a freehold because they live in one place and work in another. I do not consider that unfair. Those people signed a contract. They bought the leasehold in the first instance. They knew what they were signing. Does my noble friend realise that the freeholder may not wish to sell? Why should the Government pass a Bill which forces a person to sell something that is rightly his when he does not wish to? That seems to me a little socialistic, but I may be wrong.
Some noble Lords have spoken about the sanctity of contracts. It is an important point. I remember well, as will a number of noble Lords, the party opposite passing the Agriculture (Miscellaneous Provisions) Act 1976 which effectively tore up the contracts made between landlords and tenants in the agricultural sector without their knowledge and consent. It took away all confidence that the party opposite might not carry out such retrospective legislation again. Therefore landlords were extremely circumspect about how they conducted their business in the country.

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I regret to say that we now have a conservative Government—I believe that it is probably spelt with a small "c" at this juncture—doing exactly the same thing with residential property. As the noble Lord, Lord Williams, pointed out, the provision does not only affect London; it affects Bath, Edinburgh and many of the beautiful towns in this country. The Government are undermining the confidence of landlords and of those who wish to enter into freely-made and legal contracts between one party and another. It is a dangerous step to take.
I accept that there is a clear manifesto commitment. I regret it but I do not argue against it. However, I believe that we ought to do everything possible to contain the Bill and the provisions thereof along the lines of the manifesto, and no further. On that basis I urge the Committee to support the amendment and any other amendment which simply retains the reference to residential occupation and ownership.
Lord Jacques: I wish to support the Bill and oppose the amendment. First, I declare an interest. I am chairman of a housing association which owns a block of 72 flats. Not only is my flat my main home; it is my only home. I have lived in it for more than three years. Therefore with regard to the amendments, I have no interest to declare.
The housing association of which I am the chairman has a lease for 125 years with more than 100 years to run. Its members, the residents of the flats, also have a lease from the association for 125 years with more than 100 years to run. It is quite clear therefore that there would be no great material gain in obtaining the freehold. With such a long lease one need not worry about the freehold. However, money is not the only consideration. I should like our association to obtain the freehold because I wish to be free of the tyranny of the landlord.
Such tyranny can act in different ways. I shall give an example. Our block consists of 11 storeys. Consequently, we have two lifts. We suffered a nuisance factor with cycles being taken up and down in the lifts. We wished to build a shed in which to house the cycles so that we did not have damage to the building by cycles being brought inside. Although there would never have been need for planning permission if it had been an individual household, the planning committee decided that we had to have planning approval and that there would be a charge of £55. We then received a letter from the landlord stating that he would have to give approval and that there would be a charge of £60. That is what I mean by the tyranny of the landlord. I eventually intervened and the charge by the landlord was reduced to £25. However, the planning permission was given for only five years. At best we shall have to pay the landlord and the planning people every five years. At worst we shall have a cycle shed which will have to be pulled down at the end of the five years. That is a completely unsatisfactory position which would have been mitigated if we had owned the freehold.
In this country we are years behind the times in ownership of property. Commonhold is already in existence on the Continent and in the Commonwealth.
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The Bill is a first and important step towards commonhold. I suggest that we take the opportunity to bring up-to-date our law relating to the ownership of property.
Lord Strabolgi: I wish to say a few words against the amendment. However, I wish in general to comment on the remarks of the noble Viscount, Lord Mountgarret, and others about the so-called inviolability of contracts with the willing buyer and willing seller. I do not believe that that is always applicable to flats.
Perhaps I should declare an interest. It may be of comfort to the noble Earl, Lord Onslow, to know that my flat does not qualify on many counts. However, I am a committee member of one of the residents' associations of the City of Westminster; and I have also lived in London all my life. Up to about 30 or 40 years ago, a flat in London was a satisfactory type of residence. The flats were owned mostly by Key Flats, and other old family companies. The rents went up a little every few years. There was a nice resident porter, a fire in the hall, and so on.
One or two property developers and speculators then discovered that if they bought the freehold, they could threaten the tenants with eviction unless the tenants bought the long leases. The tenants were on short leases and had been happily living in the flats for many years. They were therefore forced to buy the long leases. They scraped the money together. Many of them were not well off; they were people on pensions, and so on. They believed that they would have security for the rest of their lives. What did the owner then do? He recouped what he lost on the lease with service charges. Those went up all the time. The tenants were made to sign contracts which said that the service charges would be for the servicing and any necessary refurbishment of the building. What did that mean? Not just painting the windows but building penthouses on the top.
I know of a block of flats in Chelsea where there has been scaffolding on the building for five years. The building is owned by a company with its head office in the Cayman Islands and an operating office in Luxembourg. The tenants could not at first find out who were the landlords, and when they eventually did find out, the landlords soon went bankrupt and were succeeded by others. It is a complete mess.
We and all tenants owe a great debt to the noble Lord, Lord Finsberg, and other Members of Parliament of all parties for central London, for the fight they have put up on behalf of tenants. I think that the Bill is an effort—which I commend—to put the whole basis of tenure of flats in London on a decent basis. As my noble friend Lord Jacques said, why should we be the only country which has this absolutely crazy system? In America and Europe people own their own flats, and the sooner we have a sensible system the better. I commend the Government for having done this.
5 p.m.
Lord Selsdon: I intervene at this point rather reluctantly; but I am concerned that, one hour 37 minutes into the Committee stage, we are still hearing Second Reading speeches about points of principle. I am also concerned that we are not aware of the impact of the Bill throughout the land. It has been said that this is a Labour Bill, that it is not a rich man's Bill; all kinds of comments have been passed. We now have before us a series of amendments which are not called wrecking amendments, but in one way or another they are thwarting amendments. They will thwart some of the intentions behind the Bill.
I declared my interest at Second Reading. I am a contented tenant and have been contented for many years. But it is not London that we are talking about; it is the nation as a whole. We have seen the figure of 750,000 people who will be entitled to enfranchisement. We do not know the cost. We are assured that ultimately the price will be fair; and we shall come to that matter at a later stage in the Bill.
Let us assume for one moment that the consideration that is paid to the freeholder, the head lessors and whomever, is fair. Let us assume that the legal fees that will be charged in that connection will also be fair, because I think that they may well be the most unfair of all. It has been said that if people wish to enfranchise a block of flats, each person may have to pay £6,000 to £7,000 towards some of the legal costs. I do not know what noble Lords who are lawyers charge in the way of fees these days, but they are fairly extensive. The more complicated an issue is, the extra cost in terms of enfranchisement could be considerable.
I do not oppose the concept of the amendments: that we should, in general, look after ordinary British residents who wish to live in or own homes. However, what is a primary residence and how many people may be excluded if the amendments are passed? If we take the figure of 750,000 people, and carry out a little research, we may examine the electoral role and make the assumption that those people who are not on it are foreign or are not entitled to be enfranchised. If we look at a few blocks of flats around London, Manchester, Birmingham and elsewhere, we find that if such amendments were passed, probably as many as 350,000 people would not be able to be enfranchised because they were part of minorities, because of foreign domination or second home domination in the property. Many people would be adversely hurt for the wrong reasons.
Let us make the assumption that we are talking of people who are normally resident in the United Kingdom, unless they happen to work abroad, or who are domiciled in the United Kingdom and who pay their taxes and make a contribution to society. If we look at ownership and ask what are the likely breakdowns, first there are single-parent families at one level; husbands and wives who may own a second home, one in one place and another in the country. There may be people who have bought genuinely properties for their family and children to live in at some time in the future. There are those working
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I abroad for international corporations or for themselves who have left the country but who own a home or a flat and who wish to return to it. They may find that they are disadvantaged.
I do not believe that the purpose of the amendments is necessarily to hurt people who genuinely, in the spirit of the Bill, would be entitled to buy the freehold of their flat. I wondered how and why those freehold and leasehold activities came in. I was originally told that leaseholds were part of British history; they were applied to flat land and the ground floor; but because one could not incorporate the whole building, leasehold came in.
We talk about money and the cost; that is probably what it is all about. If we make the assumption that at a later stage in the Bill the consideration payable will be fair—as it probably will—then much of the principle of opposition over sequestration or nationalisation disappears. My worry is more for those people who find that in principle they thought they would be entitled to receive the freehold of their flat. They are then prevented from doing so for reasons beyond their control.
Lord Strathclyde: During the course of this afternoon, many of my noble friends have expressed their concern for my well being. I can tell them that have very much enjoyed what has clearly been a most lively and healthy debate. However, this afternoon the Committee has a weighty responsibility as a revising Chamber, looking at a Bill and a provision which were passed with all-party support without a vote in another place.
My noble friends have argued eloquently in support of their belief that the extension of existing rights intended to further home ownership should not be available to absentee tenants. They pointed to various precedents, particularly that of the 1967 Leasehold Reform Act. The Government accept that there is some logic in the view that only long leaseholders who actually live in their flats ought to benefit from the ability to take control and stem the inevitable decline in the value of their asset.
Nevertheless, all long leaseholders have to pay rent and service charges, and are entitled to value for money and a say in how their money is spent. This applies to those who own the flat as a second or possibly future home. Non-resident long lessees who sublet have a duty as landlords themselves to ensure that their property is well managed. These arguments suggest that all qualifying tenants should be able to participate in collective enfranchisement, regardless of whether they live in their flats. I strongly believe that a residence condition for qualification for collective enfranchisement in flats would not be fair.
However, such a test is not acceptable for other reasons, too. The main one is that it would substantially reduce the number of blocks in which collective enfranchisement could take place. My noble friend Lord Boardman refutes this argument. The average period of tenure in flats is thought to be about seven years. At any one time a significant proportion of long leaseholders in a block would not have lived in

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it long enough to qualify for participation, so the requisite majority would never in practice be attainable.
Other effects of a residence test on enfranchisement are that individual blocks could move in and out of eligibility frequently, making it harder actually to find an opportunity to claim, and that tenants would have difficulty in ascertaining the status of their block because they could not always readily discover the residential status of non-participating qualifying tenants.
In fact I am convinced that a residence test for participation in collective enfranchisement would render unworkable this part of the Bill. Long leaseholders of flats would in practice just not be able to take over full ownership of their blocks. We would end up with a worthless, discredited piece of legislation and our declared policy would not be delivered. I understand that that is not the intention of my noble friends who moved the amendments.
My right honourable friend the Secretary of State made that absolutely clear in another place. He said that to include a residency test would make the right to collective enfranchisement unenforceable by many tenants who can themselves meet any residency test and all other requirements. As I said earlier, members of another place accepted his argument and the matter was not pressed to a Division.
The first chapter of the Bill confers upon qualifying tenants a collective right to purchase the freehold of the building containing their flats. That is collective enfranchisement. We believe that the time has now come to extend to flat owners the right of enfranchisement, which has been available to long leaseholders of most houses. An increasing number of leases will be entering the period in which they will become difficult to sell, and whereas most leaseholders of houses have control over repairs and maintenance, owners of flats are entirely in the hands of their freeholder. A majority of leaseholders report that landlords fail to meet their obligations regarding the upkeep of the building and the proper handling of tenants' money. It is right that long leaseholders of flats should have the same opportunity to take full responsibility for their homes as other owner-occupiers. We believe in the expansion of owner occupation. We cannot bring that about if the amendments are accepted.
Much was said by my noble friends Lord Peyton, Lord Boardman, Lord Campbell of Alloway, Lord Finsberg, and other noble Lords, about our commitment in the manifesto. My noble friends sought to suggest that the Bill goes beyond our manifesto commitment to enfranchise residential leaseholders. The manifesto said that we would introduce legislation giving residential leaseholders living in blocks of flats the right to acquire the freehold of their block at the market price. The word "residential" applies to the lease, to distinguish it from a commercial, or business, lease. There is a long established market differentiation between the two types, which many statutory provisions reflect. The identity of the occupier is of no consequence in
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identifying into which category a given lease falls, and both parties to leases are aware of that. So I feel that I can say quite categorically that the Bill does not go any further than we promised. My noble friend Lord Campbell of Alloway said that the Bill does not reflect traditional Conservative values. I believe that at Second Reading I proved beyond doubt that it does because of the Conservative Party's long-term commitment to allow leaseholders to buy their properties.
The amendment will prevent flat dwellers from becoming enfranchised. It is not comparable to the legislation of 1967 or 1974. That legislation dealt with individual rights of tenants to buy their houses. The provision, the Bill and the principles behind it were passed in another place, reflecting all party support—something which this House normally cherishes.
I have to ask: what gives a tenant merit by virtue of living in his main residence? Why do my noble friends believe that he should be allowed enfranchisement whereas somebody who is away temporarily should not. Furthermore, many of my noble friends seem inexplicably to have turned their faces against investors. They have also expressed their concern that foreigners should be allowed to buy their own properties. But why should landlords be willing to sell long leases of perhaps 100 years or 120 years but not be willing to sell the freehold?
I know that my noble friends have been asked to support Amendment No. 7. We have been told that it is a defective amendment and I can confirm that. We have also been told that Amendment No. 28 is better than Amendment No. 7. But we are still possibly faced with a situation of voting on Amendment No. 7. So my noble friends will vote not only for a defective amendment but in all probability for the wrong amendment. I believe that situation to be ridiculous and, for the reasons that I have laid out, I ask the Committee to reject the amendments.
5.15 p.m.
Lord Peyton of Yeovil: Perhaps I may first of all reassure the Committee that it is not my intention to go over the whole of the debate. I should like to take the opportunity of thanking all who have taken part, even though not all managed to agree with the point of view that I put forward. Perhaps I may have my noble friend's attention, as I am about to say something polite to him. I should like to express my deep appreciation of the skill, courtesy and charm with which he replied to the debate.
Having said that, I am deeply sorry that at the end he dragged in by the heels that musty, grubby old argument, so dear to Ministers without his skills, that the amendment has defects. If the amendment has an acceptable principle, the defects could easily be ironed out by the Government with all the resources at their command. I am sorry that my noble friend went so far as to spoil an otherwise very good speech with that bit of grubbiness.
I should like to make one further point, and I hope that even Members of the Committee who have spoken with eloquence against the amendment will pay attention to it. I feel very uneasy that we should

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pass a measure without even concerning ourselves that one of the results could well be—indeed, will be—a windfall to people who have not occupied the premises, have no intention of doing so and could, as soon as they have enjoyed that windfall, themselves become landlords with short-term tenancies.
I do not know whether my noble friend is inclined to take such arguments seriously. For me they are serious. I do not enjoy being invited to support measures, as we so constantly are, which have not had the adequate thought and attention of Ministers. In those circumstances I feel I can do no other than take the opinion of the Committee.
5.18 p.m.
On Question, Whether the said amendment (No. 7) shall be agreed to?
*Their Lordships divided: Contents, 147; Not-Contents, 185.

Division No. 2

CONTENTS

Abercorn, D.

Chorley, L.

Acton, L.

Clark of Kempston, L

Aldington, L.

Craig of Radley, L.

Ashcombe, L.

Crathorne, L.

Atholl, D.

Crawshaw, L.

Attlee, E.

Cross, V.

Baldwin of Bewdley, E.

Denham, L.

Banbury of Southam, L.

Donegall, M.

Beaumont of Whitley, L.

Elton, L.

Boardman, L.

Faithfull, B.

Bolton, L.

Gainsborough, E.

Borthwick, L.

Gisborough, L.

Bridges, L.

Glenarthur, L.

Brookeborough, V.

Grafton, D.

Campbell of Alloway, L.

Grantchester, L.

Chalfont, L.

Greenway, L.

997

Halsbury, E.

Napier and Ettrick, L.

Hampden, V.

Peel, E.

Harrowby, E.

Pender, L.

Harvington, L.

Peyton of Yeovil, L. [Teller.]

Head, V.

Portsmouth, E.

Hertford, M.

Radnor, E.

Hood, V.

Reay, L.

Hylton, L.

Rees-Mogg, L.

Hylton-Foster, B.

Renton, L.

Jeffreys, L.

Rockley, L.

Jellicoe, E.

Ross of Newport, L.

Kindersley, L. [Teller.]

Salisbury, M.

Kinloss, Ly.

Saltoun of Abernethy, Ly.

Knutsford, V.

Selkirk, E.

Lawrence, L.

Stedman, B.

Leconfield and Egremont, L.

Stodart of Leaston, L.

Lincoln, Bp.

Strange, B.

Lindsay, E.

Strathcona and Mount Royal, L.

Liverpool, Bp.

Lytton, E.

Swinfen, L.

Mancroft, L.

Tryon, L.

Middleton, L.

Vaux of Harrowden, L.

Monson, L.

Westbury, L.

Mountgarret, V.

Whitelaw, V.

Mowbray and Stourton, L.

Zouche of Haryngworth, L.

Munster, E.

NOT-CONTENTS

Addington, L.

Hesketh, L. [Teller.]

Airedale, L.

Hollis of Heigham, B.

Aldenham, L.

HolmPatrick, L.

Allenby of Megiddo, V.

Houghton of Sowerby, L.

Amherst of Hackney, L.

Howe, E.

Annan, L.

Jay of Paddington, B.

Archer of Weston-Super-Mare, L.

Jeger, B.

Kissin, L.

Arran, E.

Lockwood, B.

Astor, V.

Long, V.

Astor of Hever, L.

Lucas, L.

Barber, L.

Lucas of Chilworth, L.

Biddulph, L.

Lyell, L.

Blatch, B.

Mackay of Clashfern, L.

Bonham-Carter, L.

MacLehose of Beoch, L.

Boston of Faversham, L.

McNair, L.

Braine of Wheatley, L.

Marlesford, L.

Bridgeman, V.

Merlyn-Rees, L.

Brougham and Vaux, L.

Mersey, V.

Butterworth, L.

Montgomery of Alamein, V.

Cadman, L.

Mountevans, L.

Caithness, E.

Moyne, L.

Carmichael of Kelvingrove, L.

Newall, L.

Carnegy of Lour, B.

Nicol, B.

Carnock, L.

Ogmore, L.

Chalker of Wallasey, B.

Oppenheim-Barnes, B.

Clinton-Davis, L.

Oxfuird, V.

Coleraine, L.

Parry, L.

Colnbrook, L.

Perry of Southwark, B.

Craigavon, V.

Pitt of Hampstead, L.

Cranborne, V.

Prentice, L.

Cumberlege, B.

Renfrew of Kaimsthorn, L.

David, B.

Richard, L.

Dean of Beswick, L.

Robson of Kiddington, B.

Denton of Wakefield, B.

Rochester, L.

Dormand of Easington, L.

Rodger of Earlsferry, L.

Elliott of Morpeth, L.

St. Davids, V.

Falkland, V.

St. John of Bletso, L.

Ferrers, E.

Sanderson of Bowden, L.

Fraser of Carmyllie, L.

Seccombe, B.

Galpern, L.

Selborne, E.

Gardner of Parkes, B.

Selsdon, L.

Geraint, L.

Shackleton, L.

Goold, L.

Skelmersdale, L.

Goschen, V.

Skidelsky, L.

Graham of Edmonton, L.

Spens, L.

Hacking, L.

Stewartby, L.

Hamwee, B.

Strabolgi, L.

Harding of Petherton, L.

Strathclyde, L.

Hastings, L.

Strathmore and Kinghorne, E. [Teller.]

Hayhoe, L.

Henley, L.

Teviot, L.

998

Thomas of Gwydir, L.

Vivian, L.

Thomson of Monifieth, L.

Wade of Chorlton, L

Tordoff, L.

Wakeham, L.

Torrington, V.

Wigoder, L.

Trumpington, B.

Williams of Elvel, L.

Turner of Camden, B.

Wolfson, L.

Ullswater, V.

Young, B.

Moved accordingly, and, on Question, Motion agreed to.

*The Tellers for the Not-Contents reported 185 names. The Clerks recorded 186 names.
Resolved in the negative, and amendment disagreed to accordingly.
Viscount Goschen: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Scottish Office: White Paper
5.31 p.m.
The Minister of State, Scottish Office (Lord Fraser of Carmyllie): My Lords, with your Lordships' permission, I should like to repeat a Statement about Scottish constitutional issues which my right honourable friend the Secretary of State for Scotland has made today in another place. The Statement is as follows:
"As the House will know, since the general election the Government have been conducting a wide-ranging examination of Scotland's place in the United Kingdom and the way our Westminster Parliament works for Scotland. I am today placing before the House a White Paper setting out our conclusions—Scotland in the Union: A Partnership for Good.
"The Act of Union of 1707 secured for the Scottish people a strong and special place within the United Kingdom. It guaranteed the continu-ance of Scotland's separate legal, educational and local government systems. The more recent
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establishment of the Scottish Office itself, as a department responsible for administering much of Scotland's government, is another illustration of the capacity of the Union to accommodate—indeed to encourage—diversity. Equally, the Union has enabled Scotland to participate fully in the affairs of the United Kingdom, and Scots have done so to considerable effect. The United Kingdom is a partnership of peoples that has achieved great things and from which all its constituent parts have benefited.
"The initiative known as "taking stock" has led us to come forward with a range of proposals aimed at reinforcing the Union and Scotland's place within it. First, recognising Scotland's separate legal system and its other legislative needs, the Government propose a number of initiatives to improve the existing parliamentary arrangements for handling Scottish business. The Scottish Grand Committee at present has powers to debate Scottish matters and the Scottish Estimates and to take the Second Reading debates of Scottish legislation. It is also empowered to meet in Edinburgh. We propose to build on these arrangements, providing for up to 12 general debates each Session, with the opposition parties selecting the subject for debate on a set number of occasions though, of course Scottish matters, like Scottish legislation, will, where appropriate, continue to be debatable on the Floor. We also propose a new procedure allowing for debates on affirmative resolutions and on prayers against negative resolutions to be referred when appropriate to the Scottish Grand Committee. The arrangements enabling the committee to handle Scottish legislation will remain unchanged, with any Second Reading vote being taken formally on the Floor of the House. The Report stage and Third Reading debate will also continue to be taken on the Floor of the House in the usual way.
"We further believe that the Secretary of State's responsibilities have become sufficiently wide to justify augmenting these arrangements by proposing that from time to time sessions of Questions to Scottish Office Ministers be held in the Scottish Grand Committee in addition to those that take place every four weeks in this House. These sessions could be held either at Westminster or in Scotland. We also propose that at the end of each meeting of the committee there should be an opportunity for an adjournment debate specifically on matters of concern to Scotland. It may occasionally be appropriate also for statements to be made by Scottish Office Ministers to the Scottish Grand Committee. In addition, we propose to establish a new procedure, to enable the Scottish Grand Committee to invite the Scottish Office Minister in another place and also the Lord Advocate to give evidence before it on matters within their fields of responsibility.
"Some of these changes will require amendments to the Standing Orders of both Houses and we shall

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bring these forward for debate in due course, having first consulted with opposition parties in the usual way.
"Standing Orders of the House already contain a provision that enables Bills to be referred after Second Reading to a Special Standing Committee. We consider that this provision can provide a particularly appropriate mechanism for scrutinis-ing some Scottish Bills and we propose its wider use for some Scottish legislation in future, with provision for the evidence-taking sessions to be held where appropriate in Scotland.
"Taken together, I believe these measures will lead to a significant improvement in the handling of parliamentary business relating to Scotland, in a way which is less remote, is more responsive to Scottish priorities and concerns and which may relieve some of the pressure on the Floor of the House. I stress, however, that in all these procedural changes Scottish Ministers will remain fully accountable to this House and the Scottish Grand Committee will remain wholly a committee of this House. The integrity of Parliament will and must remain intact.
"We also propose changes in the responsibilities of the Secretary of State for Scotland and the Scottish Office. Recognising the important role of Scottish Enterprise, Highlands and Islands Enterprise and the local enterprise companies and their capacity to meet local needs in the delivery of the Government's training schemes, from April next year the responsibility for training policy in Scotland will be transferred to the Secretary of State for Scotland, within the framework of the Government's overall strategic priorities, initiatives and policies.
"Responsibility for the Scottish Arts Council will be transferred to the Scottish Office from the Department of National Heritage, also with effect from April 1994. We also propose to transfer the ownership of Highlands and Islands Airports Limited from the Civil Aviation Authority to the Scottish Office. And, in the context of the policies emerging from the forthcoming White Paper on Science and Technology, we shall review the scope for transferring to the Scottish Office responsibility for schemes for encouraging industrial innovation.
"These proposals represent a worthwhile integration of decision-making power in the areas I have mentioned, with the other activities for which the Scottish Office already has responsibility.
"Madam Speaker, I am also pleased to be able to confirm to the House that my honourable friend the Minister for Energy is today announcing that his department will open a major new oil and gas office in Aberdeen to serve the off shore industry.
"I also wish to ensure that the Scottish Office is more visible in Scotland and more accessible to the general public. I propose to publish in future a concise and accessible annual report on the activities of the Scottish Office and the non-departmental public bodies and next steps agencies
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for which I am responsible. The annual report may be referred to the Scottish Grand Committee for scrutiny and debate.
"Although my department already has offices throughout Scotland, we shall seek opportunities for further dispersal within Scotland. This will apply both to parts of the Scottish Office and to non-departmental public bodies for which I am responsible. In addition, in accordance with the principles of the Citizen's Charter, we shall establish a central inquiry unit accessible from all parts of Scotland for the cost of a local telephone call. This unit will be backed up by the designation of many of the existing departmental offices as Scottish Office information points. We shall examine the case for supplementing this facility with other information points in smaller towns around Scotland, operated on an agency basis. The White Paper also sets out other plans I have to further the goal of the Citizen's Charter by making my department more responsive to the needs of the people of Scotland.
"Last December the leaders of the European Community met in Scotland for the successful Edinburgh Summit that marked the climax of the United Kingdom's presidency of the Community. We shall seek to hold further such events in Scotland in the future. In that context I am pleased to announce that the European Community will hold a Europartenariat conference of small businesses in Glasgow in December. Further details of this major event will be published shortly.
"Madam Speaker, the partners to the Union need to work at bringing the reality of the Union alive for all the people of the United Kingdom. This White Paper outlines how Scotland's status as a nation within the Union can be more effectively recognised. The Union was and still is good for Scotland and good for the United Kingdom, but that does not mean it cannot be made better; and we stand ready to consider other measures to this end which may emerge over time, to the benefit of all its partners.
"The White Paper I am publishing today does not mark the end of the 'taking stock' process but the start of a renewed emphasis by the Government on the importance to the United Kingdom of all its component parts. We will continue to seek further ways of strengthening the Union and Scotland's place in it.
"We reject utterly the arguments of those who want Scotland to break away from the United Kingdom, either through the direct means of separation or by way of the slippery slope of a separate parliament. Our firm commitment is to the future integrity of the United Kingdom, secured through this House and this Parliament. The United Kingdom is a partnership of nations that has endured. We believe strongly that it is a partnership for good. In that spirit I commend the White Paper to the House."
My Lords, that concludes the Statement.
5.40 p.m.
Lord Carmichael of Kelvingrove: My Lords, the House will be grateful to the Minister for repeating the Statement made in another place. He will be aware that because of the length of the last debate the White Paper is released and we have had an opportunity to glance through it. I hope that the noble and learned Lord will be able to give us some idea as to whether time will be found for a debate on the White Paper.
I believe that everyone on this side of the House, and possibly people in Scotland generally, will be pleased that the Government have now very slowly become aware of the genuine movement in Scotland for more control and for a distinct voice in its own affairs. I am aware that the noble and learned Lord has burned the midnight oil and has probably agonised with his fellow Ministers in producing the Statement and the White Paper.
I am sure that he will not be too surprised to hear, from what we have had time to read, that in our opinion, his labours have really brought forth a mouse. It is a mouse which I am prepared to forecast will be found inadequate by the people of Scotland. It will certainly not persuade them that this Government are serious about giving Scotland any real national control of its own affairs.
Of course we cannot but welcome much of the Statement. But we cannot be expected to be widely enthusiastic about something which falls so short of addressing the real aspirations of the Scottish people. More meetings of the Scottish Grand Committee in Edinburgh or perhaps in other parts of Scotland can do no harm and would probably be helpful. Specific Scottish Question sessions held in Edinburgh are also a tiny step in the right direction as is the idea of having adjournment debates on Scottish matters at a reasonable time of day. That perhaps means that the Scottish media will be able to relay reports on them to the Scottish people instead of what happens in the other place where adjournment debates are held at midnight or sometimes long afterwards. At those times few people are concerned.
We welcome also the fact that the Secretary of State will be taking control from the CAA of the Highlands and Islands airports: so the Secretary of State will have a direct interest. I hope that that means maintaining or, better still, improving communications with the islands. We are not quite so happy about what has been said regarding the transfer of oil and gas offices to Aberdeen. We need to look very carefully at that. I believe that Aberdeen will be very disappointed if all that results is the arrival of medium to low-grade executives. The feeling in many parts of Scotland—I have heard this also from Americans—is that because of the way Aberdeen has become a real centre for deep sea oil extraction and drilling, the head office for all gas and oil exploration should be located in Aberdeen. Perhaps we shall have a chance to discuss that later.
The Statement was able to refer only briefly to the Citizen's Charter. That is something we shall read about, and no doubt it will be raised by other Members. We shall discuss it carefully when the White Paper has been circulated. There is very little flesh on
960
the bones of the Citizen's Charter, whether it is the Scottish one or the national one put forward by the Prime Minister. I believe that the Statement and the White Paper, far from stemming the desire in Scotland for real, devolved government within the United Kingdom—my party has always been quite clear on that point—will whet the Scottish appetite for more national control. However, if the proposals are a 10-day wonder, which I believe to be more likely, they may well prove to have been a waste of very valuable time and a worthless exercise as far as the ordinary people of Scotland are concerned.
Lord Grimond: My Lords, I too would like to thank very much the noble and learned Lord, Lord Fraser of Carmyllie, for having repeated the Statement. There are a great many administrative and procedural proposals, some of which may be useful. Most of them, I believe, will make very little difference at all. No doubt they will have to be discussed but not, I think, now.
However, there are one or two questions I would like to ask, partly because they are general questions and partly out of pure curiosity. First, I hope that the noble and learned Lord can assure us that the devolution of the Scottish Office and the spreading of responsibility from the centre will lead to a reduction in staff and not an increase. I hope that there will not be simply an increase in staff and buildings all over Scotland.
Secondly, I notice that Second Readings will be taken formally on the Floor of the House. I take it that that is merely a polite way of saying what happens now, which is that, whatever happens in the Scottish Grand Committee, if the Government wish to press a Bill they simply produce it on the Floor of the House and use their majority to get it through.
Thirdly, I am interested in the telephone calls. As I understand it, anyone, anywhere in Scotland, can, for 10p or whatever it is, ring the Scottish Office and indulge in whatever questions they wish to raise. It is true that one cannot ask a Minister. I shall not be able to ring the noble and learned Lord, Lord Fraser, and say, "I would like to have a chat with you about the new Bill". Who will I be able to telephone? What kind of people will be responsible? Is there any limit on that facility? I can visualise certain people spending hours over months raising interesting questions with impunity.
Lastly, I understand that this is the start of a process and that this is not the last word. With rather waning hopes, I hope that the process may eventually deal with the crux of the matter. That is contained right at the end of the Statement where it says:
"The United Kingdom is a partnership of nations".
That admits that the Scots are a nation. If they are a nation then surely they have the right to say that they want to run their own government, at least for some purposes. They have shown that time and again. They have some rights that should be taken notice of. If one continues to disregard the crux of the matter, which is not administrative or procedural, but democratic, then I believe that ultimately we shall run into considerable dangers, not least for the Union. The real thing which may be endangered by ignoring the Scots'

961
desire for better democratic procedures is the Union. Let us remember that it was the intransigent Tories who ultimately forced Ireland out of the union with the United Kingdom. Do not let that happen to Scotland.
Lord Fraser of Carmyllie: My Lords, I am grateful to the two noble Lords on the Front Benches for the welcome they gave to what is contained in the Statement to the extent which they did. The noble Lord, Lord Grimond, indicated in a ringing conclusion that he was anxious that our Union should be maintained. It is the very purpose behind the paper that we should do what we can to secure that, within the context of the United Kingdom, there should be some arrangements made as to the diversity that occurs in our respective component parts. If Scotland were inclined to go its own way as a separate nation, against what would seem to me sensible political judgment, that would have to be recognised if it was clear and unequivocally expressed.
However, we must appreciate that we cannot build into the arrangements unilateral devolutionary changes which put England or other parts of the United Kingdom at a disadvantage in any respect. I appreciate the policy of the party which the noble Lord represents that there should be a federal system, but I am bound to say that in the time that I have spoken about this matter in England, I have yet to find anyone who wants to break up England into individual federal units.
The noble Lord, Lord Carmichael of Kelvingrove, indicated in his general way that the Statement was inadequate. I rather suspect, however, that there is some relief within the Labour Party that we should have dealt with the matter just to this extent. It is perfectly obvious to me, as I am sure it is to him, that there are now four clearly identifiable component parts within the Labour Party in Scotland in relation to what should be done about constitutional affairs. Like the distinguished honourable Member for West Lothian, there are those who are unequivocally unionist and would not like to see any degree of change. There are still some who espouse an ill-digested devolutionary pattern which has within it unresolved issues. There are also some who are federalists in a liberal sort of fashion. Then there are some who are crypto-nationalists. I do not think that the noble Lord can conceal that there are those difficulties within his own party.
The noble Lord asked whether there would be an opportunity for debate. That is a matter for the usual channels although, as I indicated in the Statement, there will necessarily be some debate on Standing Orders and particular changes. I am grateful to the noble Lord for indicating that a number of the changes to the Scottish Grand Committee —I suppose, not least, questioning myself—will be useful. I cannot say that I look forward to it particularly, but I hope that a constructive model will be adopted in the style of questioning. Indeed, perhaps I may say to the other place that there might be some lessons to be learned from this House about the way in which questions are addressed to Ministers.
962
I was a little surprised that the noble Lord was so grudging about the transfer of oil and gas jobs to Aberdeen. The White Paper states that initially some 60 jobs will be transferred. I understand that that has been warmly welcomed. It should help to secure Aberdeen pre-eminence as an oil centre in Europe.
I was also asked a number of questions relating to the Citizen's Charter. The reason that we have suggested that it would be worthwhile setting up a network of points of contact and communication around Scotland is, first, that it fits in with the idea of the Citizen's Charter. If anything has emerged as part of the process of taking stock, it is that there is still a surprising degree of ignorance about the range and activity of the work of the Scottish Office. I hope that that misunderstanding will be avoided in future and that the way in which the Scottish Office works will be better understood by people in Scotland. I do not envisage that Scots the length and breadth of Scotland will be spending their time and 10p to telephone to ask silly questions, but I hope that in areas relating to health, industry, education, fishing and agriculture, people will be genuinely anxious to ascertain the appropriate point to which they should go to secure advice. I do not believe that that will increase the staff of the Scottish Office to any significant extent although clearly if some jobs are to be moved from south of the Border into the domain of the Scottish Office, there will be some increase.
5.54 p.m.
The Earl of Perth: My Lords, as I think that your Lordships will know, I remain in favour—I have always been in favour—of the Union. Having said that, equally, I have campaigned very forcefully for the Scottish people to have more say in running their own affairs.
I have not had the opportunity to read the White Paper, so I shall not expand on it at any length. However, one or two points have struck me. I think that it is most important that the Scottish Grand Committee should meet frequently in Edinburgh, and I should like to consider that point further. I also understood (but I am not very clear about it), that people would be called on to give evidence before the committee. If that is so, it would save the telephone calls that have been mentioned—and the 10 pence pieces. If, however, that is not the case, it is critical that there should be an ability for certain representatives from Scotland, from outside the Houses of Parliament, to be able to say something in Edinburgh or otherwise. If that is given force in the White Paper, all well and good. If not, we must look to see whether we can find something that improves the provisions to that extent.
Finally, I fully support the desirability of a debate. It is all very well to say, "This is a matter for the usual channels", but I feel sure that all Scottish peers would want to have a debate on this subject.
Lord Fraser of Carmyllie: My Lords, during the time of my noble friend Lord Younger of Prestwick, arrangements were put in place that the Scottish Grand Committee should be able to meet in

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Edinburgh. If there is an extension to that proposal now, it is that there should be the opportunity for it to meet not only in Edinburgh, but potentially elsewhere in Scotland. It is not difficult to envisage that in relation to, say, a fisheries matter or a Highlands and Islands matter, it might be appropriate for the committee to meet in Aberdeen or Inverness.
I believe that the point about giving evidence is covered in two respects. As a Minister in this House I am, of course, primarily accountable to it, as is my noble and learned friend the Lord Advocate. What is envisaged is that in certain circumstances (in a way, by extension from the process that occurs before a Select Committee), we might give evidence to the whole of the Scottish Grand Committee regarding a particular aspect of our respective responsibilities. A further aspect which we think could be useful is that, by extending the idea of the Special Standing Committee, those who might want to give evidence, such as either professional or voluntary Scottish organisations, might welcome the opportunity to give their evidence in Edinburgh instead of being subjected to the difficulty and the expense of having to come to Westminster.
The Earl of Lauderdale: My Lords, since my family have been involved in working for and defending the Union since the time of King James VI, perhaps I may congratulate the Government on eschewing the fragmentation syndrome of separatism. Perhaps I may ask the Minister to explain a little more about this evidence business? Is it that the Scottish Grand Committee will, on occasions, be able to resolve itself into a kind of Select Committee to take evidence from those outside Parliament as well as inside it?
Lord Fraser of Carmyllie: My Lords, no. As far as taking evidence before the Scottish Grand Committee is concerned, the present proposal is obviously a matter on which we are prepared to consult with the Opposition parties and, indeed, others. At present, it should be restricted to the giving of evidence by either myself or my noble and learned friend the Lord Advocate. There is already power for the Select Committee on Scottish Affairs to take evidence not only from Ministers either in this House or in another place, but also from the public in Scotland. Since its establishment it has, to my certain knowledge, regularly taken evidence from individuals in Scotland.
Lord Ewing of Kirkford: My Lords, can the Minister say who was consulted before the White Paper was composed? Is the noble Lord aware that my noble friend Lord Carmichael said that this is the result of the Minister burning the midnight oil? All I can say is that it must have been a fairly short wick. Is the Minister further aware that this White Paper is not even original? The historical part of it is a direct lift from John Gibson's book The History of the Scottish Office, and the explanation of the ministerial functions at the Scottish Office are easily obtained from the Library of either House of Parliament.
Is the Minister further aware that I agree with him on the point that we are all determined to preserve the
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unity of the United Kingdom? All my work as co-chairman of the Scottish Constitutional Convention has been designed to preserve the unity of the United Kingdom.
The debate taking place in Scotland, which seems to have gone over the Government's head, is directed towards devising a system that will preserve the unity of the United Kingdom. It is not tinkering in the way that the White Paper proposes that we should tinker: 12 general debates in the Scottish Grand Committee. We cannot meet the eight days that are presently laid down, because they are always squeezed into the last two weeks of July. How on earth shall we be able to meet 12 days if we cannot meet eight at the minute?
In relation to Questions to Ministers in the Scottish Grand Committee, where does that place the Secretary of State who has a United Kingdom responsibility for forestry matters? Does that mean that UK Members of Parliament will be able to table Questions on forestry matters to Ministers in the Scottish Grand Committee? Those are matters for which the Secretary of State has United Kingdom responsibility. Nowhere does the White Paper address that question. Does the Minister appreciate that, while I accept that he has done his best—I was interested to see him yesterday climb into one side of the bed with the nationalists and today fall out the other side while making it clear that he had no interest in nationalism —it is not good enough. To produce a lasting permanent solution we shall have to go further than the proposals contained in the White Paper.
Lord Fraser of Carmyllie: My Lords, indeed I did burn the midnight oil. I burnt most of it considering the report of the Scottish Constitutional Convention, trying to make some sense of it and trying to understand what we can do about the vexed question which the noble Lord, with his long experience of political matters in Scotland, knows remains wholly unresolved since the first time such matters were debated with any intensity in the middle of the 1970s. It is that Scottish Members of Parliament come to the other place and have the opportunity to vote on matters relating to England and Wales whereas English Members of Parliament would not be able to vote on Scottish matters. As the noble Lord is aware, that matter is not addressed in the paper over which he claims some authorship.
I make no apology if the noble Lord has noted that we have found sources for what he describes as the historical chapters in the document. What I sought to indicate to the noble Lord, Lord Carmichael, which was disappointing, I confess, is that as at 1993 there are still those in Scotland who have not yet appreciated—the noble Lord may believe that it should be a legislative devolution—the extent of the administrative devolution which is already in the hands of the Scottish Office. It was thought worth while to explain that again.
This set of proposals is not prescriptive. The proposals are permissive. If Scottish Members of Parliament want to take advantage of being able to make a greater contribution within Scotland and to ask questions, that is for them to decide. I believe that they can take advantage of those opportunities. I

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entirely agree with the noble Lord that we do not want, as has been the case in the past, to crush everything into the last weeks of a hot July. I hope that it might be spread more carefully throughout the year now that we have a clearer framework of what might be done.
I would advise the noble Lord to look again at the White Paper because he has misunderstood it. The idea is not that Scottish Questions should be considered exclusively within the Scottish Grand Committee. Those proposals are additional. Where, for example, English Members of Parliament wish to ask Questions of the Secretary of State for Scotland, they would still have the opportunity to do so once a month. They would still have that opportunity in respect of those matters, such as forestry, for which the Secretary of State for Scotland is lead Minister.
Lord Mackay of Ardbrecknish: My Lords, is my noble and learned friend aware that the proposals will he warmly welcomed by those people who want Scotland to remain firmly a part of the United Kingdom? In particular is he aware that the proposal to bring a European conference to Glasgow this December will be as welcome as was the Euro-summit that went to Edinburgh last December? That indicates clearly that Scotland is firmly part of the United Kingdom.
Perhaps I can ask him about the Scottish Grand Committee and the legislative programme in Scotland. Does he envisage that the proposals he has outlined will help with the passage of legislation suggested by, for example, the Scottish Law Commission, which is needed if the law of Scotland is to be kept up to date? That is an important aspect which I hope the proposals will resolve.
Lastly, does my noble and learned friend agree that he and his right honourable friend have taken stock, in contrast to the parties opposite which wish to have assemblies and parliaments which would cause fractures in the body politic of the United Kingdom? For all the midnight oil burnt by people who propose assemblies, they have never succeeded in addressing what Mr. Tam Dalyell christened the West Lothian question.
Lord Fraser of Carmyllie: My Lords, I am grateful to my noble friend for the welcome that he has given to the proposals in the White Paper. I am sure that he is right to welcome the announcement of the Europartenariat conference in Glasgow. If Glasgow and Scotland take advantage of it, it could be of considerable value to them. It will help secure Glasgow a prominence in Europe.
On the Law Commission proposals, we believe that, if the Scottish Grand Committee is used effectively, it should enable those law reform Bills which are essentially uncontroversial to pass through Parliament more efficiently than has sometimes been the case. If my noble friend has an opportunity to read the White Paper in detail he will see that reference is made to that matter.
I am sure that my noble friend is not accusing Members on the Benches opposite of wishing to bring the union of our countries to a conclusion. However,
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there are those in Scotland who would. We believe —we say this with some regret—that they still do not seem to appreciate that their proposals for assemblies can only hasten us towards an undesirable conclusion.
Lord Macaulay of Bragar: My Lords, much of what I was going to say has already been said. Perhaps I may remind the Minister that the Statement does not involve the break-up of England. That has nothing to do with the matters before the House. The title of the White Paper is Scotland in the Union. The real question is the preservation of the fabric of Scotland, because it is in serious danger of disintegrating. The Statement and the White Paper have been produced after one year's deliberation by the Prime Minister and his Ministers. Despite that length of time, the White Paper fails miserably to meet the expectations of the people of Scotland who wish to have an efficient and nationally recognisable form of government which recognises the unique position of Scotland as a nation within the Union, which is what the White Paper is said to be all about.
There is another phrase used in Scotland which is the equivalent of "tinkering". It is "footering about". That is what the Government are doing. They do not know which way they are going. They are just footering about at the edges of legislation. To Scotland, what has been produced is the equivalent of the poor man having the scraps from the rich man's table. The White Paper clearly reflects the Government's obsession that any degree of legislative devolution to Scotland—not a Scottish parliament —is the first step on the slippery slope towards the break-up of the United Kingdom. No one on this side of the House seeks that. We seek to preserve it.
What is needed is the establishment of a positive and efficient legislative machine to deal positively and quickly with Scotland's problems in health, education, industry, law and order, business and so forth, all of which have their own Scottish dimensions requiring Scottish solutions, and quick solutions in many cases. This package will not deal with the agitation North of the Border, not merely by the Scottish National Party —I just mention it in passing, because it is passing —but by people who want genuinely to preserve the United Kingdom, but who are affronted by the way in which Scottish legislation is dealt with and who look for a fair deal in Scottish legislation.
Debates and Question Time in Edinburgh are welcome. However, that amounts only to political window dressing and has nothing to do with positive legislation, which the people of Scotland are seeking.
Lord Fraser of Carmyllie: My Lords, if the White Paper fails miserably to meet the separatist aspirations of the Scottish Nationalists I am delighted. I hope that they will find nothing in it which gives them any comfort. It is intended to strengthen the Union. They can vote for us in the Lobbies as often as they wish; but in that they will find no satisfaction in securing their separatist aims.
The noble Lord, Lord Macaulay, is a lawyer. However, he is only one of many members of the party opposite which has looked at the issue for years and years and has come nowhere near trying to address a

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solution to the West Lothian question. If the noble Lord wants an assembly to deal with the matters which he mentioned, he must honestly face up to the problem of providing a solution to what is to be done about Scottish Members of Parliament coming to Westminster and voting here.
Lord Stodart of Leaston: My Lords, I wish to deal with a point which was raised by my noble friend Lord Mackay. I recall a speech made in this House by my noble friend Lord Home of the Hirsel in a debate on devolution. He said that he had become a firm devolutionist because during his early days as Minister of State at the Scottish Office he spent time examining 200 Bills which had been passed during the previous 20 years and he considered that only seven should have gone near Westminster. Will the proposed Grand Committee be able to take some of the legislation? I was fiercely involved in the Bull Licensing (Scotland) Act which caused great controversy. Will the Grand Committee be able to deal with similar legislation in order to take the load off London?
Lord Fraser of Carmyllie: My Lords, yes. My noble friend makes an important point. One of the features of the package which my right honourable friend the Secretary of State for Scotland considers to be of value is that if our proposals work, not only will they allow for a more efficient dispatch of Scottish business, but they will relieve the pressure on the business on the Floor of the House of Commons. That should be welcomed by our English colleagues in another place. That is desirable and the kind of measure referred to by my noble friend could constructively be dealt with by the Scottish Grand Committee.
Lord Taylor of Gryfe: My Lords, I know that time is running out, but I believe that questions are in order. First, the Minister said that under the new legislative arrangements for Scotland and the Scottish Grand Committee, Standing Orders in this House and in the other place will be amended. Are there any implications in the Statement for the procedures of this House and its treatment of Scottish legislation?
Secondly, in undertaking the background work and preparing the Statement, has the Minister taken into account the fact that he is in the middle of a similar exercise as regards local government in Scotland? Does the Statement relating to the devolution of Scottish legislation have any implications for the new structure of local government which he envisages?
Thirdly, while we emphasise the importance of being part of the Union, there is no reference in the Statement about the responsibilities of the Union to Scotland in an economic sense in so far as there is no reference to regional government or the distribution of government offices and so forth, which should be part of the spin-off of being a member of the Union.
Lord Fraser of Carmyllie: My Lords, perhaps I may respond quickly. I do not envisage that there will be any alteration to the powers of this House. Some aspects of our Standing Orders might be applied to allow for a more efficient dispatch of Scottish
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business. Some alterations may be required as far as my noble and learned friend the Lord Advocate and I are concerned.
The Statement does not address the issue of local government because, as I indicated to your Lordships' House on a previous occasion, it forms no part of the intentions of my right honourable friend the Secretary of State for Scotland that there should be a movement of the powers of local government into the centre and into his authority. For that reason, the issue is not addressed. Not only is it intended that there should be a movement of jobs away from the centres of Edinburgh or Glasgow to other parts of Scotland, but also, as happened in the case of jobs in oil and gas, that there should be a movement of jobs out of London into Scotland. That has been our policy for some time.

Housing and Urban Development Bill
6.15 p.m.
House again in Committee.
Clause 1 agreed to.
Clause 2 [Acquisition of leasehold interests]:
[Amendment No. 8 not moved.]
On Question, Whether Clause 2 shall stand part of the Bill?
Lord Coleraine: The Bill is technical and I wish to ask my noble and learned friend a question which I have not had an opportunity to discuss with him. It relates to the terminology of Clause 2 which provides for the acquisition of superior leasehold interests to the leases of the qualifying flats. It appears to make no provision for the acquisition of leasehold interests superior to leases of other property included in the premises to be acquired; that is to say, commercial property or flats which are not let to qualifying tenants. Is that a drafting oversight?
It may be that it is intended that the leasehold interests superior to the commercial properties or to the flats which are not let to qualifying tenants shall remain in being and shall not form part of what the nominee purchaser buys. If so, the curious result may follow that the price paid for the freehold reversions of such properties as part of the premises being acquired will be comparatively low in cases where the freehold interest is subject to a long head lease at a ground rent. I should have thought that the intention would be to sweep up all the intermediate leases in the purchase but that is not what the Bill appears to provide. I shall understand if my noble friend cannot now answer the question, and I hope that he will write to me.
The Lord Advocate (Lord Rodger of Earlsferry): My understanding is that my noble friend's understanding is correct. Indeed, it is not the intention that intermediate leases of the kind that he mentioned shall be acquired. It is intended that all that shall be acquired are the intermediate leases which lie above qualifying tenancies. That is because the policy of the Bill is to allow qualifying tenants to acquire the rights which affect them. In order that they should be able properly to exercise the freehold which they are acquiring it is therefore necessary for them to be able to acquire the leasehold interest interest between them

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and the freehold. That is why the clause is drafted in such a way. I noted my noble friend's point about the effect of the provision on other issues and perhaps I can write to him about that.
Lord Coleraine: I am grateful to my noble and learned friend for his reply.
Clause 2 agreed to.
Clause 3 [Premises to which this Chapter applies]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 9:
Page 4, line 43, after ("owned") insert ("directly or beneficially").
The noble Lord said: In moving Amendment No. 9, I shall speak also to Amendments Nos. 13, 14, and 15. The amendments are of a technical and almost probing nature. They relate to the premises to which Chapter I of the Bill applies and are designed to explore whether greater precision should be given to some of the phrases used in Clause 3.
I speak first to my Amendment No. 9. The point here is that the premises might be owned by a "person" and that might be a body corporate. It seems to me important that if it is owned by a body corporate then we should be able to find out, or have means of being told, who is the beneficial owner of the premises and who, on some occasions, may be hiding behind a corporate body. That is why I insert the words "or beneficially", because those really are the crucial words in that amendment.
The other three amendments in the group will no doubt be addressed by those noble Lords who have proposed them and I would only say that, in their different ways, they seem to be trying to achieve greater accuracy of expression in Clause 3. I would have no difficulty at all if the Government were to agree that any of these might be suitable in some modified form to bring greater precision. Clause 3 is a very complex clause which needs a little bit of discussion and perhaps some clear responses from the noble Lord when he replies. I beg to move.
Lord Strathclyde: Likewise, in replying to Amendment No. 9, I should like also to speak to Amendments Nos. 13, 14 and 15. I understand the noble Lord's intention in moving his amendment, which is to prevent a freehold being divided, perhaps within a family, simply to avoid enfranchisement. I do not consider that the amendment would actually achieve that aim. It would be very difficult for tenants to prove that a landlord had a beneficial interest in a separate freehold. There could be many forms of such an interest. A company may transfer part of a freehold from an associated company, or one person may hold part of a freehold on trust for the freeholder. Where such a person or company is otherwise unconnected, it would be difficult to prove any beneficial connection, if indeed one existed.
I recognise the noble Lord's intention that this should be a probing amendment and perhaps I may add that I do not think that it is necessary either. It would not be in a freeholder's interest to divide up his asset simply to avoid enfranchisement. Where a block is not eligible for enfranchisement, then a long leaseholder would be entitled to lease extensions and this ongoing right would prevent a freeholder from
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getting freehold reversion. Because this extension is an individual right, tenants are more likely to exercise it than enfranchisement. Once a freehold is divided that division would have to remain, or the block would once again be able to be enfranchised.
In many cases disposal of an interest in a block would be a relevant disposal under the 1987 Landlord and Tenant Act, which would allow tenants to have a right of first refusal of the sale. In that case there would be no benefit to the freeholder as he would still have to sell his interest to the tenants. Our aim in drafting provisions for enfranchisement has been to make them as practical and as simple as possible. I am sure the whole Committee would endorse that aim. It would make the enfranchisement process very complex if more than one freehold needed to be acquired and might result in blocks not being able to be enfranchised as the process was too complex and therefore too costly.
We have also made it clear that enfranchisement should only enable long leaseholders to control the property in which they have the greatest financial stake. To enable them to purchase the freehold assets of more than one freeholder might extend the scope of enfranchisement beyond the leaseholder's reasonable interest. Therefore, this amendment would in all probability not achieve the aim of preventing a block being split, and the amendment would be one that was easy to avoid. I recognise that the noble Lord has probed, and I hope that I have given him the responses that he requires. I therefore ask him to withdraw his amendment.
Lord Monson: The Minister has not commented upon the other amendments. No doubt my noble friend Lord Lytton will speak to his own amendment but the Minister has not commented on Amendment No. 14. That is a probing amendment and I am grateful to the noble Lord, Lord Williams, for giving it his indirect endorsement. These are, of course, all constructive clarifying amendments and not political in any sense of the word, but I should be grateful for the Minister's reaction.
Lord Strathclyde: The noble Lord is quite correct. Amendment No. 13 relates to the provision that a self-contained part of a building may be enfranchised where it is possible to separate services from the remainder of the block without significant disruption to the rest of that block. The amendment would prevent separate parts of a building being enfranchised unless separation of services can be achieved without significant costs.
I am sure the Committee will agree that enfranchisement needs to relate to self-contained units to ensure that the premises for enfranchisement are viable and that any remaining part of the block which is not enfranchised is also viable. We have provided the smallest viable units able to be enfranchised separately, because the aim of enfranchisement is to give long leaseholders the right to control just the immediate premises in which they have a financial stake. They should also make a block simpler to manage after enfranchisement.

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I consider that this amendment would frustrate the aim of ensuring that enfranchisement is exercisable over the smallest viable unit. The effect might be to require a larger unit to be purchased, possibly at greater expense to individual tenants than the cost of separating a smaller block. The current provision concentrates on the effect of the division of services on tenants in the part of the building which is not being enfranchised, and it ensures that they are not disturbed.
The provisions do not dictate the maximum costs of separating a block as this is properly a matter for the tenants and they will consider whether the cost is reasonable as part of their overall costs of enfranchisement. Significant cost is subjective in this context, because even a large cost may not be significant to tenants as part of the overall costs of enfranchisement. It is the tenants who will decide to enfranchise and it is they who will decide if the benefits of enfranchisement are worth the cost. That will include any costs of providing separate services, and this must properly be a matter for them to decide.
In Amendments Nos. 14 and 15, which the noble Lord has raised, the concern is about the effective enfranchisement of those tenants who do not wish to enfranchise when part of the block has been separated. It is right that the Committee should be assured that they can continue to maintain their block and not be adversely affected by the enfranchisement. I share that concern and perhaps it might help the Committee if I explain how our provisions ensure that the interests of all parties are maintained.
We have provided that the smallest viable unit should be able to be enfranchised. That will ensure that leaseholders may only enfranchise the property in which they have an immediate financial interest and should ensure that the block enfranchised will be simpler to maintain. We have also ensured that separation of a block can be achieved only where services are separate or where the separation of services does not result in significant disruption. Both these provisions ensure that leaseholders who do not wish to enfranchise are not unduly affected. There is a balance to be struck here. Clearly enfranchisement may have some impact upon leaseholders who remain in a block. Their interests must be balanced against the aim of giving leaseholders control of their own property, and we consider that we have got that balance about right.
I understand the specific concerns that should the majority of the service charge payers in a block wish to enfranchise only part of the block the other leaseholders may be left with defective leases. The leases could be defective because the total of the service charges collected in a block may no longer be sufficient to cover the cost of maintaining the block. Where this happens there is a remedy. Part IV of the Landlord and Tenant Act 1987 allows leases to be varied where they are defective. The remaining leaseholders can apply for variation of their leases where these no longer make satisfactory provision for the repair or maintenance of a flat, or of the building, or of any other land or building let to them.
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I consider it important to ensure that the right to enfranchise should relate just to the immediate property in which long leaseholders have a financial stake. I consider that in achieving this aim there is sufficient protection for other parties. I recognise that noble Lords have said that they have sought to probe, and I hope that the explanations I have given will prove valuable to them.
Lord Williams of Elvel: Could the noble Lord reassure me on one point? Am I right in thinking that the expression "person" in Clause 3(1) (a) could be a corporate body as well as a private person—that is, "person" includes a body corporate?
6.30 p.m.
Lord Strathclyde: I can confirm that that would be the case.
Lord Campbell of Alloway: If two-thirds wish to exercise the right to enfranchisement and one third does not, an issue may arise as to whether, as Clause 3(2) (b) (ii) states, it,
"could be so provided without involving the carrying out of any works likely to result in a significant interruption in the provision".
Who decides that issue? What machinery exists for the protection of the minority? "Without significant costs" could provide a little extra danger. Does it involve any danger? Will the Minister deal with that? I do not understand how the protection would operate in practice.
Lord Strathclyde: The answer lies in the Landlord and Tenant Act 1987 which goes to some lengths to provide protection for tenants who are affected by the actions of their landlords. Therefore, the clause needs to go no further than it does.
The Earl of Lytton: The Minister has given a very full answer to the amendments before I have even moved them. However, the Committee will be pleased to hear that that will shorten matters. However, I still have residual doubts about the 1987 Act and the "reconfiguration" of existing leases in the light of changed circumstances as regards the recovery of service charge elements.
It seems rather unsatisfactory that the remaining non-enfranchising tenants should subsequently have to incur expense in dealing with this aspect. The situation arises purely because the service charge may be assessed over an entire development. When a part of it is extracted, the terms of the existing leases still cover the whole, without taking account of the fact that perhaps one quarter has been taken out of the frame through an enfranchisement process.
It seems to me that to tie in with the operation of enfranchisement there should be a provision relating to the rewriting of the necessary parts of existing leases. It would be undesirable for all leases on an existing development—a multi-block development or a single block with many entrances and separate service cores—to be rewritten.
Secondly, I am anxious that the injurious affection element which might otherwise fall on enfranchising tenants in part may be artificially inflated by reference

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to a service charge anomaly which is happening elsewhere. If that is not sorted out contemporaneously with the enfranchisement process, it could make the process very expensive for a pioneer enfranchising group within a complex or a large development. Therefore, the question of benefits which are bestowed by cutting up developments through the enfranchising process needs to be thought through. I hope that the Minister will reassure me further by writing to me subsequently on the matter.
Baroness Gardner of Parkes: I support the last remark of the noble Earl, Lord Lytton. Earlier, the noble Lord, Lord Strabolgi, referred to the fact that existing tenants might find that having bought the leases, their costs were higher than had previously been the case. That happened to me many years ago. We should not want the situation to arise in which people are enfranchised and then find that they are faced with higher costs. That would be a great disincentive to enfranchisement. It is an important point to be considered.
Lord Coleraine: I support the points made by the noble Earl, Lord Lytton. My noble friend has answered well arguments about the separation of services. However, his answer as regards the separation of service charges was less persuasive. The Leasehold Reform Co-ordinating Committee has referred me to the way in which the Bill fails to deal with a number of problems arising on the one hand out of the enfranchisement of unnaturally divided buildings and on the other out of the failure to group buildings together for one enfranchisement where common sense suggests that that should take place rather than allowing individual buildings to enfranchise separately.
The Royal Institution of Chartered Surveyors has pointed to the fact that the Bill makes no provision for the revision of the leases of flats which are left outside a block artificially created for enfranchisement purposes. The remaining flat owners must bear the considerable expense of lawyers' and surveyors' fees which will be needed for the revision of their leases. For example, account will have to be taken of service charge contributions and new percentages will have to be agreed. Another example is that the remaining flats may end up with the increased capital and overhead charges of an expensive boiler and central heating system from which a number of users have seceded. The seceding flat owners will not wish to reach a new agreement with those left behind if, following enfranchisement, they wish to have their own independent systems. Equally, several blocks may be managed as one. There may be a sinking fund or unallocated reserves in the bank set aside to deal with the re-roofing of one of the blocks. How will that money be dealt with when only one of the blocks elects for collective enfranchisement? The Bill makes no provision for that.
As my noble friend said, it is true that such covenants in leases can be compulsorily varied but only under the provisions of Part IV of the Landlord
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and Tenant Act 1987. That Act has not worked well in practice and so far as I am aware, no practitioners have made much use of the provisions of Part IV.
The problem of court costs which may be involved is difficult. The flat owners may not agree with the freeholder as to how the leases should be varied. They may have to pay the costs of an application to the court. That does not seem to be fair given that those leaseholders never asked to be the third party to an enfranchisement problem and would gain no benefit from it.
If the freeholder is likely to incur costs in the lease variations, will my noble friend tell me whether those can be recovered from the nominee purchaser under paragraph 5 of Schedule 5. If so I assume that that would only be an advanced estimate of the costs likely to be incurred at a later date. In that regard I can see the freeholder telling the LVT—the leasehold valuation tribunal—that he will need the very best and most expensive professional assistance. In that case, the costs would be very high. If the nominee purchaser must pay, will my noble friend confirm—and this is important—that paragraph 4 of Schedule 5 provides that the marriage value will be reduced by the amount paid?
I know that my noble friend has been made aware of other anxieties expressed in regard to problems which may affect freeholders and lessees in cases such as those that I have mentioned. Anxiety has been expressed both inside and outside the Committee. I hope that the Minister will look further at this difficult area of the Bill and possibly move amendments at a later stage to deal with some of the anxieties expressed.
Lord Strathclyde: I listened carefully to my noble friend Lord Coleraine and to the noble Earl, Lord Lytton. I said in my original reply that I shared some of the anxieties of the noble Earl but I went on to explain why I felt that those anxieties had been taken into account. The noble Earl, Lord Lytton, kindly invited me to write to him on the matter. I should be happy to take up that invitation and I shall send a copy of the letter to my noble friend Lord Coleraine.
The Earl of Lytton: I thank the Minister for that satisfactory reply.
Lord Williams of Elvel: I am grateful to the Minister for that reply. Perhaps he will be kind enough to send a copy of the letter also to Members on the Opposition Front Bench and to the noble Baroness, Lady Hamwee. In the light of the Minister's comments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 10 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 11.
Page 4, line 46, at end insert ("except where two-thirds of the total number is not a round number, when it will be deemed to be the nearest whole number.").
The noble Lord said: I beg to move Amendment No. 11 standing in my name and in the name of my noble friend Lady Hollis. The amendment is designed to ensure that smaller blocks will not need to have a disproportionately large percentage of flats let on long leases to qualifying tenants before they are eligible for

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enfranchisement. For the convenience of the Committee, the amendment is a half-way house between Amendment No. 10 (which has not been moved) and Amendment No. 12. As the Bill is drafted, at least two-thirds of the flats must be let to qualifying tenants if a block is to qualify for enfranchisement. Thus, whenever the theoretical threshold is not a whole number, it must be rounded up to the nearest whole number. In smaller blocks of flats this has a disproportionate effect. For example, in a block of five flats the quorum will be four (80 per cent.) and not three (60 per cent.), even though two-thirds of five is three and a third, but one-third of a flat cannot qualify for enfranchisement.
Our amendment seeks to ensure that, where the theoretical two-thirds threshold in a block is not a round number, it will be deemed to be the nearest whole number rather than necessarily being raised to the number above. The 1992 Consumers' Association survey revealed that a large percentage of flat owners lived in smaller blocks. Half of those surveyed lived in buildings comprising fewer than five flats, with nearly three-quarters in buildings comprising fewer than seven flats. The problem is an important one. Unless the threshold is amended to take account of the effect on smaller blocks, a not insignificant percentage of flat owners will be unable to attempt collective enfranchisement. That problem was recognised by the Government in the Bill's passage in another place. They promised to review the practical effects of the threshold on smaller blocks of flats. I look forward to hearing the result of the Government's deep thoughts on the matter when the Minister replies.
6.45 p.m.
Lord Carnock: This amendment is grouped with Amendment No. 12 that stands in the names of the noble Lord, Lord Annan, my noble friend Lord Bridgeman and myself. In speaking to the amendment I have to declare an interest as the owner of a long leasehold flat in a large London block and the owner of freehold premises in the country that are subject to a shorthold tenancy. Amendment No. 12 and the others that stand in my name have been put forward after discussion with the Enfranchisement League, which is an organisation of leaseholders' associations representing over 18,000 leaseholders. In the majority of cases the number of flats in a building will not be a multiple of three, so that upon multiplication by two-thirds, fractions of one-third or two-thirds will be thrown up.
The Bill provides that in all cases those fractions will be rounded up to the next whole number. They will not be rounded, whether up or down, to the nearest whole number; they will always be rounded up. Under the Bill many situations will certainly arise in which tenants will have no right of collective enfranchisement because the two-thirds threshold has been raised to the next higher whole number in the rounding-up process so that they fall below the higher threshold. Under the amendment the two-thirds threshold will be reduced to the next lower whole number so that tenants in certain blocks, who will
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otherwise find themselves below the threshold, will find themselves above the threshold and the blocks will qualify for collective enfranchisement. The amendment will not apply to blocks that contain fewer than five flats. In the case of blocks that contain two flats, both tenants will have to qualify; in the case of blocks containing three flats, two tenants will have to qualify; and in the case of four-flat blocks, three tenants will have to qualify. A five-flat block is the smallest block that will be affected by the amendment. Upon multiplication by two-thirds, five will become three-and-one-third. Under the Bill that number will be rounded up to four; under the amendment it will be rounded down to three. The provisions of the Bill mean that if only two tenants do not qualify collective enfranchisement will be blocked. Under the amendment, collective enfranchisement will proceed and will be blocked only if the number of non-qualifying tenants increases to three. In the case of larger blocks the effect of the amendment will be similar but perhaps not as marked as in the case of smaller blocks.
The purpose of the legislation is to effect reforms in the law relating to leasehold tenure. As presently drawn, the Bill would bias the rounding process against change. The amendment would bias the rounding process in favour of change and would therefore be more favourable to the purposes of the Bill than the present drafting of the Bill. The Nugee Committee found that 75 per cent. of flats in inner London were in converted buildings commonly comprising 10 flats or fewer. Accordingly, this amendment, while making a very small numerical change, will affect a very large number of flats and in many cases will determine whether or not they will qualify for enfranchisement. If the principle of the amendment is accepted, there will be an impact on Clause 11(2) which deals with the number of signatures required for an initial notice. If no change to that subsection were made, in certain cases an initial notice would require only two signatures, which some people might think were too few. After careful consideration, it would appear that any necessary change would be purely consequential and could be agreed at a later stage.
Viscount Montgomery of Alamein: The amendment is to a certain extent about numbers and the "arithmetic" game. In an earlier speech the noble Lord, Lord Williams, sought to support amendments that extended the scope of the Bill. In that context it seems to me that the amendment moved by my noble friend Lord Carnock is slightly superior. When one comes to analyse the fractions, his amendment widens the scope of the Bill which in these circumstances one may think is preferable.
Lord Strathclyde: I am grateful to all noble Lords who have participated in this debate. My noble friend Lord Montgomery is right in saying that this amendment is purely about numbers. Wherever one draws the line somebody will feel that he or she is on the wrong side of it. As the noble Lord, Lord Williams of Elvel, has said, similar amendments were tabled in another place in an attempt to make the two-thirds rule more equitable, particularly where there were 10

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flats or fewer, because of the way in which the two-thirds rule operated in smaller blocks by driving up the qualification to a higher effective percentage. Noble Lords will recognise that the distortion is not so great in blocks of more than 10 flats. We promised to examine whether or not there was another way in which to deal with those blocks to bring the effective threshold slightly closer to 66 per cent. I should emphasise that we are not disposed to move away from the broad principle of the two-thirds rule. We have reaffirmed that we consider this to be the correct figure. We considered making an adjustment for smaller blocks but found that that would make the Bill unnecessarily complicated. The need to make the adjustment for larger blocks is not so great but would still make the Bill unnecessarily complicated.
In smaller blocks such adjustments would increase the likelihood of a minority of tenants being able to enfranchise, given that only two-thirds of the qualifying tenants need to participate. We therefore decided not to make adjustments similar to those proposed by the amendments.
As I said, such a likelihood is less in larger blocks. Two-thirds is the threshold and it is easily understood. I appreciate that some blocks will fall just outside the threshold and that adjustments such as those proposed by my noble friend or the noble Lord, Lord Williams, might make a few more blocks eligible. However, the cost would be to make the Bill unnecessarily complicated. It is inevitable that some blocks will fall just outside the threshold irrespective of where one draws the line.
The two-thirds rule is well precedented in other legislation, and indeed has been accepted even by the Church of England Synod as a significant majority. On that basis, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Annan: Before the noble Lord, Lord Strathclyde, replies, perhaps I may point out the extent to which the noble Lord, Lord Carnock, offered an olive branch to the Government on this issue. He did not try to reduce the figure. He merely said that if one rounded down instead of rounding up, a few more people would be included. That, after all, is the object of the Bill—to enfranchise and to be as liberal as possible. Therefore, perhaps the Minister will take the matter back and consider it further.
In a block of five or more flats a great many people would benefit. It is important to note that the noble Lord, Lord Carnock, did not make any plea for blocks containing fewer than five flats. It is a genuine attempt at compromise on the part of the noble Lord. I hope that that will commend itself to the Minister.
It is for that reason that I hope that it may be possible to give a little on this issue. After all, can one conceive of anything more damaging to confidence in the Government than if hundreds of leaseholders, encouraged to believe that at last they would be able to obtain a freehold property, found that by some abstruse manipulation of fractions their hopes had been dashed?
Lord Williams of Elvel: The noble Lord, Lord Annan, added a powerful voice to a genuine problem
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which the Minister must consider. The noble Viscount, Lord Montgomery, was right to say that the amendment of the noble Lord, Lord Carnock, is superior to mine in the sense that it would potentially enfranchise collectively more leaseholders. We tried to offer a reasonable and uncomplicated way out for the Government, one which the Government, in their deep thought, do not seem to have arrived at for themselves.
The noble Lord should consider that in a block of five flats the quorum will not be two thirds, Synod or otherwise. It will be 80 per cent. It will be four out of five. That cannot be right. If two thirds is the Government's aim, let us take the nearest round number to two thirds. Three out of five is 60 per cent. and one cannot divide flats into fractions.
I urge the Minister to put aside his brief for the moment, note what noble Lords have said, take the matter back and have another look at it so that we can debate it again at the next stage. I hope that he will be able to do that.
Lord Strathclyde: I certainly owe the noble Lord, Lord Annan, a reply to his plea. I recognise that my noble friend Lord Carnock offered an olive branch and that much of what he and the noble Lord, Lord Williams, said is based on good sense. I do not have a closed mind on this issue. I should like to read carefully in Hansard what noble Lords have said in Committee. I make no commitment whatsoever, as the noble Lord will understand, to bring anything forward at Report, but I am happy to consider the matter further.
Lord Williams of Elvel: I am grateful to the noble Lord for that chink of light. We have made a little progress and we shall see what happens at the next stage of the Bill. I remind the noble Lord that we take the issue seriously and will be looking for improvement in the Government's position at the next stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carnock Lord Carnock had given notice of his intention to move Amendment No. 12:
Page 4, line 46, at end insert ("provided that, where such building or such part contains not less than five flats and where such two-thirds is a whole number and a fraction of a number, then, for the purposes of this paragraph, the fraction shall be ignored.").
The noble Lord said: I am grateful for what the Minister said in relation to my amendment. We shall be considering the matter very carefully, possibly with a view to returning to it later.
[Amendment No. 12 not moved.]
[Amendments Nos. 13 to 15 not moved.]
Lord Kindersley Lord Kindersley moved Amendment No. 16:
Page 5, line 15, at end insert:
("() The condition mentioned in subsection (1) (a) above is not satisfied if the person there mentioned is a charity within the meaning of the Charities Act 1960.").
The noble Lord said: I am delighted that the amendment has been grouped with Amendments Nos. 19, 29 to 31, 35, 150, 153 and 155, all of which cover the general principle that charities within the meaning

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of the Charities Act 1960 and ecclesiastical landlords as defined in Section 31 of the Leasehold Reform Act 1967 should be exempted from this legislation.
At the Second Reading of the Bill, I tried to explain the effect that the Bill would have on charities and in particularly on Smith's charities, in which I must declare an interest as chairman. Since then I have been overwhelmed by the support I have received in the corridors of this House and in a number of telephone calls and letters.
My attention was drawn last night by one such supporter to an extraordinarily misleading article circulated in this House yesterday by the Leasehold Enfranchisement Association with detailed criticism of the way Henry Smith's Charity runs its affairs. If those can be regarded as the tactics of desperation to counter the support we are gaining in this Chamber, I suppose that my trustees should feel encouraged rather than offended.
The association is in a complete muddle over the distinction between capital and income and seems to regard our Kensington estate as a completely unsuitable investment for a charity. How lucky that the association was not around when our original trustees made their investment in Kensington in 1628 with Henry Smith's bequest of £2,000! We would have virtually no beneficiaries now if the association's advice had been followed then. Now we have a portfolio which is well balanced between real estate and investments in the stock market, thanks to the sale of long leases on the estate. I hope that the Committee will allow the trustees to continue to use the leasehold system in the management of our assets to produce the optimum mix of security, capital growth and income for our beneficiaries.
During the Second Reading I noted the anxiety expressed by a number of my noble friends concerning the dangers to which the Bill will expose cathedral closes around the country, most of whose medieval to Georgian buildings are owned by a charitable entity controlled by the dean and chapter of each cathedral. I have therefore put down some simple amendments which have the effect of exempting charities and ecclesiastical landlords from the enfranchisement proposals of the Bill.
I am particularly delighted that the right reverend Prelate the Bishop of Winchester, who unfortunately cannot be here today, has supported the amendments. I was also very glad to see the most reverend Primate the Archbishop of Canterbury in the Chamber earlier today. I believe that his presence in the Chamber underlines the anxiety that the Church feels about the Bill and the danger to which it exposes the Church's properties around cathedrals and elsewhere.
Why are the Government setting their face against an amendment which appears to have such massive support in this Chamber? The Minister, Sir George Young, the architect of the Bill, was kind enough to receive for the first time representatives from Henry Smith's Charity soon after the Second Reading. I was foolish enough to believe that he had been so impressed by speeches made in this Chamber in favour of exempting charities that he wished to let us know
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that there had been a change of heart on the Government's part. Not a bit of it. His last minute conversion to good manners in being prepared to receive us was soon marred by the complete inflexibility to which we had become accustomed, coupled with the astonishing remark that we were too late.
The Committee is well aware that I have not had much opportunity to attend this House; and the novice is, I expect, all too evident in the way in which I move the amendment. However, from a distance, it appeared to me that one of the vital and valuable roles of this House in recent years has been seriously to study the Bills which come to it from another place with clauses the full effect of which had not been completely appreciated amidst the clamour of different interests which prevails in another place. It has been the duty of this Chamber to stand back from the Bill and calmly and judiciously to recommend amendments to ensure that the provisions are as fair as possible to all concerned. That is why I was so shocked to hear the Minister, Sir George Young, tell me, before amendments had even been put down after Second Reading, that it was too late.
After the first shock I was then amazed to hear the Minister state that if charities were to be exempted from the Bill their leaseholders would feel let down by the Government since enfranchisement had been promised in the election manifesto. What an admission, and what a feeble excuse to put up against the relatively few charities involved and the Church. We have heard quite a lot about the election manifesto promise. However, I notice that an honourable Member in another place, Mr. Dudley Fishburn, has recently proudly proclaimed in an article in the London Weekly Times that he successfully sneaked the measure into the manifesto at the last moment without anybody noticing. I quote Mr. Fishburn on the subject of the manifesto in this article. He stated:
—Bahr you may say, 'Who reads that?' Well no one of course. But once there was that commitment, just 10 lines in length, it gave reality to what had before been but a shadowy idea".
What an extraordinary way to introduce legislation which has the effect of destroying a landholding system which has worked well for 200 years for Henry Smith's Charity and probably longer in the country as a whole.
Noble Lords may be interested to know that that same honourable Member for Kensington was not always a supporter of compulsory enfranchisement in the days before the general election. Indeed, in a letter to the manager of Cadogan Estates in 1989 he was at pains to explain that he would never be a supporter of such a confiscatory measure. He stated categorically that any right to buy would be anti-Tory and the worse kind of state bossiness. What changed his mind? I am not a political animal. Therefore I leave others to form their own conclusions. However, it seems to me that the legislation has little to do with principles and everything to do with expediency.
No wonder it is such a hotch-potch Bill with all kinds of artificial, arbitrary limits such as the low rent test and the 10 per cent. of floor space for commercial use. There must be plenty of would-be enfranchisers

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feeling let down by those features in the Bill. But the Government appear to have no problems on that score. Nor, it would appear, is there much concern for those who might have looked forward to enfranchising their properties on the Crown Estate around Regent's Park. The Government are apparently quite happy that those properties should be exempted on the ground of maintaining the national heritage. There is plenty of let down there, I imagine.
Yet when we suggest that charities and the Church should be exempted, we are told that the relatively few tenants involved would feel let down—and that the Government simply cannot permit.
We are all accustomed to progressive taxation. We feel, rather in the Robin Hood tradition, that it is acceptable to rob the rich in order to pay the poor. However, in the case of charities such as Henry Smith's which will be affected by the Bill, the Government are behaving much more like the wicked sheriff of Nottingham by robbing the poor (the beneficiaries of Henry Smith's Charity) in order to pay the rich (the leaseholders of our Kensington Estate). Confident that the Committee will not allow such robbery, I beg to move the amendment.
Lord Wolfson: I have noted the remarks of my noble friend. Will he tell us what net loss of income would arise if the proposals in the Bill were passed? Not all the properties would be acquired. The moneys received would be invested to produce a return. Already two-thirds of the assets of the trusts are in investments. Will he comment on a remark contained in the notes of the Leasehold Enfranchisement Association? I have no connection with that movement. The notes state:
"The Association has a particularly high level of complaints about managing agents in respect of freeholders with charitable status".
Will my noble friend comment on the statement that for each £1 of investment income 1p goes on expenses; and that for each £1 of property income 44p goes on expenses? I have had much to do with charitable trusts, charitable works, and so on. I regard such expense ratios as quite insupportable.
Viscount Whitelaw: I suppose that I ought to declare what can only be described as a very remote interest. I spend a great deal of my time now seeking to raise money for varying charities and good, worthy causes. I am also the chairman of the Council for Charitable Support, a body set up to find ways of obtaining more for the charity, charities and worthy causes. That is why I rise to speak. If I cannot speak as chairman of such a body it would be surprising.
My noble friend Lord Kindersley said that he is not a political animal. If I am an animal of any kind, I must be a political one. Yet he has put forward his case so well that there is little more to say. I wish simply to put this point. Last year £12 million was distributed to various charities and good causes. It was a difficult year for all charities. I can tell noble Lords that a more difficult task than seeking to raise money from people at the present time I do not know. Obviously other people are better at that than I am. But I can tell the Committee that it is a difficult task. Over the years that body has given money of about
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that figure to many charities through the way they have managed their affairs and their estate. We are now told that they will not be able to do that any more. Someone said to me the other day when I protested, "Ah, but, you see, it will all be all right because the compensation they will receive afterwards will make up for it and they will always have the same amount of money". I have lived too long in politics —I do not understand the mathematics but I understand politics—and I do not accept that suggestion for one single moment, I do not believe it for a second. That is why I am speaking today.
I simply wish to ask whether it really makes sense to deprive a great many worthy charities—and of course I include the churches—in this way. It does not seem to make sense. I say to my noble friend that the Government should think again about this during the passage of the Bill. I feel that it is hard for many people who gain from the charities and expect money from them. The charities do so much good. I know that it is easy to point that out, but in the Bill to turn our backs altogether on them at this time seems extraordinary. I hope that the Government will think again on such a worthy subject involving a trust which, as my noble friend Lord Kindersley said, has held an exemplary position over a long time. Its wonderful tradition is being undermined by an Act of Parliament and I find that very difficult to accept.
The Earl of Radnor: I wish to support the series of amendments for several simple reasons. Never in my experience—although possibly in the experience of other parliamentarians—have I come across any government depriving a charity of some of its rightful wealth. It is no good thinking that the Smith's charities or any other charity owners of property will not be deprived of their wealth. It has already been said today, first, that the charities will lose the marriage value; and, secondly, that the timing of the sale will not be theirs, and the timing is extremely important for real estate. A third point which was not mentioned is that surely as fairly large charity estates, of which we have heard, gradually become eroded by the leasehold enfranchisement, so their administration costs will have to be kept in balance with the decrease in income. I am sure that that will be almost impossible and will represent a third loss.
I believe that, for the small number of charities compared with the whole gamut of this—to me—iniquitous Bill, my noble friend should concede this small point.
The Earl of Onslow: I can see that my noble friend on the Front Bench is totally unable to accept the amendment. If he accepts it, then he admits that the Bill by its very nature, is unfair to charities. If he gives way, then he is being unfair to private individuals; so he is unfair either way. He is in a bit of a pickle, if I may be so bold as to say so.
Baroness Gardner of Parkes: I thought that the amendment was moved in a superb Second Reading speech by the noble Lord, Lord Kindersley. It took a full 10 minutes and he put the case fully. However, I cannot agree with it. I believe that there is a big

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difference between a charity running property as an investment and a charity providing charitable, inexpensive accommodation. I put into that category the Peabody Trust which I understand has provided valuable accommodation for people, going back to Victorian times. It continues to do so.
As far as concerns the charity of which the noble Lord, Lord Kindersley, is chairman, I have not read the information issued to the House, although I was interested in the points made by the noble Lord, Lord Wolfson. They were relevant as regards how much less could be spent on administration in other fields. However, I clearly recall a man sitting, year in year out, in a Range Rover in a South Kensington mews saying that a charity which I shall not name was unfair to tenants. The last time I saw him he was on a bike, I do not know whether his circumstances had been reduced—perhaps by his tenancy obligations, who knows?
There is certainly a big difference between the tenants of charities who are in business just as a property company would be and the Peabody Trust. Harrow School owns large slices of Maida Vale; the hospitals own large slices of South Kensington. A tremendous number of people would fall into that category of charities. I believe that it is right that tenants of such properties should have the same rights as other people. However, the situation is totally different where a charity such as the Peabody Trust provides low-priced accommodation. I oppose the amendment.
7.15 p.m.
Lord Williams of Elvel: I cannot add much to what the noble Baroness, Lady Gardner, said. I believe that this is a wrecking amendment. If it were passed so many people would be taken out of the scope of the Bill as to make it almost meaningless. I do not wish to say anything against charitable institutions; they are like mother-love, one cannot say anything against them, one has to make moving speeches in favour of them.
However, charitable institutions which provide accommodation at charitable rates can certainly be excluded from the Bill, as the noble Baroness said. But I do not believe that charitable institutions of whatever nature, which operate as property companies and use the income from those property operations for charitable purposes, are any different from any other organisation that deals in, owns or leases property. Therefore I support what the noble Baroness, Lady Gardner, said, and we shall support the Government if the amendment comes to a Division.
Lord Peyton of Yeovil: I hope that my noble friend on the Front Bench will feel happy and contented with the comfort he has just received from the noble Lord, Lord Williams. He has not received much from behind him yet and I do not propose to give him any myself.
Firstr, I disagree, as sharply as one is allowed to with people on one's own side, with the comment made by my noble friend Lady Gardner. She rebuked
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my noble friend Lord Kindersley for making a Second Reading speech. I thought that he made an admirable speech backed by extraordinarily good information and humour. He suggested powerfully that the Government had got it wrong. I very much hope that my noble friend Lord Strathclyde was also made to wince a little when my noble friend Lord Whitelaw spoke. I hope that those comments will be passed on with some vigour to the Minister with responsibility for housing. We all recognise that he is the parent of the Bill and it is unfortunate for my noble friend that he has to sit here and support a Minister who is responsible but who is not here.
I believe that charities should be exempt and that the Government are quite wrong in at least giving the appearance of treating the objections made on behalf of charities in so cavalier a manner. I have not yet heard any trace of Ministers even taking the objections seriously. I am curious to know whether they have even bothered to obtain the views of the Charity Commission. They may have, and, if so, I shall be interested to hear the views and also what encouragement the Government received from the Charity Commissioners to proceed along the lines proposed in the Bill.
I do not know what efforts have been made to ascertain the views of right reverend Prelates about the effects on cathedral closes. I remarked in the course of my Second Reading speech that they are places of great beauty and peace which have been cherished and preserved over many generations. They are now at risk. I am anxious to know whether the Government are in any way interested or worried about the possibility that the closes may in future lose the character which they have acquired over many generations.
Perhaps some Member of the Committee could explain to me the difference between Regent's Park and Belgrave Square. I find it difficult to understand. And what is the difference between Regent's Park and a cathedral close? The Crown Commissioners say that Regent's Park is something very special. I do not think that anybody would challenge that view. However, it might be said that what is good for Regent's Park is good for Belgrave Square and for other squares in London which are places of great beauty and charm. When the Government say that such places will be protected by estate management schemes, I believe that the Government are in very grave danger—putting it as politely as I can—of deceiving themselves with a good liberal dosing of their own eyewash.
I take up the point made by my noble friend Lord Whitelaw. He dealt with the matter very well. He said, "The charities will get their money" as if that were the same thing. Assuredly the charities will get their money, though not everybody thinks that they will be obliged to sell. Let us not have too much nonsense about the "willing seller". The charities will be obliged to sell and they will get the money. But whom am I addressing except a member of the present Administration who is not uninformed about inflation? Comparing the history of our country over recent years with that of others—I hope that I shall not be told that I am being grossly irrelevant here—I

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believe I am right in saying that in 1960 the pound sterling bought eleven and a half German marks. It is not quite the same today. The view of those who suggest that the charities ought to be content with receiving whatever money the Government believe correct is not acceptable.
I make this plea to my noble friend. I hope that he will not make the ghastly solecism which I thought he made earlier of saying that the amendments are defective. If the Government would accept the principle, I have no doubt that my noble friend Lord Kindersley, who is both modest and intelligent, would be delighted to say, "Well, do better, so long as the Government accept the principle". I hope that my noble friend will feel able to do that. I very much hope that, whatever is done with the amendments, between now and Report stage the Government will—I strongly suspect for the first time—give some serious thought to the role that charities play in our society. I am the chairman of a charitable trust. I know very well the pressure of demands upon resources which are necessarily limited. The Government now want to say, without giving a backward glance, that charities must suffer with the rest. As the noble Lord, Lord Williams, appeared to say just now, it is outrageous. I believe that to take that kind of cavalier attitude to giving and to the people who give is wrong. I hope that my noble friend will take that message back and at least give the impression of treating the point seriously; and, even more important, that he will bring back from his colleagues some evidence that they too have taken it seriously.
Earl Jellicoe: I have some hesitation in further prolonging the discussion. Nevertheless, I feel moved to make a brief intervention. First, I should like to avow a very direct interest. I happen to be one of my noble friend's clients. I happen to hold the leasehold of a small flat in Onslow Square. I suppose that, if the Bill were to pass without the amendment of my noble friend, I might be the beneficiary by a penny or two. But I would not feel at all let down if the Committee were to agree to my noble friend's amendment. I would not feel let down for two reasons. The first is the very commendable management of the estates, squares and crescents which Smith's Charity has looked after over a very long period of time. It is due to that good management, I believe, that that particular part of London makes such a marvellous contribution to London's architectural heritage. The second reason is that given already in support of my noble friend's amendment; namely, the contribution which Smith's Charity makes in the charitable field. I happen to have been a beneficiary of the generosity of Smith's Charity: it is a charity close to my heart.
I was surprised to hear the noble Lord, Lord Williams of Elvel, describe my noble friend's amendment as a wrecking amendment. That does not seem a fair description of an amendment, moved with sincerity, which has attracted a great deal of support in the Committee.
Lord Chalfont: I shall not detain the Committee long. I do not like the Bill at all. I do not like it as it has been brought forward by the present Government.
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I would not like it if it had been brought forward by a government of the party opposite, as indeed it might well have been. I do not like it for a number of reasons which it is not proper to go into now. I shall not embark upon anything like a Second Reading speech. I do not think, with great respect to the noble Baroness, Lady Gardner of Parkes, that the noble Lord, Lord Kindersley, made a Second Reading speech either. I believe he made a speech which addressed itself to the amendment he moved, and the noble Lord made it eloquently, forcefully and persuasively.
The noble Lord, Lord Williams of Elvel—although certainly there are arguments of an intellectually respectable kind to be made on both sides in respect of charities—made a notable contribution. I was much more influenced, however, by the profound and weighty remarks of the noble Viscount, Lord Whitelaw, when he asked the Government to agree to think again. That was surely a modest enough request. I urge the Government and the noble Lord to take his words to heart and at least give the matter some further thought. If not, I must tell him that should the occasion arise I shall vote in support of the amendment.
Lord Gisborough: I was quite surprised to hear of the dissatisfaction with Smith's Charity. I have known a few people living in its houses and they have been remarkably satisfied with the low rent. That is a little out of date. I cannot imagine that anybody who has taken a house from a charity can ever have imagined in his wildest dreams that he would be able to force the charity to sell at a later date. Such tenants must have realised what they were doing when they took the house on in the first place.
I am also concerned about the Peabody Trust, which I do not know at all but which I understand from what has been said asks very low rents. I cannot help thinking that the Peabody Trust and other people who, for altruistic reasons, let out houses at a very low rent (it happens occasionally) will probably suffer very severely for their altruism.
The heritage aspect has been mentioned. Onslow Square and that whole area owes a great deal to the care shown by the charity. Planning permission very often cannot control as well as the owner can.
Finally, it seems to me amazing that the Government will allow, and indeed encourage, people in charitable housing to make a profit out of a charity.
7.30 p.m.
Viscount Mountgarret: Perhaps my noble friend will address his attention to two points relating to the amendment. The first may be regarded as somewhat facetious. But I wonder what the late Mr. Henry Smith would be thinking in regard to his generosity had he known that this was what was going to happen to the foundation that he created. I venture to suggest that he might have been inclined to be less generous than he was.
The other point is more serious. Has my noble friend considered whether or not, by retaining the charitable aspect within the context of the Bill, the

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Government are acting in the public interest? If they are not acting in the public interest, it brings into question the whole legality of the Bill, at least in relation to charities. Retrospective legislation on the sanctity of contract where it benefits the public is all right, according to the European Court of Human Rights adjudicating on the Leasehold Reform Act 1967. But I seriously doubt whether there is any public interest in an absentee leaseholder or investor who may well purchase the freehold compulsorily by the Act, which would not then be his principal place of residence. Therefore, it would infringe the rules laid down by the European Court of Human Rights. I hope that my noble friend will take that point on board, otherwise one could wind up in a certain amount of trouble.
Earl Peel: Before my noble friend responds, perhaps he will be kind enough to inform the Committee whether or not the National Trust will be exempt. If so, then the amendment is acceptable; if not, it creates a dichotomy.
Lord Selsdon: I am grateful to my noble friend Lord Kindersley for introducing the amendment. It is in a way a divisive amendment and causes me a lot of personal anxiety. If I support the Government, am I deemed to be anti-charity and anti-Church? I am not sure about that. My noble friend mentions Smith's Charity and he speaks therefore with a fully declared interest. My knowledge of Smith's Charity is limited but I am probably one of the few Members of your Lordships' Committee who has intimate knowledge of the Ottoman Empire and of Turkish pirates.
I look at the original objectives as they were defined for the Charity Commissioners and without any malice aforethought. It is for,
"the relief of the poor kindred of Henry Smith".
I should like to know who the poor kindred are; whether any of the leaseholders or tenants of Henry Smith are poor kindred or not. But, more important, it is for,
"the relief and maintenance of Godly preachers".
Being, like my noble friends Lord Jellicoe and Lord Whitelaw, broad of Church and broad of mind, and also a great supporter of Winchester and anything with which the right reverend Prelate the Bishop of Winchester might be associated, I find myself in a difficult position. I therefore withdraw from that argument and ask myself, "When is a charity not a charity?" Are we at the moment talking of a charity as a charity, or a charity as a property owner? If someone is registered under the Charities Act, are they any more valuable to society than those who are not registered and also make sizeable contributions?
I declare my interest that I was actually born in a Henry Smith house; my family lived around there. The only argument we ever had was when we wanted to put the only handkerchief tree in the United Kingdom on the balcony; quite understandably the charity objected.
When I look at what we are discussing, I am confused. If we exempt charities, how many leaseholders will not be able to enfranchise? I should
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like to know. How many charities are we discussing? I am quite sure that no one in this Chamber is anti the spirit of charities and anti the giving of freedom to invest wherever they like. But we should like to see more housing for the underprivileged and for those who cannot afford higher rents. At the moment the housing associations are doing as much as they can, but in general there is no significant investment by charities in low cost or subsidised housing.
Equally, when we look at Henry Smith's, for whom I have a great regard, it says that that charity is number seven or number eight in the batting order among the top 25 grant-making trusts by size of income. That is relatively small compared with the Wellcome Trust, the Wolfson Foundation or the Leverhulme Trust. It is about the same size as the voluntary donations made by British Telecom or the London clearing banks to voluntary societies.
When I spoke to my noble friend yesterday, I suggested that it would be nice if the charities themselves could make some positive suggestions within the overall concept of the Bill to widen enfranchisement and to allow more people to own their freeholds. I cannot believe that any of the charities are against that principle provided that at all times it does not reduce the value of their assets or their freedom of manoeuvre. There are those who would say that a property investment for £2,000 from 1628 has been a remarkable investment; others may say that if we removed inflation it may not have been so great after all, and in the past few years those who were unfortunate enough to be locked into property may have seen a devaluation of 25 per cent. plus the devaluation of the currency where they could not invest internationally.
I am certainly not against any of the charities which are freeholders or landlords, and, far from that, against the Church or the principles for which we all stand. But I believe that we are mixing apples and pears; we are confusing matters. We are talking about enfranchisement of flats and properties; we are not talking about charities, knocking them and trying to reduce their assets.
I suggest to many of those who oppose the Bill on principle and say that it is unfair in monetary terms, to concentrate their efforts on the question of compensation and payment. I suggest also that the charities themselves might take the advantage, in a democratic way, of consulting their tenants. They may be surprised at how many tenants share their views and feel that they wish to continue voluntarily rather than to have the opportunity for enfranchisement. Were I a tenant of Henry Smith's I would willingly continue and would not wish to do anything to take away assets from that great charity.
As I say, I am not speaking against Church or charity; I am trying to introduce a bit of rationality.
The Marquis of Hertford: I shall be brief. My noble friend said that we are not taking away the assets of a charity. But that is exactly what we are doing. I ask my noble friend on the Front Bench whether anybody in this Chamber seriously believes that a compulsory sale results in a fair price.
Lord Crawshaw: Two noble Lords asked questions about the running of Smith's Charity. As my noble friend Lord Kindersley cannot speak again, I can speak as a trustee of the charity. At any rate, I hope that I can speak with some authority, if not as much as he.
In response to the noble Lord who raised the question of the proportion of the revenue which was distributed, I can only say that in a property-owning charity such as Smith's we have great obligations in the field of upkeep, improvements and other developments in the various squares. Of course, that takes a great deal of money. The £12 million is distributed after all that has been dealt with.
With regard to who are the poor kindred of the leaseholders, that is not the whole situation. The point is that the estate is run commercially, as my noble friend Lord Montgomery pointed out at Second Reading. It is the revenue from the leaseholders which is distributed to the poor kindred and all the other charities mentioned by my noble friend Lord Kindersley. I expect that he will say something in that regard in his wind-up speech.
Going on to the general point, all things being equal I can go along with the Government on the ideal of people owning the place in which they live; but as we well know, things are not always equal and I would put home ownership around sixth in my list of ideals. I would rather be a leaseholder on a good estate and have a good job than be a struggling homeowner, perhaps unemployed, with an impossible mortgage and a mass of other debts and problems. As a trustee of Smith's Charity I suppose that I was one of those whom my noble friend Lord Strathclyde challenged at Second Reading to demonstrate why our leaseholders should be at a disadvantage compared with the leaseholders of other landlords. But he really did not consider the position of all the other parties in the deal, and in particular all the charities which receive the £12 million a year, a sum built up over very many years and with, if I may say so, a good deal of skill. I suppose it would be unfashionable to suggest that the landlords might get a little consideration. But I can only tell the Committee of the enormous work in his own time which our chairman, the noble Lord, Lord Kindersley, puts in. It is something which people further away from the charity may not appreciate.
It might be argued that our system could be extended and not finished. The Government believe that businesses should be run by business and not by the Government. I might suggest that welfare should be run by charities and not by the Government. I can think of masses of savings to the Treasury, which no doubt finds the National Health Service to be a bottomless pit. People would know when they lease a flat that a high proportion of the rent will go to welfare. To me it is preferable to pay rent, for which, after all, one gets something, than to pay more and more tax. As my noble friend Lord Peyton said at Second Reading, others must be and should be encouraged to make similar bequests to the one which Henry Smith made.
I have a little knowledge of the workings of the Church, although not as much as the right reverend
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Prelates present. I imagine that there must be a relationship between the rents which the Church as a landlord receives and the stipends which ordinary country parsons—there are parsons in the cities as well—receive. From my observations not many people in the Church are overpaid. I would not like to see the Bill do anything which would damage the Church's revenue and income.
Finally, I should like to point out to my noble friend Lord Strathclyde that we have in existence a valuable and approved system. I do not think it is up to us to show that the leaseholders are treated unfairly. It is up to the Government to show that their proposals are an improvement for all concerned. I so agreed with my noble friend Lord Whitelaw when he said that we must reflect more on all this. I do not know whether the matter could be referred to a Select Committee to hear a little more evidence. However, I am far from satisfied that all avenues have been explored. Much more examination is needed before we see the break-up of the charitable estates, including that of Henry Smith, at great expense and with great disruption. If anything is wrecking, I suggest that the Bill is more wrecking than the amendment. I have much pleasure in supporting my noble friend Lord Kindersley.
7.45 p.m.
The Lord Bishop of St. Albans: It is no discourtesy to the noble Lord to say that this debate seems rather like Henry Smith versus the rest. There seem to be a very large number of people speaking for Henry Smith's Charity or certainly who support that point of view. The Church has been mentioned several times, from the time that the two-thirds majority in the General Synod was referred to by the Minister, and therefore it may be appropriate for me to say a few words from these Benches.
The noble Lord, Lord Kindersley, kindly invited me to associate myself with this amendment. I said that there was no way that I could because I could not possibly be here on a Tuesday afternoon. I said that I had to go to a dinner in London at eight o'clock but that I could perhaps sit on these Benches for an hour or so before that. As luck would have it, the amendment has come up just while I am here for these moments. Therefore, perhaps I may say a few words on behalf of the Bishops.
I think it is true to say that the Church of England is ambivalent on this amendment because we are not in the business of fighting our own corner. We are not in the business primarily of seeing to and caring for our own assets and our own benefit. If the Government decide that this is the way in which the Bill should go through and the amendment is rejected, then the Church of England will accept that, take it on the chin, try to readjust to it and recognise that the benefits that come through the Bill for the leaseholders —they are the people we feel for because that is the other side of the ambivalence—will be enjoyed and that their rights will be safeguarded. If that is the way it is to end up, we shall be content.
However, the Government should remember the cost that will arise. There will be a cost in terms of

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income. I am quite certain that, if the Church Commissioners could be better represented here, they would be, because in all conscience they cannot afford to lose many more millions of pounds. It means the clergy and their pay. That may have to be acceptable.
The reservoir of charitable giving and charitable influence will clearly be diminishel if the Bill goes through unamended. It may be that that is what the Government wish. It would be sad but nevertheless one would have to accept it as the decision of the elected Parliament of this land. There would also be the loss—this applies particularly to the Cathedral close—of the ambience, because the possession and control of property is not entirely for the sake of making money. It is for preserving an area—an area of peace and sanctity, particularly in the Cathedral close. Although there are not many Cathedral closes still left in this happy state, nevertheless it will be a further erosion of what those have.
So if this comes to a vote, I shall be going through the Lobby on behalf of the amendment. However, I should like to say to the Committee that the Church of England sees both sides of this argument and is in its perhaps typical, ambivalent role here.
Baroness Hamwee: The Committee will be most grateful for that extremely thoughtful contribution. It is helpful to have our attention turned to other landlords who fall within the ambit of the amendment. One of the reasons I wish to speak to it is because I think it is most unfortunate that Members of the Committee should have been circulated with information—perhaps misinformation—concerning a particular charity. That was most regrettable. I am in no way influenced by the information that was received but I do not think it is a practice that is to be encouraged.
The debate is not about Smith's Charity. It is in part about Smith's Charity, but by no means to the extent that one might have thought from the energetic contributions made by those who speak for it. The point made by the noble Lord, Lord Selsdon, went right to the heart of the issue. When is a charity not a charity? What benefits should be given to a charity? Is it appropriate that a charity should be treated differently because it is a charity, or should we be looking, as the noble Baroness, Lady Gardner, suggested, at the activities?
I believe that the noble Baroness was correct in her analysis. One must consider not the identity of the landlord but whether his activities are those which should be protected. I believe that in many cases the charities are holding their property portfolios as, if you wish, a commercial investment. We are not talking about the provision of housing to meet, for instance, a need for low cost housing. The Peabody Trust was mentioned along with the question of low rents. I suspect that the rents referred to are those for short tenancies and not the long-term leaseholds that are the subject of the Bill.
I regret that I did not understand the comment that the reservoir of charitable giving will be affected by the amendment. That did not seem relevant. I do not
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believe that the British public would be dissuaded from contributing to a charity because it saw some element of confiscation by the Government.
Lord Swinfen: I am grateful to the noble Baroness for giving way. The element of charitable giving by the general public does not come into it. It is the element of charitable giving by the big grant-making trusts who give from the income from their investments.
Baroness Hamwee: That takes me to my next point, which is whether the provisions amount to confiscation or robbery. As Members of the Committee have said, if they do amount to robbery then that is the fault of the whole Bill; it is not something that should be put right just for charities. It is a much more fundamental point and needs to be addressed for all leaseholders. I do not believe that it amounts to confiscation.
The last area of concern is that of ambience. That is a concern which I share. But it is one that should be addressed through other measures. There are measures later in the Bill which deal with environmental matters. I agree with the distinction made by the noble Baroness, Lady Gardner, and the noble Lord, Lord Williams. I feel that it would not be right to apply overall concern about the Bill just to charities because they are charities, without thinking through the consequences.
Viscount Montgomery of Alamein: When my noble friend Lord Kindersley introduced the amendment with his usual skill and charm, he exclaimed that he was a novice. If he is, then he is no mean advocate for his cause. It is therefore no surprise that he had a great deal of support when he moved around the corridors outside. Indeed, I was one of that minority with whom he spoke and, as he knows, I do not entirely agree with him.
It is perfectly legitimate for him to mount his arguments in the way that he has, particularly about the Minister and in general about the Bill. I am sorry that he should have mentioned the Member for Kensington, Dudley Fishburn, because he is not here to defend himself and cannot be. I agree with my noble friend Lord Jellicoe that Smith's Charity is extremely efficient. Nobody would question that, and I have said so before.
The point is that it is a property company and an extremely efficient one. Therefore, it would be quite wrong for it to be treated differently from other property companies. Of course, it does great good works, but this is not a Bill about charities. The noble Baroness, Lady Hamwee, and my noble friend Lord Selsdon made that point clearly. Nobody is trying to do down charities. They are a very good thing. The Bill is about property and the right to enfranchise leaseholders across the country. Therefore one set of leaseholders should not be disqualified in favour of another. Everybody must be treated equally before the law.
The noble Baroness is right in that if we are arguing whether the Bill is a good thing, that has already been done in another place at Second Reading. I hope that

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my noble friend will therefore be able to resist the siren calls he has heard from so many of those who have spoken in favour of the amendments.
Lord Strathclyde: I greatly take to heart the concerns that have been raised on an exemption for charities. I note the great sincerity that has come from my noble friends, particularly my noble friend Lord Whitelaw. I certainly do not take lightly anything that has been said. My noble friend Lord Peel asked about the National Trust. I can tell him that property on inalienable land is exempt. He will find that in Clause 85.
During the Second Reading debate earlier this month there were two speeches from my noble friends Lord Kindersley and Lord Crawshaw, both of whom are trustees of Smith's Charity. We have had powerful contributions from them again today and from other noble Lords. I therefore welcome the opportunity of setting out the Government's position in detail.
I have no knowledge of any uncomplimentary remarks made about Smith's Charity during the course of the past few days. It is not part of my case whether or not Smith's Charity is regarded as either a good or a bad landlord. Naturally I admire the tremendous work which is done by so many charities. I have seen the list of donations made by Smith's Charity: it is clear that it helps an enormous number of charities throughout the country, including those working with the young, the old, the ill, and even drug addicts, to name but a few.
It would clearly be most unfortunate if this legislation were to impede the work of that charity. Similarly, the Church Commissioners are significant landlords of leasehold properties and their important work of providing pensions for the clergy must continue. The Committee would rightly be concerned if such bodies and other charities were to be seriously and adversely affected by the Bill. Some of my noble friends have suggested that this would be the case. It is my job to reassure the Committee that that will not be the case.
I appreciate and understand the concerns that have been expressed; they were not unexpected. When the Leasehold Reform Act was debated in this Chamber in 1967 an amendment was tabled and agreed that would have exempted from the provisions of that Act houses on land owned by bodies established for charitable purposes. However, the amendment was overturned in another place and Parliament in its wisdom decided not to exempt charities from the leasehold enfranchisement provisions in that Act.
Although all charitable bodies spend their income in support of charitable ends, most raise it in a strictly commercial manner and rightly so, as my noble friend Lord Crawshaw explained. The Church Commissioners have made clear that their objective is to maximise their capital assets and revenue. The trustees of a charity are generally under a duty to use their assets to the maximum effect. So, from the point of view of a tenant, it makes little difference whether his or her landlord may be Smith's Charity or the Church Commissioners on the one hand, or, for the sake of argument, one of the great estates on the other.
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All of these charities and all the great estates will expect to sell leases at the market rate and will impose on their tenants repairing and insuring obligations. The tenants of charitable landlords are seeking enfranchisement sometimes as strongly as those of other landlords. I can see no reason why they should be excluded from the rights of enfranchisement just because their landlord's property investment portfolio might be affected.
Many of the arguments put forward by my noble friends are based on the premise that, quite apart from the principle of enfranchisement, the valuation proposals contained in the Bill will harm the charities' financial position. It will come as no surprise to the Committee if I say that I do not accept that that is so; but if, for the sake of argument, I were to accept that it were so, I am still not convinced that that would make a case for the separate treatment of charities.
If it is unfair to treat charities in this way, it is equally unfair to treat, for instance, my noble friend the Duke of Westminster, or a property investment company, or an individual who may have inherited his freehold in that way also. So, as my noble friend Lord Selsdon put it so clearly, the key argument is whether the price of enfranchisement is fair. I anticipate a very full discussion on valuation when we reach that part of the Bill.
I should at this stage say that it is not our policy that there should be confiscation of assets at less than market value. Our aim is that the valuation basis should be fair to both parties. We do not wish to enrich tenants at the expense of landlords, or landlords at the expense of tenants. Tenants will not be able to purchase their freeholds at discount and there should be no wind-fall gains. The marriage value brought about by enfranchisement will be shared between landlord and tenant in the same way that it would in the market.
As has already been mentioned, tenants of charitable housing trusts, where the flats are in housing accommodation provided by the trust in pursuit of its charitable purposes, will not be qualifying tenants and those charitable organisations will be exempt. Housing trusts are bodies that use all or substantially the whole of their funds for the purpose of providing housing accommodation. They do not hold it for investment purposes or manage their property in a commercial way.
Where charities have let flats on a long lease, presumably to raise funds by way of the premium, they have to all intents and purposes sold that property to persons who have every right to consider themselves owner-occupiers. They will usually have the greater financial interest in the property and, like other leaseholders, the expectation of being able to enfranchise.
I do not wish to have a fight with my noble friends on this. As I said earlier, I take to heart the words of my noble friend Lord Whitelaw, but I believe that the case has not been made as to why charities should be treated any differently from any other landlord. Therefore, I ask my noble friend whether he will withdraw his amendment.
8 p.m.
Lord Kindersley: I am interested in and should like to reply to the last remarks of my noble friend the Minister. I shall attempt as quickly as I can to reply also to some of the other comments that have been made in the past few minutes. I deal first with the basic and fundamental point that was made by my noble friend the Minister that charities will not be harmed by the Bill because it allows for perfectly fair valuations. That is a matter for debate and none of us is at all clear exactly how the valuation will work and what view the tribunal that will be set up will take. Therefore, the future is slightly misty for us.
The point that I should like to register is that if it is the case that half or fewer than half of the leaseholders in Henry Smith's Charity decide to exercise their rights to enfranchisement, there is no question in my mind but that we, as trustees, will have to withdraw from property in London because we would be left with the tattered remains of a once marvellous estate. The curious thing that nobody seems to have seized upon yet when talking about this—perhaps because we have all been thinking in the short term —is in due course (because whatever the prognosis about management being possible when individual freeholders are in charge, and we have heard my noble friend Lord Lindsay comment on his practical experience of that), the estate would lose the high standards that it has set to date. Nobody is going to spend £2 million on gardens and railings in anticipation of the future wellbeing of the estate. There is no question but that standards will suffer. We shall therefore have the curious anomaly that those leaseholders who rushed in, thinking that they were going to make a quick buck from converting into a freehold, will find themselves with freeholds in an area where the standards have gone down. Property will become less desirable and its value will actually be diminished rather than maintained at the high levels which all our long leaseholds in Henry Smith's Charity command today.
To my mind, that is a very convincing point that meets a number of the criticisms that have been made during the debate. I was glad to hear that praises outweighed criticisms; but my job is to answer some of the criticisms and that basic point answers a lot of the criticisms that were made by my noble friend Lord Wolfson. He asked for some specific answers about the loss of income and loss of value. Those questions are difficult to answer because, as I have said, things are uncertain. However, we asked our surveyor who runs the estate to make a rough estimate as best he can at this stage of what the legislation would be likely to mean to the value of our property in Egerton Gardens, where all the houses have been converted into flats. His preliminary estimate, based on the information available to him at the moment, is that the value of Egerton Gardens to Henry Smith's Charity would depreciate by £2 million. That is the best estimate that we can make of the loss of value now.
Turning to the loss of income, I point out that we are a long-term charity. No doubt, in the short term, we could at least make up for the loss of income from the properties that are enfranchised, particularly if
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interest rates became higher again and we could deposit the money at a higher rate than we were getting from the rents. But we look to the long term, and that would not be a sensible thing to do unless we felt that the whole portfolio needed a big cash element in it because of the dreadful economic outlook.
However, I can give the Committee some figures to answer the questions that were raised about the amount of money that is spent on the management of the Henry Smith's Charity estate. This stems from the peculiar document to which I have already referred. It is of course ridiculous to try to compare portfolio investments with estate management; but comparisons can be made. Again, it is the apples and pears problem. Of course, we have much higher management expenses in running the Kensington estate than in running an investment portfolio. I do not think that I need to insult the intelligence of the Committee by making that remark, but the question was asked. We have some figures to show that despite the extra expenditure that has to go into the running of an estate of 70 acres in Kensington, between December 1984 and December 1988 the annualised total return, which includes capital value and income, was 27.42 per cent. in the case of the Kensington estate, and the equivalent return from our investment portfolio was 12.5 per cent. In the period between December 1988 and June 1991, the return on the Kensington estate was 27.9 per cent. and the equivalent return from our investment portfolio was 13.3 per cent. I hope that will answer my noble friend Lord Wolfson who is not here, which is a pity.
I hope that I have covered the main questions that were asked. I apologise for the fact that my opening remarks were not in accordance with custom in Committee. I said in my opening remarks that I was a novice. I am a novice now. I hope that I have answered the points made by my noble friend the Minister, and that I have made clear to him that the charity will suffer and that there is a case for the exemption of charities. I believe that we have sufficient support in Committee to put the amendment to the vote.
8.11 p.m.
On Question, Whether the said amendment (No.16) shall be agreed to?
Their Lordships divided: Contents, 82; NotContents,116.
Viscount Goschen: I beg to move that the House be now resumed. I suggest that the Committee stage begin again at 9.15 p.m.
House resumed.

British Railways Bill
8.20 p.m.
Lord Mountevans: My Lords, I beg to move that the Bill be now read a third time. In doing so I declare an interest. The Bill is a Private Bill promoted by the British Railways Board on behalf of a number of its sectors, on behalf of two passenger transport authorities and on behalf of the Department of Transport. It was deposited in 1990, having passed the Commons, and it received its Second Reading in your Lordships' House on 28th January. It has since been before an Unopposed Bill Committee. I shall turn to the amendments made there later in my speech.
First, perhaps I may summarise the works which will be undertaken if the Bill is enacted. InterCity sponsors one work; that is the construction of a footbridge at Marholm, near Peterborough, on the east coast mainline. British Rail's freight businesses are the sponsors of four of the works. One involves the reinstatement of a piece of line at Guide Bridge in Manchester to facilitate the operation of aggregate trains. The second work is also reinstatement but this time at Edge Hill, Liverpool, to enable trains carrying imported coal to run directly from Liverpool docks to Fiddlers Ferry power station. The third work at Worksop is a new piece of line also concerned with imported coal. In this instance the line runs from south Humberside ports to Cottam power station. Power generation is also the reason for a fourth work, which is the construction of a new siding at Sherburn in Elmet in North Yorkshire. In that case the work is needed for the unloading of limestone, which the flue gas desulphurisation plant will turn into insulation material.
Two passenger transport authorities are seeking powers for new works. West Yorkshire wishes to construct additional tracks between Holbeck Junction and Leeds City Station in order to alleviate congestion and also to create capacity for, additional services. Merseyside wishes to reinstate a section of the line at St. Helens in order to improve connections with the west coast mainline. The temporary diversion of the Leeds to Skipton railway at Bingley is promoted on behalf of the Department of Transport to accommodate the construction of the new Aire Valley trunk road. In the context of that work, time is of the essence.

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The Bill also authorises the closure of a level crossing at Foxfield on Regional Railways Cumbrian coastline and land purchase for a new siding at Strood in Kent on Network SouthEast.
On Second Reading the Bill also made provision for the extension of a line at Ashford in Kent together with the associated permanent closure of a level crossing at South Willesborough and the reconstruction of a nearby road bridge. Those works are no longer necessary and the promoters deleted the relevant clauses while the Bill was before an Unopposed Bill Committee.
A number of other typographical amendments were made in Committee as well as amendments to take account of changes in other legislation. Generally, all the amendments were made either to resolve ambiguity or to stay au courant with present legislation. I do not propose to go through all the amendments, although I can do so should any noble Lord so wish.
The Motion to be moved by my noble friend Lord Aldington relates to the works originally proposed at Ashford. I shall do my best to answer his points when the time comes. It seems to me that my noble friend's Motion may give rise not only to questions of detail in relation to Ashford but also to points of general importance about our procedures for passing Bills. I hope that the Chairman of Committees will give the House some guidance on that matter.
I repeat the comments that I made on Second Reading because I believe that they have a significant bearing on issues which my noble friend may well wish to discuss. The powers sought in the Bill in relation to Ashford were removed because the situation had dramatically changed and they were no longer needed.
I wish to stress to your Lordships the importance of the Bill. It is not about privatisation; that is a topic for another day. One could question the necessity of granting British Rail powers to undertake works when privatisation is so close. But regardless of ownership the works included in the Bill are essential to permit the railway to continue to operate economically and safely. I believe that successor bodies to British Rail—indeed, the proposed new body, Railtrack—will desire the completion of the projects in order to ensure the smooth operation of railway services. I beg to move.
Moved, That the Bill be now read a third time.—(Lord Mountevans.)
8.25 p.m.
Lord Aldington Lord Aldington rose to move, as an amendment to the Motion, That this Bill be now read a third time, at end to insert ("but this House regrets that on the motion of the promoters the Bill has been amended so that the promoters claim that they will no longer have to honour undertakings given by them to the Select Committee in another place in June 1991 in connection with the level crossing at Aylesford Place, Willesborough, Ashford, Kent, to provide alternative routes for persons and vehicles by the time the level
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crossing has to be closed for reasons of increased rail traffic; and invites the promoters to reconsider their position.").
The noble Lord said: My Lords, I beg to move the amendment standing in my name on the Order Paper. I tabled the amendment because, under the procedure of the House relating to Private Bills which are alleged to be unopposed, it is the only way open to me to raise such an important issue. Before I embark upon my argument I wish to say that I am somewhat surprised that my noble friend did not refer to an intervention at Question Time yesterday by the noble Lord, Lord Carmichael of Kelvingrove. The noble Lord said:
"My Lords, the Minister will be aware that the British Railways Board has stated that in the event of increased international traffic arising from the Channel Tunnel—which we all hope will be the case—the board will stand by its original commitment for the reconstruction of the Crow Corner bridge".—[Official Report, 8/3/93; co1.824.]
My noble friend did not refer to that intervention and therefore I must assume that the noble Lord, Lord Carmichael, was misinformed. If that is not so and the commitment exists, and if that is what the British Railways Board believes, I should wish to rephrase a great deal of what I intend to say. However, owing to the silence that has followed my words I must assume that that is not the position of the board of British Railways.
The issue is important to the House because the undertakings, which I shall spell out in a moment and which I spelt out on Second Reading, relate to the rights of the community of Willesborough to move across the railway which divides it. There is only one surgery in Willesborough and it is in the north. If people living in the south of the area are to attend the surgery but cannot drive across the level crossing in vehicles, how can they do so unless the Crow Corner bridge is widened?
Secondly, the issue is important to the House because the undertakings were given in another place in front of the Select Committee in order to satisfy complaints by the petitioners—the residents of Willesborough—that alternative crossings would be provided by the time the crossing must be closed for reasons of increased traffic.
The third reason why the issue is important is that in my view the procedure of this House has been used by promoters to get out of undertakings that were made no doubt in good faith in another place. Those are three important issues. I believe that I have accurately summarised the undertakings in the Motion. Further particulars can be found at col. 1389 of the Official Report of 28th January 1993. I then explained the position making it clear that Miss Sheila Cameron, QC, who appeared for the promoters before the Select Committee in another place, pointed out that the level crossing will have to be closed with the advent of the Channel Tunnel. That is what she said and that is what she said was the opinion of the board: it had nothing to do with the works. My noble friend has consistently misled the House in saying that it had to do with the works. That is not the position that counsel, who was briefed by the board, put to the

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Select Committee. It was not because of the works but because of the increased traffic coming from the advent of the Channel Tunnel. What she said was:
"This level crossing will not be closed until the Crow Corner Bridge has been reconstructed and brought into use for motor vehicles".
She went on to say:
"The closing of this level crossing has now become necessary with the advent of the Channel Tunnel",
and she explained why. I added to her explanation, as your Lordships will remember. She explained that, with the advent of the Channel Tunnel and the extra traffic, it simply would be impracticable to open the crossing for more than five minutes or so in the hour.
My noble friend Lord Mountevans replied on the 28th January to what I had said. I cannot complain that he did not give a full reply, because, although I have had consultations with him, I had not given him in full a copy of what I was going to say. But your Lordships will find what he said in Hansard at col. 1394 on 28th January. He said that things had changed since those undertakings were given. He said:
"not only has the station itself been moved" [from where it was proposed to be]—
he is referring to the international passenger station—
"but other factors have changed".
He went on to say that the opening of the Channel Tunnel had been delayed. It has been delayed by about a year, but this Bill has been delayed by about one and a half years, so I do not think that helps him on that particular point. He then went on to make a surprising point. He said that the delay:
"will enable British Rail to undertake the re-signalling of the Ashford area and include Willesborough level crossing into the new plans in time for the introduction of international services".
However, as I have explained to the House, Mr. Urie of British Rail was kind enough to give me a schedule of the times and each hour of the day when the crossing could be opened; and there were two hours when it could be opened for three minutes or thereabouts. There were a whole lot of other hours when in practice it would not be possible to open it, because British Rail are not really very clever at keeping exactly to their timetable. It is inconceivable that there would have been many minutes available.
So in effect what Miss Sheila Cameron QC had to say was absolutely correct, and Mr. Urie's later information makes it even worse. Therefore I have to dismiss all the reasons —I call them excuses—that my noble friend gave why these undertakings no longer applied. I must add in a lighter tone that I am reminded of one of Aldous Huxley's sayings:
"Several excuses are always less convincing than one".
The fact is that this was a firm commitment, given to a Select Committee deciding on the petition, among other things, from the local residents of Willesborough. It was given for a very good reason and it should be honoured, because conditions have not changed. We all know that one of the favourite excuses or reasons for trying to get out of an undertaking is that conditions have changed, but I have to say that they have not.
In the Unopposed Bill Committee, the Lord Chairman of that Committee (my noble friend the Lord Chairman of Committees was unhappily ill that day and his predecessor took the chair) put to the
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British Rail representatives what I had said in my Second Reading speech. He put it succinctly, forcefully and very sympathetically; and I am most grateful to him for doing so. The British Rail spokesman replied—there is no shorthand note available but I had with me the Ashford Borough solicitor, who took a note—that the responsibility for the bridge was the highway authority's and that the highway authority—that is Ashford Borough Council—was unable to proceed with that part of the scheme.
That statement is incorrect: in fact both statements are incorrect. the responsibility clearly lies with British Rail, as was accepted in front of the Select Committee in the other place. It is simply not true that the Ashford Borough Council is unable to proceed with its part of the scheme; and it has been so told.
Unfortunately, in the procedure that we have with Unopposed Bills, it was quite impossible for me to be heard to correct that statement, or for the Ashford Borough solicitor to be heard. I think something is wrong there because the Unopposed Bill procedure is fine when the Bill is not being altered, but when it is being opposed by the promoters, I think it is not unreasonable that other people should be allowed to test what they have to say. However, there it is. We have to accept what is there, and that is why I am stressing this point to your Lordships tonight.
My noble friend Lord Caithness will remember that during the Second Reading debate he cast a little doubt upon how correct I had been in going into all these details then, because he said that the Committee stage was obviously the right place for doing that. I think he will now know, as I have discovered for myself, that with this kind of so-called Unopposed Bill, the Committee stage gives no chance for any such thing to be done. It was quite impossible for me to utter a word and, being a disciplined man, I did not do it then and so I am doing it now.
I do it, I have to say, with a feeling of sadness that a great authority like British Rail should try to "welsh" on undertakings given in another place. I use that word advisedly. Those undertakings were given in very good faith at the time and were meant to be accepted. They are now trying to get out of them, and that is what that unpleasant word means. I think it is bad that they should do that. I cannot believe that the board of British Rail knows what has happened or that the chairman of British Rail knows what has happened. I therefore hope that one of the things that my noble friend the Minister of State will do is to see that Sir Bob Reid, whom we all know and admire, is informed of what actually happened. Nobody has contradicted a word I have said so far. I hope that Sir Bob will be informed about what has happened and with his management will investigate how comes it that they, as a leading public sector authority with a great reputation and a great tradition, should renege on undertakings in this way.
I hope that my noble friend Lord Caithness will not say that, as he is neutral in these matters, he will not intervene. I suggest to the Government that they cannot be neutral as regards the good faith of public authorities which they own and whose chairmen and

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boards they appoint. Nor can they be neutral when a promoter of a Bill uses our procedure in such a way as to get out of undertakings made in another place.
Lord Clinton-Davis: My Lords, I do not seek in any way to challenge the noble Lord, but were this Bill to pass now and British Rail were then to seek to revive its original intentions, is it his view that further legislation would be required in order to deal with that situation? How would the matter be dealt with? Would it simply be a matter for planning permission? I am genuinely uncertain as to what is the situation in that eventuality.
Lord Aldington: My Lords, I too am rather uncertain about that matter. Before the debate began I was reading two long opinions on the subject—one one way and one another—on what are the various rights and duties. Unless I am misinformed, I see no difficulty in British Rail proceeding with the passenger bridge, even though the power to do that has been dropped from the Bill. I do not believe that British Rail has ever said that it cannot proceed with the widening of the bridge because it no longer has the power to do so. When British Rail sought powers to stop up the level crossing—and it had to obtain the power to do that—certain undertakings were given.
This is an unusual procedure. I am asking the House to register with me its regret that this situation should have arisen with or without the permission and knowledge of the board; that does not matter. There should be a request to the board to look at the matter to see whether it can resurrect the commitments given in the other place, even if that is in the form of the commitment described by the noble Lord, Lord Carmichael of Kelvingrove, yesterday. We should take this matter seriously. This House cannot do its job properly if it does not try to safeguard undertakings given in another place.
Moved, as an amendment to the Motion, That this Bill be now read a third time, at end to insert ("but this House regrets that on the motion of the promoters the Bill has been amended so that the promoters claim that they will no longer have to honour undertakings given by them to the Select Committee in another place in June 1991 in connection with the level crossing at Aylesford Place, Willesborough, Ashford, Kent, to provide alternative routes for persons and vehicles by the time the level crossing has to be closed for reasons of increased rail traffic; and invites the promoters to reconsider their position.").—(Lord Aldington.)
8.41 p.m.
Lord Thomson of Monifieth: My Lords, I strongly support the noble Lord, Lord Aldington, on this matter. He made out a very powerful case, which demands to be answered, about the unsatisfactory aspects of the procedures which have been followed by British Rail. I do not intend to cover the ground he covered, but the House deserves an answer to the questions he raised.
I concentrate simply on the point about the convenience for the local community in Ashford, to
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which the noble Lord, Lord Aldington, referred. It is a longstanding problem in that part of Ashford. Undoubtedly it will be greatly aggravated, if not made impossible, once the Channel Tunnel trains begin to run from the end of this year or shortly after. I have information from Eurotunnel which says that the timetable currently proposed by the national railways envisages that Ashford will be served by 14 Channel Tunnel trains per day in either direction. I believe that I am right to remember from briefing that I received from Kent County Council that during the night hours something like 10 or 12 freight trains will run in each direction. In those circumstances, the continuation of the level crossing as a practicable method of getting across the lines becomes impossible. In the light of the undertakings that were given in another place, it is strange that British Rail should change its position and withdraw its undertakings in your Lordships' House, leaving an anomalous situation which seems to make it impossible for the noble Lord, Lord Aldington, or any other noble Lord to deal with the situation created.
Finally, I am afraid that the history of British Rail's relationships with the communities of Kent over the railway aspect of the consequences of building the Channel Tunnel have been extremely unhappy. We still await some final decisions on where the line of the high speed train will run. As yet, there is no end to the uncertainty which has caused so much blight. In many ways, this episode in relation to the level crossing is a further symptom of the extremely unsatisfactory and unhappy way in which British Rail has conducted its relations with the local communities in Kent.
I hope that the noble Lord, Lord Aldington, is right—and I believe that he is likely to be right—to say that this is not a matter which has been dealt with at the highest level of the board and that the chairman of British Rail may not be fully aware of what has happened. However, the noble Lord, Lord Aldington, has made a valid case and some account should be taken of it.
8.47 p.m.
The Chairman of Committees (Lord Ampthill): My Lords, as Chairman of Committees, I am reluctant to intervene on controversial matters in debates on Private Bills. I do so now because I believe that the amendment in the name of my noble friend Lord Aldington raises issues of general concern.
I can well understand why my noble friend has tabled this amendment. In that way he seeks to give other noble Lords some indication of the point which is troubling him. The House will not have had to wait for his speech to know what is on his mind. He may well believe that the procedure which he has adopted gives the best of both worlds: the promoters get their Bill and my noble friend registers his protest.
However, the House should be quite clear that the complaint of the noble Lord does not relate to anything in the Bill which is now before the House. The undertakings referred to in the amendment concern provisions which are no longer in the Bill. As it stands the Bill contains nothing to which any

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objection has been raised. I ask the House to consider whether it would be right to refuse it an unqualified Third Reading in those circumstances.
The Companion to Standing Orders states on page 111 that:
"Debate … on Third Reading … should be relevant to the Bill in the form in which it has emerged".
Although that is stated in the context of Public Bills, I believe that it holds good also for Private Bills.
More generally, I question whether the House should ever be invited to give a Third Reading to a Bill and at the same time to attach to it what amounts to a label announcing that the House believes the Bill to be unsatisfactory in certain respects. If the House considers that a Bill is unsatisfactory, in my opinion it should not pass the Bill. On the other hand, if the House considers that the Bill is proper to be passed, it should do so without reservation.
Therefore, I hope that if my noble friend does not withdraw his amendment, the House will think very carefully about whether or not the amendment should be accepted.
8.50 p.m.
Lord Clinton-Davis: My Lords, I speak tonight without a party label and I do so in the absence, through illness, of my noble friend Lord Underhill. Fortunately, his illness does not appear to be too serious; it is one that affects his back, and he is unable to be here. He has taken a keen interest in this Bill, and I am sure that the House will wish him well.
The questions that have arisen as a result of the very unusual circumstances very eloquently expressed by the noble Lord, Lord Aldington, give rise to much concern. I believe that we were on the horns of a dilemma—certainly, the noble Lord, Lord Aldington, was—in the sense that if a means was not devised to raise these very serious concerns, the situation would have passed completely unnoticed. The noble Lord has expressed the view that he hopes that the British Railways Board at the highest level will take note of what has been said. That could not have happened at least without correspondence and the ability to know with certainty that the board at the highest level would consider the matter, which I believe is now inevitable. Therefore, the remarks of the noble Lord have served a good purpose.
The House will be grateful for the intervention of the noble Lord, Lord Ampthill, the Chairman of Committees, for setting the situation right as he sees it. He has spoken with considerable force, and it will be for the noble Lord, Lord Aldington, to consider his position in the light of those observations. But I sensed from what Lord Ampthill said that in no way was he seeking to blame the noble Lord, Lord Aldington, for taking the course that he did; indeed, I believe that he had no other choice.
The exceptional circumstances that have arisen here are, to say the least, strange. One's reading of the previous debate and the observations of the noble Lord, Lord Aldington, about the statements made by Miss Cameron on behalf of the promoters of the Bill are ineluctably clear and are not capable of any misinterpretation. The undertakings were given. One
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worries a great deal that in the light of allegedly changed circumstances it is as easy as all that to resile from those solemn undertakings. I believe it is a little unfair to blame the noble Lord, Lord Mountevans, for misleading the House. He speaks on behalf of the promoters; it is they who must bear the responsibility, not he. I do not want to deflect that. Perhaps I may add in parentheses that if the noble Lord, Lord Cledwyn, had been here tonight he would have taken the strongest objection to the use of the verb "to welsh". I am not a Welshman, although my name may sometimes give that impression. I feel that that use of language was unfortunate. However, it is not germane to the main issues we are considering.
Undertakings that are given in any place—certainly when they are given in a court of law or to one of the Houses of Parliament, which is much the same thing—cannot be resiled from lightly. I have a feeling that what might have been properly done would have been for the whole Bill, in the light of the changed circumstances, to be withdrawn and brought back without reliance being placed on the fabric of the original Bill in the light of those changed circumstances. The questions that arise are for all of us, not simply for the promoters of the Bill. They are for the Minister as well. We are all Members of this place. In those circumstances, the Minister cannot simply say that the Government have to be neutral. This is a matter of great seriousness for this House and the other place. I have not come across a situation quite like it.
Those undertakings were given in order to allay anxieties raised by the petitioners. We are now in a thoroughly unsatisfactory state of affairs. I pose a question to the noble Lord, Lord Aldington, which perhaps may be more properly directed to the Minister or to the noble Lord, Lord Mountevans. The noble Lord, Lord Mountevans, is pointing dramatically at the Minister to reply to the question that I put. What is the position in the event that British Rail decide to reinstate the undertaking and act upon it? I do not know the answer any more than the noble Lord, Lord Aldington. Will they then have to seek further legislation to undertake that position? Can they proceed simply on the basis of an application for planning permission? Can they apply to the Minister for his fiat to go ahead? All of those are highly relevant questions that impact on the deliberations in which we are engaged tonight.
My noble friend Lord Underhill raised other matters during the course of his contribution to the Second Reading debate. Although I do not believe that the questions were appropriately answered during the course of that debate, I believe that the main attention tonight should be directed to the points raised by the noble Lord, Lord Aldington. They are points of substance. They are matters which should certainly not be repeated and should not be allowed to be a precedent. I hope that the noble Lord, Lord Mountevans, will at the very least duly apologise on behalf of the promoters of the Bill for the circumstances that have arisen that have, not through him, misled people; they have misled Ashford council and certainly this House and another place.

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Having said that, I do not want to get too firmly enmeshed one way or the other because I do not know what the noble Lord, Lord Aldington, is proposing to do. I have a feeling about what he proposes to do, but that remains to be seen. The mystery will be cleared up shortly.
8.56 p.m.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, first I say to the noble Lord, Lord Clinton-Davis, how sorry we are to hear that his noble friend Lord Underhill is ill. The noble Lord is highly respected in this House, and I hope that the noble Lord, Lord Clinton-Davis, will pass on to his noble friend the good wishes of the entire House. I also say to the noble Lord, Lord Clinton-Davis, that if one cannot welsh on a commitment, presumably one cannot scotch an idea. However, I leave that to the noble Lord as a lawyer to give me legal advice later in the evening on the point.
I am grateful for the clear way in which my noble friend Lord Mountevans has presented his Bill, as amended in the Unopposed Bill Committee. I, like the rest of your Lordships, have listened carefully to the strong case put by my noble friend Lord Aldington. I can well understand the reasons that have led him to pursue this matter and propose his amendment. The Government have considered the Bill as it now stands and are content with the powers sought by the British Railways Board. It is important that the board have the powers necessary for operational and business reasons. The Bill was deposited in 1990, and I very much hope that it will make progress and be given a Third Reading this evening.
Your Lordships will recall that during Second Reading I referred to departmental interest in Works No. 4. The Bill provides for a temporary deviation of the Leeds and Skipton Railway to allow the new Airedale trunk road to be built under the railway. If the Bill was not to proceed quickly, there would be extremely detrimental effects on the timing and cost of the Department of Transport's road scheme, and it would also cause considerable inconvenience to rail users. My noble friend Lord Aldington has been very critical of the British Railways Board. During Second Reading my noble friend Lord Mountevans explained the circumstances appertaining to that particular point of concern. I say to my noble friend Lord Aldington that, as I understand it, the British Railways Board intend to comply with the agreement with Ashford Borough Council to widen Crow Corner bridge when they next reconstruct it, and when the conditions relating to the construction of a link road under the bridge are met. That is the latest advice that I have received.
All noble Lords will have listened with particular care to my noble friend the Chairman of Committees. In this House we are fortunate to control our affairs as we do and when the Chairman of Committees makes such a statement it behoves your Lordships to pay particular attention to his words.
I should like to be as helpful as possible to my noble friend Lord Aldington. I confirm to him that I shall
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pass on to the chairman of British Rail what my noble friend said, not only today but also at Second Reading. I hope that that will go some way to ease his concern. The House knows how strongly my noble friend feels about the subject. It is right that I should pass that on to the chairman of British Rail. I am sure that the House will be grateful to my noble friend for raising that point while bearing in mind what my noble friend the Chairman of Committees said.
The Government wish the Bill to make speedy progress. Before it does I should like to answer the point raised by the noble Lord, Lord Clinton-Davis, as to what British Rail would need in order to obtain authority in the future if widening Crow Corner bridge. That depends on the circumstances. I am advised that if the rebuilding of the bridge was in the normal course of events approval would simply be a case of planning permission by the local planning authority. For example, if the rebuilding of the bridge was triggered by development of the new town site as was originally proposed that procedure would apply. However, if the widening was triggered by the Channel Tunnel rail link it is likely that any necessary rights or consents would be obtained as part of the statutory process for the rail link.
9.1 p.m.
Lord Mountevans: My Lords, I am grateful to all those noble Lords who have taken part in our debate this evening. I sincerely appreciate the sentiments which my noble friend Lord Aldington expressed with regard to the subject he raised tonight. However, I am, alas, unable to agree to the Motion he tabled. My reasons are very similar to those which I gave at Second reading. I feel unable to apologise for misleading the House because I believe that I was right at the time, and I hope that I am right now.
The House has been made well aware of the situation surrounding the level crossing at South Willesborough. The situation has not changed since Second Reading, but I stress that it has changed since the Committee considered the matter in another place. My noble friend Lord Aldington tabled the amendment because of the commitments given by British Rail during the Bill's Committee stage in another place during June 1991. At that time it was generally assumed that the Crow Corner bridge would be reconstructed. The fast rail link to the Channel Tunnel and the then proposed siting of the international station at Ashford would have rendered the crossing closure and bridge construction necessary. The routing of the proposed high-speed link is now by no means certain. It may not even approach Ashford. The then proposed siting of Ashford station has been changed because the Government rejected British Rail's original proposal. The site now proposed, some quarter of a mile to the west of the present site, does not require the reconstruction of the bridge.
Also, in 1991 it was thought necessary to reconstruct the bridge because it appeared impossible to accommodate Channel Tunnel rail freight vehicles because the span of the bridge was too low. That

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reason is no longer valid either. It has proved possible to overcome the problem by lowering the track and leaving the bridge intact.
In 1991 there were also proposed road improvements associated, first, with British Rail's former new town works and, secondly, with the orbital park. For various reasons neither of those proposed developments has proceeded at the pace expected when the Committee considered the matter in another place in 1991.
The Bill did not seek any powers to carry out those associated highway works. Both the reconstruction of the bridge and the highway works proposed to go underneath the span would have been authorised by other procedures. At the time of its Committee in another place the Bill sought to stop up South Willesborough level crossing and construct a new section of railway associated with the international passenger station and compatible with the high-speed rail link as then proposed. As I said, those reasons no longer exist.
Mention was made of the oral Question which my noble friend Lord Aldington asked yesterday. One of the answers was omitted. I am indebted to my noble friend the Minister for reminding us yesterday that circumstances have changed since the Committee stage in another place.
Lord Clinton-Davis: My Lords, I am grateful to the noble Lord for giving way. He adverted to the Question which was raised by the noble Lord, Lord Aldington, yesterday. In the course of that debate a statement was made, when a question should have been put, by my noble friend Lord Carmichael to the effect that:
"the British Railways Board has stated that in the event of increased international traffic arising from the Channel Tunnel … the board will stand by its original commitment for the reconstruction of the Crow Corner bridge".—[Official Report, 8/3/93; col. 824.]
I may have misheard the noble Lord and the Minister, but I thought that the noble Lord said that that was not the case while I sensed from what the Minister said that it might be the case. The noble Lord might like to clarify the point. It may be that I am being obtuse.
Lord Mountevans: My Lords, if the noble Lord will permit me I shall come to that point later.
My noble friend Lord Aldington referred to the undertakings given by the promoters during the Committee stage in another place, in particular those relating to the reconstructed bridge. It is true that if one studies the transcript of those hearings one can find reference to those items. However, as I sought to demonstrate at Second Reading and have sought to demonstrate again tonight, they related to a particular set of circumstances which applied at that time. British Rail has consistently refused to pay for highway work. In its agreement with Ashford Borough Council its obligation to reconstruct the bridge is activated only when a railway operational reason makes its reconstruction necessary. I hope that that answer deals with the point raised by the noble Lord, Lord Clinton-Davis. I understand that when operational necessity dictates it is British Rail's intention to rebuild the bridge.
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I hope that those facts demonstrate what was in the mind of my noble friend Lord Caithness when he said yesterday that British Rail in effect believes that the situation has changed sufficiently for the works originally envisaged to be no longer necessary. Your Lordships will be aware of British Rail's statutory duty to operate,
"having due regard to efficiency, economy and safety of operation".
It is worth mentioning in the context of safety of operation that British Rail has undertaken to build a footbridge in the position under discussion to alleviate some of the problems that arise from the crossing being less readily usable by motor traffic. It will at least be of some consolation to the pedestrian traffic. I believe that my noble friend referred to the bridge as the passenger bridge. I hope that that is what he meant. "Due regard to efficiency, economy and safety of operation" is an obligation which is the basis for all British Rail's expenditure programmes.
For railway reasons, as I have argued, it is no longer necessary to reconstruct Crow Corner bridge and British Rail would be in breach of its statutory duty if it were to proceed with reconstructing the bridge without being able to prove operational necessity. The only issue surrounding the Bill, now that all references to Ashford have been deleted, is that of the intensification of the rail service. I cannot deny that the crossing at South Willesborough will be less readily usable by vehicular traffic. However, as your Lordships are aware, that happens to a greater or lesser degree whenever British Rail increases its service levels.
I hope very much that my noble friend Lord Aldington will find it possible to withdraw his amendment in the light of what I have said and given the fact that I will ensure that his remarks are read at the highest level within British Rail.
Lord Aldington: My Lords, before my noble friend spoke I was certainly considering making a short statement withdrawing the amendment. However, I am horrified that my noble friend continues to repeat what he knows from the transcript that I have in front of me is completely untrue. The Select Committee of another place was told that the level crossing had to be closed, not because of the works or the position of the international passenger station, but because of the increase of traffic as a result of the opening of the Channel Tunnel. Miss Sheila Cameron QC explained at some length the effect that that would have on the times of the opening. What my noble friend has been briefed to tell your Lordships is simply not true. I have to say that and say it firmly if this debate is to go in front of the chairman of the British Railways Board.
However, having said that and having recovered a little of my poise after the anger which my noble friend's speech inspired in me, I thank my noble friend Lord Caithness very much indeed for saying that he will pass on the debate to the chairman of the British Railways Board. That accomplishes my purpose, if I may so so. Of course I take full note of what my noble friend the Chairman of Committees said. If I had felt even more strongly than I now do, I should still have felt that I had to abide by the advice given by him.

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However, perhaps I may ask my noble friend this. Could he apply his great experience and skill to the procedure on a Bill like this which leads perfectly reasonable people—your Lordships know me as a rather mousy, wet, quiet man normally—to become very upset? Such matters ought to be sorted out in Committee rather than having such detailed discussion on the Floor of the House. I put that matter to him. With the leave of the House, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Redundancy Payments (Local Government) (Modification) (Amendment) Order 1993
9.11 p.m.
The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater) rose to move, That the draft order laid before the House on 15th February be approved [21st Report from the Joint Committee].
The noble Viscount said: My Lords, as your Lordships may know, this order, which is being made under powers contained in Section 149 of the Employment Protection (Consolidation) Act 1978, is one of a series presented at roughly annual intervals. It is concerned with the calculation of redundancy payments in the field of local government, and amends the original order passed in 1983 by bringing in some newly created employing bodies.
It may be helpful if I explain that an employee made redundant after at least two years' service is due a payment calculated according to his period of service with his last employer. Local authorities are legally distinct employers so that, other things being equal, an employee could receive a payment every time he became redundant, even though he moved on to another local government job.
This would not, however, properly reflect what actually happens in local government where a normal career progression commonly involves moving from one local authority to another, perhaps several times during an individual's working life. Consequently the law provides for redundancy entitlements to be based on total aggregated service in local government.
Unfortunately, there is no convenient definition of what constitutes local government. It is therefore necessary to list in a succession of statutory instruments all the employers with whom service can count, including many which have gone out of existence following statutory reorganisations as well as such new ones as are from time to time created. This latest order brings the list up to date by adding a few bodies, mainly in the higher education field, which have recently come into being. It also puts right a slight error in the numbering of the list which arose in the 1991 amending order.
I trust I have said enough to satisfy your Lordships that these amendments are necessary, reasonable and uncontroversial. I commend the order to the House.
Moved, That the draft order laid before the House on 15th February be approved [21st Report from the Joint Committee]. —(Viscount Ullswater.)
Baroness Turner of Camden: My Lords, from this side of the House I thank the noble Viscount for the clarity with which, as usual, he presented the order. We are in favour, of course, of the principle of continuity as set out in the order and we believe in the principle that aggregate service should count towards redundancy. We accept that the list had to be updated and that the bodies added are in the field of higher education. We think that that is right and proper and we welcome the order.
Lord Rochester: My Lords, this is a straightforward amendment, the effect of which has been clearly explained by the noble Viscount. I am happy on behalf of my noble friends to accept it.

Housing and Urban Development Bill
9.15 p.m.
House again in Committee.
Clause 3 agreed to.
Clause 4 [Premises excluded from right]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 17:
Page 5, line 21, leave out ("10") and insert ("20").
The noble Baroness said: In moving this amendment I shall deal briefly with the qualification of premises which may come within the enfranchisement net if they include a non-residential part. I shall seek to deal with the volume of that part.
As the Bill is drafted, premises or a building are excluded if more than 10 per cent. of the internal floor area is non-residential. I believe that that is too low a threshold. If the figure is 10 per cent. then a block of flats with shops on the ground floor would have to be 10 storeys high in order to come within the qualification. Many mansion blocks have commercial premises on the ground floor, particularly shops, and I suspect that few of them would be 10 storeys high.
Having taken the decision to proceed with the enfranchisement provisions, the Government will wish to create real and not merely illusory rights. They will want to allow enfranchisement on a basis which is as wide as is reasonable. If we are to accept that the rights are to apply to mixed hereditaments, then I believe that those rights should not be restricted to relatively few mixed hereditaments. I say that with a certain lack of knowledge, but having read the debate in another place I feel that it appears that there is little knowledge on the number of premises that will be affected. There was a good deal of discussion about Westminster, but I do not believe that Westminster is typical of the whole country. If the Minister, in either accepting or refuting the amendment, can tell the House the effect that 10 per cent. or 20 per cent. would have, it would be most helpful.
If the argument against increasing the figure from 10 per cent. is that the cost of acquiring the freehold for the other leaseholders would be too high, I do not believe that that is a basis for denying them the right. Certainly there will be implications in the cost, given that the value of commercial premises will affect the value of the whole of the premises. But to use that as an argument against an increase in the figure of 10 per cent. would be somewhat paternalistic. It must be a matter for the leaseholders involved. It must be their decision whether or not they seek to exercise the right and pay what will be required.
If the argument against an increase is that it will mean a loss of the right of the leaseholders to extend their leases —in other words to exercise rights under the next chapter of the Bill—I suggest that we reconsider the relationship between the two rights of enfranchisement and extension.
If the argument is, to quote the words of the Minister in another place, a concern,
"not [to] spill over into the commercial market as anything that undermined the generally satisfactory workings of that market would be unwelcome"—[Official Report, Commons, 9/2/93; col. 926.],
that would seem to be an argument that enfranchisement should be allowed only if there is no commercial element in the premises. It is quite clear that the Government do not take that view.
There is no magic in the figure of 10 per cent. and the Government recognise that. Clause 4(4) provides for the Secretary of State to have reserve powers to amend the percentage. Given that there is no magic in 10 per cent., I should like to hear why it could not be 20 per cent., which I believe would be a more realistic figure. I beg to move.
The Earl of Lytton: It may be for the convenience of the Committee if I also speak to Amendment No. 18 which stands in my name and is grouped with the amendment moved by the noble Baroness, Lady Hamwee.
Amendment No. 18 seeks, I hope, to clarify—I have to say "I hope" as I cannot be absolutely certain it will he seen that way by all parties—the manner in which floor areas fall to be calculated for the purposes of whatever percentage may be used. The amendment is in two parts. It sets out to insert the provision that,
"any garage, parking space, storage area or other part of the premises which is held on a long lease for use in conjunction with the residential parts of the premises shall not be regarded as being occupied, or intended to be occupied, otherwise than for residential purposes".
The purpose of the amendment is quite clear. It is an attempt to avoid arguments about what does or does not constitute the residential element. I need not tax the patience of the Committee by stating the obvious, other than to say that if the intention is that the Bill should operate smoothly in practice, it is important that there is a clearly defined definition for that purpose. That is the background behind that particular aspect.
The second aspect is the question of the internal floor areas of the building and the way in which the measurement shall be conducted. I am indebted for the help of the Royal Institution of Chartered Surveyors, of which I am a member. I asked about
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that particular point. When I first read the Bill I asked whether the method of calculating the floor area was satisfactory. The answer came back: "We do not think that it is terribly satisfactory".
I believe that the RICS had discussions with the Minister's department on that and other matters. The amendment attempts to improve on the definition contained in the Bill and I merely offer it to the Minister with the comment that, having kicked the problem around, it is the best that we can come up with. We can find no formula of words which is absolutely foolproof; there is nothing that is totally watertight in this instance. Matters such as the treatment of service cores within buildings and areas where one would not be able to classify its use with precise certainty as between residential and non-residential, raise significant difficulties.
Amendment No. 18 is a probing amendment to try and obtain some comment back from the Minister on what the current thoughts are on the issue. I want to impress upon him that the intention is to make the procedure run smoothly so that there are not endless battles through the courts or valuation tribunals in order to sort out matters which, on the face of it, one would expect surveyors to be able to agree as a matter of course. Obviously it is a matter of interpretation. It is an area which will be contentious as between the parties—between the freeholder and the leaseholder seeking to enfranchise. It is something that should be cleared up.
I have no specific comment to make in regard to the percentage that should apply. I know the Government's view and I hear what the noble Baroness, Lady Hamwee, says. It must be a matter for others. I do not wish to be drawn into that argument. However, I commend Amendment No. 18 to the Minister for further consideration on this point.
Baroness Gardner of Parkes: I support Amendment No. 18. I do not intend to go into the detail of whether or not it is right. The principle of establishing the position of these areas is most important.
Lord Williams of Elvel: I too will speak to both Amendments Nos. 17 and 18. We agree with Amendment No. 17. The matter was discussed at some length in another place. Various figures were put forward and in the end the Government stuck at 10 and others thought that 20 was perhaps a better compromise.
The problem is one of leaseholders who live normally in mansion blocks built in the latter part of the last century and sometimes in the 1960s, particularly in the centre of towns where often commercial premises such as chemists, travel agents or bookshops occupy the ground floor. There are extraordinary problems in trying to find the right balance between making it extremely difficult for the people who hold the leases to enfranchise, and producing something which is over-expensive and too cumbersome. I take the view, along with the noble Baroness, Lady Hamwee, that 20 per cent. would be a better figure than 10 per cent. and I look forward to hearing from the Minister whether or not he thinks along the same lines.

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On the amendment of the noble Earl, Lord Lytton, I accept that there is a problem. I am not sure that the amendment solves that problem. Amendment No. 18 excludes areas leased to residents alone and, as I see it, would thus exclude a considerable number of blocks—for instance in some blocks storeys are given over to car parking for paying customers. Such blocks will be unenfranchisable under Clause 4 as at present drafted or indeed as amended by Amendment No. 18 in the name of the noble Earl, for no particular reason that I can think of. I accept the noble Earl's point. There is a problem and it is for the Government to explain how they intend to deal with that problem, given that the noble Earl quite rightly said that his amendment is of a probing nature.
9.30 p.m.
Lord Strathclyde: Like other speakers I, too, shall speak to Amendments Nos. 17 and 18. Clause 3 defines the premises which may be enfranchised under Chapter I. This is, however, further qualified by Clause 4 which defines that certain premises cannot be enfranchised even though they may meet the qualifying conditions in Clause 3. These are premises where more than 10 per cent. of the internal floor area, excluding common parts, is given over to non-residential use and converted premises that have a resident landlord and do not contain more than four flats.
As far as concerns commercial premises we have tried to ensure that enfranchisement will only affect properties where the commercial use is very much ancillary to the residential use. We are concerned that the proposed legislation should apply only to properties which are predominantly residential.
The issue was fully debated in Committee in another place and a number of amendments were tabled with the intention of raising the threshold. In Committee we promised to reflect further and the matter was considered extremely carefully. As my honourable friend the Under-Secretary of State said during Report on the Bill in another place, and in response to another attempt to increase the threshold, we have come to the conclusion that it should remain at 10 per cent.
The threshold was chosen very carefully after extensive sampling and the taking of expert advice. There is no demand in the commercial property market for leaseholders of commercial units to have the right to purchase the freehold. On the contrary, there is great concern that our proposals for the residential market do not spill over into the commercial market. Anything which undermines the generally satisfactory working of the commercial property market and Part II of the Landlord and Tenant Act 1954 would have an unsettling effect and would be unwelcome.
Research commissioned by Westminster City Council into properties in Westminster confirms that the 10 per cent. threshold will bring within the scope of the enfranchisement provisions the largest single block of mixed-use property in terms of both numbers of buildings and the average number of dwellings per
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building. The research indicates that at the 10 per cent. threshold 88 per cent. of flats are likely to be enfranchisable. Increasing the threshold to 15 per cent. might increase the number of flats that would be enfranchisable to 89.5 per cent.
Our consultation exercise has suggested that a 10 per cent. threshold seems the best fit—not only in London, as the noble Baroness, Lady Hamwee, pointed out, but also elsewhere in the country—among all the other conflicting interests.
We are aware that many tenants in mixed-use blocks that will be excluded from enfranchisement by this 10 per cent. threshold have argued for it to be increased. I understand their concerns. It is difficult to predict how non-enfranchisable leases in properties excluded by the 10 per cent. rule will fare in the property market, albeit that they will have the right to lease renewal under Chapter II.
The commercial parts of a block are often much more valuable than the residential parts, sometimes 15 to 20 times more valuable. If the threshold was raised the cost of the freehold reversion could be prohibitive. Tenants would be acquiring interests worth more than their own flats and they would in many cases be unable to afford to buy the freehold. In those circumstances they would not benefit from our proposals because they would not have the right to lease renewal.
We feel that we have the balance about right but there are arguments on both sides for drawing the threshold elsewhere. That is why we have taken reserve powers under subsection (3) of Clause 4 to enable the Secretary of State to specify a different percentage threshold should the need arise.
I turn to Amendment No. 18. I can tell the noble Earl that I have sympathy with what the amendment tries to do although I have some concerns about the way in which it does it. Clause 4 makes it clear that, for the purposes of calculating the area of non-residential parts, any common parts of the building will be disregarded. The proposed amendment would expand this section to make it clear that, for the purposes of calculating the area of commercial use of the building, any garage, parking space, storage area or other parts of the premises held on a long lease in conjunction with the residential parts will be treated as occupied for residential purposes. I accept that this seems sensible.
I would be prepared to consider seeing if we can amend Clause 4 to make it clear that such areas are excluded from the calculation of the areas used for commercial purposes. It may be unnecessary because our definition of appurtenant property in Clause 1(8) means any garage, outhouse, garden yard and appurtenances belonging to or usually enjoyed with the flat.
I appreciate that the amendment is intended to change the way in which the internal floor area is calculated so that it does exclude all common parts. I am not sure why the amendment is needed.
The Bill assumes that the floor or floors of a building are taken to extend without interruption throughout the whole building when in fact they may not. That may be the crucial difference between what is in the Bill and what is now proposed. I hope that the

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proposed amendment will not make the calculation of the internal floor area of the building more difficult. The proposed amendment shows that the present definition may give rise to confusion, but I remain to be fully convinced.
However, I accept that calculation of the residential and non-residential parts is crucial in deciding whether or not a block is enfranchisable and I am therefore prepared to consider whether the clause needs to be and can be amended to ensure that calculation of the interior floor area does exclude all those areas we intend it should; for example, open-sided parking areas underneath blocks, other parking spaces, garages, storage areas, stairwells and other common parts. On that basis I hope that the noble Baroness will withdraw Amendment No. 17 and that the noble Earl will be happy with what I have said.
Baroness Gardner of Parkes: Perhaps I may ask my noble friend a question. In central London there are a number of blocks which have quite large garage space underneath which were in use originally by tenants at fairly reasonable rents. However, many property landlords have now increased those rents very dramatically and to such a level that tenants are saying, "It is cheaper for me to go by taxi. I won't have a car".
Therefore, what was residential parking is becoming available. First, it was offered to the tenants; secondly, it is being offered on the open market as commercial garage space. When my noble friend is looking into the matter, will he also look into that aspect? It would be wrong if, because that situation exists, people were ruled out from enfranchising their flats. The garage spaces were never let on long leases. From the statement that my noble friend made about a flat on a long lease, I was not clear whether the garage also had to be on a long lease. The garages were always short-term tenancies: that is how rents have been increased so dramatically recently. I ask my noble friend to assure us that he will take that situation into account.
Lord Strathclyde: My noble friend makes rather a good point. It shows the difficulty about making an exact statement. It was my understanding that garages were held in conjunction with residential parts. Where that is clearly the case then they will be included as residential parts whether or not the tenants may have decided to treat them in a different way. Where the parking space belongs to the landlord, however, and he has chosen to let it on a commercial basis, that may be another question altogether. However, I have said that I am prepared to consider the amendment further and I shall do so.
Baroness Hamwee: In thanking the Minister for that reply, I believe that the discussion concerning the measurement of the respective spaces shows not only how important is that issue, but also how important is the 10 per cent., 15 per cent., 20 per cent. or whatever percentage there may be. I have never been under any illusion that the measurement would be simple. I believe that as a professional it is one of the matters
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for regret in this Bill that there is so much material that a professional, both legal and surveying, can get his teeth into. I suspect that that may amount to insuperable obstacles in the exercise of the enfranchisement right.
I regret that the Minister gave me no new arguments with regard to the percentage. I think that I anticipated what he had to say when I moved the amendment. He talked of the extensive sampling that has taken place but, as I understand it, that sampling was extensive within the Borough of Westminster, but did not extend beyond Westminster. We heard earlier today that this is an issue not only for London but for the whole country. As I understand it, this issue of measurement applies particularly in many of our south coast towns such as Eastings and Hastbourne—I mean Hastings and Eastbourne, I should not elide the two. There appears to be no evidence to support the Government's case on that.
The Minister also said that Clause 4(3) will be used to alter the threshold "should the need arise". I am not sure what need might arise, but I shall not ask the Minister to come back on that. It is perfectly clear that it is a matter for the Secretary of State to consider whether or not the provisions are working reasonably well. However, there seems to be no objective measurement of that. This is the sort of clause that makes one feel that the drafting of the original does not entirely have the draftsman's confidence.
Above all, this short debate confirms the need to consider further the relationship between enfranchisement and lease extension. I shall consider the arguments and take them into account at a later stage when I may wish to return to this matter, but this evening I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Lytton The Earl of Lytton had given notice of his intention to move Amendment No. 18:
Page 5, line 23, leave out subsection (2) and insert:
("(2) For the purposes of subsection (1)—

(a) any garage, parking space, storage area or other part of the premises which is held on long lease for use in conjunction with the residential parts of the premises shall not be regarded as being occupied, or intended to be occupied, otherwise than for residential purposes;

(b) the internal floor areas of a building or of any part of a building shall be the sum of the entire areas taken up by each floor of the building or part, there being disregarded only those areas taken up by any external walls, any party walls dividing the building from any adjoining building and any common parts of the building.").

The noble Earl said: I should like to thank the Minister for his reply and to assure the noble Lord, Lord Williams of Elvel, that it was not my intention that the provisions should read as if garages in a compound or in a subterranean car park should be excluded to the detriment of residential occupiers of the building—in fact, quite the converse. I thank also the noble Baroness, Lady Gardner of Parkes, for her support for the amendment. She raised an important point about this—
Lord Williams of Elvel: Either the noble Earl is going to move his amendment and speak to it or he has no locus to speak at all if he is not going to move it.
The Earl of Lytton The Earl of Lytton: Not moved.
[Amendment No. 18 not moved.]
[Amendment No. 19 not moved.]
Lord Monson Lord Monson moved Amendment No. 20:
Page 5, line 30, leave out ("four") and insert ("ten").
The noble Lord said: This is only a probing amendment because whereas I am certain that the Government's figure of four is too low, I suspect that the figure of the noble Lord, Lord Peyton, and myself of "10" is possibly somewhat on the high side.
The Government clearly and understandably want to prevent what might be described as full-time, professional landlords from benefiting from the exclusion contained in this subsection. I refer to people who, for example, buy a pair or even a trio of adjacent terraced houses for extensive conversion—possibly a horizontal conversion—and subdivision into a large number of flats. However, there are a very large number of mainly 19th century, single—and I emphasise the word "single"—terraced houses in London which have been properly converted into five or six or even—if the attic roof is raised and dormer windows are installed—into seven or eight flats; and I do mean flats, not bed-sitters. The landlord may well live in one of the flats in what was once his own undivided house with the intention of looking after the fabric and controlling the destiny of the house. As I have said, I would concede that our figure of 10 is possibly on the high side, but is there not room for a possible compromise at six or, better still, eight?
9.45 p.m.
Lord Strabolgi: The trouble with the amendment is that it would of course exclude the much smaller houses. The noble Lord spoke about terraced houses. There are many terraced houses which have been converted into only four or five flats. They would be excluded. The number he proposes is far too high.
Baroness Hollis of Heigham: Perhaps I may speak also to Amendment No. 21 which is grouped with Amendment No. 20, although I do not know whether the noble Lord, Lord Coleraine, proposes to move it. We on this side oppose Amendment No. 20 because, as the noble Lord, Lord Monson, said, it would raise from four to 10 the number of flats which would be exempted if there were a resident landlord. That means that for those leaseholders who have a resident landlord this is effectively a disfranchising amendment. The Consumers' Association research shows that about 6 per cent. of leaseholders have a resident landlord. That is a low number. However two thirds of the properties where there is a resident landlord comprise three flats or fewer.
I recognise that the amendment is a probing one, but if it, or a similar amendment, were to have the Committee's support, then virtually all properties with a resident landlord would be exempt from enfranchisement. Is that reasonable? After all, the
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growth in the number of flats, certainly since the 1980s, has come largely from converted houses, because 75 per cent. of all flats are now in converted houses. Where the landlord was a bona fide former owner of the house that was converted, there may be a case for protecting his interest where there are four flats or fewer. I believe that I am right when I say that the noble Lord, Lord Coleraine, may refer to that point when we come to Amendments Nos. 45 and 46. Surely that protection should not apply when we are talking about 10 flats and, therefore, effectively a large commercial development into which, in some cases, the landlord may have bought subsequently and not been the original owner.
For both those reasons we oppose Amendment No. 20, and also Amendment No. 21 which would make it that much harder for leaseholders to enfranchise by raising the minimum threshold.
Lord Coleraine: I shall not speak to Amendment No. 21. I think it was grouped with No. 20 in error. One of the advantages of Amendment No. 20 which raises slightly the number of flats with the resident landlord exemption is that it would give more people the right to lease extensions. There may be some people who would rather have a resident landlord with a lease extension right than have a non-resident landlord with the right only to collective enfranchisement.
Lord Strathclyde: The effect of the amendments would be to extend the resident landlord exemption in Clause 4. Amendment No. 20 would extend that exemption to blocks containing 10 flats or fewer. Amendment No. 21—which I recognise my noble friend does not wish to be grouped, but the argument is the same—extends the resident landlord exemption to blocks containing more than four units, because some of those units may not be flats, but it would restrict the exemption to blocks of four flats or fewer.
We have restricted the resident landlord exemption to small blocks and by that I mean blocks containing only four flats or fewer. We consider it important that collective enfranchisement should not take place in premises where there is a resident landlord, but only where the premises do not contain more than four flats.
Our purpose in limiting the resident landlord exclusion to premises converted into not more than four flats is to limit the exclusions to smaller blocks that may at one time have been the landlord's home. We can see no justification for excluding premises with resident landlords that were purpose built as flats or for excluding premises containing a large number of flats or separate units.
Both the amendments will extend the resident landlord exemption to larger blocks where there are more flats or units. We have limited the exemption to blocks containing not more than four flats and we do not think that the exemption should be extended.
I know that the amendment is a probing one, but I hope that with that explanation the noble Lord, Lord Monson, will agree to withdraw it.
Lord Monson: I am disappointed with the Minister's reply. I agree that the exemptions should not apply to purpose-built blocks but must be confined to houses which were once the landlord's home. I also agree with the noble Baroness, Lady Hollis, who suggested that the Bill be amended so as to restrict the exemption to cases in which the house had at one time been the landlord or landlady's home. That suggestion is not wholly unreasonable. However, a large number of houses in London, but perhaps fewer outside London, have four floors plus a basement and therefore one can have five large flats or a greater number of small flats.
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Will the Minister reconsider the matter, studying the situation in the parts of London in which there are a large number of 19th century terraced houses? I emphasise that they are single houses, and not large purpose-built blocks, which can be converted into more than four flats. I am not referring to bedsits, which is another state of affairs altogether. Perhaps the Minister will come back at the next stage with a compromise of six. I do not expect him to give an answer tonight and therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Coleraine Lord Coleraine moved Amendment No. 21:
Page 5, line 30, leave out ("units") and insert ("flats").
The noble Lord said: I move the amendment separately because it deals with a slightly different point. Members of the Committee may wonder whether they have read the amendment correctly. Yes, I come bearing gifts—at any rate a small token—to great estates. The intention of the Government, as stated in the department's pamphlet published in March 1992, is that the resident landlord exemption should apply in the case where there is a resident landlord in a conversion containing four or fewer flats. Under Clause 4(3) the situation which qualifies for an exemption is that there should be not more than four units. "Unit" as defined in Clause 34,
"means either a flat or a separate set of premises let, or intended for letting, on a business lease".
Where a house has been converted into four flats and a tobacco kiosk or into three flats and two small commercially let workshops the use of the word "unit" would take away the exemption. The amendment proposes that the word "flats" be used in order to put right what appears to be no more than a drafting error and to confirm the Government's intentions.
I note that in speaking to the previous amendment, by noble friend continually referred to four flats and not to four units. I take it that he will recommend that the Committee accepts the amendment. I beg to move.
Lord Strathclyde: I am sorry to disappoint my noble friend because his amendment will extend the resident landlord exemption to larger blocks where there are more flats or units. We have limited the exemption to blocks containing not more than four flats and therefore we do not believe that the exemption should be extended. I cannot add a great deal to the reply which I gave in respect of the previous amendment.
Lord Coleraine: I shall read what the Minister said and see whether he is right. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Cavendish of Furness Lord Cavendish of Furness moved Amendment No. 22:
Page 5, line 30, at end insert:
("() This Chapter does not apply to premises forming part of a landholding for the time being designated as a heritage area under Schedule (Heritage Areas) to this Act.").
The noble Lord said: In moving the amendment I shall speak also to Amendments Nos. 34, 44 and 151. The group of amendments is complicated technically but I hope that the thrust of the argument can be easily and briefly explained. The amendment should be seen within the context in which this part of the Bill is being debated.
The whole issue of our national heritage looms large in contemporary debate. The media devotes much space to it and the issue is regularly discussed in another place and in this House. In addition, we have a new Ministry of National Heritage. I wonder what would have been the reaction in all those arenas of serious debate if, say, five years ago, the Church had announced its decision to flog the close in Salisbury, or if Smith's Charity or the Grosvenor Estates were
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suddenly to put its entire London estate on the market. Quite simply, such action would have attracted universal condemnation. It would have been regarded as an outrage, the principal cause of that outrage centring on the fact that an extremely important facet of national heritage was being wantonly put at risk.
When five years later the Government seek, with good and honourable intentions, to address problems of injustice and the menace of bad landlords, it seems hardly to be noticed that in heritage terms these very estates are about to be disintegrated through sale. It is as though, for the purposes of this Bill, heritage issues were to be put aside and suspended.
These amendments seek to protect those areas of our historic towns and cities, limited in number and diverse in character, whose distinctive character and environmental quality depends to a great extent on the active involvement of their landlords. It would include, for example, the closes around our great cathedrals as well as some of the great London estates. On such estates the enforcement of covenants can go some way to maintaining the distinctive quality and character of the area and can be accomplished under schemes of management. I accept the value of those schemes of management, especially in the light of the amendments brought forward to strengthen their effectiveness, for which I am grateful to the Government. What I seek is the acceptance of the principle that to an equal or greater degree the landlords contribute to the maintenance and distinctive quality and character through their active management, investment and aesthetic control.
Specifically, I draw your Lordships' attention to five important areas where schemes of management, even when strengthened, are, I believe, found wanting. First, they cannot, for example, cover managing uses in an estate as a whole to ensure that the historic character of the area is not lost through pressure to maximise individual property returns solely within the constraints of planning legislation. I gave your Lordships examples during the Second Reading debate. While most commercial properties are not directly affected by the provisions of the Bill, their management as a small element of a predominantly residential area plainly would be.
Secondly, schemes of management would not be effective in the matter of environmental improvement as opposed to mere maintenance of what exists. An example might be the use of historically correct materials in re-paving a new street. Thirdly, I cannot see how effective the schemes would be in promoting active steps to prevent historic buildings falling into decay. Under the Bill, of course, the landlord's ultimate sanction to forfeit the lease would be lost.
Fourthly, schemes of management cannot be brought to bear, for example, in the matter of the painting of stucco terraces not only the same colour every five years but with the same paint and indeed at the same time. Finally, it is difficult to see how schemes of management would allow the exercise of a patron's aesthetic control over new buildings and alterations rather than mere reasonableness which could just as well be achieved through conservation legislation.
To justify exemption under these amendments, areas would need to be of outstanding importance in the national context: the number is clearly limited. These linked amendments introduce the concept of a heritage area. Landholding could be so designated if it is wholly and substantially contained within a conservation area and at least one-fifth of the area covered by buildings which form part of a landholding comprises listed buildings; if the landlord has undertaken to comply with a code of estate management practice; and if the landholding is of outstanding historic interest and its preservation or enhancement would be secured by management by one landlord and in accordance with the code of estate management practice. Once so designated, the area would be exempt from the enfranchisement provisions of the Bill. A good example of a heritage area which fully meets those criteria would be the Crown Estate stucco terraces around Regent's Park which have already been mentioned in earlier discussions and which Sir George Young indicated in another place will not be enfranchised. As Members of the Committee know, the Crown is entitled to ignore legislation. In fact, the Crown has agreed to the enfranchisement of its properties with certain exceptions. Such an exception is the case of the Regent's Park terraces on heritage grounds.
My amendments would exempt only a handful of estates which are clearly of national importance. The interests of tenants would be adequately protected by the provision for the extension of leases. Therefore, I contend that it would not be contrary to the spirit of the Bill but would clearly be in the public interest. I beg to move.
10 p.m.
Lord Strabolgi: I believe that there is a great deal in what the noble Lord, Lord Cavendish, says. I know Grosvenor Estates very well. The property is beautifully kept. The houses have to be painted every three years, not every five years, because the lead-free paint does not last as long. It is very important that that should remain.
However, there are provisions in Clause 63 of the Bill for management schemes. I remind the noble Lord also that there has been leasehold enfranchisement on the Grosvenor Estates since 1967 for the cheaper houses, although they are still very expensive. Those houses were priced below a certain ceiling. Those houses are still painted the same colour; there is no difference at all. It is important that that control should continue because with the British liking for individuality, one does not wish to see Eaton Square looking like a knickerbocker glory and painted all the colours of the rainbow. I agree with that; it is extremely important. However, provision is made for that in the Bill.
A more serious point is that if the many areas of London which make up the Grosvenor Estates, which are conservation areas, are excluded, there will not be much left in central London which it will be possible to enfranchise under the Bill. Although I believe that there is great merit in what the noble Lord says, and
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one can see the importance of the point which he makes, I hope that the Committee will reject the amendment.
Lord Campbell of Alloway: I support this group of amendments. The noble Lord, Lord Strabolgi, prays in aid Clause 63. It remains to be seen how that would work in practice after enfranchisement. There are all kinds of practical problems as regards how those schemes will work after enfranchisement.
Surely the restrained logic of my noble friend's reasoned presentation of principle is worthy—and I ask the Minister to consider it—of further consideration before Report stage. We must hope that the Minister will consider it further because as I see it, contrary to the way in which the noble Lord, Lord Strabolgi, sees it, this is yet another of those dimensions of manifest error in justice to which I have already referred in the context of Amendment No. 7, a dimension of error which my noble friend's amendment seeks to rectify.
I have stayed here not to detain the Committee with a speech which could not add anything to what my noble friend has said, but to have the privilege of supporting him on a Division if that should arise.
Baroness Hollis of Heigham: In speaking to Amendment No. 22, I should like to speak also to Amendments Nos. 34, 44 and 151.
In many ways, we are hesitant and sorry to challenge the amendments. I speak as a former commissioner of English Heritage as well as someone involved through local government in setting up many conservation areas. Therefore, we fully support the principle behind this cluster of amendments; namely, that we need stronger powers than those currently available to protect heritage areas. I am sure that we all share that concern.
However, having talked to many experienced colleagues in the conservation and planning world, on reflection I do not believe that this cluster of amendments is the most appropriate way to go about it. First, it assumes that enfranchisement will damage heritage considerations. As my noble friend Lord Strabolgi said, there is no evidence for that. The 1967 Act enfranchised historic houses in cities like Bath and Norwich and in places like Hampstead and Belgravia. There is no evidence that following the 1967 Act there has been any deterioration in the heritage quality of those properties. I understand that something like 200 estate management agreements have been set up—for example, in places like Hampstead, Dulwich and Belgravia—which have been successful. Perhaps we need to remind ourselves that leasehold as a tenure does not exist in Scotland. It does not exist in Paris or Rome, and yet they are cities of great historic quality and are properly and fully protected. I argue that if a leaseholder has a lease of diminishing value—which will certainly be the case 50 or so years on in a 99-year lease—that leaseholder is more likely to neglect the basic repairs essential to maintain historic houses. The inescapable fact of leasehold is that it relates to a diminishing asset. As it diminishes in value why should one be prepared to invest? Unless historic property is kept in sound repair—and leaseholders

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will have less and less inclination so to do—it will quickly become ripe for redevelopment rather than protection.
The next point I make in opposition to the amendment, although I entirely sympathise with the principle behind it, is that I do not believe it is right to deny many hundreds —perhaps many thousands—of leaseholders the right to enfranchise simply because they live in historic property with no evidence that they cannot properly maintain it. There is considerable evidence that in the 1960s many of the great estates were held together—needless to say, I exempt the great landlords perhaps presently in this Chamber—not for heritage considerations but in order to maximise redevelopment opportunities when the time was ripe.
As mentioned by the noble Lord, Lord Cavendish, in moving the amendment, and by my noble friend Lord Strabolgi, we all accept that, where we are talking about terraces of houses or flats in places like Belgravia, the heritage needs to be protected. One needs to protect against the neglect of stucco, which is a fragile material. As my noble friend Lord Strabolgi said, one needs to protect against cassata icecream painting of frontages. Perhaps one needs to check vibrant awnings set to mark or demarcate the three sets of bays of a flat. One needs to check against idiosyncratic coloured railings and doors, to say nothing of UPVC windows and the like. The thrust of our hesitation is that we believe that the right way to do that is through estate management agreements which can control development and the use and appearance of property, empower landlords to carry out work or repairs and impose obligations in respect of properties used in common. It may be argued that former landlords who are now no longer the freeholders of historic estates will have little financial incentive to ensure that such estate management agreements stick. Is that true? I cannot believe that civic-conscious landlords, particularly those who have cherished their properties for several hundred years, will walk away, particularly as it will cost such landlords nothing to maintain estate management agreements since the cost will be recharged to the former leaseholders.
Equally, I understand that in the case of many estates—for example, I believe this to be the case as far as the Grosvenor Estates are concerned—there is such a heavy admixture of commercial properties in such areas that undoubtedly they will see fit to ensure that estate management agreements are made to work. I understand that the sister of a senior Cabinet Minister, who acquired the freehold of a house in Belgravia under the 1967 Act, wanted to cut down a tree. She had to go not only through the estate by virtue of the estate management agreement but also through the planning authority, and quite rightly so.
Finally, we shall ourselves be moving amendments, for which we very much hope that we shall have the support of noble Lords opposite, including the Government, and certainly the support of English Heritage in principle. We shall move amendments to strengthen Clauses 64 and 65, which define estate
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management agreements. Draft clauses are including on the Marshalled List in Amendments Nos. 163 and 164, which may need to be refined before we discuss them, perhaps next Monday. In those amendments we propose that there should be an estate management agreement where so far none exists. Alternatively, where there is an estate management agreement which is not being properly enforced we shall move amendments to ensure that leaseholders can enforce it against the former landlord, local authorities can enforce it against the leaseholder and English Heritage can enforce it as a last default power on appeal to the leasehold valuation tribunal.
It may also be the case, as was trailed in the debate in the other place, that we need a wider debate about the adequacy of conservation powers for local authorities, particularly over the control of permitted development areas.
We on this side of the House firmly believe that there need be no conflict between protecting the heritage on one side, which we all, certainly on these Benches, want to do and respecting the rights of individual leaseholders to enfranchise on the other. We believe that there need be no conflict provided that estate management agreements are properly applied and observed, with default powers for local authorities and English Heritage to ensure that they stick. If we go that route I hope that we can meet all the anxieties.
The Earl of Lytton: My Lords, I had not intended to speak on the amendment but, since the question of management schemes has been raised, perhaps it is proper that I should do so as a professional observer of how people react in the real world of property.
I should like to associate myself with the comments made by the noble Lord, Lord Campbell of Alloway, and question how Clause 63 will work in practice. I listened with great interest to what the noble Baroness, Lady Hollis of Heigham, had to say, but I am not convinced that that is how people react.
Through the Bill we are replacing a blanket proprietorial interest with a dispersed series of individual interests in different parts of what was once a large estate. The process may be fast or it may be slow, but there will eventually come a point when the freeholder's interest is so dispersed that the concept of carrying out environmental improvements, or even environmental maintenance such as the noble Lord, Lord Kindersley, mentioned in connection with the investment being made by Henry Smith's Charity, ceases to be of any relevance to the freeholder who has seen his proprietorial interest gradually eroded. There will come a time when he will walk away from that situation.
I am convinced that that is what has happened. I am reinforced in my view by seeing how the marketplace has reacted to property legislation over the past 20 or 30 years and the effect that that has had. Therefore, with the greatest of respect to the noble Baroness, Lady Hollis of Heigham, from my own observations I cannot come to the same conclusions as the noble Baroness, although no doubt she has very good reasons for reaching that conclusion.
A real problem is in prospect. People are driven by very simple motives. Management and the continuity

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of that management either protects a proprietorial interest or it makes money. I do not see that the recovery of cost as an item in a management scheme would be of any interest to any of the people involved in large-scale heritage properties or in large-scale urban or rural estates which would be affected by the Bill. I do not believe that those people have such an interest in management; they are not management organisations. I am convinced that others will fill that void. I believe that there is a potential problem. I do not know whether that supports, or otherwise, the thrust of the amendment moved by the noble Lord. However, I relate closely to the problem that he identifies. The noble Lord, Lord Campbell of Alloway, also made the point that something does not fit. The Minister would do well to have a further look at the issue.
10.15 p.m.
Baroness Gardner of Parkes: I wish to follow the remarks of the noble Earl, Lord Lytton. I was a member of the Greater London Council's Historic Buildings Committee. We found that there was great difficulty in doing anything about the arches in London because no one owned them. For example, many of the mews in South Kensington have an archway at the entrance. Many other parts of central London have attractive archways. In our experience no one maintained them because no one accepted that they owned them or had any obligation for them.
The noble Baroness, Lady Hollis, and the noble Earl, Lord Lytton, are both right. The noble Baroness is right in saying that so long as there is a commercial interest people will continue to maintain the property. The noble Earl is right in saying that when that commercial interest ceases, whether because the last of the freeholds is sold off or for another reason, no one will continue such maintenance. I understand that in law positive covenants are very unsatisfactory in terms of enforcement whereas negative covenants work very well.
In Trevor Square, Knightsbridge, all the freeholds have been sold off. When they were under one management and were leasehold properties they were maintained, but no better than at present. The local residents have taken over as freeholders. The square is well maintained. Therefore, the system can work but it is important to ensure that there is such provision in the Bill.
Lord Peyton of Yeovil: There seem to be many good intentions, but I am not sure how they will be realised. I warmly support the amendment moved by my noble friend. Perhaps the Government would like to break the ice on this occasion and move in the direction of the helpful suggestion made by one of the people behind the Minister which is in no way ruinous to the Bill. If the Minister does not do that, it will be very odd. In the inheritance legislation enacted in 1984 the Government seemed to recognise that there was a problem. They dealt with the problem in a reasonably effective manner. Because they are now so anxious to sustain the chastity of this measure, if that is the right term, they are resisting all change.
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I am anxious to help the Government. I urge them to avoid the shameful process of backtracking on their own past wisdom and pursuing the path of insisting on every detail in the Bill without exception.
The noble Lord, Lord Strabolgi, faced the problem clearly. However, when he found that to provide such a measure would involve a substantial number of exceptions, he said, "No, we cannot do that. We must have the Bill". Therefore, his good intentions came to nothing.
The noble Baroness, Lady Hollis, said very attractively and beguilingly that she was in favour of the issue in principle. However, she then suggested that we had better put our faith in estate management schemes. I read the later part of the Bill. I am bound to say that I wish I could share the noble Baroness's apparent faith in those estate management schemes. I do not know who will have any interest in sustaining them. There will be a great deal of hassle, worry and trouble about them. However, the Bill proposes to give the landlord residuary powers. I am asking why we should accept such provisions. Not only will the landlord have power but great responsibility, considerable costs, and absolutely no interest in performing the duty which will be put upon him. That seems to me very unwise indeed.
We shall come to discuss that feature in more detail when we reach the relevant clause. Meanwhile, I hope that my noble friend will at least give himself and us a change and say that he will take away my noble friend's amendments and give them serious and friendly consideration. I should be upset to hear him say that he will not meet them at all and will put them in the same waste paper basket as the rest of the amendments.
Viscount Montgomery of Alamein: I am always distressed to have to disagree with my noble friend Lord Peyton because he is always so witty and beguiling in the manner in which he deploys his arguments. Also, my noble friend Lord Cavendish is quite right to be preoccupied with the heritage. Many of us are, and he produces a good argument for it. But there are a great number of measures already in place concerning the heritage as well as a great number of organisations: English Heritage, the Royal Fine Art Commission, local government restrictions and planning regulations. All those are at present concerned with preserving the heritage in one way or another. If the heritage is not being maintained adequately by the enormous plethora of existing regulations, then there is cause for something to be done about it. However, this is not the right place, and the noble Baroness, Lady Hollis, put the point properly. She said that of course we are concerned with the heritage but it should not be at the expense of a clause like this and thus disqualifying vast numbers of people from the purpose of the Bill. That is not what this should be about.
The proposers of the amendments may be on the right track in their intentions, but they have put them in the wrong place. They should be dealing with the matter possibly not in this Bill at all but in another one and certainly not at this stage and in this manner. I

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hope that the Government will not listen to my noble friend Lord Peyton, as they were encouraged to, and will remain on the same lines as before.
Lord Strathcona and Mount Royal: In supporting the amendment, I wish to underline one simple point. The Crown estate commissioners have apparently said that they intend to follow the obligations which are imposed upon other landlords under the Bill. They are in the happy position of being able to exercise their own judgment as to how far they go in doing so. But they have apparently said that they feel it is necessary to exercise their judgment in favour of excluding themselves from the Regent's Park terraces. If they perceive it to be a major problem, then surely it is one and the Government should recognise it as such. That is what my noble friend is trying to do with his amendment.
Lord Renfrew of Kaimsthorn: Many of us share the intention behind the amendment proposed by the noble Lord, Lord Cavendish. We are very much concerned that the integrity of conservation areas should be preserved. It is the case, however, that conservation areas cover large tracts of varied townscapes. It may well be that the procedure of management schemes would meet the issue. English Heritage itself has been a pioneer in proposing management agreements for scheduled monuments. Although of course the circumstances of ownership are different, it may be that the same kind of approach could be applied to the heritage component of urban townscapes, where we are concerned with the heritage element.
It would be helpful if the Minister could give us encouragement along the lines indicated by the noble Baroness, Lady Hollis, as to how estate management schemes might be made effective in such a case. We very much share the anxiety of the noble Lord, Lord Cavendish, that if the urban areas pass out of single ownership, integrity may be lost. But it may well be that they can properly pass out of single ownership or single freehold control, if estate management schemes can be made to work. That seems the crux of it, and I for one am doubtful about the outcome at this stage.
The Earl of Lindsay: I support my noble friend Lord Cavendish in this amendment. As with the noble Earl, Lord Lytton, my doubts about the adequacies of the Bill for properly conserving some of our heritage areas are based on practical experience. I know those who support the Bill more firmly say that there are estate management schemes set up in Clauses 63 and 64. If they fail, we might also have the freehold management schemes. Behind those are the planning authorities; English Heritage; and legislation on listed buildings and conservation areas. Despite the organisations, if one looks around today in almost any area with some kind of heritage, there are flaws and problems in properly implementing the safety net.
Section 19 provisions from the 1967 Act, which have been mentioned as a great plus point for the possible estate management schemes of this Act, are not wholly good news. There have been some
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successes. There have been plenty of failures. I would caution people against quoting Dulwich too often. In Dulwich they are facing increasingly serious problems, and there is a danger that the Dulwich management scheme is about to disintegrate.
I look forward to the amendments of the noble Baroness, Lady Hollis, on Clause 64. Any strengthening of Clauses 63 and 64 will be very welcome. She mentioned Paris, Bath, Edinburgh and various other cities. I have extensive knowledge of Edinburgh, having lived there. There is a huge difference between the stone-built heritage of Edinburgh and Bath and the painted stucco heritage of London. In Paris there is a huge difference between the architecture and the planning codes on one hand, and the pattern of rental leasing and owner-occupied property. I have a general concern on the subject and therefore I intend to support my noble friend's amendment.
Lord Strathclyde: I am grateful for the opportunity of participating in the debate. I say at the outset to my noble friend Lord Peyton that I always try to deal with my noble friend's amendments in a friendly manner. I hope that when we disagree he understands it is because the force of argument lies with the Government rather than with opponents of the Government.
On the matter of dealing with heritage areas and estate management, I hope that I can demonstrate why these amendments are not necessary but why I believe that I have a crumb of comfort for my noble friends who would like to see us moving in that direction.
All these amendments are intended to exempt certain historic buildings and heritage properties from the leasehold enfranchisement, lease renewal and lease extension provisions in both this Bill and the Leasehold Reform Act. They do this by enabling the Secretary of State for National Heritage to designate heritage areas within which buildings will be excluded from these provisions.
Amendments Nos. 22, 33 and 44 are intended to exempt historic buildings and estates from the leasehold enfranchisement provisions in Chapter I by reference to heritage areas.
Amendment No. 44 introduces a new schedule which would make provision for the designation of heritage areas by the Secretary of State for National Heritage. The other amendments, Amendments Nos. 22 and 34, would disapply the rights of enfranchisement to properties which form part of a landholding designated as a heritage area, disqualifying long leaseholders of such properties from being qualifying tenants.
Amendment No. 151 would amend Clause 59 in the Bill. That clause will amend the Leasehold Reform Act 1967 by removing the rateable value limits in that Act and extending leasehold enfranchisement to higher value houses.
Amendment No. 151 would also exclude from the provisions of the 1967 Act those houses brought within the scope of the Act by Clause 59 that are in landholdings designated as heritage areas or are properties transferred for public benefit under the provisions that would have been introduced by

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Amendment No. 26. Noble Lords are no doubt looking forward to an interesting and lively debate when we consider that amendment.
The amendments would exempt historic buildings or estates in their own right by reference to what are referred to as "Heritage Areas". They would require the Secretary of State for National Heritage to designate landholdings on application, presumably by the freeholder, subject to certain conditions. They would be designated where a substantial part of the landholding falls within a conservation area, at least one-fifth of the area comprises listed buildings and the landlord has undertaken to comply with a code of estate management practice, which will also be required under the amendment.
My right honourable friend the Secretary of State for National Heritage would need to be satisfied that the landholding is of outstanding architectural interest and that its continued existence with one landlord, in accordance with a code of estate management practice, will make a material contribution to the preservation or enhancement of its character or appearance. I cannot help feeling that the amendments are designed to give my right honourable friend the Secretary of State more powers with respect to heritage or historic estates because of an inadequacy with the existing laws for listed building and conservation areas which are there to protect historic buildings and areas. If there are problems in that regard then they should be addressed in respect of that legislation.
The amendments are not as wide as those previously tabled in another place, but the suggestion is still that those areas can only be effectively managed and will only retain their architectural and historical merit if the existing leasehold arrangements are left unchanged. Therefore, the amendments still cut right across our desire to keep exemption from leasehold enfranchisement to an absolute minimum and our desire to keep such exemptions on the face of the Bill. The proposed amendments would give my right honourable friend the Secretary of State the power to exempt any properties he sees fit. The issue again is whether it is necessary that estates should continue in single ownership if they are to be managed effectively and leaseholders be denied the right to enfranchise.
I cannot accept, and do not believe, that the case has been made that, as a general proposition, landlords are necessarily better at management or more likely to care for and preserve an historic building than the leaseholder who lives in it. My noble friend Lord Lindsay mentioned the estate of Dulwich. The friends that I know who live on that estate are quite happy with the arrangements and believe that it exists for their benefit.
It has been argued that the leasehold system itself acts against the proper care and maintenance of property: if a leaseholder of a house knows that he has only a short-term and diminishing interest he has less incentive to plan for the long-term care of the property. Our proposals for estate management schemes should answer that problem and I have no doubt that we will discuss those in some detail when we reach Part IV of the Bill. Estate management
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schemes will allow the freeholder to continue to exercise some influence over the use, maintenance and redevelopment of a property even though the leaseholder has enfranchised, and I have said that there is no reason why freeholders of historic estates should not apply. They would allow the freeholder to retain control even though the leaseholder has enfranchised. The terms of an estate management scheme can deal with the appearance of a property and can empower the landlord to carry out work to maintain or repair it and can impose obligations relating to use and public access that are already contained in the leases.
I have already mentioned, and perhaps should remind the Committee, that amendments will be tabled to enable local authorities and English Heritage to promote estate management schemes where the landlord or representatives of the tenants have failed to do so.
Baroness Hollis of Heigham: Perhaps the Minister will kindly give way. Will the Government also be tabling amendments for default powers where there is an estate management agreement in place that is not being enforced?
Lord Strathclyde: I am quite prepared to consider that point between now and when we reach that part of the Bill.
I believe that long leaseholders are fully capable of caring for the buildings in which they live. Where owners of historic buildings have let property on long leases they have, to all intents and purposes, transferred ownership of that property. The leaseholders will usually have the greater financial interest in that property. I also believe that the system of estate management schemes will provide more than adequate safeguards where in the general interest there needs to be coherent management of an area as a whole.
I hope that in the light of what I have said my noble friend will understand why I cannot accept the main thrust of his amendments. I do, however, have some general concerns about heritage and we are dealing with those through estate management schemes.
Lord Campbell of Alloway: The answer to the noble Baroness, Lady Hollis, was not clear or, frankly, satisfactory. I ask categorically—because it will affect the way I would vote on a Division—whether my noble friend the Minister is prepared to assure the Committee by giving an undertaking that the Government will introduce effective and proper powers of enforcement. That was the question asked by the noble Baroness. She received no answer.
Lord Strathclyde: I am sorry that my noble friend should be talking in terms of having a Division when I have given a very full answer and offered certain aspects known as estate management schemes that we can discuss in far greater detail when we reach that part of the Bill. I said that I would consider the proposal put forward by the noble Baroness, Lady Hollis. I cannot be more categoric than that. My noble friend will, I know, be sympathetic to that but I hope that that will not affect the way in which he will vote.
Lord Renton: Can my noble friend say to which part of the Bill he was referring when he said that he will consider it when we reach that part?
Lord Strathclyde: All the estate management amendments will come up when we reach Chapter IV of this part of the Bill. Clauses 63 and 64 deal in great detail with estate management schemes.
Lord Cavendish of Furness: I thank all those who have taken part in the debate. I also thank my noble friend the Minister for his reply. In concrete terms, the crumb of comfort that was promised was so small as to be almost invisible but I felt that the tone was positive. There seems to be concern on all sides of the Committee that we must get this matter right. I certainly share the reservations of the noble Earl, Lord Lytton, about the enforceability of estate management agreements. A determination exists in the Committee to get this right. In the light of the suggestion from my noble friend the Minister that he will bring forward amendments and in the light of Amendments Nos. 163 and 164 in the name of the noble Lord, Lord Williams of Elvel, and the noble Baroness, Lady Hollis, which I have not had time to study, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Lytton The Earl of Lytton moved Amendment No. 23:
Page 5, line 30, at end insert:
("(3A) Where premises are built as part of a larger scheme of development the right to collective enfranchisement shall not be exercisable in respect of those premises until the whole development has been completed or until three years have elapsed since the premises were completed, whichever is the sooner.").
The noble Earl said: This again is a probing amendment. I hope that it will receive the response that I was able to get from the Minister on the previous amendment I moved for which I was most grateful. The amendment relates to flats developments which are under construction.
The problem which may arise is that the Bill would allow enfranchisement to occur as soon as two-thirds of the relevant part of the property or perhaps two-thirds of the first phase was occupied. In the context of an on-going development, where roads, infrastructure and matters of that kind are still unfolding, I can see that this would cause tremendous problems with the developer where he has to come back to provide for common services, for the completion of roads, drainage and so on. I do not think it would be helpful if residents of one part, as it came on stream, could make a pre-emptive strike in that situation. The amendment seeks to avoid that situation arising. I am hopeful that the Minister will be able to tell me that it is not necessary but I do not see anything in the Bill at the moment that would prevent it happening. In consistency with my aim to try to make sure that when the Bill becomes law it will operate smoothly and satisfactorily in practice, I beg to move.
Baroness Hollis of Heigham: I shall be very brief. We see circumstances in which this amendment might be sensible, but our reservations are that where there is a major development involving many blocks the
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amendment would, as regards the early blocks, hold up the tenants' rights to seek enfranchisement for three years, and for no good reason; and where those blocks could function independently. We believe that the right answer is commonhold and we await that Bill. On balance we do not support this amendment.
Baroness Gardner of Parkes: I also believe that it would be better to sell the following blocks on a different basis. I hope that that will apply. Therefore, it would be only the existing blocks that I hope would be enfranchised. The amendment may not be necessary for that reason.
Lord Strathclyde: In these provisions our concern is to ensure that leaseholders can take control of their own property. That is why we have provided that enfranchisement can relate to the smallest viable unit. It will ensure that the leaseholders can only control the property in which they have an immediate financial stake and will make management simpler. I do not consider that it would be appropriate to sterilise the right to enfranchise just because the block is part of a large development.
I do understand the concern of the noble Earl that it may make it more difficult for a developer who wishes to provide common services to the development, and that the first block to enfranchise might claim the freehold to the common parts. The developer will, however, be aware of the right to enfranchise and will need to take this into account when the development is phased. It may well be in the interests of both the developer and the tenants if their intention to enfranchise is known before the development is finished, as this may make a difference to the provision of communal services.
If the tenants do wish to purchase the freehold of common parts, and that would disrupt the development, then the freeholder can offer permanent rights over those parts in lieu of the freehold. This provision will ensure that other blocks can benefit from the common parts.
This Bill intends to give tenants increased rights for ownership and control. I do not consider it right to block those rights while a developer builds adjoining property in which the tenants may have no interest. There is provision in the Bill to ensure that the common parts can be retained for the benefit of other leaseholders so the amendment is unnecessary to protect them. I hope that gives the noble Earl some comfort.
The Earl of Lytton: It is certainly not my intention to press this amendment. In the light of what the noble Lord said I shall certainly consider the situation more carefully. I feel that he may be right in a number of respects, but there may also be circumstances where things could go badly wrong. I should have preferred to see something which prevented matters going badly wrong. On the basis of what the Minister said I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Coleraine Lord Coleraine moved Amendment No. 24:
Page 5, line 31, leave out subsection (4).
The noble Lord said: In rising to move this amendment I am glad to see that I am supported by my noble friend Lord Peyton of Yeovil, the noble Lord, Lord Williams of Elvel, and the noble Baroness, Lady Hollis of Heigham. This amendment would remove the power of the Secretary of State to vary by order, upwards or downwards, the percentage of internal floor area occupied for non-residential purposes which, if exceeded, prevents qualifying tenants from having the right to collective enfranchisement. Similarly, it would remove the power of the Secretary of State to vary by order, upwards or downwards, the number of flats in the building of the resident landlord above which the resident landlord exemption does not apply. Furthermore, the amendment would exclude the right of the Secretary of State, under Clause 89, to make different provisions in both of those cases for different areas.
Any order made under the subsection could alter the rights of either tenants or freeholders. It would operate with icy even-handedness to move the goal posts against the flat owners or the freeholders. One moment flat owners in the block would have the right to lease extensions; the next moment, after an order, they would find that they were coerced into collective enfranchisement.
A few amendments ago I was listening to my noble friend replying to the noble Baroness, Lady Hamwee, who wanted to increase the commercial percentage from 10 per cent. to 20 per cent. My noble friend said that in future 15 per cent. (or some other figure) might be found to be the right percentage. He said very happily that that could be dealt with by order under this subsection.
Perhaps I may envisage the case of a purchaser buying, say, a 30-year lease in a block with a large shopping parade at its feet. The first thing that the purchaser would want to know is the percentage of commercial use. Let us assume for a moment that he is advised, after expensive surveys, that it is 12 per cent. The purchaser might well go ahead and complete the purchase of the 30-year lease. He would move in and, if my noble friend's amendment to a later part of the Bill is accepted, he would have to wait for three years before his right to a lease extension arose. I envisage that that gentleman or lady might be very sorry indeed to discover after a couple of years that, by a mere order of the Secretary of State, the percentage figure was raised from 10 per cent. to 15 per cent. so that he no longer had the option of a lease extension. If he wanted to improve his position, he would have no option but to join his fellow lessees in what would amount to a fairly extensive and complicated financial operation of buying out the shops. That is not the sort of operation that every leaseholder wishes to get involved in.
This is not a power that should be in the hands of the Secretary of State. Parliament alone - and by primary legislation - should decide whether and to what extent the rights of expropriation contained in the Bill should be exercised. I advise my noble friend that I envisage the need for further primary legislation on this matter of lease enfranchisement within the few years that may pass before the Bill is seen in operation.
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Once the legislation has been in place for a little while the Government will have the opportunity to change the goal posts by primary legislation if that is what they feel inclined to do. On this occasion, I do not think that one should be prepared to accept the Government's excuse that it will be difficult to find time for primary legislation to do something that could be done by order. I beg to move.
10.45 p.m.
Lord Strathcona and Mount Royal: Before we proceed any further in discussing the amendment, perhaps my noble friend the Minister would care to tell the Committee why he thinks that it is necessary to give the Secretary of State what I think Ministers tend to call "flexibility", which means that they can do anything they like, whenever they like. Before we debate further whether it is necessary for the Secretary of State to have those powers, can my noble friend tell us why he feels that it is necessary to put them in the Bill at all?
Lord Renton: This is a Henry VIII clause of a particularly damaging kind. It would enable fundamental provisions of this part of the Bill to he changed by ministerial order, presumably checked only by the negative resolution of Parliament. And they are indeed fundamental provisions. One has only to refer back to earlier parts of the clause to realise that. It is important that we should know whether it is to be 10 per cent. of the floor area, a greater or a lesser part, that is to govern the criteria.
I draw the Minister's attention to the fact that this is the first amendment we have considered today with which Members on both sides of the Committee have been in agreement whereas formerly they were in disagreement.
Lord Monson: From these Benches I, too, oppose the excessive powers granted to the Secretary of State by the subsection, as it stands. I wish only that the hour were earlier so that my noble and learned friend Lord Simon of Glaisdale could be here to give this Henry VIII subsection the pasting that it deserves.
Lord Williams of Elvel: Perhaps I might add my voice to what has been said. This is the first time that I have seen such a blatant Henry VIII clause. I do not know what we were debating when the noble Baroness, Lady Hamwee, moved from 10 per cent. to 20 per cent. in the early part of the clause. I do not know why we were debating that at all, because the Secretary of State has powers to move the figure from 10 per cent. to 15 per cent., 20 per cent., 30 per cent., or 90 per cent. on any day of the week, at any time, when he gets out of his bath. So I do not understand why we were having that debate.
If the clause said merely that the Secretary of State can do what he likes—fix the percentage; and decide what is the internal floor area—well, if that is what the Government want, let them try to do it. It is one of the most absurd clauses I have ever seen in a Bill.
Lord Peyton of Yeovil: Before my noble friend replies, I put down a similar amendment without prior consultation with the noble Lord, Lord Williams, or

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my noble friend Lord Coleraine. I was suprised to find myself in their company. However, I am fortified by the reflection that I cannot again be wrong and that my noble friend, who has had such a happy day relying upon the support of the opposite Benches, might find himself constrained to look at the amendment with some sympathy, inspired by a little apprehension that he might be obliged to move in its direction.
There was a time, I am sure—I cannot exactly remember it, because it must be buried in the mists of history—when I had great regard for the wisdom of Secretaries of State. There was a time, but I cannot put a date on it, it was so long ago. Now, in the light of experience, my confidence in the wisdom and judgment of Secretaries of State is on the whole restrained and comes to the surface only in the very best of weather, and certainly not at this time of night. I ask my noble friend to understand that when governments come solemnly to Parliament and say, "This is what we recommend", and Parliament, in its quiet docile way, urged on by the Whips and everything else, says, "All right, we accept this", it is going too far when the same people say, "Of course, as soon as you lot are finished with it, we want to be free to change our mind and your decision". That is not the way to treat Parliament. It is interesting to note the way that that argument has been rehearsed again and again, and Ministers take not the slightest bit of notice. I am sure that the conversation my noble friends on the Front Bench are having is interesting, but I hope that they are deciding that this matter is too important to settle tonight and that they would like to put it off until the morning by which time they will have had second thoughts, with, I hope, some flowering of wisdom in the interval.
I do not want to detain the Committee for any length of time. I merely ask my noble friend whether there is any possibility that Ministers will at some time realise that this kind of clause is unwelcome to Parliament and that Members on both sides of the Committee have tonight once again expressed their distaste for such stuff. If my noble friend could communuicate that distaste to his colleagues, that would be helpful.
Lord Strathclyde: I have been beaten over the head by my noble friend Lord Peyton and I can see that on this issue everyone is against me. I do not think that there is any point in continuing the debate much longer and I am happy to look at the matter properly between now and Report. I know that at present the power is negative and I can understand why that is acceptable. Perhaps we should do away with the power altogether or perhaps have an affirmative power. I shall take the amendment away, consider it and discuss it with one or two of my noble friends. We can decide what to do about it on Report but I do not think it is worth discussing the matter for much longer in Committee.
Lord Coleraine: I am glad to leave the matter in the hands of my noble friend. I do not normally stand up here and talk about government by regulation; it is
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not a subject which I normally get excited about. However, I find this a most objectionable use of the power. When I am interested in a subject I see no basic difference between the negative and affirmative procedures. We want this clause out of the Bill altogether and I hope that my noble friend will think carefully about those words. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No 25:
After Clause 4, insert the following new Clause:
"Exclusion for housing associations.
. This Chapter does not apply to premises where the immediate landlord under the lease is a registered housing association and the flats in the premises—

(i) are particularly suitable, having regard to their location, site, design, heating systems and other features, for occupation by persons of pensionable age;

(ii) are occupied by persons of pensionable age or physically disabled persons; and

(iii) have special facilities which include the services of either a resident warden or a non-resident warden and a means for calling him.").

The noble Baroness said: The proposed new clause seeks to exclude from leasehold enfranchisement leasehold schemes for elderly people where the freeholder is a resident of a registered housing association. I suggest that the specialised nature of the services provided, as described in the new clause, makes that type of housing worthy of different treatment.
As the Bill stands, leaseholders of housing associations' sheltered housing schemes are able to exercise enfranchisement. The new clause is designed to seek to exclude the sheltered housing schemes. It would affect only schemes where the housing association had not received housing association grant, known as HAG. HAG-funded schemes require the association to retain 20 per cent. of the equity. Under Clause 16 enfranchisement would not apply in that situation. Many housing associations have undertaken sheltered housing schemes without using housing association grant. The clause would affect those schemes.
I do not propose the new clause lightly. I understand that there may be an argument against it and that it discriminates against a particular group of people; namely, the leaseholders in such schemes. However, perhaps the overwhelming argument is that, faced with the needs of an ageing population, the leasehold enfranchisement should not apply to take out over time the warden services and other special provisions. Ultimately the properties might be sold to people who are not elderly and the supply of sheltered accommodation might be reduced at a time when the need for it is increasing.
The wording of the proposed new clause has drawn heavily on the Housing Act 1985, which excluded sheltered housing from the right-to-buy provisions. In anticipation of the argument which might be made that restrictive covenants could do the job as well as this amendment, perhaps I may say that covenants are open to being changed between the new freeholder

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and the leaseholder once the freehold has passed to the new freeholder. Therefore, I would not accept that such covenants would be sufficient.
I am aware of the irony of endeavouring to preclude by the new clause an agreement freely entered into. That is a discussion which we have had several times. However, I believe the weight of public interest would be in favour of this proposed new clause. I beg to move.
11 p.m.
Lord Monson: I am very happy to support this amendment. The main underlying purposes of Part I of this Bill, as I understand it, are twofold: first, to prevent a minority—and it is a minority—of bad landlords making life a misery for lessees; and, secondly, to prevent difficulties cropping up for lessees during the last 30 years or so of their lease. Neither problem occurs in this case, of course, because the landlords, almost by definition, are good landlords, and since the schemes in question are relatively novel in nearly every case there will still be 60, 70 or 80 years of the lease to run.
Those who benefit from enfranchisement will therefore not be the lessees themselves but more probably their sons, daughters, grandsons, granddaughters, nephews or nieces who will want to enfranchise and then sell the property at a profit. There is nothing wrong in wanting to benefit your children, nephews or nieces, but not at the expense of the potential beneficiaries of these very highly targeted schemes which have done so much good to so many people.
Lord Beaumont of Whitley: The Bill, on the whole, is a very grey Bill, which is why I did not inflict myself on your Lordships earlier on today. However, there are areas where the grey shades over to white, and that is where it manages to make certain that owners of leaseholds who are bad landlords are put in a position where they have to sell; and that is worthwhile. At the other end of the spectrum, there are areas where it shades over into dark grey, and even black. I thought the amendment of the noble Lord, Lord Kindersley, was in the dark grey area but I supported it because of that: I thought it was worthwhile. If that was worth the support of a number of your Lordships—and a large number did support it—this one surely is much more so. This is an area where we ought to preserve the work and the rights of the people who are providing good housing for elderly and disabled people.
Lord Renton: Although the three noble Lords and the noble Baroness who have their names on this amendment are not supporters of the Government, I feel pretty confident that there are a number of supporters of the Government who would agree with me that it would be unrealistic and unthinkable for housing associations which exist to provide accommodation for people of pensionable age or physically disabled people, and which have a resident or a non-resident warden, should be subject to the provisions of this Bill. It is just not the sort of scene for leasehold enfranchisement. I would therefore very
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much hope that my noble friend would feel that this is another point that he could take away and consider between now and the Report stage.
Lord Williams of Elvel: As one of the signatories to this amendment, and indeed an opponent of the Government, as the noble Lord, Lord Renton, points out, I entirely support what the noble Lord says. It does not seem to me that this amendment would prejudice in any way the Bill as it stands if it were accepted, and it does not prejudice the interests of those who are in sheltered accommodation or who might need such accommodation in the future. Clearly, if sheltered accommodation is exempt from the provisions of the Bill and the new clause is accepted, elderly leaseholders would automatically receive the right, under Chapter II of the Bill, to renew their leases in line with leaseholders in other bonded schemes. In fact, it is that right rather than enfranchisement which is of greater interest to those living in sheltered accommodation.
The amendment may be defective in its terms, but I believe that the Minister would be wise to look very carefully at the matter and to accept the principle of it because, as the noble Lord, Lord Renton, rightly said, this is not a matter which we should allow to go through the Committee unamended.
Lord Hylton: I played a small part, in company with other Members of the Committee, in exempting this kind of accommodation from the right-to-buy provisions. As the noble Baroness, Lady Hamwee, rightly said, at a time when we are facing a dramatic increase in the elderly population and an extremely sharp increase in the number of frail elderly people, this is a timely amendment and I am glad to support it.
Lord Monk Bretton: I have given my noble friend on the Front Bench no trouble so far this evening. However, I should like to support the amendment in the name of the noble Baroness, Lady Hamwee.
I am president of a charitable housing association which is called the Sussex Housing Association for the Aged. That is a registered housing association. It was also registered under the Charities Act 1960 but is now classified as an exempt charity. That association has entered into various schemes ranging from sheltered accommodation to extra care homes.
It established a satellite company called SHAA Retirement Homes Limited which, although controlled by SHAA, does not have registered status. That provided sheltered housing by persuading commercial interests to build it and then taking over the freehold interest when it had been sold off on 99 year leases. That has been done extensively by both charitable and non-charitable housing associations.
There is a problem because those associations are caught by the Bill as it stands. The amendment would get them off the hook. I am not clear why enfranchisement of sheltered housing accommodation is a desirable objective for anybody and it may never happen. Should we do so in order that our heirs could live in that accommodation? I should have thought

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probably not because as we grow older, we shall allow our heirs to live in our former houses while we live in the sheltered accommodation.
At present, SHAA has been thinking of dissolving that satellite company which does not have charitable status, and bringing the properties back under its own charitable umbrella. I understand that that will not work because while the Bill excludes from enfranchisement the charitable housing trust—for example, the Peabody Trust, and there are not many of them—it does not exclude charitable housing associations. I do not fully understand the need for that differentiation. I wonder whether or not it is an oversight.
I am not sure whether we are also speaking to Amendment No. 33 which is grouped with Amendment No. 25. It is possible —I am not sure —that Amendment No. 33 might also produce a solution to the problem to which I refer, even were it not so widely drafted as it is at the moment and was restricted further so that it applied to charitable housing associations but not to housing associations. I hope very much that my noble friend on the Front Bench will be able to offer some help in this rather complicated matter.
Lord Strathclyde: This new clause would exclude from enfranchisement premises where the immediate landlord is a registered housing association and the flats are designed for and occupied by persons of pensionable age or disabled persons with the services of a warden. I believe that it creates an unnecessary and unfair restriction. It is unclear as the clause is drafted of which lease the registered housing association must be the immediate landlord, but I understand the principle that is put forward.
The effect of the new clause would be to make a lot of blocks unenfranchisable. Chapter II would still operate to give the right to obtain new leases to the long leaseholders in the blocks but that would be poor compensation for the disenfranchised lessees who would be unable to take control of the management of their blocks. If the intention is that Chapter I should not apply to housing association blocks containing any sheltered housing the situation could arise that a large block contained only a few such flats but the right of enfranchisement would be denied to the whole block. In any case, it is unfair to deny long leaseholders the collective right to buy the freehold simply because they live in housing association-owned sheltered housing. Why should such people be prevented from taking control of the development—which they effectively own—and overcoming the diminishing value of their leases?
The drafting of the new clause follows broadly paragraph 10 of Schedule 5 to the Housing Act 1985. That provision excludes sheltered housing for elderly people from the right to buy. However, that is not a relevant precedent since the purpose of the paragraph in the Housing Act 1985 is to ensure that sheltered flats or bungalows remain available for reletting on secure tenancies in due course rather than sold to the tenants. That is a valid restriction on the right to buy. The same restriction is inappropriate for the right to enfranchise as the enfranchising tenants are already
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long leaseholders of their flats. The purchase of the freehold would simply mean that there was a new landlord. The freeholder-leaseholder structure would remain.
I can understand the concern that after enfranchisement the new freeholders might sell the properties to other people who were not elderly or disabled and the flats would move out of the sheltered housing market. That would be unlikely to happen because any restrictive covenants in the lease, which might specify for example that the flat was only to be let to the elderly, would remain. Such covenants could not be changed unless both parties to the lease agreed. If the freeholder and leaseholder happened to be the same person there would be the democratic right to alter the lease if that person so wished. There may be residents of sheltered housing who choose not to participate in enfranchisement. The terms of their leases will remain unchanged so that any services, such as a resident warden, will be maintained. The terms of tenancies held by non-qualifying tenants will also be unaffected, and it may be that a non-qualifying tenant will not even have a change of landlord since a lease superior to the interest of a non-qualifying tenant is not liable to acquisition. If the tenant on a short tenancy rents direct from the freeholder the freeholder will have the option to take a leaseback of the flat if he so wishes.
Amendment No. 33, which is grouped with Amendment, No. 25, would prevent any tenant whose immediate landlord is a registered housing association from being a qualifying tenant in respect of either collecive enfranchisement or lease renewal. Again, that creates an unfair and unnecessary restriction. It is our intention that leasehold enfranchisement should apply to as many long leaseholders as possible and that there should be few exemptions.
The definition of a charitable housing trust has been drawn quite tightly. It is a housing trust as defined in Section 6 of the Housing Act 1985 and a charity within the meaning of the Charities Act 1960. Only where the tenant's immediate landlord is both a housing trust and a charity will the exemption apply, and it will do so on a flat-by-flat basis only. A housing trust is a corporation or body which uses its funds for the provision of housing accommodation. Some housing association flats may well fall under the definition of those which are exempt from enfranchisement.
The amendment proposed would, however, exclude from enfranchisement and lease renewal the tenants of all housing association flats. Why should long leaseholders be denied the collective right to buy the freehold simply because their immediate landlord is a housing association? It would be unfair to prevent such tenants from taking control. Where a housing association has let a flat on a long lease we consider that it has already disposed of the major interest in that flat. The price which leaseholders will have to pay for the freehold will reflect the full market value of that interest. Landlords will therefore be fairly compensated.
Both amendments would therefore interfere with rights which we wish to give to tenants under this legislation. The former is the most perverse. It

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suggests that if one is able-bodied and young it is perfectly legitimate for one to enfranchise, but if one is old or disabled in some way the amendment indicates that one is not capable of making a choice whether or not to enfranchise. I cannot believe that that is the intention of those who moved the amendment because I cannot believe that that is right.
Lord Renton: I am really quite shocked by the explanation which my noble friend has given. It seems to me that a registered housing association is in a very similar position to a collective freehold. To ask a lot of elderly people, some of whom may be in the mental state which many of us reach in our eighties—and I speak as one—to decide whether they should change an arrangement which may have suited them for years and exchange it for the complicated provisions under the Bill, where only four ninths of the residents in the particular block of flats are required to agree to what is going on, is unreasonable and almost inhuman. I believe that my noble friend should keep a more open mind on the matter and agree to take it away.
Lord Strathcona and Mount Royal: Like the noble Lord, Lord Hylton, I was involved in the Housing Act 1985 and I seem to have heard many of the arguments before. I am still not greatly moved by them. The Government was dragged screaming by this House into amending the 1985 Act, with a degree of success. So far as I am aware that has worked very well.
I do not know whether the noble Lord understood much of the brief which he read out at great speed, but I shall give him credit for having done so. However, most of us will want to read very carefully in Hansard what he said and consider whether the issue should not be raised again. I could not follow the noble Lord's arguments, but I was not convinced by those arguments any more than I was in 1985.
Lord Strathclyde:Of course I shall want to consider very carefully what has been said in this debate. I have said in many of the debates we have had in the course of today that I want to do that, and this is no exception.
There is a point here on which I suspect that my noble friend Lord Renton and I shall disagree. I do not see why, if one happens to be old, that should exclude one from the ability to make a choice. It does not mean that one has to opt for leasehold enfranchisement, but simply that one should not be excluded by the Bill because one happens to be old. I may be quite wrong on that point, which is why I am happy to reconsider the matter and read what has been said. If I am wrong, I am not sure that I have fully understood the points that have been put to me by my noble friends.
Lord Williams of Elvel: Unless there is such an exemption, there will not be the right to extend the lease, which is the most important thing.
Lord Strathclyde: The noble Lord says that that is the most important thing. I do not believe that that is so. The most important factor is the ability of people to enfranchise and to be in complete control of their affairs, if that is the choice of the tenants.
Baroness Hamwee: I am extremely grateful to the Members of the Committee who have supported the amendment. It is quite clear that there is a considerable degree of concern on the issue.
I did not introduce the amendment intending it to be ageist in any way. I do not suggest that elderly people are not capable of making choices. My anxiety is to preserve the type of accommodation and the services that accompany it, and not to lose those to an increasingly elderly population.
I do not agree with the Minister on the suggestion that a restrictive covenant can deal with the matter. However, I refer to the issue regarding a block of flats which contains only some specialised units. I accept that it is common for there to be blocks with flats on the ground floor which are designed specifically for elderly and/or disabled people. Perhaps I should reconsider the situation in that light. I am grateful to the Members of the Committee who have pushed the Minister from his original flat refusal to consider the proposal into at least accepting that he will take it away and reconsider it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Cavendish of Furness Lord Cavendish of Furness moved Amendment No. 26:
After Clause 4, insert the following new clause:
("Exclusion for property transferred for public benefit
.—(1) Nothing in this Part of this Act shall apply to property which—

(a) belongs to a body not established or conducted for profit and in relation to which the Treasury has for the time being given a direction under section 26 of the Inheritance Tax Act 1984; or

(b) is for the time being designated by the Treasury under section 31(1) (b), (c) or (d) of the Inheritance Tax Act 1984.

(2) Where an application to the Treasury for a direction under section 26 of the Inheritance Tax Act 1984 in relation to a property or designation of a property under section 31(1) (b), (c) or (d) of that Act is or has been made at any time before the expiry of one year from the coming into force of this section then subject to subsection (3) below if (before or after the making of the application) a notice is given by a tenant of a house of his desire to have the freehold under Part I of the Leasehold Reform Act 1967 ("the tenant's notice") or a notice is given under section 11 ("the initial notice")—

(a) no further proceedings need be taken towards the determination of the terms of the proposed acquisition to which the notice relates beyond those which appear to the landlord in the case of the tenant's notice or the reversioner in the case of the initial notice, to be reasonable; but

(b) the tenant in the case of the tenant's notice or the nominee purchaser in the case of the initial notice may at any time withdraw the notice by a further notice in writing given to the landlord in the case of the tenant's notice or the reversioner in the case of the initial notice and he shall not be required to make payment to the landlord, reversioner or any other relevant landlord in respect of costs incurred by reason of the notice withdrawn.

(3) Subsection (2) above shall cease to apply—

(a) if within a period of two years from the date of the application it is withdrawn or the designation is refused or not given or no direction is given; or

(b) if the applicant has not, by advertisement or by other appropriate means given adequate notice to persons interested informing them of the application for designation.

(4) In the case where an application is withdrawn or refused subsection (2) does not apply at any time falling after—

(a) the date of withdrawal of the application, or

(b) the date when the decision of the Treasury refusing the application becomes final,

as the case may be.").
The noble Lord said: My second heritage amendment is rather long and complicated. I have needed the extensive help of English Heritage in drafting it. However, it is again simple in principle. I regard it as very important. I make no apology for detaining the Committee even at this late hour.
The amendment seeks to ensure that our national heritage does not suffer as a consequence of inheritance tax liabilities by the forced sale and break-up of important properties. Buildings which are of outstanding historic or architectural interest, together with their contents, and land essential to the protection of their character or amenity, can be exempted from inheritance tax if they are given to a non-profit making body.
They can also be designated by the Treasury under Section 31 of the Inheritance Tax Act 1984. This has the result that, subject to undertakings being given concerning maintenance and public access, they are conditionally exempted from inheritance tax.
Those provisions, originating some 20 years ago, are widely accepted as being in the public interest, since the loss of tax is outweighed by the public benefit enforced through the conditions, such as those to which I have referred, of public access and maintenance. By permitting enfranchisement and thus potential break-up of such entities, the intention and benefit of existing legislation could be frustrated. To my mind, an issue of principle is therefore involved, despite the small number of cases to which it applies.
Properties which are eligible for conditional exemption are generally comparable in quality, importance and the degree of public access, to those houses held inalienably by the National Trust, and which are specifically exempted under Clause 85 of the Bill. Indeed, I pointed out at Second Reading the irony of the fact that the arrangements for conditional exemption and its predecessors were designed precisely to obviate the need for some of those houses to be taken into the care of the trust or the state.
The leasehold enfrancisement provisions of the Bill would undermine this important protection. If an estate owner is forced to sell part of the property, the undertakings given at the time of conditional exemption to maintain the character of the property and provide public access are likely to be viewed as broken by the Inland Revenue and I do not believe that the government dispute that. It will be damaging to both public and private interests.
If the Inland Revenue decides on review that the entity has been materially affected by the sale and no longer justifies conditional exemption, the owner would then be faced not only with paying tax on the value received for the disposal but on the value of the whole estate that has been exempted at the
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time of the last taxable transfer. That, in turn, would almost certainly trigger a general sale to meet the tax liability and thus damage the public interest in the protection of the heritage by maintaining such entities intact.
Aside from the damaging threat to the heritage, the Bill, unamended, represents a wholesale betrayal of those owners who have entered into an agreement with the Treasury in good faith, only to find it reneged on with potentially ruinous consequences both in terms of their own financial liabilities and the heritage they sought to protect.
Since to qualify for exemption an estate does not have to be wholly in single ownership, it may be argued that a scheme of management could avoid damage to its heritage value. However, it would not, in the view of English Heritage, provide an effective tool to bring about the visual unity which comes from the common control. More importantly, I am advised that it is not possible to enforce, through such schemes, conditions in leases which require public access, which is one of the main conditions of exemption.
The proposed new clause seeks to avoid these damaging consequences by excluding designated properties from the application of Part I of the Bill. It also provides a limited time period of one year, during which designation may be sought for potentially eligible properties. During that period, and until the Treasury has made its decision, any applications to enfranchise would be frozen.
The number of properties which would be affected by the provision is small. To date, only some 160 have been recommended on the ground of outstanding importance and of those only about 60 have been designated. The proportion of those properties which are subject to potential enfranchisement leases is itself very small. To accept the amendment would not, in my view, compromise the principles of the Bill, but it would recognise an established principle and would be of great help in protecting heritage interests of acknowledged importance.
I believe the amendment would improve the Bill and correct an injustice which I am sure the Government never intended. I beg to move.
Lord Boardman: If my noble friend is right in his analysis of the consequences—and I am quite sure that he is—then those consequences of the enfranchisement could cause gross unfairness for a small but important section of the community. I hope, therefore, that my noble friend will respond to the amendment in terms which will enable him to accept it. That would put right something which would otherwise be most unjust.
Baroness Hollis of Heigham: It will not surprise the Committee that we on this side are obviously uneasy about the amendment. It deals with a small number of properties which, if held by the National Trust, would be inalienable. Throughout the discussions today and in future debates on the Bill we seek to maximise the opportunities for enfranchisement. However, on this amendment we are dealing with a small number of properties which had special protection under

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inheritance tax agreements in return for public access, and which, when introduced, had the support of all parties.
If we on this side could think of a better way to meet the objectives that the noble Lord is pursuing we would seek perhaps to oppose the amendment and produce amendments of our own. As we cannot, we propose not to vote on the amendment should it be pressed to a Division.
Lord Campbell of Alloway: I support the amendment, but I have already spoken to it on another aspect of heritage exclusion. We are concerned with a very small number of cases, with again yet another distinct and important dimension of error and injustice. I ask the Minister to take this back.
Earl Peel: I asked my noble friend earlier about the National Trust and he confirmed that it will be exempt under the Bill. The amendment which my noble friend Lord Cavendish moved appears to give the same principle to heritage property as is given to the National Trust. It seems to me that we shall be discussing or contemplating double standards here if the amendment is not accepted by the Government.
There is also the question of endowments which would go with such properties. If the amendment were not accepted, those endowments would be likely to be subject to some form of retrospective tax which would have very considerable effects on the donor. I would have thought that that would only lead to confusion for the owner and would certainly work against the better interests of the general public.
11.30 p.m.
Lord Strathclyde: I have listened again with some care to what my noble friends have said. I appreciate that there is worry that if these properties are enfranchisable there would be serious implications for some estates. There is anxiety that coherent management of the estate would be lost and that the inheritance tax consequences of the disposal could trigger a review by the Inland Revenue of the conditional exemption.
I do not feel that the best way of dealing with this matter is in the Committee stage. I said that I recognised that there was anxiety. I am happy to take the matter away and discuss with my noble friend Lord Cavendish exactly how we might be able to meet these worries, if that is possible. I cannot give a commitment, and my noble friend will know why I cannot give a commitment. But I believe it is worth discussing this point perhaps round a table rather than in Committee.
Lord Cavendish of Furness: I thank Members of the Committee for taking part and for the sympathy expressed for the amendment by the noble Baroness, Lady Hollis. I understand her position. I also thank my noble friend the Minister for agreeing. That is entirely satisfactory and has enabled me not to press the matter to a vote this evening. I am very grateful for his offer to discuss the issue. I hope he will include the comments made by my noble friend Lord Peel about
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the fate of endowments. That is an area where I find it difficult to establish the principle. Meanwhile, I hope that my noble friend will accept my thanks. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 [Qualifying Tenants]:
Lord Coleraine Lord Coleraine moved Amendment No. 27:
Page 5, line 40, leave out ("at a low rent").
The noble Lord said: This amendment is grouped with Amendments Nos. 41, 42 and 43. The noble Lord, Lord Strabolgi, my noble friend Lady Gardner of Parkes and the noble Lord, Lord Ezra, have added their names to the amendment.
The amendment provides that to be a qualifying tenant it is not necessary to have a lease at a low rent. The low rent test provides that unless you are a tenant at a low rent, you cannot be eligible to join in the collective enfranchisement. That means in addition that in marginal cases where one less qualifying tenant many mean that two-thirds of the flats in the building are not held by qualifying tenants, not only does the tenant lose out but collective enfranchisements may not be possible for any of the qualifying tenants in the building.
The idea behind the low rent test is that collective enfranchisement should only be permitted to flat owners who have a substantial value or investment in their leases. The right should be refused to those who are merely renters paying a rent. One way of separating the two categories is by applying a low rent test. But that only works if the term "low rent" is defined in such a way that it includes something approaching all rents other than full renting rents, or rack rents. The Oxford Companion to Law defines a rack rent as the highest rent obtainable; the full annual rent of the property. It is the rent that you pay when you have not paid a premium. It is when rents are less than rack rents that they have substantial monetary value and satisfy the criteria which the Government have identified as necessary as qualification for enfranchisment.
Unfortunately, the low rent test in the Bill operates at levels so far below rack rent levels that it catches a great number of leases which change hands for considerable premiums and which should qualify for enfranchisement by those criteria. In Standing Committee in another place no Back-bencher spoke in favour of retaining the test. But it was never shown, and it was barely suggested, that flats let on long leases of 21 years or more are let at rack-rents.
The low rent test was debated on Report in another place. But the debate was on an amendment to remove the low rent test from houses under the Leasehold Reform Act 1967, and it was on that basis that Sir George Young put the case for retaining the test. I felt that it was a pretty thin case put forward by my honourable friend Sir George Young, the Minister for Housing, when answering the case for repealing the low rent test for houses. He said little about flats. He referred to the fact that the ground rents under house leases had been manipulated to prevent enfranchisement, and went on to say,
"In the case of flats, it is far less likely that ground rents have been manipulated in any way. Enfranchisement for flats

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is a recent development—first announced to the House in July 1991. As I said earlier, different statutory limits apply for leases granted since April 1990, these being £1,000 in Greater London and £250 elsewhere".—[Official Report, Commons, 9/2/93; col. 921.]
The arguments which Sir George deployed in relation to low rent tests for houses do not apply to flats. Flat enfranchisement is a collective operation and whatever illogical rule may be invoked to sustain the low rent test in respect of houses does not apply to flats. To exclude one flat owner may deprive the rest of the right to collective enfranchisement. That is something the Government do not wish. Furthermore, in general the claim of flat-owners to enfranchise, locked together as they are within the long leasehold system with little control over the repairs and management of their properties, is even more substantial than the claim of house lessees.
There is no history of a low rent test for flats. Indeed, I need not remind the Committee that in July 1991, when the department's first proposals for enfranchisement were published, no low rent test was to be applied to flats. The Lord Chancellor's departmental consultation paper on commonhold had seen no reason why one should be applied. It was not until March 1992 that the low rent test was first proposed. It may be that I have not been as observant as I should have been, but I have not heard or read why there was a change. The Committee may wish to be reminded why the Government changed their mind, and I ask my noble friend, when he replies, to tell the Committee who or what it was that persuaded the Government to change their mind. Perhaps he could also tell us why the consultation process on the Bill has been half-hearted and inadequate. I would like to think that it might be continued a little this evening so that when we eventually come to a decision on this question, we may do so with a fuller understanding of the meagreness of the arguments for including this unfair and illogical test in Part I of the Bill.
Before I formally move the amendment I shall say a few words about two of the grouped amendments. I anticipate that at this time of night, noble Lords who intend to move other amendments grouped with Amendment No. 27, may not feel that they should speak to them. However, Amendment No. 41 in the name of my noble friends Lord Carnock and Lord Bridgeman, and the noble Lord, Lord Annan, attracts me. My noble friend Lord Carnock seems to think that a lease rent of £6 a week for a flat is a low rent. I agree with him. I hope that the Minister does also, or perhaps he can tell me where I can lease a flat for twice that sum without having to pay a substantial premium.
I shall be interested to hear also what my noble friend Lady Gardner of Parkes has to say of her
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amendment, but possibly not tonight. She will propose that from and after 1st April 1990 the low rent test for flats in Greater London shall operate at rents above £2,000 a year instead of £1,000 a year. Forty pounds a week is more than £6 a week, but it still does not seem a high rent to me.
I have one final thought for my noble friend the Minister, which follows on from the amendment in the name of my noble friend Lady Gardner. There will be no difficulty in future in selling long leases at rents of £1,000 a year in Greater London or £250 a year elsewhere for substantial premiums. Why, if the Government believe that the long leasehold system is outdated, are they so unashamedly legislating for its continuance? Will my noble friend the Minister please tell the Committee why the opportunity has not been seized to abolish the low rent test altogether if the lease is granted after the date of Royal Assent? I beg to move.
Baroness Gardner of Parkes: It is very late and I hope that my noble friend Lord Coleraine will agree not to proceed with the amendment tonight. The amendment is so important that it would be desirable for him to bring it back as the first amendment on another day. It could be brought back as a new amendment on Monday afternoon. By then we will all have had the benefit of reading what he said, which will be on record in Hansard. I put that suggestion to my noble friend.
Lord Williams of Elvel: Perhaps I may take up the suggestion of the noble Baroness. Instead of the noble Lord, Lord Coleraine, putting down the same amendment I suspect that we might put down an amendment of a rather similar nature for Monday, which we could debate then if the noble Lord is good enough to withdraw his amendment.
Lord Carnock: As my amendment is grouped with Amendment No. 27 I should like to say that I think that my noble friend's amendment is better than mine and that I support it. But if it is not accepted by the Government I propose to speak to my own amendments in their proper place in the Marshalled List.
Lord Coleraine: Having heard what my noble friend Lady Gardner of Parkes said, I wonder whether it would be in order for me to ask leave to withdraw the amendment now. I do so.
Amendment, by leave, withdrawn.
Lord Strathclyde: I beg to move that the House do now resume.
House resumed.
House adjourned at eighteen minutes before midnight.