Lords Sitting of 11 May 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 Salisbury.

Rail Services: Wales
Lord Geraint Lord Geraint asked Her Majesty's Government:
What are their plans to ensure the future of regional railway services in Wales.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, our policy is for all BR's existing services to be franchised to private sector operators. We recognise the value of rail services in rural areas and have given a commitment to provide subsidy to support the provision of socially necessary services where necessary.
Lord Geraint: My Lords, I am grateful to the Minister for that Answer but I am sure that he is aware that there is still a great deal of anxiety in Wales about the future of our railways. Is it possible for the Minister to persuade his honourable friend the Minister responsible for public transport to visit Aberystwth in West Wales, to meet representatives of the local authorities to discuss the Government's strategy for the railways in Wales?
The Earl of Caithness: My Lords, I cannot give that commitment on behalf of my honourable friend in another place, but what I can say to the noble Lord is that I know that my honourable friend is going to Wales later this year to look at the railways. I am sure that he will take the opportunity, if possible, to go to Aberystwth.
Baroness White: My Lords, is the noble Earl aware of the most ambitious development programme, Wales 2010, published today by the Institute of Welsh Affairs? Has his attention been drawn to the study just completed by the Council for National Parks on the benefits to our Welsh national parks and coastline of rail rather than road transport? If he is not fully briefed on such matters, how can he reply adequately to the noble Lord, Lord Geraint?
The Earl of Caithness: Because I am adequately briefed, my Lords.
Viscount Tonypandy: My Lords, will the noble Earl tell the Minister that if he goes to Aberystwth, he should go by road because it is much quicker?
The Earl of Caithness: My Lords, my honourable friend might miss seeing some of the joys of the Welsh countryside if he did not go by train.
Lord Aberdare: My Lords, when my noble friend's honourable friend visits Wales, will he go to the heart of Wales line, which is extremely important as a link between Swansea, mid-Wales and North Wales? It is an important rail link to keep going. Is he also aware
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that many years ago the railway station at Aberdare was closed? Is he further aware that it has now been reopened and is an important link from the Cynon valley to Cardiff, with great implications for employment in the Cynon valley area? There is a lesson here that it is better to keep the lines open rather than to close them.
The Earl of Caithness: My Lords, I can assure my noble friend that my honourable friend the Minister with responsibility for railways will be visiting the heart of Wales line. My noble friend may rest assured on that. With regard to keeping stations open, of course similar procedures will apply under the franchising arrangements that we propose as exist under the present statutory duty.
Lord Morris of Castle Morris: My Lords, is the noble Earl aware that on the heart of Wales line which has just been mentioned, the rolling stock is to be cut by half in October, the timetable no longer allows connections to be made with main line trains from Swansea and that no one living north of Llandovery can go to Cardiff for the day? The new limited maintenance rules mean that if something goes wrong it can only be investigated during office hours. So if something breaks down on a Friday, it cannot even be investigated until the following Monday. In the light of those facts, would the Minister care to comment on the widely held belief in Wales that British Rail is intent on closing the heart of Wales line?
The Earl of Caithness: My Lords, in view of what the noble Lord said, I am sure that he will support us on our proposals for franchising the railways.
Lord Marlesford: My Lords, is my noble friend aware that a number of well informed people outside the railways believe in the context of the need for better regional rail services in England, as much as in Wales, that the proposal to split the responsibility for the track from the responsibility for running trains is a poisoned pill against privatisation, devised by British Rail management, and that by swallowing it the Government will have done their own health no good? Legislation on that proposal will be as wasteful of parliamentary time as it will be commercially unsuccessful.
The Earl of Caithness: My Lords, my noble friend is extremely adept at turning a Question about the future of regional railway services in Wales into a question on rail track. However, I look forward to discussing that with him on another occasion.
Lord Taylor of Gryfe: My Lords, while the Question refers to regional services in Wales, is the Minister aware that similar anxiety was expressed on regional services in general, including Scotland? The assurance which he has given is that the regional services, while they will be uneconomic and unattractive to a private investor, will be made attractive by Government subsidy so that they will be maintained. Is that a general assurance affecting regional railways?
The Earl of Caithness: My Lords, I am sure that the noble Lord listened very carefully to my Answer in which I spoke in general about the question of support for rural areas.
Baroness Strange: My Lords, is my noble friend aware that my great grandfather built the Wrexham, Connah's Quay and Mold railway in North Wales? Is he aware of my hope that the railways in North Wales will also be kept open?
The Earl of Caithness: My Lords, my noble friend's ancestry has done her proud and done Wales proud too.
Lord Clinton-Davis: My Lords, is the Minister aware that the concerns that have been expressed about this matter in the House today reflect the deep disquiet that was expressed by the electors in the county council elections only the other day, which led to that debacle for the Conservative Party? Does he agree that the cuts currently taking place, which are designed to make the railways more profitable before privatisation, and the lessons learned from bus privatisation, augur badly for regional and rural services and the railways?
The Earl of Caithness: My Lords, what cuts is the noble Lord talking about?
Lord Clinton-Davis: My Lords, if the Minister is not aware of the cuts that are already taking place on the railways, should he not learn his brief better?
The Earl of Caithness: My Lords, clearly the noble Lord cannot substantiate his question.
Lord Cochrane of Cults: My Lords, can my noble friend say what consultations have taken place between the Welsh Office and the regional railways, three divisions of which cover Wales, as to their future and present policy and development?
The Earl of Caithness: My Lords, the ultimate responsibility for the railways in Great Britain rests with the Secretary of State for Transport. However, I can assure my noble friend that the Welsh Office is consulted. It provides credit approvals and supplementary credits under projects of regional and national importance.
Lord Stoddart of Swindon: My Lords, in the light of the short, abrupt and entirely unsatisfactory answer given to my noble friend Lord Morris of Castle Morris, in which the Minister hoped he would support the Government's franchising proposals, will the Minister give an absolute guarantee that all the problems outlined in my noble friend's question will be solved by franchising and how soon that will happen?
The Earl of Caithness: My Lords, clearly the noble Lord and I will have an interesting discussion on this matter when the Railways Bill comes before the House. It is quite clear that British Rail needs the private sector to bring benefits to the traveller.

UN Relief Operations: Support
2.45 p.m.
Lord Judd Lord Judd asked Her Majesty's Government:
What is their assessment of the degree to which the United Nations is equipped to meet the growing demands for humanitarian relief in different regions of the world.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, the establishment of the Department of Humanitarian Affairs headed by Jan Eliasson means that the United Nations is better equipped to provide relief than in the past. But demands for humanitarian relief grow, particularly in areas of civil strife, and it is vital that member states provide the resources necessary to enable the United Nations to meet those demands.
Lord Judd: My Lords, does the Minister agree that recent events such as those in Bosnia, Cambodia, the Horn, Mozambique and Angola have well demonstrated that, despite the dedicated service of military and civilians, the UN is overstretched, underresourced and repeatedly asked too late by member governments to intervene on an improvised basis? What lead will the Government now give to seek to strengthen the Department of Humanitarian Affairs, improve the task-oriented work of the specialised agencies, ensure proper resources both of cash and kind and, above all, enhance the role of the Security Council in early warning, conflict resolution and pre-emptive diplomacy?
Lord Henley: My Lords, we are very anxious that full support should be given to the United Nations and the Department of Humanitarian Affairs. Certainly, we shall do our bit, as we already have done, in helping the new department. I can confirm that it was under UK guidance, with our EC partners, that the Department of Humanitarian Affairs was established last April. We were the first to contribute to that department. We are certainly keen to see that Mr. Eliasson is given all the tangible support that he needs. We have made clear our willingness to help him in every possible way, even seconding a senior British diplomat to help the DHA with advice. We will continue to give support and offer appropriate advice.
Lord Bonham-Carter: My Lords, will the noble Lord be so good as to tell the House how many members of the United Nations have not yet paid their dues and whether the United States of America has yet paid its dues, since that is very relevant to the Answer to the Question?
Lord Henley: My Lords, I do not know how many have not yet paid their full dues in terms of what they pay directly to the United Nations. The DHA is funded separately from donations. I repeat that we were the first country to make any payments to it.
Lord Bonham-Carter: My Lords, will the Minister be so good as to let me know the situation by letter?
Lord Henley: My Lords, I shall certainly write to the noble Lord.
Lord Archer of Weston-super-Mare: My Lords, taking up a point made by the noble Lord, Lord Judd, can the Minister confirm that we are among those countries that have responded yet again to the appeal for help in Kurdistan? If we talk about the role played by this country, can he give any idea of the role that other countries have played compared with Britain?
Lord Henley: My Lords, I do not want to go into the detail of all the varied programmes of humanitarian aid that the United Nations and the DHA support. Sadly, last year bilaterally we spent £163 million. As regards Northern Iraq, since 1989 we have donated in the order of £56 million. With regard to the new funds made available to the United Nations plan of action for Iraq, so far only 1.5 million dollars have come forward, but of that sum 1.4 million dollars were contributed by this country.
Lord Ennals: My Lords, I am sure that the Minister will agree that there is enormous respect in this country for the way in which Her Majesty's forces serving in Bosnia have fulfilled their humanitarian task and will fulfil the future task in regard to protected areas. Have the Government yet given an answer to the Secretary General's proposals that the UK and other countries should earmark specific troops to be available on call when there is an urgent need, as now in Bosnia?
Lord Henley: My Lords, I cannot answer the noble Lord's specific question. We will certainly make troops available where we see a need so long as resources are available. I join the noble Lord in paying tribute to our own forces for everything that they have done and to the non-government organisations and the United Nations for all that they have done in the valuable work of saving hundreds of thousands of lives in the most appalling circumstances.
Lord Molloy: My Lords, does not the Minister agree that the Bosnian situation is only one example and that the United Nations must now concentrate on preventing or limiting those situations that result in humanitarian suffering if action is not taken swiftly enough?
Lord Henley: My Lords, we must certainly act as quickly as we can. In response to the question from the noble Lord on the Front Bench I said that we must respond to any reports of emergencies as they arise. Obviously, by the nature of the term "emergency", it is difficult to be able to predict exactly when an emergency is likely to arise. We should like to be in a position to respond as and when we can.
Lord Jenkins of Putney: My Lords, the noble Lord said that forces will be made available so long as they are available. That was not quite the point being made by my noble friend. He was asking about the reply to the Secretary General, who was requesting that forces should be earmarked and therefore made available by
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a large number of countries. I do not believe the Minister replied to that point. Will he do so, or perhaps write?
Lord Henley: My Lords, if the noble Lord listened to me, I did respond and said that I did not know the answer. However, I will write to the noble Lord. I said that we could only respond according to the availability of resources. There is always a maximum beyond which one cannot go. Her Majesty's Government will do all they can, as far as is possible.
Lord Rea: My Lords, will the Government follow the example of the United States and France and establish a moratorium on the transfer of antipersonnel land mines which are causing such havoc in the wake of disasters from conflicts in many parts of the world? As a first step, will the Government agree to ratify the 1980 United Nations Convention on Inhumane Weapons and land mines protocol?
Lord Henley: My Lords, with respect, that goes very wide of the Question on the Order Paper.
Lord Judd: My Lords, does the Minister not agree that this exchange has demonstrated that the real issue is that, while dedicated service is being undertaken in response to needs which have overtaken the international community, there is a desperate need to develop a strategic role of the UN in pre-empting crises of this kind? As members of the Security Council, what are we to do about leading in that respect?
Lord Henley: My Lords, we were the ones, together with our European partners, who helped put together the Department of Humanitarian Affairs. We believe it can do a valuable job. There is much more it can do and more reforms that can take place. However, we believe it plays a vital role in co-ordinating all activities in relation to responses to disasters of the kind that we are discussing.

DSS Benefits: The Self-Employed
2.53 p.m.
Lord Campbell Lord Campbell of Croy asked Her Majesty's Government:
Whether self-employed people and owners of small businesses are fully aware of the availability of social security benefits in times of adversity and, if not, whether they will take the necessary steps to make them aware.
Lord Henley: My Lords, a variety of social security benefits are available to the self-employed. The Government are committed to encouraging small businesses, and publicise benefits widely. We are investigating ways in which information for the self-employed might be better targeted.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for his reply. However, do the Government agree with the National Audit Office that money would have been saved by the Exchequer overall if self-employed people had applied for the

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help which could have saved their businesses from failure? Is the benefits agency now taking action on that?
Lord Henley: My Lords, I should perhaps be careful about commenting on the findings of the NAO report before any future PAC hearing. It largely concentrated on income support. There is a danger of exaggerating the kind of help that income support can provide for a failing business or the self-employed, particularly because of the entitlement conditions relating to income support and its availability. I should stress that the main in-work benefit is family credit. We have seen a dramatic growth in family credit among the self-employed and would like to see a great deal more. We shall therefore be advertising to that effect.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that the most effective way of saving private businesses from failure is to ensure that the interest rate is as low as possible and that we have less bureaucratic interference in the way that they run their businesses?
Lord Henley: My Lords, again, that is wide of the Question on the Order Paper. However, I note what my noble friend says.
Baroness Hollis of Heigham: My Lords, the Minister will know that 1,300 small businesses fail every week. But is he aware that 75 per cent. of them did not know that under certain circumstances they were entitled to claim income support? Also, 60 per cent. of those failed businesses say that, had they known and claimed income support, they would have kept their businesses alive, even part time.
When the Minister focuses on fraud in his current campaign —on those who claim benefit to which they are not entitled —will he remember that there is an infinitely greater problem of people not claiming the benefits to which they are entitled, as the report from the National Audit Office on the self-employed clearly shows?
Lord Henley: My Lords, again I must repeat the Answer I gave to my noble friend Lord Campbell of Croy. There is a danger of exaggerating the extent to which income support can help the self-employed. I am not sure that a high number of self-employed people would be prepared to comply with the conditions for receipt of income support to help them through difficult stages in their business. We believe that family credit can help a great deal and are doing as much as we can to help people to take it up.
We have seen the case load grow from 50 per cent. to 64 per cent. In terms of expenditure that is a growth up to 71 per cent. In other words, those not claiming tend to be those whose claims are at the margin. We would like to see more people claiming if they have some entitlement. With regard to the level of take-up of income support, my understanding is that 90 per cent. of money available to people on income support is actually taken up.

St. Bartholomew's Hospital
2.57 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
What are their current plans for St. Bartholomew's Hospital.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, we outlined the three options for the future of St. Bartholomew's Hospital in the policy document, Making London Better. Those options are either to close the Smithfield site; to rationalise services between Smithfield, the Royal London and the London Chest hospitals; or to retain Bart's as a much smaller specialist hospital.
Lord Molloy: My Lords, I thank the Minister for that reply, but does she not agree that Bart's has proved itself as the most famous casualty department in the country? During the recent bomb incident the staff at St. Bartholomew's were magnificent. Is it right that they should be apprehensive in regard to their future?
In addition, St. Bartholemew's has the most up-to-date operating complex in Europe which could suffer a great deal if it is not given government support. I believe that St. Bartholomew's Hospital has shown beyond peradventure that it is a magnificent hospital with magnificent staff. It would be a tragedy if in any way it was damaged or done away with.
Baroness Cumberlege: My Lords, everybody in your Lordships' House would agree that the National Health Service is superb in a crisis. It always rises to the challenge and the Government would agree that in this situation it was magnificent. I refer not only to the staff who were at St. Bartholomew's Hospital, but also to those at the Royal London Hospital who also treated patients.
Lord Braine of Wheatley: My Lords, in view of the fact that advice was given before the IRA bomb disaster by the City of London police that there should be no closing down of the casualty services provided by that famous hospital, can my noble friend say what regard will now be given to that advice? Does not my noble friend agree that if the proposal to remove Bart's Hospital had taken effect before the disaster, there would be great sadness and in many cases great anger?
Baroness Cumberlege: My Lords, no accident and emergency department will close in London unless the Government are satisfied, after full consultation, that alternative care is available.
Lord Ennals: My Lords, when the Government come to take their decision about St. Bartholomew's Hospital, will they bear in mind the very grave concern that exists about waiting lists, which are longer than they have ever been in our history, and, secondly, the fact that waiting times for seeing a consultant are also going up? Will these issues be taken into consideration when a final decision is taken about St. Bart's?
Baroness Cumberlege: My Lords, I am sure it is one of the factors that those who will be considering this decision will want to take into account. I remind the noble Lord that never before have we had shorter waiting lists. We have more people on the waiting list, but the important point is that they are waiting for a shorter period of time. More people are being treated. Half of all admissions to hospital are immediate. Of those admissions from waiting lists, half are admitted within five weeks; nearly three-quarters within three months; and 98 per cent. within a year. That is a tremendous achievement.
Baroness Masham of Ilton: My Lords, what is the present position on the treatment of AIDS patients? Is it not a fact that because of the insecurity concerning what is going to happen to Bart's the ward for AIDS patients is now in a limbo situation?
Baroness Cumberlege: My Lords, only three weeks ago I visited this unit. I was, as always, very impressed by the commitment of the staff and the work that is going on there. The Government recognise the important work but they have to await the results of the specialty reviews which the London Implementation Group is undertaking. However, it is clear that the local and specialised services for HIV and AIDS will be a high priority for health authority purchasers in East London.
Lord Strabolgi: My Lords, when reviewing the whole question of the London hospitals will the Government take into account traffic problems? These were brushed aside by the members of the Tomlinson Committee, hardly any of whom were London based. They had no idea of how slow it is to move about in London traffic. They seemed to think that one could get across London in 10 minutes.
Baroness Cumberlege: My Lords, accessibility is one of the priority areas when one considers the future of the National Health Service.
Lord Auckland: My Lords, is my noble friend aware that I paid a very confidential visit to Bart's Hospital recently and that I have a younger daughter who trained at the Royal London Hospital? Can she give an assurance that there will be a very effective casualty department, particularly during daylight hours, either run by Bart's or the Royal London? Will she also bear in mind that the distance between the two hospitals is fairly considerable?
Baroness Cumberlege: My Lords, at this moment consultation is being undertaken by the North-East Thames Regional Health Authority on the accident and emergency services at Bart's. I am sure that the authority will take into account all that has been said this afternoon in your Lordships' Chamber as it will other factors.
Lord Bruce of Donington: My Lords, will the Minister give an undertaking that the findings and plans of the London Implementation Group will be made public before they are acted upon?
Baroness Cumberlege: My Lords, these proposals are out for consultation.
Baroness Jay of Paddington: My Lords, is the Minister aware that those people concerned about the fate of St. Bartholomew's Hospital in the context of the general level of health services in London are alarmed by reports that the £170 million which was promised in the statement Making London Better to upgrade primary services as a compensation possibly for the loss of hospital beds seems to have disappeared? There are reports that this money is not to be new money but is to be taken from the already hard-pressed budgets of London health authorities.
Baroness Cumberlege: My Lords, the National Health Service received £1 billion growth this current year. Clearly, that is new money. It was very false of those who made the allegation that is was not. There is greater investment going into primary care in London, and we know that that issue has long needed to be addressed.
Baroness Jay of Paddington: My Lords, may I press the Minister on the specific point about the new money, so described in the 14th February statement, for London primary care?
Baroness Cumberlege: My Lords, it is part of the £1 billion that was allocated to the National Health Service as growth for the current year.
Lord Molloy: My Lords, does the noble Baroness not agree that St. Bartholomew's Hospital is part of our great history? It is respected throughout Europe and indeed throughout the Commonwealth. Created in the days of King Henry VIII, its name has been famous ever since and therefore it deserves the support of all parties in our Parliament.
Baroness Cumberlege: My Lords, we all share the admiration for the National Health Service, particularly for the London hospitals.

Business
3.6 p.m.
Lord Hesketh: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lady Blatch will, with the leave of the House, repeat a Statement that is to be made in another place on School Tests.
It may be for the convenience of the House to know that the Report stage of the Housing and Urban Development Bill will be adjourned at about 7.30 p.m. for around one hour and that during this adjournment the Committee stage of the Disabled Persons (Services) (No. 2) Bill will be taken.

Pension Schemes Bill
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I beg to introduce a Bill to consolidate certain enactments relating to pension schemes with amendments to give effect to recommendations of the Law Commission and the Scottish Law Commission. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Lord Chancellor.)

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On Question, Bill read a first time, and to be printed.

Pension Schemes (Northern Ireland) Bill
The Lord Chancellor: My Lords, I beg to introduce a Bill to consolidate for Northern Ireland certain enactments relating to pension schemes, with corrections and minor improvements under the Consolidation of Enactments (Procedure) Act 1949. I beg to moved that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Lord Chancellor.)
On Question, Bill read a first time, and to be printed.

Statute Law (Repeals) Bill [H.L.]
The Lord Chancellor: My Lords, I beg to move that this Bill be now read a second time. As your Lordships will be aware, one of the functions of the Law Commission and of the Scottish Law Commission is to promote:
"the repeal of obsolete and unnecessary enactments, the reduction of the number of separate enactments and generally the simplification and modernisation of the law".
The Law Commissions have, over the past 24 years, presented to Parliament 14 reports on statute law revision with draft Bills attached. The 13 previous reports have resulted in the repeal of over 2,600 enactments, including 1,414 whole Acts. The present Bill proposes the repeal of 159 whole Acts or orders and the removal of redundant provisions from 462 others. The Bill also secures the reinstatement of a statute dating back to the time of George III which was inadvertently repealed by statute law repeals legislation in 1978.
The repeals set out in Schedule I to the Bill are in 16 parts. They cover such areas as the administration of justice, agriculture, allotments, company law, ecclesiastical law, family law, local government, property law and transport. The oldest statute to be repealed draws vintage from the reign of Henry VII and is the Ordinances of Corporations Act 1503. Other candidates for repeal include provisions in the Fraudulent Mediums Act 1951 and the entirety of the Piracy Act 1698, which was drafted, in part at least, as a deterrent to those captains and crew who were tempted to turn pirate—the most famous example being Captain Kidd who turned pirate with a well-armed vessel put under his command by the Government with instructions to destroy pirates.
Bills such as these play an invaluable role in the work of modernising and improving the statute book. I am sure that your Lordships would wish to join me in thanking the two Law Commissions for the thorough and painstaking way in which they have set about their task. In this context, I would also seek to record appreciation for the efforts of the principal draftsman of the Bill, Frank Streeten, who will shortly be retiring from his work at the Law Commission.
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If your Lordships are content to give the Bill a Second Reading, it will be referred to the Joint Committee on Consolidation Bills in the usual way. I beg to move.
Moved, That the Bill be now read a second time. —(The Lord Chancellor.)
On Question, Bill read a second time, and referred to the Joint Committee on Consolidation Bills.

Protection of Animals (Scotland) Bill
Baroness Carnegy of Lour: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Baroness Carnegy of Lour.)
On Question, Motion agreed to.

Housing and Urban Development Bill
3.10 p.m.
Lord Williams of Elvel: My Lords, before we consider this Bill on Report, perhaps I may draw your Lordships' attention to the suggested groupings which I received at 11.30 this morning, apart from the government groupings which the Minister was kind enough to send me earlier on. I am not making any particular complaint, but inevitably, because many noble Lords have tabled amendments, as the groupings stand they appear defective.
Perhaps I may give one example. Amendments No. 10 and 175, in the name of the noble Earl, Lord Kinnoull, deal with quite different matters. I would like to separate those two amendments. I gave notice to the Whips' Office this morning that I would like to separate them. It is not for me to do so because I am not involved with them. Nevertheless, I hope that noble Lords will pay attention to the note at the top of the Marshalled List which states:
"Although every effort is made to secure agreement to these groupings, they remain informal and not binding".
Since we are on Report and we are only allowed, as it were, one shot, apart from the mover of the amendment and the noble Lord who winds up, I believe that is something to which we should pay attention.
Lord Boardman: My Lords, as most of the amendments in the first group are in my name and those of other noble Lords, I understand the point made by the noble Lord, Lord Williams. I believe that Amendments Nos. 1 and 5 are the original amendments and the subsequent starred amendments were put down yesterday evening. I apologise to the noble Lord that there was not a longer opportunity for him to consider them. If it is of assistance, I would not object to those amendments which are starred—namely, Amendment No. 14 onwards on the Marshalled List—being separated from Amendments Nos. 1 and 5 which come first.
Report received.

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Clause 1 [The right to collective enfranchisement]:
Lord Boardman Lord Boardman moved Amendment No. 1:
Page 2, line 7, leave out ("or") and insert ("who occupy as their principal residence").
The noble Lord said: My Lords, in moving this amendment, I am speaking also to Amendment No. 5 and not to the other amendments in the group on the Marshalled List. Amendments Nos. 1 and 5 are of very considerable importance which spreads far beyond the context of the Bill itself. The Bill challenges two important principles. The first is the role of the manifesto commitments in subsequent legislation. Secondly, and perhaps even more important, it raises a challenge to the sanctity of contract.
At a previous stage of this Bill comment was made on the interests of various Members. I have no personal interest in the matters covered by this Bill. Perhaps I may also make it clear that, although the amendments to which I have spoken and will be speaking have a major effect on the large London estates, my amendments are certainly not limited or confined to their interests. There are many thousands of blocks of flats outside London which will be severely affected by the provisions in this Bill. I referred to some of those in my Second Reading speech and I shall not do so again today.
Among many other things, the matter which offends me is that under the Bill non-residential leaseholders are given rights to enfranchise. I and other noble Lords who support me on these amendments find that offensive. Our Amendments Nos. 1 and 5 (Amendment No. 5 primarily) seek to remove the right for non-leaseholders to enfranchise. Perhaps I may deal with the principles which are at issue.
The manifesto commitment to which I referred was perfectly straightforward. In a whole section relating to home ownership and the desirability of increasing it —which I am sure noble Lords will support—the manifesto referred to introducing commonhold legislation. We know that that has been delayed. It was to give residential leaseholders living in blocks of flats the right to acquire the freehold of their block at the market rate. The manifesto went on to say that leaseholders who live in a block but who do not qualify, would have the right to an extended lease. That was the commitment, but the Bill does not carry out that manifesto promise. Non-residents are given the right to enfranchise.
The second principle to which I referred is that of the sanctity of contract. That again is something which I believe all noble Lords would wish to uphold. Contracts between private individuals should not be tampered with or changed by government unless there is some overriding public interest which requires them so to do. That was recognised by the then Labour Government in 1967 in the Act of that year. It was declared that the contract between leaseholders and freeholders applied only where there were resident leaseholders. It was held that that residence gave them sufficient public interest to justify the Bill becoming an Act. That was tested in the European Court of Human
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Rights. I believe that it was fairly clear from the judgment that it was that resident qualification which made the Act just about acceptable to that court.
On the same point, I very much welcomed what my noble and learned friend the Lord Chancellor stated in a recent reply on 31st March. He was replying to a Parliamentary Question arising from the Law Commission's recommendation for reforming the law on commercial property leases, landlord and tenant law, privity of contract and estate. My noble and learned friend the Lord Chancellor said,
"The Government have decided to implement these recommendations for future leases, but not for existing leases".—[Official Report, 31/3/93; WA 54.]
As one would expect of him, he was strictly observing the sanctity of contract which would not be broached as regards past leases and how it would affect them. He did what I believe we would all expect him to do in such circumstances.
The Bill itself offends that principle. It allows one party to a leasehold contract (the leaseholder) to force the other party (the freeholder) to sell the property. The compensation may be most unfair, but that is irrelevant. I am not dealing with the question of compensation. By Act of Parliament a contract is going to be authorised to be broken without any public interest. I recognise that the Government have a problem in enfranchising the leaseholders of blocks of flats. That situation is somewhat different from that affecting houses. It is a pity that the Government did not work it out before they entered into a commitment as regards this matter. In their manifesto they said that they would endeavour to enfranchise blocks of flats where residents were living for the benefit of those resident leaseholders.
However, they then found that, unless they widened the provisions to allow non-residents to enfranchise, there was a danger that they would be unable to get enough qualified tenants to make effective enfranchisement. I have tried to meet those difficulties. First, there is in Clause 36 of the Bill a provision that any resident leaseholder with a long lease and low rent, and who is unable to acquire the freehold to enfranchise because there is not enough of them, can nevertheless acquire the long lease (I believe that it is 99 years recurring) so that in many cases he will be in a better position than if he were the freeholder. Certainly he will have the right to get a long lease notwithstanding that the exclusion of non-residents means that there is not enough of them to enfranchise the block.
The other point made was that, unless they could enfranchise and get the freehold, there was a very real danger of not being able to unfranchise and not, therefore, being able to obtain the management of the premises, so that they would be stuck with unfortunate or bad managers. I have tried to meet that argument by tabling Amendment No. 160 with which we shall deal later. It is a proposed new clause concerned with how the majority of the qualified people who wish to have their own managers can do so. I have tried to meet my noble friend's understandable objection about the problems of management.
Throughout that part of the Bill both my noble friends and I have tried, by way of tabling various amendments, to meet the difficulties that would arise by carrying out the essential terms which we understood were to be implemented —that is, in respect of resident leaseholders only.
It is worth saying that leaseholders are getting more than they ever expected from the Bill. Clearly no leaseholder who bought his or her flat ever thought that a kindly government a year or two afterwards would come along and say, "Although you have only x number of years to run, we are going to give you the right to extend or to buy the freehold". They did not expect that to happen. However, that point is by the way.
It is also worth saying that non-resident leaseholders should not be entitled to franchise. That would not be the sole exception. The Bill provides that where commercial premises comprise more than 10 per cent. of a block of flats, that excludes the whole of the block, and all the residents and non-residents living above it, from enfranchisement. Moreover, Crown lands have special provisions and are exempt from the Bill, but I believe that certain undertakings have been given. National Trust land is also exempt from the Bill. Therefore, there are, quite rightly, a number of exceptions.
I turn for a moment to the attitude of noble Lords opposite both on the Labour Benches and on the Liberal Democrat Benches. They will recall that it was their votes in Committee when the point was being discussed that supported what I would call the inequity under the Bill. Their votes made it possible for companies, including foreign companies, and foreign individuals who are never resident in blocks of flats to acquire, if the transaction goes through, those flats and to make very substantial profit by so doing. The amendments which I, my noble friends and other noble Lords have tabled sought to make that impossible.
It should be noted that 50 per cent. of all property transactions in the West End over the past 10 years have been on the part of foreign companies and foreign individuals. I make no point about that; I am not really concerned whether it is a foreigner or a UK citizen who enfranchises. However, we should bear in mind that the people who are going to be the main beneficiaries of the Bill as it now stands will come into one or another of those categories. Therefore, I wait with interest to hear what noble Lords and noble Baronesses on the Labour Benches and on the Liberal Benches have to say on the amendment now that they have had time to reflect upon it.
As the noble Lord, Lord Williams of Elvel, said, a further amendment was tabled last night in my name and that of the noble Lord, Lord Palmer, in which we have put forward something which is not nearly as satisfactory as Amendments Nos. 1 to 5 that we are now debating. In what I hope is the unlikely event of my amendments not being accepted by the House, I trust that we shall have the opportunity to debate and consider the alternative amendments which appear on the Marshalled List. That would not be as
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satisfactory, but it would certainly go part of the way towards meeting the problems to which I referred. I am grateful for the understanding that I have received in my efforts to try to bring that about.
The amendment that I have now moved is one that I hope will be carried and one which, if carried, will eliminate the necessity for those less adequate provisions to be considered by the House. Having had time to reflect on the amendment since it was last before us, I hope that the House will agree to accept it. Its purpose is to exclude non-residents from having the right to enfranchise, the right to acquire the freehold of a block of flats where they own a lease but are not residents, never have been and, to all intents and purposes and so far as we know, never will be. I beg to move.
Lord Harris of High Cross: My Lords, from the Cross Benches I should like to support the amendment moved by the noble Lord, Lord Boardman. I particularly regret that I was prevented from taking part in the Second Reading debate in order to stake out the ground. Dwelling on the chaos, the fraud and the corruption that I have witnessed on many recent visits to Russia, I have concluded that a major obstacle to progress is that private property rights there lack the secure legal guarantees that we in the West have taken too easily for granted. Accordingly, I regard this kind of measure, irrespective of motive, as an assault on a principal foundation of civilised values.
I have to declare an interest as I am a leaseholder both as regards my main residence and my small seaside flat. But, unlike some of the disgruntled Tories, I have been grateful for the choice offered by the leasehold system and I am well content to abide by my bargains.
To understand the reason behind the amendment, which, in my view, is simply a matter of damage limitation, we must ask: what is the reason for the Conservatives' zeal for enfranchisement? I presume that it is not to pursue the Lloyd George Liberal vendetta against "landlordism"; nor, I hope, is it to pander to socialist redistribution of wealth. As the noble Viscount, Lord Dilhorne, pointed out on Second Reading, the serious purpose—although, in my view, not necessarily a sufficient justification—of all previous statutes of the kind going back to 1915 was to give security of occupation to residential tenants. It was never to enrich investors, speculators and property developers; it was to secure tenants in occupation against dispossession at the end of a lease. That was the declared and legitimate purpose.
I understand that the 1954 Landlord and Tenant Act gave the right to a tenant at the end of a long lease to extend his occupation at an economic rent fixed by agreement or under the Rent Acts. But the Bill before us not only carries that expropriation of a freeholder's property much further; it also extends the benefit beyond residential tenants. Indeed, where the occupier holds a lease from a non-resident head tenant, the Bill confers no benefit whatever upon the occupier. Instead of granting the tenant security, in many cases its effects will simply be arbitrarily to transfer value

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from the present freeholder to the head lessee. The tenant will enjoy no benefit but will simply be confronted with a newly enfranchised landlord.
As the noble Lord, Lord Boardman, said, the Bill goes further than the election pledge that the Tory Party judged necessary to scoop up some votes in Kensington and Westminster. I hope that, on this occasion, a larger majority of Peers on the Government Benches will now take courage and join the majority of Cross-Benchers who supported the amendment in Committee. On that occasion, the statistics were very revealing and rather saddening. The Government's victory by 39 votes was entirely supplied by the opposition parties. Indeed, without the Labour and Liberal Democrat support, the Government would have lost on the amendment by 40 votes.
Lord Peyton of Yeovil: My Lords, perhaps the noble Lord will forgive me if I intervene for a moment. I think that he is slightly wrong. I believe that I am right in saying that the majority of noble Lords on this side of the House, from the Conservative Party, voted for the amendment.
Lord Harris of High Cross: My Lords, that is true. I think that there were 101 Tory votes for the amendment and, I believe, 91 on the side of the Government. I am saying that the Government would not have prevailed in the Lobby without Labour and Liberal Democrat support which was given for quite different reasons from those which concern us. I conclude by saying that, after Newbury, this amendment might provide a good opportunity to redirect Her Majesty's Government a little closer to the principles that stood them in good stead during better times.
3.30 p.m.
Lord Campbell of Alloway: My Lords, I support Amendments Nos. 1 and 5. It is my intention to speak only to the fundamental principle, to which my noble friend Lord Boardman referred, which is reflected in those amendments. It is not my intention to refer to the manifesto. We have heard quite enough about that and it is of no interest to the majority of noble Lords who sit in this House—and it is to the House that I am seeking to address an argument. It is a matter for the House whether it thinks that it is right or wrong.
This is rather a complex Bill and I may have got it wrong, but I think that Amendments Nos. I and 5 are, in effect, part of a package to ensure that if some leaseholders whose property is their main residence are left without a right of enfranchisement, first, there will be a right to a lease extension under Clause 36 and, secondly, there will be a right to management under a new clause which is to be introduced, one hopes, by Amendment No. 160. If Amendments Nos. 1 and 5 were to fall on a division, or to be withdrawn for some reason, I would support the Boardman-Palmer amendments (if, with respect, I may so describe them) which run from Amendment No. 14 to Amendment No. 42 not sequentially on the Marshalled List, and to reserve my position on the other amendments, in particular as regards
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Amendment No. 160 upon which there was a large measure of consensus between the noble Baroness, Lady Hollis, the noble Earl, Lord Lytton, and myself at Committee stage.
However, I adhere wholly to the views that I expressed in Committee on Amendments Nos. 7 and 28—the Peyton-Boardman amendments—which strongly support the residence qualification proposed by Amendments Nos. 1 and 5. It is the intention to seek—as I sought, with respect, to suggest to your Lordships—a reasoned argument in support of Amendments Nos. 1 and 5 as part of the package, for it is wholly apparent from the voting list at Committee stage that it is well possible that a sufficient number of your Lordships from all sides of the House may be open to persuasion, so that Amendments Nos. 1 and 5 may be carried, albeit against the Library vote (of noble Lords who do not wish to hear the argument) and the Payroll vote (of noble Lords who, unfortunately, may not interest themselves in the argument). I am addressing the House in those circumstances.
The case in support of these amendments has already been put and need not be restated. Noble Lords may, however, wish to subject the countervailing observations of my noble friend the Minister as they were advanced at Committee stage to objective analysis—I hope and truly intend that it should be objective—and to most rigorous scrutiny. I suggest with respect to your Lordships that, on such an analysis, there are no countervailing arguments based on logic—only bare assertions unsupported by any discernible process of reasoning. In this, there is no hint of criticism of my noble friend the Minister—none at all. He has stood manfully by his brief. That is his job, and with respect to my noble friend, if I may say so he has done it very well.
At the outset it has to be said—and it will be readily accepted, I know, by noble Lords on all sides of the House —that any extension of the right to buy beyond those living in those blocks of flats as their main residence may only be justified on ground of overriding public interest—an interest which justifies derogation from the fundamental principle which has always been accepted by your Lordships and which I hope always will be, and which has always been accepted in another place, that a private contract may never be set aside by legislation having retrospective effect. The only justification for that would be overriding public interest.
In this context—as regards houses—the European Court of Human Rights endorsed this principle when holding that the right to buy by those occupying houses as their main residence fell within the public interest which warranted a derogation from the principle, but it went no further. As is apparent from the speeches of my noble friend the Minister at Committee stage, the Government have not as yet sought to justify the proposed derogation from that fundamental principle on the grounds of overriding public interest. I say with deference and respect to your Lordships that there is no other ground on which

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it would be proper for your Lordships' House to reject the amendment, to extend the right to buy and to justify an unjustifiable extension.
The justification made by my noble friend the Minister on behalf of the Government (I shall deal with it in a moment) either assumes the rectitude of the premise which begs the whole question or points to objectives and results which may easily be resolved by wholly other means. In the first category (which begs the question) it is said that if all qualifying tenants cannot participate in the right to buy, the number of blocks in which collective enfranchisement could take place would be substantially reduced. That is an argument which, so to speak, eats its own tail. It is said that individual blocks could move in and out of eligibility. So be it. It is said that the declared policy of government could not be delivered. That is not the point. The point is, ought it to be delivered? That is the question before your Lordships' House.
On the second category (questions that could properly be resolved by other means) I shall not go into the question of commonhold, which strikes one straightaway, but what do the Government say? They say—I am paraphrasing what my noble friend the Minister said in Committee—that all long leaseholders are entitled to value for money and a say in how their money is spent; and that non-residents who have sub-let have a duty to ensure that their property is well managed. That could easily be achieved by a Bill directed to such a purpose.
In conclusion, my noble friend the Minister fairly accepted (col. 954) that there was logic in the residence restriction as proposed by the amendments then before him, and as is now proposed by this amendment. I say this with respect to my noble friend the Minister: one looks in vain for any logical objection to Amendments Nos. 1 and 5. The hope must be that on the merits of fair argument, if it seems right to your Lordships—as I say, it is entirely a matter for the House—the amendment may commend itself to you.
Lord Clark of Kempston: My Lords, my noble friend Lord Boardman rightly drew attention to the commitment that the Conservative Party gave in its manifesto at the last election. That manifesto proposed that home ownership should be extended to all who wanted to own their own home; that is, flats. Houses had already been dealt with. One of the points I find difficult to understand is that the Bill goes far wider than did that manifesto at the last election.
We seem to have jettisoned Tory principles because if a measure such as this had been introduced by a Labour Administration, I am convinced that the Conservative Opposition would have been diametrically opposed to it, and we should have been saying that we did not like it. My noble friend Lord Boardman spoke about the sanctity of contract. That seems to have gone out of the window so far as concerns this Bill. I have sat through many Committee stages and Report stages in another place, and I am astounded that with this Bill the Government have been so inflexible. I echo the sentiments expressed by my noble friend Lord Campbell of Alloway when he
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congratulated the Minister on defending a brief which in my view is indefensible, but which he did extremely well.
If one is a flat owner and one wants some advice on how to enfranchise but does not have recourse to legal advice, my honourable friend the Minister for Housing in another place is setting up a fund whereby one can obtain free legal advice. To do that at the same time as curtailing legal aid, is ridiculous. My right honourable friend the Prime Minister of course rightly says that he will listen to people. I hope that he will listen to those people who wish to own their own homes. That brings me to the point made so effectively by my noble friend Lord Boardman about one's principal residence. The principal residence formula is suggested in the amendment. The freeholder is an investor. An absentee lessee is in the same position. He or she is an investor. Why should any Administration, Conservative or otherwise, say to one investor, "You must sell. You will be forced to enfranchise another investor"? That again is wrong. Let us help, yes. If the flat is one's main residence, that is excellent, but to extend the provision so that one investor is forced to help another investor goes against all the principles of the capitalist system. It is against the principles of the Conservative Party.
The lessee of a flat might have two or three other flats, whether or not he is a foreigner. Why should the freeholder, who may be a British citizen, be forced to give some of his assets to someone who does not live here, wherever he may live? I support the amendments tabled by my noble friend Lord Boardman. Despite the fact that my noble friend the Minister will probably have "resist" at the top of his paper, the Government must think again about this matter. We must help those who want to buy their flats. They may not be able to obtain the consent of two-thirds of the tenants in the block, for whatever reason. Some of the tenants in the block may not wish to buy and some may be absentee lessees. The other amendment tabled by my noble friend gives those tenants the right to extend their leases on a recurring basis, and that is fair.
I am at a loss to understand why we should say to one person, "You have an asset, and you must give part of that asset to someone else who may be a lessee who does not live there". I hope that my noble friend the Minister will accept the amendments because it is against Tory philosophy to jettison our principles. It would be more shameful if we were to allow the Bill to go through in its present state.
3.45 p.m.
Lord Monson: My Lords, many of your Lordships will have received a detailed analysis based upon figures supplied by Savills, a highly respected firm of estate agents, showing the enormous profits that in many cases will be made on enfranchisement under the terms of the Bill where the lease has fewer than 75 years, or thereabouts, to run. In Belgravia, it is expected that in many cases profits will exceed £250,000.
If the Bill remains unamended, many of those enormous capital gains will accrue not just to permanent or semi-permanent residential tenants—

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those mentioned, as has been said, in the Conservative manifesto at the last election—but to those who own properties as holiday homes or to those who have never set foot in the properties in question, but have bought them as an investment. Huge profits will also accrue to companies who specialise in buying the tail-end of long leases and letting such properties out on a rack rent basis, achieving in the process an extremely high rate of return, even under the law as it stands.
How much greater will the profit of such people be if the amendment is not agreed to. That will be at the expense, in many cases, of the beneficiaries of charitable trusts. Moreover, if Amendment No. 174, which I have tabled, or something very like it, is not accepted, which provides for taxation to be levied in all cases upon such unearned gains, those purchasers who are not domiciled in the UK will in most cases not pay one penny in income tax, higher rate tax, corporation tax or capital gains tax. I cannot think that that would be welcome.
I see, much to my surprise, that. Amendment No. 174 has been grouped with Amendment No. 1. I drafted Amendment No. 174 quickly so as to put down a marker, as it were, without having had time to take advice from lawyers or accountants specialising in tax law. It is therefore more than probable that it is defective in one or more respects. If I have been too pessimistic, and the Minister can assure me that the amendment is technically perfect, I am happy for it to be grouped with Amendment No. I; otherwise I should like to take it away, work on it and come back with it next Tuesday, when I hope that I shall have massive support from the Labour Party and the Liberal Democrats, none of whom I am sure wishes anyone to receive large untaxed, unearned capital gains. For the moment, I urge your Lordships to support Amendment No. 1.
Lord Harmar-Nicholls: My Lords, before the noble Lord sits down I wish to ask him whether he is as surprised as I am by the silence from the socialist opposition Benches, in particular when we heard that their vote enabled the provision to be passed in Committee. Is there not a parliamentary principle that the vote should follow the voice? Should not their voices be heard before they cast their effective votes?
Lord Monson: My Lords, I am not in a position to speak for the Labour Party.
Lord Peyton of Yeovil: My Lords, I wish to begin my remarks by saying that I look as eagerly as anyone in your Lordships' House for opportunities to congratulate the Government on their legislative programme. Unfortunately, I have found such opportunities to be rather few. On this occasion, however, I believe that the Government are to be congratulated on their discretion, or on their good fortune, in having my noble friend Lord Strathclyde on the Front Bench to argue the case for the Bill. I know that I can speak for those who are uneasy about its content and say that his courtesy and humour and the attention which he has paid to the arguments which he felt obliged to reject have been such as to
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make our task difficult where it should have been easy. I hope that I have not embarrassed my noble friend by making those comments.
I wish to make my own position absolutely clear. I am in no way speaking on behalf of landlords, except that I am concerned about charities which are landlords. Apart from that I do not speak for landlords. Indeed, I venture to say that I do not believe that they have helped their case during our debates. Your Lordships are concerned with the extent to which government are justified in taking what belongs to one person and giving it to another, albeit at a price, there being no particular virtue in the tenant nor vice in the landlord. I wish to make it clear that a bad, rapacious, oppressive or negligent landlord will present no problem for me. I believe that such people could well have visited upon them the most fierce penalties. However, I have the gravest doubts about the comprehensive measure which is proposed.
I have never been an avid reader of party manifestos and I do not intend to repeat verbatim what appeared in the Conservative manifesto at the previous election. However, I am anxious about what Ministers have said on behalf of the Bill. Some weeks ago the Spectator produced an article which was hostile to the Bill. It drew forth from no other person than the Minister for Housing, who rightly or wrongly I regard as the parent of the Bill, the following comment in a letter to that publication:
"A huge number of perfectly ordinary people living in flats throughout England will indeed benefit from this legislation and have a real say in how their homes are run".
In saying that, the Minister conveyed the impression that that was the total objective of the Bill. However, the Bill has gone much further and it is that to which some of my noble friends and I object.
It seems to me that the Government's behaviour indicates their belief that it is important to please the many without being too worried about how unfair or oppressive they are to the few. Landlords are not particularly popular people and I do not speak for them. However, I am saying that it is always dangerous for governments to take that path, which disregards the basic questions of fairness to the few. For governments to substitute their judgment for that which has been reached between two parties to a contract on the grounds that they have a greater awareness of what is right and just is a dangerous and arrogant step. Those who take it might well find themselves rewarded not with the popularity and applause which they seek but with something very different.
I do not need to repeat the detailed arguments for the amendments which were adduced with such cogency by my noble friend Lord Boardman. I simply wish to say with all the emphasis that I can command that I believe he was right in moving the amendment and right in the reasons that he gave for doing so. I hope that your Lordships will take the long view and will realise that there is a point—not a small parochial point which does not matter but a point of deep principle—which one should not ignore.
Lord Williams of Elvel: My Lords, as the noble Lord, Lord Harmar-Nicholls, will know, it is

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customary to allow those noble Lords who put their names to an amendment to speak and to make their case before other noble Lords rise to do so. I have done that—
Lord Harmar-Nicholls: My Lords, that certainly is not a convention and I do not believe that it is a custom that people who put their names to an amendment have priority in speaking. The working of the House is clear; it operates so that all may speak from the various quarters. The custom does not exist.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord, Lord Harmar-Nicholls. If I said "custom" I really meant "courtesy" because I believe that it is a matter of courtesy. If four noble Lords put their names to an amendment it is a matter of courtesy to allow them to explain why they have done so.
Noble Lords: Hear, Hear!
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord, Lord Boardman, for the way in which he moved the amendment and to other noble Lords who have spoken to it. There is a certain cogency in their arguments. The problem as we see it is that Amendments Nos. 1 and 5, to which I am speaking, go too far.
In Committee I mentioned a study which had been carried out by the Consumers' Association. It showed that there was no uniform profile of leaseholder. The study showed that 90 per cent. of leaseholders had bought their flats within the past 10 years. Indeed, three-quarters of those surveyed had purchased their flats within the past five years. Therefore, if the amendment is accepted, at a stroke the new clause would effectively render the majority of long leasehold flat owners ineligible to take part in a bid for enfranchisement. While I have sympathy with the idea that there should be a residence test which would exclude foreign companies or other residence tests, I believe that the two amendments as they stand go too far.
The other issue raised by the noble Lords, Lord Boardman and Lord Campbell of Alloway, was the law of contract. We have had a great deal of discussion during the passage of the Bill about the sanctity of contract. I shall reiterate the point which I made on Second Reading—I do not like reiterating points which I made on Second Reading—that governments of both and all parties have sought and achieved the principle of overriding contract when, in their view, it was in the interests of the public to do so.
I accept the point made by the noble Lord, Lord Campbell of Alloway. It may be that the Government must take that on board. The abolition of the closed shop was a clear case of overriding the law of contract for which noble Lords opposite voted almost to a man. I do not believe that that principle is so entrenched that it cannot be overridden by governments when they feel it to be in the interests of the public at large.
I say again to noble Lords who have sponsored the amendment and who have spoken in favour of it so eloquently and persuasively that although we have
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sympathy with the idea that corporations in strange parts of the world may, by virtue of the Bill, become absentee landlords, nevertheless, we cannot accept the amendments as they stand and that is what we must deal with. Therefore, we shall vote with the Government should the matter be tested in a Division.
4 p.m.
Lord Coleraine: My Lords, in asking the House to reject the amendments, I do not propose to cover again the arguments which other noble Lords, the Minister and I advanced at an earlier stage. I merely pick up two points made by my noble friend Lord Boardman in moving the amendment. The first has been referred to on several occasions; it is concerned with the manifesto commitment. On two occasions during the year leading up to the general election, well publicised pamphlets issued by the Department of the Environment and the Welsh Office made it clear that no such residency qualification was to be imposed upon the right either to enfranchise or the right to have an extended lease. For reasons which no doubt seemed good to them, the Government have taken away that right from non-residents in connection with extended leases. However, it would be a great shame if this House were to take away in any shape or form, whether by this amendment or any other, the right of non-residents to protect their investments. I say quite frankly that people who are owners of flats should have the same rights as those who reside in them. It would be a great shame if that right were taken away by this Government in any shape or form.
The second point is the question of sanctity of contract, referred to by my noble friend Lord Boardman and stressed again by my noble friend Lord Campbell of Alloway. My noble friends referred to Amendment No. 160—the right to manage—which will be discussed shortly. At some point my noble friend will have to explain where the question of sanctity of contract comes into the picture as regards lessees of a building having the right, in breach of the sanctity of contract, to take away the right of management from their freeholders. That is an argument to which we shall come later. In the meantime, I hope that the House will reject the amendment.
Viscount Mountgarret: My Lords, I must take issue with my noble friend Lord Coleraine. He seems to have overlooked totally the fact that some people own property which they do not wish to dispose of. This clause will permit a person living in a flat, or for whom the flat is a principal residence, to turn round to his landlord and say, "Whether you like it or not, we are going to buy it from you". That seems to me grossly wrong. If the matter is thought through to its logical end —my noble friend Lord Middleton is sitting in front of me and I do not wish to take the steam out of what he might say —it could extend even further than that. The arguments were well rehearsed in Committee and it would be fruitless to go over them again.
I believe that people fall into three categories. First, there are some who are not affected because they neither lease nor own their flats. They do not perceive

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perhaps the difficulties which we shall create if we allow the Bill to go through unamended. Secondly, there are those who occupy their flats. They perceive that it might be a very good idea to be permitted to buy at all costs. They have probably not realised what is entailed in running and administering their own properties. I imagine that at present the properties are looked after very well indeed by the landlords of those properties, whether they be in London or the provinces.
The third category of people own the properties. There are many people in this country—including many of your Lordships—who may feel that they have a vested and pecuniary interest in retaining those properties. Those people have an absolute right to do so. Many landlords have looked after their properties following a tradition that has lasted for perhaps hundreds of years. We should be grateful to them that properties in our cities and towns, not only in London but also the provinces, are looked after so well. Those landlords have looked after those properties at great expense to themselves. I realise that they are at the same time making a profit, but that is business. There is nothing wrong in that.
Last week saw some rather dramatic events for my noble friends on the Front Bench and colleagues in another place. I say quite seriously to my noble friend on the Front Bench, because it is relevant to a number of matters, that the perception that disquiet exists only because of the recession is not quite true. The reason for the disquiet is the unacceptable policies which, for some reason, Members on this side of the House have tried to promote regardless of the feelings of supporters at the roots of our party in the country. This is one example. Will the Government listen or will they not? I am not speaking to noble Lords opposite. They are delighted about, and are revelling in, this legislation. I should be the same were I sitting on that side of the House. However, I urge the Government to take the point on board. They should listen to what people really want. They should listen to what makes sense. If it means making a U-turn, they should make it. They should listen. This is retrospective legislation. It is the breaking of the sanctity of contract. There are further spin-offs for the future which some people can perceive. I urge my noble friend to listen to the arguments of my noble friend Lord Boardman in moving the amendment. I urge the Government to accept the amendment.
Baroness Hamwee: My Lords, there is one point on which one must agree with the noble Lord, Lord Mountgarret; namely, that the Government should listen. Surely it does not escape noble Lords that those of us on these Benches, and also on the Labour Benches, listen to what people want. If we were going blindly ahead ignoring what people wanted, then it would be so much the worse for us. It is because we have listened to the argument and have made our own assessment of where the balance lies that we oppose this amendment and support the thrust of the Bill, as I made clear at earlier stages.
Like other noble Lords, I must declare an interest. My interest is merely that of a leaseholder in a
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building which consists of two flats with a resident landlord. It is not much of an interest and it certainly does not apply now.
There has been no pretence among many who have spoken in support of the amendment. They have no wish to see the Bill go through. The noble Lord, Lord Mountgarret, spoke about the debt that the country owes to freeholders who have preserved properties for hundreds of years. Like many other people who have never been able to aspire to such nice properties, I have lived in a very ordinary block which could not even be called a mansion block. This Bill is largely designed for people like that. It is not simply about the great estates in London.
To suggest that the amendment is not designed to wreck this part of the Bill is not to deal with the matter entirely directly. The more individuals are excluded, the more tenants who would qualify in their own right are also excluded from enfranchisement. Because of the way the Bill works—namely, that a certain number in any property need to qualify to allow others to take advantage of the qualification—for this amendment to apply would create a very arbitrary position. As the Minister pointed out at Committee stage, it would mean that tenants and properties would move in and out of eligibility in a way that would be very difficult to keep track of.
The question of intervention in contract and the sanctity of contract is a very important issue. I do not believe that many noble Lords would lightly ignore that, or take a view that it should simply be over-ruled. But there are other interests. Those have been very fully dealt with at Second Reading and in Committee and I sense that we are covering a great deal of old ground and not making a lot of headway. But I wonder whether we are talking, in the case of some noble Lords, about sanctity of contract or sanctity of property. I wish that perhaps some of the energy of noble Lords opposite had been brought to bear at the time of discussions about the right to buy properties in local authority ownership.
Leaseholds are a wasting asset. Often—as we have discussed at previous stages—those who own the leaseholds had no option as to the tenure of property. There was not a freehold for their particular circumstances in their geographical area that was available to be bought. The whole issue of management has also been addressed. We cannot support the amendments. Perhaps the most interesting point to come out this afternoon is the suggestion that somehow Members on these Benches are disqualified from voting and that this is somehow an internal matter. I found the arguments of the noble Lord, Lord Harris of High Cross, quite fascinating. The one point that has particularly struck me since I came to this House not so very long ago is the equality and the respect for other opinions that is so very evident. I hope that noble Lords will make up their minds on what is clearly a difficult issue. But we shall not support the amendment.
Lord Annan: My Lords, I will be very brief. Is it not possible that large numbers of the leaseholders who have waited for this Bill, as a result of which they hope their properties will he enfranchised, are sound

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supporters of the Conservative Party and that the noble Lord, Lord Strathclyde, will naturally be listening to them?
Baroness Gardner of Parkes: My Lords, I think it very important that we hear a few voices of noble Lords on this side of the House who support the Government and oppose the amendments. The appearance of the amendments is rather innocuous. They seem to address a provision that we would all like to see; namely, protection of residents over other people. But of course, that is not their purpose at all. When we look at them carefully, and when we listen to the speech of the noble Lord, Lord Boardman, who mentioned that 60 per cent. of all properties are now sold to people other than residents, we see that if the amendments were carried we might as well throw the Bill out altogether. No one will be able to enfranchise anything —certainly not in the London area. Outside London the position may be different, but if these amendments were carried I believe that in the London area pretty well all blocks would be ruled out of enfranchisement. I know that the noble Lord, Lord Boardman would be delighted with that result. But it would be very unfair to the many residents in those blocks who, unless there is an opportunity to enfranchise, will not have their right to do so. I therefore view the amendments most seriously and think it very important that noble Lords think clearly of the total implications in this matter. I oppose the amendment.
4.15 p.m.
The Earl of Onslow: My Lords, the noble Baroness, Lady Hamwee, said that leasehold flats are a wasting asset because they are going down in value. Of course that is true if one buys a short-term lease. But equally, today's lunch is not resaleable either. There are an awful lot of items which, once one has bought them, one cannot resell.
I am afraid to say that unless we pass this amendment the Bill will go down as a continuation of the "tack" and general tackiness on which the Government have been attacked quite recently. Questions such as Matrix-Churchill have left a bad taste in the mouth. There have been several other matters which have left a bad taste in the mouths of the Government's supporters. Unless the Government take that on board they will continue to have worse times than they did on Thursday of last week. It is unfortunate that the parties opposite, who claim to hold the high moral ground, seem to be trying to get in on this same act.
It has been interesting to note that those noble Lords on this side of the House who have supported the amendments have all been occupiers of leasehold flats. I am afraid to say that I find that another example of "tack", and I believe that we should be ashamed of ourselves.
The noble Baroness, Lady Gardner, said at Committee stage that she did not want to hear any more about a rich Californian who had been about to buy the pensioner's flat from the BP pension fund.
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Well she is going to hear a bit more about him. I saw him last week. He has a grin on his face the size of Mount Isa. He is as happy as a sandboy because he is getting something from the BP pension fund at very much less than he paid for it.
Baroness Gardner of Parkes: My Lords, it is not true. The formula will give him—
The Earl of Onslow: My Lords, the noble Baroness says that it is not true. The formula will not. He is quite happy. He is a very experienced businessman and he is delighted that the Conservative Government have given him a trough into which he can place his snout.
Perhaps noble Lords may think that I am getting rather cross over this issue. I am getting rather cross. It is unfortunate to see a Conservative Government behaving in this way. I shall support my noble friend Lord Boardman.
Viscount Torrington: My Lords, I should like to be clear about what my noble friend Lord Campbell of Alloway called "the Library". This debate makes strange bedfellows. I believe that this is a wrecking amendment for precisely the reasons set forth by the noble Lord, Lord Williams of Elvel. It is a wrecking amendment simply because the mathematics of it do not work. I take the point made by the noble Lord, Lord Harris of High Cross, and by numerous other noble Lords. Perhaps some modest residence qualification would make sense. Indeed, I would personally commend to the Government some elements of Amendment No. 14. But I stand rigidly against it, and I hope that other thinking Members on these Benches and on the Benches opposite will vote against the amendment and perhaps consider Amendment No. 14 in some modified form.
Lord Cavendish of Furness: My Lords, I wish to intervene briefly to speak in support of my noble friend's amendment on a matter of principle. Like all principles I believe this matter should transcend political parties and should concern every Member of the House. On Second Reading I believe it was the noble Lord, Lord Williams of Elvel, who cautioned noble Lords against failing to declare an interest. I believe the burden of his message was that we should pursue this matter as though our interests did not apply.
I declared an interest then, and I declare it again now. Recently, through inheritance, I acquired a small flat in London which, if this Bill were to pass into law, would be enfranchiseable. I would be the gainer. I do not reside in the flat and I have no intention of doing so. My noble friend Lord Coleraine was wrong in thinking that he was speaking for me when he made his remarks about owners. In my judgment I will gain substantially from the inheritance. I have never sought that privilege and none would say I deserve it. I do not think I will get any thanks from my neighbours for supporting my noble friend's amendments and I do not think I will get any thanks from my trustees for supporting this amendment. Perhaps I will not get any thanks for supporting the amendment from certain noble Lords. However, I support my noble friend's

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amendment on the grounds that I believe it to be profoundly wrong that I and thousands like myself should gain from the measures of this Bill.
Lord Gisborough: My Lords, I support the amendment and I wish to ask some questions. Mention has been made of free legal advice to leaseholders. That presumably will become a precedent and it will be a dangerous precedent. If one party is gratuitously allowed access to free legal advice, why should not the other party be allowed that free legal advice too? Noble Lords have made innuendos against landlords and foreign companies. I think it is wrong to denigrate certain parties unless for some reason they have committed a crime or done something which is wrong. It is wrong that we should denigrate parties who have done nothing wrong. No evidence at all has been provided to show they have committed any offence.
It has been said that we should listen to the people. Of course people who are going to get something for nothing will somewhat naturally be vociferous in saying they want that thing. Those people bought their leaseholds in the full knowledge of the number of years that were left on the lease. The price they paid was that much less. Clearly, when one buys a leasehold flat with two or three years to run, or whatever the term may be, one is effectively paying just two or three years' rent. If the sales are to be forced, it is only fair that they should seek the full value of the investment.
Lord Harmar-Nicholls: My Lords, I believe the most important speech on this amendment was made by the noble Lord, Lord Williams of Elvel.
Noble Lords: You have spoken already.
Lord Harmar-Nicholls: I have not spoken already. I asked a question. That is a very different matter as regards the rules of debate. We are not debating the Bill at this stage; we are debating an amendment. Amendments Nos. 1 and 5 have the support of the noble Lord, Lord Williams of Elvel. He said he had a great deal of sympathy with the principle of not allowing people who had never occupied premises to make a profit out of the Bill. That interferes with the sanctity of contract and it is retrospective legislation. However, he added that the amendments would not fit in with his sympathetic acceptance of that proposition.
I would suggest, particularly to my noble friend who is to reply, that if he can say that the amendments injure the Bill as a whole and that there is no way at all of producing an amendment to the Bill which would confine itself to dealing with the point that people who have never occupied the premises in question will not make a profit, noble Lords are right to resist the amendments. However, I cannot believe that if we have the sympathy which has been expressed and which, I believe, many of my noble friends feel, this House is not capable of producing a form of words which will separate from the Bill that particular item. If the House is not capable of that, I should be surprised almost to the verge of being disgusted. The only alternative for dealing with this vital matter would be a vote against the Third Reading of the Bill
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when that time comes. No one would wish to oppose the decision of another place to the point of voting against a Third Reading.
However, before one can say that one will not vote against Third Reading, the House must have a clear explanation as to why one particular point embodied in the amendments and supported by the noble Lord, Lord Williams, and certainly mentioned in the speeches from the Cross Benches, cannot be accepted. If my noble friend can say that it would be dangerous to the Bill as a whole and that he cannot find an answer to the problem, then we shall have to vote against the measure. If he can say that he accepts the principle of sympathy expressed by the noble Lord, Lord Williams, and that he will table a manuscript amendment, or even an amendment on Third Reading —that is possible in this House —to achieve this one narrow point, he will get his Bill and we will not need to press the matter to a vote on this occasion.
Lord Renfrew of Kaimsthorn: My Lords, I had not intended to intervene in the debate today. I thought that the proposer of the amendment made some fine and appropriate distinctions, some of which I could see the point of. Hearing the speeches which have followed from this side of the House and other sides of the House, I have come to feel with much greater clarity that the Government are in the right and that this amendment is not acceptable. I must tell your Lordships that many of the speeches could have been addressed as effectively against the principles underlying the Bill as a whole as to the principles underlying this amendment. Indeed they could have been addressed against the Leasehold Reform Act 1967 or a whole series of other pieces of legislation, many of which are generally accepted in retrospect as wise.
I do not feel it appropriate to support the amendment. The purpose behind the Bill is clear. It is to enable a great number of individuals to secure the freehold of the premises which they occupy, or at any rate which they rent. It is clear that if this amendment is carried, that objective will not be fulfilled. That will be the outcome. Interesting points of principle have been raised with which I do not entirely disagree. However, when it comes down to it, the outcome of the amendment would be to thwart the general purpose of the Bill. I cannot support the amendment.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde): My Lords, I feel that we have had plenty of time to discuss this issue. The noble Baroness, Lady Hamwee, was right when she made two points. She said that this is an important issue and that we have heard many of the arguments before. That point was echoed by my noble friend Lord Renfrew. The issue is important and we have heard many noble Lords speak on it before, particularly in Committee, when the amendment was rejected by a vote.
My noble friend Lord Boardman has yet again proposed an amendment to deal with the test of residency. He prayed in aid of his case two particular aspects. First, he said that the manifesto at the previous election promised enfranchisement for those

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people living in flats. Secondly, he said that this matter concerned sanctity of contract unless there were overriding public interests to be taken into account. The Government have supported leasehold enfranchisement, not just in this Bill, but also in 1974 and in 1967. We have supported it in the past where there has been a residency test. We supported it in 1967 and in 1974. We included it in this Bill as regards leasehold extension. Therefore, I can understand why many of my noble friends should ask why we cannot have a residency test for this aspect of the Bill dealing with the enfranchisement of leases for flat owners. There is an easy answer, but I am not sure that it is one my noble friends will find palatable. We are not opposed in principle. I have demonstrated that that is the case because the Government have supported the residency test many times in the past. We are opposed to the amendment because it will stop the enfranchisement of flats dead in its tracks.
My noble friend Lord Boardman and many of my noble friends who spoke are not against the enfranchisement of houses. My noble friend Lord Boardman accepts the manifesto commitment, but he is proposing an amendment which will make sure that people who live in flats will be unable to enfranchise. It is that contradiction which the Government have tried to address by not putting forward a residency test for flats.
Many of my noble friends have asked: if we cannot have a full residency test for flats, what can we do? Where can we find a point of agreement between the whole House and the Government? The noble Lord, Lord Williams, recognised that point when he said that there was some cogency in the arguments which he had heard. I agree with him. A persuasive case has been put forward by my noble friend. But there is the fundamental difficulty that we wish to allow the enfranchisement of flats.
Lord Clark of Kempston: My Lords, if that is the case, why is Crown property excluded from the Bill?
Lord Strathclyde: My Lords, Crown properties are an entirely different issue. My noble friend knows perfectly well that it has been agreed that the vast majority of Crown properties, although not written into the Bill, will come under those provisions.
At the beginning of this Report stage the noble Lord, Lord Williams, said that he had not had time to analyse the groupings list because it had arrived a little late. I am sorry to hear that that was the case. The noble Lord referred to Amendment No. 14 in this grouping, which was also mentioned by my noble friends Lord Boardman, Lord Campbell and Lord Torrington. That was the point which my noble friend Lord Harmar-Nicholls mentioned. In the Bill it will be possible for a block of flats to be enfranchised by people who are entirely non-resident. They may be corporations and some may be foreign. I understand the very real anxieties of my noble friends. Amendment No. 14 has not been moved, so I am not entirely sure what is at the back of my noble friend's mind, but I see that there is some merit in a reading of that amendment.
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I should like to conclude by telling my noble friend Lord Boardman that I cannot accept the amendments that he has proposed, for the reasons which I set out in Committee and have repeated again today, and which have been echoed by many noble Lords today. I feel that it would be wrong for the House to pass this particular amendment because it does so much damage to the principle of enfranchising flats. However, perhaps when we come to Amendment No. 14 we can consider it far more positively to see whether there is a way forward to deal with the problem.
4.30 p.m.
Lord Boardman: My Lords, I am grateful to my noble friend for those remarks, which are extremely helpful. First, however, perhaps I may correct three matters which arose during the course of the debate. The noble Lord, Lord Williams of Elvel, mentioned a period of 10 years. If he looks at the amendment which we are debating, he will see that residents of three years' standing would qualify as the principal leaseholder. Perhaps that was an oversight on his part.
My noble friend Lord Coleraine said that the leaflets which were issued during the election campaign were valid and should be noted rather than the manifesto. I really cannot agree. A great deal of information goes out during an election campaign but the one document which really means something should he, and is, the manifesto.
Lord Coleraine: My Lords, I am grateful to my noble friend for giving way. The pamphlets were issued nine months before the election. They were well known and well circulated.
Lord Boardman: My Lords, I do not see that that in any way alters the credibility of the manifesto. My noble friend on the Front Bench referred to the 1967 Act. I remind him that during the debate on that Bill the Conservatives voted solidly—by 191 votes—against the provision. I should not like it to be recorded that we were supportive of it at that time.
Having said that, I was interested to hear my noble friend give a warm welcome to Amendment No. 14. Many noble Lords on both sides of the House feel as I do that the Bill is wrong and that we should seek to disallow non-residents who should not be able to enfranchise. It may be a case that half a cake will be better than none at all.
Amendment No. 14, which I have put down with the noble Lord, Lord Palmer, and which we shall come to in due course, is something of a fall-back amendment in case this amendment does not receive the universal support which it deserves. The noble Lord, Lord Williams of Elvel, and the noble Baroness, Lady Hamwee, have made it clear that their Benches will not support the amendment. I am surprised and disappointed that they should he supporting the Government in what I believe are clearly breaches of both a commitment —about which noble Lords opposite are obviously not too concerned—and the sanctity of contract.
Bearing in mind that my noble friend has indicated that he will view with favour the amendment in my

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name and that of the noble Lord, Lord Palmer, which will be debated later, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

School Tests
4.36 p.m.
The Minister of State, Department for Education (Baroness Blatch): My Lords, with the leave of the House, I shall now repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Education. The Statement is as follows:
"My right honourable friend the Prime Minister and I have already confirmed the Government's commitment to this summer's tests for 7 and 14 year-olds. There is abundant evidence of the importance of testing the progress of our children. Our main competitor countries do so as a matter of course. So should we.
"It would be a betrayal of a further generation of pupils to postpone what is acknowledged on all sides to be a much needed educational reform. It would be to set aside the tremendous efforts made by the great majority of hard-working teachers to implement the National Curriculum since 1989. Tests for 7 year-olds are in their third year. We know that they work. Tests in 1991 and 1992 have improved standards of teaching and learning. Last year's pilot tests for 14 year-olds were well-received: attendance went up on test days. Her Majesty's Chief Inspector said only yesterday that the evidence provided by a good testing system was essential in order to assess the progress of our schools.
"Children have been working towards the tests for several years. Abandoning the tests would leave conscientious teachers, concerned parents and the wider community in the dark about our schools, depriving them of vital information about the attainments of individual pupils and denying Sir Ron Dearing information about the quality of the tests themselves which he himself has asked for.
"I turn now to the testing arrangements in 1994. Sir Ron Dearing has been given the widest possible remit. His task is to advise on how the curriculum and assessment framework in the round can be simplified and streamlined in response to the concerns of many teachers.
"I have discussed with Sir Ron the implications for 1994. He has advised me that the tests next year should focus on the basics. I agree. The Government have therefore decided that mandatory tests for 1994 for 7 and 14 year-olds should concentrate on the core subjects of English, mathematics and science and on Welsh as a first language in Wales. We shall decide later whether to add technology at age 14 in the light of this summer's tests.
"The testing arrangements in these subjects will he streamlined, with some substantial changes to coverage and style. I have asked Sir Ron to advise
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by July on how this can best be done, including what the balance should be between tests and teachers' own assessments.
"Sir Ron will, at my request, consider carefully the merits of external marking of the tests of 11 and 14 year-olds.
"The current obligation on teachers of 7 year-olds to make assessments of classroom work in technology, history and geography will be lifted in 1994 and will not be introduced in music, art and P.E., allowing these teachers to concentrate on the basics.
"Next year's tests for 11 year-olds in English, mathematics and science will take the form of a national pilot, leading to mandatory tests in 1995.
"The introduction of mandatory tests for 14 year-olds in history and geography which had been planned for 1994 will be postponed pending Sir Ron Dearing's review.
"Finally, to ensure that Sir Ron Dearing's recommendations about changes to the curriculum itself can be rapidly implemented, the Government propose to suspend for a period the consultation procedures specified in Sections 20 and 21 of the Education Reform Act. We shall move an appropriate amendment to the current Education Bill. This will preserve during the interim the duty on me and the Secretary of State for Wales to consult about changes, but will be designed to enable us to proceed to make changes after a single stage of consultation in cases, like this, where the need for change is widely recognised and the changes themselves are the product of extensive prior debate. These decisions will significantly reduce the work load on teachers in 1994.
"It is in the interests of properly taught children, informed parents, employers and the nation as a whole for the testing arrangements I have described today to go ahead without interruption. If not, we will have an education system without adequate rigour, and will have conceded a decade's advantage to our international competitors".
My Lords, that concludes the Statement.
4.42 p.m.
Lord Judd: My Lords, I am sure that the entire House is grateful to the Minister, particularly after such a late night, for repeating the Statement here this afternoon.
What an upheaval! Another 11th hour conversion, all too characteristic, I fear, of the indecisiveness and dithering of the present Administration. Over and over again, we are confronted by intransigent, insensitive, blinkered government, plodding relentlessly ahead until, at the 11th hour-plus, with maximum damage done, the Government do an inelegant U-turn, usually involving a kick for touch, a delay till next year, with Sir Ron Dearing wheeled into the firing line on their behalf.
In this House we have to face the fact that the crisis is right now; it is an immediate crisis. It is now, in May 1993, that there is a total lack of public confidence about what is happening in our schools. It is a sad emblem of this Administration that they are not only

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incompetent but have had the obstinacy to carry on for so long with a completely moribund system. Perhaps the noble Baroness opposite will care to comment later on the reasons that the Government have been so determined to carry on with a system which parents, teachers, the Government's own advisers and even some politicians from Conservative ranks have so roundly condemned.
It is typical of the modern management of the party opposite that they have considered that continuing with a system which is universally unpopular is a sign of strength. Does the noble Baroness really believe that a glossy advertising campaign could have sold such a rotten product? Such an attitude has been patronising to parents and teachers alike. It has also wasted still more of the money which the country's education system so desperately needs.
Support for the Government's education policies is at an all-time low. Parents have already clearly made their choice—a choice to disagree with the Government's educational policies. Sixty-two per cent. of the public said in a Gallup poll last weekend that they sympathise with the teachers' boycott of this year's tests; only 50 per cent. of the public were in favour of testing at the ages of 7, 11 and 14. A large majority is against testing at the age of 7. A poll in the Independent newspaper found that 52 per cent. of parents were in favour of abandoning the tests this year, not next year.
What choice do parents have, if the Government are still determined to grind on this year with testing, in opposition to the clearly expressed wishes so frequently put forward by the parents themselves?
What will the Government do to parents if they withdraw their children this year from tests with which they profoundly disagree? Does the noble Baroness really come to this House agreeing with her colleague Mr. Clarke, who contemptuously put down the opposition of parents to tests to teacher agitation? Does the noble Baroness really believe that parents are not intelligent and caring enough to know what is bad and good for their own children?
We on these Benches trust parents; no one is opposed to testing and assessment per se, but the tests for this year are high on administration and low on education value. That is why parents do not have confidence in them.
Why, if there are to be changes next year because present arrangements are seen to be untenable, must children this year be subjected to a continuing disaster? Where is the justice in that? What about the damage to the children this year?
We must, of course, welcome the Government's long overdue decision to concentrate, from next year at least, on core subjects and to recognise the case for greater flexibility. But can the Minister tell the House more specifically about the future of English testing and of published league tables, about whose inadequacies the public has convincingly registered its anxieties?
Meanwhile, will the Minister also explain to the House why the Government have refused even to consider the Scottish assessment system in which
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teachers and parents appear to have more confidence? We on these Benches believe that the Scottish system could well have been used, at least until the review is completed.
We are determined that the children of this country should get the education they deserve. Our children are not guinea-pigs; they are in the firing line of any dispute between this Government and teachers. They are the ones who suffer most and, by implication, so does the country's future. It is surely a sorry pass when the Prime Minister has to persuade the Secretary of State for Education to take action. Does the noble Baroness not agree that those in charge of education for the Government should take responsibility for the problems which they have created and not push the problems on to the Prime Minister and a Cabinet committee?
Of course, we are glad that the Government are acting at last. We hope that the review of the curriculum and of testing generally will be thorough, independent and that it will take into account the views of teachers and parents. However, it is far from reassuring that the Government have decided to cut out even the existing consultation procedures, and I hope that the Minister will be able to clarify exactly what that entails.
For the future, we are convinced that the membership of the School Curriculum and Assessment Authority must include a majority of those responsible for educating children rather than ideological placemen. As we argued last night, the authority must be ratified not by the Secretary of State for Education but by the all-party Select Committee on Education in the other House.
The way forward in education is through creating consensus. The crisis of confidence is because it has been made a partisan totem pole around which Right wing ideologues have frenziedly danced. We hope that the noble Baroness and her colleagues in the other place will, above all, now learn to listen. Insensitive arrogance has, I fear, so far been their hallmark—arrogance, which stems from anything but strong government.
Baroness Hamwee: My Lords, I join with the noble Lord, Lord Judd, in thanking the Minister for so clearly repeating the Statement, particularly after her late night last night. Indeed, she may have to endure other late nights later this week.
The Statement says that there is abundant evidence about the importance of testing the progress of our children. There is abundant evidence of concern about the tests this year, 1993, which the Statement does nothing to allay. In support of the success of last year's pilot test, comment was made that attendance went up on test days. If that is the extent of the evidence of support, it is poor evidence. I am appalled—I have to use strong language—that the Government propose, in order to go ahead with their programme, to suspend the consultation period provided by the Education Reform Act enacted only in 1988. To override consultation, or even to be thought to override consultation, can do no more than confirm the despair of teachers, parents and indeed pupils.

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I mentioned parents. The confidence that parents in this country have in the teachers who are teaching their children has become abundantly clear over the past few days. The noble Lord, Lord Judd, referred to the recent opinion polls and other reports of the support of parents. I do not believe that as a body parents by and large are against testing. I believe that they would like to see the programme work but not the programme as it is now. In fact, I suspect that they find it quite difficult to follow the current rows that are going on. It is an indicator of their confidence in the teachers of their children that they believe the expressions of concern voiced by those teachers and are prepared to say so.
I believe that parents would like to see a good and appropriate system. It is a tragedy that the Government have messed that up. The Government do not even seem to recognise the need to stop digging the hole that they are in or even to feel the pain when they shoot themselves in the foot.
Baroness Blatch: My Lords, first of all I thank the noble Lord, Lord Judd, and the noble Baroness, Lady Hamwee, for responding so fully to the Statement at very short notice.
The noble Lord, Lord Judd, started by referring to another eleventh hour conversion. I ought to make clear at this point that what was announced today was confirmation of the testing arrangements for 1993. But quite rightly, while there is a review pending, it is important to turn our sights on arrangements for 1994. It would be wrong further to delay those arrangements. September will be the start of the 1993-94 academic year and it is important that the framework for 1994 is made known to the schools in particular, the teachers and the parents. That is the reason that we have come forward today with those arrangements. I welcome what the noble Lord had to say about the 1994 proposals—namely, that children shall be tested on the basic subjects and that there will be some suspension of the other subjects that were planned to come on stream in 1994.
As for the 1993 tests, which the noble Lord believes should not take place, where children have been studying for three years now for those tests it is important that they should sit them. The children have worked hard for three years. Interestingly, the noble Lord, Lord Judd, and his colleagues did not make such comments last year. However, there was some very successful piloting last year of the science and mathematics tests. Indeed a very high percentage of schools took part in that pilot test. There were concerns but they were addressed and the information gained from that very large-scale pilot test informed this year's science test. We believe that the tests will continue to improve as we work with teachers to make sure that their concerns are met. The tests were received well and it is absolutely true to say that there was a record attendance of 14 year-olds in the days when those tests took place.
We responded and have continued to respond to suggestions for improvements. We listened and continue to listen to teachers and to respond to their concerns. We responded, for example, to the very first year tests for seven year-olds. They were better in the
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second year and even better in the third year. We extended the period over which the testing takes place and it is now possible to test seven year-olds from the middle of the spring term to one month before the end of the summer term, thereby making it much more manageable for schools and teachers. We also know that many of the tests for seven year-olds are now well under way in a large number of schools. The tests are not entirely completed, but there are some schools that are very close to completing them.
It is also important to keep the whole debate in perspective. We know that teachers have been concerned and we have already responded to some of them. We will continue to respond to those concerns —hence the Sir Ron Dearing review. But those concerns do not amount to a reason for pupils not taking the test. I have to say to the noble Lord and to the noble Baroness, Lady Hamwee, that when those tests have been taken this year we shall be showing those test papers to the world. Many parents who have been led to believe that somehow the tests are harming their children, when they see the test papers will wonder what all the fuss was about.
I was asked specifically about the future for testing English. I am not sure at what the noble Lord's question is aimed. English is a cornerstone subject in the national curriculum and it is absolutely fundamental that it should be tested rigorously. But the nature of the testing is part of the review. The noble Lord, Lord Judd, along with the rest of us, must await the outcome of that review.
The noble Lord also asked about the future of league tables. My department does not produce league tables. We produce information about the results of tests of children in our schools. We believe that that is important information for the child, the parent, the teacher, the school and the area in which the school is located. It also happens to be very important for us as a nation to know how well our children are achieving.
We can no longer stand by and wring our hands over our competitor nations doing better than we do —France, Germany, America or Japan doing better —if we are not even able to know how well our children are performing. We can only know when information is publicly available and measured against a national standard.
I understand the concern expressed by the noble Baroness, Lady Hamwee. She said that it was wrong to override consultation. I understand that she was referring to the possibility of suspending Sections 20 (and 21 as it pertains to Wales) in order to allow for speedier implementation of the reforms. I understand that. But it is important to remember that consultation is already under way with parents, teachers and all interested organisations.
I should like to put on record that Sir Ron Dearing has written to 1,400 schools inviting comments. He has met all the teacher unions and plans to meet them again. He has already held the first of a series of regional conferences with heads and teachers covering the full range of his remit. He has invited comments from every single school through The Times Educational Supplement. So there is a serious consultation process taking place.

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I make an appeal for understanding to all noble Lords. When that consultation period stops—it can be as extensive as is necessary for Sir Ron Dearing to come to a view about his advice to my right honourable friend the Secretary of State —and my right honourable friend has properly considered that advice and decided on a way forward for the medium and long term, I believe that it is in the interests of children and teachers that it should be implemented as quickly as possible. We simply ask for the forbearance of the House. We must speed up the legal process that follows the process of consultation to enable us to effect those changes as speedily as possible so that we have a long-term framework of national curriculum and an effective system of assessment and testing.
5 p.m.
Lord Glenamara: My Lords, I am utterly astounded at how insensitive and stupid the Government can be. They completely ignored last week's election results; they completely ignored the public opinion polls at the weekend; they completely ignore the fact that every teachers' union in the country, including that of the head teachers and the most moderate union of all, are opposed to the tests. They still push forward with them.
The tests will not take place. The Government want confrontation with the teachers and that is what they will get. I have been involved in teacher politics all my life. In persisting with this ludicrously complicated 14 year-old test this year the Government will cause a great deal of bad feeling which will persist in the education system for years to come. If they had an ounce of statesmanship in them, they would do this year what they propose to do next year and limit the tests to the basic subjects. If they did that, there is half a chance—I put it no higher—that the teachers would co-operate. I do not know, but it is worth trying.
Why do the Government push forward this crazy 14 year-old test system? They have taken leave of their senses. The seven year-old tests are cruel nonsense. At least one-third of children do not learn to read until they are seven. Also, I wonder whether noble Lords realise that half the children who take the so-called "seven year-old" tests are only six years of age. Yet they are solemnly tested and the results recorded and published. It is utter cruel nonsense and the results published are not worth the paper on which they are written. The tests are cruel to the children and to the parents. They give a completely misleading impression. I am shocked and disgusted by the Government.
Baroness Blatch: My Lords, I know that the noble Lord's experience in education is much more extensive than mine. But I wonder whether he has physically been in a school when the seven year-old tests have been carried out. What happens in practice when children are tested in reading is that one day they are heard to read by a teacher, but this is not called testing; another day, when they are sitting reading one to one with a teacher, it happens to be called testing.
In most cases, in the hands of a good teacher, the child hardly knows that testing is going on. Testing the
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reading of a child at seven is fundamental to the progress of that child. If one goes into many of our secondary schools, as I do, one often finds large remedial departments. When one inquires why some children are in the remedial department, one frequently finds that it is because they did not acquire and consolidate the basic skills early in their lives in primary and infant schools. It is therefore fundamental to their progress that they learn and that the effectiveness of that learning is properly tested.
The noble Lord, Lord Glenamara, said that one-third of children do not learn to read until they are seven. That is precisely the rationale for introducing a national curriculum—so that we do not wait until they are seven before they learn to read; in fact, that they learn to read from the moment that they go into school and by the ages of six or seven they are making some progress—progress that matches their potential to learn.
Baroness Young: My Lords, is my noble friend aware that unlike other noble Lords who have spoken, I welcome the Statement? It is a positive response to public anxiety, and all of us who are interested in the important subject of education are aware of some of the difficulties that have been encountered.
I support standing by the testing arrangements this summer. I am glad to hear that we are going to look to 1994 for focusing on the basics, if I understood it correctly, of English, maths and science at 7 and 14. However, there is no doubt that we shall learn from the 14 year-old tests carried out this summer and they will be helpful in identifying the way forward.
It is worth remembering that when we introduced the Education Reform Act 1988—I will be corrected if I am wrong—many teachers did not want a simple test. They said it would be unfair. The Government therefore went into this much more complicated system of testing and assessment which now everybody complains is too complicated. There must be a way through all this and I am glad that Sir Ron Dearing is looking at it. I hope that he will find a way through.
If there is one positive success story that comes out of this, it is the seven year-old tests. It cannot be said too often that they have already raised standards—something for which we should all be grateful. The noble Lord, Lord Glenamara, may laugh and say that they are "cruel nonsense", but I too have taught for primary school teachers. I have looked at the test papers to see their content. Nobody will say that they are perfect but they have raised standards. I do not believe for one moment that seven year-olds are hurt by them. On the contrary, there is a broad measure of support for the testing.
I know what the polls said at the weekend because I read the results. But the fact is that when one looks at our education system as a whole, the brightest children have always been tested. They take A-levels because that is a qualification for higher education. The children that have suffered are the average and less average children because they are not being tested. That is where we are failing them. It is no use continuing to complain without bringing forward something positive. The Statement is a good way

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forward. I accept that the tests need amendment and I am sure that my noble friend would agree with that. But when the consultation period is over, we should be able to look to what should happen in 1994 and beyond.
Baroness Blatch: My Lords, I thank my noble friend for her welcome for the proposals. My noble friend makes the point well and it is true that evidence from this year's testing will be most helpful to Sir Ron Dearing in his work with teachers to effect and develop the tests in the future.
My noble friend is right when she refers to the importance of what is happening to seven year-olds. I wish to put on record that our infant and junior school teachers have risen magnificently to the challenge of the national curriculum. It has meant great changes for them. They have acted in an extremely sensitive way when testing seven year-old children. I have witnessed it at first hand.
But the most important point made by my noble friend, which I want to emphasise, is that it is as important to recognise and record progression for a child that starts at the bottom of the ability stream as it is for a child at the top of that stream. That is the rationale for both the national curriculum and for systematic assessment and testing.
Viscount Tonypandy: My Lords, I speak with some reluctance because I do not like to disagree with the noble Baroness, to whom I have listened often with agreement. Today I am disappointed. The noble Lord, Lord Glenamara, was a headmaster of a school in the North of England. He later became Secretary of State for Education and Science and through his life, like myself, he has kept in touch with the teaching profession.
In the 60 years that I have been linked with the teaching profession I have never known such overwhelming feeling from differing and rival unions. I believe it is unwise for Her Majesty's Government to say, as the noble and learned Lord, Lord Shawcross, said in 1946, that Whitehall knows best. He was proved wrong then. I believe that the Government are making a profound mistake in not doing this year what they propose to do next year. The noble Minister said that it would reduce the work of teachers. Why not do it now? I realise that in politics face-saving is very important—I like to save my own face from time to time—but there is an undoubted movement in the country, of which the Government are obviously aware (otherwise we would not have had this Statement today), to the effect that the will of the people is to take the advice of the teaching profession and to say that on this matter teachers know best.
Baroness Blatch: My Lords, I say to the noble Viscount, Lord Tonypandy, that I hope I have not detracted from the great experience and expertise of the noble Lord, Lord Glenamara. I said at the outset that his expertise outmatched my everyday experience. This House and indeed the country have benefited enormously from his enormous experience in government.
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The Government understand the widespread concern but cannot ignore Thursday and what teachers and parents are saying. I believe I have made the case that the Government have not ignored it. That is why the tests for seven year-olds are better this year than they were last year and were better last year than the year before. It is only by working with teachers in the classroom and listening to their concerns that we can respond.
The problem arose because of the enthusiasm and perhaps zealousness of the professionals in drawing up the subject orders. It was when the national curriculum started to come together that an unmanageable package was produced, particularly for primary schools. Sir Ron Dearing and his review team will be looking at manageability, the issue of overload —which we have admitted is particularly an issue for primary schools—and the formulation of a less complex assessment system. My noble friend Lady Young talked about trying to satisfy teachers who did not want straightforward tests that simply tested achievement but wanted diagnostic and summative testing all in one form, which led to a system that was too complex. We are looking at that too.
We have been asked why we do not change the system this year. We are only about four weeks from the tests that are to be sat. These children are being tested on a very small number of subjects. Many of the seven year-olds are more than half-way through their tests at the moment. We believe that primary school teachers will welcome the fact that we are to take a more fundamental look at the whole of the national curriculum and assessment and testing system. I do not believe that it will do the children any harm to sit the tests this year, but they will provide very important evidence for Sir Ron Dearing and his team to use in working with teachers to develop better and more effective tests next year and for years to come.
Lord Stoddart of Swindon: My Lords, is the noble Baroness aware that the Statement this afternoon has merely compounded the confusion that already exists and creates more chaos in the education system than has ever appertained before? Is she also aware that the examination system has now been reduced to farce and the education department is the laughing stock of the country, if not the world? Can we expect the Secretary of State for Education to resign?
Baroness Blatch: My Lords, I certainly take issue with what the noble Lord has just said. We have not yet heard a response from other people to the Statement today. The Statement has put two things before the House. The review that is taking place at the moment will look at the national curriculum and the assessment and testing system and take into account the concerns of teachers, head teachers, governors and parents. It is important for us to let the schools, teachers and parents know what we plan to do for 1994. Far from confusing people, we have said that we will strip away those subjects which were planned to come on stream next year and test only on those basic subjects. We will look at how in the interregnum we can simplify and streamline the testing

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in 1994. I believe that that makes the position clearer and there is much less confusion, which is the opposite of what the noble Lord has just said.
Lady Carnegy of Lour: My Lords, I too welcome the Statement, particularly the last part of it which speaks of the speedy implementation of decisions once finally made.
The noble Lord, Lord Judd, has said that he admires the Scottish testing system. I also admire it. But I would draw to his attention the fact that my predecessor in office, the chairman of the education committee in Tayside (who is a member of the Labour administration in Tayside at the present time), has for some months been stirring up a boycott to try to prevent testing in Tayside, using very much the same language as the noble Lord has used. I sometimes wonder whether or not the Labour Party is in favour of testing as part of the education process.
Perhaps I may refer to a speedy conclusion of the results of the current consultation and the final arrangements to be implemented in schools. I hope that my noble friend can assure us that the procedure she has suggested will result in quick implementation. Children are only 7, 11 and 14 once and they desperately need these tests. Teachers need them and parents want them. It is extremely important that Parliament, through its enjoyment of intruding into the education system by way of political discussion, does not hold up the implementation of those tests.
Baroness Blatch: My Lords, perhaps I may thank my noble friend Lady Carnegy of Lour for her welcome of this proposal. As to the point about speedy implementation, I can give her the assurance that, as pointed out to the noble Baroness, Lady Hamwee, the Government want to carry out a thorough exploration of this issue and then go for the speediest possible implementation in the interests of children and teachers. As to the Scottish system, because there is no national curriculum in Scotland, the testing system is basically different. I also make the comment made by my noble friend. I do not believe that noble Lords opposite support testing, and I know that they do not support public information and public accountability for that testing.
Lord Dormand of Easington: My Lords, I have seldom seen so many red herrings swim past the Government Front Bench. In the first place, we must get absolutely clear that teachers are not against testing. They are as keen, enthusiastic and dedicated about testing as the Government profess to be. What they are against is the present form of testing. I remind your Lordships that the objections that have been voiced are two-fold: first, that the tests are fundamentally flawed, which is a matter of professional judgment, and, secondly, concern about bureaucracy and the time that is being taken up in the classroom itself. Last week, following the Government's humiliating defeat in the elections the first thing that the Prime Minister said, very properly, was that he would listen to people. By an overwhelming majority all of the unions, except for
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the NUT—and there is no question what the declaration of that union will be on Thursday—have expressed their view. If the Government will not listen to that, heaven help the education system. I end by putting a practical question to the Minister. Who will administer the tests this year? That matter has not been touched upon. If the Government do not get proper co-operation after a proper ballot, which they are obviously not getting, who on earth will do the testing this year?
Baroness Blatch: My Lords, pre-1988 it is not possible to say that all children were tested in schools. For many children going through schools the first public testing they had—or the first testing against any kind of standard—was the GCSE at the age of 16, which for many children was much too late. The noble Lord mentioned the National Union of Teachers. It is worth recording prior to the result of the ballot, which I think is fairly predictable, that the National Union of Teachers is opposed to all national curriculum testing in all subjects at all levels for all children. I do not believe that is constructive in this debate.
The noble Lord's final question was about obligation. There is a statutory obligation on head teachers and governors to see that the tests are administered. We would expect them to make all reasonable efforts to see that the tests were administered.

Housing and Urban Development Bill
5.21 p.m.
Consideration of Amendments on Report resumed on Clause 1.
Lord Coleraine Lord Coleraine moved Amendment No. 2:
Page 2, line 29, leave out ("qualifying tenant of a flat") and insert ("tenant of a flat or other unit").
The noble Lord said: My Lords, in moving this amendment I speak also to Amendment No. 3. These are technical amendments. Under Clause 1, flat owners are entitled but not obliged to enfranchise in respect of appurtenant property demised by the leases of qualifying tenants. Appurtenant property is property outside those premises which are the primary subject of the enfranchisement, and is defined as any garage, outhouse, garden, yard and appurtenances belonging to or usually enjoyed with the flat. In addition, enfranchising flat owners are entitled to ask to acquire land outside the relevant premises which qualifying tenants are entitled under their leases to use in common with the occupiers of other premises.
The amendments would allow the enfranchising qualifying tenants to have exactly the same options to acquire appurtenances and rights of user in respect of commercial properties and other flats in the building; that is to say, flats held on short leases and flats held on long leases but not at low rents.
There may be a case for not extending the provision to short leases, but as regards long leases there seems to me to be no reason why commercial properties and flats should not be sold with their appurtenances and rights, which is what would happen in the property market in the normal way. The appurtenances and

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rights would have to be paid for in the usual way together with any severance payment, injurious affection payment, under paragraph 5 of Schedule 5.
I should like to give examples which illustrate my point. It may be that the garages built with a block of flats are in a separate block, or it may be that the storage facilities associated with a shop are similarly in a detached building. It would be curious if all the garages and the storage space could not be acquired in one go with the freehold reversions to the flats and shop. Another situation would he where a ground floor flat with an adjoining garden would be detached from the garden at the coming to an end of the lease.
In all these cases the rights which I would extend to flat owners can be overreached by the freeholder exercising the right of leaseback. I put it to my noble and learned friend the Minister that an amendment along the lines of this group would give a better and more realistic balance to this part of the legislation.
The Lord Advocate (Lord Rodger of Earlsferry): My Lords, I have listened with interest to what my noble friend has said. I noticed that in his concluding words he talked about a balance. It seems to me that in saying that he hit upon what is correct. In this matter one has to have regard to balance. Built into the Bill there is a certain balance. While the policy in the Bill is to extend enfranchisement to as many tenants as possible, nonetheless we have tried to do that at the same time as restricting to the minimum the amount of property which qualifying tenants can acquire. Accordingly, under Clause 1, as it is drafted, they may acquire only property demised in their own leases including, if it is demised in their own leases, appurtenant property such as a garage, a garden or whatever it may be. They may also get any property which they are entitled to use in common with others. Given that the property is being acquired against the freeholder's will, that seems to us to be the correct principle to apply.
On the other hand, my noble friend's amendment seeks to extend the right of acquisition to appurtenant property demised in leases held by tenants, other than the qualifying tenants, of any flats and units contained in the relevant premises and also to property which any of the tenants of flats—and not just the qualifying tenants—is entitled to use in common with others. Given the basic approach, which is to minimise the amount of property being taken, we did not want to allow the enfranchising leaseholders to acquire appurtenant property let to non-qualifying tenants or property over which non-qualifying tenants have rights of use in common with others, although I can see that in certain circumstances that might at least be convenient.
Our policy is to allow the qualifying tenants to be entitled to acquire the minimum property necessary in order to give them control of the property demised to them or over which they have rights. I recognise that this may result in a division of the reversionary interests in some non-qualifying properties, but there is no reason why that should adversely affect the tenant of the property because the terms of the lease will remain unaltered.
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My noble friend Lord Coleraine drew attention to the provisions of Clause 19(4). Under those provisions, the existing reversioner may in the counter notice require the enfranchising leaseholders—the nominee purchaser—to acquire any interest in the premises that would for all practical purposes cease to be of use and benefit to the freeholder or any of the other landlords or would cease to be capable of being reasonably managed or maintained by him. I believe that this power is likely to be used in many cases where isolated units would remain outside the enfranchisement.
Where the existing freeholder or any intermediate leaseholder is prepared to retain those interests, and is willing to remain as landlord to the non-qualifying tenants in respect of those interests, it is consistent with what I have outlined as the fundamental approach of the Bill that he should be entitled to do so. I do not see that this should lead to any insurmountable problems. For those reasons I would ask my noble friend to withdraw the amendment.
Lord Coleraine: My Lords, I am grateful to my noble and learned friend for his detailed reply. It is, as he said, a matter of balance. When the Bill is in operation we shall see how it works out. I would anticipate amending legislation fairly shortly after the Bill has been in operation. That would be the time to press this amendment further if it seemed to be needed. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 3 not moved.]
Viscount Goschen Viscount Goschen moved Amendment No. 4:
Page 3, line 17, leave out ("and") and insert ("or").
The noble Viscount said: My Lords, in moving Amendment No. 4, I should also like to speak to the other amendments that have been grouped with it. This large group consists of technical amendments which are needed to clarify certain provisions, to correct cross references and amend minor defects. They have been drafted in response to comments and also on further consideration of the Bill. They are needed to ensure that the provisions of the Bill will work effectively. I am sure that the House will not wish to waste its very valuable time by requiring a detailed explanation of each amendment, although I am willing to provide an explanation if there is any uncertainty about the effect of any of the amendments. I beg to move.
5.30 p.m.
Lord Williams of Elvel: My Lords, I am grateful to the noble Viscount for speaking to this very large group of amendments. I record my gratitude to the Government for giving me early warning of these amendments, first, that they would be tabled and, secondly, that they were to be grouped in the way that they have been. I have no objection to that procedure.
The noble Viscount very kindly offered to say something more about any of the amendments if there was any difficulty. There are three amendments in the group which I would like to ask the noble Viscount about. The first is Amendment No. 60. As I

1219
understand it, it deals with compulsory purchase. Where an acquiring authority serves notice to treat, then the vesting order which is referred to in Schedule 4 ceases to have effect.
The questions that I ask of the noble Viscount as regards that amendment are these. At what stage does notice to treat become effective in the sense of ceasing the activity of the vesting order? Is it the mere fact that the compulsory purchasing authority lodges a notice to treat with some appropriate body and makes a press announcement? How are we to be certain that it is genuine? A certain number of questions arise from this amendment and I shall be grateful if the noble Viscount can spell out in a little more detail what Amendment No. 60 means.
The second amendment about which I wish to ask questions is Amendment No. 112 to Clause 53. I ask these questions because I find it very difficult to understand the language used in the amendment. I am sure that it is technically correct, but can the noble Viscount explain in words of one, or possibly two, syllables, what that amendment achieves? As regards subsection (6) it is apparently a declaratory amendment. I am quite surprised to see such an amendment with the words,
"It is hereby declared that",
in the middle of a clause. I understand that there are declaratory clauses at the beginning of a Bill. I hope that the noble Viscount can help me on that matter.
The last amendment on which I have questions is Amendment No. 115. What does the expression "for the time being" mean? I am not quite sure how that is meant to operate. Having looked through the amendment, in principle we have no particular objection. I am taking up the offer of the noble Viscount to explain in more detail the three amendments to which I have drawn your Lordships' attention.
Viscount Goschen: My Lords, Amendment No. 60 adds an express provision as to the effect that compulsory purchase proceedings will have on an order for the vesting of a landlord's interest. As originally drafted, paragraph 5 was intended to make provision to this effect by stating that Clause 28(5) would apply as if any references to a binding contract being entered into were references to a vesting order being made.
However, Clause 28(5) not only refers to a contract being entered into but also to the completion of the acquisition and to the discharge of the contract. Therefore, it is not enough simply to treat references to a binding contract as references to an order for vesting. So Amendment No. 60 and the consequential Amendment No. 59 provide an express provision for vesting orders in place of the cross-reference to Clause 28(5). The notice to treat is a formal step when the acquiring authority serves a statutory notice on the owner of the property.
Amendment No. 112 ensures that the grant of a renewed lease by the local authority, housing association, housing action trust or an approved landlord who has acquired a public sector landlord's interest is not treated as disposal requiring consent
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under any of the provisions described in paragraph 9(2) of Schedule 9. Without a declaration to that effect there may be doubts as to whether consent is required.
Amendment No. 115 is a clarification of the valuation provisions for the granting of new leases. It concerns the valuation of intermediate interests and clarifies that these are to be valued subject to any intermediate leases between them and the tenant's lease and subject to that lease. It is important to ensure that proper valuation is made, taking into account all existing contracts. This is a necessary drafting amendment and I commend it to the House.
On Question, amendment agreed to.
[Amendment No. 5 not moved.]
Clause 3 [Premises to which this Chapter applies]:
Lord Carnock Lord Carnock moved Amendment No. 6:
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: My Lords, in moving this amendment I shall be speaking also to Amendments Nos. 17, 22, 24 and 32, all of which stand in my name. Amendment No. 6 is the same as an amendment which I moved in Committee and which, in the case of blocks containing five flats or more, provides for the elimination of fractions when applying the two-thirds, low-rent test; in other words, any resulting fractions will always be rounded down. Under the Bill the fractions are always rounded up.
A rounding down process will help tenants in the smaller blocks of flats to become qualified for enfranchisement. The amendment will be of particular help in the case of blocks containing seven, eight, 10, 11, 13 and 14 flats. Amendment No. 32 provides that an initial notice must be signed by at least four-ninths of the tenants in the block in order to preserve the present position under the Bill as now drawn. Amendment No. 17 provides that all flats at a rent of £300 or less in London and £75 or less elsewhere would be considered to comply with the low-rent test without more ado.
My vision is clearly fixed on the moderate flats and my gaze is averted from those who occupy luxurious flats in fashionable parts of the West End of London. It is in this area of the modestly-priced flats that the burden of leasehold tenure presses the most heavily. It is in this area that tenants will have the greatest difficulty in obtaining advice. It is in this area that there is the greatest exploitation; the greatest number of uncaring landlords; the greatest amount of unemployment; the greatest amount of social deprivation. It is in this area that the inequalities, anomalies and injustices of the present law will be at their most apparent and most abrasive. It is in this area that the relief given by this amendment will be the most welcome and have the most widespread effect.
Amendment No. 22 is similar to an amendment which I moved in Committee. It will assist tenants in establishing that their flats qualify for enfranchisement by enabling rateable values to be increased to take account of improvements. Amendment No. 24 provides for the indexation of rateable values. During

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the period 1st April 1973 to 31st March 1990, the two-thirds low-rent test became progressively more perverse. During that period rents were escalating with inflation while rateable values remained fixed, the policy of quinquennial valuations having been abandoned. Capital gains tax has been indexed for years. The formula that I have used in this amendment has been taken from the Taxation of Chargeable Gains Act 1992. I shall be listening carefully to your Lordships' views. I beg to move.
Viscount Bridgeman: My Lords, I should like to support my noble friend Lord Carnock and to speak particularly to Amendment No. 17. The Bill as it stands would fail to achieve one of the basic intentions of this Government, which is td enfranchise a substantial number of leaseholders of flats who are paying low rents. Those paying less than £300 per year represent probably 90 per cent. of long leaseholders of flats. The low-rent test as it stands is based on a system of valuation, the rateable value, which is now obsolete, to which my noble friend referred. He referred also to the absence of quinquennial assessments, which were part of the old rating system. The effect has been quite simply an arithmetical anomaly. In Committee my noble friend gave an example of a lease on a flat taken out in 1973 for which the ground rent was £50 and the rateable value £270. Clearly, that satisfied the low-rent test. Fifteen years later, an identical flat might have attracted a rent of £300 but, as we have seen, the rateable value would have remained £270, and the low-rent test would have failed.
The test has become perverse. To apply the low-rent test, as currently drafted, produces a throughly flawed result, and, almost by default, a large number of leaseholders, particularly in the middle and lower rent groups, will remain disenfranchised. Of those, there will, regrettably, be a significant number of tenants of bad landlords who in many cases exact exorbitant service charges and neglect to maintain properties.
I should also like your Lordships to bear in mind that many leaseholders in the low-rent category will be unfamiliar with property law and will not be able to afford expensive legal advice. When the time comes for a collective decision to be taken on whether to apply for enfranchisement, they may well (through ignorance or for whatever cause) have disadvantaged themselves.
A further serious problem is likely to occur where entire blocks of flats are disenfranchised. That situation has come under discussion from many quarters and from many sides in this debate. In this case, the Government must realise that by the unjustifiable exclusion of, say, a couple of flats, they risk the possible disenfranchisement of all the flats in that block—in other words, a compounding of the injustice brought about by the anomaly.
The Bill as it stands is flawed by a legislative accident quite outside the Bill—the freezing of the rateable value. The provision that flat leases with rents of less than £300 are treated as low-rent flats with no further low-rent test has the merit of simplicity. It brings into the enfranchisement the vast majority of
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long leaseholders of flats and, it must be said, frees many of them from the abuses of bad landlords. I very much hope that the Minister will take note of the amendment.
Lord Harding of Petherton: My Lords, I should like to add my voice to those supporting the amendments, especially Amendment No. 17. It seems ridiculous that flats with obsolete rateable values should be excluded from the terms of the Bill. The only way to include them would be to provide a rent threshold, as laid down in the amendment.
Lord St. John of Bletso: My Lords, I, too, wish to join in supporting Amendment No. 17. Clearly, there is an anomaly in the low-rent test. As the noble Viscount, Lord Bridgeman, has already pointed out, in the 1970s properties had rents that were in reasonable proportion to their rateable value. However, as your Lordships know, rateable valuations have not changed since 1973. Clearly, the threshold provided in the amendment will provide, not necessarily for those at the top end of the bracket, but particularly for the property owners at the lower to middle end of the market. Clearly, therefore, I support the amendment.
5.45 p.m.
Lord Williams of Elvel: My Lords, there is some difficulty in this grouping. I am sorry that the noble Lord, Lord Carnock, accepted it because it groups a relatively "mild" amendment—if I may put it like that —Amendment No. 6, which deals with fractions (which we support, although we would not die in the trenches for it) with a very important series of amendments on the low-rent test. I am referring to Amendment No. 17 and the subsequent amendments to which we now have to speak. I should very much have preferred to have been able to discuss Amendment No. 6 now and for Amendment No. 17 then to be taken in its place. If the noble Lord, Lord Carnock, would agree to ungroup the amendments, I should like to talk only about Amendment No. 6 now.
As we are on Report, I have only one chance to speak to this grouping, which as I have said, the noble Lord, Lord Carnock, has accepted. Let us suppose that the House were to accept Amendment No. 6. It is by no means clear that Amendment No. 17 would be consequential on Amendment No. 6 and it therefore could not be accepted on the nod, as it were, if Amendment No. 6 were accepted. It is a great pity that we have got ourselves into this confusion, and this is one of the reasons why I mentioned this thought earlier.
Lord Carnock: My Lords, with the leave of the House, I should be prepared to accept the degrouping that has been suggested.
Lord Williams of Elvel: My Lords, I am most grateful. Again, with the leave of the House, I should prefer to speak to Amendment No. 6 now and to have a further debate on Amendment No. 17 in its place. As the note on groupings, to which I drew the House's attention, states:

1223
"It is … open to any Peer to speak to an amendment in its place in the Marshalled List".
I should very much prefer to speak to Amendment No. 17 when it comes in its place, but I shall yield if the noble Lord, Lord Renton, wishes—
Lord Renton: My Lords, I wonder whether I may seek guidance without being considered to have made a speech. I do not intend to comment on the amendments moved by the noble Lord, Lord Carnock, but to point out that he very wisely did not refer to Amendments Nos. 29 and 30, which are my amendments and which are grouped very strangely, if I may say so, with this group of amendments. My amendments have a completely different purpose from all the other amendments in this group. Therefore, unless my noble friend Lord Strathclyde, who is always so considerate in these matters, is prepared to give me an undertaking that either or both of my amendments are accepted, I shall have to. move them separately when we reach them and to have a separate debate when No. 29 is reached. As I understand it, one is entitled to ask for that.
Lord Monson: My Lords, I agree with the noble Lord, Lord Williams of Elvel. The noble Lord, Lord Carnock, spoke to a great many amendments, covering a wide range of issues, by no means all of which are interconnected. I can see that, from the Government business managers' point of view, they want to rush things through as quickly as possible, but I do not think that it is a good idea from the point of view of the House because we do not then have a chance to fulfil our scrutinising role properly.
I wish to speak only to Amendment No. 6. If Amendment No. 1 had been agreed to, I might have had some slight sympathy for Amendment No. 6 since it would have helped to counterbalance the inadvertent side-effects of Amendment No. 1. As far as I am concerned, they would have been inadvertent since my support for Amendment No. 1 and consequential amendments was not based on any Machiavellian desire to sabotage the Bill as a whole, as some people seem to think; it was based on a desire to prevent large capital gains being made by people who, on any reckoning, are totally undeserving of such gains.
However, Amendment No. 1 was not pressed and I am therefore opposed to Amendment No. 6 because the main people who will be hit by it will be small landlords. Where a building contains 20 or 25 flats it will not make a great deal of difference because that will mean a difference between 13 and 14 in the first instance and 16 and 17 in the other. Therefore, percentagewise, the difference will not be very much. However, where the building contains only five flats it will make a very great difference, which will be at the expense of the small landlord. The small landlord is unlike some of the other groups of landlords who have powerful, well-financed and influential people to fight on their behalf. Hence, I am afraid that I must oppose Amendment No. 6.
Lord Williams of Elvel: My Lords, I hope that I am justified by regarding the intervention of the noble
1224
Lord, Lord Monson, as a comment made during my speech. My speech began by stating that we should ungroup—if I may use that unpleasant expression—Amendment No. 6 to which I wish to speak, and about which the noble Lord, Lord Monson, intervened, from the low rent provisions which are contained in Amendment No. 17 and subsequent amendments; and, indeed, from the amendments of the noble Lord, Lord Renton, which, as the noble Lord quite rightly indicated during another intervention in my speech, have nothing to do with either Amendments Nos. 6 or 17. I wish, therefore, to address my remarks to Amendment No. 6.
It seems to me that it is a minor but sensible amendment that the noble Lord, Lord Carnock, moved and it is one which we support. It would extend, even by a slight margin, the ability of people to enfranchise. Anything which has that effect has our support. Therefore, I simply conclude by saying that this is a debate about Amendment No. 6, which we support. I very much hope that the noble Lord, Lord Carnock, will speak to and move Amendment No. 17 when we reach it. I also very much hope that the noble Lord, Lord Renton, will move his amendments; that is, unless we receive an assurance from the Minister that he need not bother to do so because the amendments are already accepted.
Baroness Hamwee: My Lords, I should like to put on record our support for Amendment No. 6. I do not think that it is necessary to rehearse the arguments, save to say to the noble Lord, Lord Monson, that I do not think that a landlord who is the freeholder of a small building is necessarily a small landlord; indeed, there must be many property companies and individuals that have a range of properties within their portfolios. One cannot put forward arguments based on the size of the buildings as to the holdings or wealth of the landlord in question.
The Earl of Kinnoull: My Lords, I should like to add my voice to the comments made about the grouping issue. I have tabled two amendments—Amendment Nos. 10 and 175. They deal with totally different issues and I should like them to be taken separately. I do not blame my noble friend on the Front Bench for the situation because, in any event, the grouping is informal.
Lord Coleraine: My Lords, I should like to express my support for the amendment. I also hope that my noble friend Lord Carnock, will take the advice of the noble Lord, Lord Williams, and speak to the amendment when we reach its normal place on the Marshalled List so that we can discuss it in more detail.
Lord Strathclyde: My Lords, we discussed in Committee the issue of the number of qualifying tenants needed for a block to be enfranchiseable. I said then that I would consider the matter further, and that I have done. But I have to tell noble Lords that my position has not changed. We intend to retain the two-thirds thresholds. I agree that there are situations where the two-thirds by two-thirds rule means that the actual number of tenants needed exceeds 67 per cent.

1225
because of the way that the arithmetic works. But the distortion is not very great in blocks containing more than 10 flats.
We have considered carefully whether provision should be made to bring the effective thresholds nearer to 67 per cent. But to round down the number to the nearest whole number would merely distort the figures in the other direction. Enfranchisement would be possible by fewer than four-ninths of all the tenants in the block, which is of course the minimum allowed by the general two-thirds by two-thirds rule. As my noble friend Lord Renton said, his amendments deal with that aspect and we shall debate them later.
I note that to prevent that happening noble Lords have tabled an amendment to the effect that the initial notice cannot be given by less than four-ninths of the total number of tenants in the block. But such complicated amendments would have very little impact. It is true that more blocks would become enfranchiseable, but the proposal to round down the two-thirds fraction with a floor of four-ninths of the total number of tenants in the block does not actually make any difference to the minimum number of tenants who must participate.
Perhaps I can explain that by way of an example. In a block of seven flats, under the provisions of the Bill the minimum number of qualifying tenants is five and the minimum number of participating tenants is four. If Amendments Nos. 6 and 32 were accepted, in a block of seven flats the minimum number of qualifying tenants would be four—that is, 4.6 rounded down to 4—but the minimum number of participating tenants would still be four, because it must not be less than four-ninths of the total number of tenants in the block, which in this example is 3.1.
The whole point is that wherever the line is drawn it is inevitable that some blocks will fall just outside. To make adjustments for particular types of blocks would make the Bill unnecessarily completed. We are not disposed to move away from the broad principle of the two-thirds rule, which ensures that the block is occupied by a majority of qualifying tenants and that a majority of those qualifying tenants are in favour.
I believe that our two-thirds threshold is fair. As I said earlier, we shall discuss later the separate issue that at least half the tenants in the block must participate in giving the initial notice—a matter to be dealt with in the amendments of my noble friend Lord Renton. As for the low rent test, I am happy for that to be dealt with when we reach that stage on the Marshalled List. I hope that I have not disappointed my noble friend in not being able to accept his amendment. However, I hope that he understands why that is the case and on that basis will feel able to withdraw the amendment.
Lord Carnock: My Lords, I thank my noble friend the Minister for that reply. In the circumstances, I propose, with the leave of the House, to withdraw the amendment.
Noble Lords: No.
The Deputy Speaker (Lord Alport): My Lords, is it your Lordships' pleasure that this amendment be withdrawn?
Noble Lords: No.
5.56 p.m.
On Question, Whether the said amendment (No. 6) shall be agreed to?
Their Lordships divided: Contents, 85; Not-Contents, 156.

Division No. 1

CONTENTS

Addington, L.

Jenkins of Hillhead, L.

Airedale, L.

Jenkins of Putney, L.

Amherst of Hackney, L.

Judd, L.

Ardwick, L.

Kagan, L.

Attlee, E.

Kilbracken, L.

Belhaven and Stenton, L.

Killearn, L.

Birk, B.

Lindsey and Abingdon, E.

Bonham-Carter, L.

Listowel, E.

Boston of Faversham, L.

Macaulay of Bragar, L.

Bridgeman, V.

McIntosh of Haringey, L.

Brooks of Tremorfa, L.

McNair, L.

Carmichael of Kelvingrove, L.

Mason of Barnsley, L.

Carnock, L.

Mayhew, L.

Clewyn of Penrhos, L.

Merlyn-Rees, L.

Clinton-Davis, L.

Meston, L.

Cocks of Hartcliffe, L.

Molloy, L.

Coeraine, L.

Monk Bretton, L.

Dean of Beswick, L.

Morris of Castle Morris, L.

Desai, L.

Mulley, L.

Dormand of Easington, L.

Nicol, B.

Ewing of Kirkford, L.

Northbourne, L.

Fitt, L.

Ogmore, L.

Foot, L.

Pitt of Hampstead, L.

Galpern, L.

Prys-Davies, L.

Gardner of Parkes, B.

Renfrew of Kaimsthorn, L.

Geraint, L.

Richard, L.

Gladwyn, L.

Robson of Kiddington, B.

Glenamara, L.

Rochester, L.

Graham of Edmonton, L.[Teller.]

Seear, B.

Sefton of Garston, L.

Grantchester, L.

Stoddart of Swindon, L.

Grey, E.

Strabolgi, L.

Hampton, L.

Taylor of Blackburn, L.

Hamwee, B.

Taylor of Gryfe, L.

Hanworth, V.

Thomson of Monifieth, L.

Harding of Petherton, L.

Tordoff, L.[Teller.]

Harris of Greenwich, L.

Varley, L.

Hilton of Eggardon, B.

Warnock, B.

Hollis of Heigham, B.

Whaddon, L.

Holme of Cheltenham, L.

White, B.

Hughes, L.

Wigoder, L.

Hutchinson of Lullington, L.

Williams of Elvel, L.

Jay, L.

Winchilsea and Nottingham, E.

NOT-CONTENTS

Abercorn, D.

Brentford, V.

Ailesbury, M.

Brougham and Vaux, L.

Aldenham, L.

Bruntisfield, L.

Aldington, L.

Cadman, L.

Allenby of Megiddo, V.

Caithness, E.

Alport, L.

Campbell of Alloway, L.

Annaly, L.

Carnegy of Lour, B.

Arran, E.

Carr of Hadley, L.

Astor, V.

Cavendish of Furness, L.

Astor of Hever, L.

Cawley, L.

Belstead, L.

Chalker of Wallasey, B.

Birdwood, L.

Charteris of Amisfield, L.

Blatch, B.

Chelmsford, Bp.

Bledisloe, V.

Clark of Kempston, L

Boardman, L.

Clinton, L.

Bolton, L.

Cochrane of Cults, L.

Boyd-Carpenter, L.

Colwyn, L.

Brabazon of Tara, L.

Constantine of Stanmore, L.

Braine of Wheatley, L.

Cranborne, V.

1227

Crawshaw, L.

Monson, L.

Crickhowell, L.

Mottistone, L.

Cumberlege, B.

Mountgarret, V.

Daventry, V.

Mowbray and Stourton, L.

Davidson, V.

Moyne, L.

Denham, L.

Murton of Lindisfarne, L.

Denton of Wakefield, B.

Norrie, L.

Dilhorne, V.

Onslow, E.

Dundonald, E.

Orkney, E.

Elibank, L.

Orr-Ewing, L.

Ellenborough, L.

Oxfuird, V.

Elles, B.

Palmer, L.

Elliot of Harwood, B.

Park of Monmouth, B.

Elliott of Morpeth, L.

Pender, L.

Elton, L.

Peyton of Yeovil, L.

Faithfull, B.

Portsmouth, E.

Ferrers, E.

Prentice, L.

Fraser of Carmyllie, L.

Radnor, E.

Fraser of Kilmorack, L.

Rawlinson of Ewell, L.

Geddes, L.

Reading, M.

Gisborough, L.

Rees, L.

Goschen, V.

Renton, L.

Gray of Contin, L.

Rodger of Earlsferry, L.

Grimston of Westbury, L.

Romney, E.

Haddington, E.

Roxburghe, D.

Hamilton of Dalzell, L.

St. Davids, V.

Hardinge of Penshurst, L.

Shannon, E.

Harmsworth, L.

Shrewsbury, E.

Harrowby, E.

Skelmersdale, L.

Harvington, L.

Stewartby, L.

Hayhoe, L.

Stockton, E.

Henley, L.

Stodart of Leaston, L.

Hertford, M.

Strafford, E.

Hesketh, L. [Teller.]

Strange, B.

Holderness, L.

Strathcarron, L.

HolmPatrick, L.

Strathclyde, L.

Hood, V.

Strathmore and Kinghorne, E. [Teller.]

Howe, E.

Hylton-Foster, B.

Sudeley, L.

Iddesleigh, E.

Suffolk and Berkshire, E.

Jeffreys, L.

Swansea, L.

Jenkin of Roding, L.

Swinfen, L.

Johnston of Rockport, L.

Swinton, E.

Kimball, L.

Terrington, L.

Kindersley, L.

Teviot, L.

Kintore, E.

Teynham, L.

Knutsford, V.

Thomas of Gwydir, L.

Lauderdale, E.

Torrington, V.

Layton, L.

Trumpington, B.

Lindsay, E.

Ullswater, V.

Long, V.

Verulam, E.

Lucas of Chilworth, L.

Vivian, L.

McColl of Dulwich, L.

Wakeham, L.

Mackay of Clashfern, L.[Lord Chancellor.]

[Lord Privy Seal.]

Westbury, L.

Mancroft, L.

Wilberforce, L.

Marlesford, L.

Wise, L.

Merrivale, L.

Wolfson, L.

Mersey, V.

Wyatt of Weeford, L.

Middleton, L.

Wynford, L.

Milverton, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.7 p.m.
Lord Strathclyde Lord Strathclyde moved Amendment No. 7:
Page 5, line 18, leave out from ("are") to ("and") in line 19 and insert ("neither—

(i) occupied, or intended to be occupied, for residential purposes, nor

(ii) comprised in any common parts of the premises;").

The noble Lord said: My Lords, I beg to move.
Lord Williams of Elvel: My Lords, am I right in thinking that the Minister has not spoken to this
1228
amendment? On the grouping that I have he is due to make a speech explaining what Amendments Nos. 7 and 8 are about.
Lord Strathclyde: My Lords, the noble Lord is entirely correct. The noble and learned Lord the Lord Chancellor caught me out when he asked me to move my amendment. I believed that I was moving one of the consequential amendments to Amendment No. 4. In fact we are on Amendment No. 7 which is grouped with Amendment No. 8. Perhaps with the leave of the House I may explain the amendments. I am grateful to the noble Lord, Lord Williams, for his intervention.
In Committee, I agreed to reconsider the definition of internal floor area to ensure that parts of a block of flats let with flats and used for car parking and storage should be included in the residential space. I have given the matter further thought and believe that clarification of our intention would be helpful.
I am pleased to bring forward on amendment to achieve that. It replaces Clause 4(1) (a) while Amendment No. 8 adds a new subparagraph to the same subsection. Their effect is to treat all garages, parking spaces and storage areas which are within the building positively as part of the residential floor area of that building provided that they are occupied, or intended to be occupied, for residential purposes or used in conjunction with any parts so occupied. They will not therefore be included in the calculation of the non-residential area. The amendments will thus differentiate between such areas intended for use in conjunction with residential property and those not allocated to tenants of flats under their leases which are let by the landlord for commercial use by third parties. It is right that such parts of the building should be included in the non-residential use calculation.
If the House accepts the amendment there should be no possibility of disputes about how such space within the building should be allocated. The provision is fair to all parties and it improves the Bill. I beg to move.
Lord Williams of Elvel: My Lords, the Question having been put, perhaps I may reply to the Minister's explanation of the amendments, which clarifies our discussion in Committee. The proposal preserves the balance in the Bill for which both sides of the House are looking. We shall not oppose the amendments. We are grateful to the Minister for them.
Baroness Gardner of Parkes: My Lords, I thank the Minister for bringing forward both amendments, in particular Amendment No. 8. It relates to an issue that I raised about garages. He said that it was designed to avoid any disputes. I suppose that "intended for use" may be helpful but I am not sure whether it covers the situation which I described. Many blocks of flats have underground parking, which was intended for the residents. However, many residents now living in central London no longer feel the need to own cars and they, the head lessee or the owner rent out a certain number of garages. The number may vary. Is it the case that if all the garage space in a block were let out it would become totally non-residential? I refer

1229
to garages being let to outsiders. The Minister said that it would be made clear that space let to outsiders was different. On the other hand, does the provision refer to a garage being let with a dwelling? In many blocks the garages are not let with the dwelling because there may be 50 flats but only 10 garage spaces. In the past the residents had to be put on a waiting list, but now that fewer people want to pay the high rents which are demanded for garages it may be that only five are occupied.
I can understand that the situation is complicated. I hope that the Minister will be able to assure me that the phrase "intended for use" means that whether or not a garage is occupied by business users, if it had been built with the intention of being part of a residential block it will qualify.
Will my noble friend also comment on the phrase "in conjunction with a particular dwelling?" In the situation that I have described the dwelling can change from time to time. Flat 1 may first have a garage but two years later flat 5 may have the same garage or car parking space. Although the amendment is helpful and I am grateful to my noble friend for moving it I believe that his idea that there will be no argument or discussion is optimistic. I support the amendment and I thank my noble friend for bringing it forward.
Baroness Hamwee: My Lords, the noble Baroness has raised an important issue. It is a mini-example of the issue that we discussed in conjunction with qualification; that premises could move in and out of the definition. That would be difficult to deal with. The point would not apply if a leaseholder sublet the garage space because the space would be used or there would be the intention that it should be used in conjunction with the leaseholder's own dwelling.
The noble Baroness was right to draw your Lordships' attention to the situation in which the garage space might be let independently by the owner of the building. I have experience of that. My firm is about to move into a new office block and the owners of the building have been talking to us about the use of garage spaces which were built at the behest of the local planning authority for use in conjunction with a neighbouring residential block.
Perhaps we could look at how the phrase "particular dwelling" relates to the premises. Some work might be done on that which could narrow the issue. Perhaps we could use the phrase "in conjunction with a dwelling" rather than "a particular dwelling".
The Earl of Lytton: My Lords, I welcome Amendments Nos. 7 and 8. I can relate to the point made by the noble Baroness, Lady Gardner of Parkes. One of the unfortunate products of the Bill is that as one looks more closely one sees endless circumstances in which subdivision is possible. The amendments are not comprehensive and conclusive in terms of allowing no further questions to be asked as subsidiary questions, having answered the main question. Nevertheless, on balance they are welcome because they clarify serious omissions from the Bill. I welcome them, although my welcome is qualified for the reasons that I have given.
6.15 p.m.
Lord Strathclyde: My Lords, I am grateful for the general welcome given to the amendments. Following our discussion in Committee we realised that we needed further clarification. It was useful to hear the comments of noble Lords and perhaps I can do something further to tighten the definition. I shall reflect on the matter between now and Third Reading.
I turn to the point made by my noble friend Lady Gardner of Parkes. At the end of the day the way in which the clause operates will depend on the particular circumstances of the premises; for example, how many flats and garage spaces there are and so forth. My noble friend's example of 10 garage spaces and 50 flats is unlikely to be a problem because I suspect that 10 garage spaces will be less than 10 per cent. of commercial premises. The main point is that garage spaces which are essentially private will not be part of the commercial space. However, where, for instance, the basement has been let to NCP on a regular basis for third parties to park their cars, that will fall under commercial use.
I hope that I have explained the intention behind the amendments and I hope that the House will accept them. I accept that we may have to do some further thinking to see whether the provision can be tightened up.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 8:
Page 5, line 22, at end insert:
("( ) Where in the case of any such premises any part of the premises (such as, for example, a garage, parking space or storage area) is used, or intended for use, in conjunction with a particular dwelling contained in the premises (and accordingly is not comprised in any common parts of the premises), it shall be taken to be occupied, or intended to be occupied, for residential purposes.").
On Question, amendment agreed to.
Lord Monson Lord Monson moved Amendment No. 9:
Page 5, line 30, leave out ("four") and insert ("six").
The noble Lord said: My Lords, once again I wish to speak up for the small landlord affected by the Bill because, if I do not, it does not look as though anyone else will. However, I hasten to say that I do not fall into that category. By "small" landlord I mean the genuinely small landlord and not the large landlord who happens to own a number of small properties. I say that in response to the noble Baroness, Lady Hamwee, although I accept that her point was perfectly valid.
Specifically, I wish to speak up for the former owner occupier of a house, not a purpose-built block of flats, who has run into serious financial difficulties. That may be because of the machinations of certain Lloyds syndicates or for a variety of other reasons. In the circumstances he has had to convert the substantial house in London or in the country, in which he and perhaps his family have lived for generations, into five or six flats which are sold on long leases.
As the Bill stands the limit is a mere four. That is a totally unrealistic limit because many single houses, whether in London or in the country, can easily he

1231
converted into five or six flats or even more. Why should a resident landlord, who in all probability has a great sentimental affection for the house and grounds in which he has grown up, become a second-class citizen in his own property? By "property" I mean the fabric of the house and the grounds and not each individual flat. I believe that that is wrong and that the fixed limit is arbitrary. I am not asking for a great change but for a small change which will make the Bill fairer. I beg to move.
Baroness Hamwee: My Lords, I wonder whether the noble Lord has seen that my Amendment No. 25 seeks to deal in part with the issue which he raises; namely, the freeholder, his parents Or grandparents. Perhaps in responding, the noble Lord may wish to refer to that amendment.
Lord Coleraine: My Lords, I should like to indicate that I still have the sympathy that I expressed in Committee for the thinking behind the noble Lord's amendment. I would refer to Amendment No. 25 in a slightly different way. Before Amendment No. 9 is acceptable, the noble Baroness's amendment should be brought into the Bill because at present the right to claim the resident landlord's exemption is much too widely drawn. It enables someone who might happen to buy the last flat in a block of flats which is being converted, and with it the freehold, to be in the position of a resident landlord. As I understand it, Amendment No. 25 would go some way towards preventing that.
As regards the amendment before us, as I see it, there will be cases where a resident landlord situation would involve more than four flats. I understand from the Marshalled List that the Henry VIII clause is likely to be excluded from the Bill, and that is all to the good. Difficulties arise as regards the resident landlord's test. First, as I understand it, unless the block includes more than four flats, it is much more likely that the situation will be entirely reversed so that the lessees of one moment finish up as the landlords of the previous landlord. That is another reason why I have sympathy for the amendment.
It seems to me that the clause is also rather unfortunate in that it does not give the rights of a resident landlord to a long lessee who may have converted his home; but that is another matter.
Lord Campbell of Alloway: My Lords, I should like to ask my noble friend on behalf of whom he speaks. He once informed the House, in answer to a question by my noble friend Lord Peyton, that he was representing amendments proposed by the Law Society. I have seen a letter which says that that is not the case. I ask on behalf of whom the noble Lord speaks. I have always spoken only on behalf of myself.
Lord Coleraine: My Lords, with the leave of the House, I speak on behalf of myself. I did not say that I was speaking on behalf of the Law Society. At another stage I moved amendments recommended to me by the Law Society but in this case I speak on my own behalf. As I see it, I am speaking in a way that I hope will preserve a proper balance in the Bill between
1232
the interests of both flat owners and freeholders. It will not have escaped the notice of my noble friend that on this occasion my sympathies are with the freeholder.
Lord Strathclyde: My Lords, these amendments affect the resident landlord's exclusion provisions in Chapter I of the Bill. Your Lordships have heard that the amendment tabled by the noble Lord, Lord Monson, widens exclusion for resident landlords by applying it to premises containing not more than six units instead of not more than four units.
The amendment would widen the resident landlord exemption and deny more tenants the right to enfranchise. Later we shall consider amendments to Clause 9 tabled by the noble Baroness, Lady Hamwee, which do exactly the opposite; namely, they narrow the resident landlord exemptions in an attempt to make more leases enfranchiseable. Perhaps, given our discussions, we should have grouped the amendments together so that we could see the opposing arguments on either side.
I can see why those on the side of the landlord would want to widen or extend the resident landlord's exemption and as a result exclude even more flats from the right to enfranchise. I can also see why those on the side of the tenant would want to narrow or restrict the resident landlord's exemption and as a result extend enfranchisement to even more leaseholders.
We have deliberately restricted the resident landlord exemption to small blocks—and by that I mean blocks containing only four units or less. As I said in Committee, our purpose in limiting the resident landlord exclusion was to exclude smaller blocks that are the landlord's home. We can see no justification for excluding blocks with resident landlords that were purpose built as flats or for excluding larger premises that now contain a large number of units.
I appreciate that some large homes may have been converted into premises containing more than four units, but we have had to draw the line somewhere and we do not think the exemption should be extended. If we did, there are likely to be houses elsewhere converted into seven or eight flats, that have resident landlords, with equal claims to exemption.
We think we have got the balance about right. We do not want to alter or change the resident landlord's exemption and I would urge the noble Lord to withdraw the amendment.
Lord Monson: My Lords, I am grateful to the noble Lord, Lord Coleraine, for his support, slightly qualified though it is. I should like to pick up one point which he made. Like the Minister, the noble Lord referred to a block of flats. We are not talking about blocks of flats but about ordinary two or three-storey houses which have been converted into flats. We are not talking about blocks. That is what the argument is about.
I am grateful to the noble Baroness, Lady Hamwee, for her intervention. I had not spotted Amendment No. 25. At a quick glance, it looks interesting.
In the absence of widespread support for my amendment, I shall see how we get on when we reach Amendment No. 25. I believe that the Government are being unreasonable in this regard. It is true that

1233
some, but not many, houses have been converted into seven or eight flats. There are many more which have been converted into five or six flats, probably as many as have been converted into four flats. I believe that the line has been drawn in the wrong place. Let us see how we get on when we reach Amendment No. 25. I reserve the right to return to this matter but, at present, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Kinnoull The Earl of Kinnoull moved Amendment No. 10:
Page 5, line 30, at end insert:
("( ) This Chapter does not apply to premises falling within section 3(1) if the premises are premises which have been held by or in trust for a charity within the meaning of the Charities Act 1993 for 100 years or more from the date of the passing of this Act.").
The noble Earl said: My Lords, in moving this amendment I shall speak also to Amendment No. 175. In Committee my noble friend Lord Kindersley moved an amendment to exempt charities from the provisions of the Bill. My noble friend spoke with feeling and persuasiveness and with considerable experience in that field. I am glad to say that my noble friend drew support from all sides of the Committee in a general defence of charities.
Although my noble friend Lord Strathclyde was sympathetic, he had an obdurate and unhelpful brief. However, I am sure that my noble friend will agree that charities are a unique and precious institution in this country, quite unlike anything in Europe, either in scale or social achievement. Charities are enshrined in our heritage and the present generation has a clear duty to protect, preserve and increase the good which charities achieve for generations to come. For that reason alone, it is disappointing that so far the Government have taken the view that charities will not be added to the list of exemptions, except in a very small area; that is, registered charitable housing trusts. Not even the Church has any redress.
The amendment does not seek to renew the debate about the exemption of charities. That was fully discussed in Committee when we were reminded that the House took a supportive view in 1967 of that very same issue as a staunch guardian of charities, but later the issue was lost in another place. The Minister's arguments for rejecting the exemption of charities from the Bill relied principally on the new fair compensation formula which he suggested would cause no loss to charities. Secondly, many charities use property simply as a form of investment alongside equities in their portfolio.
It is not my purpose to argue the financial loss that many charities will suffer in their property portfolios as a result of this Bill. It is a sad fact. The facts have already been estimated and announced on how much charities will lose. I propose to move this small amendment on exemption. It refers to a very small and rare area for charities; namely, those which are over 100 years old, with original endowment lands still held as property endowment, undisturbed for 100 years and now happily part of the community. Why do they have to suffer when they represent a very small fraction of the charity properties generally? In my view, they deserve exemption. It is because these
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unique charities of over 100 years with endowment lands are a very ancient social heritage that I suggest this amendment to my noble friend. I hope that he can show some support for charities in this Bill, albeit in this minuscule way. I hope that he will accept the principle of the amendment even if he is not happy with the present words. I beg to move.
6.30 p.m.
Lord Monson: My Lords, the noble Earl, Lord Kinnoull, has argued the case so well that there is little for me to say, save that, as I understand it, it is part of Conservative philosophy to preserve institutions which have served the country well over the years. I believe that for that reason alone the Government should consider agreeing to the amendment.
Lord Kindersley: My Lords, I am grateful to the noble Earl, Lord Kinnoull, for raising once again an amendment to exempt charities with the important qualification that they should have been in existence for more than 100 years. As I tried to make clear on Second Reading and at Committee stage, Smith's Charity—in which I should again declare an interest as chairman—qualifies easily for this exemption. We are an exceptionally long-term investor. Our Kensington estate has been, and still is, the cornerstone of our investment policy, allowing us to distribute funds this year amounting to £12 million, most of which will go to causes which are suffering from the withdrawal or reduction of government support. It is rather curious that the Government should, on the one hand, encourage charities to raise money from the private sector so that there is less public money going into them and at the same time penalise charities such as this one and make it more difficult for them to give support to these very same causes. I fully support the amendment.
Lord Peyton of Yeovil: My Lords, I too should like briefly to support my noble friend's very modest amendment. I am bound to say that I do so more with hope than with confidence, though I am sure that we can rely on my noble friend's sympathy. Perhaps he may translate that into action one of these days. The Government have given the impression throughout the Bill that it is merely a pity that charitable activities should have got in the way£"Too bad. We shall not change course. We shall just go on, and the charities can get bruised". So far as I know, the Government have not even expressed regret that the decision has been taken out of the hands of charities.
The Minister for Housing has declared himself on one or two occasions to be of the opinion that charities will be able to take the money and go on as before. That view does not fit with the experience that has been voiced, for instance, by my noble friend Lord Kindersley. It is high time that the Government at least gave the impression that they look upon charitable activities with some favour and are not totally disregarding of their value in a community which very badly needs them. If I may say so, well-intentioned activities on the part of the

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Government are no substitute. Governments often do not recognise in time the weaknesses and needs which charities exist to remedy and where they offer help.
I hope that my noble friend the Minister will accept my noble friend's very modest amendment. But if he cannot do that, I hope that he will at least take the opportunity of saying that he is slightly sorry that charities should be bruised in this manner and that it was not the Government's's intention.
Lord Williams of Elvel: My Lords, I hope that the Minister will accept the invitation of the noble Lord, Lord Peyton, and express his admiration for the work performed by charities. Having expressed that admiration—as I am sure he will, and we shall join him in expressing it—I hope that he will see no particular reason why properties held in trust for charities should be excluded from the legislation in the way that the amendment of the noble Earl, Lord Kinnoull, implies.
As I understand it, trustees of charities are legally bound to manage properties on a fully commercial basis. We on our side have no evidence at all to show that charities, as commercial landlords (as they are bound to be), are any more benevolent in performing that function than any other category of freeholder. There are those who argue that they are somewhat tougher than other freeholders.
The problem with the noble Earl's amendment is not only that a certain group of freeholders would be exempt if the amendment were accepted. The leaseholders involved, whose homes are at stake, would be excluded from the legislation and they would fairly soon see a fall in the value of their leases as they became "second-class citizens" unable to enfranchise under the legislation. As the noble Earl pointed out, in the end the previous legislation has not drawn the distinction that the noble Earl, Lord Kinnoull, tries to draw in his amendment. We believe that it would be anomalous and undesirable if the amendment were accepted by the House.
The Earl of Onslow: My Lords, it was interesting that the noble Lord, Lord Williams, said that it was a very good thing for the Government to say that they supported charities, and then went on to say that the Government should enable some of our assets to be "nicked". I find that rather an odd attitude. Am I right in saying that the noble Lord declared an interest in living in a house in Thurloe Square which I believe belongs to Smith's charities? I am sure that the noble Lord will clarify the point.
Lord Williams of Elvel: My Lords, I declared an interest as a leaseholder in Thurloe Square. The freehold does not belong to Smith's charities.
The Earl of Onslow: My Lords, I stand corrected. However, it seems to me wrong that the Government should allow the assets of charities to be taken by the beneficiaries of the flat owners. The flat owners would not be keen on the proposals if it would not give them value. That means by its very nature that the assets of the landlords will be reduced and the assets of the charity will be reduced. It is a great pity that the
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Government are taking this line. We cannot make them change their mind completely. But at least the noble Earl, Lord Kinnoull, is trying to mitigate a small disease.
Lord Campbell of Alloway: My Lords, having listened to the arguments so far on this amendment, having opposed the Government previously on Amendments Nos. 1 and 5 and being about to do so on Amendment No. 12, I must say in all fairness that I cannot see why, on the basis of the argument adduced, the Government should accept this amendment.
Baroness Gardner of Parkes: My Lords, we debated this matter fairly thoroughly at Committee stage, so I do not intend to go into the arguments again. I was surprised afterwards to find how many noble Lords were not aware of the Peabody Trust and the Guinness Trust and that those bodies provided subsidised housing. I wish to emphasise that I am delighted that bodies of that kind which provide social housing are exempt. We are talking here only about those charities that run their property interests as a commercial business. The amendment refers to premises which have been held for 100 years. As I read the amendment, if a house was acquired 99 years ago it will not be exempt from the measure but one that was acquired over 100 years ago would be exempt. Therefore I find the amendment slightly strange in that respect.
When he replies, I hope that the Minister will clarify whether charities have to pay capital gains tax. I know they have a favourable tax status. If they pay no capital gains tax or corporation tax, they would be much better off than any commercial landlord in the realisation of whatever price they obtained for their property. Recently I have met tenants of charities who have told me they are only too pleased that the charities concerned are offering them longer leases. The tenants are pleased to accept those longer leases. I believe that those charities who treat their tenants well will find that those tenants will accept longer leases and will not particularly wish to enfranchise.
Lord Hamilton of Dalzell: My Lords, I wish first to take issue with a point made by the noble Lord, Lord Williams of Elvel. He said he thought that those left with long leases would have them devalued. However, in economic terms it will be the freeholders who have their assets devalued because, with the advent of the enfranchisements, the supply of property will rocket. Enormous quantities of new money will have to come into London to enable those freeholders to retain their prices at current levels.
As regards whether charities should be released from this provision, I find that the Government applaud the work of charities. However, it is difficult to support the Government on this issue because it contains many contradictions. As chairman of the executive committee of the Queen Elizabeth's Foundation for the Disabled I took issue with my right honourable friend the Chancellor of the Exchequer about increasing the amount of VAT charities have to pay. I know that has nothing to do

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with this debate and it had nothing to do with the Chancellor of the Exchequer because the matter of who pays VAT is settled in Europe. However, he consoled me by saying that the fundamental basis of government policy was to encourage people to give to charities. He said that the Government were concentrating on that matter. I find it hard to see how this Bill helps charities in that respect. Perhaps the only thing one can say to my noble friend is to consider the point that charity starts at home.
Baroness Hamwee: My Lords, I had not intended to speak. I apologise to your Lordships because I do not normally like to start speeches with that phrase as it simply takes up time. Nevertheless, I had not intended to speak because I have already made the points that were made by the noble Baroness, Lady Gardner of Parkes. However, I wish to refer to a point which I made, as it were, in passing at the previous stage of the Bill. I hope that in responding the Minister will indicate support for all charities and not merely those which have been going for so long they have been able to accumulate the portfolio which is referred to in the amendment.
6.45 p.m.
Lord Strathclyde: My Lords, it is useful to have this opportunity to discuss charities again, particularly as we had a relatively full debate on this matter in Committee.
The amendment referring to charities as landlords disapplies enfranchisement rights where the premises have been held by or in trust for a charity for 100 years or more. I am not sure what proportion of property held by charities, or held in trust on their behalf, has been held for 100 years or more, but I suspect that this is certainly a significant, if not substantial, proportion of their holdings. I am also not sure why any exemption from or disapplication of enfranchisement rights in Chapter I of this Bill should apply to those particular properties and not those who have held property for less than 100 years.
I have listened very carefully to what my noble friend Lord Kinnoull and others who supported him have had to say in speaking to these amendments. I know that my noble friend recently met my honourable friend the Minister for Housing in the hope that the Government would accept the amendment but, as he knows, we intend to resist it.
I should make it perfectly clear that I am fully aware that a number of your Lordships are very concerned about the implications of this Bill for charities. During Committee I said that I admire the work which many charities do and confirmed that it would obviously be most unfortunate if this Bill were to impede the work of any charity. That includes the more recently established charities that the noble Baroness, Lady Hamwee, mentioned. I would say to my noble friend Lord Peyton that I am full of praise for the work that charities do. This Bill will have no effect whatsoever on property which is owned by charities and which is let for charitable purposes. However, where that property is run as a commercial
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proposition and is used as an investment, why is it right that charities should be excluded from the provisions of the Bill?
The Leasehold Reform Act, which was debated in this Chamber in 1967, did not exempt charities from the provisions of that Act. We maintain that, although all charitable bodies spend their income in pursuit of charitable ends, most raise it in a strictly commercial manner. Most charities are bound to maximise their capital assets and revenue. In fact the trustees of charities are under a duty to use their assets to the maximum effect. As far as the tenants are concerned, it makes little difference who their landlords may be.
I can see no reason for treating charities any differently from any other landlord, such as the great estates, where they have already disposed of property on a long leasehold basis for a market premium. Their tenants, like any other long leaseholder, will consider themselves owner occupiers and will usually have the greater financial interest in the property. They will, like all such leaseholders, also have the expectation of being able to enfranchise.
I wish to correct a point that was made by my noble friend Lord Onslow. There is no question of assets being nicked, as he put it. I hope he will join us in our discussions when we reach the amendments that deal with valuation. I can confirm to my noble friend Lady Gardner of Parkes that there is roll over relief for capital gains tax purposes when charities realise their assets under this Bill. I hope that the House will agree, as was the case in Committee, that the case made for charities is of no greater value now than it was then. I hope this amendment will not be accepted.
The Earl of Kinnoull: My Lords, I am grateful to all noble Lords who have spoken in support of this amendment. I realise we had a long and important debate on this issue in Committee. I did not intend to resurrect that debate through this amendment. This amendment was a genuine attempt to find some way for the Government to show more concern about charities.
The principle behind this amendment is that charities are special. They are not just ordinary landlords. Charities are not exempt from this provision at the moment although the Crown Estate and the National Trust are exempt. If there are exemptions, I believe there are other bodies which are worthy of exemption too. I have never accepted the argument that a tenant of a charity should automatically be treated differently to tenants of other landlords. I do not accept the argument that a charity which has lasted for over 100 years and which has endowment land that has been in existence for 100 years and has never dabbled in property should suffer the swingeing provisions of this Bill. This is a sad day. My noble friend has given a charming but negative reply. I do not intend to seek the opinion of the House on this issue as that occurred at the previous stage. With regret, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Rodger of Earlsferry Lord Rodger of Earlsferry moved Amendment No. 11:
Page 5, line 31, leave out subsection (4).
The noble and learned Lord said: My Lords, I am moving this amendment in response to the reservations your Lordships expressed during the Committee stage about subsection (4) of Clause 4. During debate then the power for the Secretary of State to vary by order both the percentage of non-residential accommodation in blocks qualifying for collective enfranchisement and the number of flats in blocks with resident landlords exempted from collective enfranchisement was described by a number of noble Lords as a Henry VIII provision. Traditionally Parliament, and particularly this House, is suspicious of such powers.
The provision was included in the' Bill for the best of motives. We wanted to build in a degree of flexibility so that changes could be made to the various threshold figures if fine-tuning seemed necessary in future to allow the Act to continue to meet its objectives, for example, on the matter raised by the noble Lord, Lord Monson.
Nevertheless, having considered the matter again in the light of the debates on the definition of qualifying premises, we believe that the criteria in Clause 4 are right as they stand. Therefore, the case for a power to vary either of them is not overwhelming. In the light of the views expressed in Committee, I am content that the provision in Clause 4(4) can be deleted. I beg to move.
Lord Williams of Elvel: My Lords, the noble and learned Lord has responded to the discussion which we had in Committee on this subsection, when I found myself, in the unlikely company of the noble Lord, Lord Peyton of Yeovil, moving an amendment that the subsection be deleted. The reasons were precisely those which the noble and learned Lord has given. The Bill as drafted provides the Secretary of State with Henry VIII powers to amend primary legislation simply by order.
I accept the noble and learned Lord's assurance that the subsection was included for the best of motives. Indeed, I can see reasons why an arrangement of that nature might be useful and why some adjustment might be necessary to the Act, as the Bill will become when enacted, in the light of experience. Unfortunately, the clause as drafted put the Government in a hole. If in drafting Clause 4 the Government had said that they did not know what the percentage would be but would find out, there could have been an open debate. We could have had an affirmative resolution procedure, which would have solved the problem. However, by drafting Clause 4 to state the percentage and in saying in subsection (4) that the Secretary of State could change the percentage to any figure that he liked the Government raised a number of hackles in your Lordships' House. That was apparent when we discussed the matter in Committee.
While we are grateful to the noble and learned Lord for removing subsection (4), and will not oppose the amendment, I have some sympathy for the Government in that they have now placed themselves
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in a position in which they cannot amend the primary legislation—which may eventually have to be amended—without coming back to this House.
Lord Peyton of Yeovil: My Lords, it would be churlish on my part if I did not take the opportunity to thank my noble and learned friend for this act of repentance. It is very nice of him to remove this unsightly object from the pages of the Bill. It is nice to know that it will not form an ugly blot on the face of the statute book in the future.
I warmly welcome this evidence of some dawning modesty on the part of Secretaries of State. That is very much to be welcomed. I wonder what process the Government went through between Committee stage and now which led them to this wonderful conclusion, but I shall not be so intrusive as to ask them to answer that question in public.
Lord Renton: My Lords, there has been a tremendous increase in the insertion of Henry VIII clauses into our voluminous legislation of recent years. We should rejoice that this is another sign that the Government are thinking better of that. I hope that it may be an indication that we shall be burdened less with these clauses in future.
Lord Campbell of Alloway: My Lords, this unsightly object—as it was so pertinently described by my noble friend Lord Peyton—was retrieved by some draftsman from a pigeon-hole in a department. Do the Government not believe that it is time that the contents of that pigeon-hole were destroyed by fire so that we do not need to have this type of discussion again?
Lord Coleraine: My Lords, since it was I who moved the amendment which brought about this amendment I should like to thank my noble and learned friend for acting with complete constitutional propriety over the amendment. I should like to express my gratitude, together with the noble Lord, Lord Williams of Elvel, and my noble friend Lord Peyton of Yeovil.
Lord Rodger of Earlsferry: My Lords, there is biblical authority for the amount of rejoicing which occurs when a sinner repents. The House has done a great deal of rejoicing over this act of repentance on the part of the Government.
In response to the remarks of my noble friend Lord Campbell of Alloway concerning the contents of the pigeon-hole, by which he meant Henry VIII clauses, I remind him that such clauses have a use within their proper sphere. It has been decided that this is not a necessary use of such a clause in the Bill. In the circumstances, including those alluded to by the noble Lord, Lord Williams, it is thought appropriate to withdraw the subsection. In the light of all the rejoicing over our repentance I commend the amendment to the House.
On Question, amendment agreed to.
Lord Cavendish of Furness Lord Cavendish of Furness moved Amendment No. 12:
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 person 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 Lords, it may be remembered that I tabled this amendment in Committee with a view to ensuring that our national heritage does not suffer as a consequence of inheritance tax liability by the forced sale and break-up of important estates. At the time my noble friend Lord Strathclyde recognised the anxieties which many of us felt about the implications of the Bill in that respect and agreed to consider the matter further.
Since then the Government have stated in another place that there will be no review of designation of the whole property following a part disposal resulting solely from leasehold enfranchisement under this Bill or under the Leasehold Reform Act 1967, provided there is no breach of undertakings in respect of the retained property. I know that that assurance will bring comfort to those who feared the financial consequences which might have followed from the Bill. Thus far the statement is to be welcomed, and I should like to record my thanks to my noble friend.
However, the statement brings no comfort whatever to English Heritage because the effects of the Bill persist in contradicting a principle now embodied in legislation for more than 20 years: that it is
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desirable to keep outstanding historic entities—usually a country house, its contents and historic setting—intact under common control when fiscal pressures might otherwise encourage break-down.
To be accepted for conditional exemption such entities must be of outstanding importance in the national context. Keeping them intact has long been accepted as being in the public interest, the loss of tax being outweighed by the public benefit, enforced through conditions requiring, among other things, an acceptable amount of public access.
It is possible to imagine a stable block attached to a great house being converted into flats. The same might apply to a dower house. Indeed, it might apply to the main house itself where former servants' quarters and offices could be counted for the purposes of this Bill as a block of flats. The removal of those parts from the ownership of the remainder would, without question, damage the coherence of the historic entity.
The argument has been put both in your Lordships' House and outside that adequate common management and compliance with conditions can be achieved under a scheme of estate management, supported by something known as "estate rentcharges". That is an obscure device which some have suggested might provide a means of circumventing the bar on positive covenants running with the title.
However, the Law Commission report of 1984 cast considerable doubt on that, and until legislation is brought forward to implement the recommendations of the commissioners, I am advised that there is no effective means of creating positive covenants or obligations that run with the title. Such provisions would be helpful in protecting heritage interests, including, for example, ensuring the proper care of historic buildings, restored and sold on by charitable building preservation trusts, as well as properties enfranchised under the Bill. I hope that the Government will act on the Law Commission's recommendations, perhaps to mark the tenth anniversary of its report.
The key point is that schemes of management, with or without estate rentcharges, would not, in my view, provide an effective tool to retain visual unity, indeed personality, which comes through common control, often by generations of the same family. Nor would they provide the financial safety net in enforcement which is generally available to a landlord under a lease, where the lessee's interest could ultimately be forfeited for serious breaches of covenant. Whether or not such tools could retain a reasonable level of visual unity and compliance with conditions of exemption over enfranchised property would be irrelevant if the Bill is passed in its present form, together with the new clause promised by the Government in the Finance (No. 2) Bill regarding review of designation. That is because it is proposed that the review of designation of retained property will not follow from a part disposal under the provisions of the Bill, provided—and I emphasise this—that there is no breach of undertakings in respect of the retained property.
So there is no attempt whatever to provide for the safeguarding of the heritage value and quality of the

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designated entity as a whole. Indeed, the situation could be even worse, for the proposal creates a potential loophole which leaves open to owners a means of disposing of parts of the designated entity through the creation of enfranchiseable leases, without any risk of bringing down the designation as a whole.
Such ill-considered and ad hoc proposals merely serve to emphasise the necessity of a simple and effective means of ensuring that the Bill does not frustrate the intentions and benefit of existing legislation which enjoys such wide support, not least from all sides of your Lordships' House.
My amendment seeks only to put certain properties, comparable in quality, importance and degree of public access, on an equal footing with those held inalienably by the National Trust, and which are specifically exempted under Clause 86 of the Bill. I must ask the Minister, as I have asked him twice before, why cannot those very few properties enjoy similar protection in heritage terms?
Those then are the reasons that I commend the amendment to the House. It excludes 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 reached a decision, any application to enfranchise would be frozen. As I have said, the number of properties which would be affected by the provision would be small. Of the 160 that have been recommended on the grounds of outstanding importance, only 60 have so far been designated. Furthermore, the proportion of the properties which are subject to potentially enfranchiseable leases is itself very small indeed.
To accept the amendment would not, in my view, compromise the Bill, which we do not seek to challenge, but would recognise a long established policy of protecting heritage interests of acknowledged importance. I beg to move.
7 p.m.
Lord Renton: My Lords, I support the amendment for the reasons that my noble friend Lord Cavendish has so clearly expounded. I hope that it will be considered relevant—it is relevant —and I hope that it will not be embarrassing to any member of the Government to mention that two of the most famous stately homes in the country, Grade I listed buildings which contain flats of the kind mentioned by my noble friend, happen to be in the constituency of the Prime Minister.
Lord Palmer: My Lords, I too wish to add my congratulations on the superb way in which the noble Lord, Lord Cavendish, introduced the amendment. It is important to remember that the main point of the amendment is to maintain the status quo which had all-party support. That is to preserve England's heritage in the private sector. It is a great shame that the amendment has had to be tabled and one must ask whether or not Her Majesty's Government are
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interested in the heritage. From their reluctance to accept the amendment, coupled with Sir George Young's passion for enfranchising, the answer would appear that they do not.
All heritage bodies throughout the country have acknowledged that the private sector is the much preferred guardian of our national heritage. That is why noble Lords on my right introduced designation in the first place. Its main objective was to keep the heritage property entire and to relieve the state and the National Trust of having to take on such properties. As the noble Lord, Lord Cavendish, said, it seems idiotic that the National Trust has been specifically exempted from the Bill whereas the private heritage sector has not. If the Government do not accept the amendment, the catastrophic effects of the Bill will cascade through the private sector, causing irreparable damage to our national heritage. I support the amendment.
Lord Peyton of Yeovil: My Lords, I warmly support the amendment so eloquently moved by my noble friend Lord Cavendish. I wish particularly to draw the Minister's attention to what my noble friend Lord Cavendish said about the need for a simple and effective means of ensuring that the Bill does not frustrate the intentions and benefits of existing legislation which is widely supported.
It would completely satisfy me if my noble friend would say that it is not the Government's intention or wish that this legislation should touch in an injurious way the heritage properties to which my noble friend referred. I hope that the Minister can do that and in doing so he will bear in mind that the Government's intentions, often so pious and pure, do not always find themselves fulfilled in fact; nor do they yield what I would describe as general satisfaction in the event. I hope that my noble friend will be able to give us the unqualified assurance that the Bill will not and could not have the effect of frustrating the heritage policy.
Baroness Hollis of Heigham: My Lords, we on this side also believe that this is a serious issue which we hope that the Government can address more fully, either by adopting the amendment or by giving an undertaking that they will come back at Third Reading with an amendment along the lines mentioned by the noble Lord, Lord Peyton. We are referring to a small number of properties, about 160 designated properties in all, which are free from inheritance tax in return for public access.
At the Committee stage we were apprehensive that the enfranchisement proposals would jeopardise the tax-free status where public access was to be ensured. In overcoming that problem by government announcement, the Government have had the perverse effect of worsening the other consideration in your Lordships' minds; namely, to avoid the fragmentation of estates which in the national interest should be held together.
As I understand the position, there could now be nothing to stop parts of the estate from being fragmented by individual leaseholders who take advantage of the enfranchisement and thus the heritage quality which we are all anxious to protect is

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lost. So in remedying the tax position, to which we do not object, the Government have increased the risk of fragmentation, to which we certainly do object.
We cannot believe that that is the Government's intention. It is clearly perverse and against the interest of such designation as originally established by law. Therefore, like other Members of the House we very much hope that the Government can give some indication of their views on this matter. We are not willing to oppose the amendment and we are hesitant about supporting it. We shall judge our response in the light of the Government's response in their turn.
Lord Montagu of Beaulieu: My Lords, I must tell noble Lords that I was abroad during the Second Reading and therefore this is the first" time that I have spoken on the Bill. If I had spoken, I should certainly have expressed my dismay and dislike of it. Nevertheless, it is too late for Second Reading comments. I should therefore like to reserve my comments to support my noble friend Lord Cavendish. It is well known that I have been involved in the conservation of historic houses for over 30 years, initially as the first chairman of the Historic Houses Association and latterly as chairman of English Heritage. During that time there have been many crises. However, a system has now evolved which is the envy of the world.
I suppose that the best treatment of historic houses is for them to remain in private hands and be open to the public. Some are open to the public and have flats or apartments made out of the building. Some, because of their geographic position, consist entirely of flats. They are under strict control. Sensible leases were drawn up. They were often long leases because the owners felt that a long lease was best for continuity of management. Scarce capital was often invested by the owner and the tenants were carefully chosen. The system works well. It has also been used by the National Trust.
But despite those arrangements, in recent years one of the greatest threats to houses has been death duties and inheritance duties. We were all delighted when we won the argument, with the support of all parties in this House, to establish designation and exemption of the house, contents, grounds, and the historic buildings associated with it. Those exemptions were on conditions laid down by the Treasury and on the advice of English Heritage. The whole object was to ensure continuity of ownership and management, not only of the house but also the grounds.
There is now the extraordinary situation which penalises the owner for having in the past shared his house in order to minimise costs and contribute to the upkeep, thus saving state money. After all, it is much better to see every room in the house used because rooms which are uninhabited are bound to deteriorate.
Under the Bill some of the great houses and outbuildings, after hundreds of years, will be split up irredeemably. There will never be that same entity again. Today's tenants may be all right, but what about tomorrow's freeholders? How does one value a flat in a historic building which has at no cost the privilege of all the amenities of the grounds? Who
1246
pays for the roof, clears the drains, mows the lawns and ensures security? Owners of historic properties will now lose their inheritance, which they have fought so hard to retain over so many centuries, because they trusted in the leasehold system; a system which has served this country so well for so many years. They never dreamt that any government, let alone this one, would cause its destruction.
This legislation will affect historic properties and designated properties very seriously in the future. If the Government thought it would not do so, why has the National Trust, with its vast resources and special legal position, been exempted? Perhaps I can tell the House why. It is because the Government do not dare take on such a highly respected and authoritative body. I am delighted that it has obtained the exemptions. But it is also a charity. It is run on commercial lines, but obviously some charities are more equal than others.
I end by informing the House that I have absolutely no property, nor has my family, which could possibly be enfranchised, so I speak entirely objectively. I urge fellow Peers to support the amendment. In doing so they will ensure that our historic properties are conserved in their entity for future generations to derive from them enjoyment and enlightenment.
Baroness Hamwee: My Lords, my noble friends on these Benches tell me that they are in something of a dilemma. They have no wish to detain your Lordships longer than is necessary but they want me to put on record their and my support for the amendment.
7.15 p.m.
Lord Campbell of Alloway: My Lords, after such a magnificent and authoritative speech, perhaps I may make a very brief speech in support of the amendment. My interest consists in having been a member of the Georgian Group since its pioneer days under Angus Acworth. It has always been much interested in English Heritage. Otherwise I hold no brief and I am not part of any lobby.
What has been said by my noble friend Lord Cavendish is wholly true. The Law Commission's recommendations may not be ignored. It is idle to pretend that schemes of management could provide any satisfactory safeguard. The disparity of treatment with that of the National Trust is simply not understood and not acceptable. The designated properties are indeed few and those that qualify are not great.
For the reasons given by other noble Lords, this is a case for the Government to make a clear and decisive exception and make it now.
Lord Renfrew of Kaimsthorn: My Lords, I speak as one who supports the aims of the Bill and who in general is not in favour of amendments which restrict the opportunities of leaseholders to obtain the freeholds. In that respect I realise that I am not at one with all my noble friends on this occasion. However in this amendment—so ably moved by my noble friend Lord Cavendish of Furness and spoken to most effectively by my noble friend Lord Montagu—they have a very important point.

1247
We are speaking about some of the finest historic properties in this country. I would not be in favour of any amendment that sought to broaden the application to historic areas in general—that has been suggested and there have been amendments proposed to that effect—because that would have the effect of depriving many leaseholders of the opportunity of obtaining the freehold of the property. But in this case the historic houses in question and the designated properties are of such heritage importance that I urge my noble friend the Minister to take the amendment very seriously.
Lord Strathclyde: My Lords, I listened to what my noble friend said in Committee and again to what he and others have said today. I appreciate that there is a general concern that the enfranchisement provisions of the Bill will lead to the break-up of some historic estates and the continued maintenance and conservation will be at risk because coherent management will be lost.
However, I do not accept that that is necessarily the case. The landlords will already have transferred ownership by granting long leases, presumably to raise funds by way of a premium, in the hope that they will continue to control maintenance and conservation under the terms of the lease. The leaseholders will have just as much of an interest in maintaining the property, which in turn affects the value of their interests. As they may have the greater financial interest in the property, one could argue that they have a greater interest in maintaining and conserving it.
The landlord may be able to continue to exercise control over the overall appearance and maintenance of the estate by promoting estate management schemes. At this stage I do not want to argue the merits of those schemes because we shall be coming to them later this evening. However, I should like to point out that we have gone some way to improving the provisions on estate management schemes and have tabled an amendment that would give English Heritage and local planning authorities the power to promote estate management schemes in conservation areas.
The other anxiety of my noble friend Lord Cavendish concerns the inheritance tax consequences of enfranchisement and the fact that a disposal of part of a property could trigger a review by the Inland Revenue of the conditional exemption of the whole of the property. If the enfranchisement materially affects the heritage entity, the review could lead to a tax charge on the whole property.
During the Committee stage I recognised that there was some anxiety and agreed to take the matter away. In answer to a question in another place last Friday, my honourable friend the Financial Secretary made a statement. Without repeating it in full I can say that my honourable friend announced that the Government propose that where a part disposal of a conditionally exempt property results solely from leasehold enfranchisement under the provisions of this Bill or under the Leasehold Reform Act 1967, and
1248
there is no breach of the undertakings in respect of the retained property, then there will be no review of the designation of the retained property.
Having obtained that concession from my honourable friend the Financial Secretary, I understand that, as my noble friend Lord Cavendish and the noble Baroness explained, English Heritage now considers that while that will satisfy the financial concerns of most landlords, it could run counter to heritage interests. They argue that there is no provision for the maintenance of conditions over enfranchised land but recognise that an estate management scheme could provide for that. I am reluctant to make the creation of estate management schemes a condition of inheritance tax exemption not being reviewed. I have already agreed to give English Heritage the power to promote estate management schemes in conservation areas.
English Heritage also argues that the landlords it sought to protect in Committee may now create leases that could be enfranchised, severing property from an estate without triggering a review of the inheritance tax exemption and freeing the enfranchised property from the conditions attached to conditional inheritance tax exemption. Continuation of those conditions could be provided by an estate management scheme. The existing owners might not be willing to promote one but English Heritage will have those powers.
I understand that the loophole already exists in a wider form. The Inland Revenue already accepts that the granting of a lease for a premium in respect of a conditionally exempt property may not be a chargeable event. Therefore owners could grant a number of long leases for a substantial premium without incurring a tax charge. Those are matters of tax law which the Inland Revenue is keeping under review. If my honourable friends at the Treasury thought the granting of leases was being exploited to bring tax savings or to avoid the conditions of inheritance tax exemption, then they would consider remedial legislation.
The object of the amendment of my noble friend Lord Cavendish is to keep properties and estates that are currently conditionally exempt from inheritance tax intact and to exempt them from the leasehold enfranchisement provisions in the Bill. But the sale of a freehold need not result in the break-up of an estate in the same way that the sale of the contents of a house can separate paintings or sculpture, for example, from their context. The buildings will still be there, in the same relationship to each other, whoever owns the freehold.
Conditional exemption from inheritance tax does not prevent the freeholder from selling long leases for a premium as long as the terms of those leases are in keeping with the conditional exemption. If they are there should be no reason why the leaseholders should not enfranchise.
Lord Campbell of Alloway: My Lords, perhaps my noble friend will give way. He is not addressing the point of our speeches. He is replying from a brief but he is not answering the points raised.
Lord Strathclyde: My Lords, I am sure that my noble friend made a good speech and made good sense in his speech. But perhaps he will listen to what I have to say and when I have completed my remarks he can then make a decision as to whether or not I have responded to his points and take whatever course of action he feels is necessary. I am only half-way through my comments. It is an extremely important issue. That is illustrated by the substantial number of noble Lords who have come to speak and to support my noble friend Lord Cavendish. Because it is such a complicated issue I have done my noble friend the courtesy of giving him a very full answer. I hope that he, in any case, will listen closely to what I have to say and perhaps then will be able to decide what to do with the amendment.
As I said earlier, the estate management schemes that we have included in the Bill will help. They will allow for the freeholder to retain control and exercise some influence over the use, maintenance and redevelopment of a property, even though the leaseholder has enfranchised. There is no reason why freeholders should not apply for such schemes to cover their estates.
Estate management schemes are intended to allow the landlord to retain powers of management over houses or flats which became enfranchised. The terms of a scheme can deal with the redevelopment, use or appearance of property; they can empower the landlord to carry out work to maintain or repair properties and can impose obligations in respect of property used in common.
Leasehold valuation tribunals will, in considering applications for estate management schemes, have regard to the past development and present character of an area and, following acceptance of an amendment during Committee, to architectural or historical considerations as well as to the circumstances generally.
I have already said that I do not believe that it is right to frame exemption from enfranchisement in terms of the application of tax law. If historic buildings or estates are to be exempted, then they should be exempted in their own right. However, I believe that leaseholders are fully capable of caring for the buildings in which they live and that the system of estate management schemes, coupled with legislation relating to listed buildings and conservation areas, provides adequate safeguards where in the general interest there needs to be coherent management of an area as a whole.
I have attempted to explain that enfranchisement does not affect the heritage properties of the areas with which we are dealing. But I recognise the deep concern of many of my noble friends. I should like to suggest to my noble friend that, rather than pressing his amendment at this stage, we can perhaps continue our discussions on what is clearly a complicated issue to see whether we can come together to reach a compromise on dealing with the whole problem.
Lord Cavendish of Furness: My Lords, I thank all noble Lords who have spoken—I believe all spoke in favour of my amendment. I am grateful also to the Minister for his reply. I should like to place on record
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my gratitude for the trouble that my noble friend has taken in discussions outside this Chamber. He is nothing if not patient and courteous, and I am certainly grateful to him.
I do not accept anything that he says in the line of estate management schemes. I do not believe that it begins to approach the problems referred to by myself and other noble Lords. I am grateful for his offer to take the discussions further. However, we are at an advanced stage of the proceedings on the Bill and it remains my view that there is an irreconcilable divide between heritage interests and the effects of the intentions of the Bill. There is no available alternative to the amendment until the Government belatedly act on the Royal Commission's report—now 10 years old. With a heavy heart therefore I must seek the opinion of the House.
7.30 p.m.
On Question, Whether the said amendment (No. 12) shall be agreed to?
Their Lordships divided: Contents, 114; Not. Contents, 57.

Division No. 2

CONTENTS

Addington, L.

Harrowby, E.

Airedale, L.

Hertford, M.

Aldenham, L.

Holme of Cheltenham, L.

Amherst of Hackney, L.

Hood, V.

Ardwick, L.

Howie of Troon, L.

Bledisloe, V.

Hylton-Foster, B.

Boardman, L.

Iddesleigh, E.

Bonham-Carter, L.

Jeffreys, L.

Bridgeman, V.

Jeger, B.

Broadbridge, L.

Jenkins of Hillhead, L.

Campbell of Alloway, L.[Teller.]

Johnston of Rockport, L.

Kilbracken, L.

Carnock, L.

Kilmarnock, L.

Cavendish of Furness, L.[Teller.]

Kindersley, L.

Kinloss, Ly.

Charteris of Amisfield, L.

Kintore, E.

Clanwilliam, E.

Lindsay, E.

Clark of Kempston, L

Lyell, L.

Clinton, L.

Lytton, E.

Cochrane of Cults, L.

Macaulay of Bragar, L.

Cocks of Hartcliffe, L.

McNair, L.

Craigavon, V.

Mancroft, L.

Darcy (de Knayth), B.

Masham of Ilton, B.

Daventry, V.

Middleton, L.

Dean of Beswick, L.

Monk Bretton, L.

Devonport, V.

Monson, L.

Dilhorne, V.

Montagu of Beaulieu, L.

Donoughue, L.

Mountgarret, V.

Dormand of Easington, L.

Mowbray and Stourton, L.

Ellenborough, L.

Napier and Ettrick, L.

Elliot of Harwood, B.

Nicol, B.

Ewing of Kirkford, L.

Ogmore, L.

Faithfull, B.

Onslow, E.

Falkland, V.

Palmer, L.

Gainsborough, E.

Peyton of Yeovil, L.

Galpern, L.

Portsmouth, E.

Gisborough, L.

Radnor, E.

Gladwyn, L.

Reading, M.

Glenarthur, L.

Renfrew of Kaimsthorn, L.

Greenway, L.

Rennell, L.

Grey, E.

Renton, L.

Grimston of Westbury, L.

Robson of Kiddington, B.

Haddington, E.

Rochester, L.

Halsbury, E.

Romney, E.

Hamilton of Dalzell, L.

Roxburghe, D.

Hampton, L.

St. John of Bletso, L.

Hamwee, B.

Sefton of Garston, L.

Harding of Petherton, L.

Shrewsbury, E.

Harmsworth, L.

Skelmersdale, L.

1251

Stedman, B.

Taylor of Blackburn, L.

Stodart of Leaston, L.

Taylor of Gryfe, L.

Stoddart of Swindon, L.

Thurlow, L.

Strafford, E.

Tordoff, L.

Strange, B.

Whaddon, L.

Strathcarron, L.

Wharton, B.

Suffolk and Berkshire, E.

White, B.

Swinfen, L.

Wilberforce, L.

Swinton, E.

Wyatt of Weeford, L.

NOT-CONTENTS

Arran, E.

Knutsford, V.

Astor, V.

Lauderdale, E.

Blatch, B.

Long, V.

Braine of Wheatley, L.

Mackay of Clashfern, L.[Lord Chancellor.]

Brougham and Vaux, L.

Bruntisfield, L.

Merrivale, L.

Cadman, L.

Mersey, V.

Caithness, E.

Mottistone, L.

Chalker of Wallasey, B.

Moyne, L.

Chelmsford, V.

Park of Monmouth, B.

Cranborne, V.

Pender, L.

Cumberlege, B.

Prentice, L.

Denton of Wakefield, B.

Rodger of Earlsferry, L.

Dundonald, E.

St. Davids, V.

Eden of Winton, L.

Seccombe, B.

Elles, B.

Sharples, B.

Elton, L.

Stewartby, L.

Ferrers, E.

Strathclyde, L.

Fraser of Carmyllie, L.

Strathmore and Kinghorne, E[Teller.]

Gardner of Parkes, B.

Goschen, V.

Teviot, L.

Gray of Contin, L.

Thomas of Gwydir, L.

Harvington, L.

Trumpington, B.

Hayhoe, L.

Ullswater, V.

Henley, L.

Vivian, L.

Hesketh, L. [Teller.]

Westbury, L.

HolmPatrick, L.

Wise, L.

Howe, E.

Wolfson, L.

Jenkin of Roding, L.

Wynford, L.

Killearn, L.

Resolved in the affirmative, and amendment agreed to accordingly.
7.38 p.m.
Viscount Goschen: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion perhaps I may suggest that the Report stage begin again at 8.35 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Bail (Amendment) Bill
Brought from the Commons; read a first time, and to be printed.

Disabled Persons (Services) (No. 2) Bill [H.L.]
Lord McColl of Dulwich: 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 McColl of Dulwich.)
On Question, Motion agreed to.
House in Committee accordingly.
[THE DEPUTY CHAIRMAN OF COMMITTEES (Lord Cocks of Hartcliffe) in the Chair.]
Clauses 1 and 2 agreed to.
In the Title:
Lord McColl of Dulwich Lord McColl of Dulwich moved Amendment No. 1:
Line 1, leave out ("empower") and insert ("enable").
The noble Lord said: In moving Amendment No. 1 I should like to deal also with Amendments Nos. 2 and 3. I am advised that these amendments would make the Title reflect the contents of the Bill more accurately. They in no way alter the substance of the Bill. I beg to move.
Baroness Cumberlege: I should like to thank my noble friend for clarifying the Title of the Bill. I regret though that the Government's position has not changed since the Second Reading of the Bill and, sadly, we still feel unable to support it despite its greater clarity in the Long Title.
On Question, amendment agreed to.
Lord McColl of Dulwich Lord McColl of Dulwich moved Amendments Nos. 2 and 3:
Line 1, leave out ("make") and insert ("pay allowances to").
Line 2, leave out from ("persons") to end of line 3.
On Question, amendments agreed to.
Title, as amended, agreed to.
House resumed: Bill reported with amendments.
Baroness Trumpington: My Lords, I beg to move that the House do now adjourn during pleasure until 8.35 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.42 to 8.35 p.m.]

Housing and Urban Development Bill
Consideration of amendments on Report resumed. Clause 5 [Qualifying tenants]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 13:
Page 6, line 7, at end insert:
("(2A) Subsection (I) does not apply where the immediate landlord under the lease is a registered housing association and all the flats in the premises are—

(a) particularly suitable, having regard to their location, size, design, heating systems and other features, for occupation by persons of pensionable age, and

(b) are occupied by persons of pensionable age or physically disabled persons, and

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

The noble Baroness said: My Lords, this is the opposite of moving an amendment immediately after Question Time in the early afternoon, when one struggles to make oneself heard against the noise of departing Peers. I hope that there will be the noise of Peers coming into the Chamber, but I dare say that they are otherwise engaged.
Amendment No. 13 is very similar to one which I moved at Committee stage. It is to exclude from the enfranchisement provisions the properties described in the amendment. That is where the immediate landlord is a registered housing association and all the flats in the premises—that is a change because the amendment refers to all the flats—are particularly suitable as regards location, size, design, heating systems and other features for people of pensionable age and are occupied by people of that age or by those

1253
who are physically disabled, and have special warden facilities, as described. I have stressed the word "and" between each of those three criteria because they are additional and not alternative.
The provision is designed to exclude sheltered housing schemes from the Bill. As I said in Committee, it would, as I understand it, affect schemes only where a housing association had not received housing association grant, as HAG-funded schemes require an association to retain 20 per cent. of the equity.
It was a proposal which received widespread support at Committee stage: that leasehold enfranchisement should not apply to warden services and other special provisions which fall within sheltered housing in order not to lose from housing stock this type of provision. The wording of the clause is close to that of the Housing Act 1985 which excluded sheltered housing from the right-to-buy provisions. At Committee stage the Minister said that it was unclear, as the matter was then drafted, of which lease the registered housing association must be the immediate landlord. I hope that, with a slight change of wording, the amendment has helped, as was the intention.
His other argument was based on the use of restrictive covenants in a lease. He said that he understood the concern that, after enfranchisement, new freeholders might sell the properties to other people who were not elderly or disabled, but that the matter could he dealt with by way of a restrictive covenant. I disagreed with him then and, if he repeats the argument, I shall do so again, because a restrictive covenant can be altered by agreement between those who are concerned. It is precisely in order to avoid that agreement, which would override the provisions, that I seek to include the new provision in the Bill. I beg to move.
Lord Monson: My Lords, I gladly support this amendment. It seems the height of folly to upset the smooth-running existing arrangements of sheltered housing. I fully concur with the noble Baroness when she says that restrictive covenants are not the answer because they can so easily be altered or got round.
Baroness Hollis of Heigham: My Lords, we on this side very much support the amendment which is straightforward. It seeks to ensure that leaseholders, like tenants of local authority sheltered housing provided by a housing association, should not see that property pass from its primary usage—that is, supporting the elderly in the community—to some other use. It means, for example, that if the current leaseholder dies, having enfranchised, there is nothing to stop his or her heirs selling that property on for some other use totally independent of that for which it was designed, thus subverting the viability of the entire sheltered housing scheme. It is a very limited amendment, but it will ensure that sheltered housing remains for its primary purpose, which is to enable the elderly to stay within the community. We very much support it.
Lord Monk Bretton: My Lords, I should like briefly to support the amendment. The conclusion that one must reach is that the Government's position is, "It may never happen", but I think that we risk a muddle. There is a risk that parts of such homes for the elderly will be enfranchised. There will then be difficulties with the warden service because mixed occupation is bound to jeopardise that. Although it may never happen, it most certainly could, and I hope that my noble friend will take a further look at this matter.
As far as I can see at the moment, registered charitable housing trusts are exempted from the provisions, but charitable housing associations, which have provided this type of housing on long leases, are not. The question relating to those housing associations is whether there was a charitable element to their work. I believe that there was because they got the schemes together originally, ensuring that the housing was built. Although the property was sold off on long leases to those people whom they wished to help but who had more means than some of the others, there remains the fact that they got the schemes off the ground and provided warden services to those people on the same basis as they provided warden services to everybody else. Therefore, there is a definite charitable element to their work.
I hope that my noble friend will give some thought to ensuring that charitable housing associations which provide such houses for the elderly will be treated in the same way as registered charitable housing trusts.
8.45 p.m.
Lord Strathclyde: My Lords, I am grateful to the noble Baroness, Lady Hamwee, for the way in which she moved her amendment. As she rightly said, we discussed this issue in Committee and I promised then that I would consider it further. I am sorry to say that our position has not changed, but perhaps we can now consider why.
I do not believe that there is any justification for denying long leaseholders in sheltered housing the right to enfranchise. As I said in Committee I understand the concerns which have led to this amendment being tabled: that once the freehold has been bought the flats may be sold to people who are not already elderly or disabled and they will therefore move out of the sheltered housing market. I said that that is not a valid concern because any restrictive covenants in the leases, which might specify, for example, that the flats were only to be let to the elderly, would remain. The noble Baroness said that if I produced that argument she would not agree with it, but I do not know why she would not agree because such covenants could not be changed unless both parties to the lease agreed. Is it not fair enough that where a landlord and a leaseholder have agreed to change the covenant those tenants should be able to decide whether or not they want to enfranchise, just like any other class of leaseholder?
We have also heard the view expressed that people who live in sheltered housing do not really want to enfranchise and so we need not bother to give them the opportunity, but it is wrong to discriminate in that way. Why should a long leaseholder be denied the

1255
collective right-to buy the freehold simply because he or she lives in a sheltered housing block owned by a housing association? To deny people this right simply because of the type of accommodation in which they live would be tantamount to suggesting that such people are incapable of making an informed decision about the accommodation in which they live. The whole of this legislation is about giving people that ability and that choice.
Of course, there will be residents who, for whatever reason, do not wish to participate in buying the freehold. That is their choice. The important point is that they are able to make that choice. Those who choose not to join in would not be disadvantaged, as the terms of their leases would remain after enfranchisement. Any services, such as a resident warden, would be maintained.
As for tenants who do not qualify for enfranchisement, the terms of their tenancies would also be unaffected. In fact, such tenants may not even have a change of landlord, because 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 of taking a leaseback of that flat if he so wishes.
What the noble Baroness had to demonstrate was that there is a real reason for stopping tenants of sheltered housing from being able to enfranchise, and I am not at all convinced that the noble Baroness has come up with compelling arguments.
I turn now to the point raised by my noble friend Lord Monk Bretton. Where such bodies are involved in charitable works, they would be excluded because "housing associations" may include housing trusts. Therefore, registered housing associations can, under certain circumstances, be charitable housing trusts and therefore would not be covered by the legislation. It is important to get the practical aspects of this right. All that I am saying is that where tenants have the ability to change their tenure and are not constricted by leases, they should have the opportunity to seek enfranchisement.
Baroness Hamwee: My Lords, we do not seem to have advanced a great deal. The Minister has invited me to expand on certain points underlying this amendment, and I shall gladly do so. He said that this would be a denial of a right to a particular group of tenants. I must make it clear for the record that I am not suggesting—and I do not believe that any of your Lordships who have supported the amendment would suggest—that those tenants are incapable of making an informed decision, which is what the Minister said.
The balance must be between the rights of an individual tenant and the interests of the preservation of a particular and specialised type of housing stock. From the way in which I and other noble Lords have dealt with the general thrust of the Bill and the. rights of tenants to enfranchise I think that the Minister must take seriously support for this exclusion when it comes from those of us who have supported tenants' rights.
We are not talking about a private landlord; we are talking about housing associations. They are quite
1256
different animals. The Minister asked why restrictive covenants would not do; the answer is that it is precisely because they would allow the overriding of the provisions of the Bill. Where there are restrictive covenants between two parties, they can, of course, agree to vary those covenants or to lift them altogether. It would need the provision of legislation to prevent that agreement. It perhaps takes us back somewhat to the arguments that we had at the beginning of the afternoon. But the very fact that restrictive covenants can be altered by agreement is why I seek to insert the provision in the Bill, rather than leaving it to the lease or other arrangements between the tenant and the housing association.
The Minister mentioned the charitable housing trusts. As I understand it there are very few of them. Registered housing associations do not generally fall within that category. That is why the additional separate amendment has been put forward. Sheltered housing was excluded from the right-to-buy provisions of the 1985 Housing Act. Given the support for the proposal from all sides of the House both today and on previous occasions, and given the fact that the Minister has not given me any hope that we may return to the matter again, I should like to test the opinion of the House.
8.51 p.m.
The Deputy Speaker (Lord Airedale): My Lords, the Question is, That Amendment No. 13 be agreed to? As many as are of that opinion will say, "Content". To the contrary, "Not-Content".
Noble Lords: Not Content!
The Deputy Speaker: My Lords, I think the "Not-Contents" have it. Clear the Bar.
Division called.
8.55 p.m.
The Lord Chancellor: My Lords, Tellers for the Not-Contents have not been appointed pursuant to Standing Order No. 51. A Division therefore cannot take place, and in accordance with Standing Order No. 54, which provides that no proposal to reject a Bill should be agreed to unless there is a majority in favour of such a rejection, I declare the amendment agreed to.
The Lord Chancellor: My Lords, I call Amendment No. 14: the Lord Boardman.
[Amendment No. 14 not moved.]
The Lord Chancellor: My Lords, I call Amendment No. 15: the Lord Strathclyde.
Noble Lords: It should be 14!
Viscount Goschen: My Lords, I have already spoken to Amendments Nos. 15 and 16 when I moved Amendment No. 4.—
Lord Williams of Elvel: My Lords, I was not aware that Amendment No. 14 had been called by the noble and learned Lord.
The Lord Chancellor: My Lords, I called Amendment No. 14 and it was not moved.
Lord Williams of Elvel: My Lords, I am sorry and I apologise to the noble and learned Lord. In the confusion, I was not aware that the noble and learned Lord had called the amendment. Therefore, if he will permit me, I should like to speak to the amendment.
Baroness Gardner of Parkes: My Lords, no!
Lord Williams of Elvel: My Lords, I am afraid that I did not hear the noble and learned Lord call Amendment No. 14. It was simply that, in the confusion—
Lord Boardman: My Lords, I have only just come back to the Chamber having responded to the call for a Division. I am now told that Amendment No. 14 standing in my name has been called. I should like the opportunity to move it.
The Lord Chancellor: My Lords, I called Amendment No. 14 after I announced the result of the non-Division in respect of Amendment No. 13. I do not think that I called it particularly silently, at least I certainly did not intend to do so. But, on the other hand, it appears that my call was not universally heard. I think, therefore, that the justice of the case requires that I call the amendment again.
I call Amendment No. 14 standing in the name of the noble Lord, Lord Boardman.
Lord Williams of Elvel: My Lords, I am most grateful to the noble and learned Lord. I was in the Chamber throughout but I did not hear—perhaps because my hearing is defective—the noble and learned Lord call Amendment No. 14. Therefore, I am very happy to move that amendment formally in the expectation that the noble Lord, Lord Boardman, will make a speech upon it. I think that the amendment needs to be discussed.
Lord Coleraine: My Lords, before the matter goes any further, I should like to point out that I was also present in the Chamber when my noble and learned friend called the amendment. I heard that it was not moved and then my noble and learned friend called Amendment No. 15.
Baroness Gardner of Parkes: My Lords, that is true.
The Lord Chancellor: My Lords, I certainly called Amendment No. 14 to the best of my ability. I waited for a while but nothing happened, so I declared it not moved and went on to call Amendment No. 15. On the other hand, we are all rather fallible—myself particularly—and I think, therefore, that in all the circumstances it is only just that I should re-call Amendment No. 14. I shall do so now.
9 p.m.
Lord Boardman Lord Boardman moved Amendment No. 14:
After Clause 5, insert the following new clause:
("Qualifying tenants satisfying residence conditiun
,—(1) For the purposes of this Chapter a qualifying tenant of a flat satisfies the residence condition at any time when the condition specified in subsection (2) is satisfied with respect to him.
(2) That condition is that the tenant has occupied the flat as his only or principal home—

(a) for the last twelve months, or

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(b) for periods amounting to three years in the last ten years,

whether or not he has used it also for other purposes.
(3) For the purposes of subsection (2)—

(a) any reference to the tenant's flat includes a reference to part of it; and

(b) it is immaterial whether at any particular time the tenant's occupation was in right of the lease by virtue of which he is a qualifying tenant or in right of some other lease or otherwise;

but any occupation by a company or other artificial person, or (where the tenant is a corporation sole) by the corporator, shall not be regarded as occupation for the purposes of that subsection.
(4) In the case of a lease held by joint tenants—

(a) the condition specified in subsection (2) need only be satisfied with respect to one of the joint tenants; and

(b) subsection (3) shall apply accordingly (the reference to the lease by virtue of which the tenant is a qualifying tenant being read for this purpose as a reference to the lease by virtue of which the joint tenants are a qualifying tenant).").

The noble Lord said: My Lords, I shall speak also to Amendments Nos. 34, 35, 38, 40 and 42. Under the Bill two-thirds of the long leaseholders of the block must participate in the application to enfranchise, and unfortunately none of them need be resident, as your Lordships will know from a previous amendment. There are amendments down, which may well commend themselves to my noble friend the Minister, allowing that figure to be stepped up to three-quarters.
Amendment No. 14 improves the situation in that it requires half of the participating leaseholders—I remind your Lordships that two-thirds of the leaseholders must qualify, and that two thirds must then participate—to be residents. So there will be a significant residents' entity in the participating leaseholders.
Secondly, the amendment excludes companies from being residents. As the Bill stands, the whole block could be acquired by company leaseholders. The amendment—I believe in all fairness—excludes companies and corporations from qualifying as residents. Thirdly, the amendment relates to the definition of resident. Throughout the Bill resident is defined as someone who has occupied the flat as his only or principal home for the last three years or for periods amounting to three years in the last 10 years. That definition was used also in the 1967 Act.
The amendment extends that definition by qualifying as a resident one who occupied the flat as his only or principal home for the last 12 months or for periods amounting to three years in the last 10 years. That overcomes the problem, which has been referred to, of residents who have only recently taken up residence. It was a point referred to by the noble Lord, Lord Williams. Limiting the period to three years might exclude a number of people. The amendment widens the definition to 12 months. Although I am less happy with that than I am with the exclusion of non-residents, the amendment goes a long way towards solving the problem of enabling residents to enfranchise, to which my noble friend the Minister referred, and towards meeting some of the principles in respect of which the Bill, without the amendment, would be offensive. I beg to move.
Lord Williams of Elvel: My Lords, I am glad that we have the opportunity to discuss the amendment. We had this debate earlier, and I believe that the noble Lord, Lord Boardman, was right to ungroup—if I may use that inelegant expression—Amendment No. 14 from the previous amendments. We support entirely the position in subsection (3) of the amendment. We do not believe that there should be companies and absentee landlords who can do what they like and create what I believe are called "artificial persons". We support that principle. I promise the noble Lord our support on that part of the amendment.
We have some difficulty, however, with subsection (2) which imposes a restraint on enfranchisement. It is not to our liking. I and my colleagues should like to think about it. But if the Government were prepared to look seriously at the provision and possibly include it in the Bill, that is something that we might have to live with. It is something that I and my colleagues in the other place might well object to. Nevertheless, it is probably better than nothing.
Perhaps I may return to what I said earlier. We recognise that there is a problem over residence. We recognise that "residence" is difficult to define. One of the things that we can define quite easily, and which would exclude enfranchisement, is leases owned by corporations, or those standing in for corporations, which are not themselves real people, but which are leaseholders. We are anxious to encourage the enfranchisement of real people who are leaseholders. I say to the noble Lord, Lord Boardman, that our reaction to the amendment is that we agree with anything which is against absentee landlords and artificial persons but as regards residents, we have had our doubts about "the last twelve months". We shall see.
Lord Peyton of Yeovil: My Lords, I look forward with unusual eagerness to reading the Official Report of what the noble Lord, Lord Williams, has just said so that I can understand on which side of the argument he intended to descend. He appeared to be saying not much more than that this is a curate's egg amendment; there are bits which are bad and there are bits which are good. He left me very confused and muddled. The reason for my speaking is to give my noble friend on the Front Bench a chance to get his wit together more powerfully than mine so that he can understand exactly what the noble Lord, Lord Williams, said and meant to say and, moreover, so that my noble friend might understand what his right honourable and honourable friends down the passage might say when the amendment, if it is passed, reaches them.
I wish to make a personal comment about the amendment. I cannot help but feel some deep regret that my noble friend Lord Boardman did not decide to vote on the earlier amendment. At least that 'would have had the advantage of making the views of some of us on this side of the House very clear without necessarily impeding the progress of this compromise. It goes some of the way to pleasing the noble Lord, Lord Williams, but not all the way.
The debate is becoming confused. This little
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amendment, which is now before us, is welcome because it goes some way towards acknowledging that the Government have not been wholly right in the argument. At the same time I take the opportunity to express my considerable regret that earlier today we were unable to express a clear opinion on the mistaken course which the Government have adopted.
Lord Palmer: My Lords, I would first like to pay great tribute to the noble and learned Lord the Lord Chancellor for his sense of fair play in this matter. I too have put my name to the amendment. Unlike the mover of the amendment, Lord Boardman, I did not leave the Chamber and I certainly failed to hear. I am the third youngest person in the Chamber tonight and I reckon that my hearing is quite good. We owe a great gratitude to the noble and learned Lord for showing an amazing sense of fair play.
It also gives me enormous pleasure to support the noble Lord, Lord Boardman, as it appears that there is no logical reason at all why a non-resident should benefit from the Bill. I sincerely hope that your Lordships will give the amendment full support. I support the amendment.
Baroness Gardner of Parkes: My Lords, I would like to bring before the House the matter of—
Noble Lords: Order!
Lord Strathclyde: My Lords, my noble friend Lady Gardner is out of order in speaking from the Bishops' Bench.
The Earl of Onslow: My Lords, we have not as yet allowed women priests in the Church of England. However, I am sure that my noble friend Lady Gardner will make an excellent successor to Archbishop Cranmer.
My noble friend Lord Boardman withdrew Amendment No. 5 on the undertaking of my noble friend on the Front Bench to accept the amendment, to all intents and purposes. I suggest that that was the case because it was within the bounds of possibility that he would have lost. If my noble friend on the Front Bench does accept the amendment I sincerely hope that he will be careful not to say, "I accept the amendment in principle", after which one's old chum "drafting errors" will come into play. Off the Minister will go and say, "I think that I will accept the amendment", and the Government will introduce an amendment along the same lines at Third Reading. If that is to be the case I sincerely hope that my noble friend on the Front Bench will not be tempted to water down the amendment just a little on the grounds of legislative clarity. I sincerely hope that he will not attempt a fast one like that. I do not believe that he will, but I hope that he is warned that some of us will be on the look-out if he does.
Baroness Gardner of Parkes: My Lords, I am concerned about a principal and only resident. What will be the situation of someone with a large family occupying two flats? Will that person be able to enfranchise only one of the flats and not the second in which the other half of the family lives? I should be

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sorry to rule out such people. There are people with big families who cannot fit into one flat in certain blocks. I know of a number of such cases.
I am also sorry that we are debating Amendment No. 14 because we had passed on and Amendment No. 15 had been called. However, the main reason for my objection to returning to the amendment is that it was tabled so late that we have not had time to consider in careful detail how it and Amendment No. 31 mesh together. It may be that it is quite a good compromise but I feel that the amendment has not been tabled long enough for noble Lords to consider its full ramifications. That is why I feel a degree of anxiety about the amendment.
9.15 p.m.
Baroness Hamwee: My Lords, the noble Lord, Lord Peyton, was less than generous in claiming not to understand the points made by the noble Lord, Lord Williams. I take a similar view to that of the noble Lord, Lord Williams. I support the exclusion from qualification of a "company" or "artificial person". However, those of us who do not wish to see a residence test would prefer it not to be included. If it is to be included, then the shorter the period of residence the less objectionable that would be. I hope that that makes the position quite clear.
I am not sure whether Amendment No. 31 is being spoken to with this amendment. The noble Lord, Lord Boardman, has not referred to it but the amendments seem to go together. I am rather mystified as to what is intended by Amendment No. 31. It requires explanation.
Lord Boardman: My Lords, Amendment No. 31 provides that half the participant tenants must be resident. Two-thirds must be qualifying tenants; at present two-thirds of those must participate without any residential qualification. Amendment No. 31 says that half of those two-thirds must be residents in order that they can participate.
Baroness Hamwee: My Lords, that explanation is rather difficult to follow without an algebraic calculation before me but, nevertheless, I thank the noble Lord for that intervention.
Lord Coleraine: My Lords, like the noble Baroness, Lady Hamwee, and unlike my noble friend Lord Peyton of Yeovil, I read the lips of the noble Lord, Lord Williams of Elvel, and I understood all that he said. One must be particularly wary and respectful of such a skilfully drafted amendment as that brought forward about eight weeks after the matter was last discussed and immediately before it is to be discussed on Report.
Other noble Lords will be as grateful as I am for the occasions on which my noble friend sitting behind me reminds us of our interests. On this occasion I declare once again my interest in that I am a lessee of a flat which has been my home for 17 years. During the whole of that period it has not been my sole residence. Therefore, I wish to address a few remarks on the question of residence.
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I must tell the House and my noble friend Lord Boardman that this proposed clause and the way in which it deals with residence—sole or principal residence—is clearly in breach of the Conservative Party manifesto where residence alone is referred to. It is also clearly in breach of the two pamphlets issued by the Department of the Environment and the Welsh Office, to which I referred earlier. It makes no difference that Section 36 was amended at an earlier stage in these proceedings to introduce a sole and principal residence amendment to lease extensions. That also was in breach of the manifesto and the documents. I hope that my noble friend will resist the amendments.
Lord Strathclyde: My Lords, this is the third time that I rise to address the House on the residency test. We are now dealing with this amendment separately from Amendment No. 1.
The Government have always resisted a residency test. They do not do that on the basis of principle because, as I explained earlier this afternoon, we have included residency tests in all other aspects of leasehold enfranchisement and extension. However, we object to it on the basis of practicality. The noble Baroness, Lady Hamwee, the noble Lord, Lord Williams, and I have given many examples of how a residency test would prevent leasehold enfranchisement. Some of my noble friends have also given examples of that.
However, I have always maintained that there may well be a way through which would deal with my problems as regards a residency test. I believe with the introduction of this new clause that I have been outmanoeuvred by my noble friend.
The amendment allows qualifying tenants to choose between occupation of the flat or part of it as an only or principal home for either the preceding 12 months or for periods amounting to three years out of the last 10. The second year of the test means that people who have recently let out their flats because, for example, they have gone abroad for a period, would not be denied the opportunity to join in collective enfranchisement. In the case of joint tenancies, only one of the tenants need satisfy the condition. Occupation does not have to have been under the qualifying lease. So, for example, someone who has lived in a flat owned by his or her parents and has recently inherited a long lease, or a former secure tenant who has exercised the right to buy, will be able to participate.
The test contained in the new clause is intended to prevent a majority of non-resident long leaseholders purchasing the landlord's interest. Our declared policy, on which I have pronounced many times, is that flat owners should be able to gain ownership and control of their blocks. That point was echoed by the noble Lord, Lord Williams. The test that has been proposed by my noble friend Lord Boardman does not seriously interfere with that objective. Therefore, with the noble Lord, Lord Williams, I understand that my noble friend has come forward with something that could work. It clearly signals that flat owners cannot take over if only a minority of the participants lives or has lived for significant periods in the flats.

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The noble Lord, Lord Williams, said that this Bill was about encouraging "real people" to enfranchise. That is the Government's position. I feel that my noble friend has produced something that does encourage "real people" to enfranchise.
My noble friend Lord Onslow suggested to me that I should not take back this amendment and promise a redrafting. Having listened to the debate earlier this afternoon, and indeed to the short debate that we have had this evening, and seeing the strength of the presence of my noble friends on the Back Benches, I should like to propose to my noble friend Lord Boardman that he should move his amendment. The Government will accept it, and if there are any drafting errors we can sort them out at Third Reading.
Lord Boardman: My Lords, I thank my noble friend for that somewhat surprising concession, following the events of the past few weeks. I welcome it. I much appreciate the great support that noble Lords have given by being here and speaking not only on this amendment but in particular on the earlier amendments, which made it clear that we on this side of the House felt that residential occupation by an element of the leaseholders was an important part I am delighted that my noble friend has been happy to accept the amendment.
On Question, amendment agreed to.
Clause 6 [Meaning of "long lease"]:
Viscount Goschen Viscount Goschen moved Amendments Nos. 15 and 16:
Page 7, line 41, leave out from ("Where") to ("then") in line 43 and insert ("in the case of a flat there are at any time two or more separate leases, with the same landlord and the same tenant, and—
( ) the property comprised in one of those leases consists of either the flat or a part of it (in either case with or without any appurtenant property), and
( ) the property comprised in every other lease consists of either a part of the flat (with or without any appurtenant property) or appurtenant property only,").
Page 8, line 1, at end insert:
(""appurtenant property" has the same meaning as in section 1;").
The noble Lord said: My Lords, I have already spoken to Amendments Nos. 15 and 16 with Amendment No. 4. I beg to move them en bloc.
On Question, amendments agreed to.
The Deputy Speaker: My Lords, in calling Amendment No. 17, I have to say that if it were to be agreed to I could not call the next one.
Clause 7 [Leases at a low rent]:
Lord Carnock Lord Carnock moved Amendment No. 17:
Page 8, leave out lines 13 to 16 and insert:
("(1) For the purposes of this Chapter a lease of a flat is a lease at a low rent if either no rent was payable under it in respect of the flat during the initial year or the aggregate amount of rent so payable during the period of twelve months immediately preceding the relevant date did not exceed £300 if the flat is in Greater London, or £75 if elsewhere, or the aggregate amount of rent so payable during the initial year did not exceed the following amount, namely—").
The noble Lord said: My Lords, I have already spoken to this amendment with Amendment No. 6 in
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accordance with the grouping as it then was, since when the noble Lord, Lord Williams of Elvel, has indicated that he wishes to speak to Amendment No. 17 in its place in the Marshalled List. He inquired whether I would agree to the de-grouping of the amendment, which I gladly did. In the circumstances, I could speak further to this amendment but I do not think that the business of the House would be in any way furthered if I did so. Accordingly, I beg to move.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord, Lord Carnock, for his introduction to this amendment. It is one of the important points in the Bill, at least in Part I of the Bill which concerns the low rent test. The noble Lord, Lord Carnock, allied with the noble Viscount, Lord Bridgeman, and the noble Lord, Lord Annan, introduced a series of amendments which go some way, in our view, to mitigating the damage which the Government are doing to the Bill, as drafted, as regards the low rent test. Our view on the low rent test was clearly stated in Committee. We believe that there is no case for including it. After all, it disenfranchises on a more or less random basis many leaseholders who would otherwise be in a position of enfranchising. It goes against the general thrust of not only this Bill but also the 1967 Act.
Nevertheless, I have to accept that in Committee your Lordships decided against the abolition of the low rent test. We were advocating its abolition and we shall continue to do so. Therefore, we have to go to certain fall-back positions. One of the fall-back positions that is available is that advocated by the noble Lord, Lord Carnock.
There are certain disadvantages to the noble Lord's amendment. One of them is that, as regards the position in London, the amendment does not quite achieve what the noble Lord hopes it will achieve. But the main advantage, in our view, is that the amendment achieves at least a mitigation of the damage that the Bill as drafted will cause to leaseholders outside London. As I have pointed out on I do not know how many occasions, 75 per cent. of leaseholders who are affected by this Bill live outside London. Even in London, as far as I am concerned, we are not talking about the great estates. We are talking about those leaseholders who live in areas of northern London who would benefit from the noble Lord's amendment.
I have said all along that we will support any amendment, provided it is reasonable, that mitigates the damage which is done by the low rent test as presently incorporated in the Bill. I stick to that position. Therefore, although I have certain quarrels with the noble Lord, Lord Carnock, on the details of what we are discussing, nevertheless I believe this is a good amendment in the context of the day. The question is: what will the Government do about it? Alas, I suspect the Government will do nothing. I suspect that the noble Lord, Lord Carnock, in moving this amendment will meet a total brick wall from the Minister on the Benches opposite. I think that would be a pity; not because, philosophically, the Minister or the Government in general are opposed to what the noble Lord, Lord Carnock, is suggesting, but it would

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be a pity if there were no consideration of Amendment No. 24. That amendment seems to add a new dimension to the rateable value equation which is at present in the Bill. Even if the Government are wholly opposed—like a brick wall—to any adaptation of the low rent test, I believe that, as in capital gains tax, indexation of rateable value should be considered very seriously.
I say all that in the reasonable expectation that the noble Lord, Lord Carnock, will not receive any help or comfort from the Government. Nevertheless, I wish to place on record that we support the noble Lord in his Amendments No. 17 and, in particular, No. 24. I hope that the Government may in the course of time have second thoughts, as they have on other occasions.
9.30 p.m.
Lord Wolfson: My Lords, I too should like to support my noble friend Lord Carnock's amendment. I should have liked it to have gone further. I supported a complete repeal of the low rent qualification at Committee stage. I agree with the views of the noble Lord, Lord Williams, on the subject. I hope that my noble friend the Minister will not find the bricks behind him too hard and will be able to offer this concession. It is not only very much within the spirit of the Bill but also of the manifesto before the general election.
Lord St. John of Bletso: My Lords, I wish to restate my support for the amendment. As the noble Lord, Lord Williams, mentioned, the proposed rent threshold is aimed particularly at the lower to middle end of the property market. Without the amendment many leaseholders will be unjustifiably disfranchised, which is against the objectives of the Bill.
Baroness Hamwee: My Lords, this seems to be a time of the evening for modified rapture. Like other noble Lords I should have preferred to see a more far-reaching amendment. However, we covered the ground of whether or not there should be a low rent test at all on a previous occasion. Given the outcome of that debate, I too should like to say for the record that I support the amendments in the name of the noble Lord, Lord Carnock.
One of the points that I made when we discussed the low rent test at the previous stage was the manipulation of the provisions of legislation by solicitors in drafting leases. Leases state, for instance, that the rent would be such and such an amount or £1 more than the amount which was required in order to take the lease out of the provisions of the Leasehold Reform Act. Shortly after the Committee stage I took the wrapper off a legal professional journal and out fell a flyer for a seminar entitled "Residential Leases -The New Law (and how to use it)". The document began with a quote from a member of the profession:
"These new leasehold rules should bring in lots of work for solicitors—if they can get their act together in time".
Continuing with the promotion of a seminar on how to make the best use of the clients of the proposed legislation the document quite bluntly said:
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"The Bill could have been called 'The Conveyancing and Practice Development Bill'. This seminar will tell you how to take full advantage".
I recognise that I am speaking against members of my own profession in mentioning that, but it is a point which should be made in arguing for simple and not manipulable legislation.
Lord Coleraine: My Lords, as it was I who moved the amendment which was defeated in Committee, I should merely like the record to show that I warmly commend both the amendments to the House.
Lord Monk Bretton: My Lords, I also wish to say a word in support of the amendment of my noble friend Lord Carnock. I feel that without it there will be far fewer enfranchisements of flats in areas mostly outside London. Not only will there be fewer enfranchisements, but there will also be many anomalies, together with many disappointments. I wish to emphasise that I think it would lead in the end, only too quickly, to demands for further legislation which would probably be more radical.
Lord Strathclyde: My Lords, this is, of course, yet another issue which we debated at some length in Committee, the issue of the low rent test. At that time the Committee voted decisively in favour of retaining the test. The amendments before us seek to amend the structure of that test. I am not convinced that the amendments are of much benefit, but I generally feel that the low rent test should not be amended. The test marks the extent of the transfer of ownership from the landlord to the lessee. This is crucial in determining whether enfranchisement should be allowed to take place at all. The low rent test has been recognised and accepted for many years by the property market as the threshold indicating that equity has been transferred and effective owner occupation commenced. A landlord knows that his interest in a property let on a low rent is effectively lost to the lessee.
The low rent test appears in roughly the same form in several important pieces of landlord and tenant legislation, and I listed them in Committee. I would therefore not be willing to amend the current form of the test. However, perhaps that is an argument against what the noble Baroness, Lady Hamwee, said. The fact is that this is a test which has been well precedented and well used in the courts and by professionals both in property and in the legal profession, and that is another reason why it should not be changed. To change the rules at this stage would upset the property market and affect the basis on which quite proper transactions were entered into.
It is for those reasons that it is difficult for me to accept Amendment No. 17. Adding a new limit to the test would unnecessarily complicate it and would disturb the workings of the well-established and accepted rules. Perhaps my noble friend Lord Carnock, who moved the amendment most eloquently, could reflect on that to see whether he could propose something better.
I also have reservations about Amendments Nos. 22 and 24. At this stage I am not certain whether my noble friend spoke to Amendment No. 22. He indicates that he did not. I have trouble in supporting

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Amendment No. 24 which introduces the suggestion that the rateable value should be increased in line with the retail prices index. As I explained, the low rent test is well established and has worked since both the last rating revaluation and the abolition of domestic rating. The RPI is notional. It is in no manner fixed to capital or property rental prices, nor does it take account of regional variation, which is marked in property. I suspect that any link between increases in ground rents and retail prices is likely to be tenuous.
I know that my reply is disappointing to my noble friends but I cannot accept the amendments which would upset the long-term operation of the property market where leases are based on a long established and understood test.
Lord Carnock: My Lords, I have a heavy heart at hearing that reply. Not a single Member of the House has spoken against my amendment. In relation to indexation, my noble friend on the Front Bench indicated that the two-thirds test was proven and had been working satisfactorily. I have to say that that is really not the case. The reason that it is not is that during the period from 1st April 1973 to 31st March 1990 the retail prices index rose by 421 per cent. Throughout that period ground rents were rising at a rate not appreciably different. Throughout that period the rateable value remained fixed because the policy of the Government which existed when the low rent test relating to rateable values was introduced envisaged that there should be quinquennial valuations. The principle of quinquennial valuations was abandoned.
The result is that if one considers two identical flats, one let on, say, 1st April 1973 and the other let in March 1990, there will be very different results upon the application of the low rent test. The low rent test has been rendered perverse, giving false results, because the rateable value has remained fixed and the ground rent or rents have been escalating.
It is a fundamental rule of arithmetic that when making comparisons one compares like with like. At the inception of the low rent test, like was being compared with like but toward its termination like was not being compared with like. The test therefore gave perverse results.
In the circumstances and at this hour of the night, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Coleraine Lord Coleraine moved Amendment No. 18:
Page 8, line 13, after ("flat") insert ("entered into on or before the date of the passing of this Act (or after that date but in pursuance of a contract entered into before that date)").
The noble Lord said: I shall speak to this amendment, which is a paving amendment for Amendment No. 20, and also to Amendment No. 21, which is consequential. Amendment No. 20 provides that a lease entered into after the passing of the Act, otherwise in pursuance of an earlier contract, is a lease at a low rent. Paragraph (a) reads:
"either no rent was payable under the lease in respect of the flat during the initial year or the aggregate amount so payable during that year did not exceed two-thirds of the rent at which the flat might on the date the lease was entered into reasonably have been expected to be let from year to year if the tenant undertook to pay the Council Tax and all other
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usual tenant's taxes and to bear the cost of repairs and insurance and the other expenses, if any, necessary to maintain the flat in a state to command that rent".
The Government have made clear that there is general dissatisfaction with the residential long leasehold system as it exists in England and Wales, particularly with regard to flats. They propose that rights of either enfranchisement or lease extension should attach to flat leases where, at the time the lease was granted, the property in the flat substantially passed to the tenant.
As your Lordships know, in Committee I moved an amendment which would have removed the low rent test altogether but it did not satisfy the requirement that in every case property must be shown to have passed when the lease was granted. The amendment was rejected by the Committee.
It is fair to say that the Government's sincerity in their whole attitude to the low rent test and the long leasehold system as it applies to residences will be most clearly tested by the response to this amendment. I tabled and spoke to a similar but much less satisfactory amendment in Committee, Amendment No. 155A, which was related to houses. The debate can be read in the Official Report of 22nd March at col. 113 to 117. The Minister's reply is there to be read.
As I said, this is the better amendment. I should like to draw the attention of the House to what at present is happening in the market to the kind of long leases where the Government are saying that the property is not passing to the lessee. I have with me particulars of a block of four flats recently for sale in Mount Street, Mayfair. The lower two flats of the four are for sale at £475,000 each on new 83-year leases. I must be careful what I refer to as "ground" rent; the Minister would feel constrained to call it a "rack" rent. The ground rent is to be one quarter of I per cent. of the premium. At a ground rent—or a rack rent, call it what you will —of £1,187.50, the property and the flat, under the Bill and in accordance with the Government's reading of the situation, is to be deemed to have remained with the freeholder. The two upper flats are for sale at £400,000 and £350,000 respectively on the same rent terms, and they just scrape through. Their leases are seen by the Government to be true ground rent leases.
It is sheer hallucinating madness. My amendment is drafted to replicate a rates revaluation as of the date of the grant of the lease. The precedent is in Section 19 of the General Rate Act 1967. In my view, the amendment provides the safeguards which the Government claim are required for the protection of freeholders in the case of leases granted after the passing of the Act.
In case it should occur to my noble friend when replying to my amendment that it will involve complicated valuations, let me say straight away that it will not do so. If the amendment were in place, either proper rack rents would be granted on short leases, or landlords would grant leases for proper ground rents in order to maximise their capital considerations; there would be no cases where any lease was granted for 21 years or more at a rent anything like the rent limits which the amendment imposes. I beg to move.
9.45 p.m.
Lord Boardman: My Lords, I find the amendment extremely confusing. There seems to run through so much of the debate a philosophy that anyone who enters into a contract to take a flat is somehow entitled to read into it that he is entitled to enfranchise it. My noble friend referred to flats which are advertised for sale. One wonders whether one should put a footnote at the bottom, saying that the flat will qualify for a kindly government to make them a present of the flat or that the ground rent is fixed at a rate which will not entitle a kindly government to do that.
I find the conception that they can enter into a perfectly ordinary agreement—they know what they are buying, what the ground rent is and what they have to pay—and then people like my noble friend turn round and say, "They should have the right to enfranchise. The Government should allow it". I find it to be cloud cuckoo land and I hope my noble friend on the Front Bench will not support the amendment.
Lord Strathclyde: My Lords, these amendments would affect the future determination of a low rent by disapplying the current test and introducing a new test with an anti-avoidance device for leases granted after the enactment of the Bill.
We have discussed the provisions of the low rent test at some length. Its purpose is clear. The current test has been in existence for many years and all landlords and tenants will be aware of its provisions. It cannot be altered lightly.
My noble friend argues that a lease may be deliberately set to fail the test and be unenfranchisable. That is true, but it may be with the agreement of both parties. The point is that where that has happened, the tenant will know before purchase, because of the certainty of the test, that his lease will not be able to be enfranchised and he will therefore pay less for the lease. Equally, a developer will have the benefit of the long established test to ensure that leases are enfranchisable and he can therefore charge a higher premium for such leases.
Landlords and tenants are free to enter into future leases which will or will not pass the existing test, both parties being aware of whether or not the lease will pass. There would therefore be no point in complicating matters by tinkering with the established test and introducing a different test with an anti-avoidance device for leases granted after enactment of the Bill. Again, I suspect that my reply will disappoint my noble friend, but I do not believe that he has made a case for me to accept the amendment.
Lord Coleraine: My Lords, I believe that the proposition put forward by my noble friend—that there will be a differential market between new leases granted with the right to enfranchise and those granted without the right to enfranchise—is a very suspect one given the fact that anyone enfranchising has to pay the full price, and certainly more than the freeholder will get if he puts it on the market elsewhere. I am sorry, but not surprised, that my noble friend has been able to say only a little about the question of property passing. I believe that everything
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he has said shows what the Government's attitude is to low rents and what they really feel about the question of property passing. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carnock Lord Carnock moved Amendment No. 19:
Page 8, leave out lines 20 to 25 and insert:
("(b) where—

(i) the lease was entered into either on or after 1st April 1963 but before 1st April 1990, or on or after 1st April 1990 in pursuance of a contract made before that date, and

(ii) the flat had a rateable value at the date of the commencement of the lease or else at any time before 1st April 1990,").

The noble Lord said: My Lords, in moving this amendment I also wish to speak to Amendment No.129 in Clause 62 which is grouped therewith. The purpose of the amendment is to make clear that subsection (1) (b) of Clause 7 applies only to a flat the lease of which was entered into on or after 1st April 1963 and before 1st April 1990 and where the flat actually had a rateable value at the date of the commencement of the lease or at any time before 1st April 1990. Under the Bill as drawn the paragraph could have purported to apply to a flat which had no rateable value at any relevant time, so that the provision at the end of paragraph (b) relating to two-thirds of the rateable value could not operate. Therefore, there appears to be an omission in the Bill which will be supplied by the amendment. Where such a flat has no rateable value it will be covered by the provisions of paragraph (c), which is of a sweeping-up character. The£ 1,000 threshold will apply if the flat is in Greater London and the £250 threshold will apply if it is situated elsewhere. Amendment No. 129 to Clause 62 corrects a similar omission in relation to the provisions affecting long leasehold houses. I beg to move.
Lord Strathclyde: My Lords, I have listened with great care to the arguments advanced by my noble friend in relation to the case where a property has no rateable value. I accept that this could have happened because when the lease of a property was entered into the property was not habitable or because the property was simply not registered in time before rates ceased to exist, perhaps because it was part of a new development. There is a special case here as it will not be possible to apply the low rent test to these properties.
On that basis, and if it is the wish of the House, I consider Amendments Nos. 19 and 129 to be reasonable and am happy to accept them.
Lord Carnock: My Lords, I am grateful to the Minister for his reply.
On Question, amendment agreed to.
[Amendments Nos. 20 and 21 not moved.]
Lord Carnock Lord Carnock had given notice of his intention to move Amendment No. 22:
Page 9, line 5, at end insert ("and
(f) for the purpose of determining the proportion that the rent payable in respect of the flat during the initial year hears to the rateable value of the flat, the rateable value shall be adjusted to take into account any improvements (whether made before the appropriate date or within five years thereafter; but, if made

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thereafter, made only with the consent of the landlord, or, if such consent is not given, approved by the court for this purpose).").
The noble Lord said: My Lords, I have already spoken to this amendment. I do not propose to move it.
[Amendment No. 22 not moved.]
Lord Rodger of Earlsferry Lord Rodger of Earlsferry moved Amendment No. 23:
Page 9, line 28, at end insert:
("(7) In this section any reference to a flat let under a lease includes a reference to any appurtenant property (within the meaning of section 1) which on the relevant date is let with the flat to the tenant under the lease.").
The noble and learned Lord said: My Lords, in moving this amendment I shall speak also to the amendments which are grouped with it. These amendments deal with a technical and drafting matter. They have been drafted to ensure that in certain cases where there is a reference to "flat", the reference has the precise meaning which is designed for the particular context.
It may be convenient if I deal, first, with Amendments Nos. 23 and 28. Your Lordships will recall that the definition of a flat which applies in Chapter I is the general definition for that chapter which is found in Clause 91(1). But for the purposes of Chapter II there is a drafting gloss on that general definition in Clause 59(2). Your Lordships will see that "appurtenant property" is included within this definition of a flat for Chapter II but is defined separately in Clause 1(7) for the purposes of Chapter I.
The drafting in that way is deliberate. The effect of this difference in treatment is that a group of enfranchising tenants, each with a single lease of a flat and garage, will have the right to acquire the building in which the flats are located, but also, if they wish, they may acquire the appurtenant property demised by their leases. I have already explained that the policy reasons for this were to keep to a minimum the amount of property that has to be acquired while leaving the extent of enfranchisement flexible.
However, on this approach a potential difficulty arises because of the rent test in Clause 7. Clause 7(1) applies the rent test only to the rent and rateable or letting value which applies to the flat itself, even where, for example, the tenant has one lease of the flat together with a garage. On the current drafting it is a suggestion at least that in such a case the rent would need to be apportioned between the flat and the garage before the rent test could be applied. It also follows that the rateable value might also have in such cases to be apportioned where there is no separate rating on the garage. The effect of all this would be cumbersome.
To avoid these complications it has been decided that the low rent test should apply to the flat, together with any appurtenant property enjoyed with it. That is the effect of Amendment No. 23. Amendment No. 28 is simply consequential on Amendment No. 23 in that it directs that, for the purposes of the low rent test and its application under Chapter II, the meaning of "flat"
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shall be construed in accordance with Clause 59(2) rather than Clause 7(7). Amendment No. 128 does the same, in effect, for Chapter II.
The remaining amendments, Amendments Nos. 57, 119, 120, 123, 126 and 127, provide a gloss on the meaning of flat in cases where the landlord denies tenants the rights of collective enfranchisement or lease renewal on the ground that he proposes to redevelop. The current drafting requires only that the landlord must show that he has a reasonable need to obtain possession of the premises, which, as it stands, may mean that he would need only to show that he intended to obtain possession of appurtenant property demised with the flats. That is not thought to be satisfactory. The effect of the amendments is that the landlord, before he can invoke this exception, must show that he could not redevelop the premises without obtaining possession of the flats. These are technical amendments. I beg to move.
Lord Williams of Elvel: My Lords, I too shall speak to the amendments which the noble and learned Lord has spoken to. I have one question for him. This Bill has been through another place. It has also been in Standing Committee in another place. It has been through this House in Committee and here, on Report, we still have technical amendments moved by the Government which may be justified. But for goodness sake, cannot the Government get the drafting right before they go through all the procedures of Parliament? That is the job of the noble and learned Lord, the parliamentary draftsmen, the Bill team and the rest. Why are we at this time of night not debating the real issues of the Bill but technical amendments which the Government recognise are deficiencies in the Bill?
Lord Rodger of Earlsferry: My Lords, one of the purposes of going through the procedures both in Committee and on Report is that matters of technical detail, where necessary, can be put right. It would surely be a far worse situation if the Government were not to put right, and not take the opportunity of putting right, defects which emerge. As everybody recognises, this is a complex Bill. Everyone recognises that it is difficult. A highly technical area of the law involving conveyancing is concerned.
In that situation it is very difficult to get matters right at the very first instance. It is much to be preferred that as these wrinkles emerge—which is what they are—the machinery goes through and one examines the Bill in accordance with parliamentary procedures, it is proper that these wrinkles are put right. I do not apologise for bringing this amendment before the House.
On Question, amendment agreed to.
[Amendment No. 24 not moved.]

Dunham Bridge (Amendment) Bill
Brought from the Commons; read a first time and referred to the Examiners.
House adjourned at two minutes past ten o'clock.