Lords Sitting of 17 July 2001

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

Lord Condon
Sir Paul Leslie Condon, Knight, having been created Baron Condon, of Langton Green in the County of Kent, for life—Was, in his robes, introduced between the Lord Janner of Braunstone and the Lord Sharman.
Lord Corbett of Castle Vale
Robin Corbett, Esquire, having been created Baron Corbett of Castle Vale, of Erdington in the County of West Midlands, for life—Was, in his robes, introduced between the Lord Dubs and the Baroness Crawley, and made the solemn Affirmation.

Northern Ireland: RUC Funding
2.48 p.m.
Lord Glentoranasked Her Majesty's Government:
In the light of the £117 million shortfall faced by the police in Northern Ireland revealed in the final annual report of the Chief Constable of the Royal Ulster Constabulary, how they propose to maintain law and order in Northern Ireland.
The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton): My Lords, the £117 million shortfall referred to by the chief constable in his 2000–01 annual report covers a three-year period from 2001–02 to 2003–04. The possible funding deficit for the current financial year as highlighted by the chief constable is approximately £20 million. However, I must emphasise that the Government remain fully committed to ensuring that the RUC has all the resources necessary to continue to deliver a high quality policing service to the community.
Ministers are aware of the chief constable's views. Officials continue to discuss the issue with both the chief constable and the police authority.
Lord Glentoran: My Lords, I thank the Minister in part for that Answer. The chief constable in relation to this shortfall in his annual report said:
"Should appropriate additional funding not be made available, I have no doubt the required cuts would severely impact on our ability to maintain basic services over the three-year period".
Does the Minister accept that policing with inadequate resources leads to ineffective policing? That is well-proven in many parts of the world; the reverse being the
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case more recently in New York. Does the Minister also accept that the Patten report clearly states that its recommendations assume a peaceful and normal environment for policing? Furthermore, does the Minister agree that any further concessions to Sinn Fein over policing in Northern Ireland would make this small sum of money as a shortfall totally irrelevant?
Lord Falconer of Thoroton: My Lords, first, if there are inadequate resources for policing, policing suffers. The issue of the right level of resources is being discussed between the police authority, the chief constable and the Government. That is how it has always been and that is how it should continue to be. Secondly, the noble Lord asked about Patten. Yes, certain elements of Patten require normality, but as the chief constable has himself accepted, some of the elements can be implemented straight away. That process continues. Thirdly, the process of negotiation continues and it is hoped that the Good Friday agreement will be implemented in all its parts.
Lord Smith of Clifton: My Lords, is the noble and learned Lord satisfied that there is enough money fully to implement the Patten proposals?
Lord Falconer of Thoroton: My Lords, the report to which the noble Lord, Lord Glentoran, referred does not deal with the funding of Patten. Once Patten begins to be implemented in full it is important to ensure that there are adequate resources to do that. That is for discussion on other occasions.
Lord Molyneaux of Killead: My Lords, given that terrorist organisations, both republican and loyalist, remain armed to the teeth, does the noble and learned Lord share my concern over the current campaigns to reduce still further the numbers and the effectiveness of the Royal Ulster Constabulary?
Lord Falconer of Thoroton: My Lords, just as in relation to resources, the Government remain committed to ensuring that the police force and the security forces remain at levels to deal with the security threat in Northern Ireland. That has always been the Government's position and that will remain the Government's position.
Baroness Park of Monmouth: My Lords, does the noble and learned Lord agree that the cost of the rioting in July alone was £5.5 million. that 483 experienced officers have already left and 800 are to go, that Sinn Fein is asking among many other things for retrospective inquiries into RUC behaviour and that meanwhile the cost of the Bloody Sunday inquiry is running at £50 million? I should be interested to have that final figure confirmed. In the light of all that, is this not an extraordinary moment to be allowing any doubt whatever to rest upon the ability of the RUC to do its job? I recognise that the noble and learned Lord has given us some assurances. I hope he will able to assure us that I am wrong in supposing that we would ever consider having a Bloody Sunday-type inquiry retrospectively into the activities of the RUC.
Lord Falconer of Thoroton: My Lords, the noble Baroness asked about leavers. In year one of the voluntary scheme, 483 officers left between January and March 2001, which is the same figure as that given by the noble Baroness. Year two runs from April 2001 to March 2002. Eight hundred and twelve officers are expected to leave during that period. The chief constable is comfortable with that process. As I have always said, the level of policing must ensure proper security in Northern Ireland. The noble Baroness asked about the cost of the disturbances in July. I do not have the answer to her question and so I shall write to her. The noble Baroness asked about the cost of the Bloody Sunday inquiry. I do not know what the cost is and so I shall write to the noble Baroness on that as well. The noble Baroness asked about inquiries like the Bloody Sunday inquiry. Each case has to be looked at on its merits. There was merit in having a Bloody Sunday inquiry. I do not think that I should go any further than that.
Lord Blease: My Lords, have the Government had any information or approaches from the Northern Ireland Police Board? Has the police board issued any public statement about these matters?
Lord Falconer of Thoroton: My Lords, we have had approaches from the police authority in relation to the issue of funding. We are talking to the authority in the same way as we are talking to the chief constable. I am not aware that it has made any public statement in relation to these matters.
Lord Glentoran: My Lords, would the noble and learned Lord be kind enough to answer my third question? Does he agree that any further concessions to Sinn Fein over policing in Northern Ireland would make this cash shortfall irrelevant?
Lord Falconer of Thoroton: My Lords, I indicated that there had been talks at Weston Park when a whole range of matters were discussed. Those discussions included the Ulster Unionist Party. The talks were designed to ensure that the Good Friday agreement will be implemented in full. In relation to Patten, we believe that the Act implements it in full. But if people come forward with proposals saying that we are wrong, we shall listen to them.

Road Traffic Charging
2.55 p.m.
Lord Renton of Mount Harryasked Her Majesty's Government:
Whether they intend to move forward on proposals to tax cars on entering traffic-congested urban areas.
Lord Falconer of Thoroton: My Lords, the Transport Act 2000 provides enabling powers for local authorities in England and Wales to introduce a congestion charging scheme as part of a local transport
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plan to relieve traffic problems and fund improvements to public transport services. The Greater London Authority Act 1999 gives similar powers to the mayor of London. The mayor and a number of authorities outside London are considering using these powers to develop charging schemes.
Lord Renton of Mount Harry: My Lords, I thank the noble and learned Lord for that Answer. Will he tell us frankly whether he is in favour of the proposals put forward by Ken Livingstone over the past 24 hours and in the papers last night and today? Does he expect them to be repeated in other major cities? Does he think they will help? What effect will queues and delays have on cars entering the central zone, from Knightsbridge to St James's or Green Park, if they have to stop to pay £5 as they go through a checkpoint? Would it not be better to concentrate on the earlier plan of getting the utilities in London—electricity, gas, water and cable TV—to dig their holes in the main road at the same time rather than one after the other, seriatim, as they do at present?
Lord Falconer of Thoroton: My Lords, I am all in favour of the holes being dug at the same time to try to reduce delays. I do not think that the mayor's plan involves people stopping and paying £5. Cameras will take photographs and drivers can either pay in advance or pay afterwards. The Government have given local authorities and the GLA the power to bring forward proposals in relation to charging schemes. That is what the mayor of London has done. He is now consulting on those proposals. It will be for the Government to consider those proposals when he puts them to us. And he has not done that yet.
Lord Faulkner of Worcester: My Lords, does my noble and learned friend agree that if the congestion charging achieves a 15 per cent reduction in traffic congestion in central London and raises £200 million for public transport, that will be a prize well worth winning?
Lord Falconer of Thoroton: My Lords, I entirely agree with my noble friend. One has to look at the scheme and see whether it aims to achieve that. We obviously think in principle that such schemes could achieve that; otherwise we would not have given powers to local authorities, the GLA and the mayor to produce such schemes.
Lord Jenkin of Roding: My Lords, what consideration have the Government given to the impact of such a charge on the workings of the House of Commons and of this House? Have the Government thought about that? Have they any plans as to how it might be dealt with?
Lord Falconer of Thoroton: My Lords, as I understand the proposal made by the mayor, it will cost drivers £5 to come into central London. Should Members wish to come by car to the House of Commons or the House of Lords where there are car-parking arrangements, they might have to pay £5. I am

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not sure that that would necessarily impact adversely on the workings of this House—unless the noble Lord has some other view in relation to that.
Baroness Strange: My Lords, is the noble and learned Lord aware that the mayor of London has already caused a great deal of traffic congestion in central London by blocking up and making one-way streets in the middle of London so that it is almost impossible for a taxi to come from Euston, King's Cross or St Pancras down to Westminster?
Lord Falconer of Thoroton: My Lords, it would be unwise for me to comment on the road schemes of the mayor. I have seen taxis arrive from Euston and King's Cross so the journey is not completely impossible. But I think that complaints about that should be taken up with the mayor rather than me.
Baroness Hamwee: My Lords, first I shall quickly declare an interest as chair of the Greater London Assembly. Does the Minister agree that this is a charge rather than a tax, and that the charge will be ring-fenced so that it is used to improve public transport? If that laudable aim is to be achieved, does he agree that, on reflection, government support for the companies likely to be running the Tube is correct, given that they will be conferred "equal priority"—to use his words—to improve stations as well as lines and trains? However, it must be a matter of common sense that what passengers need is for the trains to work and to be able to move swiftly through to their destinations.
Lord Falconer of Thoroton: My Lords, I shall answer the first part of the question put by the noble Baroness, but not the second part. This Question does not concern the Tube; it is a Question about congestion charging. Yes, I agree that we are referring here to a charge and not to a tax.
My noble friend Lord McIntosh has just whispered in my ear, and I have received confirmation by a note, that the mayor and the GLA do not determine where one-way streets should be sited around Euston and King's Cross stations, it is the London Borough of Camden. Perhaps I may redirect the inquiries of the noble Baroness to that local authority.
Lord Stoddart of Swindon: My Lords, bearing in mind the fact that company car drivers will be able to reclaim their £5 a day, that commercial traffic will recoup the sum by charging higher prices, and that the rich will be affected hardly at all because they have got plenty of money anyway, is it not only the poor who will be disbarred from central London, and thereby be disadvantaged by the scheme?
Lord Falconer of Thoroton: My Lords, my noble friend has made points which it may well be appropriate to submit to the consultation on the detail of the scheme. Once all the points have been
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considered in that consultation, it will then be for the mayor and the GLA to decide what they will do in relation to the scheme.
Lord Peyton of Yeovil: My Lords, I wonder whether the noble and learned Lord will be able to give some comfort to those of us who are anxious that Ministers should not suffer any inconvenience or the burden of personal expenditure when they bring their cars to this place? We understand that the rest of your Lordships are not a matter of any importance to the Government.
While I am on my feet, perhaps I may echo what was said by my noble friend about holes in the road. They are caused and occupied by arrogant people who care not a curse for the convenience of the public. Does the noble and learned Lord agree that it is time that Ministers spoke to them fairly sharply?
Lord Falconer of Thoroton: My Lords, first, perhaps I may express my profound thanks to the noble Lord, who has sought to look after my interests in every single way over the past four years. I do not know what is the position in relation to Ministers, just as I do not know what is the position in relation to noble Lords. No doubt, if a group either of noble Lords or Members of the other place wishes to make representations to the mayor and the GLA on this issue, they will do so.
So far as concerns holes in the road, perhaps I may say how enthusiastically I endorse the proposal that holes in the road should be kept to a minimum and that such holes should be dealt with in a manner most efficient for the travelling public. That is a point on which I believe all noble Lords would agree.
Earl Russell: My Lords, I appreciate that the Minister may not wish to respond to questions put to him as regards the Tube. However, does he agree that, were the Government's proposals as regards the Tube to be as unfortunate as everyone other than the Government expects, they would have an effect on the congestion charge which might be described as "knock-on" in more senses than one?
Lord Falconer of Thoroton: My Lords, the congestion charge seeks to reduce congestion in central London. During the course of the consultation, it is for individuals and groups to decide whether they will do so or whether they will not. Having refused to respond to the question put to me by the noble Baroness, Lady Hamwee, as regards the Tube, it would be churlish of me to answer the noble Earl, Lord Russell.
Lord Dixon-Smith: My Lords, during the passage of the Transport Bill 2000 the noble and learned. Lord's predecessor made much of the need to improve the public transport system before a congestion charge was introduced. Can the noble and learned Lord tell the House what improvements have been made to London's transport infrastructure now that the system for congestion charging is being introduced?
Lord Falconer of Thoroton: My Lords, I accept entirely and support the proposition that before a

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congestion charge is introduced, improvements have to be made to public transport. That has always been a part of the Government's position. In their transport strategy, the mayor and the GLA accept the same approach. They have proposed improvements to various kinds of transport. No doubt, in the course of the consultation, that issue will be considered.

Peers' Register of Interests: Consent for Entries
3.5 p.m.
Lord Campbell of Allowayasked the Leader of the House:
Whether the Register of Interests now to be prepared is to be made available for public comment; and whether entries relating to spouses, relatives or friends are to be made without written consent of those concerned.
The Lord Privy Seal (Lord Williams of Mostyn): My Lords, the new register will be a public document, as is the current register. Written consent will not be a requirement for entries relating to spouses, relatives and friends, but I suggest that it would be a normal courtesy to inform any persons before entering details about them in the register.
Lord Campbell of Alloway: My Lords, in thanking the noble and learned Lord for that reply, may I ask how our courts will restrain unjustified comment or unauthorised entries into a register that will be available worldwide on the Internet and to the press? As probity is not in issue, perhaps I may also ask whether the mandatory disclosure of the interests of spouses, relatives and friends is not incompatible with the convention as a want of respect for private and family life? Why do we not implement the suggestion put forward by the noble and learned Lord, Lord Nolan, and reach a joint decision as to registration which affects so many private rights?
Lord Williams of Mostyn: My Lords, it is difficult for me to contemplate the notion of an unauthorised entry into the register because, plainly, only noble Lords will be entitled to place any entries on to it. I think that the registrar would be able to recognise any interloper.
As regards the courts, the noble Lord knows that the normal rules of defamation would apply. If defamatory material is disseminated, then any citizen has the right to institute proceedings in the libel courts.
With regard to Article 8 of the convention, which covers the right to private and family life, again, the noble Lord will know that a balancing is introduced in the second part of that article on—I shall paraphrase
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generally here—public interest grounds. I believe, and the House endorsed this, that these disclosures are in the public interest.
Lord Mackie of Benshie: My Lords, can the noble and learned Lord tell the House what would happen if a friend refused permission?
Lord Williams of Mostyn: My Lords, exactly the same as would happen at the moment. Noble Lords well know that the obligation has been in place since 1995. That followed the Griffiths report, which was accepted by the House. However, as I said in response to the noble Lord who put the Question, the permission of the friend is not required. It is the duty of your Lordships to make the declaration in exactly the same way as if I were a major shareholder in a large company. I would not have to seek the permission of that company to make the disclosure.
Lord Renton: My Lords, bearing in mind that Clause 12 requires us to declare the interests of our relatives, can I ask the noble and learned Lord to bear in mind that I have never dared to ask those two daughters of mine, who make good incomes, how much they earn and that I have no intention of doing so?
Lord Williams of Mostyn: My Lords, Section 12 does not require mandatory registration. It states in heavy bold type,
"relevant financial interests may also include (depending on their significance)"
Plainly the incomes of the noble Lord's daughters are of great significance, but it is unlikely to be of relevance to the way in which the noble Lord would speak or vote. Indeed, perhaps I may attach an adjective to this; namely, the point put by the noble Baroness, Lady Park of Monmouth: if you do not know, you do not have to say.
Lord Peyton of Yeovil: My Lords, I wonder whether the noble and learned Lord could refer back to the guidance he gave on 2nd July to a point raised by the noble and learned Lord, Lord Ackner? When he has taken a good look at it, perhaps he would arrange an early opportunity to come back to the House to explain to noble Lords what on earth it meant.
Lord Williams of Mostyn: My Lords, yes and yes.
Lord Acton: My Lords, I believe that my noble and learned friend is aware that I have rather a large number of relations, some of whom are Members of this House. For example, like myself, both the noble Viscount, Lord Cranborne, and the noble Earl, Lord Selborne, have Cecil blood flooding through our veins. I apologise for mentioning their names in their absence. Is it incumbent on me to declare, for example, the relevant interests of the noble Viscount, Lord Cranborne? Do I have to learn them off by heart? What is the system?
Lord Williams of Mostyn: My Lords, we are always fortunate that we can choose our friends and not our relatives. The interests of the noble Viscount, Lord Cranborne—modest as they are—would already have been declared by him.
Lord Strathclyde: My Lords, has the noble and learned Lord had an opportunity to reconsider what he said in the debate on 2nd July? He said that this code of practice was a "light touch"? Is it not in fact a blunt instrument?
Lord Williams of Mostyn: No, my Lords. It is intended to be, and is in fact, a light touch. A number of your Lordships said that they did not want an independent investigator such as they have at the other end of the Palace. We avoided that. Indeed, it will be recalled that the principle of mandatory declaration was the universal recommendation of the group which I had the honour to chair, on which sat two Conservative Peers nominated by the noble Lord, Lord Strathclyde. I repeat—not for the last time, I know—that the present situation obtains on the Griffiths recommendations in respect of declaration, which were put into effect in 1995. Those recommendations were endorsed by the House.
The Earl of Onslow: My Lords, is the noble and learned Lord aware that I have absolutely no intention of writing down anything about the money of my friends, relations or whoever it may be? If that happens, will I be hauled off to the Tower or called in front of the Committee for Privileges?
Several noble Lords: Yes!
The Earl of Onslow: My Lords, all I hope is that I will be treated with as much comfort in the Tower as some people were in previous times. Having said that, what is the penalty concerning the requirement to fill in a piece of paper which—I am very sorry—I believe to be an extraordinarily stupid instruction?
Lord Williams of Mostyn: My Lords, the noble Earl must come to his own conclusion. He asked whether he should go to the Tower of London or be complained of here. I entirely agree with him that punishment before trial is probably appropriate for him. One sanction, as was said, is that there would be a naming and shaming. Your Lordships have alternative sanctions. We have the sanction, very rarely used, that it is moved that a noble Lord be no longer heard.
However, I would observe that we had a very full debate and the House voted by a majority to support the code of conduct.
A noble Lord: By a majority of three.
Lord Williams of Mostyn: To paraphrase, a majority of one is sufficient. Three is ample.

Commonwealth Heads of Government Meeting, Brisbane
3.13 p.m.
Lord Blakerasked Her Majesty's Government:
Whether they expect any change to be made at the forthcoming Commonwealth Heads of Government Meeting to the core values and principles of the Commonwealth.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos): My Lords, the Commonwealth's fundamental principles are set out in the Singapore Declaration of 1971 and in the Harare Declaration of 1991. The Commonwealth High Level Group, of which the UK is a member, will present to the forthcoming Commonwealth Heads of Government Meeting in Brisbane a report containing recommendations on the future direction of the Commonwealth, including its fundamental principles.
Lord Blaker: My Lords, I am grateful to the noble Baroness for that Answer. Is she aware that the core values and principles of the Commonwealth include democracy, the rule of law, the independence of the judiciary, just and honest government, and fundamental human rights? Is not the reign of terror which has been conducted for the past two years in Zimbabwe a flagrant breach of those values and principles? If the situation in Zimbabwe is not resolved for the better before or at the Commonwealth Heads of Government Meeting, the Commonwealth will begin to fall into disrepute.
Baroness Amos: My Lords, I entirely agree with the noble Lord, Lord Blaker, that democracy, the rule of law and the independence of the judiciary all fall within the Harare Declaration. A number of my ministerial colleagues and I have made it absolutely clear that we want to see a stable Zimbabwe, with economic and political policies which will enable Zimbabwe to reach its potential. We have worked tirelessly with the Commonwealth, the United Nations and the European Union; we have shared with African leaders our concerns about some of what is happening in Zimbabwe. Indeed, the noble Lord may recall that the Commonwealth Ministerial Action Group agreed that a group of Ministers should go to Zimbabwe to find out exactly what was happening in that country.
Lord Marsh: My Lords, does not the Minister agree that since the last election in Zimbabwe there has been, by any standards, an uninterrupted record of barbarity and breaches of the law in that country? Ministers know perfectly well what is happening yet no sanctions whatever have been taken against a government who are behaving against every tenet of acceptable conduct.
Baroness Amos: My Lords, this question has been raised several times in relation to Zimbabwe and the Commonwealth. I believe that noble Lords

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understand the position in relation to the Commonwealth, but perhaps I need to repeat it. Action against a country which flouts the principles of the Harare Declaration can be taken only in certain narrowly defined circumstances—mainly, the unconstitutional overthrow of the legitimate government. This does not apply to Zimbabwe.
The limitation of the Commonwealth mandate to unconstitutional overthrow is, in our view, too restrictive. We have made that absolutely clear. That is why we have supported an expansion of CMAG's role to cover a wider range of situations. The High Level Group has been looking at this issue and is due to report at Brisbane in October.
Lord Richard: My Lords, do the Government intend to raise the issue of what is going on in Zimbabwe specifically at the Commonwealth Heads of Government Meeting? I am bound to tell my noble friend that her previous answer gave the impression that they do not.
Baroness Amos: My Lords, the issue of Zimbabwe was raised at the last CMAG meeting. There is a proposal that a small group representing CMAG should go to Zimbabwe. There is an alternative proposal, which has been made by Nigeria and South Africa, that a wider group of Commonwealth Ministers should come together to discuss Zimbabwe. We are watching these developments with interest. We have not yet been able to make a decision on what our own role in that should be. We are awaiting clarification in relation to that. We have been involved with the European Union in terms of the critical dialogue with Zimbabwe. It is important for us to take this issue stage by stage. There will, of course, be a report from CMAG to the Commonwealth Heads of Government Meeting and we shall see what arises from that.
Lord Howell of Guildford: My Lords—
Lord Redesdale: My Lords, the Minister said that there will be a review of the—
Lord Williams of Mostyn: My Lords, perhaps we should hear the noble Lord, Lord Howell.
Lord Howell of Guildford: My Lords, is it not the position that the policy of critical dialogue and quiet discussion with Zimbabwe has failed? Has not President Mbeki of South Africa admitted that it has failed? Is it not now time for a much firmer policy? Given that all the principles outlined by my noble friend Lord Blaker are being flouted by President Mugabe, is it not time for the Commonwealth leaders to warn that if things have not improved by the time of the Commonwealth Heads of Government Meeting, Zimbabwe will be asked to leave the Commonwealth?
Baroness Amos: My Lords, perhaps I am not making myself absolutely clear. The Commonwealth
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works by consensus. Britain is a part of a much wider group. We have to ensure that we work with those in the Commonwealth and our other international partners who have expressed concern about this matter.

Business of the House: Standing Order 46
3.18 p.m.
Lord Williams of Mostyn: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That Standing Order 46 (No two stages of a Bill to be taken on one day) be dispensed with to enable the Consolidated Fund (Appropriation) Bill to be taken through its remaining stages this day.—(Lord Williams of Mostyn.)
On Question, Motion agreed to.

Procedure of the House: Select Committee Report
The Chairman of Committees (Lord Tordoff): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the First Report from the Select Committee (HL Paper 9) be agreed to.—(The Chairman of Committees.)
Following is the report referred to:
1.Delegated Powers and Regulatory Reform Committee: terms of reference
Before the dissolution of Parliament, and without a formal meeting, the Procedure Committee agreed revised terms of reference for the Delegated Powers and Regulatory Reform Committee (formerly the Delegated Powers and Deregulation Committee). Because there was no time before the dissolution to report these new terms of reference to the House, the Committee is doing so now. The Committee also recommends that the Delegated Powers and Regulatory Reform Committee should be subject to a 4-year rotation rule.
The revised terms of reference are:
to report whether the provisions of any bill inappropriately delegate legislative power, or whether they subject the exercise of legislative power to an inappropriate degree of parliamentary scrutiny; to report on documents laid before Parliament under section 3(3) of the Deregulation and Contracting Out Act 1994 and on draft orders laid under section 1(4) of that Act;to report on documents laid before Parliament under section 1(1) of the Regulatory Reform Act 2001 and on draft orders laid under section 6(1) of that Act; and to perform. in respect of such documents and orders, and of subordinate provisions laid under section 4 of the Regulatory Reform Act 2001, the functions performed instruments by the Joint Committee on Statutory Instruments.;
(the words in bold are new)
Additionally, the Committee recommends the following changes to standing orders necessitated by the Regulatory Reform Act 2001:
Standing Order 40(6) to read as follows (new words are in bold):
"Any motion relating to a report from the Delegated Powers and Regulatory Reform Committee on a draft order laid under section 1 of the Deregulation and Contracting Out Act 1994 or on a draft order laid under the Regulatory Reform Act 2001 shall be entered before a motion to approve that draft order."
Standing Order 72(1) to read as follows (new words are in bold):
"No Motion for a resolution of the House to approve an Affirmative Instrument shall be moved until:
(a) except in the case of any Order in Council or draft Order in Council made or proposed to be made under paragraph I of Schedule I to the Northern Ireland Act 1974, or a draft order proposed to be made under section I of the Deregulation and Contracting Out Act 1994, or a draft order proposed to be made under section 1 of the Regulatory Reform Act 2001 there has been laid before the House the report thereon of the Joint Committee on Statutory Instruments;
(b) in the case of a draft order proposed to be made under section 1 of the Deregulation and Contracting Out Act 1994, or a draft order proposed to he made under section 1 of the Regulatory Reform Act 2001, there has been laid before the House the report thereon of the Delegated Powers and Regulatory Reform Committee; and
(c) in the case of a Hybrid Instrument, the proceedings under Private Business Standing Order 216 or 216A have been terminated."
2. The printing of explanatory notes to bills
Standing Order 50 provides that a public bill brought up from the Commons when this House is not sitting may be printed and circulated before first reading. The Committee recommends that the standing order should apply also to any Explanatory Notes accompanying such a bill and that the words "and any Explanatory Notes thereto" should be added at the end of Standing Order 50(1).
3. Human rights declarations and second readings of bills
The Committee recommends that the minister in charge of a government bill, who gives the statement required by s. 19 of the Human Rights Act 1998 on whether the provisions of the bill are compatible with the European Convention on Human Rights, should under normal circumstances move the second reading of the bill. If that minister is unable to do so, another minister should do so on the basis that he or she is acting on behalf of the minister who has given the statement.
4. Appellations
The Committee recommends that Members of the House who hold or have held the office of Chief of the Defence Staff should be entitled to the appellation "noble and gallant".
5. Repeating the oath in Gaelic
Members of the House must take the oath of allegiance or make the solemn affirmation before they can sit and vote in the House. The oath or affirmation must be taken in English, but since 1982 any Member of the House who wishes to do so has been allowed to repeat it in Welsh. The Committee recommends that a Member of the House should be allowed to repeat the oath or affirmation in Gaelic.
On Question, Motion agreed to.

Consolidated Fund (Appropriation) Bill
3.19 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read a second time.—(Lord McIntosh of Haringey.)
On Question, Bill read a second time; Committee negatived. Then, Standing Order No. 46 having been suspended (pursuant to Resolution of this day), Bill read a third time, and passed.

Land Registration Bill [H.L.]
3.20 p.m.
The Parliamentary Secretary, Lord Chancellor's Department (Baroness Scotland of Asthal): 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.—(Baroness Scotland of Asthal.)
On Question, Motion agreed to.
House in Committee accordingly.
[THE CHAIRMAN OF COMMITTEES in the Chair.]
Clauses 1 to 3 agreed to.
Clause 4 [ When title must be registered]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 1:
Page 3, line 8, leave out "seven" and insert "fourteen"
The noble Baroness said: In moving Amendment No. 1, I shall speak also to Amendments Nos. 4, 11, 23, 33, 35, 40, 41, 42, 48 and 76. However, I should like to point out to the Committee that I propose to speak separately with regard to Amendments Nos. 35, 40 and 41. Therefore, although the amendments are grouped together and are connected, my introductory remarks will focus initially on all the amendments other than Amendments Nos. 35, 40 and 41. The amendments in this group are designed to reinstate the proposal in the consultative document that the length of lease that must be registered should be reduced from 21 years, as at present, to 14 years rather than the seven years stated in the Bill.
It is acknowledged in the report at paragraphs 1.17 and 3.14 that there was no consensus on consultation for an immediate reduction to seven years. The amendment would reduce the immediate change in the law and impose a smaller initial burden on the property industry, the conveyancing profession and the Land Registry's resources than the proposal in the Bill. If experience of that limited change suggests that a further reduction is desirable and will not overstretch the industry, the professions and the registry, it will then be possible after consultation under Clause 5(4) to make that reduction by order. We believe that that would be much more practical.
If, initially, only 14-year and longer leases are compulsorily registrable, and seven-year leases are only required to be registered as from a later date, for a while there will be unregistered leases of between seven and 14 years in existence that will have been granted before the further change is made. However, this will not delay the time when unregistered conveyancing becomes obsolete, because there will anyway, for 21 years after the date on which the legislation comes into force, be unregistered leases still in existence which were granted before that date for terms of up to 21 years.
The proposal to make all seven-year and longer leases compulsorily registrable is a major change in the law. It will cause equally major changes in practice, all of which are best introduced by stages thereby

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enabling the industry and the professions to become familiar with the new system without undue pressure, and also enabling any problems that may emerge to be tackled before they become widespread. Any leaseholders who wish to apply for voluntary registration of seven-year leases will be able to do so under Clause 3(3), if they believe that the benefits of registration are worth having. A number of organisations have been in contact with us, including the Country Landowners Association, which also feels quite passionately that the amendment should be accepted by the Government.
Amendments Nos. 35, 40 and 41 are specifically intended, first, to apply to leases of manors the principle suggested for leases generally—namely, that, in the first instance, compulsory registration should apply to leases of 14 years or more rather than seven years or more; and, secondly, to exclude altogether from registration leases of manors for five years or less, which are unlikely to be dealt with. I beg to move.
Baroness Scotland of Asthal: Perhaps I may begin by saying that we very much share the noble Baroness's concern in relation to the need to avoid unnecessary bureaucracy and burdens on business. That, of course, is the thrust of much of what the noble Baroness said. However, although we share those aims, we agree that more leases should be registrable and share the benefits of registration. I note what the noble Baroness said in relation to the incremental change. However, during consultation not one voice was heard as to where the dividing line should be taken. We have given the matter a great deal of thought. It is clear from the Land Registry and other organisations that the period of 14 years is one which both the industry and the registry could manage. Therefore, we differ on the speed with which the benefits should be brought into force.
We have considered the matter. We believe that the Bill is more likely to achieve the intended aim without the amendment. Increasing the length of leases that will be subject to compulsory registration would, we think, limit the improvements in the market that the Bill will bring and impede progress towards the realisation of the Bill's overall objectives.
Using the registered system saves money for both domestic and commercial lease transactions. As was helpfully mentioned on Second Reading by the noble Earl, Lord Caithness, who I see is now in his place, agricultural leases will also benefit. As many have pointed out, there is, indeed, a cost to registration. People taking out a new lease would be put to the additional expense of preparing and making an application to the Land Registry. Those costs are not insignificant. We estimate that they may amount to a little over £100 an average transaction.
However, unregistered conveyancing transactions are significantly more complicated than those drawn up under the simpler, more certain law applying to registered transactions. The name and title of any existing or intermediate leaseholders, and the quality of their title, is easier to establish, as is the identity and quality of title of the freeholder. Even if the
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conveyancing transaction remains a paper one, it should be very much quicker. Therefore, although we understand the concern that has been expressed, when one looks at the market there appears to be overwhelming support for the reduction that we propose. Conservatively, we estimate that some two and a half hours could be saved on each transaction. It is a matter that we believe will inure to the benefit of the market and of all those who wish to take advantage of the new scheme outlined in the Bill. We invite the noble Baroness not to pursue the amendment at this stage.
3.30 p.m.
Baroness Buscombe: In responding to the Minister's reply, perhaps I may read out part of paragraph 1.17 of the document. It states:
"There is only one issue upon which we have diverged from the views of respondents and that concerns the length of registrable leases. Having regard to other compelling policy objectives, we did not follow the trend of responses".
It is important, therefore, to note that there was not overwhelming support for changing the term from 21 years to seven years. The idea that no respondent actually came up with a specific time—be it 15, seven or nine years—is not an argument for the reduction to seven years rather than to any other term that represented a "half-way house", which we believe would be much more practical in the circumstances.
Perhaps I may quote from briefing we received from the Country Landowners' Association:
"By making such leases compulsorily registrable landlords and tenants will be put to greater expense. The current consultation paper on business tenancies, rightly, seeks to remove some of the more cumbersome procedures regarding obtaining exclusions from the security of tenure provisions of the Landlord and Tenant Act 1954 Part II. Yet by reducing the qualifying term to 7 years, in the CLA's opinion an unnecessarily bureaucratic burden is going to be placed on both landlords and tenants and their advisers.
The introduction of such leases into the realms of compulsory registration would also impact upon many farm business tenancies which at present do not need to be concerned with registration since their term is rarely more than 21 years. Many of the CLA's members are parties to such tenancies and consequently, given the current state of the rural economy should not be subjected to any increase in the bureaucratic burden that will be brought to bear by this enactment".
I could say more on the subject. I have listened to the Minister's response. I am sorry that she is not prepared to move on the amendment. I shall consider the matter further; however, I suspect that we shall bring it back on Report. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Buscombe Baroness Buscombe moved Amendment No. 2:
Page 3, line 14, at end insert ", unless at the time of such grant the person to whom it is made is the tenant of the whole of the land comprised therein for a term expiring on or after the date on which the estate granted will take effect in possession"
The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 34 and 52.
These amendments are designed to remove the need to register a lease which takes effect in possession more than three months after it is granted, if it is not otherwise required to be registered, in a situation in which it is a renewal of an existing lease to a tenant already in possession.
The reason for making such a reversionary lease registrable—set out in paragraph 3.32 of the consultative document Land Registration for the Twenty-First Century—is that, if it is not registered, a buyer of the landlord's interest may not be able to find out about it before the term actually begins because the tenant is not yet in possession. But that objection does not apply where the reversionary lease is a renewal to an existing tenant. In that situation, we suggest, there is no practical need for such a lease to be registered merely because it does not take effect immediately.
Under the Bill as it stands, a renewal for a year or even less granted at midsummer of a lease expiring at Michelmas would be registrable—and that is a trap. I beg to move.
Lord Goodhart: I believe that there is some force in the amendment. I can see that the provision is a potential trap in the circumstances proposed. It does not seem necessary in order to serve the perfectly legitimate purpose that is served by requiring registration of leases to persons who are not currently in occupation under an existing lease.
Baroness Scotland of Asthal: The common theme of these three amendments is to seek to exclude reversionary leases from compulsory first registration (where the landlord's title is unregistered), or from registration as a registrable disposition (if the landlord title is registered). Those reversionary leases would otherwise be subject to the requirements for compulsory registration in Clause 4 or Clause 27, where that lease is a renewal and the tenant under the lease is also a tenant under an existing lease of the type set out in the amendment. The third amendment seeks to provide that such leases should be capable of being protected by actual occupation and so override registered dispositions.
The provisions in the Bill give effect to the recommendation in the Law Commission and Land Registry's joint consultative document, which was unanimously supported by all those who responded to it.
The difficulty with the amendments is that they would place an unreasonable burden on an intending buyer. He or she would have no way of knowing from the register that the reversionary lease existed and would have to inquire of an existing tenant in circumstances where he or she may not expect to do so—for example, where he or she has had produced to him or her by the seller the tenant's existing lease which makes no mention of, say, an option for a further grant. If the intending buyer is purchasing a portfolio of properties the problem could be magnified.
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With the advent of e-conveyancing the number of inquiries should be kept to a minimum so that a buyer can rely as much as possible on the entries in the register. So if such a reversionary lease is not on the register, then an intending buyer of, say, the freehold reversion will not know from the register of the existence of the lease. Furthermore, the fact that a new lease taking effect more than three months in the future has to be registered, enables a buyer to protect his position by registering an estate contract or by making a priority search under Clause 72.
The Bill seeks, so far as is practicable, to make the register as comprehensive as possible, particularly with the advent of electronic conveyancing. The proposed amendments would hinder this objective. It would also make the law more complicated by excluding from the category of reversionary leases in Clause 4(1)(d) or Clause 27(2)(b)(ii) certain leases by reference to the status of the tenant under that lease.
There is another, less serious, problem with Amendment No. 2. There is a possibility that the first lease dealt with under the subsection could in theory be also a reversionary lease of some sort. Where this was the case, the tenant would not be in occupation under either lease. This would only multiply the problems that a prospective buyer would face.
In the light of that explanation, I invite the noble Baroness to withdraw her amendments. We have considered this difficulty and we understand why the amendments were put forward. However, looking at the matter in the round, greater transparency will be possible if a lease is registered as we propose.
Baroness Buscombe: I thank the Minister for her response. I also thank the noble Lord, Lord Goodhart, for his support with regard to our suggestion that under the Bill as drafted a renewal for a year or even less would be registrable and, therefore, the provision creates a trap. I should like to consider the Minister's remarks carefully before deciding whether to return to the matter on Report. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Buscombe Baroness Buscombe moved Amendment No. 3:
Page 3, line 23, leave out "held"
The noble Baroness said: This is a brief, perhaps pernickety, point, but we consider that it is a worthwhile amendment. The amendment is simply for verbal clarification. As paragraph (b) of Clause 4(2) stands, and the expression "held for a term" is read as governing the word "land", which as a matter of language is the last antecedent, there is no minimum duration specified for the "leasehold estate", which is made a "qualifying estate" and therefore registrable. The result would be that any sublease would be registrable if it related to land which was subject to a registrable lease. If the word "held" is omitted, paragraph (b) refers unambiguously to a "legal estate … for a term" of the specified length. I beg to move.
Baroness Scotland of Asthal: I am most grateful to the noble Baroness for proposing the drafting amendment which I am most happy to accept.
On Question, amendment agreed to.
[Amendment No. 4 not moved.]
Lord Goodhart Lord Goodhart moved Amendment No. 5:
Page 3, line 24, at end insert—
"( ) Where subsection (1)(c), (d) or (g) applies, the requirement of registration applies both to the qualifying estate and to the estate granted of it or the protected first legal mortgage on it.
The noble Lord said: This amendment arises in circumstances where a registrable interest such as a lease for a term of more than seven years as the Bill now stands, or a protected charge, is granted out of unregistered land. That is covered by subsection (1) of Clause 4 which states:
"The requirement of registration applies on the occurrence of any of the following events".
Subsection (1)(c) states that,
"the grant out of a qualifying estate of an estate in land—for a term of years absolute of more than seven years from the date of the grant".
Subsection (2) of Clause 4 states that,
"a qualifying estate is an unregistered legal estate which is—a freehold estate in land, or a leasehold estate in land … for a term whic… has more than seven years to run".
When I first considered that measure it was unclear to me whether the text of the Bill as it now stands requires the registration of both the existing unregistered interest and the newly-created interest, or only the latter. Paragraph 12.12 of the Law Commission report makes it clear that the requirement applies only to the newly-created interest. Therefore, the unregistered existing interest does not have to be registered at that point. The report also points out in the same paragraph that it is desirable that the newly-created lease should be registered with an absolute title rather than with a good leasehold title, the difference being, of course, that a good leasehold title gives no guarantee of the freeholder's title. Therefore, obviously, an absolute title which does that is much better.
The current practice is, as far as possible, that absolute title should be provided and, therefore, the contracts provide by a special condition which overrides Section 44 of the Law of Property Act 1925 that the grantor of the lease has to prove his or her title. To ensure that, the owner of the freehold will have to deduce his or her own title; that is, produce evidence which is sufficient to establish their own right to registration. It seems clearly desirable that the owner of a freehold should, therefore, be required to register the freehold title on, let us say, the grant of a 99-year lease, just as much as the freehold title would have to be registered in the event of an outright transfer of the freehold.
It certainly seems to me that in line with the spirit of the Law Commission's proposals it is desirable—it would certainly simplify conveyancing—that whenever a registrable lease or a protected charge is granted out of an unregistered estate at the same time
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the unregistered estate should also be required to be registered in exactly the same way as if there were on that occasion a transfer of the freehold title. I beg to move.
3.45 p.m.
Baroness Scotland of Asthal: I should say straight away that we have great sympathy with the attractions of the noble Lord's amendment. But having said that, having gone down that road, we found unfortunately that the measure was not workable. I shall explain why that is in a moment. But before I do that, and before I discuss the substance of the amendment, it may assist the Committee if I touch briefly on the subject of rule-making powers in the Bill as they bear directly on some of the concerns which have been raised.
The Select Committee on Delegated Powers and Regulatory Reform recommended a greater degree of parliamentary scrutiny of land registration rules. Members of the Committee have tabled amendments to that effect. Although I am not sure that the Government can accept those amendments at this point for reasons we shall discuss in due course, I am happy to say that I undertake to bring forward government amendments on Report. I hope that that will assist our discussions.
The amendment of the noble Lord, Lord Goodhart, adds to the requirements for compulsory first registration. It is relevant to three situations listed in Clause 4: when a term of years is granted for seven years or more; when a term of years is granted of any length and takes effect more than three months into the future; and when a protected first legal mortgage is granted of a qualifying estate. The amendment would require not only the estate itself to be the subject of first registration, but also the estate out of which it is granted. As the overall aim of the Bill and, indeed, the Government's general policy, is to widen registration as far and as quickly as possible, I have, of course, listened to the noble Lord's comments with considerable sympathy and very much agree with his overall aim.
It will not surprise the noble Lord, Lord Goodhart, to know that that option was one which the Law Commission considered seriously when considering how to approach the topic. It was discussed in considerable detail with the Land Registry, but after much head scratching it was decided that it could not be made to work. It was therefore not included in the 1998 consultation document. I shall explain why that was the case.
The requirement to register the superior estate when specific leases are carved out of it would catch the superior title to a short lease. In some cases that lease could relate only to a very small area of the total landholding. That would be a disproportionate effect of a deal of that nature and the disproportion could only be increased by the shorter length of leases that give rise to first registration under the Bill. There would also no doubt be processing difficulties for large organisations which have portfolios of short leases that may come up for renewal all at the same time.

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That is the course which the Law Commission and the Land Registry recommend—in relation to a general extension of compulsory registration—despite their considerable enthusiasm for spreading the bounds of registration. I shall not tell tales out of school if I tell the noble Lord that when this matter was revisited the previously mentioned attractions were reconsidered. However, unfortunately, the same conclusion was reached. They discuss the case for introducing wider powers of compulsion to bring more land on to the register. They point to the very considerable advances in the attraction of registration which the Bill will bring. They suggest that compulsion should be avoided unless it is quite clearly required for the common good. They therefore recommend that the need for further action should be considered only five years after the Bill is brought into force. These are clearly attractive arguments which the Government will want to consider, not least in the light of the progress of the Bill. They will make an announcement on this when they issue a formal response to the commission's and registry's report. We shall look at the issue again but we think that the Bill needs to settle for a while.
We have come to the conclusion that to make compulsory now the registration of all land would not be right. First, it would be premature to do so. The Land Registration Act 1997 extended significantly the requirements for first registration and its provisions are broadly reproduced in the Bill. Those changes have started to have effect only recently. The present Bill will offer considerable additional benefits. A significant rise in voluntary first registration is expected as a result. Compulsion should not be employed until it is clear that it is needed.
Secondly, compulsory registration is at present triggered by dispositions of unregistered land. It is not at all easy to devise a system of compulsory registration of title other than one that operates on a disposition of the land in question—unlike the cases dealt with in the amendment. So the mechanism of compulsion in such situations is not self evident. There are dangers that any system could become too heavy handed. We would wish to avoid that. Any system of compulsion would obviously have to comply with the ECHR. The means would therefore have to be proportionate to the desired ends.
Thirdly, the Bill is likely to stretch the resources of both the conveyancing profession and the Land Registry for some years after its implementation. It would not be possible to accommodate a programme for the compulsory registration of all the remaining unregistered land at the same time. I can assure the noble Lord that we believe that the Bill goes some way towards the objective of the amendment. It already has the effect that a legal charge triggers first registration. The estate that has been charged must also be registered. This approach was introduced into the current system of the Land Registration Act 1997. I understand that it is working well at present. The land registration system caters for the situation where the superior title has not been seen by the Land
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Registry and enables the registry to grant good leasehold title until such time as the superior title is produced for registration.
There are incentives in the Bill to encourage voluntary first registration of titles—not least the provisions in relation to adverse possession. There is also a fee reduction to encourage registration. We need to encourage the orderly and gradual registration of these large landholdings at a pace that can be controlled by those organisations and the Land Registry enabling them to cope with those applications smoothly.
For those reasons, I invite the noble Lord to withdraw the amendment.
Lord Goodhart: I am grateful to the Minister for having given such a full explanation of the reasons why she is unable to accept the amendment. Nevertheless, I remain somewhat unhappy.
I fully understand the Government's reasons for not proposing that all unregistered loans should be made the subject of immediate compulsory registration. Nevertheless, any transfer of a freehold requires compulsory registration, but it is still possible to create a 99 or 199-year lease out of an unregistered estate without registering the estate of the grantor. That seriously weakens the position of the lessee who, in a good leasehold title, has something that is significantly less valuable than an absolute title to the lease. Therefore, that should be phased out as soon as possible. If the noble Baroness is able to provide it, I should be interested to see more detailed analysis of why the Law Commission rejected the proposals; and why they are thought to be unworkable. I am not entirely persuaded that that is so.
I may well wish to bring the matter back on Report, possibly in a form which gives the Government power to introduce this step at a later stage when the initial flurry of registrations caused by the enactment of the Bill has quietened down. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4, as amended, agreed to.
Clause 5 [Power to extend section 4]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 6:
Page 4, line 19, after "mortgagee" insert ", or the fide to a leasehold estate in land for a term which at the time of the relevant transfer, grant or creation has less than five years and one month to run,"
The noble Baroness said: The amendment is designed to prevent the rule-making power being used to introduce compulsory registration of five-year and shorter leases. Five-year leases are very common. They are usually occupational business, residential or farming leases and are not assigned as frequently as longer interests. Therefore we believe that there is no pressing practical need to register them, either to ensure that a purchaser of the superior interest finds out about them or to make it easier to buy and sell them.
If registration is ever to be extended to such interests, we believe that the change should be made by further primary legislation which can be considered in the light of experience of registration of leases for terms of less than 21 years and decide then whether the balance of practical advantages and disadvantages favours such an extension of registration. I beg to move.
Baroness Scotland of Asthal: I am happy to agree with the noble Baroness that there is a length of lease below which it would be sensible not to require compulsory registration. However, in relation to the amendment I can go no further.
The Government are, of course, committed to removing unnecessary regulatory burdens. That is a significant factor in bringing forward the Bill. By accelerating the change from the cumbersome and old-fashioned system of unregistered conveyancing for leases, into the simpler, quicker and cheaper registered law, we believe that we will be significantly reducing the cost of conveyancing.
There is, however, a point at which the current law relating to the formation of contracts probably makes it unlikely that the balance of benefits in registration will remain positive. Under contract law, leases granted for a period of three years or less do not have to be in written form as a deed. The logical break-off point is three years. The five-year leases have to have a deed. Requiring registration of leases of less than three years would therefore be likely to introduce new inflexibilities into the current arrangements, and wholly new costs. It is very difficult indeed to envisage a Lord Chancellor contemplating the exercise of his powers to reduce the qualifying term of the leases to bring unwritten leases within the scope of registered conveyancing. Leases of more than three years are therefore likely to be the practical limit of the power.
However, there would be significant problems in tying a future Lord Chancellor's hands by preventing him or her from reducing the qualifying period below five years and one month. First, it would slow down the extension of the benefits of registered conveyancing throughout the leasehold market. It would therefore leave unregistered conveyancing with a significant role for the foreseeable future, leaving in place the difficulties that follow from attempting to run two essentially separate systems of land law alongside each other.
A parallel system would also work against the streamlining of current systems. For example, one large property holder has said that reducing the qualifying period to the point at which grants by deed are no longer necessary would have the considerable practical advantage of enabling him to rely on the dematerialised leases, which will form part of the register of title, so creating scope for significant storage savings, just as major lenders have saved money by relying on access to the register to prepare land certificates when needed, rather than having to keep paper copies at all times.
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It is true that at one time a reduction in the qualifying period would have created problems of additional work for the registry as well as the market. Although the Bill enables a staged approach to the reduction of the qualifying period, the problems that could be created by reducing the period can be significantly exaggerated. The process is already becoming automated for conveyancers and the registry and it will increasingly become more so. The registry's quinquennial reviewer thought that the additional work created by requiring registration of leases of more than three years and up to seven years in length could be ignored, so great were the benefits to both sides of the widest possible registration.
A particular factor for the reviewer was the importance of securing the greatest amount of accurate and neutral information on developments in the leasehold market. The fresher market information is, the greater its value. There would be a significant advantage to the whole property sector in having a complete picture of the number and length of leases, the financial terms of new leases of various lengths for particular types and sizes of property in particular areas, and the most recent leasehold transactions in the same area. All that information is important to the market. The market for short-term leases is particularly opaque and particularly sensitive to changes. The amendments would work very significantly against the introduction of transparency in that area. We want transparency and we feel that the Bill provides it.
The amendments would also work against the overall objectives of the Bill. They would greatly reduce the prospect of the register becoming as complete and accurate a reflection as possible of the state of the title to all land at any given time, so that title to land could be investigated online with the minimum of additional enquiries and inspections. I therefore hope that, having considered those arguments, the noble Baroness will feel able to withdraw her amendment.
4 p.m.
The Earl of Caithness: I listened with care to the noble Baroness, who has answered the point that I was going to ask her. However, surely we are talking about the power for the Lord Chancellor to reduce the qualifying period from seven years to three years. Why do the Government not bite the bullet now and go to three years straight away, taking away the power from the Lord Chancellor, which will cause a lot of anxiety?
While the noble Baroness considers her answer to that, will she also advise the Committee what sort of order the Lord Chancellor will be able to make under subsection (4)?
Baroness Scotland of Asthal: Of course we see the attraction of biting the bullet between seven years and three years. Three years is the cut-off point when we move from unwritten to written. However, we also have to take on board that the system will take a little time to adjust. The Lord Chancellor of the day will be

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able to consider what new rules on reduction need to be brought in once we have a proper assessment of how it would work.
The most important thing is for the Bill to work practically so that practitioners and the Land Registry can fulfil the expectations that will be on them. We need a smooth, transparent, clear transition from the current position to the quick, easy, transparent e-conveyancing of land that we all want.
We genuinely believe that the period of reduction to seven years will enable the registry and conveyancers to do that without any untoward difficulty. It will be possible, practical and smooth and can be delivered.
Confidence in the system is necessary. Once that confidence has been established, it will be possible for the Lord Chancellor of the day to look again at whether a Further reduction is merited, but that would be done at a time that was in line with what the market, the profession and the registry could tolerate with ease.
The Earl of Caithness: Will the noble Baroness comment on my second point? What type of order under subsection (4) will the Lord Chancellor introduce?
Baroness Scotland of Asthal: I cannot give the noble Earl a specific answer on that at the moment, but I shall write to him. It is important to know that the Lord Chancellor of the day will have to consider how the system has worked. As regards the rules that will be issued, I have already said that we are seriously considering the recommendations made by the standing committee. I shall come back to that later. I mentioned that in answer to the noble Lord, Lord Goodhart, because there has been some interest—I shall not say concern—about how the rules will work. We are taking that on board and trying to construct a procedure to meet the needs and aspirations of many people who have expressed concerns.
Baroness Buscombe: I thank the Minister for her full response to the amendment. We entirely understand the Government's objective of having a register that is as complete and accurate as possible, but surely we must balance that primary concern against the regulatory burden. It is one thing to say that the system will be quick and easy, but it will also be an added cost and burden. Five-year leases are very common, particularly among small businesses and residential and fanning leases. There is no pressing practical need to register those leases, either to ensure that a purchaser of the superior interest finds out about them or to make it easier to buy and sell them.
We understand the objectives of the Bill, but we are concerned to protect the interests of those who will be burdened with more costs and regulation in meeting those objectives. We shall think carefully about what the Minister has said and decide whether to return to the point on Report. We also believe that such a fundamental issue should be subject to primary legislation.
Baroness Scotland of Asthal: I can respond to the noble Baroness on cost. We hope that the whole Bill
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will reduce costs. The noble Baroness will know that, at the moment, the preparation work for lawyers and others for unregistered land in particular can be very complicated and time-consuming. We know, for example, that, because of their complexity. deeds can take up an incredibly large amount of time. We hope that, by introducing the registration of those processes, the procedure will become simpler, quicker, easier and cheaper so that the burden on business and on those who wish to participate in such a transaction should, over time, be reduced. That is one of the main benefits that we consider the procedure will guarantee to those who operate within it.
Baroness Buscombe: I thank the Minister for returning to that point. I believe that, for the time being, to some extent we must beg to differ, not least because the representations made to us from business and from the fanning industry in particular indicate that they also beg to differ. However, I shall consult them again and, on that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6 [Duty to apply for registration of title]:
Viscount Bridgeman Viscount Bridgeman moved Amendment No. 7:
Page 4, line 38, at end insert—
"( ) An application under subsection (5) may be made either before or after the expiration of the period of 2 months mentioned in subsection (4). or any later date which the registrar has specified under subsection (5)."
The noble Viscount said: The purpose of this amendment is to clarify the position so as to ensure that an application can be made after the period has expired. I beg to move.
Baroness Scotland of Asthal: Clause 6(5) allows the registrar to extend the period during which the application for first registration may be made. There is good reason for doing so. Unless such an order is made, the period for registration will expire after two months.
The noble Viscount's amendment would make it clear that such an order can be made both before and after the expiry of the two-month period and before or after the expiry of any extension of the period for registration granted by a registrar's order. It will, indeed, be desirable to give the registrar adequate flexibility to make the order when the parties need it, regardless of whether or not the original period for registration has passed.
I can reassure the noble Viscount that the clause as drafted does not contain a time limitation on the registrar's ability to make an order. It is implicit in the clause that the registrar can make the order at any time. That interpretation is endorsed by the next clause. Clause 7(3) clearly envisages that the order could be made after the two-month period or any extended period has expired. In those circumstances, the adverse effect of failing to register within the specified period is removed retrospectively by Clause 7(3) when an order is made.

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Therefore, it is also implicit that the application to the registrar can be made at any time. In practice, the extension order is usually sought after the period for registration has expired and when the matter comes to the attention of the applicant's advisers. Quite often, it is sought in conjunction with the application for first registration. There is no intention to change that practice. Therefore, I respectfully suggest that the amendment is not necessary.
Viscount Bridgeman: I am most grateful to the Minister for those full assurances, in the light of which I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Clause 7 agreed to.
Clause 8 [Liability for making good void transfers etc]:
Viscount Bridgeman Viscount Bridgeman moved Amendment No. 8:
Page 5, line 24, at end insert—
"( ) For the purposes of section 12A of the Stamp Act 1891 (c. 39), an instrument to which section 7(1) above applies shall be treated as having been accidentally spoiled."
The noble Viscount said: This is a probing amendment. It seeks to ensure that if an instrument is avoided by a failure to apply for registration, the stamp duty paid on it can be used on any replacement instrument executed to give effect to the original transaction. That may not be strictly necessary for instruments which replace outright transfers under Clause 4(1)(a) and (b) because, under Clause 7(2)(a), the transferor becomes bare trustee for the transferee, and there is no stamp duty on the transfer of a legal estate by a nominee to his principal. However, if a lease becomes void for non-registration under Clause 7(2)(b), it has effect as a contract to grant the intended lease. Therefore, the replacement lease may incur stamp duty. I beg to move.
4.15 p.m.
Baroness Scotland of Asthal: I hope that I shall be able to reassure the noble Viscount. Clause 6 imposes a duty to apply for first registration of title within a specified period. Clause 7(1) states the effect of failure to apply for registration in accordance with that duty. The consequence is severe. The instrument which disposes of an interest in the property is made void so that the legal title reverts to the previous owner.
Therefore, the registrar can make an order to extend the period for registration, which he will almost always do. That has the effect of removing the adverse consequence as if it had never happened. In the unlikely event that the registrar refuses to make an order, a further instrument must be prepared at the expense of the person who failed to apply. That would then operate to transfer the legal title back to where it should have been.
The proposed amendment serves the most sensible of purposes. It ensures that, in that unlikely situation, stamp duty would not be paid twice. It seeks to achieve
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that by treating the instrument as spoilt under Section 12A of the Stamp Act 1891. I hope that Members of the Committee will not mind my pointing out that the spoiling of instruments is covered by Section 12A of the Stamp Duties Management Act of the same year. That means that, so long as the Commissioners of Inland Revenue are satisfied that the instrument is to be treated as though it had been spoiled, no duty will be charged on the replacement instrument.
The noble Viscount has raised a very helpful issue. I hope that he will not mind if I do not simply accept the amendment at this point. We shall hold further discussions. Talks that we have already held with the Inland Revenue have revealed that other ways may exist in which this desirable state of affairs could be achieved under the stamping Acts as they currently stand, some of which may turn out to be more convenient.
Therefore, I undertake to ensure that the matter is fully investigated and, on Report, I shall report back to the House on the results of those deliberations. I am grateful to Members of the Committee for raising this point. However, in the light of that undertaking, I hope that at this stage the noble Viscount and the noble Baroness, Lady Buscombe, will feel able to withdraw the amendment.
Viscount Bridgeman: I am most grateful for those reassurances. I look forward to further progress on Report, in the light of which I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 agreed to.
Clauses 9 and 10 agreed to.
Clause 11 [Freehold estates]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 9:
Page 7, line 9, leave out paragraph (c) and insert—
"(c) interests of any person in adverse possession, within the meaning of the Limitation Act 1980 (c. 58), of the land or any part of it."
The noble Baroness said: In moving Amendment No. 9, I shall speak also to Amendments Nos. 10, 17, 59 and 105. Briefly, the reasons for Clauses 11(4)(c) and 12(4)(d) are given in paragraphs 3.46 and 3.47 of the Land Registration for the Twenty-First Century report. In effect, a first registered proprietor should be protected where he buys a paper title which a squatter has time-barred if the squatter is out of possession and the purchaser/proprietor has no notice of the defect in title. A squatter who was in possession for 12 years or more but who has vacated the property deserves no particular sympathy. However, if a squatter has been in residence for 12 years or more and is still in possession, anyone who buys the paper title is on notice of the position. We believe that the amendments are designed to give accurate effect to the intention. I beg to move.
Lord Goodhart: Amendments Nos. 17 and 59 stand in my name. They concern the same subject but have a somewhat different objective. Under the present law, adverse possession extinguishes the title of a previous

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owner after 12 years; that is, it extinguishes the title and the original owner therefore no longer has any title to the land. That is provided by Section 17 of the Limitation Act 1980. In the case of registered land, the same result is achieved through a different mechanism; namely, the title is not extinguished but the registered owner from the end of the 12-year period holds the land on a bare trust for the person who exercised the adverse possession. That person is therefore entitled at any time to claim the right to registration.
Under Section 70 of the Land Registration Act 1925, rights that are acquired or are in the course of being acquired under the Limitation Act are overriding instruments. The Bill will alter that. Under Clause 11(4)(c), adverse possession binds the estate on first registration only if the freehold proprietor, the person with the paper title or the person acquiring the title has notice. I am afraid that it is not altogether clear to me why notice for that purpose is relevant. Indeed, it will give rise to a somewhat difficult issue about whether the proprietor in fact has notice. Except to that very limited extent, those possessory interests do not override.
There is a new procedure, which appears in Part 9 and Schedule 6, for acquiring title by adverse possession. I have no problem whatever with the new system operating when adverse possession has lasted for less than 12 years at the date at which the Bill comes into force. That is in line with the long-established principle that limitation periods can be changed without being treated as a retrospective alteration of existing rights. When the 12-year period has already been completed the adverse possessor will have acquired an indefeasible title. There are several reasons, apart from the mere abandonment of the land, why the new proprietor might not have notice of that indefeasible title. It is wrong that in those circumstances an adverse possessor should be deprived of what, by the time the Act comes into force, will have already become an indefeasible title. The adverse possessor would at best have existing rights taken away and would be forced to apply to the registrar under the new procedure, which, in many cases, it might not be possible for him to do because he would no longer have a possessory title that he could register at that point.
That would give rise, among other things, to concerns about what is in effect the appropriation—the confiscation—of existing indefeasible rights and it raises the question of whether that is in accordance with Article 1 of the First Protocol to the Human Rights Act. I am concerned about the drafting that is used to defeat what would under existing law be an indefeasible title. I recognise that that is to a limited extent a complication because it means that someone who appears to have a paper title may find that that title is no good. Nevertheless, I am doubtful about the justification for changing existing law for those who have already acquired an indefeasible title.
Baroness Scotland of Asthal: The common theme of these amendments is the extent to which the interests of persons in adverse possession should override first
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registration and registered dispositions. I will deal first with Amendments Nos. 9, 10 and 105, proposed by the noble Baroness, Lady Buscombe, and then turn to Amendments Nos. 17 and 59 of the noble Lord, Lord Goodhart.
Clause 11(4)(c), in respect of freehold land, and Clause 12(4)(g), in respect of leasehold land, are intended to cover the case in which a person has acquired title by adverse possession, has then left the land and the former owner has resumed possession. Within 12 years of doing so the former owner then sells as apparent owner. On the conveyance or assignment the buyer will not get title but will acquire only such rights as the seller had as squatter. However, provided that he does not have notice of the squatter's interest at the date of registration, the buyer will "take" free of it.
The effect of the amendment would be that a buyer will "take" subject to the interest of a squatter who is in adverse possession at the time of registration, such as in the example, even though the squatter is not in actual occupation and even if the buyer did not have notice and so could not reasonably have discovered the squatter's interest. However, the case of a squatter who has already acquired title and is in actual occupation falls within the terms of Clause 11(4)(b) or Clause 12(4)(d), so the proprietor "takes" subject to the squatter's rights.
Paragraphs 3.46 and 3.47 of the Law Commission's report, Land Registration for the Twenty-First Century—A Conveyancing Revolution, with which the noble Lord, Lord Goodhart, and the noble Baroness, Lady Buscombe, will be very familiar, explains the reasons for those provisions and the way in which they work.
Amendment No. 105 relates to the transitional provisions in Schedule 12 in respect of rights already acquired by squatters over unregistered land under the existing law before the Bill comes into force. It is consequential to Amendments Nos. 9 and 10.
The effect of paragraph 7 is to create an additional but temporary category of overriding interest on first registration. Under the present law rights of squatters are overriding interests. Under the Bill a squatter's rights will override first registration only if the squatter is in actual occupation. Squatters who are no longer in actual occupation will therefore no longer fall within the protected category when the new law comes into force. That could involve some unfairness. Paragraph 7 therefore provides for the existing regime to continue for three years. That will allow sufficient time for squatters who have extinguished the title of the paper owner but who are no longer in actual occupation to make application for registration of title.
In our view the Bill strikes a fair balance between the squatter and an innocent buyer. To make no transitional provision would be unfair to those who have acquired rights by adverse possession but to preserve those rights in perpetuity would prevent the realisation of our aim that the register should be as complete a record as possible of the title. I hope that the noble Baroness therefore feels that it is appropriate to withdraw her amendment.

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I turn to Amendments Nos. 17 and 59, tabled by the noble Lord, Lord Goodhart, to whom I listened carefully. As was made clear on Second Reading, the Bill's proposals set out to provide a careful balance between the rights of owners and the need to ensure that neglected property continues in useful life. In particular, I was happy to agree with the noble Lord's observation that the Bill would be unlikely significantly to damage the position of those who had taken over property to house themselves in the short term. Indeed, by clarifying the periods involved, it may positively help them. Nevertheless, we believe that it is important to ensure that the balance stays in the right place.
The amendments would shift two careful balances in the Bill. First, they would significantly reduce the protection that the Bill gives to the rights of registered owners. Secondly, under the transitional arrangements to be found in Schedule 12, the rights of all those who have acquired rights by possession of land under the general limitation Acts are fully protected for three years. This would include both those who have remained in continuous occupation of the land, and those who have acquired possessory rights, but whose occupation has been discontinuous.
The rights of the first group will form a permanent feature of the Bill. Anyone in actual occupation of the land will have rights which override both first registration and subsequent registered dispositions of the land under Schedules 1 and 3.
Despite what the noble Lord has said with his usual eloquence and erudition, I am far from being convinced that those who have once squatted on land but have subsequently left it should be protected in the same way.
That is only partly because of a wish to preserve the rights of registered owners. It is fundamental to the Bill that the register should give the clearest possible picture of the rights and obligations to which land is subject. Rights should have overriding status only when it is impracticable or impossible that they should be registered.
There are obvious problems for someone in actual occupation of land being required to register in order to retain those rights. The application for registration would be, at least for some, merely the prelude to steps by the owner to recover possession. Therefore, we understand those issues.
But the position of someone who has occupied land, but subsequently left it, is rather different. He has no ground to expect such immediate action by the owner. The provision in paragraph 7 of Schedule 12 will give three years grace in which it will be possible for someone who claims to have acquired a title which extinguishes that of the first registered proprietor to protect his rights by registration. We suggest that is not a particularly onerous price to pay for that protection.
The noble Lord also raised the issue of a limit on possession rights not being ECHR compliant. Adverse possessors are given those three years to register their
1402
rights. We believe that that is a proportionate remedy for their prospective loss which must be balanced against the interests of a prospective buyer.
But the permanent continuation of the transitional protection suggested by the amendment would create very significant practical problems for buyers. They would run the risk of finding themselves bound by the rights of squatters, where that squatter is no longer in actual occupation. The chances of ascertaining that someone had acquired a permanent right, hidden from the register, from past occupation would in many cases diminish to nothing.
I would therefore argue that the noble Lord's suggestion would in fact significantly damage the structure of the Bill. It would put prospective buyers in the future under a burden of risk that is unreasonable. In the light of that explanation, I hope that the noble Lord will feel able to withdraw his amendments.
4.30 p.m.
Lord Goodhart: I cannot withdraw an amendment which I have not yet moved, but when we reach those amendments I shall not move them.
I am somewhat concerned. I am not sure that this is a major issue because I am not aware of many problems caused nowadays by squatters who have been in occupation for 12 years and then moved away. So I am not sure that we are talking about very much. But in the case where somebody has acquired an indefeasible title before this Act comes into force—it will be a transitional matter because there will be no new rights to do that—I am unhappy with the concept of that being removed after the end of the three year transitional period. So again, that is something to which we may wish to return on Report.
Baroness Buscombe: In responding to the Minister, I apologise to the Committee and, in particular, to the noble Lord, Lord Goodhart. To put it mildly, I am feeling under the weather and I suddenly panicked because I could not think what had happened to Amendments Nos. 17 and 15. I then suddenly realised that they belong to the noble Lord, Lord Goodhart. Therefore, I apologise for the fact that my remarks did not necessarily bear any reflection on the intention behind those proposed amendments.
I listened to the Minister's reply on this complex point. I shall read Hansard with care and then decide whether or not to return to this matter on Report. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 agreed to.
Clause 12 [Leasehold estates]:
[Amendment No. 10 not moved.]
Clause 12 agreed to.
Schedule 1 [Unregistered interests which override first registration]:
[Amendment No. 11 not moved.]
Baroness Buscombe Baroness Buscombe moved Amendment No. 12:
Page 45, line 10, leave out from "occupation" to end of line 11.
The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 13, 49 and 50. By tabling these amendments, we are seeking to offer the Government a choice of explanation.
I shall deal first with Amendments Nos. 12 and 49 and then Amendments Nos. 13 and 50. The underlying intention behind these amendments is to seek clarity and consistency in relation to beneficiaries as they are defined in the Bill.
Paragraph 2(1) of Schedule 1 and paragraph 2(1)(a) of Schedule 3 deprive a person in actual occupation of land of protection in relation to any beneficial interest of his under a settlement under the Settled Land Act 1925. By contrast, a person in actual occupation of land who possesses an interest under a trust of land will be entitled to protection in respect of that interest.
The only justification for the discriminatory treatment of the beneficiary under a strict settlement which is given is that interests under a strict settlement are "relatively uncommon" and since the Trusts of Land and Appointment of Trustees Act 1996, no new strict settlements can be created. That may be true, but the fact that persons who are beneficially interested under strict settlements are in a minority is hardly a justification for withholding the protection of the law from them.
Amendments Nos. 13 and 50 pose an alternative option which we should like to put to the Government. These amendments are designed to enact the present position under the law as it stands at present which is established by judicial decision in the Flegg case that where a beneficiary, under a trust of land, is in actual occupation, his interest does not override that of a purchaser or, importantly, a chargee from the trustees if they make that disposition in exercise of their powers under the trust, or by the general law, to overreach the interests of beneficiaries. We believe that including a statement to that effect in the legislation is a useful confirmation and clarification of the law. I beg to move.
Baroness Scotland of Asthal: The general theme of the amendments is to what extent interests under a trust should be protected by reason of actual occupation so as to override a first registration or registered disposition.
As the noble Baroness outlined, Amendments Nos. 12 and 49 seek to provide protection for interests under the Settled Land Act 1925. Amendments Nos. 13 and 50 seek to ensure that the interests of those under a trust of land are overreached in certain circumstances. First, I shall address the settled land amendments.
We have considerable sympathy with the arguments advanced by the noble Baroness, Lady Buscombe, for removing the exceptions for settled land in the Bill as it currently stands. So, too, did the Law Commission. In its 1998 consultation paper the commission originally suggested that the right of a beneficiary
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under the Settled Land Act 1925 shall cease to be, as now, simply a minor interest and become an overriding interest on first registration and in relation to registrable dispositions.
As the noble Baroness pointed out, comparatively few people are affected by this issue and. indeed, comparatively few responded on this point. However, most thought that these rights should not be overriding. Since 1996 it has been impossible to create new settlements under the 1925 Act as a result of the Trusts of Land and Appointment of Trustees Act 1996. This will therefore be an issue of rapidly diminishing importance.
Any settlements of registered land expressly created before 1997 should have been protected by the entry of the prescribed restrictions on the register. The Law Commission therefore thought it likely that little or no hardship would be caused by the abandonment of the recommendation. It therefore recommended the continuation of the present position under which a beneficiary under a settlement cannot protect his or her rights by virtue of his or her actual occupation of the settled land. I hope that the noble Baroness will feel comforted by some of the things I have said.
As regards trusts of land, the second point raised by the noble Baroness, I am certainly not unsympathetic to the intention of the amendments. However, we hope to be able to convince Members of the Committee that they are not necessary. Although we believe that both amendments are unnecessary, the reasons differ.
In the case of first registration, the issues are essentially those of the law relating to unregistered land. That is because overreaching will take place when the conveyance or other disposition is completed. The former beneficiaries will therefore have no interest in the land when registration takes place. Under Clauses 11(4) and 12(4) the unregistered interests under Schedule 1 must affect the estate being registered at the time of registration.
In the case of registered land, the noble Baroness is correct in that the position is covered by the common law as discussed in the case of City of London Building Society v. Flegg, to which the noble Baroness correctly alluded. As many noble Lords will know, that was a case in which it was held that the society was not subject to the beneficial interests of Mr and Mrs Flegg in respect of its registered charge, even though the Fleggs had beneficial interests in what was in those days a trust for sale and were in actual occupation of the registered land. That was because the mortgage advance had been paid to the two trustees of the trust, the registered proprietors, Mr and Mrs Maxwell-Brown—as many noble Lords will remember, Mrs Maxwell-Brown was the daughter of the Fleggs—so the overreaching took place. That is well settled law and will remain.
We note the comments of the noble Baroness about the worsening of the position of a small minority. However, the interests under a strict settlement have never been overriding. As was stated earlier, they are only a minor interest under the 1925 Act, so need registration. I hope that the explanation is one which

1405
finds favour with the noble Baroness and that she is satisfied that the Bill deals with the issue adequately and addresses the issues which concern her. I hope therefore that she will feel able to withdraw the amendment.
4.45 p.m.
Baroness Buscombe: I thank the Minister for her response, which I shall read with care. I am not sure whether I understood her entirely. My underlying intention with the amendments is to ensure that neither class of beneficiary—either under the Trusts of Land and Appointment of Trustees Act 1996 or those under the Settled Land Act 1925—is mentioned or that both are mentioned. It seems that there should be a level playing field.
I agree with the Minister that few people are affected by this provision. However, it is probably right to say that the economics are enormous and will continue for some time. This is an important point. I shall carefully read her comments. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 13 not moved. ]
Lord Goodhart Lord Goodhart moved Amendment No. 14:
Page 45, line 11. at end insert—
"( ) Where an interest of a person in actual occupation of any land is an overriding interest under sub-paragraph (1), the interest in that land of any other person under whom the person in actual occupation holds the land by virtue of any grant or licence."
The noble Lord said: In moving Amendment No. 14 I shall speak also to Amendment No. 53. I apologise for the fact that there is a misprint on the Marshalled List in both amendments, which is my fault. It should refer to a "grant or licence" and not, as it does, to a "grant on licence".
Under Section 70 of the Land Registration Act, interests are overriding interests if they are the interests of a person in actual occupation of land or in receipt of the rents and profits of land. Under the Bill, the only interests which are overriding are those of persons in actual occupation, and receipt of rent and profits is not enough. However, actual occupation is defined so as to include occupation by employee or an agent.
Let us assume, however, that a freeholder has granted a contractual licence, which is a form of interest, to A to occupy land and that in turn A has granted a sub-licence to B at some rent or contractual payment. The purchaser inspects the land and meets B. B tells the purchaser that he, B, is there as a licensee of A. In that situation, under the present law the interests of both A and B would be overriding. Under the law as is proposed by the Bill, the interests of B will be overriding but not the interests of A who is in receipt of the rent and profits but not in occupation.
This seems to me to give rise to a peculiar position. I am conscious of the fact that I could be wrong because it is undoubtedly a complicated position. There is plainly no transfer to the purchaser of A's contractual rights under the original licence granted to
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A by the previous freeholder. Therefore, if B, who has the protected right to remain there, pays for the benefit of the licence, that payment is presumably still payable to A. If the licence under the contract is terminable by A, it remains terminable by A and not by the purchaser because there is no transfer of the right to terminate the licence.
However, if A's licence from the earlier freehold requires contractual payments to be made, it is not clear how the purchaser can claim any right in that payment because he is not a party to the licence and there can be no transfer of the rights under the licence. So, A could say, "Thanks. I'd like to go on simply getting my income from B. I recognise that when B leaves I will have no further right to the property but I prefer that to having to agree a new licence and paying you something for it."
The Bill recognises the fact that occupation by an employee or agent is occupation by an employer or principal, but occupation under any other form of contractual relationship should be treated as giving an overriding interest not only to the actual occupier but to the other party to the contract under which the occupier holds it. I beg to move.
Baroness Scotland of Asthal: The noble Lord will know how much it will pain me to disagree with him, but I fear that on this occasion I must. He will also know that in relation to person B the licensee would not have a property right; he does not have it now and will not have it in the future. That is the short answer in relation to his proposition, but I want to explore the point because the noble Lord has, with his usual cogency, put it well.
The fundamental objective of the Bill is to achieve a situation in which, under the system of electronic dealing with land that it seeks to create, the register should be as complete and as accurate a reflection of the state of the title to the land at any given time as is practicable—that point has been made several times but it bears repeating—so that it is possible to investigate title to land on-line with the absolute minimum of additional inquiries and inspections.
One of the main functions of the Bill is therefore to cut back on overriding interests as far as that can be achieved. Any interest which can bind subsequent buyers without being clear from the register adds to the difficulties of the transaction. If the interest is capable of being protected in other ways, it should not be an overriding interest.
Accepting the amendment would add a further overriding interest to those which already exist. It would require a buyer to make inquiries not only of the person in actual occupation, but also of any person from whom he or she holds the land by way of lease or licence. That is a significant extra burden for anyone and it would significantly undermine the objective of being able to do so on line.
That is why the Law Commission consulted on this issue with a provisional recommendation that the rights of those entitled to rents or profits should cease to have an overriding interest. Its recommendation was strongly supported by those who responded.

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It may be worth noting that the first registration of a leasehold estate—in circumstances where the superior titles are not themselves registered and were not deduced to the register on that first registration will be reflected in the class of title which the registrar gives to that leasehold estate. Usually, the lease will be registered with good leasehold title. That means that in any subsequent dealings with that leasehold estate any disponee will necessarily be alerted to the fact that one or more superior titles are not registered.
It is possible that this explanation might not entirely satisfy the noble Lord and he may believe that some difficulties remain. However, I hope that he will agree that it is of fundamental importance to the main objectives of the Bill that overriding interests should be reduced, in so far as that is possible, that his amendment would have the effect of adding an undesirable and not, perhaps I may respectfully say, an entirely necessary interest to what should be a very select category indeed.
Even though, as always, I find it interesting to listen to the noble Lord, I hope that in the light of that explanation he will feel able to withdraw his amendment.
Lord Goodhart: I am grateful to the Minister. I recognise that a licence is not technically an interest in property, but it is a kind of interest which in certain circumstances can be binding on the owner of the property.
I recognise and agree with the principles behind the desire of the Law Commission to restrict the number of overriding interests. However, I believe that from time to time the fact that we have removed any rights from the person, as against the owner, who is in receipt of rents payable by the occupier may lead to an untidy situation. If and when problems arise, they may have to be sorted out by the courts and in the circumstances I shall read what the Minister said. It is possible that I shall not want to take the matter further, but I shall not give an undertaking to that effect now. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Geddes): I must advise the Committee that if Amendment No. 15 is agreed to, I cannot call Amendment No. 16 because of pre-emption.
Baroness Buscombe Baroness Buscombe moved Amendment No. 15:
Page 45, line 12, leave out sub-paragraph (2).
The noble Baroness said: In rising to speak to Amendment No. 15, I shall speak also to Amendments Nos. 16, 54 and 55. These amendments are designed to elucidate further the meaning of "actual occupation" by ensuring that an occupier's protection is not jeopardised by a temporary and fortuitous absence at the relevant moment. Its continuing connection with the land remains apparent on inspection.
The meaning of "actual occupation" and of the definition in terms of physical presence is discussed in paragraph 8.22 of the report. It appears that an occupier's physical presence is intended to include presence by "his or her user" of the premises.
The case law on "actual occupation" under the present legislation indicates that occupation can include "making use" of the premises. However, the new legislation—this Bill—amends the law fundamentally in many respects. It is a new land registration code rather than a consolidation and on this point it uses the expression "physically present", which is not in the existing Act. It is therefore not at all certain that the case law on "actual occupation" will be applied to the new wording.
Occupiers' interests are a significant part of the system, particularly in connection with mortgages of residential property. It is therefore important to clarify their scope as fully as possible rather than to leave the matter to be litigated by people of modest means.
The wording of the amendments may not be ideal and I hope that the Minister will appreciate the fact that they were prepared under some pressure of time. They may not include the case where, for example, someone may be using the land but inspection alone does not show whether the disponer, the registered proprietor or someone else is doing so. We believe that it is important to explore the point and further the principle of including additional elucidation in the Bill. I beg to move.
5 p.m.
Baroness Scotland of Asthal: Although I am unable to accept these amendments, I wholeheartedly agree with the noble Baroness that it is important to explore these matters. We have listened very carefully to the points that she raises and shall consider them fully. However, for the reasons that I shall give, we do not believe that these amendments help to resolve the matter. With the leave of the Committee, I shall give a fairly full response to the issue at this stage because if we are to look at the matter together that may be of assistance.
This group of amendments concerns the issue of "actual occupation". There is another group of amendments concerned with easements which touches upon a similar theme and some of the ground covered now will be revisited then. The interests of persons in actual occupation override both first registration and registered dispositions. There are more exceptions to this category in the case of registered dispositions, but both provisions (in paragraph 2(2) of Schedules 1 and 3 respectively) state that a person is to be regarded as being in actual occupation of land only if he, his agent or employee is physically present there.
These amendments, in the alternative, seek to provide a partial definition of the term "physically present" or remove all references to physically present" from these provisions by leaving out paragraph 2(2) of each schedule. It may help to allay the concerns that the noble Baroness has raised if I explain the approach that has been taken. The existing

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statutory provision is to be found in Section 70(1)(g) of the Land Registration Act 1925. That provides that the rights of those in actual occupation are an overriding interest. The provision refers to,
"The rights of every person in actual occupation of the land or in receipt of the rents and profits thereof, save where enquiry is made of such person and the rights are not disclosed".
As many Members of the Committee will be aware, the meaning of those words has been found to be not wholly clear. The phrase "actual occupation" was considered in Williams & Glyn's Bank Ltd v Boland. That case has tested many lawyers for some time. In his speech in that case the noble and learned Lord, Lord Wilberforce, made it clear that the addition of the word "actual" to "occupation",
"merely emphasises that what is required is physical presence, not some entitlement in law".
The Bill will give statutory effect to that point. If that was not done, there could be a danger that "actual occupation" would be interpreted more widely so as to embrace entitlement to occupation.
An example of where a term has been widened in its interpretation by the courts is "possession" in the context of the right to sue for the recovery of land. It had been thought by many that to sue for recovery the claimant had to be in possession of the land. Many Members of the Committee will be aware, however, that in Manchester Airport Plc v Dutton the majority of the Court of Appeal held that a mere legal entitlement to possession was sufficient. Therefore, the words "physically present" in these sub-paragraphs do not refer to the degree of continuity or permanence that is required to constitute actual occupation. Two of the amendments seek to do that by referring to,
"had not permanently given up all connection with the land".
In our view, that is not necessary because of the meaning of physical presence and case law concerning actual occupation. The distinction that the subparagraphs seek to draw is simply that only a person in actual occupation of land, and with an interest in land, can have an interest that overrides first registration. A mere entitlement to occupy is not sufficient.
The case law on the definition of actual occupation makes it clear that physical presence is required. "Physically present" is not a legal term and so can bear its dictionary meaning. The temptation to try to give some kind of guidance as to how the phrase is to be interpreted is, we confess, considerable. Despite the persuasive arguments that the noble Baroness puts forward, we believe that it is wiser to resist them and not attempt to provide a partial statutory definition of the term "physically present". What constitutes physical presence will depend, as under the present law, upon the nature and state of the property. That is clear from the judgment of Lord Justice Nicholls in Lloyds Bank Plc v Rosset. In that case the majority of the Court of Appeal was of the view that a person could be in actual occupation through his or her agent or employees. The Bill will give statutory effect to that
1410
view. If as proposed in two of the amendments paragraph 2(2) was omitted from both schedules the statutory effect would not be achieved.
We have not included in the provisions the rights of those in receipt of rents and profits which are within the equivalent provision in Section 70(1)(g) of the 1925 Act, although that is a topic on which there is a further amendment before the Committee. The first amendment in this group seeks to apply the test of physical presence at the time of an event that triggers first registration. First, under Clause 11(4) or Clause 12(4) it is the rights affecting the estate at that time to which the first proprietor is subject. With first registration, the purpose is to establish a baseline for the statutory title, so the registrar looks at the position at the time of the application.
However, the question whether or not the first registered proprietor is bound by an interest that can be an overriding one on first registration will have been determined prior to that date, for example at the time of the event which triggers first registration. Unlike the position where the land is already registered, there is no "registration gap" because the triggering disposition vests the legal estate. In the case of, for example, a legal charge over registered land, the chargee does not have a legal estate until the legal charge is completed by registration, hence there is a gap between the two events.
Secondly, the proposed test could not apply to voluntary first registrations as there is no triggering event. It is hoped that there will be a large number of voluntary registrations once the Bill comes into force. Where first registration is voluntary, the overriding interest may have arisen, or been created, after the first registered proprietor acquired the land but before he or she applied for the registration of the title.
I hope I have explained why we consider that these provisions do not require to be amended as proposed or to be left out of the Bill. However, I have noted the concerns that have been raised this evening. The provisions certainly deal with very complex issues. I undertake to consider the amendments further, in particular in relation to the use of the term "physically present". It may be possible to improve the Bill in the light of the debate; if so, the Government will return to the matter at Report stage. We shall of course be very happy to receive any contributions before that stage to help clarify this matter.
The Earl of Caithness: I am grateful to the noble Baroness for taking away the point. There is potential for confusion and further litigation in due course. The noble Baroness said that my noble friend's amendment was a partial interpretation. I am sure that with the help of her officials the Minister can provide a full interpretation.
Baroness Buscombe: I thank the Minister for her response and also for the support of my noble friend the Earl of Caithness. I appreciate the Minister's reassurance that she will take away and consider the

1411
points that I have made. Further, I am grateful to the Minister's very helpful offer of more consultation between the stages of the Bill.
The point was raised at Second Reading by my noble friend Lord Kingsland and I repeat it now, not least because a number of extremely experienced and able members of the Chancery Bar have already questioned the meaning and definition of the term "physically present". If we are unable to clarify this term prior to the passing of the Bill we are in danger of seeing more litigation than is really necessary. That would be unfortunate. Therefore, I shall return to those who are supporting us. The Minister said that she will consult with others. Let us see if we can come up with some solution to the point. On that basis I have pleasure in begging leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 16 and 17 not moved.]
Schedule 1 agreed to.
Clause 13 [Appurtenant rights and charges]:
Viscount Bridgeman Viscount Bridgeman moved Amendment No. 18:
Page 8, line 13, after second "estate" insert "or interest"
The noble Viscount said: In moving Amendment No. 18 I shall speak also to Amendment No. 19. These are technical amendments. The purpose of the clause is to facilitate the registration of the benefit of, among other matters, appurtenant easements. I refer noble Lords to Note 68 on page 473 of the report.
Section 1(1) of the Law of Property Act 1925 describes the fee simple and the lease as estates. Section 1(2) describes easements and so on as "interests" and as held "for an interest equivalent to" a fee simple or a lease. It is therefore not strictly correct to use the word "estate" to include easements and other matters within Sections 1(1) and (2) of the Law of Property Act 1925. For the avoidance of doubt, the appropriate course is to extend the provision to refer to registration of "interests" which are appurtenant to, or burdens on, a registered estate. I beg to move.
Baroness Scotland of Asthal: As the noble Viscount has said, Amendments Nos. 18 and 19 tabled by the noble Baroness both make amendments to Clause 13. As such, I shall take them together.
The clause relates to the scope of rules which may be made to ensure that a register contains information not only about the registered estate but also unregistered estates which subsist for its benefit.
The amendments have been tabled to ensure that the rules can provide that the register contains information not only about unregistered legal estates but also about unregistered legal interests. That is highly desirable in view of the underlying objective of the Bill to ensure that the register contains as much of the information about the property as possible.
I hope, however, that I can reassure the noble Viscount, Lord Bridgeman, that the clause as originally drafted achieves this aim. The definition of legal estate contained in Clause 129(1) of the Bill refers to the definition in the Law of Property Act 1925.
1412
Section 1(4) of that Act defines "legal estates" to be the estates, interests and charges which are authorised to subsist or to be conveyed or created at law.
I am pleased to say that the clause as drafted already ensures that the rules have their wider scope. Therefore, I invite the noble Viscount to withdraw the amendments.
Viscount Bridgeman: I am most grateful to the Minister for that guidance. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 19 not moved.]
Clause 13 agreed to.
Clause 14 agreed to.
5.15 p.m.
Clause 15 [Right to lodge]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 20:
Page 8. line 32, leave out "Subject to subsection (3),"
The noble Baroness said: In moving Amendment No. 20, I shall speak also to Amendments Nos. 22 and 108. These amendments are designed to retain permanently the ability of the holder of a registrable interest to enter a caution against first registration. Paragraph 3.58 of the report justifies the removal of this possibility on the basis that such a caution should not be,
"a substitute for first registration",
and registerable estates should be registered. However, the discussion at paragraphs 2.9 and 2.13 of the report accepts that compulsory registration is triggered by the making of a disposition. That is likely to continue to be the case because it is—as the report says—"not easy" to devise an alternative system.
Pending a further review of mechanisms for ensuring comprehensive registration, as recommended in paragraph 2.13 of the report, the right course is to allow an owner who has not made a disposition triggering registration to enter a caution, so that he is told of any application for registration made by anyone else and affecting his land. Forcing an owner to apply for voluntary registration in order to avoid the risk of trouble arising from a mistake by someone else is a "heavy-handed" and "disproportionate" measure, such as paragraph 2.11 of the report deprecates.
We have received very strong support for the amendment from the Charities' Property Association. It is deeply concerned to highlight the possible impact on endowed charities of the abolition of cautions against first registration. It states:
"It is possible that the Law Commission will recommend compulsory registration of all land. Currently, there is only encouragement of voluntary registration of land which means that there will continue to be unregistered land for the foreseeable future".
However, for many endowed charities, such as members of the Charities' Property Association, this could have a negative impact, particularly because

1413
cautions against first registration are to be abolished. In effect, the Bill will not provide them with the same level of protection against squatters for their unregistered land in contrast to the extra protection for registered land being conferred by Part 9 of the Bill.
In some cases the land that endowed charities own is unregistered because it has been owned for hundreds of years and full legal documentation does not exist. It would therefore, we suggest, be extremely expensive and very complicated for endowed charities to register it.
Currently, endowed charities with unregistered land can register a caution against first registration, as can others, by lodging a plan with the Land Registry and a statutory declaration for a fee of £40. The cautioner would then be notified of any application by a third party—such as, for example, a squatter—to register the land. Clause 15 and Schedule 12 remove that right.
This is a very important and fundamental point with regard to the Bill. On that basis, I beg to move.
Lord Goodhart: I rise to support the noble Baroness because my name is attached to some of the amendments in the group. I originally was inclined to the view that the Law Commission proposals on this matter were correct. But, having read the letter from the Charities' Property Association, a copy of which I also received, I was very impressed by its argument. Therefore, I support retaining the right of a landowner to register a caution against first registration over his own land.
I shall not add to the noble Baroness's comments except to say that, as between Amendments Nos. 107 and 108, I prefer Amendment No. 108 because paragraph 16 of Schedule 12 will still be necessary even if the other provisions which Amendments Nos. 20, 22 and 108 seek to delete are removed.
Baroness Scotland of Asthal: Amendments Nos. 20, 21, 107 and 108 deal with the rights of an owner, or anyone else prescribed by rules, to lodge a caution against first registration. I hear what the noble Baroness, Lady Buscombe, says in relation to how that will impact, particularly on charities.
Amendment No. 20 tabled by the noble Baroness would remove the qualification of the right of a person to lodge a caution against first registration set out in subsection (3). I shall therefore consider at the same time Amendment No. 22, which would delete subsection (3). That qualification stops the owner of a freehold estate or a leasehold estate with a term of more than seven years from lodging a caution as a substitute for applying for registration itself.
One of the fundamental aims of the Bill is to extend registration as far and as soon as possible. One of the ways in which it does that is to clarify and extend the benefits which come from registration and to ensure the sharpest possible distinction between registered and unregistered land. Those benefits form a package, and the way for the owners of land to achieve them is to have their land registered. Registration, however,
1414
not only provides benefits to the individual owner but also provides collective benefits. For example, problems can and do arise with the boundaries between registered and unregistered land, and the proprietors of unregistered land who continue in that state can be creating difficulties for their neighbours. The opening of the information contained on the register has provided much valuable material to the general public.
The Bill therefore seeks to maximise the advantages to the owner of registration. The amendment would do something to reduce the effectiveness of those measures. It would, in effect, enable a measure which is needed to provide a necessary safeguard for the interests of third parties to be used, as a side wind, to avoid some of the need for registration. That is undesirable. The overall aim should be that the person with an unregistered legal estate which is registrable should register it rather than using other means to protect his or her interests.
I would seek to reassure the noble Baroness, Lady Buscombe, that the new prohibition will not apply immediately. Under the transitional arrangements in paragraph 13 of Schedule 12, the new provision will have effect two years after the rest of the clause is brought into force. That will give landowners time to arrange to register their estates in land in the relatively rare circumstances where they feel that protection by a caution against first registration is warranted.
I hear what the noble Baroness says about it not being fair to require registration, particularly in relation to charities. But requiring registration in order to get the benefits is not being heavy handed, given the considerable benefits that we genuinely believe will accrue to those who register their interests. All owners have the opportunity to benefit from this system, which will make the dealings in their property quicker, surer and cheaper. Registration is not expensive and cautions have been useable for this purpose only since 1998.
Although we understand the concern, we genuinely believe that the reality will not be either as onerous or as burdensome as many fear. For the reasons I have already given, cautions against first registration under Clause 15 must not be used as an alternative to substantive legislation. To allow otherwise would be fatally to compromise our ambition of a complete register. However, we do intend to modify the application of the new rules in the early days of the new system so as to allow landowners the chance to make a protective entry in relation to their own land. That concession in paragraph 14 will run for a period of two years. The amendment would remove it. Similar considerations apply in relation to the Crown to paragraph 15.
As to paragraph 16, nothing in the repeals made by the Bill affects the validity of any caution against dealings against first registration lodged under Section 53 of the Land Registration Act 1925 or any enactment replaced, directly or indirectly, by that Act. The paragraph ensures that cautions against first registration under the 1925 Act are treated in a similar

1415
manner to cautions under the Bill. We believe that they will assist the general move towards the desirable goal of total registration of title. We think that the first instinct of the noble Lord, Lord Goodhart, to be supportive of the Law Commissioners was the right one. We regret that he has been tempted away from our shores but we hope to entreat him back.
The Earl of Caithness: Following on from what the Minister said, perhaps I may refer to a charity that does not make any dispositions on the land. What is the advantage to it of having to register the land within the two year period?
Baroness Scotland of Asthal: The benefit is to have clarity of interest. The noble Earl knows that one of the most difficult things for many is to identify precisely who owns land, who has an interest in land and who has an overriding interest. For many years, such points have beleaguered all those who have dealt in land. The advantage proposed by the Bill is one of transparency so that those who have the benefit of the interest will be able to register that interest and anyone coming to the register will be privy to the rights and responsibilities that they will be subject to and take on by virtue of that disposition. That transparency must, of itself, be a real benefit.
Baroness Buscombe: I thank the Minister for her response. I appreciate the transitional period of two years to support those such as charities who will have to comply with the provisions of the Bill. I cannot agree with the noble Baroness that the benefits outweigh the burdens. We are talking here about exceptional properties and exceptional owners. Charities and others will be forced to spend an enormous amount of money on carrying out searches on these properties to ensure that they are then able to be registered. I cannot believe that the ambition for a complete register is a benefit that outweighs that burden. While the ambition is in principle a good one, it is too inflexible in this instance. On that basis, I wish to test the opinion of the Committee.
5.30 p.m.
On Question, Whether the said amendment (No. 20) shall be agreed to?
Their Lordships divided: Contents, 79; Not-Contents. 115.

Division No. 1

CONTENTS

Allenby of Megiddo, V.

Colwyn, L.

Anelay of St Johns, B.

Cope of Berkeley, L.

Attlee, E.

Dean of Harptree, L.

Baker of Dorking, L.

Dixon-Smith, L.

Bridgeman, V.

Dundee, E.

Burnham, L. [Teller]

Elton, L.

Buscombe, B.

Ferrers, E.

Byford.B.

Flather, B.

Caithness, E.

Fookes, B.

Carnegy of Lour, B.

Fowler, L.

Clark of Kempston, L.

Garel-Jones, L.

1416

Geddes, L.

O'Cathain, B.

Glentoran, L.

Onslow, E.

Hanham, B.

Palmer, L.

Hayhoe, L.

Park of Monmouth, B.

Henley,L.[Teller]

Parkinson, L.

Hogg,B.

Perry of Southwark, B.

Howe, E.

Plumb, L.

Jenkin of Roding, L.

Rawlings, B.

Jopling, L.

Renfrew of Kaimsthorn, L.

Kimball, L.

Renton, L.

St.John of Bletso,L.

Knight of Collingtree,B.

Seccombe, B.

Laird, L.

Selborne, E.

Lamont of Lerwick, L.

Selkirk of Douglas, L.

Lindsay, E.

Selsdon, L.

Luke, L.

Sharples, B.

Lyell,L.

Shaw of Northstead, L

McColl of Dulwich,L.

Skidelsky, L.

Mar,C.

Strathclyde,L.

Marlesford, L.

Taylor of Warwick, L.

Masham of Ilton, B.

Tenby, V.

Mayhew of Twysden, L.

Thomas of Gwydir, L.

Molyneaux of Killead, L.

Vinson, L.

Monro of Langholm, L.

Vivian, L.

Montrose, D.

Waddington, L.

Murton of Lindisfarne, L.

Wade of Chorlton,L.

Northbrook, L.

Weatherill,L.

Northesk, E.

Wilcox, B.

Norton of Louth, L.

Young, B.

NOT-CONTENTS

Acton, L.

Grenfell, L.

Amos,B.

Grocott, L.

Andrews, B.

Hardy of Wath, L.

Archer of Sandwell, L.

Harrison, L.

Ashton of Upholland, B.

Haskel, L.

Barnett,L.

Hayman, B.

Bassam of Brighton, L.

Hilton of Eggardon, B.

Berkeley, L.

Hollis of Heigham, B.

Bernstein of Craigweil, L.

Howells of St. Davids, B.

Billingham, B.

Howie of Troon, L.

Blease. L.

Hoyle, L.

Borrie, L.

Hughes of Woodside, L.

Brennan, L.

Hunt of Chesterton, L.

Brooke of Alverthorpe, L.

Hunt of Kings Heath, L.

Brookman, L.

Irvine of Lairg, L.(Lord Chancellor)

Brooks of Tremorfa, L.

Burlison, L.

Janner of Braunstone, L.

Carter, L.[Teller]

Jay of Paddington, B.

Clark Of Windermere, L.

Jeger, B.

Clarke of Hampstead, L.

King of West Bromwich, L.

Clinton-Davis, L.

Kirkhill, L.

Craig of Radley, L.

Lea of Crondall, L.

Crawley, B.

Levy, L.

David, B.

Lipsey, L.

Davies of Coity, L.

Lofthouse of Pontefract, L.

Davies of Oldham, L.

McCarthy, L.

Desai, L.

McIntosh of Haringey, L. [Teller]

Dixon, L.

Donoughue, L.

McIntosh of Hudnall, B.

Dormand of Easington, L.

MacKenzieof Culkein, L.

Dubs,L.

Mason of Barnsley, L.

Elder, L.

Massey of Darwen, B.

Evans of Parkside, L.

Morgan, L.

Farrington of Ribbleton, B.

Murray of Epping Forest, L

Faulkner of Worcester, L.

Nicol, B.

Filkin, L.

Parekh, L.

Fyfe of Fairfield, L.

Patel of Blackburn, L.

Gale, B.

Paul, L.

Gibson of Market Rasen, B.

Pendry, L.

Gilbert, L.

Peston, L.

Gladwin of Clee, L.

Pitkeathley, B.

Gordon of Strathblane, L.

Portsmouth, Bp.

Gould of Potternewton, B.

Ramsay of Cartvale, B.

Graham of Edmonton, L.

Randall of St. Budeaux, L.

1417

Rea, L.

Thornton, B.

Rendell of Babergh, B.

Tomlinson, L.

Rooker, L.

Turnberg, L.

Sawyer, L.

Turner of Camden, B.

Scotland of Asthal, B.

Uddin, B.

Sheldon, L.

Walker of Doncaster, L.

Simon, V.

Warwick of Undercliffe, B.

Slim,V.

Watson of Invergowrie, L.

Smith of Leigh, L.

Whitaker, B.

Stoddart of Swindon, L.

Whitty, L.

Stone of Blackheath, L.

Wilberforce,L.

Strabolgi, L.

Williams of Mostyn, L.(Lord Privy Seal)

Symons of Vernham Dean, B.

Taylor of Blackburn, L.

Williamson of Horton, L.

Temple-Morris, L.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.38 p.m.
Viscount Bridgeman Viscount Bridgeman moved Amendment No. 21:
Page 9, line 2, leave out "in gross"
The noble Viscount said: The amendment is designed to enable the holder of a profit appurtenant—that is, a right of pasture, fishing and so on attached to his land—to caution against first registration of the land over which his right exists. The report does not explain why the ability to caution is restricted to profits in gross—that is, not annexed to any land. The holder of each type of profit has an equal interest in ensuring that his right is recorded on registration of the land over which it is exercisable. I beg to move.
Baroness Scotland of Asthal: As the noble Viscount rightly said, Clause 15 defines the circumstances in which a caution against first registration can be lodged. A caution can only be lodged if it relates to a qualifying estate. Subsection (2) defines what is a qualifying estate for this purpose.
It may be helpful if I explain that a profit which exists in gross is one which is capable of an independent existence from land, such as the right to hunt, shoot game or harvest crops. One of the important changes made by the Bill is to make these valuable rights capable of registration in their own right.
The amendment tabled by the noble Viscount would remove the words "in gross" from the definition of profit à prendre in the list of qualifying estates. The effect would be to enable a caution against registration to be lodged in respect of any profit, including those which are only appurtenant to the land. These profits, however, are not capable of being registered with their own titles.
It therefore follows that any caution against first registration in relation to such a profit would have to be lodged against the registration of the title to the estate which the profit affects. But an unregistered legal estate in land is already a qualifying estate in land for the purposes of the clause. The owner of the profit would therefore be able to lodge a caution against the registration of the title to the estate because he or she is entitled to an interest affecting a qualified estate.
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The change to the Bill, if I may respectfully say so, is not necessary. In the light of this explanation, I hope that the noble Viscount will feel able to withdraw his amendment. I quite understand that, when there is a question mark of this kind, it is important to clarify the matter openly in debate in order that there can be no misunderstanding.
Viscount Bridgeman: I am grateful to the Minister for that explanation, in the light of which I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 22 and 23 not moved.]
Clause 15 agreed to.
Clauses 16 and 17 agreed to.
Clause 18 [Cancellation]:
[Amendments Nos. 24 and 25 not moved.]
Viscount Bridgeman Viscount Bridgeman moved Amendment No. 26:
Page 10, line 2, after "period" insert "(not being less than twenty-eight days)"
The noble Viscount said: In moving Amendment No. 26, I shall speak also to Amendments Nos. 64 and 67.
Amendment No. 26 and the related amendments specify a minimum period which must be allowed to the recipient of a notification for him to respond and protect his rights. Such provisions can in effect have substantive results as such a person may lose his rights if the period is too short for an effective response. It is therefore appropriate to restrict the rule-making power to ensure that adequate notice is always given. I beg to move.
5.45 p.m.
Baroness Scotland of Asthal: Amendments Nos. 26, 64 and 67 deal with a common issue. That issue is whether a minimum length of time should be specified in rule-making powers in the Bill which allow notice periods to be prescribed. I shall therefore consider these amendments together.
I shall turn first to Amendment No. 26. As we have already seen, Clause 18 deals with the mechanics of applications to cancel cautions against first registration. When an application is received for cancellation, the registrar will serve the notice on the cautioner. The cautioner will in many cases object to the withdrawal of the caution, and if agreement cannot be reached the matter will be referred to the adjudicator for resolution.
Subsection (4) provides that if the cautioner does not respond within the period which is specified in the rules, the registrar must cancel the caution. This is because the obligation lies with the cautioner to substantiate his claim. The amendment moved by the noble Viscount seeks to impose a minimum period of notice below which the rules cannot go.
It may be helpful at this point if I explain how the notices work under the present system—when one sees that, one better understands—and by that I mean how

1419
the notice is served on the cautioner when a first registration application is received. This is the nearest situation to an application to cancel a caution against first registration that exists under the present law.
In that situation, the cautioner is given 14 days to respond. This period is set out in the rules. The rules also provide that the registrar can shorten the period stipulated in the notice, but not to less than seven days. There is another factor in the equation. The rules contain deemed delivery provisions which say that a notice is deemed to be received seven days after posting, not including the day of posting. This means that the cautioner can in reality have as much as 22 days' notice.
Our first thoughts were that these provisions are broadly right, and there is no intention to change the deeming provisions or the periods of notice in the foreseeable future. The Committee may be interested to know that, far from concerns being raised that notice periods are too short, the Land Registry has in fact received complaints that third parties are in fact given too long to respond.
It may be helpful to remember that, generally, challenges to the registration of a caution will come when a property is about to be sold and investigations at the registry reveal its existence. That is the time when it becomes critical. There is a balance to be struck between the period of time given to the cautioner to respond to a notice and the inevitable delay that will result in the sale of the property while the matter is investigated.
While we appreciate the concerns raised by the noble Viscount, I hope it will be of some assurance to him that the rules which will stipulate the period of notice, although not subject to detailed parliamentary scrutiny, are subject to the scrutiny of the Land Registration Rule Committee. Members of the Committee will know how zealous the rule committee is in dealing with these matters appropriately. It will be well placed to balance the various interests and to take a rounded view on what the appropriate period should be. It is of some importance that the committee should be free to set whatever limit or limits are appropriate to the variety of circumstances with which the rules will have to deal. That will develop over time.
I turn now to Amendment No. 64. Clause 36 deals with the mechanics of applications to cancel unilateral notices. It is very similar to the procedures for applications for the cancellation of cautions against first registration. When an application is received for cancellation, the registrar will serve notice on the person with the benefit of the notice. That person will in many cases object to the withdrawal of the notice and, if agreement cannot be reached, the matter will be referred to the adjudicator for resolution.
Subsection (3) provides that if the person with the benefit of the notice does not respond within the period specified in the rules, the registrar must cancel the notice. As with applications for cautions against first registration, the obligation lies with the person who has placed the entry on the register to substantiate his claim. It is clear that a reasonable period of notice
1420
is needed, if the rights are to be a reality. As I have mentioned, the rules are subject to the scrutiny of the Land Registration Rule Committee. The committee should be free to ensure that the rules prescribe an appropriate period or periods in the variety of circumstances with which they will have to deal. This level of detail is perhaps inappropriate for Parliament, and it is certainly one that might inhibit the development of the rules over time.
As with cautions against first registration, challenges to the registration of a notice will come when the property is about to be sold and investigations at the registry reveal its existence. There is a balance to be struck between the period of time given to the person who has lodged the unilateral notice to respond to a notice from the registrar and the inevitable delay that will result in the sale of the property while the matter is investigated. We have attempted to get that balance right. It is not always as easy as one would like.
I turn finally to Amendment No. 67. Clause 45 deals with the mechanics of serving notice of applications to register a voluntary restriction. When an application is received for the entry of a restriction, the registrar will serve notice on the registered proprietor. The registered proprietor may in some cases object to the registration of the restriction and, if agreement cannot be reached, the matter will be referred, as in other cases, to the adjudicator for resolution.
Subsection (2) provides that the registrar must not determine the application if the registered proprietor has not responded until the notice period specified in the rules has expired. The amendment seeks to impose a minimum period of notice below which the rules cannot go. As with the other rules that I have mentioned, rules concerning notice periods under Clause 45 are subject to the scrutiny of the Land Registration Rule Committee. This committee is best placed to decide what the appropriate period should be, and its decisions should not be fettered by an arbitrary period specified in the clause. We know that the periods will vary, particularly if we get to the stage of having e-conveyancing which will make matters a lot quicker. The rule committee may then he in a position to shorten or lengthen a period, or to adjust the rules, so as best to meet the needs of any given situation. Situations will vary; whereas to set these matters in stone in the Bill will make the process rather cumbersome and heavy.
The notice period that is settled upon must fit in with the land registration scheme for notices generally. The scheme may well change over time, and we have catered for that. Twenty-eight days may be far too long in the situation with which we shall he faced, I hope relatively quickly, when e-conveyancing is introduced and this is done on-line. It may he possible to do it much more quickly, efficiently and effectively without causing any risk or difficulty in relation to those who are attempting to apply it.

1421
We believe that our approach strikes a balance between the period of time given to the registered proprietor to respond to a notice and the delay and inconvenience caused to the applicant for the entry of a restriction while the matter is investigated.
Taking all those factors into account, the Bill should not artificially restrict the power of the Lord Chancellor, with the assistance of the rule committee which advises him, to make the right decision for the circumstances that exist from time to time. I hope that my response has covered the concerns raised by the noble Viscount.
Viscount Bridgeman: I am grateful to the Minister for her most helpful reply, which addresses our concerns. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 18 agreed to.
Clauses 19 to 22 agreed to.
Clause 23 [Owner's powers]:
Lord Goodhart Lord Goodhart moved Amendment No. 27:
Page 11, line 19, at end insert—
"( ) Owner's powers to charge a registered estate or a registered charge may be exercised by a document expressed to create a charge by way of legal mortgage, whether or not that document is a deed."
The noble Lord said: The amendment picks up a point that is made in paragraph 7.6 of the Law Commission's report. The Law Commission proposed in its consultative document that a deed should not be necessary in order to create a registered charge giving a chargee powers under Section 101 of the Law of Property Act. According to a subsequent report, that proposal was accepted by most respondents. However, the Law Commission changed its mind simply on the ground that this particular provision would not be necessary when electronic conveyancing was introduced, and the commission expected that only a relatively short time would elapse before its introduction.
I am slightly more pessimistic about this matter than the Law Commission. It seems to me that there is a possibility that e-conveyancing could be, not a matter of months, but several years off. Therefore, I cannot see any objection to removing as an interim stage the requirement that a charge should be by deed. The provision does not seem to serve any useful purpose. The Law Commission appears to be happy in principle that that obligation should be removed, so why not allow its removal? The aim of this amendment, and of Amendment No 28 which is grouped with it, is that this should be possible. I beg to move.
Viscount Bridgeman: I wish to speak to Amendment No. 28. This amendment is designed to ensure that if anyone tries to create a charge or sub-charge in a way which the new system prohibits—for example, by using an old printed form which creates a mortgage by demise—the instrument operates as a legal charge under Clause 23(1) and Clause 51, rather than being absolutely void as a purported disposition which the
1422
proprietor has no power to make or operating as an equitable charge arising from a contract for a mortgage in which case it might be ineffective if there was no document signed as a contract under Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.
The insertion of a provision governing the consequences of a disposition in a form forbidden by the legislation, and validating it as a transaction of the type permitted, is the same technique as was adopted in Sections 85(2) and 86(2) of the Law of Property Act 1925 when mortgages by assignment were abolished. The first paragraph of the proposed new subsection preserves, out of caution, provision for what will happen if someone tries to create a mortgage by assignment. This is technically needed, because paragraph 2(6) and (7) of Schedule 11 effectively repeal the equivalent provisions of the Law of Property Act 1925 in relation to registered land. I beg to move.
6 p.m.
Baroness Scotland of Asthal: Perhaps I may begin by dealing with one of the concerns expressed by the noble Lord, Lord Goodhart. When speaking to his amendment, he said that he reasonably anticipated that charges were a long way away from being handled electronically. I must disabuse him of that: charges will be one of the earlier parts of e-conveyancing to be implemented. We realistically expect that this may be available next year. Therefore, I caution the noble Lord to prepare himself.
This amendment has been grouped for discussion with Amendment No. 28. The amendments relate to the manner in which an owner can exercise his power to charge his property. Clause 23 sets out the powers of an estate owner to deal with that estate. It includes an unlimited power to do anything that is possible under the general law, with one exception. At the moment, it is possible to create a legal mortgage by demise or sub-demise over registered land. These methods will be abolished by the Bill, as they are no longer used. Instead, the owner will be able to create a legal mortgage in two ways: by either a charge expressed to be by way of legal mortgage; or a charge to secure the payment of money.
The form of charge is short and simple, and it is made by way of a deed. Amendment No. 27 gives an owner an additional power to create a charge by a document which is expressed to be by way of legal mortgage, but one which is not necessarily a deed. If I may respectfully say so, this idea is not entirely new. It was floated in the joint Law Commission/Land Registry consultative document. The arguments for this option were said to be that the rights of the parties are determined by registration of the document not the method by which the document is executed by the parties. This suggestion has not been taken forward in the Bill. The reason for that is a very practical one.
The Bill is setting the framework for electronic documentation and conveyancing. As I said earlier, the first of those electronic documents is likely to be an

1423
electronic charge. This is likely to be taken forward in the near future. Again, I tempt the noble Lord as regards the possible date. The precise form of written instrument used to create a charge will therefore cease to be relevant very quickly.
As I said, the current methods are simple to use. No-one will be prejudiced by the failure to introduce this change in the run-up to electronic charges. There is little point in permitting this additional method for a short space of time, when there are so many other longer-term adjustments that will need to be made. Amendment No. 28 also amends Clause 23. It adds two further ways of charging a property. The first restores the mortgage by demise or sub-demise. Again, the Law Commission comes to our assistance because its consultation document specifically asked whether those methods of making a charge were now used, given the easier method of using a form of charge. The clear consensus was that they are not. Therefore, it seems unnecessary—and indeed undesirable—to clutter up the statute book with a provision that has fallen out of use when there is an alternative method that achieves all that the earlier option achieved, and one that is considerably simpler for all concerned.
The second way enables a legal mortgage or sub-mortgage to be used to have the same effect as a charge. We suggest that this is also an undesirable step. We are moving to the electronic world. The first documents that are likely to become electronic are charges. They will be easy to draft, simple and electronic. It is not desirable to allow a less convenient method to be introduced as an alternative way to deal with the mortgaging of registered land. The move for electronic conveyancing must be towards rather than away from standardisation. We believe that that will make the completion of such work much simpler. The use of a charge document is not onerous. However, its use is beneficial to the conveyancing community at large. I therefore invite the noble Lord and the noble Viscount not to press their amendments in this regard.
I should also stress that one of the delights that I have in proposing these issues to the Committee derives from the fact that the Law Commission has done so much of the work for us; and there is consensus. We have tried to be utterly practical with this Bill, so that people will know how to apply the legislation and be able to do so with ease. We shall also have the benefit of the professions advising us as to how to do this more easily. If we felt that there was a lacuna in this respect, I can certainly reassure noble Lords that we should be very happy to address it. However, there does not appear to be a need for that at present.
Lord Goodhart: I hope that the Minister's prediction of the time within which electronic conveyancing of charges will be brought in is accurate. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 28 not moved.]
Clause 23 agreed to.
Clause 24 [Right to exercise owner's powers]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 29:
Page 11, line 25, at beginning insert "The manner of exercise of"
The noble Baroness said: In moving Amendment No. 29, I should like also, with the leave of the Minister, to include Amendment No. 30 in my remarks. I believe that it makes sense to deal with the two amendments as a group.
Both amendments are intended to restrict the rule-making power by confining it to prescribing how owners' powers are to be exercised and the form of registrable dispositions, and to eliminate any possibility of rules imposing substantive restrictions on the powers that can be exercised—who can exercise them, or what provisions parties to dispositions can validly agree and include: for example, in a lease, as to alienation; or in a charge, as to the circumstances in which repayment can be demanded. Such restrictions would probably never be deliberately imposed by land registration rules. But if it should happen that such rules are made in terms in which their effect in a particular situation is open to argument, any possible interpretation of them as imposing substantive restrictions will, we suggest, be untenable if it is ultra vires the rule-maker to do so. I beg to move
Lord Bassam of Brighton: Clause 24 identifies the persons who can exercise an owner's powers of dealing with the registered estate. This includes not only the person who is actually registered as the owner of the registered estate, but also any person who is entitled to be entered as proprietor.
Subsection (2) makes the exercise of the rights of those who are entitled to be registered subject to rules. The intention is that rules will prescribe how the powers are to be exercised. This is done under the current land registration system by prescribing that the forms of disposition that they should use are the same as if they had already been registered; and that, before registration is completed, they must show to the registrar's satisfaction that they are entitled to be registered as the proprietor of the land.
Amendment No. 29 helpfully makes it clearer that the rule-making power is limited to the manner in which the rights to deal with the land are exercised, and does not seek to restrict the actual powers of disposition. That is our intention, as set out in the provision. We are grateful to the noble Baroness for suggesting the amendment. In our view, this issue merits further investigation, as well as clarification of the intended use of this rule-making power.
There are a variety of rule-making powers located in the Bill, both in the specific clauses dealing with particular areas and, more generally, in Schedule 10. It may be that on further consideration the powers needed are already contained in other provisions within the Bill. We undertake to report back on this issue at Report stage and give careful consideration to the helpful points which have been raised. On that basis, I ask the noble Baroness to withdraw the amendment while we carry out that urgent investigation.

1425
I turn to Amendment No. 30. Clause 25 relates to the way in which an owner can exercise his power to deal with a registered estate or charge. A registrable disposition will only have effect if it complies with detailed rules. The amendment tabled by the noble Baroness seeks to limit the rule-making power to the form, but not the content, of the registrable disposition.
This clause is a very important provision when we look forward towards electronic conveyancing, which has been much discussed today. The form of the disposition may in fact become the completion of fields on a computer screen with the necessary details of specific terms which have been agreed. The content of such electronic documents will therefore be all important.
I appreciate that there will be concern about the prescriptive nature of the rules made under this provision, especially as the provision is somewhat wider in scope than the provision which exists under the current law. I can, however, reassure the noble Baroness that there is no intention to curb the owner's powers to deal with the registered estate beyond what is required to make the system work in an effective manner for all concerned. The rules made under this provision will be subject to the scrutiny of the Land Registration Rule Committee, which is well placed to decide how far these details need to be set down and to vary them as circumstances change. That committee would be able to review the details which the registry requires with the details which conveyancers are able to provide. This will be difficult to predict in advance and will need adaptation as methods of dealing with the registry change.
As the Committee will appreciate, this provision will be an essential part of the development of the electronic conveyancing process. I hope that in the light of those comments the noble Baroness will feel able to withdraw the amendment. I hope that she is satisfied with my earlier assurances on Amendment No. 29.
Baroness Buscombe: I thank the Minister for his response to the grouping without notice, if I may put it that way. I thank the Minister for the reassurance he gave in relation to Clause 24 and Amendment No. 29. We believe that that is an important amendment and we are grateful that the Minister responded so positively. We look forward to discussing it again on Report. I shall consider with care what the Minister said on Amendment No. 30. We are still concerned that Clause 25 offers the possibility of incorrect interpretation. However, for the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 24 agreed to.
Clause 25 [Mode of exercise]:
[Amendment No. 30 not moved.]
Clause 25 agreed to.
6.15 p.m.
Clause 26 [Protection of disponees]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 31:
Page 11, line 37, after "this" insert "or any other"
The noble Baroness said: Without having given notice, I should be grateful if I could group Amendment No. 31 with Amendment No. 32. I do so in response to a rather rushed exercise on our part given the time frame within which we have had to respond to the document, Land Registration for the Twenty-First Century.
I shall be brief. I look forward to hearing the Minister's response because the amendments raise an important point. They would ensure that where local authorities or other statutory corporations are so constituted that they can only perform acts which the relevant statute authorises, and purported actions not so authorised are absolutely void, such ultra vires acts are not validated or partly validated because, or in so far as, they happen to affect registered land. It is also important to ensure that anyone dealing with such an entity is not caught out by statutory limitations on its powers. I beg to move.
Baroness Scotland of Asthal: I fully understand what the noble Baroness says in relation to Amendment No. 31. However, I am afraid that it would undermine the structure of the Bill as regards the powers of a registered proprietor and the protection of buyers from those owners.
If a registered proprietor is subject to statutory limitations on his powers, he should enter a restriction. I am afraid that we do not see why the risk of a proprietor breaching such a statutory limitation should be placed upon the buyer. That very much accords with the policy of the Bill that a person should be able to rely upon the register and restrictions on a registered proprietor's powers should be apparent from the register. An example of the effect of the amendment would be that it would not be necessary to enter a restriction to reflect the limitation on the powers of a tenant for life under the Settled Land Act 1925. We envisage that there would be real problems with the measure. I hope that the noble Baroness will see the force of those arguments and perhaps be minded to withdraw the amendment.
I turn to Amendment No. 32. As the noble Baroness said, this amendment adds, in effect, a further subsection to Clause 26. Clause 26 reflects one of the major principles behind the Bill. That principle is that a person dealing with a registered proprietor can assume that his powers of disposition are unlimited unless there is an entry on the register to the contrary. That is one of the fundamental points that we hope the Bill will deliver.
The amendment imposes a duty on the Lord Chancellor to make rules to ensure that when the powers of a body corporate to deal with its land are limited, for whatever reason, that fact is recorded on the register by the entry of a restriction. The idea is to prevent a void transfer operating to pass the legal title in such cases under Clause 26.

1427
I absolutely appreciate the concerns behind this amendment. It is highly desirable to avoid such situations arising. I am pleased therefore to be able to reassure the noble Baroness that the registration of compulsory restrictions in these circumstances is frequently undertaken by the registry at present. A few examples of such restrictions show how this works—restrictions are entered when a company is in liquidation, when a charity owns land and needs consent to disposal from the Charity Commission and when a public sector landlord must meet certain conditions when selling property. Usually they need the consent of the Housing Corporation. I could go on. There are many situations which are thus covered.
I reassure the noble Baroness that there is no intention to alter that approach. There is no intention to change the types or number of such restrictions following the coming into force of the Bill. The need for such restrictions is monitored quite closely by the registry and amended to reflect new and altered powers of disposal set out in new primary legislation.
The registrar is given specific power under subsection (1) of Clause 42 to enter restrictions to prevent invalidity or unlawfulness in relation to dispositions of a Registered estate or charge. The decision to enter a restriction depends on the circumstances of a particular case. As the Committee will know, some corporations have different powers of disposal for different parts of their asset base. For example, insurance companies have limited powers to deal with the funds representing their long-term business assets. The power for the registrar to enter such restriction needs to be very general, as set out in Clause 42.
I can reassure the Committee that the registrar must be able to exercise that judgment on a case-by-case basis. Greater detail of what that means in practice appears in a number of internal practice manuals and in the leading text book on land registration. I shall not reiterate them now. I invite the noble Baroness to look at them. They are helpful; she might find assistance. We believe that it is not appropriate or practical to deal with such dynamic issues in rules.
There will be change. We have to be able to respond quickly to those changes. The registrar has the necessary discretion to deal with them appropriately. I hope, therefore, that the noble Baroness will feel able to withdraw the amendment.
Baroness Buscombe: I thank the Minister for her robust response to Amendment No. 31. I accept entirely what she said in regard to that amendment. I appreciate the reassurances that the noble Baroness has been able to give in relation to Amendment No. 32 by express reference to Clause 42(1) and the specific powers of the registrar. I shall read with care what she said. I am somewhat satisfied that her response has met our concern. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 32 not moved.]
Clause 26 agreed to.
Clause 27 [Dispositions required to be registered]:
[Amendments Nos. 33 to 36 not moved.]
Baroness Buscombe Baroness Buscombe moved Amendment No. 37:
Page 12, line 26, at end insert "or one which is appurtenant to a term of years absolute which is not registered or required to be registered"
The noble Baroness said: Amendments Nos. 36, 38 and 43 were grouped together. Subsequently we decided to move Amendment No. 37 and speak to Amendments Nos. 39 and 44 because we think that they are preferable. I do so now.
These amendments are intended to ensure that easements and rights of entry for short terms of years do not have to be registered or noted on the title to the servient land. Such easements or rights will almost always be appurtenant to or exercisable over short leases and a requirement to register them where the lease is not itself registrable is a trap and unnecessary. Anyone dealing with the servient land will be expected to inspect it and will see that there are rights of way, light and so on. But as the Bill stands, easements appurtenant to a short lease will be registrable under Clause 27(2)(d) (and equivalent rights of entry under paragraph (e)) and under Clause 27(1) they will not operate at law unless registered against the servient title—paragraph 7(2)(a) of Schedule 2. Therefore on a subsequent dealing with the servient title they will not be overriding interests under paragraph 3(1) of Schedule 3 because that applies only to legal easements. I beg to move.
Lord Bassam of Brighton: Amendments Nos. 37 and 39 deal with the same policy issue. They relate to the scope of compulsory registration of property rights. Amendment No. 44 is consequential on them both. I shall therefore consider all three together.
Amendment No. 37 amends the scope of the category of registrable interest set out in subsection 2(d) of Clause 27. That category relates to interests falling within subsection (1)(2)(a) of the Law of Property Act 1925—namely easements, rights and privileges. As originally drafted, there is only excepted from the requirement to register such of those interests as can be registered under the Commons Registration Act 1965. A buyer can readily search against the commons register. This approach accords with the main objective of the Bill—to get as much information about the land on to the register of title for those interested to discover easily and online.
Amendment No. 37 widens the exception. It excludes from the effect of registration any easements rights or privileges which are attached to an unregistered lease, which does not have to be registered. This goes against the deliberate policy of requiring appurtenant rights to be protected on the register even if they are appurtenant to an estate that is not registered and is not required to be registered. The reason for the policy is to protect buyers. I-low are they to know that the land is subject to an easement that has been expressly granted or reserved in favour of a lease of 10 years if it is not in fact recorded on the register? The effect is to increase the enquiries that a buyer

1429
needs to make. Those to whom easements are granted should protect them on the register. They should not put others to the expense and trouble of discovering their rights.
Amendment No. 39 deals with the same policy issue. It amends the scope of the categories of registrable interest set out in subsections 2(e) of Clause 27. That category relates to interests falling within subsections (1)(2)(b) and (e) of the Law of Property Act 1925. Subsection (b) relates to rentcharges issuing out of or charged on land. Subsection (e) relates to rights of entry exercisable over or in respect of a legal term of years of a rentcharge. The amendment introduces exceptions to both these categories. It excludes from the effect of registration any rentcharges under subsection (b) or rights of entry under subsection (e) which are attached to an unregistered lease which is not required to be registered. This also goes against the deliberate policy of requiring appurtenant rights to be protected on the register even if they are appurtenant to an estate that is not registered and is not required to be registered. The effect is to increase the enquiries that a buyer needs to make. Those to whom such rights are granted should protect them on the register. They should not put others to the expense and trouble of discovering their rights.
Amendment No. 44 is a consequential amendment to Schedule 2. The schedule sets out the registration requirements for each category of interest which is required to be registered to have effect. The point is that until those registration requirements are met, the document has no effect. This amendment amends paragraph 7 of the schedule to reduce the scope of dispositions to which the paragraph applies to correspond with Amendments Nos. 37 and 39.
Having heard those detailed points, I hope that the noble Baroness will feel able to withdraw the amendment.
Lord Goodhart: Having heard that response, I wonder whether the Government should not think again. Where one has a short and non-registrable lease, for example for a period of three years, that lease may well contain easements over, for instance, common parts of a block of flats, or something of that kind. Does the Minister suggest that those have to be registered?
6.30 p.m.
The Earl of Caithness: I am grateful to the noble Lord, Lord Goodhart, who has put the point better than I did. I was trying to think of an agricultural situation in which there was a three-year lease and any easement created under it would cease at the end of that short lease. What interest would there be to declare in such a case?
Baroness Scotland of Asthal: I understand what the noble Lord, Lord Goodhart, says about short, non-registrable leases for less than three years. He knows well that they do not have to be produced in writing.
1430
However, noble Lords will know that the purpose of the Bill is to make as many rights as possible registrable so that those who wish to take title will know precisely what they are getting.
The noble Lord, Lord Goodhart, has a point and we shall certainly consider it further, but the driving force of the Bill is to make the system as complete as possible.
The Earl of Caithness: None of us in the Committee is against what the Government are trying to do. We are all aiming for the same solution. The problem comes when we look at the nitty-gritty and suddenly see some anomalies that could be enormously expensive to try to operate and would not be practical. I am grateful to the noble Baroness for promising to have another look at the issue.
Baroness Buscombe: I thank the Minister for her response and am grateful to the noble Lord, Lord Goodhart, for his support for our request that the Minister consider those points with care. I am also grateful to my noble friend Lord Caithness for his intervention.
As I said earlier, while we support the principle of having the most comprehensive registration possible, we have to be practical and regard must also be given to cost. The noble Lord, Lord Goodhart, gave a perfect example of easements over common areas in a block of flats. That helps to show how the burden could outweigh the benefit.
We would very much appreciate it if the Minister could reconsider those points. We shall consider them as well and probably return to them on Report. On that basis, for the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 38 and 39 not moved.]
Clause 27 agreed to.
Schedule 2 [Registrable dispositions: registration requirements]:
[Amendments Nos. 40 to 44 not moved.]
Schedule 2 agreed to.
Clause 28 agreed to.
Clause 29 [Effect of registered dispositions: estates]:
[Amendment No. 45 not moved.]
Clause 29 agreed to.
Clause 30 [Effect of registered dispositions: charges]:
Viscount Bridgeman Viscount Bridgeman moved Amendment No. 46:
Page 13, line 35, leave out "in any case,"
The noble Viscount said: I shall speak also to Amendment No. 47. As always, we are attempting to be helpful. We contend that Clause 30(2)(b) is unnecessary and therefore possibly misleading. The point is a technical one, but I shall try to put it briefly. The grant of a charge of a lease is a disposition of the lease, so the result of Clause 29(2)(b) is that the charge itself takes effect subject to the burden of any interest incident to the lease. If the chargee then deals with the

1431
charge, all that he can dispose of under the general law, and therefore under Clause 23(2)(a), is what he has and no more—namely, an interest in the lease for better and worse.
Clause 30(2)(b) is therefore otiose and its presence in the legislation risks giving rise to a misconceived argument that it must mean something. The meaning of Clause 29(2) has to be restricted to leave room for Clause 30(2)(b) to operate. I beg to move.
Baroness Scotland of Asthal: I am always delighted to accept any assistance that the noble Viscount, Lord Bridgeman, wishes to give me. I also accept that this is clearly a complex and technical area. Perhaps we can scout it together.
Clause 30(1) provides that a registered disposition for value of a registered charge has effect to postpone any interest affecting the charge at the time of the disposition if the priority of the interest is not protected at the time of registration.
Clause 30(2) lists the conditions that have to be met in order for the priority of an interest to be protected. Paragraph (a) lists three conditions that apply in any case. Paragraph (b) specifies a condition that must be met in the specific case of a disposition of a charge over leasehold land. Taken together, the amendments would remove paragraph (b). I hope to convince the noble Viscount that it serves a purpose.
The point is perhaps best made by way of an example. Let us say that X has a charge over a leasehold interest. That lease contains a restrictive covenant in favour of the landlord; X then transfers his charge to Y for value. Under Clause 30(1), the registration of the transfer of the charge has effect to postpone to the interest under the transfer any interest affecting the charge at the time of the transfer whose priority is not protected at the time of registration.
The restrictive covenant was an interest affecting the charge at the time of the transfer, so the question is whether, for the purpose of Clause 30(1), the priority of the restrictive covenant is protected at the time of the registration. The priority of the interest is protected if it falls with Clause 30(2).
In principle, the transfer of the charge should not affect the priority of the restrictive covenant in the lease. However, a restrictive covenant in a lease cannot be the subject of a notice in the register, as outlined in Clause 33(c), so Clause 30(2)(a)(i) cannot apply. The correct result is achieved by subsection (2)(b). The charge transferred relates to a leasehold estate. The burden of the restrictive covenant is incident to that estate.
I said at the beginning that this was a complex and technical area. I hope that the noble Viscount will feel that my explanation has shed some light on how it is envisaged that the clause will work overall. It has a purpose. One has to track it through, but we respectfully believe that it works and is necessary. I hope that the noble Viscount will feel able to withdraw his amendment.
Viscount Bridgeman: I am most grateful to the Minister for the lucidity with which she has explained this abstruse subject. I shall read Hansard carefully. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 47 not moved. ]
Clause 30 agreed to.
Schedule 3 [Unregistered interests which override registered dispositions]:
[Amendments Nos. 48 to 50 not moved.]
Viscount Bridgeman Viscount Bridgeman moved Amendment No. 51:
Page 48, line 24, leave out "obvious" and insert "apparent"
The noble Viscount said: In moving Amendment No. 51, I shall speak also to Amendment No. 57. These amendments are designed to strengthen the protection of occupiers' rights and patent easements, which, in principle, are intended to be protected under the Bill, on dispositions of the land affected. If a purchaser is supposed to inspect land carefully and to be bound by what he finds, he should take subject to everything which is apparent on such an inspection and should not take free from something merely because it may not be "obvious" if, nevertheless, a careful inspection would show it.
Paragraphs 8.61 and 8.62 of the report, Land Registration for the Twenty-First Century: A Conveyancing Revolution, appear to use the words "obvious" and "apparent" as though they mean much the same thing. But that is not necessarily correct. In ordinary language, something is likely to be "obvious" if it will be seen even by someone who does not set out to look for it; whereas something which may have to be looked for, and will be found if looked for, will ordinarily be described as "apparent" on inspection. That is the best way to formulate the test which the report proposes. According to the last sentence of paragraph 8.62, consultation produced support for the proposal that,
"actual occupation should be apparent".
I beg to move.
6.45 p.m.
Baroness Scotland of Asthal: The common thread of the first and third amendments in this group—Amendments Nos. 51 and 57—is the test to be applied in deciding whether something is patent or apparent on a reasonably careful inspection. In the first amendment, the test is in relation to whether a person's occupation is obvious and, in the third, it is in relation to legal easements and profits à prendre.
We have of course canvassed some of this ground already. Members of the Committee will recall that we considered the application of a test in connection with the rights of those who are in actual occupation or "physically present". These amendments again raise the question of how far the Bill needs to go in setting out how the tests are met.
The second amendment in the group—Amendment No. 56—would remove the need for a test because all unregistered legal easements and profits would

1433
override registered disposition, irrespective of the knowledge of the person to whom the disposition was made. Perhaps I may deal with this amendment first.
The existence of overriding interests is an unsatisfactory, but nevertheless necessary, feature of the land registration system. One aim of the Bill has been to review all the categories of interest which have this overriding status and to assess whether and to what extent those interests should retain that privileged status. The overall aim is to reduce such interests as far as practicable—I believe that we said that earlier this evening when dealing with some of the previous amendments—and to ensure that they are restricted to interests which it would be impracticable or impossible to register.
By replacing paragraph 3 of Schedule 3, the amendment proposes that all legal easements and profits à prendre should have that status. Underlying the amendment is a justified concern that it should not be possible to avoid the burden of legal easements and profits à prendre that have effect at law. We absolutely understand the motivation behind that. However, I can reassure the Committee that that was never the intention of paragraph 3.
Perhaps I may explain in some detail to the Committee the restrictions contained in the paragraph as drafted and the reasons for them. I hope that in so doing I shall be able to reassure Members of the Committee that there is no reason to have concerns about the limitations that have been imposed.
Before doing so, perhaps it would be convenient for me to set out yet again some of the principal aims of the Bill. The intention is that as much as possible of what is known about a property should be readily available on the register and, ultimately, online. The register should become as complete a record as possible of the matters affecting a property so that a buyer is not bound by something of which he had no knowledge. That is the thrust behind all the rules.
The first point is that paragraph 3 limits the category of overriding easements to those of a legal nature. That is narrower than the current law and is unaffected by the amendment.
The second point is that if the disponee, or buyer, knows of the legal easement or profit because it is patent, or obvious, then he will be bound by it. Such easements will be discovered from a reasonably careful inspection of the property, and the seller will not be under a duty to disclose them.
The third point indicates the other side of the coin. Any legal easement or profit which is not known to the buyer and which is latent should not bind the buyer. That protects buyers from undiscoverable easements and profits—a point of some importance as it is virtually impossible to dispose of an easement or profit once it has been established. However, there is an exception to this last principle. Many Members of the Committee will know that any easement which has been used within one year before the disposition will bind a disponee even though it may not be obvious to
1434
the disponee on an inspection and the landowner is not aware of it. That protects easements which are in regular use, such as easements of drainage.
The combined effect of those elements of paragraph 3 is to prevent a buyer being bound by a right of which he was unaware, which he could not have found out by inspection and which was not shown to have been exercised within the previous 12 months.
Perhaps I may say that this is a sensible point at which to strike the balance between the rights of the landowner and the person who has the benefit of the easement. We have tried to strike that balance throughout the Bill but at this point we say that it is of equal importance. After all, the person with the right over the property can always apply to note that right on the landowner's title for all to see so that no disponee is unaware of its existence. Even in relation to unregistered land, a person can apply for a caution against first registration so that the right is taken into account when the legal estate is registered for the first time.
The purpose behind the limitations is to encourage the creation of a straightforward form of standard inquiries before contract. That will prompt sellers to disclose the easements and profits of which they can reasonably be expected to know while at the same time protecting easements and profits which are not known to the landowner but which are in regular use.
Therefore, the paragraph as drafted represents a major element in the aim to make the register the determinant of title and of the rights and obligations to which the land is subject. If the amendment were accepted, it would blur greatly the careful distinctions that we seek to draw between the increasingly divergent systems of registered and unregistered conveyancing. We genuinely believe that it would work against the overall objectives of the Bill. We are confident that that is not the intention of noble Lords who tabled the amendment, although it may be the consequence.
I turn to the first and third amendments in the group. I regret that I do not see any reason for changing the word "obvious" to "apparent" in either paragraphs 2(1)(c)(i) or 3(1)(b) of Schedule 3. The issue is whether the occupier's occupation is patent. In determining whether something is patent, the courts have asked whether it is obvious, as in the case of Ashburner v. Sewell. The cases do not use the word "apparent". We are trying to use terminology that is already well known and well understood because we know of the difficulties that arise when diverging from terminology that is in use and accepted.
That suggests recourse to The Oxford English Dictionary. That defines the main modern usage of "obvious" as:
"Plain and open to the eye or mind, clearly perceptible, perfectly evident or manifest; palpable".
That is clear and contains no ambiguity. I do not think that the same can be said of "apparent". Although there is indeed a long-attested and very similar usage

1435
of the word, whose definitions match very closely those of "obvious", the commonest sense now is said to be:
"Appearing to the senses or mind, as distinct from (though not necessarily opposed to) what really is; seeming. Contrasted to real".
We know that in common parlance among people under the age of 20 the word "real" has a very different meaning to that which we attach to the word—and their use of the word is usually accompanied by the word "man"!
That introduces a set of connotations that do not—I say this with the greatest respect—help the definition for land lawyers and others who will struggle with this matter in due course. In view of the fact that the amendment would not improve the drafting—I say this respectfully and gently—I urge the noble Viscount to withdraw the amendment.
Viscount Bridgeman: We very much appreciate the balance that the Minister seeks to draw between the purchaser and the owner. With the strength of The Oxford English Dictionary behind her, we shall have to consider her reply very carefully. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 52 to 57 not moved.]
Baroness Buscombe Baroness Buscombe moved Amendment No. 58:
Page 49, line 7, at end insert—
"( ) For the purposes of sub-paragraph (1)(b), an easement or profit shall be taken to be apparent on a reasonably careful inspection it such an inspection would reveal that acts had been done on the land, or advantages had been enjoyed over it, which were in fact done or enjoyed in the exercise of the easement or profit, whether or not such an inspection would have revealed or led to the discovery of the particular right under which those acts were done or advantages enjoyed."
The noble Baroness said: The amendment is designed to ensure that an easement is protected if the facts connected with its enjoyment are discoverable by inspection. Inspection without more will not show whether, for example, an access way or light to a window is enjoyed as of right or merely by prescription. If facts that are consistent with the existence of an easement show up on a buyer's inspection the onus should, we suggest, be on him to go on to ask about the legal position.
That distinction is not discussed in paragraphs 8.65 to 8.72 of the report Land Registration for the Twenty-First Century. The result produced by the amendment would be equivalent to the position adopted for "actual occupation". Paragraph 8.62(1) points out that it,
"is not the interest that has to be apparent…but the occupation of the person having the interest".
I beg to move.
Baroness Scotland of Asthal: I am most grateful to the noble Baroness for that explanation. I confess that we had some difficulty understanding precisely what was intended by the amendment. We considered the matter on the basis that the amendment sought to spell
1436
out that if it was obvious or—to use the word in the amendment—"apparent" from an inspection that there has been activity on the land or advantage enjoyed over the land, the disponee under the registered disposition will take subject to the easement or profit even if the fact that the activity or advantage has been exercised under that interest cannot be discovered by inspection and thus the existence of the easement or profit is not discoverable or known.
We have already discussed the matter in relation to the previous group of amendments. I explained to the Committee the background to and basis of paragraph 3 of Schedule 3. In so doing I mentioned that if the disponee knows of the legal easement or profit because it is patent he would be bound by it. Such easements will be discovered from a reasonably careful inspection of the property and the seller will not be under a duty to disclose them.
It is considered that the test of what is "obvious" on a reasonably careful inspection is to be interpreted in the same light as the case law relating to the question of a patent defect in title; that is, one that does not have to be disclosed to a buyer of land prior to contract under the principles that were set out in Yandle & Sons v. Sutton. As many noble Lords may know, the learned judge in that case said: "I think he"—that is, the purchaser—
"is only liable to take property subject to those defects which are patent to the eye, including those defects which are a necessary consequence of something which is patent to the eye".
If it was patent to the eye that, for example a private right of way existed the buyer would be bound even if he did not know the particular right under which the way was used or who all the users were. That being so, paragraph 3(1)(b) already appears to cover the concerns that were outlined by the noble Baroness and I therefore hope that she will withdraw the amendment.
Baroness Buscombe: I thank the Minister for her full response. I shall look again at the Bill to ensure that I am content that this important point is already covered. I shall read with care what she said in Hansard. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 59 not moved.]
On Question, Whether Schedule 3 shall be agreed to?
Viscount Colville of Culross: It may be patent, apparent or obvious that I have not understood the schedule but on page 49 in line 6, should not the third word be "or" rather than "of"? Will the Minister comment on that?
Baroness Scotland of Asthal: I thank the noble Viscount. I had not noticed that; I do not know whether any other noble Lords had done. That demonstrates the invaluable benefit of having Cross-Benchers actively engaged in our debate. I wholeheartedly thank the noble Viscount.
Baroness Buscombe: I support the Minister's comments. We are grateful to the noble Viscount for that intervention.
Schedule 3 agreed to.
Clauses 31 to 33 agreed to.
Clause 34 [Entry on application]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 60:
Page 14, line 40, leave out "Subject to rules."
The noble Baroness said: In moving this amendment I shall speak also to Amendments Nos. 61 and 62.
The amendments taken together would ensure that an agreed notice could be entered only if the registered proprietor or someone entitled to be registered made or consented to the application. Any other application would have to be for a unilateral notice so that the proprietor would be told of it under Clause 35(1) and would have an opportunity to apply under Clause 36(1) for it to be cancelled.
Paragraph 6.22 to 6.31 of the Land Registration for the Twenty-First Century report describes the system in the Bill and indicates that it is intended not only to allow the entry of so-called agreed notices, which are not in fact consensual, to which reference is made in paragraph 6.24, but to go further and prescribe by rules that certain interests can be protected only by agreed notices without any procedure for cancellation on the proprietor's application. That is paragraph 6.25. It gives matrimonial home rights as an example.
It seems wrong in principle to allow entries to be made without the proprietor's consent and, possibly, even without his knowledge and without allowing him to use the procedure in Clauses 35 and 36 to resolve the applicant's claim where it is disputed.
Clause 32(3) provides that a notice does not validate an interest but does protect its priorities if it is valid. A so-called agreed notice in respect of a claim which is, in fact, disputed will be a serious interference with the registered proprietor's ability to deal with his land. Indeed, any prospective purchaser will insist on having the entry cleared off, which may be a protracted process if it arises out of a dispute between the proprietor and the applicant.
We believe that no justification is shown for depriving the proprietor of the protections described in paragraphs 6.29 and 6.30 of the report. Moreover, the cases in which that can happen are to be prescribed by rules which will not receive further parliamentary scrutiny. We feel strongly that that is a disproportionate interference with the proprietor's rights. On that basis, I beg to move the amendment.
7 p.m.
Baroness Scotland of Asthal: I am grateful to the noble Baroness for explaining the amendment so fully. Amendments Nos. 60 and 61 are grouped together because they are linked. The link is that Amendment No. 61 is unnecessary without Amendment No. 60. The effect of Amendment No. 60 on Clause 34(2) is to remove the Lord Chancellor's power to make applications for unilateral or agreed notice subject to rules. I can understand the concern behind this amendment; namely, that the right to apply may be curtailed by the detailed rules that are made.
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However, I hope that I shall be able to reassure the noble Baroness that the purpose of the provision is to give the Lord Chancellor power, for example, to prescribe that certain types of application will always be registrable as agreed notices. That is very similar to certain situations which arise under the present law, and the noble Baroness touched on that; for example, whereby notice can be entered of a wife's matrimonial home rights notwithstanding that the proprietor objects. If that power is to be exercised, the right to apply to the registry must be made expressly subject to rules as originally drafted. That need for such a wide rule-making power does not exist under the current law because the methods of protecting third party interests are rather different. As the law stands now, there is only a consensual form of notice, and unilateral action is taken by lodging a caution against dealings.
Even with those different methods, the position is not straightforward. For example, rights under the Family Law Act 1996 are registered as notices even though they are not in fact consensual in the normal sense. Under the new arrangements, the registry can set out in rules a comprehensive statement of the interests which can be protected by a consensual notice and which can be protected by a unilateral notice. The difference between the two is significant. The registered proprietor may challenge the unilateral notice and seek its removal.
The advantage of setting out the detail in rules is that it will remain flexible and can be more readily updated in the future. I have already mentioned the Family Law Act 1996. It is apparent from that that the treatment of these different applications by the registry can depend on legislation outside of the sphere of land registration. There must be an ability to respond to those. That makes it more important that these details are left to rules because we cannot prescribe what future legislation may need to provide in relation to its operation and how that may impact upon the Land Registry's discharge of its duties.
Having heard the reasons that I have given for the width of the rule-making power under this clause, I invite the noble Baroness to withdraw the amendment. I remind her of the role that will be played by the rule committee in that regard, which should give greater assurance.
Amendment No. 61 also amends the rule-making power in subsection (2). It makes it clear that rules can cover the form of the application that has to be made and also the information to be contained in it. However, this amendment is not necessary if the rule-making power under subsection (2) is left as originally drafted. The subsection already begins with a much more general statement that the right to make an application to register an agreed or unilateral notice is subject to rules. I therefore invite the noble Baroness not to press that amendment.
I now turn to Amendment No. 62. Subsection 34(3) sets out the three different circumstances in which the registrar may approve an application for an agreed notice. The first two cases are ones where the registered

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proprietor consents to the entry of the notice. The ability of the registrar to approve such applications has not been questioned. Therefore, we expect that that will be relatively straightforward.
However, the third situation in which the registrar may approve an application for an agreed notice will arise where the registered proprietor does not consent to the entry of a notice. It is that option which the amendment removes.
I should like to clarify the circumstances in which it is envisaged that the registrar would approve such an application. The subsection states that the registrar is able to enter an agreed notice where he is satisfied as to the validity of the applicant's claim. An example would be where the applicant could establish to the registrar's satisfaction that the registered proprietor had granted him an easement.
A more detailed example of how the amendment would work in practice might assist. When dealing with these issues, it is always difficult to think how they may apply in concrete terms. Perhaps I may pose one example. What if the registered proprietor granted an option in writing to X? X applied to have it protected by an agreed notice. The registered proprietor refuses to agree to that. X would be forced to enter a unilateral notice even though the registrar had seen the grant of the option and was quite satisfied that it was valid. At present the registrar is entitled and does enter a notice if an interest has been validly created even if the proprietor objects. It is a power which he exercises regularly and it should not be taken away from him because of its practical use. From what I have said, I hope that I have demonstrated why that third basis of approval of an application for registration of an agreed notice is necessary. It enables the practical way in which that matter has operated in the past to be carried forward and provides an appropriate level of flexibility and transparency. Therefore, I invite the noble Baroness to withdraw the amendment.
Lord Goodhart: I am not happy with the explanation given by the noble Baroness for the rejection of Amendment No. 62. It seems to me that there is a problem. We have here a claim which the registered proprietor is not entitled to dispute. The registrar may think that the validity of the claim has been proved to his satisfaction. However, surely that is not a decision which should be taken without the possibility of a hearing.
The situation is now entirely new. There is a possibility for unilateral notices as well as agreed notices. A unilateral notice is as good as an agreed notice subject only to the possibility that it might be cancelled as a result of the proprietor making a case against it. If it is as clear as that, the proprietor will not make a case. It is only where there is a dispute that the proprietor is likely to challenge a unilateral notice.
It seems to me that there is a much stronger case for the acceptance of Amendment No. 62 than was made by the noble Baroness.
Baroness Scotland of Asthal: I understand the anxiety ex pressed by the noble Lord in relation to
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Amendment No. 62. However, I am not able to say that I agree with him. First, I have indicated on a number of occasions that parliamentary scrutiny in relation to the rules and how they operate will increase. That will be a powerful safeguard.
Secondly, Members of the Committee will know that if the agreed notice is wrong, the proprietor can seek rectification of the register. Therefore, there is an available remedy. We are not depriving the proprietor of that remedy by virtue of these rules. The rules will give the flexibility that we need. The registrar is already discharging duties in that regard. We think that the system will work well.
7.15 p.m.
Baroness Buscombe: I thank the Minister for her full response to each of the three amendments. I should like the opportunity to read Hansard and consider carefully her comments. Perhaps I may comment briefly in support of the response given by the noble Lord, Lord Goodhart, to Amendment No. 62, about which there is concern. One of the reasons why we feel strongly about this point is that it has to be considered in the light of the fact that the cases to which we refer will be prescribed by rules which will not receive further parliamentary scrutiny. That is a matter of concern. We believe that it makes for disproportionate interference with the proprietor's rights.
In any event, I shall think carefully about the Minister's comments. I suspect that we shall want to return to these points on Report. However, meanwhile I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment Nos. 61 and 62 not moved.]
Clause 34 agreed to.
Clause 35 [Unilateral notices]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 63:
Page 15,1ine 13, at end insert ", and of the effect of sections 32(3) and 36(1),"
The noble Baroness said: Amendment No. 63 is designed to ensure that the proprietor knows not only that an application has been made but also what its consequences may be so that he can take an informed decision as to what, if anything, to do about it. The effect is similar to that of the protection given to an applicant by Clause 36(2). I beg to move.
Baroness Scotland of Asthal: Clause 35(1) sets out the requirement for notice to be served on the registered proprietor, and any other person named in the rules, of the entry of a unilateral notice on to the register, as mentioned by the noble Baroness. However, the proposed amendment seeks to lay down in the Bill detailed issues which need to be addressed in the notice.
Briefly, the two pieces of information referred to are, first, that the entry of a notice does not guarantee the validity of the interest to which it relates and, secondly, there is a right to apply for the cancellation of the notice at any time.

1441
I fully understand why the amendment has been proposed and why these issues should be addressed and the notice served on the proprietor and other interested parties. I see the force in that. But this level of detail is included in notices under the current system and will continue to be set out in the new notices drafted in support of the Bill. There is no indication that this level of detail has to date caused any difficulty or confusion. It is a replication of what is currently good practice.
However, there is a more fundamental issue to be considered. The framework of this legislation, unlike the 1925 Act, strikes a clear balance between the legal principles that overarch the land registration system, which should be contained in primary legislation, and the more detailed supportive provisions which are more appropriately left to secondary legislation where they can be updated more readily. We have touched on that aspect on a number of occasions tonight.
The general rule-making provision which addresses the detail of the form, content and service of notices is set out in paragraph (5) of Schedule 10. The rules made using those powers will be subject to the scrutiny of the Land Registration Rule Committee. It is in that forum that the exact details of what should be said to make the recipient of the notice understand what is at issue should be decided.
There is one further issue. The primary legislation will be used by the Land Registry and the rule committee as the guiding force behind the rule-drafting exercise. It is perhaps wrong to signal to them that these two issues are of particular significance. I am sure that noble Lords will agree that there are other issues of equal weight that should also appear on the face of the notice and which perhaps may differ from the circumstances in which the application for cancellation is made.
As drafted, the clause signals to the rules draftsmen that it is for them to consider what is needed in all the circumstances and for that to be agreed with the members of the rules committee. As I have said before, we totally accept that the rules committee will have an important role. We are mindful of the need for enhanced scrutiny. As I said at the beginning of the debate, we shall table amendments on Report which will address some of those concerns. We understand the basis of such concerns.
In the light of those comments, I invite the noble Baroness to withdraw the amendment.
Baroness Buscombe: I thank the Minister for her response. We should like to consider her comments. I am reassured to learn that amendments will be tabled on Report regarding the rules. We are also reassured to hear that the Government appreciate our concern that detailed provisions will be subject to secondary legislation which is by negative resolution. That is a continuing concern. We look forward to discussing related points on Report. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 35 agreed to.
Clause 36 [Cancellation of unilateral notices]:
[Amendment No. 64 not moved.]
Clause 36 agreed to.
Clauses 37 to 40 agreed to.
Clause 41 [Effect]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 65:
Page 16, line 34, after "may" insert ", for the purpose of giving effect to the rights of the persons affected thereby,"
The noble Baroness said: The amendment is designed to make clear that the registrar's powers are to be exercised in such a way as to give effect to the parties' rights under the general law. I respectfully refer the Minister to paragraph 6.37 of the report. I beg to move.
Baroness Scotland of Asthal: I regret to say that I must resist the amendment. Clause 41 deals with the effect of a restriction, which is to prevent an entry being made in respect of a disposition covered by the restriction without the terms of the restriction being complied with.
Restrictions come in many forms and may affect only a very specific type of disposition such as the need for the first chargees' consent to the entry of a second charge. It can also be very wide and catch any dispositions at all made by the proprietor of the land.
The amendment seeks to limit the circumstances in which the registrar can make an order disapplying or modifying the restriction to cases where this will give effect to the rights of the persons affected thereby. A restriction is of relevance only to an application for registration of a disposition if the disposition is caught by it, thereby requiring certain conditions to be fulfilled. An application is made to the registrar for an order disapplying the restriction or modifying its effect if for some reason those conditions cannot or should not be fulfilled. A common example is where the consent of a limited company is required and that company has been dissolved.
The provision is intended to deal with the obstacle of completing a specific application without changing the restriction on the register or its effect for the future. In reality, therefore, a request for an order under this subsection will be made only of the person requesting it is affected at the time by the restriction in some way. This is endorsed by subsection (3) which limits the identity of the persons who can request an order to those who have a sufficient interest in the restriction.
The provision is necessary for the proper operation of the register and in the circumstances I have described the additional words suggested by the amendment are not needed. I therefore invite the noble Baroness to withdraw the amendment.
Baroness Buscombe: I thank the Minister for her response. I am sorry that she was unable to respond more positively, although I take on board and understand the points she made. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 41 agreed to.
Clauses 42 and 43 agreed to.
Clause 44 [Obligatory restrictions]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 66:
Page 18, line 5, after "restrictions" insert ", if any,"
The noble Baroness said: Again I shall be brief. The amendment is designed to preserve the present position under which no restriction need be entered where it is not required as a matter of substantive law if joint proprietors have unrestricted powers of disposition and are beneficial joint tenants so that the survivor will be absolutely entitled. I beg to move.
Baroness Scotland of Asthal: Clause 44 addresses the very important issue of the registrar's duty to enter restrictions in particular situations without an application by the parties. There are quite a few examples of these in practice and they are used when the power of disposal is limited in some way; for example. when certain public corporations, charities, public sector landlords and other similar bodies need consent of perhaps the Charity Commission or the Secretary of State to a disposal of land.
Subsection (1), to which the amendment relates, is in fact limited to the situation where more than one person is registered as proprietor and the registrar needs specifically to ensure that any underlying beneficial interests are overreached. The amendment suggests that rules do not have to be made at all to impose a duty on the registrar to enter a restriction in these circumstances.
I would like to tell Members of the Committee what happens under the current system in the simplest case when just two people own the land. It may help to elucidate why we believe that the rules as currently expressed are favourable. First, the register of the title records only the legal title and will show them as joint owners. They are in fact trustees for themselves. Under the general principles of property law, the underlying beneficial interest in land can be held by them either as tenants in common or joint tenants. If held by them as joint tenants, it means that when one of them dies the other acquires the whole of the property automatically.
The survivor therefore has full powers to dispose of the property and no restriction is needed. That is not the case with tenants in common. The effect of the provisions of the Law of Property Act is to transfer the beneficiaries' interests from the land to the proceeds of sale only if two trustees give a receipt for the moneys. The moneys can also be paid to a trust corporation. In this situation, a restriction is entered on the register stating that unless there is an order from the registrar or the court, no disposition by only one trustee will be registered. This restriction ensures that a second trustee is appointed to receive the moneys, or either the court or the registrar investigates the position as to why on the facts that step in not necessary. Members of the Committee will know that that is a common position.
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Rules under the Bill will replicate the current arrangements. I therefore hope that with that explanation the noble Baroness, Lady Buscombe, will feel able to withdraw the amendment.
Baroness Buscombe: I thank the Minister for her response. Perhaps I may reiterate that our interest in tabling the amendment relates specifically to the position applying to joint tenants, not that of tenants in common. That said, I shall read what she had to say with care and decide whether to return to the matter on Report. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 44 agreed to.
Clause 45 [Notifiable applications]:
[Amendment No. 67 not moved.]
Clause 45 agreed to.
Lord Davies of Oldham: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
Lord Davies of Oldham: My Lords, as consideration in Committee of the Land Registration Bill is complete for today, this evening's Unstarred Question is no longer restricted to the one hour available for such dinner break business. Instead, a limit of one-and-a-half hours will apply. This change does not affect the maximum time available to my noble friends Lord Harrison and Lady Blackstone but it increases the maximum time available to other speakers from four to seven minutes. However, if noble Lords have already prepared four-minute speeches I am sure that the House will not object if they so restrain themselves.

Tourism
7.30 p.m.
Lord Harrison Lord Harrison rose to ask Her Majesty's Government what action they are taking to promote tourism in the United Kingdom.
The noble Lord said: My Lords, as one leaves the Palace this evening the first British industry that one stumbles across is tourism. I do not mind being tripped by Japanese tourists, flattened by French flâneurs, pushed by promenading Prussians or yanked off the pavement by towering Texans if it means that London and Britain's tourist industry is alive and kicking. But these are harder times, and foot and mouth disease has caused even London's hotels, theatres and restaurants to fall and stumble. We should support the tourist industry not simply through the bad times, as now, but the good times. We have not always done that.
We have not always taken the tourist industry seriously. Why? For us, taking a holiday is what we do when we cease to be politicians. We do not know how to take fun seriously. Tourism is a successful industry. As politicians, we are programmed to deal with industries in crisis rather than those which flourish. For us, tourism is a disparate industry, not a desperate one, to be found in every nook and cranny of the British way of life, not concentrated like the automobile industry in a car plant. Tourism has no Longbridge or Dagenham to concentrate politicians' minds.
For us, tourism is an industry of big attractions and small businesses, with no single voice to speak on its behalf. It has no NFU to beat its drum, yet tourism is many times bigger than farming both in jobs and wealth creation and is more poorly regarded and supported. Farmers have received £1 billion to help recover from foot and mouth disease; tourism has received a fraction of that. For us, farmers grow food, but the tourism industry only serves it, but it also serves those who stand and "waiter"—until now and FMD. The silver lining of that dreadful disease has been to throw into sharp relief not only the interdependence of tourism and farming but also the overarching importance of the former.
What should the British Government do to help tourism back onto the road of relentless progress? I am grateful to the Prime Minister for receiving American and other foreign tour operators at No. 10 recently to help dispel the image of a Britain closed to business and pleasure. I am also grateful to the Government for the £14.2 million grant under the BTA's March FMD recovery plan. But can my noble friend say whether the remaining £8 million to finance the global image campaign will be released soon?
En passant, I extol the sterling work of the BTA, ETC and regional tourist boards in helping to respond to the depredations of foot and mouth disease. I am grateful that the Government have extended the 100 per cent hardship relief on business rates to rural hospitality businesses whose rateable value approaches £50,000. I am also grateful to the Government for the minimum wage, which is a fillip to all who work in the tourist industry, but much more needs to be done. For example, will the Government respond to the National Trust's recent call to switch payments for food production to land management projects? By uprating old buildings and rejuvenating heritage attractions rural tourism can be strengthened.
Will the Government review their excellent 1999 policy document Tomorrow's Tourism to take account of the new devolved political landscape of RDAs and national assemblies? Will they contemplate a new development of tourism Bill to build on the Labour government's ground-breaking Act of 1969? Would such a Bill restore the English Tourism Council's right to promote itself within the United Kingdom, which is a licence that is granted to all other national boards?
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After all, tourism begins at home. A sound domestic industry is the sure footing to attract overseas visitors to Britain. English tourism lacks that step up.
In addition, the ETC should have a national co-ordinating role to ensure consistency of approach by the regional tourist boards. Chester brands itself as the gateway to Wales, but in general there is little co-ordination of that kind among national and regional tourist boards. Like the butterfly, tourism does not recognise political boundaries. Why is it that the RTBs which shoulder these promotional and marketing responsibilities are expected to obtain funds from their commercial members? Is there not an unassailable case for government grants to complement the private sector's current contributions? Such sprats from the public purse can catch mackerels of private investment in a real private-public partnership which should warm the cockles of the Prime Minister's heart.
Will my noble friend tell the Treasury to abolish the iniquitous air passenger duty—that poll tax on wings—which is so counter-productive and inhibits foreign tourists from coming to Britain? Will the Treasury boost the competitiveness of the British hospitality industry by realigning VAT rates in hotels and restaurants to those of our EU rivals and partners? Our thinking on that matter is one starter short of a set menu. When will the Treasury wake from its torpor and provide detailed facts and advice on the impact of the euro on the competitiveness of Britain's tourist industry? Tourists, London and Britain will be awash with euro notes and coins in five months' time, but the Chancellor's five economic tests will mean nothing to the London taxi driver or Chester hotelier who needs to provide change to the American and continental visitor who offers payment in euros. High fives to the Treasury if it can respond to this imminent change.
Will my noble friend, who is a recent distinguished graduand from the field of higher education, consider the establishment of a university of tourism whose purpose is to promote quality in the tourism product and careers for young people from the New Deal to university graduates? Does my noble friend also recognise that the tourist industry still lags woefully behind in the adoption of information and communications technology? The Harrison family has just experienced horrendous difficulties in organising its twin-centre summer holiday in Cambridge and Suffolk. Despite my wife's fluent Internet skills, in trying to secure accommodation the family was offered a stamped-addressed envelope service which would have done Thomas Cook proud in the 19th century.
Will my noble friend encourage the new Minister for Tourism, Dr Kim Howells, to continue to speak out of turn on the often exorbitant prices and poor quality service offered by hotels and restaurants? Will my noble friend consider the inclusion of tourism in the title of the DCMS? This Government support tourism, so why not proclaim it proudly? Further, does my noble friend accept that tourism is more appropriately located in the DTI, where the interests of the tourist industry and those of the consumer are instantly

1447
allied? I remind the Minister that Dr Howells comes hotfoot from the consumers' brief in the DTI and surely that is no accident.
As to the question of tourism and public policy, will my noble friend spell out the precise mechanism whereby the needs of the industry can be factored into all aspects of government policy-making? By its diverse nature this industry requires someone to lay the towel of tourism across all the deckchairs of government departments if it is not to suffer policy sunburn by benign neglect.
I conclude not only by anticipating the maiden speech of the noble Lord, Lord Pendry, a noble warrior in the cause of all things touristic, but also in making a prediction: tourism is an industry whose time has come. Next year it will be the industry to convince our fellow citizens of the worth of the single currency, as British tourists bring it home from abroad and the British tourism industry deals with it via inbound tourists.
Once the turbulence affecting the tourism industry in the wake of FMD has been overcome, we must remember to support this powerful industry, not just in the times and the years of famine but also, and paradoxically, in the ensuing years of plenty.
7.40 p.m.
Baroness O'Cathain: My Lords, in congratulating the noble Lord, Lord Harrison, on his initiative in introducing the debate, I declare an involvement, indeed a huge interest, in tourism through my directorships in British Airways and Thistle Hotels.
The debate attempts to elicit help from the Government for an industry that accounts for 4 per cent of GDP. It has a turnover of some £64 billion and employs some 3.2 million people, directly and indirectly, which is 10 per cent of total employment.
Tourism is not by any means a cottage industry but is hugely important to employment and wealth creation throughout the country, not just in London where we see the tourists. It is particularly important in rural areas. It is sad that it took the catastrophic disaster of foot and mouth disease to heighten awareness of the tourist industry and the central part that it plays in our now largely service-based economy.
We have already heard, and doubtless we shall hear again this evening, of the great generosity of the Government towards the tourist industry. Certainly, the £14.2 million additional promotional funds given as a result of the foot and mouth disaster have been as much welcomed as they have been trumpeted around. But, not wishing to sound ungracious, it is somewhat in the category of "sticking plaster to cure a major cancer" problem.
There needs to be a fundamental reassessment of the Government's role in promoting tourism and encouraging better standards and higher quality throughout the industry. Short-term measures such as the additional promotional expenditure grant are hugely helpful in the current crisis. I do not use the word "crisis" lightly. However, the importance of the industry to the economy as a whole demands that a
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strategic view is taken of what should be done to ensure that our successful tourist industry becomes stronger and fitter and more able, in effect, to compete for the ever-increasing growth throughout the world.
The Secretary of State who is ultimately responsible for tourism, the right honourable Tessa Jowell MP, on 8th July wrote in the Observer that,
"the truth is there is more wrong with British tourism than the cold it caught in March".
Despite the fact that I think the word "cold" is somewhat understated—pneumonia would be more likely—I am glad that such an admission, or recognition, of a fundamental problem exists. What would like to know is what do the Government intend doing about it?
Since 1997 the Government have, first, scrapped the English Tourist Board and replaced it with the English Tourism Council which has no marketing function. I ask the Minister, "Why?". Do not the Government believe in marketing tourism? They seem to believe passionately in marketing themselves.
Secondly, the Government have increased the regulatory burden, including the regulations conditional upon this country adopting the Social Chapter. On this subject the UK brewing and pub industry which, with one or two exceptions, covers the hospitality sector, has had an additional 79 pieces of legislation imposed upon it since May 1997. If the Minister wishes, I can give her the list because I have it here. The list includes one regulation which stipulates that GM ingredients must be listed on menus. Is that really necessary? Who wants it? Does anyone do it? How many people are employed in enforcing it?
Thirdly, the Government have forced the BTA to close a number of its overseas offices, while other "tourism economies" are investing more and more in attempting to woo customers to their shores. None of this suggests that the Government really believe that,
"there is more wrong with British tourism than the cold it caught in March".
Now is an opportunity to make some strategic decisions about where Government support for this very important industry should be focused. We need to think about the longer term as well as dealing with the immediate aftermath of the crisis in the industry following the FMD disaster. Would it be too optimistic to hope that the Government might look outside the box of usual suspects and, on a non-political basis, try and engage the best brains in the industry in a forward looking strategic analysis of what should, could and is capable of being done?
Time does not permit an in-depth analysis of what I think should, could and is capable of being done, but I would just mention one area. Bearing in mind the Government's avowed intention to raise skills levels, perhaps I may suggest to the Minister that she takes a look at the relativities between the funding for modern apprenticeships in the hospitality industry versus that for hairdressers and forklift truck drivers.
There is a devastating skills shortage and skills gap problem in this sector of the tourist industry. Colleges are shutting down whole hospitality and catering

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departments or withdrawing practical facilities because of the lack of funding—Hereford College, Sutton Coldfield College and Evesham College to name but three. Work-based learning providers are threatening to pull out of the hospitality sector because delivery under the current funding regime is so expensive. The Minister is very aware of this problem, as it was one that she dealt with in her previous government role in the department then known as DfEE. It is one that will not go away.
Too often we hear of complaints by tourists about the quality of our catering industry. I fear we cannot be surprised as there are, I am reliably informed, some 50,000 chef shortages at the moment. It is in such areas that if action were taken now the future of the tourist industry would be much brighter. It would be promotional support of lasting value. I hope that the Government will respond favourably. I again thank the noble Lord, Lord Harrison, for tabling this Unstarred Question.
7.46 p.m.
Lord Greaves: My Lords, I, too, thank the noble Lord, Lord Harrison, for initiating this short debate. I should like to focus on one aspect of the tourist industry. That is the industry in general in upland areas in this country. They have been particularly badly affected by foot and mouth disease. I particularly focus on the Lake District in Cumbria which is not only the major tourist centre for upland pursuits—mountaineering or simply sitting in one's car looking at the mountains and everything in between—but the main area of foot and mouth disease. It had some 40 per cent of the cases nationally.
According to a Written Answer I received before the last Recess, tourism in Cumbria is three times as important as agriculture in terms of its economic value. I have not been able to ferret out the figures within the Lake District National Park but my guess is that it must be at least ten times as important as agriculture. Yet most of the focus has, for obvious reasons, been on the farmers who have been stricken by foot and mouth disease.
During the election campaign I stood in the middle of Carlisle talking to people. I met a couple called Myra and Bill Pearson from Keswick. They run a guest house called the Fawsley Guest House. Their experiences are a microcosm of what has happened to the tourist industry in that area. Their guest house is in Keswick, one of the towns of the Lake District. It has not been quite as badly hit as some of the very rural areas. Since foot and mouth started their trade has been down 50 per cent. In March it was down 75 per cent; in April it was down 40 per cent; and in June it was down 60 per cent. This month it has recovered because of the Keswick convention. However, their bookings for August are zero. They fear that many businesses in Cumbria will go under unless the fells are opened quite soon, perhaps in September or October.
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According to a Written Answer I had from the noble Lord, Lord Whitty, yesterday, only 31 per cent of the fells in the Lake District are open, despite the fact that people have been told that half are open for walkers. In that area the situation is still dire.
There is an organisation based in Keswick called the Cumbria Crisis Alliance. It is a drop-in centre that is run by 20 or so volunteers. Every day many people go there, not just from the northern Lake District but from the whole area. They are mainly people in tourist businesses who are at the end of their tether and who do not know what they are going to do. But a whole series of other kinds of business is also suffering knock-on effects. For example, in January a business on the west coast bought a large quantity of quad bikes. They are machines with which your Lordships will be familiar. The company bought them from Japan. It has not sold a single one and is having to cover the cost of the machines. It is not easy. The business would expect to have sold them all by now. The Barclays Bank commercial manager in Keswick is quoted as telling the Cumbria Crisis Alliance:
"We have been instructed to start drawing on people in August".
I am told that a café at Seatoller at the top of Borrowdale went into liquidation this week. The people at the Cumbria Crisis Alliance believe that unless direct aid can be provided before the end of the summer such a future faces a large number of small businesses catering for Lake District tourists of all kinds.
I am aware that the Isle of Man Government have allocated £36 million of direct compensation to businesses suffering from a loss of income due to the cancellation of the TT races. A fortnight ago Kim Howells was in Cumbria and met the Cumbria Crisis Alliance and many other local people. He also went on local radio and television. He said then that EU state aid rules prevented the Government from helping out businesses in Cumbria. He said that it was not possible to give the kind of aid that was being given in the Isle of Man. I have been in touch with my local Member of the European Parliament, Chris Davies, for whom I used to work. He said that he had spoken to European Commission officials and learnt that they were unlikely to have any objection to payments being made to businesses suffering as a result of the foot and mouth crisis so long as they are payments made to tide them over the temporary crisis rather than long-term subsidies. In view of the extenuating circumstances, should not the Government make an application to the Commission to waive the rules so that they can give direct financial support to businesses hit by foot and mouth disease?
I should have liked to talk at length about the effect of the foot and mouth crisis on businesses concerned with outdoor pursuits and outdoor education in the upland areas. I do not have time to do so today but I put down a marker for a future occasion. Those businesses are in desperate straits because they depend directly on people having access to the upland areas for mountaineering, climbing, hill walking and other leisure pursuits. That is not possible in many places. Those businesses are being destroyed by factors over which they have no control.

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The long-term future is a matter for debate. But I would say that the future must lie in co-operation between all the interests in the upland areas—the farming industry, the tourist industry, local industries and the people who come to these beautiful areas to use the facilities. When we were discussing the Countryside and Rights of Way Bill there was a good deal of tension inside the House between what were perceived to be opposing interests—the interests of the landowners and the farmers on the one hand, and the interests of recreational users on the other. What the calamity of foot and mouth disease has shown us is that the interests of farmers, landowners, tourism and the people who go to these areas to use the facilities are basically the same and that the future lies with them working together.
7.54 p.m.
Lord Pendry: My Lords, I am delighted to be making my maiden speech in your Lordships' House and in doing so to be following the contribution made by the noble Lord, Lord Greaves. Before making my own contribution, I wish to thank the very many Members of the House who have made me so warmly welcome over the past few days. In addition, I should like to thank the officers and staff of the House for their courtesy and for the kind efficient services that they have afforded me.
I welcome the opportunity that my noble friend Lord Harrison has presented me in this short debate. It is an opportunity to place on record my affinity with those who work in this important industry, an interest I have had ever since I was given Front Bench responsibility for tourism by the late John Smith in another place back in 1992. It was given to me in conjunction with the sports portfolio. I think it is fair to say that, for an industry that employs some 2 million people, tourism has had far too low a profile over the years. In my view, the industry itself should have presented a more powerful and unified voice, demanding an insider status with government as other industries have done. Governments of all complexions, until possibly now, have been too slow to recognise tourism's potential to be one of the real economic and employment driving forces with our country.
I can say that governments are at last beginning to recognise tourism's importance because many more parliamentarians and policymakers are taking a real interest in it. I say that also because for the past four years I have been privileged to have been chairman of the All-Party Tourism Group. In that group we have many active and spirited participants. Fortunately, recent political changes have not deprived us of many of our key members. Both the chairman, myself, and its secretary, Lord Fearn, have crossed over from green to red and Viscount Thurso has changed his red shirt for a green one—a quite rare achievement, as I am sure noble Lords will agree. I can assure the House that all three of us will do our best in whatever capacity to fight tourism's corner.
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I recognise that I am also fortunate to join so many eminent noble Lords who over the years have raised important issues with Government Front Benches, as did the noble Lord, Lord Montagu with the Minister a few days ago. I recall that my noble friend Lord Harrison, the noble Baroness, Lady Anelay of St Johns, and many others have played an important role for tourism in your Lordships' House, which I know is appreciated by those who work in tourism.
Last night I hosted a parliamentary reception on behalf of the All-Party Tourism Group for the British Incoming Tour Operators. Those who attended were heartened by what the new Secretary of State said in her speech, recognising the need for a closer relationship between government and tourism in the future. I know that the All-Party Group on Tourism will be taking up the challenge presented to both the industry and government by playing its part in bringing that closer unity to reality.
I conclude by stating that my greatest wish is for tourism and sport and leisure to become a department of state in its own right. Sport and tourism to my mind are natural bedfellows. Both are vibrant and growing sectors of the leisure economy. Britain's sporting infrastructure offers huge tourism potential. There will be the perfect test next year when Manchester hosts the Commonwealth Games. This promises to be a marvellous sporting festival and a chance for Manchester and the North West to receive many visitors and to put themselves on the world map.
I would commend my noble friend Lady Blackstone to look closely at what is taking place already between sporting bodies and tourism organisations. I refer in particular to the Sports Tourism Forum and the British Tourist Authority. The BTA, the Minister will know, has established a joint marketing initiative with the FA Premier League. That will provide the BTA with the chance to reach a massive TV audience never previously attempted by the BTA. By using the FA Premier League agreement, the BTA will reach some one billion viewers in 160 countries in the 10 BTA markets where the image of Britain has been most affected by the outbreak of foot and mouth.
My noble friend Lord Harrison has given us the opportunity to discuss this important industry—but there is much more to discuss. However, that will have to wait because my time is up. It must suffice that I congratulate my noble friend Lord Harrison and express the hope that, through this debate, he will have initiated many more debates—of longer duration, it is hoped—in the months and years ahead.
8 p.m.
Lord Geddes: My Lords, it is both an honour and a privilege to find that I am to speak immediately following the maiden speech of the noble Lord, Lord Pendry. He brings with him a formidable reputation, not least 31 years as a Member of another place but also, as he mentioned, as the Opposition Front Bench Spokesman on sport and tourism for 1992–97.
However, what noble Lords may not be aware of is that the noble Lord, Lord Pendry, has another claim to fame. I am sure that he has many, but the one I have

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in mind is that he was the Middleweight Colonial Boxing Champion while undertaking his national service in the Royal Air Force in Hong Kong in 1957. What the noble Lord does not know is that by coincidence I, too, was undertaking my national service in Hong Kong in 1957. I am extremely glad to tell noble Lords that I was in the Royal Navy and thus never came across the noble Lord. Believe me, I am heartily relieved. We all welcome the noble Lord most sincerely to the House and hope that he will speak often in our debates. He brings with him an enormous expertise in this and I am sure many other subjects.
I should like to say to the noble Lord, Lord Harrison—whom I almost called "my noble friend", but that is at the bridge table—that he is to be congratulated on bringing forward this short debate. As the noble Lord, Lord Greaves, pointed out, I hope that it will serve as a precursor for a much bigger debate to be held in the autumn. Tourism is an all-embracing subject, but it covers such a multitude of industries and reflects so many facets of our national life that in a sense the word "tourism" defeats its own objective. May I say personally to the noble Lord that if he has any problems with accommodation in Suffolk, as a native of that county, perhaps he could see me after the debate and I shall try to help him.
While fully supportive of the £12 million grant to the British Tourist Authority to promote overseas tourism in England, I understand that the English Tourism Council received only £3.8 million in special grant for foot and mouth disease recovery. I am advised that that money was used successfully over Easter and the May bank holiday. The problem is that, in that context, no money remains to promote English tourism in relation to the problems generated by foot and mouth disease, despite the fact that £4 out of every £5 spent on tourism in England is spent by British people. I must confess to the House that until recently I did not know that statistic. I am further advised that only £1 in every £5 of grant to tourism is given directly to the promotion of tourism within England. I see an extremely unpleasant reciprocal there. Perhaps the noble Baroness would like to comment on that in her reply.
As my noble friend Lady O'Cathain and the noble Lord, Lord Pendry, have already pointed out, tourism is a vast industry, the fifth largest in England. It embraces 125,000 businesses, it has a turnover of £52 billion and it employs almost 2 million people. Furthermore, those figures exclude what is known as the multiplying factor; namely, that an extra £50 is generated for every £100 spent directly on tourism. It is the add-on factor. We are discussing big business and do not let us forget that.
More specifically, perhaps I may say to the Minister that there is an urgent need for a nationally compatible data management system within the industry. As I have said, of the 125,000 businesses in the industry, some 85 per cent of them employ fewer than 10 people. It is a huge, but hugely fragmented industry. I understand that the Government allocated just under £1 million from the capital modernisation fund.
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That is enormously welcome. However, if no further general moneys can be allocated from government—I hope that I am wrong about that—please could I ask the Minister at least to fund ITC in full now because then, in this hugely fragmented industry, those who are trying to co-ordinate and boost it will know where they stand and what they can do. That, almost more than anything else, is desperately important.
I shall finish with a truism that is nevertheless true: the only enduring relief for the tourism business is more tourists. Any means which we and the Government can find to promote further visits by tourists must be good for the industry.
8.6 p.m.
The Lord Bishop of Bath and Wells: My Lords, perhaps I, too, may thank the noble Lord, Lord Harrison, for his wonderfully broad sweep of this subject and for giving us an opportunity to contribute. Much of my diocese makes up the old county of Somerset. Noble Lords will have guessed that it depends on tourism as its main business. I have to declare an interest on behalf of almost 600 churches which are visited and form a precious treasure in the county. We have a cathedral without equal—he dares to say—a wondrous abbey and, here I declare a special interest because I am a transient lodger in it, a bishop's palace which is open to visitors. We hope that not only will those visitors have an opportunity to share in the spirit and history of that beautiful and unique place, but also that they will help to make it begin to pay for itself and thus save it for the future. We are only one of the many small businesses forming the tourism industry in the South West.
As we have heard from other speakers, the impact of foot and mouth disease has been totally devastating in the South West, as it has been in Cumbria. However, Devon has been the most fiercely affected. The recent reopening of paths and woodlands will help in the recovery, but many areas such as Exmoor—which is also upland, as the noble Lord, Lord Greaves, pointed out—have had little business all season. Hotels, pubs, restaurants, cafés, camping and caravan sites as well as other attractions have been seriously affected. Tourism is 33 per cent down in Somerset and 2,500 people have been made redundant. Some 14,000 are laid off. Businesses employing fewer than 10 people have been the worst affected by the crisis. For example, the reduction in turnover for the two months to the end of April was £760 million in Somerset and the South West alone.
The South West Regional Development Agency has found that around 19,800 businesses are facing bankruptcy. That is an enormous figure, and it is one that has been carefully researched. Recently I chaired a large meeting of business people. Many expressed complete despair. Usually these are independent, entrepreneurial people who make a huge contribution to the South West. They are not asking for ongoing subsidies; they would not like such subsidies. What they need is transitional help. The Government have provided £11.5 million for the South West. However, not only has that money taken a long time to percolate

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through the RDA and Business Link—almost too late for many people. It can at best help only between 5 and 10 per cent of the businesses involved. The bankruptcies will themselves cost the state a great deal. People do not always recognise that the cost of not doing something can be just as great as the cost of doing something. They will create a long-term loss for the whole region.
A massive marketing campaign is needed. The Government have provided 25p per head for the marketing of tourism, whereas in Wales and Scotland, perhaps as a benefit of devolution, £5 per head has been provided.
It is difficult to express the desolate feelings which are being experienced. Close to my home—where I live rather than lodge—the two nearest hotels were bought just before Christmas as a great venture for two families. Since they opened, one has had no business and the other very little business. We do not know how long they will survive, having invested so much.
The noble Lord, Lord Harrison, mentioned the steps that the Government have taken, and there is real gratitude for that. But, as I am sure they know, there is much more to be done.
8.10 p.m.
Lord Smith of Leigh: My Lords, I should declare an interest as the leader of Wigan council and as a director of Manchester Airport, which has an interest in tourism, and the Midland Hotel in Manchester. I, too, thank and congratulate my noble friend Lord Harrison on introducing this topic and raising again the importance of tourism in terms of creating wealth and jobs. In my region, the north-west, it is an industry which is worth £1.5 billion and provides more than 200,000 jobs. It is a very large industry.
The industry is spreading beyond the traditional areas that have been referred to by noble Lords and the right reverend Prelate. Even my own town, Wigan, now boasts its own tourism industry. It is worth some £30 million pounds through Wigan pier, and, fortunately, the Americans have not been put off coming to the international jazz festival which is taking place at the moment. I am missing a very good event today.
We need to grasp new opportunities. Tourism changes; we cannot stick to the same old events and the same old buildings and so on. When opportunities come along, we need as a country to be able to take advantage of them. Perhaps I may plead a particular case. In my area, private developers want to build an indoor snow centre of huge proportions. The centre—called "Xanadu" in its planning stage—will create real snow indoors. It will not be artificial snow; it will be real snow which will come down from the roof. The technology is proven and this British company has built such projects in the Far East.
However, when it comes to building one in the UK, the developers have run up against those intransigent objects, the UK planning laws. The project has been going through the planning stages now for almost two years. It will cost £150 million; it is expected to attract
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some 4 million visitors, many of them day visitors; and it will create somewhere in the region of 2,000 jobs. In a former coalfield area, that is an important addition. I hope that we can forget this "large project syndrome" in the UK and begin to develop projects as they seem to able to do in France.
I congratulate my noble friend Lord Pendry on his maiden speech—I say "my noble friend" not in its normal honorary sense; I have been a friend of his for some time—and on making sure that we do not forget the links between tourism and sport. He referred to the Commonwealth Games: We should not call them the "Manchester Commonwealth Games"; they are England's Commonwealth Games. They will bring a huge number of visitors—athletes, officials, the media and so on—and, more importantly, they will be shown on world television. An audience of 1 billion people around the world is expected to watch the events of the Commonwealth Games. We need to ensure that they work well for England.
I congratulate the Government on their recent decision in that regard. I think the games are now properly funded and on a firm footing. We must promote not only the games but the fact that they can be used for so many more things.
The sport I am most familiar with is not football, as is the case with my noble friend Lord Pendry, but rugby league. When the rugby league cup final was moved to Murrayfield in Edinburgh because of all the messing about at Wembley, it was the third biggest tourist event in Edinburgh. After the festival and the millennium weekend, rugby league tourism brought more people into Edinburgh than anything else—and I am sure that they were all well behaved.
The issue we are really debating today is what should be the respective roles of the Government and the industry in developing tourism and maximising its benefits across the country. In preparing for the debate, I received a copy of this agenda for tourism—other noble Lords may have seen it—which is published by England's regional tourist boards. Many of the ideas that have been mentioned by noble Lords in the debate are things that should happen in the tourist industry, but we should begin to question the extent to which they should be reliant on the Government and government funding and to what extent the tourist industry should look after itself.
If we have learnt anything from farming, it is that when an industry becomes too dependent on the Government—when it cannot move without wanting a subsidy or support here, there and everywhere—it is not good for the industry in the longer term. I hope that in the tourist industry we can develop a more mature approach. Of course it will need government support, but not always financial support; it will need encouragement and help with getting people together and so on. We should begin to think that there are other ways forward than simply looking to the Government. Lots of ideas have been mentioned. The tourist industry should take responsibility for itself.
There are two other issues I wish to refer to. The first is the developing regional agenda. The role of tourism is a very important part of that and, as my noble friend

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Lord Harrison said, the RDAs need to recognise that fact. At regional level, the fact that tourism has an impact not only jobs but on the transport system, the environment and so on should be looked at in the round.
Many noble Lords have mentioned the impact of foot and mouth, particularly in Cumbria. I managed to resign my position last week as leader of the North-West Regional Assembly, but in the brief period that I held that post, because it was so important to the north-west region as a whole,.we managed to go across to Brussels to visit both Commissioner Liikanen, who has responsibility for tourism, and Commissioner Barnier, who holds the purse strings in terms of structural funds.
Commissioner Barnier has extended the uplands programme by putting £3 million more money towards the problems mentioned by the noble Lord, Lord Greaves, and others. Commissioner Liikanen has promised to visit Cumbria and look for himself at the problems there. He will address a conference to help relaunch the industry, and I am sure that the DCMS will be welcome to send a Minister to attend that conference.
The second issue is to make sure that there is an adequate and fair playing field in terms of funding for tourism across the whole of Britain, a point referred to by the right reverend Prelate. It is not fair that in England the figure is 24p per person, whereas in Scotland it is £3.78 and in Wales £5.24.
I begin to question the role of the English Tourist Council. I suggest that we do not need an English Tourist Council. Its responsibilities can be devolved downwards to the regional tourist boards, which have the ability to work in partnership with other bodies, and upwards to the BTB, which should play the role of foreign marketing for all parts of the United Kingdom.
I suggest that the tourist industry should not become an industry waiting solely for government help. If it looks to help itself, I am sure that the Government will also help.
8.18 p.m.
Baroness Byford: My Lords, I, too, thank the noble Lord, Lord Harrison, for giving us the opportunity for the debate today. It comes at an important time.
British tourism is worth some £12 billion and provides some 380,000 jobs in rural Britain. My first question to the Minister is: how many people in tourism have been made redundant? Secondly, how many have been put on part-time employment while the foot and mouth crisis continues?
While the outbreak of foot and mouth continues to cripple certain areas of the United Kingdom, other regions have escaped the disease or have been less directly affected. But even in those areas the tourism industry is suffering acutely. Despite the low number of confirmed cases of foot and mouth, the east of England economy—and the tourism sector in Particular—has been affected immensely. A recent report compiled for the regional task force estimated
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that overall some £450 million of tourist expenditure will be lost in the east of England in 2001, with a further estimated loss of £45 million in 2002.
Tourism there contributes more than £4 billion to the regional economy and employs 135,000 people. The east of England has the second largest tourist industry in terms of nights and spend. Over the past five years, tourism related employment has grown by some 20 per cent in East Anglia. Overseas visitors account for one-third of the income from tourism in the east of England, 16 per cent coming from America, 15 per cent from Germany and 12 per cent from France.
Over the past five months we have taken many Statements in this Chamber on the foot and mouth outbreak. We have recorded our concern and expressed our sympathy to the farmers who have been directly affected. We have paid tribute to both the professional and the voluntary workers who have helped to relieve the pressures of suffering animals and who have supported families devastated by the effects of the disease.
I also extended my concern to others whose livelihoods were affected and in some cases have come to a standstill: market towns and livestock markets; hoteliers, bed-and- breakfast businesses; outdoor pursuits, mentioned by the noble Lord, Lord Greaves; zoos and wildlife parks; farm visitor centres; and equestrian centres. Suppliers to all of these businesses have felt the chill.
One cause of so many cancellations has been the confused messages put out by the Government. MAFF implied that all areas were closed, while the DETR maintained that they were all open. The lesson to be learnt is surely that an accurate information centre is essential.
Sub-post offices in Leicestershire and Rutland are currently taking part in an important six-month trial. They will be able to provide on-line access which will help both residents and visitors to gain up-to-date information. How does the Minister see this project in relation to the information that is carried by libraries and by tourist information centres? Is she confident that joined-up thinking will be established and that there will be sufficient funding for all of them?
I should like briefly to touch on the role played by the agricultural and county show programme in the yearly life of rural England. This year, it has almost been eradicated—although I should add that I am to travel to Lancashire to support its county show in two weeks' time. Lancashire has taken the decision to go ahead, without cloven livestock classes, and is accentuating the importance of rural trades and countryside businesses. For other shows scheduled earlier in the spring and summer a decision to go ahead was not viable. The organisers had to decide whether to take the risk in the event of the disease being controlled quickly; unfortunately, events proved that not to be the case. For those who exhibit their animals in livestock classes, cancellation of the shows this season has been disappointing. But more importantly, for those retailers who take trade stands, cancellation

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means the loss of a large proportion of their total income. Such trade cannot easily be replaced. The traders move from show to show, promoting their specialist goods. Equally, if those traders are not selling, the wholesalers who supply them also have cancelled orders. The loss of jobs is often reflected in the market towns and those areas of the countryside that the Government are trying to assist.
The shows might not be directly thought of as tourism businesses, but they are just that. They have an impact on rural trade; they also attract many thousands of visitors to the area. The cancellation, for example, of the Royal Cornwall Show had a direct effect on local hotels, as I saw for myself when we stayed there for a weekend. They would have been fully booked during that week and the next, but that was not the case.
I understand that many shows cannot obtain insurance cover for future cancellations due to outbreaks of foot and mouth or other disease. Have the Government considered this point? What will they do in the face of such failure to obtain insurance?
It is clear from this debate that the effects of foot and mouth have not been restricted merely to farmers and farms alone. The Government failed to react quickly enough to the outbreak. Even now, there are new outbreaks. The spread of the disease to new areas continues to cause concern. Visitors both from the United Kingdom and from overseas come to experience and enjoy our countryside. They come for holidays, for business visits or to visit friends and family. They take day trips; they visit towns, the seaside and the countryside; they use our accommodation; they eat out; they shop; they travel; they use our services and enjoy the entertainment that is provided.
I have given a number of examples to indicate the inextricable link between farming and tourism. They depend on each other, as the noble Lord, Lord Harrison, said. If the Government value the contribution that tourism makes, they must understand that truth.
8.25 p.m.
Viscount Falkland: My Lords, this debate has been refreshing. I thank the noble Lord, Lord Harrison, for providing the opportunity to discuss tourism again. I say "again" because I have taken part in a number of debates on the subject over the past two or three years, acting as number two to my "ex" noble friend, Viscount Thurso. I congratulate him on his success in being elected to the other place and I miss him enormously, not merely for his expertise on tourism. I admit that when I took over from him I was reluctant to continue, and I looked on my Benches for someone who could undertake this spokesmanship.
I was interested in the maiden speech of the noble Lord, Lord Pendry. It was excellent in both style and content. The noble Lord suggested that although the tourism business was so big, its profile was piteously low, and that it took the tragedy of the foot and mouth outbreak for us to be able to concentrate our mind
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sand blow away some of the complacency. There has been a wind of change blowing in this House and probably in the country at large. We are coming to understand that all is not well with tourism. The noble Lord expressed his belief that tourism warranted a department together with sport. I strongly agree with him. The noble Lord, Lord Harrison, suggested that tourism should be separated from the Department for Culture, Media and Sport and that it should perhaps come under the DTI. That is another possibility; however, I marginally prefer the suggestion of the noble Lord, Lord Pendry.
In previous debates I have made frequent comparisons with what happens in other European countries—France in particular. I was interested to see that the noble Lord, Lord Smith of Leigh, was going down the dangerous road of praising anything French. I can tell the noble Lord that if he wants a flea in his ear in this House, one of the quickest ways to get one is to compare anything with France. But the noble Lord is quite right: France is the country of grand projects, not only in tourism but in other fields as well. We do not have that culture in this country; it would be difficult to become involved in projects such as the gigantic snowstorm that the noble Lord so graphically described.
I hope that when the Minister comes to reply she will not continue in the vein of her response to a supplementary question that I put to her; namely, telling us how marvellous tourism is. She rather followed on from the noble Lord, Lord McIntosh of Haringey, who often told us that tourism in this country was something of which we needed to be proud rather than critical. Tourism is a huge business. The noble Baroness, Lady O'Cathain, reminded us that it has a turnover of £64 billion and employs 2 million people. One would not connect the attitudes that one hears from those involved and those connected to tourism with a business of that size. There needs to be a new attitude. The role of government is to see that that happens as quickly as possible.
We can do nothing about the infrastructure in this country which badly hampers tourism. Sir Alastair Morton tells us that we cannot have a first-class railway system for 15 years. We can do nothing about that. Our railways will be far inferior to those in France for that period of time at least. The same goes for our roads.
However, there are certain things that we can improve. We should be playing on our strengths; for example, we have a great variety of attractions in this country. But, again, as other noble Lords have said, our targeting has been too narrow. There are too many tourists visiting too few attractions. I shudder every time that I look at the steps of Westminster Cathedral. Indeed, all the people visiting the cathedral are wearing out the steps. I should like to see fewer people visiting both the cathedral and the abbey and more people going to other cathedral cities to visit other attractions, such as the palace of the right reverend Prelate.

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I should also like to see much more collaboration between various organisations, like the National Trust and the Church. Indeed, as I have mentioned before, I should like to see more collaboration with the racing authorities. There are 59 racecourses in this country, many of which are situated in places of extraordinary beauty. In some places, not even the people in the local town know that a race meeting is taking place in the area. Such meetings could attract many tourists from abroad.
The problems associated with the tourism industry are manifold. The standards of service in this country are deplorable overall. I travelled up the Al to Scotland this weekend, my destination being Edinburgh. I must say that I was enormously surprised by the transformation that has taken place in that city over just a few years. It is extraordinary: the city was full of foreign tourists, and I was extremely pleased with what I saw. I noticed many signs in foreign languages. We need to use foreign languages much more for tourist guides and on websites.
The standard of food available in this country is extremely uneven. One takes pot luck. I dread any foreign family travelling up the Al and stopping at a service station to use the washrooms and lavatories. That is a dismal experience, but something that we could easily put right. We should compel motorway service stations to adopt and maintain a high standard of washroom facilities. What is available at present is inexcusable to us, let alone to tourists. All those issues need to be addressed.
I have only just been able to sketch a few of the problems in the tourism industry in the time available to me this evening. As the noble Lord said, tourism begins at home. Our seaside resorts are in a deplorable state. Whether we can get the regional involvement, as suggested by the noble Lord, Lord Smith of Leigh, is a matter that I hope the noble Baroness will be able to address.
As noble Lords have recognised, the situation is not good. That is a wonderful change in attitude. I hope that the Minister will follow in that vein. We recognise what is wrong; we recognise the potential; and we must do something about it. When we return in October, I trust that we shall have many debates on the subject through which we shall push the Government as much as we can, so that we can get this business recognised, and, ultimately, derive the profits from it that we deserve.
8.33 p.m.
Baroness Anelay of St Johns: My Lords, I add my congratulations to those expressed to the noble Lord, Lord Pendry, on his maiden speech. I look forward to hearing him continue to fight his corner for tourism. However, after hearing from my noble friend Lord Geddes about his previous prowess in the boxing ring, I think that I might perhaps keep out of his way on the odd occasion. I also thank the noble Lord, Lord Harrison, for giving us the opportunity to debate tourism tonight.
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Tourism is an industry that does not whinge: it gets on with its job. That job is being a powerful locomotive for the economy in the United Kingdom in many sectors. As noble Lords have pointed out, this year tourism has experienced the worst crisis since the Gulf War. However, it is making a fight back; it is planning for long-term recovery, but it has a long way to go yet. It is still losing £150 million a week, which, according to the ETC, could rise to £250 million during the peak season that is shortly to come upon us.
Like my noble friend Lady O'Cathain, I was astonished to see Tessa Jowell's article in the Observer on 8th July in which she referred to the fact that,
"there is more wrong with British tourism than the cold it caught in March".
As my noble friend said, some cold! With diagnostic skills like that, I must say that I am rather relieved that the Secretary of State is not my GP.
Visitor numbers slumped when pictures of funeral pyres hit the television screens and appeared in newspapers around the world. As my noble friend Lady Byford said, when the Government gave confused and confusing advice to people about the countryside being closed, the number of tourists visiting the UK simply died away.
When the Government announced additional funding for the British Tourist Authority and the ETC so that they could give clear information to all visitors, perhaps all was not quite as it seemed from the Government's press releases and their Statements to this House. We were told then that an additional £14.2 million had been given to the BTA and an additional £3.8 million—it is the word "additional" that I question—to the ETC. Yes, that is true in one sense; but I understand that the organisations have had to pay VAT at 17.5 per cent on those sums, which has gone straight back to the Treasury. Therefore, if the Government want transparency in pricing from the tourism industry, is it not reasonable to ask that they, too, should be transparent in their press releases?
Can the Minister put on the record tonight the legal basis on which VAT is charged on such grants? I appreciate that that may be a requirement of long standing and one that is absolutely proper in its charge. However, are the rules of our own making or are they subject to EU direction? Indeed, is there any way that we could change them at some stage? Are payments to the RDAs also subject to VAT in like circumstances? As these are questions of a technical nature, I have given the department advance notice of them. Can the Minister say what contingency plans the DCMS took to ensure that both the BTA and the ETC have been able to get hold of 100 per cent of that money in order to promote tourism in the UK?
My noble friend Lord Geddes referred to the effectiveness of the ETC in co-ordinating its campaign of information and delivering a clear message to the public that the countryside was open, ready and waiting to welcome them. However, its work was cut short prematurely when the funds ran out at the end of

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May. On 12th June the inquiry hot-line had to be closed down. Can the Minister say what further help the Government plan to give to those two bodies, and others, for the marketing of tourism to UK visitors? For example, will the Government be providing additional funding for the London Tourist Board to maximise London's gateway role during the recovery period?
Much mention has been made of the sterling work being carried out by the regional tourist boards. They are, indeed, doing their best and are accomplishing some very innovative work, especially in Cumbria and the south west. However, they are doing so with very limited resources and in competition with each other for the same pool of tourists.
My noble friend Lord Geddes made valuable points about the need for the management of information via the use of information technology. I wonder whether the Government might now reconsider the request that I made in my Unstarred Question last September; namely, that they should support the development of a "Visit England" portal under the aegis of the English Tourism Council.
As regards the regions and the work of the ETC, will the Government recognise that none of the needs of tourism in England can properly be met from an exclusively regional structure? Is the Minister aware of the concern in the industry that the regeneration programmes distributed through the RDAs can be patchy: they tend to prioritise objectives that have nothing to do with tourism needs? Indeed, for something to happen to help the local tourism industry, it often depends on whether or not the agency has a member like the noble Lord with really good experience of tourism. The Minister may have read the article in NEW START of 6th July which pointed out that in order to get money tourist boards are having to design applications to lit the programmes that the RDA runs rather than the needs of the sector.
There is now a window of opportunity for the new team of Ministers to review the role of the English Tourism Council and of the regional tourist boards. I hope that they will consider restoring to the ETC its marketing role. I trust that they will grasp that opportunity. My noble friend Lady O'Cathain very properly pointed out that this new team has the wider, golden opportunity now to reconsider the Government's strategic analysis of tourism policy. There is always a time for challenging the tourism industry to do better and for challenging its preconceptions; and there is a time for encouraging the industry. Now is the time for encouragement.
8.39 p.m.
The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone): My Lords, I should begin by congratulating my noble friend Lord Pendry on what was an excellent maiden speech. We very much look forward to hearing a great deal more from him over the months and years ahead.
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I also thank all the speakers in this short debate for the contributions they have made this evening. Tourism is always an important subject but never more so than in the light of the recent outbreak of foot and mouth disease. I am
particularly grateful to my noble friend Lord Harrison for introducing the debate as it gives me an opportunity to pay tribute—as he did—to all the tourism businesses, trade bodies and national tourist boards which have contributed and continue to contribute to the recovery effort following the outbreak of foot and mouth. Clearly, there is still a great deal more work to be done, as many speakers have pointed out and as I was told just last week when I visited Chester, which is the home town of my noble friend. I saw some of the interesting facilities there.
The only point on which I take issue with my noble friend is his suggestion—if I understood him aright—that we do not know how to take fun seriously. I certainly know how to take fun seriously and I think that I can speak for my colleagues in the department when I say that. My noble friend Lord Harrison referred to a recent press article by my honourable friend the Minister for Tourism. I agree with the comments of my honourable friend. Foot and mouth disease has been a terrible body blow. However, we shall regain our markets by competitive pricing and with a well motivated workforce which delivers further improvements in quality of the kind that the noble Viscount, Lord Falkland, mentioned. I refer to the comments of David Harris, the news editor of Caterer and Hotelkeeper. Much of what Dr Howells said rings true. I assure my noble friend that my honourable friend will continue to speak out, as he always does.
This Government are conscious of the importance of the tourism industry and we are anxious to support and foster it by offering strategic leadership. Our aim is to increase international competitiveness, champion the consumer, of course, and encourage investment in skills, products and facilities which are both sustainable and accessible. I accept what my noble friends Lord Pendry and Lord Smith of Leigh and the noble Baroness, Lady O'Cathain, have said; namely, that the industry makes a significant contribution to GDP. I also accept what the noble Lord, Lord Greaves, said about its importance to the rural economy. That point was also made by the noble Baroness, Lady Byford. It is particularly important in areas such as Cumbria. The noble Lord, Lord Greaves, is also right to say that what we must see is co-operation between all the different interests in these areas. That is terribly important if we are to reestablish the industry where it has had particular problems.
I believe that the Department for Culture, Media and Sport is the right department to deal with tourism even though tourism is not included in its title. That, of course, is a matter for the Prime Minister but we have to be careful not to become too long-winded in the titles we give to government departments. Through the DCMS tourism has strong links with all the sectors that attract visitors to this country: the arts, museums, galleries, the historic environment and historic buildings such as the one where the right reverend

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Prelate is in temporary residence. I refer also to the Commonwealth Games, to which the Government have just pledged £105 million worth of support for next year, and racing, which the noble Viscount mentioned.
Tourism in Britain is a major success story. I shall continue in the tradition of my noble friend Lord McIntosh of Haringey in arguing that, although I have already accepted that much more can be done to improve the services we offer. I ought to remind the House that Britain is fifth in the world in terms of earnings from visitors after the US, France, Italy and Spain. We should not be too dismissive about the French. I thought that the noble Viscount was a little unfair in taking my noble friend Lord Smith of Leigh to task about mentioning France. In the UK in the year 2000 overseas visitors made 25.2 million visits and spent £12.8 billion. The latest estimate is that £3.2 billion was spent on inbound travel with British carriers. Tourism, therefore, is very important to our economy and expenditure by overseas visitors last year was one of the highest on record.
Some of that has undoubtedly been put at risk by the foot and mouth outbreak. The number of visits to the UK was estimated to have fallen by 6 per cent in the three months from March to May 2001, compared with the same period last year. While we are in no way over-optimistic about what is happening to inbound tourism, the trends at present appear to be not quite as bad as the figures for April, when a downturn in the region of 10 to 20 per cent was forecast. Of course, any fall is disappointing. Other factors such as the poor weather conditions that we have experienced in many areas, and are experiencing this evening, may also have contributed to that downturn. However, we planned to address a loss of this nature when awarding the BTA an extra £14.2 million this year to stimulate a recovery, as many speakers have conceded. I am confident that the benefits of that initiative will soon begin to emerge, although I accept that in some parts of the country the picture, such as the one painted by the right reverend Prelate, is pretty grim.
The noble Baroness, Lady Anelay, asked about additional money for London. London, like other parts of the country, will benefit from the extra £14 million. There is no plan to provide particular additional money for London as against any other part of the country. My noble friend Lord Harrison asked whether we plan to give yet further resources to the BTA. We need to wait to see how it deploys the extra £14 million before we decide to add any more.
A number of noble Lords have mentioned how English tourism is marketed to British customers. It has been pointed out that visitors to rural areas in particular are often from other parts of Britain. It has also been said that the devolved administrations spend more per head of population on promoting tourism than we do in England. There is no doubt that bed and breakfast accommodation, hotels and tourist attractions need to be marketed and advertised primarily to the UK visitors who make up the greater part of their customers. What is at issue here is the
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most effective way of doing that and whether the Government should pay for it. Most English newspapers are read by English people but the Government do not pay for advertising such facilities to their customers. I hope that I can take the House with me in saying that by far the greatest part of the marketing and promotion of English tourism services is the responsibility of the companies selling those services. That point was made clearly and forcefully by my noble friend Lord Smith of Leigh. I agree with him.
Our policy since 1999 has been to confine government intervention to strategic guidance and leadership through the English Tourism Council. That work has started well. I do not entirely agree with my noble friend Lord Smith of Leigh who wondered whether we needed that body at all. It has risen to the exceptional challenge of the collapse in demand at the beginning of the year by organising and executing effective tactical marketing to get the British customer thinking again about holidays and short breaks in England.
As the noble Lord, Lord Geddes, and the noble Baroness, Lady Anelay, mentioned, the ETC was given £3.8 million in April to counter the effects of foot and mouth. As I am sure they are aware, £2 million of that sum was distributed to the English regional tourist boards which are also extremely important.
However, the action required in a time of great uncertainty is not necessarily right for a long-term plan. We need to look afresh at how the considerable funds spent on private advertising and public sector regional promotion can be better co-ordinated. That point has been made by a number of speakers. I entirely accept it. To that end my right honourable friend the Secretary of State has asked the industry to work with us to prepare a programme of action which will include the co-ordination of marketing. Perhaps I may say to the noble Baroness, Lady O'Cathain, that we are working already with the best brains in the industry. My right honourable friend the Secretary of State made that very clear in one of her first speeches in her new job. This is where the joined-up thinking, to which the noble Baroness, Lady Byford, referred, is needed.
Comparisons have also been made about the generosity with which public money is dispensed to the industry in different parts of the UK. But those differences have been with us for many years. I should like to assure noble Lords that, despite those differences, it appears that the tourism business in England has grown the fastest. That is something that we should remember. A large number of specific questions were put to me. I have the answers to many of them. Sadly, I am running out of time. I shall write to noble Lords and try to respond to the points they have made.
Britain has a great deal to offer its visitors from overseas and domestic holiday makers. There is enormous diversity which ranges from heritage and tradition to a vibrant youth culture. We must, of course, always think about young people. We have everything from museums and galleries, built heritage,

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stunning landscapes through to good restaurants (as well as some bad ones) and exciting shopping possibilities. I assure noble Lords that the Government are playing their part in promoting tourism by their commitment to cutting unnecessary red tape, ensuring that regulation provides proper
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protection, driving up quality and working to improve career possibilities as well as training for those who work in this important industry.
House adjourned at seven minutes before nine o'clock.