I beg to move,
That this House welcomes the proposals contained in the White Paper on Leasehold Reform in England and Wales (Command Paper No. 2916) as a basis for legislation.
The claim that the landowner can do what he likes with his land without a thought for the social consequences has disfigured English society for a long time. To a degree, it still does; it persists. Other social injustices stemming from the stark individualism of the nineteenth century have crumbled before the twentieth century Welfare State. Yet the remarkable fact is the tenacious success of the landed interest in retarding reform, despite the growing awareness of grave personal and social injustices. Just as Parliament is now facing the problem of betterment, so, in the case of the leasehold system, until now nothing has been done to remedy the fundamental basic unfairness which vitiates the law of leasehold.
As long ago as 1884, a Royal Commission considered enfranchisement as a possible reform. Even then, some members of the Commission, including Cardinal Manning, were in favour of enfranchisement and, in a supplementary Report, stated that
legislation favourable to the acquisition on equitable terms of the freehold interest on the part of the leaseholder would conduce greatly to the improvement of the dwellings of the people of this country".
Since then, a whole series of enfranchisement Bills has been introduced, but only one has found its way on to the Statute Book—the Places of Worship (Enfranchisement) Act, 1920. Although that Act, with its limited scope, proved itself effective, the basic problems of the occupying leaseholder of residential property were left to fester.
The post-war Government set up the Uthwatt Committee, which became the Jenkins Committee. The majority of the Committee recommended against enfranchisement, but, as The Times has said:
Few reports have become so rapidly obsolete as the Jenkins Report.
Indeed, the minority Report of my hon. Friend the Member for Oldham, West
(Mr. Hale) and Mr. Justice Ungoed Thomas has become more accepted as the basis for action to alter the legal relations of landowners and leaseholders so as to accord with social justice.
The last Government did little to further the property-owning democracy about which they talked so much. Home owners got little help from them. The Landlord and Tenant Act, 1954, has been a complete failure. It allowed the leaseholder to continue in occupation on certain conditions, but only under the terms of a statutory tenancy; and that only at a rack rent. At the same time, it achieved with remarkable ingenuity the result of drastically depreciating the value of the landlord's interest. That was quite pointless confiscation, because no one was satisfied—neither the landlord nor the leaseholder. To call that Act an ill-conceived failure would be gracious. Clearly, as has now been generally recognised, something more had to be done.
Faced with this responsibility, the Government are convinced that an effective solution will not be found unless we are prepared to tackle the fundamental injustice of the leasehold system which has been the subject of controversy for generations. The leasehold system has worked unfairly, to the advantage of the landlord and to the detriment of the leaseholder, because the landlord is entitled and has the impertinence to take, free of charge, the house and improvements created and maintained wholly by and at the expense of the succession of lessees.
Under the present law, at the end of the lease the landlord has the reversion not only to the land, which has always been his, but also to the house which has been built on his land, even though he has neither provided not maintained it. That is legal confiscation. The leaseholder is expropriated. He is left with nothing, even if the house which he or his predecessors have paid for still has many years of useful life.
Can the right hon. Gentleman explain how that amounts to confiscation in a case where the lessee has himself purchased the lease at a price which reflects the fact that it will come to an end at a certain date?
I would ask the hon. Gentleman to read the White Paper again. One has to take an historic view of both the freehold and leasehold interests.
That, then, is the system under which a million families, particularly in South Wales, the Midlands, the North-West and London have had to buy their homes. Often, it was the only way in which they could do so. In the nineteenth century, whole areas were developed as leasehold estates, and, holding a monopoly of the land, very often the landowners would allow no other form of development.
Many of the leases were bought it scarcity prices. Now, in growing numbers, they are drawing to an end, and families are faced with the prospect that their homes which they or their predecessors had paid for will revert to the landlord—a property company, often enough—or that, at best, they will be allowed to stay on as statutory tenants at a rent—not a ground rent, but a rack rent which recognises that the house is no longer theirs but the landlord's.
Before that, as likely as not, they will have been compelled to carry out extensive repairs under the leasehold covenants. At best, they have a roof over their heads, but that is all. They have no interest that they can sell, or pass on to their children, although, originally, they may have bought their home at virtually a freehold price.
What kind of social justice is that? Do not let us flatter ourselves that we are talking about a relic of the bad old Victorian days. A considerable number of houses now being built, particularly in Greater London, are being provided on the leasehold system at a price which is little, if anything, less than a freehold price and subject to ground rents which, very often, are quite substantial. In Greater London, about half of the total development of private housing estates is on leasehold terms.
It is undoubtedly true that some purchasers may prefer to buy on leasehold because it may be slightly cheaper. If that be so, I can see no reason why those who buy a lease should not have the opportunity later of buying the freehold on fair terms. But it oftens happens today, I am afraid, that landlords seek to exploit the housing shortage in order to make the maximum profit, and it is surely right to protect householders from such exploitation by giving them the right to purchase the freehold at a fair price.
Both those factors give importance and urgency to leasehold reform, but there is another circumstance which I believe emphasises the need for immediate action. Today, practically everyone—certainly everyone I know—buys his house on mortgage. Many who do so are likely to suffer from the leasehold system. With a good many years to run, a purchaser of a lease may pay virtually a freehold price. What happens when he reaches the end of the mortgage term? He then realises that he has bought a wasting asset. He will realise that after he has discharged the mortgage—
I cannot give way to the hon. Gentleman. He will have an opportunity later to make his speech.
As I was saying, after a purchaser reaches the end of the mortgage term he will realise that after he has discharged the mortgage he will have an interest which is far less valuable, and which he will find difficult to sell because a subsequent purchaser may not be able to get a mortgage. He will find himself caught, the victim of the leasehold system. This is the reality now facing many owner occupiers who bought their houses, particularly when they were scarce, after the war.
Who is on the side of the property-owning democracy? A radical solution to the leasehold system cannot be put off any longer. Our solution is simple, and one which is fair. I would not pretend for a moment that there are not complexities. For example, there is the complication of covenants and chains of leases. We have examined the difficulties, and I assure the House that they can be overcome. We are dealing with them in the Bill which we introduce shortly.
Our aim—and I am sure that there is general acceptance of this—is to afford the occupying leaseholder who is living in his own home greater security. This we do by ensuring that his house will not revert to the landowner when the existing lease expires.
The right hon. Gentleman has made a survey of the background to this question, and I think that what I am about to say may strengthen his case. Would not he confirm that in the case of Scottish law, the last Government changed leasehold into freehold? Does not that strengthen his case?
I gather that the hon. Gentleman is on my side. I hope that he will make this clear during the debate, because shortly—who knows?—people may want to know which side he is on.
What we must do is to ensure that the house does not revert to the landowner when the lease expires. What we provide is that, instead, the leaseholder will be entitled to an extension of his lease for 50 years from its present expiry date. But we are going further than that, and the leasehold problem will not be settled unless we are prepared to go further. Social justice requires that the leaseholder should have the opportunity of obtaining the basic fundamental security which the home owner prizes most, namely, the freehold, with all the liberty and responsibility which goes with it. We therefore provide that he is to have the right to enfranchise his lease, that is, to buy out the freehold and any intermediate interests which there may be.
Those, therefore, are the twin rights which we confer on occupying leaseholders—the right to enfranchise, and, for those who do not want enfranchisement, or find it financially inconvenient, the right to a 50-years' extension of the current lease.
Having decided to provide those two rights, we must ensure—and there is surely no dispute about this—that the terms on which the rights are exercised are fair to both parties, and for this purpose we follow the principle that the land belongs in equity to the landowner, and the house to the occupying leaseholder.
Let me explain how that principle works out in the case of each of those rights. As the house is his own, as we recognise that the leaseholder is the owner of the building—the bricks and mortar—the extension for 50 years will be at a ground rent, and not at a rack rent. Because we regard the occupying leaseholder as continuing to own the building, the landlord is entitled to no more than a fair ground rent, but for the extended use of his land the landlord is entitled to a modern ground rent. The original ground rent usually was fixed for the run of the lease and it would almost certainly be unfair to continue it unchanged. During the extension, therefore, the ground rent will be a modern ground rent, fairly reflecting the site value subject to its use by the leaseholder, and after 25 years it will be reviewed and, if necessary, brought up to date.
Now let us consider the price of enfranchisement. What price should the leaseholder pay? Ordinarily, one would turn to market prices, but we cannot do this. Present market prices reflect the existing legal rights of the parties, and we are changing these because we believe that they are inequitable to the leaseholder. This is especially true when the lease passes its half-way stage and the reversion of the bricks and mortar show more and more in the landlord's favour. The terms for enfranchisement, we believe, must accordingly be based not on present market values, but on the value of the land itself, including any development value which may be attaching to it.
I have exhaustively and carefully considered the different ways and means of calculating this fair price, and I am drawn to the conclusion that the fairest solution is the most obvious. As we say in the White Paper, where there is no development value
the fair price for enfranchisement will be the value of the freehold interest of the site, subject to the lease and its extension of 50 years.
This will ensure that the value of the buildings on reversion is completely excluded.
I have considered whether it would be useful to the House if I gave some figures by way of example, but I am anxious not to mislead hon. Members, and particularly their constituents. There is an almost infinite variety of circumstances. The unexpired duration of the lease, the size and value of the house, the character of the neighbourhood and, as I have mentioned, the possibility of development, are all things which may affect the figures, and they will vary from case to case. After all, we are dealing with a wide span, from the small Victorian house in a Welsh valley, where the vacant possession value may be no more than £1,000, to houses in London worth twenty times as much. Thus, unless I were to take an inordinate time giving a long list of cases, I would find it very difficult to take out examples which could be taken as representative.
Let me say just two things. In any particular case, if the actual circumstances are known, there is no great difficulty in seeing what the figure would probably be. Secondly, the price of enfranchisement can never be more than the present market price. It will either be less, or, in certain circumstances, the same, but it can never be more. It will never include anything for the reversionary value of the bricks and mortar, but at the same time, we have tried to get a formula which is fair and which will never expropriate from the landowner any of the reversionary value of the land.
I have mentioned development value. In most cases consideration of development value will not arise, and, of course, it is usually significant only towards the end of the lease. But if a site has development value which would give it a greater value than that of a site for the particular house—for example, if the house has large grounds which could be developed at the end of the lease to build more houses or flats—then our proposals recognise that the freeholder is entitled to that value, that is, the value at the time the leaseholder negotiates the purchase of the freehold. This may be quite a high figure, but if the leaseholder does not wish to pay it he has the alternative of a fresh lease for 50 years—in other words, security and an interest that can command a good price if he wants to sell the house.
I have mentioned qualified leaseholders, and I now want to deal with the qualifications we intend to impose. First, the leaseholder must hold a lease originally granted for more than 21 years at a ground rent. Secondly, the house must be within the rateable value limits adopted in the Rent Act of last year. Thirdly, the leaseholder must be occupying the house, or part of it, as his residence, and must have done so for at least the last five years as a ground-rent paying leaseholder.
These conditions will not have to be satisfied at the time the Bill becomes law. A leaseholder will be able to take advantage of the rights that we shall give him if he satisfies the conditions at any time in the future, whether the lease was originally granted before or after the legislation.
I have said that he will do so if he occupies the house or part of it. This is a question of fact. What we are concerned with is the use of the house as a residence by the leaseholder.
I want to remind the House of the assurance given by my right hon. Friend the Minister of Housing and Local Government on 8th December, 1964, under which any qualified leaseholders whose leases expired after that date and who, when the Bill becomes law, are still occupying the house on whatever terms, will be brought within the scheme.
We are not intending to extend our proposals to flats. I know that some of my hon. Friends would like them to be so extended, but most flats are let at a rack rent and would not, therefore, come within the scope of the Bill anyway. Those let on long leasehold terms at ground rents are comparatively few, and do not present at any rate an immediate problem, because most of the leases are of recent origin. In any case, there are many practical difficulties about providing for the enfranchisement of single flats in blocks of flats, which do not arise in the case of ordinary dwelling-houses.
Having dealt with the leaseholder, I want to turn to the rights of the freeholder. We think it right that during the term of the original lease the landlord should be able to resist a claim for enfranchisement or extension of the lease, on the ground that he needs the house for occupation by himself or his family when the lease expires, and that they would suffer greater hardship from their inability to recover possession than would the leaseholder from being unable to exercise his rights under the scheme. But this right must have regard to the new situation which the Bill will create. If the landlord succeeds he will have to buy the value of the bricks and mortar from the leaseholder when the lease expires.
In other words, he will have to compensate the leaseholder for his loss of the expectancy of the extension of his lease for a further 50 years. If the leaseholder does not enfranchise, and opts for the 50 years' extension instead, the landlord will have the right, at any time during the extension, to obtain possession if he can show that he genuinely intends to redevelop the property. Again, however, he will have to take account of the new situation, and compensate the leaseholder for the value of the leasehold interest as it then exists.
There are many well managed leasehold estates, where enlightened management makes a real contribution—incidentally, often giving those estates a distinctive character and sense of community. These I am most anxious to preserve. I do not share the view of some of my hon. Friends that all these things can be left to local authorities. However, it would not be fair to deny leaseholders on these estates the right to enfranchisement—although in most of these estates the right to extend which is already allowed makes this of little importance. But equally unfair would be the disruption of the benefits of comprehensive estate management. I am, therefore, providing that on these estates enfranchisement will be within an agreed scheme for continued estate management, and their distinctive character will be both improved and maintained.
Although we have, naturally, got to make special provision to meet special cases, subject to the qualifications that I have mentioned the provisions that I have outlined will apply to all residential long leases, not only against private landlords but against local authorities, the Land Commission and other public authorities. Leaseholders holding leases under the Crown Estate or the Duchies may expect to enjoy the same benefits as leaseholders holding from local authorities.
Yes, he has the right to enfranchisement. As I have said, we have to make special provision to meet special cases but subject to the special provisions that we have made a leaseholder holding from a local authority will have the right to enfranchise.
I have outlined the Government's proposals, and explained why they are necessary and have taken the form they have. I now want to say a word about repercussions. First, there is their effect upon the price of leasehold houses. Certainly, some will sell for more. Unavoidably, the leaseholder will have a greater asset to sell. This we must face. But is it such a bad thing? One of the grievances caused by the leasehold system is the rapid fall which occurs in the value of a leasehold house as the lease nears its end. Many of these leasehold areas are twilight areas, marred by almost wanton neglect because the occupiers have not sufficient incentive to maintain the houses in good condition. But we are concerned with the price not only of leasehold houses, but freehold houses. If there is large-scale enfranchisement, this will diminish the scarcity of freehold houses.
Again, there is a question of redevelopment. Admittedly, this is often carried out advantageously under the present leasehold system. Our proposals may make redevelopment more difficult and less profitable for freeholders on some estates. This we recognise, but we must also recognise that in the past redevelopment has often been carried out cheaply precisely because the landlord has enjoyed the free reversion of property which someone else has built and maintained.
To put right this grievance we must accept that redevelopment schemes of some private landlords may be prejudiced. But we must also recognise that the present leasehold system is not wholly advantageous to redevolpment and, further, that with the powers of comprehensive civic redevelopment it is becoming less and less significant. In any event, we are making special provision for local authorities and other public bodies who have acquired leasehold property in order to carry out redevelopment schemes for the community.
Our proposals are simple, direct and fair. I invite the House to welcome the White Paper and to reflect the opinion of the general public—there is no doubt about that. I invite the House to welcome its provisions as a measure of social justice and a reform long overdue, giving to hundreds of thousands of people the security and pride of ownership which is rightfully theirs.
One of the most significant features of British politics is the tenacious hold that the landed interests—even speculative interests—have had on the Tory Party. As I have often said, the Tories accepted land use planning, but only on the terms of the scandal of land prices. They allowed planning to create a rigged market, affording for the few outrageous windfall profits. They believe in a property-owning democracy, but only where the real power is with the property company and the land speculator, only where the property-owner is a law unto himself divorced from social responsibility.
This is why the Rent Act was an urgent priority last Session. This is why, today, I have announced the countryside policy to renew the work of Lord Silkin in strengthening our right to enjoy our countryside. Equally, this is why we are emancipating the householder who owns his house under the leasehold system, believing that his interest comes before that of the landowner and property company and that today the first priority is with the home and the family.
Before taking part in this debate, I must, in accordance with our custom, declare two, I think conflicting, interests. One is as the holder of a long lease on a ground rent and the other is as a member of the board of a company owning property.
The fact that we are having this debate today—today of all days, if the evening newspapers are to be believed—on this hastily-produced White Paper instead of trying to complete some of the Government's legislation before the Dissolution of Parliament, the fact that the Government, in the last few days of this Parliament, have given priority to this discussion over and above their own legislation, reveals, of course, the fact that this is today's electoral gimmick.
We have one about every day nowadays. This is a rather more elaborate one than that of the Minister of Housing and Local Government on Friday, which proceeded broadly on the this year, next year, sometime never basis. They have this in common—they were both issued at four o'clock on Friday afternoon, at a time calculated to cause hon. Members the maximum of inconvenience and both have no reality whatever in this Parliament.
It is interesting to see that the Government think that they can make use of the last day or two of this Parliament by a propaganda exercise on this old and admittedly immensely difficult subject. The unreality of this debate is underlined by the fact that, even had this Parliament been going on, it would have been a very long time indeed before the Minister would have introduced any legislation. The right hon. Gentleman has only just taken his Land Commission Bill into Standing Committee. There, we are teaching him what it means and, even if he had been an apter pupil, and more diligent in his attendance, this process would have taken a little time in view of the fact that that Measure has 88 Clauses and eight Schedules.
It is quite clear therefore, that there could have been no question of legislation on this matter for many months, as the history of the matter shows. The House may have noticed an illuminating change in the Motion before us. It had been on the Order Paper for some days when, on Saturday, the last moment possible,
there appeared at the end of it the words:
as a basis for legislation
words which qualify and weaken substantially the effect of the original wording. I assume that this withdrawal on the part of the right hon. Gentleman is a result of the widespread criticism to which the actual terms of the White Paper have been subjected as well as from a realisation that the broad social issues here are issues of such importance that they ought to be examined in a manner not wholly tied to a particular set of very hastily-produced proposals.
To discuss a great issue of this sort not only on the basis of but including the Government's tentative proposals in advance of the commitments which come from the introduction of a Government Bill, is, I think, a good practice in itself. It is one which, if I may say so with becoming modesty, I followed in 1958 as a precursor to the National Insurance Act, 1959, which right hon. Members opposite never cease to denounce and never show any signs of amending. It is, therefore, a good thing that we should discuss—not tied to these particular necessarily rather hurried proposals, in view of their origin—the much more important isues which the right hon. Gentleman touched on, but did not go into deeply.
I follow him in recalling the more recent history of this matter. I shall not take it back to 1884 or, as he did in the White Paper on the Land Commission to the fifteenth century. Hon. Members opposite have not always had great enthusiasm for this matter. The House will recall the discussion some years ago when the present Parliamentary Secretary to the Ministry of Housing and Local Government said:
Some of my hon. Friends appear to have an emotional fixation about the discarded Liberal Party policy of enfranchisement."—[OFFICIAL REPORT, 30th April, 1953; Vol. 514, cc. 2453–4.]
I can give the hon. Gentleman the argument, but I cannot give him the capacity to understand it.
No less a person than Lord Silkin, who probably knows more about these matters than most people, said a month or two after—in December, 1964—that there was no urgency and that the matter needed a great deal more consideration. On 8th December, however, the Minister of Housing and Local Government, then in charge of the matter, made a statement in which he said—here, I think, the Parliamentary Secretary was a little premature—that he intended to bring forward a Bill on this issue last Session, and referred to the priority which the Government were giving it in their legislative programme. But last summer the Prime Minister transferred the issue from the Minister of Housing and Local Government to the Minister of Land and Natural Resources, no doubt on the argument that it had better be placed in more dynamic hands.
Still we have no Bill. We have only this White Paper, which comes before us in the dying days of this Parliament.
The main feature of the White Paper, as the right hon. Gentleman fairly said, is this great new principle, which none of the expert bodies to which he referred paid attention to or suggested, but which the seer of Gwydyr House has now produced. It appears in paragraph 4 and is the principle
…that the land belongs in equity to the landowner and the house belongs in equity to the occupying leaseholder.
There is a somewhat Freudian touch in the repetition in that sentence of the word "equity".
This principle has been discovered in the last moments of this Parliament so that it can glow in the sunset and will not have to be submitted to the sobering light of the precise language of legislation. It is completely unrealistic. It is a matter of infinite difficulty to separate a house from the land it stands on. English law for a thousand years has been based on that.
The principle raises tremendous practical problems, except, perhaps, in the case of caravans, and even with these practical problems arise. How does one value a house separately from the land? Precisely the same cottage will have a wholly different value if it is in Belgravia from the value if it is in Rotherhithe. On the other hand, land will have a different value if it supports the Hilton Hotel from its value if if supports a drinking trough.
I have not the experience of the Hilton Hotel that the hon. Gentleman has. I do not live at these literally high levels.
If this great new original principle which the right hon. Gentleman has brought us from Gwydyr House is right, why is it not to be universally applied? If it is a glimpse of the truth, seen by the right hon. Gentleman but denied to the dimmer eyes of Lord Jenkins and others who investigated the matter, why stop at £400 a year in London and £200 a year outside? These are Rent Act figures; but in the Act we were dealing with a totally different matter.
Rent control is an expedient designed to deal with shortage and although we may differ as to whether the line has been drawn at the right place, none the less we are generally agreed that one should not carry control beyond the levels of value at which shortage exists. That has nothing to do with the application of what one might call the "Willey principle of equity".
Why, if this new principle is right, does the action of the Inland Revenue valuer in assessing the rateable value of a house at more than £200 a year outside London and more than £400 a year in London take it completely out of the principle?
Is the right hon. Gentleman making a plea that all property which consists of long leaseholds should be subject to this right, or is he saying that none of it should be?
I shall be expounding our own policy at a later stage in my speech. At the moment, I am seeking to test the right hon. Gentleman's principle and all I am saying—and I hope that the hon. and learned Gentleman will follow me—is that this matter is not like rent control, which is an expedient designed to deal with a shortage which we hope will be temporary. It is a basic principle of equity—a principle which the right hon. Gentleman referred to as being necessary completely to reform the leasehold system.
I am asking why, if this is such a principle, it has to stop at the figures I have quoted. Surely the hon. and learned Gentleman can draw the deduction that an immutable principle which mutates at rateable value of £400 a year is a principle of doubtful validity.
If the hon. and learned Gentleman will give me the pleasure of no further interruptions, we shall reach more quickly the point when I shall discuss our own policy. I seek his co-operation in this respect.
I ask why, if the principle is right, it is not to be applied to flats? Of course, the right hon. Gentleman is right in saying that there are very great practical difficulties, but such difficulties are merely an extreme illustration of the difficulty of separating a house from the land it stands on. But why, if this is such a great principle, is it not also to apply to 50 years' hence—to the leaseholder who takes the option of a further 50 years? If I read paragraph 9 rightly, there is no question, at the end of that period, of, in equity, the house belonging to the leaseholder and the land belonging to the freeholder. Fifty years' hence, the principle is at an end.
It is no use the right hon. Gentleman saying that by then the houses will be falling down. Some will have gone or be ready to go, but many will not. There are very many perfectly satisfactory houses which will last 150 years or more. I hope that the hon. and learned Member for Dulwich (Mr. S. C. Silkin) will follow that as an illustration of the doubtful validity of the principle that apparently it cannot be applied either above certain rateable values or to flats or after 50 years.
But the point that will arouse most criticism is that of the financial terms offered for enfranchisement. It is all very well for the right hon. Gentleman to talk of the expropriation of tenants. That is a prejudicial term which did not clarify his argument. There is no question, however, that these proposals as they stand amount to a considerable major expropriation of freeholders. They flow, as the right hon. Gentleman honestly said, from his curious principle of "equity". This destroys the existing market value which otherwise the right hon. Gentleman, as he said, would have relied on.
But, again, the fact that these proposals produce such startling results perhaps casts a doubt even in the right hon. Gentleman's mind about the soundness of the principle. In many cases, compensation will be derisory and in all cases what is involved is a forceable transfer of what, in many cases, may be valuable assets from the reversioner to the leaseholder, and there is nothing to prevent the leaseholder who has availed himself of this opportunity immediately selling the property at a profit. In this way, although I am sure that he does not mean to, the right hon. Gentleman may well introduce Rachmanism in reverse.
Paragraph (12) of the White Paper is not a miracle of clarity, as the right hon. Gentleman admits. I hope that before we come to any Bill these points may be cleared up. The only freeholder likely to get market value for the property under this system is the slum landlord, because only in such cases is a house of so little worth that only the site has value. These are paradoxical aspects of the policy.
I have been given by professional people another example, which is not untypical. It concerns a house worth freehold about £8,000, for which the modern ground rent might be £50 a year. That ground rent capitalised is probably about £1,250. What the right hon. Gentleman would be doing would be to transfer £6,750 from the reversioner to the leaseholder.
There are other cases I have looked at where the real value of compensation would he about one-third the present market value. How does that square with what was said on behalf of the Labour Party by the Minister of Labour in a television broadcast at the last General Election? I think that all of us know the Minister of Labour as a man of honour who would not say anything that he did not believe to be true. He said:
We shall give them the chance to buy it at proper and decent rates. We shall ask them to pay, of course the proper value of it.
In the cases I have quoted, can any hon. Member claim the fulfilment of what the Minister of Labour said, I am sure with complete sincerity? I hope that the House has noted the very significant "of course". A society which takes people's property without proper compensation because they happen to be members of an unpopular minority is very well on the way to tyranny.
I have been reproached by the hon. and learned Member for Dulwich (Mr. S. C. Silkin) for taking so long. Perhaps I might get on.
The scales are very much weighted against the freeholder in other respects. Take the case of the freeholder who wants to occupy his house at the end of a long lease. Today, and indeed until any legislation comes forward, he has the right to occupy that house at the end of the lease, and many people have laid their plans on that basis. If he is to occupy what is today his own house, he will be have to pay his former leaseholder the equivalent of a further 50 years' lease, or what the White Paper calls the bricks and mortar value.
This is not the case which concerns the great estates and the great landlords to whom the right hon. Gentleman referred. They are not the people who want to occupy one of their houses. This is the case with the smaller man who has perhaps bought the reversion to a freehold house because he wants to occupy it in his old age, and he will find if the right hon. Gentleman's plans are put into effect, that he will have to buy that house over again if he is to occupy it as an owner-occupier.
On the other hand, the provisions with respect to redevelopment are highly material to the great estates. I was glad to hear the right hon. Gentleman, though it appeared to irritate one or two of his hon. Friends, pay a very fair tribute to the way in which some of the great estates have been administered. I am very glad that the right hon. Gentleman has given recognition to that fact in paragraph 22 of the White Paper. But does he realise what difficulties he is putting in the way of redevelopment in respect of them?
The House will probably know that a great number of estates proceed with plans of redevelopment many years forward, based on the dates when the leases are due to fall in. Under these proposals, in the case of houses with a rateable value of under £400 a year, in London, if the estate wishes to redevelop it will have first of all to grant the outgoing leaseholder a 50 year lease and then buy it back from him. Must this not have the effect of making the price of redevelopment on top of present building costs prohibitive, and is not this the recipe for the creation of slums?
The alternative offered by the White Paper is for the leaseholder to obtain a lease of 50 years with no premium, but at what the right hon. Gentleman calls a modern ground rent. There again, he gets a valuable asset which he could easily, if he wanted to, sell the next day. It would not be impossible, as only five years' occupancy is required, for someone in the course of his life to acquire the back end of several leases—the right hon. Gentleman said that the market for them would be strong—and take advantage of this several times and sell the new leases.
It is rather ironical that the only step which the Government are taking in this Parliament to help home ownership is by robbing somebody else. The right way to help home ownership is by subsidy. The right way is to provide for a fair price to be paid to the owner, for the State to help by way of the cheaper mortgages to which right hon. Gentlemen opposite have pledged themselves and by way of the grant towards the deposit to which my right hon. Friend the Leader of the Opposition referred at Hammersmith last week. To help the leaseholder to buy with State aid is the right way to proceed towards home ownership.
It is all very well for the right hon. Gentleman to take this line in the treatment of landlords, that they are unpopular, that they are rich exploiters and that they deserve what they get or do not get. Indeed, one or two hon. Members opposite applauded him for these views. But has he analysed who these ground landlords are? There are, of course, the great estates which the right hon. Gentleman praised, conscientiously managed for a modest return—such as the estates connected with the names of Westminster, Cadogan and Portman, which have done a great deal to beautify and properly plan the city in which we now are.
But there are many other landlords. There are the Church Commissioners, whose property is admirably administered at present, the proceeds of whose operations go to help make up the stipends of our underpaid clergymen. There are charitable and educational trusts and, as the Economist last week reminded us, there are the pension funds the benefits from which go to people no less deserving than the long leaseholders themselves.
It has also been the practice—perhaps the right hon. Gentleman is not aware—for people within a few years of retirement to buy the reversion to a lease because they know that in a few years' time their income will be reduced. They want possession of a house to live in or to rent at a full rent. This is a reasonable step to take and many people have taken it. This apparently, too, is to be frustrated and hon. Members opposite apparently do not mind very much.
There is another injustice. For some years Estate Duty has been assessed on the basis that the value of the estate includes the reversion of the houses; and Estate Duty has been paid on this basis. This illustrates the retrospection of the right hon. Gentleman's proposal. If the right hon. Gentleman is to do this kind of thing, ought not the Inland Revenue to reopen those cases and refund the Estate Duty paid on a basis which now turns out to be wholly falsified? If we are to proceed with justice, let us recognise that this is the kind of issue to which proposals of this kind give rise.
I want to put some questions to the Secretary of State for Wales, who, I understand, stand, is to reply to the debate. I recall with pleasure the debates in which he and I used to take part some years ago on other matters. First, if a house which is subject to a long lease has a good deal of land with it, is all the land to be available for enfranchisement or for a 50-year lease? The garden will obviously be so, but what about farm lands? What about open fields ready for development? Is the leaseholder to have the right to take all this, or only the house and garden in which he has lived?
Then there is the point to which my hon. Friend the Member for Crosby (Mr. Graham Page) referred in an interruption, and to which he was not able to get a clear response. What about the position of a local authority? Some local authorities are the reversioners of long leases. The White Paper suggests that the leaseholder can enfranchise against them—this is in paragraph 15—but cannot take from them the development value. What does that mean in practice? Does it mean that the person who has enfranchised, who is now the freeholder, will not be able to develop? What happens if the house falls down and he wants to rebuild it? What happens if somebody else puts a compulsory purchase order on—if, for instance, the Land Commission puts a compulsory purchase on? The land will have been enfranchised into the hands of the leaseholder, but the development rights will be in the hands of another person.
What happens if the Land Commission's land itself is to be enfranchised? According to paragraph 16(a) it enfranchises on Crownhold terms. What does that mean? As I understand Crownhold, the Crownhold so-called freeholder can lose his land if he has to rebuild his house or if he is guilty of any breaches of the covenants or conditions under which he holds. To call that enfranchisement is simply a misuse of language. This is not freehold as anyone in this House or outside it understands it. To talk of enfranchising against the Land Commission in these terms is a contradiction in terms.
Paragraph 22 of the White Paper refers to well-managed estates, to which the right hon. Gentleman referred. His recognition of their quality is admirable, but what does he propose to do to maintain their good quality management? Are they to do this for love, or are they to be paid for their services? If the latter, how? Once a property has been enfranchised, the administration of big estates of this kind is expensive, as the right hon. Gentleman knows. I think that all of us, including the right hon. Gentleman, admit the advantage of the good management of these estates, but how is that to be maintained once the property has been enfranchised, and what will be the financial terms? I shall be grateful if the Secretary of State for Wales would answer these questions.
The fact that the proposals in the White Paper have been conceived in a highly partisan spirit and a state of some confusion does not and should not blind us to the fact that there is an important problem here. As I said at the beginning, we have been giving a good deal of thought to this matter and we are very grateful to the Government for, whether intentionally or otherwise, giving us an opportunity this afternoon to expound our views.
The leasehold system—and here I differ from the Minister—has served this country very well in the past. The development in London, to which I referred earlier, reflects great credit, but it is a fact of which we are all aware that there are certain parts of the country where it has been for some time now causing very special problems, notably South Wales, with which the Secretary of State for Wales is immensely familiar. Because there, though perhaps in few other parts of the country, there is lacking that real freedom of choice to which my hon. and right hon. Friends attach the greatest importance over the housing sphere as a whole.
The overwhelming majority of property in South Wales is entirely leasehold and it may well be true, though I thought that the right hon. Gentleman was wrong in saying it as a generality, that in those places there is not much difference between leasehold and freehold prices. Apart from that special problem, there is elsewhere the rising demand for home ownership. This is an immensely healthy social factor and development. The desire of the citizen to own his own house and to be beholden to no landlord or local authority, however well-disposed either may be, is a very sound social development, and it is a source of pride to me and my hon. and right hon. Friends that this grew very considerably under the late Conservative Government.
We have taken some part in adapting the law of leasehold to the new and emerging circumstances to which I have referred. The Minister referred in rather disparaging terms to the Landlord and Tenant Act, 1954, but that gave what I think is most of all needed in this context—security of tenure—to a considerable number of people whose real and understandable fear was of being turned out of their homes. But this was limited to properties within the old rent control limits. This distinction is now becoming obsolete, and more and more so because under the Rent Act passed last year the Minister of Housing has power to take out of control and put into regulation such property as he thinks right to do. It is clear, therefore, that the area of control, as opposed to regulation, is likely to diminish and, therefore, the safeguard at the bottom of the scale, given and much appreciated by those affected under the 1954 Act, is now, as a result of these changes, diminishing in importance.
We therefore think it right to build on these past policies of ours, and to go further. We think that the ground leaseholder occupying residential property towards the end of his lease, where the landlord has no definite plans to redevelop or to occupy himself, should be given the option either of a lease at a rent fixed by the courts or to buy the property at a fair market price. We do not disagree with the White Paper, which itself follows our own 1954 Act, in limiting this to leases originally in excess of 21 years We would equally follow the White Paper by laying down that the property must have been occupied by the person concerned as his home for five years.
But—and here I promised the hon. and learned Member for Dulwich an answer and I come back to him—as this would be at fair prices and rents, fair to both sides, there seems to us to be no reason whatever to limit the scope of the proposal, as the White Paper does, to Rent Act figures. If this is fair, as we think it to be, we see no reason to limit it arbitrarily to certain figures.
Will the right hon. Gentleman elucidate two points? He has said repeatedly "fair rent". Is he talking about a rack rent or a ground rent? He talks about fair prices. Is he including or excluding the value of the bricks and mortar?
That is a perfectly fair question to which I will give a perfectly fail answer. We are certainly not excluding the bricks and mortar. As for the rents, we shall follow the 1954 precedent and have them fixed by the county courts at what the county court judge thinks a fair price. This is a principle of which we have experience and which has worked with a considerable degree of general satisfaction.
There are, however, further points and here we go beyond what the right hon. Gentleman has considered. Where under our proposals the leaseholder exercises his option to purchase the freehold, it is important to protect the interests of the neighbours on the estate where they remain as leaseholders, taking the other option or purchase. We therefore think it necessary to adopt the recommendations of the Wilferforce Committee to provide that in those circumstances positive covenants shall run with the land. We think, also, that there is very much to be said for the recommendation of the Jenkins Committee that leasehold redemption policies should be allowable for tax. This is the way in which the State can help the purchaser to purchase the leasehold, if he wishes, without being unfair to the landlord.
The White Paper is intended in present circumstances as an election manoeuvre, though I very much doubt whether it has served its turn. It is designed, of course, to show my hon. and right hon. Friends as defenders of wicked and oppressive landlords, and all the claptrap repeated on this subject for the last 60 years. In fact, we have shown that we have followed consistently our party's developing policies in respect of leasehold reform, adjusting them to the needs of today in terms which are fair to both sides.
I think that hon. Members opposite very much under-rate the sense of justice of the ordinary voter if they think that they can buy his support by doing something which will benefit him by robbing somebody else. I do not think that our fellow countrymen like that kind of thing. The right way to tackle this problem is to help home-ownership by direct public action, to help the home owner by the proposals on deposits and the help through the building societies to which my right hon. Friend the Leader of the Opposition referred the other day.
This debate, not the proposals in the White Paper, but the debate itself—which I hope will be very wide, may well provide the basis for legislation of a much better, more sensible and perhaps more generally agreed character. It will certainly shorten the time that will be needed when legislation comes forward, and as it will be my hon. and right hon. Friends who will be introducing the Bill it would be ungracious on my part if I were not to express to the Government our thanks for making arrangements today, however inadvertently, which will shorten our task.
The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) gave to this side of the House at least the impression that he is the spokesman for the landowners. He pushed out a number of red herrings and talked about the impossibility of doing this, that, and the other, winding up with some very unclear proposals from his own party on this leasehold problem.
There is nothing like the leasehold problem in my part of Wales for putting a little spring into the system. Once the subject is raised, the debate can go on day and night without cease, instance after instance being given of hardship and injustice arising from our leasehold law.
It should be stated, and I freely do so, that many freeholders or landowners have dealt very reasonably with the sale of land to leaseholders, usually on the basis of 25 or 30 times the annual ground rent. In one way, from that point of view alone, we owe it to them to ensure that present freeholders are required to sell to their leaseholders on a reasonable basis, and that reasonable basis, in my view, is stated in the White Paper. At last, owner-occupying leaseholders are within reach of being set free. After three-quarters of a century of agitation, much of it in angry silence, the leaseholder will be able to look upon his house as his own in a truly legal sense. I give my warmest congratulations to the Minister of Land and Natural Resources and to the Government for introducing this reform and bringing it within practical possibility.
The White Paper tells us that the Bill, when brought in, will be based on the principle that the land on which the leaseholder's house is built belongs to the landowner and the house to the occupying leaseholder. The right hon. Gentleman says that it is impossible to separate these two interests, according to his idea of equity. But, in fact, it will be a new starting point, leaving behind the harsh and unjust present law which gave to the freeholder far too much scope for exploitation.
In today's newspapers, I have read a criticism of the White Paper proposals by a joint committee of the Royal Institution of Chartered Surveyors, the Chartered Land Agents' Society and the Chartered Auctioneers' and Estate Agents' Institute. It would have been wonderful if support for the Government's proposals for leasehold reform had come from such a quarter. There is a saying which is applicable here, that no one is so blind as he who refuses to see. In its criticism, the joint committee shows no evidence whatever of being aware of the significance and nature of society and one's part in it.
It passes my comprehension why the simple principle was not generally accepted years ago. I can remember, 50 years ago, election posters in blue print in my area advertising that the Conservative candidate had a slogan on leasehold enfranchisement. He may have been advocating it, but I cannot think that the Conservative Party itself was advocating it. Certainly, Conservative Governments over 30 years have done the merest minimum to deal with these unjust laws. For generations, leaseholders have known that it was harsh and unjust for the law to allow the ownership of the house to revert to the freeholder at the end of the lease without his having paid a farthing for it. Of course, this gave rise to deep and bitter anger, and I am glad that the Labour Government have decided that this unfair law shall cease to apply.
I welcome the provision that, if a qualified leaseholder does not want, or does not find it financially convenient, to exercise the right of enfranchisement, he will be entitled to an extension of his existing lease for a period of 50 years. These proposals of the Government will hearten thousands of leaseholders now threatened with the forfeiture of their houses built at their own or their predecessors' expense. It was the lessees who bore the cost of improvements and maintenance.
So often it is said that an Englishman's home is his castle, and most people like to feel secure in their own houses. But there are many who have bought their own houses who do not have this security. They are people whose homes are their ground landlords' castles in reality. When the lease ends, the leaseholder finds himself a tenant in his own house, having to pay to the ground landlord a rent similar to that charged for like houses. Having to pay a rent to an outsider for a house which a man or his parents bought and paid for goes against the grain of elementary justice as we understand it. The leasehold law was all on the side of the freeholder and was made when the big landlords held the reins of government and held sway, as they still do, in the party opposite. Things have changed for the better, but only when the proposed Bill is on the Statute Book will it really be true that the leaseholder has security in his own house.
It was vital that the nation should have a land policy. I contend that the new Bill for the benefit of leasehold owner-occupiers along with the Land Commission Bill go very far to provide such a policy. We have been reminded that Parliament passed an Act entitled the Places of Worship (Enfranchisement) Act, 1920, which gave trustees of church property the right to acquire compulsorily the freehold of their buildings and manses on reasonable terms, and that Act stipulated that, in the event of dispute, the county court judge should be the arbiter. Surely, the sanctity of a home equals the sanctity of a place of worship or a manse and has equal right to protection. An Englishman's home is worthy of the same consideration as an Irishman's.
Fair-minded people have always resented the law that, at the expiration of a lease, the freeholder had the right to claim not only the property as originally built, but all the improvements which may have been made to increase its value and convenience to the lessee. More than that, the freeholder has been able to enforce considerable expenditure on the lessee under what is called a schedule of dilapidations. We have known of the practice of leaseholders capitalising on the reversion of property by presenting large and unjust schedules of dilapidations using them in the main as a lever to extort from leaseholders.
Many leaseholders have suffered such inflictions. They are now promised by the Government a new deal which will give protection to the occupier-leaseholder. It is full time that we did this. I hope that the Bill will be a deeper red when it emerges finally from its Committee stage.
I shall make what I suppose will be regarded as a somewhat revolutionary suggestion, that we should look at the leasehold system as it is in fact and in practice rather than as described in the White Paper. These are two very different things. They are so different that I cannot remember reading a publication of any Government as misleading as this one.
Whatever the disadvantages and whatever the inequities that the Government claim to see in this system, completely to deny—indeed, wholly to ignore, as the Government do in the White Paper—any advantages and the many outstanding and valued developments which the system has made possible is to cast aside from the outset even the appearance of attempting to look at the problem with any sense of equity or justice.
I will give way a little later perhaps.
Notably, it is the only system by which opportunity for comprehensive redevelopment when the time comes can be secured, save only by the intervention of the local authorities and the use of compulsory powers of acquisition. That alternative, with all the heartaches and problems that it gives rise to, is not self-evident as in any way superior.
Secondly, the leasehold system has enormously facilitated the imposition and enforcement of covenants which have been mutually beneficial not only as between landlord and lessee but as between one lessee and another.
I will give way later.
At least, in paragraph 22 of the White Paper the Government admit that these covenants have been of value, although I must admit that I think that in the paragraph they appear to be looking at the system almost solely from the point of view of the lessee with little regard to the point of view of the landlord. I hope that, as my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) suggested, the Secretary of State for Wales will, when he winds up, expand on his ideas, to which paragraph 22 refers, and tell us a little more how one will preserve the good management to which the paragraph refers while depriving the landowner wholly of any control over redevelopment.
Furthermore, the leasehold system is one to which, at any rate in London, we owe some of the finest town planning in the world, not least the London squares, and many of the terraces of outstanding architectural merit, including those of Nash. Very few of those would have been preserved to posterity if it had not been for the leasehold system. To compile a White Paper entitled "Leasehold Reform" without even a mention of these matters, and without even an attempt to assess the problems that will arise as a result of the demise of the system, is as irresponsible as it is inequitable.
What is much more important, and, no doubt, more significant in the context in which we are discussing the White Paper, is that not a single word has been included on the main problem which, throughout numerous investigations, has baffled even the most ardent reformers who have been prepared to look at this matter with any sense of equity and justice.
I refer to the problem that arises from the fact that throughout these long leases —we are dealing primarily with the 99-year lease; the lease that is falling in, as we are told in paragraph 4, having been created about a century ago—both the leasehold interest and the freehold reversion have been freely and perfectly legitimately bought and sold, and the reversions have been sought as investments by investors of every conceivable kind—charitable trusts, private trusts, private persons, and others. I also include the speculator, for I do not believe that over the history of this country the speculator has done anything but good.
In the case of the long lease, it must be very much the exception rather than the rule—though I very much doubt whether there are any statistics available, even to the Government—to find that both the freehold and the leasehold interest remain with the original families. In the great majority of cases, at some intervening stage leases have been sold or reversions have been sold, and in many cases both. In each case the price will inevitably have reflected those terms which are fundamental to the system.
I refer, of course, to the fact that the purchaser of the reversion will have bought the right to possession of the buildings as well as the land as at the date of termination of the lease, and the purchaser of the leasehold will have bought the right to occupy up to that date and no further. It cannot be too often repeated, in the light of what is omitted from the White Paper and of all that is said about fairness, that the price will have been fixed accordingly.
One of the peculiarities of the system is that over the years there has tended to develop two sets of values for the freehold reversion. This is partly, no doubt, the result of increasing pressure for housing, particularly housing for owner-occupation with vacant possession, and partly because inflation has reduced the value of ground rents in very many cases to little more than nominal payments bearing no relation whatever to the annual value of the land.
The result has been to lower the price that a purchaser is prepared to pay for a reversion to less than the difference between the value of the house freehold and the value of the leasehold interest. In other words, where an occupying lessee has had the opportunity to purchase the freehold, he has been able to do so at a price which, when added to that which he gave originally for the leasehold interest, is substantially less than the market value of the total interest that he has thereby acquired.
In other words, he has a freehold house at much less than the full market value. Consequently, owners of reversions who have been willing to split their freeholds, thereby defeating the opportunities for redevelopment when the time comes, when offering reversions to occupying tenants have very frequently made an offer at between the value in the open market and the higher value to the sitting or occupying tenant.
I have listened to my hon. Friend's argument with great interest, but is he aware that in some areas—for example, South Wales and the City of Cardiff—a person buying a house with more than 40 years of the lease to run would have to pay exactly the same price for that leasehold house as for a freehold house? Does not that to some extent lessen the validity of my hon. Friend's argument?
I do not think so, but I shall refer to that in a moment. When I was Parliamentary Secretary to the Ministry of Housing and Local Government my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), who was then Minister, invited hon. Members and any others concerned with hardship with regard to leasehold interests to let him have particulars. We carried out a very large number of investigations indeed both as a result of cases put forward by hon. Members, and independently through very large estate agents in London.
We were able to find no evidence whatever that the prices which landlords were asking for the reversion were such that they would not leave the leaseholder, if he bought at that price, a profit, in the sense that the value of what he had—the freehold house—would not have been greater than the total price he paid. If the words "fair and equitable", which are used so freely throughout the White Paper, are to mean anything at all, the only terms on which enfranchisement could be contemplated would be at a price somewhere between the open market value and the value to the occupying lessee.
We have been talking exclusively in terms of the long lease—the 99-year lease is what most people have had in mind. The Minister has made much of the point that the houses subject to these long leases were originally built by the lessees or their predecessors in title. This, I would suggest is a generalisation wholly without foundation. One has only to look at the great blocks of leasehold property in London, nearly all of which is in terraces, to realise the unlikelihood of any single individual ever building one of these houses. However that may be, what is abundantly certain is that nobody would build a house on a 21-year lease or any lease under about 60 years as a minimum. For the right hon. Gentleman to introduce a Bill which applies to every lease over 21 years on that argument is the sheerest hypocrisy and electioneering.
There can be nothing whatever to be said for the proposal in the White Paper for a complete expropriation, as my right hon. Friend the Member for Kingston-upon-Thames so rightly said, of a large part—probably the larger part in many cases—of the landlord's interest, which the White Paper proposes, in order to make a present to leaseholders of the most valuable portion of the landlord's reversion. The only explanation of that is that this is the most blatant attempt to bribe the electorate. If this is a prelude to the General Election—and it is certain that the Government will be in difficulties in making a convincing explanation for the programme for the last few weeks if it is not—the Government must indeed rate their chances very low, if they have to sink to this. They rate also the morality of the British people very much lower than I do. [Interruption.] What is abundantly certain—hon. Members opposite are emphasising my point at the moment—is that they are setting an example in cynical expediency which could not be in greater contrast to the moral lead that the country today, perhaps as never before, so badly needs.
Of course, I concede that it is true in some cases that either leaseholds or reversions of long leases, or both, have been continuously held by the same family throughout. But even in these cases the argument is no different. The families owning the reversion have quite deliberately refrained from cashing in on the value of the reversion. They have put up over the years with ground rents which have often become nothing more than nominal as a result of inflation, and more often than not they have done so for good reasons of estate management which have proved of lasting benefit to their leaseholders and the general public.
By definition here we are dealing with those who have inherited, as opposed to those who have purchased. On both sides of the transaction this is the case. In some cases they will have inherited under a single demise, but much more often over a period of 99 years they will have inherited under a number of demises. I suppose the Government will tell us that it is just and equitable that those who inherited the freehold should have paid death duties on an appreciating asset now to be depreciated, and that those who have inherited the lease should have paid death duties on a depreciating asset now to be enormously enhanced.
I do not deny that there may in certain circumstances be hardship under the leasehold system.
This arises not from the nature of the leasehold system, but from the fact that there is a housing shortage in certain areas and at the end of a lease these people are faced with the impossibility, or at any rate the great dfficulty, of finding alternative homes in the same neighbourhood. Here, the answer is the quite simple one which my right hon. Friend outlined perfectly clearly. I say that despite the comments of the hon. Member for Pontypridd (Mr. Arthur Pearson).
I suggest that any form of enfranchisement must be made subject not only to the greater needs of the landowner to occupy a house as his home, but also to the needs to redevelop where this is clearly in the public interest. If we do not do this then we rule out, and the provisions of the White Paper rule out, the participation of private enterprise in the renewal of outworn urban areas.
Whatever one's doctrine on these matters, it is abundantly clear to anyone who travels up and down the country, and who takes any interest at all in housing problems, that, if we are to get decayed areas renewed in a reasonable time, we shall want all the resources and effort we can get. It is absolute madness to cut out the contribution of the private developer by putting impossible financial obstacles in his way as the White Paper does.
I maintain that this is a thoroughly immoral document. If it is the Government's concept of social justice, then those two words are mutually contradictory and the phrase means something totally opposite to that which it implies. It is a document and a philosophy utterly unworthy of the Minister and of the Parliamentary Secretary. The Government's proposals represent a straight electoral bribe by confiscating legitimately acquired private property from one section of the community to give it to another, solely on the principle that there are more of the latter who, the Government believe, are likely to be so bribed. This is not the mild Socialism with which the Labour Party is so anxious to delude the electorate. It is very close to Communism.
Last week we had a notable example of principle being put before expediency and before private interest. I should be called to order if I mentioned matters of defence, and I want only to say that I immensely admired the action taken by the hon. Member for Woolwich, East (Mr. Mayhew), quite apart from the merits of the case. I mention that because I believe that in all these cases of personal resignation the decision rests on this and this alone—that the time comes when to the person concerned to stay on is too high a price in self-respect to be worth the while.
I believe that we are paying much too high a price in self-respect in the White Paper's attempt to attract the electorate by bribes of this sort, not only our own self-respect, but that of the House. If we are going to the polls, nothing convinces me more than this White Paper of the need for the British electorate to return to the House men and women capable of giving a lead in decent, honest dealing with the Government have so shamefully abrogated.
I do not propose to follow the hon. Member for Gloucestershire, South (Mr. Corfield) except to say that I shall again look up the meaning of "immorality" in the sense in which he used it. The attempt of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) to put every ground landlord and property-owning company in a white sheet was too ludicrous for words.
I have the honour to speak and declare my interest as a leaseholder. Nowhere in the country is this problem more important than it is in Wales. Proportionately, the number of leasehold houses in Wales is higher than anywhere else in Britain. I hope that the hon. Member for Gloucestershire, South does not say in Wales what he said in the House on the subject of leases reverting to the freeholder, for he would not last five minutes on the platform expounding his view.
In the areas where leasehold reform is a social problem, the matter has been a bone of contention for 80 years. It is not correct to say that in seeking to achieve necessary and desirable social reform the White Paper has a political content and an animosity to the landholder beyond what is necessary. This is a long overdue reform, for the long leases with which the White Paper is principally concerned were mostly granted in the second half of the last century.
These proposals take into account the position of the leaseholder, or his predecessor in title, who built, maintained and improved the house at his own expense. The White Paper foreshadows legislation to ensure the ownership of the house not reverting to the freeholder without the freeholder paying for it. This will relieve worry and hardship, felt especially over the last few years when leases have been about to fall in.
Nowhere is the White Paper more warmly welcomed than in Wales, where it is regarded as the leasehold emancipation charter. In the many miles of small terraced houses such as that in which I live, in the £30 to £56 rateable value bracket, the White Paper will be received with great happiness as the declared intention of the Labour Government—and if there is an election, we shall again be the Government to bring in legislation to solve this social problem.
There has been a long struggle since 1884 when the Leaseholders (Facilities of Purchase of Fee Simple) Bill was introduced as the first of a long series of unsuccessful attempts to put the compulsory purchase of freehold on the Statute Book. Now we see the culmination of the fight, a fight by two generations of Welsh people, to secure the right to purchase the land on which their houses stand.
We look for the support of hon. Members opposite who have the declared intention of according the lessee the right to purchase. We look for the support of the hon. Member for Barry (Mr. Gower) who on the Second Reading of the Landlord and Tenant Bill said:
It has been said tonight that a right has been given to Scotland for lessees to purchase. I have not familiarised myself so much with Scottish legislation as with this, but why if it is possible in Scotland, can it not be possible in Wales? Is Wales always to be behind Scotland? I know that we are well behind in the matter of Parliamentary time; I know that we do not occupy a day of the week in Parliamentary Questions, but is it always to be said that different laws can be designed for Scotland while, if there is a peculiar social problem in Wales, special attention cannot be given to Wales? I say that more as a Welsh Member than as a Conservative Member"—[OFFICIAL REPORT, 27th January, 1954; Vol. 522 c. 1817–18.]
The hon. Gentleman said that he spoke more as a Welsh Member than as a Conservative Member, and if we have to stand and be counted I hope that we shall see him in the Lobby with us.
It has been said the White Paper introduces a new dimension. Certainly it introduces a principle of justice which has been long delayed, but which is now offered to ordinary working people among whom there are thousands of small leaseholders in all parts of Britain. The Labour Government's indication that it will introduce a Bill to enable leaseholders to acquire greater security by obtaining the freehold on fair terms demonstrates the Labour Government's intention to find a solution to the problem and to right the injustices suffered by occupants for so long in the leasehold property of which there are many miles in my constituency.
Leaseholders now have to pay large sums to purchase freeholds which were created as a result of the misuse of monopoly power by landlords in the second half of the last century who would not permit development other than on a leasehold basis. The cruel and harsh injustice which has resulted from this misuse of power has been felt especially in South Wales. That is why I consider it to be a historic privilege as a leaseholder to speak for the rights of many thousands who live in houses like mine. The difficulties were rapidly accelerating and being exacerbated by the anti-social behaviour of landlords who refused to sell on fair terms and who declared instead that they would sit tight and wait for the leases to fall in. It is not a new dimension which has been introduced, but the old dimension of justice.
The Opposition may oppose these proposals on the ground of the sanctity of contract, but is that argument valid in this respect in 1966? The Tory Opposition may adduce this as an argument but in these modern times is this argumentum ad judicium—the argument appealing to judgment?
That is the position, although perhaps hon. Gentlemen opposite are not aware of it.
Speaking on the Second Reading of the Landlord and Tenant Bill in January, 1954, my right hon. and learned Friend the Member for Newport (Sir F. Soskice), who has represented that constituency with great distinction and who was at that time the hon. Member for Sheffield, Neepsend, said:
It is no consolation to those people to say that after all, it is a question of 'sanctity of contract', when their possession of what they regard—and are morally entitled to regard—as their home is threatened by the exercise of a right depending on a phantom title, 100 years' old, which is devoid of flesh and blood and simply armed with legal teeth".—[OFFICIAL REPORT, 27th January, 1954; Vol. 522, c. 1775.]
As a result, I welcome the action of my right hon. Friend the Minister of Housing and Local Government in assuring qualified leaseholders—those with leases expiring after 8th December, 1964, and who are occupying their houses whenever the Bill becomes law—that they will be brought within the scope of the
intended legislation. I welcome, too, the qualification that legislation will apply to those who have leases and entered into them for more than a 21-year period with a rateable value of £400 in London and £200 elsewhere, because the latter figure will cover the whole range of leasehold property in Wales.
I also welcome the principle that if the land belongs to the freeholder, then, in equity, the house constructed on that land belongs to the leaseholder. This is an irrefutable principle, particularly when one remembers that in Wales people have made huge financial killings without lifting a finger to make improvements to the property on leasehold land. Paragraph 4 of the White Paper points out that the leaseholder will have the right to retain his house after the expiry of the lease and the right to enfranchise his lease.
Is it not an obvious assumption that the bricks and mortar belong to the tenant of the land, the leaseholder, paying an annual ground rent, and that the ground belongs to the freeholder? Property owners are opposing the White Paper with the contention that this is coercion. They are also declaring that the principle of the White Paper, to allow the leaseholder to acquire the land on which his house is built, on fair terms is to allow one individual to coerce another.
I disagree with them, because our law must take into account public opinion—and public opinion has long been of the view that the proposals in the White Paper should be the law of the land. The assumption that the house erected by the leaseholder should not be his is born of vested interests. This should not be allowed to intrude upon or oppose the will of the people or of the Government in this matter.
It has long been asserted that the land was given to the people. The White Paper does not say at what time the marauders, armed with legal sanctions, came between and resulted in the parting of ownership from the people. However, the White Paper does say in paragraph 11:
It is important to ensure that the price paid for enfranchisement is a fair price. But present market prices reflect the position under the present law which is inequitable to the leaseholder, and the price for enfranchisement must accordingly be based not on present market values but on the value of the land
itself, including any development value attaching to it.
It should be remembered that in the overwhelming number of cases there will be no development value and that, as paragraph 12 points out:
…the fair price…will be the value of the freehold interest of the site, subject to the lease and its extension for 50 years.
It is pointed out that this will completely disregard the value of the buildings on reversion.
Only a Labour Government, attuned to the needs of the people and recognising the moral requirements of the people in law, are prepared to introduce proposals of this kind. Had the will and desire been there, these steps could have been taken at any time during the 13 years of office of hon. Gentlemen opposite.
The White Paper points out that, in the event of there being failure to reach a settlement, the parties in any case will have access to the Lands Tribunal. The White Paper will also be of great value to the great industrial conurbations of Wales, particularly Swansea and Cardiff. Much has been done for the leaseholder by my hon. Friend the Under-Secretary of State for the Home Department, the Member for Cardiff, West (Mr. George Thomas). He has put up a great fight over the years for leasehold reform.
I am sure that the hon. Member for Cardiff, North (Mr. Box) will support the principle of leasehold reform, because he knows only too well that for a small terraced house—two up and two down—in Cardiff the ground landlord is asking for a lump sum where there is yet 20 years to run on the lease; a £400 deposit to renew the lease for 80 years, taking into account the remaining part of the lease, while in addition increasing the current ground rent five times.
In the capital city of Wales ground landlords are cashing in on the inflated prices of property and are taking into account the value of the land plus the value of the property erected on it. In this connection, I recall the words of my hon. Friend the Under-Secretary of State for the Home Department in 1955 when moving the Second Reading of the Leasehold Enfranchisement Bill, a Private Member's Measure. He pointed out that in Cardiff alone 11,000 houses were owned by Western Ground Rents and 4,150 by Tredegar Estates.
The present system of leasehold, which the White Paper seeks to reform, is amoral and cruel and as recently as 1962 a petition signed by more than 60,000 people in Cardiff called for leasehold reform. However, that call was brushed aside by the then Tory Government, and I recall that the right hon. Member for Leeds, North-East (Sir K. Joseph) at that time justified the leasehold system and assisted in effecting the brushing aside of the public desire for leasehold reform.
Dr. D. R. Denman, head of the Department of Land Economy at Cambridge University, wrote in the Observer on 20th February last that the White Paper was based on a misconception in considering that bricks and mortar belonged to the tenant and the land to the landlord. He wrote:
This is fundamentally wrong in legal concepts of property and certainly not the principle on which the market deals with leaseholds. If, in fact, the Government's whole policy is based on this, there is going to be a very grave injustice.
I believe that we should give approval to the White Paper, because it means that at long last the leaseholder is on the way to being freed from the social shackles which have weighed so heavily on him in the past. It is said that the lawyers are furious about the White Paper, but I do not know why. No Government can ignore public opinion, which is the greatest force in our democracy. And public opinion is on the side of the little man.
For over two generations this injustice has weighed heavily on leaseholders. Now the White Paper gives an outline of legislation and reforms to come. In all the towns of the southern seaboard of Wales and in all the towns and communities of the valleys running from the South to the North of Wales there will be great happiness where there is only anger now. The tears of frustration will be assuaged and in that great labour belt of South Wales there will be pride and faith in this Labour Government. They will know that the pledges made by my hon. and right hon. Friends are being kept and that what any Tory Government could have done at any time since 1884 is being done by the present Government.
This proposed legislation is illuminating the valleys with hope, because the White Paper represents to the thousands of people there the fact that the Labour Party keeps faith with the electors.
I do not think that that kind of interruption is anything short of cheating. It has nothing whatever to do with the argument, and interruptions are intended for that purpose.
I propose to refer particularly to the hon. Gentleman's telling us of a horrible story—apparently, the worst he could think of—in Cardiff, where stories are pretty horrible, as we have been told several times already this afternoon, where a wicked landlord wanted to put up the ground rent by five times. What about the wicked tenant who has been paying for I do not know how long—perhaps since 1884—a ground rent which his predecessor agreed to pay under a contract, which he presumably understood, at a time when it never occurred to anyone that the symbol for £1 sterling on a piece of paper or parchment meant anything but a gold sovereign? That was what people undertook to pay.
For anything up to 99 years—or more, for there are some leases which are even longer than that—and certainly all the time since 1915, which is a considerable period, the tenant, the lessee, instead of paying a gold sovereign each year, has paid a dirty piece of paper which is worth even less than the dirty piece of paper he paid the previous year. Everybody here knows that.
If any hon. Member talks about wages or prices, he remembers that the value of the £ has shifted. Why does he not remember that when he talks about ground rent? If the £ has fallen in value by a factor of five, as it has, if the facility for perfectly ordinary people to acquire £s has been multiplied at least by a factor of five, as it certainly has, why all this horror when somebody, who has been waiting for good pounds and accepting bad ones for the previous 50 years, gets a chance to alter the price by saying, "In future, I want five times as much"?
I should like to know, with all the wisdom which the hon. Gentleman is displaying from hindsight about inflation, why his friends outside are being daft enough to grant leases for 999 years?
I do not see the relevance of that interruption. My premonition was perfectly correct.
Several hon. Members opposite have suggested that we cannot expect the British people to understand about leaseholds, I can expect the British people to understand about leaseholds. In case there are some hon. Gentlemen or hon. Ladies opposite who are British and do not understand, I will try to make them understand.
The British people, we are often told—and quite largely it is true—are very intelligent, and they have pretty long collective memories. A good many of them, even among the smallest individuals, have undertaken commercial bargains and contracts. They know perfectly well that if they pay the normal rate for hiring a bicycle or taxi-cab, or anything else, or if they try to pay off a mortgage, as long as what they pay does not represent more than a normal market rent for the object in question, that it does not diminish their indebtedness on the mortgage, it does not give them any right to claim the bicycle at the end of the hour or week.
We have had a lot today from Members on both sides of the House about morals. Generally, I do not speak about morals very much. My respect for morality is so deep that generally I leave the subject alone. However, on this occasion, it is almost obligatory to say something about morals.
I cannot say that I have looked at all earlier White Papers, but I should be very grateful if the Secretary of State for Wales, who is on the Government Front Bench, would tell us whether he can remember a White Paper so extremely tendentious and propagandist as this one. I do not ask him to agree that, from his point of view, it is tendentious and propagandist, but I ask any candid hon. Member opposite to read this White Paper and to say how extremely propagandist it is from the opposing point of view.
We have gathered from derisory cackling from the benches opposite that this White Paper has nothing to do with the General Election—that it is a matter of deep principle, and all that. In any case, it is not supposed to be a propaganda document. It is a document of State, drafted presumably by civil servants, redrafted by other civil servants, and again redrafted by the Ministers concerned; and, in the end, the Ministers are wholly responsible for it. But, as a rule, such documents do not have the extreme partisanship which this one has.
Secondly, if we are to argue about, which side of the House approaches this matter from the point of view of morality, it is a fair general rule that people, especially those seeking commercial or political advantage, are morally less respectable in exact proportion to the excess of the moralism of their language. On the first page of the White Paper there are the words "unfairly", "justice", "injustice", "principle", "justice", "reform", "harshly", "sense of injustice", "harshness", "Plan"—with a capital "P" of course—"fair terms", "principle", "right", "equity", "right". There I stop—and I have not yet got to the end of the first page. Hon. Members may take it from me that anyone who sloshes all that amount of morals, and of emotion-raising terms of morality, within one page needs looking at carefully.
There are several particular difficulties about any Bill which one can draft in one's own mind on the basis of the White Paper, which I think I might bring to the attention of the House. Take four houses in a terrace next to each other, lived in by X, Y, P and—guess who—Q. X lives in a house which his grandfather bought, in which his father was born, in which he was born, and the lease of which has still 10 years to run. The White Paper means to protect him. That is all right so far as I am concerned. Y lives next door. He bought his lease only six years ago, and he got it very cheap. He gets a large capital gain—not in the hope that he will vote Labour in the next election; we have been assured of that.
But he gets a large capital gain because it just happens that Labour Ministers have a life-long prejudice against landlords—or some of them have—and that some other Labour Members have a life-long prejudice against anyone who has anything, and it is rather fun taking something away from someone, and they intend to take it away from the landlord. To whom should they give it? Why this chap I do not know, but this chap Y is the chap who will get it.
P puts in a second bath. Perhaps it is rather over-luxurious of him, but, still, he does. There is no harm in that. His rateable value rises from £195 to £205. Q, next door, has never done anything to mend his house, or improve it, or look after it. He gets a large profit.
These would be comparatively small anomalies—and I could give half-a-dozen others—if we were dealing with a great general principle, but we are not dealing with a great general principle. The objection to the White Paper as a document is not only its excessive moralism and pietism, which I have mentioned, but also its absolute and perfect want of logic. There is not an attempted argument in the White Paper which it would not be the most truckling flattery to call a non sequitur. Every question is begged. No question is argued or settled. We are suddenly told, "It is a principle that the bicycle belongs to the shopkeeper from whom you hired it, but the tyres belong to you"—or vice versa. In this case, the lands belongs to one and the bricks and mortar to another.
No argument for this has been advanced. The only argument which we have heard from the Government benches is that there are 6,000 people in Cardiff —or 16,000, or 60,000, I have forgotten which—who will be very thankful indeed. Of course, they will: I should be very thankful if someone gave me money. Perhaps, by the by, I ought to declare an interest—a very slight interest. There are members of my family who own ground rents and my college owns ground rents, although I have no control over them nor do I get anything out of them now.
These are no reasons, I think, why we should accept the White Paper in deference to two of the Jenkins Committee in 1950. First of all, we had the Select Committee, in the 1880s, and then the Jenkins Committee in 1950, which, incidentally, produced the Landlord and Tenant Act, 1954, which was of some use to the tenants, and more recently there has been an inquiry by professional associations. All these decided against anything of the sort suggested in the White Paper. It is not much use Ministers telling us that Cardinal Manning was in favour of something like it, or that on the Jenkins Committee there were two admirable chaps who were wholly in favour of it by anticipation, admirable in so far as they were both Socialist Members of Parliament. We are told that we cannot expect the experts not to be so prejudiced that they can see no truth in the matter. We were told that 10 minutes ago. Those of us who have the opposite prejudices might take the same sort of view about Socialist Members of Parliament. There has been no argument at all to indicate that the position suggested in the White Paper is right.
I come to what I think is the greatest objection of all to the White Paper. It seems to me to destroy the nature of contracts and to some extent to destroy the nature of Law. We heard one of the pious phrases which they forgot to put into the White Paper, but which the Minister who introduced it remembered this evening—the Minister told us a lot about social justice. I know what a people's democracy is: it is a State which is not popular and is not democratic. We might hazard a guess about what social justice is. Social justice is to be found in a community where the members have no society between each other—neither society nor equality. They get treated quite differently according to whether they pay rent or accept it, or according to whether their rent is more or less than £200 a year. That is what the social part of social justice means.
What about the justice part of it? That appears to mean that if one goes seeking justice one cannot count on the predictability of the law. One cannot rely, in continuous and vital matters like land, on the predictability of the law, upon the law—although it must be changed from time to time—having continuity. You cannot rely on the law meaning what you are accustomed to its meaning and what others before you were accustomed to its meaning.
It is no answer to this to say, as has been said by hon. Members opposite, that there are statutes which cut out contracts, which say that so-and-so is to happen and that no contract to the contrary is to be valid. Here is a case where there is not the least doubt that these contracts have been valid for 500 years, and I might almost say 1,000 years. But all this is to be altered in the most arbitrary manner.
There may well be cases in which the leasehold system inflicts hardship and many more where it is felt to be a hardship, and most of all in those neighbourhoods and among those populations where it has been continually exploited as a grievance. If there are such cases of hardship—and if we had heard argument, not assertions about that from hon. Members opposite—I cannot believe the cases so awful as we are sometimes told, and certainly they are not so numerous as sometimes we are told—but for what they are, I can well believe that it might be possible to draft a Statute which might remove them or mitigate them.
My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) indicated some such possibilities. Certainly, there has not been the least attempt to produce today any kind of evidence for there being so many hardships of such a kind that it is necessary to inflict this blow upon the accustomed Law, the accustomed sense of fairness, and the reasonable expectations of our country.
I have listened with considerable interest to try to find out what, if any, is the answer to the case which has been made by my right hon. Friend. I thought one of my hon. Friends was a little cynical about the position of the lawyers in this matter. A man who possibly pleaded more than most to enfranchise was a great lawyer, Mr. Lloyd George—
Let me say at once that any suggestion here that we are proposing to deprive anyone is sheer nonsense. Of course it is. Hon. Members on the other side of this House say that we are introducing something which is silly and which is all wrong. If it is all wrong, then, obviously, the electorate will vote against us because it is all wrong. If they think that what we are doing is right, then that sense of justice which has been referred to and which raised such great hopes in the mind of the right hon. Member for Carlton (Sir K. Pickthorn) will naturally cause them to vote for the Labour Government who at long last have introduced a measure which has been in the minds of the electorate for the last half century or more.
It is sheer nonsense for hon. Members opposite to suggest that this is something new. It is not something new.
I appreciate the point the right hon. Member is making, but does he not realise that this has been a burning question for years? If he goes to South Wales he will soon find out. He must not sneer at this question. It is not a question involving hundreds of people, it is not a question of thousands of people being involved. It is a question of hundreds of thousands of people involved—street after street of people who would be turned out of their homes, yes, town after town of people who would be turned out of their homes—I am not exaggerating—unless this proposed Measure or a similar Measure be introduced in time to save them. What is not understood on the other side of the House is that it is not only a technical problem of leasehold reform. This is a very serious matter which strikes at the very root of our society, because it means that the homes of the people are to be protected, and the people themselves protected from being turned out of their homes.
That is exactly what is being advocated on the other side of the House—that they should be turned out and that the landlord should be in a position when the lease terminates to take possession of the house—
I am sympathetic to the hon. Member's case, but he is being less than fair now. The landlord cannot turn them out under the present law, and the hon. Member knows it. I hope he will try to be fair.
That is a flimsy protection compared with what we are trying to bring into effect today. What we are endeavouring to do is to give the individual who has occupied his house—and not only may he have occupied it but he and predecessors may have occupied it for close on a century—the right to continue in the house as a home. This is where the Opposition falls in its approach to this matter. It is not a question of the house alone. It is a question of the home which is at issue here. It is a question of the walls within which the family has been brought up; it is a question of the person returning to his home, no matter how humble, and finding that that home has not been taken from him. That is the nub of the matter, and that is what we have got to deal with. It is high time it was dealt with.
We are not seeking any electioneering advantage. In our addresses at the last election we stated—and we stated it from every platform throughout the length and breadth of the country—that this was our policy. Because the Opposition has impeded us with the various Measures we have been trying to introduce during this Parliament we have not had the chance of carrying this out before.
Then we are asked to regard the moral situation. I intervened to try to point out that, in the protection of the home, we have altered the contractual situation in order that men and women should not be deprived of the roof over their heads and of the home which they were occupying. This happened—why? There are plenty of good landlords, but in 1915 a lot of bad landlords took advantage of the situation that the menfolk had gone to the war and they started increasing the rents for the womenfolk and children left at home who could not afford to pay additional rents. The danger with which, in consequence, they were faced in their homes was avoided by the Rent Act, 1915, which said that the rents could not be increased beyond certain range.
That is what has prevailed since then as the basis of protection of the home. It is not unreasonable that this should be extended to the protection of the home when a lessee is being considered. It is his protection which we are endeavouring to ensure by means of this White Paper and the legislation which is to follow. It is a question of the morality of protecting a person's home, of a change of outlook in contractual matters which has prevailed since 1915. In these 51 years there has at the same time been an agitation for enfranchising leasesholders, to enable those who built their homes who built their houses and maintained them in a good and decent condition to get the advantage of their labour and of their energy—and not only of their labour and their energy but, in the towns I have referred to, the labour and the energy of the communities, of which they were part, who provided the roads and other necessities and facilities to make the land much more useable than it was before.
There is no denying the fact that in the places where leasehold has been the prevailing system of tenure the lessees have borne the brunt of practically the whole improvements from beginning to end. It is no good the hon. Member's talking about low ground rent. A ground rent of £4 or £5—or of £1 which was charged in those days—was perhaps ten times what the land was worth when they took over.
If one thinks of a town like that which the hon. Member for Barry represents the land taken for building was agricultural, waste land, or swamp. People went there and built the docks. Around those docks, houses were built. Immediately, in addition to the benefit that the landlords obtained from the docks themselves, they reaped the advantage of a ground rent which was far in excess of anything that they could have obtained if the people themselves had not built it up.
That is where we differ from hon. Gentlemen opposite. The Labour Party believes that the benefits which people create for themselves as a community should be enjoyed by the community, by the individuals creating them. Hon. Gentlemen opposite believe that if people create anything of value on land, the benefit should go to the owner of the land, irrespective of what he has done towards it himself. The Measure which we are contemplating at present deals with the situation where some leases have existed for 90 odd years, ground rent has been paid, and the tenants have kept the houses in repair. They have built up a community. They have built their own homes and neighbourhoods because they wanted a community life. They have thus lived as communities and spent their energies and money in those communities. The result has been not just bricks and mortar but a worthwhile life for those who are living within the communities.
That is really the situation. For many years I sang a song, and I am sorry none of those who sang the same chorus are present in their seats to join—
The land, the land
'Twas God who gave the land,
Why should we be beggars?
With the ballot in our hand?
God gave the land to the people.
That has prevailed as a slogan for many throughout the country. Hon. Gentlemen opposite are now afraid because one party, instead of regarding that as a slogan to acclaim from every election platform over the years, has at last had the time to do something about it. But we have had to overcome difficulties put in our way at every single step over the
last 15 or 16 months, to try and prevent us.
No, it does not say that at all. It says that the landlords have abused the gifts of the Almighty. That is what we are saying. I do not want to be ungenerous, because there are plenty of good landlords, but the fact is that far too many of them have considered themselves not only landlords but land gods. That has been the real trouble.
Hon. Gentlemen opposite are frightened now because they had 13 years in which to do something to remedy the position. If they really thought that there was anything wrong and that the electorate would be delighted if it were put right, why did they not do it in their period of office? They just smiled their generous smiles and took it easy. But now they are worried because the present Administration, which have done so well in every other respect, are now going one step further to provide leaseholders with security. Hon. Gentlemen opposite know that if there is a General Election, we shall be returned with a heavy majority, in which event we shall bring this Measure into force and see to it that the wrong which has existed for a very long time is put right.
Do not let those hon. Gentlemen imagine that lessees will be entirely satisfied with the merit of the proposals. The landlords are getting as generous a deal as could be handed to them, and we are prepared to do it in order that this wrong can be put right as soon as possible. I hope that the country will realise that the Measure is consistent with our action about the Rent Act—that vicious Act of 1957 is being swept aside—and that is consistent with our policies and with the desires of the people of our country.
The hon. Member for Swansea, East (Mr. McBride) asked what my view was about this Measure, and I should have thought that it would not surprise the House if I said that I welcomed any attempt to modify the leasehold system as it affects those who occupy dwelling-houses under long leases, which is the description of the houses affected by the White Paper. As long as I can remember, I have done so.
The hon. Gentleman may recall that some years ago I supported a Bill introduced by the hon. Member for Birmingham, Small Heath (Mr. Denis Howell), and I also supported a Bill introduced by the hon. Member for Cardiff, West (Mr. George Thomas) and, together with him and the late Mr. Clement Davies, the former Member for Montgomeryshire, I presented a petition on behalf of South Wales leaseholders. In addition, I have had the honour on a number of occasions to formulate proposals in Private Members' Bills which I have presented in order to try and find a solution to this very difficult problem.
I am going further than that. I should have thought that the hon. Gentleman would welcome my support, but he does not seem to want it. I should have thought that he would have been agreeably pleased that I was speaking so favourably about the general principles which he is supporting.
Not at the moment. I have hardly risen to resume my speech after the last intervention.
It must be recognised that this is a most difficult problem, but, from the comments made by some of my hon. Friends who represent English constituencies, I realise that it is hardly a problem for them at all. I envy them. The hon. Member for Leicester, Northwest (Sir B. Janner) will appreciate that in many English constituencies it is not a problem.
I quite agree, but perhaps I ought to declare an interest. I happen to be president of a leaseholders' association, and there are very many districts in which it is a very important problem and in which there are many leasehold properties.
The figures show almost conclusively that in very few parts of England is there anything comparable to the problem in one part in South Wales. What has made this such a problem in parts of South Wales is not only the nature of the tenure, to which reference has been made, but the high incidence of it. Indeed, it must be difficult for many hon. Members to appreciate a state of affairs where three-quarters, or perhaps more, of the dwelling-houses in a district are leasehold, but this is the position which obtains in many parts of South Wales.
For more than 50 years Members from South Wales have striven to make Westminster aware of the peculiar problem which affects us. That some progress has been made is evidenced by the appearance of this White Paper. Indeed, some success in our missionary work is also indicated by the fact that tonight there is not to be any official vote against the White Paper. [HON. MEMBERS: "Oh."] This is surely an indication that we have made some progress. I said that there was not to be an official vote against it. There may be some individual Members who feel strongly about it; I do not know. I submit that these facts suggest that today Parliament at least recognises that there is a problem and that it is most acute in South Wales.
I appreciate that hon. Members may have different opinions as to the nature of a fair solution to this problem, but I should like to feel that there was general agreement that in some areas, and above all in South Wales, there is a leasehold problem for which a solution must be found. I would remind any doubters among my hon. Friends that it was a Conservative Government who in 1954 turned all leasehold property in Scotland into freehold. The hon. Member for Leicester, North-West said that the Conservative Government were the friends of landlords. I hope he realises that in Scotland, in a country of large estates, where there were many large pockets of leasehold property, it was a Conservative Government who turned them into freehold property, and nobody in this chamber can deny that.
For a long time I have been endeavouring to promote the idea of a lessee being able to purchase the freehold. I agree that it is strange, because, as I have said, it was a Conservative Government who changed the position in Scotland. I agree that the problem there was smaller than in Wales, but the law was fundamentally changed.
Nevertheless, leases in Scotland were, in effect, brought to an end.
Paragraph 1 of the White Paper refers to
an occupying leaseholder who at the end of the term has lived in it for a period of years regards it as his family home.
This is true in the parts of Wales to which I have referred, where leasehold properties form the preponderant part of the dwelling houses. I go further than the White Paper in commenting on the situation in South Wales. In areas where 70 per cent., or 80 per cent., or possibly even 90 per cent., of all houses are leasehold, it is natural that the owner-occupier should regard his house as the family home. In English towns, where freehold property predominates, the position may be different. A person who has acquired a leasehold property has probably made a conscious and deliberate choice. Few persons in Cardiff, Barry, Newport or Swansea could have made
such a deliberate choice, because at one time nearly all the houses available were leasehold.
Paragraph 2 of the White Paper includes the interesting formula, subject to one or two reservations, already commented on by hon. Members on both sides, namely, that the freeholder is deemed to own the land, and the leaseholder the buildings on it. The criticisms made by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) may not be acceptable to hon. Members on both sides, but the formula has some limitations, as was shown by my right hon. Friend's example of a valuable property like the Hilton Hotel where it is difficult to separate ownership. Nevertheless, I believe that if certain provisions could be made for special cases, the formula would provide a chance of finding a solution to a difficult problem.
I turn briefly to the qualifications prescribed in paragraphs 5 to 8 of the White Paper for those who will benefit from possible legislation. I think that the requirement that the original lease should have been for more than 21 years at a ground rent is reasonable. By far the majority of cases which we have in mind are houses on a 99-year lease.
I expect that the proviso that a leaseholder must have occupied the house for at least five years is accepted on both sides, and my right hon. Friend indicated that this was so. As has been pointed out, it is possible that this could lead to a few anomalies, but I hope that my hon. Friends who find fault with this paragraph will not for that reason alone reject the whole idea of a solution of our difficulties.
I can appreciate the difficulties which have led to the omission of flats, but I should not have thought that these were insuperable. All that is needed is a change in the law to enable freeholds of flats to exist. I appreciate that this has not been the case generally in England and Wales in the past.
In relation to the proposals for 50 years' extension of leases, for those who do not wish to spend capital sums to acquire the freehold, the term "modern ground rent" is used, and in his introductory speech the Minister referred to this. I am not trying to be hostile about this, but I submit that this term needs more accurate definition.
The inclusion of "development value" in paragraph 11 has also been mentioned. In some cases this formula could be open to criticism, but again I trust that those who have reasonable criticisms about this paragraph will not thereby be led to reject all ideas of reforming the system of leasehold.
I am glad that to a limited extent local authorities and various public authorities are brought within the White Paper, but, except in extraordinary cases affecting the provision of essential services, I would plead that the leaseholder of a house whose freehold is owned by such an authority should be placed in a similar position to a person who lives in a house the freehold of which is owned by an individual or a company.
In my experience leaseholders of local authority property have sometimes been in a worse position than other leaseholders because, certainly in Glamorgan, rightly or wrongly the county council has refused to sell, and it is no solace to a leaseholder to be told that he cannot buy it because the freeholder is the local authority. I hope that this paragraph is not so limited as it appears to be on first scrutiny.
I am not sure why the right hon. Gentleman has favoured the use of the Lands Tribunal. I am not hostile to the proposal, but he will recall that in other Rent Acts Ministers have preferred to use the county courts. He has not explained why another body is chosen on this occasion, and I hope that the Secretary of State will be able to refer to the point tonight.
I reiterate that hon. Members on both sides of the House should be glad that some progress has been made towards finding a basis for legislation—because that is how the White Paper is described. There are obvious divergencies of view among hon. Members on both sides of the House, but it is a sign that we have advanced a long way that this debate is not dividing us tonight, in the traditional manner, in the Lobbies.
I begin by declaring an interest in this matter, in that I am a lessee on a long residential lease, and qualify under the terms of the White Paper. Apart from that direct personal interest, it is also right that I should mention a less direct one. I have occupied leasehold property for many years, and my friends and neighbours are all leaseholders. There is a large leasehold estate in my constituency, in addition to other smaller leasehold estates, and of that very large estate I was for seven years an estate governor. In that capacity I was one of my own landlords. I hope that that has at least enabled me to appreciate the problems and the achievements of the freeholders, in some cases, and to take a balanced view of the matter.
This debate, like previous ones, has shown how utterly split from top to bottom is the official Opposition. We heard the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) take about three quarters of an hour to reach a point at which he was able to declare any policy at all, and when eventually it came it was not the mountain that I had been expecting. It was not even a mouse; it was a mini-mouse. The hon. Member for Gloucestershire, South (Mr. Corfield) took an entirely different view, and described the White Paper as a moral outrage. Finally, the hon. Member for Barry (Mr. Gower) gave the White Paper his broad support. We are told that there will not be a vote tonight. I wonder why. If the White Paper is a moral outrage it is surely the duty of the Opposition to show that it believes it to be a moral outrage by voting against it.
I do not know what is the official Opposition view. Does it believe the White Paper to be a moral outrage? Does it agree with the hon. Member for Gloucestershire, South? If not, why not? If hon. Members agree with the White Paper no doubt they will vote in favour of it—or are we to see the familiar spectacle of hon. Members opposite leaning over backwards to sit on the fence?
Any hon. Member who represents a leasehold constituency, as I do, is likely to support the White Paper, on whichever side of the House he sits. I want to pay tribute to my Conservative predecessor as Member of Parliament for Dulwich. He, like the hon. Member for Barry, played a great part in trying to persuade his colleagues, again and again—unsuccessfully—to support measures for leasehold reform which did not go anything like so far as the proposals in the White Paper go. Again and again my predecessor was blocked in his efforts. He produced a Ten Minute Rule Bill. That was blocked. Every time it came up, hon. Members opposite objected to it.
I am glad to say that Mr. Robert Jenkins, who has no axe to grind now, because he has retired from politics, has declared himself, in public, as being wholeheartedly in favour of the White Paper. He says that thousands of his ex-constituents will at last be released from bondage, and the stranglehold of unjust covenants. I shall not use such emphatic language as Mr. Jenkins has used, but I am grateful for the support of one who had 13 years' experience of representing a leasehold constituency, not in Wales but in England.
We have heard much about the philosophy of the White Paper. I accept it generally, but not entirely. I have four main objections to the long leasehold system in respect of residential property. I believe that in days gone by, especially when the Dulwich College Estate was being developed in Victorian days, there was a great need for this type of tenure, because it enabled a large landowner to find people who would erect houses for him when he was not able to find the money to do it himself. To get that done—and as a part of the process which was necessary for housing people—he did it on leasehold tenure, and either the lessees themselves or a builder who sold to the lessees built the houses.
That was a valuable process at the time, but it is no longer necessary. We do not have to have such a system to procure estate development. Today, money can be found. There are developers who will build houses with freehold tenure.
The right hon. Member for Kingston-upon-Thames said that many leasehold estates today are owned by charities and similar organisations. They deal in land in this way as a hedge against inflation. This is not necessary today. By way of proper investment in the right sort of equities much more can be done to hedge against inflation—without the disadvantages of ground rents remaining stabilised for a long time—than can be done by putting money into land.
Secondly, it is no longer necessary to have this system in order to preserve good estate management and amenities. It was necessary in days gone by, before we had a modern town planning system, but it is not necessary today. It is much better that that kind of consideration should be left in the hands of the occupying lessees, who will be much more concerned for the amenities of their areas than will some remote freeholder. There are many examples of development companies developing freehold estates and providing a system under which the freeholders control the amenities of their own estates.
Thirdly, there are positive disadvantages in the system in that it creates severe hardship at the end of the term, especially at times and in areas of housing shortage. The more money the lessee has spent on his house the greater the hardship to him when he loses it. That is a formidable argument against the present system.
Finally, there is the positive disadvantage, which I have seen again and again in my area, that as one of these leases comes towards the end of the term there is no longer any incentive to maintain the house, certainly none to modernise and spend money in bringing it up to modern conditions, and, therefore, that is not done. One sees houses coming towards the end of their term deteriorating at much greater speed than houses in freehold tenure.
I said that I do not entirely accept the White Paper's principle although I accept it to a very large degree. The principle is that the value of the land should go to the landlord and the value of the house to the lessee. One has to recognise that there are differences in different parts of the country and in different estates. There are different kinds of property even within the same area, as in my area, where the Dulwich College Estate is very different from some smaller leasehold estates in my constituency.
I agree that unhappily many landlords have contributed nothing at all to the value of the houses on their estates. They have not built the houses. All they have done is to collect the rents. To them the land is a mere investment. They have no more right to the value of the house than a moneylender has to the profits made from the use of the money he has lent to an entrepreneur. They are entitled to no more than the value of the land on which the house stands.
There are other areas, however, where the landlord, by good management, has contributed to the value of the house itself. My area is probably one of those. There the estate governors look after the properties, the woods and the manor wastes, as they are called, and generally preserve the rural atmosphere. Those things contribute to the value of the houses which stand there.
Would not the hon. and learned Member concede that the landlords have recovered what they have expended by having increased rents to which they are entitled in an area of good amenity and in the payment of the lease?
If the hon. and learned Member will allow me to develop my argument, he will see what I am getting to eventually. I do not in any way dissociate myself from the general point he made.
Undoubtedly, part of the value of the houses in those cases lies in the value of the amenities of the area. That is why I particularly welcome paragraph 22 of the White Paper, which provides for estate management in future in the case of well-managed estates. That is something for which I have pressed for a long time. I hope that the negotiations which that paragraph envisages will be between the lessor, the various lessees whether they are enfranchised or not, and the local authority—because many local authorities may well be concerned with the amenities of such an area. I hope, also, that housing associations, mentioned in another paragraph, will be used where necessary to assist in the preservation of amenities. I hope, although this is not suggested in the White Paper, that the Land Commission may be put to use to supervise this general operation.
On the financial side, if the lessor in those cases is to be left to carry on with the amenities of the area which he has carried on up to now in times when leases are enfranchised, it seems right to give him an incentive to continue his sound management policy, some financial reward, possibly for what he has done in the past, but more important for what he will do in future after enfranchisement. In those circumstances I would accept that it would be perfectly just to ask the enfranchising leaseholder to pay some contribution towards the freeholder's management expenses.
It seems that there is a basic misunderstanding here. Surely the value of the land which goes to the lessor in any event is all the greater because of the high general amenity of the area. The lessor recovers that in the value of the land if it is ever sold.
It may well be true that the lessor will recover some part of his amenity in the increased value of the land. I do not dispute that. I say that the lessee, for his part, will also recover a very much higher value in some cases than if he lived on the kind of estate where nothing of this kind is done. In trying to be fair to both sides—I hope that is what we are trying to do—I see no reason why some management contribution should not be given to the freeholder. I hope that in saying that, I am not either in danger of losing votes nor in danger from my friends and neighbours of something worse befalling me. I do not think so because I think that the electors of Dulwich are reasonable people.
I am very interested in the point made by my hon. and learned Friend, because I am concerned about the question of well-managed estates. Would he agree that if we provided for an agreed scheme the enfranchised leaseholder would play his part in determining that scheme and, as freeholder, could contribute to the cost of management through a rent charge?
I am much obliged to my right hon. Friend. That is the sort of idea I had in mind. I hope that further thought will be given to the question of how it can be done.
I turn to three other paragraphs in the White Paper, first, to paragraph 11 which provides that enfranchisement can take place during the original lease. I hope that the Government will have second thoughts about that. I see no reason why enfranchisement should not be permitted during the extended lease, subject, of course, to the lessor's right to retake for redevelopment purposes, which is provided elsewhere. If we do not give that right to the lessee it seems that at the end of the extension we shall encounter exactly the same sort of problem as we would otherwise have encountered at the end of the term.
Paragraph 17 deals with the rights of freeholders to resist enfranchisement or an extension when they want the house for occupation for themselves or their families when the lease expires. I welcome that proposal. It seems a measure of equity to the individual lessor, but I suggest that it should be subject to two restrictions. First, it should be restricted: to a lessor who acquires the freehold before a lessee has vested rights under paragraph 5. Once the lessee has vested rights by having occupied for five years, it ought not to be possible for a new landlord by acquiring the freehold reversion to oust those vested rights.
There is a strong case for restricting this particular qualification to the last part of the term, say, the last five or seven years of the lease. Otherwise, what the freeholder would have to show to the court would be the intention to occupy for himself a very long time ahead and that clearly would be something very much subject to abuse.
The final paragraph I deal with is paragraph 8, on the exclusion of flats. I appreciate the difficulties which including flats might bring, but I believe that there will be greater anomalies arising from excluding flats than the anomalies or difficulties arising from including them. The idea of a freehold flat is not new and provisions could be incorporated in the Bill which would provide the necessary safeguards as between one flat owner and another. If we do not do that it seems that two particular difficulties and problems will arise.
In the first place, we shall have recently developed areas such as exist in the Dulwich College Estate, which have been comprehensively redeveloped to contain both flats and houses and the common areas—the grassland, and so on—serving both flats and houses. We would have a most anomalous situation in that a man who took a lease of one of the terraced houses and shared in the common amenities he would have a right to enfranchise but a man who took a flat, possibly at the same price and sharing the same facilities, would have no such rights. I cannot see that that will do anything other than create difficulties and anomalies.
Secondly, there is in my constituency at least one little area where there are what look like semi-detached houses, but, instead of being semi-detached vertically, they are semi-detached horizontally, they are one up and one down. Presumably, they are flats and would not qualify. If the principle that flats are to be excluded is adopted, in future those who want to develop on leasehold terms will develop in that way rather than by vertical division, because in that way they will get round this provision. In the London squares which have been mentioned today there will be horizontal divisions rather than vertical divisions when conversion takes place. I suggest that the Government should look again at the question of excluding flats.
I am greatly obliged to my hon. and learned Friend for the points he has raised. We have these points very much in mind. The difficulty is that we have received the Report of the Wilberforce Committee, which deals with the question of providing flats on freehold terms. This is not a difference of principle. We take the view that we should consider generally the question of the provision of freehold flats in the light of the Report of the Wilberforce Committee rather than deal with it in a Bill arising from this White Paper.
I am very much obliged to my right hon. Friend for that assurance, which shows that flats are not wholly excluded from the Government's proposals. It is merely that the government have not at the moment completely made up their minds. I hope that we shall be able to say this during the campaign which I understand is about to begin. I assure my right hon. Friend that his assurance will give a great deal of satisfaction to my constituents, as indeed will the White Paper, which I welcome and which I am certain that the vast majority of my constituents, whatever their political opinions, will also welcome.
I shall endeavour to be brief and to avoid repeating many of the pertinent points which have been made. The White Paper's first fault, as is indicated by The Times today, is its pontifical reliance at the outset on words such as "justice" and "equity", to which it attaches absolutely no known meaning. Indeed, it contradicts itself on more than one occasion in using these words. This has made people suspicious of what is proposed, because there appears to be an abhorrence of stating what seems to be the truth.
The fact surely is that there are many areas, particularly South Wales, where long leases are coming to an end and the tenants, understandably so, fear hardship arising because, although they will go on living in the same houses, instead of paying a ground rent they will have to pay a rack rent or, alternatively, be asked to buy the house. It is clear from speeches made by hon. Members opposite that this is where the rub has come.
Even so, I am not so pessimistic as to take the view that the difficulties to which the White Paper refers are insuperable. I ask the House to consider it from the point of view of the individual. The interest of a landlord with a lease which has more than 20 years to run is of an investment nature. In the case of individual premises, there would be no undue hardship in giving such a landlord a sum of money as an alternative investment, which would have the effect of buying up the lease. In the case of a tenant who is to be allowed to go on living in the same premises because they are not required for redevelopment, modernising the ground rent and allowing him to continue in those premises, which the landlord has done nothing to improve, is an expedient which most people would recognise.
I am surprised that there has been no attempt by hon. Members opposite to refute the charge which, I think, can justifiably be levelled at the White Paper that it is grossly unfair. I hope that the Secretary of State for Wales will tell us why the White Paper seems deliberately to avoid facing the issues raised by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). He gave figures which showed that provisions on the proposed lines would deprive a landlord with a lease nearing the end of its life of about £5,000. No attempt has been made by the Government to justify this. It is where the lease has less than 20 years to run that there is likely to be a definite financial hardship and a quite unjustifiable removal of value—value on which the landlord has probably been taxed. He will have paid death duties, if nothing else. He may even have bought his interest. The first fault of the White Paper, therefore, is that it makes no attempt fairly to meet this problem, which arises in the last 20 years of a lease, particularly in the last 10.
I am sure that the hon. and learned Gentleman does not appreciate the action which the Conservative Government took in the 1954 Act. It satisfied no one. In fact, it considerably depreciated the market value of the freehold interest. It often reduced it to one-third of what it was before. The hon. and learned Gentleman cannot stigmatise the present Government for seeking a formula which will provide a fair price for enfranchisement.
The point is that it is not a fair price. It is a deliberately "cooked" price. This is my quarrel with the White Paper. If a genuine attempt were being made to give a landlord a fair price for an interest on which he may have been taxed, the Estate Duty valuation would be a reasonable figure. In paragraph 17 of the White Paper, which is entitled "Rights of Freeholders", the right to object to enfranchisement is inordinately limited and takes no account of the vastly important planning aspects.
Perhaps at the outset of my speech I should have declared an interest, because I occupy a leasehold house in London and a leasehold cottage in Wales. In neither case could there be any possible justification for my insisting on buying the freehold. In the case of the London house, from the planning aspect it would be a virtual scandal. The square in which the house is situated has been maintained, because it is owned by a charity. It is a very pleasant square which depends on its architectural unity. The Government have advanced no reason why a charity should not have the right to object to an enfranchisement on the ground that redevelopment is proposed. The charity I speak of owns an even wider area and its power to replan and redevelop is of enormous importance.
My second criticism of the White Paper, therefore, is that it contains no proposal for allowing such a charity to make any representation in this regard. A charity has not got a family which could occupy individual houses. If the charity proposed to allow the occupier—the tenant—to go on occupying, that could easily be provided for—if redevelopment is near—either on a year-to-year basis, or, alternatively, by granting some form of tenancy until redevelopment takes place.
I am trying to put this argument as shortly as I can. This aspect of redevelopment is one which any future legislation should and must deal with.
Let me give another example which relates closely to the position of flats. In my constituency there is a small estate which was developed as a whole on an access road. A porter or caretaker has a house at the entrance and is able to assist in the running and the order of that estate. To break that up can be of no advantage to anybody. There is no case for it.
If the tenants were likely to suffer any considerable hardship, that would be quite a different matter, but there is no reason why in either of the cases that I have mentioned the factor of a genuine redevelopment and permission for the tenant to occupy should not be allowed. Indeed, it is recognised by local authorities. Why it should be regarded as wrong for a local authority to buy back a house which it does not want, but which it wishes to pull down, but quite right if a charity, which is operating in virtually the same way, wishes to do the same thing, I do not know.
The White Paper has two grave defects, in particular. It takes no account of the case where a genuine hardship is suffered by the freeholder and a gift of £5,000, or whatever the sum may be, is transferred from the freeholder to the leaseholder for no particular reason, and it takes no account of redevelopment. There are cases where redevelopment does merit and require a retention of the whole of the freehold of the estate, and this is particularly so just now when leases in many cases are coming to an end. This may not affect all cases, but it is quite easily decided, whether by a county court or by a tribunal. But at the moment these are two grave defects and I ask the right hon. Gentleman to remedy them.
I too, wish to declare an interest, as have so many hon. Members, being myself a leaseholder.
Before I deal with the various points which have been made by hon. Members opposite, I am sure that I express an opinion which is shared by many hon. Members, including those who disagree with this proposal, when I say that we regret that the procedure of the House prevents my hon. Friend the hon. Member for Cardiff, West (Mr. George Thomas) from speaking in support of the Bill. We all know how much is owed to my hon. Friend the hon. Member for Cardiff, West for the campaign which he has waged to bring this matter to national attention.
I should, first, like to make a few local points. This Measure will be extremely welcome in Swansea, because in many parts of that town there are leases which are nearing expiry. Unfortunately, far too many nave expired in the last five years. In these areas a particular type of exploitation takes place. In localities which are based upon the leasehold system, when these leases are nearing expiry there are attracted to those areas a particular group of commercial parasites who buy up the reversions in order to exploit the commercial advantage which they obtain. In many cases a person who owns a house finds that the land has passed from one owned to another without it having been offered to him, although in all justice this would seem to be the first reasonable offer to make.
We find that these people who have bought up the tail-ends of leases then try to exploit the situation by charging as much as £1,200 for a small plot of land on which is built a terrace house 99 years old. Of course, no one can doubt that the £1,200 is justified by the fact that a house stands on it. There is another type of exploitation where the ground rent is boosted unfairly. There are cases where the ground rent of £2 or £3 10s. has gone up to £50. Yet nearby new developers are charging modern ground rents far smaller than that. In far too many instances people who buy up these leases refuse to sell, waiting parasitically to take over the house when they are legally allowed to do so.
I hope that the majority of people in my constituency and in others will note the attitude of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). It is quite clear that he does not welcome the idea of leasehold reform, and this should be made absolutely clear throughout the country. It occurred to me that he showed more interest in developing his capacity for Christmas cracker humour than in making any valuable or constructive contribution to the proceedings.
At one stage the right hon. Gentleman made the point that in producing this White Paper we on these benches were seeking electoral advantage. In that case, does he deny that in refusing to have an official Division tonight his party is trying to seize electoral advantage because hon. Members opposite know that they dare not go into the election having voted against leasehold reform? I challenge them to show what they think of the Bill in the Division Lobby. We on this side of the House would welcome a Division.
Anyone who has sat in the galleries today will have been reminded of the fact that the Tories are never more moved emotionally than when they try to defend the vested interests of property against the moral rights of the mass of the people.
I apologise, Mr. Speaker, for this major breach of etiquette. As a new Member, I did not realise that this was the case. I am sure the hon. Member for Ormskirk (Sir D. Glover) does not think that this in any way undermines the strength of my point.
Should any member of the public feel in danger of being deceived by the pose that has been adopted today by hon. Members opposite, they need only refer to the speech made by the previous Minister of Housing and Local Government, the right hon. Member for Leeds, North-East (Sir K. Joseph), in Cardiff, in 1963. When dealing with the problem of leasehold reform he made it quite clear that in his opinion no hardship arises from the leasehold system. Anyone who has lived in South Wales will know quite well that only calculated blindness would stop anyone seeing that hardship on all sides resulting from the existence of the leasehold system.
The right hon. Gentleman went on to say that the great virtue of the leasehold system was that it keeps prices down. This could be true of leasehold land on which council houses are built, but it is not true in the case of the purchaser who is going to buy a house. In the major urban areas the real determining factor is the supply of and demand for houses. In Cardiff the only land available is leasehold, and the fact that the land is leased in no way reduces the prices of houses.
Let me give an example. There is a building firm which builds to set plans in various parts of the country. Two years ago it was offering a certain type of house, leasehold, in Cardiff at £450 more than the price asked for freehold property in Swansea. The same house and land in Swansea were being offered for £450 less than in Cardiff. This surely undermines the argument that the leasehold system keeps prices down.
In any case, another factor which undermines the previous Minister's point of view is that some builders use development charges so that they have the advantage of the land and the advantage of selling it, in that they charge the builder to build on the land and they still retain the title and virtually receive the income which they would have had if they had put the land on sale. It may be true that leasehold reform will raise the price of certain houses, but we should not apologise for this.
These are the houses which were artificially kept down in price because they had only 20 or 30 years of the lease to run. Mortgages were not available for this reason, but as a result of the proposals in the White Paper mortgages will be available and, therefore, the price of these houses will become a fairer price. This will result in introducing into the market a large number of houses which are at present not for sale. This, in turn, will take the pressure off the newer houses. It will reduce the demand for them and thus help to level down prices.
There is also the important social consequence in terms of human liberty in that this will provide far greater mobility to those people whose houses have only 20 years' lease to run. A constituent of mine who came to see me had wanted to move out but she had been unable to do so because no one could raise a mortgage on her property.
In his speech in Cardiff the former Minister also said that he was satisfied with sale at market value. Indeed, the right hon. Member for Kingston-upon-Thames has repeated this today. Let us be clear what we mean by market value. It means that one pays again for the house which one has already bought. Having paid for it once, when the lease expires one is expected to pay for it a second time when one may be at an age when one has not a large income to pay for it.
Two other main arguments have been put forward on this subject. One is the sanctity of contract argument. We should not go too far on this. I had the terrible suspicion that if some hon. and right hon. Members opposite had been in the House when the abolition of slavery was discussed they would have said, "Look at the property rights of the slave owners. Consider the sanctity of the contract." In South Wales there can be no question of sanctity of contract. I am not a learned Member and, therefore, will bow to advice if I am wrong, but as I understand the law of contract—
I hope that should there be a Division the hon. Member will come into the Division Lobby with us against this form of slavery.
As I was saying, under the law of contract, as I understand it, if one is forced into a contract that contract becomes void or unenforceable, but in South Wales many people were forced into a leasehold contract simply because of the monopolistic power of the ground landlords in that area. It is calculated that 400,000 families live in leasehold houses in South Wales. They could only get leasehold houses. They had no choice and, therefore, one can say that there is morally a doubt about the sanctity of contract there.
The hon. Member for Gloucestershire, South (Mr. Corfield) made what he seemed to feel was an important point of principle when he referred to death duties and he said that in the past they would have been paid on a decreasing asset but now this asset would be increased in value. He thought it an important principle that this should not be allowed to happen. If that is so, why did not the hon. Member make some comment on his own party's Rent Act which had exactly the same effect on houses which were previously under control? As a result of that Act the value of those houses shot up and an exactly parallel situation was created.
I am glad that in the proposed legislation we have provided the alternative of buying, or extending the lease. Many people will not be able to afford to buy. Many people without children to whom to pass on the house will feel that it is not worth tying up the capital, though at this point one should stress that children who possibly will inherit houses in this way have a certain moral obligation on them to provide the capital with which their elderly parents could be buying the freehold.
The country as a whole must realise that this reform is long overdue and could have come about only under a Labour Government. It is noticeable that the fact that we are now willing to take action in this matter has produced a slight reform among the party opposite, but let us be absolutely clear that the reform is slight. The general public should remember that under the terms put forward by the party opposite this afternoon there would be little or no change in the existing position and that if they were allowed to buy the land freehold they would have to buy it at a higher cost.
I did not want to interrupt the election speech of the hon. Member for Swansea, West (Mr. Alan Williams). We have heard that the date of the election has been announced and no doubt some hon. Members on both sides will have that very much in mind when the are speaking on this important White Paper today.
If I heard him aright, I concluded that the hon. Member made out a case that one could purchase a house rather cheaper in Swansea than in Cardiff. If that is so, that no doubt adds to the attractions of Cardiff over Swansea, because the hon. Member, like two of his hon. Friends, has the rare privilege of living in my constituency and being represented in the House by me. If either he or his colleagues have any trouble with their ground landlords I shall be only too glad to offer my services in bringing the two parties together.
Order. The hon. Gentleman can say that to the candidate when the election is on, but in the Chamber he must address his Member in the third person through the Chair.
Anyway, I am grateful to the hon. Member for Swansea, West for his attempted intervention.
Although we have heard of a wide range of differing opinions on the methods proposed in the White Paper, I am sure that few would disagree, and certaintly very few in South Wales, that reform of the leasehold system is something which is long overdue. Like other hon. and right hon. Members who sit for Welsh constituencies, I have lived with this problem long enough to know something of what is described in paragraph 3 of the White Paper as the "sharpening sense of injustice" felt by leasehold owners as the day of judgment approaches.
By that day I mean the expiration of leases, whereupon the leaseholder has to make up his mind whether to hand the property over, lock, stock and barrel and in good order, to the ground landlord or to seek the protection of the Landlord and Tenant Act, 1954, whereby he becomes virtually a tenant in his own house.
Lawyers both inside and outside the House of Commons have had great difficulty in understanding this sense of injustice, and I think that this is the main reason why we have so far failed entirely to find a solution to this complex problem. In my opinion, their view is misguided. I believe that it is based, and has been based, on the assumption that the leasehold contract is one invariably freely negotiated between ground landlord, on the one hand, and leaseholder, on the other.
In South Wales, at least, I can affirm that nothing is further from the truth and the overwhelming proportion of would-be householders in recent years have had no option whatever. The hon. Member for Pontypridd (Mr. Arthur Pearson) reminded us that an Englishman's home is his castle. I submit that, under the leasehold system, the Welshman's home is very rarely really and truly his own.
Whatever may be the legal argument for continuing the present leasehold system, I have always found a number of fundamental objections to the present system. I list them in this way. First, if there has been an offer of the freehold, it has been solely at the whim of the ground landlord. If the ground landlord did not want to sell his freehold, there was nothing on earth which could make him do so.
Secondly, for some reason best known to themselves, ground landlords have tended to cloud the price they ask for a freehold in mystery. We all know that surveyors have some sort of table to which they refer and from which they derive the basis of the price which they ask. But I have written on several occasions to ground landlords to ask for some justification of the price they have required, and I have received either no reply or merely an unsatisfactory one.
Thirdly, when the offer of a freehold has been made in the past, it has been done invariably on a "take it or leave it" basis. No question of negotiation—either accept the price or reject it. No recourse could be made to the courts, to a referee, or even to the district valuer to ascertain an arbitrated figure. For these reasons, there has been a great genuine and deep-rooted sense of injustice over the system.
I have long felt, therefore—and I have expressed the opinion in the House in the past—that the pendulum has swung far too much one way, in the direction of the ground landlord, and that appropriate legislation would be required to bring some equilibrium back into the situation.
I have always understood that a basic principle of English law is that, if a contract is restrictive, onerous or unfair, it can be contested in the courts, and, if it is confirmed that the contract is unfair, it will be undone. Again, I submit that the leasehold system qualifies in this respect. Yet, despite the Jenkins Committee's Report produced under the last Labour Government and, more recently, the examination carried out in 1962 for the last Government by the Law Society, the Royal Institution of Chartered Surveyors and other professional bodies, we have so far failed to provide a satisfactory solution.
I know that many eminent lawyers, surveyors and estate agents in South Wales who see this problem at first hand, as hon. Members on both sides of the House representing Welsh constituencies do, believe passionately, as I believe, that something should be done to right this wrong. Naturally, I regret that it is not a Conservative Government who are introducing a measure of reform.
I turn now to the White Paper, because I have several queries to put to the Secretary of State for Wales. First, if it is generally agreed that the leasehold system is a bad one, why are there no proposals in the White Paper to abolish it altogether? We know from experience that some parts of the country get on very well without the leasehold system. The problem is that so many people entering into leaseholds today—I am talking about new leaseholds, which are being entered into every day of the week—are quite prepared to sign a contract covering 99 years because they know very well they will not live to complete it. In other words, they are putting off the evil day. We are all putting off the evil day. In South Wales, we have had an opportunity to see the sort of problems which arise and are likely to arise when leases near expiration. If we do not tackle this problem in the very near future, we shall leave a grave legacy to future generations.
I come now to the reference to a fair price, which, I understand, is in future to be based on the principle that the land belongs to the ground landlord and the building belong to the leaseholder. It has been stated emphatically that the price to be asked would not be related to market value. This seems to raise a number of issues, not the least of which is how fair is fair. But, even ignoring the fact that landlords, even good ones, have any rights at all, under the proposed legislation home owners who have purchased their freeholds in recent years may well feel aggrieved. Equally, those who sold properties recently at what may now be well below the market price will be most unhappy about the proposed legislation.
Is the Minister of Land and Natural Resources certain that the proposals outlined in the White Paper will not paralyse the market for the buying and selling of houses at least within a certain price range? Will it be so easy for freeholder and leaseholder to settle a price where development value may be involved, and will the Lands Tribunal be able to cope with a rush of cases in the event of a large number of disagreements?
Further, like my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), I wonder why the Minister has chosen to exclude houses with a rateable value of over £400 in London and £200 in the provinces. I have always understood rateable value to be based mainly on the building rather than on the land. Yet we are told that the price to be paid for the freehold is to be based on the land alone. There seems to be something contradictory in the White Paper proposals here.
Next, I cast doubt on the right of the leaseholder to buy the freehold at any time during the period of the lease. If this is to cover 99 years, it seems a very far-reaching proposal, and it will present a number of problems. It will reduce the incentive on the leaseholder to acquire his freehold. I wonder what the situation will be if a ground landlord dies and lawyers want to wind up his estate. If the leaseholder does not want to buy the freehold, presumably the number of other prospective buyers of the ground lease will be very few and far between. Will there not be quite a number of estates which cannot finally be wound up because of the outstanding ground rents?
I notice, and I welcome, the decision to include the local authorities in the proposed Bill's provisions. It is unarguable that some local authorities have not behaved very well in offering freeholds to their sitting tenants. I notice, also, that there is a qualification with reference to the exclusion of development rights. I wonder whether we shall receive a firm assurance from the right hon. Gentleman that such exclusions on account of development will be kept to an absolute minimum and will not be used as an excuse to reduce the effect of this aspect of the proposed enfranchisement.
I certainly welcome the alternative to purchase by providing the right to extend the lease by 50 years at a modern rent. This seems to be an eminently suitable suggestion, particularly in present circumstances. I do not say that only because I suggested something similar during the 1962 debate, but it seems to me that, as a basis of easing the position at a time when we know that housing is in very short supply, to extend the lease in this way and relieve the position gives breathing space and also gives the building programme an opportunity to catch up so that the supply and demand situation of housing generally is more in balance. Also, with a slight variation on the proposal in the White Paper, it might also provide a better atmosphere for ground landlords and their leaseholders to come to grips of their own accord.
No doubt many of the variations that I have mentioned, and which have been mentioned in various articles in newspapers and trade papers that we have read in recent days, will be debated and altered during the Committee stage by whichever Government is destined to resolve this problem. Naturally, I welcome my right hon. Friend's remarks in this regard.
With these reservations, I welcome the White Paper as an attempt to resolve what everyone admits is a most complex problem, one which has been bitterly resented and bitterly misunderstood and will continue to be so unless we find a solution. I welcome the White Paper, in the words of the Government Motion, as a basis for future legislation.
It has become apparent during the debate that there are only two hon. Gentlemen opposite who fully appreciate the difficulties of the leasehold system and the hardships involved. I put it to the hon. Members for Cardiff, North (Mr. Box) and Barry (Mr. Gower) that they have been fulsome in their praise of the White Paper, but we have not had a word from them about whether they dissent from the proposals put forward by their right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). I should like to hear their views about that.
I do not want to make another speech, but, obviously, I do not dissent from what my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has said. What he has said may not go far enough. However, I am sure that hon. Members on both sides of the House will agree that if we can find a fair price solution to this difficult problem, that is the one we want.
I am sure that the constituents of Cardiff, North, and Barry will pay due attention to what the hon. Gentleman has said.
The crux of the matter is: what is a fair price? I do not consider that a fair price on reversion includes the bricks and mortar which have not been contributed by the landowner. The hon. Member for Gloucestershire, South (Mr. Corfield) dubbed the White Paper—or so one could deduce from his remarks—a wholly immoral document. I do not in any way doubt his integrity; he has been consistent in these matters ever since he entered the House of Commons. I would assume from what he has said that his is the voice of the Opposition in dealing with leasehold reform.
But if he considers the proposals put forward by my right hon. Friend as immoral, what would he consider to be the position of friends of mine who had reached the age of 70 and had lived in their home for 55 years, and then found all at once that they were to become tenants of their home, that in doing so they would have to pay a very large bill for repairs to put the house into the conditions that the landlord thought necessary, and that they would also have to pay £1,200 for the house which they had considered their home for all those years? If that is not immoral, I do not know what is. In putting an end to that, the White Paper, I consider, is a moral document and not an immoral one.
The right hon. Member for Kingston-upon-Thames was apparently in great difficulty. He said that the Conservative Party had given great attention to the problem and had come to certain conclusions. As my hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin) said, what the Conservative Party produced was a veritable mouse. The right hon. Gentleman's difficulty arose from the fact that he realised that in a space of 16 months the Government had produced proposals. The right hon. Gentleman said that they were hastily produced. Every week hon. Gentlemen opposite say that the Government have been in office for a long time but are not producing anything. Now that the Government have produced proposals, the right hon. Gentleman says that they are hastily prepared.
In effect, the right hon. Gentleman's speech was grudging appreciation of the fact that people in many parts of Lancashire, the whole of South Wales, and so on, have come to the views expressed by the Government in the White Paper. I urge the right hon. Gentleman, when he considers these proposals again on behalf of the Conservative Party, to consider the views of his hon. Friends the Members for Barry and Cardiff, North, for they agree fundamentally with the taking away from the valuation of the bricks and mortar on the land. This is a point of fundamental importance.
This day is a momentous occasion in the history of South Wales. We are emancipating not just houses, but the homes of thousands of people in South Wales. In so far as the White Paper affects England, the Englishman now owes a debt to South Wales and the Welsh Members for their consistent approach to this problem. We owe a great debt to my right hon. Friend for bringing these proposals forward. We who have been conversant with the problem for many years have appreciated the great difficulties inherent in the system. Probably he has had a great fight with the purely academic legal mind in this respect.
I do not say that with any disrespect to the legal approach to the matter, because I fully appreciate the difficulties. But here we face moral principles above purely legal ones. We should also pay great tribute to my right hon. Friend the Secretary of State for Wales, because we realise that he has been the watchdog for Welsh interests in this matter. I repeat, today is a very momentous occasion.
We heard from my hon. Friend the Member for Swansea, East (Mr. McBride) about the question of the sanctity of contract. I am glad that that matter has been dealt with, however briefly, today. I spoke about the matter some years ago. In my area, the sanctity of contract in the matter of leasehold is absolute bunkum. The people know it is. If they wanted a roof over their heads, they had to lease a piece of ground. By leasing that piece of ground for 99 years, they helped to produce the wealth of the country by manning the mines, iron works, steel works, and so on. We owe a great tribute to them for that, but they simply did not have any choice in the matter, I will not deal with the proposals here, because they have been dealt with adequately already by a number of hon. Members, and later we shall hear the views of the Secretary of State for Wales. I think that they can be adequately dealt with in Committee when we deal with the Bill.
However, I want to express my full appreciation of two important points in the White Paper. One is the departure from the old principle of buying leasehold property—the separation of the bricks and mortar from the land. This is fundamental to the problem in South Wales, and I am glad that the Labour Government have been able to deal with it. The other aspect—and I say this with some reservation—is the choice of the 50-year period. My hon. and learned Friend the Member for Dulwich posed the valid question whether, during that 50-year period, possible purchase can be reconsidered.
I want to mention the debt that the people of Wales owe to the Prime Minister. On two occasions in South Wales, in 1964, he pledged that he would pay due attention and give priority to the problem of leasehold. He bound this up with the other vexed questions of rent and land reform. We have the Rent Act on the Statute Book, the Land Commission Bill is before the House, and now we have these leasehold proposals. I hope that in a few weeks' time my right hon. Friend the Minister of Land and Natural Resources, if he is successful—as I hope he will be—in retaining office, will be presenting the proposals in this White Paper in a Bill before the House of Commons.
Having listened to so many hon. Members from Wales, I feel rather like the Irishman who asked, "Is this a private fight, or can I join in?" I say this because, despite my name, I wish to draw attention to the fact that the problem of leasehold reform exists to a marked degree in the Midlands, particularly in the Birmingham conurbation and spreading over into Smethwick.
I welcome the opportunity to discuss leasehold reform. It is of vital importance to a very large number of people in the Midlands and I know that many of them feel that their case has not been greatly helped by hon. Members opposite who have sought to make party political points. That sort of thing merely leads to a hardening of attitudes when we should be seeking the greatest possible measure of agreement.
In welcoming the opportunity to discuss the subject, one feels that it is hardly possible to congratulate the Government on bringing forward a White Paper on a matter which has been under discussion since 1884 for we did not know until after 5.30 p.m. today that there was to be a General Election for certain. When we began to discuss this White Paper, therefore, we were still in a pre-election period. Why was not a Bill presented instead? Why are we not discussing the Second Reading of such a Bill instead of the rather academic points of the White Paper?
It really will not do for hon. Members opposite to ask why the Conservatives did not deal with the matter in their 13 years of office. Leaseholders in general will not accept that kind of argument. They will point to the fact that the party opposite is not in office for the first time. Leaseholders will find much to criticise in successive Governments.
There is grave danger that the White Paper may raise the hopes of leaseholders for early legislation. I believe that it would be correct to say that, had such legislation been ready, it would have been presented to the House rather than this White Paper. We should not now be discussing broad principles but the hammering out of some kind of agreement between both sides of the House. There is, in fact, a broad measure of agreement between the Minister's statement and the statement made by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). [HON. MEMBERS: "No"] There is broad agreement on the need for change.
I have always been a firm advocate of leasehold reform, and I would welcome a Bill which led to wide changes. But I realise that there are broad ranges of opinion within the House and I would like to see us try to get an agreed solution rather than one which represents a party political viewpoint.
When speakers seek to obtain sympathy for their case, they often refer to the aged and to widows, but in this subject one can with justice point out that it is very often the aged and the widows who live in streets most affected by leaseholds. Often, the streets are called "Mafeking Terrace" or "Pretoria Villas", both in the Midlands and in South Wales, and the very names proclaim the date at which they were built. In my constituency, there is row upon row and street upon street of such houses. Indeed, one ward is made up of houses affected by leasehold, except in a few cases where groups of lessees have banded together to buy blocks of freeholds.
Some of the houses are in very bad condition and do not present a great problem because they are scheduled for redevelopment under council housing schemes. The real difficulty lies in the well-maintained houses of 60, 70 or 80 years old which have a good expectancy of life, which have been improved over the years with proper sanitation and other facilities installed and which are, therefore, first-class dwellings that will continue to provide homes for a very long time. The owners of these houses have a growing feeling of worry and, indeed, fear as they realise that their leases are coming to an end. I take issue with the hon. Member for Aberdare (Mr. Probert), who spoke of a family who had lived in their house for 55 years and suddenly found that they were to lose their home. How could this have happened, unless they entered into the agreement without understanding it? They must have known, under present legislation, what would happen.
Many of my constituents explain to me how worried they are in realising that their leases are coming to the fag end. They have great difficulty in selling—not because it is difficult to sell a house in the Midlands, where there is a terrible housing shortage, but simply because of the difficulty of the would-be purchasers obtaining a mortgage. I agree that it will make a great improvement in the general housing situation if such houses can be bought and sold with a reasonable expectancy of life.
If we face the problem squarely, we see that the broad aims of the White Paper are acceptable to most people. What are not acceptable are the terms in which it is couched and its implications, together with the failure to explain the correct legal position. I am not a lawyer, but since the White Paper appeared I have ascertained the legal position.
We should be explaining to people that while it may be possible to say that, in equity, the lessee owns the bricks and mortar, in law he does not. No one should go round saying that he does own them in law. We should explain that until such time as the Government brings in legislation to give leaseholders the opportunity to own the bricks and mortar, they do not own the bricks and mortar in law. To say merely that they do "in equity" is misleading and an injustice that should not be perpetrated on the aged, the widows and others we are trying to help. It does not strengthen the case but weakens it.
There is great need to give security of tenure to people with leases and reform is needed. I have listened carefully to the arguments of some of my hon. Friends who say that if an agreement has been entered into that agreement should have been understood and therefore should have been upheld. Apart from three rows of houses which fetch enormous prices relative to those in other parts of the country, except London, in my constituency there is no choice other than between a council house and a pre-1914 house. It is ridiculous to think that in such circumstances there is a free contract, a free choice. One has to take a house of that type because there is nothing else. We have to help people in that position, and I hope that hon. Members who do not have this problem in their constituencies will show sympathy and understanding for those who do.
Certainly we should consider very closely the proposed terms which are outlined in the White Paper. There are dangers, for this is not purely a one-sided argument. For example, there is the danger of property continuing to be used long after it has ceased to match up to the standards of the present time. When it comes to the end of a 99-year lease, much property in industrial towns is not good, and while keeping those which are in good condition and which we want to keep we do not want also to be keeping slums which are hardly worth keeping and which will perpetuate themselves and prevent private development. In my constituency the number of new private houses built since the war could be numbered on one hand, and it would be a great pity if in the Midlands and other areas we were to go on with redevelopment being carried out only by local councils. This proposal might lead to a reduction of the amount of private development which could take place with the end of leases. This is a matter which should be considered very closely.
The subject of price has exercised the minds of many hon. Members today. I am not entirely happy with the suggested way of making a financial settlement. I would have liked to have had the district valuer asked whether he could assess what would be a fair market price under the conditions of whatever legislation is introduced. As a layman, that seems to me to be more fair than the present rather arbitrary proposals.
I should like to ask a straightforward question. We have heard that flats are to be excluded while houses are included. Maisonettes are a popular form of building in the Midlands where we have to build rather higher. Are they to be included? I hope that they are.
There is an exception which ought to be made. In certain areas enlightened councils offer council houses for sale to sitting tenants. It is normal practice not to offer the freehold in such cases. Even my own council does not offer these freeholds. It would probably be sensible for the council to keep a freehold in these circumstances. This is quite a separate issue from private ownership.
Finally, ought there not to be a covenant when freeholds are acquired compulsorily? It would be wrong for a person who acquired a freehold compulsorily to be able to sell it the following week. A five-year or ten-year covenant would ensure that these freeholds were purchased by people who wanted to live in the house. If they did not want to live in the house, we would want the site to be redeveloped if that was at all possible.
I welcome the opportunity to discuss this matter. If legislation had been before the House today, it would have had my support in any Division, but I reserve my right to criticise individual provisions in any legislation brought forward by the Government which will succeed the present Government so soon. However, I believe that these proposals are a serious attempt to bring this subject into public discussion which must do good. Leaseholders throughout the country do not want party political points to be made out of this by either side. They want action to be taken by this honourable House and they could not care less which party does it, as long as they get it done soon.
May I follow practically all other Welsh Members and declare my interest in leasehold? So pervading is the effect of leasehold in Wales that it would be exceedingly difficult for any householder, business or professional man not to declare such an interest.
On the eve of the election, we have heard the Conservative Party speak with its customary number of voices. It is an extraordinary feature of today's politics that, with an election so imminent, we find the Conservative Party split three or four ways and presenting to many contrary views. We have heard a great deal from every quarter of the Conservative Party about how hon. Members opposite have some reservations or some disquiet about the leasehold system. To that extent, the election has cast its shadow before it. However, when we come to the fundamental proposal which has come from the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) we find that at this late stage, at one minute to twelve, the Conservative Party, at long last, has come out officially to say that it believes in the principle that a leaseholder should have the right to acquire the freehold of his property. This is a deathbed conversion.
But Wales will not be deceived, for Wales will understand that what the Conservative Party has done today, frightened of the growth of public opinion and aware that the Labour Party has diligently worked out a viable plan in the short time that it has been in office, is to save what is left from the wreck. Its proposal, which has been put forward clearly and unequivocally, is simply that we should give the right to a man to buy his freehold, but that it should be at the market price. That is what the Tories have said. By the market price, they mean not only the cost of the land and not only the development value which may be within the land, but the house, the bricks and mortar, all that we in the Labour Party say has already been paid for by the leaseholder. This is a view from which, under the questioning of my hon. Friend the Member for Aberdare (Mr. Probert), the hon. Member for Cardiff, North (Mr. Box), who is temporarily my Member of Parliament, has unambiguously declared that he does not dissent.
If our politics are to be open and free from confusion, it must be known that the view of the hon. Member for Cardiff, North and presumably, if he had taken the trouble to remain in his seat, that of the hon. Member for Barry (Mr. Gower), is that they do not dissent from the official view of the Conservative Party that the right to enfranchisement must be given only on the principle that the leaseholder must buy his own house twice.
I will certainly declare my interest. I have a leasehold property and I also have shares in a company which owns leasehold property.
The expression "fair price" was adopted by the right hon. Member for Kingston-upon-Thames, who said that it was the market price, which definitely included the value of the house. I do not believe that the hon. Member for Cardiff, North wants to evade the issue. If he does not agree with his Front Bench on this subject let him say so, but he cannot have it both ways.
On occasions I have dissented from the view expressed by my Front Bench and I have never dithered about doing so if I felt that a matter of principle was at stake. The hon. Gentleman, however, has not dissented in any way from the Conservative proposal that the right to enfranchisement must be conditional on the leaseholder paying the full market price, including the value of the land.
The hon. Gentleman really must not misrepresent me. I said that a fair price was the solution to this problem. Had the hon. Gentleman listened to my speech he would have heard me also say that the pendulum had swung too far in the direction of the ground landlord, but that perhaps this was swinging it too far in the opposite direction. I said that something between the two, the payment of a fair price, might be the answer.
The hon. Gentleman makes it clear that he does not agree with the method of assessment in the White Paper and believes that it goes too far in favour of the leaseholder. I gather that he dissents to some degree from the Conservative view that the leaseholder should pay the full market price.
Nevertheless, the hon. Gentleman cannot dodge the fact that he believes that the White Paper favours the leaseholders of South Wales far too much. My hon. Friends and I do not believe that and that is why we are bound, on this St. David's Day, a memorable day for Wales, to feel that Wales has been given an announcement which will bring to an end the injustices which have been going on for generations.
For quite a time I have heard of how the principle of the sanctity of the contract is being breached. I have equally heard that our proposals are immoral. Those two views are being put forward by hon. Gentlemen opposite. We in South Wales look back and ask, "How morally was the land acquired on which the homes of our constituents are built"? It is an important question. If the morality of this matter is being put at issue, have we not the right to turn back the pages of history and ask by what right, what morality, the owners of the large estates that straddle Wales came by their land?
We recently had a discussion, which was well canvassed in Wales, during which we found that the soil of the land even of the Severn Bridge which is being constructed had to be paid for to the Beaufort Estate. This estate straddles across Wales to such an extent that before the reform legislation it was at the behest of the then duke as to who would be the hon. Member for Pontypool and who for Swansea, West.
When we look back we are obliged to ask ourselves how these landlords acquired their land in Wales. I am mentioning the Beaufort Estate by way of example, particularly since we know something about it. It is a name well known in South Wales. My hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) even has a township in his constituency named after it. I am not sure that he takes a particular pride in that, although I know that he does not exactly follow the politics of the Beauforts.
To take that one example of the Beaufort Estate—and I do not wish to worry hon. Members by giving an historical exercise—these points should be made because of what has been said about the morality of the matter. How did Beaufort begin? There was a playboy, James I, who had some singular whims and tastes, among them being that he elevated many a page boy to be duke or earl. Let us go back to, say, 1607, when lands were being bestowed on people like the Beauforts. We find that one of Beaufort's ancestors was the first Master of the Horse. I will not go into the morality of the question, but it came about that following a meeting in a hunting lodge between the then Master of the Horse and the notorious king, these grants came into existence.
Is it seriously suggested that these huge estates came into the hands of these landlords in Wales or elsewhere by accident, rather than by the most ambiguous and distasteful methods? Is it not time, when hon. Gentlemen opposite are talking about the sanctity of contract being breached and that there is something immoral involved in this, that we did something to make the family homes of our people secure? Is it not time that we reminded the nation that these robber barons or doubtful personalities of the past never came to their land by any legalistic method?
It is ludicrous for anyone to put forward the proposition being adduced by hon. Gentlemen opposite. It is characteristic of the Tory Party that on a day when we are discussing this issue they should seek to talk of morality. What has happened so often with Conservative talk is that they are merely talking about morality but start by saying, "We must begin by looking after our pockets".
We are making a radical assault on the idea that the landlord has a right to his land and everything that goes on it. This radical approach to an old doctrine needs to be taken and on this side we are proud of it. We do not have to apologise because we are putting into effect a principle which is part of a social revolution. The lawyers on the benches opposite have suggested that this is a tremendous breach—this severing of the land from the house—and they are right because it is a breach in that respect and it has come about, I am glad to say, thanks to the energy of my Welsh colleagues and I and the fact that we have a Minister for Land and National Resources with courage and a Secretary of State for Wales in the Cabinet—and not least because we have a Prime Minister who, having given pledges to Wales, is prepared to see that they are fulfilled.
This is, of course, a long battle. It is a battle which Wales has fought before. My right hon. Friend the Minister rightly drew attention to the fact that a Measure was introduced in 1920, the Places of Worship (Enfranchisement) Act. That legislation has always interested me. I confess that wherever I canvassed the view now being expressed in the White Paper I drew attention to it, as have some of my hon. Friends for many years. It was because we knew that we had a precedent—a precedent which Wales had given us—that we could canvass the proposals in the White Paper.
So rapacious were the ground landlords—so unscrupulous and utterly immoral were they—that during the 19th century they were getting their hands on the chattels and churches of Wales which were coming to the end of their leases. Greedy even for the houses of God in Wales at that time, the ground landlords were prepared for them to be used for worship only upon payment of extortionate premiums, high ground rents or large capital sums.
I remind hon. Members—if my hon. Friends who represent Wales need reminding—that Wales persuaded the nation in a battle that lasted for many years that there should be the right for people to be able to save their places of worship for themselves. There were four or five attempts to gain that right. Four of them were made in 1891, 1892, 1911 and 1912. It is as a result of that—of Wales being in the vanguard of this movement—that this reform is being made; that the ground landlord should have precisely the same compensation in respect of a home as he receives in respect of a chapel.
When I hear Conservatives in Wales trying to spread confusion by saying that there is difficulty in the principle, that it is impossible to apply, that it would introduce something of such astounding novelty that there would be complications in the Bill, I say to them that they should go to any experienced valuer in Wales who will tell them that this principle has been operated over years in respect of places of worship without any difficulty. Therefore, we know that what we have in this White Paper is a viable and moral scheme.
I will come to that in a moment.
I hope that it is fully appreciated in Wales and Smethwick what the differences in cost would be if the Tory Party came to power—an unlikely probability, but let us test this extraordinary hypothesis—in money terms to the leaseholder if he lived in Cardiff or in Smethwick and if the Tories fulfilled their five-minutes-to-twelve promise of tonight that they would give a right of enfranchisement on their terms. I realise that there are some dangers in trying to make an assessment, because, as the Minister rightly said, there are so many variables, but perhaps I can presume to be a little bolder than he could be in this context.
I put precisely the same question to valuers in South Wales: what would be the difference in the so-called market price of typical houses in South Wales if the principle belatedly adopted by the Tory Party were applied and if that adopted by our party were applied? I am sure that the attention of Wales is focused on this debate. The are 400,000 leaseholders in Wales who are waiting to hear the views expressed in this Chamber. Therefore, it should go out to them how substantial are the differences in payment which they would be called upon to make if they wished to acquire their freehold if Labour is returned to power or if the Tories come back.
Let me take a typical small terrace house in one of the valleys, in a back street of Swansea or in some of the more modest areas of Cardiff with a value, with vacant possession, of £1,000. If the lease had 25 years to run and there were a small ground rent of 30s. per annum, on the Tory Party's scheme it would cost £180 to acquire the freehold, and on the Labour Party's scheme £31. I hope that it will be realised throughout Wales and, indeed, the Midlands that the differences can be as large as that between the scheme presented by the Tories and the one which we believe to be moral and equitable.
Let me take a small house as would be in a typical area in the Cardiff, North constituency, Plasnewydd, with a lease which has 19 years to run and a ground rent of £2 10s. per annum which today would bring £1,600 vacant. There are many such houses in Barry. The indolent Tories did nothing to prevent large sections of the town of Barry from being utterly immobilised because of the refusal of some of the ground landlords to sell the freehold in any circumstances. Under the Tory principle, the freehold of such a house would cost £450. Under the principle expounded by the Labour Party, it would cost £54.
Let it be know that the differences between the two parties are not marginal, as the hon. Member for Smethwick (Mr. Peter Griffiths), in his attempt to blur the differences, tried to indicate. The differences of principle are wide and they are reflected in the figure which we regard as just and which should be paid by a leaseholder in Cardiff and the figure which, perhaps would be paid under the Tory principle.
I have deliberately selected typical properties, and I have gone to a qualified—[Interruption.] Let the hon. Member for Cardiff, North put the same questions which I have put to a qualified valuer in South Wales—we have many—and he will find that, although there would be marginal differences perhaps between valuers, they are great and wide as between the Tory formula and the Labour formula.
Let me give a final example. I take a small property whose vacant possession value today would be £2,350 with a lease which has 27 years to run and a ground rent of £2 10s. If the Conservative formula were applied, the price of the freehold would be £470. If the Labour Party's formula were applied the price would be £53.
The hon. Gentleman will have plenty of opportunities to put forward his argument in the election campaign.
It is right that it should be understood that there are great differences of principle between the parties. It is right that it should be understood that there is considerable ambiguity in the scheme of right hon. and hon. Members opposite, some of whom think it utterly immoral that there should be any interference with the sanctity of contracts—that view has been clearly expressed today—and those who say that the market price or the full economic rent, as I understand it should be paid. That was the alternative presented. There is no alternative in the Tory Party's scheme to the 50 year extension which we are proposing. What the Conservatives are offering is either the market price, or turning the owner of the house into a tenant at a market rental.
The hon. Member asks about flats. What zeal of the proselytiser the hon. Gentleman shows in his sudden conversion to the enfranchisement proposals by wanting to have every type of property taken into account. I heard the Minister make a very measured statement in which he declared that he would give full consideration to the Wilberforce Report and that he would study it with great care to see whether he could turn the recommendations and proposals in it into a viable scheme so that the leaseholder of a flat could take advantage of it. Hon. Members opposite who have hopes that none of these schemes will come to fruition—the flats scheme, for example—should be a little measured in their pessimism.
I realise that, after 13 years in which the Tories were not even able to work out a feasibility study, they felt confident that when the Labour Party came to power we would never be able to deliver the goods. But the goods are being delivered, and after the election comes we will see the goods are delivered in a Bill which will be proudly presented and received by Welsh Members of Parliament.
I will not attempt to follow the hon. Member for Pontypool (Mr. Abse) in his remarks save to reflect that he mentioned that his constituency was at one time a rotten borough in the patronage of the Duke of Beaufort—and I hardly think that the hon. Member would have been nominated in those days, at least not for his views on leasehold reform.
I shall speak for only a short time. I am happy to say that I have no interests to declare. As far as I am aware, there is no leasehold property in my constituency, and it is my view that there should be no leasehold property in anybody's constituency. In the long time since I first had acquaintance with the labyrinth of English land law I have thought that it badly needed simplification. The great F. E. Smith, then the Earl of Birkenhead, in the 1920's tried to simplify the law, and succeeded to a certain extent by the Property Acts of 1925 and 1929 but, even so, we are left with the highly complicated system of land tenure of today.
I was brought up in the belief that the land belonged to the people—not to the landlords, not to the State, but to the people; and I have always believed that the leaseholder should be enfranchised. I am very happy to give the warmest possible welcome to the White Paper and, indeed, I should be prepared to go further than the White Paper has gone.
As a member of the legal profession I should like to deal with the argument of sanctity of contract, which I believe to be absolute nonsense in this context. Certain socially ameliorating legislation was introduced in the 1920's which obliged landlords to fulfill their obligations in small tenements and small houses, and the legality of the apparent effect of those Acts was challenged in the court, when there was a famous judgment by Lord Justice Atkin, as he then was, one of the greatest jurists of his age, in which he said that where there was gross inequality of bargaining position in the original contract, the same considerations could not apply as where there was a contract openly entered into with people of equal bargaining power.
How can it be argued that in areas such as those in South Wales, where the only possibility of getting land on which to build a house was to get leasehold land, in 1870, there was equality of bargaining power? There was nothing of the kind. If we are to make any advance socially in this country the argument of sanctity of contract must be carefully weighed and kept in proper perspective. It is a very important principle in the right circumstances, but where there is gross inequality of the bargaining power, as when most leaseholds were originally entered into, it is nonsense to pray this argument in aid today.
May I introduce a note of cynicism into the debate? I have looked at the history of the attempts to reform the leasehold system in this country. Any number of Bills have been introduced into the House by private Members. We all know of the great efforts, to which I am happy to pay tribute, of the hon. Member for Cardiff, West (Mr. George Thomas). I am sure that we regret that he is not here today. Not only private Members but also Governments of different complexious have tried to reform the leasehold system and there have been genuine attempts when this House was overwhelmingly in favour of some kind of reform. But somehow or other we have still the leasehold system with us, and it is not without significance that even today we are discussing only a White Paper.
This is a general debate on leasehold and there is not a Bill before the House. It needs a very tough Government and a very tough Minister to get through the House and another place the necessary legislation to reform the leasehold system, but I hope that whichever Government is in power after the next election will give priority to a Bill to reform leasehold and will push the Bill through.
It can always be argued that there is some injustice when we reform the law. After all, we are changing a system and we must balance these matters. We have heard arguments about morality and about principle but I believe that this is so much bunkum. All we can say that there will be far less injustice if the leaseholders are enfranchised than if they are not. There will be some hardship and inequality here and there in the changes. We have to accept them, while trying to avoid them as far as possible. There are bound to be equitable arguments on both sides whenever we change an established system.
One is bound to be able to point to a degree of hardship in one place or another, but that does not in this context detract from the fact that we ought not to have had a leasehold system in the first place. I am not an authority on the law in Scotland, but I understand that there are no leaseholds in Scotland and that the problem does not arise there. Even if one buys a flat there, one buys the equivalent of the freehold of the flat. I cannot see why we cannot do that in England and Wales, too, and I should be prepared to support legislation to introduce simplicity of tenure into our land system whereby we should have only freeholds or the equivalent of freeholds and the leasehold system would be abolished altogether.
May I conclude by mentioning one matter concerning the value which is to be paid? It seems to me that we could have a simpler system of evaluating the land than that contained in the White Paper. We must have a broad and simple touchstone. It seems to me that a house plus the land can easily be valued. What would the house make if it were freehold property? If a percentage were introduced to apply throughout the country—say 10 per cent.—as the value attributable to the land, this would be a far simpler system.
There would be complaints from many quarters if such a simple system were introduced, but it would be far better for the majority of the people. Looking back at the historical development of leaseholds, it seems to me that it would be fair to say that the value of any land where the leaseholder has been emancipated is a certain percentage of the value or the house and land sold together as though it were freehold.
We have listened with some interest to the minority views of the hon. and learned Member for Montgomery (Mr. Hooson), who has been giving us such a graphic representation of the Parliamentary Liberal Party in a few weeks' time. We should not overlook that the Liberal Party have campaigned on the subject of leasehold for a very long time.
It is a good thing that we have arrived at a moment in time when leasehold reform is presenting itself as a practical possibility. The hon. and learned Member expressed some cynicism which perhaps is justified in the light of the past, but we now have quite a different situation because the housing situation is different, the pressure for housing is different and more people are buying houses. This represents a change in the whole of the housing occupation of the country. We are in a new situation because of the Government's Rent Act. I trust that we shall shortly be in a new situation because of the provisions in respect of the Land Commission. If it were not for this background the possibility of leasehold reform would fade considerably.
It is plain that on all sides of the House—though not perhaps uniformly from the Opposition—there is a welcome for a Measure which is by no means determined by electoral considerations, whatever may have been said by hon. Members opposite. Within my constituency there is a very large estate owned by Magdalen College which is occupied predominantly by people who do not vote for me. I do not kid myself that because of this promise in the White Paper they will suddenly have a change of heart. We as politicians know that people do not make up their minds at the polls over one single issue. There is much more to the change of public opinion than that. Moreover, that this Government devote one day to a measure which will benefit a relative minority of voters, whatever their colour, scarcely allows the claim that this is an election, vote-catching measure. It is a measure which we have promised ourselves, and which we have promised the country for so long, and that is precisely why this White Paper is before us tonight.
The right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) suggested that this was a hastily presented White Paper. Those, I think, were his words. Of course, my experience of gestation periods is likely to be a little bit narrow, but, compared with the time I am used to, it has been some 14 months since the Queen's Speech in November, 1964, which promised a measure of leasehold enfranchisement, and I do not think there has been anything hasty about this. I regret very much that the difficulties which surround the problem should have occasioned so much delay. But here it is at last. It is a singular indication of the haste with which we are anxious to get this through that not only two of my hon. Friends on these benches referred to it as "this Bill before us "but my right hon. Friend the Minister of Land and Natural Resources himself made the same mistake, and I can only urge that this, if I may use a misnomer, poignant error is an indication of what I trust we shall be doing when we come back with a reinforced majority in a few weeks' time.
We have gone through a period of massive housing change—I think few of us have taken this into account tonight and few of us have tried to place the problem of leasehold reform against it—an era in which rising land costs and the possibilities derived from developments have made nonsense of the security which appeared to be offered by the 1954 Act. For instance, in my own area, in Tooting, a leasehold house with a lease approaching its end was the subject of an approach by the occupier to see whether the freehold might be purchased; a similar approach a few years before had met with the price of 50 years' equivalent of the ground rent; the latest approach, before this Government came into power, was for no less than 500 years' equivalent of ground rent—a measure, firstly, of the inflation of land values, but, more particularly, of the fact that had that lease fallen in and a Tory Government been in power the possibility of developing that land would have meant the end of the tenure of that accommodation.
The fact is that leaseholds and their values have tended to diminish while the values of freehold property have increased, and while the value of the £ has diminished. It is this fact above everything else which has meant harsh injustice to people who devoted large capital sums to leasehold property always in the hope, however slim, that the freeholder might relent and sell the leasehold or that some legislation would be brought in to allow them a measure of leasehold enfranchisement such as we are discussing tonight.
In many leasehold estates there are parts of houses where the freehold has been sold, and where this makes absolute nonsense of the claim made by the hon. Members opposite that these great leasehold estates represent good management and better planning. We have lived through a time when local authorities' planning powers have grown and outweighed the planning possibilities of leasehold estates.
The hon. Member for Folkestone and Hythe (Mr. Costain) must be a little more specific. My right hon. Friend the Minister has paid tribute to the well-run estates. I do not differ from that. I am castigating the badly-run estates, and when hon. Members opposite wave aloft the banner of London's squares as examples of what leasehold estate management can achieve, it seems to me that those banners are concealing the ill-run estates which are so frequently owned by freehold property owners granting sub-leases.
I welcome the White Paper first and foremost because any legislation which follows will almost certainly lead to an end of the leasehold system as we know it now, and that is something which the hon. and learned Member for Montgomery will welcome. There are one or two points in the White Paper about which I have some misgivings, and I have not heard any reference made in a critical fashion to the five-year tenancy which the White Paper suggests should be imposed if enfranchisement is to be granted.
There are three criticisms that I have of it. First of all, if a person has to prove a five-year tenancy of his house, it means that we are sacrificing, perhaps for so little, that mobility of labour without which the economic plans of the country cannot come to full fruition. It means that he has to sit tight for five years, and he has a disincentive to move if employment entices him to some other spot.
Secondly, the boot is on the other foot when it comes to talking about widows and orphans. Say that a wage earner with a family is purchasing a leasehold property and, within the five years which is required to prove his tenancy, he dies. It becomes necessary for his widow or whoever is administering his estate to get rid of that house. It seems to me that five years is an unnecessarily long time to impose upon anyone to assert his right to a tenancy. I do not believe that an individual householder buys a house and occupies it for as much as a year unless he is proving his intention to stay where he is.
Lastly, there is another small point about the five-year imposition, and that is where an elderly person makes a house available for perhaps only a short time to a member of his own family, not to make any profit, but where, by not occupying the tenancy himself for a short time and allowing it to go to his son or daughter, he loses the right to leasehold enfranchisement.
When we come to table legislation in the future, I urge that we take a closer look at the five-year period, thinking more in terms of the realities of housing among people and not in terms of the bookkeeping of large estate companies, and recognise that a year is long enough for a person to establish the intention of living in a property.
I have a few reservations about what the White Paper, with a considerable share of glossy generosity, calls fairness to landlords". I am all for fairness, but it means different things in different contexts. I am not so happy about reviewing ground rents after 25 years. It is not even something which people who have granted leases in recent years have felt it necessary to do. Even allowing for the inflation that we were discussing earlier, they have been prepared to grant leases without any review of ground rents for a much longer period—for 99 years or even 999 years—and I do not see why any legislation should give the freeholder the power to revise his ground rent after only 25 years.
I would add my voice to the plea that we do not have to be so fair to landlords that any renewal of a lease is extended to 50 years. We know that any lease for less than 50 years is precisely the lease that does not get a mortgage. Therefore, the moment that a new lease is granted for 50 years, it becomes a much less saleable product than before. Why not a new lease for 99 years, if we are talking of perpetuating a system which the White Paper should set out to destroy root and branch? We do not have to be that fair to landlords who have had a very generous slice of the cake for many years.
In many ways, the leasehold system is the most exquisite refinement of all that is wretched about the landlord system which has pervaded the country for so long. In common with my hon. Friends, I hope that we shall find a way, with the Wilberforce Committee's recommendations, to include flats in any future legislation.
I want to refer with a glow of joy to the reference in the White Paper to a chain of leases. I do not have any interest to declare, because I managed to sell my leasehold house a couple of years back. But I suffered from a chain of leases, and it is one of the most irritating things imaginable to make an approach for the freehold of a property and find that between oneself and the final freeholder there stand half a dozen people making a good thing out of a large number of such leases. I welcome the extinction of the chain lease system.
This is a first-class indication of what a Labour Government who really set out to right so many wrongs can achieve. I do not believe that this is a great social revolution, and I do not detect the malign hand of Moscow behind it, as one hon. Gentleman opposite seemed to think. I welcome it as an earnest, first, that we are struggling hard to keep our promises, and, secondly, that it displays the Labour Party's firm intention that justice shall be done, however much hon. Gentlemen opposite may castigate it as mere words and pomposity, among all sections of the community.
Like many other hon. Members who have spoken during this debate, I must declare an interest, although I do not think that it will be a very valuable one. I have become the possessor of an 80-year lease, and by definition I have to pay for it at very nearly the freehold price, so I suspect that there will not be a great deal in it for me. None the less, it is an interest which I declare.
From those who have spoken in this debate, it has been apparent that this is a problem which has strong regional overtones. Clearly, there is a problem for Wales, and I accept that. Where there are towns which consist largely of leaseholds and council property, and a person has little opportunity of making his choice between the two, there is certainly a problem, so there is a regional problem in Wales, and possibly one in Birmingham, too.
There is also a difference between leaseholders in equity. The word has been derided, but we would all agree that it makes a great difference as to when the leaseholder got his hands on the lease. For the man—and he has been instanced—who has been the holder of a lease for many years, and perhaps his father and even grandfather before him, there will be a great sense of injustice if the house finally goes from his keeping and he becomes a tenant. We can accept that. There will be a different sense of injustice for the person who, with his eyes open, buys the last 10 or 15 years of a lease, and knows what he is doing. Therefore, among leaseholders, too, there are dearly great differences in equity, and what must be put right on their behalf, so we have both the regional problem, and the differences between leaseholders.
Because I am not qualified to do so, I do not want to speak about those areas in Wales and Birmingham where this problem exists to a large extent. I want to mention for a moment or two some of the inner areas of London where it seems that the problem is entirely different and where legislation based on this White Paper might well cause considerable injustices which will have to be watched if legislation is finally brought before the House.
If one considers an area like Pimlico, which is very near this House, which was developed by Cubitts within the last 100 years, one gets the position of large areas, well within the £400 limit, where there is a moving population, and by definition few leaseholders will have been there for very long, and yet for all of them, on the present proposals, there will be the most enormous uncovenanted gains if they can get their hands on leasehold property and change it into freehold.
I cannot help but think that any legislation which works on roulette principles, which finally gives to people, admittedly in a small and specialised area, who have held leases for a short time, and may have bought them at the fag-ends of leases within the last 10 or 15 years for sums well under four figures, and which can be disposed of as freehold for more than £10,000, must inevitably create injustice. Whether or not it is an injustice to the landlord hardly matters; in fact, the landlord has been half expropriated already by the 1954 legislation. None the less, it seems to be unjust that, simply through legislation, someone should obtain a windfall involving sums quite different from those which we have heard discussed in relation to Wales.
There is also likely to be an injustice in the inner areas, near the centre of the town. A typical leaseholder may live in the bottom half of a house, or even in a basement, while other people live in the rest of the house, and there will be a strong tendency for him to try to get hold of the freehold and then, because of the tremendous prize that is dangled before him, try to move out everybody else from the house, whether or not they are protected tenants.
It is not possible to make many useful suggestions in a debate such as this, but there is great merit in the suggestion that anyone who cares to turn a leasehold into a freehold and get a gain such as I have mentioned should certainly be prevented from realising that sum by the immediate sale of the freehold to somebody else. This restriction already applies in the case of houses which are valued for probate. If they are sold within a certain period credit must be given for the extra money over and above the probate valuation.
It also applies if a person receives a grant of, say, £400 to repair or decorate his house, or to put in a bathroom. The money must then be handed back, together with interest. The sale of the property is prohibited unless that is done. In cases where large gains are made it is right that the community should be protected against exploitation in this way simply by people turning leaseholds into freeholds and selling straight away.
On paragraph 21, which dealt with covenants on enfranchisement, if legislation is introduced on the basis of the White Paper the question that I have referred to will have to be considered with the greatest care. I can only view with cynicism the prospect of managing to insert in legislation covenants which will really protect those who have bought into a well-managed estate, knowing that this means that they must wash their houses every year and paint them every fourth year—as I am under a covenant to do—and who wish to keep their street looking at its best, with uniform painting. I see the greatest difficulty in making certain that these covenants will always be applied in future if an estate becomes fragmented.
This is not an argument against leasehold enfranchisement, but it is an argument for submitting that the Government should think very carefully about the question of protecting those who are now subject to covenants of this kind.
I do not want to detain the House for very long. This White Paper, with its far-reaching proposals for leasehold reform, has been warmly welcomed in those areas most directly affected. When its provisions become law they will go a very long way to justify the old adage that "An Englishman's home is his castle."
Need I say that that applies also to a Welshman? In my constituency the proposals in the White Paper have been received with exceptional pleasure. This may be well understood when it is realised that well over 70 per cent. of householders there are owner-occupiers, a very high percentage by any standard. The proposals will remove from the minds of many of those people fears and anxieties which become more real and intense as year by year a lease nears the date of expiry. The possibility of losing one's home is very real for those people.
The publication of this White Paper last week meant that a revolutionary and radical change is envisaged in a system which has created fear and insecurity for many thousands of people for decades past, a system which was basically illogical and terribly unjust. It will be hailed as a new legal charter for leaseholders and will end for ever the continued terror of the unscrupulous ground landlord for it will confer on leaseholders legal rights founded on the principle of justice and good social morality.
The present system where, on the expiry of a lease, the law allows ownership of the houses to revert to ground landlords without their making any payment whatsoever, is totally indefensible in a modern society. Unscrupulous landlords, over the years, have taken every advantage of this provision, causing untold misery and suffering to many householders who have struggled to purchase their homes and keep them in good repair through the years. I say at once that all ground landlords are not bad and they do not all act in this manner. In many cases I know of there has been a readiness to sell the freehold reversion on reasonable terms. That ought to be said, but in the majority of cases—I speak more of South Wales and Western Ground Rents comes to mind very swiftly as one of the most inhuman and unjust—the record is not one of which they can be proud.
I can give many instances of a ground landlord refusing to sell at any price, or asking fantastic prices. This can have many different effects as the lease draws nearer to the closing date. The owner finds it impossible to sell and prospective purchasers find it impossible to raise a loan with only a short period of the lease remaining. Building societies—who can blame them?—refuse to consider loans in those circumstances. I will give one example in a letter I received from a constituent. It is dated 6th January.
I quote a small part of it:
I am the owner occupier of the above leasehold property and pay ten shillings per annum ground rent under a lease which is due to expire in nine years.
Despite the short term remaining on the lease, I have spent a large sum of money modernising the property in the hope that I would be able to purchase the freehold or renew the lease. I have contacted the landowner several times to this end without satisfaction. On the last occasion the landowner refused an offer of £250, plus legal fees, against the advice of her estate agent …
My family has now reduced in size and my wife and I would very much like to move to a smaller house. I have tried to sell the above property since April 1965 but have been unable to do so because interested parties have been unable to obtain a mortagage loan due to the short term remaining on the lease.
That is one of the problems that face many people in these circumstances.
In another instance I know of in Rhondda—and this is not an isolated case—£800 is being asked by one ground landlord for houses bought a few years ago for between £500 and £650. I will not weary the House with the many more examples which I could give at this time. One feature of the White Paper which is very welcome is contained in paragraph 7, page 4. This extends the provision to cover cases where the lease expired after the 8th December, 1964, in accordance with the promise and assurance given on behalf of the Government by the Minister of Housing and Local Government. This is extremely important and very welcome. It is evidence of the good faith and responsibility of this Government.
When I first came to the House, in 1959, I was appalled at the apparent indifference of the Tories, and especially their Front Bench, to the human problems resulting from the present law. There seemed to me to be a complete failure to recognise the injustices it permits. I felt that we were living in two different worlds. Their record over the years in opposing every attempt to right the situation is deplorable and does them no credit whatsoever.
The House can, therefore, understand why I feel sick when I hear the Leader of the Opposition talk about the wish of his party that the people should own their own homes. He should reflect upon the record of past Conservative Governments on this question of leasehold enfranchisement. He will find that it is indeed a sordid one, and I would suggest to him that it would be far better to have an example than a precept.
The White Paper makes it clear that the present Government will carry out their promise on leasehold reform and even if the leaseholder does not want to purchase the freehold—and one can appreciate conditions and circumstances where this will be the case—he will have the right to extend or renew his lease for a further 50 years if he desires. This will enable him to sell his house for a fair price if he so wishes. Building societies will be more ready to lend money to the prospective purchaser and this will allow a freedom in the sale and purchase of houses which is not now possible when the lease nears its end. This will be to the mutual benefit of all concerned.
Above all, the White Paper makes clear without any dubiety that the land belongs in equity to the landowner and that the house belongs in equity to the occupying leaseholder. Under this principle I believe that justice rests evenly with both parties. It is a principle that I am satisfied will commend itself to all decent, fair-minded people.
I have no intention of dealing with the many other parts of the White Paper. The Bill which is soon to be published will be eagerly awaited by thousands of people who have lost all hope of the Tories doing anything in this matter. I sincerely hope that it will be made as simple as is humanly possible, that the machinery for the implementation of this change can easily be understood by ordinary men and women, and that it will speedily pass through the various stages necessary for it to be placed on the Statute Book, for when it does I believe that it will be a day of joy, a day of liberation from worry, a day of freedom from fear, for many thousands of people in England and Wales.
Mr. Deputy Speaker, having sat here all day I am grateful for the oppor- tunity of catching your eye, although I understand that I am to speak for only seven minutes.
The White Paper is nothing more than a piece of electioneering propaganda. In fact, the Labour Party, having during the last election produced a manifesto which it could not honour, could not go into the next General Election with a manifesto but had to use another device which it has called a White Paper.
The hon. Member for Swansea, West (Mr. Alan Williams) made great play of the fact that the Conservatives did not know how they would vote on this matter, or whether we would vote at all. This is such a mixed grill that it is not possible to pick out the pieces. If the Minister of Land and Natural Resources wanted to test opinion, he should have produced a Bill and then we could have tabled Amendments Clause by Clause. There are a number of parts of the White Paper—[Interruption.]—I have only seven minutes, so I hope that the Minister will do me the courtesy of keeping quiet.
There are some paragraphs in the White Paper with which my hon. Friends will agree. There is one paragraph which follows exactly the policy which my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has enunciated. We believe that the people who have the primary rights are those who are living in their houses, and that they should not be deprived of their accommodation for the sake of making the property empty. What I find most regrettable in the White Paper is the use of a word such as that to which my hon. Friend the Member for Carlton (Sir K. Pickthorn) referred, the word "equity".
This is not equity at all. So far as I know, nobody on either side of the House has yet quoted The Times, which "comes clean" in its leading article when it talks about the war on the landlords. At any time landlords are fair game for the Labour Party. During election time they are particularly ripe. It is because there are more tenants than landlords that right hon. Gentlemen opposite aim their big guns at the landlords.
Had time been available I would like to have explained the leasehold system. Apart from my right hon. Friend the Member for Kingston-upon-Thames, nobody has attempted to explain it. There is no political powder there. Without the leasehold system many parts of this country could not have been developed. The leasehold system in housing is equivalent to preference shares or debentures in ordinary industrial world. The Liberal Party, which came, went and has not returned, said that it was dead against any attempt to have any type of leasehold system. Is it against debentures or dated stock? Does it not realise that there are certain parts of the community, certain investors, who, in the interests of long-term security, are prepared to accept a lower rate of interest?
Why, when they have carried out their side of the bargain, when they have accepted a low rate of interest and expect at a later date to receive a capital sum, should they be deprived of it? Why do right hon. Gentlemen opposite say that somebody who has managed to buy a lease cheaply, as people could easily have done in the last six years, should not be able to take advantage of it? A man who happens to own his own house and sells at a profit gets his profit free of tax. The Minister has not mentioned that.
Do hon. Members opposite intend to say, at the next General Election, "Let us have another gimmick"? Why not say to the motor manufacturers that if a man buys a second-hand car cheaply and it breaks down, they should give him a new car? When we start breaking the sanctity of contract, where do we go? Leasehold is part of the financial system. If I had the time I would have quoted many examples of the leasehold system having worked most fairly for the landowner, the occupier and the developer. A building which is well known to many hon. Members, Dolphin Square, was made possible only because of the leasehold system. My small group had only the money with which to buy the land. We had to get a leasehold in order to find the money to produce the building.
The Minister has ruined his case for the White Paper and for equity when he says that leasehold enfranchisement can only be brought about for the middling and lower poor. The Labour Party says that it is not interested in the middle class. That is why it restricts the ability to enfranchise all land. If it is fair for one, it ought to be fair for all. If it is not for all, it is not fair for any.
As I may be referring to assistance by and to building societies in connection with leasehold reform, I should disclose an interest as being a director of a building society and also of a trust property company, which does not own any residential long leaseholds. The hon. and learned Member for Dulwich (Mr. S. C. Silkin) commented on the varying views which had been expressed from this side of the House. He went on to express his own disagreement with certain vital points in his right hon. Friend's proposals. So did the hon. Member for Pontypool (Mr. Abse) and the hon. Member for Wandsworth, Central (Dr. David Kerr). They all expressed divergent views on the proposals in the White Paper.
There are, of course, difficult points to decide, upon which members of the same party will express various shades of opinion. But my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) stated fully and clearly the Conservative policy on long leaseholds. I will try to restate it in my own words precisely, so that I can move from that basis to criticise the proposals in the White Paper.
The Conservative policy is that the person who has made the long lease house his home shall not be evicted from it when that long lease comes to an end. He should have a right to choose in what capacity he should remain there, either under a form of controlled tenancy such as exists at present, or under a lease for a substantial and definite term, or as a freeholder. But as this involves taking away the freeholder's present right to possession of the houseat the end of the lease, the tenant must pay for what he takes, namely, the house itself either in rent or in a purchase price.
There is a corollary to that general statement of principle—that we must see that any proposals put forward do not frustrate the provision of modern dwellings and the redevelopment of the land. It would be ironical if any reform of leaseholds merely preserved the old dwellings, and perhaps even the slum dwellings, and we were unable to develop.
One could use long words about this—leasehold enfranchisement, compulsory acquisition, enforceable options, and other such long phrases, but what we want to put forward from this side of the House is the occupier's opportunity to stay on in his home and the freehold owner's opportunity to get paid for what he gives up. The fair rent at which the tenant should continue in the house could be decided by the county court or any of the other agencies, such as the Lands Tribunal, equipped to decide these matters, and so also the question of the settlement of the purchase price if the long leaseholder desires to become the freeholder.
But there are three major points in this scheme. First, the tenant should be credited with the cost of recent improvements. This was a point mentioned by the hon. Member for Rhondda, East (Mr. G. Elfed Davies). It would be fair that the tenant who wishes to purchase the freehold should be credited with the improvements that he has made to the property. Perhaps in future one would provide for some prior notice of proposed improvements of that sort.
Secondly, we would ensure that adequate building society loans are available for the tenant who wishes to purchase the freehold, something on the lines of the previous scheme of subsidising loans on older houses. I realise only too well that it is no good saying to a tenant, "You can buy the house at the end of the lease at a fair price", if he cannot raise money on a house which, if we are dealing with a 99-year old lease, is a 99-year old house and not normally one on which a building society advance would be made. So we must ensure that he has that opportunity.
Third, the tenant should have assistance, if he needs it, with the deposit in purchasing that freehold interest. We have proposed the scheme which, I think, is best expressed by "double your money"—that is, the Government granting £ for £ or a certain proportion of the individual's savings for a deposit.
With that assistance, we would hope to make it easy for the long leaseholder who has made the house his home to stay on there as freeholder. That is a statement of a fair policy and, moreover, one which is consistent with previous Conservative policy. Within the housing shortage range, we have for many years recognised the need for security of tenure for the long leaseholder. We proved that in the Landlord and Tenant Act, 1954, Part I. That Act is not, as the hon. Member for Leicester, North-West (Sir B. Janner) said, a flimsy protection to the long leaseholder whose lease runs out. He is given the rights of a controlled tenant. It certainly is not, as the Minister himself called it, an ill-conceived failure. It has worked very well in protecting those tenants who might otherwise have been evicted from their homes. In passing, I point out that since 1957 that 1954 Act has applied to long leases at normal rents, so existing Conservative legislation gives protection to a wider category than that covered in this White Paper, that is, tenants holding 21-year leases at normal rents.
The hon. Member for Wandsworth, Central said, quite rightly, that we are in a new housing situation now. There is the increase in home ownership and the growing desire for owner-occupation. There has been the introduction of the recent Rent Act and the regulated tenancies provided by it. That Act gives protection to weekly tenants of houses of quite high rateable value, and this necessitates the removal of the anomaly that at present the weekly tenant in a house of, say, £100 rateable value has greater protection in law than is given to the long leaseholder, someone with a lease for 21, 30, 40 or 99 years. Thus, in view of that present position, with the desire for home ownership and the protection for even the weekly tenant of property of high rateable value, our rethinking on leasehold reform has brought us to the conclusion that the long leaseholder deserves greater security than the weekly tenant. But such rethinking did not require from us the mental gymnastics of this extraordinary White Paper.
I am much obliged to the hon. Gentleman for spelling out these suggested reforms, which, of course, we did not have a chance to study before they were announced earlier this afternoon. I take it that he accepts that all three remedies, extension of the lease, staying on as a statutory tenant under the 1954 Act or any new legislation, or enfranchisement, are absolutely defeated if there is development. In those circumstances, the leaseholder would have no chance; he could be out in the street again.
I think one must preserve the right to develop, as I said earlier. Otherwise, any form of leasehold reform such as is put forward in the White Paper will frustrate the provision of new dwellings. All it will do is preserve dwellings 99 years old already, without any opportunity for good development. Where good development is offered, we must preserve the right to allow it to go ahead.
The hon. Member for Swansea, East (Mr. McBride) called the White Paper a "leasehold emancipation charter". If legislation slavishly followed the statements in the White Paper, it would be better called a seven-page "spivs' charter". After nearly 500 days in office, the Government give birth to this election hand-out. [Interruption.] Indeed, it is an election hand-out in more senses than one. [Interruption.]
If leasehold reform was as vitally important as some speakers from the Government Benches today have said, why have a General Election before bringing in this legislation? But the White Paper is necessary as the Government's window-dressing for the General Election.
Take paragraph 5 of the White Paper, for example. Here one qualifies for a bonanza in the following manner. Suppose one bought in 1962 the fag-end of a lease of a £10,000 house, because that is the sort of house that these proposals might cover in London. Say the lease was to end in 1967 and one paid, as one would have done, about £2,000 for it in 1962. The rise in value since 1962 would probably cancel that out and, in 1967, the tenant, having acquired the house at a small price a few years ago, would be entitled to the whole house—£10,000 worth of it—which would be handed over to him as a gift, and the very next day he could flog it. Is that equity? Is that what the Government want to bring into operation? What a lovely General Election this is going to be! [Interruption.]
I have told the Minister, who is jeering from the Government Front Bench, that we support a form of leasehold enfranchisement, and I explained exactly what form we supported. We do not support the sort of frills which are put forward in the White Paper. Up to the present the Government have had to pay electoral bribes out of the Exchequer. Now they can pay them out of the unfortunate freeholders' pockets. Who are the freeholders about whom we are talking in the White Paper? We have heard about some of them, such as the great estates. They include institutions, as my right hon. Friend the Member for Kingston-upon-Thames said—the Church Commissioners, charitable and educational trusts, and pension funds. In many cases they are persons of small means who have purchased ground rents as investments.
This is where I think the reasoning of the White Paper is so naive and false. The proposition is put forward that the land belongs to the freeholder and the bricks and mortar belong to the tenant because 99 years ago the land was provided by the freeholder and the bricks and mortar were provided by the tenant. That principle is then completely abandoned in paragraph (5) where it is applied to a 21-years' lease. How can anyone in their senses think that a person will take a 21-years' lease and build a house on the land? I challenge the Minister to produce a single instance of a house being built on land by a lessee who has a lease of only 21 years. That paragraph shoots down the whole principle in the White Paper. In 999 cases out of 1,000, what happened 99 years ago is about as irrelevant as the hon. Member for Pontypool's case on homosexuals in Charles I's reign.
It is just as irrelevant. As my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) said, as between the present tenant and the present landlord, the tenant bought the right to use the house for the remaining years of the lease and paid, therefore, less than he would have paid for the right to use it forever, the freehold. On the other hand, the landlord bought not only the right to receive a few £s in ground rent but the right to the reversion, the right to receive possession of the property at the end of the lease. He paid for that accordingly when he purchased it.
Not even in its wildest dreams, as far as I know, has the Labour Party proposed the seizure of investments without compensation. In proposing nationalisation, even when seizing for the benefit of the community, as far as I know it has always been prepared to pay compensation. But here is seizure of an individual's investments without compensation. That is why we object to the principles set out in the White Paper.
I am pointing out the parts of the White Paper which I oppose because they are based on a wrong principle of compensation, but that does not mean that there is not a good case for protecting the long leaseholder who has made the house his home and to protect him without seizure of the property from the landlord. Let us take another example.
In paragraph 3 the White Paper says:
Two circumstances make reform a matter of urgency.
I suggest that there were actually three circumstances—the two phoney circumstances as set out in paragraph 3 and the General Election. The first "phoney" statement in paragraph 3 is the story of the person who purchased a mortgage just after the war and now, as the mortgage runs out, finds that he has nothing left. But he would not at that time have got an advance from a building society on under a 60 years' remaining term and he would have got an advance for 20 years. So he has 40 left. The other circumstance is expressed as
…landowners used their monopoly power…
But later we are told that the Minister praises the enlightened management of the larger estates. It is not these circumstances that make the White Paper so urgent. The urgency is that the Government thought it was necessary to put the White Paper before the people at the General Election.
On paragraphs 9 and 10, one can really win the pools without buying a 2s. postal order. Suppose the case of a person who acquired a five-year fag-end of a lease five years ago for the equivalent of, say, five years' rack rent. The owner of the ground rent bought at the same time. I do not care whether it concerns a £200 house in Cardiff or a £20,000 house in Chelsea—the owner of the ground rent who bought it five years ago will have paid nearly the freehold value. If the tenant does not want to take over the freehold he can, under the scheme, have a 50-year lease—on a house for which he paid a very small sum a few years ago. If he wishes, he can sell that lease next day. The freeholder gets nothing but what in paragraph 10 is called
a modern ground rent attributable to the site
In face of that sort of result, my right hon. Friend the Member for Carlton (Sir K. Pickthorn) was right to refer scornfully to these phrases about "equity", "morality" and so on in the White Paper. The White Paper is dripping all over with the words "fair", "equity", "justice between the parties", "morally entitled", and so on. This is sheer hypocrisy. This is just an electioneering stunt.
I am welcoming leasehold enfranchisement in a form which I have put to the House. I shall continue to criticise the White Paper even if the right hon. Gentleman does not like it, because when it talks about equity and justice and morality, what equity and justice and morality are there when a tenant who has paid for his leasehold interest 45 years ago and who has lived in the house for all that time is entitled to receive the house free at the end of his lease—no more than his neighbour, who paid the value of the leasehold interest only five years ago and who can get exactly the same. What equity is there is giving the same gift of a few thousand pounds to each without discrimination?
One could take example after example of the inequity between tenant and tenant within this system put forward by the right hon. Gentleman. The right hon. Gentleman has gone out of his way in the White Paper to say that he desires to have equity between landlord and tenant, but in doing so he creates the greatest possible inequity as between tenants themselves.
What about the extraordinary position with flats? What are the different considerations of equity which apply as between flats and houses? The hon. and learned Member for Dulwich expressed the anomaly. I cannot see what difference in principle there is between paying a premium in 1960 for the lease of a flat which started in 1950 and paying a premium in 1960 for the lease of a house which started in 1850. Is there some distinction between flats and semidetached houses? My hon. Friend the Member for Smethwick (Mr. Peter Griffiths) called attention to maisonettes. Do the Government say, if they are to implement the White Paper exactly as it stands, "You own the bricks and mortar if your dwelling is semi-detached vertically, but you do not if it is semidetached horizontally"? That is what appears from this provision.
I shall certainly read that to see whether I can support it. Obviously, the White Paper was produced in such a hurry for the election that the right hon. Gentleman could scarcely find time to read the Report of the Wilberforce Committee. Why not provide here for the recommendations about enforcing positive covenants?
If both the right hon. Gentleman the Minister and his Joint Parliamentary Secretary had not started their careers in the Temple on the common law side, they might, perhaps, have known the maxim of the Chancery Bar, "He who comes to equity must come with clean hands". [Interruption.] The right hon. Gentleman and the Joint Parliamentary Secretary come to the House with very mucky hands with this White Paper—with the paste for the posters and the printer's ink for the pamphlets for the General Election dripping from their fingers.
I will repeat Conservative policy on this, because it does not seem to have sunk into the Minister's mind. It is that, subject to ensuring that the provision of modern dwellings is not frustrated, we would give the residential long leaseholder the right to continue in residence—as a long leaseholder or as a freeholder—but in giving that right we would not expropriate the lawful and in no way improper an immoral investment of the freeholder. So the tenant would not get his house free but would have the right to buy the freehold or a long lease at a price which would take into account improvements and at a price with which he would be assisted by building society advances and in saving up for his deposit. That is a fair scheme between the both parties, a scheme which a Conservative Government will have the honour to pursue in the next Parliament.
This has been an interesting debate and it will have an extraordinary conclusion. [Interruption.] I am used to the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). He is not half as clever as he thinks, and I speak as one who proceeded him in the National Insurance sphere.
This evening the House is called upon to vote for or against a Motion which reads:
That this House welcomes the proposals contained in the White Paper on Leasehold Reform in England and Wales (Command Paper No. 2916) as a basis for legislation.
I understand that the right hon. Member for Kingston-upon-Thames and other hon. Gentlemen opposite have described this as the "spivs' charter". They have also called it confiscation. They have referred to it as being all sorts of things—yet the House intends to accept it unanimously, without a vote.
Hon. Gentlemen opposite have said that this is an election gimmick. Then they told us that they have been having
some rethinking about it. Why have they been rethinking? It is less than 18 months since we had a General Election. At that time they issued a special manifesto for Wales. I have it with me—the authentic document with the picture of the lost leader. Being a manifesto for Wales, it had to refer to the issue of leasehold, did it not? Of course it did. It began in a typical Conservative way, with these words:
As Conservatives, we have very great sympathy with the desire of occupiers, particularly in Cardiff, Swansea and Newport, to own their own houses.
I declare my interest. Why is Llanelly not included in it? Why not the Rhondda and Monmouth? Having expressed their complete sympathy with the people of those three great towns—the capital city of my country—in the end they turned down enfranchisement, so why do they bring a bogus enfranchisement to the House tonight? You tell us that these are election gimmicks. What is yours?
I exempt you from that completely, Mr. Speaker.
Let us have no more about election gimmicks. I am very proud that this evening I am a member of a Government who are taking the first decisive step to remove an old grievance and to right an old wrong. Perhaps the House will extend its indulgence because much of this debate has been about Wales and, therefore, I think that I am entitiled, and want, to explain why, to use the words of the right hon. Gentleman, this issue for us is—how did the right hon. Gentleman describe it, "an emotional fix"?
Very well. If anybody says that I, or the Welsh people, feel emotional about this subject, let me confess at once that we do. Let me explain why.
I have grown up with this problem. I know its background. Let me set the background, because it is important that it should be understood. Welsh Members on the benches opposite dare not come out against the White Paper. They will now have to defend in their constituencies the scheme put forward in the White Paper. This is the background. This is why we feel proud about what we are doing.
Let me give the background in the setting of my own South Wales. In the 40 years from 1871 to 1911 the population of the three industrial counties of South Wales—Carmarthenshire, Glamorganshire and Monmouthshire—trebled. People came from the valleys and the hills and the other side of the Severn to work in the pits and the mills. There was work in plenty, but no homes. There were no council houses. It must appear to hon. Members opposite an idyllic society. There were a few private contractors' houses.
Hon. Members opposite have never understood Wales—but Wales understands them all right. What was available to the men who came to work was the company house, and the worker did not care to have his boss as his landlord. So the people set about building their own houses. It became a passion with them. These are the people who have been described as "spivs".
The hon. Gentleman said it in general terms He has now qualified it.
The people set about building their own houses. That is what they wanted to do. But they had to get land. Practically all the land—in some places all of it—was owned by one landlord or a few landlords and there was no freehold available. It was leasehold land.
Right hon. and hon. Members opposite talk a lot about the sanctity of contracts. What sanctity is there about that contract—the working man in a pit or mill who wants to build his own house, not on good agricultural land but on land in the valleys? The only terms on which he could get a site for his house was a lease, generally of 99 years, with terms set out in the covenant, and at the end of the 99 years everything—the house he had built and stinted, saved and sacrificed to pay for, for which he cared and which he had improved, and a garden which he had made out of the stony soil—went to the landlord.
Not only did the house go back to the landlord but it was often accompanied by a bill to meet the cost of making it in a better condition for the landlord. That is the background to the problem, the reason for all the intense feeling about it and the reason the White Paper has been warmly welcomed.
We are a land of owner-occupiers. Fifty-two out of every 100 houses in Wales are owner-occupied. In some areas such as the Rhondda it is 70 or 80 out of 100. We are owner-occupiers because, traditionally, that is our background. This was the tradition and the great sense of dignity which belonged to all these people—and these are the people about whom we are concerned. The sons and the daughters and the grandsons and the granddaughters of those people will be cheering today. One hon. Member said that the White Paper would result in cheers in South Wales—and certainly South Wales can do with a bit of cheer. We have had more than our share of tears.
We set about this task and we worked very hard. For some time we have tried to find a basis. We have been seeking to do justice to the people I mentioned. Does any hon. Member opposite claim that the present leasehold system is fair to the owner-occupier? I pause and give hon. Members a chance to say so. Does anyone opposite claim that the system which I have described is fair?
But it has been our experience, every time this problem has come before the House, that every Bill, every inquiry and every investigation has become bogged down by arguments about sanctity of contract, and by all the other legal entanglements around it. I am glad that our Government have cut right through them and have sought a solution. We looked for a principle on which we could build and plan a design to embody in legislation.
The principle which we have taken is that we regard the land, the site, as belonging to the landlord, to the freeholder. We admit that, and from it flows certain things and certain provisions in the White Paper. Secondly, we said that the house belongs in equity to the leaseholder. That may be argued. My view is that we were right to begin by laying down a basic principle of this kind. Unless we do that and unless it is accepted, I do not think that the House will arrive at legislation and my desire is to arrive at legislation as quickly as possible.
But we have gone beyond that. Having said that that is the basic principle, we have tried to clarify it. It has been said that in these proposals we have leaned over towards the leaseholder and the owner-occupier. If that is said, my answer is, "Why not?". Is it not our privilege as well as our responsibility to protect the weak? Is not that the concept of the Welfare State which we have been developing? If it is said that in some cases we are unfair to the landlord—I do not think we are—and if it can be proved that we are slightly more than fair to the leaseholder and to the owner-occupier, I say, "Why not? I am glad we are, and I make no apology for it".
We have sought to produce a practical plan. We have said, first of all, "We will define what kind of leases are covered". We have said that they should be leases of 21 years or more. Generally speaking, in Wales and many other parts of the United Kingdom they are 99-year leases. Secondly, we have sought to lay down what kind of house will be covered. We have used what are already established, in a sense, as standards—the standards in the Rent Act. The right hon. Member for Kingston-upon-Thames asked about that. He asked why we confined the Bill to houses within the rateable value limits of the Rent Act. I was not sure whether he desired that we should abolish these limits altogether. Perhaps he is producing his own scheme. But since he asked why set the limits at £200 rateable value outside London and £400 inside London, I will give the answer. Why confine it? he asked. Why not make the proposal apply to everyone? Well, I put it to the right hon. Gentleman, are these limits to be exceeded in his party's proposals, such as they are?
I hope I made it clear in my speech that our proposals have no rateable value limits. The question I asked the right hon. Gentleman, on the other hand, was, why, if this was a great principle of equity—not just an expedient for helping the poor, but a principle of equity—equity stopped at the rateable value of £200 a year?
We have set these limits—[HON. MEMBERS: "Why?"]—If hon. Gentlemen will wait, I will give the answer. Because we planned this as a consistent whole. The Bill will not stand alone. It will be one of a consistent series. The Rent Act gave security of tenure to some; and when we bring in the Bill based on this White Paper it will give it to others. Since these are related Measures the value limits obviously ought to be the same in each case.
Now to clear up the right hon. Member's concern about those left out. These proposals exclude houses having a rateable value of £200 and over in the provinces. In Wales, there are only 799, out of 879,000 houses. Indeed, outside London, in England, there are only 110,000 house above that. They are few. It is a problem of size. We think it right, since we have the value £200 already embodied in legislation, to have it again.
The right hon. Gentleman also asked me a question about what happens to development where the leaseholder purchases his enfranchisement from a local authority or the Land Commission. In this case, he does not acquire the development rights, but he can if he wishes rebuild his house on the same site, since that sort of development does not fall within the scope of the planning Acts. What we set out to do is to grant to the owner-occupier security in his own house.
We gave a good deal of time and attention to the problem of well-managed estates in all our considerations. We know, of course, that there are good landlords. One decent landlord in my town has played fair with the town. I pay tribute to him. He could have sold his rights in the town to tycoons. But he said that when he came to the town the town had been good to him and he would not do that.
There are well-managed estates, as my right hon. Friend said. We are very anxious that on those estates which are subject to covenants and to agreements by those who occupy the houses or the flats, whatever they may be, and who join in preserving the amenities, those shall be preserved. One hon. Member gave an account of the house and the terrace in which he lives, and where, every year, the occupiers are under an obligation to do certain things to the houses, and he said that they did them.
I am proud of my own country, but I hate the ugliness that man has made of some of it. I wish that there were more well-managed estates. There are some in my country, and we want to preserve them. We do not want to deny the rights of people living in well-managed estates. At the same time, we want to establish terms and conditions whereby, if an extension to a lease is given, it will be such that those well-managed estates can be preserved.
I give the assurance, therefore, that when we come to frame the provisions of the Bill it will be our intention to provide arrangements by which those well-managed estates can be sustained and be enfranchised in that setting.
We need some clarification on that point. If a local authority wishes to develop and takes a property for development, will it pay the long leaseholder compensation for the loss of interest which otherwise he will suffer?
Certainly it will.
The problem which occupies the minds of some of my hon. Friends is how it will work. As I see it, when the Bill becomes an Act of Parliament, there will be certain rights. There will be the right to enfranchise and the right to an extension of a lease. It is essential to preserve the right to enfranchise, and I understand that hon. Gentlemen opposite have put forward proposals to that end, although they fall far short of our Measure and far short of what the people want.
When it becomes an Act of Parliament, there will be many questions to be settled, not the least of which is how prices of enfranchisement are to be assessed. We shall be considering all those matters, and they will be embodied in the Bill later. We are merely setting out the basic principles here. When the Bill finally becomes an Act, and it begins to operate, I believe that our people can get down to working it in a constructive and co-operative manner.
A leaseholder will be able to apply to a free holder and say, "I want to buy the freehold of my house." No doubt the freeholder will put a price to him, and, if he regards it as satisfactory, that will be the end of the deal. However, if he regards it as being unsatisfactory and too high, he will say to the freeholder, "I am not prepared to pay that", and thereafter the problem will have to go for final decision to a tribunal.
We regard it as essential that any tribunal which settles a matter of this kind shall be easily available to the people concerned. We are dealing with ordinary people, very often with low incomes, and we are anxious to make the scheme work in a practical way, so that we do not offer enfranchisement and, at the same time, make it impossible to obtain it because of the cost.
The right hon. Gentleman may not be aware that his hon. Friend the Member for Pontypool (Mr. Abse) gave some alleged savings under the provisions of the White Paper of properties which he refused to identify. I am sure that the Minister realises that that may raise false hopes. Will he, therefore, give some specific examples which have behind them the authority of the Government?
I am not going to be drawn into giving specific examples. They will vary from house to house. Unfortunately, I did not hear my hon. Friend, and he may have given some examples, but he has a lot of experience in these matters. I am anxious that people who seek to enfranchise their houses or extend leases will understand that they will have a fair and square deal and that we shall make it possible for them to settle the transactions.
There are many terrace houses in the valleys of Wales. I believe that once the Bill becomes an Act the occupiers of these houses will form an association and seek to get a price for them. I believe that the price will be settled for one house of this type, and that once the pattern is established there will be voluntary agreements between the leaseholders and the freeholders. I shall not, therefore, quote any figures at the moment.
During the debate I have heard hon. Gentlemen opposite talk about the possibility of some people getting uncovenanted benefits as a result of a Bill based on this White Paper. I was interested to hear this intense indignation about people getting such benefits. What about the landlord? All that he did was to lease the site for 99 years, and more often than not he did not live near it. There is in this an element of the absentee landlord, who did not lift a finger to help, and at the end of 99 years took the house from the son of the man who had built it, the miner or the pit worker.
The urgency of the matter is that many of these houses were built in the 'seventies, the 'eighties and the 'nineties, and the leases are running out. We have had representations about this, as I am sure the hon. Member for Cardiff, North will agree.
I am glad that the hon. Gentleman nods in assent.
These leases were running out and these houses were going back to the landlords during the 13 years when hon. Gentleman opposite were in power. Did they develop any indignation about landlords confiscating peoples' houses and gardens? Of course not. What we have seen this evening is merely synthentic indignation just before an election.
I have been greatly privileged to say a few words during this debate. I feel that I am repaying a debt of honour to a great generation of men and women, the finest of our citizens in Wales, and indeed in other parts of the country. They had two great ambitions. First, to own their own houses, and, secondly, to give their sons and daughters a better chance than they had. To do so they stinted and saved. They never had a holiday, apart from a day out in Cardiff or Swansea. They saved and stinted because to them there was a nostalgic mystique about owning their own houses.
I ask the House to approve the White Paper. I do so because it is fair, just, and right, and because I want to repay a debt of honour to my forebears and those of my colleagues who did all this for my country and for our kingdom.