Crown Estate (Proposed Sale of Homes)

Backbench Business Committee – in the House of Commons at 3:41 pm on 4th March 2010.

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Motion made, and Question proposed, That this House do now adjourn. -(Lyn Brown.)

Photo of John Bercow John Bercow Chair, Members Estimate Committee, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Members Estimate Committee, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission

Just before I ask Frank Dobson to make his speech, may I appeal to right hon. and hon. Members leaving the Chamber please to do so quickly and quietly, without conducting animated or noisy conversations in the interim? That would be helpful- [ Laughter . ]-although there is no prohibition on laughing.

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras 4:27 pm, 4th March 2010

Among the people I represent are residents of 539 flats on the Cumberland Market estate that are owned by the Crown Estate. Like their fellow Crown Estate residents in Victoria Park in Hackney and Tower Hamlets, Millbank in Westminster, and Lee Green in Lewisham, they were told, out of the blue, that their homes were to be sold. That has caused consternation among the residents, who range from elderly people such as Bill and Mary Greenleaf, who have lived all their lives at Cumberland Market, to young key workers who have recently got a flat.

All four estates are settled communities. Some people live in blocks of flats, others in street properties. Their homes are well managed, giving rise to far fewer complaints to local councillors and MPs than council or registered social landlord properties. The form of tenure ranges from leaseholders through regulated and assured tenancies to assured shorthold tenancies. All are let at affordable rents.

Documents were released under the Freedom of Information Act 2000, but they contained massive redactions, and when I say massive, I really mean massive. They nevertheless revealed that the Crown Estate had been considering the proposal to sell off its affordable housing for well over a year. They also showed that the Crown Estate board might have been misled into adopting that policy. The minutes show that the board was given to understand that a mixture of flats and street properties was

"not typical of affordable housing stock in the capital".

In fact, the reverse is true. Such a mixture is entirely typical of the affordable housing stock in London.

The board was also told that the Crown Estate's affordable housing portfolio was short of a critical mass compared with registered social landlords, who might have 50,000 flats. In fact, with 1,500 units, the Crown Estate is bigger than the vast majority of registered social landlords. It was told that the stock was not purpose built, but I am entirely at a loss to understand what the purpose of a flat or house is, other than to house someone. The board was told that managing affordable housing was not one of the Crown Estate's core skills, even though it has been doing it rather well for 80 years, and is branching out into novel, non-residential investments that have got into trouble.

In relation to consultation, the board was told that the tenants were being treated like other public sector stock transfers, but such stock transfers require a ballot of those affected, and the existing landlord needs to accept the outcome of the ballot. It was told that a two-month consultation period with the tenants was satisfactory, but it was never told that the Government's recommended minimum for such a consultation was three months.

In addition, the documents did not refer to the future of the current arrangement whereby key workers are nominated to fill flats that become vacant. Nor was the board advised of the impact of ending the arrangement on the key workers themselves or on the recruitment and retention prospects for the bodies that nominate their key workers for such lettings. Nor did the documents explain to the board that the nominating bodies included eight hospitals-Bart's, the Chelsea and Westminster, Homerton, King's College, the Royal Free, St. Mary's, Great Ormond Street, and University College hospital. They did not mention that the nominating bodies also included the London Ambulance Service, 10 NHS primary, community and mental health trusts, the London fire brigade, London Underground, Transport for London, the Metropolitan police and the education departments in Camden, Westminster, Hackney and Tower Hamlets, as well as the House of Commons.

The documents did not make it clear to the board that, when the tenants were to be consulted about their homes being sold to the new landlord, they were not going to be told who the new landlord would be. If I were a member of the Crown Estate commission's board, I would be most unhappy that all these aspects had not been drawn to my attention before I was asked to arrive at the decision to sell off the affordable housing.

Yesterday, the chief executive of the Crown Estate gave evidence to the Sub-Committee of the Treasury Select Committee. When asked about the tenants' response, he conceded that there had been

"a good deal of concern" about the proposed sell-off. He is clearly a master of understatement. On behalf of myself and my party colleagues, my hon. Friends the Members for Hackney, South and Shoreditch (Meg Hillier) and for Lewisham, East (Bridget Prentice), my parliamentary colleague, Mr. Galloway, and Mr. Field, who is in the Chamber, I can confirm that the overwhelming majority of the tenants wish to remain with the Crown Estate. That is the heart of the matter. Those residents do not want to be sold off like chattels, or treated like the contents of the place where they live, and no foreshortened, inadequate process of so-called consultation is likely to change their minds.

For a start, the consultation period is too short, but it is much worse than that. The Court of Appeal has laid down that when public bodies are consulting, they must ensure that

"those consulted must be provided with information which is accurate and sufficient to enable them to make a meaningful response".

The Crown Estate will not or cannot disclose who the new landlord will be, so I submit that the information is very clearly "not sufficient". The Crown Estate asserts that the tenants will be protected if they are transferred, but provides no information whatever to back up that assertion.

Let me give the Minister some examples of the problems that have not been cleared up through the consultation process. Some rights of leaseholders and tenants are statutory and should carry over, but in my experience, there is a world of difference between a landlord such as the Crown Estate, which is happy to comply with the law, and a landlord who is reluctant to comply with it-and the tenants certainly know the difference.

In any case, some of the terms and conditions currently employed by tenants of the Crown Estate are the product of clear improvements on the statutory minimum. For instance, assured tenants under the Crown Estate are protected by a ceiling on rents of between 40 and 60 per cent. of the market rent. No explanation has been forthcoming from the Crown Estate as to how this concession would be legally enforceable against a new landlord. It could not be left to their good will. Under the Crown Estate, assured shorthold tenants are told that their short tenancy will always be renewed, provided they are not in breach of their other tenancy conditions. By what mechanism could this become a legally enforceable right against a new landlord? Answer comes there none- no answer to these questions and no assurance about other guarantees sought by tenants on such matters as internal transfers and joint tenancies.

When talking about future landlords, the Crown Estate says it wants to involve a private landlord in collaboration with a registered social landlord. It talks of wanting to continue the same "tone of management" with "focused housing providers", but neither tone nor focused housing providers are matters enforceable in law. If all the terms and conditions that the tenants currently enjoy were to be carried on by the new landlord, what would be in it for a private, profit-seeking landlord? The answer seems to be the potential value of any flats that fall vacant, as these could raise a lot of money if let at market rents or sold to the highest bidder. That could happen only if the present arrangement to let vacant flats to key workers is abandoned.

None of the hospitals or other bodies that presently nominate key workers has been consulted by the Crown Estate. In his evidence to the Treasury Sub-Committee yesterday, the chief executive said that those bodies had been informed, but I can assume that this was only very recently, because when I checked with some of them last week, I found that they had got to know about it through newspapers, radio and television or as a result of my telephone call.

Until this consultation exercise started, it is fair to say that most Crown Estate tenants were reasonably satisfied that the Crown Estate usually acted in good faith. However, doubts have now arisen because the Crown Estate has stopped re-letting flats that fall vacant. Tenants fear that this is because vacant flats would fetch a higher price in the transaction than flats with sitting tenants. Yesterday, the chief executive told the Sub-Committee that 32 flats were empty at present, but the tenants believe that many more than that total are already vacant.

A further concern is that the existing terms and conditions which the Crown Estate assert would prevail under a new landlord are set out in the tenancy handbook, but the Crown Estate has just withdrawn the tenancy handbook, which has raised suspicions about its commitment to protect the provisions set out in that self-same handbook.

A further source of concern is the reports that the tenants have received from former tenants of Church Commissioners' affordable housing in south London. Those former tenants of the Church Commissioners say that similar promises to those being made by the Crown Estate were made to them before their homes were sold off, but after the sale their rents rose and empty properties were disposed of. They note that that transaction on behalf of the Church Commissioners was managed by a Mr. Paul Clark, who is now pushing the Crown Estate's sell-off proposal as the Crown Estate's director of investment and asset management.

In the face of that threat to their homes, the residents associations from the four estates have got together. Though with minimal resources at their disposal, they have mounted a very effective campaign to draw attention to the threat to their quiet enjoyment of their homes. They have organised meetings and rallies, briefed the news media, and submitted evidence to the Treasury Sub-Committee. They have involved local councillors and Members of Parliament-my hon. Friends the Members for Hackney, South and Shoreditch and for Lewisham, East and I have also submitted evidence on their behalf to the Sub-Committee.

We now call for the Crown Estate to conduct a ballot of the residents of its affordable housing, and to abide by the result of that ballot. We also call for it to provide free, independent legal advice to the four residents associations and individual tenants. The Crown Estate still refuses to disclose the identity of the landlords to whom it proposes to sell. It is also withholding other information that tenants require to make a "meaningful response", as the Court of Appeal put it.

At yesterday's Sub-Committee meeting, the Minister who will reply to this short debate expressed her concern about the treatment of the tenants, and said that she would put it to the Crown Estate that it should conduct a ballot. I therefore hope that she will confirm that she will meet representatives of the Crown Estate, and that she will take that opportunity to ask them to conduct a ballot. If it does so, we should assume that it will be expected to abide by the result. The residents associations would welcome the opportunity to meet the Minister to brief her on their concerns before she meets the Crown Estate. I and other MPs would be happy to facilitate such a meeting if she agrees. The Minister has the power to issue directives to the Crown Estate, but that should not be necessary if it responds responsibly to her request.

All that the tenants ask is that the Crown Estate lives up to its avowed objectives, set out in its latest annual report. It says in that report that it is working towards thriving and sustainable communities and to ensure that its business activities have a positive economic, social and environmental impact on the wider community. It has been doing that for years at Cumberland Market, Victoria Park, Lee Green and Millbank. To achieve its objectives, we all believe that it should leave well alone.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster 4:43 pm, 4th March 2010

I congratulate Frank Dobson on securing this important debate. I associate myself entirely with his words. As he will know, we have tried to work together, along with Meg Hillier. Underlying much of what the right hon. Gentleman said is the fact that the Crown Estate has traditionally been a very good landlord. The communities that it has built have been more stable than many of those we represent in central London, where the turnover is 20 to 25 per cent. annually. Nothing could be further from the truth in Millbank estate, where a number of people have lived for the entirety of their lives, some 50 or 60 years, and where communities go through the generations.

The Crown Estate has been a force for stability and continuity in our central London constituencies, so it is disappointing that we have come to this pass. I cannot help thinking that it was the travails of that organisation over the past 18 months that persuaded it to look on the estates as something of a jewel in the crown for the purposes of a quick sale. We hope that good sense will prevail and that it will be persuaded that a sale is not yet necessary-either by a general bounce back in the property market or in its other investments, or by a recognition that it would be better for these communities to remain intact and continue to provide the rental incomes to which it has become accustomed.

I cannot stress too strongly the sense of community that exists in Millbank, which I am sure is also reflected in these estates in other constituencies. There is a tremendous community there. The 640 or so Members of Parliament who do not represent constituencies in central London may have the impression that London has a transitory community, but in many ways nothing could be further from the truth. We all represent a collection of villages with a proud sense of history, and over the past 20 or 30 years residents' associations and amenity societies have done a huge amount to instil a sense not just of history but of ongoing community.

I hope that the Minister will give credence to what has been said today. I work closely with local councillors in the Tachbrook and Vincent Square wards, where the Millbank estate is located, but I also do cross-party work, which I think is particularly necessary. The hon. Member for Hackney, South and Shoreditch played a major role in ensuring that we kept Bart's hospital and in securing the important investment in Barts and the London NHS Trust, which is covered by Hackney, the City of London and the eastern areas of the Westminster part of my constituency. These issues should extend beyond any sense of partisan politics, and I hope that we will continue to work together and put the interests of our residents first and foremost.

It should be emphasised that key workers are not necessarily only in the public sector, especially in central London. Although a number of key workers in the Millbank estate work in local hospitals and schools and in public sector jobs here in the House of Commons, some of the people who are the glue in our communities work in newsagents' shops and other relatively low-paid retail jobs but are nevertheless committed to living and working in central London. Without the properties in the Crown Estate and other estates in our constituencies, we will lose that vital social glue.

I shall not detain the House any further, Mr. Deputy Speaker. Thank you for allowing me to make a brief contribution. I look forward to hearing the Minister's reply.

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury 4:48 pm, 4th March 2010

I congratulate my right hon. Friend Frank Dobson on securing this opportunity to debate a matter that is of great interest to some of his constituents. I understand that he has represented Holborn and St. Pancras for more than 30 years, and is an assiduous constituency Member. I recognise the worry and concern felt not just by his constituents but by others, as evidenced by the contribution from Mr. Field and the presence of my hon. Friend Meg Hillier. I hope that the further details that I shall give will go some way towards reassuring my right hon. Friend, the other Members who are present and the House as a whole, and, most important, the tenants of the Crown Estate.

The Crown Estate is charged with managing the property assets owned by the sovereign, whose revenue is automatically paid to the Government. Its remit is to maintain and enhance the value of the estate and the return obtained on it, but with due regard to the requirements of good management. It is charged by law to generate a commercial return from the assets that it manages, and as such it keeps its asset portfolio under review so that it can decide how to improve its return. It is currently considering the sale of 1,200 residential units, about 500 of which are in the constituency of my right hon. Friend the Member for Holborn and St. Pancras. To that effect, it is conducting a consultation exercise, asking its residents for their views about a possible sale of the freehold on which their properties are situated. I want to emphasise that no decision on whether to make a sale has taken place yet, and the Crown Estate will only make a decision once residents' views are known and fully considered.

I completely understand the concerns of my right hon. Friend and his constituents on this issue. Any possibility of change in ownership is, of course, worrying for residents. The Crown Estate is considering the sale because it believes it is likely that a specialist expert residential landlord could provide a better service. It is also clear that the capital receipts it would generate from the sale could be used profitably in other parts of its business, and it may help the House if I explain this.

The Crown Estate is prevented in law from borrowing as most private sector property companies can and do. It must generate capital for its investment and development activity from disposals of its own assets, essentially by reordering priorities. If it goes ahead, the sale of its London residential property would be one such disposal. In effect, the Crown Estate would redeploy the proceeds within the business. I want to lay to rest a couple of rumours that are floating around. The Treasury has not ordered the Crown Estate to sell off vast chunks of its portfolio to raise money for the Exchequer, and neither does the Crown Estate need to sell this part of its estate urgently because it is in desperate financial straits.

I understand, of course, that the main worry for residents is what the outcome of a possible sale may be on their tenancies, and that was the main thrust of my right hon. Friend's remarks. Therefore, in order to offer reassurance I should explain the protections that the Government have been told would be in place if the Crown Estate decided to sell. The first of them is to do with rents. My right hon. Friend set out some tenants' fears about rents and other terms, and he is especially troubled about the position of those 35 per cent. who have regulated tenancies. I hope I can alleviate some fears by telling Members that the rent officer determines their rents, and that will not change. Some tenants also benefit from a ceiling rent-the 40 to 60 per cent. referred to in my right hon. Friend's speech. These rents cannot rise above a certain percentage of the market rent, and that will not change either. That is protected by law.

It is likely that some of these residents, if not most, will be key workers, and this means that the rental framework that the Crown Estate's tenants enjoy would not change if there were a sale. Rents might, of course, change, but within the same rules that the Crown Estate operates under now. Tenants' other contractual rights would also be protected in the event of a sale. The process is not quite the same as a block transfer of housing assets by a local authority, although there are some similarities. One important right is that, as a matter of law, any new owner would have to honour existing tenancies. Another protection is that if there are enough regulated tenants who are leaseholders with long tenancies in a particular building, and they want to buy it for themselves, the Crown Estate will give them right of first refusal.

Naturally, I was disappointed to hear from my right hon. Friend that some of his constituents thought that the Crown Estate was behaving in a secretive or high-handed way. I hope that residents will express their views through the various avenues that are available. The consultation process remains open, and I understand that the Crown Estate has also provided drop-in centres so that tenants can talk over their personal positions, any aspect of the proposed sale that troubles them, or the proposal at large. Also, the chairman and chief executive of the Crown Estate plan to meet the residents' associations during the consultation process so that they can hear tenants' views at first hand.

As for the view that the Crown Estate has been secretive, I hope and believe that this might be a result of circumstance, rather than an attempt to hide from people what is going on. The Crown Estate needs to protect the commercial positions of possible purchasers, and talks with possible new owners will continue well into March. The Crown Estate will then produce a "findings" document-a summary of the responses to the consultation-which will be circulated to residents within two weeks of the end of the consultation period on 23 March. After this, the Crown Estate will consider the outcome of the consultation and the marketing exercise before making a final decision.

With the uncertainty that this period brings, I know that people will be worried, but the outcome has not been decided. The Crown Estate will decide from the content of the feedback that comes through during the consultation process. It will need to be collated, evaluated, followed up where necessary, and presented to the Crown Estate board. At the same time, the Crown Estate will need to weigh the strength of interest from marketing to potential purchasers, and how the possible new owners' proposals stack up. It has set out its requirement that it will consider a sale only to a specialist in the residential housing field. It also recognises its obligation as a good landlord to look after its tenants' interests in selecting a new owner, if indeed there is one.

I can assure the House that no decision will be made in haste; it could take several months before it is clear what will happen, and during that time the tenants will have plenty of opportunity to have their say. The Crown Estate has advised that it will keep tenants informed as the process moves forward. As the consultation process draws to a close, I plan to meet the Crown Estate commissioners to hear their conclusions on the consultation process and to find out what interest the marketing process has thrown up. I will want to assure myself that the action planned by the commissioners is in line with their statutory duties and takes full account of the wider public interest. I of course intend to raise the issue of tenants ballots at that meeting, and before that I will be more than happy to meet my right hon. Friend with some of his constituents to hear their concerns.

The Crown Estate has a very strong sense of its responsibilities as steward of public resources. It manages its property assets as a trust and is conscious of who owns the assets it manages and who receives the income. I hope that I can reassure my right hon. Friend that the question of selling this part of its asset portfolio arises out of a strategic stock take and, as I have said, for no other reason.

My right hon. Friend secured today's debate to address the concerns of some of his constituents, and I am glad that we have been able to have it. I hope that I have been able to go some way to give assurances and, as ever, I would encourage his constituents and those of other Members to play a full part in the consultation exercise, so that their concerns can be fully taken into account.

Question put and agreed to.

House adjourned.