Amendment 5

Kew Gardens (Leases) (No. 3) Bill [HL] - Committee – in the House of Lords at 5:15 pm on 21st May 2019.

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Baroness Jones of Whitchurch:

Moved by Baroness Jones of Whitchurch

5: After Clause 1, insert the following new Clause—“Requirement to publish informationWithin one month of the day on which this Act is passed, the Secretary of State must publish an impact assessment including information about the property portfolio at Kew affected by the Act, the associated financial liabilities and income projections.”

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Shadow Spokesperson (Environment, Food and Rural Affairs)

My Lords, Amendments 5, 6, 7 and 8 in this group are in my name, all of which are probing amendments, and part of which we already began to address in the other debate, so I will try to amend my notes as we go along. They all address the need for more information to be provided about the financial impact of the Bill and the management of the longer leases.

Amendment 5 addresses the fact that the Bill does not include an impact assessment, and the background details of the financial consequences of implementing the Bill are indeed rather sparse. For example, as we know, the original estimates for additional receipts from the extended leases was quoted as £40 million, and this figure has now been scaled down to £15 million. However, we have not really had an explanation for the disparity between these two figures, or indeed an explanation of the basis on which that new figure of £15 million has been calculated.

The statement on the financial implications of the Bill in the Explanatory Memorandum is equally vague:

“Incomes from the change will depend on further development of Kew’s Estates Strategy and third party partnerships”.

However, in his response to me at Second Reading, the Minister reported that:

“The estate strategy is not in the public domain”,—[Official Report, 7/5/19; col. 1171.]

and is therefore not available to us, although he said that he would be happy to talk to me about it.

At Second Reading and earlier in this debate, a number of noble Lords asked for further details of the property portfolio at Kew so that we could assess fully the potential for future lease extensions beyond the seven residential properties initially identified, but they have not been forthcoming so far. In addition, the Minister referred several times to the difference between the core and non-core estate, which I know he is beginning to regret. At some point, we need to flesh out both that difference and how much of the non-core estate could be affected in future. There is a black hole where that information needs to be. I hope that he will come forward with further details on that at some point.

I moved the amendment not to be unhelpful but to understand the potential for future income generation—not just for those seven properties but for what could be in the pipeline beyond that. We would all benefit from knowing that. At the moment, it feels as though we are being asked to sign up to an open commitment with little in the way of financial guarantees to underpin it. We felt that the mechanism of an impact assessment would be a helpful way of getting that information.

Amendment 6 would require the lessee to gain permission from the Kew trustees before undertaking any refurbishments. The Minister addressed that issue in his earlier answers. Obviously, one advantage of bestowing longer leases on properties is that it gives the lessee more freedom of opportunity to improve the property they lease. It is important that we tie down the approval process for those refurbishment plans to ensure that they will all receive prior approval.

Amendment 7 would require the criteria for the grounds on which longer leases would be granted to be published. Again, we touched on this at Second Reading; there was a concern that, although proposals from the holders of very long leases may seem reasonable at the time, the holder of that lease—for 150 years, say—could, over time, deviate from the core values underpinning Kew’s activities. As I said, that is particularly true of commercial leases rather than residential ones. It is obvious to say so but 150 years is a very long time to share a world heritage site with a commercial leaseholder. There is concern that their activities could become more at variance in the longer term. Again, we touched on this issue in earlier debates. We need to be clear about the criteria for extending longer leases and to be assured that there will be more sensitivity here than for a standard lease in terms of the leaseholder’s expectations in respecting the property and the activities they carry out there.

Finally, on Amendment 8, we asked the Secretary of State to publish the criteria under which Kew could end a lease prematurely. That follows on from previous amendments, which address the need to be able to terminate a lease prematurely if the activities of a leaseholder, particularly one holding a long lease, are no longer acceptable to the trustees at Kew. Again, this may concern activities beyond those traditionally imposed on leaseholders but which could nevertheless damage the intrinsic values and behaviours expected of those using the Kew estate. Indeed, it could require automatic break clauses.

I am trying to tease out the basis of the argument. We all feel that this is not a question of having a standard lease as you would for a standard residential property. We may expect other expectations to be built into the lease, with special requirements to honour Kew’s mission. I am interested to know whether the Minister envisages having special leases of that kind. I look forward to his response on these issues. I beg to move.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat Lords Spokesperson (Environment, Food and Rural Affairs)

My Lords, I am broadly supportive of the amendments tabled by the noble Baroness, Lady Jones, except that the time limit is a bit short. It is not like me to give the Government a lot of time to do something, but the period of one month set out in Amendments 5, 7 and 8 is not realistic; it should probably be closer to three months.

Amendment 6 is unnecessary because six of the properties are listed and all of them are in a conservation area. Richmond council, which was referred to earlier, will have to give permission for any refurbishments because the buildings are listed and certainly during my time dealing with these things, I know that you have to consult with the people who are affected by the works. I would therefore expect the trustees of the Royal Botanic Gardens at Kew to be an official consultee anyway, so the amendment, as I say, is unnecessary.

As regards Amendment 7, the reasons were clearly set out at Second Reading why Kew Gardens wants to lease these properties for longer. Obviously it is to increase the income and to remove the maintenance costs, thus reducing its liabilities so that it can concentrate on its core values, as we have heard from the noble Viscount, Lord Eccles. Again, the period specified in Amendment 8 is too short and three months might be better than one month.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

My Lords, I am supportive of these amendments but in saying that I was quite taken by the compromise proposal made by the noble Baroness, Lady Kramer. That was not the subject of an amendment but I hope that Ministers will seriously consider what she said when she proposed the withdrawal of part of the Bill.

What interests me is what will happen in the event that the Government decide to drive through the Bill in its current form with the possibility that at some stage in the future, when we are all pushing up daisies, someone might come along and say, “We are going to develop more of this site”. As I understand it, apart from the protections which the Minister has referred to, along with the tight planning arrangements and highly restrictive covenants that might exist in terms of the land, there is the possibility that it might be decided to raise money by selling land for development. We may not be here, but we are making provision now for what is to happen over the next 150 years.

The questions I am about to ask might sound a little hysterical, but they are not beyond the bounds of possibility. In the event that a developer was brought in, would the land be tendered for? Could the land possibly go out to public auction? As long the conditions of the covenants and the restrictions and the protections are in place, the land could still go to public auction. Alternatively, could this be decided by the board under private treaty arrangements? Is there the possibility of a clawback on profits made by developers in the form of some kind of betterment levy? How would the ground rents be set? If the board or the department had control of the ground rents, that might well be the way of influencing to some extent what might happen in the event that the land was used for residential development in the future.

Another question that has to be asked if housing development takes place at some point in the future is whether there would be a social housing component. I understand that the local authority is subject to the provisions that apply elsewhere in London. What about subleasing? Would the state in some way be in a position to approve the subleasing of the land? I did not altogether understand what third-party partnerships were when they were addressed by the Minister at Second Reading given that I was not able to be here. Is there an as-yet-unpublished internal development options document written on the basis of maximising the revenue within the planning constraints I have already referred to?

I have never visited the site, although I will. I only really learned about it last night at midnight when I sat up in bed to read the documents and looked it up on Google Earth. It is a vast site, and it was only when I saw the size of it that I realised that on its fringes there may well be the potential for development, which people in the future may grasp at because they need the money, because other budget arrangements are somehow contracting. If the Minister cannot answer my remarks today, I would be grateful if he would write to me.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Conservative 5:30 pm, 21st May 2019

Following on slightly from the point made by the noble Lord, Lord Campbell-Savours, can the Minister address the nature of the leases? These will presumably be repairing and insuring leases, in the sense that at the end of the term of the lease Kew will want the property back in the state in which the lease was granted. It would be worth while if my noble friend could confirm that, either now or in writing later.

The one amendment in this group with which I have particular sympathy is Amendment 7. This seems to provide a way to get some of the answers to the questions posed by my noble friend Lord Eccles about core and non-core land and to the wider concerns in the House about whether this is a one-shot deal or whether there is—as the noble Lord, Lord Campbell-Savours, just said—around the periphery of the properties a whole series of small plots of land that might at one time or another be envisaged as falling under the provisions of this Bill. Some work on Amendment 7 could provide some answers and reassurance to those of us concerned at the nibbling away that might take place over a period of time in circumstances that are hard to foresee now.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

My Lords, I am most grateful to the noble Baroness for tabling these amendments. Without going on for too long, I should like to take the opportunity to place on record a number of points.

Amendment 5 seeks to require the Secretary of State to publish, within a month of the Act being passed, an impact assessment covering any property that could be involved in these leases and any related financial liabilities and income projections. I understand that the aim of the amendment is to ensure public transparency on the scope and impacts of the leases that may be enabled under the Bill. I am most grateful to the noble Baroness for allowing me to put on record the detail already published in Kew’s annual report and accounts, which includes the valuations set for Kew’s heritage assets of land, buildings and dwellings, as well as those assets under restoration.

Kew has already estimated the value to Kew of the properties affected. I understand that the £40 million was in 2015. Since then, the assessment is that the value of leases and avoided renovation costs in the short term would be up to £15 million. This estimate is based on the seven residential leases, of which two are currently unoccupied properties that require substantial renovation. This means that there cannot be any more quantified projections other than those that Kew has given at this time.

The need to scrutinise the impacts of lease proposals will be fulfilled by Kew in taking specialist advice and preparing proposals for consideration by, first, its executive board and board of trustees and, ultimately, the Secretary of State. This includes the involvement of Kew’s finance committee, audit and risk committee and capital development committee, as well as Defra. As I have said, and as we have all realised, Kew will focus on the seven residential properties currently let on assured shorthold tenancies or empty. As I have said, Kew has no immediate plans beyond that.

I find it really rather alarming that everyone is determined that dreadful things can happen. The noble Lord, Lord Whitty, has already said that this is one of the most protected sites in the country. No Parliament can bind its successors. All we can do is use our best endeavours now, with the protections that are there in legislation. I am looking at the noble Lord, Lord Campbell-Savours. If a Parliament decided to amend the National Heritage Act in an adverse way, of course we would regret it, but it is for future Parliaments to decide those matters. What we can deal with today is having all the protections we possibly can. I have sympathy with all that the noble Lord, Lord Whitty, is seeking, but it is on record—even from the noble Lord—that this is the most protected part of the kingdom.

The development of all aspects of the Kew estate will remain subject to the approval of its board of trustees and in line with Kew’s world heritage site management plan, just as any shorter-term leases already would. Although I fully endorse the desire for meaningful transparency in these leases and the motivation behind the amendment from the noble Baroness, the degree of variation means that it would be best served through Kew’s existing proposals and commitments. Indeed, the lease would be publicly available at the Land Registry when the sale completes.

It is the view of my department that this amendment would risk providing information that would not be precise. Of course, it is subject to market conditions. In addition, the Secretary of State has to follow the guidance in Managing Public Money, formerly the Treasury Green Book, which requires value-for-money assessments.

The noble Baroness, Lady Bakewell, referring to Amendment 6, made some important points about the local planning authority. I understand and share the wish of the noble Baroness, Lady Jones of Whitchurch, that any refurbishment or development should require the correct approval so that it does not compromise the property—which is Crown land—the world heritage site or Kew’s functions and activities in any way.

Kew’s activities, including any lease under the Bill’s provisions, are overseen by Kew’s board and the Secretary of State. The discussions and negotiations about leases would be initiated by Kew in accordance with its governance. This includes the trustees’ code of best practice, the National Heritage Act 1983 and the framework document between Kew and Defra. The lease itself would be prepared for and on behalf of the Secretary of State using specialist property lawyers and specialist commercial advice.

There will be numerous bespoke conditions in the lease agreement itself that shall offer the appropriate and relevant protection to Kew under this amendment. As I shall detail, these would deal with the unique nature of the land at Kew and, in particular, the listed buildings on Kew Green and, in doing so, provide complete protection for the Secretary of State and Kew.

As well as conditions bespoke to Kew, which I shall turn to in a moment, the usual lease conditions would apply. The usual leaseholder covenants include obligations not to do anything that contravenes planning; to comply with any estate regulations that may be drawn up; not to make any alterations to any part of the internal or external structure of premises without freeholder consent; to submit plans to the freeholder if consent for alteration is required; not to sublet or transfer premises without freeholder consent; not to interfere with or obstruct the performance of a freeholder in carrying out its duties; not to use the property for anything other than the use specified in the lease; not to access the property other than as specified in the lease; and not to cause a nuisance from the property. In addition, I assure your Lordships that all Kew leases will expressly include a leaseholder obligation not to do, or allow to be done, anything that will bring into disrepute the Royal Botanic Gardens, Kew, including its status as a world heritage site or the listed building status of any house, for example.

Some of the houses will contain features typical of buildings of this age, such as plasterwork ceilings and cornicing. Given their listed building status, features such as these may not be altered, so any lease would provide that such features must be preserved and may not be damaged in any way. As the noble Baroness, Lady Bakewell, said, the local planning authority, advised by Historic England, is responsible for deciding whether a proposed development, or even internal renovation, should be allowed to go ahead.

I hope I can also reassure your Lordships that the Secretary of State would absolutely not grant a lease without the recommendation of the Kew trustees. The Secretary of State would take advice from specialist property lawyers as to the appropriate level of protection given Kew’s listed building status and the world heritage site. Therefore, I believe that robust procedures are already in place to ensure that the correct approvals are made. I am as concerned as anyone that none of these buildings be refurbished insensitively, but the terms of any standard lease, bolstered by special conditions for Kew and alongside the governance that the local planning authorities, Kew trustees and the Secretary of State provide, ensure that the points in the noble Baroness’s amendment are already covered.

Turning to Amendment 7, I am again grateful to the noble Baroness for the opportunity to clarify the criteria that would apply. Instead of taking three months, I hope I am able to put on record now these points. I re-emphasise that Kew’s current proposals extend to only seven properties, two of which are unoccupied and none of which is part of the core estate. These leases are being pursued to free up vital revenue for Kew, and will do so with no impact on Kew’s core functions. I am pleased to reassure your Lordships that these criteria derive from the various protections already in place, which I have strongly emphasised. It is, however, absolutely right that the noble Baroness, Lady Jones of Whitchurch, referred to respecting the property, because that is exactly what we must do.

To preserve the protection of the property and Kew’s functions, obligations on the leaseholders would include the following requirements, which I will place on record in the context of Amendments 7 and 8: to repair and keep the property in good condition and decoration; to allow Defra or Kew to access the property to carry out any necessary works; to make good any damage caused by the leaseholder to the property or to the Kew estate; not to do, or allow to be done, anything that will bring RBG Kew into disrepute, including its status as a world heritage site; to comply with the provisions of any statute, statutory instrument, order, rule or regulation, and of any order, direction or requirement made or given by any planning authority or the appropriate Minister or court; not to alter any of the property internally or externally without the express written consent of Kew’s board of trustees and the Secretary of State; not to sublet any of the property without the Secretary of State’s consent; not to assign, transfer or sell their interest in the property without the Secretary of State’s consent; not to interfere with or obstruct in the performance of the duties of the Secretary of State, or Kew by way of servant; not to use the property for anything other than the use specified in the lease; not to access the property other than as specified in the lease; not to leave the property unoccupied for a certain period of time; and, finally, not to cause a nuisance from the property. I want to be very clear that there has been proper consideration of this in reference to, as my noble friend Lord Hodgson said, the status and condition of the property.

The noble Baroness was right to raise also the issue of forfeiture. The right to forfeiture occurs when the leaseholder under a lease breaches an obligation contained within a lease. What these obligations may be are a routine part of lease agreements, and so are the conditions for termination of the lease—I have already placed these on the record—as to obligations that will ultimately result in forfeiture if breached under a Kew lease. As I said, the lease agreement itself will be drawn up by specialist property lawyers acting on behalf of the Secretary of State to reflect the various considerations and protections that need to apply in respect of the property itself, the world heritage site and Kew’s functions and activities. I should stress that lease agreements will need to be, and shall be, drawn up and agreed on a case-by-case basis by specialist property lawyers, even though they will have most conditions in common.

Forfeiture of a business lease and forfeiture of a residential property are not the same. This Bill does not seek to disapply any protection a leaseholder may have from unlawful eviction. The forfeiture clause in a lease cannot be one size fits all, since the court looks very seriously at any possession claim, and it is a complicated area of law. This does not, however, negate the fact that breach of leaseholder covenants under leases created by this Bill—such as an obligation to keep in good repair—can and will, if appropriate and if sanctioned by the courts following sufficiently serious breaches, result in the Secretary of State taking back possession of the property.

Advice has been taken from specialist property counsel who deal specifically with Crown land in advance of the noble Baroness’s amendment. It may be helpful to note that, well before any claim to take back possession could be necessary—for example, as a result of disrepair —the lease would provide a clear power for the Secretary of State to step in and undertake whatever repairs and maintenance are necessary to preserve and protect the building and prevent any risk to its status, and its listed building status in particular. I thought it important that I put those conditions on the record as a basis on which to show that we take these matters extremely seriously. As I said, I would be very happy to meet any noble Lords interested in discussing these amendments or seeking reassurances.

In answer to the noble Lord, Lord Campbell-Savours, I can say that the value of the leases is considered in the premium. It would be possible to set the ground rent at any level, but this would impact on the marketable value of any lease, and would prevent it reaching its optimum.

As yet, because it is subject to parliamentary consent, Kew has not presented a development options document. Clearly, it wants to be in a position to move from 31 to 150 years, because this will enable it to get the best value from these properties. However, I hope I have managed to give the noble Baroness some reassurance.

To echo the noble Lord, Lord Whitty, the protections for Kew are of the highest order. It is an extensive parcel of land, and we are very proud of this 350 acres of Crown land and its world heritage site status—incidentally, I can confirm that the car park is part of the world heritage site. As a nation, we should be very proud of this world heritage site, and I see it as our duty to for ever protect it. In the meantime, I hope that the detail I have gone into reassures the noble Baroness that some thought and consideration have already gone into protecting Kew.

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Shadow Spokesperson (Environment, Food and Rural Affairs) 5:45 pm, 21st May 2019

My Lords, I am very grateful to the Minister for spelling that out in the detail he did. Many of the points he raised provide some reassurance. I was particularly pleased that he talked about bespoke conditions, and that leases will not be just standard residential or commercial leases but will have a bespoke element that applies specifically because of the unique nature of being within the grounds of Kew. I am very grateful for that.

A theme has come out of our discussions on the various amendments. We have assumed, and the Minister has talked about, this relating to seven properties. As the noble Baroness, Lady Kramer, said earlier, none of us has a problem with the original seven residential properties that have been earmarked for a longer lease. Our concern is what happens after that, and I still feel that we have not really been enlightened on that point.

I cannot believe that Kew has no other information about its portfolio and other properties that it may want to put into the mix in future. We are still trying to grapple with the Minister’s phrase of “core” and “non-core”, and I think we need more information. I would welcome the chance to sit down with the Minister and figure out which properties are “core” and “non-core”, and what other properties might be in the pipeline. I realise that this may not happen immediately but in the medium to longer term, and the Bill will relate to aspirations that Kew might have in future. I feel we are still in the dark, and I would like more information, but this is obviously not the time to go into that in more detail. For the time being, I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendments 6 to 8 not moved.

Clause 2 agreed.

House resumed.

Bill reported without amendment.