House of Lords
Council Tax Valuation Bands Bill [HL]
Lord Marlesford (Con)
My Lords, it is one of the great privileges of being a Member of your Lordships’ House to be able to initiate legislation through Private Members’ Bills. It is even better to be able to get one’s Bill debated, but that is now a matter of luck. I introduced this Bill in the previous Parliament but it never got to the top of the queue for a Second Reading. This time I was lucky in the ballot, with my Bill coming seventh out of 42 Bills. So, of course, I am now a supporter of House of Lords reform—at least as far as procedure goes.
Let me say straight away what this Bill is not. It is not a new system of local government taxation. The Bill seeks, quite simply, to update the system of council tax in England. I emphasise England because, as drafted, it covers Scotland and Wales and, as they are covered by devolution, my first amendment would be to confine it to England.
Local government taxation has always been a tricky matter. The old rating system fell into disrepute, as had the schedule A income tax on imputed rental value of owner-occupied housing, which was the system from 1918 to 1952. The 1990 poll tax lasted rather less time; it was, of course, a political disaster for the Tory party. In 1993 it was replaced by council tax, introduced by my noble friend Lord Heseltine. It has served us well, but it needs refreshment. Five years of coalition government did nothing to help. I suspect that we will hear from the Minister that this Conservative Government will oppose my Bill, but that they have nothing new to offer either.
My Bill does not seek to change the two basic principles or the design of the council tax. Those principles are: first, to divide residential properties into eight bands of value labelled A to H; and, secondly, to apply a different level of taxation to each band with progressive levels of taxation for each band.
In 1991 the bottom band A was for properties worth up to £40,000 and the top band H for those worth more than £320,000. Those are the same today. The ratio of tax was set at the figure of six for band A and 18 for band H. For some arithmetical reason, six was chosen to start with. Thus the most expensive properties paid, and still pay, three times those of the lowest value. There are some differences between the rates at which different local authorities level council tax, but they are not very great overall. Give or take a couple of hundred pounds, band A properties attract council tax of about £1,000 a year. Thus the most expensive of all properties attract only about £3,000 a year. This is, I believe, no longer either fair or publicly acceptable.
It was, indeed, endless bad publicity for the small amount paid by those buying properties for many tens of millions of pounds that tempted the Lib Dems into inventing their mansion tax, which was a wealth tax on only one form of asset. The Lib Dems wisely dropped it; Mr Miliband unwisely scooped it up. He made much of it during the election campaign. Practically every desirable policy from health to education was to be financed from this miraculous pool of wealth. My Labour friends tell me that it did them little good on the doorstep. Many marginal Labour voters, who individually would have been most unlikely to reach the £2 million mansion tax threshold, rejected what they saw as a vindictive “soak the rich” policy.
There has long been a need to update the council tax to reflect current market values. The inhibiting factor has always been the task of revaluation: colossal in both cost and human resources, and controversial in that all valuations tend to be—must be—subjective and therefore result in expensive argument and dispute. The most accurate value of a property at any point in time is obviously the price actually paid for it. Fortunately we now have the Land Registry, one of the most efficient and respected public bodies in the whole public sector. Since April 2000 it has recorded all prices for the transfer of ownership of dwellings. Well over half of all dwellings are now on the register. The register is completely transparent.
My Bill does two things: it updates the prices in the bands and it increases the rate of progression. In the Explanatory Notes, which I hope your Lordships have with you, illustrative tables show the bands that I propose and the rate of progression that I suggest. I say at once that both the bands and the rates of progression are amendable as far as I am concerned. They merely represent my own view of what seems sensible, after quite a lot of consultation.
I have used the existing denominator—the ratio figure of six—as the starting point for band A, which would now cover properties of up to £250,000 in value. I have made band B properties up to £500,000. That will be slightly more progressive than the old system, at eight instead of seven, thus a 33% increase rather than 17% above band A. Thus, existing band A properties would continue to pay exactly the same—about £1,000—and band B would pay about £1,300. My suggestion is that it would get more progressive towards the top, with the new band H properties worth more than £20 million paying £42,000 council tax rather than the present £3,000. Again, I emphasise that this is not introducing a new element into the existing system, which has always been progressive and never made any attempt to limit the charge on expensive properties to any relative use made by households of local government services.
I also emphasise that my proposals are no more a wealth tax than is the present system. The £42,000 charge for band H is a mere 0.21% of £20 million, while £8,000 is a mere 0.16% of £5 million. We were never really told the details of the mansion tax, but at 1% on all properties worth more than £2 million, a £5 million property would have paid £50,000 a year and a band H property would have paid £200,000 a year. There may be some danger that stamp duty, to some extent increased to meet public concerns, may be becoming counterproductive to retaining London as a magnet for wealth, which we wish it to continue to be. Perhaps key to my Bill, enabling updating to be introduced in a timely manner, is Clause 1(2), which states that any property that has not been bought or sold since 1 April 2000 will continue to be subjected to council tax in exactly the same way as at present. All such properties would migrate to the new system of bands and charges when they change hands. Meanwhile, there will be two scales operating side by side.
To those who say that it is inequitable for similar properties to pay different rates of council tax I say only that there has always been a differential between the tax liabilities of similar properties that are in different locations, bought at different times and subject to different economic and social influences. The only way to counter that would be to revalue all properties, not only at frequent intervals but when any significant change affecting them took place. That could be anything from a development, a new road, mining, fracking, or even the waxing or waning of local schools—or perhaps a change of neighbours. But it would be quite impossible for officialdom to take account of all such factors. That is the job of the market, which is why tying council tax to the price actually paid for a property is sound economics.
A crucial point is that the purchaser of a property will know exactly what the financial implications are of a transaction. To some extent that would make market prices more realistic. There is good evidence that buyers already take account of stamp duty, as well as legal and financing costs, in what they are prepared to pay a seller. They would also want to take account of council tax bills. In this sense it is the seller who pays part of such costs.
I have had much encouragement after discussing the Bill with many colleagues. Sadly, not everyone has skipped back to enjoy the delights of a sunny Friday in September at Westminster. Three who are not able to be here but who have been particularly supportive of what I am trying to do are my noble friends Lord Lawson of Blaby and Lord Baker of Dorking and the noble Lord, Lord Butler of Brockwell.
In summary, I am proposing a practical, cost-effective and much overdue refurbishment of council tax. It will use up-to-date values of houses as determined by the market and recorded by the Land Registry. Those who live in modest dwellings will pay no more than they do now. It will increase considerably but not excessively the contribution to local government revenues from the most expensive houses, especially in the London area. There will be no need for widespread and costly bureaucratic revaluations. I beg to move.
Lord Flight (Con)
My Lords, the proposals of the noble Lord, Lord Marlesford, for reforming council tax valuation bands strike me as inherently sensible and fair. I am surprised that none of the political parties has taken up this model.
It seems to me ridiculous that for a long time the top valuation bands in London have started at a value of a mere £320,000, when, in Kensington, you can get little more than a garage for that money, and the difference between the amounts paid at the top and bottom bands is far too small in relation to the values of the properties and, indeed, the potential local authority services being used. The existing difference in council tax bills between modest and grand houses is, as I say, far too small, and so greater rate progression is justified. In addition, very large houses often have more people living in them, and to the extent that council tax is there to finance local authority services, they are burning up more of those services.
It was very clever of the noble Lord, Lord Marlesford, to take April 2000 as the cut-off date and, as he said, make it possible, on a going forward basis, to use the purchase prices recorded in the Land Register and save all the hassle of valuation and revaluation in the future. I do not see any great problem in leaving pre-April 2000 dates of purchase properties with the old rate. Over time, obviously, it will change to the new rate as ownership changes and people move on or die.
Council tax is also a cheap and easy way to collect tax. I would be interested to know whether the arithmetic of the proposals of the noble Lord, Lord Marlesford, means that local authorities would become virtually self-financing, which I think is also extremely desirable. Should the same formula be applied to Greater London as to the rest of the country, when house prices in the Greater London area are clearly wildly in excess of those outside London? At the end of the day, the size and luxury of the accommodation are what matter. It is debateable whether the noble Lord’s proposed progression arithmetic of increasing the ratio between the lowest and the highest band from three to 42 is right. Arguably, it might be a little too high. It might be an idea to, as it were, cap the maximum that is payable, but those are only minor points.
However, my major quid pro quo or proviso concerns stamp duty. Irrespective of whether these changes are made, there is, in any case, as a matter of principle, a need to reduce stamp duty rates. The reform of the slab effect is fine but stamp duty bills in London are now far too high and are already considerably damaging turnover in the market. In many parts of central London a fairly ordinary family home with a garden now costs in the order of £3 million, and the stamp duty bill is £117,750—a cash cost. It is no wonder that everyone is digging out their basements or adding another floor to their houses because that is a lot cheaper than moving house. This situation may also discourage older citizens from trading down as they incur a substantial stamp duty cash cost.
It may sound as if I am shedding crocodile tears for the more fortunate. However, it is bad enough that young professionals in London have to borrow huge sums and mortgage their future to buy somewhere decent to live, but the addition of stamp duty cash costs means that they cannot afford to move to a larger house as and when they have a family and need more space and, they hope, a garden. The top rates of 10% and 12% are self-evidently too high and are a rip-off. They make even lawyers’ charges look cheap. Unbelievably, you do not get much in central London for £1.3 million, but the stamp duty at that level is £36,000. That means that those whose career requires them to move around the country cannot move their families as they cannot afford the cash cost of such large stamp duty bills. Therefore, you get the unsatisfactory situation whereby someone rents a room near where they work and leaves their family a long way away, and often the marriage breaks up as a result. That is unfair. Teachers are particularly hit by this situation. How on earth they can afford to pay these stamp duty bills on their remuneration I cannot imagine.
From a practical point of view, I also suggest that the Government have their estimates and calculations wrong of the level at which to pitch stamp duty to optimise revenues. I think they did the same thing with the CGT changes. The present charges are already reducing significantly the volume of transactions. A recent analysis by Knight Frank showed that sales of £1 million-plus properties were down 21% in the year to this April. In addition, it is a discriminatory tax on those living in London. While Greater London transactions accounted for 13% of the total, Greater London stamp duty revenues in the first quarter of this year were nearly half of the national total, so this tax is silently affecting major redistribution from London and the south-east to other parts of the country. From a purely practical point of view, it would be sensible to pitch stamp duty charges at a level that at least optimises revenues rather than at a level which, Laffer curve-like, potentially reduces revenues as well as messing up the market.
The noble Lord, Lord Marlesford, is absolutely on the right track. It is necessary and fair to move in that direction, but it needs to be accompanied by some sensible reductions in the rates of stamp duty.
Lord Sherbourne of Didsbury (Con)
My Lords, I congratulate my noble friend Lord Marlesford on having secured time for this Bill and on his tenacity, as he managed to use the cities Bill in July to give us an amuse-bouche and almost a forerunner of his speech today. I also congratulate him on his bravery, as the story associated with anybody who has tampered with, or sought to amend, property taxes is not a very happy one. I suspect that my noble friend the Minister will, in her very charming way, want to give this Bill a very wide berth indeed.
I wish to highlight two of the points that my noble friend Lord Marlesford made which I think are important and will not go away. The first is the anomaly whereby, especially in London, the very expensive houses and properties of bankers, hedge fund managers and oligarchs, costing millions of pounds, are taxed at the same rate as the modest homes of people with much more modest jobs and earnings. My noble friend is right to examine how the bands can be extended to make those living in more expensive properties pay a fairer share of the cost of local government. If one of the canons of taxation is fairness, he is right to draw attention to that aspect.
The other point I want to highlight is how property should be valued; my noble friend raised this question. At the moment it is valued on valuations going back 25 years. It would be absolutely absurd if the rates of income tax were levied on the incomes earned 25 years ago. He has found a very ingenious way of dealing with this problem.
At some stage in the future, both those points will have to be dealt with. As I said, Governments are understandably badly scarred by property tax reform and they will no doubt delay dealing with this, but at some point it will have to be dealt with. The longer that takes, the greater the danger that the council tax system will fall into disrepute, as have other local government taxes in the past, and that when the adjustments have to be made, they will be even more painful than they need have been.
I congratulate my noble friend on having brought this Bill to the attention of the House and having highlighted what I think are really important points.
Lord Desai (Lab)
My Lords, I congratulate the noble Lord, Lord Marlesford, on not only having secured a date for his Bill but having done it on his birthday, which is a rare achievement. The best compliment I can pay him about his Bill is that I wish I had thought of it myself.
We have had Prime Ministers fall on the question of appropriate property taxation. Your Lordships will remember that when we were trying to remove the rates, there were stories of little old ladies in large houses living next door to another house where there were four adult men working full time, and what a great injustice the rates caused. There were not enough old ladies in large houses in the census but that was the propaganda and therefore we moved to the community charge, or poll tax. The poll tax became a complete disaster but it happened because of the reluctance of politicians of all parties to revalue property according to what the market was doing. People who swore by the market—who had always sworn by the market—and encouraged property-owning democracy, and congratulated themselves when house prices were rising, refused to pass it on into taxation. That anomaly caused the loss of Mrs Thatcher and then when the new Government tried to do the council tax, my party—which used to listen to me in those days, long gone—asked me if I could think of an alternative. I racked my brains but I did not come up with anything as good and radical as the noble Lord has done.
This is an excellent Bill because it restores progressivity to property taxation. We do not have much progression when it comes to wealth taxation but he has at least restored it here—if the Government accept it, which I very much doubt because we already heard the noble Lord, Lord Flight, crying copious tears about people living in merely £3 million houses who are struggling to make ends meet; no doubt these sorry tales of the poor rich will multiply. But I hope the Government have the courage—they have the majority, they have the numbers and I am sure my party would try only to make it more radical, not less radical—to seize this opportunity and go ahead and do it.
The most brilliant part of the noble Lord’s suggestion is that rather than having any official revaluation committee, he is relying on the market to do the revaluation. By protecting people who have not sold a house since 2000, he is protecting the people who are vulnerable and have not moved out; they might be elderly and they do not want to. This is a humane, progressive, radical and economically intelligent Bill—a rare thing. It is so rare that it may not get government support but I urge the Government to support the noble Lord.
Lord Brooke of Sutton Mandeville (Con)
My Lords, it is a pleasure and a privilege to follow the noble Lord, Lord Desai, who speaks in the midst of a sea of Conservative Back-Benchers. It is not the first time that the noble Lord’s enthusiasm for the solitary has embraced me. During the 2001 general election, he was the only Peer in a British IPU delegation to a great jamboree in Havana to dance the salsa. I fear neither my noble friend Lord Fowler nor myself followed him in that experience.
This is going to be a brief speech for reasons irrelevant to this Bill but since a Second Reading debate is on the principle of the Bill in question, I wanted to support my noble friend Lord Marlesford. I was one of the relatively few Members of your Lordships’ House present just over eight weeks ago when the noble Baroness, Lady Hollis, launched the dress rehearsal for this debate with her Amendment 75A to the Cities and Local Government Devolution Bill on 15 July, as my noble friend Lord Sherbourne has already mentioned. That Bill was in the charge of my noble friend Lady Williams of Trafford, who of course is here today to respond for the Government.
The subject of the amendment of the noble Baroness, Lady Hollis, was broadly the same as today’s—council tax bands—and would have committed the Secretary of State to consult with local authorities before laying,
“before each House of Parliament a report on the introduction of additional higher bands of council tax in England for the areas of combined or local authorities which may assume additional functions under the provisions of this Act”.
The noble Baroness, Lady Hollis, alluded in her remarks to my noble friend Lord Marlesford’s creative endeavours in this area, and he immediately followed her; he was immediately followed by my noble friend Lord True, who is speaking today as well. There is a marked overlap of dramatis personae in these matters.
I am not proposing to retrace our steps on that terrain today—they occurred in a somewhat different context and anyone who was not present can read the debate for themselves. My noble friend Lady Williams of Trafford made it clear in her response that she would reserve her comments on our noble friend Lord Marlesford’s speech until today. Her remarks were understandably less than the full exposition of Her Majesty’s Government’s case to which we look forward today.
I support my noble friend Lord Marlesford today because his Bill is characteristic of his admirable trait of getting inside a genuine issue that for a variety of reasons has not received the recent scrutiny it deserves. Other examples of his persistence are outside the scope of this debate but they all occur in a manner directly reflecting the essence of this Chamber’s function as a scrutinising and revising body, and he deserves the approbation of your Lordships’ House at large. He has defined the problem in an admirably comprehensive speech. He has also sought to present imaginative and ingenious legislative remedies which would ameliorate a state of affairs that will deteriorate further if a searchlight is not shone upon it.
I can guess the outline of the Government’s case, which I suspect will owe not a little to the legendary Fabius Maximus Cunctator. I am happy to serve as a member of the infantry in my noble friend’s troop of interested supporters, and this debate, whatever the outcome, will have been a very worthwhile illumination of an issue that will fester unhelpfully if it is not further attended to. In the mean time, we are all in my noble friend Lord Marlesford’s debt.
Lord Wasserman (Con)
My Lords, I support the Motion proposed by my noble friend Lord Marlesford that the Bill be read a second time. As it is a very short Bill, I propose to keep my comments very short, too. As my noble friend Lord Brooke has already pointed out, my noble friend Lord Marlesford has a well-deserved reputation for identifying bits of our administrative arrangements which are in need of updating, either to take account of changed economic and social circumstances or new technology, or simply because the world has moved on and we look at things in a different way. Our statute books contain several examples of what I call Marlesford modifications, aimed at making our bureaucracy more cost-effective and our society fairer. This Bill is his latest contribution to this campaign.
Although it carries the innocuous and, dare I say it, rather tedious title of Council Tax Valuation Bands Bill, which sounds very much like something out of a “Monty Python” sketch, it is in fact a very ingenious Bill with wide-ranging implications. As the noble Lord, Lord Desai, pointed out, it is also very radical because it proposes that those who own the most expensive properties should pay not three times more in council tax than those who live in the least expensive, as is now the case, but 42 times as much.
Is 42 the right number? This is clearly a matter of opinion. I am not going to try to defend it or any other set of ratios set out in Clause 1(3). Debates about numbers and ratios are best left for Committee, when the real experts in the intricacies of council tax collection—of whom I am definitely not one—will no doubt have plenty to say. However, I welcome the progressive nature of the Bill’s proposals, particularly at the higher ends of the scale, and believe that they are much more in keeping with the spirit of the times than our present arrangements, whereby those at the top pay only three times as much as those at the bottom. Those arrangements are simply no longer defensible in a world where fairness has become a basic principle across the whole political spectrum.
The Bill is concerned with more than simply increasing the progressivity of the council tax system so as to achieve greater fairness. It makes two other ingenious, important and very sensible proposals. The first is that council tax bands should reflect more accurately the actual values of the properties being taxed. As has already been pointed out several times this morning, the present bands were set as at 1 April 1991, which is almost 25 years ago, when a property worth more than £320,000—the beginning of the top band—was something to behold. I noticed the other day that there is a property for sale in Smith Square, which is very convenient for Members of your Lordships’ House. It is on the market now for £25 million, although I will admit that it contains a gym, a jacuzzi and a lift. Is it sensible that that property should be lumped in the present band H, with all other properties valued at more than £320,000? Is it fair that the purchaser of this property should pay no more than three times as much in council tax as someone who owns a property at the very bottom of the scale?
It seems obvious that the property values used to assess council tax should reflect the situation in the real world. Here is where the Bill’s third ingenious and sensible proposal comes in. The main argument against revaluing all properties in England for council tax purposes is one of cost. In our so-called age of austerity this is indeed a powerful argument but, as has been pointed out several times already, the Bill deals with this objection by proposing that the new property values used for assessing council tax should be taken from the land register—that is, from the list of actual property transactions recorded under the Land Registration Act 2002, rather than being produced as the result of a massive revaluation of the kind completed 25 years ago. I have no doubt that those who know much more about this subject than me will tell us in Committee why this proposal is fraught with administrative and technical difficulties—but that is what Committee is for. For these reasons, I urge your Lordships to give the Bill a Second Reading.
Lord True (Con)
My Lords, I guess that I speak for the away team and, in so doing, I declare an interest as leader of a local authority. I make no apology in following my noble friend by saying that the technicalities and administrative details of measures matter and that your Lordships’ House is very good at considering precisely those things. I congratulate my noble friend Lord Marlesford on bringing the Bill forward but if it proceeds to Committee, as I am sure your Lordships will intend and which I think would be an excellent idea, we shall want to look at those details.
I start on a more general note as this is Second Reading. My noble friend Lord Marlesford and I come from the same stable, as indeed does my noble friend Lord Sherbourne: the Conservative research department. My noble friend Lord Brooke did so as well, I believe.
Lord True
Sorry, my noble friend’s father—I apologise. Anyway, we are interested in policy and it is absolutely true that what my noble friend Lord Marlesford has come up with has some ingenious aspects.
When you think about policy, you need to think about what you are trying to achieve. One effect of reforming a tax might be to raise more revenue. I noticed from the noddings on the other side at the speech of the noble Lord, Lord Desai, that there is certainly some interest in the possibility of raising more tax from the better off by this mechanism. Personally, I would like to hear of a little more ingenuity in reducing spending. I do not think that my noble friend was after raising more revenue overall.
The second reason might be redistributive. Actually, if you want to redistribute money from the wealthy to poorer people, there are far more effective methods than working through bricks and mortar; you go directly to income and the pay packet. That is a well-tried mechanism. Another motivation might be—I have heard a lot about this in this debate—some sort of mild embarrassment about the fact that wealthy people live cheek-by-jowl with people not so well-off: a distaste for the privileges of substantial wealth, one of which might be property.
We are getting a rather confused approach in the way that policy is going at the moment. Do we want to have wealthy people or do we not? I follow very much my noble friend Lord Flight’s remarks about stamp duty. We have lately seen a reform of child benefit, which has effectively been withdrawn from those earning over £60,000 a year— not necessarily the way I would have reformed child benefit, but it is done and I am perfectly content with it. On the pension side, we want to reduce privileges for those earning more than £150,000. Meanwhile, before the Recess, we had a measure in your Lordships’ House proposing unlimited free childcare on the ratepayers for people earning up to £5 million, £10 million or £20 million a year. Indeed, we pay for free school meals for the five and six year-old children of people of unlimited wealth—a policy which overall costs the country more than £1,000 million a year. So we have a slightly confused view in different areas of policy on whether or not we want to get after wealthy people.
The trouble with going after property, as others have indicated, is that it is an imperfect measure of what is actual wealth now. Income and property value do not always coincide. This is a point which others have alluded to and which we can look at in Committee, but I say to my noble friend that this is written as a retrospective measure. Anyone now living in a property which had been bought or sold since 2000 would suddenly find, on the passing of this Bill, that their council tax went up overnight if they were at the upper end in parallel to the other measure. We would be introducing a new taxation system based on the values of up to 15 years ago in place of one based on the values of up to 23 years ago. I do not know whether that is what is intended but it looks to me to be retrospective.
I believe that property taxes in this country are relatively high in international terms. There are good economic arguments, as the noble Lord, Lord Desai, said, for raising them if we wish to. It is absolutely correct to say that stamp duty in the south-east, and in London in particular, is counterproductively high, and one would not wish to add another disincentive effect by setting council tax levels too high and discouraging people from moving. Inheritance tax, contrary to the sleight of hand of my right honourable friend the Chancellor, is scheduled to go on rising—the take from it will rise by 50% in the survey period, whatever you see in the headlines. So property is quite heavily taxed, particularly at the higher level, but that is not necessarily a reason to address reform in itself of a tax which, I remind noble Lords, is about paying for council services. It is not a surrogate wealth tax or a surrogate mansion tax; it is designed to pay for council services. That is another philosophical issue that we need to consider.
In the detail of the Bill is an extremely ingenious proposal to put the Valuation Office Agency out of business—and, as a good Tory, I can certainly follow that. Measuring values when properties change hands in any reform is a very ingenious proposal. Many properties of course change hands not on sale but on succession: they change title when somebody dies, and the value is registered through the IHT system. The Bill would seem to include that form of succession, so the higher council tax would immediately bite on the carer of an older person who had died. The definition in the Bill is “bought or sold”, and whether that includes inherited needs to be clarified in Committee. A lot of people who are living together and who already fear the impact of inheritance tax will be interested in that aspect, which is something to probe in Committee.
I do not want to tire the House too much, but we need to look at the impact of the measures in Committee. It is certainly fiercely redistributive, as my noble friend has said, within local authority areas. The dampening effects within the council tax system would lower band D in an area such as mine with a large number of higher-value properties.
What then is the impact on the authority as a whole? Normally, the grant system would adjust itself to account for the impact of changes in council tax and would claw back the kind of windfall gains that some authorities might get. If this came in, it would probably have the effect of my authority getting a negative grant and having to pay the Treasury money. Some might support that. Before Committee, for the convenience of the House and my noble friend, I will run a council tax model through our computer on this basis and see what impact it would actually have. I do not think that every Government would compensate local authorities for the possible effect on their area of this change in the system. There is therefore a risk that people across the financial board might lose money if Governments claw money back.
Although the suggestion is ingenious and the mechanism is particularly interesting, I am concerned about the retrospective effect. As other noble Lords have said, we have to look carefully at what the impact of the new bands might be and whether the levels are right. There are irrationalities in council tax, as there are in every form of local taxation. Unless central government deals with it, there are basically only three ways of doing it: a local income tax, direct charges for services or a levy on property. At the moment we have a sort of mix. I personally think the balance overall is not too bad at present. My noble friend’s Bill is certainly worth considering, but would I go forward with it without considering very carefully in Committee the specifics of some of the issues that I have raised more broadly? On balance, I would probably leave it, but I would want to investigate further whether we could make savings through the Valuation Office Agency issue.
Lord Kennedy of Southwark (Lab)
My Lords, I thank the noble Lord, Lord Marlesford, for bringing his Private Member’s Bill to your Lordships’ House today. I declare an interest as an elected member of Lewisham Borough Council in London. I am unable to give the noble Lord the full support of the Opposition today, but I wish him and his Bill well. I think we can all agree that there is an issue, and this is an important part of the discussion in seeking to resolve matters. I agree with the noble Lords, Lord Brooke of Sutton Mandeville and Lord Wasserman, about the noble Lord’s creative endeavours and his ability to get a grip on issues that may not have been looked at for some time.
As my noble friend Lord Desai said, the council tax was introduced to replace the poll tax, the very unpopular form of local taxation that the Conservative Government introduced in 1989, first in Scotland and then in England and Wales. As we all know, it led to Mrs Thatcher being deposed as Prime Minister and replaced by John Major. If I am correct, it was the first policy announcement he made: he immediately said in the other place that the poll tax was to be scrapped. The council tax is how local people pay for the services they receive from their local authority or authorities, which include housing, social services, transport, policing, and fire and rescue services. However, it covers only part of the cost, with the rest of the money coming from central government through grants and other forms of funding.
As the noble Lord, Lord Marlesford, outlined, properties are allocated one of eight bands, coded by the letters A to H, on the basis of an assumed capital value as of 1 April 1991. There are discounts for single people and other exemptions where properties are unoccupied. The noble Lord, Lord Flight, has a point about the narrowness of the bands, particularly in London, something which was also mentioned by the noble Lord, Lord Wasserman. However, my experience in Lewisham suggests that we would certainly not be self-financing on the basis of these changes.
The previous Labour Government did not proceed with a revaluation, and I am sure part of the reason for that was the effect on poorer families. The coalition Government also did not proceed with a revaluation, and I suspect this Conservative Government are going to do exactly the same thing. The point of the noble Lord’s scheme is that it does not require a revaluation but would instead deal with the issue as properties are sold. The problem that I have is that I do not want people, particularly people struggling to make ends meet, having to take on extra costs that they would not otherwise have to pay. That of course would be the effect if this Bill became law.
As a councillor in Lewisham, I was delighted that we froze our council tax this year. I believe I am correct in saying that we have frozen our council tax in all but one of the last four years, but that was before I became a member of the authority. I hope we are able to continue to freeze our council tax for many years to come.
If the Bill manages to get some time in Committee, it will be possible, through probing amendments, to see how it could be improved and the idea put forward by the noble Lord explored further in debate. The noble Lord, Lord True, made that very point about dealing with these matters in Committee. We can also look at this in terms of policy development for local government, and one thing that I will want to look at is the whole question of value for money. I am concerned about the value we get in local government when tendering out services. There is an issue there in terms of the cost that local government actually pays. I fully support wealth creation—we all need wealth creators, because they provide the tax that we need to pay for our public services.
The noble Lord, Lord Marlesford, mentioned the proposed mansion tax when introducing the Bill. One of the problems with the mansion tax is of course its application in London. With property prices ahead of many other parts of the country, family homes in London—often very nice ones—can be bought and sold for large sums of money, but they would not be, in anyone’s understanding, a mansion. That is a real problem.
One of the criticisms of the council tax is of course its perceived unfairness in not taking into account the ability to pay. Critics point out that although the capital value of a property in which a person lives might give some indication of the relative wealth of an individual, it does not necessarily relate to current income. On the other hand, benefits are available to reduce the amount of council tax paid—although we are all aware of the cuts there in recent years.
It is important to say in looking at any element of local government funding that the cuts that have been asked of local government have been difficult to absorb. Local government has risen to the challenge in recent years and delivered local services at a level that local people would expect, but that is becoming more and more difficult. I see that first hand in Lewisham, with the difficult decision that we had to take to balance our budget and deliver the best possible services with fewer resources.
I hope that the Bill gets some time in Committee for us to debate the matter further. The funding of local government is a complex area. I want fair funding for local authorities—fair for local people, fair for everyone involved, and getting the best possible value for money.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)
My Lords, first, I apologise to my noble friend Lord Marlesford and other Members of your Lordships’ House that I entered the Chamber after my noble friend had started speaking. I was in fact dealing with another matter of interest to him, but I apologise.
I thank my noble friend for setting out the purpose of his Bill, for his interest in the fairness of the council tax system, and for providing the Government with an opportunity to set out their position on the subject of council tax revaluation. I also congratulate him on giving a bit of a warm-up act during the passage of the Cities and Local Government Devolution Bill, as other noble Lords mentioned, and wish him a happy birthday.
I know that these are matters about which my noble friend has been concerned for some time and I congratulate him on his determination to bring a Bill before this House. He will not be surprised to hear that the Government have reservations about the Bill, and I would like to explain them for the benefit of the whole House.
First, the Bill’s proposals would require the formation of a second council tax list based on Land Registry values, to which properties would transfer from the valuation list as they were sold, the start date being 2000. My noble friend envisages that eventually this would be the only property list for council tax. However, I fear that he overlooks the protracted transition period in which two parallel council tax lists are likely to require maintenance and use.
Not only would this extended period place a heavy and potentially complex administrative burden on those administering the tax but it would lead to confusion and an understandable sense of unfairness among taxpayers. Residents in similar houses on the same street could face radically different council tax bills purely on the basis of when they had bought their property. Council tax is used to pay for local services, and to charge one household significantly more or less than another according to arbitrary parameters set out in the Bill may rightly be considered unfair.
The use of Land Registry values throws up another issue. The provisions in this Bill would mandate the use of property values across a range of years going back to 2000. Placing properties in bands on the basis of different valuation dates does not strike me as particularly progressive. Indeed it leaves banding at the mercy of fluctuations in the market across time.
The Government believe that it is fairer and more consistent to have properties banded in a single list, on the basis of their value at a common date. The current council tax system already offers a means of updating a property’s band if it appears incorrect. Council tax payers have the right formally to challenge whether their home is in the correct band within six months of becoming liable for the council tax on a property for the first time. This council tax band may increase on sale if this operation is clearly understood by those selling and buying properties, and avoids an arbitrary distinction between pre-2000 properties and post-2000 properties. The band may also be changed to reflect significant changes in the locality—for example, if a motorway has been built nearby.
The other aim of the Bill is to make a very large adjustment to the council tax banding charge ratios. The suggested ratios show a steeper progression than those currently in place. On Report of the Cities and Local Government Devolution Bill on 15 July, my noble friend accepted that the increase from band A to band B under his proposals would produce an increase of 33%, compared to only 17% under the existing arrangements. That does not strike me as an increase in fairness. At the top end of the scale, for the highest value properties, the tax paid would be 42 times the value of a band A property. I know that my noble friend may disagree, but that creates the very picture of a punitive mansion tax, penalising those households living in larger homes simply because they have been bought or sold since 2000. That is of course something which the Government have long opposed, and we see no reason to change our position.
Looking beyond the numbers, however, I remind my noble friend that council tax is intentionally not a wealth tax. It is not the domestic rates but rather a hybrid property and personal tax. It is a tax which aims to raise income for the council to help to fund services, taking account of the value of a person’s home and their personal circumstances. Local council tax support goes even further and takes account of their income. Council tax is deliberately not a version of the old domestic rates, and the use of bands, rather than point values, and the moderate ratios between bands reflect that as much as the inclusion of personal circumstances.
A number of noble Lords have talked about an additional band, band H, for expensive properties, and it seems an attractive proposition. It would cost less than a full revaluation and it would get at the highest-value homes. However, there are a number of logistical problems with such an approach, even beyond the principle that more bands are not needed.
The Valuation Office Agency does not hold specific information on the precise value of properties in any band, only that they fall within that band. It would therefore need to reach a view about the actual point value of properties before they could be ascribed a new band. It would need to undertake a substantial data enhancement exercise to ensure that its physical property data were sufficient for the task and undertake an analysis of sales evidence.
Newly valued properties could also be subject to appeals, causing lack of certainty for all involved. The revaluation in Wales in 2005 prompted overall appeal rates of about 5% of all properties. We would expect similar or increased levels of appeals following a revaluation and the implementation of a new band in England.
Although the above costs might not be huge, they are significant, and in a time when money is tight and households are hard pressed, such a voluntary cost is unacceptable for the marginal change that it would bring about.
However, the main issue for me with the idea of an additional band is that if we were to set in train a revaluation of one set of properties, it would be likely to raise questions about the integrity of other bands. Any change that creates a two-tier system will increase the sense of unfairness rather than diminish it, and, as I have explained, the Government have no intention of conducting a full revaluation during this Parliament.
Above all, we must bear in mind that, despite arguments set out today, there is no public clamour for change in the bands of council tax or for a new revaluation. Collection rates remain extremely high, at 97%, which does not create the picture of a population that considers it unfair and in need of fundamental reform.
Given the unfairness of the proposed changes to council tax and the logistical difficulties of implementation, I must express my reservations with regard to the Bill and reiterate the Government’s firm and abiding commitment to protecting hard-working taxpayers from the financial pressures of high council tax bills.
Lord Marlesford
My Lords, I thank everybody who was kind enough to take part in this debate. I very much appreciated the general feeling that it was worth proceeding along the sort of lines that I have been thinking on. I felt particularly encouraged by what the noble Lord, Lord Desai, and indeed the noble Lord, Lord Kennedy, said: that it is worth considering in this way.
I was much more disappointed than I expected to be by what the Minister said. It was really rather sad. A lot of quite irrelevant points were made. I do not blame her; she was saying what she had been told to say. I quite understand the way that the system works.
I will not go into all the inaccuracies, but there is no question of forming a new band. Other points were made which we will discuss in Committee, because they are mainly Committee points.
The point about stamp duty is a valid one. I made it myself to some extent—I think that there is a need, as with all taxes, to get that balance right, as my noble friend Lord Flight said. My noble friend Lord Sherbourne gave a general welcome to the Bill, but he is right that we need to go into considerably more detail. It was good to be signed off on the economics of it by as distinguished an economist as the noble Lord, Lord Desai. He and I came into the House on the same day, in the same list. In those days, the great and the good were put here for what they had done, and there were others who had no particular merit but were put here for what they might do, and he and I were in that list. In those days, there were 10 a year of those people. The system has grown in rather a different direction in rather a large way since then.
I was very grateful for what my noble friend Lord Brooke of Sutton Mandeville said. We must progress it along the sorts of lines that he is talking about. My noble friend Lord Wasserman has considerable experience of the sorts of things that I am trying to do, in devising methods to improve technical aspects of government. In fact, one of his great achievements is the invention of the police and crime commissioner system, which is not relevant to the Bill but, despite what people say, is working extremely well, particularly in Suffolk, where I come from.
My noble friend Lord True knows an enormous amount about local government, and I take very seriously the points that he made. I do not think that there is an element of retrospection, in the sense that at any moment, when a system is introduced, it will apply to people in the form that it is introduced. Rather luckily, the date on which the Land Registry started to have its full record was April 2000, which means basically that—
Lord Trefgarne (Con)
I am sorry to interrupt, but if my noble friend would point forward, rather than addressing my noble friend Lord True directly, we could hear what he was saying.
Lord Marlesford
I am so sorry. It is rather fortunate that the date of 2000 was the date when the full Land Registry started, because that is basically before the big explosion in prices. Therefore, there would, in practical terms, be a very limited element of retrospection.
Lord True
I should explain retrospection, since my noble friend Lord Marlesford is on the point—and my noble friend on the Front Bench made the same point. What is proposed, if it is going to look back to anybody who bought a house before 2000, is to tax people on their past choices and on potentially capricious values. I do not think that that is a very fair way in which to proceed. In that sense, it is retrospective but, obviously, it would come into force and go forward.
Lord Marlesford
The point that I was trying to make on that is that, for many people already on the register, there would probably be very little difference in bands, because they would have bought their property before the big explosion. To be honest, I think that the people who had just bought a property at a huge price would be among those who I would be content to pay a much higher tax. So, yes, of course it would apply. Indeed, from now on until this measure comes into force, which I hope that it will, people will be able to say to themselves, “Well, if this comes into force, it will do so on the price that I am paying now”. Therefore, people can take it into account. I do not feel that the oligarch who bought a £20 million house in Smith Square with his jacuzzi and swimming pool can really have an enormous amount to complain about if he pays £42,000 rather than £3,000 in council tax. I think that he will be very pleased to be living in this country, with all the benefits that go with it, compared to his own country, perhaps, and pleased to pay that small ticket.
Most of these points need to be dealt with in Committee, but I would just say to my noble friend Lord True that yes, indeed, prices of houses are registered when ownership is transferred—and, indeed, death is a transfer. The valuation made in that case is, of course, made by a valuer. But the number of dwellings transferred at death are very few compared to those transferred by market transactions, so a valuation is required then. That value is often argued about with the capital taxes office, and all the rest.
Lord Flight
On both death and gifting, valuations are required for IHT and capital gains tax reasons, so it is going to happen automatically, anyway.
Lord Marlesford
Exactly, there are valuations in those cases. But there is a very big difference between doing it just for those and doing it for everything. The argument has always been that we cannot have a complete revaluation. The Minister used again that very old argument, which I reject, and I have tried to meet it by saying that, fortunately, we have the Land Registry and, fortunately, for well over half of dwellings at the moment, we have the actual prices that have been paid. As for the poorer people at the bottom of the market, very few people at that end will find that they pay a higher council tax. The movement in my banding from £40,000 to £250,000 would include virtually all the people in band A anyway—it is very unlikely that people would find themselves in band B. Quite a lot of the people currently in band B will remain in band B, because that goes up to £500,000. So there is a certain automatic adjustment from the price mechanism and the market in that respect.
I shall not continue now, because a lot of these points need to be studied in detail. I hope that the Government will show themselves perhaps a trifle more open-minded, rather than merely trying to produce old and jaded arguments and persuade some unfortunate Minister to put them forward for them. I ask the House to be graciously prepared to give this Bill a Second Reading.
Property Boundaries (Resolution of Disputes) Bill [HL]
(9 years, 2 months ago)
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The Earl of Lytton (CB)
My Lords, in outlining the Bill’s purposes, I have a particular interest to declare. First, I am a practising chartered surveyor, with involvement in the realms of boundary, title and party-wall matters. I chair my profession’s specialist panel in this area, and together we produce guidance notes for members. I am also a property owner—although, thankfully, without any current boundary disputes.
I must express my thanks and appreciation to a number of people, and first to Charlie Elphicke MP, whose original Bill was introduced in another place in 2012, which started all this rolling. I am most grateful to him for his advice and support. Secondly, I thank the group of what I might describe as the top five professional boundary practitioners, under the leadership of Andrew Schofield, FRICS, who took that earlier Bill away and substantially reworked it to produce the document before us today. I particularly single out Mr Schofield because he has been my adviser, mentor and supporter on many of the technical issues relating to this Bill. Thirdly, I must thank the staff of the Public Bill Office for their unfailing assistance and courtesy. Their help with preparing the Explanatory Notes has been frankly beyond price. Perhaps I should also thank Lady Luck, who has favoured my entry in the ballot, enabling me to introduce this Bill.
I also thank the Minister and his department for being ready to listen, even if they do not entirely buy the reasons why this Bill is needed, and, not least, I thank the Minister’s officials for meeting me yesterday at short notice. I note with appreciation and satisfaction the support of my professional body, the Royal Institution of Chartered Surveyors, and, in particular, I thank Mr Martin Burns of the RICS for his advice and encouragement. I thank the Pyramus & Thisbe Club, a learned society, mainly of surveyors but of other professions as well, which has a particular interest in this matter. It so happens that I am a member of that club. A number of individuals showed a positive interest in this. Finally, I express my fondest thanks to my wife for her patience about all the late nights when I have been dealing with this thing and have come home from the office or from this House late in the evening.
I look forward to the comments of the noble Earl, Lord Kinnoull. His late father was a great supporter of the Party Wall etc. Act, which I had the privilege of taking through your Lordships’ House in 1995-96. I very much look forward to what he has to say and to hearing the noble Baroness, Lady Gardner of Parkes, who has such extensive knowledge of the residential world, its foibles and its areas of conflict.
The fundamental premise behind this Bill is the undeniable fact that boundary issues are a matter of technical complexity and, as such, are most amenable to scrutiny by technicians first and foremost and to legal overview as a second stage. This Bill is intended to be in tune with the general direction of policy to reduce conflicts and provide alternative non-judicial means of resolving disputes. This is the broader public interest hook on which the Bill hangs. I know that the Minister and his department are very much aware of this. I hope he does not feel that I am trying to force the pace by this Bill having its Second Reading today; it just so happens that it is the date I was offered.
Any consideration of property boundaries brings with it considerations of title, but title is a legal construct based on the documentary and other paper evidence and in many cases is now registered at the Land Registry. However, on the ground, the proper interpretation of these factors is a matter of observation, identification, physical facts, measurement and cartographic or other documentary interpretation. This is a surveying task. For what is shown by a line on the registered title plan—plotted, as it is, on to a Ordnance Survey plan base—at best denotes the presence of a feature that a cartographer believed to be in the position shown, but it is entirely silent about what that feature is on the ground. Moreover, Ordnance Survey has a standard disclaimer that a line on a map does not reflect a legal boundary, just as the Land Registry has a standard proviso that the title plan accords with what is known as the general boundary rule. This rule ultimately boils down to little more than a plan for identification purposes, though invariably this is ignored by owners, who believe the title plan is to be taken literally. Therein lies part of the problem.
One may be lucky as a practitioner and find a more accurate pre-registration deed plan lurking somewhere, but one quickly runs into the legacy of hand-drawn or traced plans, plans not to scale, or plans defaced with overzealous outlining, subsequently photocopied and then re-coloured. This is a legacy issue, an historic failing of those involved with conveyancing at a time when, I am afraid to say, precise boundaries did not matter that much. Now, with more intensive uses of land, competing neighbour aspirations and high property values, it does matter, and often it matters very much indeed.
Practitioners, the judiciary, the professions, local government and public bodies all agree that boundary disputes are toxic. Evidence from Citizens Advice in correspondence with me reveals that last year it dealt with around 3,600 inquiries in England and Wales. Practitioners believe that with the cases they handle, usually via solicitors, the total may be in excess of 5,000 per annum, but I admit that no accurate records are kept. One well-known specialist practitioner recently advised that additional staff had just been taken on to deal with the increasing workload. Other practitioners share the view that the problem is growing.
Although there is, of course, access to forms of alternative dispute resolution, such as mediation, arbitration or adjudication, the parties to a property boundary dispute can very seldom be compelled to use them and even less to honour the spirit of the process. Furthermore, for voluntary ADR to work, it needs to be in the common and reasonably balanced interests of the respective parties—often even for voluntary agreement on the process to be reached, let alone on being bound by the outcome. There is seldom the necessary convergence of financial strength, commonality of motives or intended outcomes to make this a reality. Sadly, owners of property can be very defensive about boundary issues, which are often tied up with other matters: pets, trees, children, lifestyles, poor living conditions, poverty and maybe racial or cultural differences. Bad or uncertain title can be added to that rather heady mix.
The fact that it is difficult, expensive and, in terms of disposing of property, a serious barrier to transactions means that there are abuses, with some owners apparently wilfully ignoring the mores of polite society and being prepared to chance it to see what they can get away with or just in total denial that they might be in the wrong. A neighbour, realising that the defence of their property carries a high tariff, has to either accept the incursion or fight it to the bitter end.
Once parties start down the road of litigation, it very quickly becomes impossible to reverse the process because of the rapidly accumulating costs. These costs can quickly overtake the original issue to become the real bone of contention, and frequently dwarf many times over the economic value of the disputed land. I am inclined to give clients a bit of advice that the ferocity with which boundary disputes are pursued is in inverse proportion to the value of the land in question, and after many years I have no reason to resile from that advice. Because of the effects on transacting property subject to a dispute—effectively it is a block on being able to dispose of it—there is no retreat: a conclusion must be reached some way or other.
Practitioners’ experience is that a boundary dispute that goes to court is likely to cost on average in excess of £100,000. When coupled with the costs of the winning party, this can be ruinous for the loser, and most specialist practitioners are aware of cases where a party has been forced to sell their property to meet the bills. While it is, of course, a free world in which a fool and his money may be deemed to take their chance or be parted, I submit that it is also the duty of public law and administration to have such measures in place as will reduce, if not completely protect citizens from, such activity, if not their folly.
We also know that the civil courts cannot cope with present workloads and have been described in some quarters as sclerotic. Boundary cases in the courts typically take years to reach a conclusion. I think it was David Powell, FRICS, a well-known practitioner and technical author, who once remarked that when meeting a new client on a boundary case, he would warn that such disputes can be hugely expensive, so much so that for the same money one could have a very good family holiday in some delightful foreign spot or even construct a swimming pool in the back garden. He then added that the majority of clients ignored his advice, which is why he enjoyed many foreign holidays and had a large swimming pool. I give that as an anecdote. Citizens Advice’s recent email to me observed that many of its cases relating to planning also have a boundary element but are not included in its boundary inquiry figures. It is often in the planning and construction of home extensions that the need to know a boundary position with precision is most pressing. The definition of “title” has not kept up with this, or with advances in measurement and positional accuracy.
The views of the judiciary in some high-profile cases have been quite illuminating. In the case of Moncrieff v Jameson before the House of Lords in 2007, the noble and learned Lord, Lord Scott of Foscote, noted the regrettable and surely unnecessary falling out of neighbours who had lived in amity for many years. Lord Justice Sedley, in the Court of Appeal case of Strachey v Ramage in 2008, similarly observed how defective conveyancing has led to war being unnecessarily declared between neighbours, with costs that vastly exceeded the value of the land. The 1997 court case of Alan Wibberley Building Ltd v Insley induced Lord Justice Ward to lament the dread with which judges would greet the label “boundary dispute”. Later, in the same case before the House of lords, Lord Hoffman referred to them as a particularly painful form of litigation, with disproportionate amounts of money spent and claims often involving small and valueless pieces of land but,
“pressed with the zeal of Fortinbras’s army”.
So the Bill, or at any rate its principle, has the support of several key sectors. I suggest that it would have the following advantages. It would restrict occasions of conflict; reduce costs; lower the burdens on the courts; give greater certainty of outcomes; substantially reduce timeframes for resolution; provide a determinative conclusion; and retain ultimate redress on matters of law to the courts. It would also do the same for easements and rights of way. However, being based on the construct of existing land entitlement, it would not address or determine adverse possession cases, though it might clarify just how much of the possession was actually adverse. It seems to me that if the boundary is uncertain, you cannot log the degree of your adverse possession. As I said earlier, though, it is in line with the general thrust of public policy, which I know to be espoused by the Minister: that these cases should be kept out of the courts at all costs. It is a public interest issue of a pressing and apparent nature, and I believe that it can no longer be ignored.
The Bill is in effect largely enabling legislation, empowering the Secretary of State to make orders governing much of the finer detail. This is deliberate. The power is confined within the Bill’s purposes, so it would not afford a wider power—even less a Henry VIII provision—but it provides for future flexibility. It provides for boundary dispute cases to be referred to technical experts first, rather than to litigators. It would intercept certain existing cases before the courts as well as providing a trigger mechanism where, before action has been commenced, a boundary issue has arisen. It then provides for a dispute resolution process that is very similar to that in the Party Wall etc. Act 1996, which, as I have said, it was my privilege to take through your Lordships’ House at the time. That Act has been in force since 1997. It is believed that around 500,000 to 600,000 cases have been dealt with under its umbrella, and only about three cases of substance have proceeded to the senior courts and not many more than that to the county courts. It is a tried and tested formula in which surveyors are appointed and charged with objectively considering the issues and producing a document, known as an award, setting out their agreement and determination. On matters where they cannot agree, there is a third surveyor who will effectively act as a referee. The award so produced, by either the two surveyors or one or other of them, or the third surveyor, as the case may be, is appealable to the courts. So there is judicial oversight.
Unappealed awards, however, would require registration of the outcome with the Land Registry as a determined boundary. The determined boundary is a specific process, which means that, as opposed to the general boundary rule, the actual boundary in question—not necessarily the whole boundary of the property but the particular boundary—becomes part of the registered title, and any future purchaser has due notice of that. So it makes that boundary definitive for the purposes of the registered title, and the purpose of that is to avoid the case then resurfacing at some future date because of a change of ownership.
The Bill provides for the role of surveyor to be discharged by certain specified types of person. There are some precedents for this; for example, in some agricultural arbitrations the arbitration function has to be exercised by a chartered surveyor. The point is that the exercise of technical expertise in boundary matters must necessarily be done by someone with the requisite training, subject to continuous professional development and with a proper policy of indemnity insurance. Only professional bodies such as those referred to in the Bill encompass all of these and monitor them year on year.
To summarise: I believe that the Bill, or something like it, would defuse many potentially contentious situations; provide orderly and more predictable outcomes to cases that have become contentious; reduce costs; and substantially reduce timeframes from years to months. A typical party wall case, for instance, is normally dealt with in a matter of a few months, seldom running into years. More to the point, it would contain the risk and reduce the heartache, stress and bitterness of these often very emotive situations. I believe that the courts would thereby be freed up. It would prevent serious and protracted blocks on transacted property and, with that, the corrosive risks of attendant uncertainty. It would be flexible and, as I have suggested, reasonably future-proof.
There have been some criticisms of and comments on the Bill, and I will address one or two of them. First, it has been said that it would somehow cut across title issues. For the reasons I have already stated, I do not believe that that is the case. It has also been suggested that it is unnecessary, but I believe that I have made the case for its necessity, even though the numerical incidence of such cases may appear low in statistical terms. It has been suggested that the Bill would sit ill with adverse possession cases. Again, I do not believe that the Bill trespasses—if I can use that term—on that territory.
It has been suggested that there are other suitable forms of dispute resolution. Sadly, this does not seem to be the case because, as I say, the parties to a dispute cannot be obliged to use them or adhere to the outcomes. It has been suggested that the Technology and Construction Court, the judicial body to which the Bill proposes that an appeal be made, is not the appropriate forum for that. I have had some very helpful email correspondence with Judge Anthony Edwards-Stuart, who is in charge of the Technology and Construction Court. He said that it was not the right forum, but very helpfully suggested that perhaps the Bill might merely refer to a right of appeal to the High Court, leaving the Heads of Chancery and Queen’s Bench divisions to work out which court should actually deal with the appeal. I am very happy to accept that sound advice.
It has been suggested that the definition of “surveyor” may need tweaking—funnily enough, because it makes a technically incorrect reference to “engineers”. Again, I am very happy to tweak that and oblige by dealing with that in an amendment. I believe that these and other matters can be dealt with by amendment to the Bill. With that, I beg to move.
The Earl of Kinnoull (CB)
My Lords, I congratulate the noble Earl on bringing the Bill to the House, the second in his suite of “neighbourly matters” legislation—the first being, as he said, the Party Wall etc. Act 1996, of which more in a second. I welcome the very clear reasoning that he has just set out.
Boundary disputes of course happen naturally and always will. Those who sit in tutorials learning Roman law at Oxbridge have to learn about them from several thousand years ago, and Citizens Advice has advised that last year alone it was giving advice on 3,700 such disputes. I dare say that there were many more.
The situation in England and Wales at the moment means that such disputes are extremely expensive to sort out and very slow. They give rise to blight on an affected property, and that blight is expressed both in the saleability of the property and in the ability to raise mortgage finance on it. They give rise to problems between what one might term big party property owners and small party property owners because the big party will be tempted by use of wallet to be, frankly, unfair to the small party, and abuses can and do happen. They also clog up the courts, about which I shall say more in a second.
I feel that the Bill is in line with a general policy in life of trying to provide better access to justice for people. It would speed things up and produce much lower costs. It would also blunt the abuse weapon, to which I have just referred, between larger and smaller parties.
I have much direct experience of the Party Wall etc. Act 1996, both as a private individual and corporately. At least two of the things that I have been involved in have become very contentious indeed. I feel that, after nearly two decades of it being in service, the one thing that one can say is that the mechanism provided under that Act really works well.
One party wall surveyor, who I think is the chairman of the Pyramus & Thisbe Club and who has been in practice for more than 25 years, told me proudly that he has never had to go to a third surveyor in his line of work. There is a very clear reason for that, which is that to be a successful surveyor you have to have as a core skill relationship management; otherwise, you simply will not get any clients. That ability to have relationship management is, I am sure, at the core of being able to bring together parties whose feelings often run very high and at the core of being able to get a deal done.
The noble Earl mentioned previous criticisms of efforts to bring forward legislation of this kind. There is one more criticism, which is that surveyors lack legal expertise. I think that is a weak point and I shall make three counterpoints, although there are more. The first is that, very often in these disputes, the issues are not legal but factual. A surveyor with gum-boots on is probably much better suited to facilitating a resolution in a dispute than someone sitting in a lawyer’s office.
The second point that I make in rebuttal is that surveyors can and do employ a lawyer if a legal point comes up. Indeed, in one of these very contentious cases that came up, precisely that happened. Both surveyors immediately wanted to instruct a lawyer on a very arcane point. Legal advice was taken and prepared, and the dispute was eventually resolved.
The third point concerns the judiciary. We have had various quotations and in fact the law reports are littered with interesting quotations from the judiciary about how little they enjoy boundary disputes. I have a quotation from Lord Justice Mummery in Bradford v James in 2008:
“There are too many calamitous neighbour disputes in the courts. Greater use should be made of the services of local mediators, who have specialist legal and surveying skills”.
He went on:
“Litigation hardens attitudes. Costs become an additional aggravating issue. Almost by its own momentum the case that cried out for compromise moves onwards and upwards to a conclusion that is disastrous for one of the parties, possibly for both”.
I think that the judiciary would certainly want to try to export a lot of boundary disputes to another method of resolution.
In summary, I agree very much with the noble Earl that the current arrangements produce disputes that go on for too long, are too expensive, are open to abuse—there are instances of abuse—and clog up the courts system. I have three very short questions for the Minister. First, does he agree that it is preferable to do something about this issue now than to let the status quo be? Secondly, does he agree that the Party Wall etc. Act mechanism has been a great success over its nearly two decades? Thirdly and accordingly, does he agree that such a mechanism could successfully be applied to other boundary disputes to the benefit of all?
Baroness Gardner of Parkes (Con)
My Lords, I declare at the outset my property interests, which are in the register.
I support the Bill for two reasons. One is that I think it is a very positive and good idea, and I like what is in it. The second is that I have huge respect for the noble Earl, Lord Lytton, and his expertise in this field. I am a qualified dentist but I am not a qualified anything in terms of property, other than having experience of being a sufferer of people who argue about something and then it ends up in court. I found myself in a situation where, although the case was withdrawn and ruled to be completely out of order, my legal bills simply to have the case withdrawn and have it vanish from the list were horrendous.
Therefore, I support something that is practical and easy to operate, as well as being a system in which the public can have confidence, as I believe they can as there is a parallel with the party-wall procedures. I have never had any problem with party-wall procedures; I have found them very effective. I think that this country is tending more and more to push out smaller self-help systems in favour of putting us all into court. I am very opposed to that. The leasehold valuation tribunal, where you could take your case and you were told that it would not cost you more than £500, was thrown out. Now, it costs you much more than that even for an appearance. I understand that employment law has gone the same way in that you can no longer handle cases yourself. I think that there are many very good things about people being able to deal with their own cases with the benefit of help from someone such as a qualified surveyor, who is well qualified and understands the process. I believe that the public in general would be relieved to know where to go to get this sort of advice. The party-wall system is well known, and something similar, as proposed in the Bill, would definitely have a very good effect.
I am also delighted to speak after the noble Earl, Lord Kinnoull, because I served with his father for many years on the Woolwich Building Society board. I held him in very high regard, and I hope and trust that his successor has the same ability. From the sound of it, that seems very likely, and I hope that we will hear more from the noble Earl.
I like the fact that the Bill proposes the establishment of clear and simple processes. They can be understood by ordinary people in the street or by a neighbour who has a boundary issue with you. The noble Earl, Lord Lytton, mentioned that people are terrified of getting involved in something where the costs are unlimited. People can even find themselves losing their properties after they have taken on a legal challenge. Qualified surveyors are respected and valued.
I think it was mentioned that there would be a code of practice, and I feel that that would be very important. Of course, the Government and Members of this House will probably have an opportunity to look at any code of practice that goes with the Bill, and it will be important to consider it in detail. However, it is the sort of thing that people are used to. They like to know that there are procedures that they can follow and understand. Technical procedures have a complexity, which the noble Earl mentioned, and therefore you need to know where to go to get the right advice. I stress that I very much support non-judicial means that work. If they do not work, you can find yourself in an expensive situation. However, by that time, you will know a little more about the situation and might be more willing to agree to something. I certainly believe that to be the case.
I do not intend to go on at great length because the issue is clear-cut and the proposal is good. The case has been presented in great detail by the noble Earl, Lord Lytton. It is worrying that every politician seems to be pushing the public more and more into litigation. Instead, simple procedures such as that proposed would avoid much of that. It would also do away with the acrimony which it is terribly sad to see develop between people who have been neighbours for years, and have got along well; suddenly there is bitterness, which is not forgotten and lives on.
I strongly support the Bill. I will not go on any more because everything that needs to be said has and will be said here today.
The Earl of Erroll (CB)
My Lords, I want to say a couple of brief things in the gap. A dispute such as this happened to my family and it would be useful if a proposal such as this covered it, although I am not sure whether it does.
What happened was that there was a privately owned lane with a verge along it. The title deeds to it were probably lost in the mists of time. No one could find them and it did not really matter. However, the people who owned land along the lane sold off building plots. The trouble is that the chap at the end of the lane, where it joined the highway, then put in a claim for adverse possession over the verge, which the Land Registry accepted, even though there was no fence along the verge edge. The registry said that the applicant had mown it or whatever, and agreed to the application. The challenge is that the water meters for the entire lane are at the end of it. That is all right because an existing right can be proved, and the water for all the other properties down the lane runs under it. However, the owners of those properties have no right to dig up another person’s land—or apparently they do. We understand that there is probably a right to maintain the water pipe; therefore, although adverse possession over the land was granted, there is probably also a pre-existing right to use of the lane.
That may be fine, but no one is sure where the telephone lines, sewage or other things run. What is under there? And what happens when one wants to put in something new, such as broadband, when there is a need to run a fibre-optic cable under the lane? Can you do this? The answer is probably no because the owner has adverse possession, and I am not sure how fair that is. The challenge is that because the Land Registry has accepted the application and registered it, the situation cannot be disentangled. Should one be able to?
I merely describe the situation; these disputes get complicated and there needs to be a simple way in which to sort them out. Perhaps issues such as this could be incorporated within the scope of a Bill such as this. It may be too difficult; I do not know. However, unravelling such issues should be possible because it is easy to make mistakes, particularly when no one knows the precise position. This issue arose partly because there was no duty to inform the people who lived up the lane about the fact that adverse possession was being registered because there was no apparent interest in it. I leave noble Lords with that other difficult problem.
Lord Kennedy of Southwark (Lab)
My Lords, I thank the noble Earl, Lord Lytton, for bringing this Private Member’s Bill forward for debate today. He is a man of considerable expertise in this area, and the intention of his Bill is to resolve property boundary disputes at the earliest opportunity and with the least cost to the individuals concerned. That is a very welcome intention indeed.
We are all aware that matters concerning boundaries can lead to highly charged and protracted legal proceedings, which can be extremely expensive for the parties involved and certainly far more expensive, as the noble Earl said, than the value of the land in question or the boundary in dispute. That situation is of benefit to no one and one we all should all be concerned to remedy.
We had a useful debate on this very issue on 15 January this year, led by the noble Earl. Being able to move forward quickly and consider proposed legislation in this area is welcome progress. I generally welcome the Bill and what it proposes. That is not to say that there are no areas where it could be improved and refined in your Lordships’ House, and I hope we will have a day in Committee to do that.
As has already been outlined, the Bill makes provision for the resolution of disputes concerning the location or placement of boundaries and of private rights of way relating to the title of an estate in land. It seeks to do this by requiring the owner of land who wishes to establish a boundary to serve notice on the adjoining landowner. If the adjoining landowner does not specifically consent to the notice, a dispute is deemed to have arisen. The dispute is then resolved by an agreed surveyor or, where there is no agreed surveyor, three surveyors who shall determine the precise location of the boundary or location and extent of the private right of way. I very much agree with the noble Baroness, Lady Gardner of Parkes, that too many matters are driven towards the courts, and the Bill gives us a clear and straightforward way in which to resolve these disputes.
The matter is not to be questioned in court except through an appeal to the Technology and Construction Court, or perhaps just the High Court, and if no appeal is made within 28 days, the award is submitted to the Land Registry. The Secretary of State shall by regulation approve a code of practice that would set out the form and manner in which the documents are to be served and used under this procedure. Where a party to the dispute seeks to disrupt or not co-operate with this process, they would be guilty of an offence and, on summary conviction, liable to a fine.
I am assuming that the Bill is not going to receive an enthusiastic welcome by the noble Lord, Lord Faulks, but I hope that he can recognise that this is a real issue—a real problem—and that this is an attempt to reduce the costs and have these boundary disputes determined quickly and efficiently for as little cost as possible to the parties involved. The noble Lord on a previous occasion has said that this proposal would not always return beneficial results and suggested that this could be due to the adversarial nature of these disputes and the potential lack of legal expertise held by the appointed surveyors. I agree with the points made by the noble Earl, Lord Kinnoull, in that respect. If the Minister intends to pursue the opinion he stated previously, perhaps he could also address the argument that it is the very expertise of these surveyors in determining these matters that in fact would make the likelihood of successful appeal proceedings less likely. That is because the determination will have been made by a qualified professional who is expert in their field, following a code of practice set out by the Secretary of State on how these matters are to be determined.
It would also be helpful to your Lordships’ House if the noble Lord, Lord Faulks, said that he is of the view that this and a combination of factors would mean that a high number of appeals is likely. That would not be beneficial. Does he expect more boundary dispute appeals to appear before the courts, or would there be fewer appeals but not sufficiently few to justify making the change proposed in the Bill? How did he and his department come to that conclusion—if, indeed, that is the conclusion? Will he share that information with your Lordships’ House by placing a copy in the Library?
It may be that Minister is absolutely right, but I should like to understand what is behind that thinking if he is going to put forward arguments such as those he advanced in January. With those questions to the Minister, I bring my remarks to a close and again thank the noble Earl, Lord Lytton, for bringing this matter before your Lordships’ House. It is a valuable contribution to the debate on these matters and a pointer to where we need to make improvements.
The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, I congratulate the noble Earl, Lord Lytton, on securing a Second Reading for his Bill on this important issue.
As the noble Lord, Lord Kennedy, indicated, we had a debate, initiated by the noble Earl in January this year, in which many of the issues that have been discussed today were canvassed. That is nothing but to the good. Similarly, I have had an opportunity to meet with him and others who are concerned with the issues that the Bill generates. I am grateful for that opportunity, and for the noble Earl’s acknowledging his engagement with officials in my department.
The Bill’s core aim is making it easier to resolve boundary disputes. It proposes to do this through a system like that adopted in the Party Wall etc. Act 1996, which would require disputes about the exact location of a boundary between adjoining properties in England and Wales to be referred to a surveyor or surveyors acting as independent adjudicators for final determination, subject only to a right of appeal to the Technology and Construction Court.
Pausing there, I note that the noble Earl has been in communication with Sir Antony Edwards-Stuart about the suitability of the TC court as a venue for appeals. He has indicated that he does not think it appropriate but makes some useful suggestions. I am sure that, if the Bill were otherwise to proceed, the precise venue for an appeal is something that could be satisfactorily concluded.
The Bill also proposes to apply this system to disputes relating to the location and extent of private rights of way.
The noble Earl considers that the procedure proposed in the Bill will make dispute resolution simpler, faster and more cost-effective. These are laudable aims, which the Government share. Indeed, we have made, and continue to make, considerable efforts to control the cost of civil litigation to ensure that the costs incurred are proportionate to the subject matter of the dispute. However, we have significant reservations about the extent to which the proposals contained in the Bill would in fact improve matters. Indeed, we are concerned that they could have the unfortunate effect of making the resolution of these disputes more complex and costly than at present.
A similar Private Member’s Bill relating to the resolution of boundary disputes was introduced in the other place in 2012 by the honourable Member for Dover, Charlie Elphicke. In the light of the concerns that that raised, the Government decided to carry out an initial scoping study, the results of which were published on 15 January this year. The core conclusions of the scoping study were that there would be merit in the Government carrying out further work to assess the feasibility of improving a number of aspects of the current system, including, in particular, the use of mediation and expert determination, the spreading of best practice and the provision of better information, but that more radical reform, such as that proposed in this Bill and its predecessor, would not currently be justified.
The noble Earl’s Bill differs in some important respects from its predecessor and, in particular, extends to disputes about the location and extent of rights of way. These were not considered in the scoping study to which I have referred.
Before I update the House on the steps the Government have taken since the publication of the scoping study in considering improvements in the current system, I would like to focus on what we see as the core difficulties with the approach proposed by the noble Earl.
Responses to the scoping study confirmed that boundary disputes can arise for a number of reasons. Although some disputes may follow an unprincipled unilateral annexation of a strip of land, many more will derive from two honestly held beliefs—or fairly honestly held beliefs—as to where the boundary lies. At the root of these divergent views will frequently lie a conveyance that is poorly drafted or, at least, does not define the property to be transferred with sufficient clarity and precision. Because of this, such disputes will ultimately hinge on the legal question of who owns a particular piece of land or is entitled to exercise a particular right of access, and will fall to be decided on the interpretation of the evidence in the light of the law. In particular, the outcome will depend on the interpretation or construction of legal documents, such as conveyances and the plans incorporated in them.
I do not, in any way, wish to downgrade the very substantial contribution that surveyors can and do make to the resolution of these disputes. It is of course the case that judges will often rely to a considerable extent on the advice and expert evidence that surveyors provide.
In answer to the question raised by the noble Earl—is a boundary line a technical issue or a legal one?—a technical assessment of where a boundary lies is, in part, a surveying exercise. It would be unusual not to consider the lie of the land. However, this is not the whole story. The line of a boundary is ultimately a legal issue. I note the distinction that the noble Earl has made but am afraid that I am not entirely convinced by it.
The kind of dispute with which we are concerned is one that the courts and the land registration division of the property chamber of the First-tier Tribunal are designed to determine. I entirely agree with all speakers in this debate who confirmed that surveyors have great expertise in this area. However, a surveyor, no matter how expert in technical issues, will not be able to give a ruling that is conclusive in legal terms and will not necessarily have the legal expertise to deal with the complex legal issues that might arise; of course, I include adverse possession in this. This in itself would make it likely that many decisions would be appealed—this is my answer to the point made by the noble Lord, Lord Kennedy. That prospect becomes even more likely when one takes into account the considerable bitterness and antagonism that such disputes can generate.
I agree with all noble Lords who have expressed the view that it is far better that these matters are resolved out of court by simple arbitration or the involvement, perhaps, of one surveyor in a relatively informal context. However, as a number of noble Lords have pointed out, the reality is that these disputes can escalate and often involve costs that are out of all proportion to the amount in dispute. I fear that the mere interpolation of a process, which this Bill envisages, will not prevent those determined to see these disputes carried out to the bitter end.
The comparison with party-wall cases is of course important. However, unlike party-wall cases, boundary disputes are generally likely to produce a winner and a loser. Therefore, the chances that a loser will be determined to vindicate his or her view of what is right by bringing an appeal are high. A rigid system requiring referral in all cases at an early stage to the process, as set out in this Bill, could also serve to raise the stakes in the dispute, increase hostility and entrench attitudes.
Taken together, these points would mean that the Bill would simply add a further layer to the proceedings, which would increase the costs involved rather than reducing them. In addition, in some cases, the early appointment of experts could itself front-load costs where the dispute might have been resolved in other ways.
We believe that a more effective and proportionate approach is to look at practical procedural improvements to the current system, rather than undertake a radical overhaul. With that in mind, we are exploring the scope for improving court and tribunal procedure, encouraging the use of mediation and expert determination, and improving the availability of information on ways to settle disputes. We are in the process of developing firm proposals in the light of our discussion of these issues with the relevant bodies. As we announced in the report on the scoping study, we aim to announce our emerging conclusions before the end of the year.
I note, of course, that the noble Earl quite fairly said that the date for the Second Reading of his Bill was rather beyond his choice. I think he might accept that, in some ways, he would have been a little happier if it had come after the scoping report had been concluded. Be that as it may, I hope he will be reassured by the fact that the matters raised by his Bill are receiving serious consideration by the Government.
The noble Earl, Lord Kinnoull, with whom I shared the experience of studying Roman law at Oxford—there is some comparison with these issues—referred to the inequality of arms that quite often prevails in these disputes and which can result in their escalation. It is difficult to avoid that, whatever particular procedure we adopt. He also quite rightly made the point that surveyors are often particularly useful in resolving these disputes because of their skills in relationship management. That, of course, is a valuable quality in any profession, as I am sure he would agree.
The noble Earl said that the disputes are often factual, not legal. I agree with him to some extent. They are a bit of both: both fact and law. He referred, as did a number of other noble Lords, to the fact that the judiciary tend not to welcome such disputes. That is true. In my own experience, I have seen that judges, knowing that they are facing a boundary dispute, do not jump for joy at the prospect of the decision they will have to make. But not all judges, despite the quotations that we have received, share this lack of enthusiasm for boundary disputes. Indeed, the noble and learned Lord, Lord Hope, who spoke in the debate in January, told the House that he found them extremely interesting. He also, valuably, pointed out some of the advantages that there were in Scotland in resolving these issues, and in his careful consideration of the noble Earl’s Bill said that,
“I am not entirely convinced that making it compulsory for every such dispute to be resolved by reference to a panel of surveyors and excluding the courts entirely—as I think the draft Bill seeks to do—is either necessary or desirable. There will be cases where the title deeds alone will provide the answer and it may be that agreements can be reached; but I am not entirely sure that understanding these deeds is within the exclusive competence of a surveyor. There is then the problem of how to deal with other evidence about the way the property has been used, which may be hotly disputed and requires analysis, presentation of evidence, cross-examination of witnesses and so on. There is also the matter of adverse possession, which could raise very difficult issues”.—[Official Report, 15/1/15; col. GC 267.]
The noble Earl, Lord Kinnoull, asked me three questions. I think that I have dealt with the party wall issue and the comparison, which I respectfully suggest only goes so far. On the status quo not being satisfactory, we are well aware of the difficulties and, as I have indicated, are considering them.
I am sure that many noble Lords have similar experience of potentially difficult and expensive disputes to that of my noble friend Lady Gardner, and the Government share her desire to do all we can to limit the expense and heartache which such disputes can cause. The noble Earl, Lord Erroll, spoke of the immense complexity that is sometimes involved in such disputes. I cannot of course comment on the particular problem that he outlined in detail, but I detect that what he was suggesting was that, if there is to be a change in the law, it would be good if it embraced as many of the potential difficulties such as those which he has described.
We are grateful to all noble Lords who have taken part in this dispute.
Lord Faulks
I mean this debate—I am most grateful. I hope that my comments in this debate will reassure the noble Earl, Lord Lytton, and others who have spoken that the Government are committed to ensuring that boundary disputes can be resolved fairly and effectively and to minimising the adverse impact of adversarial behaviour and entrenched positions. We believe that the work that we are undertaking represents a more effective approach than radical reform of the law, which the Bill suggests. While the Government will not oppose the Motion to give the Bill a Second Reading, for the reasons that I have given we have reservations about the changes to the law that it proposes.
The Earl of Lytton
My Lords, I thank warmly all noble Lords who have spoken. I hope that they will excuse me if I do not go into a huge amount of detail on what has been said, because all the matters that I feel are important have already been covered.
The noble Earl, Lord Kinnoull, and the noble Baroness, Lady Gardner, raised two core issues: first, access to justice and, secondly, the question: if not this Bill, then what and when? That will perhaps be more apparent at the end of the year, when the results of the scoping study are better known and the department’s further consideration becomes available to us. I live in hope, but at this juncture it is difficult to predict that.
The noble Earl, Lord Erroll, raised a different type of issue. I will ask him to forgive me if I do not go into detail on that either, save to say that questions of orphan bits of land—verges, footpaths, left-over bits from once larger landed estates and so on—are hostage to what can sometimes look like a land grab. With it, the extent of public and private rights and easements are considerations that are often shorn from the resultant successful registration of title by adverse possession, regardless of the physical presence of the representative bits of conduit underneath the ground.
I thank the noble Lord, Lord Kennedy, for the support of his party on this issue. I think that we all share the fundamental aims that we are trying to achieve.
I thank the Minister for saying that the question of the reference to the Technical and Construction Court can relatively easily be dealt with, and I believe that that is the case. He then turned to his core reservations. He felt that expert determination or mediation was the way forward but he regarded this Bill as radical. I do not entirely share that view given that the constituent bits of the mix, as I have explained, have been rather well trailed and bench-tested for the past decade or more. That apart, the Minister still did not explain why under current terms enforcing expert determination and mediation, which is ultimately the only way of corralling these things, can be dealt with other than by being somewhat radical in approach. So we possibly part company there, but it may be a matter for further discussion at some juncture.
I appreciate that an assessment of a boundary may only partly be a technical issue, but getting rid of the assessment of what I might call the physical issues in advance and dealing with it by way of surveyors of both sides would refine the situation in a way that it tends to be refined anyway at the stage when, later on, litigation is well under way. At that point, the trial judge and the protocols demand that a technical expert be appointed by either side if they cannot agree a single joint expert and that a report be then produced which has to be exchanged or, at any rate, comes before the court. However, at that stage, much powder and shot has already been expended in the battle of wits between, as we have heard, often very unequal parties. I cannot help thinking that putting the consideration of the factual and technical basis before the process rather than part way through would be of benefit generally.
Clearly, the Minister has to have the construct of due process and the proper sanctity of the court. He mentioned comments made back in January by the noble and learned Lord, Lord Hope of Craighead, when he referred to excluding the court entirely. I suggest that that is a slight exaggeration of what is contained within the Bill because that is not what it does. It leaves the backstop of judicial scrutiny in place. I understand the issues and in a sense we are where we are, but I believe that the Bill has merit. We should continue to discuss it and therefore I ask the House to give the Bill a Second Reading.
Succession to Peerages Bill [HL]
(9 years, 2 months ago)
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Lord Trefgarne (Con)
My Lords, this Bill has nothing whatever to do with membership of your Lordships’ House. It concerns only the arrangements for succession to hereditary peerages, which Peers may, or may not, wish to come to your Lordships’ House. It intends only to bring the succession arrangements into the 21st century.
Noble Lords will be aware that most hereditary peerages can descend only through the male line. Thus it follows that in some cases, where there is no male heir, sadly therefore the peerage usually dies out. There are a few peerages, mostly Scottish ones or very ancient ones, which can descend through the female line and there are a very small number of other peerages where the letters patent specifically allow descent through a woman. My noble friend Lord Fellowes, when he comes to speak, will explain from his position of special knowledge some further details on this matter.
There are two other points that I would like to make. First, a number of your Lordships asked me why I do not propose that hereditary peerages simply descend through the oldest child, come what may. Speaking personally, I would have no particular objection to such an arrangement. But the plain fact is that that proposition has been before Parliament on several occasions and has on each of those occasions failed to attract your Lordships’ support. I therefore propose a more modest arrangement. Modernisation of the hereditary peerage should now begin and it is for that reason that I bring this modest proposal before your Lordships. Thus it is that the purpose of the Bill is to authorise succession through the female line in those circumstances where the peerage would otherwise disappear. I hope that your Lordships will agree that this proposition is right and proper in the present circumstances and will agree to the Bill.
I make just one further final point. A peerage is not the only hereditary title within our system. There are also baronetcies and one or two other more obscure hereditary titles, mostly within Scotland. I have received several representations from those representing baronets who would like their titles, too, which like peerages descend only through the male line, to be the subject of this Bill. Again, I would have no objection to widening my Bill in that way, but I fear that any such amendments may be said to be outside the scope of the Long Title and therefore out of order. That is a matter for the clerks rather than for me and I make no further observations.
There is a difference between abeyance of a peerage and extinction of a peerage. It is a highly technical difference and I would not claim to be an expert on it, save to say that abeyance generally applies to the very oldest peerages and may therefore come within the scope of this Bill. I have nothing more to say in connection with this measure and I hope that it will find favour with your Lordships. I beg to move.
Lord Pannick (CB)
My Lords, I congratulate the noble Lord, Lord Trefgarne, on bringing this Bill before the House and on doing so in such economical terms.
No one could suggest that a Bill on this subject is premature. The Sex Disqualification (Removal) Act 1919 removed sex discrimination in relation to the exercise of public functions, or the holding of any civil or judicial office or post, or from entering or carrying on any civil profession or vocation. Yet here we are, nearly 100 years later, debating a Bill that will remove some of the inequality—although, as the noble Lord said, only some of it—in relation to succession to peerages. This is a quite remarkable situation.
Women were given the same voting rights as men in 1925. The Equal Pay Act 1970 and the Sex Discrimination Act 1975 addressed sex discrimination in employment, education and in the provision of goods, facilities and services. Even the Church of England, not known for being in the advance of social progress, has now provided for women bishops, and Parliament has provided recently that succession to the Crown no longer depends at all on a person’s gender—see Section 1 of the Succession to the Crown Act 2013—and rightly so. The only area of public life that I am aware of that retains institutional discrimination against women is the hereditary peerage.
I can think of only one argument in favour of such prejudice: that the hereditary peerage is so absurd and anachronistic an institution—why on earth should a person’s status depend on that of his or her father—that we cannot expect to apply basic principles of fairness in that context. But that will not do. The peerage is not a private club. Indeed, 92 hereditary Peers, of whom the noble Lord, Lord Trefgarne, is a distinguished example, sit in this House helping to make the laws of the land. The peerage cannot claim to be exempt from the basic principles of fairness that govern the rest of our society.
In this context, as in others, discrimination against women is simply objectionable. It is entirely without justification and we have tolerated it in relation to the peerage for far too long. I therefore welcome the Bill because it puts this issue on the parliamentary agenda.
But the Bill, as drafted, is patently inadequate. It will need substantial amendment in Committee. Clause 2(3) would allow a woman to succeed to a title if she has no male siblings. If she has younger male siblings, they will have precedence over her. The noble Lord, Lord Trefgarne, said in a quite remarkable statement that his Bill aims to bring succession to the peerage into the 21st century—really? He said that his proposal is modest, but it will perpetuate sex discrimination and for that reason it needs to be amended.
If the oldest child of the monarch now succeeds to the Throne, whether they are male or female, how can it possibly be defensible to retain a position that the oldest male child of a Peer will succeed to the title? If this Bill were to be enacted, then in the magnificent creation of the noble Lord, Lord Fellowes, “Downton Abbey”, as I understand it the Earl of Grantham would now be succeeded by his eldest daughter, but only because he had no sons. However, a younger son would retain precedence over an older daughter. That is quite indefensible.
In his play, “A Woman of No Importance”, Oscar Wilde wrote:
“You should study the Peerage, Gerald … it is the best thing in fiction the English have ever done”.
It is time that we brought the peerage into the real world. The peerage has hitherto treated women as being of no importance. This Bill, which is a modest improvement, would treat women as being of very limited importance. The peerage needs to do better than that. I congratulate the noble Lord, Lord Trefgarne, on introducing the Bill and I look forward to noble Lords improving it in Committee.
Lord Fellowes of West Stafford (Con)
My Lords, I rise to support the Second Reading of this Bill, and I must immediately declare an interest. My wife was born female, something of which I am very glad, but the fact remains that had she been born male, she would now be the fourth Earl Kitchener of Khartoum. As it is, our law preferred to let this title, probably the most historic of any of the imperial creations, become extinct rather than have it be held by a woman. As the niece of the last Earl, the reason she does not have that rank is only and entirely due to her sex. Of course, she is expected to take on the duties of the name, to be president of the Kitchener charities and to award the Kitchener scholarships, but the name she may not have because she is female. And if noble Lords think I find that extraordinary in 2015, they would be absolutely right. The fact is that women born into titled families are non-persons. They have none of the legal status of their fathers and brothers and none of their rights, even if they are sometimes obliged to perform their duties. It is an absurd and outdated situation.
Of course, there are many, no doubt some in your Lordships’ House, who would be happy to see the end of hereditary titles altogether, but that is not what we are debating here. They exist at the heart of many modern institutions and they enshrine an attitude to women that has no place in modern society. We may hear that the exemption of women will bring these titles to a natural end more quickly, but it will not. There are more than 800 of them, and especially the older ones will live on indefinitely without the intervention of a new law. It would be statistically impossible for a situation ever to arise where there was no heir to the dukedom of Norfolk, the earldom of Derby, the earldom of Devon or many others. There may be an argument for abolition, but there is no plan to abolish them yet. While they exist, are we prepared to tolerate the negative status of women they represent across the board, with the exception of a few Scottish titles and a tiny handful of English baronies?
An argument in this debate that always strikes me as questionable is when a speaker will say, “Why should we bother with this? Why spend useful time on it when we have more important things to do?”. This has the double benefit of conferring a place on the moral high ground to the speaker, showing how unsnobbish and unfrivolous they are, while at the same time changing nothing and leaving women at the bottom of the pit. But it does not wash because the suggestion that holding a title is no longer of any importance in Britain today does not wash. It is still a privilege to hold one, and it is a privilege that is denied to women.
It is true that there was a belief in the 1960s that by stopping their creation, the status of the hereditary aristocracy would soon fade and be replaced in terms of public profile by the life peers, but this has not happened. You will find holders of hereditary titles or their wives on the boards of many, if not most, charities, chambers of commerce, universities and hospitals, to say nothing of the Court, where almost every major position is still conferred on a hereditary Peer or his wife. I am sure, indeed I know, that many of these people take their appointment seriously and do excellent work, but that it is clearly thought by the authorities that their noble names will add lustre to the various organisations is proof that a hereditary title is still viewed by the public as conferring distinction, however illogical that may be. If, therefore, holding a hereditary title can be construed as a distinguished position and a privilege, how can we allow women to be excluded solely because of their sex?
Of course, there may be—I am sure there are—many of your Lordships who think that the trouble with my noble friend Lord Trefgarne’s Bill, as we have just heard, is that it does not go far enough and that the peerage should follow the Crown’s example and simply have succession in order of birth, with the firstborn inheriting irrespective of sex. I do not propose to put up a stout argument against this because I believe in it. However, I would point out only that there have been several attempts to encourage some interest in the idea, but it never gets off the ground, and the reason is simple. An immediate change now to eldest child inheritance would mean that a great many men would be stripped of their courtesy titles and the names they have lived under for years, and so would their children. It would mean that the financial arrangements that have been designed to protect a large number of families’ interests would be wrecked, and that those same families would be facing an intolerable position, dividing siblings and bringing real unhappiness.
The Royal Family took advantage, very sensibly, of a moment when the next three heirs—two then, but three now—were male eldest children and so nobody would be deprived of anything. By the time the new law will have any effect with Prince George’s daughter or granddaughter, the public and the Royal Family will have had many years to make the necessary adjustments and to grow used to the plan. The peerage would have no such luxury. Because of that—this is the point—as things stand, no such Bill will ever pass. However, once the law has been changed to give women at least some legal status within noble families, and once they are allowed to pass on the rights that their brothers can pass on, I am reasonably convinced that public opinion will cease to regard female Peers as anything very unusual and the climate will alter, perhaps leading to further reform. But we have to take the first step, and this Bill is the only first step that may pass into law.
Of course there will be losers, even in the proposed scheme. No one will be stripped of a courtesy title, and almost no one will have their financial arrangements disturbed since most Peers without a son nowadays rightly prefer to leave their fortunes to their daughters, whether or not they can control the descent of their title. But there will be heirs presumptive who will have to yield the senior position in the succession to their nieces or cousins. I would point out only that heirs presumptive have never enjoyed the security of heirs apparent. There has always been a chance that the Peer in question would marry again and produce a son, thereby displacing a more distant relative. My own cousin lost a baronetcy, which he had assumed was his until half way through his 20s, when a baby boy was suddenly and rather surprisingly born. The father of the present Marquess of Northampton was 61 when his son appeared, no doubt putting a few noses out of joint. But even the displaced heirs will not lose their rights entirely. They will merely have to step back to allow a better position in the queue to their female relatives who will have a senior claim—and what is wrong with that?
The advantage of allowing the revival of peerages made extinct in the present reign is twofold. It would seem harsh to exclude living women who would have had the right to succeed under the new system, and by including them there can be no risk of opening the running sore of legal action to defend their rights. This change will, or should, allow all female heirs who were alive when the last holder of their family’s peerage died to make a claim within one year of the Bill’s becoming law. Of course, some will not, and many of the extinct peerages were new and had no heirs, male or female, but there will still be a number of them, which is the strength of the clause.
By the measure, there will immediately be a group of hereditary lady Peers who will render the situation normal. It will not be necessary to wait for three-quarters of a century for a sufficient number to build up to make it ordinary. Of course, to quote Mandy Rice-Davies, I would say that, wouldn’t I? The fact is that my wife’s situation does not make it any less true. The sooner the female hereditary Peer becomes ordinary, the sooner these women are accepted within the traditional system, and the sooner the climate may be right for further reform.
In short, if your Lordships believe there should be no area of our public life where women are made nothing, please support this Bill. If you would like to see total equality, support this Bill to get the process started, because if you do not, there will be no change. If you believe that women are the equals of men and that leaving them as non-persons in any part of our constitution is wrong, support the Second Reading of this Bill. In fact, your Lordships should oppose it only if you believe that it is quite correct for women to occupy an inferior position, and be denied all rights, on so public a stage. The choice, of course, is yours.
The Earl of Clancarty (CB)
My Lords, I am grateful to the noble Lord, Lord Trefgarne, for the opportunity to discuss this issue. I have a hereditary title and I have a daughter who could inherit that title if the law were changed. I should also say that my wife, the journalist Victoria Lambert, is a co-founder, with Liza Campbell and Sarah Long, of the campaign group that wants to see gender discrimination removed from titles.
We now have women bishops. Since 2013 women, including Dame Ellen MacArthur, can be members of the Royal Yacht Squadron. From this year, women can be members of the Royal and Ancient Golf Club of St Andrews, and this year as well, women competed for the first time on the same day as men in the equivalent Oxford and Cambridge boat race. These changes will not apply to all women; they are niche changes, but nevertheless significant ones for the advancement of gender equality. So it should be with hereditary titles; women should have an entirely equal chance of inheriting a title.
There are those, of course, who do not believe in the hereditary system at all because of its innate unfairness and think that it should be swept away. Not all of those people will be anti-monarchists, and it is worth reflecting on the fact that the monarchy itself is simply a part—the top part, certainly, but a part of the wider system of hereditary titles. If hereditary titles are unfair, so is the monarchy. They are part of the very same system. As long as we have the monarchy—and it remains hugely popular—the system as a whole needs to be dealt with in the same way that the monarchy has very correctly been dealt with through the Succession to the Crown Act. Otherwise, the system remains inconsistent in terms of gender equality, which is unsatisfactory.
The titles themselves are not abstract. They are the property of the Crown. It needs to be more widely recognised that the great majority of these titles and offices, which are owned by the Crown, and for which it has responsibility, are gender-discriminatory. There are significant wider ramifications. One is that titles often go with other possessions which means that women can sometimes be excluded from the home they grew up in through the inheritance of a title by a stranger—a distant relative from the other side of the world—because there are no boys in the immediate family. That is not uncommon. Also, what should not be underestimated is the influence that this system has at all levels of society when women can still be left out of inheritance entirely because that is the way things have been done. Nor should we ignore what continuing influence such gender discrimination has abroad.
In terms of the Bill itself, it is worth noting that when we discussed this topic last at the Committee stage of the Equality (Titles) Bill, introduced by the noble Lord, Lord Lucas, the year before last, with the will of all sides of the House behind us, we were heading at the time the Committee stage was halted towards a greatly simplified Bill that stated simply that the eldest child of either sex was the one who would inherit. In my view, that is the Bill that should go to the Commons, and which would stand the best chance of being passed. Clause 3(2) of this Bill, which still allows men to inherit before women, and is therefore gender-discriminatory, must go. Surely it contradicts current equality legislation.
There are those who say, “But what about the expectations of young men?”—to which the reply is, “What about the expectations of women?”. In contemporary times this cuts both ways. The hopes of young women are as valid as the hopes of young men. The previous Government said that this change would be,
“far more complicated to implement fairly”.
The answer to that is clear. If the Government can sort this out for the Royal Family, with all the international complications involved, a simple, effective Bill can do the same for the other titles which the Crown owns and has responsibility for.
Baroness Flather (CB)
My Lords, as noble Lords will have noticed, I am British but not English and I look at a lot of things in a slightly different way. When I came to your Lordships’ House in 1990, I was the only Asian and the only minority woman in this House. The House was full of hereditary Peers, and I was worried about this because I had not met any aristocrats before I came to your Lordships’ House. I wondered how they would treat me. I can tell your Lordships that I was treated better in this House by the hereditary Peers than I have ever been treated anywhere else in my life. They became my friends—and my entertainment as well—and I learned a lot from them. They had a great sense of humour and they had a light touch about life. I have to tell your Lordships that I miss them and I have great affection for hereditary Peers.
That is by the by. We are talking about the Bill. When I saw it on the list I thought that I must speak because I must support it. Then I read the Bill and I got really quite upset. I thought that I was going to support something that I have always wanted: the eldest child inheriting regardless of gender. I cannot put it better than the noble Lord, Lord Pannick. He is the ultimate person for saying the piece. I am delighted with and endorse everything that he has said.
I am not sure about the other Bills because I am not very good with dates, but the other Bills may have come before we decided on the monarchy. They may have come before we had decided that the eldest child will be the next monarch. That will make a huge difference in people’s thinking: if the eldest child is a girl, she will inherit; if the eldest child is a boy, he will inherit. If they can do it, I cannot imagine that this House cannot do it.
I listened to the noble Lord, Lord Fellowes, with interest. He is really worried about the situation of some of the boys: how are they going to live? How are they going to manage? They will not have the amount of money that they would have had. In the old days they got sent to the colonies, as we all know. The younger sons were all sent to the colonies. You have not got any colonies so we have to find some other way of finding employment for them. Maybe it will encourage them to become professionals and to become more able to fend for themselves. That also would not be a bad thing.
In the case of Countess Mountbatten, Earl Mountbatten did not have a son. It had to go through Parliament to pass the title to Countess Mountbatten. Of course that is wrong. Viscount Whitelaw did not have a son and his title has died. It is quite right that that should not happen. If we want to make a change we have to make it gender neutral, as the fashionable term is these days. It has to be the eldest child. Thank you very much.
Lord Northbrook (Con)
My Lords, I welcome my noble friend Lord Trefgarne’s Succession to Peerages Bill. As an aficionado of the topic, I declare an interest as my title will die out under current peerage inheritance rules. I have a very capable eldest daughter who would be more than suitable to carry it on.
I believe that the Bill offers a way forward to prevent this extinction without seriously threatening the status quo for those peerages where there are male heirs. It is better than Lord Diamond’s Bills of 1992 and 1994, which proposed that hereditary Peers could petition the Crown to amend their letters patent so that the peerage could descend to the eldest legitimate child, male or female. It seems more logical than my noble friend Lord Lucas’s recent Bill, which sought to enable the succession of female heirs to hereditary peerages if the incumbent of the peerage wrote to the Lord Chancellor to ask that this should occur. I prefer it also to Mary Macleod’s Succession to Hereditary Peerages and Estates Bill in the other place, which included provision to remove male preference primogeniture in succession to hereditary peerages.
After the Succession to the Crown Act has passed, it seems only logical that appropriate change should be made for hereditary peerages. The House of Commons Political and Constitutional Reform Committee’s 2011 report on the rules of succession to the Crown noted that the proposal to end the preferential treatment of men in the line of succession had been,
“widely welcomed, and with good reason”.
It also drew attention to holders of hereditary peerages, noting that,
“the way in which their titles are inherited, and its effect on the gender balance in Parliament, remain matters of public interest”.
My noble friend Lord Fellowes of West Stafford stated in a submission to the Hereditary Peerage Association in 2008:
“People will tell you how difficult it would be and how it would involve re-creating all the peerages from new. … When”—
in the 1700s—
“the Duke of Marlborough was needed for another campaign and his only son was dead, a bill was introduced into Parliament granting a new remainder allowing a unique form of female descent to the existing title, without recreating it”.
As we have heard, my noble friend Lord Fellowes has now approved what are essentially the contents of this Bill, based on the Marlborough precedent.
In the same submission, my noble friend Lord Fellowes touched on his concern that, if nothing is done in this sphere, European law may step in with a solution of its own. The noble Lord, Lord Pannick, surprisingly did not mention it, but as I understand it Section 14 of the Human Rights Act 1998 makes it now illegal to discriminate on the basis of sex, where both sexes may perform the function required. Discriminating against women solely on the basis of their sex is also illegal. The noble Lord, Lord Pannick, has also mentioned to me that, if a legitimate female issue, where the peerage would otherwise become extinct, referred a case to the European Court of Human Rights, they could well have a chance of success. The organisation called The Hares—I think I see a couple in the audience—may well pursue this route, or much worse could happen if Mr Corbyn gets into power. It is far less disruptive to peerages, in my view, to pre-empt such a referral by enacting this Bill. Will the Minister give the Government’s thoughts on the outcome of such a referral, and their reaction to it?
I can understand the logic of Clause 3, which would guarantee a batch of new Peeresses, making the peerage look refreshed and modern from the first moment of the change, as opposed to having to wait years for any alteration really to show, and 1952 seems a sensible date. It is striking that there are currently no women on the most recent register of hereditary Peers who have put themselves forward to be eligible as candidates for future by-elections. All the hereditary by-elections since 1999 have been won by men. As of now, only one Peer of the 92 hereditary Peers who were allowed to continue in 1999 is female.
I have two other issues to raise. I think that there should be an amendment extending the change to baronets, although I take the point made by my noble friend Lord Trefgarne about that being outside the Title of the Bill. I am not sure either about the principle in the Bill of excluding a very close relative such as a brother from inheriting a peerage. Ruling out cousins and distant relatives is fair enough as their expectations are never high, but a very close relation may be a step too far. As the noble Lord, Lord Fellowes, stated, family financial arrangements could be seriously disrupted. There could be an argument for an amendment extending the peerage succession to brothers—a modification of the semi-Salic system, although it has to be said that an heir presumptive has never had the security of an heir apparent.
But overall I welcome this Bill wholeheartedly. It would merely put peerage succession on to the same basis as the Crown used to be. I wish it a safe passage through the House.
Baroness Hayter of Kentish Town (Lab)
I thank the noble Lord, Lord Trefgarne, for bringing this issue to the House, if only to tease out the Government’s and, indeed, the Opposition’s, view on the issue.
It is obvious that the Bill will not affect the size of the House one way or the other, yet, of course, that is the big issue that concerns probably all noble Lords, as evidenced by the debate that will take place here on Tuesday. The increase in the size of your Lordships’ House to 826 gives great urgency to reducing the number of Members rather than suggesting ways of bringing in a new category of Peer. Indeed, as we know, the Prime Minister has already appointed in five years more than double the number of Peers that Labour did in 11 years, creating new Peers at a faster rate than any other Prime Minister since life peerages began. Therefore, it seems to me that the priority for the House is to look at size rather than this issue. That is partly for the sake of this House and how it works but also, I have to say, because of the anachronism of appointing Peers here not by virtue of their own experience and attributes but those of their fathers, grandfathers or even great-uncles. Therefore, ending the hereditary by-elections as any of the 92 places fall vacant should surely be a better way forward. The calls I have heard today for maintaining the status of titled families are ones I did not believe I would hear in the 21st century. But more than that, as has been said, the flaw of the Bill is that it stands feminism on its head. For the very pragmatic reasons that the noble Lord, Lord Trefgarne, gave, it does not get rid of primogeniture for hereditary titles but says only that, where there is no man, a woman will do.
Your Lordships will have noted that there is only one other woman speaking today, which I think says something about how our sisters in the rest of the House feel about this issue. Perhaps they are not present because they also regard this Bill as deeply anti-feminist. It is saying, “Let us have some more women in this House”, of which I approve, “not for what they have to offer, their experience, knowledge, ability, insights, professionalism or anything like that but because some male forebear either fought, bought—
The Earl of Clancarty
I accept entirely that hereditary peerages will be removed from this House. Sooner or later that will happen. However, this Bill has nothing to do with hereditary peerages in this House, as the noble Lord, Lord Trefgarne, said.
Baroness Flather
I know that I am the only other woman speaking, and, as I said, I am not even English, but the noble Lord, Lord Pannick, and the noble Earl, Lord Clancarty, made the same points that I did. They did so very strongly and in some ways better than me.
Lord Winston (Lab)
I am very grateful to my noble friend for allowing me to say a word. I want to be a loyal member of a paid-up Labour Party. I suspect, although I do not know, that there are quite a few disloyal members. However, I do not understand the argument here. Surely we are not talking about membership of the House of Lords or the size of the House; this is a different issue. We have to accept that we have to address that issue in a logical and rational fashion. I understand that on the whole my party is not particularly favourably disposed to the hereditary peerage for whatever reason. However, that is not really what we are discussing here, is it?
Baroness Hayter of Kentish Town
What we are discussing is whether as a House we want to continue with titles and the privilege and status—I think respectability has been mentioned—and whether that is a priority. Surely, if we are to do anything, the priority is to do something about the peerages in this House. That is something my party would like to do by removing by-elections for hereditary Members.
We want women, whether in this House or with the other titles they may earn, to get them by their own ability. The examples are the women who serve in this House. They may get damehoods before they get here. We would not want those to be inherited, I assume, because the awarding of a title is about what they have done for themselves. The point I am trying to make—perhaps ineffectively—is that surely the priority is for more women, whether in this House or with other titles such as dame, to receive them by virtue of what they have done for themselves. The examples I want to give are the people who have got peerages here on their own abilities rather than the abilities of some male forebear.
The noble Baroness, Lady Grey-Thompson, was a dame before she came here. She did not get that because her father was a great athlete. She got it because she had won 16 Paralympic medals, 30 world titles and the London Marathon six times; she chairs the Women’s Sports and Fitness Foundation; and she was BBC Wales Sports Personality of the Year. The noble Baroness, Lady Benjamin, is an actress and television presenter, and chancellor of the University of Exeter. The noble Baroness, Lady Finlay, is past president of the Royal Society of Medicine and a consultant professor of palliative medicine. These are women who have gained their titles—which happened to bring them here; some of them had damehoods before—because of what they did. Those are the examples I want to give.
There are, of course, people such as the noble Baroness, Lady Harding of Winscombe, the chief executive of TalkTalk and named as one of the 10 most influential women. She happens to be the daughter and granddaughter of Peers, but has her title because of what she has done in her own right.
Baroness Hayter of Kentish Town
Could I just finish with this example? I am arguing that the Bill seems to be based on the continued assumption that women should not gain a title—recognition—because of what they have done but because of what a father, grandfather or great-uncle did. I give way to the noble Baroness.
Baroness Chisholm of Owlpen (Con)
I am sorry, my Lords, I think in this debate you cannot give way—you just have to keep going.
Baroness Hayter of Kentish Town
I am delighted to get that bit of advice. The assumption behind this—that because there are titled families the best way to deal with that is to pass the title, where there is not a man, to a woman—is, in the 21st century, the wrong assumption. As a feminist and on behalf of the other women here who have great experience in the trade union movement, for example, and who have won their spurs by their own efforts, I say that that is the way we should recognise women, not because of what their male forebears have done. If a woman wants a title, I say, “Do the same as anyone else. Go out and earn your spurs. Work in civil society, trade unions, business, academia, medicine or law”. That, surely, is the way to be recognised and to be valued in society. In the 21st century, that is the feminist way forward—not to inherit a title because of a male forebear.
The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)
My Lords, I, too, congratulate my noble friend Lord Trefgarne on securing this Second Reading, which has provoked an engaging, thoughtful and at times entertaining debate. Among his many accomplishments, I know that my noble friend has spent much time supporting the excellent Brooklands Museum, which I thoroughly recommend to your Lordships, where he has helped to conserve and restore to life the gems of British motoring and aviation. Today his intention and energy has turned to protecting and conserving that other part of our nation’s history, the peerage.
My noble friend’s energy and tenacity is obviously shared by a number of your Lordships who have spoken today. Although it is invidious to single out anyone in particular, I thank my noble friend Lord Fellowes for his passionate contribution to the debate. He is clearly following in the footsteps of the great Lord Kitchener and becoming the recruiting sergeant for this campaign. I can see the poster now: “Your peerage needs you!”.
This debate reminds me that while a number of your Lordships have spent many years looking into this issue I am a mere novice, trying to get my GCSE on issues such as abeyance while many of your Lordships clearly have doctorates on the subject, so forgive me for stating the obvious and repeating a point made before. This Bill, as its title suggests, is about the succession of peerages. Its purpose is to ensure hereditary peerages do not die out and like that noble prince in Sleeping Beauty, it aims to give the kiss of life back to peerages that now lie dormant. Its primary purpose is not therefore to address the inheritance of peerages discriminating against women, which I know that a number of your Lordships have debated before.
This latter issue—the equality of treatment before the law—is one that this Government take seriously in every walk of life. As the noble Lord, Lord Pannick, and others have said, during the last Parliament the coalition introduced what became the Succession to the Crown Act 2013, which removed, as your Lordships know, the male bias with regard to the descent of the Crown. We therefore sympathise with the concerns over gender inequality in the area raised and discussed by your Lordships today.
However, as your Lordships know better than me, and as has been pointed out, addressing this area of discrimination means tackling a very thorny legal thicket. Over the summer, I asked my officials to give me the relevant debates on this issue. I rather regretted that, as I got a very large pile of reading for my deckchair. As I ploughed through those previous debates, I must confess that I felt as if I was reading a mix of Jarndyce v Jarndyce and “Kind Hearts and Coronets” with a good sprinkling of “Downton Abbey”. Indeed, as Dickens described Jarndyce v Jarndyce:
“Innumerable children have been born into the cause; innumerable young people have married into it; innumerable old people have died out of it”.
The same could be said of this issue.
With that in mind, while it is obviously true that the succession of most peerages does not treat men and women equally, one must ask whether the Government ought to be devoting time and resources, both of which are limited, to addressing this extremely complex subject. Discrimination on the grounds of not just gender but race and age is clearly and sadly present in many parts of society and, despite the efforts of this Government and their predecessors, continues to blight the opportunities of many people—many more than those affected by the issues we are discussing today. When it comes to our approach to tackling discrimination, addressing these wider aspects is the Government’s priority.
I realise that these words will irk some of your Lordships and those who have campaigned on the issue that we are discussing. As has been mentioned, I see that a group called The Hares has been specifically created to lobby for a change to the law to create gender equality in the peerage by ending male primogeniture. I fear that to them I am yet another tortoise whose plodding is holding up progress but I assure your Lordships that I am more than willing to hear of ways in which this area of discrimination might be tackled. Let us not forget that, in the end, the tortoise wins the race.
The fact is that the Bill would have a very limited impact in addressing the fundamental issue here, namely gender inequality in the succession of hereditary peerages. As the noble Lord, Lord Pannick, pointed out, Clause 2(3) of the Bill explicitly states:
“Within each group of siblings”,
male heirs,
“in order of birth and their issue”,
would succeed before female heirs in order of birth and their issue. The Bill therefore permits women to inherit hereditary peerages only when there is no direct male heir. Surely, if we are to achieve equality in this area, the first born should inherit the title irrespective of their gender. I am not alone in saying this. The campaign group The Hares described the clause in an email to me as,
“clearly gender discriminatory. Under present equality legislation this is unacceptable”.
I also draw your Lordships’ attention to Clause 2(2), which states that,
“any daughter (‘D’) and her issue shall be treated for the purpose of succession as they would be treated if D had been male, save as provided by subsection (3)”.
It is not clear whose daughter is being referred to and whether this provision excludes female relatives, other than a daughter of the incumbent, from inheriting a peerage. If that is the case, this further highlights the Bill’s inadequacy in promoting gender equality.
I will now explain the concerns that the Government have with Clause 3, which provides for the revival of peerages that have become extinct. Given that we believe that many peerages have the potential to fall within the scope of this clause, it is vital that there is thorough consideration of and consultation on the significant impact this clause could have. To begin with, the effect of immediately reviving a large number of extinct peerages should not be underestimated. Before a peerage can be revived, its provenance and the right of the individual in question to inherit must be proven before the peerage can be entered on the Roll of the Peerage. The Bill would therefore create a considerable amount of additional work for the Crown Office and, most probably, the College of Arms. If the descent of a title were in any way unclear or contested, it could take years for matters to be resolved. I can almost hear the solicitors in Lincoln’s Inn rubbing their hands with glee.
Clause 3(1) states:
“For any peerage which became extinct on or after 6 February 1952”,
the Bill shall vest the peerage,
“in the person who would have succeeded to that peerage if the universal rule of succession had applied”,
to it since 6 February 1952. The Bill therefore proposes that the line of succession for all peerages that became extinct on or after 6 February 1952 is to be traced back and potentially altered from that exact date. This is very likely to have odd, and potentially unfair, consequences in some cases. For example, suppose a now-extinct peerage had been inherited by a distant male relative after 6 February 1952 and that male relative had since died. It may be the case that, applying the “universal rule of succession” from that date, the title would not have been inherited by that male relative but by a closer female relative instead. In that case, according to Clause 3(1), the fact the peerage had been inherited by the male relative would be ignored. Instead, the inheritance would be retrospectively redirected through the female. This is not only a somewhat strange method to adopt but could affect the legitimate expectations of the male relative’s successors who wished to revive the peerage. Clause 3(1), which applies the new rule of succession on and after 6 February 1952, would therefore appear to be incompatible with Clause 5(3)—which states that the Bill will not affect any succession to a peerage which has already taken place. Similar issues arise in respect of Clause 3(2) and (3), which make provision for peerages which became extinct before 6 February 1952. These are changes that should not be undertaken lightly without proper consideration of their effects or of any potential unfairness or conflict they could cause.
Turning to the issue of the inheritance of land associated with some peerages, Clause 5(2) states that the Bill, if it were to become law, would,
“not affect the succession to land or any other property real or personal”.
It should be noted, however, that there are a number of hereditary peerages which carry estates, either by virtue of the terms of the instrument creating the peerage or as a result of a trust arrangement which has been put in place in order to ensure that the peerage and property descend together. In those cases, the Bill would create a strange system whereby property would continue to be inherited by the oldest male heir even if, under the Bill’s provisions, the title went to a female heir, leading to titles being split from their associated estates. It would be impossible to say how many titles would be affected by this provision, given that trust arrangements are often confidential matters. This is another aspect of the Bill that would have to be carefully considered in order to prevent any unintended consequences.
My noble friend Lord Northbrook raised the issue of the ECHR and Article 14. During my summer reading, I also had the opportunity to look into it. The prohibition of discrimination set out in Article 14 of the ECHR applies only in conjunction with other rights set out in the convention. The right to peaceful enjoyment of one’s possessions is set out in Article 1 of Protocol 1 to the convention. It has been argued—unsuccessfully—that Article 1 of Protocol 1 applies to hereditary peerages and the right to inherit a peerage, and therefore that accession to hereditary peerages engages Article 14. Although peerages have been described as a type of property under English law, there is Strasbourg case law to the effect that nobility titles cannot be regarded as possessions within the meaning of Article 1, Protocol 1.
The High Court of England and Wales has confirmed that the right to sit and vote in Parliament by virtue of a hereditary peerage is not a possession. Furthermore, Strasbourg has held that Article 1 of Protocol 1 applies only to a person’s existing possessions, not future ones. It does not guarantee the right to acquire or succeed to possessions. Therefore, as Article 1 of Protocol 1 does not extend to peerages or the right to succeed to a peerage, Article 14 cannot be engaged. It is highly unlikely that a successful claim could be raised under the Human Rights Act 1998 in the UK domestic courts, as the Act does not apply to the Lords Select Committee on Privileges and Conduct, which is the only domestic court with jurisdiction to hear peerage claims.
To conclude, I fully understand the interest and passion that this issue raises for some families, but as your Lordships would, I hope, agree, one of the great strengths of this House is to legislate with care and caution, to kick the tyres of policy and to think through the consequences of our actions. In that spirit, I hope that I have clearly set out the Government’s reservations about the approach set out in the Bill.
The Bill itself fails properly to address the issue of gender discrimination in the succession to hereditary peerages: rather, it provides a means by which hereditary peerages which have died out can readily be revived. In addition, the Bill raises numerous problems and concerns, particularly relating to Clauses 2 and 3— problems which would take up a significant amount of parliamentary time and consideration in attempting to work out. Indeed, they may never be resolved, due to considerable uncertainties as to whom the provisions of this Bill may adversely affect and the likely unintended consequences were it to become law.
By making a single, rather sweeping change to the descent of all hereditary peerages, potentially the Bill would affect a considerable number of families in different ways, according to their own individual circumstances.
The Earl of Caithness (Con)
My noble friend has spoken on this point, and we have listened with care. Can he tell us how many peerages have become extinct since 6 February 1952?
Lord Bridges of Headley
I will have to write to confirm that, but I am led to believe that there are scores. I will need to write to my noble friend to confirm that.
In some cases, the Bill will lead to the disinheritance of individuals with legitimate expectations to inherit an hereditary peerage. Whereas the Succession to the Crown Act could be introduced without disturbing the legitimate expectations of anyone in line to the throne, I suggest that even with lengthy and detailed consideration and research, it would be impossible to foresee clearly all the effects of the Bill. At the very least, such a change should not be undertaken without extensive consultation and public discussion.
Above all, I hope that your Lordships would agree that given this complexity, the Government’s priorities should rightly lie elsewhere, as I said at the start.
Let me conclude by stressing that I hope that all I have said will be seen as constructive criticism. The Government recognise the inherent inequality in the succession of hereditary peerages and are happy to consider further attempts by interested parties to address the multitude of issues of gender discrimination which overcome the complexity that I have outlined.
Lord Trefgarne
My Lords, I am grateful to every noble Lord and noble Baroness who has contributed to this debate, and particularly grateful to my noble friend the Minister for his lengthy, interesting and detailed reply. I am reminded that back in 1956 a case came before Parliament relating to a peerage that had gone into abeyance in 1302—so there is some complexity in these matters.
I have an open mind on many of the issues that have been raised during the debate, and I shall be happy to consider amendments that might correct the anomalies referred to, particularly the one referred to by the noble Lord, Lord Pannick, and repeated by others.