Housing: Modern Methods of Construction

Lord Moylan Excerpts

Thursday 5th September 2024 Lords Chamber

[Lord Moylan (Con)]

My Lords, I thank my noble friend Lord Carrington of Fulham for introducing this debate, especially when I had to withdraw due to a change of circumstances. It was a privilege for me to chair the short inquiry into modern methods of construction, undertaken by the Built Environment Select Committee. I add a word of thanks, although time precludes me from naming them all, to the clerks and the team that supported that inquiry when we undertook it.

Ten years ago, modern methods of construction were the future, particularly the top level of MMC, which is modular construction, where a whole unit—a whole home—can be built off-site, more or less, and be delivered to the site. However, in the last couple of years, most of the firms engaged in that activity have either withdrawn from the market or closed. The purpose of our inquiry was to try to find out why.

Time precludes me from explaining at great length why that is, but we certainly found disarray at the heart of government. The policy was good, but the implementation was almost totally absent. Reference has been made to the committee that never met. I also refer to the strange attitude of Homes England, which claimed that it had a strategy in the shape of the five Ss—five words that all began with S—but when we asked for the document that underlaid the strategy, it was not able to produce it. I hope that the new Government will look very carefully at that.

What is the role of government in this? It is very important for the Government to have a regulatory role that unblocks some of the things identified by my noble friend when he introduced the debate. I would be very cautious on one matter: I agree with the noble Lord, Lord Rooker, that you cannot switch a factory on and off. Many of these firms are demanding a pipeline but, as he said, every factory needs a pipeline. Why is it that the Government should supply the pipeline in this case, rather than encouraging these firms to go out and find and create their own market?

Leasehold and Freehold Reform Bill

Lord Moylan Excerpts

Committee stage
Monday 29th April 2024 Lords Chamber

[Baroness Thornhill (LD)]

The problem is evident and not disputed, but the solutions are clearly debatable.

We support the amendment from the noble Lord, Lord Bailey of Paddington, as we share his concerns. The insurance scheme in the Bill, without the permitted insurance payment being set at something nominal such as £5 or £10 a year, could become another cost centre for freeholders. We know how difficult it is for freeholders, especially on larger developments, to get like-for-like quotes. Often, brokers will not even quote, which makes challenging at tribunal very difficult, especially when the freeholder claims that their fees are for works done and not pure commission. It is good for there to be a backstop in the insurance scheme in the Bill, so that brokers are fairly remunerated, while ensuring that other parties in the distribution chain, including freeholders, are banned from profiteering from the captive leaseholders who pay but do not get to choose the policy.

Amendment 82 in the name of the noble Baroness, Lady Taylor of Stevenage, and signed by my noble friend Lady Pinnock,

“would prohibit landlords from claiming litigation costs from tenants other than under limited circumstances determined by the Secretary of State”.

Clause 60 puts limits on the right of landlords to claim litigation costs from tenants. When the Bill was in the Commons, the Minister said that

“unjust litigation costs should not be incurred”—[Official Report, Commons, Leasehold and Freehold Reform Bill Committee, 25/1/2024; col. 347.]

by leaseholders—and we agree—but the Bill as drafted does not go far enough in preventing that happening. There will be circumstances in which it is appropriate for leaseholders to bear those costs, but we believe that Amendment 82 makes provision for that. The presumption should be that the costs are not borne by the leaseholder, unless in circumstances specified by the Secretary of State.

My noble friend Lady Pinnock’s Amendment 80 would require the Financial Conduct Authority

“to report on the impact of the provisions in the bill around insurance costs in order to monitor progress on reducing costs passed on to leaseholders”.

I am pleased to say that the Law Society also supports the amendment. Rising insurance premiums have sent service charges soaring in the last few years, mostly due to the costs associated with remediation works following the tragedy of the Grenfell Tower fire. That means that even the leaseholders who can access funding to help them pay for vital works to their buildings are still paying the price to remedy a problem that they did not cause.

Clause 57 places a limitation on the ability of landlords to charge insurance costs to leaseholders. This is a very welcome step in the right direction. It is essential that this provision works as intended to protect leaseholders from extortionate costs. The Financial Conduct Authority’s report into insurance for multi-occupancy buildings, published in September 2022, found not only that premiums were rising, with mean prices increasing by 125% in the period from 2016 to 2021, but that the level of commission rates for brokers was

“an area of significant concern”,

with eye-watering rates of up to 60% being seen.

The FCA also found that brokers were sharing commission with the freeholder or the property management agent, meaning that they were unfairly profiting from leaseholders. Commission—and not cover or costs—was therefore the driving factor in the choice of policy. The provisions in the Bill to limit the ability of landlords to charge insurance costs to leaseholders, alongside the Bill’s increased transparency requirement, should—one hopes—go a long way to protect leaseholders. We also note that as of 1 January this year, the regulator will force insurance firms to act in leaseholders’ best interests and to treat them as a customer when designing products. They will be banned from recommending an insurance policy based on commission or remuneration level. It is clearly very early days, but we hope to see some improvement from that.

There is, of course, the argument that the Government should go further. A cap on service charges for leaseholds, especially at a fixed amount rather than as a percentage, has been suggested as a way to properly protect leaseholders from unreasonable costs. We would, therefore, want to place a requirement on the FCA, whose thorough report provided the impetus for these provisions, to assess whether it has had an impact in reducing costs for leaseholders and preventing freeholders and managing agents profiting off them. We hope that the provisions of the Bill will provide the necessary relief for leaseholders, who are clearly facing exorbitant costs. It will, however, be essential that the Government keep a close eye on the impact of Clause 57 and take action if it is not going far enough.

Finally, the noble Lord, Lord Moylan, does have some amendments in this group—I looked very worriedly at this point. On the surface, they appear to be about making the process simpler and easier, which is probably a good thing and worth consideration. I look forward to hearing what the noble Lord says.

[Lord Moylan (Con)]

My Lords, I had assumed that the noble Baroness had risen to speak to the amendment standing in the name of her noble friend Lady Pinnock. I will speak to the amendments in my name in this group. Although there are eight of them, they fall into three broad topics, so I hope to dispose of them fairly quickly.

The first are Amendments 81 and 81A. These relate to the ability of right-to-manage companies to bring legal proceedings and charge the costs to the service charge. The effect of the Bill is that freeholders will not be able to charge legal costs to the service charge unless they obtain a ruling from a tribunal. In the case of right-to-manage companies exercising the functions of the freeholder, they have no source of income apart from the service charge. If they are not able to charge their legal costs to the service charge, then they will not be able to bring legal action at all. In fact, without that ability, they would not even be able to initiate legal action unless the directors of the company were willing to fund the preliminary legal activities from their own pockets. If they were willing to do that, and they proceeded to court, they might find that the court or tribunal did not find that they were entitled to recover their costs or find that they could recover only part of their costs as a result. Again, they would have no recourse to any source of funds apart from their own individual pockets in such circumstances.

The second amendment, Amendment 81A, would extend this provision not just to right-to-manage companies but to residential management companies. Right-to-manage companies were established under the Commonhold and Leasehold Reform Act 2002, but there are other residential management companies that exist that are not right-to-manage companies under that Act. These two amendments are alternatives; they are both probing.

I have heard that the Government are aware that this is a problem and are willing to do something to address it, so I hope that this particular probe will find a positive response from my noble friend on the Front Bench, because it cannot seriously be the Government’s intention to make it virtually impossible for anyone to become a director of a right-to-manage company without having to face serious personal financial risks that were never envisaged when RTM companies were established in 2002.

Amendments 81B, 81C, 81D and 81E all work together. They relate to a different problem, which is that the Bill allows a court or tribunal to award costs to a freeholder in certain circumstances specified in the Bill. However, if these costs are not paid, the only recourse the freeholder has is to go back to the court and seek a new judgment to have the costs awarded to them, whereas the normal method of dealing with such a matter is to make a simple online claim for a judgment in default. That course of action is precluded, as I understand the Bill, in the case of freeholders seeking to recover the legal costs that have been awarded to them. All this will do is burden the courts with more applications, which can and should be, and are normally, dealt with through an online process that takes a few weeks to go through. That surely should be available to freeholders.

The third topic in this group relates to Amendments 82A and 82B. These, again, are probing amendments to understand why the Government are extending the protection in relation to legal costs to all leaseholders, when surely the intention must be to extend it to those leaseholders who are home owners—that is, who own the property that is the subject of the legal dispute. The Bill has the effect of giving this protection also to investor leaseholders—those who hold the property entirely as an investment. I do not understand the Government’s logic in doing this, and these amendments probe that by suggesting that it should benefit home owners only.

[Lord Khan of Burnley (Lab)]

My Lords, I thank the noble Lord, Lord Bailey of Paddington, for introducing this group, setting the context for this debate about insurance payments and asking for clarity in relation to his amendment, which I am sure was also the intention of the noble Lord, Lord Moylan, in asking for clarity with one of his amendments and probing efficiency in his other amendments. I agree with the noble Baroness, Lady Thornhill, about the extortionate increases in insurance charges passed on to leaseholders. We found that the risk price that insurers charged between 2016 and 2021 pretty much doubled. The brokerage charge increased by more than three times. The service charges added on increased by about 160%, so they more than doubled, and those charges were passed on to leaseholders.

I will quickly speak to Amendment 82, in the name of my noble friend Lady Taylor of Stevenage. This new clause would prohibit landlords from claiming litigation costs from tenants other than in limited circumstances determined by the Secretary of State.

--- Later in debate ---

[Lord Gascoigne (Con)]

My Lords, I thank my noble friends Lord Bailey of Paddington and Lord Moylan, and the noble Baronesses, Lady Thornhill and Lady Taylor of Stevenage, for their amendments in this group. I will take them in turn.

Amendment 79, moved by my noble friend Lord Bailey, aims to ensure that insurance brokers’ remuneration is linked to market rates. It also aims to prevent wrongdoing. We share the intent of this amendment and are committed to introducing a fair, transparent and enforceable approach to insurance remuneration. We also recognise that insurance brokers are an important party in the provision of insurance. Given that, this amendment pre-empts the content of secondary legislation. Following Royal Assent, we will consult on what would constitute a permitted insurance payment, then lay the necessary secondary legislation before Parliament. This will clarify what remuneration will be permitted by those involved in the arranging and managing of insurance. My noble friend Lord Bailey spoke with his customary passion. We continue to welcome his views and the Minister remains keen to meet. I hope that, with that reassurance, my noble friend will withdraw his amendment.

Amendment 80 was tabled by the noble Baroness, Lady Pinnock, and spoken to by the noble Baroness, Lady Thornhill. I assure all noble Lords that this Government are committed to banning building insurance commissions for landlords and managing agents and replacing these with transparent handling fees, to address excessive and opaque commissions being charged to leaseholders. The amendment seeks that within one year of the day on which Clause 57 comes into force, the FCA conducts a report into the impact of this clause in reducing instances of unreasonable insurance costs being passed on to leaseholders.

We agree in principle with monitoring the impact of the clause and, more widely, that insurance costs must be reasonable. The FCA has been closely monitoring the multi-occupancy buildings insurance market in recent years, has strengthened its rules on fair value, and provides regular updates. The most recent update to the Secretary of State was published on 29 February. We will continue to work closely with the FCA and other stakeholders to develop our secondary legislation and in monitoring buildings insurance. Please be assured that this is an area on which we, and the FCA, are keeping a close eye. I hope that with this reassurance, the noble Baroness will not move this amendment.

Amendments 81 and 81A were tabled by my noble friend Lord Moylan; I will take them together. Amendment 81 seeks to exempt right-to-manage companies from the requirement for landlords to apply to the relevant court or tribunal to recover their litigation costs from leaseholders through the service charge. This amendment would apply where the right-to-manage company is exercising the functions of the landlord. Amendment 81A seeks to exempt “non-profit entities” from the requirement for landlords to apply to the relevant court or tribunal in order to recover their litigation costs from leaseholders through the service charge. The amendment provides examples of types of “non-profit entities”, including resident management companies and right-to-manage companies.

Clause 60 seeks to protect leaseholders from being charged unjust litigation costs from their landlord. It does this by requiring landlords to successfully apply to the relevant court or tribunal in order to recover their litigation costs, either through the service charge or as an administration charge. The court or tribunal will make an order that it considers just and equitable in the circumstances.

We understand the intention behind my noble friend’s amendments. The Government recognise the position of resident-led buildings. That is why the reforms also include provision to set out in regulations those matters which the relevant court or tribunal must consider when making an order on an application. The Government will carefully consider the detail of these matters with stakeholders and the tribunal, including where a building is resident-led. We would be concerned that the exemption provided by Amendments 81 and 81A would leave leaseholders with little protection from paying unjust litigation costs where a resident management company or a right-to-manage company is in place. I ask my noble friend not to move his amendments. However, it goes without saying that this is a complex area of reform and we are considering the issue carefully.

[Lord Moylan (Con)]

It is unsatisfactory if this is to be left to secondary legislation. Bearing in mind that the directors of the right-to-manage company are elected by the leaseholders, and can be replaced by them, and that they are really one entity, what is to happen if the tribunal decides not to make an award of costs? How are the directors to recover that money and who would become a director in those circumstances if they did not have that assurance in advance?

[Lord Gascoigne (Con)]

I will have to pick that up at a later date. There are a number of variables in that circumstance. I hope that my noble friend will forgive me for not having an answer to hand. I will certainly take this up with the department, rather than saying something that is incorrect at the Dispatch Box. My noble friend is absolutely right to raise it as an issue. It is under certain circumstances that those individuals find themselves in that situation, but I am more than happy to take that away and then write to my noble friend.

I turn to Amendments 81B to 81E, also in the name of my noble friend Lord Moylan. As I have previously said, Clause 60 seeks to protect leaseholders from unjustified litigation costs by requiring landlords to successfully apply to the court or tribunal to recover their litigation costs from leaseholders. This replaces the right that leaseholders currently have to apply to the courts to limit their liability for landlords’ litigation costs. The relevant court or tribunal will make an order on a landlord’s application that is just and equitable in the circumstances.

Amendments 81B and 81D seek to amend the provision that allows the court or tribunal to make a decision on the landlord’s application for their litigation costs that it considers

“just and equitable in the circumstances”.

Instead, the amendment stipulates that where a landlord is successful in relevant proceedings, the court or tribunal will allow the landlord to recover their litigation costs from leaseholders—unless the landlord has acted unreasonably. We understand the intention behind my noble friend’s amendments—to minimise the amount of court or tribunal hearings. However, the Government have a few concerns with the amendment.

The amendment would mean that the court or tribunal would always need to make an order that the landlord can recover their litigation costs from leaseholders where the landlord had been successful in proceedings in whole or in part. The only exception is where the landlord has acted unreasonably. Of course, where a landlord is successful in bringing or defending a claim, we would expect that the court or tribunal would allow them to recover their litigation costs from leaseholders. However, there may be a range of variables and nuances that occur in disputes which need consideration on a case-by-case basis.

The Government think the relevant court or tribunal is best placed to assess applications for costs, taking into account the circumstances of each case. In addition, the measures currently provide for regulations to set matters which the court or tribunal will consider when making a decision on costs applications, which we will consider carefully with stakeholders and the tribunal.

Amendments 81C and 81E seek to allow landlords to recover their litigation costs, where allowed under the lease, without needing to make an application to the relevant court or tribunal in certain circumstances. These circumstances include where proceedings before the county court are subject to a judgment in default, where litigation costs have been incurred in relation to forfeiture proceedings or where proceedings against a landlord have been struck out or are settled before the first hearing. Again, the Government have concerns about these amendments. For example, if a landlord is unsuccessful in proceedings of forfeiture against a leaseholder, this amendment would allow them to recover their litigation costs from a leaseholder regardless. These amendments would also make the provisions more complex, with different rules applying to different scenarios. We completely understand the intention behind my noble friend’s amendments. However, for these reasons, I ask that he does not press them.

Amendment 82, tabled by the noble Baronesses, Lady Taylor and Lady Pinnock, and spoken to by the noble Lord, Lord Khan of Burnley, seeks to prohibit landlords from recovering their litigation costs from leaseholders apart from in excepted circumstances to be set out in regulations. Clauses 60 and 61 already seek to rebalance the litigation costs regime for leaseholders in an effective and proportionate way. As I have previously noted, Clause 60 will require a landlord to successfully apply to the relevant court or tribunal in order to recover their litigation costs from a leaseholder. This applies whether the landlord is seeking to recover their litigation costs as a service charge or an administration charge. I also note that Clause 61 gives leaseholders a new right to apply to the relevant court or tribunal to claim their litigation costs from their landlord. For both landlord and leaseholder applications, the relevant court or tribunal will make a decision on costs in the circumstances of each case. Taken together, these measures will rebalance the litigation costs regime and remove barriers to leaseholders challenging their landlord. We believe the Government’s approach strikes the balance of being robust but proportionate. Therefore, I respectfully ask that they do not press this amendment.

Finally, I turn to Amendments 82A and 82B from my noble friend Lord Moylan. Currently, in the tribunal and for particular court tracks, leaseholders can claim their litigation costs from their landlord only in very limited circumstances even when they win. This may deter leaseholders from being legally represented or from challenging their landlord in the first place. As I have previously said, Clause 61 gives leaseholders a new right to apply to the court or tribunal to claim their litigation costs from their landlord where appropriate. As with the landlord application for costs, the court or tribunal will make an order that it considers just and equitable in the circumstances.

Amendments 82A and 82B seek to amend the new leaseholder right so that it applies only to home owners rather than investor leaseholders. Amendment 82B provides the definition of a “homeowner lease” so that the leaseholder right applies only to a leaseholder of a dwelling which is their only or principal home. Exempting certain leaseholders from this right would restrict access to redress where we are seeking to remove barriers. For example, there may be instances where a leaseholder who privately lets their flat needs to take their landlord to court because they are failing to maintain the building, which is impacting their property. In these circumstances, we would want the leaseholder to feel able to hold their landlord to account. Providing leaseholders with rights, regardless of whether they are home owners or investors, is in line with the approach we have taken throughout the Bill. Such an exemption would be out of step and will add complexity to the measures. Therefore, I ask my noble friend not to press his amendments.

[Lord Moylan (Con)]

May I ask the indulgence of the Committee? I should have declared when I spoke—as I did earlier in debate—that I live in a building which is run by a right-to-manage company of which I am a director, as is shown in the register of interests. I should have said that in my opening remarks, but I hope I will be forgiven for adding it now.

Leasehold and Freehold Reform Bill

Lord Moylan Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, our amendment in this group refers to the fact that the Bill currently makes an exception to litigation costs being borne by landlords in the case where right-to-manage claims have been withdrawn or otherwise ceased early and the right-to-management company has acted unreasonably in bringing the right-to-management claim, allowing the landlord to apply to the tribunal for any reasonable costs.

The key arguments for the amendment are that, first, leaseholders should not be put at risk of having to pay costs simply for exercising statutory rights, in this case the right to seek to acquire and exercise rights in relation to the management of premises in which one has a leasehold interest. There is also concern that unscrupulous landlords might use the rights provided for in new Section 87B of the Commonhold and Leasehold Reform Act 2002 as a means of recovering costs from right-to-manage companies that act reasonably and in good faith and, by implication, that it would discourage right-to-manage companies from initiating a claim because of the financial risk it still entails for individual participating leaseholders. Put simply, the fear is that new Section 87B will incentivise unscrupulous landlords to fight claims on the basis that they are defective in the hope of recovering costs by means of it. Our main concern regarding Clause 48 is that the use of the words “reasonable fee” and “reasonable costs” would not allow either of the above situations to occur. I ask the Minister: who will determine the definition of “reasonable”, and how?

I will comment on other amendments. We think that the amendments tabled by the noble Lord, Lord Bailey, are very reasonable, and we support his aims here. In fact, colleagues in the other place submitted similar amendments in Committee.

I also look forward to hearing the noble Lord, Lord Moylan, introduce his amendments, which would incorporate local authorities and their properties, both within the HRA and without, but I ask whether he had discussions about this proposal with the Local Government Association or local authority stockholders. Most good local authority landlords already have substantial arrangements in place for liaison with leaseholders and tenants around the management of property, and there is certainly no issue with improving that through more effective right-to-manage arrangements. However, as much local authority property will be occupied by a mixture of local authority tenants and leaseholders, it would be important to ensure that there were no unintended consequences. I urge that that level of consultation takes place before any proposal such as this proceeds further. The noble Lord, Lord Moylan, will forgive me if he has already done that consultation, but it was not clear from the amendments. With that, I beg to move Amendment 60.

[Lord Moylan (Con)]

My Lords, it is a privilege to speak after the noble Baroness. I will come to answering her question. To give a blunt answer, I have not undertaken the consultation that she refers to, but I will explain when I get to that part of my introduction why I think that this stands on its own.

As I said at Second Reading, I strongly support those parts of the Bill which facilitate the exercise of the right to manage on the part of leaseholders in residential blocks. There are several measures in the Bill which do that. The right to manage is, in some ways, the crucial key to unlocking the levels of dissatisfaction which some leaseholders have with the way in which their blocks are managed. I strongly support it.

There is a particular issue which the Bill does not address. As a consequence of my general support for this—contrary to my remarks in earlier debates— I hope that the Government will give me a softer and more welcoming answer. As a result of my proposal, perhaps my noble friend on the Front Bench will even give me one of those answers which invites me to attend a meeting. In fact, I have had a meeting with my noble friend about this, though she may not recall it. We met last summer to discuss this issue with officials, and she was very sympathetic to it. That gives me additional reasons for thinking that this might be a welcome amendment.

The amendment arises from a particular case, but it raises questions of general importance. I shall refer to the case later, but I want to address the question of general importance first. When the right to manage was introduced through the Commonhold and Leasehold Reform Act 2002, certain exceptions were placed on it. The Government intend to ease some of those restrictions, and I welcome that. One restriction was that the right to manage did not apply where the landlord of the building was a local housing authority.

I have tabled two alternative amendments—this is my point about consultation. Both amendments would reverse that assumption. One would eliminate it entirely. It would bring within the ambit of right to manage all blocks where the local housing authority was the landlord, including those within the housing revenue account. The noble Baroness, Lady Taylor of Stevenage, said that this could raise certain difficulties in cases where a block had so many long lease holders that it could exercise the right to manage but would be left with certain local authority tenants in the block. I have experience of local government, as does the noble Baroness. I recognise that she is correct in saying that there might be certain sensitivities about this. I think it could be managed. Indeed, it would be liberating for all the tenants of the block in many ways. The local authority tenants would also have a say in the management of the block. They would not be excluded from it simply because they were local authority tenants.

Recognising that this is a slightly daring proposition, I have suggested an alternative which would simply take out of the provision local housing authority-owned blocks where they were owned simply as an investment. I have left it vague as to whether that is a commercial investment or one held in the local authority’s pension fund. These are probing amendments. I should be happy to discuss these issues with my noble friend the Minister.

I come now to a particular case. There are blocks where local authorities have acquired property as an investment. Doing so immediately extinguishes the right of the long lease holders to exercise their right to manage—there are no local authority tenants. I think that is wrong. The case I am thinking of concerns a block acquired by a London local authority from a commercial property investment trust, bought at market value as an investment. The local authority, the new owner, was dissatisfied with the accounts inherited from the previous manager—it had their own manager for the block. As a result, it has not been able to put satisfactory accounts together for the last three years. As a consequence, it has not had the legal standing to issue invoices to its tenants for its service charges. It has been running the building’s operating costs out of the capital sums that had been set aside as a sinking fund to pay for future improvements to the building. It is all very unsatisfactory.

That is a classic situation in which long leaseholders would normally exercise the right to manage but, completely arbitrarily, are precluded from doing so. That is wrong. We should facilitate this.

At the very least, my noble friend should welcome my second amendment, Amendment 62, and say that where a local authority acquires a property for commercial purposes—not for the housing of its tenants but as an investment, either in its own name or as part of its pension fund—the right to manage would be restored. The financial interests of the local authority would be preserved, as they are under the current arrangements. It is simply that the right to manage the building would be taken over by the long leaseholders, as elsewhere, and they would manage it in just the same way as in all the other right-to-manage arrangements we are so much in favour of.

I will stop at that point because I have simply made my case, but this is a strange omission from the current arrangements, and one that we now have an opportunity to correct. I would be very happy to attend the meeting.

[Lord Bailey of Paddington (Con)]

My Lords, I will speak to my Amendments 65A and 65B. The Government should be applauded for their ambitions as laid out in the Bill. Let us hope that we can achieve them all. I put on record that I am pleased with the Government’s direction of travel, because some of my interventions up until now may have seemed slightly belligerent, but can my noble friend the Minister provide some reassurance around the Government’s stated aim of a revolution in the right to manage? That would help to address what, for me, is at the heart of what I consider the leasehold scandal, which is really about control. Leaseholders in England and Wales are unique in the lack of control that they have. Worldwide, leaseholders and those with commonhold and many other types of tenure have much more control. I believe that is something the Bill can address, and the Government have to demonstrate that they want to deliver on it. Indeed, it was our own Secretary of State who said that he wants to see a revolution in the right to manage.

I put on record my colleagues Nickie Aiken and Barry Gardiner, who brought a very similar amendment in the other place. Amendment 65A seeks to ensure that leaseholders in mixed-use property who would otherwise qualify for the right to manage because 50% or more of the floorspace is residential, but because of a technicality—a boiler or an underground car park—are prevented from having that management given to them, still have that right. The current test means that you have to demonstrate that your building is self-contained or that the residential part is partly self-contained, but the layout of the building might suggest that it is not self-contained due to an underground car park or boiler room, when actually it is.

The Law Commission saw these two tests as too strict. It suggested that a third test could be set whereby, if it could be demonstrated that people are reasonably capable of managing the residential area fully independently, they should be given access to this power. As I have stated in most of the debate, the thing that most drives me is the potential for the abuse of service charging. Giving residents control over their assets is clearly the answer to that.

The amendment does not mean that leaseholders can take over the management of shops, hotels or commercial premises. That is not the idea of the amendment. The right to manage applies exclusively to the residential parts, such as corridors and lift lobbies —parts of the building used only by residents. The amendment does not seek to change that position.

At Second Reading, I made the point that even the leading freeholder lobby group pointed out that free- holders own, at best, only 2.5% of the capital interest in the buildings they have the freehold of. That leads me to my other amendment, Amendment 65B. We must lower the threshold at which a group of people can take over the management of that lease. It is currently at 50%. I suggest that it should be at around 35%—again, to help the Government achieve their stated aim of a revolution in right to manage.

--- Later in debate ---

[Baroness Thornhill (LD)]

My Lords, I have asked to speak to the amendments in this group, which is a bit shorter than it would have been had the Clause 47 stand part notice remained. That was certainly something on which I would have urged the Government to stand firm.

We strongly support Amendment 60 in the name of the noble Baroness, Lady Taylor of Stevenage. Anyone who has done a bit of googling on the right to manage can see that right-to-manage claims by leaseholders are often fiercely opposed by freeholders. What is meant to be a so-called no-fault process can involve costly and stressful litigation for leaseholders, as freeholders drag the right to manage claim into the tribunal system. Freeholders gameplay and try to block RTM bids, because the right to manage signifies loss of their control and ability to rip off leaseholders in perpetuity.

Against this backdrop of right-to-manage cases going to tribunal and becoming the subject of “lawfare” by freeholders, it is surely reasonable to ensure that right-to-manage companies cannot incur costs in instances where claims cease. The way things stand, it is clearly intended to be a disincentive to leaseholders to seek the right to manage, and that imbalance cannot be right. Some noble Lords may remember the Canary Gateway case: it took an outrageous four years for the shared-ownership leaseholders to secure their right to manage, with the freeholder-driven litigation going as far as the Court of Appeal.

Turning to Amendments 61 and 62 in the name of the noble Lord, Lord Moylan, we on these Benches would support them in principle as they are increasingly sold as access to the right to manage. However, they stand in stark contrast to the noble Lord’s other amendments, which sought to reduce leaseholder access to collective enfranchisement and right to manage.

[Lord Moylan (Con)]

My Lords—

[Baroness Thornhill (LD)]

I hesitated and thought about cutting that bit out, but go on.

[Lord Moylan (Con)]

The noble Baroness could not expect to get away with that. Any attempt to cast me as a as a poodle of freeholders and opposed to leaseholders is bound to be foiled because it is untrue. I have made it clear throughout that I strongly support the right to manage and its extension. This is very different from expropriation of somebody else’s property. This is simply a technique for managing a building and managing it well.

I should also say while I am on my feet that when we exercised the right to manage in the block in which I live, many years ago, the freeholder was highly supportive because they were sick to death of the managing agent as well, and realised that their building would be managed a great deal better by us, as it has been. They have an interest in the building being well managed: they want the roof to be repaired; they want the facade not to fall off in chunks in the street because, after all, they, too, whatever else is said, have a long-term interest in the building.

[Baroness Thornhill (LD)]

My comments were not about right to manage. That was a good segue into another short speech by the noble Lord.

However, we are conscious that expanding right to manage to leaseholders under local authority landlords was never considered by the Law Commission, nor put out to public consultation. We are unsure whether the Government have done policy work in this area. It is a whole other ball game and will be challenging. But, in principle, given that many local authorities have been guilty of significant and tragic failures of service, to put it mildly, this should be a right of local authority tenants too. But it will be complex, for many of the reasons that were well outlined by the noble Baroness, Lady Taylor.

It is also worth reminding ourselves that local authority leaseholders have, since 1994, been able to take over management through tenant management organisations. I do not believe any work has been done regarding their success or otherwise. But such a review could ignite and inform this topic on another occasion. We welcome the probe by the noble Lord, Lord Moylan, and also the subtleties of his alternative proposals, and will certainly attend the said—and very popular —meeting.

Finally, I come to Amendments 65A and 65B, in the name of Lord Bailey of Paddington. The aim of Amendment 65A is a good one: to ensure that leaseholders in mixed-use buildings can avail themselves of the right to manage. At the House of Commons Public Bill Committee in January, MPs heard that many leaseholders in mixed-use buildings would still be unable to benefit from the reforms in the Bill to take over management—because, as the noble Lord said, of the existence of, say, a shared plant room or car park, under rules regarding structural dependency and self-containment. The existence of a plant room or other infrastructure is something decided by the original developer and leaseholders have no control over these factors, so it feels unfair to exclude them from right to manage based on the way a block has been designed, especially if they qualify under the new 50% non-residential premises limit.

Amendment 65B would put rocket boosters under the right to manage, opening it up to far more leaseholders. We on these Benches support the amendment and the intent behind it. Members in the other place have raised concerns that the 50% trigger is too high. The 50% participation limit on right to manage was also flagged as an issue by leaseholder campaigners at the Commons Public Bill Committee in January.

There may be concerns about 50% being less than a majority, but, as the noble Lord said, many leaseholders will never be able to obtain 50% support because of the high levels of buy to let in their block. But ultimately the Committee was persuaded of the case to bring down the 50% threshold. It is not right that just one person—the freeholder or landlord—has such control over leaseholders and can impact almost at will on their finances. As the noble Lord’s amendment suggests, 35% of leaseholders triggering a right to manage, with a right to participate for remaining leaseholders who did not originally get involved, is a far better situation than rule by one freeholder, whose interests, as the Law Commission concluded, are diametrically opposed to that of the leaseholder. Leaseholder self-rule with right to manage and a 35% participation threshold is a much more democratic state of affairs. Let us be honest: many councillors and MPs are elected to govern on much less than 50% of the vote—in fact, usually around 35%.

[Baroness Scott of Bybrook (Con)]

My Lords, I thank the noble Baroness, Lady Taylor of Stevenage, for Amendment 60, which would leave new Section 87B out of the Commonhold and Leasehold Reform Act 2002. This is a new power, inserted into the 2002 Act by the Bill, for the tribunal to order the repayment of a landlord’s process costs for right to manage claims which are withdrawn or cease to have effect in circumstances where a right to manage company has acted unreasonably.

The noble Baroness asked who would decide what was reasonable or unreasonable and the level of reasonableness. The costs will be determined by the tribunal, as is the case with other kinds of litigation or court proceedings.

While we strive to reduce costs for leaseholders, we do not believe it is right to do so where the right to manage company acts unreasonably in bringing a claim and the claim also fails. For example, landlords should not have to meet their own wasted process costs where leaseholders clearly make an unfeasible claim or fail to bring the claim to an end at an earlier stage.

The noble Baroness should be assured that the new power for the tribunal does not automatically entitle landlords to repayment. If the tribunal does not consider that costs should be payable, it can decline to make an order. Removing new Section 87B would expose landlords to unfair costs. For these reasons, I ask the noble Baroness kindly to withdraw her amendment.

I thank my noble friend Lord Moylan for his Amendments 61 and 62. The amendments seek to remove or amend the existing exception to the right to manage for local authority premises so that the right can be used by their long lease holders. I should explain that there is a separate right to manage scheme for local authority secure tenants and leaseholders under the Housing Act 1985 and its relevant regulations. The Commonhold and Leasehold Reform Act 2002 therefore excepted local authority leaseholders from the long-leasehold right to manage to avoid creating conflicting schemes.

The Bill delivers the most impactful of the Law Commission’s recommendations on the right to manage, including increasing the non-residential limit to 50% to give more leaseholders the right to take over management, and changing the rules to make each party pay their own process and litigation costs, saving leaseholders many thousands of pounds.

An alternative route to management is available in some local authority blocks that contain a mixture of tenants and leaseholders, where a prescribed number and proportion of secure tenants are in support of exercising the right. This involves setting up a tenant management organisation. It would complicate a system that we are trying to simplify if two separate routes were to apply to a single block, and the Law Commission made no recommendations on local authority leaseholders.

[Lord Moylan (Con)]

My Lords, I have some familiarity with the Housing Act 1985 from my time in local government. I am reasonably well aware of the obligation to create tenant management organisations, which are often not block-specific but estate-wide or, in many cases, spread across the entire local authority council housing stock. It seems a strange way to go about trying to exercise the right to manage if we are discussing a block held as an investment that has no local authority tenants. Can my noble friend assure me that the Housing Act 1985 is an effective means for leaseholders in the circumstances I describe to exercise their right to manage, when in fact it is an obligation on a local authority rather than a right granted to long lease holders?

[Baroness Scott of Bybrook (Con)]

We believe this is the correct way of doing it. I would be very happy to meet my noble friend to discuss this further but, with the evidence we have, we agree this is the correct way forward. But I really am very happy to meet with the noble Lord.

Leasehold and Freehold Reform Bill

Lord Moylan Excerpts

Committee stage
Wednesday 24th April 2024 Lords Chamber

If we do not accept the amendments in my name and that of the noble Lord, Lord Howard, this law stands a very strong chance of being attacked under human rights law, because it is not offering fair compensation to the freeholders, and it is retrospective. I therefore very much hope that the Minister will see the dangers and unfairness in this, and accept the proposals in these amendments.

[Lord Moylan (Con)]

My Lords, it is a privilege to speak after the noble Baroness, with her depth of knowledge about this subject, and my noble friend Lord Howard of Rising, who did me a number of favours. First, he saved me from any obligation to explain the meaning of marriage value. Secondly, he made a moderate and temperate case for his amendment when my argument might be expressed in a somewhat less moderate and well-tempered manner, because I feel a real sense of outrage about what is being proposed.

As my noble friend has explained, marriage value is a real financial asset. His Majesty’s Government say that they are abolishing it. They are not abolishing it; they are, in effect, transferring, at the stroke of a pen, value from the freeholder to the leaseholder without any compensation. It is, simply, expropriation. My amendment, which is a probing amendment—I would not expect it to be part of the Bill—obliges the Secretary of State to pay compensation to those who have lost out as a result. Of course, I really want the Government to scrap the provision itself, rather than for compensation to be paid, and I would not expect my amendment to be a practical policy. It is a probing amendment to raise the question about expropriation without compensation.

I want to make three broad points. There are genuine evils in the leasehold system. I made it clear at Second Reading that there were things that I support in the Bill. For example, it was scandalous that in recent years some housebuilders sold leasehold houses with rapidly escalating ground rents, which they then securitised in order to increase their capital receipts. Also, it is scandalous the way that many freeholders are implementing their obligations in relation to the cladding crisis; people are genuinely suffering as a result.

However, how many of these evils are actually being addressed by removing marriage value from the calculation of the enfranchisement premium, or the premium paid for extending a lease? It is not germane to the main evils that the Bill has been advanced as addressing.

Expropriation of this character implies some wrongdoing on the part of the person whose assets are being expropriated. It requires a high test. Noble Lords will have noticed that even in the case of the friends of Putin, we have been sensitive and careful about expropriation. We have frozen assets, but when it comes to whether we should expropriate them and give them to Ukraine or do whatever useful stuff we might do with that money, we all draw back from it because of the legal consequences. Here, we are perfectly happy to expropriate assets and hand them around the market without any consideration, and with very few people rising to protest about it, even in your Lordships’ House.

I believe that the Secretary of State said that he sees this as an act of justice, but what justice is involved in transferring wealth from a group of people who include, as my noble friend has said, charities and pension funds to leaseholders, who in many cases are frightfully rich? We will shortly come to amendments in the name of the right reverend Prelate the Bishop of Manchester which deal specifically with charities, which I have put my name to. I live in Kensington, and as I declared at Second Reading, I live in a flat on a long leasehold. However, there are many people around Kensington with very expensive properties who are salivating at the prospect of this going through. This is not substantially helping the poor and middle classes; it is going to transfer huge amounts of wealth to people with long leases. The more valuable the flat, the bigger the benefit that they are going to get from it. Where is the justice in all this? I simply do not understand how that point can be made.

My second point relates to the European Convention on Human Rights, on which I do not claim to be an expert. I have a suspicion that my noble friend, when she rises to answer, will say that in respect of Article 1 of the first protocol—to which the noble Baroness, Lady Deech, has referred with such learning—similar cases in the past have been taken to the court, and that the landowners, the freeholders, have lost. Therefore, the Government are certain that this will pass that test. I am, of course, wholly unqualified to comment on the legal merits of the case in either way. However, even if it did pass that test, is this something that should pass the test in England, as far as the older rights that we have inherited are concerned? This is principally England that we are talking about, with its tradition of respect for private property and not implementing retrospective law or seizure of assets without very good reason. I would suggest that it does not pass the test. Even the Law Society—the “leftie lawyers”, as they are often referred to, which is not a phrase that I would use, and I hope Hansard will put that in quotation marks—is concerned about the damage that this will do to the reputation of English law.

My final point is addressed to my fellows on these Benches, who take the Conservative Whip. Are we and our noble friends on the Front Bench here to expropriate property without compensation, without justice, without an argument, or without there being serious wrongdoing on the part of the person whose assets are seized? Is this what we came into this House to do? I do not think it is. This is something that the Government need to take away and rethink very seriously, because it is wrong, it smells, and it is something that we should have nothing to do with.

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[Lord Moylan (Con)]

I am very grateful to the noble Baroness for giving way. If there is any suggestion that I have been critical of the European Convention on Human Rights, if that remark was addressed to me, I should be glad to know when that was the case because I have never said that we should withdraw from that convention. I do not know whether the remark was addressed to my noble friend Lord Howard of Rising and not me. If that was the case, I apologise for intervening.

[Baroness Pinnock (LD)]

There was, of course, no mention of or reference to any noble Lord in this Chamber. It was a general reference to criticisms of that court under the human rights legislation. We have heard in debates in your Lordships’ House over the past weeks that have hinged on the rule of law. So it is most interesting, for those of us who have felt that the rule of law had been breached in the decisions that have been made, that it is now being raised in defence of these amendments. The debate has become emotive on this issue.

I hope that we can draw back from that rather, because what we have here is the Government’s intention to rebalance the rights of leaseholders as against the rights of freeholders. From these Benches, we support the rebalancing of those rights. In many cases, we think that the Government are not going far enough, but there ought to be a rebalancing of those rights. That is not referencing in this case the fact that there seems to be an argument among those who have moved or supported the amendment, that the loss of value can be defined as an expropriation. I find that difficult to accept because all along, in changes to legislation on major infrastructure projects, property is infringed and property holders feel abused. But it is for the state to make those decisions. So I am not sure why we are going to the barricades on this issue.

[Lord Moylan (Con)]

I am grateful to the noble Baroness for giving way. In the case of infrastructure, it is certainly true that private property owners can have their property taken away from them to allow infrastructure to be built. But this is under a compulsory purchase regime whereby they receive something approaching the market value, normally plus a premium of so many per cent on top. My amendment would ensure that those expropriated of their marriage value would receive that. Is the noble Baroness, in fact, swinging in behind my amendment? There is a clear difference between what is proposed today and the compulsory purchase regime.

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[The Lord Bishop of Manchester]

My Lords, while I thoroughly enjoyed that previous group, I hope this one will not prove quite so wide-ranging. In tabling these amendments, my aim is to deal with an issue that in the charity world is specific to a small number of bodies but would severely impact the work that they do. First, I am a leaseholder myself, as it happens, as set out in the register of interests. I have been through the process of extending my lease; my flat is not in London, and it was quite a simple and cheap process. Secondly, although I am no longer on the board of governors of the Church Commissioners, it is the body that pays my stipend, owns my home and covers my working expenses, so I declare that interest too.

The commissioners are directly affected by the proposals in the Bill. They would indeed benefit from my amendments but, as has already been mentioned by the noble Lord, Lord Truscott, in the previous group, that charity is large enough to withstand the adverse impact. Smaller charities would struggle much harder to maintain their work, and it is their case I seek to plead today.

As I said at Second Reading, I wholeheartedly support the central thrust of the Bill, which is to protect leaseholders from freeholders who exploit them as a cash cow. I also agree that leasehold is ripe for bold reform. I have spoken repeatedly in your Lordships’ House on behalf of victims of the cladding scandal, as well as joining them on public platforms in Manchester. My lifelong commitment to those in housing need is well known in this House and that commitment remains undiminished.

I was unable to be in my seat on Monday and I am grateful that my right reverend friend the Bishop of Derby spoke to an amendment in my name that day. Having carefully read the report of that debate in Hansard, I have informed the Whips’ Office that I no longer intend to oppose the question that Clause 47 stand part of the Bill, nor does my co-signatory, the noble Lord, Lord Thurlow. I have taken that step as I believe my efforts at this stage are best focused on the specific issue of charities and marriage value. I apologise to noble Lords for the lateness of that decision but hope that they will take it as a sign that even a bishop can be penitent.

To focus on the subject of this group, in England there are a small number of charities, probably no more than a dozen, all of them with long and distinguished histories, which, in centuries far past, came into the possession of land lying largely within just a few miles of this House. As London grew and the land increased in value, rather than simply selling it and seeking to invest elsewhere—remember that back then there were far fewer opportunities for investment—the charities stuck with the business they knew and understood. They kept the freeholds and have used them as regular and predictable sources of income to drive their work. The charities, apart from the commissioners, of which I am aware, are John Lyon’s Charity, the Portal Trust, the Dulwich Estate, the London Diocesan Fund, Merchant Taylors’ Boone’s Charity, and Campden Charities —not a large number.

John Lyon’s Charity was gifted its land in St John’s Wood about 500 years ago. Income from being the freeholder, principally through marriage value, provides it with about £4 million per annum, which is one-quarter of its total income. Marriage value is not a matter, as we have heard, in which the freeholder can set their own arbitrary figure. It is not open to the abuses that have been associated with ground rents. It is also the case that around 80% of all marriage value is in or around the capital. This is a very London-focused issue.

The money that John Lyon’s Charity receives enables it to be one of the principal providers of youth services to some of London’s most needy children. Properties on its holdings sell for around £5 million. The leaseholders who purchase them are not London’s poor and needy. Many are not resident in the premises, which are let out to tenants. A typical leaseholder on such an estate is, as we have heard in previous debates, more than likely to be a wealthy overseas investor or corporation. I have nothing against them, but the Bill, in its present form, will transfer money used presently for youth work to these very rich organisations and individuals. It will present them with an entirely unearned windfall, hence my comments at Second Reading about this being a “reverse Robin Hood”.

I have been told that the Bill needs to be kept simple, and that making any exceptions will unnecessarily complicate it. Of course, there is already an exception for the National Trust, but I will not debate that any further. However, the simplest solution to a problem is not always the right one. In any battle between simplicity and justice, justice must always prevail.

I have also been told that it would be wrong for some leaseholders not to profit from the abolition of marriage value when others, whose freeholders are not charities, do. I will not go back as far as my good friend, the noble and right reverend Lord, Lord Sentamu, did when citing Magna Carta in the previous debate, but there is another principle that is long established: the assets of a charity should not be alienated from it at anything less than full market value, except where those assets are being applied directly to the purposes set out in the charity’s objects clause. That principle has been applied even to such flagship Conservative projects as tenants’ right to buy, in which charitable housing associations were excepted as not being forced to sell properties at a discounted value, unless that discount was being made up from elsewhere. I have not heard any case, not even an unconvincing one, as to why leaseholders of charity-owned freeholds should be treated more favourably than charity tenants.

My amendments in this group offer one way forward. They stipulate that marriage value should continue to apply in cases where the charity owned the freehold before the Act came into effect. There would be no loophole allowing charities to purchase freeholds and apply marriage value in future, nor any opportunity for other bodies to seek to register as charities thereafter. From day one, those leaseholders with charity freeholders should know exactly who they are.

We could tighten it up even further—this is still just Committee stage. It would make little difference if the exemptions applied only to charities, or their predecessors, which owned the freehold prior to 1950, which would of course exclude most housing association leasehold properties. Given how few they are, we could even name them in a schedule. We could explore how marriage value for charities might be phased out over a period of some decades, as was referred to more generally in the previous group, instead of the impact hitting in full in the first year. We can also look at ways of compensating charities in full for the loss of assets—again, an issue referred to in the previous group. I note the Minister’s comments that to fully compensate all freeholders would be an unfair burden on the taxpayer. We are talking here about something much smaller—a small number of charities severely impacted—and I beg to suggest that that can be afforded. None of this needs to slow down the progress of this much-needed Bill through your Lordships’ House.

I am grateful to the Minister, who has already met me and representatives of some of the affected charities, written to us setting out the Government’s current position, and assured us that she remains ready to meet again. I greatly appreciate her openness to such conversations. I also appreciate the Opposition Front Bench for similarly listening to our concerns. I look forward to hearing the views of other Members of your Lordships’ House, so that the charities impacted can have a better sense of where we might find ways forward to tackle this problem. In the meantime, I beg to move.

[Lord Moylan (Con)]

My Lords, it is a pleasure to follow the right reverend Prelate the Bishop of Manchester, and I have added my name to his amendments.

There is a great deal that I could say on this issue but, since I said most of it in the debate on the last group, I shall keep my remarks fairly short. I can add a little personal knowledge of one charity to which the right reverend Prelate refers, because it is very Kensington-based. I have no connection with it and no interest to declare—but Campden Charities was started in the 17th century by Count Campden, a devout Puritan. When he died, he left a charitable endowment, naturally in the shape of land that he owned, for the benefit of the poor youth of Kensington. His widow, when she died, did likewise with her property—hence the plural. It is Campden Charities: technically, they are two separate endowments, but they are run as one. They own land in Kensington to this day from which they have an income, and they continue to support the poor youth of Kensington—and there are poor youths in Kensington—giving them grants to allow them to continue their education and apprenticeships, and work of that sort. Their income is now going to be, to some extent by this measure, reduced and expropriated.

As I say, apparently as Conservatives we feel no embarrassment in doing this—we feel no constraint on us. We are too tender and too ginger to feel that we can expropriate the assets of ill-doers such as Putin’s friends—they are sacrosanct. But those who do good, such as charities, can have their money taken away with very little debate and handed to leaseholders who may or may not be poor and meritorious. Who knows? What is it next, I wonder, for my noble friends on the Front Bench? Shall we be stealing the widow’s mite from the poor box?

[Lord Bailey of Paddington (Con)]

My Lords, I want to pay tribute to Campden Charities, as I am a beneficiary of the activities of Campden Charities. I came from a community where the likelihood of one of us appearing in the Lords was next to zero, and Campden Charities is an important part of my arrival in your Lordships’ House. I point out that removing the ability of charities countrywide to provide such services would be devastating to some of the poorest communities in this country. Again, I stand here as a witness to the effectiveness of some of the work that they do.

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[Lord Gascoigne (Con)]

My Lords, I thank the right reverend Prelate the Bishop of Manchester, and my noble—and actual—friend Lord Moylan for their valuable contributions at Second Reading, and for the amendments that they have put forward which seek to alter the Government’s current position on marriage value and hope value. I say on behalf of my noble friend the Minister that we are grateful for all the time and engagement with the right reverend Prelate on this issue, along with the Church Commissioners and the charities which she has spoken to today.

In addition, we are grateful to all noble Lords who have spoken on this group and on the somewhat excited group previously. As has been noted, a lot of the points that I will speak to were covered in the previous discussion. I also say to the right reverend Prelate that we are always happy to meet. In answer to the noble Baronesses, Lady Taylor and Lady Pinnock, the Minister is more than happy to engage with any noble Lord who is impacted by this, as well as charities, to discuss it further.

Amendments 28 and 46 would exempt freeholders who are charities at the time of the Bill receiving Royal Assent from the removal of the requirement for leaseholders to pay marriage value, and for hope value to be payable. Before I go into detail, I reiterate the Government’s wholehearted recognition of the vital role and work that charities provide in our communities up and down the land, as has been noted by my noble friend Lord Bailey.

However, as the noble Baroness, Lady Scott, explained previously, we do not believe that leaseholders should pay marriage value. The leaseholder needs to enfranchise to prevent financial loss from the running down of their lease, and to prevent their losing possession when it ends. As has been said, we do not believe that their position, which concerns their security in their home, should be used as a basis for requiring them to pay more than a third party to enfranchise, nor that the freeholder should profit by way of windfall by selling to the leaseholder as compared to a third party. Under our valuation scheme, the freeholder is compensated as if the lease ran its course.

The good work of a charity is separable from its funding. Requiring leaseholders of charities, for no other reason than the coincidence of the nature of their freeholder, to pay marriage value when other leaseholders do not have to would be, I am afraid to say, unfair. Granting exemptions would also create an unbalanced two-tier system. By removing marriage value across the board, we will level the playing field and ensure that we are widening access to enfranchisement for all leaseholders, both now and in the future.

There have been a couple of references to the National Trust. Briefly—as I know it has been covered previously in this debate—it is a different scenario given that its land is inalienable and cannot be sold, yet it is not exempt from the removal of marriage value. I am not aware of the case that the noble Earl, Lord Lytton, mentioned, but I am certainly more than happy to look into it for him. I assume—and it is only my assumption—that it is because it is for the National Trust as an entity to decide, but I assure the noble Earl that I will look into it.

The noble Baroness, Lady Pinnock, asked about other charities that may be impacted by this beyond those that we have discussed. Again, I am not aware of any, but I am sure that that work has been done by the department. I will certainly take it back and investigate. Further to the point made by the noble Baroness, Lady Taylor, it is something on which we will continue to engage with any noble Lord or any charity that is impacted, as we have done with the right reverend Prelate.

For these reasons, I respectfully hope that the right reverend Prelate the Bishop of Manchester and my noble friend Lord Moylan will understand and therefore not press their amendments.

[Lord Moylan (Con)]

Before my noble friend sits down, perhaps I may address a point he made earlier which was made also by my noble friend Lady Scott of Bybrook. The idea that the Government are peddling, that if a landowner sells a leasehold or freehold interest to a third party, they do not receive marriage value, is to assume gross inefficiency of markets and complete ignorance of market participants. It is of course true that the purchaser would not pay marriage value as a separate sum, but the purchaser is perfectly aware of the potential for marriage value and will pay a price that incorporates that. To assume anything else is to assume that all those clever and evil hedge fund managers are too dim to notice what is going on. It simply is not the case. The line the Government are peddling is simply unfounded in fact and reality.

[Lord Gascoigne (Con)]

Obviously, I completely respect my noble friend, but I think I have answered that point.

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[Lord Borwick (Con)]

My Lords, I first declare my interest in my home, which is a long-leasehold property in London. It would not normally be declarable, but in the case of this Bill, this should be an exception. I also declare my interests as in the register in property companies, some of which are developing or have developed houses.

While I am not a great fan of a Conservative Government forcing freeholders to sell land to lease- holders, that principle sailed many years ago, and my Amendments 41, 43, 44 and 45 are designed to simplify the process in this Bill, reducing the costs for the department. They would speed up the process, perhaps by as much as 18 months, making it quicker and cheaper for the Government.

The present structure of the Bill has the price of the enfranchisement calculated by a system laid out in Schedule 4, under which the single most important factor is the deferment rate. I believe that the deferment rate is more important to the size of the actual price than the abolition of marriage value or any other factor.

What is the deferment rate? Some noble Lords believed that it must be in the Bill, but that is not so. The deferment rate, an interest rate by another name, is to be decided by the Secretary of State for DLUHC by way of statutory instrument. When will this be published? We do not know. Departments take a different time for SIs, and some take as long as five years. I have been criticised in the past for being acidic about the Department for Transport taking as long as five years to bring forward an SI on disability matters. The point is that it is certainly not instantaneous.

The interest rate is to be set by the Secretary of State at a date to be announced in due course. I could be rather difficult and quote my right honourable friend from another place, Michael Gove, on the subject of setting interest rates. He has been a supporter of the principle that interest rates should be set not by the Chancellor but by the independent Bank of England. For many years we have had that as a common policy between all parties, yet the Bill reverses that policy, at least in respect of the deferment rate.

The Minister has said that the rate will be a market rate for about 10 years, amended only by another SI. I am afraid that markets do not work like that—they alter fast and furiously. Over the last 10 years, the national rate has varied quite widely, between 0.1% and today’s 5.25%. Yet the department will fix it for the next 10 years, subject only to review at about a year’s notice. If the department was that good, it could make a fortune in the markets rather than create legislation. It cannot be done accurately, but the department still wants to do it.

I submit that my solution is better: there should be a variable rate, varying automatically as a simple margin over base rate. We can have a debate about what that margin should be. I have proposed 5% as a probing amendment. The leaseholder will, in almost all cases, be a worse credit risk than the freeholder, and I have asked several banks about their prospective price for a loan to finance an enfranchisement. I have had a variety of suggestions, as each price will of course depend on the particular circumstances, but a margin of 5% over base rates seems to be a reasonable guess.

There are occasions when leaseholders of flats in a block have enfranchised but one in 100, say, has not come up with their share. It is not unknown for the freeholder himself to provide the finance, and I am told that a margin of 5% over base is considered reasonable by freeholders when they are the lenders.

The first thing would be to agree that the rate should be variable, to take account of current financial circumstances. My Amendment 41 achieves this. The second thing is to agree that the margin on the rate over bank rate should reflect the leaseholder’s cost of borrowing, which is consistent with the rest of the terms of the Bill, but at present I am not entirely certain what that margin should be. I look forward to other noble Lords expressing their opinions.

Amendments 43 to 45 are either consequential or the equivalent measure for leaseholds to be extended rather than enfranchised. My noble friend Lord Forsyth, who is not in his place, was going to support this proposal and may put his name to it later, if it comes forward on Report.

The noble Lord, Lord Truscott, mentioned this amendment at an earlier stage. I did not know whether I should stand at that moment or wait. I hope he will forgive me for replying to his point now. The current rate set by the tribunal is 4.75% or 5%—the noble Earl, Lord Lytton, can immediately correct me if I am wrong—so 10.25% may be wrong, but so is 4.75% or 5%. The noble Lord, Lord Truscott, asked whether a return of 10.25% is available, but the question should be whether any lenders charge as much as 10.25%. I believe that they do, so his argument is actually an argument for variable rates. I beg to move my amendment.

[Lord Moylan (Con)]

My Lords, I rise to support, in general, the principle of what my noble friend Lord Borwick has said, but I am not entirely sure that we need to go into this new world that he is creating when we have a perfectly satisfactory world that already exists. I hasten to add that I am not a chartered surveyor, and everything I say is subject to correction by Members of this Committee who understand these matters better than I.

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[Baroness Scott of Bybrook (Con)]

My Lords, I thank the noble Baroness, Lady Taylor, and my noble friend Lord Borwick for Amendments 41 to 45 in this group. I turn first to the series of amendments tabled by my noble friend, and I thank him for his constructive engagement with me and for the time he spent in trying to address this vital matter.

Amendments 41 and 43 to 45 would seek to replace the current provisions in the Bill, which will allow the Secretary of State to set the deferment rate used in enfranchisement valuation calculations, as well as removing a requirement to review these rates every 10 years. Instead, these amendments would require the deferment rate to be prescribed by a formula, which would be based on the Bank of England’s base rate plus 5%. The specific deferment rate would then be calculated based on the date of the leaseholder’s enfranchisement claim.

As I have discussed with my noble friend Lord Borwick, this is one potential solution for setting the deferment rate, but it is not the only one. I am aware of the importance of the deferment rate to both leaseholders and freeholders, and it is important that we take the time to take this decision carefully. There are serious consequences with any attempt to prescribe the methodology for setting the deferment rate in the Bill; this would tie the hands of this Government, and successive ones, in terms of adapting the approach if the need were to arise. It is also important that the Government retain their role in providing balance between market stability and the need to review the rates. It is the Government’s view that the proposals in the Bill enable this balance, and it would therefore be inappropriate, at this stage, to prescribe in the Bill the methodology for setting the deferment rate.

These deferment rates are a really important part of the Bill. At the moment, it is difficult for leaseholders to understand how much they may have to pay to the landlord when they enfranchise. Different rates are used across the country and across the industry on a case-by-case basis. The deferment rate is used to calculate the reversion value, and this provides the landlord with the compensation for the value of the freehold property with vacant possession in the future; that is, at the end of the lease. Prescribing these rates and using them to develop an online calculator, which will help leaseholders understand what they may have to pay, is also important. These rates will be prescribed at a market value to ensure that the amount that landlords are compensated reflects their legitimate property interests. These are important decisions.

The noble Lord, Lord Moylan, asked about the timing; this could take years and years, but we do expect the majority of these reforms to come into effect in 2025-26, as set out in the Bill’s impact assessment. Obviously, this may change, but that is what we expect. We will continue to carefully review all the information and views shared on the setting of rates, and I welcome any further thoughts that the Committee has on this matter.

[Lord Moylan (Con)]

Does my noble friend the Minister have a moment to give a response to my query about whether the Government regard the deferment rate as a real interest rate or one that incorporates inflation? I ask because the calculation, as I understand it, assumes zero inflation in the value of the asset over the time to the point at which it is being valued, and that a real interest rate is therefore appropriate. Is that her assumption or is she assuming an inflation-based interest rate, which, I suggest, would have consequences for how the asset is valued at the end of the term during which it is assessed? Does she have any comments on that?

[Baroness Scott of Bybrook (Con)]

I reiterate that this is why we would like the Secretary of State to be involved because it is complex and there needs to be a balance. I will come back to the noble Lord with any further comments, but this is why we would prefer the Secretary of State to have this role, to make sure that we are balancing the market at the time with leaseholders’ representation.

I turn to Amendment 42 from the noble Baroness, Lady Taylor, which would require the Secretary of State, when prescribing the deferment rate used in the enfranchisement valuation calculations, to set this at a level that would encourage

“leaseholders to acquire their freehold at the lowest possible cost”.

I assure the noble Baroness and the Committee that the Government are committed to making enfranchisement cheaper and easier and that these reforms will achieve that aim.

I understand how vital setting rates is for enfranchisement premiums. This very proposal was discussed in the other place, and I reiterate the importance of not constraining the Secretary of State via the Bill when making such important decisions. We have been clear that we will set the rates at the market value and recognise that many different elements need to be considered when setting them, as I have just reflected to my noble friend. We continue to have conversations with all relevant stakeholders. As I said, I welcome members of the Committee sharing their views on this matter so that the Government can take them into consideration when making a final decision. For these reasons, I ask my noble friend—

Impact of Environmental Regulations on Development (Built Environment Committee Report)

Lord Moylan Excerpts

Friday 19th April 2024 Lords Chamber

Moved by

[Lord Moylan]

That this House takes note of the Report from the Built Environment Committee The impact of environmental regulations on development (2nd Report, Session 2022-23, HL Paper 254).

[Lord Moylan (Con)]

My Lords, I begin by offering a few words of thanks to the committee and its current and former members. I am delighted to see so many of them here today contributing to the debate. I also thank the clerk of the committee, Kate Wallis, the researchers, Anna Gillingham and latterly Andrea Ninomiya, our administrator Hadia Garwell and, in particular, our specialist adviser Kelvin MacDonald both for his academic insights and his experience as a planner and former planning inspector. I will also take this opportunity to congratulate my noble friend Lord Banner on what I am sure will be a very welcome maiden speech that will follow shortly in the course of the debate.

The time available for this debate is cruelly short, given the significance of the topic, so I have broken my thoughts down into three broad areas. The first is the general problem, the second is to illustrate it with some particular problems and the final point, if I get to it in time, is to ask whether there needs to be a problem at all, because perhaps there does not.

The general problem is that the Government have ambitions for building a certain number of houses—there are well-publicised housing targets—and to leave the environment in a better state than previous generations had it. The starting evidence for the committee is that neither ambition is likely to be met. In fact, we found very few people who thought the Government would hit their housing targets, and we heard authoritatively from various senior figures at some government agencies that they will not meet their environmental targets either. Even worse than not meeting them is the fact that they appear to be operating in antagonism with each other, so that, rather than cross-departmental working to achieve both, we appear to have two sets of targets working against each other the whole time.

In that context, it is worth saying that the environmental targets tend on the whole to win. Part of the reason for that is the legal background to the environmental targets, which is European Union law that we have inherited, particularly the habitats regulations. They are fundamentally coercive. They require things to happen or prohibit things from happening. On the other hand, housing is driven fundamentally by the Town and Country Planning Act regime, which is essentially a permissive regime—having planning permission does not oblige you to build anything—and is of course based on domestic law. There is no European Union background to it in particular. As a result, we have constant, unnecessary battles going on that arise in part from conflicting legal systems.

Of the particular problems that the report addresses, the most prominent and the one most deserving of time is summarised in the expression “nutrient neutrality”. This dates back to a judgment of the European Court of Justice delivered in 2018, I believe. It related to Dutch farmers. The Netherlands is very intensely farmed. For a small country, it produces an awful lot of food and a lot of pollution from that runs off into rivers. Various parties went to the European Court of Justice and said that this must stop. The European Court of Justice agreed and the Dutch Government completely kiboshed themselves by putting in place a draconian plan for buying up farms and closing them down, which has resulted in a sort of revolution in domestic Dutch politics.

That is not the key matter of interest to us. The key matter of interest is that Natural England, an unaccountable agency that exists under statute in the UK, decided that that judgment applied to England as well—we are speaking predominantly of England in this debate, incidentally, as noble Lords will be aware. It was backed up in this, I understand—although, of course, I have not seen it—by legal advice from Defra. As a result, it started to issue advice in relation to applications for residential planning permission which effectively banned them because they would add pollutants to nearby watercourses without any mitigation.

It is not possible for Natural England to actually ban or nullify a planning permission. It does so by way of advice. None the less, it is very potent advice because, first, local planning authorities live in constant terror of having judicial review proceedings brought against them and, secondly, it must be said that many local authorities are delighted to be told that they cannot build anything in their area, which is a further problem we have with our housing market.

In fact, of course, we all know that the pollution in our watercourses comes predominantly from sewage overspills and agricultural practices. These agricultural practices are licensed by the Environment Agency, another player in this complex ecology of quangos running round causing confusion in every direction. Natural England has no purchase on that, but it does have purchase on applications for planning permission—so the whole burden is being put on the housing market when in fact it belongs elsewhere. As a result, 14% of England’s land area is now effectively under a ban for residential development at a time when we need more housing.

Biodiversity net gain offers a contrasting story. What was notable about nutrient neutrality was that it arrived out of the blue, as court judgments tend to do, so those in the development world had no chance to repair or plan for it. In the case of biodiversity net gain, there was discussion and consultation, and the larger housebuilders have incorporated it effectively into what they are doing; but the smaller housebuilders, for whom the committee has great concern, have not managed to do that.

I remind noble Lords that, 20 years ago, 40% of homes were delivered by small and medium-sized housebuilders. That is now down to 10%. We have moved towards a highly oligopolistic market for the provision of homes and we have driven the small builders out, mainly through the costs of planning permission and regulation of this character. If you are building a small site, as smaller builders tend to do, incorporating biodiversity net gain is extremely difficult.

The larger housebuilders often get permission to deliver it off-site, and here we come to another conflict with government policy, because they do that by buying up agricultural land and turning it fallow, yet Defra tells us that it has an objective that we must continue to produce food for this country. At the moment, we produce 60% of our own food. The Defra target is that that figure should not fall, yet it is encouraging people to buy up agricultural land and turn it into a nature reserves, or whatever.

Finally on biodiversity net gain, there are perverse outcomes in relation to derelict sites. Everyone agrees that building on a brownfield site is better than building on a greenfield site. Yet a brownfield site, if left derelict, becomes biodiverse quite quickly. The weeds come, the birds, the bees and the rodents arrive, and so on. So, if you are going to take a brownfield site that has been left derelict for some time and build on it, the first thing you do is contribute negative biodiversity net gain, as you will flatten it and destroy all of that. What you have to supply to make up the difference and the additional 10% starts from a lower base and is a bigger challenge. We are perversely encouraging greenfield site development when we say we want to encourage development of brownfield sites.

Finally under particular problems, I come to the question of what is referred to as “water neutrality”. This is a slightly misleading expression as it suggests some parallel with nutrient neutrality. It is almost better described as “water sufficiency”. We do not have enough water for many of the developments. It was announced in the Sunday Times while we were doing our report that the Secretary of State had said there were going to be 250,000 homes built in Cambridge. It was pointed out that a planning application for 5,000 homes in Cambridge was being held up because the Environment Agency claimed there was insufficient water to supply them.

Happily, when we quizzed the Housing Minister on this, she was able to assure us that the Secretary of State had said no such thing and it had appeared on the front page of the Sunday Times entirely as a matter of speculation. So it was a great consolation to us to know that that article had no basis in the thinking of the Secretary of State, given that there is no water to service these 250,000 houses. But it does raise the question: why have we not built any reservoirs for 40 years, or whatever it is, that might help and contribute to our housing target?

I will be very brief now. Is there a problem? I think there is a problem at the moment. Does there need to be a problem? Of course not. We are a reasonably well-off country. A reasonably well-off country can both build houses and improve the environment. It should not be that difficult. There should not be a conflict. But it requires a vision and a plan—and, in the case of pollution in rivers, a plan that will take at least 30 or 40 years to deliver. It requires buy-in to that plan; it requires leadership and selling that vision, and then delivery with cross-party support.

I think that can be done. The current way is to go around insisting that you are entitled to have what you want now. Well, nobody is going to get what they want now. The only answer will be a long-term plan. Somebody has to take the lead. I look to my noble friend on the Front Bench to do that as she steps forward and explains how the Government are going to resolve these problems for future generations. Sadly, it is unlikely that she is going to resolve them for this generation. If we can cast light on that and point at a path, we can feel that we have done something very valuable.

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, I thank all noble Lords who contributed to this debate. I add my particular congratulations and thanks to my noble friend Lord Banner on his maiden speech. Given the time constraints, I hope that the noble Lords who spoke will forgive me if I do not respond individually to each of them but instead confine myself to making a few remarks in response to the comments from my noble friend the Minister.

All of us in this Chamber are agreed, I think, that the objectives of building housing and of improving the environment are desirable and, if properly planned, attainable. That is also true of my noble friend the Minister; we are all as one on this. I was pleased to hear from my noble friend that the Government are doing various things they can boast of, but what I did not hear was an acknowledgement, as was well identified in this report, that the system we are operating with is broken—not necessarily fundamentally broken, but there are systemic problems—nor that the Government are going to grasp the problem. What I heard was that the Government are spending money, perhaps for the highly desirable objective of trying to work around the nutrient neutrality bans on housing, but not what they are doing to address the overwhelmingly predominant cause of the pollution in our rivers: farming practices and the discharge of sewage and other pollutants. It seems to me that the Government have not quite grasped the seriousness and systemic nature of the problems that the report identified.

I am gratified on behalf of the committee that the report itself attracted so many compliments from noble Lords who spoke. If I may say so, I am very proud of it. I am pleased that I can say I have been associated with it. It has lessons that any Government should seriously learn; that is true of not only current Ministers but Ministers who will hold office after the general election that we must expect this year. These problems are not going away; they require a long-term, well-thought-out solution. Whoever’s laps these problems land in, I hope they will find this report a useful guide to what they should do.

Motion agreed.

Social Housing: Right-to-buy Sales

Lord Moylan Excerpts

Thursday 18th April 2024 Lords Chamber

[Baroness Swinburne (Con)]

I remind the House of the statistic I gave in answer to an earlier question: of those homes, since 2010, 172,600 are for social rent.

[Lord Moylan (Con)]

My Lords, further to the question from my noble friend Lord Young of Cookham, perhaps my noble friend the Minister has not quite grasped the root of the problem. We are dealing here with small and medium-sized housebuilders. When they generate social housing to accompany their private sector developments, that social housing frequently comes in penny packets, isolated to one house on the site and so on. There are 13,000 of these now waiting to be built, but the housing associations are not interested in them—they are simply not interesting to housing associations, as they are too difficult to manage. It is unblocking that logjam that I think my noble friend was asking my other noble friend on the Front Bench to address herself to.

[Baroness Swinburne (Con)]

Indeed, this is where a local authority could step in to deliver more replacement homes. In the current economic climate, councils are able to continue to deliver 50% of their right-to-buy replacement homes as acquisitions each year until 2025, with a focus on the purchasing of new homes. That should help small, medium-sized and large housebuilders.

Leasehold and Freehold Reform Bill

Lord Moylan Excerpts

2nd reading
Wednesday 27th March 2024 Lords Chamber

[Lord Moylan (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Stunell, with whom I served on the Built Environment Select Committee. I declare as interests that until August 2023, I was a member of the board of the Ebbsfleet Development Corporation, and that I own and live in a leasehold flat in London and own nominally a further leasehold flat as a will trustee, though I have no financial interest in it.

Some time ago, the block of flats in which I live was the second block in the country to exercise the right to manage when that legislative provision was introduced. It has worked extremely well for us. It has persuaded me very strongly that the control of the management of the building in which you live is the solution to many of the problems that leaseholders have experienced with their freeholders and managing agents. I am slightly baffled as to why the noble Lord, Lord Stunell, suggests that this is something that only the middle classes can attain to. The residents in the block where I live probably fit the description that he set out, but I do not understand why he says that this can be done only by them. We do not manage the building ourselves. We interview, appoint and periodically change a professional managing agent—a property agent—but that agent reports to us and is accountable to us, financially and in the decisions made. The structure also allows us to put in place a long-term plan. The legislation requires us to have a 10-year plan, which has made the prediction of service charges very much easier.

I strongly support those parts of the Bill aimed at giving residents greater control of the management of the blocks in which they live. However, if, as is not the case where I live, there is profound disagreement between the residents of a shared property concerning heavy expenditure, no legal structure will resolve those issues satisfactorily. We need to bring about a change in human nature, which I am afraid is probably beyond the capacity of your Lordships’ House.

I am concerned that the right-to-manage provisions appear not to extend to local authorities, even where the property is held outside the housing revenue account. That is a point that I may wish to probe further in Committee. I am also concerned that landlords will not be able to recover their legal fees from tenants as a result of disputes and about how that impacts on right-to-manage companies and any other form of tenant control that might be adopted as a result of the Bill. It would in effect make it impossible for the right-to-manage company to take action against delinquent leaseholders, because they do not have the resources or the deep pockets of these freeholders to take legal action and risk being left with large legal bills. I would like to probe that further as well.

Where the right to manage is not exercised, leaseholders must face the prospect of service charges being administered by or on behalf of the freeholder. This is the nub of the matter. I will come to ground rents in a moment; this is a much more important issue. I certainly take the view that freeholders should not make a penny out of service charges. There is no justification for them to do that. I would be perfectly happy if the Bill contained a provision preventing that from happening. I would also be happy if the Bill contained a provision saying that the total revenue to a managing agent was capped at a certain percentage of expenditure. I do not think that it requires, at least in this respect, for a regulator to enforce that. One could simply make such Bills unenforceable in the courts, so that the demand could not be collected.

Where I depart from the Government—and, I think, from nearly all noble Lords who have spoken so far—is on the provisions relating to the retrospective cancellation of ground rents, and indeed of marriage value. I am afraid to say that this is an astonishing proposition from a Conservative Government. As lawyers have said, it clearly threatens to damage the reputation of English law in the eyes of both domestic and foreign investors. It makes a wholly unjustified transfer of wealth from one group of persons to another—an estimated £40 billion being transferred from one pocket to another, with almost no justification involved. It will cause very serious difficulties for pension funds and other good-faith investors. I worry that there will be a tendency in this House not to engage properly with this issue, but to say, “Leave it all to the European Court of Human Rights, because they’re going to sue anyway; let them sort it out”. I think we have to engage with the equity of this issue: with its fairness and justification. I have great difficulties with it.

I come to the question of estate charges. I have not heard until today the expression “fleeceholder charges”; I think we are talking about the same thing. These were brought up with great eloquence by the noble Baroness, Lady Thornhill, and I share her outrage. The reason I mentioned my former membership of the board of the Ebbsfleet Development Corporation is that Ebbsfleet is being developed on this basis. The residents of Ebbsfleet will be paying charges for the maintenance of common utilities—parks, roads, amenities and things like that—which would normally be borne by a council.

I think this is the next great scandal approaching the housing market; I have actually said this in the House before. But I do not think it is the case that one should present this, as the noble Baroness did, as a case of wicked mis-selling by developers, because it is in very large measure attributable to councils that are simply resiling from taking on their duties. They will accept the additional council tax generated by the new properties, but will not take on the responsibilities for maintaining those common amenities. So there are at least two parties involved whose attitude on this needs to be addressed if we are to correct it.

I come finally to two lighter points. First, could we all agree to drop this use of “feudal” as a term of abuse? First of all, not everything about feudalism was bad, despite what the noble Baroness, Lady Finn, may choose to correct me on. But, much more importantly, the law of property in this country was totally reorganised by the Law of Property Act 1925. That made provision for a form of tenure where property was shared and gave it the name “leasehold”. That might be an ancient name—they have got rid of “copyhold” and all the other stuff that existed—but the fact is that leasehold as we know it today is not even 100 years old, let alone medieval. It is the creation of 20th-century law. We should recognise that and stop trying to demonise it by making out that it comes from the Dark Ages.

Finally, and very briefly, although this last point may be thought to stretch the scope of the Bill a little, I shall be making a personal effort at some point to try to persuade the Secretary of State that it is time to amend the building regulations to make starling nest bricks compulsory in new developments.

--- Later in debate ---

[Lord Truscott (Non-Afl)]

My Lords, it is a pleasure to follow the noble Lord, Lord Adonis. I will come to ground rents shortly. I declare an interest as a long-standing leaseholder.

The Bill before your Lordships’ House today is, in my view, profoundly disappointing, as one or two noble Lords have said. As the Secretary of State for Levelling Up, Housing and Communities, Michael Gove, said in the other place, leasehold is a “fundamentally unfair system”, and his aim is the effective destruction of the leasehold system. Leasehold is, in his words, “outdated” and “feudal”, although I know that the noble Lord, Lord Moylan, does not like that word. I agree with the noble Baroness, Lady Finn, that leasehold has no place in the 21st century. The Bill falls a long way short of its objective of the destruction of leasehold, as the noble Baroness, Lady Andrews, also said.

As it stands, the leasehold system is virtually globally unique—in a bad way—to England and Wales. It perpetuates a property market where around 10 million leasehold dwellers are at the mercy of freeholders and associated freehold professionals who sponge off them. Leasehold codifies and preserves, in the modern age, the medieval relationship between the serf and the lord of the manor, because that is historically where leasehold comes from. I agree with the noble Baroness, Lady Finn, on this. As a historian with three degrees in history, I can assure noble Lords that it is quite the historic pedigree. There is a gap between those who own property outright and those who do not. This applies not just to the great estates that still own huge chunks of prime London and other areas but our country as a whole.

The Secretary of State, Mr Gove himself, said in the other place that the Government would destroy the feudal leasehold system:

“We will do so by making sure that we squeeze every possible income stream that freeholders currently use, so that in effect, their capacity to put the squeeze on leaseholders ends”.—[Official Report, Commons, 11/12/23; col. 659.]


The noble Baroness, Lady Thornhill, repeated this. We hear that Mr Gove is having trouble fulfilling the Tories’ election manifesto pledge to reduce all ground rents to peppercorns. The noble Lord, Lord Adonis, referred to this. But Mr Gove is being opposed by the Treasury, Downing Street and freeholder interests. Meanwhile, as noted in the debate, the Competition and Markets Authority has ruled that there is no legal or commercial justification for ground rents. Ground rents provide no service and are purely rent-seeking.

I have very little sympathy for the self-serving arguments of vested interests that want not only to water down the Bill further but to emasculate it completely. The effect of reducing ground rents to peppercorns is exaggerated by the pension industry and freeholder lobby groups. I do not agree with the noble Lord, Lord Moylan, on this point. Some are hiding behind the European Convention on Human Rights and the right to property. The noble Lord, Lord Adonis, referenced this. Apart from this making an excellent case for an opt-out from the ECHR, which I would have thought the noble Lord, Lord Moylan, would welcome, I point out that the rights of leaseholders need protecting too.

We were told that marriage value was to be abolished under the Bill—

[Lord Moylan (Con)]

I have never actually argued that we should withdraw from the European Convention on Human Rights. I have an open mind.

[Lord Truscott (Non-Afl)]

I did not say that at all. I said that I would have thought that the noble Lord would welcome an opt-out from the ECHR on this. If that is not the case, I am happy to accept what he says.

Going back to marriage value, I do not think that marriage value should be replaced with a deferment rate that makes lease extensions even more expensive than they are now, because the deferment rate that the Government are talking about setting is merely marriage value by another name, and it can end up with leaseholders paying even more for lease extensions than they pay now, because it depends on the rate. In my view, His Majesty’s Government should completely abolish the outmoded concept of marriage value based not on what a property is currently valued at but on what a freeholder imagines it may be worth in the future. However, I welcome the Government’s commitment to an online calculator, so at least leaseholders know what the cost of extending their lease might be.

I listened carefully to the Minister’s opening speech, and I hope that she can assure the House that, when the Bill becomes law, it will indeed be cheaper and easier for existing leaseholders to extend their lease or buy their freehold. The greater transparency on charges, including insurance, and the end of the unfair presumption of leaseholders always paying all the landlord’s legal costs is a step forward. As it stands, the system is heavily weighted in favour of the landlord or freeholder. Any legal challenge is fraught with risk, uncertain and extremely costly. Very few leaseholders attempt it. As noble Lords have said, the stories of excessive and padded service charges and extortionate insurance premiums are legion and endemic. These abuses must be brought to an end as soon and as far as humanly possible.

The extension of right to manage in residential blocks is long overdue. I do not accept that mixed residential and commercial blocks cannot be managed by right-to-manage companies, or that investments will dry up as those who live or invest in such blocks are given more say over how they are run.

I regret the absence of the regulation of property management agents, as the noble Lord, Lord Best, has repeatedly raised, or even an insistence that they should be trained and qualified. Property agents can control millions of pounds, and the standards of some of them are unbelievably poor. I know of no other body that manages potentially such large sums of other people’s money that is wholly unregulated. Voluntary codes and redress schemes are not enough.

Commonhold is once again being insufficiently promoted by His Majesty’s Government, as mentioned by the noble Lord, Lord Young of Cookham, and others, including the noble Baroness, Lady Taylor of Stevenage. It may be unpopular with developers but I believe it offers a realistic alternative to the flawed leasehold system.

On forfeiture clauses in leasehold, which a number of noble Lords and the Minister mentioned, although I agree that no one should lose their home for service charge arrears of a few hundred pounds—these can be dealt with by the county court and bailiffs—forfeiture clauses can be a useful deterrent to other breaches of the lease that are otherwise difficult to enforce, such as persistent anti-social behaviour. I look forward to these and other issues being fully debated as the Bill progresses through your Lordships’ House.

Housebuilding

Lord Moylan Excerpts

Wednesday 28th February 2024 Lords Chamber

[Baroness Scott of Bybrook (Con)]

The noble Lord has some interesting ideas in this area, particularly about the large housebuilders, which seem to have controlled the market. That is why we are putting a lot of support into small and medium-sized housebuilders. As for the Oliver Letwin report, we will look at everything once we have got this report and when we start to work on it, and we will be bringing out further information in due course.

[Lord Moylan (Con)]

My Lords, is my noble friend aware that your Lordships’ Built Environment Select Committee has repeatedly found that the cost and arduousness of the planning system is a deterrent to development, particularly for small housebuilders, who have fallen from producing 40% of our homes 20 years ago to merely 10% today? Will she consider the possibility of alleviating the burden of the planning system, particularly for smaller sites, so as to make it possible for smaller housebuilders to survive and thrive?

[Baroness Scott of Bybrook (Con)]

As I have said previously, SMEs play a critical role in housebuilding and in the housing market in this country. Through the Levelling-up and Regeneration Act, we have made changes to the planning system that will support SMEs to build more homes by making the planning process easier to navigate, faster and more predictable. The Government have recently announced policies that will support SME housebuilders, including an expansion of the ENABLE Build guarantee scheme, Homes England’s pilots of SME-only land sales and updating the community infrastructure levy guidance. So we are in the same place as my noble friend and we will be working with this sector very closely in the future.

Levelling-up and Regeneration Bill

Lord Moylan Excerpts

Report stage
Wednesday 13th September 2023 Lords Chamber

My noble friend objected in Committee, saying that the amendment would destroy the funding integrity of the British Standards Institution. However, since Committee, it has emerged that Libraries NI, the largest single library authority in our country, has introduced free online access to a full database of more than 100,000 British, European and international standards. This amendment is infinitely more modest. It seeks free online access only to British standards related to planning, which must represent a small minority of the total made available in Northern Ireland. So, the question arises: if what this amendment seeks has already been accepted in Northern Ireland, why not in the rest of our country? I am all in favour of every opportunity to bring Great Britain into line with the many good things that have been found in Northern Ireland. The Government claim to be keen to promote digital accessibility. Here is an opportunity for them to do so. I beg to move.

[Lord Moylan (Con)]

My Lords, it is a pleasure to speak after my noble friend Lord Lexden. In this case, I am going to speak about a slightly different subject, although he made his own case very well. I will speak principally to Amendment 282N, in my name, but associated with it are Amendments 302A, 315ZA and 317, as consequential and related amendments. They have been referred to as my ULEZ amendments, but I am not really going to speak about the merits or demerits of ULEZ. Instead, I will talk about the knotty issue of relations between the elected Mayor of London and the elected borough councils and how they work together to make the capital a success. There has always been the potential for this to go wrong.

I hope noble Lords will forgive me if I remind them of my experience. I was the deputy leader of a London borough when Ken Livingstone was mayor. I chaired for two years during that period London Councils’ transport and environment committee, a statutory committee representing all London boroughs and the Corporation of the City of London, irrespective of party, in their relations with the mayor and Transport for London. Then, a little like a poacher turning gamekeeper—or the other way around—I was a member of the board of Transport for London for eight years and deputy chairman of Transport for London for about half that time.

I have therefore seen those relations operating in practice over a lengthy period. It is fair to say that, under the independent and then Labour mayor Ken Livingstone, they were quite often rather scratchy. They improved considerably when Boris Johnson became mayor. I would like to think—if noble Lords would allow me to be a little boastful—that that was because of the number of people working with him who had experience of local government, such as myself, my noble friend Lady O’Neill of Bexley, who is sitting here, my noble friend Lord Greenhalgh, who is not in his place, and others. There was a much more collaborative relationship.

Under the current incumbent, that collaborative relationship has continued in many respects. This is to be welcomed. For example, the boroughs and the mayor have worked together closely on active travel programmes and various other matters. However, it is clear that, in the case of the extension of the London ultra low emission zone, they have collapsed. What we have are two levels of government, each convinced of their democratic authority, locking horns and threatening a sort of paralysis in transport policy. This could also extend to other areas.

What exists in other parts of the country? In London, the Greater London Authority Act 1999 gives powers in relation to road user charging to the mayor to act without being trammelled in any way by the views of the boroughs, beyond the consultation he is required to conduct with them. When we look to other parts of the country, we see that different legislation applies— Part III of the Transport Act 2000, for those who are interested. In the combined authority areas, these powers are held jointly by the combined authority and the relevant constituent authorities, acting as local traffic authorities. Decisions on road user charging in these areas typically require the majority or unanimous consent of members before any scheme can be established.

In the case of the Greater Manchester Combined Authority, the constitution is explicit in stating that questions relating to road user charging require all 11 members of the combined authority to be unanimously in favour for any vote to be carried. In the West Midlands Combined Authority, changes to transport matters require either a simple majority or a unanimous vote, depending on the question to be decided and on the members entitled to vote. In neither of these cases could road user charging be introduced without the collaboration and assent of the constituent authorities. It is rather different from London.

I instance these points to say that in this country we can embrace a different pattern of the distribution of power. The essence of my amendment is simply to try to extend, in a small way, some of the co-responsibility that exists in Manchester and Birmingham to the arrangements in London. It seeks to rebalance this by bringing the decision-making in London more into line with what exists in the rest of the country.

The amendment would give London borough councils a new power to opt out from—but not veto—certain road user charging schemes in future. First, it would be operative only where the principal purpose of a road user charging scheme applying in the council’s area is the improvement of air quality. Secondly, it would be available only to London borough councils which already meet air quality standards and objectives under the Environment Act 1995—I say in parenthesis that, currently, no London borough meets those standards—or have an approved plan to do so that is an alternative to the plan advanced by the mayor to be achieved through road user charging.

There is no free ticket here for London boroughs away from their responsibilities for air quality. Where the council can show to the satisfaction of the Secretary of State that it has a plan which is likely to achieve and maintain improvements, the Secretary of State would be under a new duty to approve its alternative plan, thus making it eligible to opt out of certain TFL charging schemes.

The combined effect of these various conditions will be that there will be no impairment of the air-quality obligations falling on London boroughs, but there will be the opportunity to show that they can meet them in a way that is more acceptable to their local people, as they judge them on the basis of their democratic mandate. I think that would be a modest and sensible rebalancing of power. It is focused, it is proportionate, and it is good common sense.

I see that my noble friend the Minister has indicated her support for the amendment, and the associated other amendments, and I very much hope that they will find favour across your Lordships’ House.

[Baroness O’Neill of Bexley (Con)]

My Lords, I support my noble friend’s Amendment 282N. In opening, I remind the House that I am the leader of the London Borough of Bexley and am therefore involved in both London Councils and the Local Government Association—although I have not quite made the dizzying heights of being a VP of the Local Government Association, like many Members of this Chamber.

It is important to point out at the outset that I firmly believe in improving air quality, having seen the benefits of improved air quality myself. My parents used to live in Lewisham, and my father suffered from chest problems for years, but that all changed when he moved to Bexley—and not just because it has a good council. As council leader, I am proud to report that, in Bexley, we have good air quality, below the legal limits, and we are always looking at ways to improve that air quality. But we fundamentally believe that the expansion of ULEZ to outer-London, and the way it has been done, is undemocratic.

If this amendment had been in place before, the mayor would not have been able to ignore local views, to fail to engage constructively with the boroughs or to have brought it forward in such a quick way that has had a disastrous impact on many of our residents. He also would not have contradicted the statement he made two years ago that he was not going to expand ULEZ. This amendment highlights a way to protect democracy for those in London going forward.

Local councils understand their locations and their residents—I know many Members here have connections. Bexley, like most other outer-London boroughs, is very different from central or inner-London. That is why my borough, like others, has campaigned against the Mayor of London’s insistence on extending ULEZ to the borders of London. We are very conscious of the need to continually look to improve air quality locally, and we take measures to do so, but our lack of transport connectivity—we are one of the few London boroughs without the Tube—makes us heavily reliant on the car. Many of our small businesses and trades men and women depend on vans. Many invested in the diesel vehicles they were told a decade ago were greener and cleaner but now face the ULEZ charge.

One of those measures is lobbying to improve public transport. You would hope that, when the opportunity arises, the mayor and TfL would seek to help, but in neither of the recent proposals for the Superloop or the DLR extension to Thamesmead did they even identify the need to improve the transport infrastructure in our part of the borough.

We have some of the poorest wards in London, and the residents in those wards are more likely to be those with non-compliant cars. Those cars are vitally important to allow residents to fulfil their employment, as well as look after their families. Cars, some on finance arrangements, have become worthless overnight. I have heard of many people taking out loans to replace them, the scrappage scheme not being relevant, or indeed having to revert to leasing rather than owning a car to allow them to get about.

In common with other outer-London boroughs, we also have a high number of older residents, and their cars give them independence to visit their family and friends, get their weekly shopping and attend medical appointments, among other things. How often do we all hear about people buying their last car? In the last few months, the communications I have received have included some revolving around people having to draw down their life savings to replace a car they had no intention of replacing.

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[Baroness Jones of Whitchurch (Lab)]

My Lords, I declare an interest as a member of the South Downs National Park Authority, which is a major planning authority. I am speaking to Amendment 247, to which I have added my name, and the three amendments in the name of the noble Duke, the Duke of Wellington, to which I have also added my name.

The noble Baroness, Lady Willis, has set out with great clarity the rather modest intention of our original Amendment 247, which was to underpin the delivery of nutrient neutrality measures, which are necessary to halt the catastrophic damage to some of our most protected wetland sites. Since then, of course, the Government have tabled a raft of amendments that would have the opposite effect to that which we were seeking to achieve in our original amendment. That Government package goes against many of the fundamental principles of environmental protection to which we agreed during our consideration of the Environment Act.

We have heard reference to the letters from the chair of the Office for Environmental Protection, Glenys Stacey, who has made it clear that the government amendments amount to a regression in law. In the meeting that the noble Baroness, Lady Scott, had with Peers this week, she said that that judgment by the OEP was wrong as it had not considered all the factors. That is a serious allegation to make, and I would be grateful if the Minister could update the House on how these differences of opinion between the Government and the independent regulator, the OEP, are being addressed.

Our Amendments 247YYAA, 247YYAB and 247YYAC address the heart of our concerns about the Government’s proposals. First, as the noble Duke, the Duke of Wellington, has said, they place an intolerable requirement on public bodies to ignore the evidence of water pollution in plain sight and pretend that it does not exist. In fact, I am surprised that these late amendments were not sent back to the lawyers due to defective drafting; as has been said, they now require public bodies to look both ways at once, facing different requirements in different legislation. As Matthew Parris said in his recent Times article, under the government proposals,

“when considering an application to build, the authorities must assume that what poisons rivers does not poison rivers”.

This is madness. Planning authorities currently have a responsibility to take all material considerations into account, including the need for more housing and for environmental protections. The government proposals will undermine our evidence-based planning system and set a dangerous precedent.

Secondly, it is being argued that these measures are necessary to unlock housebuilding. I listened to the noble Lord, Lord Best, and normally I agree with him on so much, but I felt that his contribution was rather intemperate and had obviously been swayed by some of the so-called evidence given to his committee. I wish that, as he said, the committee had heard evidence from the noble Baroness, Lady Willis, before it made its decisions on this issue, because delays in securing planning permission are not the biggest barrier—it is the inability of developers to build out schemes that have already been approved. We all know the statistics about how much is already in train but has not been developed.

The further uncertainty caused by the government amendments may mean that fewer houses, not more, will be built. Because the legislation is not retrospective, there will be tens of thousands of homes across the country for which consent has already been given, with nutrient provisions in place, but on which the developers have not yet begun. So planning departments will need to enforce the nutrient provisions in relation to those consented developments, leading to a two-tier system that will last for many years.

Thirdly, as Natural England has confirmed, it is perfectly possible to address the balance between the habitat regulations and housebuilders through non-legislative means. There are already a number of well-established schemes that do this, adopting a more strategic approach to the nutrient migration scheme. The Government and the noble Lord, Lord Best, have suggested that everything has come to a halt. This is simply not the case. Housebuilding is still happening, and people are working with Natural England to make sure it is being done in an environmentally sensitive way.

Finally, these proposals will be a major blow to the rollout of the green finance system, which is necessary to support nature recovery. For example, in the South Downs we estimate that we have about 4,000 hectares of nutrient neutrality offset land in the Test, Itchen and Solent catchment areas alone. That represents around £400 million of potential income to landowners and farmers to support economic opportunities and help with the agricultural transition, while also supporting nature recovery.

Without nutrient neutrality offsetting, the Government have no hope of reaching their private finance targets in the environmental improvement plan of £500 million every year by 2027—so it is a lose-lose situation. I urge noble Lords to reject these ill thought out plans and find a consensual way to deliver a housebuilding programme that enhances, rather than wrecks, our water quality.

[Lord Moylan (Con)]

My Lords, I am grateful to speak, in part in my capacity as chairman of your Lordships’ Built Environment Select Committee, to which the noble Lord, Lord Best, referred. I should explain that we have, perhaps coincidentally, spent the last six months taking evidence—not “so-called evidence” but actual evidence—on precisely this topic. The subject of our inquiry has been the interaction between environmental regulations and development. Inevitably, the question of nutrient neutrality has occupied an important place, because it is so important and live. The noble Lord, Lord Best, has explained that the report is not yet published; it is practically at the printer, and we hope it will appear next week, so we are not in a position today to quote from it. However, I see a number of members of the committee in the Chamber and I hope that they will speak, because we have been very struck by what we have found.

A great deal of what we found was explained by the noble Lord, Lord Best, and I do not propose to repeat all of that. I will speak more briefly, but I would like to draw attention to one conclusion we reached without any dissent. When new environmental legislation is introduced, which is well thought out, consulted on and given adequate time for implementation, it is normally absorbed, adopted and implemented by the housebuilding industry with no disruption or difficulty. That is the right way for us to make environmental legislation; it is what we normally do. However, in this case, that is not what has happened at all.

The root of the problem is a European Court of Justice decision in 2018 in a case related to Dutch farming—which, as we all know, is probably the most intense farming in the world—and the consequences it had in the Netherlands for run-off into watercourses. That judgment created a more restrictive interpretation of existing habitat regulations than had been agreed and understood before. Because we were still part of the European Union—I shall not go into the European consequences of this—Natural England rightly understood that this judgment had an effect in England as well. So it took legal advice on what consequences it had.

It then went off and discussed it with Defra, and Defra look legal advice. I have not seen that advice, but it appears to have concurred with the advice obtained by Natural England. Our committee still does not quite understand why Defra insisted at that stage that nobody should be allowed to discuss this, and that it all had to be kept very secret between Defra and Natural England. The result was that when it announced the consequences of that new decision, as it understood them, there was no warning whatever. There was none of the normal consensus, building of consultation, buying in, or time for implementation. All of a sudden, it appeared in a number of catchment areas covering, I believe, approximately 14% of the land area of England. It is absolutely true that it has not stopped housebuilding in every part of England but, in effect, overnight there was a moratorium in roughly 14% of the land area of England even on the completion of sites that already had planning permission. This is utterly disruptive and completely unplanned and, in my view, evidence and argument for treating this particular circumstance as a special case. The Government need to take steps to sort this out, untangle ourselves and make a plan that allows us to deliver all our housebuilding and environmental objectives over time.

Levelling-up and Regeneration Bill

Lord Moylan Excerpts

Committee stage
Monday 22nd May 2023 Lords Chamber

I take that as a green light to assist councils to move these hazards off the pavement. I urge all disabled people to get a bit more militant and reclaim our pavements, in the same way that I urge motorists to reclaim our roads from the Just Stop Oil agitators. We do not glue ourselves to the road and we want the freedom to move. Wheelchair-bound people cannot get into 70,000 public buildings, which have not bothered installing ramps, and the equalities department, obsessed with gender, does not give a hang about it and will not change the law. Now we find the pavements barred to us as well, so let us take them back for genuine pedestrian users who have the right to move freely, unhindered by street furniture and mobile death hazards. Once again, I congratulate my noble friend on tabling his amendments, the noble Baroness opposite on speaking on her amendments, and everyone in this House who speaks up for disabled people.

[Lord Moylan (Con)]

My Lords, it is normal to say what a pleasure it is to speak after a previous speaker, but it is impossible to speak after my noble friend and provoke as much of the Committee’s interest as he has.

I will speak in support of the amendments in the name of my noble friend Lord Holmes of Richmond to which I have added my name, and I do so on the basis of too many years spent on a local authority, much of it responsible for administering legislation that relates to the management of our highways. Much of that legislation dates to the 1980s, but one of the duties in it goes back to the Middle Ages and really to the beginning of having local authorities at all: that is the obligation on the local authority to keep the King’s highway clear. The reason for that is simple: if you operate commercial premises and are a frontager on the highway, you are very attracted by the prospect of trading from that highway, because you can expand your premises rent-free. That makes a great deal of sense commercially.

For centuries, it has been the sad task of local authorities to try to push back people who are trying to trade on the public highway because—here I make two points—the public highway is, first of all, a public asset. It is maintained at public expense primarily for the benefit of the public and not for the private use of frontagers. Secondly, my noble friend Lord Holmes referred to the purpose of the highway, but he was not quite as precise as I would have liked. There is a precise understanding in law of the purpose of the highway—that it allows people to go to and fro. Any use of the public highway for the purpose of trading—in this case we are discussing trading in front of refreshment businesses, restaurants and cafés, but the same applies to shopkeepers—can exist only as a concession by the local authority. In my experience, this is generally a contentious matter with local people and one should be very cautious about granting such licences.

All such caution was thrown to the wind as a result of the Covid pandemic. The Government switched from a carefully balanced system, where local authorities which understood their communities had a clear say in the matter and knew from experience how to balance various demands, to one in which the advantage was given heavily in favour of the commercial frontager, who has the right to do this. The Bill, in effect, seeks to make that even more expansive and practically to continue it permanently. I think this is a dangerous thing to do. It is and should very much be a matter for local authorities, which understand their local communities. The balance should be adjusted back to where it was before—more on the neutral part of the scales rather than heavily weighted, as it is now.

What harms arise? First, it is impossible for me to add to the harms that arise to people with various disabilities, about which we have heard. I cannot and do not intend to add anything to what my noble friends Lord Holmes and Lord Blencathra said from their own experience, but there are other harms as well. To some extent, they arise from the conceptual model that arises when we talk about “the high street”. We talk about the high street as if it were a distinct thing or use but, in most urban areas, if you lift your eyes above the gaudy shopfront, you will see lots of other things happening in the high street above ground, many of which are people living there. If you are overlooking a pavement and there are licences that allow people out on the pavement, you will suffer a harm directly in relation to that.

Some harms are quite acceptable. If the closing hours and hours of operation are sensible, perhaps you can live with that. You want to get on with your neighbours and do not want local businesses to fail, but you are entirely dependent on the licensing regime and the attitude of local councillors as to what hours should be allowed. You are also exposed to poor management and exposed, outside your window—here I speak from a degree of experience—to people talking loudly and having parties, some of which are louder than others. It is impossible to expect any management to control that properly; they simply cannot go around doing that. However well intentioned, they have to work with noisy and difficult people.

We need to get back to understanding what the highway is for, what a public asset is, paid for at public expense, and what its primary purpose is. We need to understand that local authorities are probably the best determinants of this and we need to reset the dial, so that they have the chance to do that.

I cannot sit down without referring to the amendment in the name of my noble friend Lord Young of Cookham. No chance goes by in your Lordships’ House for him to propose something restrictive of smoking without him dashing at it very much like a ferret up a trouser leg. Here we are again with yet another restrictive amendment proposed on smoking, and it is purely vindictive and entirely punitive. He endeavours to put a gloss of public interest on it, and maybe he thinks he is contributing to people giving up smoking. I gave up smoking last year and I assure your Lordships that at no point in my consideration did the possibility of being denied access to a pavement café arise, nor would I have given it any weight had it come into my mind. There were other reasons why I gave up smoking last year.

One of the problems with these vindictive approaches is that the people who make them simply do not understand smokers. The noble Baroness, Lady Jones of Moulsecoomb, who I think said that she “loathed smoking”, possibly does not want to understand them; she just wants to give vent to the loathing. I do not know. My noble friend offered a few other reasons. The first was generosity in favour of the business success of the premises. He said that they would be much happier, attract more business and be family friendly. I do not think that that is sufficient reason to impose restrictions on a lawful activity, because it is not the business of this House to make businesses successful. That is their job: we set a framework and they try to make the businesses successful. That is not our motivation nor should it be, in my view.

I very much hope that the Minister who, in the course of this Committee, has developed a great deftness at turning away suggestions made by Members of your Lordships’ House, maintains that deftness in respect of this amendment and finds a way of saying that this is not an appropriate place for the Government to pursue yet more vindictive legislation against smokers.

[Baroness Jones of Moulsecoomb (GP)]

I did not say that I loathe smokers—both my parents were smokers. I loathe smoking because of the impact it had on my parents, both of whom died from smoking-related disease.

[Lord Moylan (Con)]

I did say—and I think Hansard will show—that the noble Baroness said she loathed smoking. I was careful not to say that she loathed smokers. I hope she did not mishear that, because it would have been a mishearing.

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Moved by

[Lord Moylan]

472: After Clause 214, insert the following new Clause—
“Duty to consult on the licensing of hackney carriages and private hire vehicles(1) The Secretary of State must consult such persons as the Secretary of State considers appropriate about the merits of amending Part 2 of the Local Government (Miscellaneous Provisions) Act 1976 (hackney carriages and private hire vehicles) such that only upper-tier authorities in England, outside of Greater London and the City of Plymouth, would become permitted to grant licences to—(a) hackney carriages,(b) drivers of hackney carriages,(c) private hire vehicles,(d) drivers of private hire vehicles, or(e) operators of private hire vehicles.(2) In this section—“upper-tier authority” means—(a) a unitary authority, or(b) a combined authority;“unitary authority” has the meaning given in regulation 2(3) of the Local Government Changes for England Regulations 1994 (S.I. 1994/867);“combined authority” means a combined authority established under section 103 of the Local Democracy, Economic Development and Construction Act 2009.”Member's explanatory statement
This new Clause would require the Secretary of State to consult within a reasonable timeframe on the proposal of the Government within its Levelling Up White Paper of February 2022 "...to explore transferring control of taxi and private hire vehicle licensing to both combined authorities and upper-tier authorities”.

[Lord Moylan (Con)]

My Lords, Amendment 472 stands in my name. On another occasion, I am sure that this amendment would attract a wide-ranging debate, but I will understand if there are few speakers this evening and I will be satisfied with a short answer from my noble friend, as I intend to explain. This amendment is to probe where His Majesty’s Government are on a proposal in the levelling up White Paper that the licensing of private hire vehicles and taxis be carried out by upper-tier or combined authorities, rather than by district authorities as now.

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[Earl Howe (Con)]

My Lords, the amendment in the name of my noble friend Lord Moylan would require the Secretary of State to consult on the proposal in the levelling up White Paper

“to explore transferring control of taxi and private hire vehicle licensing to both combined authorities and upper-tier authorities”.

I reassure my noble friend that the Department for Transport plans to engage stakeholders on the proposal set out in the levelling up White Paper to explore transferring the responsibility for licensing taxis and private hire vehicles to upper-tier and combined authorities. The aim is to do so during the course of this year. Clearly, as my noble friend will understand, it is essential that the proposal is considered in detail before any decisions are taken about whether to proceed with the change. I am sure that the issues highlighted by the noble Baroness, Lady Taylor, can be picked up in that engagement process. My colleagues at the Department for Transport reassure me that they are currently working on this, so I hope that that, in turn, reassures my noble friend Lord Moylan sufficiently to enable him to withdraw his amendment.

[Lord Moylan (Con)]

My Lords, I was somewhat taken aback by the vehemence of the noble Baroness, Lady Taylor of Stevenage, who was speaking almost as if I were suggesting that this power be transferred from local authority to some remote Whitehall bureaucracy and administered by statutory instrument in a way displeasing to your Lordships’ House. We are both committed to local government; it is simply a question of which tier of local government, where more than one exists, is the appropriate authority for doing this.

None the less, I am delighted to hear what my noble friend the Minister said; he offered me the assurances I wanted to hear. The discussions, consultations and engagement will proceed, and he has given a timeline. I have achieved as much as I had hoped to achieve in the course of this debate, and I beg leave to withdraw my amendment.

Amendment 472 withdrawn.