Chancel Repairs

Lord Kennedy of Southwark Excerpts

Thursday 15th January 2015 Grand Committee

[Lord Kennedy of Southwark (Lab)]

My Lords, like other noble Lords who have spoken, I thank the noble Lord, Lord Avebury, for tabling this Question for Short Debate today. It is a most timely discussion.

As we have heard, chancel repair liability derives from the disposal of church lands following the Reformation. Previously, the rector had the obligation for the repair and upkeep of the church and was able to raise sums of money—tithes—from parishioners. After the Reformation, much church land was passed to lay landowners but the liability for upkeep remained, and this is the problem in effect. The lay landowner with the liability to pay for chancel repairs has no means to cover the costs.

Some progress has been made to deal with this anomaly, most recently in 2003 when the then Labour Government changed the law, as other noble Lords have mentioned, so that after 13 October 2013, where interest has not been noted at the Land Registry, any purchaser of land to which the liability previously attached will not be subject to it, although the current owners in such cases would remain liable. That is some progress but we need to go much further.

We are fortunate in this country to have beautiful buildings of all ages and types. They tell the story of our history and they should be preserved. Our system of listing buildings helps protect them. I note that the Church of England is responsible for maintaining 45% of the grade 1 listed buildings in the country and that the majority of all parish churches are grade 2 or higher. The right reverend Prelate the Bishop of Derby made reference to this obligation. We have to find another way to fund the upkeep of these buildings and phase out the chancel repair liability, particularly for individuals.

Looking at the Wallbank case, referred to by the noble Lord, Lord Avebury, which went all the way to your Lordships’ House—which found against the Wallbanks and left them with a repair bill that amounted to £250,000 including VAT, and legal fees of £200,000—you can have every sympathy with individuals who find chancel repair liability claims served on them, and it illustrates how unsatisfactory the present position is. The case established that chancel repair liability, although ancient, is an enforceable part of the land law of England and Wales, whereby property owners can be compelled to pay for the repairs to the chancel of a church.

The noble Lord, Lord Avebury, introduced a Private Member’s Bill into the House of Lords on 14 July 2014, the effect of which, on becoming law, would be to abolish the liability on lay rectors for chancel repair. With so few days left in this Parliament before it is dissolved at the end of March, I do not think the Bill is going to make much progress, as the noble Lord himself suggested. What the Bill is proposing to do goes in the right direction, but for it to make real progress in the next Parliament there also have to be provisions to identify replacement funding, and that is where the Government come in.

Responding to a debate in the other place on 17 October 2012, Helen Grant did not offer much comfort and generally took the line that the provisions in place as a result of the 2002 Act have achieved a “better balance” and that the Government were not “persuaded” of the need for change. I contend that the Government need to move on from that position and try to find a lasting solution. Not to do so would continue to make certain properties unsaleable, bringing blight and distress to people, and that cannot be right.

I hope that the noble Lord, Lord Ashton of Hyde, when he responds to the debate, will be able to give a commitment that the Government recognise that there is a real issue here that needs to be addressed; that abolishing the liability in its entirety or at least for private individuals is long overdue; and that they will work with the noble Lord, Lord Avebury, and the Church of England to enable him to bring forward another Bill early in the next Parliament that resolves this question finally and provides a mechanism for replacement funding to be identified. That could just be the Government ensuring that, when the liability is removed, the Church of England will be able to apply for other funding streams. If the Government committed to working with the noble Lord, Lord Avebury, and the Church of England in a similar way to that in which they have worked with the noble Lord, Lord Naseby, on the Mutuals’ Deferred Shares Bill, they could make much progress here, which would be to their credit.

The noble Lord, Lord Ashton of Hyde, has heard the right reverend Prelate the Bishop of Derby say that the Church of England wants to get rid of the chancel repair liability. I therefore hope that he will take up my suggestion and work to resolve this, and not just tell the Grand Committee that the Government are going to keep the matter under review, because we all know what that means—that the Government are going to do nothing at all about it, which is not acceptable in this case.

[Lord Ashton of Hyde (Con)]

My Lords, I am grateful to my noble friend Lord Avebury for raising the issue of chancel repair liability for debate today. I am also grateful for the interesting contributions of other noble Lords who have spoken. I feel, in some ways, that the right reverend Prelate should be here, I will not say in the dock, but here with me to answer some of the speeches, which were all on the theme of changing the present situation. I listened carefully to the concerns expressed about chancel repair liability and I am sure that the Ministry of Justice will consider them in detail, but I must make clear—I trust that this will not come as too much of a shock to noble Lords, except, perhaps, to the noble Lord, Lord Kennedy—that the Government have no plans to change the law at present. None the less, it is because we take the concerns seriously that we are keeping the situation under review.

I do not have time to go through the long history of chancel repair liability. In fact, my noble friend Lord Avebury has dealt with that admirably, as have other noble Lords. The Law Commission has considered the liability a number of times since the 1960s. The present legal position is that chancel repair liability is an ancient but valid right that enables the owner, who, in England, is usually the PCC, to enforce the liability. This right can play an important part in the finances of the 5,000 or so churches with the benefit of the liability. In earlier times, the main problem was that the liability was sometimes difficult, if not impossible, for a prospective buyer to discover. Now, following the removal of its status as an overriding interest in October 2013, its existence is readily discoverable. This is a major improvement, as my noble friend Lady Wilcox said.

On the other hand, the unpredictability of the incidence of the liability, its open-ended size and particularly its joint and several nature, mentioned by the noble Lords, Lord Cashman and Lord Rooker, still attract criticism. It is, however, unclear how far these potential problems are causing widespread real difficulties in practice. The Ministry of Justice’s impression is that enforcement, now and for some time past, against ordinary homeowners is rare. This may be a consequence of the relatively small number of chancels, probably about 500 to 600, where the liability falls on individual property owners. It may also be because PCCs are reluctant to enforce the liability. Their wider mission may, perhaps, not be best served by imposing financial hardship on individual members of the local community. That is, however, a decision for individual PCCs, who can get advice from the church and the Charity Commission, as well as their own legal advice.

Under Section 110 of the Charities Act 2011, trustees can get reassurance from the Charity Commission that they are acting in accordance with their duties. It may also be that the level of concern about the liability has been temporarily increased by the registration. My noble friend Lady Wilcox asked how many ordinary householders are affected by this liability. We do not have the statistics indicating how many ordinary householders are affected, but the Land Registry has received about 9,000 applications for registration of notices and 160 applications for the registration of a caution against first registration. What we can be sure about is that there are enough people who may be affected to take this subject seriously.

The Government appreciate that homeowners who were unaware that their home was subject to the liability may well have been worried by the notice. The speech by the noble Lord, Lord Rooker, reminded us of the effects to real people, not just in theory, but the reality is that their legal position has not changed. The fears that were expressed leading up to the deadline of October 2013 that the registration of a notice can render a property unsaleable or unmortgageable do not seem to have materialised, nor does the market in chancel repair liability insurance seem to have disappeared. That is not to say that chancel repair liability cannot or will not cause major problems for some homeowners, but at present it is not clear that that liability is doing so in practice.

Even if reform is necessary, it may not be straightforward, as the right reverend Prelate made clear in a very measured speech. Abolition, as advocated by the noble Lords, Lord Avebury, Lord Cashman, Lord Rooker and others, would almost certainly require compensation to be paid because chancel repair liability is a property right protected by the Human Rights Act, as confirmed by the House of Lords. The sums involved in aggregate might run to hundreds of millions of pounds. The right reverend Prelate suggested that compensation is the way to abolition but he did not mention by whom. The noble Lord, Lord Kennedy of Southwark, said that that is where the Government come in.

Schemes for release, redemption or compounding might be created or present ones, as outlined in the Ecclesiastical Dilapidations Measure 1923, improved, but their cost and attractiveness to prospective users would have to be considered carefully. The noble Earl, Lord Lytton, mentioned some of the difficulties in estimating a compounded amount, taking into account the net present value for an unlimited liability stretching forever. What discount rate, for example, would one use, taking into account the average interest rate across all years forever?

I know that my noble friend Lord Avebury and other noble Lords will be disappointed that the Government are not developing any proposals for reform at present but I assure noble Lords that the Ministry of Justice will consider evidence of actual hardship or general problems that the law may cause and will keep the situation under review.

[Lord Kennedy of Southwark]

Having heard the contributions of noble Lords, in particular from the right reverend Prelate the Bishop of Derby, that is a most disappointing response from the Government and makes no attempt to deal with the issue.

[Lord Ashton of Hyde]

The problem is that nobody has come up with a simple way of how to do it, except by providing compensation, because it is a property right under the Human Rights Act. The issue is: who provides compensation to the people who own the right? We have decided that there is no necessity to do that when there is no actual example of hardship taking place at the moment. The reason that I said that we will keep it under review is that if there is evidence of actual hardship taking place, we will consider this measure.

--- Later in debate ---

[Lord Kennedy of Southwark]

Is it not possible for the Minister to say today that he would welcome discussions between his officials, the noble Lord, Lord Avebury, and the Church of England? If this could be resolved, everyone would be happier. I do not see why he cannot even offer that to the Committee.

[Lord Ashton of Hyde]

I did indicate that when it comes to dealing with the church and the National Secular Society, we would take part in discussions if required. I also made clear that if there was evidence of hardship, the Ministry of Justice would consider it. I do not think that that is unreasonable in the absence of any actual evidence of hardship at the moment. If there is evidence of hardship, we will discuss it, and of course we are always willing to talk to the noble Lord, Lord Avebury, or any other noble Lords at any time.