House of Commons Hansard Debates for 14 Jul 1995

Mr. Alistair Darling (Edinburgh, Central): We support the Bill and the amendments and I am grateful to the hon. Member for Blackpool, South (Mr. Hawkins) for having set out the background and drawn our attention to many interesting points to which the Minister will no doubt reply and on which I see no need to comment.

It would also be right to draw the attention of the House to the efforts of the hon. Member for Hertfordshire, North (Mr. Heald). As those of us who have engaged in the lottery of the private Member's Bill procedure to introduce legislation that has all-party support know, it takes a lot of time. It is remarkable how Bills that have all-party support tend to be held up much more than those that are contentious. The hon. Gentleman deserves credit and his efforts have clearly been noted by the Whips and his leader as he has been promoted to greater things.

11.15 am

We should also be grateful to the other place, which, as we have come to expect, has amended and improved

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the Bill. It is worth reflecting on the fact that many private Member's Bills are substantially improved and tightened up in the other place, which deserves credit for that.

I raised the need for such a provision during the passage of the 1993 Finance Bill. Although I am sorry that the Government were not able to find Government time for the legislation, we now have a measure which will hopefully receive Royal Assent shortly and which, as the hon. Member for Surrey, East (Mr. Ainsworth) said, will greatly benefit the insurance industry, particularly as it finds itself in increasing competition with insurance companies based in other parts of the European Union. Most other member states have such provisions, which gives them a competitive advantage.

There is no doubt, either in the industry or in the House, that this measure is a great advantage to the industry. All of us want the United Kingdom insurance industry to compete well within the EU and other parts of the world, which it is doing. Other measures will, of course, be necessary to help, but the Bill is very welcome. I have two questions of which I gave the Minister some prior notice at least an hour or so ago and I will put them on record so that I can get a Government response. I appreciate that the Minister represents the Department of Trade and Industry rather than the Treasury, but I think that I may properly ask him when the Government will say whether tax relief is to be given or what measure of it is to be given to the reserve funds. One of his colleagues in the other place said that the Government would at some stage indicate its tax policy and reference was made to a statement by the former Financial Secretary to the Treasury, who said that the Government were considering tax relief for an acceptable scheme. It might be helpful if the Minister told us what stage those considerations have reached. I appreciate the fact that that may properly be a matter for the Chancellor's budget statement, but it would help the industry and the House if the Minister said how far the Inland Revenue has got. To some extent, the question of tax relief begs the question as to what the regulations will be. Without that detail it is difficult to see on what basis there would be tax relief. One point that is worth drawing out is that, when the matter was first raised and a former Financial Secretary to the Treasury--now Secretary of State for Health-- made a statement of the Government's intent, it was said that the matter was to be tax-neutral. Perhaps the Minister can confirm that that is the case, if he is in a position to do so.

Another obvious question is, where have we got with the regulations to be made under the Bill? The DTI has produced a consultation paper, to which the industry and others have no doubt been responding. For the Bill to work there must be regulations and it is in the interests of all concerned that those regulations are brought before the House at the earliest opportunity. I saw in the DTI consultation paper that it was thought that those regulations would come into effect in December 1995. Given that the House is about to rise for the long summer recess and will not return until the middle of October, time is getting tight. So I assume that the regulations are at an advanced stage or that those in the DTI and possibly the Treasury will work throughout the summer to lay the regulations before the House when we return. Although that is conceivable, will the Minister let us know the position?

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It would be helpful if the Minister gave a specific response on those two matters. He may also wish to respond to the other matters that have been raised but I do not intend to refer to them because that would be unnecessarily repetitive, among other things. I conclude by reaffirming our support for this measure. I hope that it will receive Royal Assent at the earliest opportunity, which will be of great benefit not just to the insurance industry and all those who work in it but to the country as a whole.

The Parliamentary Under-Secretary of State for Corporate and Consumer Affairs (Mr. Jonathan Evans): First, I thank the hon. Member for Edinburgh, Central (Mr. Darling) for his remarks. He is absolutely right to say that in 1993 he first identified the demand on the part of the British insurance industry for equalisation reserves to be granted tax relief, not least to help our insurance companies in the non-life sector to compete with companies on the continent, which are currently given tax relief.

I was grateful for the remarks made by the hon. Member for Middlesbrough (Mr. Bell), who led for the Opposition when the Bill was considered on Second Reading. I should also express a measure of sympathy with the hon. Members for Edinburgh, Central and for Middlesbrough, in that, although they both understood the Bill's importance for the British insurance industry and the fact that it had wide all-party support in the House, they and my hon. Friend the Member for Hertfordshire, North (Mr. Heald), now Under-Secretary of State for Social Security, went through the difficulty of trying to persuade some hon. Members in the new Labour party of the importance of this measure.

Mr. Peter Ainsworth: I was present during the Second Reading debate armed with what I regarded as a finely honed speech, which was never delivered because sadly some Opposition Members were determined to be so voluble as to impede the Bill's progress. I remind my hon. Friend that the hon. Member for Bolsover (Mr. Skinner) said that the Bill

"is all about arranging things in favour of the bosses of the insurance companies so that they can get increased directors' pay and all the rest of it."--[ Official Report , 27 January 1995; Vol. 253, c. 651.]

My hon. Friend might like to comment on that assertion.

Mr. Evans: I do not intend to detain the House with too much comment in that direction because in a way it would be unfair to the hon. Member for Edinburgh, Central, who has always supported this measure. Although the Bill has had widespread all-party support, I recognise that there have been difficulties and I am grateful to the hon. Gentleman for the efforts that he, at least, has made to persuade those in his party of the merits of the argument. He knew that the Bill was of great importance to the insurance industry.

Mr. Darling: I am grateful to the Minister for his kind comments and for letting me intervene. As people outside the House follow our proceedings, I should draw attention to the fact that part of the difficulty in relation to this Bill and others was that it was caught up in the controversy about the Civil Rights (Disabled Persons) Bill, which I note has been set down for today's business. That fact, and everything that the public and the House know about how the Government dealt with that Bill, led to unfortunate delays on this measure and others. With due

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respect to the Minister, it might be an idea to get on with discussing this Bill rather than engaging in a political dogfight, which I am happy to have but which would not be particularly productive on a day such as this.

Mr. Evans: I had intended to move on with the Bill in hand. The only thing that prevented me from doing so was my generosity in giving way to the hon. Gentleman.

I am grateful to those hon. Members who expressed their thanks to my hon. Friend the Member for Hertfordshire, North for introducing this measure in the first place. At this stage, he cannot take the proceedings further because of his well deserved appointment to ministerial office, but we all recognise the efforts that he made in carrying the measure through. I thank my hon. Friend the Member for Blackpool, South (Mr. Hawkins) for taking on the Bill at this relatively late stage in the proceedings. I also thank the noble Earl Northesk, who demonstrated great competence and clarity when he presented the Bill in another place.

My hon. Friend the Member for Blackpool, South has mastered the details of the Bill quickly and presented the Lords amendments before the House skilfully and persuasively. They are technical matters but they are also very important. This debate has been valuable and thoughtful. I join those hon. Members who have welcomed my hon. Friend's efforts and endeavours for the manner in which they spoke to the amendments today and the efficient organisation that has enabled the Bill to reach its final stages in the House.

May I express my delight that other hon. Members have referred to the role played by my hon. Friend the Member for Ryedale (Mr. Greenway) in his position as chairman of the all-party group on insurance, who has promoted this idea with vigour equal to that of the hon. Member for Edinburgh, Central. Finally, I thank my hon. Friend the Member for Surrey, East (Mr. Ainsworth) who was present throughout Second Reading and is a sponsor of the Bill.

In dealing briefly with the Lords amendments, I take the opportunity to clarify the Government's position on the points that have been raised by the Accounting Standards Board. My hon. Friend the Member for Surrey, East referred specifically to the concerns outlined by the board and others on the accounting treatment of equalisation reserves. This matter has been discussed with the Accounting Standards Board and the Association of British Insurers. Under the insurance accounts directive, equalisation reserves are required to be shown as liabilities in published accounts. The amendments introduced by the noble Earl Northesk in another place give effect to that part of the directive for any equalisation reserves that might be created using new section 34A of the Insurance Companies Act 1982, which is inserted by the Bill.

The Government recognise that that treatment would not normally apply under generally accepted accounting principles in the United Kingdom. Equalisation reserves represent amounts set aside to meet potential future obligations. Such amounts would normally be treated as reserves rather than liabilities in a company's accounts. We have received representations from the Accounting Standards Board and others that there should be adequate disclosure in the accounts to enable someone reading the accounts to understand the nature of the equalisation reserve, and that the treatment of equalisation reserves required by the insurance accounts directive should not be permitted to weaken the "true and fair" concept that applies to company accounts generally.

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On the first point, I understand that the Accounting Standards Board and the Association of British Insurers are discussing how adequate disclosure can be achieved, and that there are good prospects for agreeing guidance to companies on that issue. We fully support that. On the second point, the Government have strongly supported the extension of "true and fair" reporting to the insurance sector via the insurance accounts directive.

Save in exceptional circumstances, such as those that apply to equalisation reserves, insurance companies are legally obliged to follow the true and fair requirement as it applies generally. Like other companies, they are expected to comply with applicable accounting standards. We do not believe that the treatment of equalisation reserves has any wider implications for the interpretation or meaning of the "true and fair" view which all company accounts are required to give, either in relation to other aspects of the insurance business or for companies more generally. Having dealt with those matters which are directly related to the amendments before the House, I will now respond briefly to the points raised by the hon. Member for Edinburgh, Central. He will be aware that this measure is necessary because it is a preliminary step that must be in place to ensure that tax relief can subsequently be made available for equalisation reserves.

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That is a twofold process. The first part of the process is for us to have legislation in place. The second part much involves Treasury Ministers. It is for my right hon. and learned Friend the Chancellor of the Exchequer, when he comes to make his Budget statement, to make any statement that may be necessary about the tax treatment of the reserves that we are discussing. The Government have made it clear throughout the passage of the Bill that they are not in a position at this stage to give any commitment on what the position may be at the time of the Budget statement. The Bill is important because it is vital to ensure that a statutory vehicle is available as and when tax relief may be agreed by my right hon. and learned Friend the Chancellor.

The hon. Member for Edinburgh, Central talked about the period of consultation on draft regulations. The hon. Gentleman will know--he has seen the consultation paper--that there has been widespread consultation. I understand that over the past few days the Department has received responses from the London Insurance and Reinsurance Market Association and the Association of British Insurers. We would hope to be in a position to publish draft regulations by about mid-September. Thereafter the regulations will be laid as and when any concession may be made on the tax treatment of the reserves. It would be inappropriate to lay any such regulations unless subsequently there is a statement by my right hon. and learned Friend the Chancellor to the effect that such tax treatment will be made available.

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Once again, I thank my hon. Friend the Member for Blackpool, South for all his work on the Bill and congratulate him on his skill in explaining the amendments. I also offer my thanks to my hon. Friend the Member for Hertfordshire, North for his efforts in introducing the Bill when he was on the Back Benches. I am well aware that in the non-life sector the Bill is warmly welcomed by the insurance industry. The Government welcome it as well.

Mr. Hawkins: I shall respond briefly to one or two of the points made in this short but important debate. I thank my hon. Friend the Minister for what he has said about the agreement between the Accounting Standards Board and the Association of British Insurers. I thank also my hon. Friend's officials, who have clearly been working extremely hard to ensure that the agreement between the board and the ABI can be referred to this morning.

I pay tribute to my hon. Friend the Member for Surrey, East (Mr. Ainsworth) both for his perceptive interventions and remarks this morning and for being present throughout the earlier stages of the Bill's consideration. He was a sponsor of this important measure. It is a great shame that he did not have the opportunity to give the House the benefit of his fuller remarks on Second Reading. We have had an indication this morning of the interest that he takes in these matters. Perhaps there will be other occasions when insurance matters come before the House, when we will be able to hear my hon. Friend at greater length.

I look forward to the future discussions between the Accounting Standards Board and the ABI. I am as confident as my hon. Friend the Minister that an agreed view will be reached. I look forward also to seeing the results of the consultation process. Important issues are dealt with in an extremely detailed consultation paper that has been produced by the Department. I do not intend to detain the House by referring to those issues. I welcome the fact that some of the most important bodies such as the London Insurance and Reinsurance Market Association and the ABI have already made submissions in response to the consultation paper. I hope that many other bodies and companies will do so. It is crucial that United Kingdom insurance companies should benefit from this legislation to enable them to compete adequately in the rest of the world with European insurance companies.

I welcome the contributions that have been made in this short debate.

Lords amendment agreed to.

Madam Deputy Speaker: We now come to Lords amendment No. 2, which will be moved formally.

Mr. Hawkins: Rather than moving it formally, Madam Deputy Speaker, I should like to say a few words.

Madam Deputy Speaker: That is not possible. As Lords amendments Nos. 1 and 2 were grouped together, any remarks about amendment No. 2 should have been made when amendment No. 1 was being discussed. It is now too late.

Lords amendment No. 2 agreed to.

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National Health Service (Amendment) Bill

Lords amendment considered.

Clause 14

Short title, etc.

Lords amendment: No. 1, in page 11, line 12, after ("2") insert (",3").

11.34 am

Mr. John Austin-Walker (Woolwich) rose --

Mr. Michael Fabricant (Mid-Staffordshire): On a point of order, Madam Deputy Speaker. I raise this matter while my hon. Friend the Under- Secretary of State for Corporate Affairs is still in the Chamber. Is he to make a statement about the marvellous news in the west midlands--I have the privilege to be a west midlands Member--that £80 million of intervention funding is to be made available by the Department of Trade and Industry? We are seeing a £400 million investment of private money from the Jaguar motor company, some--

Madam Deputy Speaker: Order. I cannot allow the hon. Member to raise a point of order simply to make observations. The matter is concluded.

Mr. Austin-Walker: I beg to move, That this House doth agree with the Lords in the said amendment.

Hon. Members will remember that the Bill received all-party support during each stage of its passage through the House, for very good reasons. It was understood that the Bill was concerned with the protection of national health service patients. The same was true in the other place. There has been all-party agreement on the Bill's principles and scope. I wish to reassure hon. Members immediately that the amendment does not alter those principles or scope. The amendment was introduced in the other place by the Government. It received cross-party support. It deals with a technicality. It clears up a difficulty in the drafting of the Bill, and relates to the timing of the commencement of the Bill, when enacted, in relation to the coming into force of the Health Authorities Act 1995. The Bill rightly refers to "health authorities". It refers to the new authorities that will come into existence on 1 April 1996 when the Health Authorities Act comes into force. Family health services authorities are not health authorities within the meaning of the National Health Service Act 1977. To allow the provisions of the Bill to apply to family health services authorities before April 1996, provision had to be made for reference to health authorities to be read as references to family health services authorities. Clause 14(5) provides that where clauses 2 and 6, which set out the arrangements for the suspension of practitioners and for the constitution of the tribunal, refer to a health authority, that means a family health services authority until 1 April 1996.

Regrettably, clause 14 omitted an additional reference to a health authority. The additional reference is contained in clause 3. One of the effects of clause 3 is to bring tribunals into line by removing practitioners' right of appeal to the Secretary of State against directions of the NHS tribunal. Such appeals will be made to the High Court on a point of law. Perhaps most importantly, the

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clause provides health authorities with the power to implement tribunal directions that practitioners should be disqualified. That is the central point of the Bill.

If clause 3 had remained unamended, tribunal directions to disqualify practitioners between the date of commencement of this measure and 1 April 1996 would be meaningless. They could not be put into effect by family health services authorities. By bringing clause 3 into the ambit of clause 14(5), the problem will be overcome. I believe that it would have been possible technically to delay the implementation of clause 3 until after the Health Authorities Act came into force. I discussed that possibility with the Department and with officials of the NHS executive. However, the Government concluded that it was preferable to table the amendment to preserve the Bill's intentions. I agree with that view and I am happy to accept the amendment.

As I said on Second Reading, I presented the Bill in the light of the experience of some of my constituents because I believed that their safety was placed at risk by the existing arrangements. I raised those matters with the Minister of State. He and I normally exchange angry views across the Chamber but I hope that the Under-Secretary of State for Health, the hon. Member for Battersea (Mr. Bowis), will convey my thanks to the Minister of State for his positive response to me. I also thank Baroness Gardner of Parkes for taking the Bill through the Lords, the officials in the Department of Health and especially those in the national health service executive for their assistance. The amendment is small but important. I commend it to the House and hope that hon. Members will give the Bill final approval.

Mr. Paul Boateng (Brent, South): On behalf of my hon. Friend the Member for Dulwich (Ms Jowell), who speaks for the Opposition on these matters and is unavoidably detained by a long-standing constituency commitment, I welcome the amendment, whose intentions have been explained by my hon. Friend the Member for Woolwich (Mr. Austin-Walker). The House and the millions of national health service patients who will benefit from the Bill owe him a debt of gratitude. He has done the House, his constituents and the nation a great service by introducing this much needed and extremely helpful measure. We are happy to do all that we can to speed it on its way.

The Parliamentary Under-Secretary of State for Health (Mr. John Bowis): I am grateful to the hon. Member for Brent, South (Mr. Boateng), who is standing in for his hon. Friend the Member for Dulwich (Ms Jowell), for his endorsement of the Bill and the amendment. I am sure that he will forgive me if I express even more gratitude to the hon. Member for Woolwich (Mr. Austin-Walker) who has steered the Bill through the House and spoken to the amendment. I am grateful to him for the gracious way in which he spoke about my hon. Friend the Minister of State. I shall certainly pass on his message of a ceasefire, or perhaps a temporary ceasefire. That will be treasured by my hon. Friend who, I am sure, will read Hansard in bed tonight with a little glow of pleasure.

Mr. Boateng: If that is all he gets pleasure from I feel sorry for him.

Mr. Bowis: I do not think we should follow the hon. Member for Brent, South down his pleasure routes.

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I am also happy to accept thanks to Baroness Gardner of Parkes and to the officials in my Department and in the NHS executive. I am sure that they will be appreciated.

As the hon. Member for Woolwich said, the amendment seeks to correct an anomaly that would arise if clause 3 were not brought under the scope of clause 14(5). The Bill has the Government's full support and I am pleased, or fairly pleased, to be here to take it through what I hope will be its final stage before Royal Assent. I had the pleasure of dealing with the Bill in its earlier stages and it went to the other place with the Government's blessing. At first sight the Bill's subject matter seems somewhat arcane. The National Health Service Tribunal is perhaps not much in the public eye. The hon. Member for Woolwich spoke about his personal experiences and about the tribunal's important function. It is a quasi- judicial body which considers representations from family health service authorities that individual practitioners shouldbe removed from authorities' medical, dental, pharmaceutical and optology lists. Doctors, dentists, pharmacists and ophthalmists may provide family health services as unrestricted principal practitioners only if they are included in such a list. The NHS tribunal is the only body with the power to remove them from a list and thus from general practice.

As the House would expect, the tribunal's powers are rarely invoked and only in extremely serious cases where a practitioner's conduct or practice is such that the family health services authority feels that the provision of services is in jeopardy. The tribunal is asked to consider only about five or six cases a year, but they involve circumstances, about which the hon. Member for Woolwich spoke at an earlier stage in the Bill's progress, where patient care may have been compromised either directly, because the practitioner poses a physical threat to his patient, or indirectly, because the standard of care that he provides falls far short of that which the NHS, patients and the House have a right to expect.

11.45 am

In cases where the tribunal considers an authority's concerns to be justified, it may order the removal of a practitioner's name from the appropriate list and may even prevent its inclusion in similar lists that are held by other authorities. I pay tribute, as I am sure does the hon. Member for Woolwich, to the tribunal's chairman, Adrian Whitfield QC, for the assiduous way in which he and his colleagues perform their functions.

The tribunal has far-reaching powers but the Bill is valuable because the workings of the tribunal could be streamlined in several ways. It is valuable most of all because there is a serious gap in the tribunal's available powers. The Bill allows for the appointment of a permanent deputy chairman, lay members and a wide pool of professional members. That would better equip the tribunal to carry out its functions with the required speed.

The Bill will enable the NHS tribunal to declare that disqualified practitioners should not be allowed to work in the family health service as locums, assistants or deputies to principal practitioners. At present no such restrictions are available to the tribunal, even when it feels

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that it would be wholly inappropriate for a disqualified practitioner to provide services as a locum, assistant or deputy. The Bill will plug that loophole.

The measure removes a practitioner's right of appeal to the Secretary of State for Health but will leave in place the right of appeal that is provided by the Tribunals and Inquiries Act 1971 to the High Court on a point of law. The Franks committee recommended that appeals from decisions of all tribunals should be made to a court. The provision brings the NHS tribunal into line with good tribunal practice. Most importantly, the Bill will provide the tribunal with a power to suspend practitioners from providing family health services in wholly exceptional circumstances so as to protect patients.

The family health services authorities, which make representations to the tribunal, said that the continued inclusion of a practitioner's name in one of their lists would be detrimental to the provision of services in their areas. They will be able to ask the tribunal to suspend that practitioner from duty with immediate effect where it is felt that that is vital to protect patients. If granted, that order would remain in force until a tribunal was able to hear in full the representations made against the practitioner in question. Some hon. Members may have thought that the power that I have outlined already exists. Of course it does for practitioners who are employed in hospital and community services. That is why, in the topical case of Dr. Kiberu, such steps were possible. But the key word is "employed". Family health services practitioners are not NHS employees. They hold a contract of service with the NHS and are regulated by family health services authorities. Their contracts of service do not contain a clause allowing for suspension or disqualification from practice, nor can the powers that are available to the professional regulatory bodies, which in any case are to protect professional standards, assist in the immediate removal of practitioners from family health services authorities' lists. At present there is no means by which a practitioner can be removed from practice immediately, even when that appears to be essential to protect patients. It is plain that the NHS needs power to do that, although from what I have said about the rarity of tribunal hearings the House may appreciate that we do not expect the power of suspension to be used often. However, such cases arise when the conduct or practice of a practitioner may be such that fears are raised for the safety of his patients. In such cases, the NHS needs to be able to act quickly to secure above all else patient safety. That is why the NHS is grateful to the hon. Gentleman for bringing the Bill forward. The amendment does not alter the substance of what the Bill seeks to achieve. It is the substance of the Bill and the purpose of the NHS tribunal that the amendment protects. As the hon. Gentleman said, we foresaw real difficulties if the scope of subsection 14(5) was not extended by an amendment to cover clause 3. As the hon. Gentleman has described, clause 3 removes the arrangements under which practitioners may appeal to the Secretary of State for Health against decisions to disqualify them. It goes on to provide health authorities with the power to implement tribunal directions that practitioners should be disqualified.

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New health authorities will not be established until 1 April 1996. Therefore, without the amendment, family health services authorities would not be able to carry out directions of the national health service tribunal to disqualify practitioners. It follows that such directions made before 1 April 1996 would have been meaningless. Only the most serious cases are referred to the NHS tribunal. The hon. Gentleman brought this Bill before the House with patient safety at the forefront of his mind. I recall the eloquence with which he cited a case in his constituency where patients had, at the very least, been put at serious risk.

Clearly it would be nonsense if NHS tribunal directions to disqualify practitioners could not be implemented for however short a period as a result of a technicality. Bringing clause 3 under the scope of subsection 14(5) will put that right. It is simple and will ensure that the hon. Gentleman's intention in introducing the Bill and the House's earlier understanding of its provisions are preserved, so I am grateful to the hon. Gentleman for piloting this amendment and the Bill through the House. I hope that the House will view it as favourably as it has the Bill and that hon. Members will allow the Bill to complete its final stage, coupled with thanks to the hon. Gentleman.

Lords amendment agreed to .

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Landlord and Tenant (Covenants) Bill

Lords amendments considered.

Clause 1

Tenancies to which the Act applies

Lords amendment: No. 1, in page 1, line 6, after ("Sections") and insert

("( Transmission of benefit and burden of covenants ), ( Transmission of rights of re-entry ),")

11.52 am

Mr. Peter Thurnham (Bolton, North-East): I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Deputy Speaker (Dame Janet Fookes): With this, it will be convenient to discuss also Lords amendments Nos. 10, 11, 16, 23, 28 to 30, 39, 61, 62, 74 and 88.

Mr. Thurnham: Today is a day that has been looked forward to by many tens of thousands of small business men and shopkeepers up and down the country, who long to be free of the worry of landlords pursuing them many years after they have vacated their premises. I give thanks to my noble Friends the Earls of Courtown and of Northesk, who assumed stewardship of the Bill in another place. My noble Friend the Earl of Courtown introduced the Bill so successfully that he was quickly promoted to the Whips Office, leaving the Bill to be ably carried through by my noble Friend the Earl of Northesk, who also helped with another Bill that we have already debated today. I am immensely indebted to my noble and learned Friend the Lord Chancellor who has been so instrumental in introducing the 89 amendments to my Bill, all of them useful and many crucial to the Bill's success. I hope that the amendments will commend themselves to the House.

I thank the Law Commission and parliamentary counsel for their enormous assistance, without which the Bill would certainly be a much less effective reform and would probably not have been able to progress this far. I am immensely grateful to my hon. Friend the Parliamentary Secretary, Lord Chancellor's Department for the excellent and inestimable work that he and his Department have done in securing agreement and in helping Bill on its way.

Finally, I thank the British Retail Consortium, which sponsored the Bill, and with its legal advisers, and the British Property Federation for all that it did in working out the package of additional changes that enabled the Bill to proceed on the basis of agreement and support on all sides, without which, as the private Member's Bill not drawn in the ballot, it could never have got off the ground.

When the Bill was last before the House, on 21 April, I expressed delight that it had got as far as Third Reading and I am overjoyed that we are now in the final stages of a difficult, but immensely valuable undertaking. The reforms that it will enact will benefit all sorts of tenants by removing the spectre of privity of contract liability from new tenancies, and will also introduce changes to help tenants under existing tenancies, changes for which tenants have been crying out for a long time. They will also provide for new tenancies a sensible and balanced

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modification that will provide the property industry with the necessary control over investment to maintain market confidence, without the need for harsh restrictions.

The House would be assisted by an overview. Although the number and complexity of the amendments may appear daunting, none of them affects the policy aims of Bill which the House agreed earlier this year. The amendments will ensure that those aims are effectively met. Hon. Members will recall that the Bill proceeded in the House on the clear basis that changes would be incorporated in another place and the purpose of many of the amendments is specifically to make the necessary provision for those changes.

I shall stick closely to my notes because I appreciate that what is reported in Hansard can be referred to later by the courts. As was explained in the other place, the amendments fall into two categories. The first category comprises amendments that are necessary to give affect to the various elements of the agreed package put forward by the British Retail Consortium and the British Property Federation and accepted by the Government after consultation. Those amendments were tabled by my noble Friend the Earl of Courtown. The second category comprises amendments that are necessary to ensure that the Bill is complete and that it gives full effect to the recommendations of the Law Commission, which, it should be remembered, are at the heart of the reforms. Those amendments, many of which are technical, were tabled by my noble and learned Friend the Lord Chancellor. Amendment No. 1 and the others with which it is particularly linked fall into that second category. Clause 1 makes it clear that certain provisions are to apply only to new tenancies and that others are to apply to both new and existing tenancies. Subsection (1), which amendment No. 1 alters, lists the provisions that are to apply only to new tenancies. The change is necessary because a number of extra provisions are needed tocarry through effectively the Law Commission's recommendations and it is accordingly necessary to add them to the list, which amendment No. 1 does.

Amendments Nos. 10, 11, 30, 61, 62 and 88 in particular, together with amendments Nos. 23 and 28 and 29, which make provision for certain special cases, are aimed at ensuring that the Law Commission scheme, which the Government accepted for new leases, will work effectively in practice and are accordingly very detailed. I shall explain the framework and I believe that my hon. Friend the Minister will be better placed than me to clothe that framework with greater detail if necessary.

Mr. Eric Pickles (Brentwood and Ongar): Perhaps my hon. Friend or my hon. Friend the Minister will comment specifically on amendment No. 10 and in particular on the idea both in subsection (2) and in subsection (3) that the concept of covenants is void unless "immediately before the assignment" was specified. I have had a case in my constituency where negotiations have been protracted and in many ways took place in two specific parts. Will my hon. Friend or the Minister clarify exactly what is meant by "immediate"? Would it have to be just before the assignment and just before the tenancy, or earlier in the negotiations, and if so, what is the limit?

Mr. Thurnham: I am interested to hear my hon. Friend's point. Nearly every right hon. and hon. Member

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in the House has had constituents' cases that have given them concern. I am coming on to further detail on amendment No. 10. If those points do not cover my hon. Friend's question, I am sure that my hon. Friend the Minister will be able to cover his point. This important group of amendments is necessary to avoid potential problems arising from the interface of the new regime with existing law governing the transmission of benefit and burden of covenants and their enforcement under privity of estate, which is contained in a unsatisfactory mixture of statutory provisions and common law rules. The amendments will provide a proper framework for new tenancies in the Bill rather than attempting the extremely difficult task of amending existing law consequentially.

Amendment No. 10 introduces a new clause that sets out the basic principle for the transmission of the benefit and burden of covenants for new tenancies. It includes provision originally contained in clause 7, which is accordingly deleted, and certain parts of sections 78 and 79 of the Law of Property Act 1925, which are to be preserved for tenancies--those sections not being affected otherwise than in relation to tenancies. Together with the new clause introduced by amendment No. 11, it also replaces sections 141 and 142 of the 1925 Act, which will accordingly not apply to new tenancies. Amendment No. 88 does the job of disapplying these statutory provisions in the case of new tenancies.

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The basic principles of the Law Commission's scheme, contained in subsection (1) of the new clause introduced by amendment No. 10, is that the benefit and burden of all landlord and tenant covenants of a new tenancy are annexed to the whole and to each and every part of the lease and reversion as appropriate and shall pass on an assignment of the whole or any part. There is, as the Law Commission recommended, no distinction between covenants which touch and concern the land and those that do not. The annexation to each and every part ensures that, in the case of an assignment in parts, all covenants are enforceable by and against each of the assignees.

The assignee of a lease or reversion respectively will be bound by the burdens and entitled to the benefits of the covenants, except where they did not bind the assignor--for example, because the covenant was limited in duration or the assignor had been released from it. Where only part of the interest is assigned, the assignee will be bound by the burdens and entitled to the benefits of the covenants only to the extent that they relate to the part assigned to him. There is a saving for cases where the assignor was not bound when he assigned only because of a waiver that was expressly personal and was not intended to benefit anyone else. In such cases, it will be appropriate for the assignee to be bound by the covenant in question. There is also a saving to enable the parties to a lease to provide expressly for covenants to be purely personal and for the benefit or burden not to pass on assignment, notwithstanding the basic principle above.

The new clause introduced by amendment No. 11 reproduces for new leases the existing rules governing the transmission of the landlord's rights of re- entry under a tenancy, which would not otherwise fit into the framework for new leases, as they are not landlord covenants or tenant covenants.

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Amendment No. 30 inserts a new clause which makes clear who may enforce the covenants benefiting either a landlord or a tenant under a new tenancy. Mortgagees of the reversion who are in possession and lessees of the reversion will, where they are entitled to rent and profits under the tenancy, be able to enforce and, as a corollary, have enforced against them the various rights and obligations of the landlord. Concomitantly, a mortgagee of the lease who is in possession will be able to enforce, and have enforced against him, the tenant's rights and obligations.

Amendment No. 61 introduces a further new clause to provide for another element of the framework to give full effect to the Law Commission's recommendations. This new clause makes it clear that an assignee shall have no rights or liabilities under a covenant of the tenancy in relation to anything occurring before the assignment. The new clause makes a saving for cases where the assignor expressly assigns his accrued rights to the assignee, which may be convenient in some cases as part of the bargain for the assignment. It also preserves the present position in respect of the landlord's rights of re-entry.

Amendment No. 62 ensures the completeness of clause 15, which makes provision for new leases concerning the effective release from any covenant occurring on assignment by virtue of the Act. Release on assignment will not affect any liability of the assignor for breach occurring before the assignment or any accrued rights of the assignor relating to a breach of the other party occurring before assignment. Where any person has taken on a liability parallel to that of the tenant, release on assignment to the tenant will release that person to the same extent.

Amendment No. 62 covers the case where a landlord or tenant assigns the whole of his interest but is not released, making it clear that any such assignment does not affect any liability of the assignor arising before the assignment.

Amendments Nos. 23, 28 and 29 provide--as I mentioned earlier--for the operation of the Law Commission's scheme in certain special cases. Amendments Nos. 23 and 29 cover the possibility that there may be another party to the tenancy other than the landlord and tenant--that is to say, a management company. Amendment No. 23 ensures that the procedure of clause 8 concerning apportionment of liability on assignment of part is available where it is a third party who is entitled to enforce the covenant in question. Amendment No. 29 introduces a new clause to make provision for the position of management companies in relation to the Law Commission's scheme, ensuring that the benefit and burden of covenants with management companies will pass and the provisions for releasing assignors and binding assignees will operate on assignments of the lease or reversion.

Amendment No. 28 introduces a new clause to make effective provisions for cases where an assignment is not lawful or voluntary, but takes place in breach of a covenant against assignment or by operation of law, such as passing to personal representatives on death of the landlord or tenant.

The Law Commission recommended that such assignments should not have effect to release the person parting with the interest from his rights and obligations under the lease, the possibility for misuse or unfairness to the other party being obvious. Such assignments should, however, as is the case at present, be fully effective to

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pass the estate and accordingly to bind the assignee. The assignor will be released only on the next assignment that is not an assignment in breach or by operation of law.

The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor): I want to start by congratulating my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) on his Bill's progress into the final straight, which is in no small part due to his tireless efforts in holding to the essential principles of the reform, while facilitating and maintaining the reconciliation of conflicting interests whose clash prevented his earlier Bill from making progress. I also congratulate him on the determination and considerable persuasive skills that he has deployed in keeping this reform high on my agenda.

Before I move on to add some detail to the framework of my hon. Friend's explanation and, I hope, to add to our understanding of the amendments, I must put on record my appreciation of the Law Commission's enormous contribution in getting the Bill to this stage. Commissioners, officials and parliamentary counsel at the Law Commission have all given unstintingly of their time and expertise in assisting with the amendments that we are now considering. I am sure that my hon. Friend will not take it amiss if I say that the result of that work is a vastly improved measure, which comes to the House with the support of all sides in another place and which is thoroughly deserving of similar support in this House.

In order fully to understand the amendments and the way in which they fit into and enhance the Bill, it is necessary to have an overview of the scheme that the Law Commission has recommended and that is the underlying basis of this reform in relation to new tenancies. That scheme is full and detailed and, as a result, the amendments have also had to be full and detailed. Therefore, to proceed without a full explanation of the principal amendments would be to do the Bill and the House a disservice.

The guiding principle of the Law Commission's scheme is that all covenants and obligations between lessor and lessee should be enforceable between the landlord and tenant for the time being, with no distinction being drawn between covenants which touch and concern the land and other covenants. Thus, when the landlord's or tenant's interest is assigned, the assignee should become bound from the assignment by the whole package of rights and obligations as it bound his predecessor, including any variations. The assignee should not, however, take on any rights or liabilities in respect of any breach of covenant occurring prior to the assignment.

The corollary of this is that the assignor should cease to have any rights and obligations as from the assignment, but should not lose any accrued rights in respect of a breach by the other party prior to the assignment, and should likewise remain liable for any breach on his own part occurring prior to the assignment. The Law Commission did, however, recommend a difference in the position of landlords, which the Government accepted and which both Houses have agreed. A landlord under a new tenancy who assigns the reversion will be released by a simple notice procedure which gives the tenant the right to argue that it would be unreasonable in the circumstances for the landlord to be released, with the final decision lying with a court in the case of a dispute. That is because tenants have no way of vetting the landlord's assignee and preventing assignment

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