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Lord Cope of Berkeley: My Lords, the House is frequently grateful to the noble Lord, Lord Bruce, for his wisdom and his diligent hard work on these matters. We have frequently had occasion to benefit from them. On this occasion we on this side of the House are grateful to the noble Lord for supporting a view that we have expressed previously, notably in relation to a Bill introduced not long ago by my noble friend Lord Saatchi. Clearly, these are important matters.
One of the noble Lord's points related to whether or not we should be having this discussion on a money Bill. For greater accuracy, I have just looked up the Companion to the Standing Orders, which specifically says that the conventions on money Bills do not debar the Lords from amending such Bills—and clearly from debating them as well. I understand that on a few occasions amendments have been made in this House to such Bills and that they were accepted by the Commons. The only provision is that if we fail to pass the Bill without amendment within one month of it being sent to your Lordships' House, it becomes law automatically, so we have to get a move on with such Bills, particularly if we wish to amend them. That is why there is a special note on today's Order Paper explaining that we have not observed the usual intervals in considering this Bill.
There is no doubt that we can discuss and amend money Bills. However, that has not been our usual practice; nor has it been our usual practice on any Bill to have extended discussions on the Motion that the Bill do now pass. That practice has recently been criticised by the Captain of the Gentlemen-at-Arms, among others.
Those are the customs and rules of your Lordships' House at the moment. They may change. If some of the propositions that are flying around about the future of your Lordships' House come to pass in any form—it seems unlikely at the moment, but let us suppose—those rules will certainly be under the greatest and
most careful scrutiny and will almost certainly be altered considerably. I know that the Government do not wish to discuss powers on these occasions, but that is my view and I do not think that I am alone in holding it.Meanwhile, we should observe the customs of your Lordships' House with regard to money Bills. We should not stop ourselves entirely from talking on them, but we should exercise a certain self-restraint.
Lord McIntosh of Haringey: My Lords, I shall do my best not to open up debate on the matter. The House owes a debt of gratitude to my noble friend Lord Bruce and to the Opposition Chief Whip for expanding the time-scale of House of Lords reform. While other people want to move forward, they appear to want to move back to 1911. I know that the noble Lord, Lord Saatchi, wanted to do that, because he wished to question Section 1 of the Parliament Act 1911, which debars the Lords from rejecting money Bills.
The procedural situation with money Bills is that they are certified as such by the Speaker. That certification is final and there can be no challenge to it. The Bill is then sent here and if it is not sent back within a month—I believe that this Bill arrived here on 18th October—it is presented for Royal Assent without the intervention of this House. The noble Lord, Lord Cope, is right that such Bills can be amended, but the Commons is not obliged to consider any amendments that are made and if the Bill has not been passed in the form in which it arrived in this House, it can still go for Royal Assent without us.
I do not propose to say more on the constitutional matter. The noble Lord, Lord Bruce, raised three points of substance about the Bill to which I shall respond briefly. First, he raised matters relating to the European Union budget. I remind him that the Bill concerns the own resources decision, which sets out the system by which the budget is financed. It does not directly concern the setting of the annual budget.
Secondly, the noble Lord raised a question about debate in another place on the European Commission budget. It is true that the last such debate was on 12th July 2000 about the 2001 budget. However, a scrutiny debate on the 2002 budget is scheduled for committee on Monday 19th November at 4.30 p.m. I understand that that will not simply go through on the nod, although of course that is a matter for the House of Commons and not for us.
Thirdly, for anyone worried about European Community spending rising, the Berlin agreement maintains the own resources ceiling at 1.27 per cent of EU GNP and will stabilise spending through the EU budget. For the first time, spending in the existing member states will be lower in real terms at the end of a six-year financial perspective than it was at the beginning. I hope that that goes some way to calming my noble friend's fears.
Commonhold and Leasehold Reform Bill [HL]
3.25 p.m.
Lord Goodhart moved Amendment No. 1:
- Page 2, line 18, at beginning insert "Subject to subsection (1A),"
The noble Lord said: My Lords, I shall speak also to Amendments Nos. 2 and 3. The purpose of the amendments is to make it possible to convert property that is currently in multiple occupation from leasehold to freehold without the consent of all the holders of the various leases, but on the basis of the agreement of at least 80 per cent of the leaseholders in the property.
This is the fourth time that we have debated the subject. We debated it twice before the general election, when the previous Bill was lost, and this is the second time that it has come back to your Lordships' House under the present Bill.
There is wide agreement in principle that commonhold is to be encouraged and that if the procedure were reasonably simple, it should be possible for existing leasehold properties to be converted into commonhold without necessarily having to get the consent of 100 per cent of the leaseholders. It will be very difficult to get the consent of everyone. In the case of small houses divided up into four or five flats, it may be possible to secure the unanimous agreement of all the parties to conversion, but with larger properties, such as blocks containing 10 units or more, it is unlikely that there will not be at least one person who either positively dissents from the idea of conversion to commonhold or at least is not prepared to agree to it. Conversion to commonhold will require some financial commitment because the leaseholders will necessarily have to put their hands in their pockets to acquire the freehold.
We think that if a clear and substantial majority of leaseholders wish to convert—by that we mean at least 80 per cent of them—it would be desirable for them to be able to do so. We have therefore proposed a scheme to make that possible. Those leaseholders who agree will have to pay between themselves the full cost of acquiring the freehold. In a number of cases that may be a deterrent to making a conversion. The same issue would arise if they desired to proceed with the lesser or preliminary step of collective enfranchisement. If they are willing to put their hands into their pockets and pay for the whole acquisition of the freehold, there is no reason for the law not allowing them to do so.
When debating the corresponding amendments in Committee, the Government argued that they would add to the complexity of the legislation. At the outset of the long history of the Bill, I was inclined to agree. However, attempts to draft the necessary legislation lead me to think that it is by no means as difficult as I first thought.
Our amendments are relatively short. I am sure that they are not yet in a form to achieve the desired result. Consequential amendments may be necessary,
together with some improvement to the drafting, which might result in longer legislation—but nothing elaborate. It would be perfectly possible to draft a short text making it possible for people to enfranchise with the agreement of 80 per cent or 90 per cent of the leaseholders.The Government's second argument was that it was unnecessary to provide for conversion on something less than a 100 per cent basis because leaseholders will have the alternative of collective enfranchisement. That is something of a halfway house. In fact, it is a good deal more than a halfway house. The problem is that collective enfranchisement is where the extra money is involved to purchase the freehold. If 80 per cent of the leaseholders proceed to enfranchise, as they will be entitled to do under the Bill, and are willing to pay the price of enfranchisement themselves, they will have done the vast majority of the work necessary for conversion to commonhold. Conversion from an RTE company to a commonhold association would cost the leaseholders little and would present few, if any, practical problems.
The right to convert could and should apply both to existing enfranchised properties and newly formed RTE companies. There would undoubtedly be a need for a special form of the commonhold community statement to cover cases where the commonhold association held up to 20 per cent of the property as landlords of a lease. We do not see any legal or practical difficulty drafting such a special form of the commonhold community statement.
The Government's third objection was that management would be made more difficult. But virtually the same problems would be faced by an RTE company that purchased the reversion on the basis of less than 100 per cent membership. Some leaseholders would be members of an RTE company, some would not. The situation is virtually indistinguishable from that which would arise in the case of a commonhold association where a small proportion of the units forming part of the commonhold were held as leasehold property, not commonhold.
We acknowledge the problems—which might be sufficient to deter many or even most people who would, in principle, like to convert from proceeding with a conversion of less than 100 per cent. However, if people want to try, why not have a framework that makes it possible for them to do so? The cost to the public purse would be minimal, amounting to no more than the cost of providing a new standard form of the commonhold community statement where some units were held on leases. In those circumstances, there is no reason for not making it possible to convert on the basis of 80 per cent or 90 per cent consent among the leaseholders within the property where the majority wish to convert to commonhold. I beg to move.
3.30 p.m.
Lord Kingsland: My Lords, requiring 100 per cent consent to convert has largely been a question of the Government against the rest of your Lordships. On Second Reading in January, and in Grand Committee
the following month, the noble Lords, Lord Goodhart, Lord Richard and Lord Williams of Elvel, my noble friends Lady Hanham and Lord Courtown, and myself all expressed doubt about the 100 per cent requirement. For the Government, the noble Lord, Lord Bach, sought to justify the provision on the ground that, without unanimity, anomalous leaseholders would remain.Clause 3 is somewhat opaque about the degree to which 100 per cent consent is necessary. Clause 3(1) lays down that requirement but subsection (2)(e) states that regulations may provide, inter alia,
- "for consent to be deemed to have been given in specified circumstances".
- "enabling a court to dispense with a requirement for consent in specified circumstances".
In Committee, on 16th October, the noble Baroness, Lady Scotland of Asthal, accepted that it was not impossible to devise a system under which fewer than 100 per cent of persons interested had to consent to convert to commonhold but added that this would lead to administrative difficulties because of the need to distinguish both between commonhold units and non-commonhold units and between the differential management tasks. The Minister added:
- "To tailor-make the documents and structures that they reflected would not only add to the costs of the conversion process but fly in the face of the thinking behind commonhold".—[Official Report, 16/10/2001; col. 489.]
Later, at col. 492, the noble Baroness said that the amendments provided no fewer than four different schemes to displace the 100 per cent rule. The amendments of the noble Lord, Lord Goodhart, and the noble Baroness, Lady Hamwee, the Minister said, did not overcome the serious problems that she had outlined although she conceded that they represented,
- "the kernel of a workable scheme to provide for conversion with less than 100 per cent. consent".
One of the other schemes was that proposed by the Opposition Front Bench. Perhaps, understandably, these proposals were not received with great favour by the noble Baroness. Therefore, I shall concentrate my few remaining remarks on what looks likely to be the most promising scheme so far as concerns the noble Baroness; that is, the scheme of the Liberal Democrats.
That scheme has, I concede, the attraction that the non-consenting proprietor of a flat is not irretrievably shut out but can at a later time, until the expiry of his or her lease, exchange the lease for the freehold estate in the flat. The new schedule provides for two new sets of regulations: one to deal with the price and the terms on which the lessee buys into the commonhold; and the other, in rather general terms, to,
- "make consequential provision for giving effect to this Schedule".
I hope that your Lordships' House will accept, first, that your Lordships wish commonhold to be popular. I do not believe that there is any dissension in your Lordships' House about that. Secondly, I hope that your Lordships will accept that it should not become compulsory. The amendments aim to enable existing blocks of flats to convert to commonhold in the face of a small but appreciable opposition, which, by the law of averages, there is likely to be. If there must be 100 per cent agreement, as the Government wish, such conversions will be rare and there will be a danger that, after all the effort that has been put into the Bill, commonhold may never catch on.
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