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Lord Dubs: My Lords, indeed, I welcome what the Minister has said. I am grateful to him for having met the points that were made during the Committee stage of this Bill.

On Question, amendment agreed to.

Clause 86 [Appointment of manager: transfer of jurisdiction to leasehold valuation tribunal]:

[Amendments Nos. 141 to 143 not moved.]

Lord Dubs moved Amendment No. 144:


After Clause 88, insert the following new clause--

Common parts: right to self-management

(". After section 34 of the Landlord and Tenant Act 1987 insert--
"Common parts: right to self-management.
(1) The Secretary of State shall have power by order to provide a scheme for the self-management by qualifying tenants of common parts of the premises which the landlord is obliged to maintain and for which the tenants contribute a service charge under their existing leases.
(2) An order under this section shall be made by statutory instrument and shall be subject to approval by resolution of both Houses of Parliament.").

The noble Lord said: My Lords, Amendment No. 144, standing in my name and that of the noble Baroness, Lady Hamwee, attempts to make possible a self-management scheme for the common parts of buildings in which there are leaseholders. I have looked carefully at the issue of Hansard covering a discussion of the same point, although on a different amendment, at the Committee stage. The Minister referred at that time to the fact that I had not only tabled an amendment which was about two columns in length but had also sent him a copy of an alternative scheme which was, I think, some 24 pages in length, for his comments. I did not think it appropriate to table such a complicated scheme for debate at the Committee stage; nor have I thought it appropriate to do so at this stage of the Bill. However, I should like, if I may, to quote a passage from Hansard at col. 173 during the Committee stage, when the Minister said:

10 Jul 1996 : Column 352


    "I know the noble Lord has a more detailed proposal up his sleeve--and he was kind enough to show me a copy. Indeed, that would be a useful starting point. But there are many difficult questions to be addressed. There is a great deal of detail to be gone into. There is a requirement for extensive consultation if we wish to go down that route and it would quite clearly not be possible to incorporate such a proposal in this Bill without extensive Henry VIII provisions. Under these circumstances I hope the noble Lord will realise that even should we favour his proposals--which we do not--it would not be appropriate to proceed with them in this Bill."--[Official Report, 18/6/96; col. 173.]

Although the Minister said that the Government were not in favour of these proposals, I took some comfort from what he said. He suggested that developing a scheme of self-management for leaseholders was complicated, very detailed and would require extensive thought and consultation. With that I quite agree. That is why I was concerned that the amendment I had tabled for Committee stage did not meet all the requirements. I felt that the scheme which I sent to the Minister--the more detailed scheme which he said would be a useful starting point--actually went further towards trying to develop a self-management scheme for leaseholders.

However, it is quite clear that to put down an amendment which is virtually a Bill in itself was still quite an undertaking and probably not appropriate; so what I have here in Amendment No. 144 is something quite different. This amendment seeks to give the Secretary of State the power, if he chooses to exercise it, to develop a self-management scheme for qualifying tenants of common parts of premises, and that such an order would be made by statutory instrument subject to approval by both Houses of Parliament. In other words, if the Secretary of State felt that there was something in this and it would be appropriate to accept this amendment, it does not compel him to do anything at all. But should the Secretary of State feel, in the near or distant future, that there was merit in developing a self-management scheme, he would have the powers to do so.

This allows the Secretary of State on a future occasion, after consultation, to put forward a scheme; but I repeat that the Secretary of State is under no obligation to do anything. The wording of the amendment is quite clear: that the Secretary of State shall have the power by order to provide a scheme but that he does not have to do anything at all if he wishes not to do so. He is enabled to do this in the future. A great deal of concern has been expressed by many leaseholders about the management of their properties.

A self-management scheme would have much to commend it. It would give leaseholders certain rights of management; it would not take away ownership from the freeholder; but it would ensure that the management was carried out in a way which was sensitive to the needs and wishes of the people living in the flats and subject every day to the consequences of poor management, if that exists.

Therefore, it seems to me that this amendment would go some way towards meeting the wishes of leaseholders. It would certainly go a long way towards meeting what the noble Lord, Lord Lucas, said--and I repeat my quotation--that the scheme that I sent him would be a useful starting point. I believe that that was the case also with this amendment. I beg to move.

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6.30 p.m.

Lord Gisborough: My Lords, the idea of a self-management scheme is seductive but I hope that the Minister will bear in mind the dangers. There may be cases where self-management would lead to problems. Elderly people whose central heating is in need of repair or whose roof needs mending may simply decide not to bother to have the necessary repairs carried out. It is a recipe for many buildings getting into serious disrepair.

Lord Monson: My Lords, I had considerably sympathy with the arguments of the noble Lord, Lord Dubs, on self-management when he raised the matter in Committee. Having said that, there are a great many problems involved, both problems of principle and considerable practical problems as those who have the slightest experience of self-management in the rare instances when it has happened will know.

The noble Lord, Lord Gisborough, mentioned one particular problem. It is very difficult to get a small number of people, even well-educated and intelligent people, to reach agreement about what is to be done in relation to the maintenance of the buildings concerned and it is even more difficult to get them to make a contribution towards the cost, whatever the technical, theoretical legal obligations may be. This is really a matter for primary rather than secondary legislation. Therefore, I could not support the amendment.

Earl Ferrers: My Lords, there was extensive discussion at Committee stage of the Bill in this House and at various stages in another place about whether leaseholders of flats should be given a right to manage in the form which is advocated by the noble Lord's amendment. The different amendments, which the Opposition have tabled at previous stages, have varied in length and complexity, although all have been incomplete and deficient in various ways.

The noble Lord, Lord Dubs, said that his scheme would run to 26 pages. As far as we can see, any scheme which would come close to working could be in the order of 25 clauses. Therefore, this is a fairly complicated proposal. I understand why the noble Lord, Lord Dubs, did not wish to table at this stage the equivalent of 25 clauses. If we wanted to run such a scheme, the idea of the noble Lord, Lord Dubs, might have been a starting point. But the real problem is that we do not wish to run such a scheme.

Amendment No. 144 is now reduced to the bare minimum as it provides the Secretary of State with an order-making power to introduce the scheme at a later date if the Secretary of State thought it appropriate. That is a whacking great Henry VIII clause. I agree with the noble Lord, Lord Monson, that this is not something which should be introduced in secondary legislation. If we were to do that, I fear that we should incur the wrath of the noble and learned Lord, Lord Simon of Glaisdale, not to mention the noble Earl, Lord Russell, who is not in his place. I did not see the noble Baroness, Lady Hamwee, rise up in wrath at the idea of introducing a Henry VIII clause but I have no doubt that she feels a similar sentiment.

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As the current amendment contains no detail of what sort of scheme is being envisaged it is difficult to make any further specific criticisms of it. But, in moving the amendment, the noble Lord, Lord Dubs, has indicated that he wishes to see the same sort of scheme as that set out in the previous amendment debated in Committee.

The Government have consistently opposed an automatic right to self-management at every stage of this Bill's progress through Parliament, and for very good reasons. The right would apply whether or not the landlord was doing a good job. Even if he were behaving impeccably, the leaseholders could say, "Thank you for what you have done and goodbye. We'll take over now", and the landlord receives no compensation. Noble Lords might ask why he should receive any compensation. Whether we like it or not, it is a fact that the price which the landlord pays for property does reflect the income which is available from management. Management should be a wholly reputable business; exploitation is not. If management is the landlord's job, then management has a value to him. Yet the noble Lord's proposal contains no provision for any element of compensation to the manager who has been discharged summarily from his responsibilities.

This right to manage would therefore be unfair to the many reputable landlords who undertake their responsibilities in a conscientious manner. It offends against the basic premise of the leasehold system, which is that a lease is a private contract freely entered into. It is a voluntary agreement between the landlord and the tenant which gives certain rights and obligations to each party.

The Government therefore think that the right to manage is not the right way forward. We believe that our proposals represent a better alternative. Perhaps I may state briefly what they are. We have already given leaseholders the right to buy out the landlord's interest in the property if they wish under the enfranchisement legislation. This Bill contains a number of proposals to improve that right in ways which we shall be discussing shortly. Enfranchisement provides a complete and clean break--the leaseholders take over all the landlord's rights and obligations, and they take over his interest in the property. They gain complete control over the property. And the landlord goes down the Suwannee with a cash sum.

For all those reasons, I believe that a right to remove a person who is doing his job properly is not correct. Therefore, I hope that the noble Lord will feel that his amendment is inappropriate.


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