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.