English Devolution and Community Empowerment Bill

Debate between Baroness Thornhill and Lord Gascoigne

Committee stage
Tuesday 20th January 2026 Grand Committee

[Lord Gascoigne (Con)]

My Lords, it is a great pleasure to speak for the first time in the passage of the Bill. I know we do not have to address it, but I was intending to speak at Second Reading and I had to pull out for personal reasons just beforehand. This is an issue that genuinely interests me. Every time I sit in these meetings or take part in these discussions, it feels like being at Davos or the United Nations, with so many titles and vice-presidents, and I feel a bit left behind not having any myself. I am a bit like my noble friend Lord Norton in that I am merely a bystander in this, someone who is interested. I am a political geek and a taxpayer; those are my interests. Like others, I congratulate the Minister on many belated happy returns for yesterday. I can think of no better way of spending your birthday than with some of your closest friends late at night in the House of Lords.

My Amendment 12 is embryonic. We are in Committee and I am happy to have a discussion; perhaps if the Minister is still feeling jovial from her party, we can continue that joviality and have another discussion. This amendment is simple, yet it would introduce an essential safeguard into the Bill. Given that the Secretary of State ultimately has the power in the Bill to create these new strategic authorities—it lies in his or her hands—this amendment would ensure that they are satisfied that each new authority is capable of doing what is expected of it before it is created. Those capability tests should be grounded and focused, though not exclusively, on four areas: first, governance arrangements, to ensure that it is transparent, able to make decisions and face scrutiny; secondly, financial sustainability, so that it is on a sound financial footing and able to carry out the new powers and deliver; thirdly, administrative capacity, and whether it has the right people, expertise and systems in place; and, finally, accountability mechanisms, to ensure that it has credible systems for scrutiny and democratic oversight. To be clear, I envisage the same sorts of tests applying to both the new mayoral authorities and the new unitary authorities.

Ultimately, I say with respect to the Minister, this is not game playing, a stunt or an effort to stop the Bill. It is grounded in my concern that there is nothing in the Bill to ensure that, before a new authority can exist, it must be ready and able to do what it says it will. The Bill talks about their functions, voting systems and the powers they will have, yet a Bill about empowering the people has nothing about whether the system being invented will be able to, any good at or even capable of delivering better services for the people—not to mention better value for money, though that is in a future group. I am sure the Minister is looking forward to me speaking on it in due course.

I am sure that some will say that this amendment is unnecessary. Those people who object will probably fall into three rough camps. The first will say, “We don’t need to worry. It’s going to be fine. We should take what we’re given; it is what it is and we can’t go around dictating from on high what it should be like on the ground”. But that is exactly what the Bill is doing: we are dictating what the new system should be like. We are saying that there should be a plan in place and how it will work. I think we should make sure that these authorities are capable of standing on their own two feet. Given that one of the arguments for reforming local government is that it is already quite messy and difficult to navigate, we surely do not want to create a system that is even more confusing. Before we hit the “Go” button, there needs to be effort on the ground and in Whitehall to ensure that the new structures in place are robust and coherent. That is not bureaucracy, it is just accountability. One of the many fears I have about the Bill, I am afraid to say, is that if transparency and accountability are not built in from the outset, that will make it harder to understand and hold people’s feet to the fire. These tests do that.

Another argument against this amendment will be that, ultimately, it should be for the people to decide whether the authority is doing a good job or not. I am a genuinely firm believer in democracy: it is precious and unique. Of course the electorate will ultimately be the judge, but that will come only after the changes have happened, years down the track. With so many elections already being delayed because of reorganisation, there will be no checks put in place before changes take place.

Finally, I am sure that some will say that it is not possible to test something that does not exist. However, we can do so, not just in the prep work and the planning of what is intended, but in seeing whether existing local authorities are good at what they are doing already: whether they are late or slow in delivery, whether services are being cut or expanded, their finances, workforce capacity, roadworks, housebuilding—you name it. Before noble Lords feel compelled—this has happened to me before—to defend the honour of local authorities, I pre-empt this by assuring them that I am certainly not blanketly saying that all local councils are not up to it. Equally, I am not saying that Whitehall is perfect—far, far from it. I am merely saying that, before we proceed to create and approve these new authorities, there should be a system to ensure that they will work, including how they will build on, incorporate or tackle issues in the pre-existing authorities.

There is one final area I will touch on, which we have talked about in passing already. I do not want to open this up into a broad debate about local government finance, but it does have read-through here. We all know the challenges and I do not want to dwell on it, but, across the land, capabilities are not uniform. I read some research that showed that councils in the north are twice as likely to be at risk as those in the south. Then there are the associated costs of reorganisation, never mind whether the new entity is going to be any good. Some organisations are already asking whether the current wave of reorganisation will save money or in some circumstances cost even more. Yet this Bill has no requirement to test capability, never mind finances, before those new bodies are created.

This Bill should not be seen as an exercise to create layer upon layer without thinking it through first. This is a serious issue. It is about spending serious sums of money on serious things affecting the lives of many, so it is important that we get it right. Devolution is meant to be about making the system work better, and that is what is driving this amendment. I recognise that many councils will do an enormous amount of work in getting these changes right, but rather than hoping that this version of devolution works and that things do not go wrong for the taxpayer, let us put in a safeguard. Rather than rely on good intentions, let us make the system work from the outset. Trust is not enough. These simple tests, or something like them, would make sure that from the get-go the new system is better, stronger and more capable of delivering improved services for the people. I beg to move.

[Baroness Thornhill (LD)]

My Lords, I acknowledge the constructive intention behind Amendment 12 from the noble Lord, Lord Gascoigne. The desire to ensure that strategic authorities are properly equipped, financially sustainable and governed with integrity is entirely understandable. We have all seen, all too often, the consequences when structures are created without sufficient capacity or clarity of purpose. We do not want that to happen here, and this amendment seeks to guard against it. However—the noble Lord’s heart sinks—while I appreciate that instinct, we cannot support the amendment as drafted.

The noble Lord, Lord Gascoigne, and I have different perspectives as we come from different backgrounds—him from No. 10 and me from more than 25 years in local government, 16 of them as a directly elected mayor. To us, the amendment seems to reintroduce a centralising veto at precisely the moment when the Bill is meant to be shifting power away from Whitehall. The Secretary of State would become the arbiter of whether an area is “capable”—a term left undefined, and thus open to subjective interpretation. What one Minister might judge as prudent due diligence, another might use as a brake on local ambition. That uncertainty does not sit comfortably with our belief in consent-based, locally driven governance.

We also have to be alive to the practical effects on the ground in the places about which we have spent many long hard hours talking—those most in need of levelling up. They are often those with a much weaker starting capacity. They could find themselves locked out by criteria that they are not yet able to meet, precisely because they have not been granted the devolution tools that would help them grow that capacity. We risk creating a circular trap: you cannot have the powers until you have the capacity, but you cannot build the capacity until you have the powers.

However, we recognise that strong oversight will be necessary with changes of this magnitude. Several amendments in the names of other noble Lords show a strong appetite across the Committee for rigorous oversight, but it must be oversight that does not stray into overprescription or paternalism. I understand why there may be concerns; the noble Lord, Lord Gascoigne, expressed them well. My spectacles are not rose-coloured—I acknowledge that local government has not always got it right and that there have been failures, some of them cataclysmic—but, with my tongue firmly in my cheek, I think that we could also say this about past Governments, Prime Ministers and initiatives.

That said, the amendment springs from a very real concern: the public must have confidence that new strategic authorities will function effectively from day one. On that point, I entirely agree with the noble Lord. There is space—and, indeed, a need—for transparency in how readiness is assessed in order to ensure that governance arrangements are fit for purpose and to avoid the creation of authorities that are destined to struggle. However, in our view, the answer is not to place broad, undefined tests solely in the gift of the Secretary of State. Instead, we might look to more balanced alternatives, such as clear statutory criteria developed with the sector rather than imposed on it. I am sure that the Local Government Association will be keen to work collaboratively on this; we could even look at greater parliamentary scrutiny rather than ministerial discretion. There is room for a serious discussion on this matter—I hope that we can hold that with the Minister.

The amendment addresses a genuine risk but, in our view, the mechanism it proposes risks undermining the very local autonomy that the Bill is meant to strengthen. We should not let the perfect be the enemy of the good by setting hurdles that, in some areas, those who would benefit the most will struggle to clear. I genuinely look forward to hearing the Minister’s response.

Leasehold and Freehold Reform Bill

Debate between Baroness Thornhill and Lord Gascoigne

Committee stage
Wednesday 1st May 2024 Lords Chamber

[Baroness Thornhill (LD)]

My Lords, I support Amendment 92 in the name of the noble Baroness, Lady Taylor of Stevenage, and explained so well by the noble Lord, Lord Khan of Burnley. The right to manage was first introduced in the leasehold reform Act of 2002. From the start, it was, as the noble Lord said, intended as a simple and cost-effective alternative to collective enfranchisement, but, despite the happy intentions of that Act, the reality was quite different. Take-up has not been what we would all have hoped for or expected, because the right to manage has proved incredibly problematic in practice.

These problems culminated in the Law Commission’s final report in 2020—time has marched on—on exercising the right to manage. It summarises the difficulties as follows:

“The ‘simple’ RTM process envisaged in the original consultation which led to the 2002 Act has not come to pass. The requirement for strict compliance with the statutory procedures, such as the service of certain notices on particular parties, can be unforgiving to leaseholders. In many cases, small mistakes made by the RTM company have afforded landlords opportunities to frustrate or delay otherwise valid claims. The Court of Appeal has noted that while the procedures ‘should be as simple as possible to reduce the potential for challenges by an obstructive landlord’, in fact they ‘contain traps for the unwary’”.


This is not a good advert for anyone seeking to exercise the right to manage, which we believe is fundamental to the change we need. The Law Commission subsequently made 101 recommendations, of which the then Government adopted two.

Whole swathes of actions could be happening to make this process simpler and to encourage residents to take this up. We have no doubt that the process is not an easy one and that the provisions in the Bill as it stands are actually quite limited. The uplift from 25% to 50% is welcome, as are the beneficial changes in cost provision, and minor changes to courts and tribunals. They are all positive but underwhelming—a far cry from the 101 recommendations.

In debates throughout the course of the Bill we have heard numerous instances of excessive charges and unfair practices, from both Houses. The Law Commission summed it up best when it said that

“the landlord and leaseholder have opposing financial interests—generally speaking, any financial gain for the landlord will be at the expense of the leaseholder, and vice versa …Their interests are diametrically opposed, and consensus will be impossible to achieve”.

This amendment is quite realistic: it is starting only with new build, but what it does is symbolic, in that it draws a line under the past and clearly points the way forward. Noble Lords will notice that I am not wearing rose-coloured spectacles, and we are not saying that the residents’ right to manage will be any easier—but it will be fairer. Those paying the bills control the bills and can remove any poorly performing providers. We believe that a leaseholder-controlled resident management company with an elected board, accountable to all leaseholders, is a far more democratic arrangement than one middleman freeholder controlling block management, spending leaseholders’ money freely and not involving them in the decision-making processes. It is fundamentally a better way to go, and there seems to be widespread support for it.

We support this amendment because we believe that it is a step in the right direction and could reinvigorate right to manage with the right support. It seems that the Government are finding reasons not to do something instead of working to enable something better to happen.

[Lord Gascoigne (Con)]

My Lords, I thank the noble Lord, Lord Khan of Burnley, for speaking to Amendment 92 in the name of the noble Baroness, Lady Taylor of Stevenage, and I am grateful for both contributions in this brief discussion.

The amendment seeks to require the establishment of leaseholder-owned management companies for all leasehold flats. I understand the intention to ensure that, by default, all leaseholders of new flats would be responsible for the management of their buildings. The Government support the desire to give more home owners control over the management of their buildings. This Bill is intended to do just that, and will make it cheaper and easier for more leaseholders to own and manage their homes should they wish to.

In some cases, developers have voluntarily set up residents’ management companies to transfer management responsibility to leaseholders. We welcome this, and encourage the industry to adopt this model where appropriate. However, we believe that the best way in which to achieve resident-led management for new buildings is not for government to mandate change to leasehold but to reinvigorate and improve the uptake of commonhold. Commonhold does not require involvement from a third party.

We will reinvigorate commonhold so that it is a genuine alternative to leasehold for new flats. However, there are limitations in the current legal design of commonhold which can limit its use in some settings. We must get any changes right, and preparing the market for the widespread uptake of commonhold will take time. Existing leaseholders can already use the right to manage to take over management responsibility for their building. This is an established, no-fault right that allows leaseholders to take over management responsibility when a majority of leaseholders wish to do so.

There are some situations where the right to manage is not available because leaseholder-led management is not considered appropriate—for example, in largely commercial buildings or where there are social tenants. We believe that it would not be appropriate to apply a blanket provision requiring residents’ management companies for all new buildings without considering where equivalent protections should apply.

Further practical challenges include determining at what point during development and the sale of units management responsibility would be transferred; what position the freeholder would have in the management company if they retained non-residential units or those on short leases; and what protections would be required should leaseholders not wish to take up management responsibilities. Answering these questions would require significant additional consideration—consideration that is ultimately unnecessary because a reinvigorated commonhold is the answer for new buildings, and the right to manage for existing leaseholders makes sure that home owners can already control the management of their building.

Leasehold and Freehold Reform Bill

Debate between Baroness Thornhill and Lord Gascoigne

Committee stage
Wednesday 24th April 2024 Lords Chamber

[Baroness Thornhill (LD)]

My Lords, when we started the debate today, I felt like I was wading in mud. I feel I am still in the mud—it has got thicker, and the fog has come down. This is a complex and complicated Bill. I have really enjoyed listening to the arguments and the debate; I have already learned a lot. Report will be a lot better—certainly for me.

I will try to keep my remarks short and my questions simple in order to seek clarification. The noble Baroness, Lady Taylor, has, in her own style, ably illustrated the issue and set out the case for her amendments in great detail. I will not repeat those—some paragraphs have already been knocked out of my speech.

The newly inserted Sections 19A and 89A set out the general rule that neither a current nor a former tenant is liable for any costs incurred by another person because of enfranchisement or a lease extension claim. However, new Sections 19C and 89C set out the exceptions to this rule. The debate is around whether these exceptions are justified. We are seeking the Government’s justification for this variance. Amendments 47 and 48 from the noble Baroness, Lady Taylor, would delete these exceptions, so that leaseholders would not be liable to pay their landlord’s non-litigation costs under any circumstances. We agree. Each side should pay its own costs; we are unsure as to why this is not the case.

When this was debated in the Commons, the Government argued that, while the main aim of the changes to the costs regime was to address the imbalance of power that has existed between the landlord and tenant, they had a desire to ensure fairness on both sides. Sections 19C and 89C prevent the landlord incurring a net financial loss when leaseholders exercise their rights to enfranchisement and lease extension, thus acknowledging that this really is a balancing act. We look forward to the Minister’s comments as to how the Government have managed to keep the scales level.

I agree with the comments made in the debates on the last two groups. Some of the problems are because much too much is being left for later regulations, in either guidance or SIs. I believe that we should have had a clear government position on issues as important as landlord costs, deferment and capitalisation rates. This is still too vague. Such uncertainty is bad, not only for the leaseholders but for us parliamentarians who would hope to scrutinise and improve the legislation. However, I note the explanation from the Minister in the last group.

The Law Commission’s report highlights that the current law means that the landlord is overcompensated for these non-litigation costs. We support the Government in saying that costs should be balanced. It has to be said that these amendments raise important questions as to whether new Sections 19C and 89C undermine this aim. The noble Baroness, Lady Taylor, has made a good case to that effect.

[Lord Gascoigne (Con)]

My Lords, I thank the noble Baroness, Lady Taylor, for her Amendments 47 and 48, which seek to remove the exception on costs arising from low-value lease extension or freehold acquisition claims. While the Bill includes a new general rule that each side will bear its own costs, we believe that there need to be exceptions in certain circumstances so that the regime is fair for both sides. The low-value cost exception entitles landlords to receive a portion of their process costs from leaseholders in low-value enfranchisement and lease extension claims for flats and houses respectively. We believe that these are necessary provisions that protect landlords from unfair costs.