English Devolution and Community Empowerment Bill

Lord Cromwell Excerpts

Report stage
Monday 13th April 2026 Lords Chamber

Then we were told that only proposals that could demonstrate value for money would be entertained. But there has been no published cost analysis. Nobody knows what council tax might be in the new arrangements. Nobody has a clue about council tax harmonisation or debt apportionment or the pension fund strain costs, which the Times said could cost as much as £1 billion, as the staff with the longest service can retire on grounds of efficiency, typically at a quarter of a million pounds a pop. The people who told us in 2020 that LGR would save a fortune now say that it will not save a bean. They were suckered, but the Government have not published any financial analysis at all. We know that they have not published that analysis because they do not have the first idea of the costs, because they have split the districts by not following the rules that they set at the outset to use the districts as building blocks—

[Lord Cromwell (CB)]

Forgive me for interrupting. The noble Lord is giving us a lot of very interesting information, but we are on Report and I just wonder how much more he has to give us.

[Lord Fuller (Con)]

The answer is not very much. I am getting to the nub of the point.

The Government have said one thing and done another. That is an important legal point, because in 2007 when they tried to use these same provisions that they now seek to rely on under the Local Government and Public Involvement in Health Act, Mr Justice Ouseley, in his judgment in January 2010, found that the Secretary of State for Communities and Local Government had changed the decision-making approach in an unfair and unlawful manner. He said:

“the Secretary of State set out repeatedly the basis upon which he would refuse proposals, and without any warning adopted a wholly different approach, and reached decisions which, on the original approach, he would not have reached. … On the face of it, the decisions taken by the Secretary of State … made a mockery of the consultation process”.

This amendment would stop the jiggery-pokery and the changing and moving of the goalposts during the process that we have seen today. Furthermore, a previous part of that botched process in 2010 was quashed by Mr Justice Cranston, a former Labour MP, because the tabulation of costs and benefits alongside a full plain English explanation of what it would mean to the man on the street, which included a full statement of the total forecast cost to the council tax payer had not been done—and of course it has not been done. Our counties, subject to LGR in this round, are being pushed into a financial leap in the dark—brought to you by the same people who told the nation that business rates would not be put up for pubs.

I hope that my learned friends run the rule, following the 2010 judgments by Justice Ousley and Justice Cranston as a guide, but it is now clear that the Government never intended to follow the rules and have not even bothered to run the numbers anyway, resulting in a no man’s land of councils being too small to be big or too big to be small. We were promised better than this. I strongly support the amendments because we have seen gerrymandering in this process. That is not good enough, and these amendments would prevent it happening in future. I hope councils do not waste too much time on this until my learned friends have completed their deliberations, because they sorely need to.

--- Later in debate ---

Small retail businesses, the stated target for these provisions, are unlikely to be helped at all. Upwards-only rent reviews usually occur at five-year intervals in a 15, 20 or 25-year lease. Small shops frequently have only a three or five-year lease. This becomes irrelevant in those circumstances for those small businesses that we are trying to protect and help. Any consultation would have revealed this fact. All I ask is that these provisions apply exclusively to SMEs, the sector we are so keen to support.

[Lord Cromwell (CB)]

Good morning, my Lords, and indeed it is good morning. I support Amendment 318C, which has just been spoken to by my noble friend Lord Thurlow. I should start by declaring that I have a son who works for a commercial property company.

My noble friend Lord Thurlow made a series of powerful points about the effects of this amendment, and I agree with him that a one-size-fits-all approach to rent review clauses is not appropriate, given the very wide range of properties rented by businesses, from perhaps a single office or lock-up garage rented by an SME to thousands of square feet of custom-designed and built warehousing rented by a global corporate.

The Government’s intention of assisting SMEs by preventing upwards-only rent reviews is consistent with protecting tenants from exploitative landlords, and I have, and I am sure most noble Lords have, no difficulty at all with that. However, negotiations between large corporates and commercial property companies are conducted between well advised and experienced professionals. Such tenants are large, powerful and of high value, and commercial property companies make great efforts to attract them and agree terms across a variety of issues, of which rent reviews are but one. These often complex negotiations between large organisations are conducted by staff with, I suggest, a good deal more detailed training, knowledge and experience of the subject than, with the greatest of respect, most parliamentarians. Neither party needs any help or interference from Parliament about the specifics of rent review terms they negotiate to include or exclude as part of their discussions.

This all seems very far away from government business, much less any manifesto commitment, and more like a hastily considered afterthought to the Bill for the residential sector that was before this House some months ago. As my noble friend Lord Thurlow has set out, for large businesses it will introduce instability, destroy value, damage the confidence of lenders, shareholders and investors alike and harm the much mentioned growth agenda.

That brings me back to where I started: dealing with the difference between an SME and a large business and how we determine the cut-off point between them. Will the Minister consider revising this aspect of the Bill so that a prospective tenant that is a publicly listed company will have the ability to opt out and retain it as a negotiating point, rather than have this aspect of their negotiations predetermined by the Government? These are not SMEs brow-beaten by a grasping landlord but large and powerful entities quite capable of navigating the give and take in negotiating leases that meet their needs. I look forward to the Minister’s response to this suggestion as a practical way to improve this amendment and mitigate the concerns raised by the noble Lord, Lord Thurlow.

[Lord Fuller (Con)]

My Lords, the hour is late, so I will be brief. I support the valedictory amendment in the name of the noble Lord, Lord Thurlow. I also associate myself with what may be valedictory comments from the noble Lord, Lord Cromwell. It is going to be a shame to lose their surveying expertise and that of the noble Earl, Lord Lytton, who has contributed so valuably over the last year in all manner of property-related matters covering the built environment which underpins our economy and social infrastructure.

Clause 85 and the related Schedule 34 provide for an amendment to the Landlord and Tenant Act, but it is going to have so many unintended consequences that will chill new investment in all manner of privately funded capital projects. I note that this provision was not in the manifesto nor trailed prior to the publication of the Bill. It has simply been fly-tipped at the end of this Bill, where it sticks out like a sore thumb in a jarring juxtaposition with the Bill’s other provisions.

I support Amendment 318C and its intention to protect small and medium-sized enterprises, but there is a serious risk of further damaging overseas investor confidence in the UK. If we are to attract private investment in large-scale developments, which may include data centres, city office blocks, mixed-use developments with residential property above them, the City of London and huge warehouse fulfilment centres, some sort of revenue growth is required over the life of the asset, without which investments will be placed elsewhere in other countries and other jurisdictions.

Setting small and medium-sized enterprises to one side for the moment, the large-scale tenants of these buildings are, so to speak, grown-up adults. I am not sure that Amazon needs additional protections from the law when contracting for a distribution warehouse. It is for the market and the law of contract to determine that precise equilibrium between those who take the risk of putting up the building and those who take the risk of occupying it. It is certainly not for government in a market economy to insist on a one-size-fits-all approach. This will chill not just future building but also the existing carrying value of those property assets which are owned by pension funds and whose rents support our senior citizens in retirement. Once again, it is the poorest in society who will be adversely affected by this misguided and misdirected sixth-form debating society approach to our economy.

I am grateful to the former Ernst & Young ITEM Club chief economist Martin Beck, who tells me that a blanket ban, as contemplated by this Bill, will cause an £11 billion downgrade of pension fund assets, meaning £2 billion less construction investment per year in the UK—and overall, when everything is taken into account, a £4.2 billion a year hit to our national economy. We need large-scale investments to grow the economy and to provide work for groundworkers, brickies, roofers, painters, decorators and our pensioners.

Schedule 34 represents yet another act of self-inflicted harm to our economy and our way of life, reducing our international investor confidence in the stability of UK plc with our rule of contract and well-established property rights, chasing away inward investment by a Government who say they are keen on growth but act in every respect to damage it.