Baroness Thornhill (LD)

Your Lordships will be pleased to know that I have taken a scythe to my speech, so it might come out a bit disjointed. The short version should be directed to noble Lords at the other end of the table: I understand their position because turkeys do not vote for Christmas. It depends on which lens you look at this through. So it is no surprise that I rise to oppose the stand part notices for Clause 85 and Schedule 34. They are the mechanism by which the Bill ends upward-only rent reviews for new and renewed commercial releases. Removing them would preserve the system that has been quietly hollowing out our high streets and small businesses for years. The noble Lord talked about evidence and there is plenty of evidence to show that. The real-world effect of upward-only rents is very simple: when trade is good, rents go up, and when trade is bad, rents go up. Rents do not come down. That might look neat in a contract but, on the ground, it has meant businesses paying yesterday’s rents in today’s economy. We have all seen what that looks like: a shop where footfall has dropped, but the rent is still set at pre-pandemic levels and is going up; a café that has survived lockdowns, energy shocks and staff shortages, only to be hit by a rent review that moves in one direction regardless of takings; or a small local business doing everything right but that is forced out because the lease allows rents to rise but never to reflect reality. I confess to my hairdresser being exactly in that position: after 40 years of work in Watford, she is no more. “The rent rise”, she said, “was the final straw”. This is real. Clause 85 matters because it allows rents to move down as well as up, so that they can reflect what is actually happening on a street, in a town centre or in a local economy. Markets work both ways and leases should be able to do the same. If we remove Clause 85, we are not defending the market; we are defending a one-way ratchet that has already failed our high streets. I will blot out a big paragraph here. That does not mean that we should ignore the risks. Markets will adapt and some landlords may try to push the risks elsewhere through higher initial rents or shorter leases. This is why scrutiny, monitoring and review matter, but they are arguments for refining Clause 85, if necessary, not for removing it altogether. Perhaps the Government might consider this on Report. Likewise, a small caveat: this is a broad reform applying across all commercial sectors, not just retail and hospitality, where the effects and problems are most visible. I would be interested to know what work has been done to understand the impact of this change on commercial property investment, particularly in struggling town centres and regeneration areas. How do the Government justify the big-bang breadth of this measure? Have they considered whether a more targeted approach might have achieved the same aims over time? If we are confident that this is the right direction—we believe it is—we also have to be confident enough to measure its effects. Therefore, we have some sympathy with Amendment 254 in the names of the noble Baroness, Lady Scott of Bybrook, and the noble Lord, Lord Jamieson, but we feel that 12 months would not be enough time to measure the true effects of this significant change.