Lord Young of Cookham (Con)

My Lords, I shall speak briefly to Amendment 15 in the name of the noble Lord, Lord Berkeley, which deals with lease extensions from the Crown Estate. I may do so with less republican overtones than we have just heard. Those who have been following the proceedings of the Bill will know that I have raised the question of what happens to freeholds when they end up in the hands of the Crown Estate under an obscure process known as escheat. When a freeholder of a block of flats disappears or goes bankrupt, by default the freehold goes to the Crown Estate, whose policy is then to dispose of it, getting the best value, as is required by the 1963 Act. I raised the issue as to whether that obligation was trumped by a subsequent undertaking given by the Crown Estate to dispose of freeholds or extend leases in accordance with Acts relating to leasehold reform, when they would get less than market value. In September I got a letter from the Minister saying that, against this backdrop, the Crown Estate “does not believe the 1992 parliamentary undertaking applies to escheat”. That crystallised the problem. On the one hand, clear undertakings had been given to Parliament by the Crown Estate that it would respect the Leasehold Reform, Housing and Urban Development Act 1993, which I happened to put on the statute book, but on the other hand, it would not respect it when disposing of freeholds back to leaseholders. We then had a meeting with the Minister and the Crown Estate. I am most grateful to the Minister for his role in initiating it. At that meeting it became clear that, contrary to what the letter said, the Crown Estate would abide by the leasehold reform Act. This undertaking is now reproduced in the draft framework agreement, which says that the Crown Estate should comply with “all public undertakings given on its behalf by ministers in Parliament to follow the law ‘by analogy’ where Crown bodies are not bound by the specific legislation in question”. While issues remain in the specific case that I raised with the Minister, which I will pursue with him offline, I regard the principle as satisfactorily resolved and am grateful to him for the role he played in securing that agreement. I end with one final suggestion. The process of escheat brings windfall gains to the Crown Estate. When a freeholder disappears or goes bankrupt, the Crown Estate acquires the freehold but, crucially, under the process of escheat, it does so free of any obligations that may have accrued to the previous freeholder. It then disposes of it, with a fee paid by the purchaser. This income is different from the rest of the income of the Crown Estate and should be shown separately in its accounts. I had a look to see whether this was the case, but could not find it. One could argue that these windfall proceeds are rather like unclaimed bank accounts and should go to charity via the Reclaim Fund, but that is a matter for another day. Does the Minister agree with the accounting change I have proposed?