Bishop of Derby takes part in debate on chancel repair liability

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Bishop of DerbyOn 15th January 2015, the Bishop of Derby, the Rt Revd Alastair Redfern, took part in a short debate in the House of Lords, led by Lord Avebury, on what steps the Government are taking to abolish the liability of private householders and others for chancel repairs. The Bishop put on record that the Church is, in principle, in favour of changing the law. However, he cautioned that the loss of title may cause the local parish financial hardships, and that compensation for the financial loss that would occur must be taken into account. The full transcript of the debate is reproduced below.

Chancel Repairs

Asked by Lord Avebury: To ask Her Majesty’s Government what steps they are taking to abolish the liability of private householders and others for chancel repairs.

Lord Avebury (LD): My Lords, a consensus that reform of the law on chancel repairs is long overdue has emerged from discussions with the church, the Law Commission, the Law Society, the Country Landowners’ Association and the National Secular Society. Since the Chancel Repairs Bill will not make further progress until after the general election, a preliminary debate on the issues is useful now.

By the 12th century, the liability to pay for chancel repairs, the CRL, was already linked to the tithes being received by the rectors of certain parishes. At the Reformation, Henry VIII sold the right to the tithes to lay people who became liable for chancel repairs as “lay rectors”. Under the current law, the Tithe Act 1936, some lay rectors are still responsible for those repairs, but the tithes which originally enabled them to make a profit from the transaction were abolished. The unfortunate remnants were those who owned land that was not relieved of the burden in 1936, or their successors in title, who have been living under a sword of Damocles for the past 78 years. It is for discussion whether major institutions such as the schools of Eton and Winchester or the colleges of Oxford and Cambridge should continue to be required to pay long-standing non land-based CRL, but it is unreasonable for the owners of generally small plots of land in some 2,500 Anglican parishes in England—around half of them—to be potentially liable for the charge, which is without limit.

The Chancel Repairs Act 1932 reasserted the little-used right to enforce CRL, but transferred enforcement from the ecclesiastical courts to the county courts after a lay rector was sentenced to prison by the High Court for contempt of the ecclesiastical court for non-payment of CRL. It was seldom recovered during the succeeding half-century, and in 1981 the General Synod accepted the recommendation of its standing committee, headed by the late Archbishop of Canterbury Lord Runcie, to phase it out. In moving to receive the committee’s report, Mr Clark of Southwark said:

“So I hope we shall support the suggestion that we phase out these liabilities, just as the Church of the 1830s agreed reluctantly to tithes being phased out”.

The synod approved the recommendation, but declined to use its legislative powers to implement it. Soon after, and with Church of England involvement, the Law Commission recommended the abolition of CRL by statute after a 10-year notice period, which would by now have long expired. That recommendation, made in a well argued paper, was not implemented, but if the synod itself agreed to ending CRL, thinking it unlikely that compensation would be forthcoming from the Government in 1982, it would be even less realistic in this age of austerity to expect the taxpayer to reimburse parishes for the loss of a doubtful future income. Given the furore over even the registration of CRL of properties in the roughly one in 20 parishes thought eligible to do so, parochial church councils have wisely refrained from enforcing their legal rights since 2003, so are they worth anything?

The state already contributes hugely to the upkeep of churches through gift aid worth some £84 million; the Listed Places of Worship Grant Scheme worth £42 million; the National Heritage Memorial Fund, currently funding repairs to Winchester Cathedral costing £14 million and of York Minster at £18.3 million; further grants to cathedrals recently announced worth £8 million; Heritage Lottery Fund grants to churches of £300 million in the 10 years to 2004, the lion’s share to the Church of England; and finally, £15 million recently announced by the Chancellor of the Exchequer for repairs to church roofs and rainwater pipes under the Listed Places of Worship Roof Repair Fund.

In 2003, following a refusal by English Heritage to fund repairs to the church in Aston Cantlow in Warwickshire, the local PCC refused an offer of £25,000 from the lay rectors, Mr and Mrs Wallbank, and the parish took the case all the way to the House of Lords, with the active support of the Archbishops’ Council. There, the Wallbanks lost, and had to sell their farm to pay the CRL and costs approaching £500,000.

Parliament reacted with an order providing for registration of CRL at the Land Registry, to alert buyers to land being subject to the liability, since it was rarely shown on deeds, but lawyers doubt whether buyers of unregistered land are protected as envisaged when the order was enacted. The church warned PCCs that failure to register under the order might render trustees personally liable, so it is little wonder that an estimated 17,000 titles in a few hundred parishes have been registered. The vast majority are owned by ordinary householders, not major landowners.

Attempts were made to mitigate the harm to the mission of the church that registration caused. Titles were singled out where the return seemed most lucrative or there was likely to be opposition. PCCs often announced that there was no intention of enforcing the liability. However, assurances are not legally binding and can be rescinded at the stroke of a pen. Even cancellation of the registration does not extinguish the right to enforcement.

PCCs were ill equipped for the laborious and exacting work of registration, often involving missing, archaic or inaccurate documents. Unsurprisingly, thousands of registrations have been made in error, compounding the distress caused to householders. This happened, for example, in Gorleston in Norfolk, where all of the nearly 1,000 registrations had to be withdrawn.

Given the hostility to registration reported by the media, churches would find it extraordinarily difficult and counterproductive in terms of their relationships with their parishes to sue for recovery of CRL. It appears not to have been attempted since Aston Cantlow. Registration is literally a medieval anomaly that undermines the value and saleability of land, creating lasting animosity towards the church, without achieving the objective of improving the funding of chancel repairs. It aims at taxing citizens who may not even be Christian or belong to any religion, for the purposes of one faith out of dozens in our multicultural society.

Even more harmful for many landowners than the exposure to unquantifiable and theoretically limitless CRL is the blight of registration, significantly reducing the sale price and even making the property unsaleable, particularly to buyers requiring mortgages. Since Aston Cantlow, purchasers of land have routinely taken out insurance against having to pay CRL, and this has proved very lucrative to the insurance industry, given that payouts have been minimal. But for property blighted by registration, premiums are astronomical or insurance is totally unavailable.

The only fair solution is abolition, modelled on the Law Commission’s recommendation, but until that can be effected, a much greater availability is needed of compounding—the ability to buy out the liability to CRL, at low cost and minimal professional fees. At Edingale in the diocese of Lichfield, the diocese agreed after long and stressful negotiations to accept just £45 from a householder to extinguish her liability to pay CRL of thousands of times that amount if it had been recoverable. Without compounding, any would-be purchaser would have had to take into account the probability that, ultimately, the church would be able to enforce the claim, as it did in Aston Cantlow.

Some dioceses already recommend compounding, but a uniform countrywide scheme would be the ideal, possibly by way of amendments to the Ecclesiastical Dilapidations Measure 1923. The initiatives of the Reverend Greg Yerbury, team rector of Penkridge, Staffs, might provide a useful model. In any case, based on the principle that half a loaf is better than no bread, it might be sensible for the church to devise a workable national scheme for compounding before we return to the Chancel Repairs Bill, abolishing CRL altogether after the general election.

Baroness Wilcox (Con): My Lords, I thank my noble friend Lord Avebury for bringing this subject to the attention of the Committee and thereby giving us all the opportunity to discuss a very important matter—chancel repair liability. In my role as chairman of the London Diocesan Advisory Committee and as an active member of my parish church in Cornwall, I see more of the varied picture that the Church of England presents than do most people. The views I have heard from the members and officers of the Church of England on the subject of chancel repair liability are equally varied. I speak now as an individual member of the church, not on behalf of any church body.

As we have heard from my noble friend Lord Avebury, this matter is one that can come between churches and their local communities, and it has long been understood that something must be done to remove the element of surprise from the situation. Those of us within the church had been resting on the assumption that something has been done. In 2002, Her Majesty’s Government brought the Land Registration Act on to the statute book, giving the church 10 years to get its house in order and register legitimate chancel repair liability, after which the door would shut in October 2013. That was the date that we all had in mind: October 2013. After that, it would be settled, with no more scope for nasty surprises—surprises for churches seeking grant funding that are coerced into researching historic liabilities, and, of course, surprises for the owners of properties affected by those liabilities.

There are two sides to every story, of course. In fact, many registered chancel repair liabilities are against wealthy institutions, the church authorities themselves or others who are well able to pay. Those landowners would no doubt be pleased to see the value of their asset rise as a result of the abolition of chancel repair liabilities. However, the worst-case scenario is more often quoted. An unsuspecting person of modest means buys an unassuming house only to discover, despite having taken all possible precautions, that they are liable for a bill of a quarter of a million pounds to mend the church roof. That nasty element of surprise is undoubtedly one of the worst aspects of the current state of affairs, but I wonder how often it actually occurs. I do not have the numbers, but I hope that my noble friend may have the list to hand when he replies to the questions which I and others are asking.

It was precisely that problem which Her Majesty’s Government sought to tackle in the Land Registration Act 2002. At least, that was the popular understanding among my church friends. I think that it is fair to say that in practice the law is not what we all hoped for, a view supported by the Law Society in its parliamentary briefing. Its principal limitation is that it applies only to properties sold since October 2013. All property which has not been sold since October 2013 continues to dwell under a cloud of uncertainty. Even worse, the point of sale being the completion of the sale means that, at least in theory, it is possible to discover and register a new chancel repair liability between exchange of contracts and completion. That means that even when a property search has been returned blank, there remains a risk. Unsurprisingly, the insurance industry has risen to the challenge, and chancel repair liability insurance remains a lucrative business. In practice, the 2002 Act has not met the needs of churches, landowners or potential purchasers.

To my mind, the neatest, fairest and best solution to all this is to bring forward a law to fulfil what we hoped was the ambition behind the 2002 Act: to remove uncertainty and any further possibility of nasty surprises. However, to abolish chancel repair liability altogether without compensation to the churches concerned would not send the right message to the volunteers struggling to maintain our church heritage.

I do not dispute that the present Government have been generous in their funding for church buildings, but in the European context, where many countries’ churches are funded largely by the state to the tune of billions, we get extremely good value for money. The volunteers of the Church of England care for 12,500 listed buildings—more than 10 times as many as the National Trust and English Heritage combined. While churches can apply to certain grant funding pots, there is no guaranteed state funding at all for this substantial part of our national heritage.

While grand country houses and ruined castles are, at best, noble works of art and, at worst, symbols of local oppression, our historic churches represent the very best hopes and aspirations of the communities that built them, celebrated their lives in them, and were ultimately called to that final act of parish communion in their churchyards. In seeking to legislate further to end the undoubted unfairness of the present system of chancel repair liabilities, I urge the Minister to ensure that hard-pressed individual congregations tasked with caring for this very significant part of our heritage are not put at a disadvantage as a result.

Lord Cashman (Lab): I, too, congratulate the noble Lord on enabling this important debate on an issue which should have been settled years ago but that I hope will be settled soon. I know that I am not alone in having received supportive calls for the repeal, or at least the reform, of this liability from, among others, the Law Society of England and Wales and the National Secular Society. The Law Society is calling for reform of chancel repair liability for a number of reasons, but primarily to reduce the financial burden on purchasers of land and speed up the conveyancing process. It also puts the case that, more widely, reform could help to improve the UK’s standing in the World Bank rankings of ease of doing business. Interestingly, in the section on registering property, we are currently ranked 68th, against an overall ranking of eighth. Much more, clearly, needs to be done.

More widely, the number of property titles blighted by CRL per parish ranges from as few as one to hundreds or even thousands. Where it is a small number, the people singled out will feel doubly vulnerable because of the several nature of CRL—that, in many cases, any one landowner can be sued for the entirety of the repairs needed, as happened in the previously-cited case of Aston Cantlow. Where the number of CRL registrations in a parish is large, untold distress is caused to a significant proportion of the community, including many without the knowledge or resources to cope with it. In Lytham St Annes, more than 6,000 titles were reportedly registered by the church, the largest number in the country. I believe that the parish with the second largest number of registrations, approaching 1,000, is Gorleston on the Suffolk coast, a town I know well. It is a town with a high proportion of elderly residents, and not a wealthy one; 20% of people are on benefits, compared with 13% for England as a whole. With so many properties sharing the CRL burden, the individual sums recoverable would, one could argue, have hardly been worth collecting or registering, but much as in Lytham, the church in Gorleston gave the impression that the registrations were made just to follow orders, or as the vicar said, “in order to comply with the requirements of the Charity Commission placed on the trustees of charitable organisations”.

The tale goes on. The vicar offered property owners a way out: pay the parish £50 and receive what he described as a “certificate of exemption”. He promoted this as being cheaper than insurance. The recognised way, of course, of buying out CRL is through the Ecclesiastical Dilapidations Measure 1923, under which the money goes to the diocese. These exemption proceeds went to the parish, and an acknowledged expert on CRL has seriously challenged the exemption’s validity. The vicar, too, seems to have had second thoughts, for he has refunded the £50 contributions, which he had said were better than insurance, seemingly whether or not the property owners wanted to lose the exemption they assumed that they had contractually secured. The parish has, it seems, thrown in the towel. I quote this as an example of damage done to the many. It has thrown in the towel because every registration has been revoked, but only after about a year of heartache and uncertainty for those whose properties were registered.

Although I imagine that some owners may reasonably assume that the Church’s right to sue for CRL is thereby removed, the PCC remains free at any time in future to reregister or, more importantly, to sue for it. I hope that I have put the case not only for reform but for repeal. I believe sincerely that CRL is a pernicious, medieval relic and the time is long past for the curtain to be dropped rather heavily upon it.

Lord Taverne (LD): My Lords, until I found out from my noble friend Lord Avebury what his debate was about, I must confess that I had never heard of CRL. Then I discovered that this ancient, medieval, ecclesiastical relic still exists and can have potentially catastrophic effects on thousands of owners of mainly small plots of land in some 2,500 Anglican parishes. Owners can be held responsible for the cost of repairs to churches amounting to tens of thousands of pounds and that potential liability can make their house unsaleable. The liability is perpetual and can be annulled only by compounding—that is, by buying it out. This can involve large legal, surveyors’ and insurance costs, if it can be insured against at all.

Churches have argued that owners knew or should have known about this when they bought the land but they generally did not know, or they would have avoided making the purchase. In time registration of land was made an option for churches so that owners would know about their liability for CRL, recorded in the Land Registry, but many bought their property before registration. For example, 30 families in Broadway found out about it only when they received a letter from the Land Registry. It was a traumatic discovery causing an outcry of anguish, duly reported by their Member of Parliament, and in the end registration of their property was withdrawn because of its effect on the reputation of the church.

That unlikely adverse publicity for churches has meant that since the Aston Cantlow case they have not asserted their right to sue landowners, but its existence still blights owners’ property. One landowner was nearly driven to suicide because he lost his principal assets. Sometimes registration by the local church has proved ineffective because the archives holding the records are difficult to trace. Some people have therefore tried to get registration overturned, but the costs are huge and the task is impossible for laypersons because of the legal complexities and because the owner might need to find the relevant archives which are kept in different locations. It is no wonder that the Synod recommended in 1981 that CRL should be phased out. Unfortunately, it did not press the issue.

The case for abolition of this oppressive anachronism is overwhelming. It can ruin lives and I am told that the legal position, even of those who have not had their properties registered, is uncertain. It should go the way of tithes, and I hope that the right reverend Prelate will pass on to the most reverend Primate the Archbishop of Canterbury, who has shown deep concern about social justice, our pleas that this anachronous imposition of huge burdens on possibly thousands of landowners should be ended as soon as possible.

The Earl of Lytton (CB): My Lords, I, too, welcome this debate and thank the noble Lord, Lord Avebury, for the opportunity. In rising to support him, I declare an interest as a chartered surveyor, as an occasional provider of quinquennial surveys on ecclesiastical property and as a valuer—not in the matter of professional involvement with CRL but rather the implications for valuation and the philosophy of this ancient impost more generally.

In every consideration of property valuation the question of risk looms large and often has a disproportionate effect on net present value. Typically, that is reflected in a discount rate or the rate of accumulation applied in a valuation. This is not just theoretical science but reflects the real world of human response to risk and reward over extended timescales and observed over centuries. CRL affects land value because of how the liability is transmitted and how it attaches to owners.

There is one thing more potent in valuation than a perceived liability and that is a liability that cannot be quantified. To counter it often requires the adoption of a worst case scenario. CRL, to quote Donald Rumsfeld, is full of “known unknowns” and here are some of them. First, whether it applies at all is far from obvious. The basis of liability—is it keeping a chancel windproof and watertight, or is it something more elaborate?—has been the subject of a more recent decision. What is the resultant amount of the liability and its calculation? Is it shared or individual—joint or several, to use the technical term? The timing of its imposition and the inability to defer or amortise regardless of impact is significant. The reliability of safeguards such as insurance and the implications for professionals, which have been raised by the Law Society, are certainly uppermost in my mind as a professional myself. There is the difficulty of buying out the liability—or compounding, to use the correct term—at a fair sum and at a time of one’s choosing. There is the absence of a right of appeal against either the impost or the quantum. There is the potential for expensive delay at critical moments, with consequential market-value effects, and it can be a severe impediment to transactions. Unfortunately, as the noble Baroness, Lady Wilcox, mentioned, the Land Registration Act 2002 has not resolved the issue; it has simply put a large part of it into the long grass.

Liability falling on wealthy landowners may be one thing but when it falls on unsuspecting householders, reluctantly deemed by the PCC to be the most amenable of various possible pockets, that is clearly something else. The selectively capricious manner of its imposition hugely adds to the risk and to the disproportionate resultant contagion. It can destabilise family finances, destroy livelihoods and wreck lives, as we have heard. The ability to pay matters not one jot. I cannot prove this but I suspect that CRL has the potential to destroy more third party property value than it confers in benefit in terms of chancel repair.

I am no great moralist, but if CRL were in the hands of private landowners, such non-recourse powers would have long since been outlawed as contrary to the public interest. I was raised in the Roman Catholic faith. I know very well that desirable ends of maintaining places of worship exist but they do not necessarily justify capricious or inequitable means of financing them. Part of the problem is that although there is a perception of the great wealth of the established church, administered under the auspices of the Church Commissioners, this does not inure for the benefit of parochial church councils, which are legally obliged to shoulder the funding of church repairs from their own resources and congregations. Although the real estate, if I can term it that, belongs to the diocese and is administered centrally, it is the parochial church council that has the unfortunate business at the sharp end of imposing CRL. This is a fairly invidious state of affairs. Clever financial minds—I do not single out the Church of England for this; far from it—have segregated asset from parish burden, and this is part of the issue.

Like the noble Lord, Lord Avebury, I ponder the message that this sends out. It seems to me that there is a consensus that CRL should be abolished, and I hope the Government will get on with it.

Lord Rooker (Lab): My Lords, I am very happy to support the noble Lord, Lord Avebury. I want to tell your Lordships a story. It is the story of Helen Bailey from Staffordshire, whom I spoke to yesterday evening.

Helen Bailey said: “The parish church officials in Edingale, Staffs, seemed entirely ignorant of the consequences of registration on title holders, and they appear to have given the affected individuals not one iota of thought and were utterly insensitive. They appeared not to have had any guidance regarding the human impact of CRL from the Lichfield diocese or from the church centrally, and seemed to be treating it as some sort of purely legal and technical matter. No attempt was made by the church to consult with owners, as had been the case in the adjacent parish of Alrewas, as a result of which registration was not proceeded with. Having decided in principle to register, it apparently did not occur to the Edingale Parochial Church Council to establish whether there were any extenuating circumstances rendering registration an act of callousness or even inhumanity. The church officials did not even observe the most basic courtesy of informing us”—that is, Helen Bailey and her neighbours—“of what they were about to do, or even had just done. The first I learnt about registration was when the letter arrived from the Land Registry. The next day I met one of my neighbours who had also received a letter; she looked as white as a sheet and had clearly not slept. The owners of the adjacent farm, who own the bulk of the affected land, received no notification. The land was not registered, so they got no notification from the Land Registry and it was only much later, at the insistence of the affected homeowners, that the church took any steps to inform them.

“Some weeks after registration a church official appeared on my doorstep, clearly very proud of his prowess in having navigated the mechanics of registering CRL and apparently expecting me to congratulate him. He seemed astonished when instead of being impressed, I expressed my anger and concern and acquainted him with the consequences of his actions. The church council appeared not to have done the basic internet research into CRL, which would have revealed its potential to blight the lives of affected individuals.

“Fortunately, my background as an accountant and experienced CAB adviser and as an advocate equipped me to do some research. Initially what I learnt served only to create increased anxiety as the full implications became clear. Recognising that CRL would in all probability make my property unmortgageable—and therefore potentially unsaleable—I had no choice but to try to find a solution. Initial letters to the church yielded nothing beyond denials of responsibility and hollow sympathy; there was an almost bewildering refusal to engage in the distress it had caused. The local vicar was more genuinely sympathetic but had no idea how to resolve the damage inflicted on my neighbours and me. In the end I was very fortunate to find myself in contact with the Reverend Greg Yerbury, whose integrity, expertise and kind assistance proved invaluable.

“My researches revealed that the historical proofs relating to CRL in Edingale were less than unequivocal but sadly also revealed that my neighbours and I had to disprove liability rather than the other way around, something we could not possibly afford to do. Assurances by the PCC that they had no intention of ever enforcing CRL were of no value at all as they did not remove the blight. Insurance was no longer available now that the liability notices had been registered and we eventually concluded that the only truly effective way to get rid of the blight was to buy out the liability via compounding under the 1923 legislation”—which has already been referred to.

“Again with Greg Yerbury’s support, I approached the church regarding compounding. Its initial response was unfortunately pretty unhelpful as it would involve fees for solicitors, accountants and surveyors which would have run into thousands and been quite unaffordable, even if shared. Eventually, and only after considerable effort, a more pragmatic solution was arrived at by Reverend Yerbury on the basis of a calculation proposed and agreed with all parties. Because Edingale parish church is small, relatively modern and the chancel is in good repair, the compounding cost ended up being calculated at around £50 per acre. In the end I succeeded in arranging compounding and it cost me £45”.

Helen Bailey continued, “It has been suggested to me that this trivial settlement sum proves that I was making an unnecessary fuss about nothing, but the absolute reverse is true. The settlement sum demonstrates the financial sabotage of CRL and the true idiocy of enforcing this ancient and anachronistic legislation. The church has gained practically nothing. For the sake of £45 they wrought disproportionate destruction on the value of my home and brought misery to my neighbours and me. Had I not drawn attention to this in the media and tracked down Greg Yerbury, who has been most helpful”—he seems to deserve a medal, I might add—“I am sure that my neighbours and I would still be in this invidious position”.

It is time for this legislation to go. I am in favour of preserving our church buildings, although I am not a churchgoer. I have two lumps of stone from St Laurence’s in my back garden, bought at auction to support the refurbishment of the church. I have no problem about that, but this legislation has to go.

The Lord Bishop of Derby: My Lords, how do I follow that? I thank the noble Lord, Lord Avebury, for introducing this debate. As a number of noble Lords have said, the Church of England is on record as supporting the principle of abolishing what has helpfully been called CRL, to put it into shorthand. It is very important to stress that. We are on record as saying that we support abolition in principle. The question is how and on what terms. Clearly, it is in no one’s interests to hear stories such as the one we just heard from the noble Lord, Lord Rooker. How could CRL be abolished? The fact is that property—not only the properties under CRL—is often subject to rights and restrictions. This is not new, and it is not unusual. In the Wallbank case in 2003 the House of Lords recognised that this was a right commensurate with other rights. In the 2003 judgment, Lord Rodger of Earlsferry stated that,

“in principle I do not find it possible to distinguish”,

CRL,

“from the liability which would attach to the owner of land which is purchased subject to a mortgage, restrictive covenant or other incumbrance created by a predecessor in title”.

It may feel anachronistic, but the fact is that it is not unusual for properties to be subject to these kinds of restrictions and challenges. In law, the most recent judgment we have from the House of Lords found that it was not easy to distinguish this from others. We can distinguish the pastoral effects of the cases, but in terms of good practice in the management of property and of rights it is a much more complicated issue.

The noble Lord, Lord Avebury, made important statements about the amount of funding the Church of England receives from the Government, and that is very welcome. However, as the noble Baroness, Lady Wilcox, said, the churches have to put in an enormous effort to maintain the buildings. They are not just a vital part of our built environment, but a facility that is there for people when they want it, as they want it and on their terms. A very few of us keep these buildings fit for purpose as a spiritual resource and a spiritual sign.

It is interesting that the Tithe Act 1936 did not abolish CRL. Parishes are often willing to come to a sensible arrangement, although in the story we have just heard it was a very tortuous route. For instance, in my own diocese in Derby, one of the former Dukes of Devonshire had quite a lot of liability in a number of parishes of which he was a patron. Years ago he commuted this responsibility in return for a financial payment, and he now has no liability at all. I make that point because, of course, if we suddenly abolish all this, some people have paid compensation in good faith and in recognition of that right and that the Church needs to be recompensed in some way. We have heard again that trustees have a liability to maximise assets. Again, I do not endorse the way in which this was done in the story which the noble Lord, Lord Rooker, gave us. That showed the wrong enthusiasm, but you have to be enthusiastic for maximising the assets that you oversee.

How can we proceed to get rid of the CRL and all the problems it causes? The advice we received is that—under the European Convention on Human Rights and the Human Rights Act, and taking into account the previous practice of the Government, the Tithe Act, and the previous practice of individuals such as the Devonshires—in all those cases such a right is commuted in return for some kind of compensation. That is the principle by which legislation would need to proceed. It is a well known constitutional principle that Parliament does not deprive a subject of a right in the nature of property without providing compensation.

I propose that we have to proceed to change. All the speeches have made that clear. This has to be done on the basis of compensation. This would be fair to the current liabilities that property owners hold, because they are legal liabilities. It would be fair to give parishes notice and some kind of recompense for having to take on an even greater burden of the maintenance of buildings. This would be fair to current legislation and good practice in the administration of property and of property law, as Lord Rodger reaffirmed in 2003. We are fully behind this. It is just a question of how it is done. There is a very strong case that there needs to be some element of compensation to be fair to all concerned.

Lord Kennedy of Southwark (Lab): My Lords, like other noble Lords who have spoken, I thank the noble Lord, Lord Avebury, for tabling this Question for Short Debate today. It is a most timely discussion.

As we have heard, chancel repair liability derives from the disposal of church lands following the Reformation. Previously, the rector had the obligation for the repair and upkeep of the church and was able to raise sums of money—tithes—from parishioners. After the Reformation, much church land was passed to lay landowners but the liability for upkeep remained, and this is the problem in effect. The lay landowner with the liability to pay for chancel repairs has no means to cover the costs.

Some progress has been made to deal with this anomaly, most recently in 2003 when the then Labour Government changed the law, as other noble Lords have mentioned, so that after 13 October 2013, where interest has not been noted at the Land Registry, any purchaser of land to which the liability previously attached will not be subject to it, although the current owners in such cases would remain liable. That is some progress but we need to go much further.

We are fortunate in this country to have beautiful buildings of all ages and types. They tell the story of our history and they should be preserved. Our system of listing buildings helps protect them. I note that the Church of England is responsible for maintaining 45% of the grade 1 listed buildings in the country and that the majority of all parish churches are grade 2 or higher. The right reverend Prelate the Bishop of Derby made reference to this obligation. We have to find another way to fund the upkeep of these buildings and phase out the chancel repair liability, particularly for individuals.

Looking at the Wallbank case, referred to by the noble Lord, Lord Avebury, which went all the way to your Lordships’ House—which found against the Wallbanks and left them with a repair bill that amounted to £250,000 including VAT, and legal fees of £200,000—you can have every sympathy with individuals who find chancel repair liability claims served on them, and it illustrates how unsatisfactory the present position is. The case established that chancel repair liability, although ancient, is an enforceable part of the land law of England and Wales, whereby property owners can be compelled to pay for the repairs to the chancel of a church.

The noble Lord, Lord Avebury, introduced a Private Member’s Bill into the House of Lords on 14 July 2014, the effect of which, on becoming law, would be to abolish the liability on lay rectors for chancel repair. With so few days left in this Parliament before it is dissolved at the end of March, I do not think the Bill is going to make much progress, as the noble Lord himself suggested. What the Bill is proposing to do goes in the right direction, but for it to make real progress in the next Parliament there also have to be provisions to identify replacement funding, and that is where the Government come in.

Responding to a debate in the other place on 17 October 2012, Helen Grant did not offer much comfort and generally took the line that the provisions in place as a result of the 2002 Act have achieved a “better balance” and that the Government were not “persuaded” of the need for change. I contend that the Government need to move on from that position and try to find a lasting solution. Not to do so would continue to make certain properties unsaleable, bringing blight and distress to people, and that cannot be right.

I hope that the noble Lord, Lord Ashton of Hyde, when he responds to the debate, will be able to give a commitment that the Government recognise that there is a real issue here that needs to be addressed; that abolishing the liability in its entirety or at least for private individuals is long overdue; and that they will work with the noble Lord, Lord Avebury, and the Church of England to enable him to bring forward another Bill early in the next Parliament that resolves this question finally and provides a mechanism for replacement funding to be identified. That could just be the Government ensuring that, when the liability is removed, the Church of England will be able to apply for other funding streams. If the Government committed to working with the noble Lord, Lord Avebury, and the Church of England in a similar way to that in which they have worked with the noble Lord, Lord Naseby, on the Mutuals’ Deferred Shares Bill, they could make much progress here, which would be to their credit.

The noble Lord, Lord Ashton of Hyde, has heard the right reverend Prelate the Bishop of Derby say that the Church of England wants to get rid of the chancel repair liability. I therefore hope that he will take up my suggestion and work to resolve this, and not just tell the Grand Committee that the Government are going to keep the matter under review, because we all know what that means—that the Government are going to do nothing at all about it, which is not acceptable in this case.

Lord Ashton of Hyde (Government Response): My Lords, I am grateful to my noble friend Lord Avebury for raising the issue of chancel repair liability for debate today. I am also grateful for the interesting contributions of other noble Lords who have spoken. I feel, in some ways, that the right reverend Prelate should be here, I will not say in the dock, but here with me to answer some of the speeches, which were all on the theme of changing the present situation. I listened carefully to the concerns expressed about chancel repair liability and I am sure that the Ministry of Justice will consider them in detail, but I must make clear—I trust that this will not come as too much of a shock to noble Lords, except, perhaps, to the noble Lord, Lord Kennedy—that the Government have no plans to change the law at present. None the less, it is because we take the concerns seriously that we are keeping the situation under review.

I do not have time to go through the long history of chancel repair liability. In fact, my noble friend Lord Avebury has dealt with that admirably, as have other noble Lords. The Law Commission has considered the liability a number of times since the 1960s. The present legal position is that chancel repair liability is an ancient but valid right that enables the owner, who, in England, is usually the PCC, to enforce the liability. This right can play an important part in the finances of the 5,000 or so churches with the benefit of the liability. In earlier times, the main problem was that the liability was sometimes difficult, if not impossible, for a prospective buyer to discover. Now, following the removal of its status as an overriding interest in October 2013, its existence is readily discoverable. This is a major improvement, as my noble friend Lady Wilcox said.

On the other hand, the unpredictability of the incidence of the liability, its open-ended size and particularly its joint and several nature, mentioned by the noble Lords, Lord Cashman and Lord Rooker, still attract criticism. It is, however, unclear how far these potential problems are causing widespread real difficulties in practice. The Ministry of Justice’s impression is that enforcement, now and for some time past, against ordinary homeowners is rare. This may be a consequence of the relatively small number of chancels, probably about 500 to 600, where the liability falls on individual property owners. It may also be because PCCs are reluctant to enforce the liability. Their wider mission may, perhaps, not be best served by imposing financial hardship on individual members of the local community. That is, however, a decision for individual PCCs, who can get advice from the church and the Charity Commission, as well as their own legal advice.

Under Section 110 of the Charities Act 2011, trustees can get reassurance from the Charity Commission that they are acting in accordance with their duties. It may also be that the level of concern about the liability has been temporarily increased by the registration. My noble friend Lady Wilcox asked how many ordinary householders are affected by this liability. We do not have the statistics indicating how many ordinary householders are affected, but the Land Registry has received about 9,000 applications for registration of notices and 160 applications for the registration of a caution against first registration. What we can be sure about is that there are enough people who may be affected to take this subject seriously.

The Government appreciate that homeowners who were unaware that their home was subject to the liability may well have been worried by the notice. The speech by the noble Lord, Lord Rooker, reminded us of the effects to real people, not just in theory, but the reality is that their legal position has not changed. The fears that were expressed leading up to the deadline of October 2013 that the registration of a notice can render a property unsaleable or unmortgageable do not seem to have materialised, nor does the market in chancel repair liability insurance seem to have disappeared. That is not to say that chancel repair liability cannot or will not cause major problems for some homeowners, but at present it is not clear that liability is doing so in practice.

Even if reform is necessary, it may not be straightforward, as the right reverend Prelate made clear in a very measured speech. Abolition, as advocated by the noble Lords, Lord Avebury, Lord Cashman, Lord Rooker and others, would almost certainly require compensation to be paid because chancel repair liability is a property right protected by the Human Rights Act, as confirmed by the House of Lords. The sums involved in aggregate might run to hundreds of millions of pounds. The right reverend Prelate suggested that compensation is the way to abolition but he did not mention by whom. The noble Lord, Lord Kennedy of Southwark, said that that is where the Government come in.

Schemes for release, redemption or compounding might be created or present ones, as outlined in the Ecclesiastical Dilapidations Measure 1923, improved, but their cost and attractiveness to prospective users would have to be considered carefully. The noble Earl, Lord Lytton, mentioned some of the difficulties in estimating a compounded amount, taking into account the net present value for an unlimited liability stretching forever. What discount rate, for example, would one use, taking into account the average interest rate across all years forever?

I know that my noble friend Lord Avebury and other noble Lords will be disappointed that the Government are not developing any proposals for reform at present but I assure noble Lords that the Ministry of Justice will consider evidence of actual hardship or general problems that the law may cause and will keep the situation under review.

Lord Kennedy of Southwark: Having heard the contributions of noble Lords, in particular from the right reverend Prelate the Bishop of Derby, that is a most disappointing response from the Government and makes no attempt to deal with the issue.

Lord Ashton of Hyde: The problem is that nobody has come up with a simple way of how to do it, except by providing compensation, because it is a property right under the Human Rights Act. The issue is: who provides compensation to the people who own the right? We have decided that there is no necessity to do that when there is no actual example of hardship taking place at the moment. The reason that I said that we will keep it under review is that if there is evidence of actual hardship taking place, we will consider this measure.

Lord Avebury: As we have a couple of minutes, I ask the Minister whether the Government will encourage the church to consider the schemes of compensation that I mentioned at the end of my speech, which have been successful in certain parishes? As we heard, one householder managed to compound his liability for the sum of £45. If the church could be encouraged to consider that sort of solution, it might solve the financial problem.

Lord Ashton of Hyde: I believe that the church is in discussions with the National Secular Society, for example, in dealing with this. The Government have said that they are prepared to join in those discussions or to take account of them. Beyond that, I am not able to commit the Government but I know that we will be interested to listen to what they have to say and we are prepared to take part in those discussions.

Lord Kennedy of Southwark: Is it not possible for the Minister to say today that he would welcome discussions between his officials, the noble Lord, Lord Avebury, and the Church of England? If this could be resolved, everyone would be happier. I do not see why he cannot even offer that to the Committee.

Lord Ashton of Hyde: I did indicate that when it comes to dealing with the church and the National Secular Society, we would take part in discussions if required. I also made clear that if there was evidence of hardship, the Ministry of Justice would consider it. I do not think that that is unreasonable in the absence of any actual evidence of hardship at the moment. If there is evidence of hardship, we will discuss it, and of course we are always willing to talk to the noble Lord, Lord Avebury, or any other noble Lords at any time.

(via Parliament.uk)