THE CHAIR Mr James Humphery (Salisbury) took the Chair at 11.00 a.m.

The Chairman: By permission of the Business Committee, we now move to an extract from Questions, to deal with a range of Questions concerning Octavia Hill. I would just like to remind members that we are now in Questions mode and that Standing Orders 106 and 107 apply. This is very much Question Time and not statement time.

Mr Gavin Oldham (Oxford): On a point of order, Mr Chairman. Under SO 18 I wish to make a statement of personal explanation regarding matters raised by the Bishop of Worcester on Monday evening which are the subjects that we are discussing now.

The Chairman: I will take advice on that.

Mr Oldham, I am grateful to you for raising that but I am not going to permit you to proceed. My view is that a point of personal explanation should have been raised at the time or immediately after the remarks about which you are concerned were made. I would like to proceed now with Questions.

Mr Gavin Oldham (Oxford): If I may say, with respect, Chairman, at the time that the remarks were made we were expecting a following motion on the subject of Octavia Hill. That was lost because we had insufficient time. There was therefore not the opportunity to make a personal explanation but I really feel that there is an obligation to do so because sweeping statements were made in that summing-up and they do need a reply.

The Chairman: Mr Oldham, I hear what you say and members of Synod will have noted your concern, but I am not prepared to proceed with your point of order at this stage. I want to move on to Questions and consider the substance of the issues that other members of Synod wish to raise.

Questions 17-25 are for answer by the Church Commissioners and are to be answered by the First Church Estates Commissioner. I will not be watching the clock when he gives his first answer, but he and others should know that there is a speech limit of one minute for replies to supplementaries.

Questions

Questions asked in accordance with Standing Orders 105-109 were answered as follows:

Church Commissioners

17. Mr Joseph Brookfield (Blackburn) asked the Church Commissioners:

Have the Church Commissioners considered what impact their proposed sale of the Octavia Hill Estates is having on perceptions of the Church as a whole in wider society?

18. Mrs Christine McMullen (Derby) asked the Church Commissioners:

Given the acute shortage of affordable housing in south London, why is the proposed sale of the Octavia Hill Estates not restricted to housing associations which are registered with The Housing Corporation, who would be able to maintain this provision?

19. Mr Adrian Greenwood (Southwark) asked the Church Commissioners:

What enforceable conditions are the Church Commissioners attaching to the sale of the Octavia Hill Estates to ensure that (a) the terms of the tenancy agreements of existing tenants remain substantially the same and (b) future rent increases are restricted by a formula to keep them affordable, such as the Government’s current guideline for housing associations of RPI plus 0.5 per cent?

20. Mr Adrian Greenwood (Southwark) asked the Church Commissioners:

What enforceable conditions are the Church Commissioners attaching to the sale of the Octavia Hill Estates to ensure that a significant proportion of the properties are retained in perpetuity as affordable rented housing for people not able to afford to rent or buy on the open market in the area?

22. Miss Vasantha Gnanadoss (Southwark) asked the Church Commissioners:

Regarding the proposed sale of the Octavia Hill Estates in south London, are the Church Commissioners aware of the strong opposition to the proposed sale amongst tenants, local elected leaders and local church leaders, many of whom believe that the sale is contrary to the mission of the Church?

24. Mr Peter Haddock (Southwark) asked the Church Commissioners:

Why, since the Octavia Hill Estates have been managed as affordable rented housing over the past century, is the proposed sale not on an Existing Use (Social housing) Valuation?

25. Revd Paul Collier (Southwark) asked the Church Commissioners:

Why are the Church Commissioners proposing to sell the Octavia Hill Estates to the highest bidder?

Mr Andreas Whittam-Smith (First Church Estates Commissioner, Ex-officio): With the Chair’s permission, I will answer Mr Brookfield, Mrs McMullen, Mr Greenwood, Miss Gnanadoss, Mr Haddock and Mr Collier together.

As members of Synod know, the Commissioners’ Assets Committee decided last year to market the freeholds of their remaining properties on the Octavia Hill Estates. The Committee’s decision was taken as part of its overall investment strategy and reflected the fact that the Commissioners are not suitable owners of such assets, lacking the economies of scale and the sources of funding available to housing associations and to publicly quoted companies specializing in this field.

Last week the Committee met to review the bids received, and Synod will understand that we were faced with an extremely sensitive and difficult decision. The Commissioners are not a housing charity and have a clear legal duty to manage their investments to support the mission of the Church throughout the whole country. In particular, charity law requires trustees not to sell land or buildings at under value.

The Committee also carefully considered the nature of the bidders in terms of their potential impact on the estates and its tenants. The offers on the table were from private landlords, housing associations and joint ventures between the two. From the research we conducted into each of the offers, the Committee noted that, by and large, there was not a significant difference in the way these different types of bidder were proposing to manage the estates.

After much deliberation, the Committee agreed to accept the offer from a 50/50 joint venture between Genesis Housing Group, a registered social landlord that owns and manages 41,000 homes across London and the South East, and Grainger Trust, a publicly quoted company which owns over 12,000 residential units. The Committee believed that this bid was the best in all material respects.

From the outset of this process, the Commissioners have been open with residents and other stakeholders. We have welcomed the subsequent dialogue and have given interested groups and individuals every opportunity to make representations. We believe that the current sale will have the benefit of both meeting our obligations and being a positive outcome for residents. The estates will now be managed by a housing association, which is more likely to be able to invest in the estates for the future.

Rental policy will be a matter for the new owners and will not be a condition of the sale, although it is subject to the rights and obligations of the existing tenancies. Over 50 per cent of these tenancies benefit from either rental or tenure security and in many cases both. The Committee is satisfied that the management of these estates by the new owners will be in accordance with the best practice in the housing association sector.

Mr John Pope (Chichester): Was the decision to sell put to the whole board of the Commissioners or was it just the Assets Committee and, if so, why?

Mr Andreas Whittam-Smith: The Assets Committee of the Church Commissioners, under the law establishing the Church Commissioners, has exclusive control over the assets, so it was not put to the Board of Governors and it would indeed have been improper to do so, although the Board was extensively consulted. We could not consult until we had the first round of bids in front of us to see what was the colour of the bids, if you like, but in January, before the second-round bids were received, I met the four Commissioner bishops of the Church Commissioners in Leeds, at the end of their meeting, and earlier, last Monday, I met separately the Archbishop of Canterbury and the Archbishop of York. So I think that we consulted as much as was right, and we tried to be as open as possible.

The Bishop of Southwark (Rt Revd Tom Butler): Is the First Estates Commissioner aware that, as a charity, they are not necessarily called upon to maximize their assets when it comes to sales but that they are called upon to optimize their assets, and that if, in maximizing their assets, the good name of the charity or the mission that it stands for is undermined, it cannot be said that they have optimized their assets?

Mr Andreas Whittam-Smith: There will be many trustees of charities of different kinds in this hall at the moment and no doubt all will have wrestled with very similar questions, but we have at our disposal a judgment – the Oxford judgment – which is of quite recent date, 1991, which is addressed to the Church Commissioners, so it is not a precedent which we have to draw conclusions from, and which discussed the question of the Commissioners’ treatment of land. It was a judgment given by the Vice-Chancellor so it is at a very high level. I quote just one or two sentences from it: `If the Commissioners’ land is to be disposed of at an under value, they need an express power to do so. Such a disposition cannot properly be made in exercise of their power to make and change investments’. A lot of people have suggested to us that this can be stretched. People have quoted advice received from Lord Phillips, not the Lord Phillips who is Lord Chief Justice but another one. He was the counsel who brought the case on behalf of the Bishop of Oxford and lost the case. I am not disposed myself to ignore a statement so solemnly given, addressed to the Commissioners and of recent date, by the Vice-Chancellor.

The Bishop of Southwark (Rt Revd Tom Butler): Am I allowed another supplementary, Mr Chairman?

The Chairman: No, Bishop, you are not, I am afraid.

Canon Dr Christina Baxter (Southwell): I wonder if we might be told whether the Assets Committee are answerable to anyone other than God. If they are not answerable to the Board of Governors (which I knew was not the case), are they answerable to Parliament?

Mr Andreas Whittam-Smith: I would need advice on this constitutional point, but we are at least indirectly answerable to Parliament because the Church Commissioners themselves are. If there was to be a proposal that our powers be altered, it would in the end have to come in front of Parliament, and Parliament would have to judge whether we should maintain our exclusive control or not.

Revd Dr John Hartley (Bradford): When you mentioned that the Commissioners may not sell land at under value, does that mean under the price that the highest bidder is prepared to pay or does it mean under the value which it is generally felt that that property is worth?

Mr Andreas Whittam-Smith: You only establish the value of a property finally in a competitive bidding situation. That is the value: everything else is theoretical. In this case, there was quite a wide gap of some millions between the top bid and the third bid.

Revd Hugh Lee (Oxford): You said that it was a duty of the Church Commissioners to support the ministry of the Church. Do you understand that to mean to fund the ministry of the Church or do you mean it to support overall the ministry of the Church?

Mr Andreas Whittam-Smith: It is a mixture, I think, of the two. We are responsible, as I think everybody knows, for clergy pensions up to 1998. That is a straightforward financial duty. We fund bishops and their see houses and their working costs and so on. There I think we have to be very moved by the way individual bishops wish to carry out their mission; different bishops will have different ways of doing it and our arrangements have to reflect that. We also make funds available, through the Archbishops’ Council, to poorer dioceses, but then how the dioceses use those funds is entirely a matter for them and we cannot influence that.

Revd Peter Spiers (Liverpool): Given the legal opinion of the Vice-Chancellor and the constraints which the Assets Committee perhaps felt they were under, did the Assets Committee consider going back to the Vice-Chancellor, in the light of the decision that they were about to make, for clarification of his legal opinion?

Mr Andreas Whittam-Smith: This again is carrying me into legal territory, and I would need advice; but I think it would be fairly difficult, if not impossible, for us to have got a declaratory statement from the Vice-Chancellor in these circumstances. I do not believe that would have been possible.

The Bishop of Hulme (Rt Revd Stephen Lowe): Is the First Estates Commissioner aware that there are many of the elected members of this Synod who are Church Commissioners who are now increasingly anxious about the governance of the Church Commissioners, and does he now believe it might be right to have some sort of review of the nature of governance in the life of the Church Commissioners?

Mr Andreas Whittam-Smith: I think that it would be very proper to have such a review. The issue would be whether, if you subjected the Assets Committee to a variety of non-financial considerations, that would, over the course of time, be the financial result that the Church would be happy with. That would be the issue.

Mr Mark Russell (Archbishops’ Council, Ex-officio): We can all learn from experience, can we not? Bearing in mind that a lot of residents felt that they were not listened to in this process, could I ask, if the First Church Estates Commissioner had a chance to do this all again, if it would be done in exactly the same way, or could we learn something from this?

The Chairman: I am afraid, Mr Russell, that is out of order because you are asking for an expression of opinion, which Standing Orders do not permit, unfortunately.

Mr Andreas Whittam-Smith: Could he re-phrase his question?

The Chairman: We will move on.

Dr Philip Giddings (Oxford): Would the Church Commissioners explain, given the powers of the Assets Committee, what consultations there were with the local diocese, what steps are to be taken to improve relations with the local diocese in view of the concerns that have been expressed, and whether as a matter of policy the Church Commissioners would be prepared to commit always to consult the local diocese when such issues arise?

Mr Andreas Whittam-Smith: There were consultations with the local diocese. Do not forget that this was first announced last July, so there has been a very substantial period for people to make representations and so on. We have met at least two groups, one purely of clergy, from the local diocese. As far as the residents are concerned, we wrote to them on five occasions, and we set up a hot line so that residents could call us if they wished to discover more about the process. Remember that there are just over 1,000 properties and perhaps three or four people per property, so two or three thousand people, and I must tell Synod that only 20 calls were received in that period from July to December. That suggests to me that the concerns expressed were not perhaps as widely shared as some people might suppose.

Mr Adrian Greenwood (Southwark): I apologize for not being here at the beginning of these proceedings but, as the author of some of the Questions, I would like to follow up with a supplementary and ask the First Estates Commissioner whether, in the light of all the feed-back from Synod members, from local MPs, from the leader of the council at Southwark who, I believe, is writing to us today, he would instruct the Assets Committee to reconsider this matter so that a wider debate can be held and wider issues can be taken into account, bearing in mind that people’s homes are at stake here?

Mr Andreas Whittam-Smith: First of all, I do not think that people’s homes are at stake. As regards the security of tenure which the residents enjoy, either because they are Housing Act tenants or assured tenancies or they are shortholds, those conditions of tenure cannot be changed; they are established by the law: even the most rapacious, Rachman-type person cannot change those arrangements. I will not ask the Assets Committee to reconsider the matter because I very firmly believe that this is an extremely satisfactory outcome. The Commissioners are not satisfactory managers of this sort of property. We are not big enough; we do not have economies of scale; and I must tell members that, while the capital value has increased substantially, the actual income return we received, especially if we take into account the fact that we have spent £20 million on improvements in the very recent past, was close to zero. So I would not wish to go back on the sale.

Miss Vasantha Gnanadoss (Southwark): Are the rents going up?

Mr Andreas Whittam-Smith: The rents are all going to go up by six per cent. That is the figure, as it happens, set by the rent officer for the Housing Act tenants. That same figure is being applied to the other types of tenure. I must say that in 2005 the average increase in rents, when these properties were under the control of the Church Commissioners, was about six per cent, and that is very much what is happening in the market.

21. Mrs April Alexander (Southwark) asked the Church Commissioners:

What was the original purpose behind the development of the Octavia Hill Estates, and what was the rôle of Octavia Hill?

Mr Andreas Whittam-Smith: The concern of the Ecclesiastical Commissioners, having inherited certain London property, was to provide decent accommodation for the working classes. My predecessor wrote in 1934 that ‘it is the Commissioners’ policy to act as public-spirited landowners. It must be understood, however, that they have no funds especially applicable to housing … They are not, as is sometimes supposed, entirely free to sacrifice the objects entrusted to their beneficence in order to help other causes, however excellent or deserving of financial support’.

Octavia Hill helped the Commissioners manage their property, on the basis that the landlord is not merely a rent collector but is responsible for the spiritual and moral well-being of its tenants. Her concern was to provide well managed housing for the deserving poor as long as they paid an economic rent so that their souls were not corrupted by receiving something for nothing.

The Bishop of Southwark (Rt Revd Tom Butler): Is the First Estates Commissioner confident that the housing that is now being sold will still be available for London poor or indeed for key workers in London?

Mr Andreas Whittam-Smith: All the final bids on the table gave us assurances about key workers. In the case of the bid that we have accepted, the housing association part of that bid itself has a wholly-owned subsidiary called Pathmeads which will manage the properties and which itself does a lot of work for many London authorities, particularly in the area of key workers and also of asylum seekers and so on. So I have no doubt at all that key workers will remain a very important part of the estates, and with the housing association itself owning 50 per cent of it (so in a sense every flat is 50 per cent owned by this housing association), I cannot believe that they will not continue to honour that tradition.

Mr Adrian Greenwood (Southwark): Does not the answer to Question 21 indicate that ethical considerations affected the provision of the Octavia Hill Estates in the first place? My supplementary therefore is: why are ethical considerations not being taken into account now, in order to preserve the legacy that Octavia Hill left us?

Mr Andreas Whittam-Smith: I think that ethical considerations have been applied now. We deliberately indicated as far as we could, without falling short of our duty to maximize the value of the estates, that we preferred to see a strong involvement from a registered social landlord, and in the event that is exactly what came in front of us. The last three bids were none of them, so to speak, pure but they all had a strong, socially registered landlord impact, and that is the best thing we can do. The best thing we can do as a small player in this field and with other duties is to hand it on to somebody whose first concern is the concern you have mentioned.

The Chairman: Under Standing Orders, we can only take two supplementaries but in my discretion I will allow one more on this Question.

The Archdeacon of Lewisham (Ven. Christine Hardman): Was the matter of this sale referred to the Ethical Investment Advisory Group for its advice?

Mr Andreas Whittam-Smith: Again, I should say that the Ethical Investment Advisory Group has been on notice since July last year of this impending sale. Moreover we have the very great advantage of the fact that two members of the Assets Committee – the Bishop of Worcester and Mr Gavin Oldham – are also members of the Ethical Investment Advisory Group, so the channel is completely open.

23. Mrs April Alexander (Southwark) asked the Church Commissioners:

What undertakings were given to tenants, to local clergy and to the General Synod about the future of the properties on the Octavia Hill Estates in 2001 when the policy on rents was last reviewed?

Mr Andreas Whittam-Smith: The Commissioners’ policy statement of 2001 set out the basis of future rental policy on the estates and has been adhered to. In addition, since 2002 the Commissioners have undertaken approximately £20 million of improvements to the estates. When this statement was issued, the Commissioners undertook to keep their policy towards the estates under regular review, alongside their on-going review of all their investment assets.

Mrs April Alexander (Southwark): I wonder if the First Church Estates Commissioner could tell us whether there were any commitments made then which have not been met.

Mr Andreas Whittam-Smith: I am not aware of any.

Mr Adrian Greenwood (Southwark): In relation to the partnership between the Grainger Trust and Genesis Housing Group, whose subsidiary Pathmeads he referred to, is the First Estates Commissioner aware that Pathmeads Housing Association does not own property but only manages property on behalf of the private company and it would therefore be helpful if he could have confirmed that the sale is to a private company whose motive is to produce profits for its shareholders and whose intention will be to raise rents and to sell off properties as they become vacant?

Mr Andreas Whittam-Smith: I cannot confirm any of your statements. First of all, Pathmeads is wholly owned by the housing association, which itself is 50 per cent of the joint venture. Second, it is true that Pathmeads do not own any property. That is because they are specializing in managing property, and that is a perfectly reasonable thing to do. In fact, I think it is an advantage.

The Chairman: Thank you, members of Synod. That concludes this item of business, and Questions will resume tomorrow evening.