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Leaseholders’ Rights Bill

Volume 494: debated on Friday 26 June 2009

Second Reading

I beg to move, That the Bill be now read a Second time.

I start by declaring an interest. I am a private sector leaseholder and a director of the management company of the block of flats in which I live. I used to be chairman, but resigned because of a potential conflict of interest due to a planning application from the block next door.

I congratulate the two Members who have got their Bills through to Third Reading today; I hope that they will see their names in lights. After 17 years in this place, this is my second private Member’s Bill, and it stands about as much chance of getting through as the first one did. That first one was about a similar subject; it was about commonhold and leasehold issues before 1997. This Bill, however, is much more concentrated on public sector leaseholders. I say here and now that I am conscious that the Bill is defective; should a miracle happen and it get into Committee, I will be only too happy to correct it. There is an implication that the Bill applies to private sector leaseholders. My concentration and interest today is on public sector leaseholders, and I would seek to correct the mistake, to which I freely admit, in Committee.

I thank those who have helped with the Bill. I start with the hon. Member for North Southwark and Bermondsey (Simon Hughes). Frankly, I lifted most of my Bill from his Bill of last year. At that time, I pointed out from the Front Bench the same defects in his Bill for which I have just apologised in mine. He and I have long had a concern about the rights of public sector leaseholders and the unfairnesses that they face. I hope that, for once, we are in step together because we have to right the wrong that public sector leaseholders face.

I thank the many groups of public sector leaseholders that have briefed me extensively on their difficulties. I am thinking of leaseholders from Westminster, Camden, Islington and Orbit South, which has been transferred out of Bexley housing department. Part of the reason why I am interested in this subject is that I, too, have public sector leaseholders in my constituency of Beckenham. I have long sung the praises of the housing association, Broomleigh. However, the association and I have crossed swords over many years on the issue of public sector leaseholders. I think that it is beginning to get things right; it is certainly not as backward as some of the other registered social landlords that we are having to deal with. I also thank the Clerks and the Library for their help in preparing the Bill. I am grateful to everybody who has contributed to the Bill.

I want to put on the record how supportive the hon. Lady was last year when my private Member’s Bill was trying to make progress. I fully support this Bill and want it to make progress, because it is hugely important to thousands of people. Depending on how long the debate goes on, I may have to disappear for a little while to carry out constituency duties, as I hope the hon. Lady will understand. However, I will be back. She has my commitment that I will be there today and any other day before the end of this Session when she needs me.

I am most grateful to the hon. Gentleman. I promise that I am not planning to speak until he gets back—that would be totally unfair and would certainly take credit away from the Under-Secretary of State for Transport, the hon. Member for Gillingham (Paul Clark), for his marathon. I hope that we will still be discussing the matter, because I know that the hon. Gentleman has serious experience and expertise to contribute to the debate.

As I said, I have been aware of leaseholders’ problems for many years. In my original constituency of Hastings and Rye, we dealt with the difficulties that private sector leaseholders had. Over the years, we have managed to give them the right to consultation and to get their own quotes for works. Although the system is by no means perfect, private sector leaseholders, if they have the will to do so, can manage their own blocks and properties properly and to their benefit. However, that is not true in the public sector.

When I talked to my predecessor as MP for Beckenham, he briefed me about the difficulties of his public sector leaseholders, who have become my public sector leaseholders. As I have said, Broomleigh, the local large registered social landlord that took over Bromley’s council housing, took over some public sector leaseholders with it. Practically the first thing that I had to do as the MP for Beckenham was try to sort out the difficulties that those leaseholders were having, such as enforced contractors, a lack of consultation on the repairs that had to be done and very little option in the repayment of substantial sums. Many people felt that they had no input into their contracts and that they were badly managed.

Broomleigh is a very good housing association and picked up on those problems. It created a leaseholder unit and started to put in place the procedures that I wish to introduce under the Bill. The issue then died away, however, and the leaseholder unit was disbanded. There was then another problem, about bay windows in blocks of flats. It reignited all the problems about the lack of consultation, the lack of the right to bring forward other contracts, and leaseholders having no control over costs and little control over payment, with huge bills and demands for instant payment. I am glad to say that Broomleigh then resuscitated the leaseholder unit. Although people were still unhappy and there were flaws in the process, we are beginning to see a much more sophisticated understanding from Broomleigh of how to manage a block of mixed tenure, where there are public sector leaseholders who react differently from tenants when faced with repairs.

However, that best practice—at least, it is getting towards best practice—has not been copied by many councils or by other RSLs. My Bill would give public sector leaseholders the right to consultation, to get quotes from other contractors for work that needs to be done and to have a wide variety of repayment methods to ensure that bills are paid. Public sector leaseholders recognise that their properties have to be maintained, so there is the will to contribute to maintenance and repairs. What particularly irritates them is that they are unable to contribute to the process by which those repairs are carried out. They have no right to monitor whether they are carried out well, and demands for money come without a by-your-leave. They can see how inefficiently many contracts are managed.

Over the years, because of my interest in the matter, I have had contact with a wide variety of public sector leaseholder organisations. There was one meeting, probably the largest public meeting that I can remember, with public sector leaseholders in Tower Hamlets. They were incandescent with rage about how the council was dealing with their leases. Since I published the Bill, I have been contacted by leaseholders in Camden, Westminster and Islington. I have notified the hon. Members for Islington, South and Finsbury (Emily Thornberry) and for Regent's Park and Kensington, North (Ms Buck) about the Bill and the fact that I would be mentioning leaseholders in their constituencies. I know that both have worked hard on behalf of public sector leaseholders.

What has caused more difficulties than anything else is the sheer size of the bills that public sector leaseholders are asked to contribute to. Not all, but a lot, of the work has been driven by the decent homes standard. None of us would say that it was wrong to bring that in, but the problem is that most RSLs—I use that term to include both councils and housing associations, because we will be here even longer if I have to explain that each time—treat public sector leaseholders as though they were tenants. They also overload bills with management costs and a whole variety of other expenses that they think they can get away with.

I pay tribute to the hon. Lady not simply for introducing the Bill but for her work over many years. I remember working with her on the Commonhold and Leasehold Reform Act 2002—we have been round these houses many times before.

I wish to highlight the point that the hon. Lady has just made. The problem is not simply that RSLs often treat leaseholders in the same way as tenants. In one particular way, they treat them very differently. As she said, that is in loading their service charges while providing no explanation of how those charges are broken down between the rental and leasehold income that they receive. I am sure that she could adumbrate that point with many cases, but it is an important one to make.

I am most grateful to the hon. Gentleman, and I agree entirely. In fact, in due course I shall mention a letter that I have received from somebody who not only found themselves in that position but has been told how much they are paying compared with other tenants, which is way out of kilter. The hon. Gentleman and I are at one on this issue, and anyone who understands the problem knows that this is a cross-party issue, because it is the same wherever it happens.

Some people may remember that earlier this year, an elderly lady from Ramsgate aged 91 received just before she died a £16,000 bill for work on her flat to meet carbon dioxide emissions standards, and she had to take out a mortgage. That was, to say the least, insensitive. Leaseholders are simply told how much they have to pay. We have all worked very hard for people in the private sector, who in contrast are consulted and have the right to get their own quotes and pay in different ways, and whose management charges relate only to works to be done.

As a slight digression, I add that most of the problems arise from the original legislation that we passed in the ’80s giving people the right to buy. At the time I was not in the House, but I suspect that the thought was that the public sector would behave in the same way as the private sector. Sadly, all these years later that is not what has happened.

I was around at the time, just about, and I remember that people were given bad advice. The mood was in favour of buying. Children told their parents “Go on, buy your flat, it would be good.” However, no one looked at the small print, which said that people would have to pay not just for things connected directly with their flats, but for the district heating system and the gardens. Suddenly they were facing bills that were much bigger than they had ever contemplated.

The hon. Gentleman is quite right. I suspect that when the legislation was written, there was no conspiracy, but this was simply one of its unintended consequences. I could wax large about the problem, and indeed would be happy to introduce another Bill in an attempt to deal with it, but I thought that if I kept it short and sweet, we might be able to get somewhere with this particular issue. If we can give public sector leaseholders the right to consultation, we shall be able to dig down into what the charges are and how they relate to their properties.

One of the groups that contacted me is the Islington Leaseholders Association. I received 40-odd letters from its members. Vicki Leonard, who lives in N1, wrote:

“Leaseholders do not have to be consulted on any works…That was annoying enough in itself but more annoying is the astronomical cost of everything they do”.

That basically constitutes inefficiency. I received a long and detailed letter from a gentleman called Douglas Cape, who wrote:

“At the first public meeting…the Project Officer…said he was only there to talk about the new window design. When it was pointed out to him that his own invite to the meeting…said ‘You will have the opportunity of asking any questions regarding the contract’ he refused to acknowledge his own letter and said he still could not answer any questions.”

It is disingenuous, to say the least, of RSLs to say that they are consulting in such circumstances.

What was said in those letters was echoed in many others from, for instance, members of the Association of Camden Council Leaseholders and the Churchill Gardens lessees association. I am hugely grateful for the time that they spent briefing me on their problems. Another member of the Islington association raised the issue of the sums that are charged, and the fact that it is not possible to obtain alternative quotes. Geoff Shirley wrote:

“I and other leaseholders…have been informed by HFI that to replace our windows, 2 bedroom units will be charged £8K-£9K.

Considering the fact that only one main contractor has tendered for this work is outrageous. How does HFI justify that sole price when they have no other comparison price.”

Public sector leaseholders should not be faced with such sums when they are unable to wield any influence.

The position is made worse by the current agreements between RSLs and single suppliers of maintenance. The Government have been pushing that arrangement for understandable reasons: it is often more efficient for a contract to be let over the long term and for a single contractor to do maintenance work on an estate. However, in the event of a large replacement programme, the contracts with the sole suppliers do not allow competitive tendering. It is not beyond the wit of man, or the lawyers, to write a contract making it clear that it relates entirely to routine maintenance, and to specify that when there are larger contracts to be let, competitive tenders will be required. That would allow public sector leaseholders to bring their own contractors in.

Another problem is that large public sector organisations often have a list of preferred suppliers. While that reassures such organisations that the standards on which they insist will be met, it also constitutes a closed shop, and does not allow public sector leaseholders to bring in new contractors who might do the job as well as, if not better than, those on the public sector list. I want public sector leaseholders to have that option. I do not want to become involved in a great political debate about whether it is a good idea—

But I am happy to give way to the hon. Gentleman, who is about to turn this into a political debate.

Absolutely not. I entirely agree with the hon. Lady that both private and public sector leaseholders should have the right to consultation and the opportunity to propose alternative contractors. That has been common ground between us for many years. However, I should like to know why she believes that section 151 of the Commonhold and Leasehold Reform Act 2002, which amends section 20 of the Landlord and Tenant Act 1985, does not provide adequate remedies for public sector leaseholders.

One of the problems of discussing leasehold is that we become involved in hugely complex and technical detail. My understanding, however, is that the Government have their own problems with the 2002 Act. Implementing it has not been as easy as writing it. I am merely trying to encourage the Government to do what they wanted to do in that Act. It must be plain that I am in consensual rather than opposition mode today. The hon. Member for Brent, North (Barry Gardiner) and I are in agreement: we both want to improve the position of public sector leaseholders.

Another problem that causes many people grief is the inefficiency of the contracts when they are let. I referred earlier to a very sweet and sad letter that I had received. Jean Harwood wrote:

“My big immediate problem is time. Originally HFI… told us all work had to be completed by 2008. I cut my holiday short as a result but nothing happened. Then January 2009 was given to start erecting scaffolding. Still nothing. However, they did start on the first block on March 2nd. It took 5 weeks to completely erect that. Incidentally, we were told they would erect two blocks at a time. The second block was started April 27th and the third block May 5th. I’m also informed that when this block is finished the fourth block will be done (that is where I live). To date NO windows have been replaced. I was assured by HFI that they would start work as soon as the scaffolding went up and would be down within 2 weeks on completion.”

That is not an unusual tale for such contracts.

Martin Kneidinger wrote to me about

“Very expensive charges compared to the work delivered and the time it took to finish. (More than a year!) Finished work is very poor quality and would not be acceptable on any private site in London I have been working on as an architect

We chose the 2 year interest free payment plan and to do that we had to start paying our bills before work was finished. Nowhere near finished to be more specific.”

Those issues come up time and again. Here is a quick example from Karen Neale, who writes about

“these grossly inflated…piecemeal and inaccurate estimates”.

I could go on endlessly, but hon. Members will be grateful that I shall not.

Something else that has emerged—this has happened more recently—is that management costs on such contracts have escalated dramatically. Again, however, leaseholders have no control over them. I am grateful to Dr. Peter Wright of Camden for a couple of examples. For one contract for lighting maintenance, he has worked out that

“40.24 per cent. of the costs are due to management costs; leaseholders will pay 10 per cent. administration…on top”.

Therefore, 50 per cent. of the costs of that contract went on administration and management. It is beyond belief. Nobody in the private sector would dream of charging that.

In response to another contract, the Churchill Gardens Lessees Association wrote:

“We do not consider the costs of the bids to be excessive. However, we do have concerns about add-ons of 40 per cent. totalling £460,000 on the contract price.”

The association continued:

“What is the 3.8 per cent. contractor’s overhead contingency for? If the tender preparation is outsourced, where is the corresponding saving in fees? Why is the contractor not responsible for his own safety audit? Where is the £24,700 fee for plans—

£24,700 for plans?—

“going? Why is a separate asbestos survey needed? The Estate has been so surveyed many times previously.”

I could go on. Some of the costs being dumped on public sector leaseholders are outrageous.

Then there are the experiences of the leaseholders of Orbit South, who have recently been transferred from Bexley. My hon. Friend on the Front Bench, the hon. Member for Bromley and Chislehurst (Robert Neill), who used to be the member of the Greater London authority for Bexley and Bromley, will be well aware of the problems of the leaseholders of Orbit South. They have been in touch with me because Orbit South has taken exactly the same approach to them. Those leaseholders are challenging their monthly management costs, which increased from £75 a month in 2003-04 to £116 a month this financial year, and will potentially be £140 a month next year. Even in the private sector, the management charges in my block—it is a rather pleasant block, as everybody will have seen recently in The Daily Telegraph—are not that size. It is unbelievable that management costs should be so much and that the leaseholders should have no redress or ability to negotiate.

I thank my hon. Friend for giving way and for her plug for my past existence. I, too, have Broomleigh leaseholders in my constituency, although we tend to pronounce it “Bromley” at our end of the borough. In any event, does she agree that one of the issues that people feel strongly about is the fact that tenants and leaseholders in the situation that she has described are at a significant disadvantage? When we are seeking to encourage, for example, the growth of mixed communities, it seems strange that, as things stand, private sector tenants have at least some leverage against their management companies, whereas public sector tenants do not have the same leverage when they are confronted with bills from what can sometimes be monopoly suppliers, even in the case of fairly enlightened housing associations and registered social landlords such as Broomleigh.

I could not agree more with my hon. Friend. He draws a clear contrast between the treatment of people in the public sector and the treatment of those in the private sector, however enlightened a housing association or council is. While acknowledging the defects of the Bill, I hope very much that he will support the principle, so that we can move forward in finding a remedy to the injustice that has emerged. That injustice is an example of the law of unintended consequences, but we need to deal with it.

The difficulty is that councils and RSLs are used to telling tenants what to do. They have difficulty in getting into the mindset of people who have bought, and that comes from a different way of thinking. I am lauding neither one nor the other, but we have to recognise that the difference exists and that RSLs need to work much harder to deal with their leaseholders to provide the kind of service that they are giving to their tenants. That is all that we are asking: that leaseholders should have the same ability to manage their environment as RSLs think that they are giving to their tenants.

Does it surprise the hon. Lady to hear of a situation concerning the Stadium housing association in my constituency? It relates to the leaseholders in Airco close, who were billed for an equal sum for their water bills despite the fact that each of the flats had a water meter. When the housing association was challenged about this, it simply informed the leaseholders that, because there was a common tank, they would each have to pay the same amount. I have taken the trouble to point out to it that, under Ofwat regulations, if a meter is fitted, it is illegal to charge on any basis other than that of metered usage. This exemplifies the way in which RSLs tend to treat leaseholders by telling them what to do, with the implication that if they do not like it, they can lump it.

I sometimes wish that the ingenuity that goes into dreaming up these spurious charges was applied to working with leaseholders to ensure that they got a better service. I share the hon. Gentleman’s horror and disgust at such behaviour. If this debate—let alone the Bill—does nothing else but draw RSLs’ attention to the bad behaviour that they show to the people who live on their estates, we will at least have achieved something, if not much else.

I recognise that it can be difficult, particularly when there is mixed tenure, for RSLs to bring in the kind of thinking and techniques required to work with public sector leaseholders. However, given my illustrations of how badly managed so many contracts are, the RSLs could probably save themselves a huge amount of money by employing properly managed contractors and taking on board the arguments and points put to them by their leaseholders.

I have spent half an hour talking about clause 1. Clause 2 is much shorter, and it basically encourages the Government to consult on policies that affect leaseholders before they promulgate them. After all, this Government have said that they wish to consult, and they produce endless consultation documents. Many of their policies affect leaseholders, yet the basic rules of consultation do not appear to have been observed for them.

A document called the Sedley rules—which I confess I had not come across before—sets out four requirements for lawful consultation. The first is that

“consultation must be at a time when proposals are still at a formative stage.”

This means that a decision maker cannot wait until they have identified a definite solution. They must embark on the consultation process while being prepared to change course if persuaded to do so. They cannot make a decision in principle and then consult. Nor can they start by excluding an option and then denying any real opportunity to present a case on it.

The second is that

“the proposer must give sufficient reasons for any proposal to permit of intelligent consideration and response.”

The reasons given should be the true reasons. Consultees should be told the criteria that are intended to be adopted. The third is that

“adequate time must be given for consideration and response.”

The fourth is that

“the product of the consultation must be conscientiously taken into account in finalising any statutory proposals.”

I was interested to find out what had happened to the Tenant Services Authority, because I was pointed towards the issue by my very good consultees, who asked me to table a parliamentary question. I did so, and I do not declare any interest whatever; I did it because I am interested in the subject. My concern was that the Tenant Services Authority had no responsibility whatever toward public sector leaseholders, so I tabled a question and the reply was:

“The Tenant Services Authority has no responsibilities in respect of leaseholders who own 100 per cent. of the interest in their homes. Leaseholders already have access to a wide range of protections and rights.”

We wish! It continued:

“The Housing and Regeneration Act 2008 limits the Tenant Services Authority’s future regulatory remit to ‘social housing’, which includes low cost rental and low cost home ownership accommodation”—[Official Report, 25 March 2009; Vol. 490, c. 492W.]

under the Act. Quite apart from anything else, that clearly means that public sector leaseholders were not consulted on that legislation. Their rights are not only ignored by the RSLs; they are being overridden by Government—not, I am sure, in any way malignly, but through just not thinking.

That is why clause 2, which I also took from the earlier Bill of the hon. Member for North Southwark and Bermondsey, is an important part of the Bill. If we are dealing with a group of people who find themselves in a position of almost exclusion, the best thing we can do to help them become part of the wider community is to ensure that they are consulted and involved at all levels.

Public sector leaseholders, as I hope I have made very clear over the last half hour, have huge disadvantages in their dealings with their landlords. My Bill does not sort the whole problem out; I make no claim for that, as a much bigger legislative job would be necessary. Nevertheless, by giving those leaseholders the right to consultation, the right to receive quotes and the right to a variety of forms of paying back their bills, the Bill will take a small step to mitigate the anger and alienation they feel and their regret at becoming public sector leaseholders. I very much hope that the Government will give the Bill as fair a wind as possible at this stage of the legislative cycle—at the very least by indicating that they understand the problem and plan to do something about it.

I congratulate the hon. Member for Beckenham (Mrs. Lait) on securing a place in the ballot and on introducing the Bill. The regularity with which Bills on leasehold reform turn up—whether it be from the hon. Lady or from my hon. Friend the Member for Brent, North (Barry Gardiner), who is a regular on this issue, or from others—shows the importance of the issue and demonstrates that something must be done. I declare an interest in that I am a leaseholder and I am facing the possibility of a rather large bill coming up in the not-too-distant future, although we will not be particularly affected because proper consultation is taking place.

I am minded to support the hon. Lady’s Bill, subject to what my right hon. Friend the Minister might say. I hope to speak at less length than the promoter did, which would probably be a record for me on a Friday, but there are a few points that I would like to raise.

My initial impression on reading the Bill through was that it was entirely about the private sector, not the social sector. I thought of intervening to ask how the hon. Lady envisaged her Bill applying to registered social landlords, as it appeared to me that the Bill did not deal with them. It seems to deal almost perfectly with the private sector and existing protections, but it is difficult to see how it fits together with problems experienced in the public sector.

The hon. Lady’s point about mixed tenure is particularly important. In my constituency, problems have arisen primarily in housing estates where some people have bought their homes while others are still tenants. We need to think about how to deal with the difference between the two. As my hon. Friend the Member for Brent, North said in an intervention, problems occur when leaseholders feel that they are being loaded with bills that really belong to the housing revenue account and tenancy side. Sometimes it can be the other way round. That issue must be dealt with at some stage.

There is a further problem where the landlord—in this case, the council, or in my area, the arm’s length management organisation—has entered into a long-term agreement with one contractor. At present, we are in the middle of an £88.5 million decent homes initiative improvement project, the contract for which has been awarded to Balfour Beatty. A lot of problems have arisen as a result of that. One of the key questions leaseholders will always ask is whether they will get value for money from cosy arrangements—the term “sweetheart deals” crossed my mind, but that might be going too far—between the contractor and the arm’s length management organisation.

The Bill also fails to deal with major works contracts that may be sufficiently large to require a public notice under the EU procurement rules and advertising in the EU journal. In such instances, a problem arises about how people can get involved in the consultation process and, more importantly, how leaseholders might be allowed to put forward alternative proposals when it is necessary to go through that tendering process required under EU regulations. That issue must be addressed in this process.

The Department for Communities and Local Government has done some research on this issue. In 2006, it was recommended that the Department should provide

“further guidance on the standards of works to be carried out in flatted accommodation and…clarify the position in relation to the decent homes standard”.

I shall cite an example of that important point shortly. It was also recommended that the Department should

“provide further guidance in relation to defining hardship”.

One issue that confronts leaseholders in social housing arrangements is that they can face big bills that they did not expect to have to pay when they originally bought the property, whether under the right to buy or otherwise. I was a councillor in Westminster in the 1980s when right to buy was introduced, and I remember warning people who bought flats in badly neglected blocks that they would face enormous bills in the future. Many people did not think that that would happen to them; they believed that Lady Porter would look after them, but she looked after them in a rather different way, as we all know. I shall not go into the details of that, other than to mention the “homes for votes” scandal. Part of that scandal was the fact that leaseholders were asked to buy flats—including in my ward—in tower blocks, and were then faced with enormous bills.

One problem was that purchasers went ahead without having their eyes open to the possibility of bills. Matters have improved somewhat, and I understand that leaseholders purchasing under the right to buy now have to be given a five-year estimate of possible future costs, but what happens beyond that five-year period? Unfortunately, many elderly tenants thought the right to buy was their way of providing a little nest egg for their children, but they then found that the circumstances were rather different when, as pensioners, they were faced with bills for many thousands of pounds.

I have cases where people have bought a property after having done all the searches and were then told that they have a five-year bill to pay.

That clearly should not happen.

The social sector leaseholders working party was reconstituted by the Government in 2005 and reported two years ago. It recommended the introduction of separate legislation for social sector leaseholders because of the increasing complexity of social sector leasehold management as a result of the various rules and regulations relating to the arrangements. The statutory consultation process under section 20 of the Landlord and Tenant Act 1985 did not really suit the arrangements often found in respect of social landlords, particularly the way that ALMOs, local authorities or housing associations have to go through particular arrangements laid down by the Government.

I wish to refer to a couple of cases from my constituency in order to illustrate the problem. One of them concerns Woodburn close, whose tenants wrote to me in April saying that for several months they had heard nothing from their ALMO, Barnet Homes, but that then in a short space of time they received letters informing them of a planning application that was being submitted. Those letters did not, however, detail the estimates and so forth for the work. The Woodburn close tenants go on to say:

“Despite previous requests none of the lessees have received quotes as to the cost of the works…It appears as if Barnet Homes have made a decision and are steam rolling it through, without due consideration to the lessees who have to pay.”

Then there was a public meeting. The letter continues:

“the initial letters were in respect of the windows, and it was not until the public meeting that Barnet Homes declared their intention to replace the aerial system at this time, and clean out the gutters”.

The tenants make the point that digital switchover was not for another three years, and that estimates of the cost of the work had not been received. The letter continues:

“we have to question the necessity of doing”

this work

“as there is a Sky system which does not require scaffolding.”

That system could have been installed at a cost of between £150 to £200 per home. The tenants complain that

“Barnet Homes have carried out this exercise without due consideration of the lessees issues”.

Barnet Homes wrote back to me saying that the

“design and details of the scheme have now been finalised”,

and it anticipated consulting tenants within the next two to three weeks by letter, with a breakdown of the proposed costs. That was on 11 May. It has not happened yet, so far as I can see. Again, Barnet Homes completely ignored the leaseholders’ alternative suggestion regarding the TV aerial. It simply bulldozed through, saying, “This is what we’re going to do.”

I received a letter from the tenants expressing continuing concern,

“as it appears they”

—Barnet Homes—

“are likely to provide the lessees with a range of quotes and that everything has already been decided. This includes the comment in respect of the digital switchover, which does not acknowledge there may be cheaper alternative systems that provide the same service.”

The windows replacement is being done under the decent homes initiative. The letter continues:

“It appears that they are wedded to single suppliers and are not giving the lessees full opportunity to comment as part of this consultation.”

Barnet Homes wrote back to me saying that the scheme is part of the decent homes initiative,

“which is being carried out under a five year Partnering Agreement with Balfour Beatty…The framework is not a traditional tender contract”

and Balfour Beatty had obtained different quotes, but as far as the leaseholders are concerned, that does not make a great deal of difference. The ALMO says it is not

“wedded to a single supplier”,

but in effect, it is.

We should also consider the quality of work—a point made by the hon. Member for Beckenham. There seems to be a general feeling among contractors—big and small—that anyone who lives on a council estate is entitled to second-class service and second-class quality of work. The contractors think they can get away with blue murder, charging top-dollar prices for substandard work. Time and again, I receive complaints about that. Such work might be treated as “snagging”, but a lot of it is not. Some of it is quite serious, and whether snagging or serious, this issue is a major irritation to leaseholders—and, indeed, tenants—who have paid through the nose for work that has not been done properly.

A case was brought to me last year concerning major works in Frith court. The lessees told me:

“The rewiring was supposed to be being done, and the trunking has been installed but has not been wired. It is…not clear how it can be wired up and the trunking looks extremely ugly, too.”

I saw that for myself. The lessees said that apparently, the windows are being replaced, but that that was not necessary for the flat in question because they had already been replaced before they bought the property. They have been charged £4,500 for renewing the guttering, which has not been done to a decent standard in several of the blocks. The soffit boards have been replaced, as have the common parts windows. The front and rear doors have been painted, but to very poor workmanship, as I again saw for myself. They are expecting a further charge of another £2,000 for rewiring.

Barnet Homes wrote to me saying that it gave section 20 notices the year before, giving a “brief description” of and reasons for the works, with estimated block costs and contributions. If it is admitting to a brief description, that is probably bad enough. It also said that the electricity trunking had been painted to blend in with the wall. Well, it did not look that way to me. It looked appalling, with great chunks of steel-work inside the common parts. I certainly would not put up with that, and I do not see why the tenants should have to. Barnet Homes also said that remedial work had been done to the gutters and snagging items that it had been agreed were to be rectified. It gives the costs involved for the work, which are astronomical. It could be done more cheaply.

The hon. Member for Beckenham has made a really important point about the social sector. Contractors tend to think that they can milk the council and do not realise that it is not the council or the ALMO that pays. They think, “It is public money—we can load up the contract.” They do not realise that the money actually comes from the leaseholders and tenants. That is part of the problem. I have given two examples that have recently come to my attention, but time and again tenants and lessees have raised with me their concerns about some of the charges being imposed. Sometimes, the people involved are in the building trade themselves and they say that they could contract for the work far more cheaply, but they are not allowed to do so.

The hon. Lady has hit on an important issue. As she says, the Bill is not perfect and requires considerable amendment, but I am certainly minded to vote for it on Second Reading in the hope that changes can be made in Committee.

My hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes) was keen to participate in this debate, but he has had to leave to attend an important constituency engagement. He was a sponsor of the Bill, and was pleased to be here this morning when the hon. Member for Beckenham (Mrs. Lait) introduced the Bill. He is a keen supporter of the Bill mainly because it would shift the balance between overbearing councils or housing associations and leaseholders, who are often left out of the process. It would empower them to have more of a say, and that cannot be a bad thing.

The Bill is not a threat or a challenge: it would just give leaseholders the right to be involved and put forward alternatives. For example, it would give them the right to prepare an alternative proposal, which is innocuous enough. In fact, it could be advantageous by allowing the council to see other options. The Bill would also give leaseholders the right to a ballot on the decision. The right to transparency on the details would not be threatening either, and councils and housing associations should be prepared to be challenged about past work so that they can be sure that they have got value for money. The Bill also proposes a budget to ensure that the bill for works in any one year is not unaffordable.

When we set out national programmes, we often fail to consider leaseholders—the many thousands of people who have bought a house and who should be consulted. It is not threatening to have to engage them in deciding on best practice. Indeed, it could be very constructive. The Bill also includes a low-cost arbitration process.

The pressure from tenants to improve and upgrade houses is immense. I have people coming to my surgeries every week to demand more and more for their houses—rightly, because some of the houses are in poor condition. But that pressure is different for leaseholders, who want to weigh the balance between the effect of spending that money and the cost of it to their own purse. In the narrow sense, tenants do not have that consideration—although of course in the global sense they do. That is why leaseholders need to be fully engaged in the process.

The councils and housing associations are under great pressure to deliver. We politicians hold them to account for what they do on a day-to-day basis, and if they fail to live up to the mark, they can be kicked out in the elections. That pressure to perform often means that leaseholders are overridden—seen as a minor irritant in the way of progress. That is why we need this sensible and reasonable Bill. As I have said, it includes provisions on ballots; transparency; budget limits for one year; low-cost arbitration; and the right to be consulted. It may not deal with every point, but it is not a threat to the Government, councils or housing associations. Rather, they should welcome this contribution and engagement with the process. They should see leaseholders as valued partners, not as threats or irritants. That is why the Liberal Democrats support the Bill.

I am grateful to my hon. Friend the Member for Beckenham (Mrs. Lait) for promoting the Bill, and I congratulate her on doing so. It has enabled us to refer to the work of our local registered social landlord, Broomleigh Housing, and issues that are common to Members with constituencies across the country.

I was also grateful that my hon. Friend accepted at the outset that the Bill, if it progresses, will need changing in Committee. On the basis that the intention is to limit its application to public sector leaseholders—

I see that my hon. Friend nods to confirm that, and so I think we can give it our “in principle” support, in the expectation that in Committee improvements and refinements can be made to ensure that we address precisely the issues that are at hand.

My hon. Friend struck a very important note about basic justice, which is something that I have come across with my constituents. There is an imbalance of treatment between leaseholders in the private sector and leaseholders in the public sector. I hope that that will weigh compellingly with the Government as they decide their stance on the Bill, given the concessions made by my hon. Friend about amendment in Committee. I cannot believe that the Government, any more than the Opposition, would wish to see leaseholders who happen to be in the public sector being disadvantaged in comparison with those in the private sector. Ironically, they are sometimes disadvantaged in comparison with tenants in the private sector, depending on the attitude of the council and the RSL.

There has been a long history of monopolies sometimes being unresponsive to their tenants, either deliberately or because of a culture that seeps into an organisation. I can remember that attitude from when I was a London borough councillor, back as long ago as when the hon. Member for Hendon (Mr. Dismore) recalled his experiences in Westminster. When I was a parliamentary candidate in Dagenham, the local authority was monolithic in dealing with its tenants. Since then, things have improved there, as they have in many local authorities, but an underlying problem remains. Under the current legislation, the local authority leaseholder, for the reasons set out by my hon. Friend, is at a disadvantage in comparison with others. I think it right that that disadvantage should be addressed.

I agree with the hon. Member for Hendon about the risk posed by contractors sometimes taking advantage of that monopolistic position. That is made worse when the leaseholders are unable to apply the same basic leverage as other tenants would. I hope that for that reason, if for nothing else, the Bill will commend itself to the Government.

I was interested, too, to note the lacuna that seems to exist in relation to the Tenant Services Authority, which I was very interested to find out about. I am not seeking to be unduly party political, but it seems strange that the Government, having created two quangos in place of one to deal with housing, have reached a situation where there seems to be a gap in the available protection. Some people—the public sector leaseholders—fall through the system and are covered by neither quango. I hope that, although that does not come within the scope of this Bill, we could sensibly address that failing. I have great respect for the Tenant Services Authority, its excellent chairman, Anthony Mayer, who I have known for a number of years, and its team. Clearly, somebody needs to act as a champion for public sector leaseholders and I hope that the Government will look beyond the scope of the Bill and redress that imbalance as a matter of justice.

Let us consider the question of contracts, repairs and so on, and the inevitable pressures, to which my hon. Friend rightly referred, on RSLs, in particular, to seek larger contracts and to bundle them together to seek efficiencies. It is important to try to strike a balance between that and the risk of unfair treatment from a largely monopolistic supplier. Again, that seems to me to be a compelling reason for bringing forward this Bill.

It is surprising that the Government have not so far been willing to move on this matter. I hope the when the Minister for Regional Economic Development and Co-ordination responds, she will take that on board. I was a little disappointed last year to receive an answer to a written question to the then Secretary of State, the right hon. Member for Salford (Hazel Blears), which stated that

“it will not always be appropriate or helpful to make identical provisions for social sector and private sector leaseholders in order to provide them with similar rights and protections.”—[Official Report, 13 May 2008; Vol. 473, c. 586W.]

I was surprised to hear that, and even more surprised to hear it at a time when the right hon. Member for Salford was Secretary of State. I would be surprised to hear it from anyone of her party. The wording may have been unfortunate. It is not language that I would like to adopt on behalf of my party, because where we can do so in a proportionate and sensible manner, we ought to try to ensure as level a playing field as we can.

As I say, I hope that we can move to a situation in which one group does not fall through the gaps in the system, particularly given that all parties seem to desire to encourage mixed communities; that is certainly the Government’s stance. They want people of different tenure to live side by side. I would not disagree with that. That makes it all the more unfair if, probably not through a deliberate policy, but just as one of those perverse consequences that arise from an omission somewhere in the drafting of legislation, one group of occupiers is in a less advantaged situation than the others. I hope that that, too, is a compelling reason why the Government should at least let the Bill make progress, with a view to seeing what refinements can be made in Committee.

The other points were compellingly made by my hon. Friend the Member for Beckenham, so I do not intend to keep the debate going at any great length. When she responds, I am sure that she will make it clear that the provision on the £12,000 payment is intended to relate to the public-sector leaseholder. In the private sector, there is more negotiating power—power that those in the public sector do not have. With those observations, and the assurance from the promoter of the Bill that she would amend it in Committee, I hope that the House feels that the Bill raises important issues. It is not perfect in its current form, but its proposer does not pretend that it is. It raises issues that need to be addressed, and if it did go forward to Committee, hopefully we could come up with a solution that deals with issues that, on the face of it, potentially lead to injustice and unfairness in the treatment of people. It ought to be possible, with good will, to find a sensible and proportionate means of addressing that.

In many senses, the Bill is a result of the failure of the Commonhold and Leasehold Reform Act 2002. That was flawed in many ways, and I say that as someone who campaigned for five years to get it on the statute book. It was a great day when that was achieved. It was only the third leasehold reform Act since 1887, and it was substantially flawed. That was partly because civil servants had done their usual thing of giving their Minister a “Blue Peter” Bill—one that they had prepared earlier. It had substantially been prepared for the Conservative Government and had not taken account of all the work done in subsequent years by my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) on the subject.

Of course, civil servants were fearful that the 2002 Act would not get through the Lords. In those days, the landed interests of those there were still substantial; civil servants were very fearful that they would fight the Bill for a long period and delay the Government’s legislative programme accordingly. For that reason, key elements of the 2002 Act did not work properly. However, it introduced consultation, which was not obligatory before. Critically, it introduced an obligation on landlords to hold moneys in trust. Extraordinarily, that had not previously been a requirement. Of course, it also supposedly made commonhold and enfranchisement easier.

I remember that in my speech on Second Reading of that Bill, I said that even if 5 per cent. of new properties were designated commonhold, I would consider it a tremendous success if that were achieved within 10 years. Sadly, I have been proven right. Nowhere near 5 per cent. of new build is commonhold. I gave a target of 10 per cent. for enfranchisement, and that target, too, has not been met. That shows the fundamental inadequacies of the 2002 Act. I concluded my speech by saying that we would have to revisit the issue in seven or eight years, but what is seven or eight years when leaseholders have been waiting 130?

It is essential that the inadequacies of the original Bill are widely addressed, which would encompass some of the points made by the hon. Member for Beckenham (Mrs. Lait). I always advise people not to buy leasehold unless they also have a share of freehold. It is only with a share of freehold that people get control. The issue of control is precisely what she raised in the Chamber today. People buy their house, thinking that they have finally become homeowners. They therefore think that they have control over their property. The tragedy of leasehold is that they do not. Their landlord has control over the property, all the more so, as she pointed out, in the public sector or with registered social landlords.

I believe the Minister will refer the hon. Lady to section 151 of the 2002 Act, which amended section 20 of the Landlord and Tenant Act 1985, and will say, “You don’t understand. Provision for consultation is already made there.” If I were the hon. Lady, I would make this response: “To have a right but no means of enforcing that right is to have no right at all.”

That goes to the heart of the issues that the hon. Lady raised, which all of us across the Chamber recognise from our casework experience. The rights may exist, but either the RSL does not know that it has those obligations, or the leaseholders do not know that they have those rights. Where they do know and try to enforce their rights, they find that there is no mechanism for them to do so.

To have a right but no means of enforcement is to have no right at all. That is why the matter needs to be addressed. My own view is that it probably cannot be addressed by the mechanism of the Bill. The hon. Lady is sufficiently experienced in the House, and I know from her indications to me that she understands that, but today she has provided a very valuable service not only to the House and to the Government, but to leaseholders across the country. The issues must be revisited and addressed. Those rights and the remedies for breaches of those rights must be put firmly back into the hands of leaseholders.

I begin by congratulating the hon. Member for Beckenham (Mrs. Lait) on her success in bringing the Bill before the House. It is obviously an important subject. I thank my hon. Friends the Members for Hendon (Mr. Dismore) and for Brent, North (Barry Gardiner), and the hon. Members for Dunfermline and West Fife (Willie Rennie) and for Bromley and Chislehurst (Robert Neill) for their contributions.

I understand why hon. Members on both sides of House think that the subject is important. We all want to ensure that people live in decent homes, where they can have input into issues that affect them and their communities, particularly when they are asked to contribute directly by paying service charges, as in the case of leaseholders.

I assure the hon. Lady and everyone else who has contributed to the debate that I will look carefully at the points made and discuss them with my right hon. Friend the Minister for Housing. I know that hon. Members feel strongly about this and I hope that I will be able to give them some reassurances. The hon. Lady made it clear that she understood that parts of her Bill were defective.

The Bill’s underlying principle is to help leaseholders who are being asked to pay high service charges. In some of my remarks there will obviously be a crossover between private sector and public sector leaseholders although, as I acknowledged, I know that in this Bill the hon. Lady feels most strongly about public sector leaseholders. The Bill seeks to give secure tenants more input with their landlords where national consultations are concerned. As I have said, those are all worthy aims, and I will deal with some of the specifics in more detail later.

All of us recognise and have sympathy with what in some cases are, as many hon. Members have outlined, long-standing and difficult problems that leaseholders face with high service charges. That is clearly a particular difficulty in London, as was obvious from the contributions from London Members. I also agree that there needs to be sufficient and appropriate consultation between landlords and their leaseholders on service charges. I will come on to describe the existing consultation requirements a little later.

We all want to ensure that leaseholders have a fair deal on service charges, and I am aware of the effect that high bills can have on those receiving them. That is why we have tried to put in place a system of safeguards and measures that make people aware of what they are taking on when they buy a property. Both my hon. Friends the Members for Hendon and for Brent, North referred to certain advice that they were always keen to pass on to people entering into leasehold arrangements.

Service charges should be transparent and reasonable, and my Department is working on ways to improve that. We are all aware of leaseholders’ important role in, and responsibility for, contributing to the upkeep and maintenance of the common parts of the buildings and communities in which they and other tenants live. That responsibility should be spelt out in the terms of their lease.

It is also important to recognise that local authorities, in particular, are charged with bringing their housing stock up to a decent standard by 2010 and already have wide powers to assist those leaseholders who face difficulties paying their service charges. That assistance can take a number of forms and be tailored to suit individuals’ circumstances, which of course can vary considerably.

Leaseholders who pay service charges also have statutory rights that they can exercise where service charges and their property’s management are concerned. It would help if I put on the record those rights, the assistance that is available to support leaseholders when they find themselves in difficulties and the improvements that the Government have tried to make so far.

I hope that I shall be able to illustrate that, since the Government came to office, we have shown a commitment to develop the rights and protections that are available to leaseholders, and that we have delivered on that commitment. However, we are of course looking at what more can be done, particularly to reflect some of the points that have been made.

We published a Bill, to which hon. Members have referred, setting out a wide range of proposals for improved leaseholder rights. We consulted widely on the proposals, and the result was the Commonhold and Leasehold Reform Act 2002, which significantly improved on the previous position of leaseholders—although I note hon. Members’ reservations today about the Act. The improvements do demonstrate, however, that leaseholder rights have been and remain important to the Government.

As the right hon. Lady moves through her speech, will she differentiate between the rights that are given to private sector leaseholders and public sector leaseholders? The problems that I have raised occurred well before the 2002 Act and have continued since its introduction. The legislation certainly helped with the problems of the private sector leaseholder. If she would differentiate, I would be grateful.

I shall certainly make every effort to do so.

On the question that the hon. Member for Bromley and Chislehurst raised, the legislation applies to both public and private sectors, and amendments in the Housing and Regeneration Act 2008 also provide for some flexibility. In particular, it ensures that all leaseholders receive useful and relevant accounting information about the service charges, taking into account the other financial rules to which landlords, such as local authorities, are subject. It is important to state that clarification.

I am grateful to the Minister for her reference to the concerns about the 2002 Act, and I acknowledge what she says about some of the amendments and the issues that have arisen. Does she also concede that, whatever the good intentions, there is a concern among many within the public leasehold sector that the systems under the 2002 Act have proved bureaucratic and complex? There is a specific concern that the statutory consultation procedures are essentially incompatible with the public sector procurement of services. They do not fit in with some of the requirements in respect of the volatility of the market, the bulk buying of materials and the need to meet European Community requirements, as reflected in the consultation procedures. I hope to be provided with more detail in due course. Whatever the intention, there seems to be a mismatch in practice. That needs to be considered.

I would certainly be grateful for any further information that the hon. Gentleman can supply.

I should mention two things. The hon. Member for Beckenham asked about the Tenant Services Authority, and I assure her that we intend to extend its remit. We hope to start consultation on that in July this year and to have regulations in place in April 2010, subject to that consultation. We intend to extend the authority’s remit so that local authority social housing is included within its regulatory scope. I could write to her with further details when we start the consultation process.

What the Minister just said was carefully worded. Did she mean that the Tenant Services Authority will also be invited to take into consideration the interests of public sector leaseholders in both council housing and the housing associations?

Our proposal is that the Tenant Services Authority should regulate property within the definition of social housing under the 2008 Act. I hope that that clarifies the issue for the hon. Lady. However, I shall certainly write to her with more details about the consultation as it develops.

I am hugely grateful to the Minister for giving way, and obviously I do not want to turn this debate into a dialogue, but a public sector leaseholder who bought their home would not regard themselves as living in social housing. That is the crux of my point.

I understand the hon. Lady’s point, and I shall write to her with further details. Obviously, there are issues about the overall regulatory burden, and we want to aim the consultation and the new regulations at the most appropriate sector to provide the maximum help. I take into account what she has said and will write to her with further clarification.

The 2002 Act gave leaseholders a far greater say in how the money that they pay in service charges is spent and it improved their right to challenge the amount that they are asked to pay in addition to any rent. Since the introduction in October 2003 of the consultation provisions in the Act, and in regulations made under powers conferred in it, far greater consultation with leaseholders must take place before a landlord can spend service charge monies. That consultation is required before a landlord commits to contracts for works that will require any leaseholder to pay more than £250. Meaningful consultation must also take place before a landlord enters into an agreement for works, or for services of more than 12 months, where the costs to any leaseholder would exceed £100 in any relevant accounting period.

I shall briefly set out what that consultation consists of. The landlord must give notice of their intention to carry out qualifying works. Those are works costing more than £250, or £100 in respect of long-term agreements, in any accounting period. That must be done in writing to leaseholders and to any recognised tenants association. The notice must summarise the proposals, including the reasons why the work is necessary, and seek the views of the leaseholders and associations. The landlord must have regard to any observations that he receives and invite the leaseholder and any associations to nominate suitable contractors.

Can my right hon. Friend elaborate, not for the benefit of the House but for the benefit of leaseholders, on what precisely “must have regard to” means?

As I understand it, if there were a challenge the landlord would have to show that he had taken the views of leaseholders into account before proceeding in a way that went against those views. If that is not correct, I will write to my hon. Friend, but I understand that that is usually what happens when the words “have regard to” are inserted in legislation. It is so that in any subsequent challenge, including a judicial review, the onus is on the landlord to show that regard has been taken of the points made by individuals who objected to a proposal.

My right hon. Friend is most courteous in giving way again. I do not wish to press the matter, but it needs to be emphasised that it is easy for a landlord to say, “Yes, we took the objection into account, but we dismissed it. We read it and took on board the fact that the leaseholders wanted a different contractor or a different method of doing something, but it was not the method that we favoured and we thought it better to press ahead.” The fundamental question is whose home it is. It is the leaseholder’s home, and the problem is that leaseholders who have paid for a property feel that they have rights over it, yet someone else can impose their will on them.

I certainly hear what my hon. Friend says, and I understand that there can sometimes be that difficulty of interpretation.

The hon. Member for Beckenham mentioned regulation by the Tenant Services Authority. I am assured that the TSA already regulates RSLs, and that the consultation will be on the extension of regulation to local authorities. In assessing the performance of a local authority or RSL, we would take account of the way in which it managed the relationship with its leaseholders, but we would not seek to regulate the legal relationship between the leaseholder and the freeholder—the local authority or RSL—which is covered by existing statute.

Although in general a landlord must invite the leaseholder and any associations to nominate suitable contractors, there are exceptions. For instance, that does not apply when the works are to be carried out under a long-term agreement that has been subject to full consultation in the past. Leaseholders and any recognised tenants associations have 30 days in which to nominate as many contractors as they wish.

My right hon. Friend has referred to big contracts, which I mentioned earlier. Barnet Homes has an enormous contract across the borough, worth £88.5 million, with Balfour Beatty in connection with the decent homes initiative. As far as I can see there was no consultation, but how on earth could any consultation on a major contract be of any relevance to the people on the receiving end of the small contracts for their block?

I understand my hon. Friend’s point, and, as I have said, I will consider it. I presume that when a specific project is involved, it may be possible for leaseholders to say that they do not believe that full consultation has taken place in the past, and that they wish to nominate a different contractor. That would lead to consideration of whether the landlord had had regard to the points that had been made, and perhaps to future consultation and regulations. More generally, there is a move to ensure that local government takes account of the way in which contracts are delivered and of procurement practices, and to ensure that smaller local companies—I know that this interests my hon. Friend—can benefit from those practices.

I am grateful to my right hon. Friend for giving way to me again. She will appreciate that in the case of a very large contract such as the one cited by my hon. Friend the Member for Hendon (Mr. Dismore) the contract that specifically affects the leaseholder’s block is often a sub-contract, but the main contractor does not have the same obligation as the registered social landlord to consult the leaseholder. That is a real problem, and it needs to be addressed.

My hon. Friend’s point follows on from the point made by my hon. Friend the Member for Hendon, which relates to the procurement practices of local authorities, as well as some of the rights in existing legislation.

It is not just a question of local authorities. We could consider the matter in the context of the warm homes initiative, for example, under which the Government have given an enormous national contract to the eaga partnership, which relates to the point that my right hon. Friend made about using local contractors. The costs of installing a new boiler are astronomically inflated under the eaga arrangement, yet the work could be done far more cheaply if individuals paid for it themselves and then charged the scheme. That is not just a local authority problem, however; it is a general problem, and we have to get away from it. In part, I accept her earlier point, but we need to find a way of allowing people more control over the work done in their own homes.

I am sure that my right hon. and hon. Friends in the Department of Energy and Climate Change will listen carefully to the points that have been made about how we proceed with the Warm Front contracts.

The leaseholders and any recognised tenants associations have 30 days within which to nominate as many contractors as they wish. The landlord must then try to obtain an estimate from at least one person nominated by a leaseholder and at least one nominated by a residents association. The landlord must then supply a statement, free of charge, to every leaseholder and any recognised tenants association setting out the amount specified in at least two of the estimates as the estimated cost of the proposed works, as well as a summary of any observations that the landlord has received in relation to the proposed works or the estimated expenditure from any tenant or recognised tenants association, along with the tenant’s response to those observations. If the landlord selects neither the lowest estimate nor a contractor who has been nominated, he must explain his decision in writing. If the landlord fails to consult properly or does not acquire a dispensation from the need to consult from a leasehold valuation tribunal, he cannot recover any more than the amounts that I have already mentioned: £250 or £100.

Can the right hon. Lady explain how the leaseholder’s right to obtain other quotations or other contractors’ names, which she has described, sits with the five-year contract for whole of the works, and whether the contractor would have a legal right to compensation should one of the leaseholder’s contractors be given the job? Also, as I said, one of the gateways used by RSLs and local authorities is to say that contractors have to be on their approved list or meet their system of approval. That instantly brings delay into the system, so can she explain how that would work?

I will attempt to. I know that there are, for example, exceptions for large-scale contracts that are already subject to competitive tendering under EU requirements. Therefore, as the hon. Lady says, some of the bigger contracts would fall under those arrangements.

I want to clarify a point raised by my hon. Friend the Member for Brent, North about the meaning of “must have regard to”. It means that landlords must consider the responses and take what they say into account, and that they should be able to give a reason if they are not going to follow them. Magnificently, I think that that is what I said before.

The Commonhold and Leasehold Reform Act 2002 built on the rights of leaseholders to challenge service charges. Those rights enable them to challenge the reasonableness of service charges through an independent leasehold valuation tribunal. LVTs offer leaseholders a relatively informal and inexpensive way of challenging the service charges that they are asked to pay. Previously, such disputes had to be determined by a court. Service charges were, and continue to be, payable only to the extent that they are reasonably incurred. When they are incurred for the provision of services or the carrying out of work, they are payable only if those services or works are of a reasonable standard.

Leaseholders can now challenge before an LVT service charges payable for the costs of services, repairs, maintenance, improvements or insurance, or for the landlord’s costs, including overheads of management. The fact that they can also now challenge the service charges that they are asked to pay in relation to improvements has benefited local authority leaseholders in particular. Leaseholders can now ask an LVT to determine whether service charges are payable, as well as to determine their reasonableness. They no longer need to go to court to determine such matters.

The Minister might remember my reading out the experience of the leaseholders of Orbit South, whose management charges have increased by 100 per cent. over recent years. She really needs to consider what is happening in the real world, as opposed to what is happening in the legislative world. Many public sector leaseholders experience a total disregard for any of the rights that she is reading out; she must bear in mind that what she is reading out is not what happens to public sector leaseholders.

My right hon. Friend has been most generous in engaging in debate, and I hope that our interventions will be constructive. All that she has said is absolutely right, and I know that the hon. Member for Beckenham (Mrs. Lait) and I accept that these provisions exist in the legislation. However, let me cite a case as an example.

There is a block of flats in my constituency whose windows had needed doing for many years. Eventually, one leaseholder got so fed up with their not being done that he paid a private contractor to do the work. A year later, the landlord decided to do all the work, but then billed that leaseholder for fitting new windows even though he had already paid to have the work done the year before. The leaseholder took the landlord to a leasehold valuation tribunal. The Minister is right to say that LVTs are supposed to be a quick and effective means of getting justice without having to go to court, but the landlord turned up with five QCs. The leaseholder was blown out of the water—in legal terms—and ended up with a bill for the landlord’s legal costs for the five QCs on top of the bill for the windows. The LVTs, which were supposed to provide a quick and easy means of redress, are not working, and we need to address that.

As my hon. Friend knows, the tribunal system is obviously meant to provide people with a form of redress where they can make their own case, so it should not involve five QCs. One hopes that tribunal chairmen would be able to acknowledge points made by the individual taking the case and would not be intimidated by five QCs. I am not sure how the individual taking the case to the tribunal ended up paying the costs for five QCs. I am surprised to hear that, so perhaps my hon. Friend will write to me with further details. My recollection of the tribunal system is that the person opposing the individual can have legal representation while the individual does not, so I am not quite sure how the system led to costs being awarded in that way.

There were complaints under the previous system that leaseholders were insufficiently protected from being coerced into paying sums claimed by landlords through the threat of forfeiture. Landlords would begin or threaten to commence repossession proceedings to recover disputed sums. In such circumstances, the leaseholder’s mortgagee would often pay up to avoid losing the leaseholder’s property, which formed the security for the loan. The Commonhold and Leasehold Reform Act 2002 stopped such action being taken when service charge moneys were still in dispute. It also prevented forfeiture action from being used as a means of recovering relatively insignificant amounts of money—where service charges, administration charges and ground rent or a combination of those charges did not exceed £350 and where no part had been outstanding for more than three years.

The 2002 Act also significantly improved the ability of most leaseholders to take over the management of the building containing their flats and introduced a no-fault right to manage. This gave leaseholders the right to take a greater stake in their homes: they could get together and take over the management of the building containing their flats. I should say that this is one particular area where the rights introduced in the 2002 Act distinguish between the public and private sector, because the right to manage is obviously not applicable to the public sector. I view that as an understandable exception within the legislation.

The right hon. Lady might like to know that Broomleigh had one or two blocks that were full of public sector leaseholders and it sold the flats as freehold. There are some enlightened RSLs, but not very many of them.

I acknowledge the hon. Lady’s point, but as I say, there is that distinction in the 2002 Act between the private and public sector. Leaseholders no longer have to undertake potentially lengthy proceedings to satisfy a leasehold valuation tribunal that one of a number of grounds had been met to justify removing the current manager. Rather, they could join together and take away the management. This was a substantial increase in their rights.

As hon. Members are no doubt aware, collective enfranchisement is also an important right that allows leaseholders to buy the freehold of the building containing their flats. This gives leaseholders an even more significant stake in their homes. They can step into the shoes of their landlord completely. Exercising collective enfranchisement was also made substantially easier by the 2002 Act. It removed some obstacles to enfranchisement and opened up the right for many more leaseholders. The 2002 Act also made it easier for leaseholders who wanted to maintain the value of their properties to extend their leases. In both cases, changes were made to the valuation principles. These changes reduced the opportunity for disputes about the price payable for either enfranchisement or lease extensions.

I rise simply to lay down a marker. Following the Custins v. Hearts of Oak court case, in 1967 a Labour Government introduced legislation establishing the principle that there should not be marriage value. That principle was given away in the 2002 Act, and that has been a significant financial impediment to many leaseholders exercising their right to enfranchisement. We will need to consider that at a future point.

I thank my hon. Friend for making that point, and I assure him that we would look into it—and, no doubt, discuss it with him—if we were to introduce further consultation on this matter.[Official Report, 14 July 2009, Vol. 496, c. 3MC.]

For the first time, all leaseholders are entitled to receive a prescribed ground rent demand at a certain time before such sums became payable. This provided important protection against a leaseholder inadvertently forgetting about his obligation to pay a ground rent and then facing claims for additional costs alleged to have been incurred by a landlord in recovering these sums.

In the Housing and Regeneration Act 2008, we amended the Landlord and Tenant Act 1985 to enable us to introduce measures to ensure that leaseholders will automatically receive a regular statement containing information about their service charges, with the same right to see supporting documentation. Landlords who do not provide the statement or make the supporting documents available will be open to challenge at a leasehold valuation tribunal. We are currently drafting regulations to give effect to this measure, along with other measures to provide protection in respect of service charge moneys held by landlords. Leaseholders will have sanctions if this is not complied with, including the right to withhold service charges. Also, when leaseholders receive demands for service charges and administration charges, they must be given a summary of their rights and obligations in relation to such charges. That means that when they need to know, they are made aware of their important rights where such sums are concerned. Leaseholders can now challenge demands for administration charges covering matters such as payments for consent, which they are required to pay under the terms of their lease. Leaseholders of houses can now also take over the responsibility for insuring their properties from their landlords.

I turn to an issue that will be of particular interest to the hon. Member for Beckenham. We have looked at the issue of local authority leaseholders who find it difficult to pay service charges. The Housing and Regeneration Act 2008 increased the options available to local authority landlords to help leaseholders in this position. Since April 2009, landlords have been able to offer interest-free equity loans and to buy equity shares in properties. This is in addition to their long-standing ability to offer loans on varying terms, to spread payment over a longer period, to agree to delay payment until the property is sold, or to buy properties back outright from owners who are in arrears with service charges or cannot cope with the costs of looking after their home. The Government fund part of the cost of such buy-backs by letting the authority retain more of the receipts from property sales.

Under the Social Landlords Discretionary Reduction of Service Charges (England) Directions 1997, landlords can also cap service charges if certain conditions are met, including if a leaseholder will suffer exceptional hardship. In 2002, we undertook a review of issues relating to major works service charges paid by local authority leaseholders. That was done because of concerns raised over high service charges that were being levied on local authority leaseholders, principally arising out of work being carried out to bring homes up to an acceptable standard under the decent homes programme. We learned that many local authorities, particularly in London, already offer a range of forms of assistance to their leaseholders. They offer a range of payment by instalment options; some agree to delay payment until the property is sold; others even offer a discount if the bill is paid in full promptly.

A written ministerial statement on 29 March 2007 outlined the Government’s position and the options on offer to leaseholders at that time—support which, as I have already mentioned, has been improved by legislation. However, I can assure the hon. Lady and other Members present that we are keeping the position under review in the light of current financial and housing market conditions. I therefore hope that Members will agree—although I completely take on board the points made today—that the Government have improved the rights and protections available to leaseholders in many significant respects. They have been empowered by rights that were not available until we took this action.

Let me deal with the Bill’s proposals in more detail, and begin with the proposal for involving tenants in works. As I outlined earlier, the consultation provisions in the Landlord and Tenant Act 1985 which were amended by the Commonhold and Leasehold Reform Act of 2002, already cover most of what is proposed here. There is a statutory requirement that all landlords must consult their leaseholders before carrying out works to their buildings and estates. These existing consultation requirements, which are contained in regulations made under the 1985 Act, cover most of what is proposed in the Bill.

I have already mentioned how the existing consultation rights give leaseholders an input into the procurement process. We have to ask whether the additional requirements proposed in the Bill—to consult on specifications for tenders, to put forward counter proposals and to hold ballots—would add to the consultation process. It would not be helpful to tenant or landlord if we were to replicate or replace rather than add to the process. We need to be cautious not to increase the complexity, time scales, costs and burdens of consultation, given that in some cases those would be passed on to leaseholders.

We also want to be clear that there is no risk that leaseholders could also force landlords to accept counter-proposals that could put them in a position where they are not able fully to meet their contractual obligations to all leaseholders—and to their tenants—to maintain and repair a building or estate. I am sure that those are consequences that the hon. Lady would want to ensure were avoided in her Bill.

Proposed new section 20ZA(1)(g) would require the landlord to make certain documents available for 10 years. Retaining documents relating to service charges, works and agreements should, at the very least, be a matter of common sense where it is not already enshrined in best practice or as a statutory requirement. But it is sensible for both leaseholders and landlords to retain those documents. Because leaseholders can challenge the reasonableness of service charges through a leasehold valuation tribunal, even when they have paid the charges, landlords need to be able to justify those charges with documentary evidence. Without such evidence, they are likely to have a weak case that will not impress a leasehold valuation tribunal. However, it seems unlikely in practice that a leaseholder will need to see information relating to service charges that goes back some 10 years.

Further, leaseholders can currently request a summary of service charges, representing the last 12 months, and can ask to see documents supporting the summary.

Also, as I have previously mentioned, we will be proposing changes to the legislation so that leaseholders will automatically receive a regular statement containing information about their service charges, with the same right to see supporting documentation. We are drafting the regulations that will give effect to this measure. There will also be sanctions if this requirement is not complied with, including a right for leaseholders to withhold service charges. Landlords would also be vulnerable and open to challenge at a leasehold valuation tribunal if the supporting documents were not available. We need, therefore, to reflect on the need specifically to legislate to compel landlords to retain information for an arbitrary period of time, particularly as it is already in a landlord’s interest to do so.

Proposed new subsection (5)(g)(iii), which can be found in clause 1(2), would place a requirement on landlords to make publicly available requests to the residential property tribunal service as well as the decisions. We think that that is unnecessary, because determinations made by those tribunals that determine matters under the residential property tribunal service are already publicly available through the residential property tribunal service website. Of course, tribunals make all relevant information available to the parties involved in the dispute. We therefore do not need to add additional burdens and costs to the process by asking landlords to make public all requests to the tribunal.

The final element of clause 1 relates to payment arrangements that must be made by landlords when service charges exceed £12,000 in any 12-month period. I recognise the driver behind the clause. I know that quite a number of local authority leaseholders have received high major works service charge bills that reflect the work being carried out through the decent homes programme to overcome years of neglect. The intention of the clause appears to be to allow leaseholders to spread out their contributions to costs over a longer period. However, we need to ensure there is no ambiguity and to ensure clarity in what is proposed.

There is a risk that the clause is unlikely to achieve what is intended. In addition, it would also affect all landlords and not just local authority landlords. It would require landlords to make index-linked arrangements for leaseholders to pay in reasonable instalments when contributions exceed £12,000 in any 12-month period. As I said, the clause raises a number of questions that I think would need to be considered. For example, what does it actually mean? Over what period should the instalments be paid? What would be regarded as reasonable instalments? Those matters appear to be left solely to the discretion of the landlord.

Clause 2 proposes to amend section 105 of the Housing Act 1985. Section 105 deals with the duty on landlord authorities to engage with their secure tenants on housing management matters that are likely substantially to affect them—for example, if there is a new programme of maintenance, improvement or demolition of dwelling houses let by the authority, or a change in policy or practice. Landlord authorities for that purpose mean local authorities, registered housing associations, charitable housing trusts and development corporations. That means that secure tenants of these authorities must be kept informed about the authority’s proposals and given the opportunity to comment.

The Bill would require those landlords similarly to consult their secure tenants on all national Government consultations that substantially affect them and where the landlord intends to respond. As proposed, it would appear that that would be a significant additional burden for any authority to carry, without obvious benefits to the tenants. As drafted, the proposal would also appear not to relate to leaseholders, whereas I believe that the Bill’s main aim is to help them.

Overall, there is a balance to be struck. We all need to satisfy ourselves that what is proposed would provide a greater opportunity for tenants to make their views known to Government, rather than duplicate how the Government received responses. We also need to consider the burden on local authorities and other landlord authorities, which may be forced to consult on issues on which tenants do not wish to engage.

To recap and conclude, the proposals in the Bill put forward by the hon. Member for Beckenham, while very well intentioned, are already available under existing legislation. I do not think that the changes proposed would deliver real benefits to leaseholders, and there is a danger that they would add significantly to the procedures with which landlords would need to comply. Again, that would create unnecessary burdens and costs—costs that would, in many cases, be passed on to the leaseholders whom the measures are intended to benefit.

The current position strikes a fair balance between the rights and responsibilities of leaseholders, having taken into consideration the sometimes polarised views of those affected, so the Government cannot support the Bill. However, as I have said, I will certainly look at all the issues closely, and will discuss them with my right hon. Friend the Minister for Housing. I ask the House not to support the Bill on Second Reading.

Mr. Deputy Speaker, I apologised to your predecessor in the Chair for having left the Chamber to attend to constituency duties. I was here for the beginning of the debate, and for all the earlier debates today. I just want to make a brief comment. It is disappointing for us sponsors of the Bill, and those of us who have piloted similar Bills through the House, that the Bill introduced by the hon. Member for Beckenham (Mrs. Lait) is not getting a more positive response. When I left, she was making a very good case; when I came back, the Minister was making a response that was clearly not very helpful.

The part that I heard was not very helpful; I can say that without having heard the other part. [Interruption.] Yes, I caught the mood music. We will obviously study what the Minister said carefully, but for the tens of thousands of people in boroughs such as mine, which is where the Minister lives when she is in London, there will be considerable disappointment that the Bill is not getting Government support. The Minister has undertaken to speak to her colleague, the new Minister for Housing. I hope that Ministers will at least work out what changes the Government would be willing to make to reflect the consistent concerns. I am sure that those concerns are not unique to outer south-east London, or inner south-east London, but are shared, as my hon. Friend the Member for Dunfermline and West Fife (Willie Rennie) said, by people all over the country. I hope that the Minister will take away the message that the present legislation is not sufficient.

With the leave of the House, may I congratulate the Minister on her mammoth speech, even though it was deeply unhelpful? The people affected by the problems that we have discussed are public sector leaseholders, who have come to me, to the hon. Members for Hendon (Mr. Dismore), for Brent, North (Barry Gardiner), and for North Southwark and Bermondsey (Simon Hughes), and, interestingly, to the hon. Member for Dunfermline and West Fife (Willie Rennie)—[Interruption.] Not Renfrewshire; I know about Renfrewshire. It is on the other side of the country. Of course, unless the law has changed in Scotland, there is no leaseholding law there. However, I congratulate the hon. Member for Dunfermline and West Fife on doing a noble job with regard to a very unfamiliar situation.

I thank my hon. Friend and colleague the Member for Bromley and Chislehurst (Robert Neill). All of us have public sector leaseholders in our constituency who have consistently complained for years, after the 2002 Act just as much as before it, about the deficiencies in their input into the homes in which they live.

The right hon. Lady tried nobly to defend the current system. Although I appreciate enormously her offer to brief the Minister for Housing and to write to me about various matters, she and the Department must understand that the situation for public sector leaseholders is deeply unsatisfactory. At some point legislation will have to be introduced, possibly much more extensive than my Bill, which I readily acknowledge is defective, to give those leaseholders a fair crack of the whip in the management of their own homes.

Those who read the debate or may have been listening to it will be desperately concerned that the right hon. Lady thinks there is a fair balance at present. They know well that that is not the case. As there is a certain eagerness to get on to other private Members’ Bills, I shall not seek to divide the House. I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.