House of Lords
Thursday 17 March 2016
Prayers—read by the Lord Bishop of Birmingham.
Employment: Job Creation
Since 2010, employment in the UK has risen by more than 2.3 million people. Comparable international figures for this period are not available, but over the last year the UK has seen the second largest rise in employment in the whole of the EU, after Spain.
We have had youth obligation programmes and we seem to have turned the corner here. The figure that I have consistently given to this House over the past nearly six years has concentrated on the workless number—those unemployed or inactive in the 16 to 24 age group. In recent months that figure has been at an all-time low. It is 14.3% of the population and has come down to just a shade over 1 million. It is very interesting that even through the boom years the figure was going up. There was a structural issue. We seem now to be getting at the roots of that structural problem and are beginning to see the figure come down, as I said, to an all-time low in recent months.
Does the Minister recall, as I do, the dire consequences that were predicted by so many businesspeople, economists and politicians were we not to join the eurozone? In view of those predictions having been so spectacularly wrong, has the Minister heard any apologies from those people?
My Lords, I welcome the rise in employment but I want to ask about the disability employment gap. I was pretty shocked on reading the Red Book to discover that the single biggest revenue raiser was the new decision by the Government to save £4.4 billion over five years by taking personal independence payments away from hundreds of thousands of people who need aids to get dressed or manage incontinence. That is on top of previous PIP cuts, lost Motability cars and ESA cuts. How will that help disabled people into work?
There is a huge misapprehension about the cost of PIP, which has been going up rather than down. These are not cuts: on the present trajectory the figure is moving up to £12 billion, and when we discussed it during the passage of the Welfare Reform and Work Bill there was an expectation that in the key 2019-20 year it would be £9 billion. We are reducing a rapid growth and adjusting how to get PIP because clearly we are getting much higher figures than originally expected through the use of those aids and appliance measurements.
Does my noble friend accept that, contrary to what the noble Lord opposite said, it was not Prime Minister Gordon Brown who kept us out of the single currency but Prime Minister John Major? Gordon Brown simply stuck wisely to that Conservative decision.
As the Minister said, we do not have precise international comparisons on job creation, but we are doing okay on the number of jobs. However, is not productivity also very important? On average, we have lagged behind the French by 20% over the last 20 years. Does the Minister agree that the answer is to invest more in people and lifelong learning? If he agrees, can he tell me what the Government will do about it?
An economist would reply that the way to get more productivity out of people is to put more capital in and raise the quality of people’s input. It is clearly a long-standing issue that we have lower productivity than other major countries; the comparisons are often with the US and Germany. However, there is something about the structure of our service-based economy that means the comparisons are not necessarily what they seem to be. Nevertheless, it is quite clear that one of the major challenges of this economy is to get our productivity up.
My Lords, will the Minister reflect on the paradox that if more people are being assessed more rigorously as being eligible and fit for work, even with disabilities—he and I agree on that—there is a certain irony in using the increase in the volume cost of the personal independence payment as a reason for taking away that PIP from those who have been judged to be so disabled that they are entitled to additional support, some of which will eventually enable them to take work? Is it not therefore a completely cost-ineffective means of dealing with the challenge of increased PIP to reduce the number of people who are eligible for it?
We carried out a survey of a representative sample of about 400 people, with, I think, 95% accuracy. We found that the vast bulk of people in the categories that we are talking about did not have extra costs apart from the aids and appliances they were using. Some of those aids and appliances were, for instance, a bed. We found that extra costs were not applied to these particular measures.
European Union: Single Market
To ask Her Majesty’s Government what assessment they have made of the Civitas publication, Myth and Paradox of the Single Market: How the trade benefits of EU Membership have been mis-sold, and what discussions they have had with the Governor of the Bank of England about that report.
My Lords, in order to inform policy-making, the Government review and note the wider evidence, including the Civitas publication, on an ongoing basis. The UK will be better off in a reformed Europe because British businesses will have full participation in the free trade single market, bringing jobs, investment, lower prices and financial security. The Government’s new settlement confirms that there will be a new focus on further extending the single market.
I regret that the Government are so dismissive of this ground-breaking report, which shows that four smaller non-EU countries —Chile, Korea, Singapore and Switzerland—have been able to make vastly more free trade deals than has the EU, with its pretended clout, on our behalf. Can the Government tell us why, as the world’s fifth largest economy, we could not do as well or better if we left the EU? Secondly, do the Government accept that the single market would want to continue its free trade with us, because we are its largest client?
My Lords, I think that I said in my opening reply that the Government took into account all evidence, although that does not mean to say that they agree with it. The Government’s view is clear. We believe that any other alternative to EU membership would leave Britain worse off. No free trade agreement, including the Canada-EU free trade agreement, is as successful in removing the non-tariff barriers to trade as a single market. This is particularly important for Britain, which relies less on goods, which are hindered by tariffs, and more on services, which are hindered by the non-tariff barriers. No country outside the EU has agreed full access to the single market without paying into the EU and accepting free movement. As far as the trade imbalance that the noble Lord mentioned—he is right about it—he talked of a leap in the dark, but he must also recognise the fact that, while half the goods that we exported went to the EU, when you look at it from the EU’s point of view, 7% of the EU’s goods came to the UK. I hardly think that that is a strong negotiating stance to get all 27 countries to agree unanimously to a new trade deal in two years.
My noble friend the Minister referred to a reformed European Union. There is no reformed European Union. Indeed, the European Union has proved itself to be unreformable. If the single market is such an economic miracle, why does he think that the European Union is widely recognised as being something close to an economic disaster zone at the present time? Why does he think that in the latest opinion poll in France, published in Le Monde a few days ago, 53% of the French people said that they would like a referendum so that they could leave the European Union?
My Lords, when the noble Lord says that the European Union is not reformed, he ignores the fact that we are out of the parts of the Union that do not work for us. We will not have to join the euro. That is agreed. We will not have to be part of eurozone bailouts. That is agreed. We will not be part of the European army. That is agreed. Importantly, we will not be part of a EU superstate. We have the best of both worlds—and the one thing that we have is a market of 500 million people on our doorstep without any trade barriers at all.
My Lords, I have not assessed the Civitas report, but I have read quite a lot of it. I think that the former Business Minister, Edward Davey, might be a little surprised to see that he had been a catalyst for a whole 213-page document about the single market. We were told earlier that it was a ground-breaking document, but even the author of the Civitas paper says that,
“non-member countries pay nothing for exporting to the Single Market, other than the tariff and trade costs of individual exporters”.
Would the Minister not agree that that is the very reason that the United Kingdom needs to be in the single market, precisely so that our individual exporters are not subject to the tariffs that third countries are subject to? Can the Minister tell us—
My Lords, the noble Lord spoke of lower prices in the single market. However, since this organisation is a protectionist one, is it not clearly the case that consumers within the EU are paying higher prices than they would otherwise be paying?
My Lords, as we are on this subject, could my noble friend clear up a little matter of fact? Were those letters that were published over the names of distinguished former military personnel and leading industrialists drafted by people being paid by Her Majesty’s Government who subsequently importuned those gentlemen for their signatures?
My Lords, I am afraid that my briefing did not cover that. What I can do is commend to the House the speech made in the debate on 2 March by the noble and gallant Lord, Lord Stirrup, who made it very clear why it is preferable to remain in the EU.
My Lords, there have been 2.7 million apprenticeship starts in the last six years, and 1.2 million in the previous six years. We have introduced reforms to encourage employers to design high-quality apprenticeships; announced the new institute for apprenticeships; delivered National Apprenticeship Week, which is this week; and established a new Apprenticeship Delivery Board, which is encouraging more businesses to deliver high-quality apprenticeships.
I thank my noble friend for that Answer. I do not think she mentioned this but maybe I should: this is National Apprenticeship Week, which is why I am on my feet today. I almost brought in my father’s indentures with me, but I thought that would be showing off. For many young people taking the apprenticeship training route, it is important that they earn while they learn. By how much has the minimum wage for apprentices risen over the last year?
My Lords, all apprentices must earn while they train. It is a real job. In October 2015 the apprenticeship national minimum wage increased by 21% to £3.30 an hour, and this October we are increasing it again by 3% to £3.40 an hour. Of course, most apprentices are paid much more than the minimum wage.
My Lords, a number of key stakeholders, including colleges, training providers and small businesses, are not represented on the Apprenticeship Delivery Board, which the Minister has just mentioned. That being the case, how will the board be able effectively to ensure and promote best practice?
My Lords, consultation has been a key feature in all the work that we have been doing on apprenticeships. I certainly take the noble Baroness’s point that we need to ensure that those particular groups are properly consulted and helped with good practice. We will be publishing a lot more material on how the apprenticeship system will work in coming months.
Not all of them, I suspect. This gives me the opportunity to say that I think we are doing the right thing and that the levy will help to correct two decades of underinvestment in apprenticeships and insufficient attention to quality. Our whole approach is to increase standards, make every apprenticeship last at least a year and generally change the whole basis of training in this country.
My Lords, I welcome the growing number of apprenticeships, and I met some very impressive apprentices at a dinner in the House yesterday evening. To meet the Government’s target of 3 million by 2020, many more SMEs will need to be persuaded to offer apprenticeships. What are the Government doing to encourage SMEs and make it easier for them to offer apprenticeships?
There are two things. First, we need a much greater level of awareness; I spoke about that in my first Answer. Secondly, we need incentives. Of course the levy will provide more funding that can be made available, and 98% of employers will not have to contribute to that levy at all. There is also the apprenticeship grant for employers, which provides £1,500 to small businesses taking on their first new apprentice aged 16 to 24.
My Lords, I congratulate the Government on the huge amount of work done on apprenticeships, especially the new progress on university apprenticeships. But is my noble friend aware of reports showing that female apprentices earn less than males, are likely to receive less training than males, and are more likely than males to be unemployed at the end of an apprenticeship? While I congratulate the Government on all the work they are doing, could they look at this area and ensure that the gender pay gap and other differences in the wider workplace do not start to play out between men and women in apprenticeships, too?
Apprenticeships are of course subject to the same equality duties as any other employment, and 53% of starts in 2014-15 were female. But my noble friend makes a good point: are females finding it more difficult to finish? That is an interesting contribution to the debate, which I will certainly reflect on.
My Lords, 10.6% of those starting an apprenticeship in 2014-15 had a BME background—an increase from 8% in 2009-10. We have set ourselves a target of increasing the proportion by 20% by 2020. I do not know whether those figures include Gypsies, but I will let the noble Baroness know.
My Lords, will the Minister join me in paying tribute to the businessman David Meller and Nadhim Zahawi of the other place, who chair the new Apprenticeship Delivery Board? In the light of the Chancellor’s comments yesterday in the Budget on his commitment to extend further education loans to the over-19s, how many apprentices will benefit from this extension?
To quote my noble friend’s response to a previous question, my briefing does not cover the answer to that question. The Chancellor made it clear that we are giving levy employers a 10% top-up to their monthly levy contributions—but I shall write to my noble friend about the education side.
My Lords, 96% of apprenticeships are restricted to levels 2 and 3; I am sure we would all like to see that extended. There is also a problem about age, as in recent years most apprenticeships have gone to those aged over 24, although the target age is much younger. Will the Minister also comment on how apprenticeship completions are going? According to the latest figures, they are down from 76% in 2010-11 to 68% in 2013-14—something that must be reversed.
The noble Lord is right to be concerned about the decline in completion rates. What seems to be happening is that as we are raising standards, requiring the apprenticeship to last for a year and generally toughening up, completion rates are falling. We will publish an operating model in April and information on funding rates in June. In that work, and in the quality work that we are doing, we need to take into account the essential importance of ensuring that youngsters are able to end their apprenticeships as well as begin them.
Help to Save Scheme
I am grateful to my noble friend for that reply. As nearly half the adult population have savings of less than £500, it is clearly sensible to have a scheme like this to encourage them to put money on one side for a rainy day. As by definition these savers are on low incomes, can my noble friend give an assurance that these accounts will be easy to access and accessible without penalty?
My noble friend is correct. This is designed specifically for those on low incomes. In fact, we think that 95% of the eligible population from households will have total incomes of less than £30,000. The idea is that people will be able to withdraw at any time without penalty to cover urgent costs. The Government will consult shortly on how exactly the bonus should work. We want to avoid disincentivising people from making withdrawals when they need to. The whole point is to get households saving a bit so that they can cope with unexpected shocks.
My Lords, Martin Lewis of MoneySavingExpert.com said that,
“there is a risk ‘Help to Save’ could substantially mis-prioritize people’s finances. Already, many people make the mistake of trying to save when they are in debt, and yet the cost of debt for most usually vastly outweighs the gain of saving”.
Can the Minister say what percentage of those eligible are in debt and what guidance in this area will accompany the scheme?
To take the last bit of the noble Lord’s question first, there will be a consultation as I said, and these details will have to be gone into, not least with the providers of these accounts. This is to help prevent people getting into debt in the first place. I take the point the noble Lord raised. There are potential dangers, but at the same time I return the quote. The chief executive of StepChange Debt Charity said:
“We welcome Government recognition of the need for a savings scheme aimed at those on low incomes. Our research shows that if every household in the UK had £1,000 in rainy day savings, 500,000 would be protected from falling into problem debt”.
The Saving Gateway, which had cross-party support, is similar. This scheme is improved. The fact is that at the time the Saving Gateway was unaffordable in the context of the financial position that the Government inherited. I do not think it matters whether this scheme is as successful or not as the Saving Gateway; the point is that it is achieving a good end.
I welcome the scheme, but is it not being paid for by the very workers at whom it is aimed—those on universal credit and tax credits? The Government are cutting £1,600 a year from the universal credit payments of these very low-paid workers. Perhaps if the Government had let them keep their universal credit they could have saved on their own. In reality, is it not, as my honourable friend Owen Smith put it,
“like stealing someone’s car and offering them a lift to the bus stop”?
My Lords, the New Economics Foundation report by Sarah Lyall notes that 15% of people in the UK—approximately 7.4 million people—have turned to debt for essential day-to-day spending. It also notes that 6% of people in the UK—approximately 3 million—use credit as a safety net on a weekly basis. Will the Minister please explain how those people will be able to save?
We want to prevent people getting into debt. Half the people on low incomes do not have one week’s wages spare. If we get people into the habit of saving—in the scheme they have to save only £1 pound a month to start with; it can go up to £50 a month—it will prevent people getting into debt in the first place. The Government are subsidising that to incentivise people to do that.
Notwithstanding that this is a good scheme, did the Minister hear the “Today” programme this morning, on which John Humphrys tore the Chancellor apart for failing to deliver on his promises? Does the Minister agree on the importance of the independence of the BBC—even though it may not be in his brief?
My Lords, will the Minister affirm the importance, in addition to the Help to Save scheme, of the increasing number of credit unions which routinely go into schools to try and create a culture of saving from the very earliest age, to address the endemic problem of a presupposition of debt?
Clean Neighbourhoods and Environment (Amendment) Bill [HL]
A Bill to raise the penalty for littering offences; to provide for an offence that relates to allowing a dog to foul the land; and to require local authorities to provide appropriate and convenient litter disposal points.
The Bill was introduced by Lord Selsdon, read a first time and ordered to be printed.
Occupational Pension Schemes (Scheme Administration) (Amendment) Regulations 2016
Child Support (Deduction Orders and Fees) (Amendment and Modification) Regulations 2016
Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2016
Motions to Approve
Companies (Address of Registered Office) Regulations 2016
Registrar of Companies and Applications for Striking Off (Amendment) Regulations 2016
Motions to Approve
Housing and Planning Bill
Committee (7th Day)
Relevant document: 20th Report from the Delegated Powers Committee
Clause 115: Assessment of accommodation needs
82GD: Clause 115, page 52, line 30, at end insert—
“(c) plots on which gypsies, travellers and travelling showpeople can have both residential accommodation and space for the storage of equipment.”
My Lords, Section 225 of the Housing Act 2004 requires housing authorities to carry out an assessment of the accommodation needs of Gypsies and Travellers who reside in or resort to their area, and Section 226 allows the Secretary of State to issue guidance on the carrying out of this responsibility. An order was subsequently made in 2007 about implementing the provisions of the 2004 Act.
The Bill seeks to change the situation. There are two ways of looking at its provisions in respect of Gypsy and Traveller sites. Either they will absolve councils of their responsibility for planning to meet the needs of these groups for sites, which will make a difference to the position laid down in the 2004 in terms of what will happen on the ground; or, as the impact assessment suggests, it will not. If the latter is indeed the case, the only reason for the Government to include Clause 115 in the Bill is to throw a bone to councils and some communities that wish to make as little provision as possible, preferably none, by implying that the Government are responding to opposition to such provision, which unfortunately is fairly widespread. Such would be the sort of clients who might be disposed to engage the assistance of an organisation called Planning Direct. This organisation’s comments on the relevant clause distastefully boast of a 100% success rate in stopping Traveller sites for parish councils, for which in its publication it helpfully supplies contact details. If the Bill makes or is intended to make little or no difference, why does it include the provision in the first place?
Another organisation, Planning Resource, which describes itself as providing independent intelligence for planning professionals, reports divided opinions among planners. The strategic planning convenor for the Planning Officers Society believes that it will have little impact, but also believes that there is some real concern over councils misinterpreting the rules and that the change is,
“almost like handing local authorities, which are reluctant to plan for travellers, an excuse not to do it”.
Others, in fairness, take a more positive view of the change, but Marc Willers QC declared that he has,
“no doubt that site provision will reduce and that the shortage of accommodation for Gypsies and travellers will increase if the requirement to assess their needs is subsumed into a more general housing needs assessment and the guidance on assessing their needs is swept away”—
that is to say, the problems will increase when an assessment of their needs is no longer required.
The all-party parliamentary group for Gypsies and Travellers echoes those concerns, describing the combination of the new Planning Policy for Traveller Sites, published last August, and the Bill as making for a “complex, confusing system”. It adds that the Traveller site planning policy leaves open questions as to the assessment of,
“the needs of Gypsies and Travellers within and outside the new planning definition”.
Moreover, most authorities will have completed their general housing needs assessment in any event and may not have included Gypsies and Travellers. It points to the potentially paradoxical outcome that the uncertainty may lead to more unauthorised encampments. The all-party group commended Leeds City Council, which conducted a full assessment of needs several years ago and provided a number of new pitches, thereby saving as much as £2,000 a week on services that it would otherwise have had to provide.
Concern over the provision is widespread. The Catholic Association for Racial Justice is deeply concerned about the latest planning policy for sites which it says is making it much harder for Gypsies and Travellers to obtain planning permission to live even on their own land. It concludes:
“The impact of these … changes could be very undermining for Gypsy and Traveller communities, increasing their already serious disadvantage and marginalisation”.
The chair of the Greater London Authority housing committee, Tom Copley, wrote in December to the Minister, Brandon Lewis, reporting that his committee had written to the Mayor of London in January 2015 with five recommendations that he thought would be undermined by the Bill. The committee considered that the Gypsy and Traveller community could be further marginalised by its provisions and that its suggestions for toleration sites would be undermined by removing the requirement for assessments of need. He called on the Minister to reconsider the changes. Can the Minister say whether her honourable friend Mr Lewis did so? Did he reply to the letter—and, if so, in what terms?
At the heart of the problem is the glossary appended to the planning guidance as to the definition of Gypsies and Travellers which lists three issues, among other unspecified matters, in determining whether people are Gypsies and Travellers: namely,
“whether they previously led a nomadic habit of life … the reasons for ceasing their nomadic habit … whether there is an intention of”,
“how soon, and in what circumstances”—
matters which noble Lords may think are rather difficult to establish.
Travelling showpeople are defined separately. The Showmen’s Guild is concerned about the possible impact on its members. The noble Lord, Lord Shipley, who is not in his place, and I, are very familiar with this group, as it is integral to the Hoppings, which is Europe’s largest open-air travelling fair and which has, for 150 years, taken place on Newcastle’s Town Moor, just a few hundred yards from where I live. It originated as a temperance festival and, though its character may have changed slightly over the decades, it is an enormously popular event, despite the wet weather that usually coincides with it.
The Equality and Human Rights Commission’s briefing to the House of Commons reminds us that homelessness among Gypsies and Travellers is currently estimated at 20%, and that they are among the most disadvantaged communities in the country. The commission concluded that the Bill may be in breach of Article 8 of the ECHR, of Articles 4.2, 5 and 27 of the European Framework Convention on the Protection of Minorities, and of Article 27 of the International Covenant on Civil and Political Rights.
The commission also asserts that the impact assessment fails to examine the equality impact, as required by Section 149 of the Equality Act 2010. We are dealing with a small but deeply deprived community, some of whose members belong to a people who—like the people I belong to—suffered very severely in the Holocaust of the Second World War. If this group is to continue to function effectively—to live the kind of life that it seeks to lead—this Bill is distinctly disturbing. If this House changes nothing, it is unnecessary; if it makes a change, it is, frankly, repugnant.
Amendments 82GD and 82GE require local housing authorities to consider the need for the provision of plots of land from which Gypsies, Travellers and travelling showpeople can have living accommodation and storage space for their equipment. I know from my own time as leader of Newcastle City Council that such provision creates concern locally and sometimes allows people with rather extreme views to stir up ill-feeling about this group. The provisions of this Bill lean towards that unfortunate development. It is not, of course, intended, but the apparent change—whether it is real or not is open to question—is not likely to help the settled relations between people in one or other of the relevant groups and the local communities in which they ought to be able to play a part. I beg to move.
My Lords, I shall speak to Amendment 82H, which has broad support across this House. This is a simple probing amendment that would seek to retain Sections 225 and 226 of the Housing Act 2004 in legislation, requiring local authorities to undertake a direct assessment of Gypsy and Traveller needs. I shall also speak to Amendment 82GD, tabled by the noble Lord, Lord Beecham, which may point towards an alternative way forward.
I start by welcoming the publication of the Government’s draft guidance on Clause 115, which makes clear the duty of local authorities to undertake a specific assessment of all those whose primary residence is in caravans or houseboats, including Gypsies, Travellers and showmen communities. The very presence of this draft guidance is reassuring, and I am glad that the Government are making progress. I recognise that in the rush to get this guidance out it may not have been possible for Ministers and officials to consult all stakeholders about the content but I am sure that the Minister will reassure the House that all the relevant parties—including representatives of the Gypsy and Traveller communities—will be consulted extensively before final guidance is published. I know that there are a number of concerns about the proposed guidance, not least the failure to define what is meant by a household —something which has led to a great deal of confusion and cross-authority discrepancies in the past, as authorities have defined it in different ways.
I understand that the Government’s stated intention behind Clause 115 is to remove a general perception that Gypsies and Travellers are given favourable treatment under planning law. I also recognise that under current legislation there is no requirement to perform a specific assessment of those residing in caravans and on waterways who are not part of the Gypsy and Traveller communities, and that this may result in such groups slipping through the net when local authorities assess housing needs. As such, I have no objection in principle to the expansion of the existing assessment requirements to cover all those residing in caravans and on waterways, as long as this is genuinely an expansion and does not threaten the current arrangements regarding assessment of specific Gypsy and Traveller needs.
With this in mind I will highlight two main concerns, which I hope the Government will address. The first is the total lack of mention of Gypsy and Traveller communities in Clause 115 and only the smallest mention of them in the draft guidance. It is important to bear in mind that some local authorities, often under pressure from the wider community to refrain from making land available for Gypsy and Traveller sites, are liable to seize on any excuse not to undertake a full and detailed assessment of Gypsy and Traveller needs. The Government’s own impact assessment seems to recognise that the failure to put reference to Gypsies and Travellers in primary legislation—relegating any mention to secondary guidance only—may give local authorities the impression that the importance of assessing those needs has been downgraded in the new legislation. Making it clear in primary legislation that any assessment requirements include a requirement to assess the needs of Gypsies, Travellers and showmen residing in or having recourse to a local authority is therefore essential to maintain the pressure on local authorities to carry out such an assessment.
The simplest way of ensuring that the Gypsy and Traveller communities are directly mentioned in primary legislation is to ensure that Sections 225 and 226 of the Housing Act 2004 remain in legislation, as my amendment proposes. I see no reason why the two pieces of legislation cannot stand side by side, with local authorities subsuming the Gypsy and Traveller assessment requirement within the broader assessment of caravans and waterways. There are, of course, alternative ways of maintaining reference to Gypsies and Travellers, the amendment of the noble Lord, Lord Beecham, being one of them. None of these amendments would in any way imperil the Government’s aim of expanding the assessment requirement and ensuring parity of treatment for all in the assessment process.
The second concern that I have centres on the categories of caravans and inland waterways that are proposed in Clause 115 and reflected in the draft guidance. The use of these simple categories fails to capture the nuanced differences in the needs of the groups for which this legislation is intended to provide assessment, and may result in an inadequate assessment process if these nuances are not made clear. The accommodation needs of those residing in static caravans, for example, may be very different from the needs of Gypsy communities that are constantly on the move, which will again be very different from the needs of travelling showmen, who often require extra space for vehicles and equipment. I hope the Minister can confirm that these distinctions will be made clear in the revised guidelines and that any assessment will be required to differentiate between them.
What these categories ignore altogether, however, is the requirement that local authorities include the needs of Gypsies and Travellers living in settled, bricks-and-mortar housing in their assessment, despite this being included in the guidance. Given that any guidance issued is guidance only, can the Minister explain to the House how the Government intend to ensure that local authorities assess vulnerable Gypsy and Traveller families who might be abiding in bricks-and-mortar housing, perhaps only temporarily, when under Clause 115 there will be no statutory duty on them to do so?
I hope that everyone across the House recognises the importance of ensuring that local authorities are equipped to provide properly for the accommodation needs of Gypsies and Travellers in their communities. A failure to provide a proper, robust requirement on local authorities to assess the needs of Gypsies and Travellers will inevitably hinder the provision of accommodation sites and space, which is only likely to increase the number of illegal sites, stoke community tensions and endanger a cultural identity that has endured for hundreds of years.
If the Government are committed to expanding the assessment requirement, that expansion needs to be done very carefully, building on the good work that is already being done to foster stronger relationships between local authorities and vulnerable minority communities. Indeed, I hope the Government might use these legislative changes as an opportunity to work with the Gypsy and Traveller communities to improve the assessment process, not undermine it. I hope the Minister can provide assurance that this will be the case.
My Lords, I support the amendment and draw your Lordships’ attention to my entry in the Register of Interests as a district councillor. I flagged up at Second Reading that I would be returning to this issue, and I support wholeheartedly the comments of the previous two speakers.
In 2004, while I was still the leader of Somerset County Council, the Government passed the Housing Act, of which Section 225 ensured that:
“Every housing authority must, when undertaking a review of housing needs in their district under section 8 of the Housing Act 1985 … carry out an assessment of the accommodation needs of gypsies and travellers residing in or resorting to their district”,
and prepare a strategy to meet those needs. Section 226 went on to provide guidance on how this was to be carried out. This significant step forward required councils to make assessments of the Travelling community’s needs. Of course, many councils had been doing this for a considerable time and making the necessary provision as a result; however, many were not—bowing to extremes of public opinion and abdicating their duty to provide accommodation for all types of people.
I am at a loss to understand why, apart from again bowing to pressure from certain quarters, the Government are now seeking to delete this requirement for local authorities to make provision in their housing needs assessments and local plans for sites for Travelling communities. The requirement is there now and is not arduous. Making it virtually impossible for Travelling communities to find permanent or temporary sites will only lead to an increase in what are known as illegal encampments. I will refer to this again later.
As we have heard, there are several groups of Travelling communities: Roma Gypsies, covered by the Race Equality Act; showpeople, including those in the circus trade, fairgrounds and historic seasonal fairs; and other Travellers, some of whom are called “new age” Travellers. The groups are distinct and have different requirements. I have long been an advocate of the need to provide permanent sites for individual Gypsy families, which will often include more than one generation. I have received a briefing from Friends, Families and Travellers and I have also met with representatives of the Showmen’s Guild and received a briefing from the Equality and Human Rights Commission.
Most of us will have seen at one time or another a group of caravans parked on a wide grass verge, in a lay-by, in a farmer’s field, or even in a town centre car park—the latter can be very disruptive to residents trying to park to do their shopping or visit the library. However, mostly the caravans are in the countryside and cause little problem. Sometimes the local landowner will allow them to stay, but more commonly legal action is taken to move them on. This is costly and, without legalised authorised sites to move them on to, only displaces them further down the road, or maybe over the neighbouring county boundary, where they become someone else’s problem.
In March 2015, guidance was produced by the DCLG, the Home Office and the Ministry of Justice on Dealing with Illegal and Unauthorised Encampments. Most of this dealt with moving the problem on and said:
“Public bodies should not gold-plate human rights and equalities legislation”.
Did any of them ever actually do this? The document might just as well have said, “Ignore it altogether”. This is despite statistics from January 2015 showing there were 593 more caravans on authorised sites than the year before—so not illegally camped.
A more positive document from the DCLG was published in August 2015, which gave very useful guidance for how provision might be made for sites for Travelling communities. In the same month, the responses were published from the consultation undertaken between 14 September and 23 November 2014 by the then Secretary of State at the DCLG. This second document reiterates the former publication, and paragraph 3.32 makes clear:
“The Government intends to review the implementation of the revised policies to consider their impact and ensure that they effectively support those persons who have a nomadic habit of life”.
Hurrah. However, there is reference to treating those who have previously travelled and now wish to be static but still part of the Travelling community as requiring bricks-and-mortar accommodation in the same way as the settled community. This will have a devastating effect on some sections of the Travelling community.
When I met with the Showmen’s Guild, it was extremely concerned about the removal of the 2004 needs assessment. The ability to have accurate numbers of those in need is essential to meeting that need. To return to where we were in 2000, when there was no information available, is unhelpful in the extreme. On Monday, we spent some time in this Chamber debating how the needs of tenants and residents looking for homes have changed over the years. This is also the case for the Travelling showpeople and others. Previously they might have been looking for somewhere to overwinter, repair their equipment and recharge their batteries. Nowadays they are looking for permanent, 12-months-a-year sites where their elderly can stay and gain access to GPs and health centres, they can look after the children, the children can go to school and receive an education, and from which they can travel to other parts of the country to earn their living.
The Showmen’s Guild is self-financing and self-regulating, and those it represents live in close family units supporting each other. They are proud that they receive no government handouts. It has 4,500 members, who are the heads of families representing 25,000 people. They are Travelling showmen who go to fairs and circuses, as we have heard. They attend overseas fairs in Dubai, China and New York, bringing money back into this country and reinvesting in their equipment, which enables them to keep up with the best in Europe. Examples of their presence are the Winter Wonderland fair, which is a multimillion pound business, and the King’s Lynn Mart, a fair which has been running for 800 years and is now run by the Showmen’s Guild. The fair brings a wealth of business into the town.
When I met the showmen’s representatives, they said that spending time worrying about whether they were able to have a permanent base took their minds off the job, which was not helpful. They need a year-round base in order to make repairs to equipment. They have a long-standing tradition, which is now a 21st-century industry, and their attendance at annual local events can mean businesses report a 25% increase in takings. The Showmen’s Guild believes it is important to count numbers in order to make both five and 10-year site provision, and for local authorities to undertake this task.
I see from the DCLG website that the previous Secretary of State is now the UK’s special envoy for post-Holocaust issues. During the era of the Holocaust, German authorities not only targeted Jews but other groups because of their perceived “racial inferiority”. They included Roma Gypsies. During this period, some 200,000 Roma Gypsies were murdered in the so-called euthanasia programme, according to the Holocaust Encyclopaedia website.
Let us not forget the need to protect all peoples of diverse opinions, faiths and ways of life. It is a basic human right to have a home, and for some this will be a caravan, even if it is on the same site 12 months of the year. These people deserve humane consideration and to be treated with respect. Sections 225 and 226 should remain as part of the Housing Act 2004.
My Lords, I declare an interest as president of Friends, Families and Travellers. I am proud to attach my name to Amendment 82H, not only because of the breadth and distinction of its support from the highest levels in this House—I know that the noble and right reverend Lord, Lord Williams of Oystermouth, very much regrets that he cannot be here. I also speak in memory of my friend Lord Avebury, whose amendment to the Housing Act 2004 the Government’s proposal in Clause 115 seeks to destroy. He was throughout his life a campaigner for justice and fairness and, when the Government of the day repealed his Caravan Sites Act 1968, which resulted in a few hundred more sites, he sought tirelessly to bring in replacement provisions, culminating in those in the 2004 legislation, in which I was honoured to join him.
Why is it necessary to oblige local authorities specifically to include Gypsies and Travellers in their housing needs assessments? It is because without this, as has been said, local authorities have an excuse to shirk even more their responsibility to provide sites for that small proportion of Travelling people—which, as has been said, includes showpeople—who need them. The DCLG’s published figures for the Traveller pitch fund are 533 sites for 2011 to 2015, but even that small number is misleading, because it is not a net figure: it omits the pitches lost to development. The real figure is in the region of 305 to 335, according to research done by Friends, Families and Travellers—that is 61 to 67 a year, which can barely respond to household formation, let alone repair the huge gap in provision.
Homelessness is now more acutely on the increase, particularly in the Midlands, because of the Government's new definition of Travellers, so well explained by the noble Baroness, Lady Bakewell, which ignores their ethnicity as established in law. Clause 115 did not emerge from consultation, nor was it presaged in the Conservative manifesto. It is as if the Government want, stealthily, to do away with a culture and traditional way of life that is different from that of the settled majority. Instead of bringing in measures that could improve social cohesion and oppose the prejudice that has made this very small minority so often marginalised and deprived—to the severe detriment of its health and education opportunities, let alone ordinary peace of mind—they seek to deepen that deprivation.
Clause 115 did not go unchallenged in the other place. My honourable friend Teresa Pearce cited over 11 national and local organisations, including the Joseph Rowntree Trust and all the leading Gypsy, Traveller and showmen bodies, in her request to remove it. In his response, the Minister, Brandon Lewis, did offer welcome recognition of the duty to assess all housing need. His justification for removing the reference to Gypsies and Travellers was:
“Our clause emphasises that Gypsies and Travellers are not separate members of our communities”.—[Official Report, Commons, Housing and Planning Bill Committee, 26/11/15; col. 345]
It has long been recognised that identical treatment is not at all the same as equal treatment. Indeed, in this case it would result in manifest inequality. Mr Lewis may have realised that he was on sticky ground, because he then offered to incorporate,
“any necessary elements of the current ‘Gypsy and Traveller Accommodation Needs Assessment Guidance’ in wider planning guidance”.—[Official Report, Commons, Housing and Planning Bill Committee, 26/11/15; col. 345]
Guidance has indeed just been published, but without the consultation which the noble Baroness, Lady Williams of Trafford, had offered at her very helpful meeting with the all-party group. It would have benefited from that. What guarantee does it give Travellers, forcibly evicted at great cost to the evicting authority or continually refused planning permission, that their local authority will be obliged by law to ensure that their need for a site is accommodated? I emphasise again the small number concerned—perhaps 25,000 in the whole of England—but even that has proved too much for our majoritarian culture. Advisory guidance with no statutory backing, open to change without parliamentary intervention, will hardly do much when there is no political leadership.
The Government’s own impact assessment has the grace to recognise this, as the right reverend Prelate the Bishop of St Albans, said. It says that,
“some local housing authorities may misinterpret the removal of a specific reference and therefore possibly fall short in their duties”.
However, it claims that this is balanced by the eight years’ experience of implementing the previous system and the reference to the provision of caravan sites and houseboats for canal workers. The problem is that the minimal provisions of those eight years needed strengthening, not eroding, to make enough of a difference.
The truth is that the studies which housing authorities carried out to assess need have been, at the best of times, insufficiently disaggregated to pick up small minority communities. Only specific Gypsy and Traveller assessments can ensure that a proper attempt can be made to provide sites which can preserve their way of life and allow them to live legally, in harmony with their settled neighbours. I hope that the Minister will take this on board and accept all the amendments in this group.
My Lords, I will briefly intervene in this debate. It is quite important when considering this issue to bear in mind that some of the local authorities that have dealt with the situation as it currently applies in legislation have found that the legislation itself has given rise to difficulties for them and, in some circumstances, to abuse.
I will say another word about travelling show people. I very much appreciated what the noble Lord, Lord Beecham, and the noble Baroness, Lady Bakewell of Hardington Mandeville, said about them, and I want, in a sense, to support what they said.
First, on local authorities, I remind your Lordships that I was Member of Parliament for South Cambridgeshire. That district has one of the largest numbers of sites for Travellers, relative to its population and area, of anywhere in the country. Contrary to some of the implications about the attitude of local authorities in the absence of statutory provisions requiring them to behave in certain ways, the local authorities in the district have always rigorously sought to assess the requirements of Travellers in our area and to provide for it. That is because it has historically been an area where Travellers have been welcome in order to support the industry in the county, not least because of the needs of the farming community. However, the issue is that the specific statutory provisions, which Clause 115 would in effect remove, have not enabled local authorities to make disinterested and even-handed assessments of housing needs for all the members of our community, but have given an opportunity—often not for the legitimate Travelling community, who have been coming to South Cambridgeshire over generations—frankly, for abuse.
I refer not least to Smithy Fen at Cottenham in my former constituency, where some come, assert that they are part of a Travelling community—even in circumstances where they already have established residential accommodation in other places—and use the requirement for an assessment of need, which they then assert has not been met, buying at agricultural prices property in a place where development land values are many orders of magnitude greater. They then take possession and seek planning permission over a period for those properties, giving themselves very large uncovenanted benefits and, in some cases, moving on and doing the same elsewhere. The statutory provisions give a sense that, contrary to what the settled community feels, there has to be a fair assessment and an even-handed effort to meet everybody’s housing needs. Those housing needs are being met in ways that would never be accommodated for the purposes of the settled community. The same piece of land would never be able to be developed by somebody from the settled community whose need for housing might be at least as great. Often, in villages, there are young people who would love to live in that village and would love to have that site available for development but, for material planning reasons, it is not available. Therefore, it is important to them that the local authority has the ability—and should be required—to look at housing need and to respond to it across the community. In many places in consideration of this Bill, many Members on all sides of the House have taken the view that we should trust local authorities, through the planning process, to assess planning need and to provide for it. Frankly, that is what we should do in this case.
Clause 115 goes on to say, “but there are some specific circumstances” and refers to caravans and houseboats. That is where Amendment 82GD has some points of merit to consider because, particularly where Travellers are concerned, it is not just about caravans. It is also about a mix of provision of residential accommodation, caravan accommodation and space for equipment and so on. That is especially true for travelling show people. I know them well. They have a major site at Meldreth, the neighbouring village to my own in my former constituency. We made very good provision for them, which was very important to them. This was a classic instance of the special requirements of a plot, because they must have permanent accommodation for members of their community who are older, those who are retired and particularly where children need access to school. Therefore, they have permanent accommodation, temporary accommodation and space for equipment. A mix of all three is important and has been provided for them there.
Given the nature of the need, for certain plots the characteristics of that plot have particularly to be identified in the planning process in the same way as for caravans. I encourage the Minister in replying to look at whether, alongside the provisions in Clause 115, there is a need to identify specific characteristics of certain plots for which there would not otherwise be provision in the normal development framework.
I shall not comment on that. I am simply commenting on South Cambridgeshire where there is evidence that we—the people of South Cambridgeshire, the local authority and Cambridge city—are trying our hardest persistently to increase the availability of sites and have done so successfully. However, with all that effort, at no point have we been able to satisfy the requirement on the basis simply of asking how many people are seeking sites in South Cambridgeshire. That is a different issue. The issue is—as is true for all housing need—that local authorities must be in a position to decide the balance between the requirement for housing and the availability of sites, consistent with the wider development framework.
My Lords, I am afraid my experience in the adjacent county of Bedfordshire is different from that of the noble Lord, Lord Lansley. That is why I support the amendments of my noble friend Lord Beecham and the right reverend Prelate the Bishop of St Albans. I used to be responsible for Gypsy and Traveller health in north London. In my mid-40s I decided to reassess my career and to abandon London—he who is tired of London is not tired of life—to live in rural Bedfordshire.
I saw that the first parish council meeting in my new village was going to deal with Gypsy and Traveller assessment. That sounded like a place that I should be, being really keen having seen the huge mountain that Gypsy and Traveller communities have to climb in a wide variety of areas, not least housing, but also in health and equality generally. It gave me the biggest education I had ever had. It was like a bear pit. The amount of undiluted prejudice on both sides of the argument was so huge that it terrified me. I sat at the back of the parish council meeting—I should say that the parish council regularly attracts about three spectators but on this occasion we had 600—and kept my lip severely zipped. In integrating into the community, I had to recognise that there was huge prejudice surrounding the Gypsy and Traveller community. Ever since that night I have regretted not standing up and saying something.
Having followed the issue for over 25 years, I know that Bedfordshire’s assessment record has improved immensely, but in terms of achieving sites for the Travelling community it has not improved as significantly as I would like. Therefore, anything that allows the importance and prominence of this hugely difficult issue in rural communities to be diluted is a retrograde step. Given half a chance, local authorities faced with this horribly controversial issue will take the line of least resistance if they are allowed to. Therefore, the amendments of the noble Lord, Lord Beecham, and the right reverend Prelate the Bishop of St Albans are absolutely required.
My Lords, I apologise to the Committee for missing the first two or three minutes of the introduction to the amendment by the noble Lord, Lord Beecham.
We need to recognise that the Gypsy community suffers multiple disadvantages, and not just in housing. It suffers some of the worst health outcomes in the country, as well as the worst rates of infant mortality and the poorest educational outcomes of any community in the country, and it has the least access to finance of any community in the country. If you do not have a settled existence, and particularly if you are constantly moved on from road verges, it is difficult to open a bank account or to enter the legitimate financial scene.
We also need to recognise that something like 75% or 80% of Gypsies have accommodation that is suitable; it is not a question of the whole community roaming around and looking for somewhere to stay. It is a marginal problem but it is very important and serious, and it is one where we ought to sustain the push with legislation to make sure that local communities face up to their responsibilities.
It is also interesting that many in the Gypsy community are strongly religious. For instance, I remember that when I was a Minister there was a huge row about an unauthorised encampment of Gypsies and fears about hundreds of caravans turning up, but it turned out that they were coming to a Pentecostal Christian event organised for Gypsies. That was counterintuitive, but maybe counterintuitive is what we need to be here. It is the last group in Britain that it is legitimate to slag off in the golf club bar, on the street corner or, indeed, at the parish council in a way that nobody would if those involved were Pakistani, Afro-Caribbean or Chinese people, because, apart from anything else, they would know that it was illegal to do so. They would know that it is something we do not do in Britain but you can still say these things about Gypsies. Unfortunately and sadly, that is the case, and I do not think we should give anybody an excuse to default on their duty.
However, I want to put this issue in a more positive light. We need to give those who want to take their duty seriously some legislative backbone in saying to their communities, “I know this is a tough one. I know it’s difficult, but you can see that the law requires us to do it”. I believe it would be a serious mistake to go backwards on this provision and I hope the Minister will take account of the views that have been expressed.
My Lords, in debating this clause, I am conscious of the absence of the late Lord Avebury, which was mentioned by the noble Baroness, Lady Whitaker. I was saddened, as were others, on hearing of his death. I know that he was a committed and forceful advocate for the rights of the Gypsy and Traveller community, and I hope that together we can do justice to his memory.
I thank all noble Lords for their amendments. I understand their reasoning, which seeks to ensure that local authorities have an explicit duty to assess the accommodation needs of Gypsies, Travellers and Travelling showpeople. I emphasise that this clause does not remove that duty.
I turn first to Amendment 82H, tabled by the right reverend Prelate the Bishop of St Albans. The Government’s intention is to ensure that the assessment of accommodation needs is seen to be fair to all. We know that some feel that a specific mention of Gypsies and Travellers in legislation relating to such assessments somehow accords them more favourable treatment. We want to combat that impression which, as my noble friend Lord Lansley mentioned, only adds to misunderstanding between the Traveller and settled communities, not to remove the duty to assess the needs of Gypsies and Travellers. Their needs will be assessed, but in a way that is seen to be fair to all.
The aim therefore is to simplify legislation to ensure that the housing and accommodation needs of all the residents and those who resort to an area are considered without specific reference to particular ethnic groups. The clause makes it clear that the needs of those persons who reside in or resort to an area with respect to the provision of caravan sites and moorings for houseboats are considered as part of the review of housing needs. This would include all those who are assessed at present and potentially those who simply choose to live in a caravan, irrespective of their cultural traditions or whether they have ever had a nomadic habit of life. We recognise that for many, but for Travelling showpeople in particular, this assessment needs to include consideration of not only residential accommodation but also space for the storage of equipment—I am speaking particularly about Amendments 82GD and 82GE. That is why we have published draft guidance that makes this explicit.
The definition in Planning Policy for Traveller Sites relates to the provision of sites and is relevant for those seeking planning permission for Traveller sites. The definition is based on proof of nomadism and ensures that planning provision relates to specific land use requirements. The duty in the Housing Act is about assessing the housing and accommodation needs of all in the community and those who resort to it, including those with or without an existing nomadic way of life and those who wish to resort to caravan and houseboat dwelling. We would not wish to align the housing definition with the planning definition as it would limit the scope of the assessment to those who proved an existing nomadic lifestyle. I hope that this reassures the right reverend Prelate the Bishop of St Albans, who raised these points.
Noble Lords and others have rightly raised concerns about human rights, and we are ever mindful of our obligations under both domestic and international law regarding the treatment of protected groups. Therefore, before proposing this clause Ministers gave very careful consideration to their public sector equality duties and the need to ensure that local authorities understand their duty to assess the needs of those living in houseboats and caravans. This includes those with protected characteristics such as Romany Gypsies and Irish Travellers, for whom it is recognised that caravan-dwelling is a cultural part of their identity. We have therefore published draft guidance explaining how the needs of such groups should be considered under this revised legislation. We want local authorities to assess the needs of everyone in their communities, and our clause emphasises that Gypsies, Travellers and Travelling showpeople are not separate members of our communities. I hope Lord Avebury would have agreed with me that they should be treated fairly.
The noble Lord, Lord Beecham, asked whether my honourable friend the Housing Minister in the other place had responded to a letter from the London Assembly Group. I can reassure him that the Minister responded and explained that the changes in the Bill would not impact on how local authorities assess their needs. Local plans need to be found sound before they are adopted. This means that they should be positively prepared, based on a strategy that seeks to meet objectively assessed development and infrastructure requirements.
The noble Lord, Lord Beecham, the right reverend Prelate the Bishop of St Albans and the noble Baroness, Lady Bakewell, asked whether any change led to more unauthorised encampments. I can reassure them that the change in legislation is about local housing authorities assessing accommodation needs. It for local planning authorities to ensure that their local plans address the needs of all types of housing and the needs of different groups in the community.
The right reverend Prelate the Bishop of St Albans raised concerns about local authorities ignoring needs. If a public authority does not comply with the general duty under Section 149 of the Equality Act 2010—the public sector equality duty—its actions or failure to act can be challenged by judicial review. He also asked what consultation was undertaken on the draft guidance. Officials in the department and my noble friend the Minister, who is in her place on the Front Bench, have engaged with the Gypsy and Traveller communities through liaison groups, which meet every few months. The guidance is published in draft, so we are continuing to engage with representatives from the Travelling communities. I hope that reassures noble Lords on that point.
The right reverend Prelate also raised the question of how a “household” is defined. It is for a local authority to ensure that it considers the combination of needs of its community. The guidance is clear that this covers the needs of households from all sectors of the community, whatever that household might look like. Local housing authorities will be able to consider how best to assess that need in summary. With these explanations and assurances, I hope that the noble Baroness will agree to withdraw this amendment.
Will the Minister say a bit more about whether he sees this as a watering-down of the provisions? Clause 115(2) seeks to remove Sections 225 and 226 of the Housing Act, which state that a “housing authority must”—it is a very clear duty. This clause would replace that with a “duty to consider”. My noble friend Lady Whitaker said that this would allow authorities to shirk their responsibilities and, as my noble friend Lady Young said, take the line of least resistance. How are we to avoid that?
Before I conclude, many noble Lords have mentioned Lord Avebury. He was a very good man and we all miss him very much. I know which side of the debate he would be on if he were in his place today. It is worth noting that just a couple of days ago, on 15 March, it was the anniversary of his famous by-election win in Orpington.
I understand the thinking behind the noble Lord’s question, but I might put it another way. He used the word “watering-down”, but it could also be said that it might lead to local authorities underestimating the accommodation needs of Gypsies and Travellers. Again, as I hope I have made clear, that is absolutely not the case: the proposed changes to primary legislation make it clear that the needs of all those, including Gypsies and Travellers, who reside in or resort to a district are considered in the same way as before in respect of the provision of caravans, sites and moorings.
My Lords, by the standards of Committee stage on the Bill, this has been a relatively short debate, and I will not prolong it too much. But I find myself slightly puzzled at the position that we end up in.
First, I thank those who participated. Most have supported the amendments. One of the most telling phrases was that of the right reverend Prelate, who said that the provisions in the Bill failed to capture the nuances of the needs of Gypsies and Travellers. I think that that is right. I particularly welcomed the participation of my noble friend Lady Whitaker, who is a tireless campaigner for the groups that are the subject of this amendment.
I was, however, slightly puzzled by the contribution of the noble Lord, Lord Lansley. I very much welcomed the rare degree of agreement between us, which we did occasionally experience in his ministerial past, but the notion that somehow it was the system that created the problem in his constituency where, as he put it, a particular group took possession of land and developed it, strikes me as a little odd. This is not the Wild West. Presumably they did not just walk on to somebody else’s land and erect fencing around it. They must have acquired the land and they must, presumably, have got planning permission for building on it. The implication was that they had developed it and sold it and moved on. The noble Lord is shaking his head. Perhaps I have misunderstood him.
To be clear, yes, they acquired it, but at agricultural values. Then the utilities were provided because the utility companies were required to do so. Then, of course, they subsequently made retrospective planning applications. Often in particular circumstances, when they were refused planning permission, they based the essence of their argument to the inspectors that they had a housing need as Travellers in the area, that the local authority was not providing collectively for all the housing needs of Travellers, and that therefore their particular application should be granted.
Then that is a failure of the planning system, not of the particular requirements of this group. However, let us go back a little. Section 8 of the 1985 Housing Act required every local housing authority to,
“consider housing conditions in their district and the needs of the district with respect to the provision of further housing accommodation”.
That clause was effectively amended by the 2004 Act. It was amended because insufficient provision was being made for this group and because very often it was not made because of pressure from people who feared or, at any rate, opposed provision for the categories of would-be residents that we were talking about.
If the 2004 Act was in response to the failure by then of authorities to make provision—and that clearly is the case—what sort of message does it send to remove that duty under the 2004 Act and then say, “Well, it’s all right because they have a duty to consider everything”? They had that duty under the 1985 Act and it was clearly not being fulfilled.
There is a special case here and I hope that the Minister will, with his colleagues, think again about a clause which in my view is specifically designed to buy off support for those who do not want to see provision being made for this vulnerable group. At this stage, I will not test the opinion of the House, but it is a matter to which we may well return on Report, unless the Government reconsider. I beg leave to withdraw the amendment.
Amendment 82GD withdrawn.
Amendments 82GE and 82H not moved.
Clause 115 agreed.
Clause 116: Licences for HMO and other rented accommodation: additional tests
83: Clause 116, page 53, line 19, at end insert—
“(c) has a current entry on the database of rogue landlords and property agents as set out in Part 2 of the Housing and Planning Act 2016”
My Lords, as this is my first proper intervention in today's proceedings, notwithstanding the questions I asked in the previous debate, I refer Members to my entry in the Register of Members’ Interests and also declare that I am a councillor in the London Borough of Lewisham.
I should also say in this opening contribution, as I have voiced in previous debates, that our proper consideration of this Bill and all its clauses and schedules is made all the more difficult because of the poor handling of the Bill through Parliament by the Government. I do not feel that it is going to be any better today. It is a scandal how poorly prepared the Government are. At every session we are either highlighting new problems or discovering new issues that will make the implementation of the measures in the Bill even more difficult to deliver.
This Bill should have been proposed in the Queen’s Speech in May this year, having had proper pre-legislative scrutiny in this Session of Parliament. I should further add that running three days of Committee in a row next week is not, in my opinion, ensuring that we get the best out of these debates. It makes preparation for debates difficult and the scrutiny process very difficult.
With today’s Committee day and then three days next week—and, I understand, proposals for two of the first three days when we return after Easter being reserved for Report, it means that, including today’s debate, the main business in six of the next seven days in your Lordships’ House will be the Housing and Planning Bill. It is not a good way to proceed; not a good way to make legislation; not a good way to treat Parliament; not a good way to treat local authorities which are trying to understand what is happening and interject with their views; not a good way to treat the voluntary sector which is trying to keep up with what is going on and give its views; and not a good way for the Government to be seen to be taking on board the views expressed to them, and hopefully responding to them. It is all unsatisfactory and all of the Government’s own making.
I agree entirely. It is not good for the Minister or indeed for all Members of your Lordships’ House; there are many Members who have been here all the time for these debates.
Amendment 83 in my name and that of my noble friend Lord Beecham is quite simple in its intention and, hopefully, will cause the Government no problems at all. That said, I often think that my amendments will help the Government and improve the legislation and should be of no concern at all, but so far I have not been able to persuade them of that fact. Still, we carry on in the hope that on Report the issues and concerns that we have raised will be responded to, because, although we do not like the Bill, we fully understand our role as a revising Chamber in seeking to improve the Bill before it becomes an Act of Parliament.
The amendment seeks to add, in an additional clause, that those with an entry on the database of rogue landlords and letting agents cannot be granted an HMO licence. A house in multiple occupation is a property rented by at least three people who are not from one family but who share facilities such as the bathroom and the kitchen. A licence is required if the property is rented out to five or more people who are from more than one family, the property is at least three storeys high and tenants share facilities such as the toilet, the bathroom or the kitchen. It is important that people identified as rogue landlords should be specifically unable to rent out properties as houses in multiple occupation and should be prevented from obtaining a licence to rent out such properties. My amendment is clear, straightforward and simple. I look forward to the Government’s response, and I beg to move.
My Lords, Amendment 83, tabled by the noble Lords, Lord Kennedy and Lord Beecham, would require a local authority to have regard to the fact that a landlord had been included in the database of rogue landlords and property agents when considering an application from that landlord for a licence to operate a house in multiple occupation or selective licensing. A local authority is already required to have regard to a range of factors when deciding whether to grant a licence under the Housing Act 2004. These include whether the applicant has committed any offence involving fraud or other dishonesty, or violence or drugs, or certain serious sexual offences; practised unlawful discrimination; or contravened any provision of the law relating to housing, or of landlord and tenant law. These factors would be likely to include all the offences leading to inclusion in the database. The database will be a key source of information for local authorities when taking decisions on whether to grant a licence.
These safeguards are very important as it is essential that a local authority can be confident that a licence is granted to a landlord or agent only if they can demonstrate that they are a fit and proper person to operate a house in multiple occupation or a property subject to selective licensing, and will not pose a risk to the health and safety of their tenants, many of whom may be vulnerable. Clause 116 includes two further safeguards by providing that a local authority will also be required to have regard to whether the landlord has leave to remain in the UK, is an undischarged bankrupt or is insolvent.
The aim of Amendment 83 is to ensure that local authorities fully consider the past behaviour of landlords and agents who are applying for a licence. The Government are extremely sympathetic to this aim. To do this, local authorities need access to information about the previous activities of a landlord and to share that information across local authority boundaries. The database will be an important step forward in sharing information about convictions recorded against residential landlords and property agents. It is extremely unlikely that a local authority would be unaware of a matter leading to an entry on the database of rogue landlords and property agents when deciding if an applicant was a fit and proper person. I trust that with this explanation, the noble Lord will agree to withdraw the amendment.
Amendment 83 withdrawn.
Clause 116 agreed.
Clause 117: Financial penalty as alternative to prosecution under Housing Act 2004
84: Clause 117, page 54, line 18, leave out “as an alternative” and insert “in addition”
My Lords, I suspect that this will be another very brief discussion. Schedule 9 amends the Housing Act 2004 to provide that any financial penalty should be an alternative to prosecuting a rogue landlord for an offence. The Explanatory Notes give no justification for this change, and, given what we know about some of the appalling conditions that rogue landlords create or tolerate, I see no reason why they should be immune from a criminal prosecution.
It is perfectly legitimate that a financial penalty should be imposed, but it is a matter of good sense to ensure that totally unacceptable behaviour is treated as a crime, in the hope of deterring others from committing the same offence and behaving disgracefully towards their tenants, rather than their simply being able to pay a financial penalty without any publicity. The deterrent effect of prosecution ought to be invoked.
Indeed, even leaving aside deterrence, conduct of the kind that we regularly read about is simply appalling, and society’s rejection of such an approach by landlords should be made clear by retaining the possibility of prosecuting them. In the absence of any explanation of why the change should be made, I hope that the House will express a view and the Government will reconsider this strange provision. I beg to move.
My Lords, Amendment 84, tabled by the noble Lords, Lord Kennedy and Lord Beecham, would make a change to Clause 117 so that a local housing authority could impose a civil penalty in addition to, rather than as an alternative to, prosecuting a landlord. The Bill as drafted provides local housing authorities with a choice on whether they want to go down the civil penalty route or the prosecution route, depending on the seriousness of the offence. We have looked at this carefully and come to the conclusion that it would be disproportionate to use both regimes in relation to the same conduct.
Local authorities will benefit from other measures proposed in the Bill. For instance, they can apply for a rent repayment order where the rent has been paid from housing benefit or universal credit where certain housing offences have been committed, as set out in Part 2 of the Bill. This is in addition to the powers already available through the Housing Act 2004 whereby magistrates can impose unlimited fines on conviction for the most serious housing offences. I hope that after this brief explanation the noble Lord will agree to withdraw the amendment.
Could the Minister comment on whether this would cover the instances that I have spoken about of invisible rogue landlords who give their tenants no rent books, nor anything of any sort? Would a criminal offence not have a bit more impact on them, and encourage them to be fair to the people living in their properties?
I was answering the points raised by noble Lords, and the main point is that we think it disproportionate to use both regimes. I hope that that answers the noble Baroness’s question. I am now able to answer the question asked by the noble Lord, Lord Campbell-Savours, about fines. The answer is: up to £30,000.
The Minister says that it is up to £30,000. There has been an interesting series of programmes recently, I think on BBC on weekday mornings, in which a team has been going out and looking at properties, particularly in east London, where invariably ethnic minority landlords are exploiting illegal entrants to the United Kingdom, or indeed other people from within the ethnic minority. I have made a point of watching some of these programmes and have begun to realise that these landlords are dancing round local authority officials. The local authority officials seem almost unwilling to exercise real responsibility to bring these people to court. When we talk about up to £30,000, we may end up with little fines of a few hundred pounds for what appear to me to be major offences. Huge breaches are going on in London in properties that come under Sections 64 to 67 of the 2004 Act.
The law seems quite clear. You would imagine that the law would work, but the reality is that it is not working. These people are not being pursued. My noble friend used the phrase “in addition” and I think that it is important that those words are introduced. These rogue landlords need to know that they will not only be taken to court—where they can hire smart-backsided lawyers who can manage to get the fines reduced to whatever level they think is acceptable by simply acting in the interests of their clients—but will be pursued by the authorities, which, I understand, have the right to use that money to do up the property.
The Government are taking a very weak-handed view in dealing with this matter. HMO properties in London are at the bottom end of the market in terms of the treatment of tenants by landlords. The law needs to be tightened up in this area. I hope that when we get to Report we can table amendments that everyone will support to bring home the lesson to the Government that this area is not being dealt with in a good enough way.
I wanted to expand on my previous answer to say that prosecution fines are unlimited civil penalties of, as I mentioned, up to a figure of £30,000. It may give the noble Lord some reassurance to say that we have the power to provide guidance to local authorities on what to use and when in terms of fines. We intend to consult local authorities on the guidance on this matter.
Perhaps I can pursue this a little further. How many people have actually been charged, nationally and in London, over the last 12 months, say? Does the brief tell us the number of people who have been through the courts or do the lawyers manage somehow to deflect the legal actions? If the Minister does not have the reply, perhaps he can indicate to the Box that the information might be made available to us during discussion of a subsequent amendment.
My Lords, I confess that I am not at all satisfied with the Minister’s reply. We are seeing a change in the law to put a financial penalty as an alternative to prosecution. As my noble friend rightly said, we are talking about some appalling examples, which would make the likes of Rachman blush, if he were still around, of abuse of tenants and appalling housing conditions. What is effectively being said in the legislation is: you can buy out of the consequences of that appalling behaviour by an unspecified fine—unspecified in the Bill; I appreciate that there is scope.
The behaviour is worse, in many respects, than many of the offences that are routinely dealt with in the courts in terms of the impact on citizens. It is simply not good enough to allow rogue landlords to escape with a financial penalty but without the stigma of being convicted of a criminal offence. I urge the noble Lord to consult again his ministerial colleagues, because I agree with my noble friend that we should seek on Report to reverse the current position. It will not take long, but my goodness it is important. In those circumstances, I beg leave to withdraw the amendment.
Amendment 84 withdrawn.
Clause 117 agreed.
Schedule 9 agreed.
Clause 118 agreed.
84A: After Clause 118, insert the following new Clause—
“Overcrowding in shared residential buildings
(1) Local authorities may set limits for the number of residents that may lawfully reside in each rented property in a shared residential building.(2) Local authorities may set limits under subsection (1) for each relevant rented property whenever the contract for renting the property changes at any point after the day on which this section is brought into effect.(3) If a complaint is made to a local authority about overcrowding in a rented property for which a limit has been set under subsection (1), the local authority may investigate whether the limit is being exceeded and, if so, order the landlord of the property to take action to end the overcrowding.(4) Where the local authority orders a landlord to take action under subsection (3), the local authority may charge the landlord a fee to cover the reasonable costs of the investigation and action undertaken by the local authority.”
My Lords, my commercial interest is on the register. I have also owned a flat for 29 years, which has mainly been lived in by family or let. I pay tribute to the Public Bill Office, which has been very helpful in preparing amendments—something much more complicated than it seems—and the Library, which has been invaluable in coming up with information.
We have all seen overcrowding on television in the sordid garages in Acton where there is no water or anything else. But the problem is the same at the top end of the market because the Deregulation Act took away the right of councils to go into properties in London —it was only effected in London—and find out who was living there. The Government said at the time that new regulations would be required but we have heard nothing more about this. It is very important that we do.
I asked a Question for Written Answer on this and was told that councils have the power to determine how many people should be in a property and to inspect it. The difficulty is that before the Deregulation Act some authorities, such as Westminster, had six full-time officers checking on who was in a property, if it was overcrowded, and how long people were staying there, but unfortunately they no longer do. Other boroughs have always found checks costly and have not bothered. But we need to know how many people are in these properties.
I think I mentioned that, in the block in which my flat is, 10 Airbnb guests are often in a one-bedroom flat. That means 10 times more people using hot water than the 90-something year-old lady who is paying for half that water. It is therefore very unsatisfactory to have not seen hide nor hair of the new regulations. This has to be investigated, as set out in Amendment 84A. The issue is also addressed in Amendment 84B so I will speak to that as well.
This is about the right to manage. At last after all these years we now have the right to manage the block I am in but it turns out that, although you need only a 50% vote to get the right to manage, you need 100% to do pretty much anything else significant to improve things. You get to the point where fire doors are being left open and anyone can come in from the street. People in these blocks are abusing long-term residents, including the 90 year-old I have spoken about. There has to be some way of assessing these issues, so Amendment 84B seeks to change the percentage needed on the right to manage. It should be possible to have all these people known, so that if they cannot be there and are not aware of what is happening, they can appoint a proxy or authorise someone else to speak for them. It is very unsatisfactory to be in a position where you can see the overcrowding and the dangers, yet nothing can be done about it. I beg to move.
My Lords, the amendment proposed by the noble Baroness, Lady Gardner of Parkes, is excellent. As usual she understands the issues about how people in the rented sector can be exploited, as well as the problems that can be caused to others living nearby. This proposed new clause suggests a practical solution.
The amendment would give powers to local authorities to take action when necessary on the number of people who may lawfully reside in each rented property in a shared residential building. We have all seen reports of severe overcrowding, usually of vulnerable people, in conditions that are truly unacceptable. The amendment would give local authorities a power to do something about that by setting numbers straightaway. I can recall a situation where workers in east London were in effect hotbedding. People would be able to sleep in a bed for a period of time and then it was the turn of the next person, so that at least two if not three people were using the bed in shifts. For such practices to be happening in modern Britain is an absolute disgrace, although I accept entirely what the noble Baroness said about this cutting across society. It does not affect only people living in sheds in east London.
The proposed new clause would give local authorities powers to set limits, investigate complaints, and the ability to charge reasonable costs for investigation and any necessary action that has to be taken. I hope that the amendment will receive a positive response from the Government, and I may intervene later in Committee once I have heard the Minister’s response.
On Amendment 84B, what would happen? It talks about the information being made available to members of the right-to-manage company but, once they have that information, what will they do about it? I do not quite understand how the amendment deals with the problem in terms of providing a solution.
I go back to Amendment 84A in the same group. One problem when local authorities get involved in dealing with blocks of flats in multiple occupation is that sometimes they hesitate to do so because they know that, if the property is overcrowded and someone has to leave, they are then responsible for sorting out the problem for that tenant. Certainly I get the feeling when watching those programmes that local authorities are a little careful in this area because they simply do not have any properties for people to move into. That is why in general we need to give local authorities far more substantial powers to deal with these properties. They cannot simply become the receptacle into which people in difficulties are put. They cannot just be passed on to the local authority, which is then responsible for housing them when it does not have any accommodation available. I say that against the background of other provisions in the Bill which are going to remove particularly vital property in London from the market.
All these things interconnect. I simply say to the Minister in terms of the previous provision, Amendment 84A, that the Government should write a new clause themselves that would put together a far more substantial package to deal with the problem, and perhaps taking evidence from organisations outside. It might be that they should consider introducing a separate Bill to deal specifically with this problem because it is one that has to be resolved.
To help me understand these matters, perhaps the noble Baroness could explain what would happen once the leaseholders have acquired the information. They must be given some sort of power to actually deal with the problem. We will be dealing with management committees in later amendments. Their members often have little power unless it is enshrined in the original lease, signed by every leaseholder, that there are responsibilities to be met.
My Lords, are there not already regulations about the overcrowding of buildings? I am sure that there are also regulations covering the sharing of bedrooms, particularly between young people. I think I am right in saying that under the age of 12, children of opposite sexes can share the same bedroom, but it is deemed undesirable beyond that age. In certain dwellings it is sometimes impractical to change that. Do we not already have regulations in place? I agree entirely with what my noble friend is trying to do, but I wonder whether the regulations we already have are being enforced as well as they might be.
If there are such regulations in place, of which I am totally unaware, how many prosecutions have been brought? I would bet that there has not been one anywhere in the United Kingdom. The reason for that is because there are probably hundreds of thousands, if not millions, of people living in homes where those regulations are being defaulted upon.
My Lords, there are regulations about all these things. There are fire regulations, regulations on overcrowding, spatial regulations and so on. The difficulty arises if you have a room in the sort of flat that one of my children rented at one stage. Changes can be made without the local planning authority or anyone else knowing about them. In that particular instance, what had been a two-bedroom property with a fairly large kitchen and dining area was converted into a three-bedroom property when part of that area was hived off, thus creating another bedroom. It meant that, in effect, three couples—six people—were sharing one bathroom, which was a trial in its own right. However, the third bedroom which had been hived off the kitchen and dining area had no direct access to the safe environment protected by a fire door, which meant that the people occupying that room were not safe, given that a kitchen is a potent area for fires to start because of cooking, electrical equipment and so on. I felt that the property was at risk and I told my offspring that, if they had to rent in that flat, for heaven’s sake not to rent the room off the kitchen but to take a room off the lobby.
A local authority has no real way of catching up on this kind of thing, particularly if the properties are relatively temporary lets. Often these are places which are let to students for a year or nine months at a time for the academic year. The tenants may not be registered at the property as electors because their university might have registered them, so there is no real audit trail to enable the authority to look into the issues.
I think that there is a real problem here. The noble Baroness, Lady Gardner of Parkes, doughty campaigner as she is for getting these things sorted out—I support her in her intentions behind her amendments—should note that, nevertheless, to use a West Country phrase, we are a bale short of a stack on catching up with these issues in practical terms. That is the conundrum. Also, landlords might not be particularly interested in enforcing such a provision. It might be possible to deal with these issues through a body other than the local authority, but I do not know. However, there is a problem here which is creating situations that are hazardous and prejudicial to some of the people who are occupying these properties. I certainly therefore support the gist of what the noble Baroness has said.
Is there not great irony in the fact that, to get around this problem, we need more bedrooms? In London, the flats with the most bedrooms—the three-bedroom flats—are the very high-value flats that are going to be sold off under this Bill. It shows what a mockery this Bill makes of housing problems.
My Lords, I thank my noble friend Lady Gardner of Parkes for her amendments, which seek to address overcrowding and unlawful subletting in flats in residential blocks. For reasons that I shall come to shortly, however, I do not think that they are necessary, since both local authorities and managers of residential blocks have sufficient powers to tackle overcrowding and associated problems. The noble Earl, Lord Lytton, and my noble friend Lord Swinfen, alluded to this. I will explain further.
I will respond first to Amendment 84A. Part X of the Housing Act 1985 already deals with statutory overcrowding, which it defines by reference to a room standard and a space standard. If either of these is contravened, an occupier or landlord may be guilty of an offence. Statutory overcrowding results if two or more people of the opposite sex aged over 10—I have a figure of 10, not 12—and not being part of a couple have to share a room. This is defined as the room standard. Statutory overcrowding also results if the permitted number of persons who can sleep in a dwelling is exceeded. This is the space standard, which is calculated by reference to the number of rooms available as sleeping accommodation and their floor-spaces.
Local housing authorities can use their existing powers to gain entry to a dwelling in order to measure rooms to work out the permitted number. They also have powers to require information about the number of people sleeping in a dwelling and to inspect, report and prepare proposals on overcrowding generally in all or part of a district.
On the point made by the noble Lord, Lord Campbell-Savours, where a local authority considers that a property is overcrowded to the extent that it is hazardous to the health and safety of the occupiers, it may—and must, in the case of a category 1 hazard—serve a prohibition order under Part 1 of the Housing Act 2004 on the dwelling. This prohibits the use of all or part of a dwelling for residential purposes, limiting the number of persons who can occupy it. Whether the overcrowding is actionable will be determined by applying the housing health and safety rating system, which provides a numerical score of the severity of the potential hazard. Those scoring highest are category 1 hazards, and the authority is required to take action. Hazards with lower scores are category 2 hazards and the authority may take action. In any case, if the local authority serves a prohibition order limiting the number of persons who can occupy a dwelling, it is a criminal offence to contravene the order by permitting more persons than specified in the order to occupy it. A local authority can recover from the landlord its expenses in preparing and serving a prohibition notice.
On the interesting point raised by the noble Earl, Lord Lytton, about how one would find out about such overcrowding, it is subject to intelligence from local residents and the immediate area. It is fair to say that it works; no doubt on occasions it is hit and miss, but that is where we stand at the moment.
In deciding whether a dwelling is overcrowded, a local authority must apply an objective test and not its own perceptions or those of others. My noble friend’s amendment would enable local authorities to set standards in individual cases in addition to the national standards and existing hazard rating systems. This would cause confusion and uncertainty.
While I appreciate that flats that appear to be overcrowded can cause problems for other residents of the block, local authorities and managers of the blocks have powers to address them. For example, a local authority can serve a noise abatement notice if noise is coming from a flat, and the landlord or manager of the block can take action against the long leaseholder for such a nuisance if there is a condition or covenant relating to it in the lease. I am pleased to report that Kensington and Chelsea, where, I understand, my noble friend Lady Gardner is a leaseholder, was this year awarded £91,000 from a £5.3 million fund to tackle rogue landlords. This funding will work alongside the measures in Parts 2 and 5 of this Bill to ensure that local authorities have the resources and incentives to tackle rogue landlords.
On Amendment 84B, the freeholder and the manager of a block of flats already have powers to investigate compliance with the terms of a long lease, such as whether a flat has been sublet in contravention of the terms of the lease. Many long leases, but not all, permit subletting. The lease may specify such matters as the need to seek approval to sublet, a requirement to register the subletting with the landlord, the duration and nature of the subletting, and the restrictions on the persons to whom the flat can or cannot be sublet. Many leases will require the flat to be occupied only as a family unit in single occupancy. A long leaseholder who sublets in breach of the terms would risk forfeiting the lease. Where subletting is permitted, the long leaseholder remains responsible for complying with the terms of the lease and is therefore liable if his sub-tenants breach any covenants, such as those that address noise or use of the flat. Again, the long leaseholder would risk forfeiting the lease if the terms are not being complied with. It will, therefore, always be in the interest of the long leaseholder to ensure that the subletting does not cause a nuisance to other residents in the block. I hope that my responses provide reassurance to my noble friend.
Can the Minister put it on record that, when people buy their leases and turn them into a share of the freehold, they have the opportunity at that point to redraft the lease documents? That is the point at which they could input the restrictions required to cover many of the issues raised by the noble Baroness, Lady Parkes.
I note the noble Lord’s point but point out that the lease is a matter between the leaseholder and the landlord.
I hope, however, that my responses have reassured my noble friend that landlords of residential blocks and local authorities can take action to tackle overcrowding and problems associated with flats. With these assurances, I ask my noble friend to withdraw her amendment.
My Lords, I thank those who have contributed to this debate, but I do not think that anyone has any idea what goes on under the surface. In the particular block that I am speaking about, the head lease should have been made available to all leaseholders in the block. However, a loophole in the law allows someone to set up a sister company with the same directors and, after two years, to sell it to any outsider. This is what happened—the head lease was sold over our heads to an outsider. The outsider then has to decide whether or not they are going to be a good landlord. The tenants and residents tend to believe that the intention is to make the place so uninhabitable that we will all happily sell our bit of it, because it is a post-war block built in the 1950s, when building materials were scarce. It is not a glamour block, but next door three tiny houses have been demolished and a fabulous block has been built. It is nothing to do with the man who owns ours, but it is a private enterprise venture, and the cheapest apartment was £6 million. So the site must be hugely valuable. To the people living in the place it is no more valuable than when we bought it for, by comparison, pretty well nothing, but it changed our thinking completely: it is why we have gone for the right to manage, so that we can upgrade the conditions and protect the block.
I do not know whether that answers the point that the noble Lord, Lord Campbell-Savours, made. Would he like to respond on that?
The holder of the freehold to whom those leases are transferred must comply with the original leasehold agreement between the original freeholder and the leaseholders. You cannot simply arbitrarily change the lease. There must be, in the original lease provided by the freeholder when the block was originally purchased, provision to do the things that the noble Baroness is now objecting to. Maybe no one has read the original lease.
I thank the noble Lord for that remark. I do not want to prolong the debate on this but I am certainly pinning my faith on the right to manage. If we can get a more realistic percentage of how many people are required to do things under that right, then I have hopes on that point, too—and I have an amendment tabled later on it. Meanwhile, I note what has been said but the difficulty with local authorities is that they do not have the money to do any enforcement. That is their one complaint to me. Kensington and Chelsea was mentioned. Westminster had a team of six and sacrificed other things to have its properties checked, but Kensington and Chelsea does it only if there is real pressure and the situation becomes impossible, because it is short of funds for enforcement and very limited in what it can do.
On that very point, the noble Viscount, Lord Younger, said that councils can recover their expenses. It would be quite useful to know what he meant by expenses. Are we talking about reasonable costs or full costs? If necessary he can obviously write to me on what he meant by expenses, but the point the noble Baroness makes is absolutely right: councils do not have the resources to undertake this work.
Amendment 84A withdrawn.
Amendment 84B not moved.
Clauses 119 to 122 agreed.
84BA: After Clause 122, insert the following new Clause—
(1) A tenant may make an application for an order that all or any of the costs incurred, or to be incurred, by the landlord in connection with proceedings before a court, residential property tribunal, leasehold valuation tribunal, or First-tier Tribunal or Upper Tribunal, or in connection with arbitration proceedings, are not to be regarded as costs to be taken into account in calculating the amount of any administration charge, within the meaning of paragraph 1(1)(d) of Schedule 11 to the Commonhold and Leasehold Reform Act 2002, payable by the tenant.(2) The application shall be made—(a) in the case of court proceedings, to the court before which the proceedings are taking place, or, if the application is made after the proceedings are concluded, to a county court;(b) in the case of proceedings before a residential property tribunal, to a leasehold valuation tribunal;(c) in the case of proceedings before a leasehold valuation tribunal, to a tribunal before which the proceedings are taking place, or, if the application is made after the proceedings are concluded, to any leasehold valuation tribunal;(d) in the case of proceedings before the First-tier Tribunal, to the tribunal;(e) in the case of proceedings before the Upper Tribunal, to the tribunal;(f) in the case of arbitration proceedings, to the arbitral tribunal, or, if the application is made after the proceedings are concluded, to a county court.(3) The court or tribunal to which the application is made may make such order on the application as it considers just and equitable in the circumstances.”
My Lords, I shall speak to Amendment 84BA, which is in my name, and to Amendment 84G. These are, I hope, noncontroversial amendments which would level the playing field—which is currently tilted in favour of freeholders—for leaseholders.
Amendment 84BA addresses an irregularity concerning the consideration of recovery of a landlord’s costs from leaseholders as administrative charges. At the moment, a landlord can recover their costs for appearing before a tribunal or court as an administration charge where a covenant exists in the lease, without the leaseholder being able to ask the tribunal or court to consider the reasonableness of the costs, which they are able to do when the costs are recovered via the service charge. This is potentially unfair and can discourage leaseholders from exercising their rights to seek a determination that service charges or other payments are payable and reasonable, where they are aware that the landlord can recover his costs in this way through this loophole. The proposed amendment would enable the court or tribunal to consider on application whether it is reasonable for a landlord to recover all or part of the costs of appearing before it as an administration charge, where the lease allows this. At the moment, that cannot be done.
This amendment would therefore be similar to the existing legislation which enables tribunals and courts, on application by a tenant or leaseholder, to limit a landlord’s costs of appearing before a court or tribunal where they seek to recover them through service charges. This is not to say that a landlord should not be able to recover his costs, but rather that a tribunal or court should be able to consider whether it is reasonable so to do.
Amendment 84G would give leaseholders the right to obtain from their landlord contact information for other leaseholders in a shared block, for the purposes of obtaining statutory recognition of a tenants’ association. This may be relevant to some of the issues raised by my noble friend Lady Gardner. To put this in context, the Landlord and Tenant Act 1985 allows a tenants’ association made up of qualifying tenants to seek statutory recognition. Such recognition provides the association with additional rights to those enjoyed by individual leaseholders. Because this is a collective right, the relevant guidance suggests that a specific proportion of qualifying tenants should support the application before recognition of the tenants’ association can be sought, which means that leaseholders have to contact other leaseholders to get the necessary proportion.
However, it is apparent that leaseholders are finding it increasingly difficult to obtain the numbers needed to seek recognition, particularly where they require contact information about absent leaseholders. This will not surprise my noble friends, given the well-documented increase in absent leaseholders and the growth of subletting. Putting a note through a letterbox, for example, is not a satisfactory way of achieving contact because there are no guarantees that the subtenant will pass the note on to the landlord. There is also no obligation on the landlord to pass on information. This means that a number of qualifying tenants are not given the opportunity to take part in the formation of an association, which is frustrating and potentially weakens the ability of leaseholders to exercise their statutory right.
This amendment to legislation which I fear I put on the statute book myself some 30 years ago—I clearly omitted to make it absolutely perfect—would address the problems outlined by requiring a landlord to supply relevant information with individual leaseholders’ consent within a given timeframe, thus helping those tenants seeking to exert their collective rights. I beg to move my first amendment.
My Lords, the noble Lord, Lord Young of Cookham, has raised one of the legacy issues derived from the way in which leaseholds are set up. I have a possible reservation about the impact of leaseholders exercising their right to manage, but the point he made highlights a particular mismatch here.
Landlords of landlord-managed blocks tend to have rather blurred lines when it comes to dealing with what exactly constitutes a legitimate service charge item. It is all very well if they are pursuing something that will clearly protect the service charge payers in the block—if it is a block—generally; it is quite different if the landlord is using the service charge to finance his pursuit of a particular tenant on a landlord/tenant issue, as opposed to a service charge issue. That is where the muddle starts to creep in. The way in which the service charge provision and its recoverability are set out in many old leases simply has not kept pace with the passage of time. We are stuck legally where we are because of how these things were done historically, perhaps during the 1950s, 1960s or 1970s, when we did not have the same sort of concentration on ensuring that the rights of tenants, as the payers of service charges, were as adequately protected as they might be under modern drafting.
This does raise an issue, and the only thing on which I would counsel a bit of caution is long leaseholders who have exercised their right to manage. Would they get caught for part of the administrative costs of pursuing a non-paying long leaseholder in a block on a service charge item? Would they then suffer the same fate? Otherwise, it puts them in an exposed position. However, the basic premise raised by the noble Lord, Lord Young, is to me unassailable. Why should the generality of long leasehold service charge payers in a multi-unit building foot the bill for the landlord pursuing a particular tenant on a landlord/tenant issue? On that point, he is absolutely spot on.
My Lords, I would like to bring a little experience to this debate. I was involved in an enfranchisement over getting a share of a freehold from leasehold. Although it was an enfranchisement, if I remember rightly, the costs were not payable by the tenant in the enfranchisement proceeding before the tribunal. Notwithstanding that, it is interesting to know what can happen in these tribunals. In the tribunal in which my residents’ association was involved, we were paying £3,000 a day for a lawyer. I remember sitting there one day during the inquiry. There had been a gentle chat in the morning and at lunchtime the chairman of the tribunal looked up at the clock and said, “I think we’ve had an interesting day and I suggest that we adjourn until tomorrow morning”. In the event that the bill had been payable, the residents would have had to share out the £1,500 costs. In fact it was not payable, because, as I said, it was an enfranchisement. In circumstances where the liability did fall on the tenants, the bill would have fallen on the residents. Ministers have to have in mind the fact that complications such as those can arise in a tribunal, where the chairman might not be fully aware of the costs of the lawyers representing the residents.
I have a little experience of the second issue raised by the noble Lord, Lord Young of Cookham, because I also live in Westminster. We had the devil of a job tracking down the 168 members of our residents’ association, which we needed because we had 999-year leases. The reason was quite simple: in London most of the flats were owned by people from all over the world—Hong Kong, China, Singapore, Malaysia. How were we possibly going to get their addresses? When we approached the management company, which obviously had the addresses because it had to send them their service charges, for example, we were told that it was not within its rights to give us that information. The amendment moved by the noble Lord, Lord Young of Cookham, deals specifically with that problem and I think Ministers should be sympathetic. If they cannot be sympathetic today, perhaps civil servants could give the matter a little more thought when they are advising Ministers in the future during the course of the Bill.
My Lords, I will speak to Amendment 84D, which has been put in this group. I have no problem with that. In my research for what I shall say, I also discovered quite a lot of involvement of the noble Lord, Lord Young, from a long time ago, which I shall come to in a few minutes.
The purpose of the amendment is to bring the tenants of the Duchy of Cornwall in line with other tenants of other landlords and their rights to buy. First, it repeals Section 33(2)(c) of the Leasehold Reform Act 1967. Secondly, it repeals Section 94(11)(c) of the Leasehold Reform, Housing and Urban Development Act 1993, concerning Crown land. I could read out the relevant clauses, but I expect noble Lords can understand what they are all about and if they want to read them, they can.
The amendment is also part of a Private Member’s Bill that I put in for the ballot last May. It did not come very high, so I thought it would be useful to raise the subject today, because it is relevant. The purpose is to examine the exemptions and immunities from certain Acts of Parliament which do not extend to the Duchy of Cornwall. Individuals who hold leases from the Duchy do not, unlike other persons who hold leases from private estates, have the right to enfranchisement. The purpose of the amendment is to give them the same rights as if they were leaseholders in England and Wales.
The first thing to discuss is whether the Duchy is a private estate or not. There has been an awful lot of debate about this. The Government, in many Written Answers over the years, have said that it is a private estate. On 9 June 2009, Bridget Prentice MP said:
“In general terms, the Duchies of Cornwall and Lancaster are private estates in that they belong to the heir apparent and the monarch respectively in their private capacities”.—[Official Report, Commons, 9/6/09; col. 528W.]
In a Written Answer to Andrew George MP, on the same date, Harriet Harman said:
“The Duchy of Cornwall is a private estate that funds the public, charitable and private activities of the Prince Of Wales, the Duchess of Cornwall, Prince William and Prince Harry”.—[Official Report, Commons, 9/6/09; col. 528W.]
There seems to be little debate about that. In a case brought by Michael Bruton on the Helford river, which I think is still being debated in a tribunal, having been to the European Court of Justice and back, the argument was that the Duchy of Cornwall did not have to do an environmental impact assessment on an SSSI over installing cages in which to grow oysters because it was a private estate. Michael Bruton argued that it was a public estate and the case has still not been resolved. While all this is going on, a large number of tenants are not able to buy their own houses, in contrast to those who are tenants of somebody else.
I will now give some examples from the island of St Mary’s in the Isles of Scilly, which I think apply elsewhere. They go back to the origins of the 1967 Leasehold Reform Act, which said that the Crown was exempt from this particular clause, but a voluntary undertaking was given to Parliament through a Written Answer by Mr Fred Willey, who was Secretary of State for Land and Resources, in 1967. My noble friend probably remembers that. The Answer does not mention the Duchy of Cornwall but refers to Crown leases. It stated that the Crown authorities will agree to enfranchisement,
“except that enfranchisement will be refused where the house is of special architectural or historic interest … or adjoins such houses and is important in safeguarding them and their surroundings”.—[Official Report, Commons, 31/6/1967; col. 42W.]
In 1992, during of the passage of what became the 1993 Act, a further Written Statement was made to Parliament, by Sir George Young, as the noble Lord then was, which was materially different from the 1967 Answer. He stated that, regardless of the exemption under the Act, the Crown authorities would agree, subject to specified conditions and exceptions, to the enfranchisement under the same qualifications and terms which applied by virtue of the 1967 Act and the 1993 Act to lessees held from other landlords. The relevant exception affecting the Isles of Scilly states that,
“where the property or area in which it is situated has a long, historic, or particular association with the Crown … the areas referred to in paragraph 3(iii) include the Off Islands within the Isles … the Garrison on St Mary’s and parts of central Dartmoor”.—[Official Report, Commons, 2/11/1992; col. 19WS.]
This indicated that the 1967 test had been materially changed. There appears to have been no consultation about this and no debate in Parliament. Perhaps other noble Lords who were in the House of Commons at the time can correct me on this. It is not even very clear whether Members of Parliament voting on the Bill were aware that there had been a material variation to the Crown undertaking. It is not clear whether it was drawn to the attention of the noble Lord, Lord Young—maybe he will have views or maybe he cannot remember it. For the Crown to claim that it was entitled to refuse enfranchisement, the Crown no longer had to show that the property was of special architectural or historic merit. It now became clear that if it was in an area which had a long historic or particular association with the Crown, that was good enough.
There is an awful lot more in this story, which I will not bore the Committee with now except to say that the situation is rather confused. We can sit or stand here to debate this and say, “It doesn’t really matter because there are many other things going on to do with the Crown and the Duchy which need careful discussion”, but we have to remember that people who have bought a lease are affected by this: if the lease has come from one particular landlord, they cannot buy it, whereas if it has come from another landlord, they can. That is very unfair.
As I think I have demonstrated—there are many other documents that we can use to demonstrate it—the Duchy in this case is a private landlord, so the argument that its tenants should have an exemption from the right to buy seems to me very unfair. We know that leaseholds are a diminishing asset—that is the whole point of them—but just because somebody owns a house on the Isles of Scilly, in Cornwall or somewhere else of no particular architectural merit, why should they be exempt? The only safe way is to remove this exemption, which is why I tabled this amendment.
I thank the noble Viscount for giving way. I entirely endorse the amendments in the name of the noble Lord, Lord Young, and my noble friend Lord Berkeley. I sympathise with the amendments in the name of the noble Baroness, Lady Gardner, who is temporarily not in her place, although I have some difficulties with the wording. Amendment 84E would insert a clause about sinking funds which states:
“The buyer of a leasehold … is required to make periodic deposits”.
She refers again to the buyer of a leasehold in proposed new subsection (4), but of course the leaseholder need not have purchased—
I apologise to the Committee. The group that I have includes the noble Baroness’s amendments. But if the groups were changed only this morning, perhaps I should withdraw my apology and confirm merely that I support the amendments of the noble Lord, Lord Young, and my noble friend Lord Berkeley.
I thank the noble Lord, Lord Berkeley, and my noble friend Lord Young for their amendments. I welcome the consideration of issues around the operation of leasehold, which I know are of interest to many in the House.
Amendment 84BA seeks a right for a leaseholder to obtain an order restricting a landlord’s ability to recover the costs of appearing before a court or tribunal as an administration charge. My noble friend Lord Young has raised an important issue, which others have also expressed concern about today, including the noble Earl, Lord Lytton, and the noble Lord, Lord Campbell-Savours. As the Committee will be aware, legislation already allows tribunals and courts to make this type of order where a landlord is seeking recovery of costs through a service charge. I should like to consider this further and I hope, with that assurance, that my noble friend will agree to withdraw his amendment.
I will now address changes proposed in Amendment 84D, tabled by the noble Lord, Lord Berkeley. I listened carefully to what the noble Lord said. As noble Lords will know, the Crown is not bound by legislation except where that is specifically provided for. The underlying exceptions to the Leasehold Reform Act 1967 and the Leasehold Reform, Housing and Urban Development Act 1993 apply to Crown land, which for the purposes of those Acts is defined as including the Crown Estate, the Duchy of Lancaster, the Duchy of Cornwall and the interests of any government department. There are no plans to change the exemptions set out in statute.
However, the Crown authorities covered by this exemption have committed, through a voluntary undertaking renegotiated in 2001, that the Crown would, as landlord and subject to specified exemptions described in the undertaking, agree to the enfranchisement or extension of residential long leases under the same qualifications and terms which apply by virtue of the 1967 Act and the 1993 Act. These specified exemptions include property that stands on land held inalienably by the Crown, and where there are security considerations. They also include where properties, or the areas in which they are situated, have a long historic or particular association with the Crown.
These exceptions are important to protect land and property associated with the Crown. Within the Duchy of Cornwall, which is the focus of this amendment, this includes the off islands within the Isles of Scilly—as the noble Lord will know, they are St Agnes, Bryher, St Martin’s and Tresco—and the Garrison on St Mary’s. The Duchy of Cornwall is not part of the Crown Estate: they are treated as separate entities, as is shown for example by their distinct listings within Section 33(2) of the Leasehold Reform Act 1967. However, only the son and heir of the monarch can hold the Duchy as the Duke of Cornwall. When there is no Duke of Cornwall—for example if the eldest son is not the next in line to the Throne—the Duchy reverts to the sovereign. The Duchy of Cornwall estate is therefore always linked to the sovereign and as such is, for the purposes of the specific provisions in the Acts in question, brought within the meaning of Crown land. It would not be appropriate to change this. With that rather prolonged explanation, I hope that the noble Lord will agree not to press his amendment.
Amendment 84G seeks to tackle the difficulties faced by leaseholders seeking statutory recognition for a tenants association and thereby to become a recognised tenants association, by requiring landlords to provide contact information for absentee leaseholders. This point was raised eloquently by my noble friend Lord Young. The Government recognise the difficulties faced by tenants associations that wish to seek recognition in ascertaining and reaching the necessary membership numbers needed for recognition. This issue has also been raised with Ministers, and my noble friend Lord Young has set out the challenges faced by leaseholders very clearly. I should also like to take this issue away to consider it in more detail ahead of Report.
Going by my own experience, if a statutory requirement was placed on the management company to forward correspondence requesting that information to the people who own the leases, particularly if they were abroad—in other words, if the responsibility was on the management company—following a request from the residents association, we would indeed get the names.
That is a possibility, and I will bring that into the considerations that we will undertake prior to Report. I thank the noble Lord for his point. I hope that my noble friend will agree to withdraw his amendment and the noble Lord, Lord Berkeley, will not press his later.
I am very grateful to the Minister for his answer, but in the exception mentioned—when properties are of special architectural or historic interest or adjoin such houses and it is important to safeguard them and their surroundings—the definition of whether a lease could be given up is very wide. Many of the buildings which I believe are the subject of this debate are in fact 1960s houses. They are probably very nice houses but they are not in the same category as the Garrison or the off islands or anything like that. It seems that there is no appeal in this process. The Duchy’s decision is final and that is that—you like it or lump it. Can nothing be done about it?
I would not put it in quite that way. There are no plans to make changes, but the noble Lord will know that we are talking about properties that are considered to have a long historical association with the Crown. I will investigate further and if I can furnish the noble Lord with more information, I will certainly do so in the form of a letter.
My Lords, I am grateful to everybody who took part in this debate. In response to the noble Lord, Lord Berkeley, let me say that, indeed, I do not remember the background to a Written Parliamentary Question that I answered in 1992. My general impression was that the Duchy agreed voluntarily to abide by what was in the legislation. That was the background, which I think was broadly confirmed in the exchange, although there might be some minor amendments more recently. I am grateful to my noble friend for his benign response to my two amendments: the teams of Young and Younger seem to be on the same wavelength here. Against the background of the assurances that he has given, I am more than happy to beg leave to withdraw Amendment 84BA.
Amendment 84BA withdrawn.
Schedule 10 agreed.
Clauses 123 and 124 agreed.
84C: After Clause 124, insert the following new Clause—
“Client money protection for lettings agents
(1) Subject to the provisions of this section, a person may not accept money from another person (“T”) in the course of lettings agency work unless there are in force authorised arrangements under which, in the event of his or her failing to account for that money to the person entitled to it, his or her liability will be made good by another. (2) In this section “T” is any person who seeks residential accommodation which is to let, or who has a tenancy of, or other right or permission to occupy, residential premises; and a “relevant payment” means any sum of money which is received from T in the circumstances described in subsection (1).(3) In this section “lettings agency work” has the same meaning as in section 83 of the Enterprise and Regulatory Reform Act 2013 (redress schemes: lettings agency work) and a “lettings agent” is a person who engages in lettings agency work.(4) The Secretary of State may by regulations made by statutory instrument—(a) specify any persons or classes of persons to whom subsection (1) does not apply;(b) specify arrangements which are authorised for the purposes of this section including arrangements to which an enforcement authority nominated for the purpose by the Secretary of State or any other person so nominated is a party;(c) specify the terms and conditions upon which any payment is to be made under such arrangements and any circumstances in which the right to any such payment may be excluded or modified;(d) provide that any limit on the amount of any such payment is to be not less than a specified amount; and(e) require a person providing authorised arrangements covering any person carrying on lettings agency work to issue a certificate in a form specified in the regulations certifying that arrangements complying with the regulations have been made with respect to that person.(5) A statutory instrument containing regulations under subsection (4) is subject to annulment in pursuance of a resolution of either House of Parliament.(6) Every guarantee entered into by a person who provides authorised arrangements covering a lettings agent shall tenure for the benefit of every person from whom the lettings agent has received a relevant payment as if the guarantee were contained in a contract made by the insurer with every such person.”
My Lords, Amendment 84C is about client money protection. It would require every letting agent to have the money that they hold—belonging either to a tenant by way of advance rent or to a landlord as rent received or funds for repair or insurance—to be protected. In this way, even if a letting agent disappeared or went bankrupt, such money would be safe and available to the landlord. This client money protection is required of solicitors, other professionals, estate agents and, indeed, anyone else holding client money that belongs to others. It is what is needed for rents collected by letting agents on behalf of landlords. It is not the agent’s money and it should be held separately in a protected client account.
This is a big issue: there are hundreds of cases of letting agents taking money from tenants as holding fees, deposits, rent, service charges or even tax, but then pocketing the money. Sometimes, the long arm of the law catches up with them. Tim Glasson was jailed for 21 years for unlawfully and dishonestly keeping rent and deposits; Roy Jackson of Suffolk Letting stole £70,000 from landlords and Keiran Farrer stole £17,000 in rents and deposits, repaying neither the tenant nor the landlord. Similarly, Shirley Player was jailed for stealing £400,000 and Russell Baker was accused of taking £150,000 in deposits but not handing them on to either a tenant deposit scheme or the landlord.
This money is not going into the housing market. It deprives landlords of their income and tenants of their security. About 60% of landlords use letting agents to help to manage their property. Thus money for repairs and insurance, in addition to rents, is channelled through the agent’s bank account. This is not money for the agent’s services; it is due to be handed on to someone else.
The amendment would require the funds to be in a ring-fenced protected client account, in the same way as happens with solicitors. It is strongly supported by landlords as much as by tenants. It is backed by the National Landlords Association, RICS, the British Property Federation, the Association of Residential Managing Agents, the Association of Residential Letting Agents, the Property Ombudsman, Ombudsman Services, Crisis and Shelter. It was recommended by the CLG Select Committee in the other place.
Reputable letting agents strongly support the amendment. As David Cox, who leads their professional association ARLA, said, client money protection is,
“fundamental for tenants and landlords to ensure they have peace of mind should an agent go bust or take off with their funds”.
A director of a large firm, Kinleigh Folkard & Hayward, which protects landlords’ and tenants’ money under a client money protection scheme, said that,
“all too often, rogue agents who do not subscribe”,
to such a scheme,
“misappropriate landlord and tenant funds … It should be compulsory for all agents to subscribe to a client money protection scheme”.
Savills—well-known to everyone in this House—urges the Government,
“to make it compulsory for all letting agents to have client money protection”.
We are talking about vast amounts of money handled, but not owned, by letting agents: probably £2.7 billion at any one time, perhaps £700 million of which is unprotected. In deposits alone, renters typically hand over £600 each, with no guarantee of its safety.
Amendment 84C, which would require all letting and managing agents to have client money protection, is based on similar provisions in the Estate Agents Act 1979. Agents would have to maintain a segregated bank account for clients’ money, with written confirmation from the bank that all the money in that account belonged to the clients. It would mean, importantly, that the bank was not entitled to combine that client account with another account or to offset the money in that client account for any sum owed to the bank by the letting agent.
We tabled a similar amendment to the Consumer Rights Bill and it seemed that the Government were almost persuaded. They came up with a compromise amendment of their own, which required letting agents to display whether they had client money protection. However, it has not worked and it was never going to work. As far as tenants go, they cannot choose which letting agent to use; it is the landlord who chooses. For a tenant, if a particular letting agent is handling the property that they already rent, or which they want to rent, they cannot shop around to find another agent. Their only choice is not to rent that property. They have no consumer power to change behaviour in the market. It hardly works for the landlord either. Many are small and non-professional and do not really appreciate the importance of client money protection until, of course, it is too late.
The Government’s transparency amendment, which became part of the Consumer Rights Act 2015, is fairly useless because, even before that change, every letting agent who had client money protection already proudly boasted about it, but that did not drive the rogues to follow suit. As we predicted, the amendment made little difference. It did not help tenants, who could not shop around, and it did not help landlords, who could only check at the beginning, and not later, whether there was client money protection in place. The other problem is that even the law that was put through is being flouted. We have numerous examples of letting agents failing to display their charges and whether they have client money protection.
When we dealt with this before, the Minister for BIS, the noble Baroness, Lady Neville-Rolfe, claimed that client money protection could,
“make it difficult to encourage landlords to invest in properties”.—[Official Report, 3/11/14; col. GC 600.]
How wrong could she be? It is exactly the security given to landlords by client money protection that will encourage them to invest, knowing that the rents paid over to the letting agent are safe and sound. This amendment is wanted by tenants and is particularly wanted by landlords; it is also strongly supported by reliable letting agents. I beg to move.
My Lords, I support the amendment, to which my name is attached. I declare my interest as chairman of the advisory board of the Property Redress Scheme, which has been mentioned in passing.
It seems very little to ask, in legislating for housing, to require letting agents to have a protection scheme in place for moneys received by them in their course of business from tenants, prospective tenants and anyone who is renting or seeking a place to rent. It has been estimated—I always wonder how these estimates are arrived at—that letting agents hold about £2.7 billion in client funds, yet if the agent has not elected voluntarily to obtain cover, landlord and tenant can lose their money. If disaster strikes in the form of an agent going bust or running off with the loot, under this amendment the landlord and tenant would be covered. The amendment does not require government underwriting, so the Chancellor does not need to amend the Budget. The cover could be provided by the users; this would supplement any award under any one of the redress schemes. As the noble Baroness, Lady Hayter, has said, we are not asking for reinvention of the wheel. Section 16 of the Estate Agents Act 1979 already provides protection in the course of sale and purchase transactions.
Client money protection is of course operated by the travel industry. Travel agents in the UK are required by law to be a member of an independent client money protection scheme that uses ABTA or ATOL. Many of us may have had to use these in the past—I certainly have. When you pay for your travel, your payment to the agent is protected by ABTA or ATOL against the agent going bust or going walkabout with your holiday money. You claim against ABTA or ATOL rather than against the travel agent. This amendment asks that what is the norm for the travel industry, just for going on holiday, is also used for letting agents—for most people, the property that they own or seek to let is much more important—and that there should be compulsory protection for rents, deposits or moneys held, even moneys for repairs.
The current problem is that while there are voluntary schemes, which, as the noble Baroness, Lady Hayter, mentioned, the good guys subscribe to, the bad guys do not subscribe to them, which is why we need the system to be compulsory. The careful tenant or landlord, if they have the opportunity to choose, can have their money protected, because independent schemes are in use. It is particularly important that the independent holder of client protection money should be involved rather than the money simply staying in clients’ accounts.
What is different? The noble Baroness, Lady Hayter, gave the example of solicitors, so I will concentrate on that. As a chartered accountant in my early career, I audited firms of solicitors and I had to give them something called the accounts rules certificate. It was incredibly traumatic when I found that a client, who was a friend of mine, had, sadly, not separated the money properly into a client account and I had to qualify my accounts rules certificate. I use this as an example because in the letting industry letting agents do not have a law that requires them to have a client account. If, as the noble Baroness, Lady Hayter, says, they should have a client account, nobody forces those letting agents to operate in that way, as the Law Society does for solicitors.
There is an urgent need for us to convert into law what is voluntary at the moment and is done by many people who belong to professional bodies to protect people who are most at risk, often small landlords and letting agents. A noble Lord described a property owned by one of his children, I think, and said that they should not choose the room next to the kitchen. Very often people do not have the ability to decide whether to choose the property—often they feel that they are only too lucky to find someone who will let to them and they do not realise that the rents, deposits and money for repairs are at risk. That is why we urgently need this amendment.
My Lords, I support the amendment in the names of the noble Baroness, Lady Hayter, the noble Lord, Lord Kennedy, and my noble friend Lord Palmer. I hope that noble Lords will not read anything into my very brief appearance here on the Front Bench.
We have heard a little about some of the figures. Back in 2012, Reading University carried out a survey that showed that some £23 billion a year was paid in rent and that in a year some £6 billion to £10 billion was held by agents after being collected by them on behalf of landlords. However, as my noble friend Lord Palmer points out, a more recent survey shows that, at any one time, some £2.7 billion is held by letting agents. The amendment is about the protection of that money.
It is worth reflecting on what eminent people have said about this issue. In July 2013, the Property Ombudsman felt moved to say something about client money protection under the heading:
“Client Money Protection Is a Necessity for the UK Lettings Market”.
“'We need an even playing field for lettings. All agents are required to hold client money in a separate Clients Account but there is no current requirement to have those funds insured against unlawful use or fraud, which is why”,
client money protection,
“is crucial for landlords and tenants”.
He went on to say that client money protection,
“is not a duplication of any deposit scheme or professional indemnity cover. It goes beyond that and provides landlords with the peace of mind they need to know that the rent collected by an agent is protected”.
As we know, many good agents and trade bodies, such as the Association of Residential Letting Agents and the UK Association of Letting Agents, recognise the importance of this and provide necessary protection for their members. Sadly, however, some do not.
Back in 2013, the Property Ombudsman surveyed some 8,000 lettings branches and discovered that, while 80% had client money protection, 20% did not. The ombudsman concluded:
“My personal viewpoint would be to question why a letting agent would not support CMP. In the absence of any regulation … agents themselves need to take proactive steps to show landlords and tenants that they have taken out the necessary cover to protect rental income”.
However, it is very difficult indeed for the vast majority of agents—those who provide client money protection—to persuade the others to do so. It is also difficult for them to run the necessary publicity campaign to warn landlords or would-be landlords and the public of the need to choose an agent who provides that protection.
Of course, agents are helped to some extent by the new transparency rules, which are being enforced by local authorities; I have no doubt that the Minister will refer to that in his response. These require the publication of the breakdown of the fees that agents charge to tenants and landlords, the redress scheme that they belong to and a statement of whether they are a member of a client money protection scheme. I recognise that there are many such schemes—again, no doubt, the Minister will refer to schemes such as SAFEagent and CM Protect. However, as the noble Baroness, Lady Hayter, points out, there is no evidence to suggest—and the vast majority of agents agree with her—that those schemes alone will provide the level of protection that is needed.
Earlier in our deliberations on this legislation, during our discussion of zero-carbon homes, the Government said that by opposing the introduction of tighter energy efficiency standards they were protecting housebuilding businesses; they said that they were stopping the overregulation of housebuilders. I was able to point out at the time that the housebuilders themselves supported the introduction of the regulation. We have a similar case here. It is instructive to learn what Mr Brandon Lewis said in response to such an amendment when this matter was discussed in another place. He said:
“We want to ensure that we have a strong and thriving private rented sector that is not tied up in excessive regulation. Requiring agents to pay to belong to a client money protection scheme would force honest agents to buy insurance against the risk that they themselves were fraudulent, when, as the hon. Lady said, the vast majority of agencies are not. Introducing a mandatory client money protection scheme at this point would be a step too far and would overburden a market that is perfectly capable of self-regulation”.
That is slightly odd, coming from a Minister who is imposing a large number of regulations in the Bill. However, it is much more bizarre that in this case, just as with zero-carbon homes, the industry itself is pressing the Government to introduce regulation.
It was the Association of Residential Letting Agents that drafted the amendment before us today to protect money received from clients and held by agents, such as rent due to landlords. The Government claim that the only reason for rejecting the amendment is that it would overburden the industry, but given that the industry wants it imposed on itself, I hope that the Government will drop their opposition. I hope that when the Minster responds he will reflect on the other thing that Mr Brandon Lewis said during his response to a similar amendment in another place. He went on to say, rather indicating that even he is a bit worried about the situation:
“However, in May 2016 we will review the impact of the transparency measures that were put in place only recently. At that stage, I will take due consideration of whether any further action is needed”.—[Official Report, Commons, Housing and Planning Bill Committee, 10/12/15; col. 719.]
We see yet again another example of the Government being prepared to consider something after we have finished our deliberations on this legislation. I urge the Minister to reflect on the fact that the agents themselves want to see an amendment such as this in place. I hope that the Minister will support, if not the precise wording of the amendment, something along these lines.
My Lords, it gives me considerable pleasure to be responding to the noble Baroness, Lady Hayter, who will probably remember only too well that not so long ago we debated a number of Bills with some vigour. This amendment would introduce provisions under which cover for money received or held by lettings agents in the course of business, generally known as client money protection, would be mandatory. I hope that at the end of my remarks I can offer a little light at the end of the respective tunnels for particular Lords, if I may put it that way.
I am aware of some support within the housing sector for this measure. That has been reflected in interventions from the noble Lords, Lord Palmer and Lord Foster. But I am concerned that requiring lettings agents to belong to a client money protection scheme will introduce burdens and costs into the sector that could have implications for rent levels. Instead, this Government’s approach is to encourage lettings agents to adopt client money protection without the need for regulations. I shall explain.
We have already legislated through the Consumer Rights Act 2015 to require lettings agents to be transparent about whether they offer client money protection. Transparency raises consumer awareness and encourages landlords and tenants to shop around and choose an agent based on the level of service that it provides. I recognise the importance of client money protection. This is why in our guide on how to rent we champion the SAFEagent scheme—a kitemark scheme, in effect. This helps landlords and tenants easily to identify agents that offer this protection by the display of the SAFEagent mark. I accept that participation is voluntary but estimate that at least two-thirds of agents already offer client money protection. At the moment, to introduce mandatory client money protection would be a step too far and overburden a market that is perfectly capable of self-regulation. The balance of regulation for lettings agents is now about right. We need to allow time for the transparency measures to which the noble Lord, Lord Foster, alluded to bed in.
We shall review the impact of the transparency measures later this year. I reassure all noble Lords, and in particular the noble Lord, Lord Foster, that this review will be taken seriously and that we intend to work closely with our industry partners and representative groups to develop this review. I hope that this explanation reassures noble Lords and that the noble Baroness will withdraw her amendment.
What is the Government’s logic? The Minster has said how good money protection schemes are, how everyone feels reassured by them and how many people—landlords and others, lettings agents in particular—subscribe to them. So, as the Minister said, they are good. If it is good to be voluntary, why is it not even better to be compulsory? The compulsory element sweeps up the bad landlords. The Minister is talking about the good landlords who use lettings agents. The idea of compulsion would be to deal with those who are not at the moment helping protect tenants and landlords. The logic in not making a successful voluntary scheme compulsory is lacking.
I appreciate that the noble Lord feels strongly about this, but as explained earlier, at the moment we feel that we have got the balance right. I have explained that the review will aid us further by providing greater intelligence. Further regulation could deter lettings agents and make it difficult to encourage landlords to invest in properties. This is what this Bill is about—freeing up the market to ensure that the supply of housing for rent helps to meet the country’s urgent housing needs and demand.
The Minister is suggesting that the introduction of measures proposed in this amendment would increase costs on letting agents. That is true. I have looked at the costs of such insurance schemes as are currently available. We know that the Minister says three-quarters of lettings agents have already entered such schemes. I believe that it is almost 80%. Will the Minister share with the House, either from figures in his brief or by writing subsequently, the Government’s estimate of the cost of the introduction of the scheme, not to the 80% that have taken it up but to 100%, and of its impact on rent levels?
Yes, indeed. I shall make two points arising from the noble Lord’s question. We believe that the balance is right also because we want to encourage a market whereby customers or people who wish to rent have the opportunity to shop around and to go to those agents where there is a kitemark scheme and reassurance in terms of their level of service. We believe that the market will weed out those without that. To answer the question on the money involved, agents typically pay an annual levy of around £300 to join a scheme. The noble Lord probably has these figures himself. This forms part of a central pot of money that can be used to pay successful claims by landlords and tenants.
My Lords, I thank the Government Front Bench for allowing us to take this amendment at this stage and apologise to the noble Lord, Lord Bates, and my noble friend Lord Rosser. The reason is that between 2 pm and 3 pm this afternoon I am completing my house purchase and I will have the keys at 3 pm. That is utterly relevant to this debate because the money was certainly in my solicitor’s account at 2 pm. I am hoping that by 3 pm it will be in the account of the seller and I am completely confident that that money in the solicitor’s account is safe.
It will not go through estate agents—estate agents hold very little in client accounts. You pay almost nothing to the estate agent. The seller will have to give them a percentage of the sale, but it is very small. But the amount that tenants pay to lettings agents is enormous. So under an earlier Act, client money protection is essential for estate agents, who hardly handle any client money, but not obligatory for lettings agents who handle an enormous amount. The noble Viscount, Lord Younger, again says that tenants can shop around. They cannot. In London, you are lucky to find anywhere to live. The idea that as a tenant you would shop around for your lettings agent, let alone the property, is, I am afraid, unrealistic.
I thank the noble Lord, Lord Palmer of Childs Hill, for his intervention. I have to confess that when I went on holiday I had not realised that my money was protected, but there it is. We make it essential for holiday firms and estate agents, but somehow for lettings agents this £300 to safeguard tenants’ and landlords’ money is a step too far.
I hope that the Minister was not saying that he wants even more lettings agents coming in—lettings agents who would not protect their clients’ money. I think that that is what he is saying. He is saying that he wants more people to come in as lettings agents, but without requiring them to protect their clients’ money. That sounds to me like a charter for more rogue “set up today, take the clients’ money tomorrow” lettings agents.
Despite the Minister’s firm response, I hope that the Government will think about this again. We will clearly bring it back on Report. I am not threatening anything but I think he knows how much support it will have. Instead of having to go down that route, I ask the Minister whether he will be willing to meet me, the noble Lord, Lord Palmer, and perhaps some other noble Lords to talk about this, as I do not feel that the Government are taking the right position here. For the record, I saw a very healthy nod from the Minister there. So I thank him for that and apologise to the Committee for having to get my new key at 3 pm. For the moment, I beg leave to withdraw the amendment.
Amendment 84C withdrawn.
House resumed. Committee to begin again not before 2.51 pm.
Terrorism Act 2000 (Proscribed Organisations) (Amendment) Order 2016
Motion to Approve
My Lords, the International Sikh Youth Federation, which I shall refer to as the ISYF, is a separatist movement committed to the creation of Khalistan, an independent Sikh state in the Punjab region of south Asia, and was established in the 1980s. The ISYF’s attacks have, in the past, included assassinations, bombings and kidnappings, mainly directed against Indian officials and Indian interests. The ISYF has been proscribed as a terrorist organisation in the UK since March 2001. The decision to proscribe it was taken after extensive consideration and in the light of a full assessment of available information, and it was approved by Parliament. It is clear that the ISYF was concerned in terrorism at that time.
Having reviewed with other countries what information is available about the current activities of the ISYF, after careful consideration the Home Secretary has concluded that there is now not sufficient evidence to support a reasonable belief that the ISYF is currently concerned in terrorism as defined by Section 3(5) of the Terrorism Act 2000. Under that section, the Home Secretary has the power to remove an organisation from the list of proscribed organisations if she believes that it no longer meets the statutory test for proscription. Accordingly, the Home Secretary has brought this order before the House and, if it is approved, it will mean that being a member of, or providing support to, this organisation will cease to be a criminal offence on the day that the order comes into force.
The decision to deproscribe the ISYF was taken after extensive consideration and in the light of a full assessment of available information. As noble Lords will appreciate, it would not be appropriate for us to discuss any specific intelligence that informed the decision-making process.
The Government do not condone any terrorist activity, and deproscription of a proscribed group should not be interpreted as condoning any previous activities of this group. The British Government were always clear that the ISYF was a brutal terrorist organisation. Groups that do not meet the threshold for proscription are not free to spread hatred, fund terrorist activity or incite violence as they please, and the police have comprehensive powers to take action against individuals under the criminal law.
We are determined to detect and disrupt all terrorist threats, whether home-grown or international. Proscription is just one tool in the considerable armoury at the disposal of the Government, the police and the Security Service to disrupt terrorist activity.
The Government continue to exercise the proscription power in a proportionate manner, in accordance with the law. We recognise that proscription potentially interferes with an individual’s rights—in particular, the rights protected by Article 10 on freedom of expression and Article 11 on freedom of association in the European Convention on Human Rights—and so should be exercised only where absolutely necessary. A decision to deproscribe is taken only after great care and consideration of a case, and it is appropriate that it must be approved by both Houses. If agreed, the order will come into force on 18 March. I beg to move.
I thank the Minister for his explanation of the background to, and purpose of, the order. As he said, it amends the Terrorism Act 2000 by removing the International Sikh Youth Federation from the list of proscribed organisations, meaning that, if the order is passed, it will no longer be proscribed as an organisation concerned in terrorism within the meaning of Section 3(5) of the Act.
As the Minister said, the international Sikh Youth Federation was added to the list of proscribed organisations under an order in 2001. Proscription has a number of consequences. These include it becoming a criminal offence to belong to or invite support for the organisation, or to arrange a meeting in support of the organisation. It also means that the financial assets of the organisation become terrorist property and can be subject to freezing and seizure.
Under the terms of the Terrorism Act 2000, a proscribed organisation, or any person affected by the proscription of the organisation, can apply to the Secretary of State for deproscription. If the application is refused, the applicant may appeal to the Proscribed Organisations Appeal Commission. According to the Explanatory Memorandum, the Secretary of State has received such an application for the deproscription of the International Sikh Youth Federation and has now decided that there is insufficient information to conclude that the group remains concerned in terrorism.
The application was made by three members of the Sikh community in early February last year. It should have been dealt with within 90 days, but was not since the response was not made until the end of July last year. The response was to the effect that the Secretary of State still had a reasonable belief that the International Sikh Youth Federation was concerned in terrorism, but no reasons were given.
The applicants appealed on the basis that the Government had not given any reasons for the refusal to deproscribe, contrary to the rule of law, and that the ISYF was not concerned in terrorism. The Proscribed Organisations Appeal Commission directed the Home Secretary to provide reasons to support her position. However, on the day that the reasons and evidence were due, the commission was told that the Home Secretary would not now defend her decision but would lay an order for deproscription, which is what we have in front of us today.
Of course, the inevitable question that has been asked is what new information had come to light between the end of July, when the Home Secretary declined the application for deproscription, and the decision at the door of the Proscribed Organisations Appeal Commission some six months later not to defend that decision—new information that could not have been known or found out at the time of the decision at the end of July, over which the Home Secretary said there had been extensive consideration and a full assessment of the available information.
There is a feeling in some quarters that being required to provide reasons for the decision not to deproscribe may have been a not insignificant factor behind the very different decision then made by the Home Secretary to lay an order for deproscription. I have no doubt that the Minister will wish to respond to that point. Perhaps he could also say, without disclosing its nature or content, whether significant new information became available for the first time between the end of July 2015 and December 2015 which proved a key factor in reaching the very different conclusion from that reached in July: that the International Sikh Youth Federation should no longer be proscribed.
The Independent Reviewer of Terrorism Legislation has previously suggested that once an organisation has been proscribed, there should be a review of that decision within specified time limits to ensure that it continues to be justified and necessary. Since proscription is currently for an indefinite time, are the Government now looking at adopting a procedure and process along the lines suggested by the independent reviewer, and to which I have just referred?
I am sure I am not the only noble Lord to have received information from the Sikh Federation UK for this debate. Its briefing indicates its clear view that the ban that this order seeks to lift has been in existence for so many years as a result of pressure from the Indian Government. That was strongly denied by the Government in the House of Commons two days ago, and I assume that the Minister will repeat the Government’s position when he responds.
Proscription means that the financial assets of the organisation concerned can be subject to freezing and seizure. If this order is agreed, will any funds or financial assets of the ISYF be released and, if so, when? Which other bodies, organisations or countries will be advised that the ISYF has been taken off the list of proscribed organisations?
We support the order. In the House of Commons on Tuesday, the shadow Home Office Minister Lyn Brown MP said that she hoped the Sikhs in our communities could now look forward to a new relationship with the Government. She said that she had met representatives of the UK Sikh Federation who had told her about the real difficulties that have affected former members of the International Sikh Youth Federation, including naturalisation and international travel issues. The UK Sikh Federation also says that it has found it challenging for well over a decade to represent the community properly due to the association with the ISYF, and that there has been an associated reluctance on the part of Ministers and officials to engage with the federation. If the Minister accepts that this has been the situation in the light of the IYSF’s proscription, will one effect of deproscription be to change that, and, if so, in what practical way will that change be reflected?
My Lords, I am grateful to the noble Lord for his questions. I will try to respond to them in the order in which they were asked.
The noble Lord’s first question was about the changes that occurred between July, when the application was considered, and December when it was about to be presented to the Proscribed Organisations Appeal Commission. Following careful consideration of the available evidence, the Home Secretary decided to maintain proscription of the group in July on the basis that she considered that the evidence demonstrated that the group remained concerned in terrorism. However, in December 2015, having further reviewed with other countries the available information about the current activities of the ISYF, after careful consideration the Home Secretary concluded that there was not sufficient evidence to support a reasonable belief that the ISYF was currently concerned in terrorism, as defined by Section 3(5) of the Act.
The Home Secretary considers various pieces of open-source material—the noble Lord asked about the nature and content of the material—when determining whether a group is engaged in terrorism, but she also considers material obtained via the intelligence agencies. Of course, as the noble Lord suggested, it would not be appropriate to discuss the specific material that informed the decision-making process, particularly details of the information reviewed and how this altered the assessment of the IYSF’s current activities. We always seek to present as much information as we can, but I cannot comment on matters relating to intelligence.
The noble Lord asked about David Anderson’s concerns. Clearly, David Anderson is a very well-respected adviser to the Government on terrorism legislation and in fact we are dealing with a lot of his recommendations in another context on other legislation. We look very closely at his proposals. David Anderson had stated that,
“the Home Secretary had … agreed to a process for deproscribing groups that no longer met the statutory test, and that a preliminary analysis had unearthed 14 groups that may be in this category”.
While it is not government policy to provide a running commentary on any proscribed organisation, I can confirm that officials did not recommend that the ISYF should be deproscribed at that time.
Under the current regime, the organisation or any person affected by proscription can submit a written application to the Home Secretary requesting that she considers whether a specified organisation should be removed from the list of proscribed organisations. We believe that addresses the noble Lord’s concern as to whether there should be a sunset clause in relation to proscription matters.
In respect of the possible impact of proscription and the points raised by the Sikh Federation in relation to visa and citizenship applications, the Home Secretary has to be satisfied that an individual seeking citizenship meets the statutory requirement for citizenship and is of good character. A range of issues is considered when determining whether an applicant meets this test and an individual’s current or former membership of a proscribed organisation may well be a factor as well as the individual’s specific activities.
The noble Lord raised an important point about the nature of the relationship with the Sikh community within the UK. This is, of course, extremely important. In relation to the point about India, I can say without hesitation that diplomatic pressure did not lead to the ban on the ISYF having been maintained since 2001. Proscription of a group can remain only if there is compelling evidence to support a reasonable belief that it is currently concerned in terrorism as required under Section 3(5) of the Act.
Regarding engagement with the Sikh community, I do not want at this stage to expand the deproscription debate into a broader one on engagement with other organisations. The focus of our discussion should be deproscription, which is quite distinct from other areas of government engagement.
The noble Lord asked whether we intended to engage with other countries. We engage with other countries in considering whether an organisation should be proscribed or deproscribed. It is an important part of the process and we will inform other countries with an interest in this deproscription of our decision.
In relation to the point about relations with the wider Sikh community, we have some distinguished members of the Sikh community in this House and of course recognise the immense contribution they make to the wider community. We hope that any misunderstanding that may have occurred in the past can be removed and that we can have a more positive relationship going forward if this deproscription has been a barrier.
I do not want to convey in any sense that we did not believe that there was just cause for the then Labour Government to proscribe this organisation in 2001. There was clear evidence then that it should be proscribed, but we have now looked at it again and arrived at a different conclusion.
Proscription is not targeted at any particular faith or social grouping but is based on clear evidence that an organisation is concerned in terrorism. It is the Home Secretary’s firm opinion that, on the basis of the available evidence, the ISYF no longer meets the statutory test for proscription and it is appropriate that it is removed from the list of proscribed organisations in accordance with the deproscription process set out in law. I thank the noble Lord for his questions and commend the order to the House.
Housing and Planning Bill
Committee (7th Day) (Continued)
Amendment 84D not moved.
84E: After Clause 124, insert the following new Clause—
“Sinking funds for repairs: leaseholds
(1) The buyer of a leasehold in a shared residential building with common parts is required to make periodic deposits of sums into a fund to be maintained and used for the purpose of making repairs to the building in which the leasehold property is situated.(2) The fund shall be held and administered by the person designated to fulfil that role by the leaseholders.(3) The sums to be deposited and the timetable for their deposit shall be determined by those holding rights in the shared building, and the collection of those sums may be incorporated into the building’s service charge arrangements.(4) The requirement provided for by subsection (1) applies to any buyer of a leasehold who completes the purchase of that leasehold at any point after the day on which this section is brought into effect.”
My Lords, this amendment is self-explanatory, and people in this House have heard me speak before on the issue of sinking funds. It was drawn to my attention particularly by people who bought their council flats in the days of Margaret Thatcher. No sinking funds were set aside at all and, if you are a tenant in a local authority block, you do not have to pay for sudden repairs. However, the case I quote to the House is of a woman who has an income of £10,000 a year and received a bill, this year, for £12,000 for her part of the roof repairs. When I followed this up with the housing association that owns the property, it said the problem is that there are 26 people in exactly the same position. To avoid this, from the day that you own a leasehold, you should really be part of a sinking fund so that you do not suddenly find yourself threatened with losing your home altogether because you cannot find the money. What happens if she does lose her home? The local authority has to pick it up again, so it seems that the fund is necessary.
It is also very necessary and important that a sinking fund exists in private blocks. We do not have one in the block that I own a flat in and, some years ago, someone suggested that we have a voluntary scheme. The scheme came into force and we all put our money in, and it was great because it paid for all the repairs for the year—some minor and some less minor. Then, a new tenant bought a leasehold in the block and said, “I don’t want to pay a sinking fund; there is nothing in the lease about it”. They had to give us all back our money, whereupon, years later, we will be faced with another giant bill for a new boiler system or new central heating or something.
It really is so much better if people have a sinking fund for repairs, and it is important that this should be a possibility for people in local authority housing and people who have a right to manage, even if their lease does not have provision for a sinking fund. My aim is to put in a clause that would enable people to decide that by a majority. If a majority want it, it should come into force, and it should not be the case that it can be withdrawn at a later date, which was what threw our system into complete chaos, it having been done on a voluntary basis. I beg to move.
My Lords, I sometimes think that the noble Baroness’s title is not really adequate: “Baroness Gardner of Leaseholds” would have been better than Baroness Gardner of Parks. She is an expert in these matters and deeply committed to improving the situation of leaseholders, and on that she is to be congratulated. It is fair to say that the aspirations in these amendments are to be welcomed. However, I have some difficulties with the drafting.
In Amendment 84E there is a reference to:
“The buyer of a leasehold in a shared residential building”.
However, not every owner is a buyer—they may inherit or be given the property, and so “buyer” is not the right term. That also applies to subsection (4) of the amendment’s proposed new clause. It is also not clear in proposed new subsection (1) how the requirement is to be made. Normally, of course, provision is made within the lease. The implication here is that, somehow, legislation should overtake the provisions in an existing lease, which I think is a somewhat difficult concept. Furthermore, proposed new subsection (3) says that:
“The sums to be deposited and the timetable for their deposit shall be determined by those holding rights in the shared building”,
but it does not indicate how many of the leaseholders would be required—I suspect that a majority is what is intended, as it is in subsection (1) of the new clause proposed in Amendment 84F. That needs to be tidied up.
Having said that, there will be a chance, if I may say so respectfully, to improve the wording of the amendment before we get to Report. I hope that the Government will be sympathetic to this and possibly work with the noble Baroness in coming to an agreed position. She has highlighted a significant issue that is having adverse consequences for many occupiers of leasehold properties; at any rate, those with common parts. Perhaps the Minister will undertake to look at that with her and others to see whether the Government might bring forward an amendment to meet the objectives set out here but, as I said, unfortunately with drafting that may not achieve them.
My Lords, I do not like either of these amendments. I want to make it quite clear that I think they are wrong in principle. For a start, Amendment 84E states that the buyer of a leasehold “is required”—in other words, it would be mandatory. There are blocks of flats—particularly where there is self-management, as in the case of my arrangement in Maidenhead—where resident committees agree that a sinking fund is not needed. We simply agree to turn up the money when a large expenditure is required. A couple of years ago, we had to spend £80,000 on a roof repair, but we agreed in advance that we would not levy for it until the expenditure needed to be incurred. It should be left to people in blocks of flats to decide whether there is a sinking fund, because there are varying views. Therefore, I am against that provision.
I am also opposed to Amendment 84F, and I will explain why. It is being suggested here that a majority—51%—of leaseholders could change the terms of the lease. If the terms of a lease were changed in such a way whereby a minority objected, and that objection was so strong that they just become awkward, which is what happens, they would simply default on the payment of their service charges. You cannot divide leaseholders in that way. In the case of the block in Maidenhead, where we have shared freehold interest, every time we enter into major works—indeed, any works—we agree in the resident committee. Because we are also the management company running the organisation, in which I take a very active part, we make sure that everybody agrees. Indeed, we get letters or emails from them confirming that they agree to any change that we wish to make. The reason is very simple. We have people that live both within and without the United Kingdom. In the event that we were to take an action which in any way they found unacceptable, I know that people would say, “Well, I’m sorry. I just do not agree with what you’ve done. I know I was invited. I know it said that in the event that I was unable to be there I would be deemed to be in favour of the proposal”, but irrespective of that they would feel that they were being manipulated into taking a decision to which they object.
Anything that suggests that you could in any circumstance compromise the decision of all the leaseholders in any particular building would be totally counterproductive. It will lead to objections, as I say, by leaseholders and in many cases a refusal to pay. I can tell you that if you are in a small development and someone refuses to pay, it triggers all kinds of arguments, all kinds of concerns, and sometimes they end up in the courts. That is the reality of the world we live in. Therefore, I am totally opposed to both these amendments.
I would like to respond to the point made. I think it is very interesting.
First, I should have spoken to Amendment 84F as well as Amendment 84E, because the two are linked on the groupings list, which I had not realised. The situation as described sounds entirely different from my own personal experience. My experience is that people who do not live in these places at all—except maybe for a few weeks in the summer when they come from somewhere overseas—do not respond to any attempt to contact them whatever. If you end up with a sufficient majority of those people, you cannot get anything done. There is no money to put forward even for emergency repairs. In each case you are asked to pay your money in advance, before the work can go ahead. Often legal action has to be taken against someone who says, “No, I’m not paying until I’m sure you’re doing the work”. An instance in hand was that, as the building was old, we wanted to have all new windows at the front. We all paid our money for them. People came and put up the scaffolding and the windows were delivered. The council arrived and said, “Have you got permission for that?” “Oh no, we phoned up and they said you don’t need it.” “Oh yes, you do. This is a conservation area”—the building itself is not worth conserving, but it is a conservation area. So the windows were all taken down, taken away and thrown away. We paid for them but we never got them, which was pretty disastrous for everyone.
Other times when someone needs emergency work done on the boiler or heating systems, again the money is needed up front—and people often have to be taken to court to get it. They might claim that they had not been justifiably contacted, but with the right to manage there could be a contact address or a proxy for every single resident or owner in the block.
I went to a meeting with Peter Bottomley, who is in the other place, and someone stood up from the department there. They said that the department was seriously considering the idea that if you fail to respond in any way you would be deemed to be not opposed to whatever was suggested. I then came back to this House and tabled a Question on that and I was told, no, that was not being thought about. Now again I am told that maybe it is being thought about. I find it extremely confusing, but I am looking for some way whereby you can deal with non-resident, uninterested parties who would allow places to fall apart.
The answer is actually in the original deed. If on acquisition of the property and purchase, the original deed specified that a suitable majority was sufficient to take a decision and the purchasers signed up to that, they are bound by that. The resident association, or the management company if it is run by the resident association, would have that in mind when it took decisions. Both these amendments could be dealt with in terms of the original lease. In the event that a lease change is required, then you would need—to be fair, in my view—a 100% majority turnout, or proxy or whatever, of all the residents to take that decision to introduce these provisions into the lease. If that is done then it is fair, but to impose it on people who may be reluctant to accept it is quite wrong.
The second to last point the noble Lord made was that you have to have 100%. The problem is getting the 100%. I have asked Questions in this House—I had the Library look them up and there must be at least six—and each time the Government have answered that it is impossible to get 100%, or that it is very easy to avoid getting 100%. All you need is a landlord who has a different interest to pay one person or own one flat in the block himself and he can prevent any action of any sort to improve or maintain it.
We have gone into this legally in great detail over many years, but the answer is no, you cannot amend anyone’s lease unless everyone agrees to that. That is why I would be quite happy with the 100% if one could be sure of replies from 100%. However, if the replies do not come one way or another, it is very fair that the action should be deemed to be not opposed. They would be given ample time. They would be able to produce—this happens in Australia and everywhere; it is very simple management—a contact or someone who could attend any meeting as a proxy. They can authorise a party. There is no reason why they should not be able to reply in some way. They either deliberately wish to be obstructive or they are uninterested. Either way, it can have a disastrous effect on everyone else in the block. You need only one person to be obstructive.
In the description I gave, the landlord himself—the head lessee—has now bought one. He is happy to take on every flat that comes up if anyone wants to leave. He is always offering to buy mine. The point is that to get that 100% is acknowledged to be impossible. Certainly it is very difficult. Even when you agree on the works to be done and everyone is prepared to pay their money, there are always a few who have to be taken to court and works never start until all the money is available to pay the contractor. This means that terrible deterioration can happen during that period. Of all the points that are in these two amendments, to me, that concerning the leaseholder who fails to participate in the vote is the most important. In that instance you are being deliberately manipulated or controlled by people who do not have enough interest to bother expressing their views.
My Lords, I thank my noble friend Lady Gardner for her amendments. I agree that, as indicated in Amendment 84E, it is important to ensure that sufficient funds are available for the repair and maintenance of leasehold blocks, and that sinking funds built up over time can indeed play an important role in mitigating large one-off service charge demands. However, while well-intentioned, the amendment is unnecessary. It would cause conflict and confusion with the existing requirements and responsibilities under the terms of the lease, and does not address a range of important issues covered by the existing legislation. I am grateful to the noble Lord, Lord Campbell-Savours, with his great knowledge, for being helpful in this regard.
The existing legal contract between the freeholder and leaseholder, which, as we all know, is called the lease, already provides for the collection of service charges for the upkeep and maintenance of a block. In a growing number of cases, provision is also made for an amount to be collected called a sinking fund. Importantly, where a lease does not already provide for a sinking fund, legislation makes it possible to seek a variation of the lease to do so.
It is sensible, clear and workable for the person responsible for the upkeep and maintenance of the building to also be the person responsible for any sinking fund. To require the creation of a separately held and managed sinking fund administered by someone other than the person with legal responsibility for maintaining the block would create conflict and confusion with the existing lease, as would trying to dovetail it with the existing arrangements. For instance, if major work were required to the roof of the block, how would responsibility for the work be determined and how would any shortfall in the funds needed to carry out the work be dealt with? Who would be responsible for arranging the repairs? The current arrangements keep responsibilities and accountabilities clear, and do not fall foul of any legal obligations and responsibilities.
Importantly, legislation enables the freeholder to be held to account on service charges, including any sinking fund. Leaseholders have the right to challenge the reasonableness of service charge amounts being sought, whether for day-to-day use or towards a sinking fund. Existing legislation governing service charges also provides for a wide range of important issues, including the protection for service charges by deeming them to be held in a statutory trust, and that the money may be deposited only at a financial institution specified by the regulations. Under the amendment, it is unclear how the leaseholders would determine who held and administered the sinking fund, or how contributions would be determined and spent. The existing arrangements, in contrast, provide protection and a route to challenge the freeholder.
I say again that I recognise the important role that sinking funds can play, and that where the lease does not already provide for a sinking fund it is possible for either leaseholders or the freeholder to seek a variation of the lease to do so. This is the most appropriate route for creating sinking funds, avoiding unnecessary confusion and ensuring that appropriate protections remain in place. I hope that with this explanation my noble friend will agree to withdraw her amendment.
I turn to Amendment 84F. The leasehold right to manage is a right for leaseholders to take on specific responsibility for the management of their individual block from the landlord, by which I mean the freeholder, where they meet the qualifying criteria. That right can be exercised where a majority of qualifying tenants agree. It does not require or allow variations to leases. I understand my noble friend’s concern that once a right-to-manage company has been set up, the company needs 100% agreement from the members of the right-to-manage company before anything can be done. However, I am pleased to reassure her that this is not the case. In taking over responsibility from the freeholder for the management of the block, the right-to-manage company is required to carry out the repairing obligations under the lease, for the benefit of the leaseholders and the freeholder. This is the same as the freeholder would be required to do where they are responsible. Failing to do so could result in a breach of the lease. There is a requirement to consult on major works, but there are no particular restrictions that require 100% agreement before the right-to-manage company can carry out their obligations.
On top of this, the company is subject to company law in general, and the decision-making process, voting arrangements and appointment or termination of directors are set out in the prescribed articles of association. These are the RTM Companies (Model Articles) (England) Regulations 2009, which set out the objects of the Company. These generally require a quorum and a majority, but certainly do not require 100% agreement. I hope that this somewhat protracted explanation allays my noble friend’s concerns.
My Lords, I take the point made by the noble Lord, Lord Beecham, that the wording might be defective. The purpose of Committee stage, however, is that it is the topic that you are really discussing and you can always go back and correct the wording. So that is not really the issue but I appreciate his point, though I thought the Public Bill Office had done jolly well even to get it as clear as it is, because I found it impossible.
The Minister has not looked at the entire situation. He keeps talking about the freeholder and the leaseholder, but what about the head lessee—the person between the freeholder and the leaseholder? This is where most of the problems come in. The head lessee should not even exist because the head lease should have been offered to all the people in the block, but because of that company law loophole it was not. That therefore creates an extra intermediate tier. Where that happens, you are in quite a degree of difficulty. Our freeholder seems quite benign and willing to go along with things, except where he evidently agreed to set up this sister company and floated it off to an outsider as a leaseholder —the head lessee. It becomes very complicated when you get these extra layers in management, and it means that each process has to go to each person.
I cannot remember the detail, but something meant that until we got to the door of the court the head lessee would agree to nothing. We were applying to the court to deal with it without his consent because he refused to respond to any correspondence, making it very difficult for everyone. Right at the last moment, there was a message from his solicitors saying, “We agree”. What was at issue was nothing terribly major, but it was hard to believe that we had to go through those legal procedures to get a simple agreement about something.
May I make a suggestion to the Minister? There is a reform that would be helpful. Some freeholders require 50% of the residents to agree to the formation of a residents’ association that they are prepared to recognise, but unless they get 50% the freeholder will not recognise it. I would like to see, in law, some requirement for a lesser percentage. Particularly in blocks of flats in London, where you have large numbers of residents living abroad—despite the amendment moved by the noble Lord, Lord Young of Cookham—the fact is that you cannot get their addresses and therefore you are often limited in the number of people you have access to in order to meet that 50% threshold. Perhaps the Minister might ask officials to look at that. A nice little amendment to that effect on Report would be very helpful.
That sounds like a good and constructive suggestion. Perhaps we can work on that idea. Certainly we are looking for some answer to this. I went this week to a meeting on the private rented sector at which the person speaking was the present Housing Minister. The one thing on which he agreed with me was that we need a property consolidation Act. I have been involved in Act after Act since 1981, when I took my seat in this House, and the way that each law amends the previous one and goes on to change something else is such a hotchpotch. We really should have a comprehensive consolidation Act. The problem is that the Law Commission does not do these any more, but if the Government were prepared to pay then it certainly would. That would save a huge amount of bother for ordinary people. If ordinary people cannot understand the law, it is very difficult to implement it and for people to feel satisfied with it. That is why I am all for a consolidation Act.
Meanwhile, I think that we have aired this subject fairly well. I am grateful for the comments from those who have made them, and I beg leave to withdraw the amendment.
Amendment 84E withdrawn.
Amendments 84F and 84G not moved.
Clause 125: Designation of neighbourhood areas
85: Clause 125, page 59, line 12, leave out “Regulations under subsection (11) may provide that”
My Lords, we move at last to Part 6 of the Bill, headed “Planning in England”. Some of us thought we might never get here—but here we are. First, I thank the government time managers for giving us some extra time at the end of this Committee stage, so that we can have a bash at dealing with Part 6 properly. I understand that a lot of the housing stuff that has gone before is extremely important. Nevertheless, we had feared that it would take over completely, and we would not be able to deal with planning in any sensible way. So I thank the Government for providing the time—even if that time will not, by and large, be conveniently arranged for a lot of us. Never mind.
As well as moving Amendment 85 I will speak to the other amendments in the group that are in my name. The planning clauses as a whole raise some important principles, and I am sure that we shall have some clashes of views on those principles as we go through Part 6. They also raise a series of the kind of issues that that House of Lords is, at least in part, here to look at—to try to understand what the legislation actually means, how it might work, and whether it will work. It is important that we look particularly at some of the clauses in Part 6 that were put into the Bill right at the end of its progress through the Commons, and have not been properly scrutinised at all. So I hope that we shall do that.
There are a lot of concerned people working in the planning system around the country who, on the basis both of my experience and of information provided by colleagues, do not understand how this is going to work either. The Government have been organising meetings, seminars and so on, but many people believe that the legislation needs looking at thoroughly before it leaves your Lordships’ House.
The amendments in the group are about neighbourhood planning. We are starting off in a fairly benign way on this subject, because there is probably more agreement on what is proposed in this part of Part 6 than there is on some other areas. The amendments relate to Clause 125, which is called “Designation of neighbourhood areas”, and Clause 126, which is called “Timetable in relation to neighbourhood development orders and plans”.
I have no doubt that all noble Lords in the Committee are fully up to speed on neighbourhood planning and what all this means, but it may be helpful to put on record at the beginning the fact that neighbourhood planning is one of the success stories from the Localism Act, which some of us here spent a lot of time working on five years ago. Neighbourhood plans are the main part of neighbourhood planning, and about 1,800 of them are at some stage from the initial inquiry through to adoption. That is a lot: the system is a success. We should be looking to build on that success, and where successful neighbourhood planning has taken place, to move it to other parts of England where so far it has not taken hold.
This is a complicated process. Five years ago some of us spent a lot of time trying to understand how it, and the legislation, were going to work. It is not easy to understand, because the legislation appears in a number of different planning Acts. Basically, the process has to start with a relevant body, which is either a parish council or, if there is no parish council, a neighbourhood forum. If there is no parish council, the neighbourhood forum has to be approved by the local planning authority—the main council. There must be a neighbourhood area, which the parish council or neighbourhood forum operates in, which is the basis for the local neighbourhood plan. In many cases, obviously, that is the parish, but if there is no parish, that is a source of discussion and delay.
Then, within that neighbourhood area, a neighbourhood plan is put together. This is the part of it that is very interesting, and sometimes quite exciting, involving residents and the local groups. The body that is responsible for the neighbourhood plan is the parish council or the neighbourhood forum. According to the rules, the plan must be submitted to the local planning authority for approval. Then there has to be a referendum involving everybody who lives in the neighbourhood area. That, again, is organised by the main local authority. Then, if the referendum vote is to approve—so far, in almost all cases it has been—the local authority has to adopt the neighbourhood plan as part of its overall local development plan.
If that sounds complicated, it is actually quite complicated, so there are within the system a number of points at which the local planning authority can, if it wishes—or just if it is not all that efficient—slow the whole process down. As I understand it, the purpose of these two clauses is to remove those impediments, or at least to speed up the process.
I drafted these amendments some time ago. I did it for two reasons. The first was a natural protest against the degree of prescription in the two clauses: effectively, they say that, in different ways and at different times, with all the usual specifications, the Secretary of State can do whatever he or she wants to do. That seems to me unnecessary. If the Government know what they want to do in changing the system, they should simply put that on the face of the Bill. Then, at least, it would be less complicated for people trying to understand it.
The second reason, of course, was to probe what the Government are intending to do—what time limits they propose, and so on. So I put some of that in the amendments. Since then I have seen a more recent document called Technical Consultation on Implementation of Planning Changes. It is an extremely interesting document, which has been circulated to local planning authorities and elsewhere, and it contains the proposed timetables for neighbourhood planning. I do not agree with everything in it—as the Committee will discover in due course over the next day or so—but the proposed timetables for neighbourhood planning are fine. Indeed, they are rather better than those I put in my probing amendments. The Government are doing better than me on this one, so good for them.
I hope that this afternoon the Minister will be able to put that timetable on the public record in the Committee. We understand that it is subject to the consultation process, so there might be changes, but it would be helpful to set it out so that at least it is there in Hansard and people can see what it is.
The reason why I raised the question of whether Clause 127 should stand part of the Bill was to protest against what seem to many of us to be two pages of unnecessary intervention powers for the Secretary of State. I know that there have been some problems over neighbourhood planning with some local planning authorities, but I do not think that the way to deal with them is to have two pages of detailed legislation setting out what will become umpteen pages of even more detailed legislation when the regulations provided for in almost every other line in these two pages are agreed. That is just a statement of opposition to doing it in that way. The important thing is: we need to get a better and clearer timetable for the neighbourhood plan-making process, set out and agreed in legislation, and then let us all get behind the whole neighbourhood planning process wherever any of us has any influence. I beg to move.
My Lords, I have tabled Amendment 87A in this group. Since I have been silent a great deal throughout this Committee—I must say that such silence, unlike at a wedding, does not always indicate assent, but it certainly does indicate consent—I should remind the Committee that I am leader of a London borough council which is a planning authority. It wishes to remain a planning authority and it maintains vigorously that local authorities, as the arbiters of local communities, should be respected fully at every level as legitimate public authorities. One does not always hear that language, sadly, from whatever Government are in power.
I well remember the lengthy debates that we had on the Localism Act, in which my then noble friend Lord Greaves was a very active participant. I also played a part. I am a very strong believer in localism and I did play a part in that Act. One of the points that I made repeatedly at that time, often unavailingly, I fear, was that localism can be delivered in many forms. My own council was a pioneer in 2010 in inviting local people to define their own communities—a process in which about 13,000 people took part—rather than simply following ward or parish boundaries. Since then we have established with local people 14 village and town areas within our borough, with very active community engagement in discussing and setting local priorities. It so happens that only one neighbourhood forum has been set up because that has been the will of local people. They appear to have been satisfied with the process that we have taken forward.
We have now begun incorporating and adopting detailed supplementary planning documents—we call them village plans—within our local plan, which reflect that dialogue with the local community following question times, walkabouts, open meetings, post-its, as well as formal consultations. It has been a successful and popular process in which thousands of people have been involved. Indeed, I had to leave your Lordships’ Committee last Thursday early to go to a public meeting in one part of my borough, which was launching the latest village plan. Some 150 to 200 people attended the meeting in a public hall; that is unusual, as I think anybody involved in local politics would say. So, there is enthusiasm.
I was very grateful to have the opportunity to discuss my amendment with my noble friend Lady Williams on the Front Bench. I entirely except her from the many strictures that I may have made at the start of my speech about Ministers over the last 20 to 30 years, since I have been involved in local politics. My main concern and reason for tabling the amendment is that the Bill, and specifically the intervention powers of the Secretary of State, are locked in to this existing single body of statute which is about a neighbourhood forum and a neighbourhood plan, as enacted under the Localism Act. That is one method of getting people involved—a very good and successful method, as the noble Lord, Lord Greaves, rightly said—which is what we want to do. However, it is not necessarily the only method or in every circumstance the best method.
I freely admit that my amendment is not necessarily the best way. It may not be in the right form or in the right place. However, before statute and practice totally ossify and case law proliferates, establishing that there is just this one way of doing it—as laid down by departmental officials and enforced by the Secretary of State from above—and that everything else is inferior, I would like to see some protection for local authorities, and there are many. I do not claim any exceptional skill on behalf of my own, although I think it is been a principle applied by both Liberal Democrat and Conservative Administrations in my authority. Where local authorities have local planning documents in full, after full consultation, they should not find themselves snagged up on artificial challenge as a result of not complying with the specifics of statute in relation to neighbourhood planning envisaged in this single way.
All I am really asking for is some reassurance. Ideally, I would like to have it in law because ultimately, these things will be tested and challenged in law—I suspect by people who perhaps want to make mischief and do not have the overall interests of local people in mind. If it cannot be made clear in law, we need some assurance that this Government, at least—we cannot bind future Governments—recognise that there may be under heaven ways of doing good local planning and involving the public other than as laid out in the Bill before your Lordships’ House.
My Lords, I very much welcome the opportunity raised by this group of amendments to discuss this business of neighbourhood plans. Perhaps I should declare an immediate past interest as the previous president of the National Association of Local Councils, now occupied very ably by the noble Lord, Lord Taylor of Goss Moor.
The noble Lord, Lord True, rightly pointed to the primacy of what I, as a private sector operator, know as the principal authority for planning purposes. We should never forget that, fundamentally, that principal authority is the one that ultimately has to make the decision. It is informed by a series of neighbourhood plans where those have been prepared.
Localism is a great thing, but it has come in with something of a great rush into a world in which the neighbourhood construct—by that I particularly mean parish, town and community councils—has for a very long time been neglected in terms of resources, powers, authority and ability to do things. Here, we come to the issue of neighbourhood plans. As the noble Lord, Lord Greaves, pointed out, their administration is quite complex, as are the philosophical constructs behind them. Too often, I still meet people who say, “We have tried to do this neighbourhood plan but really what everybody’s concentrating on is making sure that we don’t get too many housing developments in our area”, so it is seen as a defensive strategy, which is perhaps regrettable. Because it comes with so much of the baggage of what is known as development control, which is essentially a rather negative turn of phrase, that is the inherent direction of travel and it is seen as the received wisdom.
It is not a quick process to turn this round so that people see this as an opportunity to take things forward and to generate a resource they could not otherwise have. This question of resources is one that troubles both the neighbourhood sector—if I can call it that—and the principal authorities. One thing that the noble Lord, Lord True, did not mention is that as soon as you try to step in and make good efficiencies at neighbourhood level, that has resource implications. It also requires officers’ time, which would otherwise be devoted to other things, and almost certainly requires cash outlay on things like mailing, drawing up and making documents available and so on.
The test that needs to be applied was in a question I put to one of the heads of our rural community council. I asked what he thought the main ingredient of a good local plan was. He said that first, people must be properly canvassed: rather than teasing out what they do not want, we must ask what really turns them on and gives them a buzz about their area. At that stage, you can start to peel back the skin of the onion in order to get at the truth. Unfortunately, because of what might be called the inherited philosophical direction of travel, that question is often not asked properly. As a result, we do not candidly canvass the views of the old, young, shopkeepers and businesspeople, and—maybe—the farmers, mums with children and all who would otherwise remain silent. One of the main problems with neighbourhood plans being declared unsound is that it cannot be demonstrated that that process has been gone through with rigour and care. This is an important set of amendments enabling us to discuss this principle.
I am in favour of communities determining their own situation, but if in a particular area they say the equivalent of what I believe is the current acronym— BANANA: ban anything near anyone anywhere—then the principal authority’s executive is going to have to come with a red pen and make themselves deeply unpopular, because there are certain Government imperatives. While these are particularly to do with housebuilding, they also concern the associated infrastructure such as schools, clinics, road improvements —never mind fire services and things like that.
These things are complicated and a community often does not have the voluntary resources. How many would have a private sector town planner, for instance, who had time to attend meetings and guide that process? How many would have people available to deal with the financial mechanics, so that the community can clearly state what benefits it expects and set this out in a constructive manner? These are highly complicated issues, which often require expensive professionals—I stand guilty as charged in that respect. Parishes and town councils do not have those sorts of resources.
It is all very well having a provision whereby the principal authority steps in, but there are still the issues of covering resource implications and achieving a candid representation of the community’s views to take the process forward. Those seem to be sticking points whatever is done. I hope the Minister will be able to throw some light on that.
I thank all noble Lords who have contributed to this debate. As the noble Lord, Lord Greaves, said, neighbourhood planning has been a success since its introduction in 2011. For the first time, communities have been able to prepare plans that have real statutory weight: neighbourhood plans have the same weight in law as the local authority’s local plan, and must be the starting point for decisions on planning applications. As the noble Lord also said, more than 1,800 communities have started neighbourhood planning, representing more than 9 million people, and planning applications are being approved and refused according to neighbourhood plans. The Government made a manifesto commitment to support communities who have embarked on the process and to encourage more to start.
Under Clause 125, the Secretary of State would be able to use regulations to prescribe the circumstances in which local planning authorities must designate the neighbourhood area applied for. In the prescribed circumstances, the authority would no longer need to advertise, and consult on, the proposed neighbourhood planning areas. This will allow communities to start planning more quickly and will significantly reduce the burdens on local authorities.
We have recently set out in our consultation document the two circumstances that we intend to prescribe. The first is where the whole of a parish council area is applied for. This is because a parish council is the only body responsible for neighbourhood planning within their boundary. Some 90% of applications are from parish councils, and 90% of them are applying for the whole of their parish to be designated. In nearly all cases we are aware of, the whole of the parish has been designated, but the amount of time that this has taken has varied hugely, from around six to 19 weeks. Specifying that all applications for the whole of a parish must be designated without delay would therefore remove a significant administrative burden from the system for the majority of local planning authorities.
The second circumstance where we consider a local planning authority must designate the area applied for is where it has failed to come to a decision after existing time periods have expired. These time periods are either 13 or 20 weeks depending on whether the proposed area straddles local authority planning boundaries. But local planning authorities will not be required to amend existing designations—except to enlarge an existing designation of part of a parish to cover the whole parish—and will be given time to consider competing applications to designate all or part of the same area.
I turn now to the amendments tabled by the noble Lord, Lord Greaves, who has expressed concerns that the proposed circumstances which I have described are not set out in the Bill. I would like to reassure the Committee that there are sound reasons why we believe that the detail is best left in regulations. First, we believe that circumstances could change over time as a greater number of areas are designated, and we wish to retain the flexibility to alter the prescribed circumstances if required. A power to do this through secondary legislation allows far greater flexibility. Secondly, we want to allow the opportunity for public consultation on our proposals and we are open to comments on the details.
The noble Lord asked about the proposed timetable for decisions. We are consulting on the following, which we propose would be included in the regulations. There will be five weeks for the local planning authority to decide whether to send a plan to a referendum, 10 weeks from the decision to send a plan to referendum until the date of the referendum, and eight weeks from a successful referendum until the plan is brought into force. Indeed, as the noble Lord acknowledged, these timeframes are shorter than he has proposed in his amendments.
Clause 126 inserts new paragraph 13A into Schedule 4B to the Town and Country Planning Act 1990 and amends Section 61 of that Act, as well as Section 38A of the Planning and Compulsory Purchase Act 2004. Together, these changes will allow the Secretary of State to set the time periods in regulations for key local planning authority decisions at the final stages of the neighbourhood planning process. This will ensure the timely progress of plans and orders that have passed an examination to ensure that they are taken swiftly to the local referendum and brought into force as soon as possible. I have just set out those time periods.
While some authorities are already doing this, there is considerable variation and no indication in regulations of expected performance. We estimate that if areas currently failing to complete regulated stages on time were to meet the maximum of the proposed timescales, on average an area would complete the process 17 weeks earlier. The time periods I have set out will ensure that groups have certainty that their plan or order will progress in a timely manner. They will also ensure that momentum and enthusiasm is maintained as the plan or order moves towards being brought into legal force.
I thank the noble Lord, Lord Greaves, for Amendments 87ZA, 87ZB and 87ZC to set three-month time periods for neighbourhood planning decisions. However, as I will set out, I do not believe that they are appropriate. I can assure the noble Lord that there are sound reasons why the prescribed time periods are set out in regulations and subject to public consultation. First, there is a clear precedent for setting time periods through regulations, such as the current time periods for designating a neighbourhood area. Experience may show that over time it would be sensible for the Government to look again at the prescribed time periods, and regulations will provide much more flexibility.
Secondly, as I have said previously, we want to allow the opportunity for public consultation on our proposals as we believe that local people and planning authorities should have an opportunity to have their say on this important issue as they are neighbourhood planning on a daily basis. All the proposed time periods we are currently consulting on are based on current averages and evidence.
Clause 127 inserts new paragraphs 13B and 13C into Schedule 4B to the Town and Country Planning Act 1990. This gives the Secretary of State the ability to take over a local planning authority’s responsibilities to decide whether to send a neighbourhood plan or order proposal to referendum. I stress that this will apply only in the rare cases when a proposal is blocked by the local planning authority and intervention is requested by the neighbourhood planning group.
I apologise if I repeat myself as I find my place again.
As I have said, this would apply only in rare cases. These cases would be when a local planning authority has failed to decide what action to take in response to the recommendations of the independent examiner or where the authority disagrees with an examiner’s recommendations and wants to modify the plan or order proposal against the wishes of the neighbourhood planning group, unless the modifications are to ensure compliance with EU or human rights obligations, or to correct errors. We anticipate that this power would be used only in exceptional circumstances. We have been very clear that communities and local planning authorities should be working very closely on the neighbourhood plan or order proposal throughout the process. However, we are aware, as the noble Lord suggested, that in a small number of cases there have been disagreements between groups and authorities. There is currently no mechanism to resolve these disagreements. In extreme cases those disagreements have blocked the progress of a proposal by more than a year, even though it is supported by the community and has been approved by an independent examiner. We do not believe that that is an acceptable situation. Regulations would set out the procedure to be followed when a request to intervene is made and the proposals for these are also the subject of public consultation. While this power to intervene would remove some responsibility from the local level, we believe that it is necessary in the rare cases that I have outlined.
Although I fully understand the good intentions behind my noble friend Lord True’s amendment, unfortunately we believe that it would diminish the ability of the Government to meet their manifesto commitment of speeding up and simplifying the neighbourhood planning process. The amendment would unnecessarily restrict and potentially even nullify the proposed power and would mean that some plans or orders could be indefinitely blocked by an authority or amended without the support of the community. However, I can assure my noble friend that we very much support and encourage local planning authorities such as Richmond-upon-Thames, which works proactively with communities to prepare other types of community plans. Indeed I congratulate Richmond-upon-Thames on taking such a comprehensive approach to delivering community-led planning through its series of village plans.
Neighbourhood plans are a powerful tool, because they become part of the statutory development plan, which is the starting point for planning decisions. They are subject to two consultations and must pass an independent examination and a local referendum before becoming part of the development plan. We believe that every community that passes the independent examination stage should have the right to request that the Secretary of State intervenes if that plan is blocked by a local planning authority, or amended in a way that the examiner did not recommend. It would not be right to restrict this power where an authority has adopted in the past, or says it will be adopting in the future, other kinds of supplementary planning document, and there is no guarantee that other types of documents are up to date or have the same level of genuine support as a neighbourhood plan.
We have learned from the experience of communities undertaking neighbourhood planning and believe that the proposed new power in the Bill is already limited to the right set of very specific circumstances. Indeed, the Government have further explained, in our recently published consultation document, that the Secretary of State will, in considering a request, consider the plan or order plans positively for local development needs, taking account of the latest evidence. Let me reassure my noble friend that the proposed power does not affect a local planning authority’s ability to progress other types of planning document where it is already working with its communities. I also assure the noble Lord that the proposed power does not enable the Secretary of State to intervene in any other stage of the neighbourhood planning process. For these reasons, I hope that noble Lords will withdraw or not move their amendments, and ask that Clauses 125, 126 and 127 stand part of the Bill.