House Of Commons
Friday 5th May 1978
The House met at Eleven o'clock
Prayers
[Mr. SPEAKER in the Chair]
Statutory Instruments, &C
Ordered,
That the draft Social Security (Contributions) Amendment (No. 2) Regulations 1978 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Foot.]
Orders Of The Day
Estate Agents Bill
As amended ( in the Standing Committee) considered.
Clause 1
Estate Agency Work
11.6 a.m.
I beg to move Amendment No. 1, in page 1, line 12, leave out from "property" to end of line 19.
With this we may take the following amendments: No. 2, in page 2, leave out lines 1 to 4.
No. 4, in line 14, leave out subsection (3). No. 5, in page 2, leave out lines 16 and 17. No. 6, in page 2, leave out lines 25 to 29.The Bill has all the defects of a thoroughly fussy and offensive measure. I do not believe that it is right that we should lay legislation of this sort upon the citizens of Britain. It is to seek to ameliorate the Bill's effect that I table these and other amendments. If we are not careful, it will be impossible to do any business of the sort to which the Bill refers.
I much object to the structure of the Bill. The first few clauses define a group of persons and there are the ominous words "things done". Those words occur in many places in Clause 1. It is not clear what the offence is until we get towards the end of the Bill. First, we isolate. the victims, secondly, we refer darkly to all the things that they may have done or will do, and thirdly, we come to some glimmering of what these dreadful things are towards the end of the Bill. It seems that we have to tackle the Bill the wrong way round. We should first consider what the evil is and then, perhaps, consider who those are who may be committing evil rather than taking the opposite approach that is adopted by the Bill. It inhibits our debates that we have to deal with these matters in the way presented by the Bill. In coming to Amendment No. 1 we have to consider what class of person it is who may be guilty of these heinous crimes. We are defining them without having considered the crimes. I notice in Clause 1(1)(c) that there is included in the definition of estate agents a person who effectsThat statement could mean anything. If I give a couple of friends a drink one evening and in the course of casual conversation one says "I wish to dispose of my house" and the other says "I wish to acquire a house. May I go to see it?" I have effected an introduction between those two persons, albeit unwittingly and albeit without profit or reward. It seems that that is not the right way to define estate agents. Nowhere is there the qualification that the person who effects these introductions does so for reward or profit. He is merely put in the position of being the innocent victim of the Bill by a chance introduction or meeting. Within families this sort of thing happens a great deal. It may be that father reaches retirement age and decides to give up his house because his children have grown up and left home. He says to one of his sons "Why don't I move into the bungalow in the garden and you, with the large family, might like to take over my house?" Transactions take place between the father and the son at arm's length. But still someone has introduced those persons to each other and somewhere involved in the family will be someone classified as an estate agent for the purposes of this Bill. That seems to be quite wrong. We have this strange expression at the end of subsection (1)(c):"the introduction to that person of a third person who wishes to acquire or, as the case may be, dispose of an interest in residential property".
I ask the sponsor what that phrase means. It is so widely drawn that it could mean almost anything. Which things are done after the effecting of an introduction which necessarily bring someone within the scope of the Bill? Such loose drafting is quite wrong. In any case, all these words are superfluous because we can perfectly easily define a person in business as an estate agent without including people who make introductions. If we are to include such people, we ought to specify introductions made for profit, as a trade, and not chance introductions. The hon. Member for Southampton, Test (Mr. Gould) would be wise to accept this amendment without hesitation. He owes the House an explanation as to how these words ever got into the Bill. Amendment No. 4 seeks to leave out subsection (3) of Clause 1. Here we have an exemption from the definition of estate agency work for any public or quasi-public authority involved in housing. These are such things as local authorities, the Housing Corporation, the Northern Ireland Housing Executive or any registered housing association. I want to register a strong objection that there should be a separate law for the private sector and that it should be treated as if its motives were always bad, as if it could not be trusted to do anything at all but must be supervised by detailed and fussy legislation of this sort. The suggestion is that anyone who can put up a bureaucratic coat of arms over his door is automatically totally well behaved and runs no chance of committing any of the offences set out in the Bill. This concept is creeping into our housing legislation in many ways. It is an extraordinary thing that the housing associations are not subject to the Rent Acts. It will be a great comfort to an evicted tenant to know that he has been evicted because his landlord was a public landlord. Presumably when such a land- lord evicts a person or puts up the rent, in Rachman-like fashion, he behaves in the national interest. If a private landlord does something like that, he is not so behaving. In dealing with local authorities one often comes across instances of them using their powers to put up rents, to evict, and to discipline their tenants in a way which would be impossible for a private landlord under the present law governing rented accommodation. In this Bill we have the astonishing suggestion that local authorities and housing associations should be exempt from its provisions. Whatever is the evil which the Bill seeks to stop I shall look forward at some stage to hearing why it is that such evil cannot be committed by State authorities, who can be excepted from this legislation. I do not know when we shall reach that stage in our proceedings on this Bill. It may not be today but in a week or two. It would be quite wrong for me to seek to explore this point now. The principle involved here is utterly wrong. If there are evils against which the Bill seeks to guard, if there are wrongdoings from which it seeks to protect people, they are just as likely to be committed by these State bodies as by any other. It is an indictment of the Bill that for some reason these offences are so difficult to define and so incapable of being coped with by public authorities of this sort that they have to be excepted from the Bill's provisions. It seems that the target of the Bill is rather unreal. If it was a real target it would be necessary to include within its scope the State authorities of this sort. It clearly is not a real target because the hon. Gentleman seeks to exempt these authorities. That seems to be a major defect in the Bill and I very much hope that my hon. Friends will help me to remove this subsection. I do not seek in any way to extend the scope of the Bill. I say merely that it is intolerable that there should be one law for the private sector and another for the public sector. If there is an attempt to deal with an evil it should apply to all those who are in this business. Amendment No. 6 seeks to leave out Clause 1(4)(a) and deals with the question of solicitors. Here I declare a remote interest, which I think has no bear- ing on what I have to say, in that I am a director of a life assurance company which has done some conveyancing work. It could be represented that there was a conflict of interest between my commercial activities and those of solicitors. I do not believe that that is relevant to the argument I wish to put forward. My argument is that solicitors should not be exempted from the provisions of the Bill just because they are solicitors. If they engage in the trade of estate agency, and many solicitors do, they should be included because presumably they are just as liable to pursue the malpractices complained of as anyone else. It is possible that a solicitor will be the main person involved in effecting introductions, in accordance with my first amendment. It seems strange that just because they are solicitors they should be exempted from the operation of the Bill. I shall be interested to hear from the hon. Gentleman the reason for this provision. Is it that solicitors have come to him and said that they would not allow the further passage of the Bill if they were included within its provisions? Has he been subjected to lobbying? Has there been some pressure of this sort put upon him? Why is it thought that because solicitors are solicitors they should be exempted? I should have thought that a high proportion of the estate agency business carried out in this country was carried out by solicitors, either acting in their capacity as solicitors or in a secondary capacity, doing business on the side, perfectly legally. There is no reason why solicitors should not be employees of estate agents. A number of estate agents employ solicitors to deal with conveyancing and legal problems which arise in the course of business and this trend will grow. I do not see why we should make this specific exception in favour of solicitors. I am trying to tidy up the categories of people to which the legislation is to apply. I would have found it much easier if we had been able to discuss what it was they were doing wrong before deciding that they must not do it. The Bill is drafted in a most peculiar way. I hope that my hon. Friends will support me in these three points that I have picked at random. I note that my hon. Friends the Members for Faversham (Mr. Moate) and Romford (Mr. Neubert) have two further amendments included in this group. They probably have found two equally sound, if not sounder, points. It seems a pity that at this stage in the Bill we need to ask these fundamental questions. I should have thought that the Bill could be drafted in such a form that it would be unnecessary to raise these points at this time. I find much to complain of in the Bill, and I look forward to going through every clause with great care. It seems to me to be necessary to do that in a Bill of this sort."and also to things done by him after affecting such an introduction for the purpose of securing the disposal or, as th case may be, the acquisition of that interest".
I should like to refer to the other amendments grouped with Amendment No. 1. Two of them have been tabled in my name. But before doing so I should like to follow up some of the remarks of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley).
I agree with my hon. Friend that this is the moment at which, quite appropriately, to consider some of the fundamentals of the Bill. The group of amendments raises some fundamental questions. I am not sure that I go the whole way with my hon. Friend in describing the Bill as a totally fussy and unnecessary piece of legislation. Although it would have been desirable to have the evils specified, and to have had examples before us, so that we could consider how best to deal with them, nevertheless I think that there is a prima facie case for dealing with certain offences about which we have a general understanding. There is a general feeling—not backed up by evidence in the debates—that there have been offences committed by people practising estate agency work, particularly in our larger city areas. People have suffered from lost deposits and from what many of us would call fraudulent activity. There is a prima facie case for dealing with that sort of activity, but the Bill goes much further than dealing with those relatively specific offences. There was an opportunity in Committee for the promoter of the Bill to remove some of the unnecessary parts of it, but he did not do so. We are faced, therefore, with a rather mixed up Bill which seeks to do a variety of things in a very mixed up sort of way. It is a curate's egg of a Bill: it is good in parts and bad in parts. When we have to take the curate's egg in one go, it provides a rather indigestible and basically undesirable meal. I am very worried, frankly, about the form in which it has come to the House on Report. The oddity is that we are dealing with what is called an Estate Agents Bill, but there is no definition of estate agents in the Bill. The Bill does not seek to deal with all estate agency work but only residential work, and it does not seek to cover all persons dealing with estate agency.I do not want to interrupt the hon. Member for Faversham (Mr. Moate) unnecessarily, but his remarks were beginning to sound very much like a speech on Second Reading. Will he deal with the amendments, of which we have plenty to occupy our time today?
I was just at that moment, Mr. Speaker, about to refer to the strange principle with which we are dealing in this group of amendments—the specific exclusion of a number of people who are dealing with estate agency work. My earlier remarks were intended to preface that point.
We are faced, as I was saying, with an odd Bill, and the amendments which have been tabled by my hon. Friend and myself, and by other hon. Members, might go some way towards tidying it up. At least they give the promoter an opportunity to explain the logic of some of the exclusions. My hon. Friend's amendment seeks to delete the unnecessary blanket appendage to the description of the business activities of people transacting estate agency work. The words that he seeks to delete include the wordsWhy do we need those words? At the beginning of the clause we have the statement that"and also to things done by him after effecting such an introduction for the purpose of securing the disposal or, as the case may be, the acquisition of that interest."
"This Act has effect with respect to things done by any person—
shall not be included. Why should that be so? Why should an insurance broker, if he engages in estate agency work, not be included within the terms and conditions of the Bill? We have had no explanation of this during any of the earlier proceedings. When we examine it, it is seen to be rather an odd principle. It is even more odd when we recall that in Committee we had a discussion about the relevance of the provision to bankers. There had been some representations that bankers and bank managers felt that it was unfair that their activities in estate agency, to the extent that they engaged in them, should be included in the Bill. They accepted that they sometimes make introductions and assist clients with the buying or selling of properties. It could happen on a fairly casual basis, and there might or might not be remuneration in it, but essentially they were to be included. When we examined the matter in Committee, the hon. Member for Enfield, North (Mr. Davies) said that if these people were indeed engaging in the buying and selling of houses, and assisting in such transactions, they should be covered by the Bill, and on that basis he refused to consider any amendments on the point. He said—perhaps with a certain logic—that if a banker engages in estate agency work, he should come within the terms of the Bill. Let us apply that logic to insurance brokers. I do not know whether insurance brokers engage in estate agency work. I suspect that it is a fairly modest activity if it exists at all, at the present time but that is not the point. We are laying down statute law and must provide for these possibilities. We must also provide for the possibility that once the rules are tightened up, other people will seek loopholes. If one of those loopholes happens to be insurance broking, clearly that is a matter for consideration. Why, therefore, do we have this exclusion? Probably very little estate agency work is done by insurance brokers, but it could happen."in the course of insurance brokerage by a person who is for the time being registered under section 2, or enrolled under section 4, of the Insurance Brokers (Registration) Act 1977".
My hon. Friend is on a very sound point here. It is perfectly possible for anyone who wishes to get round the provisions of the Bill to make himself into any of the things which are exempt. He can make himself into a solicitor without much trouble. He can certainly make himself into a housing association without any trouble. Both would be ways of getting round the Bill. This shows how defective in its drafting the Bill is at the moment.
I agree with my hon. Friend that it is very defectively drafted. Much of this flows from the confusion of principle of philosophy that is fundamental to the Bill.
Frankly, I think that my hon. Friend has missed some of the worst developments in legislation in the last year or two. The fussy legislation to which he referred has moved on, and it is now not that easy to set up as an insurance broker. That process has been regulated and restricted under the Insurance Brokers (Registration) Act 1977. I have glanced again at the Act, and there is no reason why estate agency work done by insurance brokers should not be included within the terms of the Estate Agents Bill.11.30 a.m.
Will my hon. Friend explain why under the Insurance Brokers (Registration) Act, as I understand it, a person cannot call himself an insurance broker unless he comes within the provisions of that Act and complies with the regulations controlling his conduct, and yet, as I understand it, under this Bill a person can still call himself an estate agent but because by definition he is not included automatically in the Bill unless he does estate agency work, the mere fact that he calls his business that of an estate agent will not necessarily bring him within the Bill's provisions?
My hon. Friend has put his finger on a difficulty. The difference, of course, is that the Insurance Brokers (Regisration) Act was quite clear in its intent. It was restrictive, it sought registration, and it was clear in its intention. It was totally wrong, but it was clear. This Bill is not clear in its intention. It is wrong in parts and totally muddled.
When my hon. Friend said that the Act was wrong and that it sought registration, did he mean that he did not think that registration was the right answer? If one considers the architectural profession, architects do not have to be members of the Royal Institute of British Architects but they may not call themselves architects and practise as architects unless they are registered with the United Kingdom Register of Architects. Would it not be better if we had a similar situation with regard to estate agents so that a person could not call himself an estate agent unless he had been registered with a central registry even though he was a member of the Royal Institution, for example?
I must be careful to relate these matters to the exclusion of insurance brokers from the definition of "estate agency". But I think that my hon. Friend's intervention is germane to the question of who we should allow to practice estate agency work. The analogy which I prefer to draw is with accountants. Anyone may call himself an accountant and practise as an accountant, but he may not call himself a chartered accountant. That is the less restrictive approach.
We could have a licensing provision. By definition, presumably, that would exclude insurance brokers who had not applied for licences and met the necessary conditions. However, the hon. Member for Enfield, North has made it clear time and time again that his Bill it not intended to license estate agents. He describes it as a consumer protection measure, and he has made the point that he is not seeking to control entry into the estate agency profession. However, that is a matter for a later debate. If the hon. Member for Enfield, North insists that bankers should be controlled when they engage in property transactions of this kind, why should not insurance brokers be controlled? I can only conclude that he believes that registration under the Insurance Brokers (Registration) Act would provide the necessary protection to the public. But that requires some examination. As I say, I suspect that very few insurance brokers engage in estate agency work. Therefore, any code of conduct drawn up by the British Insurance Brokers Association would not include estate agency work. I suspect that it would not even exclude estate agency work because probably it has never been thought of. Further, I suspect that any compensation arrangements and there are provisions for compensation arrangements in the Insurance Brokers (Registration) Act—would not apply to losses incurred to members of the public through estate agency work. So I suspect that there is no compensation provision in the Insurance Brokers (Registration) Act for estate agency activities, and it would be very surprising if there were. The hon. Member for Enfield, North may say that there is professional indemnity cover as a compulsory feature of the registration of insurance brokers. But that would not apply to estate agency work, because I do not believe that any insurer on a professional indemnity policy would regard estate agency activities as being within the terms and conditions of normal professional indemnity insurance for insurance brokers. So why are insurance brokers excluded? The oddity is that we do not know when insurance brokers are to be registered, so that if by chance this Bill became an Act before registration became effective, there would be a definite gap. That would need some explaining. But other people can still carry on in insurance work, though they cannot call themselves brokers. They can be insurance agents or insurance consultants. It is odd that the hon. Member for Enfield, North is saying that registered insurance brokers can be estate agents but that insurance consultants and insurance agents cannot be estate agents. This is a most confused and illogical state of affairs, and at the very least we are owed a considerable explanation from the hon. Member if we are to understand why we have this exclusion. I suppose that I should have declared an interest, since I am an insurance broker. However, I do not see my interest being affected one way or the other by the inclusion or exclusion of this clause. We are seeking tidiness in the legislation. It is in a bit of a mess, and the inclusion of this provision makes it even messier. That is the case, which needs some answer, with regard to Amendment No. 2. I turn now to the other fundamentally important group of amendments relating to this other quite wrongheaded exclusion of the work of local authorities, the Housing Corporation, housing associations and the Northern Ireland Housing Executive. Why are we seeking to give this advantage to local authorities if they decide to go into estate agency work? It would be an advantage. It is fair to say that many estate agency bodies have welcomed the broad terms of this Bill. However, I think that they would be rather upset if this measure went on the statute book and, in two or three years, we found that for example the Greater London Council was more Labour controlled than it is today.That is most unlikely.
I hope that my hon. Friend is right. I think that it was the hon. Member for Battersea, South (Mr. Perry) who suggested in Committee that this provision was intended to meet a situation which might arise in 50 years. However, we have to provide for the possibility. I have not seen the document, but I was told that in its manifesto last year the Greater London Labour Party claimed it intended, if it won control of the GLC, to go into the buying and selling of houses. It appeared as a manifesto commitment. I think that my hon. Friend the Member for Hove (Mr. Sainsbury) will agree that, unlikely though a Labour victory might be in the foreseeable future, we do not want to put legislation on the statute book giving it an opportunity to implement more Socialism in its activities and put private enterprise at an even greater disadvantage. That is what this clause would do as it is worded at present, because local authorities would be at a considerable advantage.
Even without Clause 21, which seeks to regulate, control and lay down minimum standards, the Bill requires individual estate agents to a spend a great deal of money. They will have to take out bonds. They will have to spend more money on accountancy procedures, and so on. But that provision will not apply to local authorities. So immediately every council, including the GLC, will have the advantage of not having to spend all this money to set up all this machinery. Why should not the local authorities be covered? Are they such saints that they do not commit any misdemeanours, or is it simply based on the presumption that if they do anything wrong the ratepayer will pick up the bill? That seems to be the underlying philosophy. Apparently the idea is that the public purse will do for local authorities what individual estate agents have to do from their own resources. That is fundamentally wrong. That is the case against the local authorities, and I feel that that is one exclusion which should be deleted from the clause. I am equally concerned about the activities of the Housing Corporation and the housing associations. Very often we find housing associations becoming very ambitious. The money which is now going into the Housing Corporation is on a very considerable scale. I understand that about £400 million is going into the acquisition or building of property throughout the United Kingdom. The Housing Corporation is becoming a very powerful organisation.Is my hon. Friend aware that there is legislation awaiting further consideration by the House which will enable the Housing Corporation to guarantee loans up to a total of £500 million? This gives another indication of the scale of the operations.
That emphasises the growing strength of the Housing Corporation. That might or might not be a matter to be applauded. However, in housing terms the Housing Corporation is gaining a very powerful place in British society. It could be that it might decide to buy and sell property. It might have such a substantial interest in a certain locality that it will buy and sell. Estate agents locally might be rather upset about the fact that the local housing association would be able to do that without any constraints upon it at all. That is another unfair advantage of the public sector over the private sector. How can that be justified? I do not believe that it can be.
I hope that the promoter of the Bill, the hon. Member for Enfield, North, will accept this point. I am not sure whether it is his Bill or the Minister's Bill because so much of this Friday legislation is Government legislation in a pretty thin disguise. I hope that whoever it is who is responsible for the Bill will accept that these exclusions are unreasonable. Before leaving the question of public authorities I should point out that we have also had a number of private Bills—Socialist measures—from local authorities seeking power to deal in estate agency activity. That means that the threat is real. This clause has been drafted to allow public authorities to deal in estate agency work. That is totally unjustified, and I hope that the hon. Member will agree to remove it from the Bill. There is one other fundamentally important group that has been excluded from the provisions of the Bill—solicitors. We had some exchanges in Committee about the principle of the inclusion or exclusion of solicitors. We trespass here on the fundamental principles of the legislation. But it will be seen by the outside world that estate agents will be constrained in the way they conduct their business, while solicitors will be able to carry on estate agency work without any constraints. No doubt the hon. Member will argue, as he has done before, that practising solicitors are covered by compensation funds and other rules. That is all right as far as it goes. I suggest that this legislation goes much further than that. If, at a later stage, he plans to control entry into the profession, to lay down minimum standards of experience and qualifications, that will not apply to solicitors. Despite this they will be free to carry on estate agency work. Also we must consider the powers of the Director General of Fair Trading which go beyond the question of bonding and insurance, and even beyond accountancy questions. He has the power to prevent what he would describe as "undesirable activities" generally. But would a solicitor, who is excluded from the provisions of the Bill be subject to these powers? All through our discussions on this matter we have been talking about only a few individuals, and therefore we have to dream up examples of rogues and rascals. Thus, we must dream up the example of a rogue solicitor in a particular area who decides to go into the property business in a big way. Can the Director General, under this Bill, bring any action against that man and prevent him from dealing in estate agency, even if that man had got his bond and has a separate clients' account for all deposit moneys received? I submit that the exclusion of solicitors means that that man is free to carry on estate agency work. That is not fair.Suppose the rogue solicitor had been convicted of an offence involving fraud, dishonesty, violence or sex or race discrimination in the course of estate agency work, presumably he could carry on as if none of those heinous crimes had been committed?
I suspect that the answer given by the promoter of the Bill would be that the professional requirements placed upon the solicitor by the Law Society would catch up with him. But would these be as effective, and would they bite in the same way as the provisions of this Bill? I do not know. Would the Law Society act as quickly as the Director General, if a solicitor committed a misdemeanour related to sex or race discrimination in the course of estate agency work? The fact remains that he would be excluded from the Bill's provisions in that respect, and I cannot see any justice in that.
11.45 a.m. Indeed, as evidence that the whole of the estate agency world feels that this is wrong, we have had a whole series of representations. I do not necessarily agree with everything that we have heard from all the institutions, but in this respect there can be no denying their general views. We have heard from the Incorpor- ated Society of Valuers and Auctioneers which says:That is the view of one very influential and important society. Then we have the view of the Corporation of Estate Agents which says:"The proposed exemption for solicitors is unjustified and should be deleted on the grounds that the current rules of professional practice of those concerned, as prescribed by the Law Society, do not afford the degree of protection which is available in terms of the draft Bill."
That is another important and influential body which supports our case. Then we have the view of the Royal Institution of Chartered Surveyors which says:"it is manifestly unfair to exempt privileged groups from the application of the law. Solicitors and local authorities are, or frequently can be, in competition with estate agents for business. They should be subject to the same controls as estate agents".
The Institution gives its reasons. These are just a few of the views of those bodies that endorse our claim that solicitors should be included in the Bill's provisions. There are others as well. I have no wish to apply more rules and regulations to other people who are engaged peripherally in activities that are not fundamental to their normal business. We do not want to put more bureaucratic conditions on the professions—on bankers, solicitors and others. But we must be fair about it. The public are entitled to be assured that estate agency work generally is covered, no matter who transacts it. If the promoter of the Bill does not intend to include a definition of estate agents, if he does not intend to license and control estate agents—and I go along with him in that—at least he should satisfy the public that estate agency work is covered generally. If he would stick to that proposition, without all these exclusions, he would have a better Act on the statute book. All he need do is create certain offences which, if committed by any individual practising estate agency work, are subject to action in the court. If he will not do that he will find himself with a mix up between licensing and non-licensing, between some sorts of estate agency work and not others. I feel very strongly that all these amendments should be accepted by the hon. Member for Enfield, North. At least we look forward to hearing his explanations."It is the Institution's recommendation that Clause 1(4)(a) should be deleted."
I rise to speak to the amendments which relate specifically to the way in which the Bill will apply to the industry upon which it seeks to impose controls. I do so against the general background of very strong feelings that I, many of my hon. Friends and many people outside have that the House should not seek to legislate in specific areas and enter new fields of legislation until there has been the fullest possible consultation.
It is a fact that this place still produces too many bad laws. We have far too much legislation. Therefore we must be very rigorous in scrutinising any new area of proposed law. This is one such area.To save my repeating the point, will my hon. Friend not agree that, however well intentioned we may be, we produce too much legislation? It is rather difficult for hon. Members when we have 37 pages—as in this case—that are meant to deal with simple matters. When Bills are too long and the actual text turns into so many pages it is much more difficult to see how the legislation will impinge on people's lives.
I completely agree with my hon. Friend's comments. I shall want to return to that matter, because much of the Bill seeks to enact legislation by cross-reference. Indeed, many measures are referred to in the Bill which one has to have to hand when trying to understand what the Bill seeks to do. Surely this is one of the greatest hallmarks of bad legislation. One has in mind in particular the Rent Acts, because it is necessary to understand and comprehend a whole series of Acts before one can appreciate what the legislation is trying to achieve.
I was about to say that I refer to this matter with some trepidation because in the last Session I proposed a Private Member's Bill which became known as the minibus Act. I seized on an area there where the law had changed and suddenly many voluntary organisations found themselves subject to an area of law to which they had not previously been subject, and I took them out of it. This Bill seeks to bring into the area of law a whole new range of people—namely, those doing estate agency work. Because of that, it is important to get the definitions right. I agree with my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) that one of the great defects in the Bill is that there is no definition of an estate agent. Indeed, that is what the amendment is about. Someone can still set up in business with a sign outside saying "Estate Agent", yet escape all the provisions of the Bill. The definition of those who are included is not as an estate agent but as doing estate agency work. The trouble in taking that kind of definition is that there is in the public mind a reputation established by estate agents, and there is some dispute as to what that means. The Bill seeks to set out a definition. But I can see a whole area of work—I declare my interest as a solicitor—which the Bill intends to encompass but does not encompass because of the difficulties of definition. I should be drawn much closer to believing in and supporting the Bill were it to name, by reference to the words "estate agent", the area of activity which it seeks to encompass. Amendment No. 1 seeks to delete paragraph (c) and the last part of Clause 1. I should like, first, to speak to the special circumstances of that amendment. The Bill seeks merely to enter into the arena of private transactions between members of the public—I shall come back to that when I deal with the other amendments—and to exclude certain other bodies, local authorities and professions. The Bill is restrictedWe then come to a form of words about which I should like some explanation from the promoter of the Bill, because, as soon as I see "things" in a Bill, it immediately crosses my mind that the parliamentary draftsman was at a very low ebb when he tried to pick out words to put in the Bill. To say "things done" is reaching the depths of definition. When, as a solicitor, I see "things" in a Bill, I am immediately put on inquiry as to what it seeks to do. I am not satisfied with the words which follow, because the clause goes on:"to things done by any person … for the purpose of, or with a view to, effecting the introduction to that person of a third peson who wishes to acquire or, as the case may be, dispose of an interest in residential property".
It is not clear why those words are put in. Referring back to the first line, again there is the dreadful phrase:"and also to things done by him after effecting such an introduction for the purpose of securing the disposal or, as the case may be, the acquisition of that interest."
One immediately realises that there has been a crisis of definition in the Bill, which my hon. Friend the Member for Cirencester and Tewkesbury has highlighted by this amendment."This Act has effect with respect to things done by any person".
My hon. Friend is on to an extremely good point. But, bearing in mind that on Sundays we are concerned with things undone as well as with things done, should not the Bill say "with respect to things done or things left undone?".
The act of commission probably pales into insignificance in this area as does the act of omission. My hon. Friend is absolutely right. Consumers expect things to be done, but often they are not done. I think that perhaps we should be addressing ourselves more to the consumer area than to any other area. We should view this Bill as a consumer measure. Indeed, in Committee, the promoter of the Bill, in response to an extremely constructive amendment tabled by my hon. Friend the Member for Faversham (Mr. Moate), said:
It is clear that this is a consumer protection measure. Therefore, I turn my mind—and I am inclined to support the amendment because of this—to other Acts of Parliament which seek to protect the consumer, in particular the Consumer Credit Act 1974. I believe that many of the powers which the Bill now seeks to enact and to give to the Minister and to the Director General of Fair Trading are already contained in that Act. I have carefully gone through the reports of the Committee stage and the Act itself. I submit that, by Orders in Council, it could easily be extended to cover the area which the Bill seeks to cover by utilising well-established legislation. The Minister is shaking his head. Of course, he knows a tremendous amount about this matter, because he has had briefs, but if he could enlighten me—"In response to his amendment—which I understand to be a probing amendment about the extent of the Bill—I must emphasise that this is not an estate agency control or licensing measure, but a consumer protection measure, concerned with the activity of the purchase and selling of property."—[Official Report, Standing Committee C, 26th April 1978; c. 5.]
I know a good deal about the Consumer Credit Act, because I have to administer it.
The hon. Gentleman very carefully avoided answering my question, as Ministers do from time to time. I hope that someone will be able to answer it later. The Minister said that he understood the Consumer Credit Act. I congratulate him, because he must be one of the few people in the country who does understand it.
Not for long periods of time.
The hon. Gentleman must not be modest. If he does understand it—perhaps there are people who will suddenly pass notes to him to explain this matter—will he explain where in the Act there is a provision which restricts him from exercising control over estate agents who receive money as deposit and, therefore, credit from their clients?
The Consumer Act controls those who provide and introduce credit. It does not apply the controls to those who receive the credit. That is the reason.
The Consumer Credit Act refers specifically to transactions. It does not exclude the deposit of credit. It specifically refers to the provision of credit, but it does not exclude the deposit of credit.
If the hon. Member wished to pursue that line he would have to license everyone who wanted to buy a house and had to pay a deposit as someone who provided credit to the estate agent. That is a ludicrous proposition.
12 noon.
To disregard something because it is, in the Government's view, a ludicrous proposition would be to exclude most of their own legislation. There is an area of this Act which could refer specifically to estate agents who receive deposits. The Minister's point is not well taken. I am willing to enter into a dialogue with him on this subject, reluctant as he might be to enter into discussions on this complex area of legilation.
It is right that we should exhaust all possibilities before a major Bill is introduced to restrict the application of the Act. That applies particularly to this amendment. It would not be necessary to restrict the application of the Act were it not for the fact that already so much law could apply. I understand that the part which my hon. Friend seeks to delete by the amendment would mean that Clause 1 would have a wide application, but no wider than it would be at the moment. After the amendment had been accepted, Clause 1 would read"This Act has effect with respect to things done by any person—
why does one have to add the words at the end of the clause? The promoter might say that paragraphs (a), (b) and (c) restrict the words in line 1 and that therefore it is necessary to come back to them again, further to extend them. But that is not right because the Bill has effect with respect to"things done by any person",
If one takes out paragraph (c), which is what my hon. Friend wishes to do, one does not take out the essence of the definition. This is what is complicating Clause 1. It would be helpful if the promoter explained his reasoning. I understand that the whole purpose of Clause 1, and, indeed, of the Bill, is to protect the consumer from those estate agents from whom he needs protection because some offence has been committed or is proposed. If that is so, and deposits which have been left with an estate agent have been retained by him contrary to the law, there are other recourses already open to that consumer. One of my constituents experienced a case such as this. It did involve not an estate agent but someone called an insurance credit and mortgage broker, who has now changed his name to a credit and mortgage broker and therefore does not come within insurance broker legislation. My constituent had left a deposit of £50 with the firm. He came to me and I immediately went, not just to the Minister—although that would have been enough—but to the Director General of Fair Trading. He instituted an inquiry and caused the return of that deposit. We are dealing with a fringe activity. The profession of estate agency in this country has not needed control. It conducts its affairs properly, above the law and directly in the interests of the consumer. It protects the consumer. I shall return to a slight addendum to that later. The Bill seeks to impose on the profession a discipline which it already accepts and for which there is no need. Adequate legislation, adequate penalties and adequate procedures already exist for controlling the recreant person who often does not call himself an estate agent but whose only objective is to take deposits. I can now see clearly the logic behind the amendment. I return to the question of consumer protection. If this amendment were passed, it would enable us, as further amendments show, to extend the Bill to an area where it is probably needed. But we should not do that without further consultation."has effect, to things done by any person".
We are considering a group of amendments. Is my hon. Friend referring to all of them, some of them, or one of them?
I am still referring to Amendment No. 1. I have yet to deal with Amendments Nos. 2, 4, 5 and 6.
The consumer needs protection against gazumping. Such protection might be provided if the amendment were passed. Already there are signs that estate agents are faced with an impossible situation which is not of their own making but a result of inadequate Government policies. Too many people are chasing too few houses as a direct result of the Government's land legislation. The supply of land has been restricted and many people are trying to buy their first home. They find that they put in an offer to an individual and then that individual does not honour what they believe to be a perfectly good contract. The contract is imperfect under Section 46(1) of the Law of Property Act 1925, because there is no memorandum in writing. This type of gazumping is a growing evil. Surely the public need protection against it. There is no adequate protection at present. If Amendment No. 1 were passed, one would be able to consider the matter. But we should not do this now. What is wrong with the Bill is that it introduces new law without adequate consultation. I received a letter this morning from an estate agent in my constituency. He said that he could see that parts of the Bill had merit, but he found, as I do, that the provisions are to be found in other Acts and that therefore they are unnecessary. He complained about the lack of consultation. He said that until he heard about it in the Press recently he knew nothing about it. Obviously he has not been paying full attention to the Press because reports appeared on Second Reading and when the Bill was introduced. The estate agent said that he had not realised that there was to be such a Bill. No meetings had been held in his area to discuss it. He felt that there had been inadequate consultation. From the experience that I gained from the Private Member's Bill which I piloted through the House, I know that consultation is onerous, expensive and difficult.Is my hon. Friend aware that the promoter of the Bill has had no consultations with any of the professional bodies concerned?
I ask the promoter of the Bill to intervene. This is such an important matter that I should like to address myself to it. Perhaps the hon. Member would like to tell me what consultations he has had.
I could scarcely resist such a welcome invitation. It is hardly possible for me to have consulted every estate agent in the country, and I have no doubt that Conservative Members have estate agent constituents who feel that they have not been directly consulted. But that is in the nature of this kind of exercise when a large group of people is involved. I can assure the hon. Member, however, that the three major national bodies concerned with estate agency have been involved in close consultation. Each of them has separately written to all hon. Members indicating not only the degree of consultation but support for the broad principles of the Bill. I think I can therefore reassure the hon. Member on that cardinal point.
It is indeed cardinal. As I understand what the hon. Member said, however, he has not had sufficient time to engage in the sort of consultations that every promoter of a Bill should engage in. The aim must be to ensure that the professional bodies are not only notified but are notified in time so that they may then engage in consultations with the profession. There is no doubt that this Bill sprang out of the air for estate agents and they have not had time to consult, particularly about the very important Clause 1.
The hon. Member has not answered that point. He may have consulted the professional bodies, but I presume that could not have happened more than a comparatively short time ago, certainly after the beginning of the Session. Since the Bill involves such a complex area of law and seeks to break new ground, I should like to be reassured by the hon. Member that he has had consultation particularly about Clause 1 which the amendment seeks to restrict. Perhaps consultations on the clause would have caused him to realise that the definition, which I have described as a crisis of definition, would have enabled him to deal with the point far more adequately than he has.Is my hon. Friend aware that, although consultations have taken place, it appears that the Royal Institute of Chartered Surveyors and the Incorporated Society of Valuers and Auctioneers, which represent a most important part of the profession, have not been consulted?
I hope that the hon. Member for Enfield, North (Mr. Davies) will reassure us on that aspect. He said that three professional bodies had been consulted, but he did not name them. It would greatly help us if we could know which they were before we decided on the amendment. We could then decide whether the necessary consultations had been held.
I described this situation as a crisis of definition. It is vital when one is introducing a Bill to cover a new area of law that one should know all the facts well in advance in order to be able to deal with the points that arise. Clause 1 determines the scope of the Bill, which is why it is so crucially imporant.I am not anxious to prolong the hon. Member's dissertation but may I make a suggestion? If the definition were so condensed as to make the provision for disposal of any interest in land as defined by the Law of Property Act 1925, would that not at any rate mitigate, if not eliminate, the crisis of definition which seems to be exciting him so much?
I am most grateful for the hon. Member's support in seeking to promote the amendment, but for all the wrong reasons.
Would not the sensible proposition that has just been advanced drive a coach and horses through Clause 1, which is the point made by my hon. Friend?
That is correct. I am most grateful to hon. Members for setting out so clearly the panorama behind this debate. When one is dealing with a new measure of this type, it is important to know exactly what its effect will be. The Bill will move on to another place, and that is one of the factors that gives me confidence. The scope and definition set out in Clause 1 may well receive greater scrutiny there. I hope that our debate today will enable those outside who have a particular view about Clause 1 to react and to make their views known. It is most important that we should take them into account.
I turn now to the question of solicitors. Being one myself, I notice that one of the least publicised facts about the profession is the code of practice under which it operates. I do not think that there is a more restrictive code, or one more calculated to produce the best for the consumer. Therefore, I regret to say that I have to disagree with my hon. Friend about the inclusion of solicitors in the Bill. My reasoning iswholly—Yes, quite holy.
12.15 p.m.
My reasoning is wholly consistent with the argument that I put forward before because, as I said then, it is unnecessary to introduce legislation to areas where protection already exists.
Did I overhear my hon. Friend wrongly say "things done by solicitors"?
I wish that I could answer that point.
I find that the consumer has greater protection under the law in his dealings with solicitors or barristers than with anyone else. There are already safeguards. The promoter of the Bill is therefore right to seize on the point about clients' money. Clients' money is the foundation of the practice under which solicitors operate. That money is sacrosanct and belongs to the client and can never be merged. I realise that the hon. Member's main objective behind the Bill is to introduce the same state of affairs into estate agency. However, this matter should be dealt with by voluntary regulation. Those in the profession to whom I have spoken feel that they must introduce that voluntary code which the hon. Member is seeking to embrace within a statutory definition. That statutory definition will probably do more damage to feelings within the profession than would a code of voluntary practice. The trouble is that when an hon. Member draws a high number in the Ballot his emphasis must be on producing legislation. He does not then seek to consult in a particular area with a view to winning acceptance of a voluntary code. Our procedure imposes a demand on an hon. Member to find an area of law that he can change. That is a matter for another debate, but it is nevertheless a defect in our existing system.Before my hon. Friend leaves the question of the inclusion or exclusion of solicitors, will he answer a fundamental question? I accept what he said about the codes of conduct to which the members of the legal profession are subject. They would cover many of the aspects of consumer protection that are provided for in the Bill. Will he, however, look ahead to Clause 21 which deals with standards of competence and which contains powers to limit those who may or may not practise estate agency? The clause could lay down minimum standards of entry into the profession. If that became law, would not estate agents have the right to feel aggrieved that similar restraints did not apply to members of the legal profession?
I am not sure whether I am allowed to look forward to Clause 21.
Order. That confirms my view. I was doubtful, but I am not now.
A large number of amendments have been tabled and I would like to speak on all of them. However, I shall not have time to deal with them all in as much detail as I should like.
As to whether solicitors should be included in the Bill, I am very much against statutory intrusion into the area of professional life, in particular as expressed in the Bill. Therefore, I could hardly logically be in favour of including solicitors, thereby extending the tentacles of the Bill into an area which does not need the regulation which I would like to see, on a voluntary basis but which the Bill seeks to impose on a statutory basis. I was asked by a constituent about the standard of practice, conduct and discipline in the legal profession in Northern Ireland. The constituent had had a lot of problems with a Northern Ireland solicitor. Fortunately, I was able to discover in the Library the Solicitors (Northern Ireland) Order 1976, Statutory Instrument No. 582. I am satisfied that this exclusion should remain for the Northern Ireland solicitors. It is clear from the order, which was made on 12th April 1976, that Northern Ireland solicitors are subject to the same sort of discipline and professional standards which apply to the profession in England and Wales. Therefore, I see no necessity to include solicitors in Norern Ierland. I want to mention local authorities. I find definitions difficult in the Bill, but this one I find particularly difficult. Clause 1(3) says:What is the reason for the words"The reference in subsection (1)(a) above to a business does not include the activities of—(a) a local authority within the meaning of the Consumer Credit Act 1974;"
If the activities of a local authority are included, why is there a need to define a local authority? If it is necessary to define a local authority, such a definition could be contained within the definition section of the Bill. Above all, why do we need to define a local authority within the terms of the Consumer Credit Act 1974? I found that difficult to understand, so I looked immediately at the Act to find out the definition of a local authority. Section 189 says:"within the meaning of the Consumer Credit Act 1974"?
If there were not the words"'local authority', in relation to England and Wales, means the Greater London Council, a county council, a London borough council, a district council, the Common Council of the City of London, or the Council of the Isles of Scilly, and in relation to Scotland, means a regional, islands or district council, and, in relation to Northern Ireland, means a district council."
and the Bill merely referred to "local authority", I would know exactly what that meant. It would, after yesterday, mean every authority controlled by the Conservative Party—but that is a different point. Why include:"within the meaning of the Consumer Credit Act 1974"
in what must be a most out-of-date definition? If we are seeking to enact good law in this place I should like an explanation from the hon. Member for Enfield, North—if we are to be convinced that we should leave in subsection (3)—of why he seeks to define "local authority" by reference to the Consumer Credit Act 1974. Why does he not seek to define "local authority" by reference to the Local Government Act or any Act of that nature? Has he some intention to include the Council of the Isles of Scilly or the Common Council of the City of London? If we are to have this legislation, which needs considerable revision—which I hope it will receive if not today next Friday, the Friday after or the Friday after that—and we are to have a Bill of which we can be proud and one which seeks to introduce the additional necessary matters which must be regulated by statute, why does it not apply to local authorities? There is a strong argument that it should. What does the Bill seek to do? It seeks to control the money that is placed by individuals in the hands of a third party with a background of a property transaction. There are many instances in which local authorities may receive deposits or negotiate with a sitting tenant or the owner of a house in a clearance area or in an area where there is to be a major road. Why should not the consumer have protection in those circumstances? I am not allowed to look forward, as you wisely pointed out, Mr. Speaker, to two clauses that impose regulations about conduct. However, when one considers what should or should not be included in the Bill, it is important that the conduct of a local authority should be regulated if the Bill seeks to control conduct that the promoter feels needs to be controlled. There are many instances of the sort of defects which the promoter of the Bill had in mind on Second Reading. I have read carefully through the reports of that debate and I can understand his reasons. One can envisage similar reasons for extending this measure to local authorities. It is not clear to me why local authorities should be excluded. Perhaps the hon. Member for Enfield, North will respond by saying that similar protection already exists under another Act of Parliament. With so many Acts going through this place, I trust he will forgive me if there is such an enactment of which I am unaware. I have tried to make a careful study of the ways in which local authorities and their actions are already subject to some sort of code of practice, regulation or legislative safeguard, and I cannot find anywhere the sort of safeguards that he wishes to give to the public in the Bill as to the activities of a local authority. On the other hand, one finds many examples in the reports of debates in the House of a local authority being accused of having offended a consumer directly and having encroached on or taken away the rights of a property owner, in particular where it is alleged that the district valuer has valued a property at a figure lower than anybody professionally competent would have done. There are many examples in my constituency, in Birkenhead, of valuations of property that can now be seen, with hindsight, to have been far too low. There are instances around the country of people feeling aggrieved because they have not been dealt with by a local authority acting within the area of property transactions as they should have been dealt with. Therefore, why does the hon. Gentleman seek to exclude local authorities when by including them he would probably be acting in the interests of what he believes to be the consumer? It would give real consumer protection. If such protection is to be given in the Bill, why is it not to be extended to local authorities? 12.30 p.m. I feel as strongly as my hon. Friends about the exclusions of the Housing Corporation, the Northern Ireland Housing Executive, and registered housing associations. Why should persons doing estate work in housing associations be excluded? I am sure that they would say that they follow the highest possible standards, so what is the objection to including them in a Bill to meet standards to which they already conform? What is the additional onerous element in the Bill from which the promoter wishes to protect housing associations? If the promoter concedes that there are onerous elements—and my hon. Friends and I have explained why we believe the safeguards to be onerous—he starts to undermine the case for the Bill. The promoter must give a detailed explanation of why he feels that registered housing associations should be excluded. It may be that, as with local authorities, there is some legislation of which I am not aware that imposes safeguards of this sort. The constitution of housing associations may lay down standards of practice and penalties to be imposed in relation to retaining credit. However, if that is the case, the idea of extending the Bill to estate agency work as defined at present is undermined by any admission made in that respect. We may not get such an admission from the promoter in this debate, but I hope that he has listened carefully to what I have said and will try to justify Clause 1 and the case against the other amendments if he opposes them."the Consumer Credit Act 1974"
As this is the first time that I have spoken on the Bill, I declare an interest as a member of the Royal Institution of Chartered Surveyors. To avoid any doubt or misapprehension about my professional competence, I should point out that I am a non-professional associate of the institution—the equivalent of an honorary member. According to the Monopolies and Mergers Commission report in 1975, there were 13,129 fellows and 23,765 professional associates of the institution. I would not claim their degree of competence or the experience of my hon. Friends the Members for Birmingham, Stechford (Mr. MacKay) and Ilford, North (Mr. Bendall), but I claim some involvement with that important institution and some knowledge of the industry.
I suppose that we should all declare an interest as persons who have acquired and probably will acquire interest in residential property as defined in the Bill. Therefore we are the beneficiaries or otherwise of the legislation. The third interest that I should declare is that I am happy to say that the communications I have received from the president of the National Association of Estate Agents comes from his office in the heart of my constituency in Church Road, Hove. I wish to concentrate on Amendment No. 5. Most hon. Members must be aware of the long and somewhat dismal record of municipal enterprise. Indeed, it would be better to call it municipal lack of enterprise on many occasions, and it should not be surprising that when local authorities try to adopt an entrepreneurial or professional role, they find themselves ill-suited to it. The staff of local authorities are not chosen or trained to carry out such functions and the members who give so generously of their time and skill in the conduct of the affairs of local authorities are not elected on the basis of their skill to act as estate agents, restaurateurs or to operate municipal fish shops or other activities. Therefore, it is not surprising that, generally, those who have failed to benefit from these activities have been the consumers on the one side and the ratepayers on the other. The Bill is concerned with improving consumer protection, and while we are always anxious to do that, we must ensure that the proposed improvements are not counter-productive by restricting what can be done for consumers. There seems to be no reason for not extending to the person acquiring interest in residential property the same protection when dealing with local authorities as when he is dealing with estate agents. If a local authority were so unwise as to set up a municipal estate agency—and we know that a number of Labour controlled councils have sought powers to do this, and to waste ratepayers' money—why should persons dealing with that agency not be entitled to the same protection as those dealing with other estate agents, particularly on such matters as interest on deposits and declaration of interests? There is nothing to prevent a Labour-controlled local authority—though fortunately there are not so many now—operating a municipal estate agency under the name of Smith, Brown and Black. The unsuspecting purchaser would not be aware that lurking behind that pseudonym was the district council. If he were buying or selling property with the alleged assistance of this firm of estate agents, he might find that the purchaser or vendor was the local authority or someone associated with it. In all fairness, local authorities should be included in the Bill if they indulge in these activities. I hope that we shall make progress with the Bill. It is a well-intentioned piece of consumer protection, but I hope that the promoter will expedite progress by giving an indication whether he is prepared to accept some of the more important amendments.The question of the exclusion of local authorities raises important matters that the promoter must deal with. We know that if a member of the public suffers a loss as a result of actions of the employee of an estate agent, he will be protected by the compensation fund or the guarantee fund. Are we similarly assured that if the employee of a local authority or housing association estate agency causes a loss to a member of the public, he will still be protected? The exclusion of the Housing Corporation, housing associations or local authorities would exclude their employees, who might commit some of these offences. Would the public be protected?
That is a good additional point. All these points show that Amendment No. 5 at least should be accepted.
Amendment No. 4 is wider, since it would exclude the whole of Clause 3 and bring within the legislation the Housing Corporation, the Northern Ireland Housing Executive and registered housing associations. The same arguments apply to them as to local authorities. I have fewer reservations about the Housing Corporation or registered housing associations acting as estate agents—although that activity is ill-defined—than about local authorities. I cannot express a view about the Northern Ireland Housing Executive, but I take it that it is the equavalent of the Housing Corporation or a registered housing association or both.I have no greater knowledge of the subject than my hon. Friend, but am I not right in thinking that the Executive undertakes most of the housing functions of a United Kingdom local authority?
I am sure that my hon. Friend is right. In that case, perhaps an amendment should have dealt specifically with that subject, because it should fall under Amendment No. 5. The consumer is entitled to the same protection in respect of the Housing Corporation and housing associations. The importance of that protection is increased by current housing association schemes—rightly promoted by the Housing Corporation—for equity sharing or leasehold participation, which amount to 50–50 ownership. A re- gistered housing association develops property for sale, but instead of conventionally selling the whole property to the purchaser, the scheme is designed to facilitate the first step on the ladder of home ownership. The purchaser buys less than a 100 per cent. interest—normally perhaps 50 per cent.—and rents the other half of his home.
These schemes have many attractions. The purchaser can later buy the other half. The Housing Corporation can guarantee loans to facilitate the original purchase. We have not seen that happen, but it is possible. If these bodies are getting more fully into the sale of property—particularly to first-time buyers—the protection of the Bill should be extended to that area. Amendment No. 2 relates to insurance brokers. I agree with what has been said and will vote for the amendment unless the promoter can relieve our minds. Amendment No. 3 has not yet been properly discussed.Amendment No. 3 is not selected.
Then I shall not direct my thoughts to that.
I am worried by what has been said about Amendment No. 1. The Bill proposes consumer protection. I am concerned whether Amendment No. 1 might not damage that intention. This is a mixed bunch of amendments. While some are designed to improve consumer protection, Amendment No. 1 seems to go the other way. I am particularly in favour of Amendment No. 5 and of Amendment No. 4. Amendment No. 2 seems worthwhile but Amendment No. 1 gives me some reservations. Perhaps the promoter will be able to put our minds at rest.12.45 p.m.
I wish to speak to Amendment No. 5, which seeks to remove the exemption of local authorities. In undermining their privileged position, I might be thought to be showing hostility, but on the morrow of the local elections, and believing, subject to confirmation, that all 19 seats in my constituency were secured by Conservative candidates, I know that the sound of "local authorities" is sweet in my ears. Since I am the vice president of the Association of Municipal Authorities—a body, as from this morning, Conservative-controlled—it might be thought that in this case I am not doing them proper service. That is not so. The number of local authorities likely to do estate agency work under the Bill's definition is very small. But this poses more than one threat.
We can deal only with local authorities. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) was apprehensive about someone turning himself into a solicitor or a housing association and escaping the provisions of another clause. However, I am sure that he would not fear that someone could turn himself into a local authority. We are dealing only with such institutions as are already well known and which come within the Consumer Credit Act 1974. It is legitimate to question whether local authorities which have the potential to engage in these activities should be excluded. I doubt it, when other legislation provides the same safeguards in other areas as this Bill seeks to create. We know of the intention of local authorities from time to time to engage in enterprise well outside the generally understood conception of the activities in which a local authority should engage on behalf of its resident ratepapers. For example, the West Midlands Bill sought vast ranging opportunities of engaging in municipal enterprise impinging on many private enterprise activities, including, one would think, potentially the operation of estate agencies. This amendment has been tabled to counter those threats, for it is clear that local authorities, with their very special privileges, could in these circumstances be in competition with private enterprise and have an unfair advantage. As public institutions, local authorities obviously have advantages not given to ordinary estate agents. Local authorities have the benefit of public funds in inexhaustible supply. By that I mean that subject only to elections every four years, they can levy extra money from the ratepayers to meet their ends. Local authorities have the privilege of their prestige as public bodies. They have the opportunity to cross-subsidise costs. In these and other ways they could be in unfair competition with others legitimately earning their livelihood as estate agents in private enterprise. It may be thought that as public institutions the reputation of local authorities is so high that there is no possibility of any breach of the standards that the Bill seeks to confer upon the profession of estate agency. That may well be so in many cases. It may well be that the integrity of local government and public service in Britain is well respected, for good reason. However, from time to time there have been examples of even public institutions, acting on behalf of—in this case—their residents, breaching the standards imposed by the Bill. For example, local authorities might trespass in areas such as discrimination which are thought to be sensitive. Who is to know whether within housing departments there is the opportunity for discrimination either on grounds of sex or of race? Whether or not one agrees with the provisions of the Bill, it is possible that in the administration of a housing department such discrimination is exercised. If local authorities were to move into estate agency work, they might show the same inclinations. Only today it has been shown that the Department of Health and Social Security has failed to meet the legitimate claim of war pensioners for compensation. Apparently this was done deliberately in the full knowledge that it was wrong. Yet it was done in the name of public service by public servants. So, although we may have a very high regard for our public service, we cannot believe it to be right in what is does in all circumstances. The amendment therefore seeks to remove the exemption of local authorities. My hon. Friends have sought to go further. I would not go so far as to exclude the other bodies set out in subsection (3), but there is clearly a temptation for anybody involved in housing, by the acquisition of expertise and all the facilities available to him, to think it wise to extend his activities into estate agency work. The average local authority is engaged in the construction of houses, in the letting of property, and in the assigning of property. From time to time local authorities acquire property already built in the private market. Some authorities—probably more as from today—actually seek to sell the properties in their ownership, but generally the policy is to sell them to sitting tenants. It is only a short step from those activities to engaging full time in the practice of buying and selling residential property. Often local authorities, according to their political persuasion, will seek to do this. It is proper to question whether they should be within the provisions of the Bill. The amendment has that purpose.I respond, first, to the major point made by the hon. Member for Wirral (Mr. Hunt).
I assure the House that, despite the enormous difficulties in satisfying everybody whose interests are affected by measures of this kind, the most serious and intensive efforts have been made to engage in consultation with the representative institutions. All the major bodies concerned have made contributions and submitted documents. One is always left with those who are practising but who are not members of any representative body. One's only response to that difficulty is that which is normally taken in the House, namely, to gauge the public interest and to identify the measures we propose to put forward in that light. I can assure the hon. Member that there has not been a lack of consultation on the Bill. I do not entirely accept the hon. Member's chiding that I did not relinquish my place in the Ballot in favour of a rather more consultative role for this year. I imagine that the hon. Gentleman, like myself, spends a great deal of time in a consultative role. It is not often that we are privileged to participate in a premier position in introducing legislation ourselves. I do not recall that he chose to turn down the opportunity he had to introduce a measure last year, a measure which I had the great pleasure of supporting. I am sure that he then engaged in the processes of consultation in the same way as I have sought to do. Tory Members have identified the difficulties that arise with any measure of this kind but have disagreed amongst themselves about how the difficulties can be resolved. The hon. Member for Wirral has said that there is a crisis of definition. That is a perennial problem for law makers. I recognise that the definition of the activity of estate agency is critical to the Bill. These amendments question the exclusion of certain categories from the provisions of the Bill. The main thrust of the measure as a consumer protection measure is to include all who engage in this activity and whose services the public may engage, thereby becoming vulnerable as prospective house buyers or house sellers. The exclusions are few and are carefully delineated. They are included only if adequate protection for the public already exists. This is not a licensing measure for estate agencies and therefore the Bill does not deal with the problem of those who practise the work of estate agency but do not call themselves estate agents. Anyone who practises estate agency is caught by the Bill with the exception of the exclusions set out in Clause 1. The hon. Member for Hove (Mr. Sainsbury) raised a qualification about the efficacy of Amendment No. 1. I think he is correct that, if Amendment No. 1 were to be accepted, we should greatly broaden the range of activity of the Bill because we would not be concerned solely with the agency work or the introduction of buyer and seller. We would also potentially include other activities associated with house purchase—for example, conveyancing. I do not know whether some Conservative Members are in favour of fresh legislation on conveyancing. It would probably be recognised by some Conservative Members that that would not be an entirely desirable measure, although I detect strong pressures on the Government Benches. I do not think that it could be included in the framework of the Bill, which as a Private Member's Bill must necessarily have limited aims.1.0 p.m.
I was trying to suggest to the hon. Gentleman that it would have been far better if he had introduced a Law of Property (Amendment) Bill rather than the Estate Agents Bill.
I accept that there is a range of other measures that I could have introduced for the benefit of the public. I am not quite sure how that argument squares with the suggestion that I should not be introducing any measure that increases the amount of legislation. I assure Conservative Members that Amendment No. 1 would greatly widen the scope of the Bill. As the clause stands, we are concerned with the central activity of estate agency that causes the public concern, namely, the purchasing and selling of houses.
The hon. Gentleman has made a couple of assertions about Amendment No. 1 that require substantiation. He says that if accepted it would widen the scope of the Bill, yet as things stand it would seem that by deletion we would be narrowing its scope. Secondly, the hon. Gentleman said that conveyancing would be included. I hope that the hon. Gentleman will substantiate his claim. Why does he say that?
I did not say that the amendment specified conveyancing. The amendment would take out the restrictive parts of Clause 1 that define the activity to be controlled. Potentially we would have a measure with greater breadth in terms of the activity with which it would be connected.
As for the categories that Conservative hon. Members have raised and whether they should be entitled to exemption, we did, when dealing with the terms of Amendment No. 6—namely, the proposed exemption of solicitors—have an extensive debate in Committee. I am sure that we all want to guarantee adequate protection to the public. The hon. Member for Wirral indicated that he had noted the extensive debate in Committee. He expressed the view that in practice the Law Society's provisions dealing with solicitors are sufficient and broadly similar to the provisions set out in the Bill. In fact, in some respects the Law Society's provisions are rather sharper in their control functions than the provisions set out in the Bill. Because of that, I consider it accurate and right to exempt solicitors from the measure. I am not trying to create a privileged sector but I am mindful that the House is concerned that legislation should be as accurate and as limited as is necessary to effect its purpose. In terms of consumer protection, I consider that solicitors are suitably controlled by their own professional body. That has been recognised by some Conservative Members. I turn next to Amendment No. 2, which is concerned with insurance brokers. The hon. Member for Faversham (Mr. Moate) identified the area of insurance brokerage as his particular worry. He said that where insurance brokers are not engaged in the activity covered by the 1977 Act it may be that their insurance would not extend to the area concerned with estate agency. As they are not engaged in the activity covered by the 1977 Act, I consider that they would fall within the provisions of the Bill. It is where their activities are already governed by existing legislation that they are exempted under Clause 1.Will the hon. Gentleman explain in what category an agent will fall who collects money for a building society? There are agents who collect a great deal of money for building societies which they hand over to the societies. It seems from the terms of the Bill and from our discussion that there is no protection in that area. I should declare an interest. I am an estate agent.
I can reassure the hon. Gentleman. He will recognise that the Bill is concerned with estate agents who act in a certain capacity in introducing buyers to sellers. I am aware that estate agents carry out other activities. As there are others who may fail within the terms of the Bill because they carry out those activities, when estate agents are carrying out activities that do not fall within the Bill are not related to the definition in Clause 1 we are not seeking to control those activities.
The hon. Gentleman has said repeatedly that this is a consumer protection Bill. If that is so, we should try to achieve the consumer's protection. Given the terms of reference of the Bill, we are achieving only part protection.
I have a feeling that the problem of definition could be endless. I want to promote consumer protection. I am sure that that is the aim of everyone. I am seeking to identify that there is a limited range of consumer protection for the buying and selling of houses that can be attempted within the scope of one fairly modest Bill, although it has 33 clauses and two schedules. The activity that the hon. Member for Ilford, North is identifying at this fairly late stage is something that would require a rather more ambitious measure. As I am being counselled by other Opposition Members somewhat to restrict my activity, it seems that it is necessary to strike a balance when deciding what can be achieved in this area.
I raise a technical point that is of some significance when dealing with insurance brokerage. The hon. Gentleman is relying on the fact that the definition of insurance brokerage would presumably exclude any extensive estate agency activities, and that if an insurance agency he would, therefore, come within the provisions of the Bill. I suggest that that might not be so.
There is no definition of insurance brokerage within the Insurance Brokers (Registration) Act 1977. There is an EEC definition but there is no definition within the Act. That was quite deliberate. It is possible for an insurance broker to regard himself as doing estate agency work peripheral to his business, and he could so include it. The fact that the hon. Gentleman refers to the Insurance Brokers (Registration) Act rather than to insurance broking, which includes other activities such as consultancy work and insurance agency work, and regards the Act as the controlling factor implies that anyone registered under the Act could practise estate agency. I suggest that he may not be completely right and that it is something that should be examined again if the Bill were to proceed further.I listen to the hon. Gentleman's representations with great care on these matters as we know him to be knowledgeable in them. I think that I take him along with me in the other reservation that has been raised in considering the amendment, then the hon. Member for Wirral referred to the problems of deposits. The hon. Member for Faversham will know—I am sure that on reflection the hon. Member for Wirral will recognise that this is so—that deposits do not come within the framework of credit under the Consumer Credit Act 1974. The taking of deposits is an entirely different concept.
I turn now to Amendment No. 5, standing in the name of the hon. Member for Romford (Mr. Neubert), which has been spoken to constructively by a number of Conservative Members. I am moved to accept the points that have been made. Obviously, I had considered that local authorities were highly unlikely to engage in the malpractices identified as potential triggers which would alert the Director General of Fair Trading. I do not think that any hon. Member would consider it likely that local authorities would engage in such malpractices. Nevertheless, I accept the point made so persuasively that perhaps it is appropriate that local authorities should be under the same degree of control in this area of activity as other engaged in estate agency. On that basis, I contend that Amendments Nos. 1, 2, 4 and 6 should be rejected by the House but that Amendment No. 5 might well commend itself to hon. Members.Amendment negatived.
Amendment made: No. 5, in page 2, leave out lines 16 and 17.—[ Mr. Neubert.]
Clause 2
Interests In Residential Property
I beg to move Amendment No. 7, in page 3, line 2, leave out
'or to a substantial extent'.
With this we may also take Amendment No. 8, in page 3, line 4, after 'constructed' insert
'or mixed hereditament with residential accommodation where the residential accommodation is not separately assessed for rating purposes'.
The effect of this amendment would be to alter the crucial definition—I am sorry that we are back to the vexed question of definition—of residential property, which obviously has great significance throughout the Bill.
As Clause 2 says:—then come the fine words which the amendment seeks to delete—"In this Act 'residential property' means land which, wholly"
I draw attention to the fact that my hon. Friend the Member for Ilford, North (Mr. Bendall), whose experience and skill we are glad to have, has tabled an alternative amendment which we are also considering and which, I suspect, might have the same effect as my amendment. I direct my words to the effect of my amendment. The first point to be made in its favour is that it seems that the words:"or to a substantial extent, consists of one, two or three dwellings or a site on which one, two or three dwellings are to be, or are in the course of being, constructed;"
are vague. We seem to be back to the "things done or undone" with which we started the Bill in line 1 of Clause 1. There is no definition of "substantial". In enacting legislation we ought to be sure that we leave those who have to implement it with clear guidelines as to what is intended. 1.15 p.m. Unfortunately, the courts are not allowed to take account of what might have been said by the promoter on Second Reading in determining the meaning of the words"or to a substantial extent"
If the courts were allowed to do this perhaps we could leave the words in. The words are worrying because there is no definition and we are left in doubt whether "substantial extent" refers to area, value or the number of individual hereditaments, in which case two residential units would outweigh one commercial unit, however large or valuable it was. I welcome and support what the hon. Member for Enfield, North (Mr. Gould) said on Second Reading. He said:"to a substantial extent".
I entirely agree and that is why we would like to see progress with improved consumer protection. The hon. Member talked later of the purchaser often having an understandably limited knowledge of the subject and said that his Bill would"The Bill proposes to regulate activities in an area where the consumer merits the greatest degree of protection. After all, the purchase or sale of a home is one of the most important transactions".
We must deduce that the hon. Member has in mind that we should protect people who are buying homes. The vast majority of such transactions relate to single properties, whether detached, semi-detached, individual flats or maisonettes. If that is the category of properties we are dealing with I submit that the words"guarantee that this … activity will take place within a framework of adequate consumer protection."—[Official Report, 3rd February 1978; Vol. 943, c. 885–6.]
are not only dangerous to the extent that they are vague but are bringing into the context of the Bill a range of transactions which it seems, whatever the need to improve consumer protection, was not the hon. Gentleman's intention. This matter was not discussed in Committee other than indirectly. There was a debate in Committee which is reported in column 38 of Hansard starting on an amendment moved by my hon. Friend the Member for Faversham (Mr. Moate), relating to the same part of the Bill but concerning the problem of planning permission. It is interesting to note that during that debate my hon. Friend the Member for Romford (Mr. Neubert) pointed out that perhaps the phrase"or to a substantial extent"
did not make it altogether clear where the line would fall. As always, my hon. Friend had detected a weakness. At the end of the debate on that amendment there was one of those occasions when Members of the Committee clearly had doubts. My hon. Friend the Member for Faversham said:"wholly or to a substantial extent"
Clearly, it is necessary to look again at this issue. The amendment then being discussed did not cover the principal point, which is whether we intend to bring within the ambit of the Bill a number of commercial property transactions. If we leave the words"We have left some obvious doubts lingering, but in view of the nature of the debate, I beg to ask leave to withdraw the amendment."—[Official Report, Standing Committee C, 19th April 1978; c. 49.]
in the Bill, I submit that a wide range of transactions in property which would not normally be regarded as transactions in residential property would be included. As an example, farms would fall within the definition. If a farm is sold there is usually a farmhouse involved. If there are not more than one or two other residential properties there as well, as far as I can see the sale of a farm would fall within the definition of residential property. I do not know how many farms there are in Enfield, North. Sadly, there are not many in Hove. We can only boast of a half-farm. I know that farm sales give rise to all sorts of problems about the valuation of tenant right and that sort of thing, and I should not have thought that it was the promotor's intention that the sale of a farm should be defined in the Bill as constituting residential property. Presumably, public houses change hands, and the same argument would apply there. If a restaurant had one, two or three units of residential accommodation above it, it could probably be included in the definition of residential property. On the whole, restaurant premises are neither very large nor very valuable, and therefore, by most of the criteria which one would expect courts to apply in determining whether a particular transaction fell within this legislation, they would include a transaction affecting a restaurant with one, two or three residential properties above it. I suppose that by far the biggest category of such properties would be shops. I do not know whether this would be an appropriate moment, Mr. Deputy Speaker, for me to declare another interest, as a director and a shareholder of a company with some substantial retailing activities. I do not know whether any of its properties might come under this definition. If they did, I should have thought it peculiarly inappropriate, because a transaction involving a supermarket and one, two or three flats would not seem to me to be ordinarily regarded as a transaction in residential property. It is a quite frequent occurrence these days for small office blocks to include a number of residential units. Once again, if there were only one, two or three of them, as the Bill stands it would seem that these transactions could, or indeed, would fall within the definition. One of the most powerful arguments that we can adduce in trying to restrict the definition of residential property, so that it applies to land which wholly consists of one, two or three dwellings on a site, is that if we do not—bearing in mind that I have itemised pubs, farms, restaurants, shops and offices as other categories of transaction which might be brought in—we shall surely end with legislation which is a great deal more complicated and more expensive. I was gratified to read, in the speech of the hon. Member for Enfield, North (Mr. Davies), when he was proposing the Bill, the words:"or to a substantial extent"
I hope that those wise words will be borne in mind by the hon. Gentleman when he considers some of the other legislation which his hon. Friends bring before the House. I suggest to him that much of it seems to be going quite contrary to his proposal to"The basis of my Bill is to minimise the degree of central bureaucratic control."—[Official Report 3rd February 1978; Vol. 943, c. 886.]
It seems to be the desire sometimes of the Government Front Bench—and of the Minister on occasions—to maximise the degree of central bureaucratic control, and we all suffer from it. If we are to bring in a lot of other transactions—which I should not have thought was the intention of the Bill or the understanding of the promoter—it will complicate the administration and make it more expensive, not just because we bring in additional transactions but also because the very nature of these transactions makes them a very great deal more complex. Once there is a commercial element in the transactions, there is the likelihood that, for example, goodwill will be involved. There are many other complications, perhaps, in regard to stock-in-trade. I have mentioned tenant right in respect of farms. There may be agreements relating to a proprietor who is carrying on a business or perhaps selling a business and opening up another shop to sell the same things in the same neighbourhood. That is a frequent occurrence. Apart from increasing the number of transactions which would be covered by the legislation—which in itself is undesirable—we would certainly increase the general complication of administration. Since that administration has to fall upon the local authorities, I strongly suggest that it would be undesirable also for that reason. Local authorities are understandably resentful of the number of occasions on which we in this House seem to pass legislation, well intentioned or not, which puts additional burdens on them. They are equally resentful about the number of occasions on which hon. Members on both sides of the House tell local authorities that they must be more economical, that they must not put up the rates, that they must economise with staff, and set up joint committees to study the number of staff and so on. My local authority has asked me—and I would be surprised if other hon. Members have not had similar experiences—how it can be expected to be so efficient and economical in its administration if Parliament continually puts additional burdens on it. This is certainly one additional burden of consumer protection which we could simplify and reduce by accepting the amendment, and thereby taking out not merely a large number of transactions but a large number of relatively more complicated transactions. I am sure that the promoter will realise, when he looks through all the clauses which follow, that the complications increase every time, because each clause brings in another aspect which will have to apply to a wider range of activities. If we leave in this definition—which, as I have said, is crucial throughout the Bill if it defines what is to be held to be residential property—all sorts of anomalies will arise. There is, for example, interest on deposits. Whether this should be accumulated and payable in every case is a matter which we can properly discuss later. There are obviously arguments on that in connection with residential property. But I suggest to the promoter that there is certainly a different set of arguments about interest on deposits when these deposits relate to transactions on what is largely commercial property. Although the words that I am seeking to delete are"minimise the degree of central bureaucratic control."
as I have suggested, the "substantial extent" does not necessarily relate to the monetary value of the bits of the property, particularly when we take into account the problems which follow from the purchase of goodwill or stock-in-trade, or tenant right, and so on, which go with commercial property on a number of occasions. Even if the courts interpreted the words"or to a substantial extent",
fairly strictly, based perhaps on rateable value we could still end with a situation in which, although the rateable value of the non-residential part of the property was relatively small, or substantially less than half the total—which would quite likely bring that total property within the definition of the Bill—the actual money changing hands on the deposit or on the contract price for the total property would very substantially relate to the commercial part. In that case, legislation relating to interest on deposits for residential property would not be appropriate to commercial property. Problems of the same kind arise in connection with insurance and bonding, which come up in Clause 18. I should have thought that an agent who was required to have special insurance or bonding in connection with commercial propertise, because we caught them in this Bill incorrectly, might find a fresh set of difficulties and expenses being imposed upon him, and this would seem to be extremely undesirable. The same goes not just for the interest on deposits but for all the legislation on deposits and the extent to which they need to be kept separately. 1.30 p.m. But some of the greatest problems arise when we come to dealing on one's own account. If we have such a wide definition of "residential property", the extent to which estate agents engaged in more or less ordinary commercial business may find themselves restricted is rather alarming. We know that solicitors can draft their own wills. Whether they are wise to do so is another matter. But there is nothing to stop them drafting their own wills and disposing in that way of any property which the Chancellor of the Exchequer has been beneficent enough to leave them. Quite properly, they cannot draft other people's wills which include legacies to them. That is a very proper protection. But if we have legislation which says that an estate agent cannot sell his own office if it has one, two or three flats above it, we are getting to a situation where we say that a solicitor cannot draft his own will. All that the estate agent is doing is trying to dispose of his own property, and I am sure that the hon. Member for Enfield, North will agree that even the most generous-minded estate agent would find it undesirable if he were selling his office with one, two or three residential units above it and had to have on that property the board of one of his competitors because he was not allowed to handle the transaction himself."or to a substantial extent"
The hon. Member has misread some of the later clauses. What the estate agent must do is hold the deposit himself. Exactly the same rule applies to a solicitor at the moment. But there is no restriction on an estate agent selling his own property.
I am grateful for the Minister's intervention. However, it is not confined only to that. We have a whole rigmarole of special conditions, declarations of interest, and so on which come in if we get to this stage. Even if they can all be overcome at a cost and at the expense of some delay, surely it is not the intention of the Bill to bring property transactions of this sort within the ambit of the Bill.
I remind hon. Members of Clause 20 (5), where we read:which is why the definition of "residential property" is so important. If we want to know what is meant by "residential property", we have to look at the definition in Clause 2. If we are to have such a wide definition of "residential property", the estate agent could be held to have such an interest even if his employer or principal or an agent of his had an interest in any part of the commercial element of the residential property. I cannot believe that that was the intention of the hon. Member for Enfield, North in his excellent idea of improving consumer protection in these matters. There is one other aspect which we must take into account in considering this definition. Consequent upon the definition of "residential property", we have this idea of connected contracts. I can see that those who drafted the Bill did not want there to be a get-out from the protection of deposits and the purchaser's interest by it being possible to have a relatively phoney contract relating to the property, with the main transaction relating to the sale of, for example, the light fittings. It is proper to bring in connected contracts to ensure that ill-intentioned persons acting as estate agents, of whom happily there are very few, do not try to avoid the intention of the Bill by such a device, especially as the use of such devices has occurred most in the sale of leasehold property in multi-occupation in inner-city areas—and in my constituency, where there is older property and where there have been some undesirable practices. I recognise that we must include connected contracts. But once we have brought connected contracts into the scope of the Bill and once we have brought in commercial transactions by this excessively wide definition of "residential property", ineviably connected contracts become excessively wide. I come back to the example of the restaurant which was referred to earlier. It is quite a normal transaction. There was a case of it the other day in my constituency. It is quite common for a restaurant to be sold with one, two or three residential properties above it and to have one of two connected contracts. One would say that the proprietor who was selling, because he was such a good chef, must stay on to be the chef, and there would be a connected contract to that effect. The other is when the good will that goes with the name over the door is what he purchaser is really after and he wants to make sure that the vendor does not set up in competition with him within, say, a mile, and so there would be a connected contract to that effect. The moment that we bring a whole range of commercial property into the definition of "residential property"—which seems to me to be silly, anyhow—we build up a vast range of problems in connected contracts. Bearing in mind that we wish to make progress with consumer protection and that time goes on, I summarise my arguments by saying that I take it to be the intention of the hon. Member for Enfield, North, from what he said on Second Reading, to strive to protect people who are buying their own homes. It is self-evident that the vast majority of those transactions involve single properties and no commercial element. I suggest that the words "to a substantial extent" are very vague and that we should always want to avoid doubt. Certainly we should try to achieve simplicity and economy of administration in this legislation, as in any other, and we should try to remove from the Bill transactions in property which would be inappropriate to the nature of the control being proposed. Finally, I suggest that if the definition which I propose is said to be a little narrower than the ideal, surely that is to be preferred to leaving in a definition which is not only vague but is much too widely drawn."For the purposes of the section, an estate agent has a personal interest in residential property",
I wish, Mr. Speaker, to move Amendment No. 8—
Perhaps I may assist the hon. Member. He may speak to Amendment No. 8, but only one amendment is moved at a time.
I am grateful, Mr. Speaker, for your guidance. In that event, perhaps I may be allowed to speak to Amendment No. 8.
I am concerned with one specific area, which is where there are mixed hereditaments. Often there is a small corner shop where the living accommodation and the business use beneath it are rated as one, more often than not on a business rating. But it is usually the case that small corner shops, which are very poor commercially, are bought for the residential accommodation above them. I think that it would add to the essence of the Bill and clarify matters if some recognition of this fact could be written into the Bill in some way. I feel very strongly that these small corner shops and the people who buy them should benefit from being protected by the Bill.I apologise to my hon. Friend the Member for Hove (Mr. Sainsbury) for speaking about his amendment when I was not here to hear all of his case. There is something of a conflict between his amendment and that of my hon. Friend the Member for Ilford, North (Mr. Bendall).
Certainly it would be undesirable to bring within the scope of the Bill a whole range of essentially commercial properties. There is no doubt about that. Again, we are almost in a crisis of definition because this clause limits the nature of residential properties to one, two or three dwellings. We have had previous debates about where one draws the line. The hon. Member for Enfield, North (Mr. Davies) has argued very persuasively that his intention is to limit the operations of the Bill to small residential transactions. That is a most desirable aim. However I am very sceptical about whether he is going the right way about achieving that aim. I doubt whether one can draw lines neatly like that in very undefined areas in legislative terms. However, if the idea is to apply the Bill essentially to residential properties, clearly it is undesirable to bring in restaurants and office blocks which could have two or three dwellings above them but which are essentially commercial in appearance and in the nature of their construction. Our concern is that we should not leave outside the scope of the Bill the type of property referred to by my hon. Friend the Member for Ilford, North. If we accepted the proposition of my hon. Friend the Member for Hove and deleted the wordswe would effectively cut out the small shop. Although I have no evidence to support this, it seems to me that problems could arise—particularly in London, where there is a large amount of buying and selling of small shops with residential accommodation attached—where there are agents who specialise in that particular type of property. It seems undesirable to leave that out of the scope of the Bill."or to a substantial extent"
What I am suggesting is that at the moment one starts bringing in an ill-defined range of commercial property including shops, pubs, restaurants and offices, one is bringing in a whole new range of complications. In some cases one is bringing in, perhaps inadvertently, property transactions which are very substantially commercial, and which are not intended to be included within the protection of the Bill.
It seems to me that, as frequently happens on discussion on this Bill, there is a clash between a social objective and the legal implications arising from it. Clearly, the hon. Member for Enfield, North does not wish to include general commercial transactions. On the other hand, he wishes to give protection to the small man buying a residential property. Therefore, to a certain extent one has to trespass on commercial ground in order to protect the small buyer. This leads to some of the complications that have been mentioned.
That, of course, brings in the problem om business transfer agents and what evolves from them.
1.45 p.m.
I see the point that my hon. Friend the Member for Ilford, North is making about the benefit of extending protection to people who buy the flat above the shop, people who are, perhaps, buying the whole property because they want the flat and are not all that interested in the shop. But if one tries to do this through the wording in the Bill defining residential property, one brings in a whole wide range of other commercial transactions.
Surely it would be better to have a definition of this property—which is crucial to the Bill—which is a little too narrow than to have one which is far too wide. Perhaps there is not an ideal, but I believe that the present definition is certainly far too wide. There is a genuine dilemma here and one can see both sides of the case. To exclude the people about whom I am concerned is wrong because surely they are particularly vulnerable. Maybe the Bill could be redefined, although I do not know how. We are talking about tens of thousands of small businesses—essentially small shops plus living accommodation. To exclude them while one is trying to protect the home buyer is very wrong because these people are often committing much more than just a deposit. They are committing their whole lives and livelihoods—sometimes 30, 40 or even 50 per cent. of the cost of the property. They are very much at risk. Very often they get short-term mortgages with very high repayments. I would have thought that in some way or other we should extend the legislation to protect them. In Committee our fear was the reverse of that. We were worried whether the term "substantial extent" went far enough to protect these people. We were assured at the time that the term "substantial" did not necessarily mean that the majority part had to be residential. "Substantial" could be even a 20 per cent. stake and the rest could be commercial. To that extent the words "substantial amount" did bring in the small shopkeepers. On the other hand—and here I agree with my hon. Friend the Member for Hove—it brings in other commercial areas that we do not intend to protect. I do not claim to know the answer. However is incumbent upon the promoter of the Bill and Government Ministers to look at this problem and to see whether a clearer definition can be established. I would not have thought it would be too difficult for the promoter to do this. One feels that he has tried to avoid definition of estate agency work and of estate agents. I think that it would be desirable to try to achieve clearer definition. Perhaps in another place they will look at this more painstakingly and carefully. Perhaps they will not allow this sloppy legal definition to go through.That is exactly what I was trying to achieve with my amendment.
I have some sympathy for my hon. Friend the Member for Ilford, North, and on this occasion I am not inclined to accept totally the views of my hon. Friend the Member for Hove. I can see the dangers which could arise. Surely it is not too difficult for the hon. Member for Enfield, North to find a solution to exclude substantial commercial elements. If he could do that he would meet a genuine point of view.
I wish to express concern about whether the Bill really does properly cover large multi-occupancy blocks. I presume that if an estate agent buys an old house which might be sub-divided into six or seven units, the purchase of that house would be outside the scope of the Bill. If he resold these units as individual dwellings, of course he would be within the terms of the Bill. We must bear in mind that we are talking about big business in the buying and selling of multi-occupancy units. It is not inconceivable that the estate agent would not resell them to individuals but perhaps retain ownership to a degree. We must remember that we are talking about fairly ingenious people. Is it satisfactory to limit protection to one, two or three dwellings, and perhaps to exclude the very wide-ranging practice of having large houses broken down into a large number of units? I am not totally satisfied that the Bill is not too narrowly drawn and will exclude large areas of residential property, multi-occupancy old houses or, indeed. purpose-built flats. Again this is not a satisfactory definition. If I had to err at this stage, I would err on the side of the amendment proposed by my hon. Friend the Member for Ilford, North rather than that of my hon. Friend the Member for Hove It is almost a choice of evils and I am not sure that the promoter should have put us in this position.I emphasise that I recognise the difficulties which have been raised by Opposition Members in terms of these two amendments. Clearly, it is recognised on both sides of the House that the intention behind the measure ought, if possible, to extend beyond the strict residential category and to take into its scope the points made by the hon. Member for Ilford, North (Mr. Bendall) regarding the small shop and the small business. That seems entirely appropriate. We are dealing with a class of consumer who is similar to the residential owner-occupier, and I am seeking within the framework of the Bill to cater for that category.
How to do that without raising the fears of the hon. Member for Hove (Mr. Sainsbury) that I have broadened a category which it is difficult accurately to define or to create the extreme difficulty of having to deal with all areas of property, in which the issue of consumer protection scarcely arises with the same degree of force as it does with residential property, is the great difficulty.I wonder whether it might help to shorten the hon. Gentleman's remarks and enable us to make progress if I say that, on reflection and in the light of what has been said, it seems to me that Amendment No. 8 meets both the points that have been made. If it is to be a mixed hereditament, it would exclude the wider commercial transactions which I believe complicate the Bill, but bring in those small shops and, indeed, properties which are shops but where the residential accommodation is of an interest to the purchaser, because normally a mixed hereditament would have no separate access. It would be a very small commercial element. Therefore, looking at the matter in that light, I wonder whether the hon. Gentleman might perhaps accept Amendment No. 8 if Amendment No. 7 were to be withdrawn.
I am grateful for that indication from the hon. Member for Hove. I am not sure that I can go with him all the way in terms of accepting Amendment No. 8, because that raises problems about the accuracy of definition. We are in a tricky area whilst at the same time being united in the objective of what needs to be covered. I give the assurance that, if hon. Members for Hove and for Ilford, North are prepared to withdraw or not move their amendments, I shall consider them further with a view to putting down a more satisfactory definition in another place.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3
Orders Prohibiting Unfit Persons From Doing Estate Agency Work
I beg to move Amendment No. 9, in page 3, line 39, leave out
'the Director is satisfied that'.
With this amendment, it will be convenient to discuss Amendment No. 12, in page 4, leave out lines 4 to 7.
My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) has had to leave temporarily However, he expressed the hope that I might move the amendment for him. I do so, albeit somewhat inadequately compared with the way in which he would have moved it.
The amendment concerns a relatively small but important point which requires some clarification. Indeed, perhaps the amendment is acceptable because, as the Bill stands, these words would seem to be unnecessary. Clause 3 gives the Director General of Fair Trading power to make an order prohibiting unfit people from doing estate agency work. That, broadly, is the intention of the clause. The Director General is obviously restricted in the way in which he exercises that power, and clearly we should be concerned that he is properly restricted. One of the circumstances in which he can exercise that power is where an individual has been convicted ofThe clause then goes on to refer to "any other offence" which might have been committed which would give grounds for an order by the Director General. So far so good. These are clearly specified circumstances. But why do we have the words:"an offence involving fraud or other dishonesty or violence".
Why are we giving any element of discretion to the Director General of Fair Trading with regard to a conviction? Either there is conviction or there is not. Surely it is enough to say that this power shall not be exercisable unless that person has been convicted of an offence. To say that the Director needs to be satisfied that an offence has been committed, with regard to clear convictions, is totally unnecessary and that phraseology could come out. If we try to find out why that wording is in the clause, we have to look further, and we come to areas which we shall be considering in later groupings, so I shall not pursue them at length now. For example, we come to the committing of"the Director is satisfied that that person—(a) has been convicted"?
It concerns me very much that the Director General simply needs to be satisfied that the estate agent has"racial or sex discrimination in the course of estate agency work".
That should be a matter of fact which can be tested in some other way. Surely it cannot be right to leave it to the Director to satisfy himself that such discrimination has occurred. The inclusion of the words"committed racial or sex discrimination in the course of estate agency work."
is, I should have thought, totally unnecessary and in some respects could be positively damaging. It is a simple matter. I hope that we may have a clear answer, explanation or acceptance of the proposition that these words be deleted. Amendment No. 12 proposes to leave out another of these wide-ranging powers that have been inserted—the extra clause to cover any loopholes which perhaps the draftsman has not thought about. Subsection (1) (d) reads:"the Director is satisfied that"
That kind of provision concerns me very much. Admittedly, the order would in future be subject to the affirmative procedure. Both Houses would have the opportunity to consider such an order and, in theory, to reject it. But in practice, as opposed to theory, we know how difficult it is to get such orders taken on the Floor of the House and to consider them at any length. We cannot amend such orders once they are before the House. Very few affirmative orders are withdrawn or negated. I am glad that the Minister of State had experience recently of having to withdraw some orders in face of House of Commons and public opposition. But, generally speaking, that is not the case. Therefore, it is not much of a safeguard. Yet we are suggesting that in future the Secretary of State can declare other practices to be undesirable. Surely we now know what these undesirable practices are. We are dealing with specific offences. The promoter of the Bill has tried to prescribe certain offences and the means of dealing with them—the deposit powers, bonding and so on. Therefore, why must we have this blanket additional power that in future the Secretary of State may declare any other activities as being undesirable. I can think of examples in relation to estate agency such as misdescriptions of properties, and so on. But are not such matters covered by other statutes—the Trade Description Act, and so on? The Minister shakes his head. I suggest that it is important to specify what we are trying to prevent. If we can specify such matters, why not specify them in the Bill now rather than leave it in this vague form? We should try to be specific rather than vague. This is a vague proposition. It is undesirable to leave it in this form. The House is entitled to an explanation."in the course of estate agency work has engaged in any practice which has been declared by order of the Secretary of State to be undesirable."
2 p.m.
I am grateful to the hon. Member for Faversham (Mr. Moate) for his brevity. I make an appeal to him and he understands why I hope that we can make some progress on the Bill so that it can be considered by another place.
The hon. Member talked about the Secretary of State having the power by order to declare certain practices undesirable. I understand his anxiety about the Secretary of State exercising an arbitary categorisation of undesirable practices. That power is limited by the obligation to consult. It might be best to give an example of what might happen if a practice were considered to be against the interests of consumers and if it were agreed by the profession that a particular practice should be outlawed. The exercise of that power would not be dissimilar from, for example, the Law Society saying that ambulance chasing by solicitors was undesirable. The estate agents and consumers might at some time in the future decide that a practice which is not a breach of the criminal law is nevertheless something which should not be practised by a reputable estate agent. I am hypothesising. Let us suppose that somebody engages in the practice of soliciting recently bereaved widows with a view to selling their property within a short time of death. That could cause a great deal of upset. That might be the type of practice which, after consultation and agreement with consumers and estate agents, might be enshrined in a code of practice. It might be agreed that that is not the type of thing that any reputable estate agent should do. Given that that type of practice would be involved and given that any agreement would follow consultation and scrutiny by the House, it is fairly reasonable way of dealing with practices which we cannot anticipate but which could arise. In essence the situation is not dissimilar from the powers in the Fair Trading Act under the consumer protection advisory committee procedure which specifies those practices which might be against the economic interests of the consumer which can be prescribed in future but which are not illegal now. The hon. Member also raised the issue of the Director General satisfying himself that the events have taken place. I make it clear that the Director General can make no judgment about whether racial tary of State exercising an arbitrary cateor sexual discrimination has been practised. That is delimited by Schedule 7 of the Bill. There must have been a finding by a court or industrial tribunal or a non-discrimination notice against which there has been no appeal. Those events must have taken place in the same way as a conviction in a court. The Director General has to satisfy himself that there has been a conviction or find- The Director General has to investigate and come to a judgment after giving the estate agent a chance to make representations. The right to make those representations set out. He must listen to the representations and pleas which are put to him before he comes to an opinion. If, in the opinion of the estate agent, he comes to the wrong conclusion, there is an appeal of a judicial nature. It is not to a court but it is subject to the control of the Council on Tribunals. Without the word "satisfy" a nonsense would be made of trying to make a judgment on the general fitness of the estate agent. This is really the converse of not having any form of licensing. This strikes a fair balance. There is adequate protection against any practice being proscribed arbitrarily or capriciously by the Secretary of State. I hope that my remarks reassure the House.I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
I beg to move Amendment No. 13, in page 4 leave out lines 8 and 9.
With this we may discuss the following amendments: No. 14, in page 4 line 8 after 'has', insert
No. 27, in clause 5, page 6, line 39 leave out subsection (5). No. 32, in clause 9 page 11, line 1 leave out subsection (6). No. 64, in page 33, line 1 leave out Schedule 1.'been adjudged by an Industrial Tribunal or a court of law to have'.
The amendment involves a feature of the Bill to which many people have taken exception. I do not mean only hon. Members, although that would be important enough, but I include those professional bodies who would otherwise give unqualified support to the Bill and wish to see it enacted without delay. I put the matter in perspective. We must recognise that the Bill introduces a concept of negative licensing by which estate agents are not subject to bureaucratic control and registration and all that that entails but are required to fulfil certain standards of practice and, in Clause 21, minimum standards of competence.
In seeking that strengthened self-regulation estate agents are following in the path of many other professions, notably medicine and the law, and more recently, credit and insurance brokers. The Bill seeks to regulate the profession with its agreement as expressed by its professional institutions at one remove. To do that it requires certain sanctions. Those sanctions are conferred on the Director General of Fair Trading, who is given considerable powers under the Bill. The principal penalty—which is severe—is the loss of livelihood. The estate agent will be banned from continuing his work if he breaches certain standards or commits certain offences. Not all of those offences, which cover a wide range, are directly relevant to estate agency as a business activity. The clause goes wide in other subsections. Not only does it include offences of a criminal nature, such as fraud and other dishonesty or violence, but it makes allowance for any other offence as defined by the Secretary of State. It allows for offences against the Bill itself, which is logical. Finally, it gives the Secretary of State the opportunity to declare that certain practices are undesirable. The catchment of the clause is extensive. It includes—and this is its most objectionable feature—that if an estate agent is found guilty and convicted of racial or sexual discrimination, in addition to the normal penalties provided under current legislation, he will be subject to a further penalty—the loss of his livelihood. It is that to which estate agents and their institutions naturally take exception. It is also objectionable on three counts. Whatever the merits of the race and sex discrimination legislation and whatever attitude one takes to it—and I have a marked lack of enthusiasm—it cannot be right that certain people should be singled out for a particularly severe penalty under those provisions. What is the justification for it? Objections are made because, first, it provides for a duplication of the law which, if not stopped, will develop and increase the complexity and abundance of legislation. This tendency is one of the most frequent and familiar grounds for complaint by the public and professions. If we provide in every subsequent Bill for offences which are already the subject of the parent Act to be the subject of further penalty in different areas of our everyday life, where will it end? If that happens every Bill concerning consumer protection or the regulation of professions to ensure higher standards could include such a provision even if the Acts in question are recent. The Sex Discrimination Act became law in 1975 and the Race Relations Act in 1976. Yet here we are being asked to add a further layer of legislative provision to penalise those who are guilty of offences of this nature. The second main objective must be that the Bill provides a form of double jeopardy for estate agents. They are at risk not only in their everyday lives, just as everyone else is, within the terms of those Acts, for any offence that they might commit through discriminating on grounds of sex or race, but in their work as estate agents where they risk incurring the steep penalty of losing their jobs and their ability to work. That puts them at a disadvantage with other professions because, although it may be argued that the other professions are subject to similar limitations on their practices, those limitations are contained within voluntary codes of self regulation. It is different in the case of solicitors and medicine where, quite rightly, critical conditions are imposed upon practitioners, but they are at least self-imposed penalties. The Bill provides an unwelcome innovation in that the law will provide such penalties for estate agents. My third objection is that this practice in one way diverts the House of Commons from the true intent, purpose and extent of legislation to which it is asked to give its support. By that I mean that when considering the 1975 and 7976 Acts the House of Commons took them at their face value as offering an offence in certain circumstances against people either in their business or other lives. If it had been known then that further layers of penalty would be made there might not have been support for those original Bills. It is worth considering whether if subsequently these Acts are to be built into much more formidable legislative monuments to this principle, we could find ourselves holding back legislation for fear of what it would bring in its trail. Here, no more than two or three years after the original legislation, we have further turns of the screw. For those three principal objections I continue to resist the idea that the estate agents should be subject to this special penalty. If the sponsor of the Bill were to seek to withdraw that provision he would have the gratitude of myself and of the estate agents, many of whom have been consulting him and have made the point to him directly.My hon. Friend the Member for Romford (Mr. Neubert) has made a formidable case on the questions of double jeopardy and of individuals or a profession being subject to a new series of penalties under the Bill, and it deserves careful consideration. Like, I am sure, the vast majority of hon. Members, I abhor discrimination on racial or sexual grounds. Nevertheless, I feel that this provision deserves to be looked at more carefully.
I wish to deal principally with my amendment, Amendment No. 14. which is of a more limited nature. A constituent who is a leading member of the profession, who is actively engaged in estate agency and is a former president of one of the professional bodies and an office holder in some of the others has written to me on a point of concern about the clause. 2.15 p.m. He suggests that a firm against whom a complaint of, for example, racial discriminational had been made might inadvertently fail to attend the hearing before the Commission for Racial Equality when the complaint was being heard. The Commission could then form a view that an offence had been committed. Through failing inadvertently to turn up to defend the action the defendant could find subsequently that a non-discrimination notice had been issued against it. That not being wholly understood, the end result on a quite minor matter might be the loss of livelihood for the individuals concerned. It would obviously be wrong—and I am sure it is not the sponsor's intention—that the Bill should contain a power which, as my constituent has said, wouldI am sure that that is not intended, but that might be how the Bill would operate. I hope that either the sponsor or the Minister will examine this point, because it surely must be important, even if an acceptable answer is given on the substantial points of concern advanced by my hon. Friend the Member for Rom-ford, that the clause should be drawn tightly enough to prevent unfairness and injustice in the way that I have suggested. I hope that we may have an undertaking that this matter will be looked at in the other place and a clarification made if necessary."give the ability to put a man out of business because somebody has formed the opinion that he has committed an offence".
I wish to declare an interest as a practising estate agent and builder. I have given the Bill general support throughout its stages, but I have considerable reservations about this clause. For that reason I wish to associate myself with the amendment moved by my hon. Friend the Member for Romford (Mr. Neubert). What does such a provision have to do with estate agency? On the whole this is a good Bill which will help the consumer and respectable and far-sighted estate agents. I am anxious that it should gain all credit outside this place and should be fully accepted. But this is the clause to which so many members of the profession and other observers have strongly objected.
Sex and race discrimination are just two of many crimes, so why have they been specified in the clause? I hope I am not being too churlish when I say that it appears to some of us that these might be the pet interests of the sponsor of the Bill and his colleagues. We can see no justification for their inclusion when other crimes are omitted. If individuals break the law in these respects they will be brought before the courts and appropriate penalties imposed if the defendants are found guilty. I am not sure that in a just society people should have to pay twice for a crime, particularly when the second penalty is deprivation of livelihood. If the hon. Member for Enfield, North (Mr. Davies) is not happy with the punishment set out in the original Acts, he should seek to increase that punishment, not in a Private Member's Bill which will then impose further burdens on somebody who has already paid his debt to society. I was taken with what my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) said about an estate agent being reported to either the Commission for Racial Equality or the Equal Opportunities Commission, often not realising that he should attend and then being found guilty without having been present. There are often many reasons for selling property to somebody. It is not always because he has offered the highest price. On many occasions one rejects an offer from somebody who is offering more in favour of somebody offering slightly less who can complete the transaction faster. Alternatively, if a person does not have a property to sell, he may be preferred to someone who offers more money. Somebody who has a property to sell may have problems and delays. An estate agent may accept the offer of somebody of greater financial standing who will have a better chance of raising the finance for a mortgage. All those factors have to be taken into account. When we say to somebody that we cannot accept his offer and the person is a single lady or a member of an ethnic minority group, occasionally he or she will say that the reason for our accepting the offer is that that person is female or coloured. Nothing could be further from the truth. Any self-respecting estate agent discriminates only against one person, and that is the bad purchaser in favour of the good purchaser. I cannot imagine there being estate agents who are worried about the colour of a person's skin or his or her sex. Estate agents are interested in getting the best possible price as quickly as possible for their clients—and their commission and fees therefrom. Therefore, it is easy to become enmeshed in race relations legislation and the equal opportunities legislation when one is an estate agent without discrimina- tings, but acting only in the best interests of one's client. I ask the hon. Member for Enfield, North to reconsider whether the clause is necessary. I do not necessarily ask him to withdraw it now, because I never hope for too much. However, will be perhaps give it further consideration when the Bill goes to another place? Will he take into account the genuine concern on this side of the House and in the profession, not of people who are racialists or male chauvinist pigs but of people who wish his Bill well and those who are practising estate agents who want to be able to act in the best interests of their clients without undue Government legislative interference?We had a debate on this issue in Committee. I am grateful for the opportunity today of meeting some points expressed by Conservative Members.
I stress that the intention of the clause is not to punish the estate agent for the second time, deliberately to create double jeopardy or to single him out as a person who ought to suffer twice. The intention is to ensure that the major thrust of the Bill is sustained in terms of a genuine form of consumer protection. Conservative Members will note two extremely important points about race and sex discrimination. First, the Director General can begin to act—and then he does not act automatically to punish an estate agent—to consider the man's fitness to pursue a practice only after a finding has been arrived at by a properly constituted body. In other words, the Director General is not the person who defines whether the initial offence has been committed. Surely, in our society now we should recognise that the concepts of racial and sexual equality should be sustained adequately in the crucial area of the purchase and selling of property.It seems to me that nobody who has spoken in the debate has disagreed with the need to sustain the campaign against racial and sexual discrimination. However, as my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) pointed out, we have legislation on the statute book to do just that. If a shopkeeper refuses to serve somebody because of race or sex and is prosecuted for that—quite rightly—and is found guilty, he can go back and open the shop again the next day and carry on trading. Why should the estate agent be treated differently?
The hon. Gentleman has anticipated the second point that I was hoping to make in order to sustain the main burden of my argument. The buying and selling of property is of greater substance and import to society than that of a shopkeeper who is concerned with the buying and selling of goods. The consequences of the transaction in the selling of property—this is why consumer protection is necessary—are fundamental to the nature of our society.
Hon. Members on both sides of the House favour the development of owner-occupation. It is an important development in our society which helps substantially to determine social relations. Conservative Members ought to express great sympathy with the concept in the crucial area of the transfer of property. Racial or sexual discrimination can, and sometimes do, produce more detrimental effects on the health of our society than do more orthodox and trivial transactions.Does the hon. Gentleman not agree that his point was foreseen at the time of the passing of the original Acts and was the ground for the introduction of those Acts? Why are we now to duplicate the point?
One should recognise how racial or sexual prejudice can emerge and be translated into action. An advantage in this part of the clause, which would ensure that estate agents did not practise discrimination, is that estate agents will be better able to resist the pressure that is often acknowledge to come from certain sections of the public that they should act in an unfair and discriminatory way. The estate agent has a responsibility to his client, the relationship is one of trust and the estate agent acts as the agent of the seller, and in meeting that professional obligation, he may be subjected by his client to the kind of pressure which society as a whole and we, as legislators, regard as unhealthy. Within the framework of the clause, estate agents will be better equipped to resist such unfair pressure.
2.30 p.m.
Is the hon. Gentleman suggesting that existing punishments for contravening race relations and equal opportunities legislation are not a sufficient deterrent to stop the estate agents contravening those Acts?
Does he not think that the fact that an estate agent can be brought before the courts is sufficient for him to tell a client who tries to bring undue pressure to bear—and this sort of pressure is occasionally put upon an estate agent—that if he did as the client asked, he would be brought before the courts? In such circumstances, I have always said that a client cannot expect me to break the law and that has always been enough to enable me to act correctly.I am sure that the hon. Gentleman would be able to resist such pressure with ease, but I am sure that he recognises that, from time to time, estate agents come under intense pressure. In consultations about the Bill, it has been put to me on a number of occasions that the difficulty is not that estate agents would act in a discriminatory way but that they have an obligation to clients who can sometimes make it a particularly difficult obligation to fulfil. The Bill gives estate agents a greater capacity to resist the development of discrimination in an area of housing where we want to see discrimination ended. That is the basis of the clause.
I recognise the point made by the hon. Member for Brentford and Isleworth (Mr. Hayhoe) and if the consequences could be as he suggests, that would be quite unsatisfactory. If he will withdraw his amendment, I undertake to look at the point again to see whether this problem can be met.I am disappointed with the hon. Gentleman's reply. When he started his speech, I thought that he was about to acknowledge the force of the arguments and that he would accept the amendments. He said that he would go a long way to meeting the various points that had been made, but he did not.
The hon. Gentleman gave a helpful answer to my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe), but that was on a technical point. I should have thought that it was elementary that someone should be adjudged by an industrial tribunal or a court of law to have committed racial discrimination. That is not much of a concession, though it is welcome for what it is. The fundamental arguments have not been met. The hon. Gentleman should have tried a little harder to meet the general proposition that an individual should not have to pay twice for the same offence. Sometimes people do have to pay twice, but we do not legislate to achieve that end. If a person is found guilty of sexual or racial discrimination, no doubt his business and reputation will suffer, but it is not for Parliament to lay down a second penalty. The hon. Gentleman argued that such discrimination is a more serious offence than dealing in groceries—It is not an offence to deal in groceries.
I see that I have said quite the wrong thing to my hon. Friend the Member for Hove (Mr. Sainsbury). I am not sure that I should even try to correct it, but I hope that my hon. Friend understands what I meant.
Clearly, misdemeanours by estate agents could have more serious implications for the victim than the offence in the sale of goods from a small shop, but if there are graduations of seriousness of crime surely that has been taken care of in the original legislation or can be dealt with in the courts. It does not warrant a second attack on the very livelihood of the estate agent who will presumably already have suffered some penalty under the original Act. The hon. Member for Enfield, North (Mr. Davies) has not begun to make out a case for including an extra penalty. But it goes further than that. The discrimination Acts have such an uncertain effect on our society and are such experimental measures that to impose these, of all Acts, as the basis of a second layer of penalties is totally wrong. Estate agents are vulnerable to accusations of sexual or racial discrimination and they have some reason to be afraid of the extra power given in the Bill to the Director General of Fair Trading. The danger is that, instead of protecting the consumer against serious frauds by a tiny minority of estate agents, we shall create such a range of offences that we would give the opportunity to every petty complainant to bring pressure to bear on estate agents, to take more and more accusations to the Director General, and to pester legitimate agents with a series of trivial complaints. Indeed, the threat of such complaints could bully an estate agent into accepting a contract that he may not deem to be correct. We are opening the dor to thousands of complaints, while not necessarily protecting the consumer. The hon. Member for Enfield, North suggested that the Bill would give an estate agent greater power to resist undue pressure from his client. I presume he is referring to a client who is racially discriminatory and tells an agent that his house should not be sold to a member of another racial group. The answer to that is that there are already statutes to give the estate agent protection. If he is being bullied in that way, he should tell the client that he is prevented from doing what the client wishes because of the Race Relations Act. If the hon. Member believes that the penalties are not adequate, he should direct his attention to the original Acts and not try to deal with the matter in this Bill. I am sure that the hon. Gentleman understands the strength of feeling on this subject. Almost every estate agent and most professional bodies and hon. Members have asked for this provision to be taken out, yet he is reluctant to do so and has given no convincing arguments for retaining it. Every hon. Member who has spoken has said that he wants to see sexual and racial equality as a general practice, but the provisions in the Bill would exacerbate the problems unnecessarily and would alienate the people whom the hon. Gentleman is most keen to support. I do not know why he is taking such an obdurate attitude. Estate agents are in a difficult position. For example, a lady may wish to purchase a property, but the estate agent may feel that she is less likely than another, a male, purchaser to get a mortgage. That might be no reflection upon her status with a building society; it might simply mean that the other person had higher earnings or some other legitimate commercial consideration. The estate agent would be in some difficulty if she, or equally a man, could allege unfair discrimination. But her power would be even greater if she could threaten that he would lose his livelihood.Only if the finding of the appropriate body was definitive.
One accepts that the process might not result in a conviction, but would not anyone go to great lengths to avoid being taken to these tribunals? Most people would give in long before that.
The same problem arises with racial discrimination. Even their firmest supporters believe that these two Acts have not worked very effectively. Perhaps one cannot expect that in so short a time. Most prosecutions have been on trivial matters and have not brought the legislation into great repute. There are areas of human opinion and patterns of behaviour which have taken root over many years. I am not saying that these attempts to legislate were wrong, but they are still experimental. To impose further penalties is wrong. The hon. Gentleman could have met the views of the House and outside opinion. He would not undermine these powers because they exist elsewhere. It is unfortunate that he has refused to do so. That reflects on his desire to carry the legislation through in a non-controversial way. One still hopes that he will change his mind, but one is not encouraged.Amendment negatived.
Royal Assent
I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:
Estate Agents Bill
As amended ( in the Standing Committee), again considered.
Clause 3
Orders Prohibiting Unfit Persons From Doing Estate Agency Work
I beg to move Amendment No. 15, in page 4, leave out lines 13 to 15.
I understand that it will be convenient to discuss at the same time the following amendments:
No. 21, in page 5, line 7, leave out '(d) and insert '(c)'. No. 22, in page 5, line 10, leave out 'or paragraph (c)'.Amendments Nos. 21 and 22 are purely consequential on Amendment No. 15, which is designed to remove the Secretary of State's power to prescribe by order further practices as grounds for prohibiting persons from doing estate agency work. Those powers are subject to affirmative resolution, but I suspect that all hon. Members—more particularly those who make up the Opposition at any time—recognise the limitations of that procedure. Sometimes Secretaries of State who might be moved to do things which are not reasonable would find it possible to do so by the affirmative order procedure.
2.45 p.m. If we are to give such vague and wide powers, even subject to that procedure, we must be sure that it is necessary. Mr. Smith, the great authority on our constitutional and administrative law, warned against Parliament delegating to Ministers the power to make regulations on matters of general principleIn this case, we have no standards and no indication of the sort of matters about which the Secretary of State might wish to bring in orders. Mr. Smith said that this power should be used only to deal with a dire emergency or an exceptional situation. I am sure that the promoter will not suggest that that should apply to the estate and agency world, but the paragraph starts with the words"unless it lays down in the enabling Acts standards delineating the boundaries of the delegate's discretion."
That is a relief, because presumably it means that an estate agent cannot be debarred for his table manners or football hooliganism, but even with that limitation a number of matters could be the subject of directions which I am sure the hon. Member does not intend. In the near future, when we have a Conservative Secretary of State for the Environment vigorously and effectively promoting the widespread sale of council houses—something that the public want—a doctrinaire Labour-voting estate agent might not wish to co-operate. As the Bill is drafted, it would be within the Secretary of State's power to say that anyone doing that work must take on commissions relating to the sale of council houses."in the course of estate agency wok".
The hon. Member does not do himself justice with that example. Behind this matter is the sort of practice that his own profession lists as undesirable. It would certainly be the intention to let the initiative come from the professions and consumers, not from the Secretary of State. That is a bizarre example. Secondly, it should be clear—if not, it can be looked at—that this power is for the protection of consumers.
I hope that the hon. Gentleman will try to deal with some of the real possible problems which his own profession debars, rather than somewhat fantastical ones. If it is necessary to say that this should be only for the protection of consumers, it must be subject to consultation in the first place. We would probably make more constructive progress that way.It is always reassuring to hear such words from a Minister, but we do not know that the Minister of State or the present Secretary of State will be those responsible for administering this legislation. If the Bill were to be enacted, we are fairly confident that they would not be responsible for more than a very short time.
Parliament must have regard, quite properly, to what is being put on the statute book and what may follow from it, including the abuse of far too widely drawn powers. The Minister of State says soothingly that the power will never be used for that purpose, but he did not say that it cannot be used for that purpose. There is nothing in the Bill to prevent its being used for that purpose. Indeed, the opposite situation could operate and a Conservative estate agent could object to something concerning the Community Land Act. Practically every estate agent—whether of any political party or of no political party—objects to that useless piece of legislation. There is nothing in the Bill as drafted to stop this power being used in connection with activities of that kind. The Minister of State blandly says that there will be consultation. I wish that he were right. However, subsection (5) says:The Secretary of State does not have to consult anybody if he does not think fit. The Bill does not say, as the Minister somewhat misleadingly suggested, that the power would be used only at the behest of the institutions. A later amendment of mine suggests that at least the name of the leading institution should be included in the subsection. If the Bill said that an order would be made only at the request of the institutions, to which the vast majority of the members of the estate agency profession belong, it would be possible to view this far-ranging power in a different light. But the Bill does not say that. The initiative to introduce an order is left with the Secretary of State. It leaves entirely with the Secretary of State the extent to which he shall consult any bodies other than the Director General of Fair Trading who is, anyway, an appointee and I would scarcely have thought he could be regarded as being independent. The order is to be approved by affirmative resolution and, therefore, will eventually have to come before the House, but it is not impossible that a Secretary of State who behaved unreasonably would be able to get members of his party to support his unreasonable behaviour, particularly in a vote on an affirmative resolution. As I am conscious that a large number of amendments must be dealt with in a relatively short time, I will not detain the House for long on this. Surely we would need to have, if we are to approve the inclusion of these wide-ranging discretionary powers, clear evidence of why this provision is necessary. Why is it necessary to include it? If something so drastic occurred as to make it necessary, I am sure the House would be prepared to consider further legislation. The House would always be ready to consider legislation proposed from the Back Benches or from the Government Front Bench, whatever Government were in power, if something affecting the protection of consumers buying homes proved to be necessary. The Bill is all-embracing. Some of us find it too all-embracing. What is delaying its progress at present is the attempt of the hon. Member for Enfield, North (Mr. Davies) to include everything—belt, braces and even sitting down in case they do not work. Unless there is good reason for the inclusion of this subsection, I suggest that we would do without it and that then quicker progress would be made with the Bill."the Secretary of State shall consult the Director and any such bodies representative of persons carrying on estate agency work and of consumers as he thinks fit".
As I said, I think that the hon. Gentleman was being a little bizarre in the examples he gave. The purpose of the subsection is this. It is an essential concomitant of the philosophy of not having positive licensing and registration but leaving the regulation of the profession to estate agents themselves. I believe that to be right. The less bureaucracy and interference we have the better.
Secondly, if it is sought to put too much detail into primary legislation—this has been a great mistake, in my view, in the great detail of the Consumer Credit Act—a lack of flexibility emerges which can prove most unfortunate in the future. Thirdly, I gave an example earlier of the type of practice which could be characterised as undesirable. It would be, for example, the soliciting of a bereaved widow very soon after her husband's death, or the attendance at funerals by estate agents. If it were the general view of estate agents and consumers that were consulted that such practices should be stopped. that could eventually be declared to be an undesirable practice. I say at once that nothing follows from the fact that such a practice has been listed by the House of Commons as an undesirable practice. That is only a trigger event. There would have to be a representation to the Director General that the undesirable practice was being followed. The Director General would have to be satisfied that there was material in all the circumstances that the carrying on of that practice made the estate agent unfit. The estate agent would have to be given the opportunity to make representations before an order was made and he could even then contest the matter under an appeal system to be set up under the Bill.May I remind the Minister that he said a few moments ago that he wanted to reduce bureaucracy? Let him reflect on what he has just said in the light of that.
That is bizarre. I do not believe that the protection of rights, whether of estate agents or anybody else, by means of an appeals system is bureaucracy. I define that as justice.
I want to correct something. I thought that the Minister of State was intervening. I did not realise that the hon. Member for Hove (Mr. Sainsbury) had completed his speech. I assume that the House will take it that I have proposed the Question on Amendment No. 15.
It was good to hear the Minister declare his belief in the need to reduce bureaucracy and to say that legislation had been too detailed, particularly in consumer affairs.
I did not say that particularly. I am all in favour of reducing bureaucracy, eliminating forms, and so on. The more we can do that, the better.
The Minister referred to the Consumer Credit Act. If he did not say so, most other people would say that in consumer protection matters bureaucracy had gone a little mad. If at this late stage the Minister is asserting his belief in the fact that bureaucracy should be reduced, it is a very welcome repentance. But I do not think that he can escape a great deal of the blame for the mountain of consumer protection legislation which in essence does not contribute much to the protection of the consumer but which imposes tremendous burdens on business which, in turn, means higher costs for the consumer. If that philosophy of cutting down bureaucracy were to express itself in some of the regulatory powers that may be taken under the Bill, it would be welcome.
However, good intentions are one thing; legislation is another. We have often heard splendid statements of intent from the Dispatch Box, but the mountain of legislation, far from getting smaller, has got higher and higher. It was interesting to hear the Minister's observation on the importance of having general legislation rather than detailed legislation that ties the hands of the Department to too great an extent. Surely the principle of what he is saying is that we should have not general wide-ranging powers in legislation, leaving the details to regulations, but less fiddly laws. We should not have so much interfering bureaucracy, whether it comes in the original statute or the regulations. It is just as bad to have wide regulatory powers in the original legislation and then a flood of regulations. The net effect on the person at the receiving end is much the same, and it might be worse, because regulations will contain much more pernickety detail than the original legislation. If I could opt for one course or the other, I think that it would be far better to specify as far as possible all the significant matters in the original legislation and not to trust that the secondary Statutory Instruments would do the job more sensibly. However, at present we have to consider the impact of the Bill on the consumer and on the estate agent and not trust the good intentions of future Secretaries of State. Efforts have been made to reassure us that orders could be enacted only after there had been consultation with the Director General of Fair Trading and other representative bodies. That is clearly provided, but those bodies are selected as the Secretary of State thinks fit. That is not totally reassuring. If we think of other comparable legislation, we can all remember that disputes have taken place between different bodies. There are disputes when individuals claim not to have been consulted. There are disputes when individual groups claim that too much weight has been given to one organisation. 3.0 p.m. When the regulations are introduced, it is likely that the Secretary of State will say, for example, "I discussed them with the Royal Institute of Chartered Surveyors". Another body will say "We do not believe that our views were properly heard". The House can do little about such disputes. Likewise, individual estate agents may say "You did not listen properly to me. You listened to the large organisations". That is the fundamental problem. That is why it is important to get matters right now. In an earlier debate we questioned whether extra power was necessary. We questioned whether there was a range of possible unspecified offences that might arise from time to time. The Minister referred to the possibility of high pressure selling tactics being applied to those who have recently been bereaved. If that is a real danger, surely we should be considering it now. If there is the danger of high pressure doorstep selling, surely it should be specified within the Bill. If it is felt that that is a danger, surely there is a duty to prevent it from happening. If it is not considered to be a danger, a hare is being started for us to chase. A more fundamental point is that the Minister said that the power to prescribe other offences is an essential concomitant of having a Bill that does not seek to license estate agents. I can understand the logic of that. If we are not seeking to lay down minimum standards—We are seeking the maximum degree of self-regulation by the profession.
I accept that, but that does not alter the argument that I was about to advance. If we are to have no regulatory powers, I suppose that it is sensible to say that there should be a wider range of offences that can be committed. I agree with that as a philosophy because I would much prefer to prescribe the offences and take people to court when they are committed than to provide a licensing system. However, the Bill embodies a potential licensing system and it is not being fair to the House to say that that is an alternative. It would be an alternative if Clause 21 were never exercised.
We shall come to that
I have no doubt we shall. However, we cannot disregard the fact that the Bill has regulatory powers within it. If Clause 21 is to be exercised and if the philosophy of the Bill entails the possibility of laying down codes of conduct, the point that he is making would come under a code and not under offences. It is not true to say that it is not a licensing measure, or that it is a measure that does not impose conditions of entry. It could be and it might be. Judging from the comments made by some organizations, that is what they would like it to be. That is the sort of pressure that we would be under.
If I am right in that respect—and I believe that I am—the argument is lost for having the general power to prescribe other offences that are not criminal offences. Surely it would be generally undesirable to leave in such wide-ranging powers. My hon. Friend the Member for Hove (Mr. Sainsbury) has made a strong case. On the other hand, if we are to be told that Clause 21 is to be dropped and that the regulatory powers are to go, I wholeheartedly agree that that would be a better way of doing things. The hon. Member has not argued that yet. Until we hear that case put forward, I believe that the Bill would be better off without this provision.Amendment negatived.
I beg to move Amendment No. 19, in page 4, line 38, leave out 'shows' and insert:
'can show that the act was done without his connivance or consent, and'.
With this we may also discuss Amendment No. 20, in page 4, line 46, after 'him', insert:
'unless he can show that the act was done without his connivance or consent'.
This is a minor but important amendment. I trust that, despite the smiles from the Minister of State, it will be fairly non-controversial, and that we can approve it quickly and move on to the other amendments. Hon. Memb- bers will note that in the Bill the words in question are to the effect that an employer must show
to prevent an employee from committing an act which would bring the agent before the Director General or the courts. This wording is worrying because in many practices there are agents or employees who take on responsibilities even though they do not hold a senior position. We all know that there are malevolent employees who, acting from unfortunate motives, can discredit their employer, the partner or principal in a firm. I do not want to make it easier for the partner, the principal or the manager of an estate agency practice to avoid his responsibilities under the Bill. I seek to ensure that there is no way in which, through the act of a malevolent employee, such a person could be brought before the Director General. This minor amendment, enabling the person to show that the act was committed without his connivance or consent, is sensible and would clarify the position. It in no way changes the general sense of direction of the clause but simply clarifies the point further. It will be in the interests of everyone."that he took such steps as were reasonably practicable"
The Bill reflects the normal principle of the vicarious liability of an employer for his employee unless the employer can prove that he took reasonably practicable steps to deal with the situation. I know that it is not the intention, but the effect of the amendment is to put a massive and intense burden upon the employer. Not only would he have to prove as a defence that he took reasonably practicable steps; he would have to provide detailed and intricate proof that he was not acting in connivance, in cahoots, with the employee. That would impose a great burden upon him.
I am sure that that was not the intention of the amendment, but it would be the effect of it. The hon. Gentleman would be well advised to withdraw it.Bearing in mind the Minister's statement, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
I beg to move Amendment No. 23, in page 5, line 12, after 'Director', insert
'the Royal Institution of Chartered Surveyors'.
With this we may take the following amendments:
No. 24, in page 5, line 12, after after 'bodies', insert 'and persons', No. 58, in Clause 19, page 22, line 28, after 'bodies, insert 'and persons'. No. 62, in Clause 21, page 24, line 39, at end insert 'and persons'.I have already declared my interest as a member of the Royal Institution of Chartered Surveyors. Perhaps I should repeat it, as I am specifically asking for this institution to be included by name in the Bill.
I was interested to hear the Minister say—I take it that the promoter shares his view—that maximising the degree of self-regulation was one of the intentions of the Bill. He could have fooled me, in view of the pages of non-self-regulation with which we are landed here. I should have thought that there were easier and more economical ways of maximising self-regulation. But the fact that we have retained in the Bill Clause 3(1) (d), with its wide-ranging powers for the Secretary of State, subject to affirmative resolution of the House, and the fact that the Minister, in defending the inclusion of the clause, referred to the importance of that power being used really at the behest of the institutions, makes this small amendment very much more desirable and, I hope, acceptable to the promoter or the Minister. Indeed, if at some later stage or in some other place the inclusion of the Incorporated Society of Valuers and Auctioneers, or any other leading institution, were also proposed, I certainly would not oppose that. But I suggest that the Royal Institution of Chartered Surveyors is the leading professional body associated with land and property, and particularly with the training of people who are to engage in that sort of work. For that reason, it seems to me appropriate that, whatever else the Secretary of State may do when he is using his discretion as to whom he consults, he should, as well as consulting the Director Gen- eral of Fair Trading, consult the Royal Institution of Chartered Surveyors. Let me assure the House—and the Minister, if he is worried on the point—that we would not be establishing a precedent. The Minister will be familiar, I have no doubt, with the Metropolis Management and Buildings Acts Amendment Act 1878, the centenary of which we shall be justly celebrating this year. I wonder what arrangements, if any, are being made to this effect, while seeking to economise all the time, of course, in public expenditure. That measure was the first to contain statutory recognition of the existence of the institution, and it seems to me that to perpetuate that recognition in the centenary year would be laudable and entirely desirable. I hope, therefore, that the idea will commend itself to the promoter.My hon. Friend the Member for Hove (Mr. Sainsbury) has spoken to his amendment. I should like briefly to speak to mine. I suspect that his amendment is perhaps not as worthy as mine, in that
could be taken to include the Royal Institution of Chartered Surveyors. In all our discussions we have assumed that the three principal bodies are the Royal Institution of Chartered Surveyors, the Institution of Valuers and Auctioneers and the National Association of Estate Agents. The three of them comprise, we are told, 70 per cent. of the profession. My amendment seeks to include in the consultation those who comprise the 30 per cent. not represented by those institutions, and for whom provision is not made in the Bill. It seems reasonable that in any matter affecting their livelihood, individual estate agents who, for reasons of their own, choose not to be members of the association should be involved in any consultations that the Minister might undertake. In Committee, the hon. Gentleman indicated the difficulty of consulting individuals. However, all that I seek to ensure is that that point of view, which would be different from the institutional point of view, would be represented in any consultations that the Minister might have under this clause."bodies representative of persons carrying on estate agency work"
3.15 p.m.
It would be quite inconceivable not to consult the Royal Institution, but it would be a little unfortunate to name one of the very reputable professional bodies without naming the others. It is not usual to do it in legislation. But I give the absolute assurance that it would be totally inconceivable not to consult it.
Secondly, as I explained in Committee, there is a difficulty about consulting representatives of those who for one reason or another object to joining any body which is representative of them. I should like to consider widening the consultation provisions so that the Secretary of State is required to consult other persons. The words "think fit" appear so that the consultation process is not justifiable. It is not capable of being tested in the courts. It remains a House of Commons matter. I shall not reopen the debates that we had last week on another Bill, but that is the reason why the words appear. I suppose that we could substitutealthough when we come to the unattached agents there is a real problem. But I shall certainly consider an amendment elsewhere to include consultation with persons as well as bodies. I hope that that meets the thinking behind the amendment."such bodies or persons as appear to him to be representative of the profession and the consumers",
I wish to comment briefly on the two amendments because they raise a matter of considerable importance. With regard to whether we should specify the Royal Institution of Chartered Surveyors, I feel that it would be invidious to select one organisation, no matter how august or distinguished it might be. As I said earlier, it is often disputes between different bodies which cause as much difficulty and argument about the consultation process as whether there has been any consultation. So I am inclined to accept the view expressed by the Minister that the term
must include the Royal Institution of Chartered Surveyors as well as the other well-known estate agents' organisations. The danger occurs, of course, when other organisations come into existence as soon as institutional arrangements come into being. The individuals who do not wish to band together nevertheless form some consultative body so that their viewpoint can be heard, and sometimes they are not given the voice which they should have in ministerial circles. However, I am much more concerned with this problem of individuals. I welcome what the Minister said about consulting persons generally, recognising the difficulty that this creates. I go back to my previous experience on the Insurance Brokers (Registration) Act where the strong organisations asked for legislation but where one got the distinct impression that several thousands outside who were not substantial enough or were not members of these large organisations did not have their voice heard. The Minister used the word "difficulty". It is difficult to consult such people. However, I do not think that we can dodge the problem because of that. If Parliament chooses to provide regulatory powers which we argue are dependent on the good will of the practitioners themselves, it is incumbent upon us to discover whether the majority truly want the legislation and not just the establishment. I feel very strongly that we should devise some sort of machinery—it may be that it comes down simply to extensive advertising in the national Press—so that we can secure the views of the individual practitioners and not just those of the large organisations and those who happen to read the trade journals."any such bodies representative of persons"
This often arises on consultation. Although one cannot define exactly how it is done, in practice we meet the problem, and on Second Reading I gave the House the undertaking that we would institutionalise the arrangements for consultation with unattached agents to meet exactly that point.
That is a helpful assurance. In view of it, I shall not detain the House any longer, other than to say that it did not work with the insurance brokers. If it had done, I do not think that we should have had that legislation. It seems that the Government Departments, especially the Department of Trade, find ways of consulting large numbers of small greengrocers and others, and they ought to be able to find some way of communicating with all small practising estate agents who are not attached to any of the significant bodies. However, I place on record by appreciation of the sentiments expressed by the Minister, and I hope that the Government generally will always follow that precept.
In the light of the Minister's very firm assurances I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4
Orders Warning Against Continuing Certain Practices
I beg to move Amendment No. 25, in page 5, line 33, leave out Clause 4.
Clause 4 deals with orders warning against continuing with certain practices. I believe that this clause needs a certain amount of inquiry, and that answers must be given by the sponsor or the Government. The Director General of Fair Trading is given power to condemn any practice in the profession of estate agency, and he will be able to ask persons to desist from carrying out that practice. That is a very wide power. I do not like the idea of the Director specifying which practices are within the law and which are not. I do not like the idea of his deciding that a certain estate agent has not fulfilled his obligations and therefore ultimately can be disqualified from practising. I think that we should have something much more firm in the Bill so that people will know what is right and what is not. Clause 3(1)(b) does specify which practices are allowed and which are not but they are not spelled out very clearly. Schedule 1 gives a whole list of possible malpractices which are subject to every sort of interpretation and not clearly defined. Also, I am not sure that I agree with many of them as being undesirable. This is not the moment for a general discussion of Schedule 1, but I have very grave doubts about the type of legislation embodied in Clause 4. I do not adhere to the principle that because someone may have done something wrong—and we all do wrong things from time to time—it is automatically regarded as giving the authorities power to disqualify that person from carrying on his business. This clause gives power to the authorities to remove peoples' right to carry on a trade just because they do something wrong, and this is happening more and more in legislation. An example of this is the 714 certificate. If someone fails to pay tax on the due date or is what is called a bad taxpayer generally, he is not made to pay up his tax as a result of the commission of his sin, but he is refused the right to continue his job as a labour-only subcontractor. If one engages in malpractices in estate agency, the proper penalty should be meted out but this does not necessarily mean that the Director should have power to consider that person unfit and therefore strike him off the list of persons qualified to practise. It may be a minor or a major offence which should be prosecuted under the law for fraud, or some other malfeasance. But it is just too easy a remedy to disqualify a person. We should contrast this with the provisions made available to those in industry who misbehave. If there is a wildcast strike or some thoroughly offensive restrictive practice, nobody would ever suggest that the persons concerned should be immediately stopped from following their employment. It is too easy with professional people, in order to make them behave, to exert discipline over them by saying "We shall threaten them with removing their right to practise". We should make the punishment fit the crime. But the idea that the Director should have power to outlaw certain practices and to strike people off the list should be checked. Therefore, I do not like the clause, and that is why I have suggested that it be left out.I think that I am right in saying that this was the new clause inserted by the hon. Member for Enfield, North (Mr. Davies) in response to strong representations made in Committee. Therefore, it would seem churlish to oppose one of the few concessions that he felt able to make during our earlier proceedings. [An HON. MEMBER: "That is not true."] The Minister says "That is not true."
No, I did not.
I do not think that the Whip could have said it, because I understand that Whips do not speak. At any rate, somebody said that it was not true. However, we have not had many concessions. Had we had more concessions, I think that we should have got through the proceedings rather more quickly than we are doing. Nevertheless, this was a concession.
I certainly do not oppose the principle of the clause, but that does not mean that we should not question in detail whether the hon. Gentleman has met the views that were expressed in Committee. Unless I have misunderstood the clause—the hon. Gentleman will correct me if I have—it does not seem to go very far to help the House. The principle of the clause was that we should avoid the full rigours of the law as applied by the Director General of Fair Trading being applied immediately. We urged that, in effect, there should be a warning notice. We argued that if the Director General construed that a person had been guilty of some malpractice under a whole range of possible offences—sex discrimination, racial discrimination, violence, fraud or on any other grounds that could give cause for an order to be made—it would be wrong to issue an order immediately. We suggested that there should be a period of possibly 30 days before the order came into effect. The suggestion was that we need not apply the full rigours of the law if the individual concerned gave an undertaking that the practice which was decreed as unreasonable would cease. That was our request and requirement. Does the clause carry out that request? It does not. The clause provides:It is limited to Clause 3(1)(d). That is the regulatory power—something for the future—which we discussed earlier. I understood that to be the fall-back provision—the power of the Secretary of State in future to designate undesirable practices which we were not yet able to specify. So far from it helping us, it is a rider to the fall-back power which might never be used, unless, contrary to what we were told before, it is to be exercised soon and is to cover all kinds of offence about which we have not been told. If we are to limit the clause to future practices of which we have no knowledge at present, what is the use of it? Am I right in saying that the Director General would not be able to use Clause 4 to issue a warning notice for other offences, such as sex discrimination, racial discrimination, fraud, violence or any of the other matters specified in the clause? In Commitee there was no question of relating it to this future regulatory power of the Secretary of State. 3.30 p.m. It is essential that the warning provision should apply to all estate agents' practices and to make it unnecessary for the Director General to issue an order unless an estate agent is totally obdurate and determined to persist in a practice which is deemed to be undesirable. Only in those circumstances should an order be made. This restrictive clause in no way goes towards meeting that general philosophy. I say that that philosophy is right. I am worried about how extensive are the powers of the Director General. I am sure that it will represent a great burden to the individual estate agent since he must look over his shoulder all the time at these penalties and provisions. If that is so, it must be right to limit the powers of discretion of a bureaucratic Director General so that he is obliged to take preliminary steps by giving a warning notice before he tries to apply the full rigours of the law."(a) in the course of estate agency work any person has engaged in such a practice as is referred to in section 3(1)(d) above".
My hon. Friend has a greater knowledge of the Bill than I since he was a member of the Committee. As I read the clause, if an estate agent were to sell a house to a member of the National Front and the Director General were to outlaw that transaction as being racialist, the estate agent could be put on a proscribed list. The width of the powers is without bound. Does my hon. Friend feel that we should seek to grant such power?
I agree. We sought to argue that in a case such as my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) described, the Director General could not apply an order immediately to ban that person from carrying on the business of estate agency because he had sold or failed to sell a house to somebody whom other people did not happen to like. I understood that the promoter of the Bill said that he would try to meet that objection. I thought that he would ensure that the Director General gave a warning first to the estate agent to desist from such practices.
This would be an offence under Clause 3(1)(b), not under Clause 3(1)(d). If I have a greater knowledge of the Bill than my hon. Friend the Member for Cirencester and Tewkesbury, that does not make me feel any happier. In fact it becomes depressing after a time. I do not believe that the promoter has met the objections. I cannot think why. It must be logical to apply a warning notice. It is a sensible system which applies in other legislation. It should be applied to all offences under the Bill, and yet the hon. Member has sought to limit it. He owes the House, particularly those who sat on the Committee, an explanation of why he has not carried out the intention that I thought he declared in Committee. A subsequent reading of the clause does not make the situation any better. Clause 3(1)(b) refers to a practice of which we have no knowledge because it has to be specified under Clause 3(1)(d). What is the point of that? I hope that the Minister will say whether Clause 3(1)(d) is likely to be implemented in the near future. I understood him to say that it was a fall-back provision for the future. If it is as remote as that, it makes Clause 4 even more remote. It does not help us to provide a more sensible system of regulations. We were hoping for more sane and sensible powers. The clause does not go nearly as far as I understood the promoter of the Bill intended. I thought that he was going to help us. I do not think that he has.My hon. Friends the Members for Cirencester and Tewkesbury (Mr. Ridley) and Faversham (Mr. Moate) have been modest in their criticism of the clause and its effects. I would not have thought that it is a responsibility that is welcomed by the Director General of Fair Trading or the Secretary of State. I am sure that they would not want responsibility for making the type of judgment which they are re- quired to make under this clause and the reference back to it to Clause 3(1)(d).
My knowledge is limited, but I do not recall a precedent for a Bill to require decisions of this kind to be taken by a Director General of Fair Trading or within a Government Department and announced by a Secretary of State. It seems to me to be a wide-sweeping, unregulated and unwarranted power, and I cannot think that anybody will want the responsibility for it, because the character of the practices that will invoke this severe restriction against someone practising as an estate agent, whether the offence is civil or criminal, whether it is a matter of personal misbehaviour of some sort, is undefined.I do not want to respond on the question of paragraph (d). We have debated that and it would be unfair to go back on that now. The precedent of these powers lies in the Consumer Credit Act, and although that refers to the Secretary of State, there is an elaborate appeals procedure. Although the appeal is to the Secretary of State, it is heard by a tribunal appointed under the appeal provisions. I believe therefore that there is adequate protection.
I am not sure that I share the Minister's complacency. As a practising estate agent and a member of the Incorporated Society of Valuers and Auctioneers, I find it difficult in my dealings with residential property to know just which decisions are likely to be taken by those who have the responsibility for determining what is fair trading under the Bill. The easiest thing in the world is to say that the provision will be generously applied, or that it will ensure fair treatment. The fact is, however, that a statutory requirement is being imposed and as far as I can see there are no safeguards for the individual.
Does my hon. Friend appreciate that I was slightly horrified by the comparatively kind reaction that he made to the Minister's intervention? The Minister is saying that a person will be judged by a tribunal that is set up by another Department of State on criteria which no one knows anything about.
Perhaps I did not use the extravagant language that the Minister's reply warranted. The answer may be that I am incapable of using it.
It is most disturbing that these powers should be created with regard to the handling of residential property. This provision is, after all, only to deal with a minor problem, but its magnitude is being developed in a way that is quite unjustified by the circumstances of estate practice. There is no indication of what is involved in personal terms or in terms of a practice generally. The powers being taken would deny a person the right to earn a living. One would think that the Government would be most cautious about introducing powers of that nature unless the reasons for invoking them were clearly defined. This is entirely unacceptable. I agree with my hon. Friend the Member for Faversham (Mr. Moate). Let there be some system of warning or of giving guidance of people so that they may have some idea of what lies behind the Bill's provisions. For a Private Member's Bill to be enlarged in this way and to give the Government of the day or the Director General of Fair Trading these massive powers is unprecedented. I support the criticism that has been made of those powers.These powers are very wide and cause me concern. At a time when we hear that the Government are trying to help the small business man, it would appear that by widening these powers they could be crucifying the small business man. The estate agent is acting as an agent—we tend to forget this—for somebody who has given him instructions. Are we now to assume that it is not all right for an estate agent, when he receives instructions from a client, to sell to an immigrant or a member of the National Front? If somebody comes to an estate agent and says that he refuses to sell to an immigrant, it appears that the estate agent may now be in trouble, whereas it should be the person who is selling the house who is in trouble. These points need clarifying. I can imagine estate agents having to qualify and put into writing matters which may go against the spirit of the Race Relations Act in any event.
I am extremely disturbed by the clause. I entirely support the amendment to exclude it. The Minis- ter should not assume that because this is a comparatively minor Bill and that there is some minor precedent in another apparently decent Act, namely the Consumer Credit Act, it is unobjectionable. The principle of it is totally objectionable.
Perhaps I ought to explain. Clause 4 was placed in the Bill in response to the requests of Members of the Committee. It is a mitigating clause. The allegation that might be made against the clause is that it is not mitigating enough. That is an argument for further changing it to provide warnings in all circumstances but is not an argument for taking it out. It was an attempt to meet some of the legitimate criticisms. It is a fair argument to say that the warning procedures should apply to other matters also, but it is not a fair criticism to say that it is a reason for taking the clause out.
I am even more astonished by that reply from the Minister than with that which he gave earlier. If it is a mitigating clause, let us understand what it says. It relates to any person
That means from dawn to dusk, whatever he is doing. It means taking lunch with a client. He may be engaged in any practice. He may be smoking a cigarette, not wearing a seat belt, talking to a Scotsman, joining the Scottish National Party, voting Labour or Liberal, or any of these other obscenities. If he is a Labour Secretary of State, he may be indulging in estate agency work, which such a Minister may find to be an offensive concept. That is a sufficient reason for declaring an estate agent not to be allowed to carry on the job that he wants to do. That it is a Private Member's Bill and is what the Minister calls a mitigating concept does not alter the fact that it is offensive for Parliament to legislate on that sort of principle and it is against any form of human right and concept of legislation that this Parliament has ever understood to be correct. The Bill is saying that the Minister shall have, by arbitrary decision—or on advice, if he cares to put it that way, by some Godforsaken tribunal of his creation—the power to say that the conduct or behaviour of a person on one occasion is a reason for him to declare that that person shall no longer be entitled to do his job. I find that offensive. Have the Government not passed legislation providing that people should be warned about what behaviour shall be regarded as reason for dismissal from a job with one employer? That is not the same as being deprived for ever from carrying out that job with any employer. 3.45 p.m. The Government are saying that a porter, for example, may be sacked by one employer but would be entitled to be employed by any other employer, but that they shall have the say whether one man shall for ever be dismissed from employment in his job by any employer. That is an offensive, evil and fundamental wrong to appear in any Act. I hope that the Government will understand that just because this is a comparatively minor measure, the extent of its frightfulness must not be misunderstood. I hope that they will agree to remove so offensive a statutory provision. If it has a mother, a father, a brother or a sister in another Act, that is no reason to have another illegitimate child."in the course of estate agency work".
Most of the contributions from Conservative Members would have been directed more appropriately to Clause 3, because Clause 4 is a genuine attempt to meet a desire expressed in Committee for a half-way house by which appropriate warning could be given by the Director General in order not to trigger off action that is specified in Clause 3.
The extent of the amendment in Committee was restricted, but there was a clearly expressed view from both sides that some warning system should be incorporated in the Bill, and this is what Clause 4 seeks to achieve. If the clause is taken out of the Bill, it will offer estate agents less opportunity for discussion and consultation with the Director General.It is clearly a great personal tragedy for me that Clause 3 was discussed when I had to be out of the Chamber. If I can find such great fault with Clause 4, which is designed to mitigate Clause 3, what would I have thought if I had been present in the discussion of Clause 3, which must be even more offensive than Clause 4? I very much dislike the powers in Clause 4 to make orders specifying practices, at present unheard of, that could force people eventually to be deprived of the right to pursue their livelihood. If this is mitigation, I am astounded.
The fact that the clause includes a gentle tap on the shoulder and a warning to desist gives me no joy. The power itself is contained in Clause 3. If it were not for my ignorance that my hon. Friends, doing noble work in Committee, had striven to have a similar provision included in the Bill, I should feel like dividing the House.A great deal of importance should be attached to the claim that this is a mitigating clause. It appears so, but the fact that it relates to the least significant offence signifies that it does not meet the intentions of the Committee or the intention of the mover of the amendment. Does that not cast doubts even on the good intentions of the promoter of the Bill in proposing such a limited clause of this kind?
I understand that in Saudi Arabia, if one is convicted of theft, normally one's right hand is cut off to make sure that one cannot commit the offence again. I suppose that it would be a mitigating factor if it were said that, instead of cutting off the thief's right hand, we would cut off his left hand. To that extent this is a mitigating clause.
In ignorance of what took place in Committee—and we owe a great debt to those who served on the Committee and have clearly highlighted many important defects in the shall not seek to press the amendment. However, if it were seen fit in another place to remove Clause 3, it would no longer be necessary to mitigate it; and perhaps their Lordships could also drop Clause 4. Clearly, one has not aimed high enough at the target here. Both clauses should be removed but it would be wrong to remove this one without also removing Clause 3.In those circumstances, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5
Supplementary Provisions As To Orders Under Sections 3 And 4
I beg to move Amendment No. 26, in page 6, leave out lines 29 to 38.
There might appear to be an inconsistency between this attempt to remove the exemption of estate agents from the protected provisions of the Rehabilitation of Offenders Act and my earlier amendment in relation to sexual and racial discrimination. If that impression exists, perhaps I might be allowed to dismiss it at the outset. The argument on the earlier amendment was that estate agents should not be subject to the extra penalty for offences of discrimination. If in the debates on the original Bills it had been argued that estate agents would face the extra penalty of losing their livelihood, the House might have held that to be unreasonable. However, this amendment seeks to discriminate against the estate agent. The earlier amendment was in itself discriminatory. If I am as successful as the sponsor of this Bill in the Ballot next Session, I may have to introduce the Estate Agents Discrimination Bill to correct the discrimination in this Bill. But this apparent inconsistency arises because, under the Rehabilitation of Offenders Act, some offences might be directly relevant, as sexual or racial discrimination is not, to the work of an estate agent. The principle of the Rehabilitation of Offenders Act, I think, was wrong. It struck at the principle of the truth. The truth is no longer a defence. If a man is guilty of an offence, that fact may not be stated against him in any circumstances when that offence is spent. I cannot agree with wiping the slate clean in that way. A man could continue in a career without inhibition or obstacle, but the past should be known and it should not be an offence to state the truth. I would therefore urge reconsideration of this provision in the Bill on the ground that, particularly in relation to the offence of fraud, it should not be a matter for concealment that a practising estate agent open. Fraud is a definite business offence That is surely germane to the business. It is not something to which we are all open. Fraud is a definite business offence which could easily arise in the course of an estate agency. The clause should be withdrawn and reconsidered to ascertain whether such offences, which are very likely and directly relevant, should be covered by it.Can my hon. Friend tell me of any other profession, trade, employment or qualification in respect of which it is provided that a conviction for fraud, dishonesty or violence outside one's employment, and for racial or sexual discrimination within it, is a bar to one's continuing to be employed in that profession or work?
My hon. and learned Friend reminds me of the point that arose earlier. It is perhaps a precedent that a profession should be subjected to this provision. I said earlier that the original statute is as recent as 1974. Here in 1978 we are asked to provide for exceptions to it. That is unreasonable as well, because Parliament is asked to consider the original legislation in the terms as defined in the draft Bill. If we are to have these further exceptions or exemptions or, as in the previous case, extra penalties, it means that Parliament is being asked, after the event, to add to the provisions of the Bill about which it was, perhaps, not happy originally.
The hon. Member for Romford (Mr. Neubert) presented an interesting case. He will recognise that the number of exemptions from the Rehabilitation of Offenders Act is small. We should be very careful about suggesting that, because estate agents hold public money, they should be made an exempt category from the Act in the same way as are members of the legal profession. It is a question of judgment as to which categories are included. I do not have strong views. The hon. Gentleman will recognise that the estate agents associations would regard this as detrimental to their interests.
Amendment negatived.
Clause 7
Appeals
I beg to move Amendment No. 28, in page 8, line 38, leave out 'in point of law'.
With this we may also take Amendment No. 29, in page 8, line 38, after 'law', insert 'or fact'.
I am disturbed that under the provisions of this clause it will be possible to appeal to the High Court only on a point of law. It may be that the Director General has made a decision which does not involve a point of law—it may be a matter of opinion. Under the clause the person against whom the Director General finds will have little chance of appeal, certainly not to the High Court.
I agree with my hon. Friend the Member for Ilford, North (Mr. Bendall). Often when dealing with one's constituents' affairs one advises them, when they have reached the end of the road on a substantive matter, that there is an appeal open to them on a point of law. Their faces fall a mile and they imagine that this will involve a major bill from lawyers. Ordinary people do not understand the difference between a point of law and a point of substance.
I repeat that my hon. Friend is right to raise this point, because the attempt to provide that an appeal can be mounted only on a point of law provides an escape route for those who seek to deny the proper processes of law. An appeal should lie against all these provisions. To restrict an appeal to a point of law is very restrictive. Nor is it entirely clear what a point of law would mean.My hon. Friend will remember earlier debates on Clause 3—
It being Four o'clock, the debate stood adjourned.
Bill ( as amended in the Standing Committee), to be further considered upon Friday next.
Employment Protection Bill
Order for further consideration ( as amended in the Standing Committee) read.
With the permission of the sponsor, Mr. Deputy Speaker, next Friday.
To be further considered upon Friday next.
Employment Protection (Amendment) Bill
Order for further consideration ( not amended in the Standing Committee) read.
To be further considered upon Friday next.
Nuclear Waste Disposal Bill
Order for Second Reading read.
Object.
Second Reading deferred till Friday next.
Hairdressers (Registration) (Amendment) Bill
Order for Second Reading read.
Object.
Second Reading deferred till Friday 14th July.
Companies (Qualification Of Company Secretaries) Bill
Order for Second Reading read.
Object.
Second Reading deferred till Friday next.
Finance (Reduction Of Taxation) Bill
Order for Second Reading read.
Object.
Second Reading deferred till Friday next.
Representation Of The People (Deposits And Nominations) Bill
Order for Second Reading read.
Object.
Second Reading deferred till Friday 14th July.
Urban Parishes Bill
Order for Second Reading read.
Object.
Second Reading what day? No day named.
Road Accident (Compensation) Bill
Order for Second Reading read.
Object.
Second Reading what day? No day named.
Age Of Compulsory Retirement Bill
Order for Second Reading read.
Object.
Second Reading what day? No day named.
Liquor Prizes Bill
Order for Second Reading read.
Object.
Second Reading what day? No day named.
Deer Bill
Order for Second Reading read.
Object.
Second Reading deferred till Friday next.
Theatres Trust (Scotland) Bill
Read a Second time.
Bill committed to a Committee of the whole House.—[ Mr. Crouch.]
Committee upon Friday next.
Sexual Offences (Scotland) Bill
Order for Second Reading read.
Object.
With the permission of the sponsor, next Friday.
Second Reading deferred till Friday next.
Local Government Act 1974 (Amendment)
Ordered,
That Standing Committee C be discharged from considering the Local Government Act 1974 (Amendment) Bill and that the Bill be committed to a Committee of the whole House.—[Mr. Clemitson.]
Committee upon Friday next.
Statntory Instruments, &C
With the permission of the House, I shall put together the two following motions.
Motion made, and Question put forthwith pursuant to Standing Order No. 73A ( Standing Committee on Statutory Instruments, &c.).
Landlord And Tenant
That the Agricultural Holdings Act 1948 (Variation of Fourth Schedule) Order 1978, a copy of which was laid before this House on 10th April, be approved.
That the Agricultural Holdings (Scotland) Act 1949 (Variation of First Schedule) Order 1978, a copy of which was laid before this House on 12th April, be approved.— Mr. Graham.]
Question agreed to.
Multiple Sclerosis (Naudicelle Treatment)
Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Graham.]
4.3 p.m.
In raising this subject, I do not want to be thought to be plugging a particular brand name or suggesting that Naudicelle is a catch-all cure for the scourge of multiple sclerosis. However, I believe that it is of fundamental importance that we and the Department of Health and Social Security give the closest attention to the dietary supplement containing a committee on borderline substances and derived from the evening primrose, which is sold in this country under the name of Naudicelle, as I shall refer to it. We should look at reasons why an increasing number of multiple sclerosis sufferers are, in a sense, conducting their own trial and marking their own personal results by the money they have to spend on the preparation as well as the testimony they almost all give to it.
I was first interested in the properties of Naudicelle by my constituent and friend, Mrs. Josephine de la Mare, secretary of the Derby Multiple Sclerosis Society. I regret to say that after a long illness, which was fought every inch of the way, she died last week. It is right that I should pay my own tribute today to this brave lady. She led me, in early discussions about dietary supplements, both to Mr. Joe Osborne of Newhall in Staffordshire, who has been working in the Burton-on-Trent area, linking Naudicelle dietary supplements with a proper regime of exercise, and to ARMS, the action group for research into multiple sclerosis. Mr. Osborne, through his own Member of Parliament, the hon. Member for Burton (Mr. Lawrence)—who has taken up his case energetically and who, I know, would have wished to be present today had he not been prevented by a prior engagement—and the ARMS group, in direct correspondence with the Department of Health and Social Security and the Medical Research Council, have been pressing for early publication of the results of recent trials at Newcastle, for further and wider trials of this substance and for support for the screening of close relatives of multiple sclerosis sufferers who may, it seems possible, be at greater risk, so that there shall be an early diagnosis of the disease. I shall argue that such wider study of a substance with no known harmful side effects and for which much is claimed, would be helped by the availability of Naudicelle on prescription at the discretion of the local general practitioner. Professor Field at Newcastle, who has been a pioneer of research into demyelinating diseases and in the screening of young people who may be at risk, is strongly of the opinion that Naudicelle can be of help to acute sufferers from multiple sclerosis in reducing the number, severity and duration of the attacks which they incur. There have been earlier experiments by Professor Millar and others into the effects of linoleic acids which principally derive from sunflower seed oils as a dietary supplement. The test which is most eagerly awaited now is the double-blind trial carried out by Professor Shaw, also at Newcastle upon Tyne. This, I understand, covers two groups of patients, the old chronic and acute relapsing patients respectively. Professor Shaw wrote to the hon. Member for Burton on 13th February to say:I include that last rider because it is important to stress very strongly that no one seriously asking for a wider study of the substance ought to claim, or ought to lead multiple sclerosis suffers to believe, that it is a cure for the disease. That is not what is claimed by those who have taken the greatest interest in it and, indeed, by the patients who claim, as I shall show, that it has many beneficial effects for them. It can, it is claimed, control the onset and severity of the attacks incurred by multiple sclerosis sufferers. The earlier the disease is diagnosed and caught, the greater the beneficial effects have been, it is claimed, in nonscientific trials. That is why we are all anxious to see the early publication of the second series of tests on acute relapsing patients being conducted by Professor Shaw. I spoke earlier this week to Professor Shaw. He told me that he will be calling together in London a group of his learned colleagues in the next few days to evaluate the results that he has achieved in the second test, prior to publication. In the nature of balloting for debates on the Adjournment, Mr. Deputy Speaker, it is not always possible to predict precisely when the debate will come. In a sense, it might have been better had we been able to have this debate a week or two after the publication of Professor Shaw's finding. However, what I shall be saying today will be argued ex hypothesi on the basis that if we learn something from the second series of tests conducted by Professor Shaw, that will be an additional reason and, I submit, an urgent reason for the Department's taking a fresh look at the claims which have been made so widely for this substance Naudicelle. Hon. Members who have communicated with the Department of Health and Social Security—as I know many of them have—have had to rely upon the testimony of those already using the substance, and the many doctors and others who have been working in this field, such as Mr. Osborne, to whom I referred earlier, who have used it often in conjunction with concentrated programmes of exercise and physiotherapy. I think that in this short debate it would be right to quote from at least some of the testimony which is typical of that which so many hon. Members have received from individual sufferers from multiple sclerosis. I shall mention one or two of the letters as an example of the pressure which has rightly been brought to bear upon Members of Parliament to make the DHSS look again very carefully at this matter. I have a number of letters here from which I shall quote very briefly. First, I have a letter from Mrs. Williams of Burton-on-Trent, who has had the disease for a long time and whose husband has worked closely with Mr. Osborne in that area. She says:"Our clinical trial has been completed but the results have not yet been fully analysed. Much of the statistical work has been done but there are still a few more calculations to be made before final conclusions can be drawn …. As you may recall, the results of the first part of the trial which were published in the British Medical Journal in October showed that Naudicelle had conferred no benefit on the treated patients. The part of the trial now under analysis deals with a different group of patients but I hope that no assumptions will be made about the outcome of the trial until the calculations have been completed. I am distressed to learn that in Italy Naudicelle has received wide publicity as an effective treatment for multiple sclerosis. This has raised hopes to a degree that is not in my view justified by the scientific information at present available."
Mrs. Williams then goes on to describe other beneficial effects of the treatment. She has had the disease for a longer period of time, and her letter is typical of many that we get expressing the general view that this substance is very beneficial indeed as a dietary supplement. The next letter is from a constituent of mine, Mrs. Mason, in Allestree, in Derby, who is talking of her husband. With this case, as with the previous one, I am following up a case which has been mentioned in the book published on the subject by Mr. Osborne. Clearly one wanted to look at such cases some months or a year later, to see whether this had been a false dawn in the case of the sufferers concerned. In each case that I have followed up it would appear that the improvement—or what they believe to be an improvement—has been sustained. Mrs. Mason, in talking of her husband, writes:"In the space of 12 months—from 10th May 1977 to the present day, 4th May 1978—there has been no need for me to visit my GP from either attacks due to MS or, indeed, any other ailment. In fact, I have not lost one working day from my employment … Of course, there have been those days when I felt a little below par, but I think one would agree all normal people experience those. Looking back over these 12 months on Naudicelle, I will now stress more strongly where the greatest stability has been created. Firstly, there has been a tremendous improvement in my vision … and a marked improvement in my circulation."
She goes on to say that the doctor is very pleased by this improvement. To the amazement of the local Press, her husband entered the sports for the disabled recently and was able to win the discus competition, the shot put and the 60 metres freestyle walk. He will go on to compete at Stoke Mandeville in September. Mrs. Mason says in the course of her letter that she thinks that the capsules should be available to multiple sclerosis patients on the National Health Service. She adds:"His wheelchair is now a thing of the past, now walking with either one elbow crutch or one walking stick, in the home on a very smooth surface he needs no aid at all, his arms are much stronger, his eyesight is better than it has been for years."
I appreciate that there are very great differences between the need to provide insulin for diabetic sufferers and what is claimed and what is so far known of the gamma-linolenic concentrates. However, I feel that when people speak in those terms, although they may be using a figure of speech, they are expressing, in what is to them the clearest possible way, the amazing effect that the treatment has had on them and on their own lives. They are lives which, I remind my hon. Friend, have been largely without hope because one of the cruellest features of the disease multiple sclerosis is that when it is initially diagnosed all too often in the past people have been told "I am sorry. There is no effective treatment. We can ease the downward progression of the disease, perhaps. We can make you comfortable for long periods of time. You will enjoy periods of remission. But the overall prognosis is pretty hopeless." That is what has caused so much despair and dismay amongst those who have had the disease diagnosed and why it is so important that we should look at every possible way of helping them. I have a number of other letters which it is perhaps unnecessary to quote at length because they all make the same basic point that their condition has stabilised and that some at least of the symptoms of this dreadful disease have been very much ameliorated over the course of months and years during which they have been taking this preparation as a dietary supplement. This is no scientific trial. I accept that. It could not possibly be. But it is of importance that we have the widest possible knowledge of these case histories, and I want to ask my hon. Friend to say how many submissions there have been from general practitioners about Naudicelle and about the beneficial effects of linoleic and gamma-linolenic concentrates of this kind, whether based on the evening primrose, sunflower or safflower oils. We need to know what the medical profession, directly in touch as GPs are with the average MS sufferer, is now saying about this, and I think that we also sould know whether there are any known harmful side effects to this preparation. I know of none, and I have been told of none. It is important that this should be established. If we argue, as I am in this debate, that it would be greatly in the interest of arriving at some kind of conclusion about the possible beneficial effects of Naudicelle if we were to have it more widely available so that there could be a test within the general population, we need to know whether it has harmful side effects. I believe and I submit that it has none. The Department has said in letters to me, to the hon. Member for Burton and to a number of other hon. Members that Naudicelle is a food and not a medicine, that it will keep a benign eye on tests into the efficiency of dietary supplements, and that it has allowed Naudicelle a Medicines Act licence under the 1968 Act with all the usual limitations, but no more than that. The problem is that for the many thousands of multiple sclerosis sufferers time is very precious and hope is rationed. Many of the letters that I have mentioned speak of the utter despair of those who have had multiple sclerosis diagnosed. This is why, in terms of those who have it at the moment and even more so in terms of those many thousands who will have it diagnosed in the next few years, it is important that we should now have from the Department a promise of early action. With that in mind, the questions which I wish to ask are these. Will the Department undertake to act on the results of the Newcastle tests if these happen to show beneficial results for acute relapsing patients? Will it, in those circumstances, be prepared to go back to the advisory committee on bordering substances and to the MRC and to consider once more the possibility of putting Naudicelle on the National Health Service at the discretion of the general practitioner concerned? Will it further extend the field trials under its own auspices prior to such reconsideration? At the moment we know of the double-blind trial which is going on at Newcastle and we know of the immense random sampling, if it can be so described, which has come to the surface as a result of the work of laymen such as Mr. Osborne and many individual branches and arms of the Multiple Sclerosis Society. We should like to see the Department itself intervening and taking a hand. Finally, I wish to go slightly wide of the subject of this debate and ask my hon. Friend whether the Department will undertake to extend and further investigate the system of diagnostic blood testing which has been developed by Professor Field. It is in this area that there is the most hope for combating those forces which appear to act early on the acute multiple sclerosis sufferer. If any of the claims for these dietary supplements have been justified, it is obviously in cases where the disease has not progressed through all its acute stages. In that stage most can be done by the dietary supplements. The badge of the Multiple Sclerosis Society is a key. We are all looking for the key which will unlock the mysteries of this disease. The most curious thing about the disease itself is that perhaps that key might be found in the seeds of that equally mysterious flower, the evening primrose."It is cruel to deprive them of it. They are like insulin is to a diabetic, and where would they be without their insulin, and yet that is free for diabetics."
4.22 p.m.
I am glad to have this opportunity of replying to the points raised this afternoon by my hon. Friend the Member for Derby, North (Mr. Whitehead). I know that his interest in this subject—which goes back a number of years—is shared by other hon. Members. Let me say frankly at the outset that there is very little I can add to what my right hon. Friend the Minister has already said on this matter in reply to hon. Members who have written to him and put down Questions in the House.
The reason for this is that in all fields of treatment and prescribing of medicines one must tread most carefully and cautiously and, as I hope I can show to the satisfaction of my hon. Friend that, in this area particularly, there is very good reason indeed for slow progress. Let me first explain something of the general context in which treatment under the National Health Service occurs. Family doctors, under the National Health Service, are free to prescribe any drug or medicine they consider necessary for the proper treatment of their patients, though they may be asked to justify their prescribing decisions, if the cost appears excessive, or if the substance may not be a drug. Only the doctor concerned can decide whether something is necessary for the treatment of his patient and whether that substance is something that should properly be prescribed as a charge on the National Health Service. If there is any doubt on the latter point, the doctor will consider carefully whether he would feel able to justify the decision to prescribe a substance if called upon to do so. If he is satisfied on this point, there is nothing to prevent him from issuing the prescription and it being dispensed in the normal way. I emphasise that it is the doctor, and only the doctor, who can determine which medicines or drugs should or should not be prescribed for a patient. It is certainly not the Department's job and it would be quite wrong for it or anyone else—including the patient—to attempt to influence the doctor's decision. My hon. Friend asked about representations from doctors. Over the course of some three years there have been 69 cases of family doctors who have defended their decision to prescribe Naudicelle for multiple sclerosis before their professional colleagues on the local medical committee. In 25 of these cases the doctor concerned was about to satisfy his colleagues that the substance had been properly prescribed in the circumstances. National Health Service legislation does not define a "drug". The question of which items or substances should or should not be regarded as drugs, which form part of the pharmaceutical services under the National Health Service Act, has been considered on several occasions by independent professional committees. Precise terminology has varied, but the basic conclusion of each committee has been that substances of a primarily nutritional nature cannot be regarded as drugs and, because they are therefore "foods", cannot be provided on National Health Service prescription. Often the question whether a particular substance is a drug depends upon the circumstances, and no definition could hold good for every case. However, for practical medical purposes, it is reasonable to expect that, where a substance is prescribed for a patient, the substance will have both pharmacological and therapeutic effect on the condition being treated. In certain conditions, a "food" may have the characteristics of a "drug". To advise on the circumstances in which items may be regarded as "drugs"—and therefore prescribable at National Health Service expense—the Department and the profession are very fortunate to have the services of an independent professional body chaired by Professor Barbara Clayton of the Hospital for Sick Children. This body is known as the advisory committee on borderline substances. The advisory committee plays a continuing role in examining claims of therapeutic efficacy for individual substances and preparations in relation to particular conditions—that is, whether in particular conditions they may be regarded as having the effect of a drug. Such is the prestige of this independent committee of experts among their professional colleagues that any recommendation which is made is usually acceptable to all concerned. However, I must point out again that whatever the committee's recommendations, the final decision whether a substance should be prescribed for a patient's condition rests with the doctor. The practical effect of this is that if the committee recommends that a substance acts like a drug for a particular condition then, if the doctor prescribes it for that condition, the National Health Service pays for it. If the committee does not so recommend, decisions to prescribe that substance may be challenged, but—and to re-emphasise the point that I made at the beginning about the prescribing freedom of the family doctor—doctors can and often do successfully defend their prescribing decisions, through the machinery laid down in regulations for this purpose, notwithstanding an advisory committee recommendation. I have described this framework in some detail, because it is germane to the fundamental question raised by my hon. Friend why the substance known as Naudicelle cannot at present be provided at National Health Service expense in the treatment of multiple sclerosis at home. I say "at home" deliberately, because a patient in hospital is provided with all his daily needs. These include whatever food and toilet preparations may be considered advisable for him and which he would be expected to provide for himself as necessities of normal life if he were living at home. As those who have had anything to do with the disease will know—my hon. Friend stressed this matter—multiple sclerosis is a very distressing disease and one which is most difficult to treat. I understand its effects are so variable between individual patients and that the course the disease follows is so erratic that often it is difficult for a layman to appreciate that a multiple sclerosis patient in remission is ill. I am told that many of the features of multiple sclerosis can present—variability, erratic and unpredictable developments—make every patient's case uniquely individual. That being so, formidable barriers are presented to those evaluating the efficacy of particular types of treatment. At any time patients may experience spontaneous remissions of the condition, sometimes of long duration, so that it can be most difficult to know whether encouraging changes are in fact due to treatment. Multiple sclerosis is the general term given to cover many symptoms of weakness and loss of use occurring in different parts of the body. Experts differ in their views on the disease, and for this reason no single method to treat the condition or alleviate the symptoms has been arrived at. One view is that if the proportion of saturated fat in the diet were reduced relative to unsaturated fat, it might help a patient's nervous system function more effectively. To explore the validity of this theory, multiple sclerosis patients have been given oils such as sunflower seed oil which contain the unsaturated fat, linoleic acid. An even less saturated fat, gamma linoleic acid is, I understand, found in the oil of the evening primrose, as my hon. Friend pointed out, and it is this oil which is contained in Naudicelle capsules. The capsules are a proprietary preparation manufactured by Bio-Oils Research Limited of Nantwich, Cheshire. From the outset it has claimed that the Naudicelle capsules contain a pre-digested form of linoleic acid which acts more directly and more quickly than other linoleic acid derivatives. This claim was included in the evidence submitted to the advisory committee on borderline substances in July 1974. At that time the committee convened a special meeting to consider in detail the whole question of the use of dietary supplements and linoleic acid and its derivatives in the management of multiple sclerosis. The committee examined in great detail all the available evidence published during the preceding years. In addition, it considered the written evidence from several consultants—some of whom participated at the meeting—who were either known to the chairman or who had been recommended by the Medical Research Council as being or having recently been engaged in research into the problem. I am advised that the research for the meeting, the trouble taken to canvass informed opinion and members' keen interest and sympathy combined to make this probably the most carefully prepared exercise the advisory committee on borderline substances had ever undertaken. Reluctantly, after much deliberation, the committee decided that there was no evidence which could justify recommending that linoleic acid or its derivatives should be regarded as a drug in the management of multiple sclerosis. The committee was particularly concerned that any advice offered should be founded firmly on scientific evidence. It felt that it would be wrong to offer advice that might raise false hopes among multiple sclerosis patients, their families or friends, that an effective palliative or cure was close at hand—a point emphasised by my hon. Friend. Members noted that research into the value of unsaturated fats in the management of multiple sclerosis was continuing and expressed their readiness to reconsider their decision if and when fresh scientific evidence became available. Moreover, in October 1974 a conference on multiple sclerosis, arranged jointly by the Medical Research Council and the Multiple Sclerosis Society of Great Britain and Northern Ireland, reached broadly the same conclusion on the question of dietary supplements as the advisory committee on borderline substances. Furthermore, it is worth pointing out that the Medical Research Council's annual report for 1975–76 stated:I must take serious note of this view. It is an expert one and is endorsed by my medical advisers in the Department. To give the House further evidence of the Government's constant concern to leave no stone unturned in this matter, I should like to point to my right hon. Friend's meeting with a deputation from the Multiple Sclerosis Action Group early last year. Particular attention was paid at that meeting to the claims that were being made for Naudicelle capsules and the superior virtues of their active ingredient, gamma-linolenate as compared with those of linoleic acid and to the need for further research. The deputation included a distinguished research scientist who, I understand, is engaged in the field of multiple sclerosis research and who explained the claims for gamma-linolenate very lucidly. However, my right hon. Friend had to tell the deputation that, having consulted the Department's medical advisers afresh about these claims and the value of further research, he felt that he would not be justified in initiating or supporting more research. He promised to ensure that any new scientific evidence that may appear is placed before the advisory committee without delay. I understand that, in addition to the research mentioned in the MRC report that I quoted earlier, a trial financed by the Multiple Sclerosis Society of Great Britain and Northern Ireland of dietary supplements, including Naudicelle capsules, has been undertaken at a hospital in the North-East. The results are expected shortly. The chairman of the advisory committee is in touch with the research teams concerned and hopes to convene at an early date a meeting of the committee, augmented by other experts invited for the occasion to consider these results. Of course, we can make no assumptions yet about the outcome of the trials. Since the submission to the advisory committee in 1974, Bio-Oils Research Limited has applied for and been granted a product licence for Naudicelle capsules under the Medicines Act 1968 as"The evidence for a beneficial effect of linoleic acid supplements in the diet is unconvincing but the existing studies should be continued; meanwhile no further trials should be supported."
Aside from the researches sponsored by MRC and the Multiple Sclerosis Society, I understand that Bio-Oils Research Ltd. has been granted a clinical trial certificate to enable it to have its product tested in relation to multiple sclerosis. The certificate is valid until November this year. Naturally, if the firm were then to produce evidence of the efficacy of its product in relation to multiple sclerosis, it would be open to it to apply for its existing product licence to be varied so as to specify the disease. If such a variation were granted there would be no question that Naudicelle might be regarded as a drug in the management of multiple sclerosis. The Government regard the promotion of health and the prevention and eradication of disease as a prime responsibility of my Department. However, we cannot will the results or the developments that we desire. I know of nobody who does not wish that a drug that would cure or alleviate multiple sclerosis were available. Certainly the moment any substance or preparation is shown scientifically to have a beneficial effect, then, whatever it is, it will be made available as soon as possible as a drug for the treatment of the disease. However, I am bound to remind the House, as I implied at the outset, that the history of research into multiple sclerosis is one of repeated disappointments. My hon. Friend has raised a number of issues including early diagnosis and the possibility of the Department having field trials about which I shall write to him. In the meantime, let me repeat that the reason why Naudicelle would be challenged if prescribed by a family doctor at National Health Service expense is that we are advised that the only scientifically reliable evidence that we have does not justify the belief that dietary supplements such as Naudicelle capsules are helpful in the management of multiple sclerosis."dietary supplements where unsaturated fatty acids are needed".
Question put and agreed to.
Adjourned accordingly at twenty-seven minutes to Five o'clock.