Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill

Lord Bourne of Aberystwyth Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 19th June 2018 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, briefly, the amendment in the name of the noble Earl raises an important point and I am happy to support it. As he said, this is a simple administrative change that could help people.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, I am grateful to the noble Earl, Lord Lytton, for his amendment and the noble Lord, Lord Kennedy, for his contribution.

The measure we will deliver through Clause 1 has been welcomed by stakeholders. It will return the practice of the Valuation Office Agency back to the position that applied before the Supreme Court decision in Woolway v Mazars. As highlighted by the noble Earl, Lord Lytton, it is important that we still consider how this measure will be implemented. In December last year, my department issued a consultation document that contained a draft of Clause 1 and set out how we plan to implement this change in the law. As we explained in that consultation, to protect ratepayers from unwanted backdated bills on the 2010 rating lists, we will allow ratepayers to choose whether they want their bill changed before 1 April 2017. We will achieve this by allowing a new right of appeal on the 2010 rating list for those ratepayers affected by Clause 1. I understand that my officials are already working with the Rating Surveyors Association and other professional bodies on the regulations to deliver this new right of appeal on the 2010 rating list.

For the 2017 rating list—about which I think the noble Earl, Lord Lytton, is concerned—the Valuation Office Agency will update the list as it becomes aware, through ratepayers and local authorities, of assessments impacted by the change in the legislation. Keeping an accurate rating list in this way is a normal part of the business rates system. Where appeals on the 2010 rating list mean that the valuation officer believes that the 2017 rating list also requires changes, I assure the Committee that these will be resolved by the Valuation Office Agency as part of its normal duty to maintain the list. Ratepayers will also be able to request a prioritised check of their 2017 rateable value if they believe it has been affected by the ruling.

From the consultation, we have seen widespread support for this approach to implementation. The amendment before us would require the valuation officer to make consequential changes to the 2017 rating list after they have resolved a case on the 2010 rating list. As I have said, it is the intention of the Valuation Office Agency to make these necessary changes. What is more, the requirement of the Valuation Office Agency to correct the 2017 rating list is already captured in primary legislation. That is significant. Under Section 41 of the Local Government Finance Act 1988, the valuation officer is required to compile, and then maintain, local rating lists. Therefore, if through the settlement of an appeal on the 2010 rating list the valuation officer concludes that the 2017 rating also needs to be changed, they are duty bound to make that change. I can offer that legislative assurance. With those assurances, I hope the noble Earl, Lord Lytton, will agree to withdraw his amendment.

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[Lord Bourne of Aberystwyth]

My Lords, I am most grateful to noble Lords who have spoken on this amendment and for that very considerate point from the noble Lord, Lord Kennedy, that he is trying to help the Government. I shall ensure that that is underlined when I get my copy of Hansard, and I appreciate his general approach on these issues.

I am grateful to noble Lords for raising this matter. The amendments before us would require a review of the impact of Clause 1. I agree with the point made many times by the noble Lord opposite; we probably have rather too many reviews, and this can sometimes get a little top-heavy. However, such a review would require compensation to be paid to local authorities for any refunds made to ratepayers as a result of Clause 1.

To assist the Committee in considering this, I will explain a little about how Clause 1 will be implemented by the Valuation Office Agency. Before I do, I remind the Committee that, as the noble Earl quite correctly anticipated, the Government do not intend to compensate local government for the reductions in rateable value that will flow from the implementation of Clause 1. This is not because we cannot estimate or measure those impacts—although there are considerable challenges in doing that. We are not compensating local government in this instance because the revenue it might have received from the Supreme Court decision in Woolway v Mazars was unexpected. Indeed, all professional bodies involved with rating, including the Rating Surveyors’ Association, viewed the Supreme Court’s decision as a surprise and an aberration: indeed, neither party to the case was arguing for it. It came as a surprise to political parties, too.

The decision disturbed the settled practice of rating as understood by valuation officers and ratepayers alike for decades. Therefore, any additional income was indeed a windfall. The noble Earl seemed perhaps to suggest that, if there had not been a refund or reduction, there was still the prospect of some obligation to repay. That is not the case. If the money has not been expended, there can be no question of any repayment. We are merely returning this windfall to ratepayers—something that I think is widely welcomed. In some cases these ratepayers have also lost small business rate relief as a result of having their property split. We do not believe that it is fair for these hard-working small businesses to be hit by large backdated bills, and we do not believe that it would be right for local government to benefit from revenue accrued in this way.

The amendments would require a review of the impact of Clause 1 and compensation for any refunds under it. Put simply, the impact of Clause 1 is to return the law to what it was always understood to be before the decision of the Supreme Court. It follows that, taken together, the combined financial impact of the Supreme Court decision and Clause 1 will therefore be neutral. So, in looking at just the impact of Clause 1 we are, in fact, looking at only part of the picture.

For those businesses whose rateable values were not adjusted by the Valuation Office Agency following the Supreme Court decision in Woolway v Mazars, there will be no change. The only situation in which there will be a repayment of business rates as a result of Clause 1 is where the Valuation Office Agency has amended rateable values to reflect the Supreme Court decision. That will be reversed.

The Bill will also allow those rateable values to be changed so that they once again reflect the practice of the Valuation Office Agency before the court decision. The way in which this will be implemented in practice by the Valuation Office Agency will be different in respect of the previous 2010 rating list compared to the current 2017 rating list. I will go into that in a bit more detail in a minute. I will ask the Valuation Office, because it does seem reasonable, to publish information as a consequence of Clause 1. I will make sure that any information that is readily to hand is published, that noble Lords receive a copy and that we leave a copy in the Library—because that will not involve any unreasonable burden at all.

Since 1 April this year the Valuation Office Agency has been unable to amend the 2010 rating list, other than as a result of an outstanding appeal. These rules protect ratepayers against very long periods of backdating, but they mean that, in this instance, ratepayers would see the benefit of the Bill in respect of the 2010 rating list only if they still have an outstanding rating appeal. Therefore, we will, through regulations and existing powers, allow a new right of appeal on the 2010 rating list for those ratepayers affected by the Bill. I assure noble Lords that it will be possible for local authorities and the Valuation Office Agency to identify these new appeals made as a result of the Bill and see the resulting change in the rateable value on the 2010 rating list. As I say, I will endeavour to ensure that information on that is passed to noble Lords.

These new 2010 appeals will, in part, provide the information sought in this amendment. However, they will not provide a complete picture of the impact, as some ratepayers will choose to use existing 2010 appeals, some of which may also deal with other, unrelated changes to the property or valuation. Therefore, the resulting change in rateable value will not always be an accurate reflection of the impact of Clause 1 alone—it is not necessarily that straightforward. Nevertheless, local authorities will be able to identify the new appeals on the 2010 rating list and see the resulting change in rateable value, and we expect these new appeals will, in part, give a reasonable guide to the impact of Clause 1 on the 2010 rating list.

I fear that it will be much more difficult to track the impact of Clause 1 on the current 2017 rating list. The Valuation Office Agency will implement Clause 1 on the 2017 rating list in the normal course of its business. For example, it may apply the new rules in Clause 1 in the course of putting new properties into the rating list, when correcting rateable values or when reflecting improvements or demolitions to the property. It may do this following a request from a local authority, following a check made by the ratepayer or using its own notices to amend the rating list. Within these different types of cases and different reasons for altering the rating list, the Valuation Office Agency cannot statistically isolate those which are due to Clause 1 alone. To resolve this, the VOA would have to manually examine each change and each valuation and calculate how much was due to Clause 1. Bearing in mind comments made with some justification about the financial impact of some of this on the VOA, this is not something we would want to do: it would be extremely resource intensive. Since this is an organisation responsible for clearing a backlog of 2010 appeals—something it is doing—implementing a new check, challenge and appeal system and delivering a revaluation in 2021, I am sure noble Lords will agree that we should not add to its burden in this way.

I fully understand that local government and others want an accurate view of the impact of Clause 1. I share that desire and have explained to noble Lords why this is so difficult on the current 2017 list. I hope I have reassured the Committee that some information will be made available in respect of the new appeals on the 2010 rating list that will be allowed once the Bill receives Royal Assent. As I said, I will ask the Valuation Office Agency to publish that information.

With regard to the Government’s stance on compensation, this does not signal any departure from the normal approach to compensating local government for changes to business rates introduced through the Budget. In this year alone, we expect to compensate local government to the tune of £1.5 billion for changes to the business rates system announced in previous Autumn Statements and Budgets. I hope the Committee will recognise that the circumstances of the Mazars Supreme Court decision and Clause 1 are very different in respect of so-called compensation. With all this in mind, I hope the noble Earl will agree to withdraw his amendment.

[Lord Kennedy of Southwark]

Is the Minister saying that the Chancellor did or did not say in the Budget that the Government were going to reimburse local government on these matters? I understood that the Chancellor had announced that the Government were going to reimburse local government but then the Government changed their mind.

[Lord Bourne of Aberystwyth]

My Lords, I say this with some hesitation because the noble Lord seems relatively certain about what he is saying, but I think I am right that in the 2017 Budget the Chancellor said that we were not going to reimburse local government in relation to this. I do not think that statement had been made before; or if it had, it was only shortly before. But I think in the 2017 Budget he made it clear that we would not be doing so. But that can be checked. As I say, I might be wrong on that.

[Lord Kennedy of Southwark]

That would be very helpful. Does the Minister have any estimate of the amount of money involved for local government? I accept that people have had the benefit of these sums of money for a period of time but, equally, everyone was surprised by the judgment of the Supreme Court. What are the sums of money involved for local government? They may be negligible or huge. We all know that local government is really pressed in terms of budgets and finance, and things are very difficult, with many competing demands. If it was a large amount of money, that could cause problems.

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[Lord Bourne of Aberystwyth]

My Lords, from what I can gather—admittedly, it is anecdotal, from speaking to local government and getting a feel for this—this position is relatively evenly spread across the country, although focused more in the urban areas, as your Lordships would expect. Again, I cannot give a precise number but I do not think it is a massive one. If I can give a more precise indication, perhaps I will do that in a letter to noble Lords ahead of Report. I do not think it is a massive number, from what I can gather.

[The Earl of Lytton]

My Lords, I thank all noble Lords who have spoken, and the Minister for his response. In defence of any appearance of lack of numeracy on my part, I say in connection with whether or not billing authorities have gained some windfall that the point outlined by the noble Lord, Lord Kennedy, is correct; namely, the budgetary process does not arise evenly or as an even offset or indeed even in a comparable year. But I do not proclaim to be an expert on local government budgeting and finance—thank goodness. I am only a humble valuer and therefore doomed to perdition for having only managed to get an O-level in ordinary maths. With that in mind, I beg leave to withdraw Amendment 2.

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[Lord Kennedy of Southwark]

I fully support the noble Earl in his Amendment 3. I think we all deal online very much more now in our work and in terms of official and unofficial things, so this is a very sensible amendment.

[Lord Bourne of Aberystwyth]

My Lords, with the indulgence of the House, I would like to pick up a point from the last group. I failed to address a point made by the noble Lord, Lord Shipley, on the pilot business rate retention issue. We are speaking to the Local Government Association and others about that. It is not straightforward but we are not convinced that there is any loss. Still, I shall seek to address that in more detail in the letter. I apologise to him for not picking that up earlier.

I thank the noble Earl for moving this amendment, which would require the Valuation Office Agency to publish on its website guidance and advice on the effect of Clause 1. I understand and appreciate the motivation behind the amendment, backed by the noble Lord, Lord Kennedy. Business rates can be a complex area and confusing to ratepayers, and of course we support ideas that would give ratepayers more information to help them to plan for their business rates liability.

On Clause 1, I agree that it is especially important that the VOA provide clear guidance to ratepayers on when they may be affected. Clause 1 concerns contiguous properties that are assessed for rating in more than one part, but there are many reasons why a ratepayer may have seen their property split into two or more rating assessments. That will include properties whose rating assessments have split because of the Supreme Court decision in Mazars, but will not be limited to that. Clause 1 will change the law to mirror the practice of the VOA prior to the Supreme Court decision. Those ratepayers may therefore fall within Clause 1. However, there will be many other reasons why a rating assessment may have been split into several parts. A property may have seen physical change requiring it to have more than one rating assessment, for example, or part of the property may have been sublet. These splits are unlikely to be related to the Supreme Court decision, and those ratepayers will not be affected by Clause 1.

It is therefore important that we explain this to ratepayers. The VOA already has clear guidance on its website explaining in simple terms how the law currently applies under the Supreme Court decision, including some clear examples. I assure the Committee that once the Bill receives Royal Assent, the guidance will be quickly changed so that it explains the operation of the new law under Clause 1. I further assure the noble Earl that the VOA will share that guidance in draft with the professional bodies, including the Rating Surveyors’ Association. The noble Earl will therefore have the opportunity to consider this guidance from his expert perspective before it is published. I appreciate that we are very fortunate in having him look at this legislation in some detail because of his professional understanding of it. This, together with the information that ratepayers can already access about their own property on the VOA website, will provide ratepayers with the information that they need to decide whether they fall within Clause 1.

I hope that with these assurances the noble Earl will agree to withdraw his amendment.

[The Earl of Lytton]

My Lords, I thank the Minister for that reply and the noble Lord, Lord Kennedy, for his support. The Minister probably credits me with a great deal more expertise than I feel I actually possess, but that is probably because, the more one knows about something, the more one realises one does not know. That seems to be one of the facts of life that one has to face. But I am reassured by what he said in terms of making sure that the information is readily available on the Valuation Office Agency’s website. Obviously, I am aware of some of the advice generally on that website, which for the most part seems to me to be clear. I thank the Minister for the assurances that he has given and I beg leave to withdraw the amendment.

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[The Earl of Lytton]

My Lords, I have some mixed feelings about the amendment moved by the noble Baroness, Lady Pinnock. In my own mind, I cannot quite get my head round whether this is to be a charge to discourage long-term empty properties as defined in the Bill or, in effect, an escalating fine. It seems to me that the two are slightly different.

At Second Reading, I highlighted the fact that there is a general lack of information about the reasons for long-term vacancy, and the high probability is that it varies quite a lot from one area to another. For instance, in some former industrial cities, whole streets of Victorian housing may have lain empty for some time because no one wants to occupy them.

On the definition of “empty dwelling”, it is a moot point, as far as I can see, as to the ease or difficulty of chasing the sums of money involved, as is the likelihood or otherwise of the “empty dwelling” label simply evaporating. I think that I may have used the example of an itinerant with a van load of cheap second-hand furniture going around populating odd properties that might otherwise be subject to this. The point is made not entirely in jest, because there is no plumbing the ingenuity of people who wish to avoid some impost or other.

Another point is that there is a reputational risk if one is not careful here. I seem to remember that, not very long ago, one local authority was said to be investigating the contents of people’s refuse bins, and I would hate to think of local government being again painted into that sort of scenario. One needs to be careful to ensure that there is a justifiable reason for an escalator.

If we are talking about what is in effect a fine, there would need to be a clear and justified framework as to how that would apply, possibly with provision for making an appeal against the charge. Now, I am not clear what happens about appeals against things like this. I am clear what happens with an appeal against one’s business rate assessment, and I am clear what happens with an appeal against a council tax banding. What I am not clear about is, where something like this comes in by dint of this type of legislation, if someone thinks that it has been unfairly applied, where do they go? I hope that a noble Lord, or a noble Baroness, with better knowledge than I have will tell me what the situation is.

I rather took to Amendment 7 in the name of the noble Lord, Lord Stunell. As we heard at Second Reading, there can be a number of different reasons why vacancy and long-term empty property status can apply. I think of the minimum energy standards regulations which came into force only a couple of months ago, making it impossible to let a property with an EPC of less than E. I think of the many hard-to-insulate properties—those Victorian properties with nine inch solid walls or suspended floors, where it is difficult to get insulation to the required standard.

In essence, the noble Baroness, Lady Pinnock, is right: there is often a local need to take a differential approach. I would appreciate the Minister saying how differential he thinks that that needs to be, or can be: whether it is endless or will be circumscribed in some way. I think of areas I know well in national parks, where you occasionally come across properties that are long-term empty, but also in former industrial cities, to which I referred. One needs to be careful about that. I do not have a solution, but I simply flag up those issues for further consideration.

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who have participated in the debate. I am most grateful to those noble Lords and the noble Baroness, Lady Pinnock, who tabled the amendments on the level of the empty homes premium, as they allow us to discuss the factors we have to consider in deciding the maximum charge on empty homes in setting the framework for local authorities. I reiterate that, once we have set the framework, this is a discretionary measure for local authorities: something we are giving local authorities discretion to administer, according to their local needs and personalised or very localised factors affecting particular properties.

I think we all agree that there is a clear case for increasing the cap on the premium that applies to long-term empty properties. The noble Lord, Lord Stunell, gave distinguished service in the coalition Government—I think in my current role—and rightly referred to the importance of the issue. We have borne down on it. My noble friend Lord Patten, who is not in his place, referred at Second Reading to how the number has reduced—we have squeezed it very effectively—but there is still more to do.

The debate is about the level to which we should take this charge and the circumstances in which it should apply. These are the difficult judgments we face. We propose through the Bill that owners of long-term empty homes should see their council tax bills double. This is a major step in allowing local authorities to incentivise such owners to bring their homes back into productive use.

One amendment tabled by the noble Lord, Lord Kennedy, would mean that owners of empty homes would be paying triple the level of council tax payable on occupied homes within two years, or within one year if his other amendment were to be enacted. In fairness, that is from the Labour Party manifesto. Perhaps it is all the more surprising that nothing happened in the other place on the Bill: no amendment was proposed, still less debated. That said, it is something we should discuss.

Under the amendments supported by the noble Baroness, Lady Pinnock, and the noble Lord, Lord Stunell, properties empty for between five and 10 years could face premiums of up to 200%, and those empty for more than 10 years could be subject to 300% premiums. I of course understand the rationale behind the amendments, and as homes are remaining empty for longer and longer, the logic of that is obvious: the figure goes up after five years and after 10 years. In addition, empty properties can be a nuisance to local residents, and potentially sites of crime or squatting. I share the concern about the need for robust measures to tackle what may become, and often are, blots on the landscape, to the benefit of those seeking a place to live as well as of local communities as a whole. I think we all understand that.

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[The Earl of Listowel]

I thank the noble Baroness for her intervention and I very much take note of what she says. I will try to be a bit more careful. There are certain places in this country where it is more difficult to let private property, and that is what I might have said.

What comes out of the debate is the question of how we make private rented property more attractive in those areas where it can be difficult to let. This might be a bit off the board but, as there are not enough properties to buy, it seems very important that rental property is made a more attractive option. I believe that the Government had been thinking of introducing new tenure arrangements so that tenants could have a minimum of three years’ security of tenure. If the Minister can say what progress there has been on that, or perhaps write to me with the information, I shall welcome hearing from him.

It also occurs to me that the private rented sector might benefit from some sort of arm’s-length body to oversee security of tenure and fair rents so that the winds of politics do not intervene in the market too much, making long-term investment unattractive and putting people off becoming tenants. That is another issue on which I would be interested to hear from the Minister, and, again, he might like to write to me about that rather than respond now. The Government are introducing an ombudsman with responsibilities in these areas, and people might have recourse to him or her if they experience unfair treatment. Perhaps the Minister can respond on that as well.

Finally, I might not have declared my interest as a landlord, as listed in the register.

[Lord Bourne of Aberystwyth]

I thank noble Lords very much for their contributions. I appreciate that the noble Lord, Lord Bird, is not in his place at present but he lobbed in a hand grenade, as it were, before departing the scene. I appreciate the point made by the noble Lord, Lord Kennedy, and will try to address some of the suggestions from the noble Lord, Lord Bird. He is always worth listening to on this area in particular, but he always has some innovative ideas.

I am grateful to noble Lords for raising the question of how the legislation will apply. The noble Lord, Lord Kennedy, is suggesting a one-year vacancy. I am also grateful for the cross-party support that we have received in both Houses for the measure that we are bringing forward, and I appreciate the points about possible refinements.

We are not seeking to alter the circumstances in which the premium is applied. Ninety per cent of local authorities applied a premium in 2017-18, and we are not aware of widespread concern that the two-year period is inappropriate. I feel that one year might be far too short a period in many circumstances. There are some exceptions where the premium does not apply, one of which is people going into social care, which the noble Earl, Lord Listowel, raised. However, situations that are not exceptions include that of people who might be adapting a property and trying to sell it. I fear that in those circumstances a year would be too short a period, and I have no doubt that there are other situations where that would be the case as well.

I understand the rationale for decreasing the qualifying period at a time of great concern about empty properties, but I remind the House that we have squeezed the number of empty properties down to a low level—a level that it has not been at for a long time, if at all. We have to make a judgment about how long the timeframe should be. I know from correspondence that the department has received that some home owners take longer than expected to sell or rent out their properties in a challenging local market. In such circumstances, retaining the two-year qualifying period therefore strikes the right balance. I understand the point that the noble Lord, Lord Kennedy, made about his desire to strengthen the incentive.

The amendment in the name of the noble Lord, Lord Bird, would allow councils to decrease or increase the qualifying period as they see fit. Local authorities would be given complete freedom to remove the requirement that a property be substantially unfurnished in order to be considered empty. I am happy to address those points. Although we should support giving councils as much discretion as is reasonable, the noble Lord’s amendment could lead to a confusing situation where the property, depending on where it is located, could attract premiums after just a few months or after quite a few years.

The principle of specifying that an empty property is one which is substantially unfurnished is well understood, and we will come on to amendments addressing that issue later. The risk of the amendment proposed by the noble Lord, Lord Bird, is that it would give local authorities an open door to extend that definition to types of properties that are not genuinely empty. Premiums could be applied to furnished properties that are periodically occupied either because they are someone’s second home or a job-related home or simply because the owner is away on holiday. I know there are views about second homes and properties that might be considered to be underoccupied, but this legislation is about long-term empty properties, which is a different matter. The design of the system already provides the right balance of flexibility for local authorities.

On the points raised by the noble Earl, Lord Listowel, about the impact of these provisions, I remind the House that local authorities have a discretion they can apply either in relation to excluding properties along the energy-efficiency line suggested by the noble Lord, Lord Stunell, or in terms of something highly personalised which relates to a particular property and the person in it. That is why it is best left to the local level to determine this issue.

The noble Earl also asked about the private rented sector and three-year leases. We are committed to dealing with this issue, which has strong support from the sector, and we are making progress. He will be aware that the private rented sector has grown significantly, and continues to grow. We are putting in place a framework that will apply in a reasonable way, with tenant fees proposals—which we will be looking at shortly—and that addresses the control of deposits, requires client money protection and so on. I will cover that in the normal write-round letter that I will issue to pick up the points made by the noble Earl.

With the comments I have made about how we are not persuaded of the need to alter the minimum period from two years to one year or anything below two years, I urge the noble Lord, Lord Kennedy, to withdraw his amendment.

[Lord Kennedy of Southwark]

I thank all noble Lords who have spoken in this short debate. I am happy to withdraw my amendment at this stage. This amendment and those in the previous group were designed to explore whether we have got this right. I may wish to come back to these amendments—particularly those in the previous group—on Report, but I am happy to withdraw this amendment given what I have heard from the noble Lord.

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[Lord Kennedy of Southwark]

My Lords, briefly, I endorse the comments made in the debate so far, particularly those from the noble Lord, Lord Deben. He is absolutely right. Suffolk is a beautiful part of the world. I know that as well as him; I spend a fair bit of time down there. It is a wonderful place. He is absolutely right that people should not be allowed to pretend to have businesses and to take advantage of these things to avoid paying what they are supposed to pay to provide for local services. That is completely wrong. I hope that when the Minister responds to the debate he can give us some comfort that the Government will look at this. It is totally out of order. If someone lives in an area they should contribute to the services provided by the local authority.

[Lord Bourne of Aberystwyth]

I thank noble Lords very much indeed for what has been an interesting and diverting debate on this amendment. I will seek to deal with all the points that have been made. I will deal with the points made by the noble Baroness, Lady Pinnock, relating to the definitions of “unoccupied” and “substantially unfurnished”; then I will seek to deal with the issues relating to second homes brought up by the noble Lord, Lord Shipley, reinforced by my noble friend Lord Deben and briefly addressed by the noble Lord, Lord Kennedy.

The definitions are clearly important to the successful operation of the premium. Indeed, they are already important to its successful operation because it already uses these terms. It is something that more than 90% of local authorities are already doing. In so far as I can see, none of them is having difficulty interpreting these terms. If anyone can come forward with some issue they feel needs addressing I would be very happy to look at it. It is of course right that local authorities must understand the meaning of these terms and that they are applied consistently across England, as I said on an earlier group of amendments. I certainly share that view.

It might assist noble Lords if I explained a little about these terms. I do not want to repeat what the noble Baroness said about the information letter of 2014, although the more she said the more I felt that we have covered these points. You cannot produce a 100% reliable definition by saying how many cups and saucers you can have left in a cupboard or how many forks and spoons can be in the drawer. To say that these furniture items would normally be there—a bed, chairs, a table, a wardrobe, a sofa, and white goods such as a fridge, freezer or a cooker—is as good as it gets for guidance.

I think that the noble Baroness said at one stage that it was not always possible to have utility bills and that some people were overseas and so on. If that is the case, it will be very difficult for them to reinforce the fact that the property is being used. That is the whole point: these people might seek to have their property as occupied so that they do not have to pay the empty home premium. If they cannot establish it, because they are overseas or so on, that seems absolutely correct. As I say, I am very happy to engage with the noble Baroness and others to look at this issue if they can bring forward evidence that local authorities are having particular difficulties with this. However, in the light of the letter and in the light of case law, I do not think that this is an issue.

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[Lord Shipley]

My Lords, the noble Lord, Lord Deben, explained what could happen. It is not complicated to do; the question at issue is probably simply whether the law in Wales is working effectively. At 70 days proof of letting, that ought to be easy to demonstrate, because evidence will have to be produced. I hope that the Government will speak urgently to the Welsh Government and assess what evidence they have, and, as a consequence of that, possibly organise a meeting of all parties involved in this issue to see whether legislation could be introduced in both Houses which would help to solve this problem. To help this along, I plan to table a set of Written Questions later this week, because securing an even better evidence base than we have at the moment would be helpful. This is not a problem just of east Suffolk, parts of Cornwall and one or two other places. I think it is quite a general problem now, or at least it seems to be, in many parts of the country which are attractive holiday areas.

[Lord Bourne of Aberystwyth]

I thank the noble Lord very much for putting down lots of Questions: my officials will be doing cartwheels at the news. However, there is a serious point behind what he is putting forward and I absolutely accept that this is a national issue. Our officials will certainly be speaking, if they have not already—I suspect they may have done—to Welsh and Scottish officials to see what is being done there. We are taking it urgently. I will cover this in more detail in a letter: it is certainly very much on the radar though I had not expected that it would come up in this context—and I should have. I will make sure that we get some more detail in the letter and I thank noble Lords for raising this. I realise now that the noble Lord, Lord Campbell-Savours, who is not in his place, raised a similar issue in Questions today. I could not quite understand what he was getting at but I understand now and I apologise to him. We will make sure that he gets the letter as well.

Given that, and the fact that I and my department take this seriously, I ask the noble Baroness, Lady Pinnock, to withdraw her amendment.

[Baroness Pinnock]

I thank everybody for a really interesting and stimulating debate. My noble friend Lord Shipley raised some issues. I am glad that my proposal has gained support because this affects all areas of the country that have large numbers of second homes, including in the north—the Lake District, for instance. We have all noted the new definition of “seriously considered”. I look forward to this being seriously considered.

I brought the definition of “unoccupied” and “substantially unfurnished” to the attention of the Committee because, with the rise in the premium, it is more likely that there will be challenges from owners that their homes are furnished and all the rest of it. Therefore, it would be helpful to local authorities to have more definite clarity on this, rather than an information letter. I think that could be achieved. I know that from time to time the department sends guidance notes to local authorities, which have greater import than information letters. That would give them something to fall back on if they are challenged, as I think may well happen. Those are the reasons for my endeavours this afternoon but I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Thornhill (LD)]

My Lords, I declare my interest as a vice-president of the Local Government Association. I fully support the words of the noble Lord, Lord Kennedy. I thank the Minister for the very detailed and informative letter he sent all of us after Second Reading; in particular, his response to my comments on fiscal incentives and deterrents with regard to empty homes. I really appreciated that and took on board what he said. Perhaps he will indulge me by allowing me to hang on to the one measure that he did not elaborate on—that is, the matter of penalties.

It is probably little known that councils actually have the ability to levy a civic penalty on an owner for not informing councils that their home is empty. It is not surprising that it is little known; the maximum penalty for doing so is actually £70, so it is no surprise that it is rarely, if ever, used, and that the general public are oblivious to it. In fact, I suspect that if we talked to the general public we would find they believed that by informing the council that their home was empty they would actually pay less or no council tax, so that shows that we have a long way to go. As the average council tax, the band D monthly payment, is now around £165 a month, a penalty of £70 is nothing—it is neither a penalty nor a deterrent. So this is a small matter but I feel that the two should have been taken together. If we are going to, justifiably and rightly, hike up council tax premiums, the penalty that goes with not informing the council should send the same level of message—£70 is, frankly, derisory.

I see both these measures—the penalty and the increased premiums—as really important in motivating councils to move this up their agenda. I say this with a degree of experience in local government, particularly in district councils where this is not a priority, largely because of costs. At Second Reading we heard a lot about powers not being used because of costs, but I think that together these two things would encourage councils to publicise the need to not leave homes empty, and to make it a publicly unacceptable issue so that people would be enraged by it and want us to do something about it. If there were to be a review, would we also review penalties in this regard, as I feel that it would be a missed opportunity if we did not? I beg to move.

[Lord Bourne of Aberystwyth]

I am very grateful to the noble Lord, Lord Kennedy, and the noble Baroness, Lady Thornhill, for their contributions on this group of amendments that relate to how we seek to address the penalty point just covered by the noble Baroness and the issue of the review, which was raised by the noble Lord.

The amendments would require the Government to review the impact of the increase in the maximum permitted level of the empty homes premium. I pause briefly to say that I think I am going to organise a list of all the things that the noble Lord, Lord Kennedy, has asked us to do reviews on. I know that he very often says that we have so many things out for review and then we have a critique of that, but we have had a couple of issues today at least where he has asked for reviews. I am only teasing.

[Lord Kennedy of Southwark]

I am very happy that the department does this. My issue with the reviews is that the Government never come to a conclusion.

[Lord Bourne of Aberystwyth]

I think the noble Lord’s issue has been that there are so many of them that there is a bit of a logjam. Anyway, we could perhaps debate that on some other occasion.

The amendment tabled by the noble Baronesses, Lady Pinnock and Lady Thornhill, would also require the Minister to determine whether the review should also consider the impact of any penalties on council tax payers who fail to tell their local authority that their property is empty. The review would need to be undertaken within two years of the legislation being enacted, with a report laid before both Houses of Parliament.

I am afraid that the Government are unable to accept the amendments. First, the Government are clear that the use of the premium and the consideration of its impact and enforcement are best undertaken by local authorities. As I have said, we are giving a discretion to local authorities; some local authorities do not apply the premium at all while others apply it in its totality. We have provided local government with complete discretion on whether to introduce the premium. Noble Lords will recognise that local government has been running the empty homes premium now since 2013, with a steady year-on-year growth in the number of councils making use of the power. Fewer than 30 councils have no premium in place at all. That gives a very clear indication that councils across the country consider this to be a useful power to drive behavioural change in owners of long-term empty properties.

In considering the Bill’s proposal to increase the maximum level of the premium from 50% to 100%, I have been struck by the widespread support from across the House—admittedly with variations, but there has been support for that increase. There is clear confidence that this is a sensible step to take. Given that, I am not persuaded that we should introduce uncertainty into the process by committing the Government to a review within two years. That could be perceived as demonstrating a lack of faith in the measure which, of course, is not the case.

Housing: Private Rented Sector

Lord Bourne of Aberystwyth Excerpts

Thursday 14th June 2018 Lords Chamber

[Baroness Wilcox]

To ask Her Majesty’s Government what progress they have made in encouraging the private rental sector to increase housing supply.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, 20% of housing is in the private rented sector, which has doubled since 2002. Since 2012, the Government have been encouraging investment in the segment of the private rented sector known as Build to Rent.

[Baroness Wilcox (Con)]

I thank my noble friend for his short reply; it is very helpful. Have the Government any plans to extend the tenancy length before stamp duty land tax is charged, and what are they doing to ensure that local authorities and people in general are aware of the new changes that are coming? I have only recently visited some of these things that are being built and the people who are moving in. It is absolutely wonderful to see the change; it is so well suited to the fast-changing lives of our younger generation.

[Lord Bourne of Aberystwyth]

My Lords, I thank my noble friend for her encouragement of my short responses, followed by her two questions. Stamp duty land tax will not be payable by many people purchasing tenancies; it will be very unusual outside London, and then only at the higher-value end of the market. Any changes are clearly a matter for the Treasury. My noble friend is quite right about the need for publicity for many of these excellent schemes that we are pursuing and, quite apart from her and others’ questions, we obviously ensure that details are provided on the website and that our partners are aware of this. It is a very good story to tell: we are progressing many changes through this House and the other place in relation to the private rented sector.

[Lord Clark of Windermere (Lab)]

My Lords, the Minister has indicated that there has been a considerable increase in the buy-to-let market. The informed newspapers say that it is drying up. Are they wrong?

[Lord Bourne of Aberystwyth]

My Lords, if I may slightly correct the noble Lord, I said that there was great growth in the private rented sector generally. I think it is fair to say that there has been a slowdown in the buy-to-let sector. Some of that is in response to tax changes, but I think it has stabilised now.

[Lord Best (CB)]

My Lords, 99% of the growth of private renting has not been about private landlords building new homes but private landlords buying existing homes, hence the corresponding decline in owner-occupation. May I ask the Minister about the concerns of Generation Rent, which are really about affordability and security—what you pay and how long you can stay in the property? Is there any progress with the important proposition from Sajid Javid—then Secretary of State for housing—that tenancies be for four years or so in the future in normal circumstances, rather than six months to one year, which can be so unsettling for tenants, particularly those with families and children?

[Lord Bourne of Aberystwyth]

My Lords, first, the noble Lord may not appreciate that the latest figures indicate an increase, although a modest one, in the rate of owner-occupation. On Generation Rent and the issue of longer tenancies, he is right that most of the private rented sector is not new builds, although we have 97,000 in the pipeline for the Build to Rent sector. However, in relation to longer tenancies, the noble Lord is absolutely right that the previous Secretary of State was in favour of this, as is the present one—very much so. We are pursuing that with the British Property Federation, which is the main player here and is committed to offering three-year tenancies and longer.

[Baroness Thornhill (LD)]

My Lords, the National Planning Policy Framework is due to report shortly. Will the Minister assure us that, in order to incentivise Build to Rent—I have some hope that this might provide additionality—there will not be further policy shifts which will in effect let developers off the hook when it comes to their financial contributions to councils with regard to the community infrastructure levy and Section 106 agreements? They provide important amenities and, in particular, contributions to social and affordable housing. Secondly, can he assure us that there will not be a trade-off in the quality of build against speed and the quantity of delivery?

[Lord Bourne of Aberystwyth]

My Lords, quality of build is important and is included in the NPPF; we have consulted on that and are now considering the responses, as the noble Baroness will know. There is also a commitment in the NPPF, as she will know, to people who want to rent their homes, and a particular provision on affordability.

[Lord Marlesford (Con)]

My Lords, I draw the attention of the House to my interests as declared in the register. Will the Government do more to encourage local authorities to facilitate the conversion of redundant agricultural buildings into residences to let?

[Lord Bourne of Aberystwyth]

My Lords, we are clearly in favour of anything we can do in that regard. As my noble friend will know, we are progressing a policy of a higher premium on empty buildings in legislation that is currently passing through this House, and it is important that we look at all avenues available to us to ensure that we use buildings for housing.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I refer the House to my relevant interests. While the overwhelming majority of private sector landlords do a good job, does the Minister agree that compulsory landlord licensing schemes, like the one in the London Borough of Newham, are an effective way of tackling rogue landlords? Will he join with me in congratulating Newham Council, the present mayor, Rokhsana Fiaz, and the previous mayor, Sir Robin Wales, on the effective work they have done in conjunction with the Metropolitan Police which has protected tenants but also uncovered council tax and income tax fraud, people trafficking, and people hiding in plain sight who were wanted by the Metropolitan Police in connection with serious crimes?

[Lord Bourne of Aberystwyth]

My Lords, I know that the noble Lord has raised this issue before, but not quite on such a broad front. This morning it is almost as if he had been sponsored by the London Borough of Newham. However, I congratulate him on getting that in. It does much good work, as all London boroughs do, and licensing, where appropriate, is certainly effective. The noble Lord will know that we are doing much in this House and elsewhere to encourage effective licensing of landlords, and I thank him very much for his support in that regard.

[The Earl of Listowel (CB)]

My Lords, I declare my interest in the property I have. I welcome what the Minister says about the increasing supply of housing in the private sector given the latest statistic released in March that 120,510 children are living in temporary accommodation, which is the 26th rise since December 2010. Would the Minister consider, among other options, developing an arm’s-length body to oversee the private rented sector so that more tenants would enjoy security and more landlords would enjoy security and a predictable future in their investment?

[Lord Bourne of Aberystwyth]

My Lords, I congratulate the noble Earl on what he does in promoting the position of children and families. That is absolutely appropriate and is something that we watch very closely. We will seriously consider any means of ensuring that that figure, which is too high, comes down.

Client Money Protection Schemes for Property Agents (Approval and Designation of Schemes) Regulations 2018

Lord Bourne of Aberystwyth Excerpts

Wednesday 13th June 2018 Lords Chamber

Moved by

[Lord Bourne of Aberystwyth]

That the draft Regulations laid before the House on 3 May be approved.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, I will refer to these regulations as the approval regulations and the requirements regulations respectively.

The private rented sector is an important part of our housing market. It has doubled in size over the last decade and letting agents now hold approximately £2.7 billion in client funds. The client money held by agents includes rent money and money provided by landlords for the purpose of making property repairs. However, there is no legal requirement for these agents to obtain client money protection. Tenant and landlord money is therefore at risk if an agent goes bankrupt or if client funds are misappropriated.

The main letting agent representatives, ARLA Propertymark and National Approved Letting Scheme, support making this protection mandatory. It is estimated that around 60% of agents already hold such protection. Making client money protection mandatory will ensure that every tenant and landlord has the financial protection they need. It will bring the property agent sector into line with others where client money is held, such as the legal profession and travel operators.

Before I go on to set out the detail of the regulations before the House today, I want to establish the legislative context. The Housing and Planning Act 2016 provided powers for the introduction of client money protection requirements. Following the passage of this Act, the Government invited the noble Baroness, Lady Hayter, and the noble Lord, Lord Palmer of Childs Hill, to chair a client money protection working group. They are not in their places today, although I know they are both supportive and regret that other pressing engagements mean they cannot be here with us today.

The working group reported in March 2017 and its recommendation to make client money protection mandatory was accepted by the Government. I thank both the noble Baroness and the noble Lord very much for their work and the report. The Government consulted on implementing mandatory client money protection in November 2017 and there was broad support for our proposals.

I shall now introduce the two sets of regulations. The first set—the approval regulations—establishes the procedure for the Government to approve privately run client money protection schemes. The second set—the requirements regulations—then requires agents in the private rented sector to belong to one of these approved schemes if they handle client money. These two sets of regulations, which together provide the framework for client money protection, are the subject matter for debate before the House today.

I turn first to the approval regulations. These require any client money protection scheme to be approved by the Secretary of State in order to operate. This will ensure that all schemes meet minimum standards and offer sufficient financial protection. The Government do not intend to create their own scheme at this time; that would be unnecessary given the number of schemes operating in the market already. However, the regulations do allow the Government to do so in future so that protection can be maintained in the unlikely event that the market ceases to offer provision. This is a prudent step.

In order to obtain approval, client money protection schemes must meet certain conditions, including those designed to ensure that landlords and tenants can easily obtain compensation. The scheme administrator must ensure that it has procedures in place so that valid claims are paid as soon as reasonably practicable. They cannot make deductions from these payments. The scheme administrator must also hold a level of insurance cover that is appropriate, given the amount of client money held by its members. Schemes must put in place arrangements so that in the event of a scheme closing, their members would be notified and transferred to an alternative scheme.

The approval regulations also establish minimum standards that must be set in scheme rules. This includes that members must hold money in a separate client account; have written transparent procedures for handling client money; and maintain adequate records. Scheme rules must also require members to hold an appropriate level of professional indemnity insurance cover. This is to ensure that client money protection schemes are not overwhelmed with claims. Rather, the first port of call for a consumer making a claim should be their agent and their agent’s insurers. Lastly, schemes must provide key information to the department on a quarterly basis to enable us to monitor their performance. If a scheme’s standards are not maintained, its approval can be withdrawn.

I now turn to the requirements regulations. These regulations will require all property agents in the private rented sector to obtain membership of a government-approved client money protection scheme by 1 April 2019. These agents will need to meet increased transparency requirements; they will have to publish details of scheme membership and inform clients when they lose cover. The Government recognise that robust and effective enforcement is essential to the successful implementation of mandatory client money protection. Agents who fail to get client money protection may be subject to a financial penalty of up £30,000, and those who do not meet transparency requirements could face a penalty of up to £5,000.

These regulations level the playing field by ensuring that all agents offer protection. For those agents who do not yet have client money protection, we anticipate that obtaining it will not be disproportionately burdensome. Indeed, the average annual fee for cover is £300 to £500. It is important to highlight that these requirements apply only when landlord and tenant money is held by a property agent and so is at risk. Agents can instead choose to eliminate this risk by, for example, allowing tenants to pay rent to their landlords directly. The new requirements should not, therefore, deter new entrants to the market.

Noble Lords may be aware that we have committed to introducing a new regulatory framework for letting and managing agents and prohibiting letting agents from charging fees directly to tenants. That legislation is progressing in the other place. Mandatory client money protection will be an important part of this regulatory framework that will give landlords and tenants assurance when using an agent. I commend these regulations to the House.

[Lord Best (CB)]

My Lords, I declare my relevant interests as in the register. I commend the Government’s two sets of regulations, which will make it compulsory for anyone who wants to operate a lettings agency to have client money protection insurance that is effective and not just a sham.

I felt unable to speak on this subject in this Chamber when the noble Baroness, Lady Hayter, pursued it so successfully, as I was then the remunerated chair of the Property Ombudsman, which was involved in this debate. However, I retired from that role last year and can now say what I think without any conflicts of interest.

Compulsory insurance sounds a dull technical matter of little interest, except to the landlords whose money is held by agents—mostly the rental payments due to the landlord later—who should now be better protected. However, the benefits of these measures go much deeper than simply covering a loss to a landlord if their agent disappears or goes out of business. These regulations will remove altogether from the lettings industry all those often small-time and sometimes pretty dubious property agents from whom not just landlords but tenants need to be protected.

In the absence of regulation, anyone can set up as a property agent. At present, no qualifications or training or financial resources are needed. The requirement to belong to a compulsory client money protection scheme will weed out all those firms, often comprising a single individual, that insurance companies assess as too risky to insure. Those are the men or persons of straw, who have no expertise and may even have a criminal record. Removing the less desirable elements from the still somewhat fledgling lettings industry is a necessary precursor to the forthcoming agents’ fees ban—the planned ban on the phenomenon of agents charging fees to tenants as well as landlords. This important ban is the next item on the list of measures to clean up the world of private lettings. It will often be the least reputable agents who have been making their money by persuading landlords to use their services by undercutting the fees that they ask of landlords and, instead, squeezing the tenant, who has no choice in the matter. The CMP regulations will make the fees ban more successful by removing in advance all those agents who are unable to get the obligatory CMP insurance.

My question to the Minister is about enforcement. We know that the problem with all aspects of regulation for the private rented sector is that trading standards officers and, in other contexts, environmental health officers, are not geared up to enforcing further regulations. Budgets for the work of these officers have been massively reduced as part of the wider cuts to local government spending. What steps is the Ministry of Housing, Communities and Local Government taking to ensure the additional enforcement that these regulations—and others covering property agents already enacted or yet to come—will require? Is it expected that the opportunity to retain the money from civil penalties will provide enough finance to cover the extra enforcement costs? While I wholly support the CMP regulations before us, it would be helpful to have reassurance that their effectiveness will not be undermined or blunted by an absence of resources for their all-important enforcement.

--- Later in debate ---

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I draw the attention of the House to my registered interest as a vice-president of the Local Government Association. I thank the noble Lord, Lord Bourne of Aberystwyth, for bringing the regulations forward today. I know that he has worked hard on this, and I am genuinely pleased that they have come forward.

To go through some of the history, client money protection was debated during the passage of the dreaded Housing and Planning Act 2016. That Act received Royal Assent on 12 May 2016, and this, frankly, is one of the few welcome measures in it. As we heard, a working group was then set up, chaired by the noble Lord, Lord Palmer of Childs Hill, and my noble friend Lady Hayter of Kentish Town. I join other noble Lords in thanking both of them for the excellent work they did on that to bring forward the scheme we have. Their consultation closed in October 2016 and their report was published on 27 March 2017. The very next day the noble Lord himself announced from the Dispatch Box that the Government would go ahead with a mandatory scheme of client money protection, and everybody was very welcoming of that.

The two regulations are before the House today, 13 June 2018, and the requirement to become a member of a scheme comes into force on 1 April 2019. As I said, I am delighted that the Government have finally done this, but you certainly could not accuse them of acting in haste on the matter. The regulations to require letting agents to belong to a mandatory scheme come into effect just short of three years after the Act giving the power for this to happen received Royal Assent. We all want this to work properly and to be right, and we all want it to be a success and effective—but having to wait 35 months to get to this point is a little excessive. So, although I welcome the regulations, perhaps the Minister when he responds could take on board the point that it seems a little excessive. I cannot see why it could not have been done in 18 to 24 months.

Having said that, what the noble Lord outlined is welcome, both as regards the approval regulation and the requirements regulation. I am delighted that they are coming into force, although I endorse entirely the comments made by the noble Lords, Lord Best and Lord Shipley, on enforcement. The regulations must be enforced properly, and to do that will require lots of training. Again, however, I very much welcome them.

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who have contributed to the debate on these regulations, and I will seek to address the points made by noble Lords in the order in which they were made.

First, the noble Lord, Lord Best, knows exactly what he is talking about in the whole area of our department’s work, so I always listen to him with great interest and much respect. He painted a picture of the need for action against a background of dubious property agents who inhabit a sort of Dickensian and Trollopian netherworld. While I accept that there are some agents who certainly need this urgent action, it is worth saying that the great mass of landlords and agents operate reputably, and I know that the noble Lord will agree with that point. Nevertheless, we need to weed out—words the noble Lord used—firms, agents and businesses that operate in a risky and nefarious way. This development of a fledgling letting fees agency industry—again, to use the noble Lord’s words—is against the backdrop of the Tenant Fees Bill, which, as I say, is in the other place and will probably be with us before the Summer Recess.

To explain the context of the link between the regulations and the Bill, as a result of the Housing and Planning Act we can act in relation to the regulations only by initially transferring the authority to do this to district councils. However, when we consulted on these measures, the feeling was that it was appropriate that trading standards should be the agency responsible, so the tenant fees legislation, when it comes into force, will move the responsibility from district councils to trading standards. That explains the choreography.

The nub of the critique of the noble Lord, Lord Shipley, related to the cost of enforcement. He is absolutely right that enforcement is key here, and in a moment I will address some of the very fair points that he raised. It is intended that the fines picked up by trading standards will be the resource available and, as the noble Lord said, there is no reason why the system should not be self-financing. Indeed, there is every reason why it should be. I will come to the points that he made in that regard, as well as the other points that he raised.

The noble Lord, Lord Shipley, again referred to the need to clean up the world of private letting, and that is what this series of measures is about. The Government’s thinking is that we want a market for the private rented sector, which has been growing. The noble Lord referred to the increase in the number of people renting in the private sector. There are now 4.7 million and that figure is set to rise further. Our thinking is that, although it is inappropriate to regulate rents, we need to create an appropriate framework so that we know that the people operating within the industry do so lawfully and appropriately, and that is what this and the other suite of measures that we have been talking about seek to address. That is the background to what we are seeking to do.

The noble Lord then made a very fair point about publicity. Obviously, we will want to ramp up the publicity once the regulations are agreed. The approval regulations will come into force immediately—the day after they are passed, I think—and we will want to publicise that on the website. We will want to work with the Local Government Association on how we can give the regulations wider publicity to make sure that potential tenants and landlords know about them. If I may, I will write to noble Lords to seek to allay concerns and to address the very fair point made by the noble Lord.

Like Mary Tudor, when, many years from now, the noble Lord, Lord Kennedy, is no longer with us, the Housing and Planning Act 2016 will be there within him, because this is certainly something that he feels very strongly about. I agree with him about the importance of these measures and the need to ensure that they are successful. I believe that, as reflected in the contributions from around the House, this is something that we have come together on. We are at our most effective when we agree essentially on what we want to do and then carry it forward. That has been very important, and I pay tribute to noble Lords who have helped in that process.

Motions agreed.

Grenfell Tower

Lord Bourne of Aberystwyth Excerpts

Monday 11th June 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, with the permission of the House I beg leave to repeat the Statement made by my right honourable friend James Brokenshire, Secretary of State for Housing, Communities and Local Government, in the other place earlier today. The Statement is as follows:

“With permission, Mr Speaker, I would like to make a Statement on the Government’s response to the Grenfell Tower fire, meeting our commitment to update the House following the Opposition day debate on 16 May. I am also writing to the Chair of the Select Committee to provide a formal report on progress, a copy of which will be placed in the House Library.

As we prepare to mark a year since that tragedy, this will be an extremely painful time for the community. Many honourable Members provided powerful and poignant contributions in the e-petition and Opposition day debates last month, and I know that the whole House will join me in sending the bereaved and survivors our love and prayers.

The fourteenth of June 2017 saw the greatest loss of life in a residential fire since the Second World War. Seventy-one people lost their lives on the night of the fire, and a former tower resident who was rescued from the 19th floor passed away earlier this year. The start of the public inquiry was a timely reminder of that terrible human cost: a baby who never lived to learn how much he was loved; three generations of a family wiped out; and heroes who died saving others. Nobody could fail to be moved by the extraordinary tributes paid by family and friends to the loved ones they lost, by their courage and dignity in the face of unimaginable loss, and, yes, by their anger too. A catastrophe of this kind should never have happened in the United Kingdom in 2017 and, when it did, the initial response was not good enough. Nothing can undo the anguish and devastation this has caused, but as the Prime Minister has said, we can and must do right by the memory of those who lost their lives and those left behind, by supporting those affected, securing justice and, above all, ensuring that nothing like this can ever happen again.

There has been an unprecedented effort across government and our public services. Help is being provided on a range of issues—from advice on benefits to emotional and mental health support. In total, we have spent over £46 million of national Government funds and committed a further £34 million to help meet rehousing costs, deliver new mental health services and deliver improvements to the Lancaster West estate. The appointment of my right honourable friend the Member for Ruislip, Northwood and Pinner as Grenfell victims’ Minister has helped ensure that the voices of those affected inform the response. We set up the independent Grenfell recovery task force to help and challenge the Royal Borough of Kensington and Chelsea to provide better support for residents and rebuild trust. I want to thank everyone for their tireless support, particularly the emergency services and the public and voluntary sectors.

Clearly, one of the most pressing issues has been rehousing those who lost their homes. A large-scale programme of investment work has been under way to ensure homes are of good quality and personalised to meet the needs of families. The council has acquired more than 300 homes in and around the borough. A total of 203 households needed new homes, and 198 have accepted permanent or temporary accommodation. That means that all but five households have accepted offers, and 134 have now moved in. Most of the work to ensure all homes that have been accepted are ready to move into is complete, and we expect many of the remaining properties to be ready in the coming weeks. While those households are preparing to move, the council has ensured that they have all have had the option to move into more suitable accommodation, but I remain concerned about the 43 households who are living in hotels. My ministerial team has met many of them and I have personally written to all of them to find out what barriers exist in each individual case and how we can overcome them.

This is not where any of us wanted to be one year on from the fire. While there has been progress in recent weeks, overall the pace has been too slow. My department and the independent taskforce continue to provide scrutiny and challenge to the council, and we have provided additional resources directly to the council to help speed up this work. We will not rest until everyone is settled into new homes.

Those affected also badly need answers and to see justice done. The Grenfell Tower inquiry and Metropolitan Police investigations will ensure this happens, but we must also learn from what has happened. Over the past year my department has been working closely with fire and rescue services, local authorities and landlords to make sure that other buildings like Grenfell Tower are safe. Remediation work has started on two-thirds of buildings in the social housing sector, and the Prime Minister announced last month that the Government will fully fund the removal and replacement of potentially dangerous ACM cladding on buildings over 18 metres high owned by social landlords, with costs estimated at £400 million, and we have made it clear that we expect building owners in the private sector not to pass costs on to leaseholders. To that end, I recently met leaseholders and put their concerns to representatives from industry at a number of roundtables. Some in the sector, such as Barratt Developments, Legal & General and Taylor Wimpey, are doing the right thing and taking responsibility. I urge all others to follow. The private sector must step up, and I am ruling nothing out if it does not.

In addition, I recently welcomed Dame Judith Hackitt’s final, comprehensive report following her independent review of building regulations and fire safety. In response, I committed to bringing forward legislation to reform the system of fire safety and give residents a stronger voice. Having listened carefully to concerns, the Government intend to ban the use of combustible materials on the external walls of high-rise residential buildings, subject to consultation. We will publish the consultation next week.

It is essential that people living in buildings like Grenfell Tower are not only safe but feel that the state understands their lives and works for them. There is no question but that their faith in that has been shaken. That is why, as well as strengthening building and fire safety, we will be publishing a social housing Green Paper by the recess. I am confident that these measures will help us to rebuild public trust and deliver the meaningful, lasting change that is needed.

Our country has seen many difficult times, but that night at Grenfell Tower was one of our darkest hours. We will never forget those who died. We will not falter in our support for those who are still grieving, or flag in our determination to ensure that no community has to go through such agonies again. In doing so, we can be inspired by the incredible spirit of the people of north Kensington and the way they have come together. And when we say never again, we mean it. I commend this Statement to the House”.

--- Later in debate ---

[Lord Kennedy of Southwark]

Before the Minister responds, I make clear that I am also a vice-president of the Local Government Association.

[Lord Bourne of Aberystwyth]

I am grateful to the noble Lord for refreshing our memory.

I start by thanking both the noble Lord and the noble Baroness—and the noble Lord, Lord Shipley, over a period of time—for their general support in dealing with what has been a very difficult, heart-rending situation. It has aided the consideration of some very important issues in this House, so I thank them very much.

I shall try to deal with the points made by the noble Lord and the noble Baroness in so far as I can. If I miss any—and on some points of detail—I may need to write to them, and I will of course ensure that that is copied to other noble Lords participating on the Statement, with a copy placed in the Library.

First, I thank the noble Lord and the noble Baroness for their words about the civil servant and public sector work that has been done in the community since the dreadful fire at Grenfell, and about the faith sector and the charitable sector. I was recently at a meeting in the community hall of the local mosque, where Muslim Aid was talking about the work done and the commitment of people in the faith sector and particularly mentioned the West London Synagogue. This was a general commitment from the faith sector in the area, an outpouring of support from individuals and from the third sector, which is a continuing feature of what is happening at Grenfell.

The noble Lord mentioned points in the North Kensington Law Centre report. I know of the report but I must admit that I have not studied it in detail. I will certainly do so and cover those points in response to him. He will be aware that experts will be sitting with Judge Moore-Bick on the second phase of the inquiry, which I think helps to provide the disinfectant of sunlight which we all welcome for transparency. He asked questions raised by the North Kensington Law Centre about rent in the same general terms. Of course, there is a rates, rents and utilities holiday—although holiday is not the right word. There will be no rent, rates—council tax—or utilities payable until June 2019, I think, for families who were in Grenfell Tower or Grenfell Walk. For other families, there is an abatement of those bills, although not on the same terms—to a lesser extent.

The noble Lord referred to the rehousing effort. Let me say first that every household has been offered at least one alternative. The noble Baroness mentioned somewhere without sunlight in a basement. I am extremely surprised to hear that, but I will look at that case. If she has more detail, that would be useful. I join her in paying tribute to the work done by Grenfell United. We may have been at the same occasion when Grenfell United was present, and it has done a remarkable amount, as have others from the community.

The noble Lord asked about retrofitting sprinklers. He will be aware that new blocks more than 30 metres high, I think, are having sprinklers fitted. There is a general issue about retrofit. He will know that this was not recommended by Dame Judith Hackitt: she dealt with the issue but did not recommend that. However, in addition to the £400 million support specifically for ACM cladding, if local authorities can justify it, we will certainly consider financial flexibility for them. This follows recommendations done earlier by the Lakanal inquiry about sprinklers, and that local authorities can do that independently. There is nothing to stop that happening, except perhaps the finance, but we will look at financial flexibilities if the case is made.

The noble Baroness referred to interim measures while the cladding work is being done. Of course, we are committed to all the combustible ACM cladding being removed from both social and private sector buildings. We think we have identified all the private sector buildings and are confirming whether all of them have ACM cladding. We have identified buildings that might have it and we are now seeking to ensure that. If I am wrong, I will address it in a letter, but I believe that local authorities have now come up with definitive figures on that. Interim measures will be in place while or until the cladding is removed, and this will be a matter for the local fire and rescue services to advise on and determine. It would certainly include the 24-hour presence of safety wardens, a ban on the use of car parks, and so on. We are obviously in discussions with local authorities on measures that need to be taken and, as I say, I think we have identified all the buildings. I hope that that addresses all the points raised, but if I have missed any I shall certainly address them in a letter.

[Baroness Finlay of Llandaff (CB)]

My Lords, on 14 June it will be unbearably painful for everybody who was involved. I should declare an interest as my daughter, seven weeks after a caesarean section, was called in. She worked that night as an emergency medicine doctor. She had no doubt that she had to go in as something major was going on.

The Government are saying never again. This year, or next year, we may be thinking of it—everyone will this year—but in decades on it will be emblazoned on the memory of every survivor and everyone who was bereaved, although the rest of the country may have forgotten. I just wonder whether the Government have given any consideration to discussing with Grenfell United and others—not now when it is so raw, but in the future—about marking the day as a national fire safety day, whereby the whole country will be expected to test their fire alarms, carbon monoxide alarms, and evacuation procedures. We would get into a national pattern and once a year make sure that in every workplace, every residence—everywhere that people are—they remember that fire safety is paramount. Some schools I know in the area have upped their evacuation procedures since this happened, but I offer it as a suggestion.

[Lord Bourne of Aberystwyth]

My Lords, I am very grateful to the noble Baroness for those points, and I am sure that the whole House would want me to thank, through her, her daughter for the assistance that she offered. I reiterate what I said on Grenfell United and its work, as well as that of the entire community.

In relation to 14 June this year, the community has wanted it recognised in a low-key way, if I can put it like that. We want to talk to the community about how they feel it is best remembered one year on. That is important. I shall certainly take away ideas brought forward by the noble Baroness to ensure that we do not forget about fire safety and the lessons learned. Perhaps in the same spirit, in terms of the future of Grenfell Tower itself, it is important for the community to lead on what happens in years to come. I am sure that it will regard this as something we never want to forget, and nor should we.

[Lord Campbell-Savours (Lab)]

I welcome the Minister saying that action in the case of the private sector had not been ruled out. That should send a very important signal to the private sector that there needs to be action.

In the Statement I think I heard the Minister say that he thought the local authority had identified all the private property. If that is the case, surely the electorates in the area—the people who live in areas where these blocks exist—are entitled to know where those blocks are located whether they are in the public or private sector. My first question is whether that information will be made available to the general public.

Finally, there are a number of hotels nationally that are covered with what looks like the material we are talking about, but we simply do not know. What is happening in the case of those hotels with this material?

[Lord Bourne of Aberystwyth]

I thank the noble Lord for his comments, particularly his recognition that the Secretary of State is determined about remedial measures for private sector buildings. The position is that local authorities have powers to identify through one of the Housing Acts—I forget which one—the properties concerned in relation to cladding. In many cases, information is being made available through local authorities, using their powers. I think I am right, and will correct it in the letter if I am wrong, that we have had confirmation from all the local authorities that that work has been done.

[Lord Campbell-Savours]

To whom are they making this information available?

[Lord Bourne of Aberystwyth]

They are making the information available to the department. This brings me to the point that the noble Lord was pursuing as to whether we will make that information public. We have to consider whether that would be helpful in addressing the work we need to do, based on safety considerations, discussions with the fire services, and so on. Considerations of safety are paramount here; we do not want to cause concern for the people in the blocks involved by issuing public information in that way. Again, I will cover that in the letter if I may.

In relation to hotels, any buildings with this cladding and above the requisite height are brought within our consideration, whether they are in the private or public sector, whether they are housing, hospitals, and so on, as was referred to earlier. This job of work has to be done with every building that is above the requisite height and has the combustible ACM cladding that was identified at Grenfell.

[Lord Faulks (Con)]

I declare an interest as a resident of the borough, and a further interest in that my wife is a councillor for the Royal Borough of Kensington and Chelsea. She is not a councillor concerned with any of the issues that arise from the inquiry, but she is extremely concerned on a personal level with all the issues that arise from Grenfell.

I am sure the Minister would agree that the Government have been extremely critical of local government throughout the period that has elapsed since the fire. That has been a narrative to which the Government and the Opposition have subscribed. There has been a significant counternarrative, of which the Minister may be aware, in a remarkable article written by Andrew O’Hagan in the London Review of Books.

I do not ask the Minister to come to any judgment about these matters at this stage. We have an inquiry, which has made a promising start under the skilful chairmanship of Sir Martin Moore-Bick. However, there is one unfortunate part of the Statement that deals with challenging the local authority. I respectfully suggest that we should not be rushing to judgment and that central government should assist not only local government but all other agencies in dealing with this terrible problem in the way that is most effective.

[Lord Bourne of Aberystwyth]

My Lords, I am most grateful to the noble Lord for his comments and understand his personal concerns and those of his wife. I could well understand somebody from the area having a particular concern.

The noble Lord referred to the article in the London Review of Books, which I confess not to having the privilege of reading, but I will do. He referred to criticism of local government in the Statement. The part the noble Lord must be referring to is setting up the independent task force at an early stage, which was asked to provide scrutiny and challenge to the council. That is a normal usage of words when such a task force is appointed, but I take the noble Lord’s point. I certainly agree with him that Sir Martin Moore-Bick has made a very good start on the inquiry, which will run its course, as will the police’s consideration of criminal charges; I must be very careful not to say anything in detail about either of those. I understand the position that he is coming from and will seek to read the relevant article to which he referred.

[Lord Shipley (LD)]

My Lords, I am grateful to the Minister for his clarification on a number of issues so far. I seek responses to two issues that I think would benefit from further clarification.

First, there is a single sentence on page 4 of the Statement that says:

“Remediation work has started on two-thirds of buildings in the social housing sector”.


By implication, remediation work has not started on one-third of buildings in the social housing sector. Is the Minister in a position to explain why that is the case? Is there a list in the department as to which blocks we are talking about and which local authorities we are talking about, and why that remediation work has not yet started? What is the timescale for starting going to be, and what is the timescale for completion of that remediation work? The Minister may not be able to respond to all that today—to do so in a letter later would be fine—but is it possible to define what remediation work actually is? It is one thing to strip off cladding, which is dangerous, but replacing it with suitable cladding which is warm and will reduce people’s energy bills is clearly important. So I am not quite clear what remediation actually means.

Secondly, and very briefly, we have a date for the publication of the social housing Green Paper, which will be “by recess”. It would be helpful to the House if we knew when a debate would take place on the Green Paper. I hope that it will not just be the case of the Green Paper being published and then going out to consultation and the House itself not having the opportunity to debate it. I hope that, rather, time is allowed for a full debate on that Green Paper, because we have been waiting for it for many months.

[Lord Bourne of Aberystwyth]

I thank the noble Lord very much indeed for that and shall seek to deal with the points that he has raised. On remediation, I do not disagree with him on the importance of ensuring that any appropriate measures take account of the need for proper insulation and ensuring that we meet our climate change targets, and so on—but the most important thing here is the target of ensuring that people are safe. That is the remediation that we are talking about. That work in relation to the public sector has started on two-thirds of buildings. In relation to the other third, interim measures will be in place; for example, 24/7 security workers will be there to ensure that fire wardens are there.

I shall seek to cover the point on the timescale in a letter, if I may, with some more detail that the noble Lord asked for. One reason why the work might not have started on one-third of the buildings is that it may displace tenants—so full account must be taken of that. Suffice it to say, appropriate interim measures will be agreed with fire and rescue authorities in relation to those that have not had work started on them yet.

The noble Lord asked for a debate on the social housing Green Paper, and I hope that we can accommodate that. Of course, there are means available to the Liberal Democrats and others, too, and I am sure that somehow we will make sure that there is proper consideration of this important Green Paper. One reason for the delay to which the noble Lord refers is that we were very keen to talk to people, through Grenfell United and others in the community, to learn about particular points that they may feel needed addressing in relation to the social sector—points that have been made in relation to dealing with complaints, and so on, that arise. That is one reason that it was felt appropriate to take that into account in working through the Green Paper.

[Baroness Lister of Burtersett (Lab)]

My Lords, I welcome the Statement and, in particular, its acknowledgement of the anger felt by many in the area and many survivors. It says that it is,

“essential that people living in buildings like Grenfell Tower are not only safe but they feel the state understands their lives and works for them”.

I do not know whether the Minister read the Observer yesterday—just to add to his reading list—but there were some very moving interviews in it, including with a survivor called Mouna El-Ogbani. One of the things she said really jumped out at me. She talked about,

“how we were treated by the government, as if we are nothing .… It’s just box-ticking for them. They don’t look at us as humans, only as numbers”.

That suggests that the people of Grenfell do not feel that the state understands their lives and still do not feel that the state is really working for them. I welcome what the Minister said about talking to people around Grenfell about the forthcoming Green Paper, but what will the Government do now to ensure that both Grenfell survivors and social tenants generally feel that the state understands their lives and works for them?

[Lord Bourne of Aberystwyth]

I thank the noble Baroness for some very valid points and for her general welcoming of the Statement, which refers to the anger felt by the community—an anger that we can all understand—and the fact that people feel that the state is not on their side. This is something that we must seek to put right and it is one element of the social housing Green Paper on which we can all come together and discuss how it is taken forward. I did not have the privilege of reading the Observer yesterday. The Sunday Times also had some very good articles on the Grenfell situation and on ensuring, as the noble Baroness said, that people feel that they are humans, not numbers. Whenever I have spoken to anybody from the Grenfell community, that message comes across loud and clear. I have seen the hours and hard work that people from all parts of the community have been putting in—not least civil servants—and the anguish that it has been causing them. I hope that that helps to convince people that we really do care about the people of Grenfell. The important thing is that we carry this forward and that nothing like this ever happens again, and I know that the House is united on that.

[Lord Scriven (LD)]

My Lords, I am sure that the Minister will agree that preserving life and saving life is just as important whether you live in Southampton, Sheffield or Sunderland. If so, then why are the Government not committing to making the retrofitting of sprinklers mandatory in tower blocks and finding the funding for that nationally, as advocated and recommended by the Royal Institute of British Architects expert fire safety group, set up after the Grenfell fire?

[Lord Bourne of Aberystwyth]

The noble Lord makes some valid points about the importance of a national response, whether it is Southampton, Sheffield, Sunderland or Carlisle. He is absolutely right. In that context, I should say that we keep very much in contact with the devolved Administrations as well, to ensure that we are joined up on this. The noble Lord referred to a particular report that recommended retrofitting, but, as I have indicated, that was not the recommendation of the Hackitt review. The Hackitt review said that this was not a silver bullet and shied away from recommending compulsory retrofitting. I have said that it is open to local authorities to fit them and to ask us to use financial flexibilities where they can make an appropriate case for it, because the £400 million is specifically meant for the removal and replacement of combustible cladding. In other situations, if the local authority wants to make a case for retrofitting, the department will certainly look at it.

Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill

Lord Bourne of Aberystwyth Excerpts

2nd reading (Hansard): House of Lords
Monday 4th June 2018 Lords Chamber

Moved by

[Lord Bourne of Aberystwyth]

That the Bill be now read a second time.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

I am grateful to the noble Lords who have given up their time to discuss the Bill. Their engagement is a recognition of how important these measures will be for people across the country. I am looking forward to hearing the considered and expert views of the House. These views are always welcome, as we work together to ensure our laws are both fair and robust. The Bill is much needed, something recognised in the Commons, where it passed without amendment. We have moved quickly to introduce it, to ensure that ratepayers receive the urgent help that it will provide, and it is designed to address two basic needs. First, it restores previous valuation practice for those hard-working business ratepayers affected by the so-called staircase tax. Secondly, it aims to reduce the number of empty and unused homes, helping those who are struggling to find a place to live.

I turn to the detail of the Bill’s first measure, which relates to the so-called staircase tax. Clause 1 provides clarification to the rates bill for businesses that occupy or own several adjoining properties. Noble Lords will be aware that, for more than 50 years, businesses operating in adjoining units or rooms—accessed from a common corridor or staircase—were assessed as a single property for business rates. This practice was widely understood and accepted by the Valuation Office Agency and rating surveyors. A 2015 Supreme Court decision, in Woolway v Mazars, found this rule to lack a legal basis. Instead, it found that each unit of a property accessed from common areas should have its own rating assessment, regardless of whether the properties are adjoining or part of the same business.

The unexpected consequences of the 2015 judgment have brought unwelcome change and uncertainty for business ratepayers. Some businesses which previously had one rating bill now receive several. In most cases, this has not led to a change in what businesses pay overall, but in two circumstances bills have increased, leading to what has been described by some as a staircase tax. First, when some properties were broken down into individual units, the total rateable value of their holdings also increased as a result. This led to an unexpected increase in bills, which was backdated to 2010 in some cases. Secondly, the change saw some ratepayers lose their small business rate relief, which helps ratepayers who own properties with rateable values of up to £15,000. It ensures that over 600,000 small businesses pay no business rates at all. To ensure that it only helps small businesses, it is targeted at ratepayers with only one property. However, with businesses operating in adjoining units or rooms now receiving two or more rates bills, some ratepayers also lost some or all of their relief. We estimate that the numbers affected are relatively low—fewer than 1,000—but they deserve to have their relief reinstated.

Therefore, Clause 1 restores the widely accepted and understood practice of the Valuation Office Agency, and those affected will be assessed as a single property once again. This will ensure that these businesses, which have already paid their fair share, do not continue to suffer from the unexpected burden imposed by that judgment. This will be a key outcome of Clause 1, and we are implementing change retrospectively—to as far back as 1 April 2010—to ensure that the earlier provision remains throughout. We have been able to bring forward this measure without amendment because of the support we have received in drafting the clause from the Rating Surveyors Association, the Royal Institution of Chartered Surveyors and the Institute of Revenues Rating and Valuation. Their expertise has been invaluable and I am grateful for their assistance, as are the Government.

The second measure of the Bill relates to empty dwellings. A shortage of housing continues to be a barrier to progress in this country, at a time when the average house price in England is almost eight times the average income, and when over 1 million households are on social housing waiting lists. For this reason, the Government are taking action on many fronts. Tackling empty homes is essential to bring more properties on to the market so that we make the best use of the homes we already have.

Clause 2 follows the commitment we made in last year’s housing White Paper to continue to support councils as they encourage efficient use of existing housing stock. As announced in the Autumn Budget, the Bill increases the maximum level of council tax premium that local authorities can charge on long-term empty homes from 50% to 100%. This means that local authorities will have the discretion to double the council tax bills of properties that have been empty for two years or more. This measure adds to existing powers we have given to local authorities to bring homes back into use. These include the 50% council tax premium, the new homes bonus scheme and the ability of councils to charge the full rate of council tax on empty homes.

Following these important interventions, I am pleased to report to the House that the number of properties empty for six months or longer has dropped by a third since 2010, from 300,000 to just over 200,000. In addition, the power to charge a 50% council tax premium has been taken up by nearly nine out of 10 councils, all but three of which applied the full 50% rate in 2017. Where councils have used the power every year since 2013, the number of properties subject to a premium has fallen by 9%. This is welcome, but we can do more. That is why, through the Bill, we are allowing local authorities to strengthen the incentive to bring empty homes back into use.

It is right that decisions on whether to apply a premium and at what rate remain with the local authority concerned. We are not changing these arrangements. Councils know their areas best and will take local priorities into account when deciding whether a premium would be appropriate. There will of course be individual circumstances where to apply a premium would not be right. Under current arrangements, homes that are empty due to the occupant living in Armed Forces accommodation for job-related purposes, for example, are not subject to these rules. They may also be exempt due to annexes being used as part of the main property, as they cannot be separately let.

There are statutory exemptions for properties left empty for a specific purpose, such as the owner going into care. Councils can also apply discretionary discounts as they see fit in cases such as hardship, fire or flooding. Where home owners are struggling to rent or sell a property in a challenging market, I do not doubt that local authorities will wish to reflect carefully when deciding whether to issue a determination, and then to reflect on what that determination should be. Our guidance on this issue, published in 2013, made it clear that the premium should not be used to penalise owners of homes that are genuinely on the market. Only properties that would already have been potentially liable for a premium will be affected by this clause. It will not bring any additional properties within the scope of the premium; it merely increases the potential of the premium.

The Bill is about fairness for business affected by the so-called staircase tax, and about increasing the incentive to bring long-term empty homes back into productive use. I look forward to hearing from noble Lords and I beg to move.

--- Later in debate ---

[Lord Campbell-Savours (Lab)]

My Lords, in the gap I want to embroider a comment made by the noble Earl, Lord Lytton. As I understand it, since 2013 local authorities in England have had the power to charge a council tax premium of up to 50% on long-term empty dwellings—that is, homes which have been unoccupied and substantially unfurnished for two years or more. This premium is in addition to the usual council tax charges applied to such a property.

I want to go to the mathematics of this. If the council tax is £1,500, at the moment the charge would be £2,250 if the local authority took the option up. If the charge was at 100%, it would be £3,000 and if it was at 200% it would be £4,500, so we would be talking about the tripling of council tax on a property—from £1,500 to £4,500. I wonder whether the Government have thought through the consequences of that.

Many home owners, or people who own property, will think, “I’m not going to pay £4,500 whereas at the moment I’m paying £2,250”—if it has been declared, because obviously, local authorities will be quite diligent in gathering this revenue—“I’ll turn my property into a second home. All I have to do is meet the term ‘substantially unfurnished’”, which two Members of this House have asked to be qualified. Is there not a danger that a very large number of people owning property that is empty will say, “My property is no longer unoccupied; it is a second home property”? They have a real incentive because the full council tax payment at the moment is going to be tripled. I see the Minister is shaking his head. I asked one of my colleagues on this side of the House, and he agreed with me that it would be tripled. That is how the mathematics work out because of the word “premium”. It is a premium over and above the existing council tax rate, so 200% takes us from £1,500 to £4,500. I am perfectly prepared to be corrected.

[Lord Bourne of Aberystwyth]

The noble Lord is right that it is a premium but it is a 100% premium, not 200%.

[Lord Campbell-Savours]

I think that should be clarified because that is the way it is going to be read outside the House. Anyone listening to the debate, given the reference to 200%, would think that it was going to be tripled. If the consequence is property being turned over to second homes, does that not mean that local authorities need clarification as to what “substantially unfurnished” means in law? Otherwise, there may well be a major shift of property from unoccupied to second homes.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who have participated in the Second Reading debate on this important, though short and focused, Bill. It seems to me, hearing the productive and helpful speeches from noble Lords around the House, that it has strong support. In so far as there was criticism—there was a little bit—this focused on the things that the Bill does not do. There are an awful lot of things that it does not do, because it is a very short, focused Bill. As the noble Lord, Lord Kennedy, rightly said, it is essentially a three-clause Bill.

I will deal with contributions from noble Lords in the order in which they were made. I will follow up the debate with a letter on points which I have missed—I am sure that there will be some—and where there are things where I do not have the answer to hand. There are some things which we will probably want to develop in Committee and thereafter.

I thank the noble Baroness, Lady Pinnock, for her contribution. I agree that there are some council areas where this will not make any difference to current practice. I bow to her superior knowledge of Kirklees which, based on what she said, is one of those areas. In general terms, there will be many councils in the north of England, though not all of them by any means, that will not see any difference from this and will not want to proceed from a 50% premium to a 100% one. That is a matter for them; this gives discretion. Similarly, there will be many councils in the south of England that do want to use it, but by no means all. This is patchy; there will be parts of southern England where this will not be helpful, just as there will be parts of northern England where it is.

The noble Baroness and other noble Lords referred to the issue of the high street and online businesses. She and others will know, from previous contributions, that the Government are looking at this. Had we sought to bring it into this legislation, it would have made the Bill much later arriving because we would have had to do consultation and so on. This Bill is focused and we want an immediate change. So far as I can gauge, the House is very supportive of that, for which I am grateful.

To clarify a point on which there was some confusion, we are talking about an increase in a premium of 50% to 100%, based on a 100% charge already—it takes it to 200%, not 300%.

[Lord Campbell-Savours]

I got my maths wrong—it was based on an amendment, which I thought had been carried in the Commons but was not. However, the principle still stands on the switch to second homes.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

I thank the noble Lord for his disarming contribution. I fully accept that various figures have been bandied about.

The noble Baroness and other noble Lords asked for information on the definition of “empty home” and “substantially unfurnished”. I will ensure that that is covered in the write-round letter, but the Bill does not alter that—it leaves it as it was. There will be substantial case law on those issues which will have an impact in this area, but it is not changed by this legislation.

I thank my noble friend Lord Patten for his contribution. He is absolutely right that this legislation did command all-party support in the Commons, where no amendment was moved, let alone made to it. He is absolutely right that this is a work in progress. We have got the figure down over six months from 300,000-plus empty dwellings to about 210,000. There is much work to be done. If we can squeeze it further and get more out of that, it would mean additional homes for people: this is the pot of gold. I am not suggesting that this is a silver bullet, but it makes a significant contribution. We can do much better than a 200,000 target. I think we are looking at something like 100,000, but I will cover that in the write-round letter.

My noble friend referred to the possibility of an escalator, depending on how long a property was vacant. Other noble Lords, including the noble Lord, Lord Kennedy, also touched on that, and I have no doubt that we will be coming back to it. I am also grateful to my noble friend for his general encouragement.

I thank the noble Earl, Lord Lytton, for his kind comments about our meetings on broader issues to do with valuation and the valuation office. I reassure him that I also have a meeting coming up with my honourable friend Rishi Sunak to talk to the valuation office about some of those broader issues. He is absolutely right when he referred to the decision in Woolway v Mazars as an aberration—that is how everybody has regarded it. All political parties and all the relevant bodies and practitioners in this area have regarded the decision as an aberration. Against that background, we would say that we have indicated that we will reverse this decision.

On shedloads of money, I do not think that anybody has referred to that. I have been very much at pains to say that a small number are affected, and again, in the write-round letter I will try to address how we can look at the numbers affected. However, we are not looking at shedloads of money, and it will be fairly evenly spread around the country. The noble Baroness, Lady Pinnock, suggested that they might all be in the same constituency. I would be a little surprised if that were the case, but in any case, we will look at that to provide some reassurance on the issue.

On the point the noble Earl made about cowboys, I very much look forward to joining a posse with him to see how we can deal with that issue, and I am sure that that will be subject to discussion. I come back to the point that this is not a silver bullet but that it will make a difference, which is what we are seeking to do here.

I turn to the noble Baroness, Lady Thornhill, with her experience of Watford and of leading that council. I take seriously what she says, and she was generally supportive of what we are trying to do. She suggested a suite of fiscal measures which, again, I will try to deal with in the write-round. Again, as she will know, that would involve much more engagement with the Treasury and much more consultation. It is therefore well beyond this piece of legislation, as I have no doubt she appreciates, but nevertheless, based on her experience, I take very seriously what she said. In particular, when we all go canvassing, we always come across an example that is very much live in one’s mind. I note what she said about the six years’ probate issue—the Jarndyce v Jarndyce of Watford. We will see whether we can say something in the write-round about how that probate operation works.

I thank the noble Earl, Lord Listowel, very much for his support and his kind words. He reminded us of the late-lamented Lady Farrington and all the work she did in this area. It was indeed considerable and we miss her contributions, as we miss her. I thank him very much for what he said about the importance of noting the impact this will have on families and children, the wider issue of local authority funding of children’s services, and the difference between statutory and non-statutory—which again, I take seriously, and which I will take back.

As always, the noble Lord, Lord Campbell-Savours, comes forward with something incisive about the issue of second homes and the definitions of “substantially furnished” and “empty” properties. As I say, I will seek to cover those in the letter; although it is unaffected by the legislation, it is nevertheless an important issue. On that issue of interaction with second homes, we are not seeking to deal with second homes here. This is somewhat different; indeed, this could be about a building owned by an institution, and essentially, it might not be anybody’s home at all, although empty. In the Commons, my honourable friend Rishi Sunak said that we would make a Statement on the second homes situation, because there is an issue with people using empty homes as something of a tax loophole, so we will want to say something about our future intentions. I hope to say something about that no later than Committee, but it will not affect this legislation. It is the subject of a much broader issue about second homes and how we deal with that issue.

As always, I thank the noble Lord, Lord Shipley, very much for his helpful comments and his indication that this is—to use his words—the right sense of direction. He referred to the question of judgment here about what is the right level of premium. Some people suggested a 300% premium, or I think they did, which would make a 400% charge, as it were, which would be significant. The noble Lord was much more modest in his contribution with regard to what we are looking at here. Again, I am sure that that is something that we will engage in as we go forward to Committee and beyond.

The noble Lord asked for a breakdown of the reduction of approximately 90,000 empty homes in the six-month figure. He will not be surprised to hear that I do not have the figures to hand, but I will seek to provide further information to noble Lords on those issues ahead of Committee.

There was also a question about empty dwelling management orders, which I have no doubt we will also be discussing in Committee.

I thank the noble Lord, Lord Kennedy, very much for his supportive comments and for raising the important question of how these measures will operate. He also talked about what the Bill does not do and about the need to get the level of premium absolutely right—I understand that—as well as the effect of Mazars. As I said, I am sure we will want to come back to those matters in Committee.

[Lord Campbell-Savours]

Perhaps I may raise with the Minister a concern that I have. We are entering a very difficult market in some parts of the country. What will happen when a property has not been sold after two years? If the owner of the property is driven into selling it, they may well end up in negative equity. It might be better for them to retain the property and avoid a substantial loss. Has that sort of problem been thought through in deciding on all this?

[Lord Bourne of Aberystwyth]

I thank the noble Lord for a very helpful intervention. One exemption which currently applies with regard to the 50% premium and will apply similarly with the 100% premium is that a local council does not need to apply the premium to people who are seeking to sell their property. There is considerable discretion as to how local councils can apply the premium, and obviously circumstances will differ from area to area. Therefore, I think that the noble Lord will find that that has been taken account of.

With that, I am very grateful to noble Lords for their contributions.

Bill read a second time and committed to a Committee of the Whole House.

Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences) (England) Regulations 2018

Lord Bourne of Aberystwyth Excerpts

Tuesday 22nd May 2018 Lords Chamber

Moved by

[Lord Bourne of Aberystwyth]

That the draft Orders and Regulations laid before the House on 19 and 21 March be approved.

Relevant document: 25th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 9 May.

Motions agreed.

Leaseholders’ Rights: High-rise Blocks

Lord Bourne of Aberystwyth Excerpts

Tuesday 22nd May 2018 Lords Chamber

[Lord Shipley (LD)]

My Lords, I remind the House of my interests in the register and beg leave to ask the Question standing in my name on the Order Paper.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, we have advised local housing authorities that building owners should take responsibility for funding fire safety measures and should draw on their existing resources to do so. It is important that leaseholders are able to access specialist advice to understand their rights. The department is providing additional funding to the Leasehold Advisory Service which provides free initial and tailored advice to support leaseholders in understanding the terms of their lease.

[Lord Shipley]

My Lords, I thank the Minister for his reply, for the announcement last Thursday of the extra £400 million being provided by the Government and for the further clarification yesterday which made it clear to the House that it could be more than that if remediation of these tower blocks costs more. I bring to the Minister’s attention the fact that in a large number of local housing authority tower blocks, fire-watching staff have been in post now for almost a year and will presumably be for some time to come. I seek the Minister’s confirmation that no cost will be incurred either by tenants or leaseholders of such a block; the faulty cladding is no fault of theirs and it seems unreasonable to expect them to pay any additional cost, either through service charges or through rents.

[Lord Bourne of Aberystwyth]

My Lords, the amount is actually £420 million, but the noble Lord is absolutely right that that could be somewhat higher: it is an estimate. That money is designed for replacing the cladding system. On the type of 24/7 watch he referred to, some of these interim measures were in place for blocks where the remediation work has not yet been completed. It is certainly our view that social tenants should not bear the cost of that. In the private sector, similarly, interim measures are in place and it is the view of the department that those costs should be borne by freeholders. My right honourable friend the Secretary of State is having round-table meetings in the next few weeks to discuss these issues with leaseholders and owners.

[Lord Elystan-Morgan (CB)]

Is it not the case that the responsibility of the landlord will depend to a large extent upon the lease or tenancy agreement and that these may vary considerably? In the circumstances, does the noble Lord not agree that there is a strong case for imposing a blanket statutory responsibility on landlords in this connection?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord is right that the position will vary according to the nature of the lease in question: it may vary enormously from one lease to another. We already have the example of Citiscape in Croydon where those responsible, the leaseholders under the lease, have had the owner of the block, Barratt, come forward and say it will bear the cost. We are hoping that that position will be replicated in other cases. We rule nothing out, but in the meantime the round tables that my right honourable friend the Secretary of State is organising provide a way forward to see how this will be received.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I refer the House to my relevant interests as a vice-president of the Local Government Association. The sum of £400 million for removing potentially dangerous cladding is welcome. Can the noble Lord confirm whether this is new money or money diverted from the affordable homes programme? Have the Government completely ruled out providing any new additional funding to alleviate the problems highlighted by the noble Lord, Lord Shipley?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord is right and I suspect he knows the answer he is going to get. The money is out of the existing funding programme but additional money will be forthcoming in the year after: it alters the profile by delaying that additional housing by a year.

[Lord Stunell (LD)]

The Minister has set out very clearly the solutions to one particular problem, but he will be well aware that the Hackitt review said that to avoid these things recurring, it was essential to have a dutyholder who would take responsibility for every phase of the building. Can he confirm that the Government have the power to do that by regulation and do not need to wait for primary legislation in order to deliver this important safety consideration?

[Lord Bourne of Aberystwyth]

My Lords, I believe the noble Lord has written on this very subject—I saw a copy of his letter this morning. We are looking at the points he has raised. But in relation to Hackitt in general, some measures will need to be taken forward in primary legislation, others possibly in secondary legislation, while others might not need legislation at all. We are reviewing that because obviously we accept what Dame Judith has said in all regards, except in relation to the banning of combustible cladding, which we are carrying out and which she is content with.

I apologise to the noble Lord, Lord Shipley. It was indeed £400 million, not £420 million. He is better informed than I am. We have so many figures flying around but I apologise to him.

[Lord Fox (LD)]

My Lords, in many cases private leaseholders do not know the identity of their freeholder. The freehold may be held in a foreign trust away from the public gaze. Can the Minister explain how in those cases leaseholders will be able to get recourse on these expenses?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord is right that it is not always straightforward; I suspect that that is a minority of cases. We are, I think, beginning to get to the tail end of the identification of buildings. We have made additional money available to local authorities, which have powers under the Housing Act 2004 to require information from the owners. He is absolutely right about that issue. We are looking at that with a view to ensuring that leaseholders do not pick up the bill, irrespective of whether or not that is a provision in the lease.

Tower Blocks: Dangerous Cladding

Lord Bourne of Aberystwyth Excerpts

Monday 21st May 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer to an Urgent Question asked in the other place. The Statement is as follows:

“Mr Speaker, we are remembering those who lost their lives in the tragedy at Grenfell Tower today as the public inquiry opens. I know this will be an incredibly difficult time for those affected. The whole House will join me in sending them our thoughts and prayers.

I am determined to ensure that no community suffers again as they have done. To that end, in the days since the fire, my department has worked with fire and rescue services, local authorities and landlords to identify high-rise buildings with unsafe cladding, ensure interim measures are in place to reduce risks and give building owners clear advice about what they need to do, over the longer term, to make buildings safe. Remediation work has started on two-thirds of buildings in the social housing sector, and we have called on building owners in the private sector to follow the example set by the social sector and not pass costs on to leaseholders. I will be holding the first round tables with representatives from the private sector this week, and I repeat what I said last week: if the industry does not step up, I am ruling nothing out.

My predecessor and the then Home Secretary asked Dame Judith Hackitt to also carry out an independent review of building regulations and fire safety. I welcomed her final, comprehensive report last week, which called for major reform, and having listened carefully to the arguments for banning combustible materials in cladding systems on high-rise residential buildings, the Government are minded to agree and will consult accordingly. In addition, the Prime Minister announced that the Government will fully fund the removal and replacement of potentially dangerous ACM cladding on buildings owned by social landlords, with costs estimated at £400 million. I will be writing to social sector landlords this week setting out more detail.

It is vital that people living in buildings like Grenfell Tower are safe and feel safe. I am confident that the work we are undertaking and the important reforms triggered by the Hackitt review will help restore public confidence and provide the legacy that the Grenfell community needs and deserves”.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I join the Minister in sharing our thoughts and prayers with the victims and the families and wishing the inquiry well. I declare an interest as a vice-president of the Local Government Association. I thank the Minister for repeating the Answer to the Urgent Question asked by my right honourable friend John Healey MP in the other place.

Following the woefully inadequate response from Kensington and Chelsea Council, does the Minister accept that the Government have been slow off the mark, as illustrated only last week by the Government giving a formal direction to local authorities to ensure that they know whether high-rise blocks in their area are safe, nearly a year after the tragedy? While the £400 million announced by the Prime Minister to remove that cladding is welcome, it also comes nearly a year after the tragedy. This is not an example of the Government acting with speed.

What action are the Government taking to ensure that blocks in the private sector are also safe and have all potentially dangerous cladding removed? What action are the Government taking to ensure that tower block residents have been told the correct course of action if a fire breaks out in their block? That could be either “stay put” or “get out”, but residents need to know about the action for their area.

[Lord Bourne of Aberystwyth]

I thank the noble Lord, Lord Kennedy, very much indeed for joining in the thoughts that I am sure we all share as the inquiry gets under way and as tributes are made by the bereaved. We can fully understand the angst that that must be causing. I had the privilege of meeting some families last week and I fully understand what they must be going through.

The noble Lord referred to the £400 million announced by the Prime Minister last week, which I think is significant. Of course, that is an estimate of the full funding of the work necessary for the measures in the social sector. The noble Lord also asked what else we are doing. Of course, there are interim measures in place while the replacement of cladding is carried out. We expect that work to be very effective—for example, patrols to make sure that the building is safe while the work is carried out—so it is not as if we are not doing anything. This is a very complex area, as I know the noble Lord appreciates, and we are doing a great deal to ensure that people in high-rise blocks are safe.

The noble Lord asked, quite rightly, about the private sector. We have, along with local authorities, identified 101 private residential blocks. We have made money available to help local authorities identify the blocks that need assistance. They have the testing available in just the same way as the social sector; there is no cost attached to the testing of the ACM cladding in those situations and interim measures will apply in just the same way. As the Statement made clear, we are expecting landlords to step up, as some have done—Barratt, for example, for Citiscape in Croydon—to ensure that they are meeting the costs. As the Statement also made clear, the Secretary of State is holding round tables to look at these remediation issues with a view to ensuring that those that can bear the costs do so and those that cannot bear the costs do not. Those round tables will start this week.

[Lord Shipley (LD)]

My Lords, I remind the House that I too am a vice-president of the Local Government Association. I want to join these Benches with the other Front Benches in expressing our sympathy and support for the bereaved residents of Grenfell.

I have two questions for the Minister. First, Dame Judith Hackitt said on the news at the end of last week that she was perfectly happy with a ban being placed on all combustible materials on blocks. The Minister has said that there is going to be consultation about that. My question is: how long will that be? There seems to be a unity of view that combustible materials should be banned, so I very much hope that the consultation will not take a long time.

I was pleased to hear the Minister say that the £400 million is an estimate. I raised this matter in the debate on the Statement last Thursday. Inevitably, it cannot be a fixed sum. I hope the Minister will confirm, for the avoidance of any doubt, that the Government will reimburse the full costs, which I understand they have to agree with local housing authorities, even if the full costs exceed £400 million.

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lord, Lord Shipley, for his comment about our thoughts being with the people affected. He had two specific questions relating to Dame Judith Hackitt’s review into safety and fire measures. He is absolutely right: Dame Judith did say that she was not necessarily opposed to a ban. I think her point in the review was that the whole building system needed to be looked at; she did not want it to be felt that this is, as it were, a silver bullet. The consultation on the ban we are considering will be of appropriate length. Of course, there is a process to be gone through, as the noble Lord will appreciate, and I have not got the exact measure of how long that will be. If it becomes available, I will certainly write to the noble Lord and share that with other noble Lords, but there is a process to be gone through and, although we do not want to hang about, we do want to do the right thing. We obviously do not want to be called to account for not doing this appropriately.

I can confirm that £400 million is an estimate of the cost. We are unable to know exactly what it will be, but essential work for councils and housing associations will be covered. Our best estimate is in the measure of £400 million, but it is an estimate.

[Baroness Brinton (LD)]

My Lords, I declare an interest as a member of the APPG on Fire Safety and Rescue. I echo the thoughts of my noble friend and the noble Lords towards the families and survivors of the Grenfell tragedy, particularly today as the other inquiry gets under way.

I am very concerned that the length of time that this might take for private sector blocks will put leaseholders under real concern. There are already reports that some builders are talking about £4 million-plus for very large buildings. How long will the consultation last, and what will the Government do, and by when, to step in if private sector freeholders still try to pass costs on to leaseholders?

Secondly, it is quite clear from the Hackitt review that increased inspection powers for both fire and building control will be required. Will the Government look at ensuring that local government and fire services have increased funding specifically to cover this? They cannot do it out of existing resources.

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Baroness, Lady Brinton, for her thoughts for the families and the bereaved. Clearly, today must be a very difficult day, more than usually so. I commend the work that she does on fire safety and rescue, which I know is considerable. She had some specific questions about leaseholders and how long we would be consulting in relation to private buildings. It is not a formal consultation but a series of round-table meetings that the Secretary of State will be holding, the first of which is coming up very shortly. We will see how that goes. But as the Answer that I repeated indicated, we rule nothing out and we are determined that those who can bear the costs should do so. I commend what Barratt has done, for example, in relation to Citiscape in Croydon. We hope that that is repeated.

The noble Baroness also asked about the increased funding that may be necessary in light of the consultation that we will have in relation to the reform of the regulatory system, and so on. Obviously, there is a doctrine of increased burdens having to be funded, if increased burdens there are, and we would expect that to apply in the normal way.

[Lord Campbell-Savours (Lab)]

My Lords, is it possible for a private landlord simply to refuse to carry out remedial work or to remove the cover? If the private landlord was to do that, knowing that the material was dangerous, what would be the position of the Government?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord, Lord Campbell-Savours, raises a very interesting point on the powers that exist in relation to local authorities and private landlords, which are considerable under the Housing Act, as he will appreciate. I do not think we have come up against that particular position. There might also be a fallback in common law on particular powers if that were to be the case. But we anticipate—and obviously we will be looking at how the round tables go; the early evidence is there—that landlords are stepping forward with interim measures and doing what they can. But we want to understand the position in the round by speaking to both the landlords and the leaseholders to see exactly how this plays out. My right honourable friend the Secretary of State has indicated that he will issue a review in July of how things are proceeding. I am sure that that will include the points that the noble Lord has quite rightly raised.

Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences) (England) Regulations 2018

Lord Bourne of Aberystwyth Excerpts

Wednesday 9th May 2018 Grand Committee

Moved by

[Lord Bourne of Aberystwyth]

That the Grand Committee do consider the Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences) (England) Regulations 2018.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, the regulations being considered were laid before the House on Thursday 15 March 2018. The private rented sector is an important part of our housing market, housing 4.5 million households in England. Houses in multiple occupation, or HMOs, form a vital part of the sector, often providing cheaper accommodation for people whose housing options are limited. However, HMOs sometimes pose greater management challenges than single household accommodation, and some of the occupiers of HMOs are the most vulnerable people in our society. That is why mandatory licensing of HMOs was introduced in 2004 for properties with three or more storeys that are occupied by five or more people.

Since its introduction over a decade ago, mandatory licensing has been successful in raising standards and enabling local authorities to tackle overcrowded conditions and poor management practices. However, over the past 10 years, the private rented sector has doubled in size, which has led to increasingly small properties being used as HMOs.

As these smaller HMOs were not subject to mandatory licensing, some rogue landlords have been able to avoid local authority detection and enforcement by letting HMOs with fewer than three storeys. Poor practice by these landlords has led to negative harmful impacts on some local communities through the accumulation of rubbish and waste, as well as noisy and anti-social behaviour outside HMOs. It is to address these problems that the Government have extended mandatory licensing to properties of fewer than three storeys. We have already laid the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order on 23 February 2018; it will come into force in October 2018. We are working with local authorities on producing guidance to ensure they are able to meet this date.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, I thank both noble Lords who speak on these issues on behalf of their parties. I thank them for their general approach, which is consistently responsible and, at the same time, questions aspects of the policy, which I fully understand.

I will deal first with the points made by the noble Lord, Lord Shipley. One thing that the noble Lord, Lord Shipley, the noble Lord, Lord Kennedy, and I have in common is that we always want these things to happen more quickly than appears deliverable. I understand, therefore, where the noble Lord is coming from when he talks about how long these things sometimes appear to take. We have touched on the fact that both noble Lords carry out visits to communities at the sharp end to see what is necessary, and similarly I have been to Sheffield and Luton and seen some of the problems that exist there, which are by no means unique. Tomorrow, I am in Leeds and Hull, and on Friday I will be in Bradford, and I expect to get similar messages there.

I thank the noble Lord, Lord Shipley, for what he said about the broader definition of HMOs that we have already brought in to take into account properties of three storeys and below. As a Government and as a country we have to be fleet of foot to change our definition in the light of new circumstances so that, as he said, things do not go under the radar. I accept that 6.51 square metres is relatively small, but, my gosh, he and I know that it is a massive improvement on some of the things that are happening now. As he rightly said, we must make sure that we focus on enforcement to make sure that these and other regulations are properly enforced.

The noble Lord, Lord Shipley, asked whether the 18-month period is appropriate. When I saw it, I also thought it seemed to be a long time. However, one needs to remember that this is not, primarily, to protect landlords. If anything, it is to protect tenants, some of whom I accept are currently sleeping in a space that is too small. However, we do not want those tenants to be forced out by a landlord saying that he has to do so because it is the law. The transitional period takes into account landlords to a degree, but, much more so, tenants as well as local authorities. Probably, 18 months is about the right period.

The noble Lord, Lord Kennedy, mentioned Newham Council, which I know does much good work. I will, when possible, visit Newham to see what is happening there. He made the justifiable point that this issue has far-reaching implications for mental health, a point which, I must confess, I had not homed in on. He is absolutely right. In a sense, I lived in a HMO as a student, but that is a very different experience from living in a HMO as an adult, particularly with children, and I understand what the noble Lord is getting at. It is not a desirable position in many situations. It may be appropriate for people on a transitional basis but it is not how most people would opt to live; I fully accept that. However, given that some people are in that position, we have to make sure that there are appropriate regulations.

I again thank the noble Lords for their comments and for their general support. I commend these regulations to the Committee.

Motion agreed.

East Suffolk (Local Government Changes) Order 2018

Lord Bourne of Aberystwyth Excerpts

Wednesday 9th May 2018 Grand Committee

Moved by

[Lord Bourne of Aberystwyth]

That the Grand Committee do consider the East Suffolk (Local Government Changes) Order 2018, the East Suffolk (Modification of Boundary Change Enactments) Regulations 2018, the West Suffolk (Local Government Changes) Order 2018 and the West Suffolk (Modification of Boundary Change Enactments) Regulations 2018.

Relevant Document: 25th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, I beg to move that the draft West Suffolk (Modification of Boundary Change Enactments) Regulations 2018, the draft West Suffolk (Local Government Changes) Order 2018, the draft East Suffolk (Modification of Boundary Change Enactments) Regulations 2018 and the draft East Suffolk (Local Government Changes) Order 2018, which were laid before the House on 19 March 2018, be considered.

These instruments, if approved by Parliament and made, will on 1 April 2019 establish two new councils: East Suffolk Council and West Suffolk Council. East Suffolk Council is made up of two existing councils: Suffolk Coastal District Council and Waveney District Council. West Suffolk Council is made up of Forest Heath District Council and St Edmundsbury Borough Council.

The instruments also provide for elections to these new councils to be held in May 2019 and each fourth year thereafter. This includes providing electoral arrangements—the warding arrangements that would be used for the first elections should the Local Government Boundary Commission for England be unable to conclude in time the electoral review which is expected it will undertake. In addition, they make transitional provisions, including for a shadow authority and shadow executive to prepare for the new councils during the period from when the order is in force until April 2019.

We have brought forward these instruments in response to locally-led proposals from each of the areas concerned. All of the existing principal councils in each area support the proposals and, as statute requires, have given their formal consent to the regulations. In line with the Government’s 2017 manifesto, we are committed to consider any locally-led proposals for district mergers and, as we told Parliament in November 2017, we will assess proposals on the basis that they will improve local government and service delivery, create structures with a credible geography and command a good deal of local support.

The Government are satisfied that these two merger proposals fully meet these criteria. In the case of East Suffolk, the merger is the next logical step to the many shared arrangements which the two existing councils in the area have today. It will improve local government in the area. It will achieve greater efficiency and resilience. It will secure for the future on-going savings totalling more than £20 million since 2010, as well as yielding further savings which the council estimates as £2.2 million per year.

The area of the new combined East Suffolk Council is a coherent geography with a population of around 240,000. This area is, in fact, the same area as the old county of East Suffolk that existed from 1888 until 1974. Finally, we are satisfied that the evidence shows that there is strong local support for this proposal, with a survey suggesting that 72% of residents would support the merger.

Turning to West Suffolk, the two merging councils already operate largely as one council. The merger completes and secures this and the benefits it brings. It will therefore improve local government in the area, securing for the future on-going savings of £4 million a year as well as yielding further savings which the council estimates as £850,000 per year. As in the case of East Suffolk, the new area recreates a traditional long-established area, that of the county of West Suffolk that existed prior to 1974, but with a population today of almost 180,000. As with East Suffolk, this proposal for a new West Suffolk has strong local support.

It may assist the Committee if before concluding I say something about the processes which have been followed by the councils and the Government and which have led us to conclude that these proposals do, indeed, meet the criteria and are worthy of implementation. In each case the councils concerned submitted their proposal after undertaking what we believe was a sound and full consultation exercise involving extensive local engagement and open consultation.

In the case of East Suffolk, in formulating their proposals, East Suffolk councils undertook a programme of engagement with residents and stakeholders from September 2016 until December 2016. The programme included: an independent, proportionally representative phone poll; a media campaign including press releases and promotion on social media; information packs for town and parish councils; an open consultation via a dedicated webpage and an online survey to collect comments on the proposals; formal communication to stakeholders; presentations and talks at resident and business forums and public events; and a frequently asked questions document updated with any common questions or concerns.

The independent poll commissioned to find out local residents’ views suggests that 72% of residents were in favour of the proposals to form a new single district council, with 22% raising concerns. All of the local institutional stakeholders, such as the NHS, the county council, major business groups in Suffolk and all the neighbouring authorities, are also in favour.

--- Later in debate ---

[Baroness Pinnock (LD)]

My Lords, I do not want to add to the comments made by anybody who knows something about Suffolk, like my noble friend Lady Scott of Needham Market. I just remind the Committee of my interests as a councillor in Yorkshire and as a vice-president of the Local Government Association. The comment I want to make is that I have attended a number of these sessions where, as a Committee, we have considered mergers or boundary reviews and, in every instance, the existing local councils involved make claims about the savings that will be made and services that will be more efficient and that residents will be happy with the general situation. My question is: do the Government or the Ministry of Housing, Communities and Local Government do a review post hoc to test whether this is in fact the case? We always accept these claims at face value, and we have a very specific claim here about the savings that will be made. No doubt that is the intention of the councils involved, but my experience of what council officers claim and what actually happens is that they can often diverge. If such reviews do take place, I would really like to have access to them and, if they do not, I suggest that they are undertaken, partly because the funding savings that will be made are very specific. Councils always also make claims about efficiency of service provision, which may well be the case, but does anybody ask after the event whether it is the case?

I share some of the concerns expressed earlier, among all the comments that have been made, about the confusion of local government now and whether we are losing the “local” from local government. The area where I am a councillor, for example, serves 450,000 residents—it is a unitary, metropolitan council—and my ward serves 13,000 electors, so some 17,000 residents. This is compared with some local authorities where the wards will be considerably smaller. We have to ask the question about whether there is a democratic deficit for people in some parts of the country. How local is local government? There is, I think, a debate to be had between getting scale and service provision and losing the local touch, which democracy requires if it is going to work well. With those comments—well, questions—I will end what I have to say.

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords very much indeed for their contributions in relation to these issues affecting Suffolk. I will deal with the contributions in the order that they were made, if I may. I turn first to my noble friend Lord Tebbit, with his personal experience of St Edmundsbury Borough Council—an excellent council in a lovely part of the country. My noble friend quite correctly said that this is de facto catching up with de jure, because this has been the position for a long while. I also remind all noble Lords that these proposals are locally led. This is not a government imposition of what we would like to see; this is something that is locally led so, in relation to the local democracy element, that is very important.

I am very happy as the Minister for Faith to be presiding over this union, this coming together, of these two parties—

[Lord Porter of Spalding (Con)]

I am sorry, but somebody will have to clarify whether I can speak. I was not here at the start of the debate, so I did not know that the Committee agreed to take the instruments en bloc. I intended to get here as quickly as I could, so I thought I could at least speak on the second pair when they were reached.

[The Deputy Chairman of Committees (The Countess of Mar) (CB)]

My Lords, the rules say that if a noble Lord is not present at the beginning of the debate he cannot take part in it.

[Lord Bourne of Aberystwyth]

I would be very happy to see my noble friend Lord Porter afterwards, if he has particular points, and to cover those in detail, if that would be helpful.

I am very happy to preside over the union of the two parties that have been living in sin, as the noble Lord put it. It all seemed to be going well until the noble Baroness, Lady Scott, got up to object—it reminded me of a scene in Jane Eyre or possibly Far from the Madding Crowd—but happily not in relation to the one union that was very close to my noble friend’s heart. She subsequently clarified her concerns about some of the issues.

Babergh and Mid-Suffolk were very close to an agreement in relation to a locally led proposal. It was not to happen, but that was a local matter, and as a department or a Government we have quite rightly not attempted to impose anything on them. So these are locally led proposals. On the unitisation issue, I shall not get sucked into Suffolk politics and matters pertaining to that great county as I do not know all the issues. Once again, however, it is open to authorities within Suffolk to come forward with locally led proposals if that is what they want.

I was not up to speed with the latest development on the review of the county council. I know the county council initiated it of its own volition without the involvement of the other areas, but if something were to come forward at a future juncture, of course we would look at it.

In relation to East Suffolk as well as West Suffolk, from the evidence we have of the consultation, these proposals are strongly supported by residents. All the districts concerned, including Waveney and Suffolk Coastal in the case of East Suffolk, are strongly in support of these proposals, which comes back to the locally led point.

That brings me to the noble Lord, Lord Kennedy. He and I have at the very least a nuance of difference in our approach here. Despite his very respectable Labour pedigree, the noble Lord has a slight Stalinist tendency to favour a standard approach for every council in the country, which is not necessarily what local councils want. These are locally led proposals. The same is true on a different canvas in relation to the mayoralties. They are not necessarily the same, but they are locally supported and bespoke.

[Baroness Scott of Needham Market]

Does the Minister accept that one of the problems, the one we are all grappling with, is that these proposals do not have any sense of originating from the people, so when people show support or do not do so they are showing support or otherwise for something that has been handed to them? It is the same now with many of the other structures of local government. We all share a deep commitment to local government structures and we want to be confident that they enjoy public support. This is not a political point. It is about local democracy.

[Lord Bourne of Aberystwyth]

I do not dissent from the general point that leadership means that proposals have to come from somewhere. I am keen to make the point, and perhaps to restate the point to overstate the point, that these are locally led proposals from local leaders. Of course they are not going to come from individual residents, but the evidence we have from the consultation, which the Secretary of State will have borne in mind when looking at these proposals, was that there was strong local support for them.

I take the point that there has to be a government policy, but the Government, of whom I am proud to be a part, are keen for there to be diversity and bespoke deals. The noble Lord probably takes a different view of this, but it is not a view that the Government subscribe to. We have a broad policy of saying these things have got to be locally led. We will look at them and scrutinise them to ensure that they are locally supported and represent value and so on, but local democracy is the key point.

[Lord Kennedy of Southwark]

I take the Minister’s point. I am conscious that in other parts of England there are other places where there are differences among what councils want. Oxfordshire is an example where there are very different views about what is wanted in the future. Do I take it from what the Minister said that if councils do not want things to happen, they will not happen?

--- Later in debate ---

[Lord Bourne of Aberystwyth]

That is essentially true. These have to be locally led. If they have not got local support, they will not happen: that is absolutely the essence of what I am saying. That does not mean that there has to be 100% support—

[Noble Lords]

Oh!

[Lord Bourne of Aberystwyth]

Well, for district mergers, there has to be 100% support from the councils. What I am saying is that there does not necessarily have to be 100% support from the local MPs, for example, and that has not been the case. I am sure the noble Lord will appreciate—

[Lord Kennedy of Southwark]

Excuse me, but I am conscious that, in Oxfordshire, there may well be a view that they want a unitary authority. But Oxford City Council does not want that and is very clear about it.

[Lord Bourne of Aberystwyth]

I am making the point in relation to district councils, as it is district councils we are looking at. There are other considerations in relation to unitary authorities but, in relation to district councils, there has to be unanimous support from the authorities concerned, as there was in these cases. It happens that, in these cases, they have support also from the surrounding authorities, not all of which are in Suffolk itself.

Lastly, I will turn, if I may, to the point made by the noble Baroness, who also has great experience of local government. We are looking at Suffolk, but she will understand from the point of view of Kirklees the need for that local dimension. We have the local dimension here, as demonstrated by the feelings of the people in the area. That is the point I wish to emphasise.

In both cases, it is about recognising—once again I will adopt the words of my noble friend Lord Tebbit—a move from the de facto to the de jure. In both cases, there has been close co-operation. In both cases, for understandable reasons, it is intended that branch offices will be kept open while headquarters will be, in one case, in Bury St Edmunds, and, in the other case, in Melton, on the outskirts of Woodbridge. So there will be no change in that regard, but it is moving very sensibly from the de facto to the de jure, which is what they want. With that, I commend the regulations and the orders to the Committee.

Motions agreed.