Planning Policy: Traveller Sites

Kevin Hollinrake Excerpts

Wednesday 11th September 2024 Westminster Hall

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I beg to move,

That this House has considered the adequacy of planning policy for Traveller sites.

It is a pleasure to hold this debate with you in the Chair, Dame Siobhain. My constituents are reasonable people; they totally understand and appreciate people’s wanting to live alternative ways of life, including nomadic lifestyles. I have lived all my life in my constituency, and the Travelling community has been part of the constituency for that whole period of time. We respect the contribution the community makes to our society, as long as communities are law-abiding and let other people peacefully enjoy their property, settlements and communities.

The real concern in my constituency is about a number of planning applications, and whether planning policies apply equally to local people and to other communities, including Travelling communities. The basic principle is that there is one law for all, rather than one law for one person and another for another person: the law applies equally to everyone in our communities and society. With some of the applications, there is a real feeling that that is not the case, and that contributes to a feeling that we are moving to a form of two-tier society, which would be a dangerous state of affairs.

Where some applications are being made, our local communities do not understand why planning policy is not being overseen equally, and there is a deal of anger about that. That is the case with a number of applications, including one at Sheriff Hutton, one near Rillington and a number of potential others. The applications are being considered, and in some cases recommended for approval, on the basis not of planning law but of other laws, such as the Human Rights Act 1998, the Equality Act 2010 and the UN convention on the rights of the child, as well as the European convention on human rights, which obviously has other consequences in different parts of our system.

Normal, law-abiding citizens go about a planning application in the appropriate way: they first find a site that suits their needs, before looking at planning policy and probably instructing an agent to act on their behalf, and they then submit an application before doing any work to that site. The application must conform to planning policy, or they will not get consent. They go through the various iterations of the planning process. It may take years to get planning consent for the property development, but hopefully at some point they get it. Most of my constituents respect the planning process and its outcomes.

[Jim Shannon (Strangford) (DUP)]

I apologise to you, Dame Siobhain, and to the hon. Gentleman, because I have other engagements and cannot stay. Does the hon. Gentleman agree that the delicate balance to be struck between allowing travellers to carry on their way of life and ensuring that the community around them is not adversely affected relates not just to planning policy but to all policies? We want to foster Traveller communities that feel engaged in and a part of our communities; that can be achieved by building relationships and through a little bit of understanding.

[Kevin Hollinrake]

As always, the hon. Gentleman is very reasonable. That is exactly the position that my constituents and I take: this is about fairness and applying the law equally. The Human Rights Act contains a requirement to consider the rights not just of the individual but of other people in such situations, but it seems that some applicants’ rights are given greater consideration than those of others. That is my biggest concern. This issue has been dealt with to some extent through planning policy, but that has not been sufficient to deal with some of the problems.

I have set out how someone who respects the law and the planning process might set about applying for planning permission. In some applications it has not been done that way. Some applicants purchase a site first, probably a roadside site, with or without access—they might create access. Sites in Sheriff Hutton and Rillington are in open countryside and not in a location where someone would normally get planning consent for such developments. The site is prepared with the access and hard standing, for example, which is not a major contravention of planning policy and not something the planning department might have too big a problem with at the time. There might be an agricultural building on the site, for example, and water and power put into the site. Preparation occurs.

Then one evening—overnight or on a bank holiday weekend when the people who look after these matters might not be in their offices—the site is occupied unlawfully without planning consent. Caravans might move on to the site, along with other equipment, and maybe toilet blocks are built overnight, which happened at one of the sites, and the site is occupied with a view to being occupied permanently. It is not a temporary position; the people occupying the site intend to occupy it permanently.

Then the planning authority has to go through an enforcement process following complaints from local people about the application. The planning authority’s wheels turn pretty slowly, which I think the people occupying the site are aware of, and enforcement measures take place. That might take months, during which time the community might experience some disturbance and real concerns are expressed.

When enforcement measures are taken, the owner of the land will submit a planning application retrospectively. Despite the flagrant breach of the proper planning process, the application is then considered as if it were made using the proper process. That is where it fundamentally goes wrong: the fact that the retrospective application is considered on the same grounds as though it were a normal lawful process is what is wrong. The application is made, of course, on the basis of the rights of the people occupying the site. The Human Rights Act, the Equality Act, the UN convention on the rights of the child and the European convention on human rights are all cited in relation to the rights of the occupants—generally the families on that site who need healthcare and education. No one would doubt the need of the children and the people in need of healthcare to access such facilities. That is the basis of why the application should be considered, despite the fact that it is retrospective.

[Jim Shannon]

I thank the hon. Gentleman for graciously allowing a second intervention. Is he aware of the latest Irish Traveller accommodation strategy 2020-2025? If he or the Minister are not, may I suggest that they access it? It sets out guidelines to provide, in this case, Irish Travellers

“with access to good quality, culturally appropriate housing accommodation which fosters a sustainable, vibrant Traveller community”.

That allows the Travellers to enjoy their own lifestyle but at the same time consider the possibility of integration. Does he agree that perhaps those guidelines, which are from a different jurisdiction, might be helpful?

[Kevin Hollinrake]

Perhaps understandably, this is not my policy area. I am holding this debate because it is a constituency issue. I am not particularly aware of the Irish rules that the hon. Gentleman mentions. But it is right to say that local planning authorities have a requirement to facilitate the peaceful enjoyment of people who live nomadic lifestyles. I support that totally. North Yorkshire should provide such facilities, and it does. That site is occupied despite the fact that there are available places on a designated Traveller site nearby. That is one of the concerns: there are other facilities available, but the person who made this application does not want to be on them. I believe they are misusing the planning policy. I have no objection to people’s right to live alternative lifestyles and to live in different ways in their own communities; what I object to is the misuse of the planning process.

The issue was dealt with, to some extent, by my very fine colleague—sadly, my late colleague—James Brokenshire when he was Housing, Communities and Local Government Secretary. In February 2019, he published some new recommendations for planning authorities, stating that the intentional unauthorised development of a site should be considered a material point within a planning application. That is absolutely critical. He was saying, therefore, that the local planning authority had grounds to refuse the application on the basis that there was an intentional unauthorised development. Despite the North Yorkshire planning authority’s awareness of that requirement, it still recommended approval on this site, which I find astounding.

I find the whole situation astounding, and so do many of my constituents. It is important that we look at the facts. Members engaging in this debate and people watching it on Parliament TV may look at the application on the North Yorkshire portal—the planning reference is 22/00102/FUL. The things I am saying are based not on local rumours and concerns, but on the actual documented situation with the planning application.

The site in question is on Cornborough Road, about half a mile out of the village of Sheriff Hutton. It is in open countryside, and is outside the development plan. The application is for eight units of accommodation—four permanent breezeblock-built units, and permanent static caravans—and 12 car spaces. It has been occupied for three years without planning consent by a family with six children. Obviously, we respect their right to go about their lives in a way they feel appropriate, and we have every hope that those children will be properly educated and receive proper public services.

The planning officers, in their wisdom, decided to recommend the site for approval, with one significant condition: occupancy of the site was to be restricted to the family and their dependants—the adults on the site, the owners of the site and their children. Of course, those children will be adults one day, which means that the site could be occupied for many decades. The application also says that there could be a variation in the application for an extended family, for example, which could mean that the site is occupied for a very long time. Remarkably, the agent for the applicant objected to that condition, again on human rights grounds. It is clear that the site will be occupied in the very long term, and that there will be the ability to sell it on to someone else.

I think it is absolutely wrong that people can effectively drive a coach and horses through the planning system. My law-abiding constituents would not go about it in that way. Unless we deal with this situation properly, it will breed a sense of unfairness—the idea that there is one law for one and another for others. Unless we deal with the problem by clarifying the planning guidance, to ensure that anybody who is guilty of a flagrant abuse of the planning system cannot ever get planning consent on a site in that way, we will see more and more such applications, not in just my constituency but in constituencies around the country.

I know the Minister is freshly in the job. I welcome him to his place. He is a good man, and we have dealt with many things in the past, when our roles were reversed, so I know that he will look at this seriously. We have engaged on this particular matter already. Furthermore, my colleague the shadow Minister, my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds), is also experienced in these matters.

I urge the Minister to tighten the rules to ensure that our constituents, law-abiding citizens of this country, feel that we are on their side. Law-abiding people go about the planning process properly, and should not feel that we favour people because of abstract laws, laws potentially imposed on us by the UN convention on the rights of the child or the European convention on human rights—now embedded in our own Human Rights Act—which mean that some people are treated more fairly than others during the process. It is important that we act and that we clarify the planning process, so that people who act in that way can never get planning consent. That is the only way we will stop such rogue applications being submitted.

[Olivia Blake (Sheffield Hallam) (Lab)]

It is a pleasure to serve under your chairship, Dame Siobhain. I thank the hon. Member for Thirsk and Malton (Kevin Hollinrake) for securing this debate on a subject with which I am sure many hon. Members are familiar, although sadly that familiarity does not always come from a good place. Often it is driven by casework.

My understanding of the issues has been enriched by listening to the Traveller community in my constituency and hearing about the problems that they have experienced. I have heard the concerns about a two-tier system in planning, but it was interesting to hear, in a discussion on a long-standing site run by the council in my area, that they are not eligible for the right to buy, even though some of those families have lived there for 40-plus years. The idea that there is a two-tier system in planning ignores the fact that there is also a two-tier system for this very prejudiced-against group of people.

Too often our familiarity comes from lurid headlines that generate a lot of heat rather than shedding light on the problems experienced by a community facing discrimination and disadvantage across the board. It is important that we bear that in mind when we talk about the issue in the context of the planning system, and it is important that we are honest about the context of those problems. It is difficult to have a sensible discussion about how we best serve Gypsy, Roma and Traveller communities when words like “incursion” are used and when groups of Travellers are repeatedly characterised as ruining picturesque landscapes, towns or villages, creating nuisance and disturbance, or somehow being above the rules.

Given that context, we need to be explicit in saying that, far from the invalidation and demonisation of such communities that we often see in the media, the planning system should support this group to live in the way that they choose. There has been an absolute failure to provide adequate sites for those who do travel. Stopping places simply have not been available, so it is no wonder that families are looking for alternatives. Unfortunately, that means a huge shortage of sites and pitches across the UK, particularly in England. As a result, in 2019 some 13% of caravans were on unauthorised land, as the organisation Friends, Families and Travellers reports. What we are seeing is not an incursion, but rather a forced displacement due to the lack of available sites for those who choose to travel.

[Kevin Hollinrake]

I absolutely agree that sites should be made available, but may I reiterate the point that I raised? For the family I mentioned, sites were available. In fact, the family occupied a site at Tara Park in Malton until they moved on to that particular site, so it is not the case that no sites are available. There are also nearby sites in Osbaldwick in York. It is not as if there are no alternatives to occupying the site unlawfully. It is important to understand that.

[Olivia Blake]

That is why I think it is important that local authorities work with the community to understand their needs. There are many reasons why individual families may not feel able to be on a site. They may also want to create their own space and home, which I completely understand.

Rather than creating more sites, the previous Government moved to criminalise GRT communities through the Police, Crime, Sentencing and Courts Act 2022. Those laws should be repealed, in my view. We should be tackling the root cause of the issue: the failure of the system to support a diverse group of people who already suffer prejudice and discrimination. There is a lack of understanding about the realities for this group.

It is not just that we need new sites and more pitches; the ones that we have are not up to scratch. That is certainly true of the sites in my constituency: they are often segregated from settled communities and suffer problems with access to services, transport and schools. There is no path to reach the community that I represent, so children have to walk down a 60 mph road to get the bus to school. When the street lights were updated, for some reason the contractor did not realise that the council owned the properties, so the community has been living with poor-quality street lighting rather than LEDs. I hope that that will soon be resolved on the site.

That is the kind of suffering that we see in those communities. They are often seen as other, as different or as difficult to deal with. That is not true, in my experience. If we listen to the concerns of the community, we will see progress and clarity of responsibility, not only from the community itself but from the services that are meant to serve it. Decisions are often made to place sites in unsafe areas next to main roads, refuse destructors, traffic-laden areas, intersections of motorways, busy highways or railway tracks. There are many reasons that people would not want their children to be near those things. That has contributed significantly to the health, education and other social inequalities that we see in the community.

We have to acknowledge that the isolation and segregation are partly due to political pressure. We know that local authorities have not achieved what they should in terms of sites, options and working with the community as best they can. That is why this is not just a technical debate on planning laws; we have to talk about tackling attitudes as well. When the Caravan Sites Act 1968 gave councils a statutory duty to create sites, many people opposed having them in their area. To put it bluntly, the location of many sites today is a consequence of anti-Traveller racism. The site in my area is right on the edge of town, away from many services.

We need more sites and pitches, and we need to end the criminalisation of people living in a legitimate way, but we also need to work with the community and listen to their needs, understanding that they are individuals and have individual rights, as we all do. The hon. Member for Thirsk and Malton probably disagrees; he alluded to European human rights putting one group ahead of another. I disagree. I think that those rights protect us all and allow us all to have the individual rights and freedoms that we so richly deserve.

[Kevin Hollinrake]

I agree with the principle. My point is that that is how the European convention on human rights and the Human Rights Act are framed, but it is not how things operate in practice. My constituents cannot occupy a field and build a house on it if it is in open countryside and not within the development limits of a village. They operate on that basis. Why should somebody else from a different community be able to occupy that site and develop it in a way that my other constituents, who work on a lawful basis, cannot? Why should that be the case?

[Olivia Blake]

The hon. Member highlights an important issue for his constituency that points to the failure in this space. I am not disagreeing, but I think we have to recognise that these rights come to the fore because of that failure, not the other way around. We really need to focus on that in our planning policies. We need to communicate with the community, work with them to understand their needs and make sure that those needs are being adequately met. We should not hold it against communities that have bought their own land; we should work with them to ensure they can go through the planning process adequately for their community needs and family needs.

We also need better integration within communities of amenities and services, and we need to end the criminalisation. To do that, we need to challenge anti-GRT attitudes and the lurid headlines that drive them. That would be a good start to ensuring that the planning system works for the community. I do not disagree with the idea that the planning system is broken, but I think there is certainly a better way into the conversation that starts with an understanding of all our communities, not just one or the other.

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[Sarah Dyke (Glastonbury and Somerton) (LD)]

It is a pleasure to serve under you in the Chair, Dame Siobhain. I thank the hon. Member for Thirsk and Malton (Kevin Hollinrake) for bringing forward this important debate. I have also listened carefully to the other hon. Members who have spoken today, and I appreciate that in some cases there is a misuse of planning. It is clear that we need the system to work better to tackle those attitudes.

I appreciate what the hon. Member for Sheffield Hallam (Olivia Blake) said, in that this is often seen as a difficult matter to deal with. But that should not be the case, and we need to ensure that sites are put in the right place to avoid segregation and isolation. My hon. Friend the Member for Edinburgh West (Christine Jardine) spoke passionately about how we have simply not progressed. Neither community feels represented, and we must seek to change that. The hon. Member for Rugby (John Slinger) spoke about the risk of the GRT community becoming second-class citizens and the need to find appropriate sites to stop the reoccurrence of conflicts. Let us engage with and listen to the GRT community and treat them with respect and dignity. The hon. Member for Bromsgrove (Bradley Thomas) raised his concerns, which I think we all share, about agencies passing the buck and the emergence of tensions.

In the space of a month, I have received correspondence about illegal Traveller sites from concerned constituents in Wincanton and Glastonbury, towns that are at the opposite ends of my constituency. The complaints are a symptom of the fact that Somerset, like most counties in the country, is facing huge challenges in properly supporting our GRT community. Friends, Families and Travellers, a national charity, received a response to its engagement campaign this summer which called for an increase in

“site provision for nomadic people, transient and permanent.”

I do not know if that respondent lives in Somerset but I would not be surprised if they did. Somerset has no transit provisions—none at all.

Members of the Gypsy and Traveller community, like all of us, have to travel across the country to attend funerals and weddings and to see family, but because we have no transit sites, and therefore nowhere for them to legally stay for short periods, the only way they can stop when passing through our sizeable county of Somerset is in the form of an unauthorised encampment. We only need to look at my casework to see that such encampments inflame tensions between my constituents and Travellers—some of whom are, of course, my constituents—and reinforce dangerous stereotypes.

With 91% of English local authorities having some form of GRT presence, we are unfortunately not alone in that, so it is alarming to see the trend growing nationally, either because local authorities are selling off sites or because they simply cannot afford to maintain them. I worry that we could soon find ourselves with huge distances between transit sites, which would make it impossible for Travellers to legally travel. That also harms our relationship with the GRT community, because then the only response that local authorities are left with is enforcement.

Not only do we need more transit sites; we need permanent pitches where members of the GRT community can stay longer than just three months. There are well-known, documented and dangerous knock-on effects of not providing the community with stability. While the community is naturally transient, it needs access to a permanent base. Without a permanent pitch or a brick and mortar address, it can be a struggle to access mental health support and GP appointments, which forces more people to use our overburdened accident and emergency services to access healthcare. It is tragic, but not surprising, that life expectancy for members of the GRT community is 10 to 25 years lower than for the general population and that the suicide rate for Traveller men is seven times higher than for settled men. We also know about the reduced attainment rates for those in education, with only 18% in GRT communities meeting the expected standard in their SATs last year.

Councils could avoid huge additional costs if they did not have to waste officer time dealing with complaints and cleaning up encampments. The case for providing permanent pitches is clear, and local authorities have a quota for delivering Traveller provision, but there is nowhere for them to obtain funding. Funding has recently taken the form of ad hoc grants that are too small and oversubscribed. If we expect local authorities to be able to maintain a constant and consistent number of sites, we must provide them with consistent and adequate funding. The Liberal Democrat manifesto pledged to ensure that all development has appropriate infrastructure, services and amenities in place, by integrating infrastructure and public service delivery into the planning process. This should also include the development of permanent pitches.

I was recently elected vice-chair of the all-party parliamentary group on Gypsies, Travellers and Roma, which wrote to the then Government in the last Parliament to urge them to increase site provision. That Government failed to deliver sites, but the new Government could. The Liberal Democrats have a strong record of supporting the GRT community, but we want to work with colleagues to bring about an end to these systemic problems.

[Kevin Hollinrake]

The hon. Lady is making a very valid and interesting point, but she seems to think that it was central Government’s responsibility to provide Traveller sites—I think that is what she said.

[Sarah Dyke]

indicated dissent.

[Kevin Hollinrake]

Okay, I have misunderstood. Perhaps she will clarify that she accepts that it is the local planning authority’s responsibility to provide these sites.

[Sarah Dyke]

I thank the hon. Gentleman for his intervention; he misunderstands. I am fully aware that it is local authorities that provide Traveller sites, but the funding is not there for them to provide it. That is my case. As we know, over and over again, many local authorities find themselves on the brink. They are under such pressure at the moment. The crucial point is that they are unable to provide the resources within their remit. That is what was lacking in the last Parliament, and that is what we need to see from this new Government, to ensure that local authorities have the resources and the capabilities they need to provide sites for our Traveller community.

It was confirmed in the King’s Speech that this Government intend to reform our planning system. When they do so, they must not treat Gypsy and Traveller provision as an afterthought to bricks and mortar housing. Looking after this community is a housing requirement, not an add-on that can be addressed when there is more time and money. I would like the Government to introduce a statutory duty to provide sites, along with proper funding measures. With a reasonable approach to location and funding, this could be the single most transformative measure for Gypsies and Travellers in England. Our planning regulations and guidance are not fit to serve the community. The guidance dictates what local authorities need to deliver on a site, but it is not properly delivering that provision, which leads to the GRT community being viewed negatively and the community feeling less safe. The Government should make updating those documents a priority.

Finally, not all these problems can be solved with reforms or increased funding. The narrative from the previous Government was not constructive and made it challenging for local authorities to build meaningful dialogue. Over the last decade, Somerset and much of the rest of the country has seen a reduction in publicly owned sites, fewer community liaison officer roles in local authorities, a lack of new private sites, an increase in unauthorised encampments, a reduction in funding for site development, and political inertia slowing down pitch development. We need this new Government to provide real leadership and ensure that the needs of the Gypsy, Roma and Traveller community are met. We should engage with and treat our Gypsy, Roma and Traveller community with respect and dignity, and provide them with the sites they need to live their lives.

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[The Minister for Housing and Planning (Matthew Pennycook)]

It is a pleasure to serve with you in the Chair, Dame Siobhain. I formally congratulate you on your honour—I have not had the chance to do so yet.

I congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing this important debate and thank him for the characteristic clarity with which he made his case. I also thank the hon. Members for Edinburgh West (Christine Jardine), for Glastonbury and Somerton (Sarah Dyke) and for Bromsgrove (Bradley Thomas), and my hon. Friends the Members for Sheffield Hallam (Olivia Blake) and for Rugby (John Slinger) for their contributions. Lastly, I thank the shadow Minister, the hon. Member for Ruislip, Northwood and Pinner (David Simmonds), for his thoughtful remarks, and warmly welcome him to his place. I will certainly take away the specific points that he raised. More widely, I look forward to working with him, as he said, on a constructive basis wherever possible.

I must make it clear at the outset that, while I noted the specific case that the hon. Member for Thirsk and Malton raised—and indeed other cases that have been raised today—I hope that hon. Members will appreciate that I am unable to comment on individual plans or applications due to the quasi-judicial nature of the planning process and the potential decision-making role of the Deputy Prime Minister. I therefore propose to make some general comments about national planning policy as it relates to Traveller sites and specifically the role of local planning authorities, including in respect of enforcement, within that national framework, thereby addressing many of the points that have been raised today, while recognising that this is an incredibly complex area of policy and law, particularly as it relates to individual cases.

Turning first to national planning policy, the Government’s approach to Traveller site provision is set out in the planning policy for Traveller sites policy paper, which should be read in conjunction with the national planning policy framework and has the same policy status as it.

My hon. Friend the Member for Sheffield Hallam, and others, raised a number of wider issues outside the subject of this debate, but I reassure her that the Government’s overarching aim is to meet the housing and accommodation needs of all communities in our society, and that we are committed to ensuring fair and equal treatment for Travellers in a way that facilitates their traditional and nomadic way of life, while respecting the interests of the settled community.

The policy paper in question makes clear that local planning authorities should set pitch targets for Gypsies and Travellers to address the accommodation needs of Traveller communities within their area. Specifically on the points made around human rights law, that is often engaged when a proposed development is closely linked to a particular person’s interests. In the case of Gypsy and Traveller developments, the right to respect for private and family life under the European convention on human rights, and in relation to the rights of the child, under the Children Act 1989 and the UN convention on the rights of the child, are often engaged. However, such considerations can be addressed by planning adequately for Traveller pitches to meet needs, and that is ultimately through the local plan process.

I think that that touches on a wider issue. In respect of the community that the hon. Member for Thirsk and Malton represents, for example, the North Yorkshire emerging local plan is in its very early stages. We need to see local plans across the country come forward in short order. We want to achieve universal coverage, but we need to see those plans progress because they are the best way that local communities can shape developments in their areas.

I noted the points made by the hon. Member for Glastonbury and Somerton on funding, and by my hon. Friend the Member for Rugby regarding the concern, which I do recognise, that local planning authorities do not face sufficient consequences for failing to adequately plan for those pitches. That is a concern raised in other areas, and, typically, as I am sure my hon. Friend will know, the penalty for not having a local plan in place—for not adequately providing for sites—is that a local authority will leave itself open to speculative development or retrospective applications. However, I appreciate that that does not address the specific challenges covered in this debate in the way that it does with more conventional planning applications.

The policy paper also states that local planning authorities should consider the existing level of and local need for sites, and the availability of alternative accommodation, among other relevant matters, when considering planning applications for Traveller sites.

I appreciate that the specific case that the hon. Member for Thirsk and Malton raised did not concern a green-belt site—as far as I understand it—but hon. Members may find it useful if I provide some detail on the proposals that we have set out in relation to Traveller sites as part of our proposed reforms to the national planning policy framework and other changes to the planning system.

As hon. Members are aware, we are consulting on a range of policy changes to ensure that our planning system is fit for purpose, supports the right development in the right places, and is able to deliver on the Government’s growth agenda. They include changes to green-belt policy to enable the targeted release of low-quality grey-belt land to meet unmet housing and other development needs. Those policy proposals will not compromise our environmental objectives or undermine the overall function and purpose of the green belt, but will support opportunities for development in areas of highest need and deliver tangible benefits to local communities and nature through our golden rules.

We intend that the proposals will address unmet need for Traveller sites and we are seeking views, through the consultation, on how the policy will operate. To be clear, that is a departure from the current policy position on the green belt set out in both the NPPF and the planning policy for Traveller sites policy paper, but we believe that it better supports the development needs of our communities and contributes to sustainable growth.

However, we will consider all these matters carefully and will finalise our position after considering the consultation responses and following targeted engagement with the key stakeholders, including specialist planning consultants, charities representing the interests of the Traveller community and professionals working in this space.

As part of wider changes to national planning policy, we will also consider how planning policy for Traveller sites should be set out in the future, including which aspects need to form part of the suite of proposals for national development management policies introduced in the Levelling-up and Regeneration Act 2023.

I now turn to the role of local planning authorities. Although the Government are responsible for setting the legislative and policy framework within which the planning system operates, including the national planning policy framework and the planning policy document for Traveller sites, it is for local planning authorities, who know their communities best, to prepare local development plans and make decisions in accordance with such adopted plans unless material considerations indicate otherwise.

I hope hon. Members appreciate that when it comes to police enforcement of unauthorised encampments, that is a matter for the Home Office and not for the Ministry of Housing, Communities and Local Government. However, I can certainly pass back some of the concerns and the comments made to my colleagues in the Home Office.

When it comes to enforcement more generally, local planning authorities have a wide range of powers, with strong penalties for non-compliance. As the hon. Member for Bromsgrove mentioned, these powers were strengthened by reforms introduced in the 2023 Act, which were implemented earlier this year. Those reforms included longer time limits for enforcement action, and action to address a loophole with retrospective development, so that there is only one opportunity to appeal.

On the basis of the available powers, it is for local authorities to decide what action, if any, to take, depending on the particular circumstances of each case. That would include intentional unauthorised development, which would be weighed by decision makers in the determination of planning applications and appeals, as I recall the hon. Member for Thirsk and Malton mentioning. Ultimately, however, it is for individual local planning authorities to determine what weight they should afford to a relevant consideration based on the circumstances of a particular case, rather than Government mandating them to follow a particular course of action.

[Kevin Hollinrake]

I support potential revisions to enforcement powers to give perfect clarity about how enforcement can happen in these circumstances. However, I want to touch on the Minister’s last point about intentional unauthorised development. Currently, that is dealt with as part of planning law, through a ministerial statement, rather than being formally in the NPPF—nevertheless, that does apply. Is he happy to maintain that situation, or will he look at that again? It is very important that that does form part of planning policy. Otherwise, planning authorities would have even fewer levers at their disposal to make sure that this kind of development does not happen. The problem is not planning policy; it is people who subvert the policy through other devices.

[Matthew Pennycook]

I thank the hon. Member for that point. To answer him directly, on national development management policies, which I mentioned, we stated in the NPPF consultation—which is still open and closes on 24 September—that we were committed to creating NDMPs to provide more certainty and consistency about decision making in a range of areas. As part of that, we will look at all existing national policies, including the policy in relation to unintentional authorised development, as set out in the 2015 written ministerial statement.

I hope that gives the hon. Member some reassurance that as part of bringing in those NDMPs, we are looking at that particular issue, which I do understand. Those NDMPs will have to consulted on, so hon. Members from all parties will have an opportunity to feed in their thoughts about whether we have got the policy right in any particular area.

I thank the hon. Member again for giving the House an opportunity to discuss these matters, and I thank other hon. Members for taking part in the debate. I genuinely welcome and look forward to further engagement on this issue with Members across the House. In the interim, I encourage all hon. Members with an interest in how national planning policy relates to Travellers to respond to the consultation on a revised NPPF before the deadline of 24 September.

--- Later in debate ---

[Kevin Hollinrake]

I thank the Front Benchers for their excellent contributions. The tone of the debate was generally very constructive. I think we are all on the same page in terms of local planning authorities having to fulfil their requirement to make sure that suitable provision is made for people who live different and nomadic lifestyles. I thank the hon. Members for Sheffield Hallam (Olivia Blake), for Rugby (John Slinger) and for Edinburgh West (Christine Jardine) for their points.

My hon. Friend the Member for Bromsgrove (Bradley Thomas) touched on the key point: we cannot have a planning system where it is easier to apologise than to ask permission. If that is the case, it creates chaos in the system. Everybody can play by those rules, and there will be chaos in terms of planning applications and wider society. It undermines faith in the system. That is the point I want to make. Whatever the protected characteristics of certain communities, it cannot be the case that in our society there is one law for one and another for another. That feeds the perception that we operate a two-tier society, and that cannot be right. It undermines the entire system.

I hope that the Minister will look at two things. As the shadow Minister, my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) rightly said, we should continue to look at bolstering enforcement powers. I also make it crystal clear that the recommendation for the planning application I mentioned was for approval despite the fact that the written ministerial statement from February 2019 said that intentional unauthorised development should be a material consideration in a planning application. Nevertheless, the planning officers recommended approval, which I think was totally wrong. I congratulate the planning committee who still rejected the application, but that might well go to appeal. I welcome the fact that the Minister is going to look at the full context of this. I hope he will make it even clearer in planning policy that somebody who is guilty of intentional unauthorised development will never be given consent for their application when there is such a clear abuse of process, and that that will not be tolerated.

Question put and agreed to.

Resolved,

That this House has considered the adequacy of planning policy for Traveller sites.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Monday 2nd September 2024 Commons Chamber

[Alex Norris]

The right hon. Lady is exactly right. The future of the high street is not about returning to how things were. There must be a place for leisure, a place, of course, for retail and a place for residential properties, and councils of all political persuasions throughout the country are trying to find that perfect alchemy. We have inherited an extremely difficult funding situation, but we are working our way through it, and future funding decisions will be made in the Budget on 30 October.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I am not sure that Mel would be all that flattered, actually!

Banking facilities are important to our high street traders. Bedale, among other towns, has no banks, and does not even have a working ATM. Given that banks have saved about £3 billion a year by closing branches, what is the Minister doing with his counterpart in the Treasury to ensure that we have proper banking facilities in towns such as Bedale?

[Alex Norris]

The hon. Gentleman knows whereof he speaks. This is another question that we are addressing up and down the country. We know that banking facilities bring people into towns and villages, and give rise to a virtuous circle. We have committed ourselves to providing 350 new banking hubs and, as the hon. Gentleman suggested, we are working with Treasury colleagues on their delivery.

Teesworks: Accountability and Scrutiny

Kevin Hollinrake Excerpts

Wednesday 7th June 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

It is absolutely right that this place offers right hon. and hon. Members the opportunity to raise concerns about value for money or process, particularly when it comes to public money, so I am grateful for the contributions from both sides of the House, and in particular from so many fellow northern Members. Indeed, as a Back Bencher, I have on a number of occasions used the privilege that this House offers to raise concerns about other alleged wrongdoings, but I think it important that we consider our language, our tone and the content and context of the claims that are made. I think that it is wrong to exonerate someone without due process, as it is to condemn somebody without due process.

In the case of the South Tees Development Corporation and Teesworks joint venture, it remains the case that the Government have seen no evidence of corruption, wrongdoing or illegality. Neither have the auditors of the STDC, nor have my hon. Friend the Member for Stockton South (Matt Vickers) or the hon. Member for West Lancashire (Ashley Dalton). However, the seriousness of the allegations, some of which have been made in the House and discussed today, could damage public trust, so it is right that they are investigated.

It is important to recognise that the review that we have commissioned was called for not only by Members of this House but by the Tees Valley Mayor himself. Our elected Mayors play an important part in championing their areas—convening communities, local leaders, businesses and investors to support levelling up in those places. As my right hon. Friend the Member for Scarborough and Whitby (Sir Robert Goodwill) and my hon. Friend the Member for Sedgefield (Paul Howell) highlighted, industry on Teesside was in decline prior to Mayor Houchen taking office. The project has the potential to deliver more than 40,000 jobs and billions of pounds of economic growth.

The Mayor has understandably raised concerns about the allegations made, recognising the damaging effects they could have on investments and job creation across the Tees Valley. That was a point raised by the hon. Member for Sunderland Central (Julie Elliott). The continued allegation of corruption poses a real risk to our shared ambitions to deliver jobs and economic growth in Teesside. My hon. Friend the Member for Hartlepool (Jill Mortimer) rightly stated that those concerns and allegations—unfounded at this point in time—deter investment in the region, a point also made by my right hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke). As he said in his final words, we have had enough of talking down the region.

The hon. Member for Middlesbrough (Andy McDonald) said that people did not need to rely on his comments about the allegations being raised, citing newspapers that had raised them. But he must be aware that the Financial Times makes no allegations of wrongdoing, but merely quotes his comments made in this House. That is similar to the points made by the hon. Members for Wansbeck (Ian Lavery) and for Warwick and Leamington (Matt Western). They raised facts, but they made no direct allegations as the hon. Member for Middlesbrough did. Those allegations are an ongoing concern, shared by the Secretary of State for Levelling Up, Housing and Communities, my right hon. Friend the Member for Surrey Heath (Michael Gove) and me. That is why my right hon. Friend has announced the independent review, which will address the accusations directly and robustly.

As the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend the Member for North East Derbyshire (Lee Rowley) confirmed earlier in the debate, the Department for Levelling Up, Housing and Communities has also now published full details on the review, including the independent panel that will lead the review and the terms of reference. I can assure hon. Members that, in line with existing practice, the Government have appointed a panel composed of external, independent experts with extensive experience at senior levels.

As the lead reviewer, Angie Ridgewell brings extensive experience of senior leadership in local government. She is the current chief executive at Lancashire County Council, having previously held senior roles across the public sector, including as director-general of two Departments. Richard Paver and Quentin Baker have been appointed to ensure the panel are fully equipped to consider the complex legal, financial and commercial matters the review is likely to cover. Richard Paver acts as the finance lead for an existing non-statutory intervention at Wirral Council. Quentin Baker is currently director of law and governance at Hertfordshire County Council and has 17 years of experience acting as statutory monitoring officer for several large local authorities.

The shadow Secretary of State raised concerns about the extent of the review and I understand that, given the time that she had to study the announcement. But she was not right to say that the review relates only to general governance, because it clearly specifically refers to allegations that have been raised, and the inquiry needs to respond on those issues, including commercial arrangements.

Members have raised the question of the prospective role of the National Audit Office. The Government considered carefully calls for an investigation to be led by the NAO. It is not, however, the NAO’s role to audit or examine individual local government bodies, and its powers would not normally be used for that purpose. It would not be appropriate to expand so significantly the role of the NAO by asking it to lead this inquiry. In confirming the review, the Government have been clear that we would welcome any action by the NAO to update its review of Government funding arrangements. These are all points that were raised by the hon. Members for Sunderland Central, for Washington and Sunderland West (Mrs Hodgson) and for Stockton North (Alex Cunningham), as well as by the shadow Minister, the hon. Member for Nottingham North (Alex Norris), who described that position as eccentric despite the fact that it is the established process—a process that Labour actually established.

It is important in this debate that we do not lose sight of the value of devolution in empowering our local communities. Mayoral development corporations are but one tool at the disposal of our elected Mayors to support renewal and regeneration where it is much needed—in places such as Redcar and Cleveland, Middlesbrough and Hartlepool, where the challenges of post-industrial deprivation are significant but the opportunities are equally so. Local and regional government working together with the private sector is an opportunity to provide the leadership and strategic direction needed to enable growth.

Equally, this Government have been clear about the importance of accountability and scrutiny for areas with devolved powers. The English devolution accountability framework, published this March by the Department for Levelling Up, Housing and Communities, sets out the ways in which we expect mayoral combined authorities to make themselves accountable to both the public and Government. The forthcoming scrutiny protocol will set out how we expect such bodies to create a sustained culture of scrutiny.

Once again, I thank Members for their important contributions today. We should be focused on ensuring the best outcomes for the Tees valley, so this is an important debate to have. Only a few years ago, the Teesworks site was a burden to the taxpayer and a danger to the public, with a significant price tag merely to maintain its safety and security. We should not lose sight of the fact that investments in that site—public and private—are helping meet our net zero targets, while providing economic opportunity and a sense of prosperity for future generations.

Question put.

Section 21 Evictions

Kevin Hollinrake Excerpts

Tuesday 25th October 2022 Westminster Hall

[Dan Carden (Liverpool, Walton) (Lab)]

I beg to move,

That this House has considered the potential merits of ending section 21 evictions.

I am grateful to have secured time for a debate on this matter, which continues to affect all our constituents. I start by paying tribute to my constituents in Liverpool, Walton, who are the innocent victims of the country’s current broken housing system.

“Everyone renting in the private sector has the right to feel secure in their home, settled in their community and able to plan for the future with confidence. But millions of responsible tenants could still be uprooted by their landlord with little notice, and often little justification. This is wrong”—

those are not my words but the words of the right hon. Member for Maidenhead (Mrs May), who was the Prime Minister in 2019, when the Government first committed to scrapping no-fault evictions. In the three years since, more than 200,000 renters have been evicted—that is the equivalent of an eviction every seven minutes, and that is despite an eviction ban that was in place for 14 months during the pandemic.

Section 21 evictions allow for landlords in the private rented sector to evict tenants from their properties without having to establish any fault on the part of the tenant. When a notice is served, it gives tenants just two months to leave their homes. Even the threat of eviction has detrimental effects on tenants. Section 21 notices mean that tenants are unlikely to exercise other rights, such as the very limited right to challenge rent increases, for fear of retaliatory eviction.

Research by Shelter shows that nearly one in five renters have decided not to complain about poor conditions in their homes for fear of being evicted. I witness that frequently in my constituency. A constituent who visited my office had complained to her landlord about the lack of essential repairs to the front and back doors. The landlord refused to carry them out. After she complained again, she received a section 21 notice in the post, telling her to leave the property. That shows the clear imbalance in power when tenants are held hostage to a bad landlord in an inadequate property.

It is easy to underestimate the dislocating and exhausting experience of someone being evicted from the place they call home: living in limbo; never certain of when their time may be up; having to pack up belongings, leave support networks and potentially change employment —all at immense personal, mental and financial cost. Children being unmoored and having to move schools or leave friends and family behind can have a lifelong impact on learning and development.

My constituency office recently spoke to a constituent who contacted us after being served a section 21 eviction notice. She has been living in her property for 13 years with her two children, aged 12 and two. She suffers from anxiety, and after being told she must leave the property her anxiety has “gone through the roof”. She has never had panic attacks as bad as they are now. She said it is

“exhausting to look after kids at the same time as worrying about where we will end up.”

She told us that being served with the eviction notice was “cruel”, and that

“you should not be able to drop a note through someone’s door telling them to pick their lives up and move on.”

If constituents are removed from properties, they are often placed on long property waiting lists, compounding the sense of uncertainty and insecurity that they experience. I want to take this opportunity to commend local organisations such as Vauxhall and Merseyside law centres, ACORN and my local Liverpool Shelter branch, which carry out fantastic work in almost impossible circumstances to support my constituents in the face of minimal Government support. All MPs here will have similar stories from their own constituents, and may be planning to share their contributions today. Indeed, it was those stories, and the tireless work of the renters’ unions and housing campaigners, that pushed the then Prime Minister, the right hon. Member for Maidenhead, to promise a new deal for renters in 2019.

It will come as little consolation that the Labour party announced in December 2017 that any future manifesto would contain a commitment to remove no-fault evictions. The 2019 Conservative manifesto echoed that commitment, promising the abolition of no-fault evictions so that tenants were

“protected from revenge evictions and rogue landlords”.

Again, those are the Conservatives’ words, not mine. Of course, like many Tory promises, that was not worth the paper it was written on. The two and a half years of the premiership of the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) passed without any Bill being published.

We have had a consultation, which the Government responded to by again vowing to abolish section 21, but now we find it kicked into the legislative long grass. It was not a priority for the previous Administration and no one knows what the new Government are minded to do—I hope the Minister can shed some light on that today. This is all despite the huge public support for the reform of private renting: some 79% of the public, 80% of Conservative voters and 86% of voters over the age of 65 back greater protections for private renters, according to Generation Rent data.

The private rented sector is dominated and characterised by insecure tenure, increasingly unaffordable rents, poor housing quality and the ever-present risk of eviction. Data from Crisis showed that in the last financial year nearly 20,000 households faced homelessness after receiving a no-fault eviction notice. Losing a private tenancy is the second biggest cause of homelessness in England. If the Government are serious about ending homelessness, what are their reasons for delay? No one should be going homeless.

When we know that private sector tenants have to move more often than people in any other tenure, and then face average moving costs of well over £1,500, we should be doing all we can to ensure that constituents are not pushed into destitution following receipt of a section 21 notice. That is more important than ever in the midst of the current Tory-engineered economic chaos that is causing absolute misery to many people throughout the country.

We are all aware of the huge challenges that our constituents face: the skyrocketing cost of living, food prices at a 40-year high, record energy costs and skyscraping inflation. All those conditions make the need for a safe and secure home more important than ever before. Add to that the dwindling supplies of affordable housing, and more than three decades of deregulation, and it is easy to realise how we have created the toxic conditions that we now find ourselves in.

Where is the Government’s plan to deal with this? It may prove to be too late for many people throughout the country. To use just one example, statistics from the Ministry of Justice show that the situation is not getting better for renters but much, much worse: there was a 52% increase in the number of no-fault evictions between April and June 2022.

Conditions for private renters are continuing to deteriorate, and the Government’s neglect is the cause. That increase in forced evictions took place against the background of 11% inflation, and rent increases of 11.8% outside of London, according to Rightmove. Those rent increases are widespread—data from Shelter shows that 1 million private renters were hit with a rent increase in August 2022 alone—and have a clear knock-on effect: eviction claims for rent arrears are at their highest level since records began.

No one from the Conservative party seems to recognise that rent increases also cause inflation. They are frequently eager to call for pay restraint, or for benefits to be held down, but never for landlords to heed the same advice. The Government continue to consult on a rent cap in the social housing sector. Why is it that private sector tenants are always forgotten about? Announcing the consultation, the Department for Levelling Up, Housing and Communities said:

“Putting a cap on rent increases for social tenants offers security and stability to families across England.”

Highlighting the potential increases of 11% next year for social tenants, the press release stated that this move would

“prevent rents…from rising significantly.”

When we know that price rises will be the same or potentially higher in the private rented sector, why will the Government not provide the same protection to private renters?

In Scotland, emergency legislation has been announced to freeze rents and establish a six-month moratorium on evictions, for both the private rented and social sectors. That demonstrates that, where the political will exists, action can be taken quickly and decisively to provide relief for tenants. What analysis of that legislation have the UK Government carried out? Would the Government be minded to announce a similar pause on evictions?

A dramatic increase in the availability of buy-to-let mortgages, little growth and access to the social rented sector, and now skyrocketing interest rates caused by a mix of backwards ideology and financial illiteracy, have led to a growth in the number of households renting privately. The lack of housing affordability and tenant security in the private rented sector go hand in hand. The cost of frequent, unwanted moves makes people worse off, and money spent on rent is money that is not spent on putting down a deposit or saving for a mortgage.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The hon. Member cites the experience in Scotland, where they have had to introduce rent controls on the back of abolishing section 21; is he advocating that we should adopt rent controls for the private rented sector?

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure, Ms Nokes, to speak with you in the Chair. I realise that when you are in a minority of one, although you are not necessarily wrong, it probably increases the chances of your being wrong, so I will probably swim against the tide of some of the speeches in this debate.

Before I go any further, I should say that there is no doubt that there is a problem in the private rented sector. Everybody would like to see a solution so that people who want to live in accommodation for the longer term are able to. However, let me take Members back to 1985, if I can. I was a relatively young estate agent in York. If someone wanted to rent a property back then, they had a very limited choice—it was probably between three or four quite dark and shabby two-bedroom terraced houses off Bishopthorpe Road in York. There was so little choice back then because we did not have section 21, so if someone invested in the private rented sector and rented a property out—if they were a landlord—and somebody occupied their property, in effect they did so permanently, if they wanted. Members might think that is a really good idea and the solution to our problems; I fear it would lead to many unintended consequences, as it did back then.

Back then we had rent controls. The hon. Member for Liverpool, Walton (Dan Carden) may say that having rent controls is a really good thing, but it would end up putting layer upon layer of legislation on top of what the Government are currently thinking of doing in terms of the abolition of section 21. That will lead to more and more regulation, which will lead to less and less supply. Ultimately, that is very counter—[Interruption.] The hon. Gentleman shakes his head, but that was the reality of the mid-1980s.

[Andy Slaughter (Hammersmith) (Lab)]

I know we are not here to talk primarily about rent controls, but they go back to at least 1915. On section 21, the hon. Gentleman may be flogging a dead horse. I do not know whether he has seen the briefing from the National Residential Landlords Association, but it says that 70% of landlords could envisage operating without section 21 and another 8% say that it had never been important to them in the first place. The hon. Gentleman may be defending the landlords’ cause, but they may have accommodated the Government’s position and our position already.

[Kevin Hollinrake]

Like the hon. Gentleman, I have seen that briefing. That means that in effect somewhere between 20% and 30% of supply might go overnight, or go very quickly, and we have seen that in Scotland—[Interruption.] The hon. Gentleman can shake his head, but it is a reality. We have seen in Scotland a reduction in supply on the back of the abolition of section 21, followed by rent controls.

Back in York in the mid-1980s, what the Government are saying will happen is—

[Rachael Maskell (York Central) (Lab/Co-op)]

On a point of order, Ms Nokes. I do not mean this with any malice, but I think that the hon. Gentleman should refer to his entry in the Register of Members’ Financial Interests.

[Kevin Hollinrake]

I appreciate that. The hon. Lady could have made an intervention and I would have responded, but she is absolutely right, and I draw Members’ attention to my entry in the Register of Members’ Financial Interests. For many years, I owned an estate agency lettings business, which I do not own any more. I have, I think, four private rented properties in the private rented sector, but I absolutely do not speak on my own behalf; if anything, I speak on behalf of tenants, because I think that the measures being advocated would lead to a reduction in supply, which would ultimately be massively counterproductive for tenants. That is the conversation we should be having: one about whether or not this idea is good for tenants.

If the hon. Member for Liverpool, Walton will just indulge me for a second in terms of responding to his points—he is shaking his head, but if he just listened to my points, it might be useful. Rent controls applied back then. It was not as if rent controls were set according to market value, because there is no market value at that point. As soon as we introduce rent controls, we effectively get rid of market values. That is what happens. Back then the rent offices would compare a property only with other properties that had been rented out, none of which were accessible by the open market. Rent controls take us away from a free market completely.

The Government are also saying that if a landlord needs to reoccupy a property or wants to sell it, they will allow them to do that and ask the tenant to leave on that basis, but that loophole was closed then and it will be closed again. Back then, if someone wanted to ask a tenant to leave, they had to find another house for them. They had to be provided with another house, because the Government did not want that to be used as a back door to getting that tenant out.

[Dan Carden]

To bring the debate back to the merits of ending section 21 evictions, does the hon. Member think that his Government should deliver on their promises, or should they backtrack on them?

[Kevin Hollinrake]

My speech is very much in the context of section 21, in that the end of section 21 will not be the end of such measures. I do not think we should abolish section 21, certainly not without more measures relating to how we deal with section 8, which is the other mechanism for getting to grips with difficult tenants—difficult not just for the landlord, but for communities. Some 50% of section 21 notices are used to get people who are guilty of criminal or antisocial behaviour out. Let us not forget the impact of what the hon. Gentleman proposes on local communities.

[Dan Carden]

It’s your Government.

[Kevin Hollinrake]

I have spoken to every single Government Minister about my opposition to their plans. Section 8 uses a court-based process. It takes around eight months to get somebody out of a property using section 8. If a person is guilty of antisocial behaviour or is well behind on the rent—measures cannot be taken until somebody is about two months behind—it will take months. It is not that much of a problem for Legal and General, Grainger, Fizzy Living or whatever. They have thousands of properties. If they have a few dodgy tenants, they can blend that problem across their whole estate, so everybody pays for the tenants who make trouble, do not pay their rent or behave in an antisocial manner. What about the small landlord?

I like it when the Opposition talk about business. They always talk about small and medium-sized businesses, as do I. They say that we should abolish section 21, but if someone with one or two properties has a tenant who does not pay their rent for eight months, for whatever reason, that can be devastating to their investment, so lots of SMEs will exit the marketplace, particularly if we abolish section 21 without first reforming court- based process.

When the section 21 measures were introduced in the Housing Act 1988, we saw a massive increase in supply, which has been very good for tenants. The reality is that in most parts of the country, most yields on properties—the return on capital investment—are pretty low. We are looking at a rental yield of 2% to 4%. Interest rates will be 5%, 6% or higher, so if landlords borrow money to buy a property, most will not get an annual return. Most landlords are not profiteering from the private rented sector—far from it.

[Margaret Greenwood (Wirral West) (Lab)]

Is the hon. Gentleman suggesting that it is appropriate for people who live in rented accommodation to be subject to the vagaries of the market? We are talking about people who live their lives in these homes. What exactly does he envisage they will do in this scenario?

[Kevin Hollinrake]

That is an interesting point. The vast majority of people in the private rented sector are happy with the shorter-term nature of rented accommodation. I wish the hon. Member for Liverpool, Walton, would not shake his head and would listen to what I say. There is a cohort of people who want to live in rented accommodation permanently. They want it as their family home. I absolutely agree that the Government should provide accommodation for those people. The Government should invest in this much more, and provide long-term, affordable rented accommodation and social rented accommodation. That is definitely the Government’s job where there is market failure.

I concede that there are market failures for people who want to live in permanent rented accommodation. I am not against the Government stepping in and ensuring that can happen. However, if they step in, tell the private rented sector to ensure that, and set out the rules that apply to someone who wants to make an investment in the sector, the reality is that we will get a reduction in investment in the private rented sector, which will mean a reduction in supply, which will make it more difficult for the tenants on whose behalf Members are speaking. That is the reality of the situation. So, yes: we should make greater public investment in long-term rental accommodation to deal with this issue. However, we should not tell landlords, who invest their private money in the private rented sector, that they have to let their property for life, which is what the hon. Member for Liverpool, Walton is considering.

If the hon. Gentleman wants the private rented sector to do that, a way of dealing with the issue would be to offer incentives for that. We could look at capital gains tax, for example; perhaps people who are willing to rent their property for a much longer period—for five or 10 years, or maybe even for life—could get beneficial capital gains tax treatment. Alternatively, we could reverse some of the changes we made in the Finance (No. 2) Act 2015, in which we restricted mortgage interest in the private rented sector; that was pretty damaging for lots of landlords in the sector. We could say to landlords, “We are no longer limiting the way you can deduct interest against your annual rental income, as long as you’re willing to rent your property out for longer, or for life, to give security of tenure to those kinds of tenants.”

I will conclude very shortly, Ms Nokes. The other unintended consequence of what the hon. Gentleman proposes is that private rented sector landlords will prioritise the best tenants. They will not take a risk because of concerns about non-payment of rent. You are going to disadvantage the people you seek to protect through the measures that the Government are planning and that the Opposition—

[Caroline Nokes (in the Chair)]

Order. Not “you”—that would be me.

[Kevin Hollinrake]

I am ever so sorry. That is the first time I have done that in seven years in this place. What is being proposed will disadvantage the people the hon. Member for Liverpool, Walton, seeks to protect.

I am fully convinced the Government will push ahead with the proposals, and that the Opposition will double down on this if they ever get into Government. I am just saying that they should be careful what they wish for, because this would be very damaging for the people they seek to protect.

--- Later in debate ---

[Rachael Maskell]

I will continue my speech for the moment, if I may. My hon. Friend the Member for Liverpool, Walton highlighted the sudden 52% increase in the number of evictions this year. There is a reason for that, and the hon. Member for Thirsk and Malton (Kevin Hollinrake) referred to it: section 24 of the Finance (No. 2) Act 2015.

We have to look at cause and effect in relation to evictions. In came legislation to curb the advantages of the buy-to-let market, meaning that landlords did not get the tax advantages they had previously had. As a result, they are in negative equity, and are therefore looking at how they can derive a profit. I see that happening in two ways in my constituency: first, landlords putting up rents significantly so that they can break even on their investment; and, secondly, landlords evicting tenants, either to put up rents—that is rare—or to flip the house over to become an Airbnb.

In my constituency, we have seen a sharp increase in the short-term holiday let market. The statistics for whole properties show that back in January 2018 there were 973. Now there are 2,118. That decreases the supply of available housing even more, so if more demand is placed on the market, up go the rents again. People in York are pulling their children out of school, giving notice on their jobs and moving out of the area. That has skewed the local economy. We cannot recruit to our public services, and we are in rapid decline, because those 2,000 homes were built to be residential. With a council that is not building, the market is rapidly becoming overheated; it is broken. When someone can make £700 over a weekend on a property—a party house, as we see in the Airbnb market in York—or £945 on rent every month, why would they hang around and not flip their property? That is how the section 21 notices are being used in the residential areas of York. It is breaking communities and harming the market. It also shows how broken the whole market is.

On top of that, the local housing allowance does not meet the levels required, for people who would much prefer to be in social housing. We have to look at the broad rental market area, which is far too large. When there is a heated-up housing market, people who cannot get into social housing also cannot get into private housing, and they have nowhere to go.

[Kevin Hollinrake]

The hon. Lady is making a good point about holiday homes. Does she concede that section 24, which limits mortgage interest for people who provide homes to the private rented sector but does not apply to holiday homes, is one incentive to make a property a holiday home? If section 21 were abolished, there would be at least two reasons to provide a holiday home, rather than a property to the private rented sector.

[Rachael Maskell]

The hon. Member makes a point, but it is not an either/or scenario. I appreciate that it is a mess, but the Government have to mop up that mess, as it is of their own making. The fact we have seen landlords rapidly flip their properties demonstrates the urgency of addressing the issue.

I hope hon. Members will support my private Member’s Bill—the Short-term and Holiday-let Accommodation (Licensing) Bill—which is due to have its Second Reading on 9 December. I am looking to license the short-term holiday let market to provide security and allow local authorities the control to prevent some of that flipping. We have to get to the source of the problems. I trust the Minister will address that today.

--- Later in debate ---

[Andy Slaughter (Hammersmith) (Lab)]

It is a pleasure to serve under your chairpersonship, Ms Nokes, and to take part in a debate instigated by my hon. Friend the Member for Liverpool, Walton (Dan Carden).

I will start by trying to agree with the hon. Member for Thirsk and Malton (Kevin Hollinrake) on this point at least: it is a complex matter to get rid of section 21. Just doing so is not going to be an answer to all our problems in the private rented sector or the housing market as a whole. He took us back to 1985—somewhere I am always happier, politics apart. The housing market was very different in those days. We had just had the Housing Act 1985, which introduced secure tenancy for local authority tenants. A few years later, the Housing Act 1988 introduced assured tenancies, which are still the default tenancy, and are the main—should be the exclusive—tenancy for other social landlords, such as housing associations. We also had protected and controlled tenancies. Other Members with constituencies such as mine, with large private rented sectors, will still come across some protected tenancies, which predate that Act. Generally speaking, those tenants have had, by definition, decades-long good relationships with landlords, fuelled by the fact that they not only have security but a degree of rent control—a fair rent, though not entirely.

[Kevin Hollinrake]

That is an interesting point, but the hon. Gentleman will concede that when trying to sell a property with a protected tenancy, the value is usually about 30% below market value. If he is suggesting that that would be the effect of abolishing section 21, that would have a very detrimental effect on property values throughout the country.

[Andy Slaughter]

I will develop my argument and hope to take in that point.

I was giving the background to saying that the one thing that dramatically changed—one of the most fundamental changes in housing law, in the Housing Act 1988—was the ability to opt out of an assured tenancy and create an assured shorthold tenancy. Some social landlords do that; I deprecate it, but they do. Certainly, most private landlords would do that. That was a real change: introducing the free market, changing the relationship between landlord and tenant, and treating people’s homes as commodities for the first time. It is not that most landlords are not well intentioned or do not look after their tenants or, indeed, that they are not entitled to make a return on their investments, but I fundamentally believe there is a slightly different relationship because we are dealing with someone’s home.

The dramatic effect of that is disguised by the fact that—even in 1989, after council house sales had been going for most of a decade but had not really taken off—we still had a thriving social housing market in the 1980s. It was the first port of call for people who wanted a secure home in the rented sector. That disguised the full effect of assured shorthold tenancy and section 21. The briefing we have from Crisis for this debate tells us that 1.3 million families with children now live in the private rented sector of nearly 4.5 million households. I am sure that most of them would prefer the security and affordability of living in the social housing sector, but that is simply not open to them.

The dramatic decline in social housing really began with austerity in 2010, with the almost complete eradication of the social housing grant, after which more and more pressures and misery were piled on social landlords. Post Grenfell, we now have essential work on fire safety, but it is costing individual landlords tens of millions of pounds and they are getting very little of that back from the building safety fund. There is also retrofitting to comply with environmental standards. There are all those issues, along with the lack of resources among housing associations.

I have a major housing association in my constituency that has no build programme until at least 2030. It is selling off hundreds of its properties as they become void, just to make ends meet. The social housing that was the first port of call for people who wanted secure, affordable rented accommodation is no longer there for many people. As for the other source, which was through planning gain, I am afraid we are still—despite the best efforts of the Mayor of London and others, along with individual councils—subject to viability assessments. Therefore, we are not in any way delivering the degree of social housing that we need to.

Such is the context in which we see the private rented sector. It will take time and a Labour Government, I am afraid, to turn that round. I wish the last Labour Government had done more on building social housing and possibly on reforming the private rented sector. Yet as I say, the problems were not as apparent then; they are now. It will take years to build the properties we need. To make the substantive changes in the law, we probably need another major piece of housing legislation. In the time it takes to turn that round, the private rented sector has to be reformed; that is a quicker option. That includes getting rid of no-fault evictions to give people that basic security, but that will not be sufficient in itself. It has to be done in the round.

We have to look at rent levels; if landlords can put rents up as high as they want to, that will just be another way of evicting people without due cause. We have to look at disrepair, which is worse than I have seen it for 20 or 30 years. We have to look at what the exemptions and exceptions are that would allow a landlord to evict. Clearly, there have to be some, but if there are too many and they are too vague, we will simply be replacing one type of no-fault eviction with another.

I do not say all that to get the Government to say, “We will take this away and bring it back in a couple of years’ time.” We would like the Minister to keep the promise that has been made. I know it was a couple of Prime Ministers ago—I think it was last week—but I think we heard from the right hon. Member for South West Norfolk (Elizabeth Truss) that this was still part of the legislative agenda. I hope it still is and I hope they get on with it and do it. What they must not do is think that that is the end of the matter. We will have to wait for a Labour Government to have wholesale housing reform, but if the Minister is going to surprise me on that, I will be very grateful.

This is my last point. I mentioned earlier that the National Residential Landlords Association had given a very thoughtful briefing for this debate. As a body, it is helpful in engaging with people, including with tenants’ organisations and trying to represent decent landlords in that way—all their members probably are decent landlords, because indecent landlords would probably not be members of the NRLA. It specifically mentioned improving tenants’ access to legal support. That is absolutely vital, whereas other things that the Government are doing are not.

If tenants want to challenge matters—even section 21 notices can be challenged if they have not been properly served or executed, or if there are other matters, or if there has been harassment—legal advice is very important. Next April, the Government will impose fixed recoverable costs, which means that not-for-profit organisations such as law centres and those few solicitors who still operate under legal aid will not be able to subsidise their housing work by recovering costs inter partes in that way. I have nothing against fixed recoverable costs in principle, but in practice they will mean a further collapse in the housing legal sector, which in turn will mean that it will be increasingly difficult for people to challenge matters.

The other issues that the NRLA raised are local housing allowance and universal credit, including the delay in paying universal credit, and the gap between what housing allowance gives and the actual cost of properties. Those are all legitimate points. If the Government think they will get a big tick from the private rented sector—any part of it—simply by dealing with the section 21 issue, I need to disabuse the Minister of that notion. Nevertheless, we would like to hear a little more confirmation about what the Government are going to do to about the situation—most of these people, whether they would prefer to be in social housing or to be owner-occupiers, increasingly do not want to be in the private rented sector.

If we had a decent and thriving private rented sector, then some people would make it their first choice, but many people are in the sector because they have no other option. They have run out of options in terms of their living conditions, their overcrowding, their security and the amount of rent they have to pay. The sector needs a proper look. Since the Housing Act 1988, we have declined into a society in which people’s right to a decent home—that is a human right, although if we are going to have another change of Lord Chancellor, perhaps it will not remain one for very long—has declined. The Government need to look at this sector in the round. They cannot just say, “We will do one or two piecemeal things”. They cannot tinker with the housing market; it needs full, wholesale reform.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure, Ms Nokes, to serve with you in the Chair.

This has been an important and timely debate because, as we have heard in the many excellent contributions this afternoon, the problems inherent in a sector that for far too many renters has always been characterised by insecurity, high rents and poor conditions, have become far more acute over recent months, as those renting privately struggle to cope with the impact of high inflation and rising prices.

I start by congratulating my hon. Friend the Member for Liverpool, Walton (Dan Carden) on securing the debate and on the characteristically powerful way in which he opened it. He always speaks with strength and clarity on behalf of his constituents and he did so again today, making a powerful case that overhauling the private rented sector in Liverpool and across the country is a matter of the utmost urgency.

I also thank my hon. Friends the Members for West Ham (Ms Brown), for Wirral West (Margaret Greenwood), for York Central (Rachael Maskell) and for Hammersmith (Andy Slaughter), as well as the hon. Members for Strangford (Jim Shannon) and for Bath (Wera Hobhouse), for their excellent contributions. Although there are common problems and solutions, I am always mindful of the fact that there are different “geographies” of renting and challenges that are specific to certain parts of the country. The debate usefully highlighted that point.

Doubtless it was not the choice of my hon. Friend the Member for Liverpool, Walton, but when I read the title of this debate late last week it struck me as somewhat odd, given its implicit suggestion that the merits of ending section 21 evictions are still essentially being contested. While there are, of course, those who remain resolutely opposed to reform of any kind, the reality is that there is now a broad political consensus on the need to ban these so-called no-fault evictions. It is obvious why such a consensus exists. As things stand, and as we have heard again today, landlords can evict tenants, after giving as little as two months’ notice, at any point after their fixed-term tenancy has come to an end. They do not have to give a reason for doing so, or even have one.

As a result, large numbers of private renters live day to day in the knowledge that they could be uprooted with little notice and minimal justification, if any. With the threat of summary evictions hanging over them, a significant proportion of those people concentrated at the lower end of the private rental market, who have little or no purchasing power, have to put up with appalling conditions for fear that a complaint will lead to an instant retaliatory eviction. Far too many tenants are evicted each year using a section 21 notice, which is why it is a leading cause of homelessness in England. Abolishing section 21 no-fault evictions is therefore long overdue and will give private renters much-needed security in their homes.

The available evidence also suggests that scrapping section 21 is likely to provide private renters with greater certainty and control over their lives without any corresponding detrimental consequences—unintended or otherwise—or disruption. I draw the attention of the hon. Member for Thirsk and Malton (Kevin Hollinrake) to research carried out by Shelter into the impact of the effective abolition of no-fault evictions in Scotland, following the introduction of new private residential tenancy agreements there in 2017. It found that the measure had no discernible impact on either the size or functioning of the private rented sector there, or on increased levels of homelessness.

[Kevin Hollinrake]

I add my thanks to the hon. Member for Liverpool, Walton (Dan Carden) for bringing forward the debate. He raised some good points at the start of his speech, which we should consider.

The hon. Member for Greenwich and Woolwich (Matthew Pennycook) might be interested to know that, in the past year, UK rents have risen fastest in Scotland. If he was including me among the people who do not want any reform, then he should not: I absolutely do want to see reform. I would like to see property rental standards that landlords must adhere to, and reforms of the section 21 process, but just not the abolition we are talking about today.

[Matthew Pennycook]

I deliberately did not assign to the hon. Gentleman a blanket position of “no reform”, but I think that, on this point, he is fundamentally wrong. We need reform, on section 21 and more widely; I will come on to that point.

That research for Shelter is telling because the predictions made by landlord groups in Scotland prior to the introduction of PRT agreements, including that they would kill the sector entirely, have ultimately not come to pass. We should have that at the forefront of our minds when vested interests in the English sector warn of the dire consequences of renters reform.

We in the Opposition still appreciate that good landlords may still harbour concerns about how reform will impact them. We recognise that when section 21 evictions are finally abolished, landlords will need recourse to robust and effective grounds for possession in circumstances where there are good reasons for taking a property back—for example, anti-social or criminal behaviour. We also share the sector’s concern about how ongoing delays in court proceedings could impact on a landlord’s ability to make use of such grounds. However, it is a welcome sign that most landlords and landlord associations now appreciate that greater security and better rights and conditions for tenants are the future of the lettings sector.

When it comes to reforming the private rented sector, scrapping section 21 evictions is obviously not the end of the matter. Among a wide range of necessary measures, we need action on standards to address the shameful fact that one in five private rented homes does not meet the decent homes standard, and one in 10 has a category 1 hazard posing a risk of serious harm. We need changes to landlord-to-tenant notice periods and a national register of landlords. We must make it illegal for landlords and agents to refuse to let to renters claiming benefits, and we need effective measures to address unreasonable within-tenancy rises.

Those go alongside other reforms that are desperately needed. As my hon. Friend the Member for York Central will know, we have argued for many months in the Levelling-up and Regeneration Bill Committee that the Government must act with far more urgency on the growing short-term and holiday lets sector. That is why Labour has made clear that, in Government, we will introduce a new renters’ charter, a new statutory decent homes standard, and take action on short-term and holiday lets.

Thankfully, there is significant consensus across the Chamber on the need to reform the sector more fundamentally, and a number of the measures that I have just outlined were in the White Paper published by the Government earlier this year. The problem is that, as things stand, not only do we not have any firm parliamentary timeline for a renters reform Bill, but, given the disarray within Government, we do not even have the certainty that one will ultimately come forward in this Parliament or, if it eventually does, that it will contain all the proposals set out in the White Paper. As such, I would like to use the opportunity presented by this debate to ask the Minister two simple questions to which private renters following our proceedings will expect answers.

First—as many hon. Members have asked today, and as I have asked many times without receiving a satisfactory answer—when do the Government plan to finally introduce a renters reform Bill? It was in the Conservative party manifesto, so presumably the Government intend to have it secure Royal Assent before the end of this Parliament. However, the Minister must appreciate that private renters facing a difficult winter cannot wait until 2024 for the Government to act. If they introduced emergency legislation, we would support it, but private renters deserve at least some assurance today that the Government will make that a priority.

Secondly, can the Minister confirm that if and when it is finally published, the promised renters reform Bill will contain all 12 of the proposed reforms set out in the White Paper? The last piece of legislation that fundamentally altered the relationship between landlord and tenant in England was the Housing Act 1988, but, as my hon. Friend the Member for Hammersmith rightly made clear in incredible detail, the private rented sector has changed beyond recognition in the more than three decades since that legislation was put on the statute book. It is simply no longer possible to regard its role as primarily a residual tenure for those temporarily unable to access owner occupation or social housing.

Some 11 million people now rent from a private landlord. As well as the young and mobile, the sector now houses many older people and families with young children, for whom greater security and certainty is essential to a flourishing life. At the end of the day, that is what we need to be thinking about here—not the price of housing or the commodification elements involved in the sector. To ensure that private renters get a fair deal, we in this place need to transform how the private rented sector is regulated and level the playing field between landlords and tenants.

As hon. members have said, it is now well over three years since the Conservative Administration of the right hon. Member for Maidenhead (Mrs May) promised to abolish section 21 no-fault evictions. In that time, over 45,000 households have been threatened with homelessness as a result of section 21 evictions, and the figures released so far this year suggest that possession claims resulting from them are increasing markedly as the cost of living crisis intensifies. It is high time that the Government stopped talking a good game about renters reform and got on with legislating for it, and the Minister needs to make it clear this afternoon that they will do so.

Solar Farms and Battery Storage

Kevin Hollinrake Excerpts

Wednesday 8th June 2022 Westminster Hall

[James Gray]

The hon. Member makes a good point. Of course, food security will be central to our considerations as we go forward. He made an interesting point: he said the solar farm in his constituency was built with the enthusiasm of local people. That is, of course, how it should be. There will be places where local people say, “I am committed to environmentalism and renewables. I want to see a renewable farm near my village or in my town. I want to see it behind a high hedge,” and they will lay down certain conditions under which it can be put in. That is great. By contrast, when local people—such as the people of Lea, in the public meeting I mentioned a moment ago—are absolutely unanimous in their determination not to have one, they must be listened to. That becomes an important part of the consideration.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I congratulate my hon. Friend on bringing forward this important debate. Is there not a danger that we swap the drive towards energy security for food security? Should we not set a balancing target for food security in this country from the current 60% to, say, 75%, where it used to be? That would prevent planning consent being given for sites such as the one near Old Malton, in my constituency, which is 70% best and most versatile land. Does he agree that giving consent for such land is absolutely inappropriate, and that councils should take food security into account in their decisions?

[James Gray]

My hon. Friend is absolutely right. One of the great considerations that we are currently battling with is the question of food security. Post-Ukraine, or during Ukraine, we are facing a real crisis in food production in this country. Why we are taking perfectly usable agricultural land and covering it with vanity mirrors and industrial battery storage units, I simply cannot imagine. It is extraordinary.

Just yesterday, we had a debate in this Chamber on a similar subject—the question of housing in planning—and, to some extent, we are discussing the same thing. Developers should, of course, be encouraged to reuse brownfield sites in town centres, but, given the choice between a brownfield site in a town centre or a greenfield site in the countryside, they are going to go for the greenfield site. We therefore have to change the planning system to focus house building on previously used land. A little off the subject, Mr Paisley—thank you for not picking me up on that.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Monday 24th January 2022 Commons Chamber

[Neil O’Brien]

That is a serious point, so let me address it in the consensual and serious way that it deserves. The rise of online shopping is posing major challenges to our town centres. That is why we are bringing forward the future high streets fund and the billions of pounds of funding that I mentioned. I also draw the hon. Gentleman’s attention to things such as the community ownership fund, which helps to save these vital local assets. But of course we recognise that there is more to do, and more to think about in terms of how we change these town centres to help them adjust to a new world in which people will continue to spend more money online. We need to make them places where people work and live as well as just shop.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

5. What steps his Department is taking to increase home ownership.

[The Minister for Housing (Christopher Pincher)]

As a Government we are determined to level up opportunities across our country, and that starts with building the homes that our people need. That is why we are helping millions of people into home ownership. Since 2010, Government-backed schemes have helped over 756,000 households to purchase their own dream home. Last June, we launched our new flagship First Homes scheme, providing homes discounted by at least 30% for first-time buyers, with a priority for local residents and key workers.

[Kevin Hollinrake]

First Homes is an excellent initiative that could deliver homes in my constituency for local first-time buyers at even below half price. Will the Minister accelerate their delivery through section 106 agreements, pilot their delivery on public sector land in my constituency, and rename the policy from First Homes to “Half-Price Homes”, because then people would understand it much more clearly?

[Christopher Pincher]

My hon. Friend, who is a doughty campaigner for home ownership, teases me. He wishes me to call First Homes “Half-Price Homes”. Perhaps that will become the shorthand name for this project. Perhaps even, in time, they will be known as Hollinrake homes. As to his other questions, we are already commissioning First Homes properties on both public and private sector land through our two early delivery programmes. We are aiming to deliver 1,500 of them before April 2023, and we certainly want to accelerate the programme so that more people are able to achieve the dream home that they want and deserve.

Building Safety

Kevin Hollinrake Excerpts

Monday 10th January 2022 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I welcome my right hon. Friend’s statement, which ticks all the boxes needed to solve this crisis, not least pointing the finger at construction product manufacturers. There is no doubt they have gamed the system to get some of their products approved inappropriately, but that gaming was facilitated by the Building Research Establishment, which, as my right hon. Friend knows, was privatised about 25 years ago. Will he make sure that these manufacturers contribute towards the costs of remediation and will he consider bringing the Building Research Establishment back under public ownership?

[Michael Gove]

My hon. Friend is incredibly knowledge-able about all matters of property and housing. On the first part, absolutely. On the second part, that is a tempting thought, but I will have to discuss it with the Chancellor.

Second Homes and Holiday Lets: Rural Communities

Kevin Hollinrake Excerpts

Thursday 6th January 2022 Westminster Hall

[Tim Farron (Westmorland and Lonsdale) (LD)]

I beg to move,

That this House has considered the matter of second homes and holiday lets in rural communities.

It is a huge pleasure to serve under your chairmanship, Mr Sharma. Happy new year to you, too, and to colleagues.

It is a huge privilege to serve our communities in Cumbria—our towns, villages lakes and dales, among the rugged beauty of England’s finest landscapes—yet the people who live in our communities are even more precious than the places themselves. We welcome those who see Cumbria as a holiday destination: a place for leisure and relaxation, and a place of peaceful serenity and exhilarating extremes. It is our collective privilege to be the stewards of such a spectacular environment for the country, yet our full-time local communities face an existential threat unlike any other in the UK. I am immensely grateful to have secured this debate, because the housing crisis that has faced our communities in Cumbria and elsewhere in rural Britain for decades has rapidly become a catastrophe during the two years of the pandemic.

For the last few decades, we have seen an erosion in the number of properties in Cumbria that are available and affordable for local people to buy or rent. What little I know of geology tells me that although erosion usually takes place over huge passages of time, sometimes a whole rockface may collapse or a whole piece of a cliff might drop into the sea in a single instant. That is what has happened to our housing stock during the pandemic. In the space of less than two years, a bad situation has become utterly disastrous.

I have been calling for the Government to take action from the very beginning, so I confess to being frustrated and angry that Ministers have yet to do anything meaningful to tackle the problem. As a result, many of us living in rural communities feel ignored, abandoned and taken for granted by the Government, and we stand together today as rural communities to declare that we will not be taken for granted one moment longer.

In South Lakeland, the average house price is 11 times greater than the average household income. Families on low or middle incomes, and even those on reasonably good incomes, are completely excluded from the possibility of buying a home. Although the local council in South Lakeland has enabled the building of more than 1,000 new social rented properties, there are still more than 3,000 families languishing on the housing waiting list. Even before the pandemic, at least one in seven houses in my constituency was a second home—a bolthole or an investment for people whose main home is somewhere else.

In many towns and villages, such as Coniston, Hawkshead, Dent, Chapel Stile and Grasmere, the majority of properties are now empty for most of the year. Across the Yorkshire Dales, much of which is in Cumbria and in my constituency, more than a quarter of the housing stock in the national park is not lived in. In Elterwater in Langdale, 85% of the properties are second homes. Without a large enough permanent population, villages just die. The school loses numbers and then closes. The bus service loses passengers, so it gets cut. The pub loses its trade, the post office loses customers and the church loses its congregation, so they close too. Those who are left behind are isolated and often impoverished in communities whose life has effectively come to an end.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I congratulate the hon. Gentleman on having secured this important debate. He has mentioned that his local authority has brought forward some affordable housing—I cannot remember the number he said—but that it was all rented. The Government have created a new scheme, the first homes scheme, to allow discounted properties to be purchased as affordable homes. Is the hon. Gentleman pursuing that with his local authority, to try to make more of those properties available to his local first-time buyers?

[Tim Farron]

I am grateful for the hon. Gentleman’s intervention. The short answer is yes. The slightly longer answer is that the first homes scheme cannot be instead of other schemes but has to be in addition to them. By the way, in a community like ours where the average household price is 11 times greater than the average income, the first homes scheme will not help people; it will not even nearly help them. Maybe if their income was seven times less than the average house price, it might just help them, so it is a good scheme, but it is barely even the tip of the iceberg. Yes, I have spoken to the previous Secretary of State to ask him to make our area a pilot, but that does not touch the sides, if I am honest. Nevertheless, the hon. Gentleman has raised a really important point.

During the pandemic, I have spoken to many local estate agents across our county. Around 80% of all house sales during the past two years have been in the second home market. Those who have the money to do so are rethinking their priorities, investing in the rising value of property and seeking a piece of the countryside to call their own, and we can kind of understand that. I do not wish to demonise anybody with a second home, or to say that there are no circumstances in which it is okay to have one, but let me be blunt: surely, someone’s right to have a second home must not trump a struggling family’s right to have any home, yet in reality, apparently it does. Every day that the Government fail to act is another day that they are backing those who are lucky enough to have multiple homes against those who cannot find any home in the lakes, the dales or any other rural community in our country.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to serve under your chairmanship, Mr Sharma, and I thank the hon. Member for Westmorland and Lonsdale (Tim Farron) for having secured this important debate. It was good to hear him speak in favour of free markets: that is not something we always hear from his party, so it was very welcome. However, I agree with him that we are in a broken market. I must draw the House’s attention to my entry in the Register of Members’ Financial Interests: I have been involved in the housing market for many years.

There is a scarcity of land across the country, and in the rural areas we are talking about today—many of which are covered by national parks, including much of my area—those scarcities are even more profound. The reality is that we are already intervening in the market by creating that scarcity through the planning process, so I do not think it is wrong for us to talk about interventions, because free markets cannot be the only solution to the problems we have in the housing market.

Certainly, second homes are having a very big effect, creating even greater pressures and affordability constraints in some of these rural areas, and not just rural areas—as the hon. Member for York Central (Rachael Maskell) said, many urban areas face the same kinds of issues. Ryedale council covers much of my patch, where the average house price is around £300,000, with an average earnings to house price ratio of about 8.7. In Hambleton, the ratio is 7.2, and in other places, such as Filey—attractive coastal resorts—prices are going up, and the increasing number of holiday lets is putting further pressure on local people’s ability to find properties to rent and purchase. We cannot just rely on a supply and demand equation to solve all those problems: we must look at different interventions.

What the Government have done through the first homes scheme is part of the solution to this problem. It is an excellent policy, and I do not quite agree with the hon. Member for Westmorland and Lonsdale that it is not a solution for his constituency. He mentioned that average house prices in his patch were 11 times greater than average incomes—well, first homes could be up to half-price. Transfer values in my area from developers to housing associations are below half-price, and there is no reason why some of those houses cannot be made available to purchase in perpetuity through discounts of half-price or even below half-price.

I urge the Government to rename the whole first homes policy “half-price homes”, because we could deliver many properties around the country to local first-time buyers at half-price. That would make a significant difference to the hon. Gentleman’s constituency and to mine. It would mean that young first-time buyers could buy properties in my constituency that would cost four or five times their average earnings, which would bring those homes in scope for lots of those people. I fully concede that this is not all about affordable homes for purchase—we also need affordable homes to rent, shared ownership and lots of other things—but first homes is a very important policy that we should be driving further forward.

Taxation is bound to come into this conversation. Clearly, the Government believe that already: there is already a 3% stamp duty surcharge for second homes, so the Government believe we need to do something about second homes to try to level the playing field between investors, second home owners, first-time buyers and other buyers in our constituencies. This is not uncharted territory for this Government, so we should have a conversation about whether we should have a council tax surcharge as well. There is a perfectly sensible conversation to be had here, while recognising that the Conservative party believes in freedom of choice, so if somebody wants to use their money to buy a second home in a different part of the country as an investment or a place to live, we should not be totally against that. It is about trying to strike a balance between those two things to make it a fair and level playing field.

Another area that could make a big difference and that could fund lots of different activities would be the way we tax non-resident overseas owners. This could be in rural areas or urban areas. I do not think there is any argument for not taxing those people pretty heavily if they own property in the UK and are non-resident. We already have a 2% surcharge, on top of the 3% surcharge, for overseas owners. These people are having a profound effect on some house prices in urban areas as well as rural areas. I think 28% of properties sold above £2 million are bought by overseas owners. Around 20% of all properties in London—and probably a decent quantity in York and other cities—are owned by overseas residents. I do not see a reason why we would not seek to tax those people even more heavily than with a 100% increase in council tax.

Roughly, if we applied a 1% wealth tax on UK properties —this is only for overseas owners, not UK residents—it would raise £4 billion to £5 billion a year. There would still be an incentive for those people to invest their money in the UK, which I am not against, but the reality is that this would make it a fair and level playing field. They would still benefit from the very high house price growth. As we have heard today, house prices have been rising by around 10%, so it still makes sense for people to invest, but such a tax would mean that we could take a little bit out of the money they are making every year from house price inflation and put it elsewhere.

I would recommend that we put that £4 billion or £5 billion a year into the first homes programme, increasing the number of properties available to local, first-time buyers who are keen to get into the housing market. That would ensure that those local people have a stake in our communities and are available for employers to do the very important work of making our communities sustainable.

Leasehold Reform (Ground Rent) Bill [Lords]

Kevin Hollinrake Excerpts

2nd reading
Monday 29th November 2021 Commons Chamber

[Eddie Hughes]

I would say that we are doing a very important thing with today’s legislation, which effectively draws a line in the sand to prevent future onerous ground rent clauses. Once we have done so, we will then have the opportunity to work, hopefully quickly, to deal with the existing ground rent problem.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I have been known to swim against the tide once or twice with regard to this particular debate. I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I am a leaseholder, not a freeholder, in this context. Nevertheless, it is not right to think that effectively scrapping leasehold and moving to commonhold is a panacea. For evidence of that, hon. Members should look at the system in Scotland, which moved to a commonhold system. Some 80% of buildings require maintenance and there is a £2 billion unfunded maintenance backlog. We should step forward very carefully. Leasehold does need reform, but I am very concerned that if we effectively scrap it altogether, we will create ourselves a new problem.

[Eddie Hughes]

I thank my hon. Friend, who is incredibly knowledgeable in this area. I remember discussing my ten-minute rule Bill with him at the time. I completely assure him that we will proceed with caution and seek advice from experts both across the House and outside the House. I look forward to discussing this with him again in the future. I also take this opportunity to thank the former Secretary of State, my right hon. Friend the Member for Newark (Robert Jenrick)—I am delighted to see him in his place—for all the work that he put in in driving forward this agenda. Back in January, he announced measures to make buying a freehold or extending a lease cheaper and easier for many leaseholders.

I now turn to the specifics of the Bill. Ground rent is usually paid annually by leaseholders to their freeholder or landlord, but, crucially, no tangible service is provided in return. The industry is also familiar with the term, “peppercorn rent”, to describe a token or nominal rent used as a payment in forming a contract, which typically is not actually collected in practice. Historically, ground rents were generally very low. The past two decades have seen a surge in properties sold with significant and escalating ground rent. At its worst, this practice can lead to properties becoming unsellable. These unfair practices have caused real misery for those affected and, in turn, have undermined the reputation of the leasehold system. Regardless of whether the ground rent is a nominal peppercorn or thousands of pounds, the fundamental issue is that no meaningful service is provided in return. We want to end this for new leases, and that is why we are legislating so that new residential long leases will have no financial demand for ground rent. Instead, nothing more than an actual peppercorn can be collected from the leaseholder.

[Eddie Hughes]

The reason why we extended the timeframe for the introduction of this legislation for those properties is to allow people time to adjust their business models, so that they can cope with the change in legislation. To avert the risk of possible future shortages of peppercorns, and to ensure that our meals continue to be well seasoned, I should clarify that we do not expect any landlord to require the actual payment of a physical peppercorn each year. In reality, the new genuine peppercorn rent for future leaseholders means that they will not pay the rent.

The specifics of the Bill apply to residential long leases in England and Wales of over 21 years for which a premium is paid. The inclusion of the requirement for a premium clarifies that normal and legitimate practices relating to rack rents can continue. For leases regulated under the Bill, the rent demanded will not be any more than literally one peppercorn a year.

Following much careful deliberation, we have arrived at a broad and flexible definition of “rent”, using the real-world meaning, and therefore including anything in the conventional nature of rent. The Government are clear that landlords should retain the ability to collect legitimate charges. The definition will ensure that landlords can still collect legitimate charges where the market reserves them as rent, such as charges for services, including building maintenance. The broad definition will deter freeholders or landlords from trying to circumvent the new system by disguising ground rent as a different charge. It will also enable appropriate tribunals to make sound judgments on whether a leaseholder has in fact been charged a prohibited rent.

We plan to leave no loopholes for unscrupulous individuals, so we are also banning the charging of an admin fee for collecting peppercorn rent. Where a prohibited rent or administrative charge is paid, leaseholders will have the right to apply to the first-tier tribunal in England or the leasehold valuation tribunal in Wales. Provided that the tribunal deems the payment inappropriate, the relevant authority can then order the amount to be repaid. In the case of prohibited rent, that must be within 28 days and potentially also with interest.

There are a limited number of exceptions from the provisions of the Bill. The first is leases used purely for a business purpose. The intention behind the Bill has never been to reduce business leases to a peppercorn rent, so through careful consideration, we have excepted business leases that include the use of a dwelling in any way that protects the interest of residential leaseholders and commercial landlords. For mixed-use properties, such as a flat above a shop, the exception will apply only if the residential use significantly contributes to the business purpose of the lease.

Community-led housing may have few other feasible funding schemes that they can use to continue to grow developments that benefit the community, rather than secure profits. To maintain this growth, we have excepted community-led housing schemes. Home finance plan leases are also excepted. That includes regulated home reversion plans, such as equity release and rent-to-buy agreements, where the consumer purchases the freehold at the end of the term. We will also allow shared ownership landlords to continue to collect a market rent on their share of the property. That practice is integral to the shared ownership model.

[Kevin Hollinrake]

The Minister is setting out a list of exemptions. Are complex developments included in that—for example, a tube station with a cinema or shopping centre attached, and a block of flats above it, all in effect part of the same development? Who will manage the complexity of that development? If I was a long leaseholder in that block of flats, I would not be keen to manage all the mechanical and electrical systems stuff in that development.

[Eddie Hughes]

I am not sure that I completely understand my hon. Friend’s point. The Bill will not change the management of that building’s operation; it will just prevent ground rent from being charged. If a leaseholder feels that they are being charged ground rent inappropriately, they will have a right of appeal, and the issue will be determined by the ways and means authority.

[Kevin Hollinrake]

I am sorry; I should clarify my point. The Minister is quite right that a management company could look after the whole entity, but things such as common areas and insurance of the whole building —among many other issues—affect the whole building, and they require somebody to have an overarching view of the entire development. I not sure how that is provided for. In fact, in 2019, when I was a member of the Housing, Communities and Local Government Committee, it looked into that and said there should be an exemption for complex developments on that basis. However, that does not appear in the Bill, despite having been referred to in debates in the Lords.

[Eddie Hughes]

As I said, the Government’s intention is to ensure that, for fairness, the provision applies in as many circumstances as possible. I am happy to pick that up with my hon. Friend for further discussion after the debate, to which I hope he will contribute.

Statutory lease extensions are the subject of existing legislation and so are not covered by the Bill. The peppercorn limit will apply to the extended portion of any lease extended through the voluntary process.

I should note that there is no longer an exception for the retirement sector. As I said to my right hon. Friend the Member for Chipping Barnet (Theresa Villiers), we believe that all new leaseholders should benefit from the reforms. The measures for retirement properties will apply no earlier than 1 April 2023. Hon. Members, some of whom are in the Chamber, have raised that as a concern in correspondence, and it has been debated at some length in the other place. We feel that the transition period strikes the right balance between the sector and consumers.

The Government recognise that these provisions require a robust and effective enforcement regime. Freeholders and landlords who abuse the system and deliberately seek to charge a non-peppercorn ground rent on leases in contravention of the Bill will be subject to steep fines of up to £30,000. After listening to and considering carefully the view expressed in the other place, we concluded that the level of fines should be higher. The new maximum fine of £30,000 is in line with other housing penalties, including those in the Tenant Fees Act 2019. Fines can be even steeper for more egregious abuses of the system. For example, if a freeholder breaks the law by charging unfair rents at multiple locations, such as in a block of flats, they will pay a penalty per lease. It does not stop there; penalties can be supplemented by the repayment of all prohibited rent collected. Enforcement will be the responsibility of local trading standards authorities, which already do an excellent job of enforcing similar housing regulations. District councils in England will also have the power to take enforcement action if they choose.

We recognise that enforcement will require additional resourcing. That is why authorities can retain any penalties imposed, and put them towards the costs incurred in enforcement of residential leasehold property rules. Taken together, the enforcement regime will act as an effective deterrent, while giving authorities the flexibility that they need to ensure that any enforcement action taken is proportionate.

The Government’s vision for a reformed and improved leasehold system is one anchored in fairness and transparency. For too long, too many leaseholders have been let down by institutional inertia and a ground rent system that has not worked in their interests. The system has been dogged by opaque rules and left many people in the dark. This legislation is targeted on exactly what it should target. By reducing future ground rents to a peppercorn, we will deliver a tangible and meaningful improvement to home ownership for future generations. We have engaged extensively to get to this point, and this process is by no means over. We are clear-eyed about the challenges ahead, and know that there is more to do, but today is a significant step towards fixing our broken leasehold system for good. I commend this Bill to the House.

--- Later in debate ---

[Justin Madders]

I thank my right hon. Friend and neighbour for his intervention, which leads me beautifully into the next section of my speech, in which I shall talk about exactly that.

I will never accept that it is right for developers to choose not to pay a sum to councils to adopt the communal areas, and that they instead save themselves money by passing on that cost to the homeowners and then make even more money from the homeowners by charging them for things that ought to be coming out of their council tax. Like my right hon. Friend, I worry that this trend will be accelerated because the ground rent gravy train is coming to an end, and that we will hear more and more stories of homeowners having no choice but to pay inflated annual service charges that, given the choice, they would prefer to pay through their council tax.

[Kevin Hollinrake]

The hon. Gentleman is making a good point about what is referred to as “fleecehold.” Does he agree it is entirely within the gift of the local authority to require the development to be made to adoptable standards in terms of roads and drainage, for example? It can then be adopted by the local authority, so people do not have to pay twice for such services.

[Justin Madders]

That is a fair point in theory, but I find it does not happen in practice. I have estates in my constituency that were built a dozen years ago and still have not been adopted because the developers have not put them up to the required standard. The to and fro never ends, because the developers have left town and they have no interest or incentive to bring those areas up to the adoptable standard.

--- Later in debate ---

[Theresa Villiers (Chipping Barnet) (Con)]

I refer to my declaration in the Register of Members’ Financial Interests, which includes an investment property that is a flat held on leasehold.

I join other Members in strongly condemning the abusive practices that have prompted this legislation, including the sale of new leasehold houses where there is no justification, and spiralling ground rents that double every few years. All the rip-off practices about which we have heard in the Chamber this evening are simply not acceptable. I, like others, very much welcome the investigation initiated by the Competition and Markets Authority into some of the major developers in relation to unfair contract terms and what looks like mis-selling.

It is clearly right to legislate to stop sharp practices in the leasehold sector. It is also correct not to apply the ban on ground rents to existing leases, as that would retrospectively impact on long-standing investments, many of which are held by pension funds that support millions of people in their retirement. Instead, the Government will be helping existing leaseholders by making it easier to enfranchise or buy themselves out of ground rent obligations, and through their second-stage reforms.

As the Bill proceeds through Parliament, we need—as I said in my intervention earlier—to consider the retirement homes sector, where, as we have heard, ground rents are often being used to generate the capital to fund communal areas and shared facilities. Including retirement homes in the ban could affect future investment in this type of much-needed housing. As my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) said, there is a case for considering a technical change to the Bill so that at least the retirement homes built but not sold prior to the commencement of the Act in 2023 are covered by the current rules, rather than the new ones.

A second potential alteration that should be looked at carefully is whether to allow the continued use of ground rents for some large, complex apartment blocks. This matter has been raised with me by a constituent who is worried that the exit of professional freeholders from the market, which is the expected consequence of abolishing ground rents, will leave leaseholders moving into such buildings with extensive financial and legal responsibilities. These complexities are intensified if there is mixed residential and business use.

The Housing, Communities and Local Government Committee acknowledged this issue in its 2019 report and advocated at least a temporary exemption for large, mixed-use buildings. If this carve-out were made, there would need to be a robust code of conduct to ensure that the remaining freeholders acted fairly. Violation of such a code should be subject to enforcement mechanisms. Having spoken to my constituent and his colleagues in the professional property sector, I think we need seriously to consider whether some leaseholders in some new blocks might want to have the option of leaving stewardship of their block to a professional freeholder.

[Kevin Hollinrake]

My right hon. Friend is making an important point. Would the code of conduct to which she refers—for those kinds of complex developments—include a cap on ground rents of, say, £100 or 0.1% of the value, whichever was lower, to ensure that the ground rent was always affordable?

[Theresa Villiers]

We would certainly need a cap, and the sort of levels that my hon. Friend mentions sound reasonable to me.

Let me turn to how this legislation will interact with new building safety laws. New building safety legislation will impose stringent responsibilities on freeholders, whether they are professionals or just flat owners who are banded together to manage their building. Frankly, not all leaseholders will want to take on such liabilities, yet this Bill will mean that for new flats, residents—whether they want this or not—will be jointly responsible for the safety, maintenance and upkeep of the apartment buildings in which they live, regardless of the size or complexity of those buildings. As my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) highlighted in his earlier intervention, worrying research in a 2019 report commissioned by the Royal Institution of Chartered Surveyors and Built Environment Forum Scotland indicates that the removal of professional freeholders in Scotland has contributed to buildings falling into disrepair. A key problem that has been identified is that difficulties in securing a majority agreement among leaseholders and getting all flat owners to fund the repair works needed can significantly slow down remedial work, and that pushes up costs.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to speak after my former colleague in the Cabinet Office, my hon. Friend the Member for Loughborough (Jane Hunt). She made some good points, not least on part-built developments. I support the Bill’s intent.

There is an expression that you should never take down a fence until you know why it was put there. As I set out in my intervention, I have one or two particular concerns. I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I have been involved in the property sector for a long time. I am not directly involved in it today and I have no vested interest—that is for the people who make comments on Twitter in particular, because I will not agree entirely with many of the points made about completely scrapping leasehold, in effect. I am actually a leaseholder, rather than a freeholder, in this context.

On the leasehold system, for most of my life, when it comes to selling and renting property, leasehold has been a perfectly workable form of tenure for most people—for most leaseholders and indeed freeholders. In recent years, there is no doubt that the system has been tremendously badly abused. It is right of the Government to act on that in no uncertain terms. However, the fence to which I referred is between freeholders and leaseholders, and it was put there to try to ensure a proper mechanism for resolving disputes. That is why we ended up with a professional landlord who had an overall interest in an entire block, rather than in a specific unit in that block. The Bill will in effect remove any interest that a professional landlord would have in a future block. My hon. Friend the Member for Wimbledon (Stephen Hammond) is therefore right that the default will become commonhold.

On freehold, in my formative years of selling property in York, most flats were leasehold, and those flats were perfectly saleable and rentable. However, if ever we came across a development of freehold flats—a block where all the owners were freeholders, or commonholders, in modern-day parlance—we found that those properties were almost impossible to sell. In fact, mortgage lenders would not lend on them because of concerns about maintenance. If there was not a method to ensure that the building was maintained or that its insurance continued, the building might fall into disrepair and the lender’s security over the property would not be sufficient to cover the mortgage. That is the concern we potentially have here, as we move to this system of commonhold. I think commonhold can work for quite a number of flats—most blocks of flats, indeed—if it is simple and easy to operate.

However, commonhold is far and away not, in any shape or form, a panacea. We can see that from the current experience. There are some effective leasehold or commonhold ways of managing blocks, with residential management companies or right to manage agreements, where in effect the leaseholders manage the block and take on the responsibility of a freeholder. However, there are disputes within such blocks or organisations. The trouble with the commonhold rules—as I understand it, and the Minister may tell me differently—is that each commonholder has the right to raise their own dispute regarding the particular property, and I do not think there is any clear means of resolving such a dispute.

Previously, in a leasehold agreement, the freeholder would have been able to say, “This is what is actually going to happen. These are the terms of the lease, and these are the terms of the lease that you must adhere to.” A simple example of that is the payment of insurance. As I am sure most Members in this debate will know, in a leasehold agreement the freeholder will normally arrange the buildings insurance for the entire block, which obviously covers communal areas, as well as things such as the roof. That would be the responsibility of the freeholder, who would pass on the costs to each individual leaseholder in proportion. If one leaseholder decides not to pay the insurance, the freeholder can say, “Well, you must pay the insurance”, and they can actually carry out debt collection on that leaseholder. If it is an absentee leaseholder, they can go even further: ultimately, they could disenfranchise that leaseholder completely, and take the apartment back from the leaseholder.

I know that that has been used in some draconian ways in leasehold, but generally there is a mechanism that makes sure everybody in the block pays a fair amount for maintenance and things such as the insurance, but I am not sure how that happens in commonhold. If somebody stops paying for their particular element of responsibility for the charges, I do not think there is any such mechanism. The others could take that person to court, but again, the problem is that the fellow residents—fellow commonholders—in that block would have to take one of their own residents to court, instead of a freeholder doing so who does not have a cheek-by-jowl relationship with the resident.

This is why I think we have some of the maintenance issues in Scotland, and in Scotland there are some big maintenance issues, as my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) mentioned. The hon. Member for Reading West asked about other jurisdictions. Australia has a very similar system, which I think is called the strata system. There are issues there about the recruitment of people to sit on the management boards, with 37% of companies expressing difficulties in recruiting residents to sit on these management boards.

[Matt Rodda]

I absolutely appreciate the difficulties that the hon. Gentleman is outlining, including indeed in relation to my constituency. I should say that my constituency is Reading East; Reading West is the COP26 President’s. In Reading and Woodley, which I represent, there are a number of private roads and other shared facilities where residents come together and share the ownership of assets. Certainly in my experience as the local MP and previously as a councillor, that can be done quite effectively. I do appreciate that there may be issues with very large blocks, and the point I was making to the right hon. Lady from Chipping Campden—[Interruption.] Sorry, I mean the right hon. Member for Chipping Barnet (Theresa Villiers); there are various interesting places around the country that we come from today. The point I was making is that we really should look at the wide range of jurisdictions overseas and try to work through some models of what is most appropriate in each given set of circumstances.

However, it is possible to bring residents together. Certainly, that is my experience locally, and in the example of shared private roads, that has been extremely successful. We have a number of areas where they are maintained to a very high standard, the residents all work together effectively and that is absolutely fine. So I do not think we should try unduly to put obstacles in the way of progress on this matter. At the end of the day, the real issue is moving on from this totally unequal system to one where individual householders are treated more equally, and work together in a collaborative and sensible way.

[Kevin Hollinrake]

The hon. Gentleman makes some good points and I am not saying that in certain circumstances commonhold cannot work. He pointed to the simple situation of a non-adopted road to which local residents have to contribute for the upkeep and it can certainly work in those situations, but I am just trying to point out that there are situations where it would prove difficult to make the system work.

Every jurisdiction—those in Australia or the US or Scotland—is different, and the UK is unique in various ways, one of which is in having a high proportion of absentee owners, such as in central London, where we all see blocks of flats that seem to be rarely occupied. Problems might arise in managing such blocks with for instance 100, 200 or 300 commonholders; there might be disputes and difficulties, such as in debt collection.

On the point about simple things to manage, the biggest issue is complex developments, as my right hon. Friend the Member for Chipping Barnet mentioned. Let us consider a block of 300 or 400 flats built above a tube station or adjoining a shopping mall; effectively there will be a common freehold in that development but would anybody here be keen to sit on a committee managing that entire block with, for example, joint M and E—mechanical and electrical—so joint electrical, heating, ventilation and broadband installations, managed not just between the 300 units but the other infrastructure in that development? There are concerns that that would be beyond the appetite of many commonholders who manage that kind of development.

[Robert Jenrick]

Yet it is done in every other country in the world—is that not the point? I share my hon. Friend’s reservations yet every other country in the world with equally complex cinemas and tube stations and infrastructure manages it in a way that is broadly commonhold.

[Kevin Hollinrake]

My right hon. Friend raises a good point and has an advantage over me as I do not know in depth how that would happen in, for instance, Manhattan, but I think we should understand that situation more before pushing ahead and ruling that commonhold will effectively become the default for every single development in the UK. The Government have done a great job in many things and one of them is in increasing the rate of development in the UK, and I have a concern that some developers might be inhibited in taking on a very complex project because of fears about selling the residential units or renting the commercial units. I just think we need to understand more before pushing ahead and rolling complex developments into the legislation, rather than exempting such developments from it as we on the Select Committee recommended and Lord Lytton recommended in his speech—he tabled an amendment.

I just think we should look at this area and make sure we get it right, because one law we constantly effect in this place is the law of unintended consequences and we must avoid that. So peppercorn leasehold and commonhold are fine, but we need to make sure we look at those complex situations. I personally think that if we do not find a simple solution and cannot demonstrate that it will work in the UK, because the UK clearly has some unique elements to the property market, then we should set a cap on the ground rent in exempted developments, for instance of £100 or 0.1% of value, whichever is the lowest, to make sure it is always affordable for leaseholders. I absolutely understand that this has been a problem, but we must make sure that developers do not avoid exploiting development opportunities—particularly brownfield development opportunities in city centres—because of complexities.

Aside from that, I am very happy to support what the Government are trying to do.

Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill

Kevin Hollinrake Excerpts

2nd reading
Monday 28th June 2021 Commons Chamber

[The Minister for Regional Growth and Local Government (Luke Hall)]

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

The Bill contains two halves: first, a measure that changes the valuation assumptions that are applied when making business rate determinations in the light of covid-19; and secondly, a measure that will provide for the disqualification of unfit directors of dissolved companies. I will start with the first measure before moving on to the second.

The pandemic has presented significant challenges for businesses in all sectors. Our response has been of a similarly unprecedented scale, with more than £280 billion provided throughout the pandemic to protect millions of jobs and businesses. In this year’s Budget, the Chancellor announced an extra £65 billion of support for 2020-21 and 2021-22. The support we have provided for businesses included 100% business rate relief for all eligible retail, hospitality, leisure and military properties for 2020-21, at a cost of £10 billion. Combined with those eligible for small business rate relief, this means that more than half of ratepayers in England will have paid no rates in 2020-21.

At this year’s Budget, we confirmed a further three-month extension to the full 100% business rate relief for retail, hospitality and leisure businesses, followed by a further nine-month period of relief at 66% subject to the cash cap, at a further cost of £6 billion. That takes the total level of support provided to businesses by Government through relief from business rates since the start of the pandemic to over £16 billion.

That is an important context for the Bill, because as well as helping businesses through the pandemic, it is also important that we support local government with the critical role it has in supporting our communities. A vital part of that is the income that it receives from business rates, so while it is necessary to provide rates relief to businesses, it is important that we do so in a way that is targeted and that ensures that those who can still contribute continue to pay this tax.

With that in mind, clause 1 is concerned with how rateable values should be assessed during the pandemic. A business rates bill is calculated by multiplying the rateable value of the property by the multiplier, or the tax rate, and then applying the reliefs. The rateable value of a property is therefore, broadly speaking, its annual rental value at a set valuation date, which in the current rating list is 1 April 2015. All rateable values should therefore reflect annual rental values at 1 April 2015. This provides a consistent tax base for all businesses.

Of course, it is necessary to update the tax base, which is done at regular revaluations undertaken by the Valuation Office Agency. The next revaluation was originally scheduled for 1 April 2021, based on values at 1 April 2019, but last year we took the step of postponing it to 1 April 2023 to ensure that it better reflected the impact of the pandemic; Parliament approved that change by passing the Non-Domestic Rating (Lists) Act 2021. The Act received cross-party support, for which we were extremely grateful.

Outside those general revaluations, a ratepayer can still submit a challenge to the VOA on their property’s rateable value between revaluations for a number of reasons, such as to correct factual errors or reflect a material change in circumstances. If not satisfied with the outcome of the challenge, the ratepayer can appeal the VOA’s decision to the valuation tribunal. It has been an established principle of the business rates system that a material change in circumstances challenge can be made on the basis of a physical change to a property or its locality. For example, a successful MCC challenge could be made following the partial demolition of a property, or significant roadworks near a property that might affect its value.

However, following the pandemic, the VOA received high numbers of MCC challenges seeking a reduction in rateable value to reflect the impact of the pandemic. Of course, the MCC legislation, as first set out in the Local Government Finance Act 1988, was not designed with covid-19 in mind, and the MCC system has never been used in response to economy-wide impacts or shocks. It has therefore become necessary to clarify, as clause 1 does, the treatment of covid-19 in assessing rateable values.

We have been clear that relying on the MCC system to help businesses that need further support in the light of the pandemic is not the right mechanism. It would mean significant taxpayer support going to businesses with properties such as offices, many of which might be able to operate normally throughout the pandemic, at a time when we have provided significant support to those most affected.

For example, the workforce of a consultancy firm based in central London that was previously entirely office-based is likely to have been working largely from home since the start of the pandemic, but the business itself may have continued to operate throughout. Under the business rates appeal regime, it could have argued that its office space had undergone a material change of circumstances due to the reduced occupancy.

If that business’s appeal had been successful, it would have been awarded a business rates reduction, but it would not have been right for it to have a reduced tax liability on that basis, given that it had not actually suffered an economic impact. Relying on the MCC system to support businesses would also mean resolving disputes through the courts, which could take years and create additional uncertainty both for businesses and for local government, which relies on income from business rates to deliver vital local services.

The Bill will therefore ensure that the coronavirus and the restrictions put in place in response to it cannot be used as the basis for a successful MCC challenge or appeal. It will ensure that changes to the physical state of a property can continue to be reflected in rateable values as and when they occur, irrespective of whether they are a result of the coronavirus, but that the general impact of the pandemic on the property market will not be reflected until the next revaluation in 2023. Until then, all rateable values will continue to be based on the property market as at 1 April 2015. This approach is supported by the Public Accounts Committee, which has welcomed the financial certainty that such a measure gives to councils.

Clause 1 applies in England. Business rates policy is fully devolved, so whether the same legislation is necessary in Wales, Scotland or Northern Ireland is a matter for their respective Governments, but we have been working closely with the devolved Administrations regarding the Bill. Although the law in Wales is similar to that in England, different legislation applies in Scotland and Northern Ireland. Of course, the impact of the coronavirus may have been different, so whether the devolved Administrations choose to follow the measures set out in clause 1 will depend on the individual circumstances and choices made in those countries.

We have also supported businesses. We have put £16 billion of support into business rates for the pandemic, and we have announced a relief worth an additional £1.5 billion for ratepayers impacted by the pandemic who have not been able to access business rate reliefs. These new reliefs will be administered by local authorities and will be distributed according to which sectors have suffered the most economically, rather than on the basis of temporary falls in property value. This will ensure that support is provided to businesses in England in the fastest and fairest way possible, and we will continue to work with and support councils and local government to enable ratepayers to apply for the new reliefs as soon as possible.

The second part of the Bill deals with the abuse of the process whereby companies are removed from the register and dissolved. The large majority of company directors are responsible, passionate about their businesses and diligent. They act as effective stewards of the companies to which they are appointed, and I pay tribute to the directors who make such a valuable contribution to our economy and who have fought so hard over the past year to ensure their company’s survival, preserving the jobs and livelihoods of so many within their business and beyond.

Unfortunately there are exceptions, and the business community and the wider public must be protected from those individuals who abuse the privilege of limited liability. Those directors who act recklessly, irresponsibly or even criminally should expect to have to answer for their conduct. That means expecting to have their conduct investigated and, if they had done wrong, facing the possibility of being disqualified from acting as a company director for up to 15 years, depending on the severity of their misconduct. Disqualification protects the public from the actions of those who have demonstrated they are unfit to hold the position of a director of a company, and acts as a deterrent to reckless or culpable behaviour.

Evidence to support disqualification action comes from the investigation of companies and the conduct of their directors. The Secretary of State for Business, Energy and Industrial Strategy may investigate live companies through the powers contained in the Companies Act 1985, and also the conduct of the directors of insolvent companies through similar powers in the Insolvency Act 1986 and the Company Directors Disqualification Act 1986. If such investigations reveal evidence that a director’s conduct has fallen below the standards expected of someone in their position, a period of disqualification can be sought, either through a court application or through an under- taking given by the person to the Secretary of State. A period of disqualification protects the business community and the wider public by preventing the person from acting in the promotion, formation or management of a limited company. Breach of a disqualification order is a criminal offence, and an extremely serious matter.

As things stand, though, there is a loophole in the disqualification regime that some irresponsible directors have been able to exploit. It concerns the situation where a company has been dissolved without entering insolvency proceedings. Dissolution should not be used as an alternative to insolvency proceedings, but there is evidence that some directors have been using the process both as a way of fraudulently dodging the payment of company debts and of avoiding insolvency proceedings and the scrutiny of their behaviour that comes with that.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I support the measures that my hon. Friend is taking in the Bill. He mentioned fraud. I take it that the measures he is talking about would not negate the potential for prosecution of fraud where it was demonstrated that a company director had defrauded the taxpayer by means, for example, of a bounce back loan.

[Luke Hall]

I thank my hon. Friend for that point. He is an expert on these matters in this House, and I look forward to working with him as we deliver the Bill.

When a company is dissolved, the only way the conduct of its former directors can be scrutinised is if it is restored to the register, which is a costly process involving court proceedings. The Insolvency Service regularly receives complaints about the conduct of directors when a company has been dissolved, and many such complaints relate to the use of dissolution to dump the debts of one company, only for a new company to start up in the same business, often with the same directors and the same employees, and often even working out of the same premises. The debts dumped in this way are often large tax debts, awards made by employment tribunals or sometimes even debts owed directly to consumers.

The provisions in this Bill will close the loophole and allow the Secretary of State for Business, Energy and Industrial Strategy to investigate the conduct of former directors of dissolved companies and, where public interest criteria are met, to take action to have them disqualified from acting as a company director.

We consulted on this measure back in 2018 and it received a warm welcome from stakeholders. It has now become extremely important that we get it on to the statute book, so that it can support the business community and the wider economy in recovering from the impact of the pandemic.

This new power to investigate and seek disqualification of former directors of dissolved companies forms part of a package of counter-fraud measures seeking to target any fraudulent behaviour relating to bounce back loan schemes through the abuse of the dissolution process and to ensure the responsible use of public funds. Retrospective provisions in the Bill will mean that, when the new provision becomes law, conduct that is happening right now will become subject to investigation and could be used to support future disqualification proceedings even if the company is dissolved.

The Bill fulfils the Government’s commitment to introducing two important measures: it will make changes to the business rate appeals system and provide for the tackling of abuses associated with the process whereby companies are removed from the register and dissolved. These are two distinct areas of policy, but our approach is consistent. We will ensure the continued operation of a coherent framework, deliver certainty, support businesses to thrive, and allow councils to plan for their finances with confidence and continue to deliver the first-class services on which our communities rely. I commend the Bill to the House.

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[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to be called so early in a debate, Madam Deputy Speaker; I am not used to that happening frequently. I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

I have been involved in business rates as a businessperson for a long time, and I greatly sympathise with businesses that have been hit by coronavirus. We know there is a disproportionate impact on some sectors as compared with others, but I support the Government’s measures here and I will explain why. The Government have put a lot of support in—I think the Minister said it was £16 billion in business rates relief to certain sectors and at least another £10 billion in grants above that. There is £1.5 billion in the Bill for businesses that were not included in those schemes.

The amendment tabled by the hon. Member for Richmond Park (Sarah Olney), who I think will speak next, is flawed. It shows a deep misunderstanding of how the business rates system works. Business rates are not about a business; they are about a property. All business rates are based on a property value. What she is trying to argue is that a business of a different business type, such as a nightclub, should be treated differently in terms of business rates from, for example, a retailer or a bank that might have traded successfully. Asking the Valuation Office Agency to value something on the basis of how a certain business has been hit by coronavirus would turn the business rates system completely upside down, at a time when that would not be particularly helpful.

I understand that more than 300,000 businesses potentially would have taken this route, some of which had not been hit by coronavirus. The amendment would create a huge opportunity—a bonanza—for the legal sector to look at this area and take these things to court. That would ultimately cost the taxpayer a lot of money on many occasions where the businesses concerned had not suffered from coronavirus.

The point is about the material change of circumstance. It is about a permanent change. That is what the measure is there for: a permanent change, as the Minister said, such as a demolition or something that affected all the premises in a locality. This is not about general market conditions. Hopefully, coronavirus will be a temporary thing and the restrictions caused by it will in two or three weeks’ time be long gone. For that reason, I do not support the hon. Lady’s amendment, and I support the Government’s action in terms of a material change of circumstance and restricting the right to take an appeal forward.

Clause 2 concerns former directors of dissolved companies. I absolutely support closing that loophole, too. As the Minister said, often, one sees business owners who will use subterfuge to avoid, for example, the repayment of bounce back loans or the payment of suppliers. That is inappropriate. If there is a direct route to that through going straight to being a dissolved entity, it is absolutely right that we close that loophole.

I listened to the shadow Minister, the hon. Member for Manchester, Withington (Jeff Smith), and he made some very good points about resources for the Insolvency Service. I have worked with it quite a lot on various matters while I have been in this House and it is not the most proactive organisation around. It may be a lack of resources, but certainly there is no point having the regulations if we do not regulate such businesses, and we have to make sure that, if these measures are introduced, the Insolvency Services does hunt down the people who try to avoid their debts, including fraudulently. As I said in my intervention on the Minister, if these debts have been avoided fraudulently, those people should be prosecuted for fraud. As I said in my intervention on the Minister, if these debts have been avoided fraudulently, those people should be prosecuted for fraud. That is another area where we lack resources. The UK has a very poor record on hunting down fraud and financial crime. That is an area where we need to beef up our resources, which would have a huge payback, of course. Consider the relative amounts charged in financial sanctions in the US versus the UK: even accounting for the size of its economy, five to six times more money comes back into the US Treasury through its prosecution of fraud. There would be a big payback for our Treasury if we beefed up resources.

Let me touch briefly on one issue with the Insolvency Service that is not directly related to the Bill but reflects on certain points made by the shadow Minister. I have been trying to get the Insolvency Service to take action against a rogue set of business rates consultants called RVA, who go into unsuspecting small businesses that do not understand that small business rate relief, for example, is freely available; they just need to contact the council and it becomes applicable to their premises and business. They do not understand that, and RVA signs them up to a contract that basically takes 50% of the relief for up to 12 years, for writing one letter to the local authority. That is absolutely wrong. We should close that organisation down now. The Insolvency Service has promised to look at it, but not as proactively as it might.

I will make a wider point on the general issue of insolvency. As many people in this place know, I am co-chair of the all-party parliamentary group on fair business banking. For some time we have had real concerns about the insolvency profession generally, and its probably unhealthy links with some of the people it gets its work from, not least the high street banks. We are doing an inquiry into that alongside the legal firm Humphries Kerstetter. We are taking evidence now and will produce a report in early September on those conflicts of interest. We have seen lots of cases, including one quite recently with KPMG and HIG where both have been fined a significant amount in a draft judgment.

There are some unhealthy alliances here. We need to remove those conflicts of interest and, as the Government have said they will consider doing at some point, move towards an independent, ombudsman-style regulator for the insolvency profession. That does not exist now; it is pretty much self-regulation, which has been proven time and again not to work. I know that is not particularly a matter for today, but this was a good opportunity to get it on the record.

[Peter Grant (Glenrothes) (SNP)]

I am pleased to contribute to this debate. I will confine my remarks to clauses 2 and 3, which are the ones that apply in the whole of the UK. The Minister pointed out that clause 1 does not apply directly to Scotland.

The SNP welcomes the provisions to close the loopholes that have been identified, although they do not go nearly far enough. I am a bit concerned that this is the second or third time recently that a Bill has been brought forward to tighten up on director and company misconduct and company fraud, but it is framed so narrowly that it is almost impossible to amend it to widen its scope or improve it further. Although we will not oppose Second Reading tonight, I hope that we are not too far away from a more comprehensive review of companies legislation with a wider scope so that Members with particular changes they want to see are able to put them forward to be debated by the House.

In effect, the proposals make a slight change to the way in which the directors of a company are allowed to be completely separate from the company itself when things go wrong. The concept of creating a separate legal entity when a limited company is formed is perfectly sound. There were valid reasons for introducing it 150 or 200 years ago, when companies legislation was in its infancy. Many of those reasons are valid today, and we should retain the protection for directors, senior managers and, indeed, shareholders of companies that go to the wall through no fault of their own, through bad luck or misjudgment. But the reasons for protecting company directors do not extend to making it harder to deal with con men, and the occasional con woman, who set out to become millionaires at the cost of other people’s pensions, savings and hard-earned cash.

When there are reasonable grounds to believe that the directors of a company have been guilty of serious misconduct—including criminal misconduct, in some cases—we cannot allow them to delay, reduce or in any way frustrate the result of punitive action just by dissolving the company. That would be like saying that somebody who faces charges under the Road Traffic Acts can get away with it just by scrapping the car. It is not the vehicle that is at fault but the people who were driving the vehicle at the time.

The Government have rightly pointed out that some of the abuses in respect of which they want to tighten up are those carried out by what are called phoenix companies: the directors shut down one company and in essence resurrect the same company, but because they give it a different name, rank and serial number it is legally a different company and all the sins of the previous company are forgotten about.

Directors do not even need to close down the guilty company first: the same abuses can equally well be perpetrated by running two or three—or, in a case I will come to in a moment, 23—parallel companies with exactly the same couple of shareholders and exactly the same couple of directors, and very often no other employees at all. Through a process that is sometimes lengthy, sometimes short, they dump all the liabilities and debts on to one company and shut that one down, while the assets and benefits are hidden away in a separate company, to be shared only by the directors. In those circumstances, surely it is right that the Insolvency Service and other regulators have the unrestricted right to pursue the individual directors, regardless of which company name they hide behind at the time.

It has to be said that if the Government are serious about imposing improved standards of integrity in the City of London, it is unfortunate that they have chosen to present the Bill on the day when one of their own Ministers told the BBC that the standard of integrity in Government conduct by which they want to be judged is what they can get away with electorally. There is a double standard there that is perhaps not directly relevant to this debate, but the Government cannot afford to ignore it.

Let me mention one example of what can go wrong when directors appear to run a company for their own benefit and not for the benefit of those whose money they are supposed to look after. The Nunn McCreesh limited liability partnership was incorporated in August 2012 and dissolved by voluntary strike-off in October 2015. It had only three officers: Phillip Nunn, Patrick McCreesh and a company that they jointly owned called It’s Your Pension Ltd, incorporated in 2013 and dissolved by voluntary strike-off in 2016.

Coincidentally, at the same time that Mr Nunn and Mr McCreesh took the decision to dissolve the limited liability partnership, the Insolvency Service was finding that the LLP had been paid nearly £900,000 for identifying investors for Capita Oak—a name with which Members will be familiar as it was a pension fund that collapsed, taking £120 million of other people’s pensions with it. Capita Oak remains under investigation by the Serious Fraud Office; we do not know whether the part played in the Capita Oak story by Nunn McCreesh and numerous other companies is part of that investigation.

Mr Nunn and Mr McCreesh moved on quickly from their dissolved LLP and set up a whole web of companies —23 at the last count—under the Blackmore brand. Between 2016 and 2019, one of these companies, Blackmore Bond plc, raised £46 million by selling high-risk mini bonds to investors that they knew were completely unsuitable for that type of investment. Blackmore Bond plc went into administration in 2020 and the investors have almost certainly lost all of their £46 million.

[Kevin Hollinrake]

The hon. Gentleman has raised a very interesting case. I am sure he will be aware that the Financial Conduct Authority was warned on numerous occasions about the activities of Blackmore Bond but apparently did nothing about it until it was far too late.

[Peter Grant]

I do not know whether the hon. Gentleman was reading through the back of my notes, but he is only about five or six lines ahead of what I was going to say.

I do not know whether Mr Nunn and Mr McCreesh were ever placed under formal investigation, or whether they might still be under investigation, for their part in the Capita Oak story—for obvious reasons, that kind of information is not shared—but surely the fact that they were able to dissolve their company should not make any difference to the investigations to which they can be subjected and the sanctions they should face if they are found guilty of misconduct in their management of Nunn McCreesh LLP or, indeed, any of the umpteen other companies they have run.

Perhaps if, as the hon. Member for Thirsk and Malton (Kevin Hollinrake) indicated a moment ago, the various regulators had communicated with each other more effectively, the Financial Conduct Authority would have heard loud alarm bells ringing when in 2017 it was alerted to the highly questionable sales techniques that Blackmore Bond was using; perhaps if the FCA had made the link to the dodgy practices in relation to Capita Oak that were carried out by a different company under the same ownership and direction, it would have moved faster than it appeared to do; and perhaps, at least, the investors who ploughed £26 million into Blackmore Bond after the FCA was warned about it would have had some warning that the Blackmore Group might have been better named the Black Hole Group, because that is exactly what it became for £46 million of other people’s money.

I described that one scandal out of the many I could have described to remind the House that we are not just looking at a theoretical loophole here; we are looking at regulatory weaknesses that have allowed chancers and charlatans to make well over £1 billion of other people’s pensions and life savings disappear, and that is before we start to look at the business-to-business frauds that have forced small businesses into liquidation, often at massive financial cost to the entrepreneurs who have set them up.

The provisions in clauses 2 and 3 address just one of those weaknesses, and much more is needed. We need a complete reform of Companies House so that, for example, details of the beneficial ownership of Scottish limited partnerships and other secretive company structures have to be published. We have known for years that SLPs have been used to launder millions of pounds of dirty money created by illicit business activities, usually related to organised crime. We need to see action soon to put a stop to that. We need to reinstate the principle of the reverse burden of proof on senior bank managers, for example. When something goes wrong on their watch, rather than it being up to the authorities to prove that they were negligent, can we go back to requiring the bank manager to prove that they were doing the right thing? This reverse burden of proof often applies in other cases of professional misconduct or questions about professional conduct. All our regulators, including the Insolvency Service and the Financial Conduct Authority, need to be adequately resourced to keep up with the almost limitless ingenuity of the criminals they are trying to keep tabs on. That is about not just the amount of money they have, but the degree of training and experience that their people have, so that the person asked to take a decision as to whether somebody is fit to be registered with the FCA has the experience to know what kinds of warning signs to look out for.

Finally, we need legislation that allows us not just to disqualify directors who are guilty of wrongdoing; it should allow the authorities to order them to pay compensation to the victims. In some cases, I will support that on the basis of a civil balance of proof, which is on the balance of probabilities, rather than the much higher bar of proof beyond reasonable doubt, which is why so many cases that the Serious Fraud Office takes to court never get as far as a conviction. We welcome the provisions in clauses 2 and 3. If the long title and the scope of this legislation had allowed it, we would have been submitting a significant number of amendments to improve it on Report. I hope the time is not too far away when legislation on the wider issue comes before the House so that directors cannot simply avoid disqualification by scrapping their vehicles.

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[Sarah Olney (Richmond Park) (LD)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House, while agreeing that the disqualification regime should be extended to directors of dissolved companies, declines to give a Second Reading to the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill because it retrospectively overrules more than 500,000 business rates appeals made by 170,000 businesses, fails to consult the affected businesses to deliver adequate support, puts business and jobs at risk by delaying the delivery of additional business rates relief, ignores the impact of the pandemic on companies that have been excluded from business rates relief, fails to recognise the impact of the pandemic on jobs and businesses in the supply chain of retail, hospitality and leisure businesses from office-based companies to manufacturing firms, severely limits the only route available to tens of thousands of businesses in claiming Government support during the pandemic, sets a troubling precedent for future crises by retrospectively limiting businesses’ right to challenge their business rates bill, fails to bring forward meaningful reforms of the business rates system and risks leading to more job losses and company closures during an economic crisis.”

I am grateful to the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Sutton and Cheam (Paul Scully) for his engagement on the contents of this Bill. The Liberal Democrats are pleased to support the aspects of it that relate to directors’ disqualification. We have seen far too often how individuals and businesses that are owed money can be defrauded by companies being dissolved and the fact that there is a lack of powers to pursue individuals for debts.

The urgency of introducing new legislation to protect against those practices has been sharpened by the large sums loaned to support businesses throughout the pandemic. The Public Accounts Committee, of which I am a member, recently conducted an inquiry into the bounce back loan scheme, and concluded that the combined fraud and credit risk of the scheme was between £15 billion and £26 billion. Although it was right for the Government to take the action they took and continue to take to protect businesses from the impact of the pandemic and the lockdown, it is now necessary to ensure that as many of those loans as possible can be repaid and to circumvent any possible actions that might fraudulently avoid repayment.

UK businesses, especially those in the worst hit sectors of retail, hospitality, travel and the creative industries, are beginning to emerge from this pandemic with an enormous debt burden. While I welcome these measures to ensure that UK taxpayers are not defrauded, there remains an enormous question mark over how many business owners who have conducted their affairs honestly and with integrity will face a debt burden for many years to come, and the extent to which that will be a drag on the revival of our economy. I urge the Minister to keep this issue at the top of his priority list and to support our indebted small businesses in whatever way he can.

Many businesses will be dealing with their indebtedness by looking to cut costs wherever they can, which will include reviewing all their existing expenses and exploring whether these can be effectively reduced. For many businesses, this will include applying to the Valuation Office Agency for a review of the rateable value of their business premises. Many businesses will be citing a material change of circumstances resulting from the pandemic and the lockdown as the reason for their application. This is an established route for businesses to appeal against the amount of rates they pay. Major crises or changes in the law, such as the foot and mouth disease outbreak or the smoking ban, have previously been accepted as valid reasons for business rates appeals. Many businesses have had their business model permanently changed by covid, and where that will impact on the valuation of the property they operate from, their ratings appeals deserve consideration by the Valuation Office Agency.

I want to pick up on the comment from the hon. Member for Thirsk and Malton (Kevin Hollinrake) about my amendment and to reassure him that it is about the market value, as it were, or the underlying value of the business. He cited nightclubs. I can probably count in decades the last time that I was in a nightclub. I do not know whether he has more recent experience, but it is a really good example of an industry that has been really badly impacted by the pandemic. Of course, not just the operating business model of individual nightclub businesses but the underlying value of nightclub premises will have been impacted, and that will be the material change of circumstances that those businesses will be relying on to contest their business rates.

[Kevin Hollinrake]

Rarely is a property built to be a nightclub. It is a property, which is valued on the basis of its rental value, which leads to the rateable value. That business may change hands and go from being a nightclub to a different kind of business. How could we have a rates system dependent on the business type that occupy premises? That is not how the business rates system works.

[Sarah Olney]

The hon. Member raises a valuable point. Nevertheless, if a property has always been operated as a nightclub business, a change of use, for example, which may well require an appeal to the local planning authority, still has a measurable impact on the value of that property.

I understand that 170,000 businesses have made 500,000 appeals to the VOA for consideration under covid-related material changes of circumstances. The Bill’s provisions retrospectively overrule covid-19 and Government restrictions as valid reasons for business rates appeals, effectively scrapping all 500,000 appeals. Instead, the Government propose a £1.5 billion fund to support payment of business rates for companies previously left out of business rates support—in other words, all those not in the retail or hospitality sectors, who have had a business rates holiday. However, the fund will not be available until after the Bill has received Royal Assent, and its Second Reading has already been delayed for 10 days, so how much longer will businesses have to wait before being compensated for not having paid a fair amount on their business rates?

There has been a lack of consultation with businesses before introducing the Bill and the proposed fund, and many firms will be left struggling with higher costs as a result. That is a direct threat to employment and to the ability of our economy to recover from the pandemic. I tabled the reasoned amendment outlining the Lib Dems’ opposition to the Bill, but I shall not press it to a vote.

Members of all parties in the House agree on the need for review and reform of the business rates regime. It imposes costs on businesses that they are powerless to control and creates an unfair playing field for businesses that do not trade out of rateable premises. The Government could make the simple move of committing to annual revaluations instead of every five years. With that, those businesses that genuinely qualify for a rating reduction would see those benefits much sooner and we could remove the need for an appeals process to reduce their costs. Every effort should be made to support businesses and to save jobs. Implementing a punitive retrospective change in the law to prevent businesses taking practical action to save on their non-staff costs represents a threat to the economy and jobs. The Government could take practical action today to help businesses, but they prefer to proceed with this Bill, which enshrines a concerning precedent that will cause many businesses to struggle.