House of Commons
Prayers
09:34 - The House divided: - Ayes: 1 / Noes: 33 - The Speaker declared that the Question was not decided because fewer than 40 Members had participated in the Division (Standing Order No. 41).
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Sir Alan Meale (Mansfield) (Lab)
I beg to move, That the House sit in private.
Question put forthwith (Standing Order No. 163).
Private Landlords and Letting and Managing Agents (Regulation) Bill
Sir Alan Meale (Mansfield) (Lab)
I beg to move, That the Bill be now read a Second time.
It is a pleasure and an honour to present the Bill. Members may ask why I have presented this particular Bill. It is because of my concern about the need to reform the private rented sector so that it works for all, not just the few who are currently abusing the system. That is sorely needed for the following reasons.
In England, there are now more than 9 million people, including more than 1 million families with children, renting privately. Those are two truly amazing figures. I say at the outset that I believe the private rented sector has an important role to play in meeting housing need. Indeed, it is an essential ingredient in doing so. Yet today in Britain, as a result of the biggest housing crisis in a generation, more and more people are being locked out of home ownership because of rising costs and are instead looking to find their home in the private rented sector. They do that at a time when, as Members will know, the housing crisis continues to worsen considerably. The situation is caused by a number of factors, not least our growing population. So far during this Parliament, home completions are at their lowest level since the 1920s when Stanley Baldwin was in No. 10 Downing street and King George V was sitting on the throne.
We are now approaching winter. Homelessness and rough sleeping are on the up, and have risen by a third since the 2010 general election. I pay tribute to many organisations such as Shelter, Framework, which is in my area, and others who work tirelessly to ease the plight of people caught in that situation. Needless to say, such organisations should be supported in their important works, which cover a range of issues.
As the housing situation worsens, people continue to struggle deeply to own their own properties, with average house prices now eight times wage levels. It takes more than 20 years for low and middle-income families with children to save enough for a deposit. Last but not least, rents are ever rising in the private rented sector, and are now moving to unaffordable levels, with many young people not even earning enough to pay their rent.
Philip Davies (Shipley) (Con)
I agree with the hon. Gentleman about rents being high, but does he accept that if landlords were forced to pay to be on a register, as he envisages in the Bill, the only possible consequence of that would be for rents to go up even faster?
Sir Alan Meale
I will deal with that point later.
On people’s inability to pay rent, last weekend The Observer revealed that rents are at an all-time high, with the average private sector tenant now paying £757 a month. I outline that because the situation is likely to worsen considerably. According to the Office for National Statistics, property prices up to August 2013 rose on average by 3.8%, with the average UK home now costing £247,000. For young people with families who need a 5% deposit, that equates to around £12,350—more than some of them earn.
As we know, most people dream of owning their own home, and like Members across the Chamber, I want people to realise that dream. Today, however, more people are finding themselves in the private rented sector for longer than in years gone by. I want a strong and thriving private sector, but evidence shows that too many tenants are being ripped off by unscrupulous letting agents, and hit by extra rip-off fees that they did not know they would face and cannot afford. People are plagued by rogue landlords and poor standards.
My Bill proposes, first, to tackle those problems head on by establishing a mandatory national register of private landlords. Secondly, it would liberalise selective licensing schemes so that local councils do not have to go through so much red tape if they see the need for such a scheme in their area. Thirdly, it would introduce greater regulation of private sector letting and management agents, and fourthly it would require all tenancy agreements entered into with private landlords to take the form of a written agreement.
My Bill seeks those things because at the moment the private rented sector is not the market it should be or needs to be. What is wrong with the current lettings market? Evidence shows that too many tenants are being ripped off by unscrupulous letting agents who fail to protect them, while also charging exorbitant and opaque fees. As evidence from the House of Commons Library shows, and as the Government have admitted, there is currently no overarching statutory regulation of private sector letting or management agencies in England, or any legal requirement for them to belong to a trade association.
Sir Peter Bottomley (Worthing West) (Con)
We are grateful to the Government for last year producing the guide to dealing with rogue managing agents. Will the hon. Gentleman join me in asking the Government, local government and the Ministry of Justice to get together with experts on the Leasehold Valuation Tribunal—the Property Chamber—to look at the way lawyers effectively tie up tenants and leaseholders in red tape, and prevent them from getting access to determination in disputes and to the kind of information he is talking about?
Sir Alan Meale
The hon. Gentleman will find that the concluding part of my speech considers precisely that issue. Having said that, lawyers—soliciting is the oldest profession in the world—make a lot of money out of everything they can. We should always be guided by such traits in the open market.
Unfortunately, the Government have recently stated that they do not intend to introduce regulation in this sector, pointing to the use of myriad ineffective consumer protection laws which, as I will show, have proved wholly inadequate at protecting either tenants or landlords. I feel obliged to say that the Government have recently moved slightly in that direction, after tabling an amendment to the Enterprise and Regulatory Reform Act 2013 that requires agents to sign up to a redress scheme. The amendment was tabled following pressure from the Labour Front Bench and the other place, particularly Baroness Hayter. Nevertheless I welcome that U-turn, which as I said at the time must be the first step and not the last word on the matter. Redress will allow tenants to seek help only after the fact, and will not prevent the unscrupulous actions of lettings and management agents in the first place.
There is much evidence of bad practice in this area. A report by Citizens Advice found that 73% of tenants are dissatisfied with the service provided by their letting agent, and reported that significant numbers of people have difficulty contacting agents and suffer delays in getting repairs to their property. Furthermore, a report by Which?, “Renting roulette”, shows that, shockingly, letting agencies are ranked second from bottom across 50 separate consumer markets. Indeed, there are many cases of agencies, even large and well-established businesses, running into difficulty because there is no client money protection, with the money of landlords and tenants being lost. Scandalously, in some instances that has not prevented the owners of companies which have gone out of business while holding their clients’ money from resuming their activities soon after the collapse, expressing a “no blame, no shame” culture. No safeguards are currently in place to protect tenants, landlords or reputable agents from being undercut by their unscrupulous counterparts.
To understand the scale of the problem on the high street we should consider the figures. It is estimated that in England alone there are more than 4,000 managing and letting agents who are entirely unregulated. It is still possible to set up a letting or management agency with no qualifications whatsoever. There is no need for them to conform to any requirements as to their conduct, or to provide mandatory safeguards for their customers, as no such formula or regulations exist. In other words, letting agents operate in the property market’s “wild west”, as the Royal Institution of Chartered Surveyors recently described it.
The problem is not only one of useless agents, as there are real problems across the industry, with rip-off and opaque fees charged by unscrupulous letting and management agents. A recent national survey found that 94% of agents imposed additional charges on top of the tenancy deposit and rent, or rent in advance.
Mr David Nuttall (Bury North) (Con)
The hon. Gentleman has referred once or twice to the fact that the sector contains 4,000 agents who are unregulated, but are they not covered by the general law? Many regulations will cover agents, regardless of whether they are members of a professional scheme.
Sir Alan Meale
I understand where the hon. Gentleman is coming from, but that is not the experience of people who have to deal with these matters, particularly local authorities, which say it is sometimes impossible even to get in touch with the landlords. They will not meet people or provide access; they will not do repairs when requested to do them; and they have to be given orders to the effect that local authorities will carry out repairs “unless”. I am not talking about making all this subject to a state scheme or anything like that. The Bill is about providing protection and lifting up the private rented sector to a level that will provide all our constituents with the opportunity to live decently.
I mentioned the 94% of landlords who imposed additional charges on tenants, and huge variations in the amount of costs have been found. By way of explanation, let me provide some facts. The charges levied for checking references ranged from £10 to £275, while charges for renewing a tenancy ranged from £12 to £220. In some cases, charges for a tenancy amounted to more than £600. According to Which?, some tenants are being charged up to £90 to renew a tenancy and up to £120 simply to check out the property. That is an incredible cost for people to pay; by and large, these people do not have much money. There is no reason for them to have to pay these charges. It should be easy to find out that information in today’s modern society; such large charges are really beyond the pale.
Mr Nuttall
Clause 3 deals with the transparency of fees, but there is no enforcement mechanism in it to have these fees reduced.
Sir Alan Meale
If the hon. Gentleman will let me get on with my speech, I will be able to answer that question. I still have quite a way to go.
Far too many Members have heard time and again in their surgeries that there is a problem with rogue landlords and poor standards. It is true that the majority of private landlords are responsible people who treat their tenants very well, but it is also true that there are too many rogue landlords who undermine responsible behaviour and prey on vulnerable tenants. This is a small but dangerous minority of rogue landlords who, frankly, make people’s lives an absolute misery. They are condemning their tenants—who are, after all, our constituents, and we were elected to come here and serve them—to live in run-down, unsafe and often greatly overcrowded properties. What is more, they regularly intimidate those who speak out, and regularly threaten them with eviction.
Needless to say, despite an increase in the number of prosecutions against rogue landlords, the problem is getting considerably worse. We recently saw press coverage of a health care assistant who was paying £350 a week for the pleasure of living in a shed in Newham. Then there is the case of the 11 young models described in this week’s Evening Standard having to pay £400 a week each to stay in a small Victorian house. One of them even had to share a bed with a stranger because another bed could not be fitted into the property. There should be no place for such rogue landlords; indeed, the time has come to drive them out.
Unfortunately, the problem is not just one of criminal landlords, because a large number of amateur landlords can cause similar problems. They may have purchased a cheap property, inherited a property or secured one by other means. They may often be well-meaning people, but they are unaware of their rights and responsibilities in letting out a property as a home for another person. A recently published case illustrates the severity of this particular problem. A young mother of two, just 33 years of age, had realised her dream of moving to a private rented home in Cornwall. Six days later, she was found dead by her young daughter. She had been electrocuted because of a faulty heater—a very serious situation. Faulty wiring was responsible; that wiring had not been checked for 32 years! An amateur landlord should protect their tenants rather than put them in such a situation.
Mr Nuttall
Does not that case demonstrate the problem with this place simply making rules and regulations? Regulations are already in place to prevent that sort of thing from happening.
Sir Alan Meale
The object is to protect people from falling into situations like that, rather than to say that there are already regulations that might or could possibly deal with them. We want proper regulations to lift up the whole sector so that people do not have to live in those circumstances.
Sadly, the death of this poor young lady is no surprise because 35% of our private rented sector homes in England are currently classified as non-decent. The reality is, furthermore, that nearly 15% of private rented homes lack minimal heat in the winter. Imagine, Mr Speaker, being unable to heat your home even for minimal warmth, especially if you were a mother with young children. I know where the hon. Member for Bury North (Mr Nuttall) is coming from when he says that current law is available to deal with these matters, but the problem is that it is not working. These things are not being dealt with: they happen day after day, week after week, month after month and year after year—and nobody seems able to do anything about them.
Let me remind the Minister that poor housing has wider costs, too, not only to the renter, but to the taxpayer. Indeed, it has recently been established that the annual costs of poor housing alone to our national health service have increased by £2.5 billion.
We must be clear, then, that rogue landlords undermine the good reputation of the majority of landlords and that there is no place for them in modern Britain. It is important that the majority of well-meaning landlords are made aware of their rights and their responsibilities. That is why my Bill proposes three specific measures.
First, the Bill proposes a mandatory national register of private landlords. This should be a light-touch register requiring all private landlords to sign up. It would be contrast with a licence-based approach and it would as a rule reveal that the vast majority of landlords were able to offer a good service to their tenants. The Minister will be pleased to know that such a national register would not cost any public money whatsoever and would be self-funded by a small annual fee from landlords.
The register would assist and improve private renting in two particular ways. It would assist local authorities in managing the housing market in their areas and offer greater transparency and information that would enable them to target enforcement action in the places most in need of it. Another advantage is that the register would enable the Government and local authorities to communicate with the majority of well-meaning amateur landlords. As I have said, many of those landlords are not aware of their rights and responsibilities and would welcome such communication. Indeed, many have said that they would welcome this new information, welcome some kind of mechanism to advise them and welcome greater liaison with the local authorities in their area.
Secondly, I propose mandatory written tenancy agreements for all new tenancies and renewals. This proposal would help to professionalise the market and allow both tenant and landlord to know exactly where they stand on their rights and responsibilities.
Finally, the Bill is designed to grant local authorities greater freedom to introduce local licensing schemes where they deem that they might improve the housing market and, of course, reduce the particular problem of antisocial behaviour in their areas. Such changes would assist more councils—such as leading local authorities like Newham, Oxford, Blackpool and now Liverpool, which are already using such powers granted to them by the last Government—to tackle some of the appalling abuse caused by some of the worst landlords in England.
The intention of the Bill and the need for it are very clear indeed. The private rented sector has, and will continue to have, an important role to play in meeting housing need, but it should not be based on the current terms. With 9 million people, including over 1 million families with children, privately renting, it is clear that the needs of people in this sector have significantly changed. So far, however, the market has not been responsive to such changes, so the Government must act to ensure that renting works for all.
I say that because, despite evidence and reports from Citizens Advice, the Resolution Foundation, Which?, the Office of Fair Trading and others, and despite calls for action and support for change from millions of tenants and landlords and the industry itself, including the Association of Residential Letting Agents and the Royal Institution of Chartered Surveyors, the Government have so far unfortunately been unmoved. That is why now is the time for action. That is why I call on Members to support my private Member’s Bill to tackle the scandal of rip-off fees, to regulate unscrupulous letting agents and management agents, to tackle rogue landlords and to help professionalise the private rented sector so that it works for all. Let us do that so our constituents and their children living in this sector in future will be protected and allowed to live a decent life. After all, we were elected to this place for one purpose only: to represent our constituents’ need and wish to lead a decent life and to have shelter—shelter for their children, and shelter for themselves while they are working or when they have reached old age.
We are talking about not a majority, but a small minority of people who have taken command of an industry and are abusing it terribly. However, we currently have no way of controlling those people. As I have said, I am not trying to extend the state sector; I am merely saying to these rogue landlords, “There is no place for you in a modern British society.” Our job here is to protect ordinary men and women and their children, and that is what we will do if we pass this Bill.
Philip Davies (Shipley) (Con)
Let me begin by referring Members to my entry in the Register of Members’ Financial Interests. I let a property in London. As a result of the changes that were made in the arrangements for Members’ expenses, I am now accidentally but technically a landlord, as are many of my colleagues. However, I also rent a property, so, as both landlord and tenant, I see both sides of the coin. I should point out, for good measure, that managing agents are involved as well. I am not entirely sure where that leaves us in relation to my interests, but I thought it worth putting on the record.
Mr Andy Slaughter (Hammersmith) (Lab)
The hon. Gentleman is being very open about his own dealings. Does not the fact that he, by accident, has ended up as a private landlord constitute good evidence of the need for regulation?
Philip Davies
It does not surprise me that the hon. Gentleman has drawn that conclusion, but I, as a Conservative, have drawn the opposite conclusion, and I hope to explain why at some point in my speech.
I must apologise to you, Mr. Speaker, to the hon. Member for Mansfield (Sir Alan Meale), and to the Minister, the shadow Minister, and all other Members who will participate in the debate. I am afraid that I may have to leave early. I have no idea how long the debate will last, and I may well be here for its entirety, but it is equally possible that I shall not. I am hosting a lunch in one of the Dining Rooms. If I do have to leave before the end of the debate, no discourtesy is intended.
I congratulate the hon. Member for Mansfield on presenting the Bill. As he knows, I am a great admirer of his: in fact, I might even be so bold as to consider him a friend of mine. He may not see it in those terms, but I certainly do. He is a good man, and he has a long track record of bringing important issues to the House and representing his constituents in Mansfield to great effect. I have absolutely no doubt about the sincerity of his case, and I commend him for that. We tend to agree on matters relating to horse racing, and perhaps we would have been better off sticking to that subject today—we could have secured cross-party agreement—but the hon. Gentleman knows as well as I do that when we leave the subject of horse racing our views tend to diverge, quite widely on occasion, and this, I am afraid, is one of those occasions. He will also know, however, that my opposition to the Bill is not directed at him personally, and that my admiration for him has not been diminished by the fact that I happen to disagree with him on this issue.
One problem has, I think, affected us all. I know that the Procedure Committee is considering making changes to the private Member’s Bill system—most of which are not desirable in my book—but, as far as I am aware, this Bill was printed only yesterday. It has been very difficult for some of us to understand all its complexities, given that we have been allowed such a short period before being invited to analyse and scrutinise it, although I am sure that if I have misunderstood any aspects of it, the hon. Member for Mansfield will pull me up. Moreover, I am not aware of the existence of any explanatory notes. The hon. Gentleman may say that none are needed because the Bill is self-explanatory, but I feel that some explanation of the Estate Agents Act 1979, and other related legislation covered by the Bill, might have helped. It might be handy in future for Bills to be accompanied by some form of briefing for Members to read beforehand. That would enable us to know exactly where we stood.
Sir Alan Meale
The delay in the printing of the Bill was due to the fact that negotiations had been proceeding for some months with a variety of organisations and individuals to establish how we could best persuade the Government of the need for such a Bill. I have already mentioned a range of those organisations and individuals. Indeed, we approached the Department for Communities and Local Government itself to establish whether it felt able to accept any of the proposals in the Bill. As the hon. Gentleman knows, a Bill should be printed up to two days before a debate on it takes place, but there was never any thought of our trying to keep this Bill secret from Members. The delay was caused by the fact that we were trying to negotiate at the last minute.
Philip Davies
I am sure that the whole House is grateful to the hon. Gentleman for that helpful clarification. I intended no criticism of him; I was simply making the point that if I had misunderstood any aspects of the Bill, I would perhaps be forgiven because we had been given such a short time in which to look at the detail beforehand. I know the hon. Gentleman well, and I knew that there would be a good reason for the delay. I certainly knew that he would not want to hide his light under a bushel. He has never done that in the past, and I had no reason to believe that he was trying to do it on this occasion.
There seems to be some kind of dispute among us about the amount of legislation and regulation that currently applies to the private rented sector. The hon. Gentleman used the word “unregulated”, and I thought I even heard him use the term “wild west”. However, what concerns me is not a wild-west-style lack of regulation in the sector, but the possibility that there is too much regulation. According to industry experts, there may well be more than 100 pieces of legislation and more than 400 regulations governing the private rented sector. I think that would sound like an awful lot of legislation to most people, and it certainly does to me. If all that does not satisfy those who want to control and regulate everything, I am not entirely sure that this extra piece of legislation is likely to satisfy them either.
The problem is that the left in politics always want to regulate something. They always want to interfere in something. They cannot help themselves: it is their natural state of being. They will not be happy until everything is regulated, or, in some cases, strangled to death, if they do not much like the industry concerned. I wonder why on earth, in 2013, we suddenly need a national register of landlords and the regulation of letting agents. This sector has been going strong for years, and we do not seem to have encountered massive problems. I understand the points that the hon. Member for Mansfield has made, but the Bill seems to me to be a sledgehammer to crack a nut. The hon. Gentleman himself said at the end of his speech that he wanted to tackle only the small minority of people who were causing a problem. It strikes me as bizarre to assume that the best way of tackling a very small number of people who, in the hon. Gentleman’s view, are causing a problem is to impose mass regulation on everyone, regardless of whether—even in his view—they are good landlords.
Sir Alan Meale
As the hon. Gentleman knows, I am not a great one for red tape, and regulation is not really my scene. The term “wild west” was actually used by the Royal Institution of Chartered Surveyors, and the Association of Residential Letting Agents also supports the Bill. Last but not least, I refer the hon. Gentleman to the numbers involved. In England alone, there are 4,000 unregistered letting agents, and a huge number of people have expressed dissatisfaction with the treatment that they have received. The hon. Gentleman should note all the comments that have been made by organisations such as Which? and Shelter. We may be talking about a minority, but it is a significant, indeed a large, minority. I want to regulate it, and to professionalise the market so that it operates better for the people whom we serve.
Philip Davies
I understand that the bodies concerned have that view, and there may be a reason why they hold that view, but if Opposition Members think 100 pieces of statutory legislation and 400 regulations amount to a wild-west situation, I shudder to think what they have in mind for proper regulation of the sector, because it seems to me to be excessive as it is.
In a report for the Residential Landlords Association, Professor Ball noted:
“Housing in general and landlord-tenant relations specifically are subject to a wide-variety of housing, health and safety, planning, social policy, and environmental legislation. This has all developed in a haphazard, uncoordinated manner over many decades. Once in place, repeal is rare. Moreover, the cost-effectiveness of many requirements was never assessed when the measures were implemented nor have recent ones been reassessed after several years in place.”
That goes to the heart of the subject. The sector’s wide-ranging set of rules, regulations and legislation, which has developed in a piecemeal and haphazard fashion, is difficult for landlords to deal with, and a much more simplified set of regulations may well be better.
The Communities and Local Government Committee did a report on the private rented sector recently and its very first recommendation was entitled “Simplifying Regulation”. It said:
“We recommend that the Government conduct a wide-ranging review to consolidate legislation…with the aim of producing a much simpler and more straightforward set of regulations that landlords and tenants can easily understand.”
That seems to me to be a sensible suggestion. What it recommends flies in the face of what the hon. Member for Mansfield is seeking to do, which is make things more onerous, more complicated and add yet another layer of regulations on landlords.
Mr Nuttall
While I think the Government are generally on the right track in respect of regulating the private rented sector, in their response to that report they have indicated that they are not sympathetic to the idea of simplifying the regulations that govern the sector. Is my hon. Friend as disappointed as I am about that?
Philip Davies
My hon. Friend makes a good point, and we look forward to hearing from the Minister where the Government stand on all this—which side of the fence they are on, and whether they merely wish to maintain the status quo.
I should say that I welcome the Minister to his position—it was a terrible oversight that I did not do so at the start of my speech. We congratulate him and we all have extremely high hopes for him. He might not be on my particular wing of the coalition but he is a good man and we have not given up hope in him yet. We hope he is going to prove his mettle today with a robust libertarian speech—we can but hope. [Interruption.] He says “liberal” but in my experience the Liberal Democrats is one of the most illiberal parties in Parliament. We have high hopes that he will prove us wrong today, however. My hon. Friend the Member for Bury North (Mr Nuttall) is right, and I hope the Minister will be able to offer him some comfort.
Professor Ball also made the point that much simplification could be achieved without legislation through the encouragement of common and overlapping positive practices among local authorities and through the setting up of websites dedicated to simplifying the burden of compliance, and that improving the performance of regulatory agents in achieving commonly agreed goals is as important as less bureaucracy.
As Professor Ball makes clear, therefore, an awful lot can be done to improve what we have in place at the moment. When regulation that is in place fails, the conclusion that many draw, particularly on the other side of the House, is that more regulation is needed. Actually, when regulation has been introduced and it has failed, that is an argument against more regulation, and it offers up the possibility that we should be doing something different.
The Select Committee report also states:
“The first step towards promoting awareness and understanding”
of the rights and responsibilities of parties in the private rented sector
“must be to have in place a clear and easy-to-understand regulatory framework…Professor Martin Partington, a former Law Commissioner, stated that housing law was ‘but one example of many policies being developed over decades, being implemented through myriad legislative enactments, leaving a mass of often unnecessary, certainly over complex legislation that does not work efficiently’.
The complexity of the regulation led some of those providing evidence to call for a simplification of the law.”
That evidence from a variety of sources is pretty striking, yet this Bill seeks to go in exactly the opposite direction. It proposes more laws and regulation, which will only make the problems that the Select Committee identified even worse.
I do not know about the hon. Member for Mansfield—or you, Mr Speaker—but the people with housing concerns who come to my surgery rarely complain about the private rented sector. Almost everybody who comes to my advice surgery to complain about housing is complaining —time after time—about social housing providers. In terms of the experience of tenants, that is where the biggest problem lies.
Mr Slaughter
I think the hon. Gentleman should get out more in his constituency. I am sure it has a private rented sector, although it may not be as big as in some London constituencies, and the conditions in that sector are far worse than in the social housing sector. I suspect that if he does not get complaints, it is because people think they can get redress through him if not directly through their social landlords, whereas those with private landlords are often banging on a closed door.
Philip Davies
I am grateful for the hon. Gentleman’s advice, but I am not entirely sure when he became such an expert on the Shipley constituency. Perhaps he is spending more time there than in his own constituency because he seems to know what the issues are in my constituency better than I do, and I will have a chat with him in the Tea Room later to seek his advice about what the people of Shipley, Bingley, Baildon and other nearby villages have been telling him.
Sir Alan Meale
I well appreciate the avenue the hon. Gentleman is going down, but he must accept that there are rogue landlords out there. Just a short while ago, he and I—he in particular—helped to raise considerable funds after people died in a fire in Malton in North Yorkshire. They died in that property because the landlord was a terrible landlord. There was no escape route and we raised the money to rebuild that property and make sure all the fire escapes and everything else were built into it. These rogue landlords do exist. Some 73% of people are dissatisfied with letting agents, and so on. The Bill seeks not to burden us with bureaucracy, but to shed a light on this area and ensure that the basic, decent things are done so that people can have a good home.
Philip Davies
I am glad that the hon. Gentleman has highlighted another area where we have worked together: raising money for the part of North Yorkshire where that sad event took place. The point I was making was not a matter of opinion, however; it was a matter of fact. The vast majority of complaints I get in my constituency about landlords are about social housing providers, not private sector providers. I was offering that up not as an opinion but as a fact. We should perhaps focus on what social housing providers are doing incorrectly.
There is one respect in which I have a lot of sympathy with the hon. Member for Mansfield, and that is on his point about antisocial behaviour; he is on to something there. Again, this is from personal experience—from speaking to people in my constituency, including those who come to see me at my surgery. Getting antisocial behaviour dealt with by a social housing provider may well be a far-too-long—incredibly long—and tortuous process, but I have evidence to suggest that social housing providers take the issue seriously, as do the local police. In my constituency, there has been some terrible antisocial behaviour by tenants in the private rented sector, but the problem is that as long as a tenant pays the rent and keeps the house in a decent manner, the landlord, who may live in another part of the country, or a different country, is not really that bothered about the tenant’s antisocial behaviour in the local community. There is an issue about landlords’ responsibility for dealing with their tenants’ antisocial behaviour, and for helping the local community by being inclined to help have tenants evicted, if there is evidence to suggest that they are causing a menace.
Jacob Rees-Mogg
(North East Somerset): I am grateful to my honourable and almost dirigiste Friend for giving way. I wonder whether it occurs to him that it is easier for private landlords to remove antisocial tenants, because under assured shorthold tenancies it is relatively easy to remove people. It is therefore swifter in the private than in the public sector.
Philip Davies
I absolutely agree, as ever, with my hon. Friend. If private sector landlords are minded to evict a tenant, it is easier for them to do so; he is right. Perhaps he has put his finger on what would help social housing providers to evict problem tenants quicker: less regulation, rather than more regulation. The situation that I am referring to—I do not know whether the hon. Member for Mansfield has this in mind—is one where the private landlord has no interest in evicting the person causing the problem, because that person is paying the rent on time and is not causing havoc in the house. The landlord is quite happy; why would they go through the hassle of trying to find a new tenant to replace someone from whom they are getting a steady income?
Jacob Rees-Mogg
The vision is of an antisocial tenant who causes a nightmare for his neighbours, but the one thing he does properly is pay his rent and look after the house. That is not likely to be true in most cases. People who are antisocial in their behaviour are antisocial generally, not just to their neighbours, so in most cases the landlord is likely to have a strong incentive to act. To legislate for the exception is a mistake that my hon. Friend normally guards against.
Philip Davies
My hon. Friend is right; I do not disagree with anything that he said. The point I was making is that the hon. Member for Mansfield is on to something, and there is a potential issue here. I say that only because the issue has arisen, and been raised with me, in my constituency; that is why I am aware that this can be a problem.
Mr Slaughter
I am with the hon. Gentleman on this; it is a very common problem. It occurs where, for example, local authority properties have been sold and are then rented out regularly for maximum income. Often there is nuisance; it could be leaks, noise—anything. However, the rent is paid, perhaps by housing benefit. Severe nuisance is caused, and that is because the landlord is a bad landlord—a landlord who is not living up to his obligations. That is exactly the type of landlord the Bill is designed to address.
Philip Davies
What the hon. Gentleman says may be right. The issue that flows from that is: what should be done? My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) is very wise, as ever, in guarding against introducing knee-jerk legislation to deal with what may be a minor issue. I am not suggesting that I know the answer to the problem; I am merely highlighting the fact that I have found this to be an issue in my constituency, so I believe that the hon. Member for Mansfield is on to something. As to whether his Bill is the right vehicle for dealing with it, I have grave doubts about that. It is not a Bill that I could support. I am merely acknowledging, in the spirit of consensus that I hate so much, that on this particular point, his suggestion has something to recommend it.
Regulating is clearly something that Opposition Members are itching to get on with, as we might expect. Only last week, the hon. Member for Islington North (Jeremy Corbyn) proposed a ten-minute rule Bill
“to provide for the regulation of letting agents; to protect tenants’ deposits; to require the enforcement of environmental and energy-efficiency standards in private-sector rented accommodation; to amend the law on secure tenancies; to provide for fair rent to be applicable to all rented accommodation; to require landlords not to discriminate against people in receipt of state benefits; to require local authorities to establish a private rented sector office; and for connected purposes.”
The Bill proposed by the hon. Member for Mansfield is not quite as bad as the one proposed by the hon. Member for Islington North, as we all might expect. Still, we can see the general direction in which Opposition Members are trying to go.
Then there is the Letting Agents (Competition, Choice and Standards) Bill, which was introduced as a ten-minute rule Bill on 2 July this year by the right hon. Member for Wentworth and Dearne (John Healey). I think that we should all acknowledge that he is an expert in this field; he was a Housing Minister in the last Government, and he is also the director of my local social housing provider, Incommunities. His Bill was
“to establish a national mandatory licensing scheme for letting and managing agents, with established standards and redress for landlords, tenants and leaseholders, and prohibition of letting and management agent fees; to enable local authorities to administer and enforce the scheme; to require that tenants, landlords and leaseholders have written agreements; and to empower local authorities, either alone or in partnership, to trade as letting and managing agents.”
That is three Bills not just in this Parliament but this year, covering pretty much the same ground, with nuances here and there. They have their differences, but they have one thing in common: they all involve more regulation for the sector.
Mr Slaughter
What is wrong with written tenancy agreements? They give certainty; they mean less litigation; they mean that landlords’ and tenants’ rights are clear; and they mean less money for lawyers—and I say that as a housing lawyer. Why would that be an increase in regulation, rather than a way of cutting through bureaucracy and the wasting of money?
Philip Davies
The hon. Gentleman has shown the true face of the Labour party. He cannot understand that a requirement on somebody is more legislation and more regulation. He seems to think that requiring someone to do something that they are not currently required to do does not mean more regulation and legislation. Of course it does. I am not aware that anybody has said they think that written agreements are a bad thing. The hon. Gentleman falls into the typical socialist trap of thinking that just because he believes that something is a good idea, we must impose it on everybody, regardless of whether they think that it a good idea and want it. In effect, he thinks that he knows best what everybody should do, and that he should impose his view of the world on absolutely everybody. He is clearly a socialist, so of course he believes that. I am not a socialist, so I do not.
Jacob Rees-Mogg
Is it not the case that if we enforce written agreements, we give more jobs to lawyers—we have enough lawyers in this country already—and increase the expense for the people participating in an agreement, who may be great friends and may feel that they do not need reams of legal protection?
Philip Davies
I have great sympathy for my hon. Friend’s view. I agree. I am not sure whether the hon. Member for Hammersmith (Mr Slaughter) wishes at this point to declare his profession in the legal world or otherwise. He is welcome to do so.
Mr Slaughter
I have already done so. The point I was making is that tenancy agreements would mean less work for lawyers. Lawyers make money where there is uncertainty. The example of friends who think they can make an oral agreement is exactly the sort of case that often leads to the worst type of litigation because there is no clarity and it is all a matter of interpretation, implied terms and what was said and done at any particular time. A written agreement is a way to clarity and simplicity in these matters. It means less money spent and less time in court. I do not know why the hon. Gentleman cannot see that.
Philip Davies
I have the disadvantage in this debate of not being a lawyer. Some people might say that it was an advantage not to be a lawyer in this place, but on this narrow point it may well be a disadvantage. I certainly concede the hon. Gentleman’s expertise in this field, but as a layman, I am not aware that written agreements are always clear or that there is no need for solicitors or lawyers to be involved in anything covered by a written agreement. Virtually every written agreement at some point leads to some kind of confusion and dispute, and the lawyers are there, as ever, to pick up the pieces. I do not accept the hon. Gentleman’s assertion that just because we have a written agreement, we do not need any lawyers to be involved. It is quite the reverse, I often find.
Mr Nuttall
One of the objectives of the Bill is to try to create a regime that protects tenants. An unintended consequence of a requirement for every tenancy agreement to be in writing is that there is a danger of an increase in sham tenancy agreements, where unscrupulous landlords may require the tenant to sign a written agreement which sets out less onerous obligations on the landlord than would be required under law.
Philip Davies
My hon. Friend makes a very good point. People who are itching to get on with such regulation ought to bear it in mind that that may have unintended consequences which end up leaving those they are trying to help in a worse position than they would otherwise be in. We should all bear that in mind.
My hon. Friend also hits on a more general point. When regulations and legislation are imposed on landlords, it is the good ones who tend to be penalised. Good landlords seek to do everything that is expected of them and go out of their way to meet all their obligations, no matter how onerous. They are not the ones causing a problem, whereas landlords who do not have the same moral scruples are encouraged to operate outside the law. They have already shown that they are not keen on doing the right thing. Why would they all of a sudden be keen on doing something because the Labour party has insisted that they do it? The world does not work like that. We could end up with tenants being in a far worse position.
Mr Slaughter
I want to be sure that I have understood the hon. Gentleman. He is saying that the reason for not imposing terms on landlords is that they might then invent contracts which give less power than statute would give, which would be void in any event because landlords would not be able to derogate in that way. If that is the hon. Gentleman’s best argument, it would probably be better for him to give up now.
Philip Davies
The hon. Gentleman is entitled to his opinion, but he has not yet come up with an argument that I have been persuaded by. It seems that I have not come up with one that he is persuaded by, and neither of us is surprised by that state of affairs. We can move on knowing that the status quo has been maintained. I agree with very little that he ever says, and he agrees with little that I ever say. That is because he is a socialist and I am not. That is the essence of democracy. I hope the people of Shipley will continue to resist the advances of socialism that the hon. Gentleman wishes to inflict upon us, even though he seems to know more about the Shipley constituency than I do.
With reference to the interest taken by the hon. Member for Mansfield in the subject, I looked at the database of early-day motions on the Parliament website, which I commend to everybody as a great resource. I do not know whether the hon. Gentleman is aware that he signed 1,787 early-day motions during the 2010-12 Session. That goes to show what an assiduous Member he is, as we who know him well are aware.
Sir Alan Meale
The hon. Gentleman no doubt realises that some of those early-day motions were tabled by him. What is wrong with signing an early-day motion? It is a notice board, a window of opinion, which other Members use as he does. That shows activity in this place.
Mr Speaker
Order. We cannot have a Second Reading debate on the merits or otherwise of early-day motions. Although the signing proclivities of the hon. Member for Mansfield (Sir Alan Meale) may be a matter of some interest, it is not obvious that they are a source of illumination as regards the Bill, upon which I know the hon. Member for Shipley (Philip Davies) intends, with whatever reference to early-day motions, to focus his remarks.
Philip Davies
You are right, Mr Speaker. I certainly would not have mentioned early-day motions if they were not relevant to the Bill, as I hope you appreciate. The hon. Member for Mansfield misunderstood my point. I was commending him for signing so many early-day motions. It is a sign of how active he is as a Member of Parliament and I am grateful for the support that he has given me in the past.
The point that I was coming on to, which I hope Mr Speaker will agree is relevant, is that one early-day motion that appeared to escape the hon. Gentleman’s notice was No. 233, which was entitled “Regulation of the private rented sector”. It was tabled by the hon. Member for Edmonton (Mr Love) and had a great deal of support from the usual suspects, like the hon. Member for Islington North. It stated that the House
“notes with concern the Government’s decision to abandon plans for a national register of landlords and further regulation of the private rented sector; recognises that the private rented sector plays a significant role in supporting the housing market in the UK; believes that rogue landlords and letting agents continue to pose a threat to consumers in the private rented sector; further notes the statistic from the Office of Fair Trading that the number of complaints against rogue landlords and letting agents is on the rise; and calls on the Government to bring forward proposals immediately to create a national register of landlords and to propose further regulation of landlords and letting agents in the private rented sector.”
In relation to the views of the hon. Member for Mansfield, it seems to me that that early-day motion was very much on the money, but it was not among those that he signed. Perhaps he can tell us whether he just did not notice that one—so many are tabled that we cannot notice all of them, and I certainly miss them from time to time, as I am sure we all do—or whether his interest in the subject has been sparked more recently, whereas early-day motion 233 was tabled earlier in this Parliament. It was interesting to note that he had not signed it, given that it seems highly relevant to what he is trying to impose on us today.
Clause 1 would establish a mandatory national register of private landlords. That raises a number of questions about the purpose of such a register. What would it be used for? Who would use it? What would be achieved by such a register? Who would administer it? In subsection (2), a duty is
“placed on all private sector residential landlords to sign up to the Register, and to pay an annual registration fee and provide all the information prescribed in regulations by the Secretary of State as required in the Register.”
I have many concerns about that. The payment of an annual registration fee, which appears to be dictated by whoever is appointed or by the Secretary of State himself, seems to open up landlords to an unlimited cost.
What control will there be over the registration fee? The hon. Gentleman made it clear in his speech that he did not see such a fee resulting in any cost to the taxpayer, which must mean that he expects the whole cost to be covered by the landlord, presumably through their registration fee. However, as we all know, with any kind of bureaucracy we always end up with a narrow focus. I think the hon. Gentleman himself referred to envisaging a light touch, but such measures seldom end up as light touch. They always end up with some empire building and more and more costs being added. At the end of the day, the landlord will pick up the tab. If the Bill were to be enacted, not only would they be picking up a tab, they would be picking up an unlimited tab, because the fees will be out of their control.
Jacob Rees-Mogg
I am grateful to my hon. Friend for giving way once again. He has been prodigiously generous. Does it occur to him, as it does to me, that this is another socialist tax?
Philip Davies
My hon. Friend is right. He pre-empts what I was going to say; I was going to make that very point. This is absolutely a tax on private landlords. The hon. Gentleman said that there would be no cost to the taxpayer, but that will not necessarily be the case. If a landlord is expected to pay a fee—in many cases, my cynicism leads me to suspect, perhaps an ever-increasing fee—the likely scenario is that that fee would be passed on to the tenant through higher rents. That will be how the landlord recoups the money to pay for it.
Obviously, many rents are paid by the taxpayer through housing benefit. I have no doubt that the hon. Gentleman intends that there will be no cost to the taxpayer as a result of this Bill, but he cannot guarantee that, and I would argue the exact opposite. The likely scenario is that this will lead to an increase in costs to the taxpayer through higher housing benefit payments.
Sir Alan Meale
Does the hon. Gentleman accept that, after the consultation process, the Secretary of State will determine what such a register should hold and what the fee should be, so he will have a handle on this and be able to control it? There is no question that it will cost the taxpayer money in any way, shape or form.
Philip Davies
I hear what the hon. Gentleman says, but I am simply not persuaded. There will be a cost to somebody, and it seems inevitable that some of that will be passed on to the tenant—and the taxpayer pays for an awful lot of tenancies. I have no doubt that were the hon. Gentleman the relevant Housing Minister at the time, the fee would be small, but heaven knows what the fee might end up being if the hon. Member for Islington North got his hands on the levers of power. I have every faith in the hon. Member for Mansfield as an individual, but he cannot guarantee who will be holding the post in the future and what the consequence of that may be.
Jacob Rees-Mogg
It occurs to me that the fee must mean a reduction in the tax take, even if it is not added to the rent, because the fee, in the normal course of events, would be tax deductable. Assuming that the landlord is making a profit on his letting, that would come out of the tax payable to HMRC.
Philip Davies
As ever on these occasions my hon. Friend makes an excellent point. Therefore, we can determine quite clearly that whatever is envisaged there will be a cost one way or the other to the Exchequer.
Who will monitor the register? How will it be monitored? How will it be determined when someone becomes a new private landlord and who will ensure that that particular landlord signs up? I am not entirely sure that I can envisage how that will happen in practice. How will existing landlords be made aware that they have to sign up? How will the process of registration of all these private landlords be carried out? What about private landlords who are foreign nationals, and who own a property in the UK but do not live here? How will we go about getting them on the register? How will they be made aware that they have got to be registered? How will they be made to sign up and pay their registration fee? I simply do not understand how having a register will help the landlord. I do not understand how it will help the private sector tenant either. What incentive will there be for landlords to sign up? If we have a mass refusal of landlords to sign up, what will be done to get them to sign up? We can argue whether the concept is desirable, but it seems filled with practical issues.
If we are to go down this route, surely the hon. Gentleman would accept that there has to some kind of incentive for the landlord to sign up. There has to be some benefit for them in signing up, and the best way to ensure that is to make signing up a free choice, not to mandate people to do it. The only effect it will have on landlords is to ensure that they have the additional task of renewing their registration every year and that they pay for it out of their own pockets. As my hon. Friend so wisely suggested, this is no more than a tax. It is a tax for letting out one’s house for others to live in. I am not sure whether that qualifies it to be called a bedroom tax, but given that most people who live in these houses will be occupying a bedroom, and given that the cost is likely to be passed on to them, we can safely say that this is the Labour party’s attempt to impose a bedroom tax on the public. It introduced the spare room subsidy when it was in government, and it now seems to be trying to introduce a new tax on people.
The Bill will drive up not only rents but property prices, which are extortionate everywhere, but particularly in London. As rents go up to compensate for the cost of the register, property prices will be driven up even further.
Sir Alan Meale
Will the Bill not also reduce rents? What about the £350 a week for a shed in Newham? What about the 11 models who were asked to pay £400 each to share a small terraced house? What about a recent report of people having been rented out a walk-in freezer? These are all situations where people pay large amounts of money and the Bill would mean a reduction for them rather than an increase.
Philip Davies
I do not doubt the hon. Gentleman’s intention; I just do not see how the Bill would work like that. The problem with the Labour party generally is that it thinks people live their lives in a particular way and that no matter what it throws at them, they will continue to live in exactly the same way and just pay the levies and taxes and burdens that it imposes on them. The real world does not work like that. There is no doubt that if the renting out of property becomes too onerous and too expensive, a considerable number of people will leave the market. They just will not bother being involved in the private rented sector. I can say with some considerable certainty that that will lead not to a reduction in rents in places such as London, but to an increase in rents, because there will be fewer rental properties to go round. That is the great flaw in this socialist ideal of imposing extra regulation and charges on people. People will not stand there and take them. They will change their circumstances so as not to be bogged down by them all. There is absolutely no doubt that if the scenario envisaged by the hon. Gentleman in his Bill were to be put in place, it would lead only to a reduction in the number of private sector landlords. That can only drive up rents, and will probably drive up property prices as well, as those who are involved feel that they can get a better return on their investment. That would be not only what I would call an unintended consequence of what the hon. Gentleman seeks to achieve, but a certainty.
Another point to bear in mind is that landlords come in many guises. Often they own only one property or a small number of them. Sometimes they are accidental landlords, as I am, who either inherited properties or were trying to do something worth while by investing in property for future pension provision. They are not all big commercial landlords making vast amounts of money from renting out their properties.
If we look at efforts to keep the private housing market under control from an historical point of view, we find measures such as the Increase of Rent and Mortgage Interest (War Restrictions) Act 1915, which introduced rent controls that restricted rents to their August 1914 levels to prevent landlords from profiteering during the war years, when demand for housing exceeded supply. Although that was intended as a temporary measure, rent control in general continued to be applied to rental agreements until 1989.
The private rented sector made up nine tenths of the housing stock in 1915, but it had declined to one tenth by 1991. It is important to reflect on the reasons for that decline in the intervening years. I suggest that rent control was one of the factors, because it reduced possible rent returns. My point is that if we introduce a system that delivers a worse return for landlords, they will just not bother letting out their properties and we will end up with less housing provision.
Mr Slaughter
Does the hon. Gentleman not think that the growth in owner-occupation, which was a result of rising living standards, the growth in social housing, which guaranteed decent-quality accommodation at affordable rents, and indeed the low standards in parts of the private rented sector might be reasons why the sector became less desirable and declined? I wish I could see the world through his glasses, but I do not think that many people do so.
Philip Davies
As it happens, the hon. Gentleman is right. I was going to say that obviously other factors were involved in the decline of the private rented sector. I am not so blind, in my intellectual dogma, that I do not see that other factors were involved, because clearly they were. Rising prosperity and the right to buy, for example, made it easier for people to buy their own homes. My point is that one of those factors was rent control. I suggest that if the hon. Gentleman cannot see past his ideological dogma and realise that rent control was also a factor, he is the one with the problem, not me.
Susan Elan Jones (Clwyd South) (Lab)
Following the hon. Gentleman’s argument, does he not think that the Government’s intention effectively to get landlords to police the immigration status of their tenants will also reduce the amount of private rented accommodation available?
Philip Davies
I am quite happy to be sidelined by the hon. Lady on that point. As it happens, I am very sceptical about that measure in the Immigration Bill. We are talking about what should and should not be the responsibility of landlords, and I have grave concerns that we are effectively making them the United Kingdom’s border police force. If the Government got their finger out and had proper border controls in this country, we would not have to put the onus on landlords, so I have a great deal of sympathy with what she says. I see that one of our distinguished Government Whips is in his place, so I will make it clear now, if I have not already—I probably have—that with regard to that particular provision my support cannot be guaranteed. That probably does not come as a great surprise, but I make that declaration now. I am grateful to the hon. Lady for allowing me to make the Whips Office aware of my reservations about that measure in the Immigration Bill, which is otherwise excellent.
Efforts were made during the course of the 20th century to stimulate the private rented sector by restricting rent control, for example through the Leasehold Reform Act 1967, which allowed previously controlled rents to be based on gross property values; through the Rent Act 1965, which introduced regulated tenancies; and through the Housing Act 1988, which deregulated rents on new lettings after 15 January 1989. Those measures were all designed to encourage investment in the private rented sector by increasing potential returns from rental income. That is because successive Governments—some of those Acts were passed by Labour Governments—realised that the best way to stimulate the private rented sector was by creating an environment in which landlords were likely to get a better return on their investment. It seems blindingly obvious to me.
The hon. Member for Mansfield said in his speech that he understood that the private rented sector was very important and that he supported it, but history shows that making terms and conditions too onerous leads to a reduction in the sector. It is only by making renting out properties more attractive to landlords that we can increase provision. There is a shortage of suitable housing in this country, so we ought to be making it easier to rent out properties to people who want them. That must be one of the solutions to our housing problems. The Bill would only make a bad situation even worse.
Mr Nuttall
We have heard a lot already this morning about the increase in the number of complaints arising from the private rented sector, which is one of the rationales behind the Bill, but given the enormous explosion in the number of people in the private rented sector over the past 15 years—from around 2 million in 1999 to 3.843 million in 2011-12—is it any wonder there has been an increase in the number of complaints?
Philip Davies
My hon. Friend is absolutely right. It is obvious that the larger the sector, the more complaints will be generated. I argue that the increase in the sector is a good thing. That might be one point on which we and Opposition Members have a difference of opinion; I see the increase in the private rented sector as a force for good, not bad.
A 2010 survey that looked at the number and type of people who are private landlords found that 89% were private individual landlords, 5% were company landlords and 6% were other organisation landlords. Those landlords were responsible for 71%, 15% and 14% respectively of all dwellings in the private rented sector. More than three quarters—78%—of all landlords owned only a single dwelling for rent, comprising 40% of the total private rented housing stock. It found that 22% of those landlords had let properties for three years or less, and two thirds—69%—had let properties for less than 10 years. Almost four fifths of all landlords in the sector earned less than a quarter of their income from letting properties in the private rented sector, and only 8% were full-time landlords.
Those statistics are important, because this kind of Bill seems to be of the opinion that the landlords we are talking about are all massive corporations that are effectively building massive profits by being bad landlords. That does not fit the facts. People in the sector may have ended up renting out property for accidental reasons; they are trying to do their best and do not expect to be bogged down with pages and pages of regulation. As we have heard, most—almost four fifths—have full-time jobs as well. A number of them may well not be making any money from renting out their property anyway.
There is a misconception behind the Bill and all the similar Bills that we have seen this year from Labour Members. It is that there are huge numbers of people making vast profits at the expense of their tenants. That does not fit the facts.
Sir Alan Meale
The hon. Gentleman will have heard me talk specifically about amateur landlords as he describes them. The organisations that some amateur landlords are involved in greatly support the Bill because it would give them the opportunity to learn more. They are not in it for the short-term grab of a large profit; they want the long-term return. Like him, they may have ended up being landlords through inheritance or whatever. They are not inherently bad people, but very good people. The Bill is to protect them and the long-term return on their capital. Regulation is not bad, but good—it brings properties up to the mark and stops rogue landlords giving the others a bad name.
Philip Davies
I am pleased that we agree on the main thrust—that the vast majority in the sector are good people trying to do the right thing, with no intention of being bad to their tenants. That is where I am coming from, and I am delighted that it is where the hon. Gentleman is coming from as well. We differ on the best way to help those people do what they are doing. I do not think that piling on extra regulation and cost is the way. He does. That is our genuine disagreement.
The consequences of such regulation would be terrible for some of those landlords. The good people, to whom the hon. Gentleman referred, might well have to sell their properties because they cannot afford the extra costs and regulation—perhaps to one of the unscrupulous landlords whom he is trying to stamp out. That would be another terrible unintended consequence of what he is trying to do. The good people are probably, by definition, not making as big a return as those who are not so good. Such a transfer of property would not be to the hon. Gentleman’s or the tenant’s advantage.
In February this year, the Office of Fair Trading concluded that the demand for rental properties was increasing. In 2010-11, the lettings market accounted for 16.5% of all housing in England, which equates to 3.6 million households. As my hon. Friend the Member for Bury North mentioned, that represents an increase from 2 million in 1999.
Government figures suggest that the number of households in England will grow by an average of 232,000 a year until 2033. There is also a general trend of increasing rental in Scotland, Wales and Northern Ireland. Meanwhile, mortgage lending has decreased following the financial crisis, so demand for properties to let may be outstripping supply. That is why it is essential that we do nothing that could lead to a reduction in the supply of private rented accommodation—all that will do is stop people having their own homes to live in.
The results of a National Landlords Association tenants survey of September last year showed that just under 37% of respondents stated that they intended to remain in private rented housing as their long-term housing solution; it seems that they are perfectly happy with their situations. Some 42% responded that they had lived in their current private rented property for more than four years, compared with only 20% who said that they had lived there for less than one year. Again, that is evidence that people are satisfied.
Mary Macleod (Brentford and Isleworth) (Con)
Does my hon. Friend agree that, at a time when many are struggling to get on the housing ladder, it is important that we encourage as many private rental landlords as possible to rent out properties, so that there is more choice? Availability is limited, especially in cities such as London.
Philip Davies
My hon. Friend is absolutely right. She knows a great deal more than me about the problems facing people in her constituency and the rest of London. As ever, she is a great champion of their needs. She clearly recognises that the last thing we want to do is choke off the private rented sector, which is what the Bill would do.
Last year, the Department for Communities and Local Government published a guide for local authorities called “Dealing with Rogue Landlords”. It illustrated many of the remedies already available to deal with what the hon. Member for Mansfield accepted was the small number of problem landlords. The document set out a wide range of powers to tackle the problems associated with criminal landlords. Those powers were enhanced by the Localism Act 2011.
There is other relevant legislation. The Housing Act 2004 allows for a housing health and safety rating system, an evidence-based system used to assess housing conditions in all residential property. That set a minimum standard for all residential properties, ensuring that they are safe and habitable. It comprises an assessment of the presence and severity of 29 hazards, including excess cold.
As a result of the 2004 Act, local authorities have a duty to take enforcement action to secure necessary improvements where those serious hazards are present. They also have the discretionary power to intervene where less serious category 2 hazards are present. To determine the most appropriate form of action, local authorities can consider the extent of the vulnerability of the persons in the accommodation.
The local authority can carry out an assessment of the home and look at the likelihood of an incident arising from the condition of the property and what the harmful outcomes may be. That seems an incredibly useful tool for what the hon. Gentleman refers to as “dealing with rogue landlords.” There is mandatory licensing of houses in multiple occupation. There is already a statutory duty on local authorities to license larger, higher-risk houses in multiple occupation of three or more storeys housing five or more unrelated persons.
Private landlords must be deemed fit and proper persons if they are to be granted a licence by the local authority. Breach of a licence condition is already an offence, subject to a fine of up to £5,000. Letting or managing a property without a licence is a criminal offence subject to a maximum fine of £20,000. There is also the additional licensing of houses in multiple occupation. Poor conditions and bad management practices can be dealt with by local authorities, which can introduce schemes subject to local consultation. There is also selective licensing—a discretionary power to license all privately rented properties in a designated area deemed to suffer from low housing demand and/or significant and persistent antisocial behaviour.
Furthermore, local authorities are required to provide a robust evidence base for introducing a scheme, and once they have introduced it they have substantial powers. There are special interim management orders to take over the management of individual privately rented properties that give rise to significant problems if landlords do not take action themselves. Local authorities can require approval from a residential property tribunal to do that, but the power is there if there are terrible landlords. There are planning contravention notices for when there may have been a breach of planning control. There are temporary stop notices, enforcement notices, stop notices, breach of conditions notices and injunctions that can be obtained from the High Court to restrain any breach. There are also powers of entry and article 4 directions. The Proceeds of Crime Act 2002 can be utilised if landlords have been using proceeds of crime in relation to local housing, and it allows specific financial investigation powers for the public sector. Lots of assets have been recovered from people using that tool.
We already have lots of legislation and regulation on the statute book that can help to deal with what the hon. Gentleman would call rogue landlords and the kinds of activities they undertake. In fact, the Department should be commended for its document, which gave people a very clear guide as to exactly what powers local authorities have. Perhaps local authorities have been unaware of what powers they have to deal with rogue landlords in the private sector. A better starting point than more legislation might be to ensure that local authorities are using the powers they already have in existing legislation to deal with the issues that he is trying to deal with.
On the register and the registrar, I do not know whether the hon. Gentleman has any idea of how much registration would cost and how much the registrar who is administering all this would be paid. Would it be a full-time or part-time role? How would the person be selected for the post? Would the role be advertised to the general public? Would it be a Government appointment? Would the landlords themselves, who were paying into this scheme, be able to appoint the person they wanted to run it? It cannot be a political post; it would need to be independent. How long would the role last for? All sorts of questions about the nitty-gritty of some of the things in the Bill need to be considered.
Sir Alan Meale
Does the hon. Gentleman realise that if we approve this measure, that matter would be for the Department? The Government would go out to consultation and talk to landlords and their organisations about such a thing.
Philip Davies
I am pleased with that clarification of how it would work. The hon. Gentleman clearly has far more trust in the Government than I do in believing they would come up with a scheme that would be acceptable. I would not wish to give them that kind of unlimited power and have no control over how they then used it.
There are already existing bodies in place, including the National Landlords Association and the Residential Landlords Association. The NLA advocates landlords accreditation as an alternative to licensing. It says:
“Accreditation is a practical solution to improving the private rented sector. Landlords provide a service to tenants and should be evaluated about what they know about the sector.”
The association requires all landlords to complete a certain level of development and to keep their knowledge of the sector up to date to remain accredited. Accreditation is backed up by a complaints process that tenants can use if they feel that their landlord is not abiding by the law. That offers a clear distinction whereby a landlord understands his or obligations. It already works with 32 local authorities as exclusive accreditation partners, and all bar three authorities in England and Wales recognise its scheme. In 2012, there were 28 complaints about members of the NLA, but no complaints about its accredited members. If the hon. Gentleman wants to go down this route, perhaps he could look at what is already in place and build on the existing work that is being done by the NLA, which seems to be working well.
Mr Nuttall
Does my hon. Friend share my concern that if a national registration and regulation scheme were introduced, all the individual schemes that the various landlords associations have would wither on the vine and we would just have a nationalised system rather than a system of several very good schemes?
Philip Davies
My hon. Friend is absolutely right. There would be no point in still being part of those schemes. Who is to say that the nationalised scheme, as he puts it, would be any better than them anyway? The numbers suggest that they seem to be working particularly well, and we should be encouraging them rather than discouraging them.
The hon. Gentleman may well say that accreditation is no substitute for proper enforcement against rogue operators, and I think the National Landlords Association would say the same, but we should reflect on the work that it does. We also have the Residential Landlords Association, which says:
“We remain unconvinced by calls for a national registration scheme since those landlords that genuinely cause the problems will not make themselves known under any system.”
We should bear that in mind. It continues:
“A policy is therefore needed which ensures that local authorities are freed up to search for and ban from the sector those operating under the radar whilst enabling the majority of good landlords to operate under an industry run accreditation scheme.”
That is the nub of where the hon. Gentleman and I disagree. He is trying to impose something on everybody to deal with a small number of people who are causing a problem; in my view, we should focus on the small number of people who are causing the problem and tackle them under all the existing laws and regulations. If he wants to enhance those powers, he can come back and put the case for that, but let us not target absolutely everybody with this scheme.
Andy Sawford (Corby) (Lab/Co-op)
I am surprised that the hon. Gentleman cites the Residential Landlords Association as being against the measures. It clearly told the Communities and Local Government Committee in its written evidence, and supported it in its oral evidence—I was at the session—that it is very much in favour of compulsory control of letting agents. It said that it is concerned
“that the local authority landlord and letting accreditation schemes are extremely light-touch in terms of consumer protection”.
It praised the Welsh legislative proposals to regulate letting agents and landlords and urged the Committee to propose that to the Government. I am therefore very surprised at what the hon. Gentleman says.
Philip Davies
I can only suggest that the shadow Minister speaks to the association and clears up any misunderstanding. I can do no better than to quote its exact words, which I repeat so that there is no doubt:
“We remain unconvinced by calls for a national registration scheme since those landlords that genuinely cause the problems will not make themselves known under any system.”
That is a perfectly clear statement by the Residential Landlords Association. If he thinks that its view is different, then perhaps he should take that up with it to clarify its position. I do not speak for it and am not trying to do so; I am merely quoting what it has said.
The Select Committee’s recent report also dealt with the issue of alternatives to the current licensing regime. It referred to a case in Leeds, saying:
“Leeds City Council decided against further discretionary licensing and has introduced a neighbourhood approach which was ‘seen as more flexible than licensing’…This approach targeted ‘neighbourhoods on a street by street basis addressing the area as a whole and dealing with standards in the private rented sector’”.
That more flexible approach has a lot to commend it. You will know Leeds city council well, Mr Deputy Speaker. It is not my local authority, but I believe it is Labour-run, and that is what it believes works for it. The Committee’s report says that Blackpool council has developed a similar area-based approach.
When the previous Government consulted on this suggestion and reported back in early 2010, the main concerns were listed in the consultation document that contained all the responses. Those concerns were valid then and are still valid now. The first main concern was that a better understanding was needed of likely costs. In particular, it was thought that linking other services to the register would increase costs, and it was suggested that they should be deferred until the register was up and running smoothly. Given that the Bill makes no mention of what the costs would be, that uncertainty will still be a factor that people are concerned about.
The second main concern was the objective of the register; there was a lack of common understanding of its purpose. It was not clear whether it was a comprehensive list of private rented properties and landlords or an attempt to enforce better behaviour. The same doubts still apply today. What on earth is the point of the register and what use is it to anybody?
The other concern was enforcement. It was said that more detailed consideration was needed of how enforcement and policing of the register would work in practice, and linked to this there would need to be clear central guidance on the criteria and process for striking a landlord off the register.
The Bill does not seem to address the concern about how enforcement and policing of the register would work in practice. That takes us back to square one, without any progress having been made on the position under the previous Labour Government in early 2010.
Clause 1(3) does not make it clear whether private residential landlords are individuals or individuals representing a company. I am sure the hon. Member for Mansfield would not want his Bill to encourage people to set up a company, rather than be individual landlords, in order to get around any regulations. I do not know whether he has a view on landlords of commercial properties. Would this be a register for private landlords with residential properties, but not for those with commercial properties? That would be a strange state of affairs.
I am anxious that other Members may wish to contribute and I do not want to take up all the time myself. Even though so many parts of the Bill need to be queried, I feel I should leave some of the other concerns to other Members.
I think that foreign landlords who own properties in the UK are good for the UK. I like to see inward investment in the UK, which we should always encourage. I am not entirely sure how the Bill would affect foreign landlords or how they would be made accountable to it. Has the hon. Gentleman given any thought to the effect it would have on foreign landlords? The flat I rent in London has a foreign landlord, as far as I can recall from the tenancy agreement, and I am sure that such a situation is quite widespread in London.
Foreign landlords have capital that they can invest in any part of the world. They are not tied in any way to the United Kingdom. Many of them may not even live here and for all I know some may well never have visited the United Kingdom, but they have made an investment here. In such a scenario, more red tape, more regulation and less return for an investment may lead to foreign landlords going to other parts of the world where they feel they can get a better return on their investment. That is what capital does. It would be a shame if we were to turn investment from the UK as a result of Bills such as this. I do not see any upside to it and have lots of doubts about it.
Mr Nuttall
Is my hon. Friend as concerned as I am about the potential risk of a foreign landlord falling foul of the Bill and finding themselves with a criminal record if they fail to register, because they would then be liable to a fine?
Philip Davies
My hon. Friend makes a good point that I was hoping to come on to. How would somebody come off the register? How would a landlord pay? Does the hon. Member for Mansfield envisage a landlord paying his money out on a pro rata basis? Would it be based on the number of houses? Would it be the rental income that determined the fee? There are all sorts of different scenarios that would cause particular issues for people and that may be grotesquely unfair in individual cases.
As my hon. Friend the Member for Bury North says, failure to register would be not just a civil offence, but a criminal offence: a person who is not on the register will have committed a criminal offence. Do we really want to use criminal law in that way? I would venture that it is not an appropriate use of the criminal law. There is much uncertainty about how the provision would be enforced and how people would know about it.
What about people who become landlords by accident when they inherit a property in which there is an existing tenant? Where would such a person stand? If their parent has died I am sure the hon. Member for Mansfield would accept that they would have an awful lot more on their mind than whether they were part of a registration scheme that they do not even know exists, because they have never been a landlord before. Is it really the hon. Gentleman’s intention that a person whose parent has just died and who is trying to deal with their affairs and organise a funeral should be found guilty of a criminal offence because they have not registered as a landlord on his register? I do not doubt the hon. Gentleman’s intentions or his sincerity, but I think the Bill is not only unworkable, but potentially unjust. To make such people criminals would be completely wrong.
Andy Sawford
I understand the hon. Gentleman’s point about the circumstances in which someone might find themselves if they ended up owning a property that used to belong to a deceased relative—most likely a parent—but it would only be at such a time as they felt able to turn their attention to letting out that property that they would then need to consider the appropriate steps they should take in order to be a responsible landlord. It is only then that they would be in a position to think about what to do with the property, not in the immediate aftermath of losing a family member. It is a scare suggestion to say that the measure would force them to take immediate steps.
Philip Davies
I think the shadow Minister and I are talking at cross-purposes. I am not referring to a person who decides to immediately rent out a house in which a deceased parent used to live. I totally accept the hon. Gentleman’s point about that. It is self-evident. I am referring to a person whose parent was a landlord of another property that the child inherits on their death and in which a tenant is already in place. If the landlord of the property is the person who must be registered, I do not know how people who have just died would get off the register. They can’t say, “I’ve just died,” to get themselves off it. How on earth could their child be expected to know that they had to register when they have never been involved in renting out properties before? They would find themselves, at an instant, the landlord of a property without knowing the circumstances involved. That is the sort of situation to which I am referring, which I think the hon. Gentleman would accept is slightly different from his suggestion.
Andy Sawford
I thank the hon. Gentleman for his clarification. I understand that he is making a slightly different point. Of course, many responsibilities fall to someone on losing a loved one and they can be very important, including thinking about the obligations they owe to people living in a rented property that they have inherited. The well-being of the tenants has to be their concern, even in a very difficult situation.
Philip Davies
Of course. The shadow Minister states the blindingly obvious. Who is to say, however, whether that person would have any ill will towards the people renting the property? Presumably, they would just carry on with the arrangements already in place, but without registering on a national register of landlords.
This is the difference between Government Members and the Opposition: they think that not registering on a state-sponsored register makes someone a bad landlord, but I do not accept that premise. I think that what makes someone a good landlord is whether they are treating their tenant well, irrespective of whether they are on a register. It is how they look after their tenant that determines whether they are a good landlord. Someone who is not on a register might be a very good landlord, but, equally, someone who is on the register might be a very bad landlord. The hon. Gentleman seems to be under the impression that being on the register would determine whether someone is a good landlord, but I am afraid I do not share that view. The hon. Gentleman seems to support a Bill that would criminalise people who had no idea about the obligation being thrust on them by the socialists opposite. We have to be careful about introducing legislation left, right and centre—in this case, left—and we must remind ourselves that laws have consequences. A criminal sanction is serious. We do not want decent people falling foul of the law by accident and receiving a criminal conviction. As I mentioned earlier, four-fifths of private landlords are part-time landlords, with just one or a small number of properties from which they earn less than a quarter of their income. We should tread carefully.
The Minister will outline the Government’s position, but my understanding, which he will either make clear or refute, is that they have concerns about the Bill. I am therefore delighted to find myself agreeing wholeheartedly —this is a red letter day for me—with the Government. I state with confidence that the Government are opposed to the Bill, because their website is clear about why they have chosen not to introduce further legislation:
“The private rented sector is already governed by a well-established legal framework and we will not introduce any further regulations. This will ensure the sector is free to grow in response to market conditions.”
The website goes on to state:
“In the past over-regulation drove landlords out of the rental market. We don't want to introduce any measures which would form a barrier to potential landlords considering renting out their properties. Over regulation would reduce the number of properties to rent and wouldn't help tenants or landlords.”
I could not have put it better myself. I find myself in total agreement with the Government website.
I am conscious that I am in danger of taking up more than my fair share of time. It would be unfair of me to dominate proceedings and I hope that Members do not think that I am doing so.
A report by Professor Michael Ball for the Property Ombudsman, entitled “Regulating Residential Letting Agents: the issues and the options” and published in October 2012, looked at the issue of the number of letting agents and the number that belong to a professional body. This is relevant to the Bill. The report states:
“The extent to which agents belong to the various professional bodies is unknown because there are no reliable figures on the size of the lettings industry. A government report in 2009 estimated that there were roughly 8,000 lettings agents…In the same year, the Office of Fair Trading offered a larger estimate of at least 15,000 letting agency businesses in the UK as a whole...In terms of the individual offices of member firms, The Property Ombudsman reported 9,523 registered lettings offices in September, 2012; as compared to 11,853 for sales…A recent survey found that 85% of agents belong to a professional body, which may indicate that the number of agents outside of the current voluntary schemes though significant is not overwhelmingly large compared to those participating.”
That information can only lead us to two conclusions.
First, the Government and their related authorities have absolutely no idea how many letting agency businesses there are. If we are to have a regulatory and registration system, a starting point might be to know how many there are. The gap between the Office of Fair Trading’s estimate, 15,000, and the Government’s estimate, 8,000, is a big one. How on earth are we going to enforce this great regime if we do not even know how many there are or where they are? At a stroke, the information presented by Professor Michael Ball makes the Bill unworkable.
Secondly, the survey found that 85% of agents—the ones that are known about—belonged to a professional body, indicating that there is not an issue in this sector that needs to be dealt with. They are already aligned to a professional body that insists on many of the standards that the hon. Member for Mansfield wants them to follow.
Jacob Rees-Mogg
Does my hon. Friend agree that a voluntary association is much better than a compulsory one, because it acts as a kitemark? If everybody has to do it we cannot distinguish between those who are good and have volunteered to register, and those who simply have do it as a matter of compulsion.
Philip Davies
My hon. Friend makes a powerful point. I suspect that both of us would have no issue with people having their own standards of excellence that they could advertise, and the Government and the hon. Member for Mansfield saying, “If you want to be with a good landlord, you should look for those who advertise with this particular crest, kitemark or standard.” By definition, that would encourage more and more landlords—they would lose out on tenants if they did not join—to reach that standard. I agree that that is a far better way of driving up standards than forcing people to sign up to something that they might not follow.
The Parliamentary Under-Secretary of State for Communities and Local Government (Stephen Williams)
I thank the hon. Gentleman for giving way, because it me a chance to stand up and straighten my legs after listening to him for nearly an hour and three quarters. He asked about the number of letting agents and speculated that the Government were not entirely sure. Among the welter of statistics available—I will be quoting some of them later—I am told that we only have an estimate of the number of letting agents. The estimates, based on information from Which?, vary from 12,000 to 17,000.
Philip Davies
I am grateful to the Minister. I apologise if I do not get to hear his speech—as I said, I may have to leave early—but I will certainly read it in Hansard. The figures I quoted were from his Department in 2009—I am not casting aspersions on him or the current Administration—and showed a gap of 7,000. The Minister’s figures still show a gap of 5,000, and that makes this scheme unworkable. I am grateful to him for sharing the level of uncertainty concerning the number of firms that would be involved.
There are other bodies that offer schemes, not just the ones I have mentioned. The UK Association of Letting Agents’ scheme is, like others, wide ranging and covers market appraisal, instructions, terms of business fees, charges and termination of client agreements, marketing and advertising, viewing and access to premises, offers, letting tenancy agreements, rent collection, property management, all that is expected of the tenant and landlord, and termination of tenancies. All those things are in place. As my hon. Friend the Member for North East Somerset said, why reinvent the wheel when such schemes are working well? Let us try to get more competition into the marketplace to encourage more landlords to sign up to such schemes. That is bound to have more success than a state-imposed solution.
When the last Government consulted on regulating letting agents, many concerns were raised about how a letting and management agent would be defined. I am not sure what view other Members have on that. Some landlords manage properties for other landlords. Sometimes family members manage properties. Those people are not official letting agents, but they are, in effect, operating as letting and managing agents. Would they be covered by this regulation? Would the consequence of the Bill be to send some of that work underground? People might not employ a professional body or registered company, but get other people to do these things under the radar. They might get friends from around the corner—perhaps even unsavoury people from around the corner—to operate things on their behalf to get around the regulatory system.
Another concern that was raised when the last Government considered this matter was what property condition standards would be used to decide whether somewhere was a decent home. Category 1 and category 2 hazards are already enshrined in legislation. Does the hon. Member for Mansfield have something different in mind? Who will determine what is an acceptable standard of property to be let? Which regulatory body will offer its expertise on what definition should be used?
The former Under-Secretary of State, Department for Communities and Local Government, Baroness Hanham, stated in reply to a parliamentary question from Lord Browne of Ladyton:
“Letting and managing agents are already subject to consumer protection legislation. Consumer protection legislation covers issues such as giving false or misleading information, not acting with the standard of care and skill that is in accordance with honest market practice and claiming falsely to be a member of a professional body or approved redress scheme. For tenants or landlords who are charged unfair or unreasonable fees by an agent, this means that they are able to report this to their local trading standards officer or to the Office of Fair Trading which has both civil and criminal enforcement powers… Disproportionate regulation on the private rented sector would push up rents and reduce the choice and availability of accommodation on offer to tenants.”—[Official Report, House of Lords, 15 October 2012; Vol. 739, c. WA444-45.]
That sums up the situation perfectly. The Bill would have a negative impact on the private rented sector and reduce the number of houses being let. It would bring no benefit because there is ample legislation in place to deal with the concerns.
The hon. Member for Mansfield mentioned Shelter. Even Shelter’s website provides plenty of advice on what people should do if they want to complain about a letting agent. I will not go through all that advice now, because that would take up time unnecessarily, which I do not want to do, but I urge people to look at the website. There is one section entitled “Complaining to the letting agent”, which gives detailed information on how to complain to a letting agent. It is an excellent document. There is also a section on “Complaining to the Property Ombudsman”, which explains how to do that.
We have not talked much about the property ombudsman, but I hope other Members will do so. The website states that that scheme
“provides a free, independent service for resolving disputes between letting agents and their customers. Many letting agents are members; those that are must display the ombudsman’s logo on windows, advertising and stationery.”
That brings us back to the point that was made by my hon. Friend the Member for North East Somerset. We should encourage more letting agents to sign up to that scheme and encourage people to rent from letting agents that are part of it.
Mr Nuttall
The property ombudsman’s annual report for 2012 made it clear that the number of offices that were registered for lettings, as opposed to sales, was 9,748. Almost 10,000 offices across the country are covered by that scheme.
Philip Davies
My hon. Friend makes a good point. That just goes to show that an awful lot of good work is being done in this sector. Perhaps a good starting point for us would be to encourage more of that good work and to make people more aware of the schemes that are in place. I confess that before I looked at the Bill, I was not aware of some of the schemes that are in place to help my constituents, should they have a problem. If nothing else, I am extremely grateful to the hon. Member for Mansfield for forcing me to look at this area to see what is in place. I hope that as a result I will be able to offer my constituents a better service and make them aware of the situation. On that basis alone, we should be grateful to him for drawing our attention to what is already happening, sometimes without any fanfare or advertisement.
As I said earlier, if I am wrong I hope the hon. Gentleman will correct me, but it seems that the Bill would not apply to landlords who sub-let a room in their property. That poses the question why they would be exempt when nobody else would be. What do he and the Labour party think about such landlords? Do they believe they tend to be good or bad landlords? Is there any evidence either way?
I will come to a conclusion, because I am anxious that I may be taking up time that other Members wish to use, and I am sure others have better points to make than me. As with so much proposed legislation, the Bill is full of more bureaucracy and more interference by politicians, and it provides more evidence of the need to be seen to be doing something, which is the prevailing culture in politics at the moment. I always say that if a politician is faced with a problem, their solution will always incorporate two ingredients, the first of which is being seen to be doing something. I long for the day when a Minister will stand up and say, “That’s got nothing to do with us, it’s for people to sort out for themselves”, but so far I have been disappointed.
Jacob Rees-Mogg
Has my hon. Friend noticed that at his suggestion that a Minister might conceivably say that something was not his business, the Minister fled, so frightening was that thought to those who sit on the Treasury Bench?
Philip Davies
Maybe the Minister has taken my advice and decided that it has nothing to do with him, so he will not stay for the remainder of the debate. Maybe it is another red letter day for me, but I doubt it.
The second part of a politician’s solution when faced with a problem is to do something that does not seem to cause offence to anybody. The Bill falls in that category—it would make it look as though we were doing something, and it would not really offend any of our constituents. It is a naked attempt to please people. At Prayers, I am always struck by the fact that we pray that we will not do things through a desire for power or a desire to please, which tend to be the two traps that politicians most often fall into. I fear that the Bill shows a desire to please. It is full of good intentions but would not be very good in practice.
If we carry on at this rate, none of us will be able to breathe without breaking some regulation or law in the near future. Many points in the Bill could be dealt with by the free market and a voluntary scheme, as my hon. Friend the Member for North East Somerset suggested. Where people rent is a consumer choice issue, after all, and it is best left in that sphere.
As I said at the beginning, by force of accident I am both a landlord and a tenant, and I use a managing agent. As a customer I am quite capable of going to a reputable one, and I think I can be trusted to do that. There is plenty of evidence that there is already an abundance of remedies and laws to protect tenants from rogue landlords and landlords from rogue managing agents. I do not doubt that rogue landlords and managing agents exist—they clearly do, and that is not in dispute. What is in dispute is whether the Bill will help or hinder people, and I think it will do the latter.
Many practical issues could affect the workings of the Bill’s provisions. Some I have mentioned relate to what happens when a landlord changes their name or dies, when a landlord resides in the property that is being rented out, when a couple get divorced or when a property is bought as part of a self-invested personal pension. What about the fact that some properties and landlords are already part of a licensing scheme? Would we, as my hon. Friend the Member for Bury North suggested, force them out of a scheme that is working well to make them part of the one in the Bill, or would we allow them to stay part of their voluntary scheme? There are all sorts of practical problems with the Bill, which would make people criminals who should not be. As we know, ignorance of the law is no defence, so that is the inevitable consequence.
As a friend of mine who is a property litigation partner at Seddons law firm in London and dealt with landlords and tenants daily said to me, there is so much legislation in this area of law that creating more runs the serious risk of putting people off becoming landlords or even carrying on as landlords. The most likely consequence is the unintended one that with fewer landlords, there would probably be fewer properties for tenants to rent, which would end up helping nobody, least of all those looking for somewhere to live. It seems to me that there is too much legislation in this area, not too little, and that the Bill would unnecessarily add to that legislative mountain.
Andy Sawford (Corby) (Lab/Co-op)
This has been an interesting debate, and I pay tribute to my hon. Friend the Member for Mansfield (Sir Alan Meale). He has introduced an incredibly important Bill which could help his constituents and mine, and those people around the country living in private rented accommodation who currently face problems. That will be welcomed by responsible landlords and letting agents across England.
The hon. Member for Shipley (Philip Davies) made—at some length—a point about current regulation, and I want to emphasise the conclusions reached by the Communities and Local Government Committee, which recently conducted an inquiry into the private rented sector. At that time I was a member of the Committee, and I believe we carried out a thorough inquiry and listened to a wide range of views. The Committee concluded that there must be better, simpler regulation. The hon. Gentleman is right to say there is a great deal of regulation in this area, but I reach a different conclusion: I believe that that is the problem, and a reason for trying to ensure simpler, better regulation.
The Committee stated:
“The Government should have a wide-ranging look at the legislation covering the sector and put in place a much simpler, more straightforward regulatory framework. Once it does this, it should launch a campaign to publicise this new framework, to ensure that all tenants and landlords are fully aware of their rights and responsibilities.”
I look forward to hearing what the Minister has to say about that, and I hope that he—like me—will welcome the Bill. I believe that it does much of that job for the Government, and meets the hopes of the Committee.
As we know, because my hon. Friend the Member for Mansfield powerfully set out the case, this country faces the biggest housing crisis in a generation. We have a rapidly growing private rented sector—we have heard some of the figures, and the Minister promises we will hear more—and too many people lack security and have to pay ever increasing rents that are now at a record high. Most worryingly for those of us who meet constituents and hear about their problems, or who go out and about talking to local residents on their doorsteps, in many cases people have to suffer poor-quality accommodation.
As a result of the growing housing crisis, more and more people are locked out of home ownership and living in the private rented sector, which is now bigger than the social sector. Last year, the private rented sector overtook the social rented sector for the first time in nearly half a century. Private renting is not just an issue for young professionals, as is sometimes thought, and there are now 3.6 million households in the private rented sector, including more than 1 million families with children. At a time when home ownership is falling, people are faced with record rents, and nearly 5 million people are on local authority waiting lists. Young people are waiting until their 30s before they can buy their own home. The Government should, of course, be building more homes—that is the real solution—but they should also be supporting renters and families.
The Bill sets out a series of measures that I believe will tackle the issues faced by private renters. It seeks to regulate residential lettings and managing agents, protecting tenants, landlords and the reputations of many responsible agents. It would end the confusing, inconsistent fees and charges regime, making fees easier to understand upfront and comparable across agents. It seeks to introduce a national register of landlords, to empower local authorities to improve standards and deal with rogue landlords, and to make written tenancy agreements mandatory. I will speak first briefly about the character of the private rented sector and landlords, and the role of letting agents, and I will then set out why I believe the measures in the Bill are to be welcomed and should be supported by the House.
The private rented sector is now a mainstream tenancy. Around 9 million people in England now rent privately, and nearly a third of all private rented sector households are families with children. Many of the new generation of renters are not there through choice, but because we as a country are simply not building enough homes. The gap between supply and need is ever-widening, and an increasing number of people are unable to buy a home or to access social housing.
The English housing survey suggests that about two thirds of all newly forming households enter the private rented sector because they have no other option. It has been predicted that, if the economy remains weak, 27% of low to middle-income families will be living in the private rented sector by 2025. Many young people are losing hope of ever being able to buy a home. By 2020, 1 million young people could be completely locked out of home ownership.
The private rented sector falls broadly—certainly as viewed in the Bill—into letting agents and individual landlords. There are now more than 4,000 managing and letting agents that are entirely unregulated. They do not even belong to voluntary bodies that encourage a responsible approach to letting and management practice. The hon. Member for Shipley spoke to us at length about the various national bodies that work with letting agents and operate in this sector. I have heard from those organisations—I have met them directly, and also heard them giving evidence to the Communities and Local Government Committee—but as with all self-regulation in all sectors and industries, there are problems.
Mr Nuttall
Does the shadow Minister not think that the Consumer Protection from Unfair Trading Regulations 2008 apply to this sector, which he claims is unregulated?
Andy Sawford
As I understand it, there are 70 laws that apply in some way to this sector, providing some form of protection. As I said at the outset, however, I fully agree with my hon. Friend the Member for Mansfield that we need to simplify existing regulation and provide better regulation. We should not be confused by the proliferation of regulation over time and think that it automatically provides protection. All the evidence from my surgeries and that presented to the Select Committee suggests that it simply does not provide protection.
As I say, there are now 4,000 managing and lettings agents that are entirely unregulated, and they do not even belong to voluntary bodies, so they are not encouraged to adopt the responsible approach to letting and management practice that, of course, characterises many letting agents. Although not all landlords use letting agents, nearly 1.4 million landlords and 3.6 million private rented sector households in England—huge numbers of tenants and landlords—are currently unprotected.
It is a peculiarity of current policy that although estate agents, who hold very little money on behalf of their clients, are regulated, letting agents, who hold significant sums on behalf of landlords and tenants, are not. There are very low satisfaction levels and very few safeguards in the sector. Citizens Advice found that 73% of the tenants it surveyed were dissatisfied with the service provided by their letting agents and reported that a significant number of people have difficulties contacting agents and saw serious delays in getting repairs. Although it is good to hear about the near nirvana that exists in Shipley, I have to say that that is not the experience across the country, and it is certainly not the experience of my constituents or, indeed, those of my hon. Friend the Member for Hammersmith (Mr Slaughter).
The report “Renting roulette” by Which? saw letting agents ranked second from bottom across 50 consumer markets. There are cases of agencies, even large and well-established businesses, running into difficulties because they have no client money protection, with both landlords’ and tenants’ money being lost. In some instances, this has not prevented owners of companies that have gone out of business while holding their clients’ money from subsequently resuming their activities—often as phoenix companies, as the Select Committee heard.
Few safeguards are in place to protect tenants, landlords or reputable agents from being undercut by unscrupulous counterparts. That is why I agree with some of the conclusions reached by the Office of Fair Trading that this market is not working properly. It is still possible to set up a letting or management agency with no qualifications whatever. There is no need to conform to requirements as to conduct or to provide mandatory safeguards for the consumer, and the Government have only recently moved—it is a welcome move, under pressure from the Labour party—to oblige letting agents to register with a redress scheme, whereby awards can be made against agents for quantifiable financial loss to clients.
Let me now deal with the issue of rip-off fees and variable charges, which have rightly been highlighted and which I hope the Bill will do something to address. A survey of letting agents found that 94% imposed charges on tenants in addition to the tenancy deposit and rent, or rent in advance. It also found a huge variation in the size of the charges. The charge for checking references ranged from £10 to £275. The charge for renewing a tenancy ranged from £12 to £220. In some cases, additional charges for a tenancy amounted to more than £600.
According to a survey conducted by Which? in October last year, the average holding deposit was one week’s rent amounting to £400, the average administration fee was between £120 and £420, and the average deposit administration fee was up to £29. The deposit could be anything between one month’s and six weeks’ rent. On average, one month’s rent was payable in advance. Credit reference checks were charged at between £43 and £90, and check-in fees were up to £60. That is a huge variation. How can it be justifiable for one letting agent to charge £220 to check references, when another can do it for £10? Surely that should not be presented as a separate fee. Other countries, even including Scotland, provide much clearer protections and stronger regulation to deal with such variable and unfair fees.
Some tenants are being charged up to £29 to renew a tenancy, and up to £120 just to check out of a property. It is clearly an absolute rip-off, and not to support the welcome and important measures in the Bill would be to allow that rip-off to continue. I cannot support the laissez-faire attitude that has been advocated by the hon. Member for Shipley. Indeed, it seems to me not just to be laissez-faire, but to represent a lack of care for all the people who are being grossly ripped off all over the country.
There are three principal areas of concern when it comes to rip-off fees and charges levied by unscrupulous letting agencies. As I have said, there is a substantial disparity between the fees charged by different agents for similar services, with no apparent difference in the quality of the services received. I have challenged organisations, even those that seek to extol good practice in the sector, to justify the charging of such variable fees by their members, and they have been unable to provide any such justification. That is why an increasing number of them now support measures such as those contained in the Bill.
For middle-income households moving into the private rented sector, fees and charges often constitute a significant up-front cost. At a time when the country is experiencing a huge cost-of-living crisis, caused in Downing street—living standards have fallen in 39 of the 40 months for which the Prime Minister has been in office—it is a huge ask, and often very difficult, for families to meet such costs. Too often, the charges are hidden in the small print. People are exploited by unfair fees that they were unaware that they would face. Letting agents should be required to publish information about their fees, properly and fairly, up front and very clearly, so that tenants know what they are getting into, and landlords know what they will be asked to pay to the letting agency.
Let me now say something about individual landlords, and those who hold a number of properties directly rather than through letting agencies. Of course there are many responsible landlords, and many of them are members of the organisations that have been mentioned today. I have interacted with those organisations, and I know that they seek to do a good job in ensuring that standards are met. They are aware that trying to ensure that tenants in the private rented sector are treated fairly is not only morally right, but good business. It must be acknowledged, however, that there are also many rogue landlords out there, and that they undermine responsible landlords by preying on vulnerable tenants. The reputation of the many responsible landlords and the good service that they provide are undermined by a large number of landlords who fail to offer good standards to their tenants, and by a small number of criminal landlords who deliberately prey on the vulnerable and exploit the current lack of proper, fair, effective regulation.
Shelter found that more than 85,000 complaints were made against landlords in 2011-12. Clearly none of them were made in Shipley, but I am sure that many were made in every other constituency in the country. Some 62% of them related to serious and life-threatening hazards, such as dangerous gas and electrics and severe damp, and of course while the measures would impose some burdens on individuals who might, for example, find themselves to be accidental landlords, we have to balance our consideration for the circumstances in which people find themselves as landlords against those very serious complaints from around the country, many thousands of them relating to serious and life-threatening hazards.
Philip Davies
Is the hon. Gentleman suggesting that having a register of everybody will in itself mean there will be no rogue landlords? Is it his view that wherever there is a register for an industry there are no rogue practitioners?
Andy Sawford
Sadly, I feel there will still be rogue practitioners in the industry, but we will take a great step forward today in protecting people if we support these measures; we will increasingly marginalise those rogue landlords. We will make those practices ever more unacceptable and I hope we can go further towards ensuring there are prosecutions and enforcement against rogue landlords.
Jacob Rees-Mogg
Further to that point, in respect of criminal landlords, would it not be better to enforce the existing law, rather than thinking that passing a new law is the solution?
Andy Sawford
I welcome the hon. Gentleman’s urging of the Government to enforce the existing law properly. I would also urge him to take up with them the loss of 5,000 police officers and the huge loss of resources our Crown Prosecution Service is facing, which mean that many cases, even those taken up by the police, are not referred to it. I would also urge him to look at the consequences of the massive and unfair cuts to local authorities, particularly those with the highest number of people who are being treated unfairly by landlords in the private rented sector. Their cut has been disproportionately large, and that affects their ability to seek to intervene where landlords are behaving unfairly locally. Local authorities have some responsibility for trading standards, too, which are being decimated, as local authorities find they can only sustain statutory responsibilities. If the hon. Gentleman wants to support me, I will gladly work with him and perhaps we can form a cross-party campaign. I am sure my hon. Friend the Member for Mansfield will lead us on that, and we can seek more resources for enforcement within the current framework. I would love the hon. Gentleman to support additional enforcement and regulation.
Jacob Rees-Mogg
I look forward to this fabulous nirvana of red-blue alliance, but may I suggest that if the bleak picture the hon. Gentleman paints is accurate, giving more responsibilities to the people who are so appallingly funded, etcetera, etcetera, will make it even harder for them to carry out their duties? According to his own argument, he would want them to have less to do so that they could do it within the resources they already have.
Andy Sawford
As I said at the outset of my remarks, and as my hon. Friend the Member for Mansfield has acknowledged, there is, of course, substantial regulation. The issue is that there is too much confusing regulation and we need better, simpler regulation. I hope the hon. Gentleman and I can agree on that.
Both the Association of Residential Letting Agents and the National Landlords Association agree that rogue and criminal landlords undermine the reputation of the many responsible landlords and they want action taken. I am pleased to say that action is being taken by good Labour local authorities around the country such as Newham, Oxford, Blackpool and now Liverpool, which are using the powers granted to them by the Labour Government to tackle appalling abuse by some of the worst landlords in England.
On the problem of poor standards, the private rented sector has more non-decent homes as a proportion of its total stock than any other housing tenure. In 2011 a full 35% of all privately rented homes were estimated to be non-decent. On issues of repair, damp and heating, nearly 10% of all private rented homes fall below the minimum standard of repairs and more than 15% of private rented homes lack minimal heat in the winter. Private rented sector homes have the worst damp problems of any homes in England.
Poor housing has wider costs, including to the taxpayer. It has been estimated that the annual costs of poor housing to health could be up to £2.5 billion. There are also estimated costs of £1.8 billion to the criminal justice system, and the lost earnings that result from the current group of young people is estimated at £14.8 billion, as a consequence of the impact of poor housing on their educational attainment and opportunities to get on in the world of work.
Let me say why the proposals are to be welcomed and why I hope that the House will support them. Clause 1 would introduce a simple and light-touch—those are important terms—national register of landlords. That will assist in the improvement of private renting in two ways. First, it will help local authorities to manage the housing market in their area. Greater transparency and information will enable local authorities to target enforcement action on areas that most need it.
I was out and about on the Kingswood estate in my constituency last Saturday morning. I went into a particular square and found the standard of housing, and the evidence of antisocial behaviour, incredibly disappointing. I took the matter up straight away, as I am sure any hon. Member would seek to do, with the local councillors. They sympathised and said that they had sought to address the problems, but—this is one of the sad consequences of the right to buy—all the houses in the square were now privately rented. It was very difficult for them to find out who the landlords were and contact them. Unfortunately, the tenants in those houses, many of whom were migrant workers, were being exploited. The local authority felt powerless, and so did I, as a Member of Parliament. That is why I think it is incredibly important to help local authorities by ensuring greater transparency, and arming them with information, so that they can target enforcement action.
Secondly, the light-touch register will enable the Government and local authorities to communicate with the majority of well-meaning landlords, including amateur or accidental landlords, as they are sometimes called, who want to know that they are doing the right thing, and want to know what support or advice is available to them. That way, the local authority can keep in touch with them. That could be about such simple things as measures to prevent crime or fire, which are, in some cases—because, frankly, it is a saving to the taxpayer in the end—provided for free. Landlords might welcome that information or advice.
The proposals for the register envisage no hurdles to entry other than the need to supply a few basic pieces of information, and I think that is absolutely right; it is to be welcomed that the measure is deliberately simple and not burdensome. It is a deliberate contrast with a licence-based approach, and it reinforces the view that, as the Rugg review found, the vast majority of landlords are well intentioned and offer a good service to tenants. An important point that has been touched on is that there is rightly concern about the cost.
Stephen Williams
The hon. Gentleman mentions the Rugg review, which I believe was commissioned by the shadow Home Secretary when she was Housing Minister, and which reported to the right hon. Member for Wentworth and Dearne (John Healey). It rejected a national register of landlords, and that was a recommendation that the last Government accepted.
Andy Sawford
Of course, measures were being taken forward to address some of the problems, both following the Rugg review and in 2010, but the 2010 election intervened. I am pleased that my hon. Friend the Member for Mansfield has included such measures in a private Member’s Bill and shown leadership from the Opposition Benches. I want to bring my remarks to a conclusion—
Andy Sawford
If the hon. Gentleman will forgive me, I will bring my remarks to a conclusion, as I want to hear from him. The other measures—on more extensive regulation for letting and management agencies in clause 2; on the transparency of the fees of private sector letting agents and managing agents in clause 3; on the very important requirement for written tenancy agreements in clause 4; on the designation of selective licensing schemes in clause 5; on consultation, which is also very important, in clause 6; and the thoughtful clauses on financial provisions, orders and regulations, offences and interpretation—have been well thought through. Of course, as always, they would benefit from further consideration and exploration in Committee.
I urge all hon. Members to see the intention behind the Bill, which addresses, rightly, a huge problem in many constituencies around the country. I hope that we can make real progress with the Bill today. I end by congratulating my hon. Friend the Member for Mansfield on bringing this private Member’s Bill forward.
Jacob Rees-Mogg (North East Somerset) (Con)
May I begin, as my hon. Friend the Member for Shipley (Philip Davies) did, by drawing Members’ attention to my declaration in the Register of Members’ Financial Interests? It is beginning to seem as though Government Members have forgotten the 1884 Reform Bill, which removed the property qualification for Members of this House. We probably would still qualify under the old rules, which is always a good thing.
I congratulate the hon. Member for Mansfield (Sir Alan Meale) on introducing the Bill. The subject is interesting and important and shows the ideological divide between the Opposition and the Government. I congratulate both the Minister and the shadow Minister on their new roles.
The shadow Minister, the hon. Member for Corby (Andy Sawford), made an excellent and interesting speech, if I may say so, and I was delighted that he said we wanted better and simpler regulation, which should be the motto of any Government. If only they would put it into practice when they govern. The Under-Secretary of State for Communities and Local Government, the hon. Member for Bristol West (Stephen Williams), who is a neighbour of mine, is a most civilised interlocutor in the west country and I am delighted to see him at the Dispatch Box. There is such a thing—though I hope this will not be quoted against me in future—as a good Liberal, and I am glad that the Minister fits that category.
I am fundamentally opposed to the Bill, which moves in entirely the wrong direction. I want to go back to first principles: the Bill is an attack on the rights of property and on the free market, and it introduces a new tax on landlords and regulation in a market that is working reasonably well—a very important market to which Government intervention has been very damaging, as the figures show.
My hon. Friend the Member for Shipley pointed out that at the time of the first world war 90% of housing was in the private rented sector, and that this percentage fell until assured short-term tenancies were brought in, at which point the market revived. There were also slum clearances, the development of social housing, and the enormously welcome right to buy, particularly encouraged by previous Conservative Governments, which extended home ownership to millions—an enormously beneficial development. Of course all those things happened. At the same time, what bore down on the private rented sector was the excessive regulation, particularly the control of rents in an inflationary era, with the result that people simply left the market when their properties became vacant. The stock available for private renting diminished and would have gone down further had it not been for the assured shortholds.
Assured shortholds revitalised a market in a free-market manner that has brought supply back, so in Great Britain—I say Great Britain very carefully, rather than the United Kingdom or England, both of which were referred to earlier—the figures went from 1.9 million in 1988 to 4.6 million in 2011. That revitalisation is important because the private rented sector is the most flexible element of the housing market when it works properly. If we are to have an economy where people are free to move, and free to go around the country to find employment or to better their opportunities, there needs to be a supply of housing that is easy for them to find, easy for them to move into, and fundamentally flexible.
It is striking that the highest percentage of people in the private rented sector is in London. The reason it is in London is that, excluding Somerset, London is the most dynamic part of the UK economy. It attracts an enormous number of international visitors and makes it possible for them to come, but it also attracts an enormous number of our fellow countrymen, who find London an attractive place in which to live and work. The Dick Whittington view of London—that the streets are paved with gold—has historically drawn people to the metropolis, and that requires flexible private rented capacity.
Why is that better, more flexible, than social housing? The reason is that social housing is limited in its number. If people move around the country—if someone moves from Somerset to London and gives up their social housing in Somerset—they have permanently given up something that they may never again be able to get back into. Social housing is, therefore, an enormous encourager of the status quo. It encourages people to stay where they started, where they got on to the housing ladder.
The same is true of controlled rents. Once people are in a property with a controlled rent, or one that is heavily regulated, they know that if they give it up they will never be in so beneficial a situation again. They have, therefore, less incentive to move to find employment or to increase their prosperity, and, given the way in which the law is devised, that is also often the case for any dependent children—or certainly one child—because they may be able to take on a low-priced tenancy, which discourages economic activity.
The flexibility of the private rented sector allows people to move and it allows economic activity to go where it is best needed; it allows people to move where the jobs are. That has been essential to the way in which the economy has gone since the late 1980s, and the private rented sector has been transformed by the huge number of accidental or amateur landlords that have been discussed. That is a very good thing. The idea that people can buy a property, let it out, involve themselves in the capitalist system, and effectively develop a pension for themselves by contributing to the private rented sector, is good both for the landlords and for the tenants. I happen to think that those accidental landlords are likely to be particularly good ones because their properties are the main source of their potential future income, so they have a deeper interest in the properties that they are letting out than almost anyone else is likely to have.
If I were to rent a property, I can think of nothing finer than to rent it from my hon. Friend the Member for Shipley, who, I imagine, would be a first-class landlord, and attentive if ever there was a problem with the bath overflowing, a dripping tap or the gas going off. I would have a service that was second to none. That applies to thousands, tens, probably hundreds of thousands, of individual landlords throughout the country, to whom their one property is their real nest egg. We heard from my hon. Friends the large number, as a percentage of the total property available, of people in exactly that category.
That interest that such people have means that, by and large, they are likely to be good landlords. The shadow Minister referred to being a good landlord being both morally right and good business sense, and I agree entirely. It was a fine point to make. It was almost a high point of his speech, marginally beaten by the idea that Governments should regulate less but more effectively.
The reason that it is both morally right and good business sense, and that it should be left to the market, is that if a landlord, a group of landlords or a letting agency have a good reputation, that is something they can advertise. They can have kitemarks. We have already discussed the associations that exist that will be able to say that a landlord comes up to certain standards and is signed up to the property ombudsman, so tenants know that if they go to a certain letting agent or landlord they will be likely to live in a better quality of property. That helps the landlord, because they would probably be able to get a better price, which makes good business sense. It makes good moral sense, because we all want people to live in high-quality accommodation. It is also good for the prospective tenant, who will be assured that not only is a quality property available, but that it will be managed in a reasonable way and with a form of appeal to the property ombudsman.
That is the laissez-faire approach. I approve of laissez-faire; it is a good economic approach. The governmental approach is that everything should be centrally controlled; that it should be uniform, die-cast and stamped down upon landlords and tenants, so that they fit and can all be regulated in exactly the same way. Although that may remove a small number of extreme cases—though I happen to doubt that—it has every chance of lowering the standard of the good landlords, because they no longer have any competitive advantage in saying that they have independently decided that they will offer such a degree of excellence, that they will have that verified and that they will go to the ombudsman. They are now in a situation where there is no competitive advantage for them to raise their standards. It is, therefore, a classic socialist example of attempting to level down standards rather than allowing the market to provide the best standards.
Why do I doubt that that will have a great effect on the lowest-quality landlord? It is because I think that the lowest-quality landlord tends to be borderline criminal anyway, and one thing that introducing a level 3 fine will not do is make a hardened criminal quail and quake in his boots. A life sentence might make him quail and quake in his boots, but a level 3 fine is not sufficient punishment to really make a difference to his criminal activities.
There is a further point that we should be concerned about. In the days of the greatest rent control there was the greatest incentive for landlords to be rotten, and I will explain why. In the current situation, with assured shorthold tenancies, if landlords require their asset back for other purposes, they can remove their tenant and sell their property at the full market price, so they have no reason to allow the property to run down or to behave aggressively. Under rent controls, that was simply not true. Rent controls put a substantial discount on the capital value of a rental property, so if a landlord was of criminal intent, or even just aggressive, they had a clear incentive to make their tenant’s life so unpleasant that they would be forced to leave. That is exactly what Rachmanism was about: forcing tenants out because the increase in capital value was so great that the landlord made money from it. With assured shorthold tenancies, however, there is no incentive for landlords to be really wicked. There is a perverse effect, because when one bucks the market the situation deteriorates for those one is aiming to protect most of all.
There is a further point. Many landlords who might have a property covered by a protected rent would not dream of behaving badly or aggressively towards their tenant and would want to continue running the property properly for as long as possible, but there might come a point when they have to sell. At that point the highest price in the market is likely to be from the rogue landlord, because they can make more money by rogue practices and by forcing out tenants in the protected rented sector.
Therefore, anyone calling for more regulation in the private rented sector will encourage low standards. They do it for the most noble reasons, and I do not attack their motives at all. Indeed, I apologise to the hon. Member for Hammersmith (Mr Slaughter) for the crack I made earlier about lawyers, because I did not realise at the time that he is a lawyer. It was not intended in any sense as a personal attack. The danger is that they will create something worse for the people they are trying to protect. That is why the market is likely to work better than regulation.
I go further from that point. What are the Bills that my hon. Friend the Member for Shipley talked about, and the support from the Labour Front Bench and the early-day motions all about? They are about hammering landlords. There will be people thinking about going into the private rented sector who might be uncertain about the result of the general election. I, of course, am certain that the Conservatives will have a majority of about 200 as we sweep through great swathes of the nation as our popularity rises with the success of our marvellous and glorious policies, but some people—it is extraordinary—are less positive and optimistic. They are doomsayers. They fear that the red peril might get in and that landlords will be in the front row before the firing squad to be shot down by these bullets of socialism. That, 18 month before a general election, would put people off entering the private rented sector.
This Bill, the other Bills and early-day motions associated with it and the policy that the Opposition have developed are already threatening the private rented sector, because there is a developing fear that some type of regulation will be introduced and that it will be unduly onerous and, worst of all, it will end up seeking to limit rents. The Leader of the Opposition has already called for price controls in one area. How long will it be before we hear calls for price controls in other areas? We know the deleterious consequences that follow price controls and that would hit the private rented sector.
I also said at the beginning that the Bill is an attack on the rights of property. That is an important point. The House has always defended the rights of property—the rights of individuals to own and enjoy their property and use it in a sensible and lawful manner—rather than unreasonably restricting people’s lawful use of their property. It is an incredibly important part of our constitutional settlement that the state should not interfere with property unnecessarily and that people will be able to get full value for their property without facing onerous Government regulations depriving them of that benefit.
The Bill is an attempt to reduce, limit and regulate people’s lawful enjoyment of their own property. I deeply regret that. If people decide to rent out a property, they do so under a free contract; nobody is forcing the tenant to take a particular property. There is choice. As long as there is choice, the legal enjoyment of property ought to remain sacrosanct within our national political settlement. That ties in with the liberty that people enjoy in contracts. There is no harm in a Government’s setting certain minimum contractual standards; that has been practised for a long time. However, when two free people decide that they should make an arrangement, the state ought to intervene as a later rather than an earlier resort.
In the market as it exists, landlords and tenants are both in a position of strength. Obviously, the landlord has the property, but it is only one property of many; there is not a monopolistic supplier of private rented properties. The buyer—the tenant—has many properties to choose from. He may go to a variety of letting agents and use a variety of landlords. That is an extremely sensible competitive system. It allows landlords to set their prices at the market rate and tenants to negotiate and have the freedom to decide which property they should or should not take.
The same applies to letting agents. We have heard a lot about the variable charges that they apply, but that is the market. All sorts of industries apply different rates—plumbers, electricians and supermarkets apply different rates. It is up to the consumer to decide which rate he is going to pay. Thank heavens we do not live in a society in which the state directs everybody—“You can only go to that agent rather than that agent.”
We cannot always protect people from themselves, and nor should we try. If people do not ask the letting agent, “What are your charges?”—a perfectly basic question—how can we turn up and say, “Well, you didn’t ask so you’ve been overcharged.” Letting agents will set their prices competitively because there are many of them—so many of them that the Government cannot count them. Primary school children learn how to count, but Her Majesty’s Government, with their civil service and all the resources at their command, cannot count the number of letting agents, which indicates that there is a competitive market and the ability to go from one to another and check the prices.
I happen to have greater confidence in the electorate than the socialists tend to have. I believe that my electors and constituents in North East Somerset are intelligent enough to check out prices for themselves. I campaigned in Corby during the by-election; I apologise to the hon. Member for Corby. I found that the hon. Gentleman’s electors were also first-class, intelligent, capable people, easily able to see whether one price was higher than another. Although they elected him, they do not need his help to compare prices every time they go to Tesco’s or Sainsbury’s. It is remarkably simple for people to get a comparison, and that is also part of the competitive landscape.
If someone asks for the full gamut of charges, they may well see that the agent charges £10 for one part of the process but £200 later for the inventory check. Inevitably, there is some degree of competitive pricing—low at one stage and high at another—so that the charges overall balance out. However, in many cases, the bulk of the charges impact on the landlord rather than the tenant. The charges for letting are absorbed by the landlord because he has taken the agent on as his agent rather than the agent for the prospective tenant. It is important to remember that the agent is for the seller of the good, not for the purchaser of the good. We do not need to protect people from themselves quite so much.
I want to respond to a point made by the hon. Member for Hammersmith about the legal agreements and the need for them to be written. He explained that if one of them ever got to court, it became enormously expensive. That is a perfectly valid point, but it assumes that there are not many thousands of other verbal agreements that never come to court and have an absolutely minimal cost. Again, it is about letting people decide freely for themselves.
May I say what a great pleasure it is to welcome my hon. Friend the Member for Epping Forest (Mrs Laing) to the Chair for the first time when I am speaking? It was an honour to be one of her nominators and a real pleasure to see her elected and now sitting there with such elegance and kindliness in allowing me to speak. It is rather gratifying not to have needed to catch your eye, Madam Deputy Speaker, because I was already in full flow. It is a pleasure to welcome you to the Chair.
To recapitulate, I was talking about the point made by the hon. Member for Hammersmith about legal arrangements needing to be written because otherwise it was more expensive, which I was countering by saying that there were thousands of verbal agreements that never went to court, even if the one that did proved somewhat complex. Let me turn to the detail of the Bill. “Detail” may be the wrong word, because it is vague; it leaves an enormous amount for Ministers to decide at a later date. I am very suspicious of this. In the 18th century, there was a great debate in this House—in a predecessor Chamber, of course, but this House none the less, in a spiritual sense—on the resolution that
“the influence of the Crown has increased, is increasing, and should be diminished”.
Bills like this give more power to the Crown because of what they allow Ministers to do by regulation. This Bill has only three pages—that includes all the paraphernalia that is necessary to a Bill, so only about two pages of actual law—but it opens up the opportunity for Ministers to take very widespread powers.
First, there is annual registration. I am not in favour of that when it is unnecessary. There used to be a dog licence, and it was not too onerous. It cost 37.5p, a price that was finally changed. It is one tax that was reduced before it was abolished, as it went down to 37p when the halfpenny was abolished. Registration is not, of itself, offensive. Nevertheless, the Bill says that landlords must
“provide all the information prescribed in regulations by the Secretary of State as required in the Register.”
Who knows what information that could be? Who knows how far the Secretary of State might go in his regulatory demands, how much power we might be giving not to this wise and good Government, as represented by my hon. Friend the Minister, but to a rapacious socialist Government who would put down regulation after regulation and impost upon impost?
Moreover, as my hon. Friend the Member for Shipley said, the fee that could be charged is not determined and so could be set at any level. We would find that law-abiding landlords who had their one property to let out went from profit to loss as they found that the impositions placed on them were so great that they could not afford to continue. What this does—it is fascinating how socialism often does this—is to corporatise the private rented sector, because those who would be able to cope with it would be the larger companies and letting organisations. That perhaps explains why some of the bureaucratic elements involved in letting properties are quite keen on this regulation—it plays into the hands of big players against the individual with one property to let.
I return to the example given by my hon. Friend the Member for Shipley of the person who inherits and becomes, completely inadvertently, the landlord of a property that was already let out by, say, his parents. Will these elderly parents not worry about the burden they may be leaving for their beneficiaries in dealing with this complex legal system, the charges that are being imposed, and a potentially unending list of regulations that could prescribe anything?
The Bill does not limit the information required, which could include prices. I learned when covering emerging markets that registering prices is only a very short step from price control. One country I used to look at made a great thing of freeing up the price of noodles—a deregulatory measure. However, the price of noodles still had to be registered with the Government, and if someone put the price up the Government refused to accept their registration. Therefore, although they had claimed to have deregulated and not to be regulating the price, by the power of registration they were able to regulate it.
I am deeply concerned that the Bill has within it a rather large Trojan horse, with the hon. Member for Mansfield leading as Odysseus in its innards, although there is perhaps more to fear from his honourable colleagues about what might ensue from it. It is a very unsatisfactory way of legislating. Legislation ought to be precise, limited and clear, and we ought not to give too much power to Governments.
Although I have doubts about a Labour Government in general, it is not particularly the Opposition Front Benchers I worry about, but the unforeseen circumstances of a really bad Government who might go way beyond the norms of our constitutional settlement and abuse powers such as those suggested by this Bill. That is why it is so important that this House should always circumscribe what it writes into law. Not all Governments will be good—we know that—but some will deliberately abuse the powers they have in their hands.
The Bill suggests penalties for not registering. I am against more penalties. There are far too many crimes already in this country that people can commit without really wishing to do any wrong. We have had a marvellous fall in crime, which is hugely to be welcomed. I am sure it is all down to the Government’s policies and that it has nothing to do with longer-term consequences, demographics or anything of that kind. It has all happened in the past three years and that is a great triumph. However, I do not want to see crime going back up purely because this House legislates to criminalise things. That would add cost to the operation of the state as a whole, increase burdens on the taxpayer and make the lives of British subjects more onerous. Surely this House should always be aiming to make the lives of the British people better, easier and happier, without constant intrusion and regulation spewing forth.
Similarly, I am nervous about the proposal to regulate private sector letting agents. As I have said, it seems to me that there are so many of them that there is genuine and deep competition, and competition is a much better curer of ills than state regulation. A lot of this is informal. Even in this House, every so often an e-mail comes around saying, “I have a property to let,” or “A friend of mine has a property to let. Are you interested? It’s in the Division bell area.” Do we really want to turn someone harmlessly working in a parliamentary office into a criminal because they have not registered as a letting agent for the purpose of sending one e-mail? Is that the degree of law that we wish to implement when there is already a perfectly workable system, with kitemarks, that is competitive and allows for up to 17,000 letting agents in the country at large?
I have already spoken about written tenancy agreements. I completely understand the desire of lawyers to have everything written down and buttoned up. If we look at what lawyers have done to us and at the legislation this House has passed, we will see that when we first started passing legislation it could be done on a few sheets of paper. It was clear, distinct and easily justiciable. We now pass so many volumes of legislation that practically all the legislation up to 1945 is in fewer volumes than each year of legislation since 1945. We have an incredible desire to write everything down in quintuplicate, in flowery language that is not understood by most people—half the time it is not understood by most lawyers—and that leads to endless litigation and complication. People in Somerset agreeing to let a property one to another over a pint of cider in the Crown—that fine establishment in West Harptree—are doing something that saves them cost and effort and that keeps things out of the hands of lawyers.
I am against the written requirement for tenancy agreements, I am against the need to register everybody who is at any point involved in letting a private sector property, and I am against the onerous and unending requirement of registration being put on landlords. I am for trusting the people to have the good sense to make arrangements for themselves that work, and for knowing what their best interests are and being able to operate in a competitive market. I am for the rights of property and I am for the liberty of people to decide what is best for them and their families. I am against the socialist view that it always has to be done by the state. The over-management and excessive intrusion of the state have done so much damage to this country in recent years. We need to reverse that. We need to roll back regulation and allow freedom once again to flourish. I shall therefore oppose the Bill.
Mr Andy Slaughter (Hammersmith) (Lab)
It is a great pleasure to serve under your chairmanship for the first time, Madam Deputy Speaker. I hope to do so many more times and I congratulate you on your election.
I congratulate my hon. Friend the Member for Mansfield (Sir Alan Meale) on an excellent speech and an excellent Bill. I would like to extend the same courtesy to the shadow Minister, my hon. Friend the Member for Corby (Andy Sawford). It is a pleasure to see him in his place. It is the first time I have heard him speak from the Front Bench and I hope to do so many more times, because he made a good speech that explained why this is a good Bill.
I am a rare contributor on Friday mornings, so I have not had the pleasure of hearing the regulars, as it were. With all due respect, the phrase “Never mind the quality, feel the width” comes to mind. I was not greatly persuaded by the hon. Member for Shipley (Philip Davies). I am sorry he has had to leave us and host his luncheon party, but I felt that he simply took the anti-regulation speech off the shelf without any consideration of the Bill. He confessed, either because of the late publication of the Bill or because he did not have the time, that he had not looked at it in detail. If he had done so he would have seen that it is not a great addition to regulatory burden or an impediment imposed on the private rented sector, but a necessary and modest proposal. It would be effective in an area where more effective regulation is needed.
With all due respect to the hon. Member for North East Somerset (Jacob Rees-Mogg), I am not persuaded by his Hobbesian vision of a private sector market where, to avoid Rachmanism, private tenants should sign away their rights and the only way for them to have any sort of protection would be by allowing landlords to evict them on a whim, which is effectively what shorthold tenancies do, without giving any reason. If private tenants insisted on some form of protection or regulation, they would stand in fear of the type of behaviour that Rachman and his ilk got up to in the 1950s—which led to the major expansion of social housing to counter such behaviour.
I look forward to hearing what the Under-Secretary of State for Communities and Local Government, the hon. Member for Bristol West (Stephen Williams) has to say. It is a great pleasure to see him on the Front Bench—it is long overdue. He has been given a brief to which he is well suited and I am interested to hear how he will deal with this matter. During a longueur in the speech of the hon. Member for Shipley, I could not help but do a quick Google of the Minister’s views. I came across a video—I advise other hon. Members to watch it—that he made for Shelter. I do not want to embarrass him, but I think it is entirely to his credit. He talks about his own experience of growing up in the private rented sector—his experience of eviction and poor living conditions. He made the video in the context of the “Bristol Rotten Homes” campaign, which was
“calling on the new Mayor of Bristol to take action on poor housing conditions in the private rented sector.”
Shelter stated that
“1 in 5 homes in Bristol are rented out by a private landlord yet over a quarter of these homes do not meet the Decent Homes Standard. That means many renters in Bristol are being forced to live in unsafe and indecent conditions.”
The Minister visited the Bristol Rotten Homes shop, which was a spoof letting agent that was promoting the campaign and providing housing and debt advice.
Going by that, I suspect that the Minister’s experiences and views are rather closer to mine and those of my hon. Friend the Member for Mansfield than to the brief that he has been given to read out today. This will be the first test of whether he can stand at the Dispatch Box and read out something with which he disagrees entirely, but I am sure that it will not be the last, as long as the coalition lasts.
If anybody wants to know why further regulation and scrutiny of the private lettings market are needed, they need only watch the BBC programme on racial discrimination in lettings policy that was aired last week. I am sure that some Members saw that programme, but I will describe what happened for those who did not. Having been tipped off, the BBC reporters obtained a flat and purported to let it out through 10 letting agencies in north-west London. They asked each letting agent not to let Afro-Caribbean people view the property or have access to it. Every single letting agent agreed to do that without demur and with enthusiasm. That is not only clearly unlawful, but disreputable.
I would have thought that that behaviour would surprise hon. Members on both sides of the House, given that it is almost 50 years since such discrimination was outlawed. Clause 2 would attack such disgraceful behaviour, but there are more punitive criminal sanctions for it, which I hope will be sought. The fact that such behaviour is, on the evidence of the programme, endemic across private letting agencies should at least give us pause for thought.
I know that the Conservative party—although not the Liberal Democrat party any longer—believes that qualifications in the teaching profession should not be required for a job in a state school. However, in most areas of life where people are at risk or where people seek to gain a benefit, regulation is appropriate. One would not expect lawyers to be unqualified. One would not expect to be able simply to set up and run a business in any professional walk of life without any regard to qualifications. That is not possible for estate agents. I really do not know why it should be possible for private letting agencies.
It is true that the private rented sector declined substantially for most of the last century. It is also true that it has increased massively over the past 10 years. Although I support and believe in a strong private rented sector, most of the reasons for that expansion are not good ones. One reason is the decline of the social housing sector, which is due to fewer properties being built and to properties being sold or demolished. That sector generally provides decent, affordable homes for people on low and middle incomes. Another reason is that owner-occupation, particularly in London but in other parts of the country as well, has become unaffordable in a way that it was not 20 or 30 years ago.
The average rent levels in my constituency are £245 a week for a studio flat, £467 a week for a two-bedroom flat and £770 a week for a three-bedroom house. Those rents are four to five times as much as one would pay in the social housing sector, and yet it is the private rented sector that is expanding and the social housing sector that is contracting. Those prices are unaffordable to most people, even those on several times the average income.
There are also far worse problems with housing conditions in the private rented sector than in any other housing sector, and we know that people are being forced into that sector because there is no alternative. I am afraid I did not recognise the rather rosy view that the hon. Member for North East Somerset took of a free market in which the purchaser has as much discretion and power as the vendor. That is not the private rented market that operates in London. By the Government’s own criteria, some 35% of properties in the private rented sector are described as non-decent.
Conservative Members have made the point that we do not need regulation because there are other ways of obtaining redress. My hon. Friend the Member for Corby answered that point by saying that the cuts in Government spending have removed most of those avenues of redress. The most obvious one to me, although he did not mention it, is legal aid, which is no longer available for most areas of housing law. Many cases such as some that I have litigated—as often for the landlord as for the tenant, so I am not speaking with any vested interest—will not come to court now, simply because a tenant who is living in poor conditions, being discriminated against, not having their repairs done or subject to oppressive behaviour by their landlord can get no advice on their rights. If the state takes away the ability to self-help, it has a greater role to play in enforcing standards in the private rented sector.
Andy Sawford
My hon. Friend makes an important point about legal aid changes. Does he also find that his constituency is affected by cuts to citizens advice bureau services, welfare rights advice services and other such organisations that can help local people who are concerned about their rights? Mine certainly is.
Mr Slaughter
Of the four main advice agencies in my constituency, two have shut down in the past three years, one of which was a specialist housing advice agency. The others have had their work curtailed by budget cuts. They have either stopped taking new customers or, as in the case of the citizens advice bureau, become so overloaded that they can no longer provide the service that they would wish to provide. That is a real problem.
Conservative Members made the point that the Bill would have an impact on individual private landlords. I have great sympathy with small landlords, who provide opportunities for people and expand the market. Many of them, if not most, are very good, but that does not excuse them from providing proper services and decent conditions for their tenants. If the conditions that the Bill suggests imposing on them were onerous, Conservative Members might have a point, but they are not. One cannot excuse landlords on the basis that they are amateurs or have come into the property market by mistake or happenstance. That is not a reason for failing to ensure that they provide their tenants with decent living conditions. That responsibility must fall on them.
I am afraid that some of the worst landlords I have to deal with are private landlords who acquire a number of properties and deliberately run them to a poor standard. They usually get their referrals through local authorities. I have seen some utterly appalling housing conditions in the past two or three years, of a type that I had not seen for the previous 20 or 30 years. Often, the landlords benefit from a large amount of public money through housing benefit. The state has a legitimate interest in ensuring that it gets value for money.
I believe in a strong private rented sector, but a more professional one in which there is more investment by pension funds and larger organisations that have the capacity and management skills needed to provide longer-term tenancies and fairer rents. Such organisations could perhaps also manage with a lower turnover of people and with finance received over a longer period. As we have seen from the endorsements to proposals in the Bill by some of the more respectable landlord organisations, that would encourage a virtuous spiral in the private rented sector, rather than what we have at the moment, which is a free-for-all and downward spiral. It is a sellers’ market—particularly in London, but I am sure elsewhere too—and on that basis tenants have little choice and people are living in the sorts of conditions described by my hon. Friend the Member for Mansfield. It is appalling.
About one third of those in private rented accommodation are families with children. If one reads the Evening Standard or listens to the media, one would think we are talking simply about “generation rent” and young professionals who are waiting to get on the housing ladder and who are forced into private rented accommodation while they wait. That may be right—they are certainly an important group and more should be done to enable people to get into home ownership—but increasingly we are going back to those Rachmanesque days in which vulnerable people are forced to live in those conditions. Part of that involves the relationship between social housing and the private rented sector and it is now possible—this is an intended, rather than an unintended consequence of the Government’s attack on social rent—for a local authority permanently to discharge its obligation towards homeless families to the private rented sector. That means that vulnerable people are put into the hands of what are often very poor private landlords.
Even before one gets to that stage, because of the shortage of social housing many families are in temporary private rented accommodation for up to 10 years. I will give one example from my surgery from the past two weeks. A family of six who had been in overcrowded, private rented temporary accommodation for 10 years, were finally—very unusually in Hammersmith—made an offer of a permanent two-bedroom flat. That was clearly inadequate for six people, so they had to refuse it and therefore lose their right to housing. In the end—there is still an obligation—the family were told, “Yes, we will find you a property with four bedrooms in the private rented sector for £500 a week”. That four-bedroom property turned out to be a two-bedroom council flat that had been purchased and converted by the technique of putting a piece of plywood over the bath and making the bathroom into a bedroom, making the store cupboard into a bathroom, the kitchen into a bedroom, and putting the kitchen in the lounge. It was effectively a two-bedroom property for a family of six. That is anecdotal, but it is typical of the type of problems I see in my surgery every week. I have had hundreds, if not thousands, of such cases.
As local authorities have a shortage of social accommodation to let—in my local authority there is a deliberate policy of demolishing and selling off social housing—they are forced more and more to rely on substandard private rented accommodation. Owing to the benefit cap, the only type of accommodation likely to be available in London will be of very low quality; alternatively, it will be a long way outside London.
We have a responsibility to private tenants, particularly if they are vulnerable, such as the elderly or those with disabilities, and that responsibility is not being discharged. I will not go through the Bill clause by clause as other Members have done, but if the hon. Member for North East Somerset looks at it again, he will see that when the rhetoric is put aside, the measures proposed are straightforward and pragmatic. Greater regulation is undoubtedly needed in the sector.
Greater transparency is needed, too. I do not recognise this picture of the all-knowing tenant going into the letting agency and quizzing the agent carefully on the fee and charging issues. It is perfectly clear that many agencies—not just the rogue ones; I am afraid that this is almost the norm so far as letting agencies are concerned—are not transparent. I have heard complaints about some of the blue-chip letting agencies—I shall not name them here—that let out some of the most expensive properties in London and take every possible opportunity to extort money from their tenants.
That applies right through the tenancy from the time that the tenant first signs up to the time of leaving it. First asked for money as a deposit or for rent in advance, the tenant will then be asked to pay administration fees, holding fees, fees for renewal and finally fees on leaving. The tenant is over a barrel and not in a position to escape. If a tenant is in need of housing and there is only one agency that will accept him or offer something within his price range, there is little choice. In those circumstances, it is all very well saying “caveat emptor”; a wide choice does not apply. The landlord has the whip hand on every occasion. If measures can be brought in, not necessarily to regulate but to make the fees transparent, and if we can have greater scrutiny of the worst type of landlords such as those exposed by the BBC, that would be worth while.
Written tenancy agreements are standard agreements these days. It is possible to provide one’s own, but 99% of landlords will take out an assured shorthold tenancy agreement. Everybody will know what that is. Of course disputes can arise over written contracts—that can be taken as a given—but difficulties and confusion are far more likely if the terms of a tenancy are not clear. If it is an oral tenancy, we can bet our lives that the terms are not going to be clear.
We know that local authorities are under pressure, and nobody wants to put more pressure on them at this time. I think the scheme in the Bill is effectively the beginning of self-regulation. It asks good landlords to identify themselves and allows bad landlords and bad letting agents to be identified so that they can be dealt with in a way that prevents them from abusing their tenants any longer, as some of them have done for week after week.
I shall end my comments there. I do not want to delay the Bill’s Second Reading, but I suspect that other Members may well have that in mind. My hon. Friend the Member for Mansfield has done us a great service in bringing this Bill forward and in identifying what has often been a neglected area of public policy. Frankly, it has been neglected not just recently, but over 30 years or more. People are suffering silently. It is naive of the hon. Member for Shipley to say, “I do not get these people flooding into my surgery”, because people often do not know their rights. They may be transient tenants, migrant labourers or families who simply do not know what to do. They are prey all the time to poor landlord practices and are exploited by letting agencies on the way there. If we can do something, even through these modest proposals, to address that, it should be viewed as an obligation. I await the Minister’s speech to see whether my speech has persuaded him to throw his brief away and say what we know he probably feels.
The Parliamentary Under-Secretary of State for Communities and Local Government (Stephen Williams)
What a pleasure it is to thank you, Madam Deputy Speaker, for calling me to speak. You and I served together for nearly three and a half years on the Political and Constitutional Reform Committee, so we know each other well. I feel somewhat sorry for the Committee Chairman, the hon. Member for Nottingham North (Mr Allen). In the space of a week, he has lost the hon. Member for Stoke-on-Trent Central (Tristram Hunt), who has become the shadow Secretary of State for Education; he has lost me, moving to my present position; and then the House took away you, Madam Deputy Speaker, to your position as well. I know that the hon. Member for Nottingham North wishes you well, as do I.
This is an extraordinary occasion. We began the debate this morning, and it has already lasted well into the afternoon. It is a pleasure to follow the hon. Member for Hammersmith (Mr Slaughter). Before—as he mentioned—my latitude was somewhat constrained, we worked closely together on foreign policy issues, and I like and respect him greatly as a Member of Parliament.
The hon. Gentleman mentioned a video in which I took part with members of Shelter. I had forgotten about that. I am sure that we all often forget things that we say: one thinks of Paul Simon’s lyric,
“all my words come back to me in shades of mediocrity”.
However, I do not resile from anything that I said when I took part in that video with Shelter in the pop-up shop on College Green in my constituency during the Bristol mayoral elections in November last year. The state of some parts of the private rented sector should indeed disturb us. I was talking then about my own experience of living in rooms in a terraced house which was in poor condition, and of being evicted. The one detail that the hon. Gentleman left out—perhaps he had not watched the full clip—was that I was 10 at the time. That was in 1977, and obviously things have moved on a bit since then.
We have heard several speeches so far, although perhaps not as many as we thought could be accommodated in the time available. I pay tribute to the verbal dexterity of the hon. Members for Shipley (Philip Davies) and for North East Somerset (Jacob Rees-Mogg), although they have now left the Chamber. I believe that we may be hearing from more Government colleagues shortly.
Let me begin by responding to some of what has been said. I believe that the private rented sector plays an essential role in the English, and British, housing markets, and I would not want anyone who operates in that sector to think that the House is against it. A great deal of negativity has been expressed about it today, although some Members have issued the caveat that they recognise it to be an essential part of our housing market. I believe that it provides much-needed flexibility to that market.
When I graduated from Bristol university a quarter of a century ago—I know that is hard to believe—I lived first in a one-room bedsit with plenty of strangers in the house. When I could afford it, I lived in a two-bedroom bedsit in the attic of a terraced property in Bristol, but still had to share a bathroom. Then, when I could afford it, I rented a one-bedroom flat, and when I could afford a bit more, I bought a two-bedroom flat. The private rented sector provides people with not just the first rung, but often the second and third rungs on the housing ladder, as well as providing liquidity and flexibility in the housing market. That is certainly true in my constituency, Bristol West, which contains the highest proportion of people living in the private rented sector in the country.
I am grateful to the House of Commons Library for providing me with figures from the 2011 census while I have been sitting on the Front Bench this morning and this afternoon. I think that I could have read the entire census during the four hours that have elapsed so far. In Bristol West, 21,538 households rent in the private sector, just over 40% of the total housing market in my constituency. That is topped only by the proportion in Cities of London and Westminster—where we are at the moment—which is 42%. The average in the country as a whole is about 15%. I have looked up the statistics relating to the constituency of every Member who has spoken today.
Let me at this point congratulate the hon. Member for Mansfield (Sir Alan Meale) on his success in the ballot, and on provoking and stimulating a very good discussion. I can inform him that the proportion of households in the private rented sector in Mansfield is 13.6%. In Hammersmith—as I am sure the hon. Member for Hammersmith is aware—it is just under a third. In Shipley and in Bury North—I believe we may be hearing from the latter shortly—it is about 14%, as it is in Corby. In north-east Somerset it is rather lower, at 10%.
The private rented sector has a great role to play in the future as well. Traditionally, private landlords have often been small providers who might only have one property that they let out; they might have acquired it to generate a stream of rental income to support them during their current life or, as is often the case, to provide for their retirement. This country has over a long period lacked large institutional investors in the private rental market, however, and the hon. Member for Hammersmith lamented that. In many other European countries it is the norm to rent accommodation and not to have this country’s obsession with buying, and they also have many large investors in their private rented sector. The Government want that market to develop here, too, so that there is more choice for tenants. Large providers are likely to invest heavily in quality and provide long-term leases.
That is why the Government have set up the Build to Rent fund, which hopes to generate £1 billion in investment. The Department has already agreed its first contract, in Southampton on Centenary Quay, where, as part of a wider scheme, 100 homes will be provided in the private rental market. The Government have helped to the tune of £3.5 million to get that development off the ground. We are, therefore, doing what we can to encourage larger investors and larger schemes to become more the norm in this country. Other first-round bids are being evaluated by the Department, and we have opened a second round of invitations to bid, which will end on 31 October. We would welcome more bids from new providers in this market.
We also have the private rented sector guarantee scheme. We are prepared to guarantee £3.5 billion for large potential investors who wish to enter the private rental market and provide new accommodation. Discussions are ongoing with several large institutional investors who may be interested in taking advantage of that scheme.
The growth of the private rental housing market—and, of course, of social housing as well—is key to the economy, so I should also mention the Government schemes Help to Buy, which enables more people to buy their own home, and the Growing Places fund, which has helped house builders, including in my own constituency in Bristol, to get schemes that were frozen after the crash of 2008 and 2009 off the ground.
The Government also want more affordable housing to be built. Our aim is to have 170,000 more affordable housing units built by the end of this Parliament, and we have already achieved 84,000, which will go some way towards addressing the shortfall that arose during the 13 years of Labour Government. For much of that period—certainly the first half of it when the economy was growing strongly and tax revenues were buoyant—they could, frankly, have done rather more to get affordable housing going.
As the housing market is important for the economy, it gives me great pleasure to be able to say that today’s GDP figures again show that the economy is returning to strong growth. We have had news that the economy has grown by 0.8%—again, that news came to us while we have been sitting in the Chamber today. Most pleasing of all, the construction sector, which is the sector that collapsed the most during the difficult period, grew in the most recent quarter by 2.5%. I think we can say that the economy is growing and Britain is getting building again.
Let me turn to points that the hon. Member for Mansfield made in introducing the Bill. He said that he found it amazing that 9 million people lived in the private rented sector. I found that amazing as well; I raised my eyebrows at that point. My understanding is that there are about 3.8 million households in the private rented sector, and as other speakers have said, there are children in about a third of those. I do not know whether we can extrapolate 9 million from that, but I suspect that the number is a little smaller. However, the number is significant, and the point is that the Government wish it to grow.
Sir Alan Meale
The figures are from the Minister’s Department, so I think that they are correct.
Stephen Williams
I thank the hon. Gentleman for that. We have heard that there are many estimates, and indeed ranges of estimates, available to Departments from various providers and people who survey the housing market, but the firm figure that is often quoted is that 3.8 million households are in the sector.
The hon. Gentleman referred to selective licensing, a power that is already available to local authorities. When Bristol city council was controlled by Liberal Democrats, it initiated selective licensing in Easton in my constituency, so I know that authorities are making use of that power. He said that it was being strangled by red tape; I am not sure what the evidence base is for that, because he did not expand on that point, but back in the summer, when my predecessor, my right hon. Friend the Member for Bath (Mr Foster), was in office, he initiated a survey of all housing authorities. We are still gathering in the responses, but thus far we have had 194. Given that there are about 300 housing authorities, obviously quite a lot have not yet responded, or did not feel that there was an issue with selective licensing that merited a response. From the 194 that did respond, we know that 16 selective licensing schemes have been introduced in different parts of the country. Obviously, there are still data to be crunched, and I am sure that we will be able to say more about that in due course.
The hon. Gentleman also mentioned the issue of rogue landlords—as did other speakers, perhaps to counter what he said—as if there was nothing that local authorities could do about the minority of private sector landlords who can be described in that way. Of course, local authorities already have powers that they can use; certainly, as regards health and safety, there are powers to do with the safety and sanitary condition of houses, flats and bedsits in the private rented market. I think that somebody—possibly the hon. Member for Hammersmith or the shadow Minister—mentioned that local authorities face budgetary pressures. I certainly acknowledge that, but the Department has made available a £3 million fund for district, unitary or metropolitan authorities that feel that they have particular issues with tackling poor standards in private sector accommodation. They can bid for resources to deal with those issues.
Andy Sawford
That £3 million seems a very small amount, but we should welcome it. Will the Minister tell us how much of it has been allocated to date, when allocations will be made, and how Corby borough council might bid for some of it?
Stephen Williams
On the last point, I imagine that the Department has invited all housing authorities to bid for money from the fund, and has published the criteria. Hopefully Corby council knows what it needs to do. On take-up, if the hon. Gentleman puts his question in a written form, I am sure that I can give him a full answer, but I am afraid that I cannot give him an oral answer at this moment.
As I listened to the hon. Member for Mansfield and others, I thought: what problem is his Bill seeking to address? Obviously, there are problems in the sector. I looked at some tenant satisfaction statistics from the English housing survey, from which we get our most recent, comprehensive data. There are some interesting comparisons between the private rented and local authority sectors.
In the private sector, the English housing survey found that 83.6% of tenants were fairly or very satisfied with their landlord, compared to 76.6% who had the local authority as their landlord. Some 9.7% of private sector tenants were dissatisfied, compared with almost 17% of people in local authority housing. That might back up the point made by the hon. Member for Shipley that his constituency surgeries quite often see complaints about a sector that is already heavily regulated and has democratic accountability—that is, local authorities. Although there are clearly problems in the private rented sector, they are smaller than in the sector that is under the direct control of housing authorities.
Sir Alan Meale
Assuming that the Minister’s figures might be correct and about 15% of tenants in the local authority sector are dissatisfied, let us take the figure for the private rented sector, which is 3.7 million households. Fifteen per cent. of that is half a million—a not insignificant number—so we have to deal with the fact that huge numbers of people show dissatisfaction.
Stephen Williams
Those are not my figures. As I said, they are from English housing survey data, which are available for all of us to look at. I have acknowledged several times that there are problems in the sector. The hon. Member for Hammersmith mentioned the Shelter pop-up shop. When that was in Bristol, people cited extreme cases of exposed electrical wiring, poor plumbing and awful sanitation. Local authorities already have powers to deal with those transgressions. That is what we want to see them tackling, and the £3 million fund that the Department has opened should help them.
On the tenant satisfaction data, repairs are often an issue about which people come to see us as constituency MPs. The housing survey data show that 72% of tenants in the private sector are satisfied that their landlord deals with repairs in a satisfactory way, compared with 66% in local authorities. I am not in any way trying to diminish the fact that there may well be problems in the private rented sector; I am trying to put those into context. Even in a regulated environment, and even in an environment where each of the three main parties in the Chamber controls housing authorities and councillors have oversight of what they are doing, there is a certain amount of tenant dissatisfaction. No matter what the regulation, we can never make that dissatisfaction go away.
Andy Sawford
The Minister has clearly studied the English housing survey in some detail. It is interesting to hear his take on that survey, but it would be helpful and relevant to get his take on the trends that that survey shows. It clearly shows a rise in the number of people in private rented accommodation and a trend in dissatisfaction with private rented accommodation.
Stephen Williams
I will look at the survey in even more detail to deal with the points that the shadow Minister raises, but he is right. The private sector is growing, and that is something that we wish to encourage. That is why we have the policies in place to get people investing in the private sector in order to provide extra accommodation, which is needed in general, but is needed also to provide the flexibility that many of our constituents would want.
Let me turn to the Bill and its four clauses, the first of which establishes a mandatory national register of private landlords. When the shadow Minister was speaking, he allowed me to intervene once about the Rugg review. I tried to put it to him that that review was commissioned by the Labour Government. One issue that it considered was whether there should be a national register of landlords. It rejected that and the then Labour Government, as represented either by the present shadow Home Secretary, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), or by the right hon. Member for Wentworth and Dearne (John Healey), both of whom were Housing Ministers in the period of the Rugg review, accepted that recommendation. The hon. Member for Corby said to me, but would not allow me to intervene in response, that the general election got in the way of implementation. The Rugg review was in 2008. A lot of things happened between 2008 and May 2010, but clearly a decision was made by predecessors in my Department not to introduce a mandatory national register of private landlords.
The range of benefits that a register might provide was not clear, but one was that tenants would be able to find out who their landlord was. Under the Landlord and Tenant Act 1985, a tenant can ask the collector of the rent, which in many cases may well be a letting agent, to disclose the identity of the ultimate landlord. That information has to be provided within 21 days and failure to do so is an offence. If as constituency Members we find that people do not know who their landlord is, or the local authority does not know and may want to encourage the tenant to find out, perhaps we should publicise that provision, which has been on the statute book for quite a long time.
It is unclear what a national register would achieve. We certainly believe that it would create an unnecessary burden on all landlords, whereas what has been acknowledged in the debate is that there is a small minority of potentially rogue landlords whom we should be concerned about, rather than the vast majority who provide a good service to their tenants. None the less, many private landlords are already in industry accreditation schemes.
One concern is that the introduction of any new compulsory burden of regulation involves a cost. The hon. Member for Mansfield said that there would be no compliance costs, but I would be surprised if a national register of anything was introduced without some compliance costs. People in the private rented sector are looking to make a profit and like any private enterprise or individual in business they will pass costs visited on them on to their customers, who in this case are tenants.
Sir Alan Meale
Why is there a strange state of affairs that tenants have to list themselves on either the electoral or the community charge registers, but landlords do not have to register, unless they are in the social sector? Why are many of them trying to keep out of the limelight and not live up to their responsibilities?
Stephen Williams
With respect, the hon. Gentleman is conflating several obligations that are not the same. You and I, Madam Deputy Speaker, will have debated the requirement to register to vote many times on the Select Committee and during consideration of Government legislation on individual electoral registration, but that is totally different from someone in business having to disclose their business practices via a register. We have Companies House, where directors have to be registered, but I would be hard-pressed on the spur of the moment to think of another area of business where the owners of the business have to be on a national register. Perhaps the hon. Gentleman will give a real example from the world of business in which every provider in the country of a service to our constituents must be on a national register. I cannot think of one.
Sir Alan Meale
If nothing else, such a register will allow local authorities and Government to communicate with landlords and tell them what makes a good, safe and fair landlord. Surely that is the basic context.
Stephen Williams
In the event of a problem, the person most likely to need to know the identity of the landlord is the tenant, if they pay their rent via an intermediary, whether a letting agent or someone else, and under the 1985 Act the tenant has a statutory right to have the identity of that landlord disclosed to them within 21 days. That might be a long time to wait for the disclosure, but there is a statutory right to know a landlord’s identity if it is needed for dealing with a problem.
The Communities and Local Government Committee, which has been referred to several times, produced a report in the summer. Despite the evidence it heard, which the shadow Minister was keen to refer to, it rejected the idea of a mandatory national register of private landlords. Local authorities already have powers to introduce landlord licensing schemes to tackle problems such as antisocial behaviour where there are houses in multiple occupation that do not already fall within the statutory licensing regime to which the hon. Member for Shipley referred. A house that is three storeys high and has more than five unconnected people living in it already has to be licensed, but local authorities can license properties that fall below those criteria if they have identified particular problems. Therefore, with regard to the problems that a national register might solve, there are already laws in place, passed by this place, and opportunities for local authorities to introduce regulations in their areas.
Clause 2 deals with the regulation of private sector letting agents and managing agents. That area is already heavily regulated. There is a whole range of legislation governing the activities of letting agents—if the hon. Members for Shipley and for North East Somerset were still here they would probably need smelling salts by the time I finish reading this out—including the Consumer Protection from Unfair Trading Regulations 2008, the Consumer Protection Act 1987, the Consumer Credit Act 1974, the Price Marking Order 2004, the Housing Act 1988, the Housing Act 1996 and the Protection from Eviction Act 1977.
Perhaps my parents should have known about that Act in 1977, because that was when we were evicted. Incidentally, that was the first time I met a politician. I will use that anecdote now—why not? Abercynon in south Wales was represented by a communist councillor, Mrs Ann Williams, who came to talk to my mother. I listened to them talk and asked my mother afterwards, “Who was that woman?” My mother replied, “She’s the person we vote for on the council.” I was 10, and perhaps that was what sparked my interest in politics. Perhaps we could have done with knowing about the Protection from Eviction Act 1977.
There is also legislation passed by this Government, the Enterprise and Regulatory Reform Act 2013. It has a rather ugly name, but it does rather important things. The sector is therefore already quite heavily regulated. Some 60% of letting agents operating in the sector already belong to an ombudsman scheme that can deal with complaints, but it is important to recognise—the Government certainly do—that a minority of agents do not belong to the scheme and probably do not provide a good enough service. That is why we introduced the 2013 Act.
Sir Alan Meale
The figures are important. There are around 9,000 agents across the country, and the number who are unregulated are indeed a minority, but there are 4,000 of them. Those are the ones we are trying to get to, not the ones who are very good, fair and just. I say that those 4,000 operate in a manner that does not meet the needs of my constituents.
Stephen Williams
I thank the hon. Gentleman for that point. We have already acknowledged that there is uncertainty about the number of letting agents, although I hear what the hon. Gentleman says about the 4,000.
Perhaps when the hon. Gentleman was successful in the ballot and chose this cause for his Bill, he was not aware of the Enterprise and Regulatory Reform Act 2013. I do not blame him; I am not sure I was aware of it until I was told about it, although no doubt I voted for it earlier this year. That Act allows us to introduce more regulation in this area.
Sir Alan Meale
If the Minister looks at Hansard tomorrow, he will see that I mentioned the 2013 Act in my speech.
Stephen Williams
Under the 2013 Act, various new powers are available to the Department to do with how we could regulate this area. The hon. Gentleman will have noticed last Wednesday’s announcement from the Secretary of State dealing with the whole private rented sector. Specifically, the Secretary of State said that we would lay the first order under the 2013 Act. I am pleased to say that we laid the order today. It is an affirmative order, which means that we will have an opportunity to debate it in the normal way. Early in the new year, subject to the order’s being approved, we will ask people from around the country to bring forward schemes for approval. We will then make it mandatory for all letting and property management agents in England—this is a devolved matter, of course—to become members of an approved redress scheme later next year.
Sir Alan Meale
I acknowledged that a major move had been made by the Government in the 2013 Act. Here and now I put it on the record that I am grateful for that movement. However, I want something much larger and more comprehensive than has been offered. The Government’s move is a great step forward, but it is only one move.
Stephen Williams
I suppose all politicians are guilty of saying, “You’ve done that, but I want you to go further.” That is the nature of the business that we are in. We do it to each other. Campaign groups will always say to those in Government, “Thank you for that—we’ve banked and bagged that one, but can you take the next step?”
All I am saying is that the next step has yet to be taken. The first step was the 2013 Act and the second was taken with the laying of the order today. The next step will no doubt be a Statutory Instrument Committee, which will consider the matter. Let us hope that those important steps are successful.
Requiring letting agents to belong to an ombudsman’s scheme will also empower tenants and consumers to make complaints and should be an effective way of driving up standards with the minimum regulatory burden. Our emphasis now is on making the measures that we have already introduced, and will shortly introduce, work, rather than, as the hon. Gentleman might like us to, anticipating the need to go even further.
As I mentioned, letting agents are already subject to a whole range of consumer protection legislation. If they are in breach of aspects of the legislation about charging unfair fees, for example, action can already be taken against them by local authority trading standards, which have both criminal and civil enforcement powers. My Department is keen to hear from trading standards authorities from county and unitary councils up and down the country to see how they use those powers so that we can have a full understanding of whether any action is necessary.
I can deal quickly with the third part of the Bill, which is about establishing a body to administer the national register monitoring compliance with regulations applying to letting and managing agents. Unless I missed it, the hon. Gentleman did not say what body would maintain that national register. It is not clear who would hold the data, who would have access to them, or whether there would be a charging mechanism. I can think of various people who might see some merit in having access to such data; I am sure that our friends in the Treasury might be interested. There is quite a lot of unfilled-in detail. Our basic position is that we do not accept the need for a national register because remedies are already available, so obviously we do not accept the proposal to set up a new quango to administer it.
Sir Alan Meale
The Minister is now approaching the Bill rather well. On the question of what the body would be and who would serve on it, it would be the Minister and his colleagues in Government. It would not be me or Parliament or anyone else; it would be the Secretary of State. That is what I am asking for; I am not asking for somebody out there to do it. When I was a Minister at the Department of the Environment, Transport and the Regions, I abolished quite a lot of quangos. I took the number down from 116, which was unnecessarily large, to fewer than 100. I am not a great fan of quangos. The Secretary of State will decide on this. The Minister, as a Minister, will help to decide on how the body is set up and functions.
Stephen Williams
I hear that, but our basic position is that we do not accept the premise of clause 1 that a national register needs to be set up. I speak as a liberal. It is a shame that the hon. Member for Shipley is not here, because he rather doubted my liberal credentials compared with his libertarian credentials. At least the hon. Member for North East Somerset was a little kinder, saying that I was a good liberal. As such, despite what may have been prepared for me, I am in any case suspicious of national registers for any purpose. One can see a social need for them in some circumstances, as with a register of organ donors, but it is pretty difficult to see what merit there would be in having a national register of people who are in business to provide housing services.
Where would it end? Once the precedent had been set that one sector of the private sector economy had to register every single provider of a service in that sector, no doubt other hon. Members who were successful in the ballot in future years would introduce private Members’ Bills, or table early-day motions or introduce ten-minute rule Bills, saying that it should apply to plumbers, electricians, painters or decorators. I could go through a whole list, but I am not trying to filibuster, unlike some people today. There would be calls on many other sectors of the economy to set up a national register, and we do not want to run our economy in that way.
Clause 4 would require all tenancy agreements entered into with private landlords to take the form of written agreements. The general rule at the moment is that tenants can already make a written request under section 20A of the Housing Act 1988 for certain terms of their tenancy to be provided in writing, including the amount of rent payable, the date on which the rent falls due; whether there are any terms that the landlord wishes to impose for providing for a review of the rent, and, if there is a fixed term of tenancy, how long it is. The tenant can already request that those extremely important items be put beyond reasonable doubt by having them in writing. In the case of a tenancy of more than three years, the information must be in writing, created by deed and signed by both sides. It is not a matter of it being an option that the tenant can ask for.
There is a need for greater understanding of the rights and obligations that already exist in the law of England and Wales. The Department is in discussions with representatives of the sector to produce a model tenancy agreement that landlords and tenants will be able to draw on to eliminate areas of uncertainty where a landlord is possibly trying to put one over on the tenant.
Sir Alan Meale
Whatever happens to this Bill, will the Minister give an assurance that he will consider how he could improve on those standards for the future? I would be very grateful if he would do that.
Stephen Williams
Yes. The tenant’s charter is now available among the range of documents published by the Secretary of State last week. The model tenancy agreement is not yet available, because we are working with the sector on how it should look.
Last Wednesday, the Secretary of State announced that there would be a Government-endorsed model tenancy agreement, which we will develop with the sector. His announcement included a timetable for when we will introduce the agreement. We think it will provide extra security and stability for families entering into an agreement with a landlord.
We have also published a draft tenants charter, but that is not the end of the matter, because it is out for consultation and we would very much welcome people’s comments on it. The purpose of the charter, as opposed to the legal agreement of the tenancy, is to help tenants—and, indeed, landlords—to understand what they should reasonably expect from their rental deal and how they can take action if they are the victims of hidden fees, which many Members have mentioned, or poor standards of accommodation.
The Select Committee has looked at some of the issues and its findings no doubt enabled the Government to make their proposals. The Committee said that longer tenancies and rental control should be sought within the existing legal framework.
The Government also announced last week that there would be a mortgage lenders summit—summits are a very good thing—to consider how lenders can make it easier for landlords to offer longer tenancies. The Government will review the process by which tenants can raise concerns about the standard of their private rented property and the response they should expect from the council if they do not get anywhere with their landlord, particularly in enforcing standards of safety and hygiene. As I mentioned earlier, powers already exist for local authorities to uphold that. We will also consider as part of this review whether we should require landlords to repay rent, which would be the ultimate sanction for most of them, if their property is found to have the sorts of serious hazards highlighted to me by Shelter in Bristol.
In conclusion, the private rental sector is an increasingly important part of the housing market. This Government want to see that private rental market remain. We want it to grow and to serve even more of our constituents. That is why we are concerned about whether regulation is appropriate. We certainly should not stifle the growth of the market through poorly targeted and disproportionate new regulation. The hon. Gentleman made many good points and the interesting points and perorations made by others are also relevant, but the Government are taking action. New provisions are just starting to come in, so we feel the time is not right for this Bill to proceed further.
Mr David Nuttall (Bury North) (Con)
I draw the attention of Members to my entry in the Register of Members’ Financial Interests. I own a residential property that I let out, and I am a tenant in the flat I reside in when I am in London, so I have an interest on both sides.
I congratulate the hon. Member for Mansfield (Sir Alan Meale) on his success in the private Members’ Bills ballot—I think he said that he came sixth. Having been an MP for more than a quarter of a century, he will be well aware of the difficulties faced by a private Member’s Bill, particularly one as interesting as this one, which raises concern and dispute across the Chamber.
I have listened and waited patiently for more than four and a half hours and I am grateful to have caught your eye, Madam Deputy Speaker. I thank my hon. Friend the Member for Brentford and Isleworth (Mary Macleod) for kindly agreeing to speak after me, because I have to leave in a few minutes. I apologise to the House for not being able to stay to the end. In the interests of saving taxpayers’ money, I am taking an earlier train. I am sure that all hon. Members would agree with that.
I have time only to read the headings of the speech I would have delivered if I had been called earlier, but we have had a thorough debate and covered all the issues. My hon. Friend the Member for Shipley (Philip Davies) filleted the Bill, covering many points I would have raised, and I agree with almost everything he said.
If just one thing has come to light this morning, it is that there is no doubt, despite the sector being referred to on a number occasions as unregulated, that there is a plethora of Acts, delegated legislation, rules and regulations that in one way or another have an impact on the private rented sector. Reference has been made to the first report on the private rented sector from the Select Committee on Communities and Local Government. Professor Martin Partington, a former Law Commissioner, said in giving evidence to the Committee that housing law was
“but one example of many policies being developed over decades, being implemented through myriad legislative enactments, leaving a mass of often unnecessary, certainly over complex legislation that does not work efficiently.”
If I may repeat my plea, there is one thing that the Government should do in response to that substantial report: reconsider the decision not to follow the recommendation to carry out a consolidation of legislation in this field. A consolidation and simplification of all rules and regulations covering landlords and tenants, so that they were together in one place and more easily understandable, would be a reform that benefited both landlords and tenants. That would be a great service to the nation, particularly to landlords and tenants, who would be able to look in one place rather than hundreds of places, as is currently the case.
As time restricts what I can say, I will consider just one element of the well-named Private Landlords and Letting and Managing Agents (Regulation) Bill. I note that there is wide cross-party representation among the sponsors of the Bill. They include four Government Members, including one Liberal Democrat Member, three Members from the same party as the hon. Member for Mansfield, and Members from the DUP, the Green party, the SDLP and the Alliance party. It is worth noting that one third of the sponsors represent constituencies that would not be affected by the Bill, because it relates only to England.
Problems would be caused by setting up the body that is referred to in clause 1(4), which states:
“There shall be established a body to administer the Register as prescribed in regulations by the Secretary of State”.
A new quango would be born. We know from experience what happens when a quango is born. It starts off as a fairly modest affair with just a few members and a small staff, but before long it grows like Topsy. There are plenty of examples of that.
As has been mentioned, there are 1 million landlords in the private rented sector. That seems like an extraordinarily high number. I understand, having looked into it, that it includes landlords who rent out just a room. To be fair, such landlords would be excluded from the scheme. Nevertheless, even if one excludes the estimated three quarters of landlords who are in that category, that leaves a quarter of a million landlords who would be included on the register.
I do not know what the quango would be called. It could be called the office for the regulation of the private rented sector, Often, Ofland or even Oftenland. Whatever it was called, it would no doubt be a new retirement berth for politicians. We have no idea what the members of the quango would be paid. However, given that there are hundreds of thousands of landlords to manage, one can only begin to imagine the size of the bureaucratic monster that the Bill would spawn.
Before long, the quango would no doubt need a separate department to collect the fees that were payable and an enforcement department to deal with the small minority who were falling foul of the rules. It would no doubt need a huge advertising budget so that all tenants and landlords were aware of its existence. Public affairs consultants would have to be employed. It would, of course, need its own human resources department to deal with all its staff, and its own administration department. Before long, it would need regional offices. Before we knew it, there would be a staff of thousands. The cost of that would not disappear into the ether; it would be borne, ultimately, by the tenants. This is a tax on tenants—Members should have no doubt about it. I submit that we have enough rules and regulations for this sector.
We have already heard from the Minister that the Government are doing a lot to try to improve the operation of the growing private rented sector, and there is already a plethora of rules and regulations that need to be simplified. The imposition of a new quango and more regulations would simply add to the burden on landlords and inevitably lead to higher rents. For those reasons, I oppose the Bill and urge the House to vote against its Second Reading.
Mary Macleod (Brentford and Isleworth) (Con)
It is an immense pleasure to see you in the Chair, Madam Deputy Speaker. I know that you will do the Chair and the House proud with fairness, dignity and grace.
It is a great pleasure to follow my hon. Friend the Member for Bury North (Mr Nuttall), who made some important points about the Bill. The private rental market is a vital asset to this country, especially London. For a Member who represents a London constituency, it is important to discuss and debate it. For millions who cannot afford to buy, who are saving for a deposit or who just want some flexibility, the private rental market is critical.
I have been a landlord in the past, and I have also been a tenant, as I am sure many Members have. As you probably know, Madam Deputy Speaker, I was born across the river in St Thomas’s hospital in London and spent my first years in Battersea, but then had all my education in Scotland. The first place I rented was at Glasgow university. After graduating I came straight back to London, where I feel I belong, and I have rented properties in Shepherd’s Bush, Acton, Westminster and Chiswick. I have been a tenant nine times, and I hope I have been a good tenant. I cannot remember any disorderly behaviour on my part, so I hope I have been seen as a good tenant and a good landlord.
In the London borough of Hounslow, 42% of households rent in the social and private sectors, which is 10% higher than the national average. We want to build more housing in London and encourage more private landowners to rent out property. What worries me about the Bill is that it might prevent people from doing so.
It is interesting to see how important issues in the private rented sector are to people. In my constituency there are 93,844 residents in 48,500 households. I have received a total of 14,742 cases on housing, but only 35 of those have involved private landlords. Social housing has made up a lot more of them—nearer 500 cases. That shows that for my residents, the important issues are to do not with private landlords but with social housing, whether waiting lists, the state of houses, the state of temporary or sheltered accommodation, repairs or housing associations.
I believe that the hon. Member for Mansfield (Sir Alan Meale) has good intentions to drive up standards. That is what we want, but I do not believe that the Bill is the right way to go about it. There are good landlords. When he talked about the percentage of tenants who are unsatisfied, I wondered how many of our constituents would be satisfied with us if we did a survey.
Margot James (Stourbridge) (Con)
My hon. Friend is talking about the effect of rogue landlords on tenants. Does she agree with my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) that the further regulation suggested in the Bill would be far more likely to trap decent, smaller landlords who are trying to do a good job by tenants, and that rogue landlords who are responsible for the problems that she is talking about would probably evade it? The Bill would therefore be ineffective where it really counts.
Mary Macleod
My hon. Friend makes an excellent point, and she is right to say that we want to encourage more private sector landlords. We need more landlords, and I do not want them to be put off by additional costs, regulation and red tape. In any case, as my hon. Friend said, rogue landlords would no doubt find their way around that anyway. I do not want to impose cost, red tape and more regulation. The Conservative party is about rolling back the state and having less regulation, and some of the extra charges would lead to landlords having to impose higher rents at a time when the cost of living is critical and we want more housing.
We have heard from many hon. Members and the Minister about the work that the Government have done. As the hon. Member for Corby (Andy Sawford) said, substantial legislation is already in place, and we certainly do not need or want any more. We heard about the Communities and Local Government Committee, and my hon. Friend the Member for Shipley (Philip Davies) said that we should simplify legislation. That is the right thing to do. My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) mentioned making the provisions consumer-led, and as someone who came from the business world prior to entering this place, I firmly believe in that. We do not want to live in a nanny state; we want to create a competitive market and—as my hon. Friend put to the House so well—people are intelligent enough to make those comparisons.
If we consider the recommendations in the Bill, even the national register of private landlords can and will be a financial burden on landlords—a cost that would no doubt be passed on to tenants, which we do not want. Regulation of private sector letting agents and managing agents is again about imposing more and more burdens on local authorities, increasing costs and reducing the choice and availability of accommodation offered to tenants. I certainly would not want that across London and the rest of the country.
The Minister mentioned the things that the Government have done, which are important. They recently announced a tenants package, which means that we do not need to introduce new regulation for that. The package includes the tenants charter, which will help to promote awareness among tenants about what to expect, such as transparency of letting agents fees. We heard about the Government-endorsed model tenancy agreement that written tenancy agreements can be based on.
I had hoped that the hon. Member for Mansfield would mention another issue that has been brought to my attention in my constituency many times. Landlords have had to take tenants to court to evict them because of advice that the tenants received from local councils. If tenants want to be seen as homeless and get housing support—even though under their tenancy agreement they know they should leave the property with a month’s notice, or whatever—they have been told to overstay so that they have to be taken to court and evicted. Then they will not be seen as having made themselves intentionally homeless. I had hoped that the issue would be addressed by the Bill, but it was not.
I will conclude my remarks because I want to give my hon. Friend the Member for Stourbridge (Margot James) the last few moments to say a few words. My hon. Friend the Member for North East Somerset said that we should be making life better, easier and happier for citizens of this country, and that in North East Somerset they would do that over a pint of cider. In Brentford and Isleworth it would be over a cup of Teapigs tea, which is made in Brentford, or a pint of London Pride or Chiswick Bitter. I hope that we in this House can do everything possible to make life better, easier and happier for our constituents. I therefore cannot support the Bill.
Margot James (Stourbridge) (Con)
May I add my voice to those of others who have expressed their delight in seeing you in the Chair today, Madam Deputy Speaker, and may I congratulate you on your election?
I would like to draw the attention of Members to my entry in the Register of Members’ Financial Interests, in which I have declared a property that I rent out. It is not really applicable to this debate, because it works on the basis of short-term holiday lets. Although this is not officially an interest, my partner owns two small properties in London, which she rents out and has done for some considerable time. I must say that she is a model landlord, who has not put her rent up at all in the last three years. I have observed at first hand some of the difficulties that a landlord experiences on the controversial issue of the balance of rights as between landlords and tenants. None the less, my constituency brings it home to me that the balance is a fine one, and that some tenants are victimised by landlords. That is why I sympathise with the intent behind the Bill and why I congratulate the hon. Member for Mansfield (Sir Alan Meale) on bringing it forward.
Overall, however, I feel that the balance is about right at the moment. My partner would certainly not agree, but that is my view. I believe that further burdening landlords and their letting agents with a registration scheme over and above the voluntary schemes that already exist and that are already quite effective would have the effect of disincentivising people who own small properties from renting them out up and down the country.
We all know that we face a critical housing shortage at this time. I need hardly remind Members that between 1997 and 2010, there was a woeful lack of new house building. We inherited that situation, but despite the huge improvements of the last 12 months, which have seen a record increase in house building, we still have a long way to go in providing decent homes for the many people who are on housing waiting lists and cannot find private rented accommodation. For us to pass further legislation that would, in the opinion of many, act as a disincentive to the private rented sector at a time of such housing need would, I think, be a retrograde step. Along with my Conservative colleagues, I shall therefore oppose the Bill.
In the short time available, let me cover some aspects of regulation and legislation that already give protection to tenants in the private housing sector. Private sector letting agents are subject to consumer protection law, while councils have powers to tackle rogue landlords and their agents. I am sure many hon. Members would agree that we would like to see local authorities using these powers more assertively than they sometimes do. None the less, the powers are there, and I am not a believer in bringing in new regulation and new laws just because existing provisions, regulations and laws are not being used effectively. The first port of call should surely be to use existing legislation and regulation before we start burdening the whole system with yet more regulation. A registration provision of the sort in the Bill only adds to that burden of regulation.
At least half the private landlords in this country already belong to a professional organisation, of which the Association of Residential Letting Agents and the National Association of Estate Agents are but two examples. Such bodies have provisions for codes of best practice, to which letting agents and landlords must subscribe if they are to join them. I think it much better for us to try to increase the number of letting agents who subscribe to those schemes and organisations than to attempt—
Business without Debate
Hon. Members
Object.
Bill to be read a Second time on Friday 28 February 2014.
Foreign National Offenders (Exclusion from the United Kingdom) Bill
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 28 February 2014.
Asylum Seekers (Return to Nearest Safe Country) Bill
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 28 February 2014.
Prisons (Drug Testing) Bill
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 28 February 2014.
Drug Driving (Assessment of Drug Misuse) Bill
Resumption of adjourned debate on Question (18 October), That the Bill be now read a Second time.
Hon. Members
Object.
Debate to be resumed on Friday 28 February 2014.
Property Blight Compensation Bill
Margot James (Stourbridge) (Con)
I beg to move, That the Bill be now read a Second time.
Madam Deputy Speaker (Mrs Eleanor Laing)
Has the hon. Lady the permission of the Member in charge of the Bill?
Margot James
I will move the motion on her behalf to Friday 28 February 2014, Madam Deputy Speaker.
Madam Deputy Speaker
If the hon. Lady does not have the permission of the Member in charge of the Bill—
Margot James
I apologise to the House, Madam Deputy Speaker. I do not have the express permission of the right hon. Member for Meriden (Mrs Spelman).
Police Recruitment
(11 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Siobhain McDonagh (Mitcham and Morden) (Lab)
In 1881, the Cardwell reforms abolished the practice of selling commissions in the Army. In 2013, we are adopting similar measures in relation to the British police force.
Earlier this year, one of the country’s top police officers complained that there was a growing diversity problem in the police service, and that he was “embarrassed” by the lack of progress in addressing it. This debate has been prompted by similar concerns.
We have just experienced a period in which our police service, especially in my part of south London, has increasingly begun to resemble the community that it patrols, but I fear that measures being introduced by the Government and by the Mayor of London will take us back in time. In particular, I fear that the way in which the police have been told to recruit will make it less likely that people from disadvantaged backgrounds, including ethnic minorities, will join the police forces.
Sir Peter Fahy, who is the spokesman on workforce development for the Association of Chief Police Officers and the Chief Constable of Greater Manchester, said that police forces should recruit more black and ethnic minority officers in order to reflect British society, because there was an operational need for forces to have staff who understood and worked within Britain’s diverse communities. Figures from The Guardian suggest that in England and Wales there are just 48 black or ethnic-minority superintendents and chief superintendents, and just six black or ethnic minority chief officers —3% of the total. Sir Peter said he feared the diversity problem would get even worse because of budget cuts and the removal of senior posts, as that would make it harder for ethnic minority officers to get promotion to senior roles. He therefore wanted to see a
“wider interpretation of employment law and the issues which can be taken into consideration when making selection decisions”.
Earlier this week, my hon. Friend the Member for Ashfield (Gloria De Piero) launched a sweeping review of race relations that suggests, among other measures, changing the law to allow more targeted recruitment of black and ethnic minority police officers. Anyone can respond to the review, not just Labour members, and replies will feed into the party’s policy commission. The review says:
“It is time to look at whether the legal framework needs to be changed to allow police forces to pursue BAME recruitment programmes to meet their operational needs.”
I have a lot of sympathy with that position. When my local police service was expanding in the previous decade, it was notable how many recruits were young and from ethnic minorities. They could relate to the communities in which they operated, especially to the young people who were most at risk of getting into trouble.
More than a decade ago, I persuaded my right hon. Friend the Member for Salford and Eccles (Hazel Blears), who was then the police Minister, to meet local people on Steers Mead who wanted a team of police to tackle the low-level crime and antisocial behaviour that affected their part of Mitcham. Thanks to her, we fortunately got one of the country’s safer neighbourhood teams. The model of one sergeant, two police constables and three police community support officers in every ward has been a great success and has directly led to more police officers, especially PCSOs, patrolling the streets. One reason for that success is that those officers and PCSOs looked like the people whose streets they walked down. The police had drifted away from community policing for decades, but safer neighbourhood teams meant that we had six people working local beats whom we knew and who could not be moved away from us.
It is a great tragedy that those teams are now being broken up. No longer are they required to work in one ward, and one ward alone, in which they can build up relationships and local knowledge. Instead, most safer neighbourhood officers are being asked to patrol anywhere.
Even worse, the overall number of police officers has been falling. In March 2010, when police numbers in my borough of Merton were at their height, we had 60 police sergeants, 246 PCs and 85 PCSOs. According to Merton’s borough commander, by September 2013 the number of sergeants had dropped by a third, to 39.5, the number of PCSOs had dropped by around 40%, and there were 15 fewer PCs. Inevitably, that results in fewer people in our police service who reflect the social composition of the wider community. That is why it is important that when the police recruit they do so in a way that does not discriminate against under-represented parts of the community.
As the Minister acknowledged in his reply to a question of mine last Thursday, police recruitment is currently low. It is therefore even more important that recruiters ensure that what little recruitment there is does not make it harder for people from disadvantaged backgrounds or ethnic minorities to get a job.
We are certainly not going to tackle the diversity crisis in our police service by charging potential recruits nearly £1,000 just for the privilege of going on a course that might—just might—enable them to apply. We must make no bones about it: that is what is happening with the roll-out of the new certificate in knowledge of policing.
In my view, the introduction of the CKP will seriously damage police attempts to recruit people from disadvantaged backgrounds. The CKP will make the police’s ethnic profile even less like that of the community it serves than it is now. It was already hard enough to apply to the police, but the introduction of this certificate will make it even harder.
Already there are concerns that the composition of the police is being adversely affected by the move to recruiting ever more police officers from volunteer specials. In September 2010 the Metropolitan Police Authority announced that two thirds of its recruits would need to have volunteered as police officers for more than 18 months even to be considered. That was driven by a desire to
“deliver savings of between £12,000 and £20,000 per officer in salary costs during their training period.”
Kit Malthouse, the chairman of the Metropolitan Police Authority, claimed that the charges were needed because of a “financial jam”. However, even the Liberal Democrats recognised that the charges would make it harder for police recruits to reflect the communities that they serve. MPA member Dee Doocey said that the recruitment process would favour middle-class people who had spare time. The reliance on specials is hard enough, but if serving as a police officer is possible only for people who are able to cough up nearly £1,000 many months before they can even apply to become an officer, who will sign up? Will that interest the black and Asian young people from areas such as Mitcham and Morden, where £1,000 remains a very large sum to come by? I do not think so, and in fact that is what we are experiencing.
Although total staff levels of police officers, police community support officers and sergeants are down, we are one of the few places in the country that are recruiting to even a handful of positions. The new posts do not compensate for the positions that we have lost, but at least they are something. The experience in Merton is that, thanks to the certificate in knowledge of policing, for black and Asian members of my community, applying to be a police officer has become even more difficult.
It is already rightly difficult to join the police. Applicants have to complete a pre-application questionnaire, which takes about 45 minutes. If they pass that stage, the police service will send them an application pack to fill in. If applicants meet the required standard and get through that stage, they are invited to an assessment centre for a two-day assessment. That includes a 20-minute structured interview, followed by a numerical reasoning test. That is followed by a 30-minute verbal logical reasoning test, and two further written exercises, including one in which the applicant writes a proposal document. That is followed by four interactive role-play scenarios. Day two concentrates on assessing whether the applicant can meet the physical and mental challenges of policing. Even that is not the end of the matter: the applicant still has to go through security and reference checks. It is notoriously difficult to conduct assessments in such an environment in a way that does not favour certain socio-economic or cultural groups.
The point is that it is quite feasible to spend £1,000, and months gaining the certificate in knowledge of policing, and still not get through the recruitment process. Unless they had time and money, and confidence that they would pass the rest of the recruitment process, why would anyone get the CKP? For someone from a cultural background that is already under-represented in the police force, the only rational conclusion is that it would not be a good idea for them to part with their money. That is exactly what we are finding in Merton.
We in Merton are extraordinarily grateful for the fact that, that under the guidance of Darren Williams, our borough commander, we are recruiting 17 PCs, who, if they live in the borough, can remain in it. Mr Williams organised a recruitment day a few weeks ago in our local Odeon cinema. I was desperate for young people from my half of the borough—Mitcham and Morden—to be as well represented as those from Wimbledon. I was delighted to see that two thirds of the young—and not so young—men and women who arrived were from my constituency. Everyone was excited, but many were put off when they learned that the £1,000 for the CKP was the starting point of their application. For those of us with credit cards, £1,000 may not seem like a lot, but for families who have very little, it is like £10,000 to us.
In a parliamentary answer to me last Thursday, the Minister for Policing and Criminal Justice said:
“The Certificate in Knowledge of Policing is not a requirement for entry in to any force.”—[Official Report, 17 October 2013; Vol. 568, c. 824W.]
I can categorically tell him that as far as my local police force is concerned, that is not the case. Those attending the recruitment fair were told in no uncertain terms that the CKP was mandatory. They would need either to have one, or to have enrolled to get one before February, or they would not even be able to apply to work as a police officer. The outcome was entirely predictable: disappointment and frustration from those who felt that they could make a police officer. My borough commander was so worried by the response that he approached me to ask if there was some way that we could run a pilot looking at how we could meet the costs.
As the Minister for Policing admitted to me in his answer last Thursday, no forces have established bursary schemes for students undertaking the pre-joining arrangements. However, in Merton we have attempted to start. We started by approaching the local Ahmadiyya Muslim community to ask whether they might be prepared to put up the money to allow the best of those 17 recruits to be chosen and not to be put off by the cost of joining. I am grateful that the community has agreed to put the money forward not just for people from their community, but in favour of all young people in the area, irrespective of whether they have a religion, what colour they are or whether they are a man or a woman. I am incredibly grateful to the community, as there are many other things that they could, and do, spend their charitable money on. Should they have to do this? No. To weed out people who are poor, who do not have access to such funds, but who would make police officers, is entirely wrong.
The police themselves regard the introduction of the fee as a crude way of saving money. The CKP saves the police service the cost of training, accommodation, uniform and so on. Put simply, it removes the cost of the first half of the 18-week course that used to take place at Hendon. Responsibility for paying for that will transfer from the police to the applicant, and responsibility for administering the scheme transfers from the police to the new College of Policing. But the outcome will be simple and far-reaching.
Instead of reflecting the communities they serve, the police will become like the Army was in Jane Austen’s day, when it was only those who could afford to buy a commission who became officers. Merit did not come into it. The best never got to serve. In battle after battle, brave British lion-like troops were sent to their slaughter under the leadership of well-to-do donkeys. The certificate in knowledge of policing will do the same thing for the police. In a few short years, the police have been transformed. As we have seen this week, the force is not without its problems, but it is more modern and more representative of the people that it serves than it was even as recently as at Hillsborough.
We should not be turning back the clock. The last thing we should be doing is using cost as a barrier to exclude the very best potential officers from serving their community. The cost of these certificates is far too high. It will turn the police back into a job done for those with money, by those with money. Do we want the most able people, or only those with money, to get the best jobs? What would it say about our society if those who are most likely to be affected by crime—those from poor backgrounds and from ethnic minorities—are the least likely to be able to afford to get into the police? Is it the plan that people without money should be kept out? No matter how much we improve their schools, and no matter how hard young people work, as we can see from the recent qualifications being achieved in London, are their jobs to be only zero-hours low-wage contracts?
I feel very sorry for my borough commander, Darren Williams, who has been in place for 16 years and is certainly the most outstanding chief officer I have had during that time. He has a thankless task. How is he to find like-minded new officers who are prepared to make a difference in their communities, when the only people he will have under his command will be those with a spare grand? The cuts to our police service in the past few years have been very depressing. The 1-2-3 model of safer neighbourhood policing is no longer sacrosanct; police offices and police stations are closing. The number of police and police community support officers in our communities has fallen.
Constituents like mine are more likely to be affected by crime than residents in more affluent areas. They are starting to feel the difference. Even the police themselves recognise that they have a problem because they do not reflect the wider community. I therefore ask the Minister to review urgently the costs and roll-out of these certificates before they have a disastrous effect on our communities.
The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
I congratulate the hon. Member for Mitcham and Morden (Siobhain McDonagh) on securing this afternoon’s debate on the important subject of police recruitment, but also on the important issue of greater diversity within the police service, which I strongly endorse and on which a number of important actions have been and continue to be taken by senior police officers. She referenced Peter Fahy and some of his comments on the rightful need for a more diverse police force serving our communities throughout the country.
I pay tribute to the work of police officers in the hon. Lady’s constituency and across the Metropolitan Police Service. They do an incredible amount of work for us, day in, day out, week in, week out, to keep our communities safe and to bring to justice those who would do us harm. I pay tribute to the work of her borough commander, Darren Williams, whom I had the pleasure of working alongside when he was working in my London borough of Bexley a few years ago. I know how hard working and focused he is.
Let me be clear at the outset that we have an excellent police force, one that has delivered a 10% fall in crime under this Government, despite the difficult but essential funding decisions that we have had to make. Chief constables and senior police officers are rising to the challenge of making efficiency savings and providing greater value for money while protecting services to the public. It is important to put it on the record that we inherited the toughest fiscal challenge in living memory, and had no option but to reduce public spending. At the start of the current spending review period, the police spent some £14 billion a year, so it is right that they should make their fair share of the savings that are needed. The police, like other parts of the public sector, cannot be exempt from the requirement to save money.
What matters is how officers are deployed, not how many of them there are. All forces need to look at the way front-line services are delivered to ensure that the quality of service provided is maintained or improved. As Her Majesty’s inspectorate of constabulary has previously made clear, and its latest report reinforces, there is no simple link between officer numbers and crime levels, between numbers and the visibility of police in the community, or between numbers and the quality of service provided.
There is no question but that the police still have the resources to do their important work. The Metropolitan Police Service has announced plans to recruit 5,000 officers during the next three years. Recruitment is under way, and 1,500 are expected to be in place by the end of March 2014. The Mayor of London has said that he will meet the demand of Londoners to keep police numbers high at 32,000 to deliver a safer London and to help reconnect the police with the public. That will mean that the police in London will be more visible and available, with more cops out on the street where the public want to see them.
Under the Metropolitan Police Service’s local policing model, Merton will see an additional 49 officers going into safer neighbourhood teams, almost doubling their numbers to 107. We know that, based on published data to June 2013, overall police recorded crime in Merton was down by 7% in the year to June 2013 compared with the previous year. I pay tribute to the officers in Merton for their work in achieving that result. That is why the most important factor is that forces prioritise their front-line delivery, that crime continues to fall and that victim satisfaction is up.
I want to address a number of the points that the hon. Lady raised in relation to the recruitment exercise. As I have already highlighted, the Metropolitan Police Service’s plan is to recruit 5,000 new constables by 2015, with an aspiration that 2,000 of them will be from black and minority ethnic backgrounds. It is notable that that objective has been set within the overall recruitment focus. In relation to the Mayor’s objective to achieve a more diverse police force in London, I understand that the Mayor’s office for policing and crime has established a task force to support the Metropolitan Police Service as it recruits new police officers. The task force is progressing with initiatives to introduce community ambassadors aimed at promoting and encouraging police officer recruits and careers across London and communities, to help to identify opportunities for community engagement.
The task force also suggests media improvements to increase the appeal for women and black and minority ethnic applicants. Most notably, adverts must encourage the positive impact that BME applicants could have in keeping their communities safe and improving policing. There is also a suggestion about introducing a London factor to the recruitment process, including elements of intercultural competency, London residency, subject to certain legal issues that the Mayor is examining, and language skills. Therefore, although I note the hon. Lady’s concerns, I think that the Mayor’s office for policing and crime—it is at the sharp end of the recruitment process, rather than the Home Office—from the information I have received from it, is ambitious and is seeking to drive its work forward in ensuring that the Metropolitan police work force better reflect and represent the diverse communities of our capital city.
I want to address some of the hon. Lady’s other points, for example on changes to equality legislation. We believe that the Equality Act 2010 included positive action provisions to enable employers to address identified under-representation of protected groups in the workplace. We are working with forces and colleagues at the Government Equalities Office and the College of Policing to identify ways of tackling under-representation under existing equalities legislation.
Siobhain McDonagh
In the four minutes remaining, will the Minister address the certificate in knowledge of policing and the requirement to pay approximately £1,000 to apply to become a police officer?
James Brokenshire
That was the next point I was coming to, so unfortunately I have now lost a few seconds of my time, but the hon. Lady was not to know that.
The certificate in knowledge of policing is one of a number of routes into the police. It is designed to increase access and inclusion and to build the professionalism of policing. The Metropolitan Police Commissioner has chosen, as part of his plans to recruit the 5,000 officers I referred to, to make it a requirement that candidates applying must have completed a certificate in knowledge of policing before starting as a constable. Chief officers—in this case the commissioner—are best placed to determine the skills and capabilities most needed locally, based on their understanding of the local labour market and what is needed in their forces. That is a decision best taken by the chief officer, rather than the Home Office.
The certificate can be taught and assessed by approved external providers. It is not intended that the certificate should be a prerequisite for all new recruits; the intention is to reduce training time and salary costs for cohorts of entrants who have achieved the award prior to recruitment.
I will move on to the cost of the certificate, which the hon. Lady focused on in particular. It is for each provider to set a fee—so far, 37 providers have registered for the certificate and 12 have been approved—but it is estimated that the cost of the certificate will be between £800 and £1,000, as she suggested. Many other professions, particularly law and medicine, require people to pay for the costs of their initial training. Further and higher education providers, as well as independent providers, will obtain a licence from the College of Policing to deliver the certificate course and may offer grants or loans to individual students.
The College of Policing is monitoring take-up of the new qualification, including demographic data on candidates. As my right hon. Friend the Minister for Policing and Criminal Justice stated in answer to the hon. Lady, it is too early to give an informed response on the certificate’s effect, because it is still in its infancy. It would be a matter for the force to decide whether it wished to reimburse the costs of obtaining the qualification for those who were successfully recruited. However, some further and higher education bodies that run the course may offer grants or loans to individual students.
Siobhain McDonagh
I want absolute clarity. Is the Minister saying that whether the certificate in knowledge of policing is required is a decision for the chief officer of the Metropolitan police?
James Brokenshire
Yes, that is my point. It is a local decision. It is right that chief officers should determine the skill sets that they require and therefore the appropriate process in the context of recruitment. I understand that the Metropolitan Police Service is considering providing loans for students undertaking the pre-join programmes. There are also some examples of community and local business consortia developing their own schemes to provide funding and support to those interested in taking the certificate and applying to the Metropolitan Police Service. The hon. Lady’s points are recognised and being examined further, from the information that I have been provided with by the Metropolitan Police Service and the Mayor’s office for policing and crime.
People across all communities want the police to fight crime while having confidence that their individual needs will be understood and respected. That is fair and effective policing. Police forces that reflect the communities they serve are crucial to cutting crime in a modern, diverse society. The police need to understand communities if they are to tackle crimes that affect them. Diversity is more than ever an important part of operational effectiveness.
Equality and diversity have always been a fundamental part of the British model of policing by consent, and I am clear that we must retain that model. That is why representative work forces are such a serious issue and why I am grateful to the hon. Lady for securing this debate.
There are important issues to do with the size and composition of a police force that are a matter for individual chief officers. Recruiting the right people to the police is vital in the fight against crime and will ensure that we continue to see a fall in crime and an increase in victim satisfaction long into the future.
Question put and agreed to.
Written Statements
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Departmental Contingent Liability Notification (Royal Mail)
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The Secretary of State for Business, Innovation and Skills (Vince Cable)
It is normal practice when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority for the Minister concerned to present a departmental minute to Parliament giving particulars of the liability created, explaining the circumstances and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the statement, except in cases of special urgency and/or confidentiality.
During the preparatory phase of the Royal Mail transaction, there was a need for strict confidentiality as to the content of the preparatory work, including the scope of the Royal Mail transaction liabilities and the transaction timetable.
On 10 September 2013, following the “non-standard notification” procedure outlined in “Managing Public Money” (annex 5.4), I wrote to the Chairs of the Public Accounts Committee and the Business, Innovation and Skills Select Committee outlining the proposal to provide certain indemnities on behalf of Government.
As a matter of record I have placed a departmental minute in the Libraries of both Houses explaining the procedure followed and containing a description of the liabilities undertaken.
Tax Avoidance
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The Exchequer Secretary to the Treasury (Mr David Gauke)
This Government are committed to delivering a progressive tax system that is affordable, fair and encourages growth.
As announced by the Chief Secretary to the Treasury on 17 September 2013 the Government will introduce legislation to stop people avoiding tax by using rules known as compensating adjustments.
The rules are being exploited in two areas. In the first, partnerships pay companies for services at cost price and use the tax rules to create a mark-up which is not actually paid, but which reduces the income tax bill of individual partners.
In the second type of case individuals lend money to a company in which they are a shareholder, charging excessive interest payments on which they do not pay full income tax.
The Government have consulted on technical detail and will introduce in the next Finance Bill legislation, effective from today, to stop this exploitation by denying compensating adjustments for transactions between income tax payers and connected companies.
In certain circumstances the compensating adjustment will be treated for tax purposes as a distribution of profits.
Further details on these measures are contained in a technical note published today, together with the draft legislation.
Afghanistan (Monthly Progress Report)
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The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
I wish to inform the House that the Foreign and Commonwealth Office, together with the Ministry of Defence and the Department for International Development, is today publishing the 31st progress report on developments in Afghanistan since November 2010.
I announced draw-down plans for the Helmand provincial reconstruction team (PRT) in a written statement on 9 September 2013, Official Report, column 40WS. The PRT has already begun to decrease in size. By December 2013 we envisage a small PRT political and governance team moving to Camp Bastion, followed by the final closure of the PRT in March 2014.
On 3 September, the Independent Election Commission (IEC) co-chaired a meeting of the ELECT II Project Board with the United Nations Assistance Mission in Afghanistan (UNAMA). The IEC provided an update on voter registration and preparations for the elections, and donors pledged additional funds to support the electoral preparations. Overall donors pledged $134 million.
The UN High Commissioner for Human Rights, Navi Pillay, visited Afghanistan 15-17 September. Her visit focused on three key areas—the importance of ensuring gains made on human rights are consolidated, the issue of violence against women and the future of the Afghan Independent Human Rights Commission.
On 1 September, President Karzai appointed Omar Daudzai, the previous Afghan ambassador to Pakistan, as acting Interior Minister, replacing Mujtaba Patang.
The Home Secretary visited Afghanistan 22-24 September, meeting President Karzai, the Ministers of Interior and Refugees, the Head of the National Directorate of Security (NDS), Afghanistan’s Intelligence Agency, and international ambassadors. The visit focused on a range of security and criminal issues affecting the UK (principally terrorism, drugs and migration).
On 1 September, the UK assumed lead nation status at the Afghan national army officer academy. The academy, which is designed to develop the future leaders of the Afghan national army, will begin training by the end of October.
On 27 September, the Prime Minister announced that the UK will host the 2014 NATO summit in what will be the final year of the international security assistance force (ISAF) combat mission in Afghanistan. The precise date for the summit has yet to be finalised but its themes will be discussed in greater detail at the October NATO defence ministerial meeting in Brussels.
I am placing the report in the Library of the House. It will also be published on the gov.uk website (www.gov.uk/government/publications/afghanistan-progress-reports).
Mental Health Act (Post-legislative Scrutiny)
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The Minister of State, Department of Health (Norman Lamb)
We have today laid before Parliament “Post-legislative Scrutiny of the Mental Health Act 2007: Response to the Health Committee of the House of Commons” (Cm 8735).
The response addresses the specific recommendations in the Committee’s report. These include (in the Mental Health Act 1983) the important issues of independent mental health advocate services, supervised community treatment, places of safety and (in the Mental Capacity Act 2005) the deprivation of liberty safeguards.
The Department will feed consideration of all the recommendations into future work programmes, including the revision of the “Code of Practice Mental Health Act 1983” in 2014.
I would like to put on record my thanks to the Committee for their thoughtful comments.
Intercity East Coast Franchise Competition
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The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)
Today I have published the intercity east coast prospectus, pre-qualification documents and submitted for publication an Official Journal of the European Union (OJEU) notice. These steps mark the start of the formal competition to find a new private sector partner to run passenger rail services on intercity east coast. The prospectus explains the current business as it stands today and sets out the opportunities it presents to a new operator. It also provides some indications of how we will be specifying intercity east coast when we release the invitation to tender (ITT) which is planned for February 2014. The prospectus will provide potential applicants with a large amount of information that will help them decide whether they can be the right partner for this vital and historic railway.
I am also publishing the intercity east coast consultation summary report that brings together the responses we received to the consultation conducted in 2012. This report is being published now to enable those who responded to the consultation; potential bidders for the franchise; and other interested parties to see the key concerns and issues raised in advance of the publication of the ITT.
We have seen great improvements on our railways since privatisation, with unprecedented growth in passenger numbers and the best safety record in Europe, and this Government are committed to the principle that partnership between the public and private sector works. We want to further strengthen our partnership with the private sector and continue to build on this growth so as to deliver world-class railways for passengers and best value for the taxpayer. Private sector partnership on this route will deliver, among other things, the investment in the design, build and maintenance contract for the new class 800/801 trains procured through the intercity express programme.
I am confident that through the partnership approach the Department for Transport is taking, combined with the skills, investment and innovation of the private sector, we can deliver a new railway for the intercity east coast, one that meets the Secretary of State’s three objectives for franchising across the network: that the passenger gains; the industry thrives; and the taxpayer benefits.