First Delegated Legislation Committee
Monday 2nd November 2026
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18:00
18:00
Speaker 2
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Speaker 2
The Minister to move the motion. Thank you, Sir Desmond. It's a pleasure to serve with you in the chair. I beg to move that the committee has considered the draft housing Tenancy Deposit schemes order, which was laid before the House on the 8th of September 2026. Sir Desmond. This government promised in its manifesto to transform the experience of private renting, in addition to the greater security rights and protections we've given private tenants through our Transformative Renters Rights Act. Improving how tenancy deposit schemes work is a way that we can further deliver on this promise. As things stand when tenants provide a deposit as a security for any breach of tenancy terms, the landlord is required to protect this through a government approved tenancy deposit scheme.
This means renters can feel confident that their deposit is safe and secure, and at the end of the tenancy, it's returned to the tenant and or landlord in accordance with the appropriate outcome. Under the scheme, when tenants and landlords disagree over the amount due to each party, the schemes also offer free and independent dispute resolution. Custodial tenancy deposit schemes are delivered via concessionary contracts, whereby administrators fund the service from interest earned on deposits, rather than receiving payment from government. Custodial schemes currently hold over £2.5 billion worth of tenants money on which they accrue interest.
The interest is retained by the scheme administrators as revenue, unless arrangements are in place for part of it to be paid to the tenant. As part of improving the tenancy deposit system, this government wants to unlock the value generated by the schemes and expand the ways in which it can benefit tenants in the private rented sector. Ultimately, this will mean better value for both tenants and the taxpayer. The order before us today enables the Secretary of State for housing, Communities and Local Government to receive part of the interest accrued on tenancy deposits protected under a custodial tenancy deposit scheme.
Currently, the legislation allows interest to be retained by the scheme administrator, subject to scheme arrangements, providing for part of it to be paid to tenants and or landlords. The order. I want to be really clear about this does not remove these options. It adds flexibility by introducing a new power that may be used in combination with one or both of the existing options, for example, where high interest rates mean that the interest interest generated by the scheme as a whole considerably exceeds the costs of running the scheme after allowing reasonable returns to scheme administrators. The order does not itself require any payment to be made to the Secretary of State, nor does it prescribe how such amounts must be determined.
Those matters will be determined through future scheme arrangements established via procurement and contractual processes. What the regulations do. Sir Desmond, is allow the Secretary of State to take account of market conditions, scheme performance, operating costs, value for money and the need to maintain an effective free service for tenants and landlords while avoiding disproportionately high profits being made by scheme administrators. The instrument is intended to provide flexibility for future arrangements with administrators of custodial schemes. The Secretary of State's intention is if the new power is exercised, the Secretary of State would use any funds received towards programs or activities that benefit tenants in the private rented sector.
The Secretary of State would be transparent in publishing the amount received from the scheme, the program or programmes funded, and any metrics demonstrating the value delivered. Any arrangement for interest to be paid directly to the Secretary of State will be subject to agreement from His Majesty's Treasury. Future arrangements will continue to allow scheme administrators to keep part of the accrued interest to cover the cost of the free service they provide to tenants and landlords. This amount should be sufficient to enable the scheme to provide a safe and effective service that safeguards tenants deposits to meet its key performance indicators, and to make a reasonable profit if it is a private sector entity.
Future arrangements Sir Desmond may also provide for part of the accrued interest to be paid directly to tenants, where it is decided that this is appropriate. To conclude, this order would give the government additional flexibility to determine how the interests accrued by custodial tenancy deposit schemes is distributed, so as to ensure a fit for purpose scheme that will ultimately benefit tenants in the private rented sector and the taxpayer. I beg to move. The question is that the committee has considered the draft Housing Tenancy Deposit Schemes order 2026.
Gareth Bacon.
This means renters can feel confident that their deposit is safe and secure, and at the end of the tenancy, it's returned to the tenant and or landlord in accordance with the appropriate outcome. Under the scheme, when tenants and landlords disagree over the amount due to each party, the schemes also offer free and independent dispute resolution. Custodial tenancy deposit schemes are delivered via concessionary contracts, whereby administrators fund the service from interest earned on deposits, rather than receiving payment from government. Custodial schemes currently hold over £2.5 billion worth of tenants money on which they accrue interest.
The interest is retained by the scheme administrators as revenue, unless arrangements are in place for part of it to be paid to the tenant. As part of improving the tenancy deposit system, this government wants to unlock the value generated by the schemes and expand the ways in which it can benefit tenants in the private rented sector. Ultimately, this will mean better value for both tenants and the taxpayer. The order before us today enables the Secretary of State for housing, Communities and Local Government to receive part of the interest accrued on tenancy deposits protected under a custodial tenancy deposit scheme.
Currently, the legislation allows interest to be retained by the scheme administrator, subject to scheme arrangements, providing for part of it to be paid to tenants and or landlords. The order. I want to be really clear about this does not remove these options. It adds flexibility by introducing a new power that may be used in combination with one or both of the existing options, for example, where high interest rates mean that the interest interest generated by the scheme as a whole considerably exceeds the costs of running the scheme after allowing reasonable returns to scheme administrators. The order does not itself require any payment to be made to the Secretary of State, nor does it prescribe how such amounts must be determined.
Those matters will be determined through future scheme arrangements established via procurement and contractual processes. What the regulations do. Sir Desmond, is allow the Secretary of State to take account of market conditions, scheme performance, operating costs, value for money and the need to maintain an effective free service for tenants and landlords while avoiding disproportionately high profits being made by scheme administrators. The instrument is intended to provide flexibility for future arrangements with administrators of custodial schemes. The Secretary of State's intention is if the new power is exercised, the Secretary of State would use any funds received towards programs or activities that benefit tenants in the private rented sector.
The Secretary of State would be transparent in publishing the amount received from the scheme, the program or programmes funded, and any metrics demonstrating the value delivered. Any arrangement for interest to be paid directly to the Secretary of State will be subject to agreement from His Majesty's Treasury. Future arrangements will continue to allow scheme administrators to keep part of the accrued interest to cover the cost of the free service they provide to tenants and landlords. This amount should be sufficient to enable the scheme to provide a safe and effective service that safeguards tenants deposits to meet its key performance indicators, and to make a reasonable profit if it is a private sector entity.
Future arrangements Sir Desmond may also provide for part of the accrued interest to be paid directly to tenants, where it is decided that this is appropriate. To conclude, this order would give the government additional flexibility to determine how the interests accrued by custodial tenancy deposit schemes is distributed, so as to ensure a fit for purpose scheme that will ultimately benefit tenants in the private rented sector and the taxpayer. I beg to move. The question is that the committee has considered the draft Housing Tenancy Deposit Schemes order 2026.
Gareth Bacon.
18:04
Speaker 3
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Speaker 3
Thank you, Sir Desmond. It's always a pleasure to serve under your chairmanship, and I welcome the opportunity to sit opposite the minister again, who I've seen more often in the last few days than my own wife. I appreciate the marks has already made in this debate, and I welcome the opportunity, on behalf of His Majesty's opposition, to address this set of regulations. I must be frank, Sir Desmond. We don't like this very much because this order appears to be little more than an act of state sponsored thievery in this Halloween season. Sir Desmond, lurking in the shadows is not a vampire or a monster, but the last in a slight fingers of Marsham Street, this order seeks to give the Secretary of State the power to hive off a portion of the interest accrued on someone else's money, and then pocket it on behalf of the government.
As a conservative, as a believer in private property, I am astounded to find the government pushing through yet another stealth tax just days after the budget. I know I shouldn't be. After all, it's not the first and I doubt it will be the last stealth tax we see in this Parliament. But the brazen lack of respect for other people's money beggars belief. That is why the opposition will seek to divide and will vote against this order today, as the Deposit Protection Service has stated, at present, interest goes towards the effective running of the scheme back to tenants or landlords, or in some cases, to charity in siphoning off funds to pay for MHC OG's litany of costly policies.
The government's action raises a number of questions, for example, and I think actually, to be fair, the minister may have just answered some of this. Will this leave the deposit protection schemes financially exposed? What assessment has been made of the funding needed to keep these schemes running, so that tenants and landlords are protected with certainty, along with the jobs that these companies provide. This instrument has no clear purpose, outlines no formula and sets no clear cap. We're being asked to approve a power without knowing how much money the government are seeking to take, nor what limit the Secretary of State will impose on herself in a scheme that lets the government profit from other people's money.
I also want to raise concerns about the relationship between this policy and the planned abolition of assured tenancy deposit schemes. Taken together, hiving off the interest on deposits for the government's benefit and moving all deposits into the custodial schemes will create a perverse incentive if the government takes income from the same custodial deposits that they are forcing the whole market towards. How can the government demonstrate that profiting from interest on other people's money has played no part in their decision making process? This is a very serious concern and deserves far greater parliamentary scrutiny than honourable members have been afforded today.
Indeed, we believe that there is a convincing argument that these changes should be made not through a statutory instrument, but through primary legislation. Here today, we can make no amendments. We have little time to probe the details, and we're being asked to provide a new so to approve a new tax outside the place best suited constitutionally to scrutinise financial legislation. This order lets the Secretary of State, on behalf of the government, take a share of the interest earned on tenants deposits. It does not say how much. It does not say what the money is for.
It sets no cap and no formula. The government are asking this House for a blank cheque to draw down on other people's money. That money does not belong to the government. A week after a tax hike on landlords, by changing this system, the government are creating another stealth tax. This comes on top of a new database fee, a rewritten tenancy system and a sector in which landlords are already considering the viability of their portfolios. Every cost Sir Desmond eventually lands on renters. In the end, the opposition's tests are simple. Is this a stealth tax? Well, yes it is.
Is it the government's money? No it's not. Does it deliver for renters? Clearly not. Sir Desmond, it is for all of these reasons that we will divide the House and we will vote against this instrument, sir.
As a conservative, as a believer in private property, I am astounded to find the government pushing through yet another stealth tax just days after the budget. I know I shouldn't be. After all, it's not the first and I doubt it will be the last stealth tax we see in this Parliament. But the brazen lack of respect for other people's money beggars belief. That is why the opposition will seek to divide and will vote against this order today, as the Deposit Protection Service has stated, at present, interest goes towards the effective running of the scheme back to tenants or landlords, or in some cases, to charity in siphoning off funds to pay for MHC OG's litany of costly policies.
The government's action raises a number of questions, for example, and I think actually, to be fair, the minister may have just answered some of this. Will this leave the deposit protection schemes financially exposed? What assessment has been made of the funding needed to keep these schemes running, so that tenants and landlords are protected with certainty, along with the jobs that these companies provide. This instrument has no clear purpose, outlines no formula and sets no clear cap. We're being asked to approve a power without knowing how much money the government are seeking to take, nor what limit the Secretary of State will impose on herself in a scheme that lets the government profit from other people's money.
I also want to raise concerns about the relationship between this policy and the planned abolition of assured tenancy deposit schemes. Taken together, hiving off the interest on deposits for the government's benefit and moving all deposits into the custodial schemes will create a perverse incentive if the government takes income from the same custodial deposits that they are forcing the whole market towards. How can the government demonstrate that profiting from interest on other people's money has played no part in their decision making process? This is a very serious concern and deserves far greater parliamentary scrutiny than honourable members have been afforded today.
Indeed, we believe that there is a convincing argument that these changes should be made not through a statutory instrument, but through primary legislation. Here today, we can make no amendments. We have little time to probe the details, and we're being asked to provide a new so to approve a new tax outside the place best suited constitutionally to scrutinise financial legislation. This order lets the Secretary of State, on behalf of the government, take a share of the interest earned on tenants deposits. It does not say how much. It does not say what the money is for.
It sets no cap and no formula. The government are asking this House for a blank cheque to draw down on other people's money. That money does not belong to the government. A week after a tax hike on landlords, by changing this system, the government are creating another stealth tax. This comes on top of a new database fee, a rewritten tenancy system and a sector in which landlords are already considering the viability of their portfolios. Every cost Sir Desmond eventually lands on renters. In the end, the opposition's tests are simple. Is this a stealth tax? Well, yes it is.
Is it the government's money? No it's not. Does it deliver for renters? Clearly not. Sir Desmond, it is for all of these reasons that we will divide the House and we will vote against this instrument, sir.
18:07
Speaker 4
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Speaker 4
Thank you. And it's an honour to serve under your chairmanship, Sir Desmond. This chair is one of those occasions where a rather niche piece of legislation comes forward, but actually seems completely obvious once you examine its purpose. The private rental sector has been broken for decades, and in Tamworth and around the whole country, we've seen skyrocketing rents for poor quality and substandard housing. Tenants have been living in houses or flats that feel neglected by their landlords in areas that often may say they also felt neglected by Westminster. Now community spaces have vanished and have been left neglected.
And where people cannot own their own home, some areas are left without strong advocacy for change, and this government's Renters Rights Act has overhauled the entire sector, restoring fairness between tenants and landlords by giving over 5000 tenants in Tamworth alone greater security rights and protections, with the same rights to over 11 million renters across the country. The new rules mean that renters no longer have to fear last minute, no fault evictions. Future rules brought forward by the act mean that rented homes will have to meet higher standards, especially when it comes to tackling damp and mould in rented properties.
Renters have certainty that they can stay in their homes for longer in safe, good quality homes, and they're no longer locked into contracts, unable to move. For years now, people with greater housing security can be further empowered to start building lives in the communities that they live in. And with that comes the need for serious investment in their local areas. Now, this delegated legislative committee, a piece of legislation, means that the interest already accruing on an estimated £5.5 billion that's already in the tenancy deposit schemes, will not go to the pockets just of those administering that scheme that's meant to be non-profit, but instead it could, under this legislation, be invested into local projects that align with what renters want to see in their area.
And after all that, interest is generated from the tenants own money. And it's only right that the renters and their communities could see the benefit. We can estimate that the interest earned on a pot would be around £550 million. Now that's a lot of money that could help restore libraries, reopen community centres, improve local facilities and create places where people want to live, not have to live. Rents deserve more than just a secure roof over their heads, and they deserve thriving communities, decent local facilities and a stake in the place that they call home. We can already see the trajectory that the government is plotting with its renters rights legislation, and we already see the difference it's making to communities like Glascote Heath and Stonydelph.
One moment please. Through its £20 million Pride in Place programme, and this opportunity to boost funds that communities can spend is one, I urge the Minister to consider. I will give way.
And where people cannot own their own home, some areas are left without strong advocacy for change, and this government's Renters Rights Act has overhauled the entire sector, restoring fairness between tenants and landlords by giving over 5000 tenants in Tamworth alone greater security rights and protections, with the same rights to over 11 million renters across the country. The new rules mean that renters no longer have to fear last minute, no fault evictions. Future rules brought forward by the act mean that rented homes will have to meet higher standards, especially when it comes to tackling damp and mould in rented properties.
Renters have certainty that they can stay in their homes for longer in safe, good quality homes, and they're no longer locked into contracts, unable to move. For years now, people with greater housing security can be further empowered to start building lives in the communities that they live in. And with that comes the need for serious investment in their local areas. Now, this delegated legislative committee, a piece of legislation, means that the interest already accruing on an estimated £5.5 billion that's already in the tenancy deposit schemes, will not go to the pockets just of those administering that scheme that's meant to be non-profit, but instead it could, under this legislation, be invested into local projects that align with what renters want to see in their area.
And after all that, interest is generated from the tenants own money. And it's only right that the renters and their communities could see the benefit. We can estimate that the interest earned on a pot would be around £550 million. Now that's a lot of money that could help restore libraries, reopen community centres, improve local facilities and create places where people want to live, not have to live. Rents deserve more than just a secure roof over their heads, and they deserve thriving communities, decent local facilities and a stake in the place that they call home. We can already see the trajectory that the government is plotting with its renters rights legislation, and we already see the difference it's making to communities like Glascote Heath and Stonydelph.
One moment please. Through its £20 million Pride in Place programme, and this opportunity to boost funds that communities can spend is one, I urge the Minister to consider. I will give way.
18:10
18:10
Speaker 3
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Speaker 3
Member for giving away. The honourable member just highlighted a stat around £500 million potentially raised in interest. How much does she think would be appropriate of that interest to go into the investments that she's outlined? Given that we don't have in front of us the kind of numbers of what we're supposed to be approving, as the shadow minister said, it is in fact a blank cheque.
18:10
18:10
Speaker 4
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Speaker 4
I thank the member for his comments. I think that the purpose of this is to actually outline that there's a possibility for its use, and it doesn't negate the fact that tenants can also still claim against the scheme if they need to. But what it does say is that there's money here that currently isn't doing anything for our communities. So I think that what we need to look at is what already needs to be used for administering the scheme, and then what else there needs to be to support the ebb and flow of currently what it does.
But the rest of it, I think, and hopefully, and this is what I'm asking the minister to do, is to define how it is that we can look more creatively with that money. Now, I would like the minister to be creative with it, and I urge and encourage problem solving by those who live in the communities and have bold ideas, because it's quite a lot of money. And whilst it may be undefined, it's been underutilised to date and I think that it offers a lot for communities. And so I support this legislation and I hope that it will be reinvested into communities, big ideas and boost hope, play knowledge, safety and joy.
But the rest of it, I think, and hopefully, and this is what I'm asking the minister to do, is to define how it is that we can look more creatively with that money. Now, I would like the minister to be creative with it, and I urge and encourage problem solving by those who live in the communities and have bold ideas, because it's quite a lot of money. And whilst it may be undefined, it's been underutilised to date and I think that it offers a lot for communities. And so I support this legislation and I hope that it will be reinvested into communities, big ideas and boost hope, play knowledge, safety and joy.
18:11
18:11
Speaker 5
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Speaker 5
It's a pleasure to serve the committee with you in the chair and to continue the almost daily tradition of meeting with the minister and the Shadow Minister in these rooms. The the Liberal Democrats support this principle of directing interest payments towards tenants themselves and the schemes that they need. They want to see for their communities the 9000 tenants, private tenants in Taunton and Wellington very much like to see the proceeds of these profits being directed in their direction, but we don't see anywhere in the regulations any guarantee that the funds will be ring fenced for the use of private tenants.
5.6 in the explanatory note says it's an expectation and I quote that the money would that the Secretary of State would use funds received towards programmes of activities that benefit tenants in the private sector. And 5.8 says, as an example, the Secretary of State could require funds to be used to fund a programme supporting vulnerable tenants. We would like to see this. These funds ring fenced so they are used for benefit tenants and don't disappear into some Treasury coffer. And at this stage, without that guarantee, we have difficulty supporting it. Sir Desmond, thank you.
5.6 in the explanatory note says it's an expectation and I quote that the money would that the Secretary of State would use funds received towards programmes of activities that benefit tenants in the private sector. And 5.8 says, as an example, the Secretary of State could require funds to be used to fund a programme supporting vulnerable tenants. We would like to see this. These funds ring fenced so they are used for benefit tenants and don't disappear into some Treasury coffer. And at this stage, without that guarantee, we have difficulty supporting it. Sir Desmond, thank you.
18:13
Speaker 2
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Speaker 2
Thank you , Minister. Thank you, Sir Desmond. Could I thank the shadow minister, the Liberal Democrat spokesman, and my hon. Friend for for those contributions, if I could clear up a few misconceptions on a couple of points, and then I'll respond to the other distinct points that have been put to me. Firstly, Sir Desmond, I think it is worth pointing out that the government has already improved the value that tenants tenancy deposit schemes deliver for tenants and landlords. The current administrators of custodial schemes are already expected to pay part of the interest accrued. In addition to the original value of the deposits to tenants.
The allocation mechanism is different for each of the three current schemes, but requiring administrators to pay interest to tenants and landlords will continue to be an option for future arrangements. Sir Desmond, As I tried to make clear in moving the regulations, the order is not intended to enable government to profit from tenants deposits. It enables future scheme arrangements to provide for part of the interest accrued on protected deposits to be paid to the Secretary of State. This additional flexibility, as I've said, would be particularly relevant where high interest rates mean that scheme returns on deposits held considerably exceed administrators costs of providing the scheme and wider ancillary services.
Now, the shadow Minister is perfectly at liberty to take issue with the principle of that, to take the view that administrators should benefit from the entirety of the interest accrued on the deposits. We take a different view. We think we should have the flexibility to provide for other uses. The Secretary of State's intention is that the funds received. I hope I can provide the Liberal Democrat spokesperson with some assurances on this point. Our intention is that the funds received would be used towards programs or activities that benefit tenants in the private rented sector. They wouldn't be, as he asserted, be siphoned off into some treasury fund that doesn't deliver on that purpose.
I will give way.
The allocation mechanism is different for each of the three current schemes, but requiring administrators to pay interest to tenants and landlords will continue to be an option for future arrangements. Sir Desmond, As I tried to make clear in moving the regulations, the order is not intended to enable government to profit from tenants deposits. It enables future scheme arrangements to provide for part of the interest accrued on protected deposits to be paid to the Secretary of State. This additional flexibility, as I've said, would be particularly relevant where high interest rates mean that scheme returns on deposits held considerably exceed administrators costs of providing the scheme and wider ancillary services.
Now, the shadow Minister is perfectly at liberty to take issue with the principle of that, to take the view that administrators should benefit from the entirety of the interest accrued on the deposits. We take a different view. We think we should have the flexibility to provide for other uses. The Secretary of State's intention is that the funds received. I hope I can provide the Liberal Democrat spokesperson with some assurances on this point. Our intention is that the funds received would be used towards programs or activities that benefit tenants in the private rented sector. They wouldn't be, as he asserted, be siphoned off into some treasury fund that doesn't deliver on that purpose.
I will give way.
18:15
Speaker 3
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Speaker 3
I thank the minister, and I'm listening carefully to his his response. If that is so, then why not simply put it into the s I? I share the suspicion and the honourable gentleman and I seem to be agreeing a lot these days, and I'm sure that makes both of us feel uncomfortable. But the minister has used this phrase again, and the government expects, and we've heard this so many times over the years, an expectation is not the same thing as something actually happening. So something to actually happen, you need to put it into the law.
So why not just simply put it into the s I.
So why not just simply put it into the s I.
18:15
Speaker 2
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Speaker 2
Minister simply because and I was going to come on to make this point. This order is enabling in nature. It doesn't require any payment to be made to the Secretary of State or prescribe how any payment amounts would be determined. Those matters would be determined through future scheme arrangements established via procurement and contractual processes. And I've said it before, I'll say it again for reassurance. The department will publish any information about any amounts received, the programmes funded and any metrics demonstrating the value delivered, so there will be full transparency on the use of funds. I will give way.
18:16
Speaker 6
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Speaker 6
I thank the Minister for giving way. He is always very generous with his time. Could he just then provide us with some examples of what Mhclg could use this money for to support renters, because he hasn't listed any yet, and obviously there's none stated in the s I, and I'm a bit concerned about where this money is going to be used.
18:16
Speaker 2
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Speaker 2
And forgive me, I think I did give an example in my opening remarks, but I don't want to stand here and speculate on the precise programs that might be funded through those interest payments. If we make a decision to take a portion of them in future, but being very clear about they would be directed to support private rented sector tenants, it couldn't be to the point be siphoned off for other government activities. But again, any payments made to CLG would be subject to future agreement via contractual and procurement processes. My hon. Friend wanted to intervene.
18:17
Speaker 3
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Speaker 3
Thank you. I thank the Minister for giving way and for for for his explanation, I do. I do wonder, though, whether he's able, at this stage to give any indication of what sort of thresholds there might be within the department, at which point this maneuver, this mechanism, would kick in to allow them to make those directions. I think it's perfectly right and correct that if there is a windfall on an interest, that can be put to good public use, but I'm interested where the department currently considers the threshold for that windfall to start. So we know when these schemes might subsequently start making a contribution.
18:17
Speaker 2
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Speaker 2
He helpfully brings me on to the two further points I wanted to respond to, and I think the shadow minister probed at both of these. Rightfully so. Essentially, how will the amounts due to the Secretary of State be determined specifically, what do we intend to spend them on? I can't confirm to my hon. Friend today what the amounts due to the Secretary of State will be. As I've said, the order allows for the distribution mechanism to vary, taking into account market conditions such as interest rates. Specific arrangements, as I've said, would depend on commercial negotiations with prospective scheme administrators.
I can commit that, first and foremost, the distribution mechanism will prioritise ensuring the deposit protection and dispute resolution services offered to tenants and landlords continue to be free and effective. We'd all agree. I assume that that is particularly important. My department, again, as I've said, will set key performance indicators and cost efficiency metrics to monitor the scheme administrators delivery and if the interests are Desmond accrued, exceeds the minimum cost of meeting the key performance indicators, the additional amount of interest will be distributed between the administrator of the scheme, tenants and landlords and the Secretary of State.
When setting the distribution mechanism, the Secretary of State intends to allow the scheme administrator to keep a reasonable amount of profit as reward for the service delivered. It is not the Secretary of State's intention to exploit the tenancy deposit system and agree to arrangements that leave tenants and landlords work off, specifically in terms of how the. I'll just make this point , and I will happily give way in terms of what we intend to spend any money received on. Again, the government has demonstrated its commitment to improve conditions for tenants in the private rented sector. While a specific program or programs can't be confirmed at this stage, it is our intention to use any receipts to fund government programmes to benefit tenants in the sector.
It will take time. I think this is important to say it will take time for interests to accumulate and be paid to the Secretary of State under future arrangements, if we decide to make use of the power. But those arrangements, as I've said, will depend on market conditions and priorities for the private rented sector will be subject to agreement from the Treasury.
I can commit that, first and foremost, the distribution mechanism will prioritise ensuring the deposit protection and dispute resolution services offered to tenants and landlords continue to be free and effective. We'd all agree. I assume that that is particularly important. My department, again, as I've said, will set key performance indicators and cost efficiency metrics to monitor the scheme administrators delivery and if the interests are Desmond accrued, exceeds the minimum cost of meeting the key performance indicators, the additional amount of interest will be distributed between the administrator of the scheme, tenants and landlords and the Secretary of State.
When setting the distribution mechanism, the Secretary of State intends to allow the scheme administrator to keep a reasonable amount of profit as reward for the service delivered. It is not the Secretary of State's intention to exploit the tenancy deposit system and agree to arrangements that leave tenants and landlords work off, specifically in terms of how the. I'll just make this point , and I will happily give way in terms of what we intend to spend any money received on. Again, the government has demonstrated its commitment to improve conditions for tenants in the private rented sector. While a specific program or programs can't be confirmed at this stage, it is our intention to use any receipts to fund government programmes to benefit tenants in the sector.
It will take time. I think this is important to say it will take time for interests to accumulate and be paid to the Secretary of State under future arrangements, if we decide to make use of the power. But those arrangements, as I've said, will depend on market conditions and priorities for the private rented sector will be subject to agreement from the Treasury.
18:19
Speaker 7
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Speaker 7
By the Minister for giving way in the department's calculations and crafting of this statutory instrument. Would the Minister give any indication of what level interest rates would be at to trigger this? Going back to the threshold point, if it's a windfall from high interest rates generating additional revenue, what general ballpark does the minister think interest rates would have to be at to trigger this Minister?
18:20
Speaker 2
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Speaker 2
I commend him for the attempt, but I'm not going to stand here and give him a general ballpark estimate of what the interest rates might be. As I said, any payments to Mhclg will be subject to a future agreement via contractual and procurement processes. I did just want to clear up one specific point that the shadow Minister made in terms of insured schemes. No final decision has been made in that regard. The Department is assessing the benefits and risks of both insured and custodial models. So, Desmond, to conclude, this government continues to deliver improvements for tenants in the private rented sector.
This order will provide additional flexibility in how interest accrued on deposits held under custodial tenancy deposit schemes may be distributed to use excess returns that may be generated by the scheme effectively, and the order will enable the Department to deliver an improved tenancy deposit scheme which is fit for purpose and which will, as I've said, deliver better value for money for both tenants in the private rented sector and the general taxpayer. And, notwithstanding the shadow Ministers very clear intention to survive. I hope the rest of the committee will welcome this amendment to the Housing Act 2004, and I beg to move.
The question.
This order will provide additional flexibility in how interest accrued on deposits held under custodial tenancy deposit schemes may be distributed to use excess returns that may be generated by the scheme effectively, and the order will enable the Department to deliver an improved tenancy deposit scheme which is fit for purpose and which will, as I've said, deliver better value for money for both tenants in the private rented sector and the general taxpayer. And, notwithstanding the shadow Ministers very clear intention to survive. I hope the rest of the committee will welcome this amendment to the Housing Act 2004, and I beg to move.
The question.
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