Tenant Fees Bill

Debate between Lord Deben and Lord Best

Monday 5th November 2018 Grand Committee

[Lord Deben]

I wonder if I can help the noble Lord. I know he always worries when I get up and say that I am going to be helpful, but on this occasion I might be. I remind the Committee that I am chairman of the organisation that represents independent financial advisers and those who deal with wealth management. Therefore, I understand a lot about the parallel circumstances referred to by the noble Baroness, Lady Hayter, when she pointed out the protection accorded to bank accounts and the different sorts of protection in the financial services industry. What I really want to say is that I hope my noble friend will think very carefully about this because we have seen the huge difficulty that people now have—even the most excellent of firms—in getting proper protection from the insurance industry.

The noble Baroness made an important point about being proportionate as to what the real risks are. I want to make a point about the dangers of not being proportionate. This is an industry of great importance and I am absolutely excited by the Bill because it does a whole lot of things that need to be done. However, we have to be very careful about importing into it those things that will result in unexpected and unwanted additional results.

I am not sure that civil servants are always as expert in these detailed aspects of insurance as those who deal with them daily. All the advice is that there really is no need to protect any more than the kind of protection that ARLA and RICS already provide. You do not really need that advice: the fact is that they have run the system very effectively up to now. I remind my noble friend that the party he represents is always very much in favour of free enterprise and people getting together to organise things on their own. Would it therefore not be a good idea for us to be very careful about not taking that advice?

We know that the 40% that do not belong to these organisations are, by nature, either not very careful or painfully close to the edge of the law. There is a real range. But I remind the Committee of the last speaker, who rightly said that we do not want to enfranchise the 40% by disfranchising the 60%. That does not seem a sensible answer. I hope my noble friend will take the advice of those who have had to deal with these things in other areas: that it is extremely dangerous if you get yourself into a position in which you lay too heavy a weight of insurance when it is not necessary. I have a long history of defending the consumer, but I do not see how consumers are better protected by excluding from the market the two organisations that have so far dominated it—if that is the right word.

The last thing I want to say is this: I have often spent time trying to encourage ARLA to become a more professional body. One of the successes of recent years has been precisely that, and we ought to be encouraged by what ARLA has done. It would therefore be a great pity if, on this occasion, we ignored its experience, which has come about through its own change from its history to today, or indeed the 150 years’ experience of RICS.

[Lord Best]

I want to offer my support to the noble Baroness, Lady Hayter, who has done so well in getting us to this point with CMP. It is so disappointing for those of us who have supported her efforts to hear of this last-minute significant hitch. The reason that a number of us were very supportive of CMP being introduced was not because of the 60% but because of the 40%. It was not just to make sure that the 40% had some insurance so that landlords’ and tenants’ money was properly protected. It was rather more sinister than that: it was to drive out that part of the 40% that just would not be able to get insurance, because when their accounts were viewed by those providing insurance, they would be told, “I’m sorry, we’re not insuring you”. This was, and I hope still will be, a way of weeding out the fly-by-night agents who set up shop and who we do not need in this business.

Consumer Rights Bill

Debate between Lord Deben and Lord Best

Wednesday 29th October 2014 Grand Committee

[Lord Deben (Con)]

My Lords, I hope that the Minister will listen to this very carefully. I will repeat for her interest an experience I had as a Minister when I sought to insist that the providers of telephonic communications should be able to withdraw the service to telephone numbers used by people advertising illegally in telephone boxes. This had become an increasing problem and it seemed not unreasonable that we should say that if you advertise a telephone number illegally in those circumstances, the telephone company might withdraw it.

One of the telephone companies took me to Ofcom, or the equivalent then, to say that this was contrary to competition and would create a cartel. With very great regret, the regulator said that it thought that the law did mean that. So this very simple way of removing very objectionable content in telephone boxes in the centre of London, which were very often used by young people, was stymied. I use the example so that my noble friend will recognise that this is an area in which very great care must be taken not to allow the very necessary protection for competition to interfere with the very necessary protection for other reasons.

The noble Baroness who introduced the amendment did so in a very broad-minded and sensible way, saying, “We just want to do this in order that the Minister will take it very seriously”. I just want the Minister to understand that this is much trickier than sometimes Ministers are advised. Having been through this, it is a very dangerous area to be in and the Committee will probably agree that we want both—protection of competition and protection of people so that they can make the choices that they want to make. There are many unscrupulous people around who will use the one to play against the other.

Therefore, will the Minister take it from me that it is much more difficult than is sometimes suggested, and that she needs to be on her guard in a particular way? I hope she will be able to answer the very pertinent questions that were raised by the noble Baroness.

[Lord Best (CB)]

My Lords, I have added my name to Amendment 56B. I was approached by the Internet Telephony Services Providers’ Association—ITSPA—because I chair your Lordships’ Select Committee on Communications. However, my committee has not had a chance to consider this particular issue so, having discussed it at length with ITSPA, which represents some 80 providers of telephony services via the internet, I speak in a personal capacity.

The amendment addresses a consumer rights issue relating to the penalties facing unwary customers of some of the companies that supply our mobile phone and internet connections. Unbeknown to those who sign up to get the internet from their iPhones and other mobile phones—unless they have studied all the small print and those terms and conditions that we all accept but have never read—some of the big players have built-in penalties for using the internet to make telephone calls—for example, through Skype. While providers such as BT, O2 and Sky, for example, have not adopted such practices and do not penalise their customers in this way, Vodaphone and EE have done so in recent years.

Presumably, the restrictive practices of these companies are a consequence of them providing mobile telephone services, which could be less popular and profitable if people use the internet to make telephone calls at a much lower cost. However, this practice is bad not just for the innocent consumer who can have their calls blocked or degraded, and/or could find some hefty charges on their mobile phone bills, it is also bad for this industry that finds it harder to attract investment to extend a really useful communication tool which, increasingly, could benefit more and more of us but has this cloud hanging over it. The practice is detrimental to consumer interests as well as anti-competitive and will gradually affect other services as we increasingly access the internet via mobile connections.

I note that amendments to this effect were tabled in the other place by both Conservative and Labour Members. We learnt there that the Government and Ofcom are keen to see an end to the current bad practice. We hear that in recent days Vodafone and EE have bowed to pressure from all sides and agreed to sign up to the industry’s code of practice which outlaws the technical blocking or restricting of telephone services through the internet. This is a step in the right direction. Nevertheless, as ITSPA points out, there are ways of interpreting this code of practice that could circumvent its intentions, for example simply by avoiding the term “internet access” and using a synonym such as “mobile data” or “mobile broadband”. There are also no sanctions for breaking the code, and those who voluntarily sign it one day can withdraw from it another. Only through legislation is the matter fully resolved.

As I know from the work of the Communications Committee, ensuring the law keeps pace with technological change—particularly in respect of the internet—is an important challenge for today’s legislators. This Bill takes steps in that direction and this amendment is very much a case in point. It seems that in the somewhat arcane world of telephony services, the consumer needs the protection of the law, not just of a voluntary code, to ensure fair play.

Finally, I gather that there is a school of thought that suggests we should await an EU directive on so-called internet neutrality—to which the noble Baroness, Lady Thornton, referred. That would cover this point, among other measures. However, I fear that we could wait a very long time for agreement on the content of this Europe-wide measure. Surely it is much better for UK citizens if the Government act now with a small, well-focused amendment to the Bill already before us. I am delighted to support this amendment.

Growth and Infrastructure Bill

Debate between Lord Deben and Lord Best

Wednesday 27th February 2013 Lords Chamber

[Lord Best]

My Lords, I shall speak to Amendments 30, 31 and 35. I preface my remarks by thanking the Minister for a really helpful and lengthy meeting at which a number of my earlier amendments were discussed. On the basis of that discussion, I have dropped three of my amendments, either because I have better understood where the Government were coming from or because I noticed some modest amendments along the way. I was extremely grateful for that more than helpful discussion.

Amendments 30, 31 and 35 all address the hazards in Clause 6 and are intended to ensure that the clause achieves what the Government intend: to get developers on site and building new homes as a quid pro quo for being able to increase their profits on sites where they have previously signed up to obligations to allocate some homes for affordable housing.

Amendment 30 would protect the local authority, the taxpayer and the people who need affordable housing from developers being excused from their obligations on the grounds of expected low house prices today but making substantial profits in future when house prices have risen appreciably. The amendment inserts a clawback provision for the local authority to receive payment in kind if values rise more than expected. A highly unsatisfactory outcome from the use of Clause 6 by a developer to secure a reduction in the affordable housing on its site would be for it simply to await house price increases and make a killing later. Then, the developer would see bigger gains in the years ahead, but the whole purpose of the Bill—to get sites developed today—would be thwarted.

When I brought a similar amendment from the LGA before your Lordships in Committee, the proposition was that local authorities should share a proportion of the profit from future sales if they turned out to be at higher levels than had been expected when the deal was considered by the Planning Inspectorate. The revised amendment is intended to address concerns raised by your Lordships that that route would not be appropriate. The new version would ensure that the local authority could claw back only a commuted sum—payment in kind—in the form of finance specifically to replace some or all of the affordable housing in the original planning obligation, probably to build offsite. That seems entirely reasonable and I hope that the revised amendment will be acceptable to Ministers.

Amendment 31 takes the story forward. It is intended to address the situation where, after a Clause 6 negotiation has reduced the previous requirement for affordable housing, the developer does not, as the Government hope, start swiftly on site but instead awaits the moment when the market is more favourable and prices are higher. The primary reason why sites are stalled is the reluctance of housebuilders to press forward with developments of homes for sale because the local market is sluggish and, if they build too quickly, it will be impossible to achieve the prices they desire.

Even if they are allowed to produce fewer affordable homes—homes which are usually transferred to a housing association for rent or shared ownership—the market for outright sales will remain the same, and the housebuilder may well prefer to await an upturn rather than, despite the earnest hopes of the Government, getting going with the building work which is so badly needed. Amendment 31 would compel the developer to commence construction within six months if it receives a favourable outcome from invoking the provisions of Clause 6 and secures a reduction in its legal obligation.

That is a fundamental point. Unless there is a benefit to society in the form of a rapid start on site, most people would surely ask why the state should be intervening retrospectively to overrule a legal agreement between a local council and a housebuilder simply to increase the profits of the latter. Why should central Government step in when a speculative land purchase now means that a development is not as profitable as the housebuilder had hoped? After all, no one has suggested that local authorities should pursue housebuilders for an increase in the quota of affordable housing when, a year or two after an agreement was signed, house prices rise dramatically, as they did a few years ago, when unexpectedly high profits were made.

If the developer is able to negotiate a reduction in their Section 106 obligations, they will raise the value of the site without laying a single brick. Amendment 31 is intended to overcome this major defect in Clause 6 and require housebuilders to commence construction within six months if they receive a favourable outcome from their appeal. If the Planning Inspectorate has found the development would not have been profitable because of the level of affordable housing required and has reduced that level accordingly, there should be no good reason why the developer should continue to sit on their planning approval. Instead of being accused of land banking, they should then start delivering the homes the UK so badly needs.

Finally, Amendment 35 puts the finishing touches to these proposed changes to Clause 6 by raising the threshold of what defines commencement of development on site. Planning permissions do not last indefinitely, and in considering whether to extend a permission or allow it to expire, a local authority considers whether the developer has commenced development, defined as a “material operation” in Section 56 of the Town and Country Planning Act 1990. The Act sets out what a developer has to do on site to implement a planning permission. The physical works that make up a “material operation” can be relatively minimal when compared with the totality of the development— for example, digging a trench or starting to lay a road. Case law is clear that it does not matter if the developer carries out those works simply to keep the planning permission alive, rather than with a genuine intention to complete the development. If developers have to start within six months, but simply dig a ditch, Amendment 31 has not taken us forward.

I moved an amendment in Committee to enable local authorities and developers to agree at the outset what the definition of commencement would be. The Minister’s response, which I fully understand, was that this would create a postcode lottery, with every council doing things differently. The problem might be countered with non-statutory guidance on best practice. However, in recognition of ministerial concerns, I am now suggesting an amendment that raises the threshold of what is defined as commencement. This amendment would alter the current definition of what constitutes a “material operation”. It would require a certain percentage of, for example, the foundations to be completed to count as a material operation and thus keep the planning permission alive. Spelling this out would have the benefit of certainty. It would encourage developers to move from commencement to completion faster in the future because a greater proportion of costs would have been incurred at an earlier stage.

In combination, these three amendments salvage something sensible from Clause 6 and save the Government from falling into a trap. The worst possible outcome would see the clause to reduce the amount of affordable homes that developers are required to build proceeding, but developers still not getting on with the job and instead banking the increased value gained from having their obligations reduced and waiting until house prices, pressurised by escalating shortages, rise and bigger profits can be made. I beg to move.

[Lord Deben]

Before the noble Lord sits down, may I ask a question because there is something I do not understand? What is there under present law to stop a local authority saying to a developer, “Yes, we’ll agree to this, but there are other conditions that are part of that deal”? All that the noble Lord suggests could be perfectly properly achieved in a deal with the local authority. What sort of local authority would give its permission without such a deal taking place?

[Lord Best]

These cases are historic, dating back to 2008-09, where a Section 106 agreement has been signed that does not specify that commencement on site must happen within six months or what commencement on site means, other than within the law. The agreement has not been, if you like, sharply enough defined, although it has followed standard practice. The opportunity then exists for the developer to say, “I don’t wish to proceed on this basis. I shall use Clause 6 and the Planning Inspectorate to reduce my obligations. Even though I signed up to that, I don’t want to be held to it any longer because I have decided that the profitability of my scheme would be increased if I waited some time and did the development later”. These amendments put pressure on the housebuilder and enable the job to be started.