Local Government Finance Bill

Lord Shipley Excerpts

Thursday 5th July 2012 Grand Committee

[Lord McKenzie of Luton]

My Lords, this is an intriguing series of amendments, and we have a degree of sympathy with them. The amendments would include parish and town councils within the scope of those for whom billing authorities must share their portion of the business rates. I suspect that the difficulty with this is that other parts of the components of the scheme for business rate retention would have to be applied as well. You could not just make the payment without the other bits and apply it potentially to many thousands of authorities.

Under the current local government arrangements business rates are paid to central government and come back via the formula grant, not, I understand it, to local precepting authorities but to billing major precepting authorities. However, this does not work under the business rate retention scheme. The retained business rates have to be allocated between authorities and the proposed basis is that, with two-tier arrangements, 80% of the business rate would be allocated to district authorities and 20% to major precepting authorities—police and fire and rescue included. As I understand it, the rationale for the 80/20 split is that lower-tier authorities are typically responsible for planning and more able to influence economic development.

The noble Earl might well argue—he touched on this—that the new regime for neighbourhood planning opens up that opportunity more to parish and town councils. Some are already very much involved in a drive to improve the economy of their areas. However, if such councils are not to be encompassed within the tariff top-up arrangements for billing authorities, it would seem to follow that they should have their own calculation. It might not be difficult to establish the business rate base but to derive a funding amount would presumably require some breaking out of the formula grant, and I am not sure how easy that would be to do.

In passing, we should note that there will be a requirement for billing authorities to work with local precepting authorities to address the council tax support funding. If I have read the documentation correctly, it is envisaged that this could well involve a payment from such authorities to town and parish councils.

While I understand where the noble Earl is coming from on this, the practicalities make the amendment difficult to accept. However, I will be interested to hear the Minister’s response. There is the germ of an idea here that needs support.

[Lord Shipley]

My Lords, I think I agree with the comments of the noble Lord. There is an issue here that relates to the deletion of “major”. Will the Minister respond on the content of the Localism Act? On the rights and powers of precepting authorities, my memory is that some crucial amendments were made to the Bill on Report, which enabled the protection of the rights of parish councils and neighbourhood planning councils. Is the Localism Act sufficient to deliver the resources that should lie within the money, particularly that raised through the community infrastructure levy, to very small neighbourhood areas? I would appreciate the Minister’s guidance on that point.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)]

My Lords, I thank the noble Earl, Lord Lytton, for introducing this little amendment. Neither he nor other speakers will be totally surprised when I say that it is not acceptable in its current terms. I shall tell him and the Committee why.

We recognise that parish councils underpin many neighbourhoods across England. They have been given a specific role under the Localism Act. Local, parish and town councils are specifically mentioned as being able to generate neighbourhood plans. As has been said, they are the focal point for a wide range of local involvement and action under the Localism Act. For some parish and town councils, that range of activity and involvement will include promoting economic growth but they do not have the same financial levers to deliver growth as principal authorities do. I know—the noble Earl has just said so—that some town and parish councils are keen to receive a share of business rates. That was evident not only from what the noble Earl said but from the Government’s consultation on rates retention last year, when several parish and town councils expressed in their response a desire for a change in this matter.

However, the local government resource review was set up to look at how principal authorities are funded, with a view to giving them greater financial autonomy, strengthening the incentives to support growth in the private sector and the regeneration of local economies, and reducing their reliance on central government funding. The funding of parish councils is therefore outside the scope of the review’s terms of reference. The Government’s proposals for business rates retention are focused on changing the allocation of business rates, which previously fed into formula grant, which is not paid to parish or town councils. Therefore, allocating parish and town councils a proportion of business rates would be at the expense of the principal and major precepting authorities, thus weakening the growth incentive. I just add that of course all parish and town councils have a precepting power so that in general they are able to cover their costs. Although I accept that that may not be a great contribution to growth, it is certainly something that they are able to do.

The Government consider that it might be appropriate to reassess this position in the context of an untimed, unnamed and unexpected fundamental review of the business rate retention scheme, but I would advise noble Lords not to hold their breath on that.

As I said at the outset, the noble Earl will not be surprised when I say that I cannot accept the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I shall speak also to Amendments 32 and 40 in this group. Amendment 19 relates to the determination of the central and local shares and requires them to be set after full consultation with local government. It is accepted that this determination must currently be specified in a local government finance report and thus be subject to a parliamentary process, but that is not a substitute for engagement with local government.

We accept that there has been extensive engagement in relation to the Bill but what does the Minister see as the regular process going forward in this regard? Perhaps she could outline for us an anticipated timeline of events in future years after the introduction of the business rate retention scheme, although I hesitate to call it a steady state.

Amendment 32 relates to tariffs and top-ups. The local government finance report will spell out the basis of the calculation of these payments, but before it is laid, the Secretary of State must notify such local government representatives as he sees fit. The amendment requires there to be a consultation rather than local government just being notified. Amendment 40 is a parallel amendment related to the process for amending reports.

I will just touch on the amendments in the name of my noble friend Lord Smith, who is unable to be here today. Amendment 20 mirrors our Amendment 19 and is identical. Amendment 23 causes the finance report to give details of the consultation; a proposition which we support. Amendment 25 requires the report that should be sent to local authorities to be there by the end of November, for obvious reasons. Amendment 33 mirrors our Amendment 32 and is a duplicate. Amendment 34 requires that the Secretary of State must consult on the detail and not just on the general nature of the proposals, which is the requirement at the moment. These amendments are all about proper engagement with the local government sector. Perhaps the Minister will let us know the Government's intention. I beg to move.

[Lord Shipley]

My Lords, I first declare my interest as a vice-president of the Local Government Association, which is the first of the afternoon. I apologise for missing Tuesday's Committee when large numbers of noble Lords were making a similar declaration.

[Baroness Hollis of Heigham]

Could we take it for granted that we do not need to continue to declare? If we have done so on our first Committee day it should stand for the rest of the Committee stage.

[Lord Shipley]

I agree.

[Lord McKenzie of Luton]

Could we just declare if we are not?

[Lord Shipley]

That would actually be a quicker way of proceeding.

I agree with the amendment moved by the noble Lord. The Localism Act was about devolving power and decentralising decision-making. This set of amendments makes it clear that there should be full consultation with local government before decisions are made. When decisions are made, that cannot just be about notifying those decisions but should clearly explain through consultation first but secondly explanation of the decision that has been made, particularly in a matter as complex as tariffs and top-ups. Thirdly, there has to be consultation on the detail not just on the general nature of things.

I hope that the Minister will take on board that feeling because the Localism Act has changed the balance of responsibility between central and local government. It would help enormously if it were not just left for the Secretary of State to have a set of powers whereby things can be announced but not actually explained.

[Lord Beecham]

My Lords, I entirely support the amendment moved by my noble friend and supported by my erstwhile colleague on Newcastle City Council and fellow vice-president of the Local Government Association. It clearly makes sense, and, as the noble Lord, Lord Shipley, said, it is clearly in the spirit of the Localism Act.

However, there is another aspect. The Government set much store on the proposals in relation to the business rate as part of an approach to incentivise and increase local investment by business, growing the local economy and all the rest of it. In that context, it would surely be sensible if, in addition to consulting local government perfectly properly on these topics, they also consulted business. That cannot be done at every local level by the Government and councils will no doubt continue to have discussions with their own local businesses. However, as I pointed out on our first Committee day when I quoted the London chambers report, some 53% of businesses believe that councils set the business rates now. So there is a certain amount of education to be done here. But at the national level, I would have thought it important for government to consult, particularly about that proportion of the business rate that is to be held centrally rather than devolved locally, because that clearly would be a matter of concern to the business community.

Without the necessity of moving anything formally, it would be helpful if the Minister could put on the record an intention that in any consultation about the business rate and the various elements, resets and proportions and so on, the Government will consult the business community as well as local government.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, in moving Amendment 37, I shall speak also to Amendment 38. We are still with tariffs and top-ups, which are important because, apart from levies and safety nets, they are the route to seek to address matters of needs and resources. Some local authorities collect more business rates than they currently receive in formula grant, while business rates collected by others are lower than their current funding levels. Hence, there is a need to rebalance resources, a process that we support. However, this requires establishing a business rates baseline for each authority and a baseline funding level. Amendment 37 sets down a general test for this, which requires that the basis for calculation that must be set out in the local government finance report should specifically have regard to an assessment of need. This amendment particularises that local authorities should be resourced to be able to comply with their equality duties, their obligations under the Child Poverty Act and homelessness provisions. The noble Baroness will note that these are the very same issues that central government has pressed on local government, reminding it of its responsibilities in relation to council tax support schemes.

Amendment 38 requires the local government finance report to set out details of the calculation of the baseline position. Establishing the baseline requires establishing the business rate that each billing authority collects and how this is shared between billing and non-billing authorities. The Government have proposed that this is determined by averaging business rates income, although the number of years over which it is averaged has not yet, apparently, been agreed. The amendment requires this to be made explicit in the finance report, but perhaps the Minister can in any case give us an update on this as well as set out the criteria that will determine the final basis of determination. Reverting to our previous discussion, how would this work in relation to a revaluation if the basis of the business rate baseline was an historic average? It would be difficult to do that at the point at which you had a revaluation because you would be averaging on the old basis. There is a difficulty there, but that is an aside.

Establishing the baseline also involves determining an income or funding level, and it is proposed that it is based on the 2012-13 formula grant, subject to some adjustments. It is these adjustments that the amendment also requires to be spelt out. In this regard, we support the decision to update population data, as these are a key driver of the cost of services.

So far as relative needs formulae are concerned, the Government maintain that they have increased the proportion of formula grant distribution going to relative needs at the expense of the central allocation, as this would support the most dependent authorities. For the purpose of the tariff/top-up calculation, the higher the formula, the lower the tariff or the higher the top-up will be. Can the Minister update us on what is happening on these adjustments and tell us the current thinking because the outcome of these deliberations is locked in until a reset and it can be significant? If the proposal is to set the formula grant for the current year, the Government switched data to help the disadvantaged authorities by the central and relative needs shares. If they are thinking of putting that into reverse for the purpose of this calculation, then presumably the risk is that those disadvantaged authorities will not have the benefit that the formula for the current year has given them. I should be very grateful if the Minister could deal with that.

Paragraph 2.47 of the resource review consultation document states:

“In the current settlement we increased the proportion of formula grant distribution going to relative needs at the expense of the central allocation to support the most dependent authorities but made no change to relative resources”.

On the consultation, it states:

“Responses were mixed on this point and we have decided to look again at this issue prior to further consultation, when we will take a decision on whether, or not, to consult on any proposals”.

So the question is: are the Government going to consult and what are those proposals? I beg to move.

[Lord Shipley]

Perhaps I may intervene for a moment in relation to Amendment 37 to probe the meaning of the word “need”. I should like to raise an issue concerning exempt student households. It is becoming an increasingly serious matter on which I would appreciate the Minister’s guidance.

Student households are exempt from council tax. They are also exempt from business rates where it is a house in multiple occupation but owned by a landlord. The principle has been that councils get reimbursed from the national pot. In the past couple of years, that has not been happening as it should, and in some cases there is around a 25% deficit so that only around three-quarters of the income that would be expected is being received, yet local services are being provided without all the income that is necessary to pay for them.

I understand that the consultation that is taking place over the summer with local authorities will look at this issue, but I am seeking an assurance from the Minister that the matter will be taken very seriously. In the past, need has been taken to include full reimbursement of the loss because student housing is exempt.

[Baroness Hanham]

My Lords, as I was about to say, the noble Lord, Lord McKenzie of Luton, was asking about the consultation on the needs and the formula. That is part of the summer consultation, so it will be dealt with before we meet again on Report. I am not going to muddy the water before that, so I will leave that there. I do not think there is any intention to change the exemption from council tax for students and business premises.

The first reset will start in 2013-14 and the Government will set out in the local government finance report all those elements sought by Amendment 38, but only in 2013-14 and in any reset year. I do not need to go through again the arguments I have already deployed in relation to Amendments 35 and 36 but, as I have already said, outside of a reset year, we do not intend to reset tariffs and top-ups to take account of need. We have been through this. This is because the scheme is designed to produce, and we intend it to deliver, a significant incentive for local authorities to promote growth. We think that incentive would be destroyed. Instead, we intend that the scheme should give authorities absolute clarity for a period of up to 10 years—clearly it will be eight at the start—about the payments that they will receive or make to central government. This will give them the strongest possible incentive to respond to business concerns, secure the necessary investment and increase their income through sustained growth.

I am sure that the noble Lord, Lord McKenzie, will recognise that, for these reasons, the Government cannot accept either of these amendments, and I hope that he is persuaded to withdraw Amendment 37 and not to move Amendment 38.

[Baroness Hanham]

It is as it pertains at the moment, which is that students are not charged council tax and the owner is not charged business tax. I think that is correct, and there is no intention to change that.

[Lord Shipley]

I should be very happy to have a written note about this prior to Report. It would help us enormously. The issue is that the exemption should be fully refunded to local authorities; as I understand it, in the past few years it has not been. It is becoming a problem for places that have large numbers of houses that are wholly exempt because they are wholly occupied by students. There is simply no income at all.

[Baroness Hollis of Heigham]

It would be very helpful if the Minister could clarify a position that is increasingly causing concern. There may be a house for students that is completely exempt from business rates and council tax. Then one of the students goes into a part-time job while continuing their degree. My understanding is that if the student’s income from their part-time work is above the threshold, that brings the whole property into council tax, although the student continues to be eligible for a single person discount. That seems to run directly against the concern about work incentives for universal credit and against the need for students to find part-time work, given the increase in fees that they now have to meet for the first time. Will the Minister clarify whether this affects business rates or council tax?

--- Later in debate ---

[Lord Best]

My Lords, I support the amendments in this group. The British Property Federation has said that it and others have been deeply frustrated by the way in which a policy that could have been a significant driver of growth and urban renewal has been watered down to such an extent that it will have very little impact. It seems a real shame. TIFs could be such a valuable mechanism in helping local authorities to play a really serious part in achieving local economic recovery and growth. The disappointment is that the Government are planning to control so strictly the numbers of these projects that could be encouraged by being outside the business rates growth levy or the proposed business rate system resets.

I can suggest reasons why TIFs are necessary and useful. The first is that they will help the construction industry, which is in a very bad state—the worst position it has been in for several decades—to become the engine of growth that takes us out of recession once again. We need the construction industry, and it needs the boost that TIFs could bring. Specifically in relation to housing—my pet interest—TIFs would not fund any new housing development, but they could fund the infrastructure that supports and surrounds such developments. I chaired the LGA/DCLG commission on ways in which local authorities could ease housing shortages, and I was struck by how there is synergy between what TIFs can do and easing housing shortages. A housing development can so often not go ahead because the infrastructure scheme that would surround it cannot be financed. I saw a major site, a large site of derelict land in the London Borough of Newham, which needs a big bridge built to bring it to life and enable it to be regenerated for housing, offices and commercial developments. It needed a TIF infrastructure scheme to get it going, but it would pay for itself over a period.

Then there are benefits to central government: higher stamp duty revenues resulting from rising property values—I am trying to appeal to Treasury self-interest here—higher income tax and higher corporate tax due to the increase in economic activity. Then there are savings to central government as people would get jobs and no longer require the social and health benefits they were receiving and there are the social benefits of regeneration. All these things flow from getting this sorted.

As I understand it, what is worrying the Treasury is that TIF funding goes straight on to the national debt. It is counted as being part of public expenditure because local authorities are at the heart of it. If housing associations were the ones doing the borrowing—they could not possibly be—it would not count at all. It is because local authorities are there in the middle of this arrangement that the Treasury finds reasons to block this, other than on a very modest scale— £160 million is not going to get us going. This is a self-inflicted punishment that the Treasury is insisting upon because it is not commonplace in other countries to regard as public expenditure prudential borrowing that is going to be repaid out of a flow of income that is predetermined, clear and visible. The Treasury has decided this, and it could undecide it without troubling any European agreements. I think the anxiety is that the international banking community will say, “They are changing the rules in the United Kingdom. This will scare the international financiers. The UK is up to something with these new TIFs”. I think the international banking community would like to see the UK economy getting stronger and things happening and moving forward. I do not think that the Treasury is right in holding the line on its definition, which is contrary, for example, to the definition of public expenditure in Germany, France or Holland.

It would seem entirely sensible for the Government to adopt a lighter-touch approach in relation to the approval of potential TIF projects under option 2, enabling TIFs to be a really significant mechanism for investment with minimal bureaucratic interference.

[Lord Shipley]

My Lords, may I add some further remarks about tax increment financing and say how much I agree with all the comments so far on this set of amendments? For several years, I have been absolutely convinced of the importance of tax increment financing for driving cities. In recent months, I have assisted as an adviser to the Government on their cities policy; I declare that interest. This derives from being convinced by the group of eight English core cities and their secretariat, when I was leader of Newcastle City Council, that tax increment financing potentially unlocked growth in a way that conventional capital infrastructure funding schemes did not and could not. I am particularly struck by devolution in Scotland having led to there being, in various states of preparedness, some six tax increment financing schemes on the drawing board.

The importance of this has been exceedingly well explained so far but it really matters financially. This is not just about business rates; it is about other taxes, too. Once growth in building and development happens, other taxes will follow. For example, there will be stamp duty, income tax, VAT and corporate tax revenues, all of which enable the Government to gain from growth in the country generally.

The PricewaterhouseCoopers 2008 report made absolutely clear the potential for the UK here. It drew on 40 years of US evidence and made it clear that this could be replicated in the United Kingdom. Many professional bodies—this is not just a matter for local government—now say that tax increment financing is now a thing for the future and that we must just do it. However, delivering it means that the reins must be loosened by the Treasury. First, TIF should not be treated as an in-year spending decision. Secondly, the Treasury should not place an arbitrary limit on the number of schemes permitted each year. Its consent should apply to all those schemes that meet the criteria. Thirdly, there must be longer periods, of up to 25 years, over which debt can be repaid because investment requires certainty of income for investors. Therefore, TIF cannot just be prudential borrowing with resets. For many potential schemes, 10 years—or seven in the first instance—will not be enough.

I have shared the concerns of such organisations as the British Property Federation and many others, which all urge the Government to look again at tax increment financing to understand its potential for growth, and to encourage the private and public sectors, working in partnership, to make sure that growth can be delivered. It is through growth that government spending can be maintained at its current levels.

Railways: High-speed Rail

Lord Shipley Excerpts

Tuesday 10th January 2012 Lords Chamber

[Earl Attlee]

My Lords, I have to declare a slight interest—not only am I the Earl Attlee; I am also Viscount Prestwood, because my grandfather lived in the village of Prestwood. The noble Lord asked about the environmental impact assessment. As he points out, that will be produced later on. However, it is a very detailed document. There has been some sustainability assessment of the proposed route, but the environmental impact assessment will be very detailed and look at how we will deal with every adverse impact. That will come along with the hybrid Bill.

[Lord Shipley]

My Lords, in welcoming the announcement—

[Lord Shutt of Greetland]

My Lords, I am afraid that we are out of time.

EU: Financial Stability and Economic Growth

Lord Shipley Excerpts

Thursday 3rd November 2011 Lords Chamber

[Lord Shipley]

My Lords, I join with others in thanking my noble friend Lord Newby for initiating this debate. My view is that a demand for a referendum on membership of the European Union was an unnecessary diversion. It was misguided and mistimed. Referendums are not flavour of the month and would simply have added to instability across Europe and the eurozone. However, Europe and the eurozone are often seen by the general public as the same thing, so I think that the reasons for our being in the European Union need much stronger explanation.

Being part of a single market is central to jobs. The UK has 500 million consumers in that single market. Ten per cent of our jobs in the UK—3.5 million jobs—rely on that single market. We export strongly to it. My own region, the north-east of England, is the only region in the UK to have a positive balance of payments, and we have it largely because of exports to the EU. We also have across the UK non-EU foreign direct investment which has come here because we are in a single market. The case for leaving the EU and imagining that growth would follow from being outside it is very badly put. It would be economic madness to withdraw from the EU, and it would cause a major rise in unemployment. Of course, collapse of the euro would devastate jobs, too, and so we have a responsibility outside the eurozone for helping to solve the eurozone crisis. It is central to what our Government should be doing because it is in our national interest so to do. But we have to be very careful.

I agree entirely with what the noble Lord, Lord McFall, said about institutions, particularly democratic institutions, needing to give hope to the people that they represent. We have to be seen to be capable of resolving the problems in the eurozone. I want to draw two things from what the noble Lord, Lord McFall, said, which, broadly speaking, was similar to something I wanted to say myself. The first relates to youth unemployment. It is untenable for youth unemployment across Europe to stand at 21 per cent. It is 21 per cent in the UK but in Spain it has hit 46 per cent. Our 21 per cent is almost a million young people and it is simply too high. Secondly, we have to learn more from Germany because its comparative stability and growth can set an example for other countries, not least ourselves. Germany’s organisation, partly through the Mittelstand but also generally through communications and systems involving employers, the education system, trade unions, and so on, has led to a highly integrated system based on long-term planning as opposed to short-term gain.

I find it quite astonishing that, despite the billions of pounds that have been spent in the UK on education and training, we still have a major skills gap. Unemployment in the north-east of England runs at 11 per cent at the moment, twice the level of the south-east of England. And yet a quarter of the north-east’s manufacturing, engineering and processing companies cannot find enough skilled workers. I welcome every initiative we can take to recreate a desire in young people to learn vocational skills around technology and engineering. For that reason I welcome university technical colleges, places where people learn skills to do real jobs. One has just been announced recently in Newcastle upon Tyne. I am very grateful for the work of my noble friend Lord Baker in supporting this initiative.

It is fundamentally important that to compete in the modern world our young people have to have the skills with which to do it. The skills gap that we have would not happen in Germany. A week ago the CBI issued a report urging the Government and the City to concentrate support on the forgotten army of middle-sized companies of up to £100 million turnover a year with up to 500 employees. I hope that we can learn from that.

My final point is a question to the Minister about the European Globalisation Adjustment Fund to which he may be able to reply. I understand that the UK has never applied to the fund but that it is likely to be extended to December 2013. Will the United Kingdom support that extension? It might be necessary.

Localism Bill

Lord Shipley Excerpts

Monday 17th October 2011 Lords Chamber

[Lord Jenkin of Roding]

My Lords, I am most grateful to my noble friend for the care with which he has set out these quite significant changes to the whole process of charging and applying the community infrastructure levy—or CIL, as he called it. We have moved a long way from the original intention of the CIL. In the Planning Act 2008, Section 205 states:

“In making the regulations the Secretary of State shall aim to ensure that the overall purpose of CIL is to ensure that costs incurred in providing infrastructure to support the development of an area can be funded … by owners or developers of land”.

It was perfectly clear to those of us who debated those provisions during the passage of the Planning Act 2008 what the previous Government were looking at. For instance, if you build a large housing estate, that is going to involve the building of roads. It may well involve the provision of a new school, and a number of other capital infrastructure measures that are necessary to support the community that will be enlarged by the main application when it is allowed and when it takes place.

It is quite clear from what my noble friend has said that we are moving a long way from that. It has caused a good deal of concern among those who are anxious to champion the promotion of more infrastructure. The British Property Federation, referring to what he called a “raft of new amendments”, has said:

“The upgrading of the country’s infrastructure is vital for our future economic success and the contribution from CIL will be a critical part of that at a time when public funding is heavily constrained”.

The letter that I had from my noble friend Lady Hanham, dated 7 October—just a few days ago—makes it perfectly clear that, under the new arrangements proposed, the CIL is not limited to providing infrastructure. Having set out the proposals, she writes:

“We have concluded that spending at the local authority level must continue to be directed to the provision of infrastructure”.

I will press a little further on that in a moment. She continues:

“However, at the neighbourhood and community level the demands and concerns amongst local people that new development creates are more diverse, direct and localised”.

She then refers to the amendments which my noble friend has just spoken to. She goes on:

“We believe this change is vital if we are to genuinely change attitudes to new development and secure sustainable growth”.

Changing attitudes is quite a long way from building capital infrastructure. It has changed the nature of what the CIL was originally introduced to achieve.

It may be that, in the new planning regime, it will be desirable to provide means whereby local communities can feel that they are getting some benefit. This may not take the form of schools or roads but may be some other form of benefit that will compensate them for the impact of the development to which they might otherwise have been opposed. I have always quoted the example of the French electricity system; if you want to build a new power station, in order to reconcile the local population to having to put up with that—after all it involves substantial interference in their normal lives, not only during the building but during the operation—they get electricity at a cheaper rate. That seems to me to be a very sensible thing to do. I am therefore not opposed to the idea that we need to provide something that will secure the consent, as my noble friend was saying, of the local community to the development that is being imposed upon them and to which they might have been quite vigorously opposed.

However, one point that I want to emphasise is still unclear, and I would welcome it if my noble friend could clarify this when he winds up. If councils in spending the CIL are confined to providing infrastructure, which is what I understood him to say and what my noble friend Lady Hanham said in her letter, spending at the local authority level must continue to be directed to the provision of infrastructure. That is fine, but then we are faced with the proposition that a “meaningful proportion” of the proceeds of the CIL, which is charged on the developer, can be devolved to the local parish or community, which, as I understand it, is free to spend it on anything it thinks would improve the condition of the community. What is a “meaningful proportion”? As I understand it, a local authority will be perfectly free to say, “We don’t think any more roads are necessary or that we need to build a new school, or anything like that, and therefore 100 per cent of the CIL for this particular development is going to be devolved to the local parish or community to spend as it wishes”.

I made the point previously in Committee that the CIL must not simply be used as a way of filling the gaps in local authority spending. It is not intended for that. It is intended to balance the provision of a planning application for a new structure of some sort with the infrastructure that is necessary for it. I have of course accepted that that must include the operation, maintenance and upkeep of the infrastructure, a matter that we discussed at length in Committee, but is there no limit to what the devolved body, parish, community or whatever it is can spend of the “meaningful proportion” that is delegated to it?

There is a good deal of concern about this among various bodies. The County Surveyors’ Society, which I understand is now called ADEPT, the British Chambers of Commerce, the British Property Federation, the Chartered Institution of Highways and Transportation and the local government tactical advisers group have all expressed the concern that this seems to be slipping away to the point at which it is simply providing inducements—I will not use the word “bribes”—to persuade a local community that it would be to its advantage to cease to oppose a planning application. I hope that my noble friend will be able to give me some reassurance that it is not intended to go as far as that, but there will have to be some specific measures.

I come to my two amendments, on which my noble friend has given his views. Amendment 204H would make a minor change to replace “may” with “must”, and would compel planning authorities to outline the infrastructure that they actually intend to support through CIL. If local authorities are going to have to confine their spending of CIL to infrastructure, I see no reason why they should not be instructed by the Act to outline the infrastructure they intend to support. Amendment 204J is also intended to link the evidence base used to justify an area’s CIL charging schedule to the levy’s actual expenditure. As I think my noble friend recognised, these are both intended to add to the transparency of the application of what CIL is: a tax on development. So far as local authorities are concerned, I see no reason why both these amendments should not be applied to them.

That leaves the “meaningful proportion” that is to be spent by other people. At the moment I feel that it is wide open for them to decide more or less what they would like to spend it on. I cannot believe that that is a wise way to spend the proceeds of what is in fact a tax. I hope that my noble friend can reassure me on this, but I have to tell him that there is a good deal of apprehension out there. He has told me that he has come under a lot of pressure from local authority and other community interests, which are saying that this sort of thing is necessary in order to reconcile people to new development in their area. But there must be some sort of limit on it, and I am not sure that the government amendments moved by my noble friend and the explanation set out in my noble friend’s letter of 7 October give that reassurance. I hope that my noble friend will be able to allay my anxieties.

[Lord Shipley]

My Lords, I agree with my noble friend Lord Jenkin on the need to be clearer on the gain to neighbourhoods and parishes from the community infrastructure levy. Whether that is done in the Bill, through guidance or by other means, it will be extremely important that local people in neighbourhood areas where development is taking place understand what the community gain might be as a consequence of that development.

My point is a parallel issue which relates to the duty to co-operate. It is implicit in the Bill that there is a duty to co-operate between councils on the community infrastructure levy. However, I am not certain that it is sufficiently explicit and in urban areas where there are boundaries between different local authorities, a development that could take place wholly in one council area might well impact upon the infrastructure and the well-being of one or more neighbouring council areas. To what extent should we make it explicit that there should be a duty to co-operate between local authorities on the community infrastructure levy where a development is taking place very close to a boundary? That will need to be clear, certainly by Third Reading, otherwise there could be a great deal of strain between local authorities over what a duty to co-operate over sustainable development actually means and how it is delivered on the ground.

[Lord McKenzie of Luton]

My Lords, we share some of the concerns expressed by the noble Lord, Lord Jenkin, and have some sympathy with his amendments. When we discussed this issue at Committee I thought we had established that, as previously structured, CIL gave quite a lot of scope for supporting local communities beyond what one might think of as the very strict interpretation of infrastructure, but this seems to be taking us a step further. The letter that I had from the noble Baroness was, I think, generally circulated and says:

“We are proposing amendments that would allow local authorities and parish and community councils to use this proportion of the funds to support development by providing infrastructure or addressing any other matter necessary to address the demands that new development places on the local area”.

This is potentially a very wide extension of what it was anticipated that CIL would be used for.

The noble Lord, Lord Shipley, raises a different point about what happens with adjoining authorities and how that fits together with the duty to co-operate. We also need to consider how this sort of formulation fits together with Clause 130, which we are going to discuss in due course. The noble Lord, Lord Jenkin, said that he would not go so far as to call this a bribe, but it is potentially a substantial inducement to an area to accept development and we need to reflect on that as well. Having expressed concerns about the possible dilution of funding for infrastructure, which is needed up and down our country, I pose the question that we raised when we covered it in Committee—my apologies to the Minister if he covered it—about the prospect of CIL being used for affordable housing. I am not sure where that discussion has gone, but there have been some real questions asked about the extension of CIL which takes it beyond its original intent. The new intent is not necessarily bad, as the noble Lord, Lord Jenkin, said, but we need to reflect on what it means for the funding that is available for infrastructure in an area.

Localism Bill

Lord Shipley Excerpts

Wednesday 7th September 2011 Lords Chamber

Moved by

[Lord Shipley]

84: After Clause 172, insert the following new Clause—
“Leases to which section 11 of the Landlord and Tenant Act 1985 applies: general rule
In section 13(1) Landlord and Tenant Act 1985 (leases to which the provisions about repairing obligations in section 11 of that Act apply) after subsection (1) insert—“(1A) Section 11 also applies to any lease of a dwelling house granted on or after the day on which section 173 of the Localism Act 2011 came into force, for a term of less than 21 years.(1B) Section 11 also applies to a right of occupation given by contract or any enactment and not amounting to a lease as if the right were a lease; and “lease” and cognate expressions shall be construed accordingly.””

[Lord Shipley]

My Lords, in moving Amendment 84 I shall also speak to Amendments 86 to 90. These all relate to the standards of accommodation and repairing obligations. Amendment 84 will ensure that all tenants and other occupiers of housing with short terms have the benefit of repairing obligations. The Landlord and Tenant Act 1985 provides that the implied repairing obligations set out in its Section 11 only apply to leases of less than seven years. This Bill proposes to apply that Section 11 to secure and assured fixed-term tenancies of more than seven years to take account of the fact that the new, flexible tenancies may be granted for longer than seven years. The proposed new clause in my Amendment 84 gives all the tenants of all short leases of less than 21 years the benefit of implied repairing obligations, so this amendment is important.

Amendment 86 relates to the same Act, which currently provides that those who have previously held a lease for more than seven years and who have not previously had the benefit of the repairing obligations by landlords will still not gain the benefit of such obligations if they renew their lease with one of less than seven years. There seems to be no justification for excluding any short leases from the repairing obligations, which should surely apply to new short leases, irrespective of what length the previous lease was. This amendment would achieve that result.

Amendment 87 would make landlords responsible for repairing furniture, fixtures, fittings and appliances in furnished lettings. Section 11 of the Landlord and Tenant Act 1985 implies repairing obligations into all leases of less than seven years in those granted since 24 October 1961. They are required to,

“repair the structure and exterior of the dwelling-house”,

and,

“to keep in repair and proper working order the installations in the dwelling-house for the supply of water, gas and electricity and for sanitation”.

However, it makes no provision in relation to any furniture, fixtures, fittings or appliances provided by landlords in respect of furnished dwellings, such as beds, sofas, cookers, fridges and so on.

Although most people would expect landlords to be responsible for the furniture and fittings that they have supplied in furnished dwellings, few tenancy agreements—even those of social landlords—impose any specific repairing obligations in this respect. Most furnished lettings are granted by private landlords whose tenancy agreements often make no reference to repairing obligations at all. However, where there is any such reference it is usually only one to the terms implied by Section 11 of the Landlord and Tenant Act 1985. In the absence of any specific term in the tenancy agreement covering furniture and so on, there is no obligation upon a landlord to repair or keep in working order the furniture or fittings that she or he has supplied. It is sometimes possible to argue for an implied term to make the landlord liable to repair in this situation, but this leaves the position uncertain and unnecessarily complicated in this regard.

The proposed amendment would ensure that the legal responsibility for furniture, fittings, fixtures and appliances in furnished tenancies falls where it should lie: namely, upon landlords. Given that furnished tenancies are usually short term, it is completely unrealistic to expect tenants to carry out such repairs themselves. These repairing obligations should fall on the landlord, not the tenant. This amendment would ensure that this was the case.

Amendment 88 would ensure that all tenants can live in housing that does not injure the occupier’s health. Again, it refers to the same Landlord and Tenant Act and the same obligations. The courts have decided that the obligation to repair arises only where there is disrepair—namely, where there has been deterioration from some former condition. As such, the obligation to repair does not usually cover design defects. However, sometimes unhealthy housing conditions arise not from disrepair but from design defects. The most common example is condensation dampness which occurs as a result of the construction of a dwelling house; namely, through inadequate insulation, ventilation and/or heating, and not because of any disrepair to the structure or the installations supplied. The point is extremely important because currently tenants living in unhealthy conditions which arise as a result of design defects are unable to take any civil action to ensure that these conditions are rectified. While it may be possible for tenants to take action in the magistrates’ courts under the Environmental Protection Act 1990, no public funding is available to take such cases. Local authorities can also bring proceedings under the 1990 Act but, of course, are unable to bring proceedings against themselves.

Amendment 88 would enable tenants to take civil proceedings in order to make their landlords rectify design defects which render the premises injurious to the health of the occupiers. It seems only right in the 21st century that tenants of residential accommodation should expect to live in accommodation that does not injure their health and should be able to take steps to rectify the defects giving rise to these conditions whatever the cause. In relation to the installations in a dwelling house, tenants are already able to take civil action to rectify design defects which result in the specified installations not being in proper working order. They should also be able to take action when the defects affect, or will affect, their health.

The public spending implications of this are not great because the decent homes standard has improved the public housing stock. The main benefit of this amendment would be private tenants of rogue landlords, where the worst of the housing stock now rests. Indeed, giving such tenants a private remedy could reduce public spending because it would take some of the pressure off hard-pressed local authorities, which have the job of enforcing the housing standards in the Housing Act 2004, and could also provide savings to the National Health Service. The current necessity to draw a distinction between disrepair and design defects, as opposed to simply concentrating on the effects on the occupier, makes the law in relation to repairs unnecessarily complicated and results in the need for expert evidence on the cause of the problems. Removal of the distinction would greatly simplify the law in relation to disrepair. This proposal would therefore benefit not just those tenants who are presently living in unhealthy housing conditions but the civil justice system as well.

Amendment 89 would make landlords responsible for the repair of installations for ventilation, particularly extractor fans. The Landlord and Tenant Act 1985, as currently enacted, makes no provision in relation to installations for ventilation, save in respect of windows. Lack of ventilation is a common cause of condensation dampness in dwelling houses and is often prejudicial to health. Over the years many properties have been fitted with extractor fans in order to combat this problem. However, there is presently no obligation on landlords to keep such installations in repair or proper working order unless this is expressly provided for in the tenancy agreement. Few tenancy agreements, even those of social landlords, make specific reference to extractor fans, with the result that tenants have no remedies when extractor fans break down or do not work properly. Given that extractor fans are usually fitted by landlords, the responsibility for repairing them should fall on the landlord, not the tenant. This amendment would ensure that this was the case.

Finally, Amendment 90 seeks to ensure that all tenants and other occupiers of housing can live in housing that is fit for its purpose. In 1996, the Law Commission recommended that, subject to certain exceptions, an implied term of fitness should be imposed on all tenancies of less than seven years. This proposed new clause goes a little further in that it would apply the term not only to tenancies but to licences. It seems only right that any occupant of residential accommodation should be able to expect accommodation that is free from damp and has natural lighting, ventilation, a water supply and other basic facilities for sanitation and the cooking of food. At present, the other main repairing obligation in Section 11 of the 1985 Act is confined to matters of disrepair. Therefore, if a property is unfit in the respects mentioned above because, for example, of design defects, the occupier has no remedy. That cannot be right. A house with no damp-proof course could be rendered so damp as to cause the tenant pneumonia but there would be nothing in the tenancy agreement to compel a landlord to install one. On the other hand, if there was a damp-proof course in place that had failed through disrepair the tenant would have a contractual remedy. That is an absurd anomaly.

Public spending implications again are not great because a decent home standard has improved the public housing stock. Again, the main benefit of this amendment will be private tenants of rogue landlords, where the worst of the housing stock now rests. Indeed, giving such tenants a private remedy could reduce public spending because it would take some of the pressure from local authorities who have the job of enforcing housing standards in the Housing Act 2004.

In the recess, my noble friend the Minister replied to me following Committee stage. I should like to pursue a sentence in the letter that I received because it caused me some concern. I am sure that that was unintended but we need to clarify the record. In terms of repairing obligations on landlords, the letter states that,

“where there is no evidence to the contrary I am not prepared to increase burdens on landlords with the attendant risks for growth in the sector”.

It is inevitable that the private rented sector will grow but I am puzzled by what I would regard as the basic standards of accommodation, with basic attention to repair and maintenance of properties and enabling people who are tenants to live in accommodation that is fit for purpose. I do not see that as a risk for the sector. People have a right to expect a basic standard of accommodation and I hope very much that my noble friend will put my mind at rest and confirm that there should be applied a basic standard that needs to be delivered through amendments to the law. At present, too many private sector rented accommodation units are falling through the legislation that currently exists because it has not been modernised—well, in the past 25 years—to a standard that would reflect current modern needs.

[Lord Beecham]

My Lords, Newcastle is once again united. We are even more united now than we were under the previous Administration. I congratulate the noble Lord, Lord Shipley, on tabling these amendments and equally congratulate those who have briefed him so thoroughly with the material that he has brought to your Lordships’ House today. He has highlighted an important area of the national housing debate which has been subordinated in recent times to the simple question of household numbers, housebuilding and the long queue of people denied access to accommodation, including first-time buyers and their problems. Much of the emphasis has been simply around numbers and the owner-occupied sector.

The real problems addressed by the noble Lord’s amendments are to be found essentially in the private rented sector, which has received insufficient attention for many years under Governments of both parties, with the result that, as the noble Lord pointed out, far too many people are living in unsatisfactory accommodation. We are living in a letters’ market, as it were. Demand for rented accommodation is going up all the time and obviously property numbers are not going up to match. Reputable organisations are anticipating additional problems when changes in housing benefit come in, and already there is some indication that private landlords are reluctant to let to housing benefit tenants. There is huge pressure within this sector. As the noble Lord pointed out, that sector has much the highest rate of disrepair and the least degree of modernisation through to decent home standards. Therefore, there is a huge need for concentration on these problems. The very basic matters to which the noble Lord referred must be an essential part of the responsibility of any landlord.

There will be a slight irony if the Government resist the amendment. If the exterior of a property was at issue, Town and Country Planning Acts would apply. Owners can be made to tidy up the outside of their property, and even paint it, whatever the length of tenure or even if it is owner-occupied; but when it comes to the inside, as the noble Lord pointed out, these powers do not exist for far too many properties. Therefore, there is nothing wrong in principle with imposing obligations on owners—in this case, renting owners—because they are applicable to all owners as far as concerns the property exterior. One might have thought that, from the point of view of safety and health, the interior is more important. It is perfectly logical that legislation should be amended in the way proposed by the noble Lord.

I will sound a cautionary note. The noble Lord referred to the availability of civil proceedings once the measures pass into law. Again, I remind noble Lords that access to the courts by this group of potential litigants is likely to be affected by the pending changes to legal aid. If current proposals go through, only under exceptional circumstances will legal aid be available to assist tenants in enforcing repair obligations of this kind. Perhaps that should be borne in mind in future debates. I hope that the noble Lord and his colleagues will join Members on all sides of your Lordships' House in investigating those steps very thoroughly, because these matters are not divisible. If we are looking at the housing situation holistically, we must look not only at obligations but also at methods of enforcement. The noble Lord touched on them. We must be sure that those methods remain available to the people who will need them.

I hope that the Minister will respond sympathetically to the suggestions contained in the amendments. I represent an area that has a significant private rented accommodation sector. There are a number of very poor landlords and a licensing scheme that is beginning to have some impact. I hope that that experience, which is reflected in many places, will be improved by the Government giving fair wind to the noble Lord's proposals.

[Lord Taylor of Holbeach]

Well, my Lords, the noble Lord, Lord Kennedy, and I know that when the Toons are on the run we are in a bit of trouble. However, I welcome the chance to address my noble friend’s amendments, because the debate draws attention to the very important issue of the quality of our housing stock, in particular the rented sector. My noble friend's amendments are all interrelated. They argue a case that unfortunately the Government cannot accept. We believe that the current division of responsibilities and obligations between landlord and tenant is the right one. Having said that, we are not complacent on the issue.

The main focus of my noble friend's amendments is to allow tenants to take action through the civil courts against a landlord who fails to provide safe accommodation. His proposals draw attention to concerns about the condition of some of the housing offered for private rent. There is some evidence that the stock is improving, but we are all keen to see more improvements. However, a mechanism already exists by which tenants can be safeguarded. It has not been mentioned by any noble Lord contributing to the debate. The Housing Act 2004 introduced the housing health and safety rating system—HHSRS, as it is commonly known. The HHSRS applies to all private sector housing regardless of tenure. It provides a framework within which a local authority can inspect a home and assess it against 29 hazards. I shall not list them—I do not actually have them to hand—but they include exactly the sort of situation which my noble friend is talking about: damp and mould, dangerous fumes, hazards of falls and matters concerning the facilities for domestic and personal hygiene. It therefore largely covers the types of hazards which are of concern to my noble friend. Where a local authority discovers such a hazard in someone’s home, depending on its severity, it has a range of powers at its disposal. It can make a hazard safe and charge the landlord or require the landlord to make repairs. Where a landlord does not comply, he can receive a heavy fine and a criminal conviction can follow. All this can be triggered simply by a tenant complaining to the local authority, in contrast to the legislation which my noble friend seeks to amend which is dependent on the tenant taking the landlord to court. The noble Lord, Lord Beecham, referred to the cost, time and difficulty of any legal process. Given that these safeguards already exist as a result of the measure introduced by the previous Government, I ask my noble friend to withdraw his amendment.

[Lord Shipley]

My Lords, I am glad that the Minister is not complacent, but I think that this issue is not being taken seriously enough by the Government and that there will be increasing problems in coming months and years because of the rise in demand for private rented stock. With the law so inadequately defined in so many respects around things such as extractor fans, furniture, fittings, damp courses and so on, one of the consequences will be that conditions in the private rented sector are going to worsen. For that reason, I continue to believe it to be absolutely right that the Government have the responsibility to do something about it.

All these amendments are directed in part by a lack of clarity in the law. I entirely understand what the Minister is saying about the recourse people currently have to potential remedies, particularly through local councils, but the difficulty is that there are problems in the interpretation of the law—for example, between design defects and defects that occur because repairs need to be undertaken to an existing fitting. These are material considerations for a Government who are concerned, for example, about standards of public health. I shall withdraw the amendment, but I hope we can engage in further discussion about some of the issues that have been raised.

One of the problems that we have at the moment, being on Report on a matter that was not debated in Committee, is that we have not had the benefit of that further discussion. It has occurred here and in other amendments, and it may yet occur in one or two further amendments. That is a defect in our procedures because we have not had the time to do justice to some of the housing amendments. That having been said, and in the expectation that we can engage in further discussion on these matters, I beg leave to withdraw the amendment.

Amendment 84 withdrawn.

--- Later in debate ---

Moved by

[Lord Shipley]

91: After Clause 172, insert the following new Clause—
“Standards for private sector lettings and management agents
The Secretary of State may by regulations set the standards that private sector lettings agents and management agents must adhere to.”

[Lord Shipley]

My Lords, I shall also speak to Amendment 92. Amendment 91 would insert a new clause to give power to the Secretary of State to lay down in regulations the standards that private sector letting agents and management agents must adhere to. This would enable the Secretary of State, at a later date, to lay down statutory guidance to regulate private letting agents. A similar provision was passed recently in Scottish legislation. As there are currently no regulations governing the conduct of letting agents, such a clause would act as a starting point for a debate on what sort of regulation would be effective.

Both tenant and landlord organisations have long reported problems with private sector letting agencies, including the charging of exorbitant fees, failure to enforce basic health and safety standards in properties and inadequate client money protection provisions. The situation is such that the largest professional body for letting agents in the UK, the Association of Residential Letting Agents, which has been at the forefront of self-regulation, is strongly in favour of statutory regulation to tackle problems in the industry. This amendment is also supported by the British Property Federation, the National Landlords Association and housing charities.

The amendment would allow the Secretary of State, following further consideration and consultation, to specify new standards for the regulation of letting agents. It does not require guidance to be drafted immediately but ensures that the possibility is open, and will act as a starting point for a debate on how best to regulate the sector. There would of course have to be wide consultation on the scope and nature of any regulations, but the Bill is likely to be the best legislative opportunity to make progress on this issue for a significant period.

Around 60 per cent of private landlords use one of the estimated 8,000 letting agents or managing agents in England. However, half these agents do not belong to any of the professional trade bodies. Research has shown that tenant satisfaction levels are lower—reportedly 71 per cent—where the property is managed by an agent than where it is managed by a landlord directly, reported to be 81 per cent. In an online survey of 1,289 tenants who visited the Citizens Advice website over a three-month period, it was found that 73 per cent were dissatisfied with the service provided by their letting agent. Less than one-third of agents willingly provided full written details of their charges to CAB workers when asked. There are particular concerns in relation to letting and management agents having a lack of expertise and firms not having professional indemnity insurance or client money protection.

The current voluntary approach has significant drawbacks, with the worst agents being the least likely to submit to a voluntary scheme. Voluntary regulation, covering only an estimated half of all agents, is unfair, as it creates extra hurdles for the more reputable agents while not doing so for those who are most likely to be responsible for problems. The Association of Residential Letting Agents believes that the quickest and most effective method to eliminate unprofessional, unqualified and unethical agents from the rental market is through statutory provision via this amendment.

There is currently no mandatory licensing scheme for letting agents or landlords in the UK despite 95 per cent of consumers believing that there should be. The Association of Residential Letting Agents introduced a licensing scheme for its members in May 2009 which ensures the highest standards of service for those who use members of the scheme. Its introduction was supported by a wide variety of organisations including Trading Standards, Shelter and the National Landlords Association. The scheme delivers higher standards of service for tenants by ensuring that licensed members abide by the relevant codes of practice and rules of conduct, hold recognised qualifications and are covered by professional indemnity insurance, a recognised client money protection scheme and an independent redress scheme. The licensing scheme has many other facets to improve service, such as ensuring that all members undertake at least 12 hours of continuing professional development each year.

I do not regard this amendment as contentious. It seems eminently sensible because it is simply providing a means whereby statutory legislation can be introduced by giving the power to the Secretary of State to do so at some future date.

Finally, Amendment 92 relates to a slightly different issue but it extends the courts’ discretion to postpone or suspend the execution of possession orders in cases where there is no specific statutory power to do so. The problem is that Section 89 of the Housing Act 1980 severely restricted the power of the courts to suspend the effect of possession orders in cases where the courts had no specific statutory power to do so but had, to that point, relied on their general powers. The effect of this was that no possession order could ordinarily be suspended for longer than two weeks; in cases of exceptional hardship the court could suspend further, but only up to six weeks. The effect of this has been that an evicted tenant and his or her family are only permitted two, or at most six, weeks to find alternative accommodation whatever the circumstances of the family as regards, for example, size, medical or location needs or education.

Even if those restrictions were realistic in 1980, they are now out of date, in view of the continued pressure on the availability of affordable housing, the recent reductions in the provision of housing benefit and the increase in the types of tenancy to which Section 89 applies since it was enacted. To find alternative accommodation within the timescale provided by the 1980 Act is virtually impossible, and has been for some time, yet the courts have no power to order more. This amendment would simply enable a court to exercise greater flexibility in considering the suspension of possession orders and to allow the appropriate length in the circumstances of the case, balancing the hardship to the tenant caused by the eviction against the landlord’s need for the property. I beg to move.

[Lord Whitty]

My Lords, I support Amendment 92. Those of us who are looking at the housing market recognise that the role of the private rented sector is likely to increase and that there are serious problems with both quality and delivery within that sector. I am sorry I had to be out of the Chamber when Amendment 85, on the accreditation of private landlords, was debated. However, the vast majority of tenants and potential tenants will come across the property via an agent, and, as the noble Lord says, their actual arrangements for rent, repair and general customer service will be with the agent, not directly with the individual landlord. In those circumstances, the role of lettings agencies and management agencies is vital. Therefore, it is important that this Bill provides for some ability to set standards for them. As the noble Lord, Lord Shipley, said, it is very important that the professional trade bodies in that area—the National Landlords Association and the British Property Federation—support a degree of statutory intervention on this front for the very clear reason that good landlords, effective landlords and landlords concerned with service for tenants can get undercut by bodies that do not observe decent standards.

The amendment is permissive on the Minister and clearly will be subject to some assessment of need. However, as the noble Lord says, if we do not provide for some ability to issue regulations in this area, then a whole sector of housing provision will remain unregulated, with the better agents in that area being undermined by the worse. I hope that the Minister can at least give a positive response to this amendment.

--- Later in debate ---

[Lord Taylor of Holbeach]

My Lords, my namesake reads the situation pretty well and makes a very thoughtful contribution, as he always does on housing matters, rural housing in particular. It has been a very useful debate. In principle we have discovered the difficulties of an imperfect world where not everybody behaves as they should. I am delighted that the noble Lord, Lord McKenzie, did not get hissed at when he declared his interest as a landlord because it is important that landlords are recognised as having an important part to play. Many of the amendments introduced by my noble friend are directed at encouraging landlords to maintain high standards. The question is whether regulation is the way to deal with this problem, particularly given the need not only to deal with the current situation but to plan and develop this sector for the future, because we all know that it is an area which will need considerable investment.

Amendment 91 makes proposals for the regulation of letting and management agencies. The noble Lord, Lord Whitty, said he was going to speak to Amendment 92 but he meant Amendment 91 because that is what he spoke to. Around two-thirds of landlords let and manage their property through an agent so it is important that they can rely on a good service. We are aware of poor practice within the letting and management agent sector but regulation already exists in this area. Between a third and a half of all agents belong to voluntary schemes which set standards and offer redress when things go wrong, including client money protection. Unfortunately, far too few consumers of the agency system—both landlords and tenants—are aware of the risks of using an unregulated agent. I am delighted that the Government have been able to endorse the Safe Agent Fully Endorsed scheme—SAFE—recently launched by the industry which highlights a key risk around clients’ money. We want to explore these voluntary approaches further before a move to statutory regulation but we do not rule this out in the longer term. However, we cannot support the introduction of enabling powers where we have no plans for their use.

Amendment 92 in this group would extend the court’s discretion to postpone awarding possession of dwellings. We do not think this is necessary. We estimate that, even using an accelerated procedure available under the legislation, gaining possession through the courts takes at least six months. That is more than enough time for a tenant to find alternative accommodation and it already places a significant burden on landlords, particularly in cases where rent arrears are accumulating.

On Amendment 93, my noble friend Lord Palmer joined my noble friend Lord Shipley in presenting the argument for local authorities’ tenancy relations services. We agree that both landlords and tenants in the private sector should have access to advice and support, but local authorities already provide such advice through their housing options services. This advice is supplemented by existing powers to deal with poor practices by landlords. We therefore see no need to legislate further. New legislation would have the effect of restricting local authorities in their existing work and quite possibly add burdens simply in order to reinforce what is already there.

All the amendments pursue a proper ambition: to raise the standard in the industry. In the case of letting and management agents, we acknowledge that some bad practice exists. I have considerable sympathy with those who have been caught out by bad practice, but for the reasons that I have set out we do not think that regulation now is the right answer. Therefore, I ask my noble friends not to press their amendments.

[Lord Shipley]

I thank my noble friend the Minister for his response. In respect of Amendment 93 and tenancy relations services, the situation is getting more difficult. There are reductions in spending on tenancy relations. The Minister is right that the amendments are part of a general picture of trying to maintain standards. Where do people who have problems in the private rented sector go? If tenancy relations services are closed down or reduced in scale, and if the CAB has increasing problems in delivering the standards and levels of support that it would like to deliver, it makes it difficult to see how people will get the support they need. That means then that the Government’s objective of ensuring fit accommodation is also more difficult to achieve.

I have noted what the Minister said about Amendment 92. We will look further at that and may raise the issue again. As he rightly identified, it is an issue for the courts.

The intention of Amendment 91 was to enable the Government to do something about it. However, if we are going to explore making the voluntary approaches better, and if we have not ruled out introducing statutory powers, I am content for the moment to work with that, but we are likely to find an increasing need to move down the statutory regulatory route. With those provisos, I beg leave to withdraw the amendment.

Amendment 91 withdrawn.

Localism Bill

Lord Shipley Excerpts

Wednesday 7th September 2011 Lords Chamber

Moved by

[Lord Shipley]

62: After Clause 166, insert the following new Clause—
“Transfer of trusteeship of almshouses
In section 170 of the Housing and Regeneration Act 2008 (overview) at the end insert—“(2) For the purposes of this Chapter, “disposal of property” shall include the transfer of trusteeship of an almshouse by a registered provider where, as a result of that trusteeship, the registered provider manages land or dwellings; and “disposal of land” and “disposal of a dwelling” shall be interpreted so as to refer to the transfer of trusteeship which entails management of land or dwellings accordingly.””

[Lord Shipley]

Amendment 62 relates to the transfer of trusteeship of almshouses. I am grateful to my noble friend the Minister for writing to me in the Recess to say that she was sympathetic to the case for this amendment and would be happy to consider the matter and discuss it further even though there was a need to be cautious about extending the scope of state regulation in relation to charitable bodies. I hope that discussions can continue between today and Third Reading.

At present, if a regulated housing association sells occupied social housing, that housing association requires the consent of the regulator, who in turn requires the housing association to consult its tenants. By contrast, when the control of an almshouse is moved from one corporate trustee to another, the ownership of the property remains with the Official Custodian for Charities. For that reason the regulator’s consent is not required for the change even if the residents’ homes are in effect being sold against their express wishes. The amendment would ensure that if a registered provider wanted to transfer the trusteeship of occupied dwellings, the consent of the regulator would be required. The regulator could in turn require the housing association to consult residents.

I move this amendment because a housing trust—the Anchor Trust—is transferring the corporate trusteeship of 11 almshouses spread through London and south-east England to another charity. Many residents oppose this proposal and would prefer to be transferred to a more local charity instead. The issue here is about the rights of tenants. If this was a stock transfer, say, of local authority housing, tenants would have the right to be consulted and, indeed, to give their consent to a transfer of their properties. The question that lies at the heart of this is: if there has to be consultation and consent given for a stock transfer, why when almshouses are being transferred is there not to be full consultation and consent? The legal situation is complicated because of the charitable status of the almshouses. I understand that in this specific case there have been meetings between Members of Parliament and the chief executive of the Anchor Trust and with the Charity Commissioners. However, we need to address this issue in Parliament because I cannot see why a different system should apply to tenants of almshouses as opposed to tenants in other forms of social housing.

I recognise the need for further work to be done on the legal issues. I also recognise that we are still on Report. However, I hope that there is time to look further at those legal issues to see what might be done about this situation. In the mean time, I hope that it might be possible for full consultation and consent to be obtained from those tenants affected by this and any other proposed transfer of almshouses. I hope that it will be possible for that further work to be presented to your Lordships' House at Third Reading.

[Lord Kennedy of Southwark]

My Lords, I offer my support and that of the Opposition to the noble Lord, Lord Shipley, as I have done on a number of occasions on Report. He has identified a problem that needs to be addressed. It involves real people with real concerns. If the matter requires further work, as he says, and it can be done—I hope that the Minister will comment on that—the issue may be sorted out. Given that we are discussing a charity, I understand that the issue may be more difficult than it at first seems, but I hope that the government Front Bench will give a positive response.

Amendments 65 and 67 in this group stand in my name. Amendment 65 would ensure that a parent company of a group of housing associations can be registered even if it owns no housing itself. This would allow the regulator to regulate group members via the parent rather than directly if he thinks that that would be more effective. Amendment 67 concerns the appointment of members to housing association boards. The law as it stands allows the regulator to make unlimited appointments to a registered provider’s governing body provided that they remain a minority. For a 10-member board, it would allow the regulator to make nine appointments. My amendment limits the number of appointments the regulator may make to no more than four. This is a proportionate number of appointments and would enable the regulator to strengthen the board by adding members with sufficient skills and abilities to deal with any concerns that they may have about the board’s performance. However, the number would not be too overbearing as this sort of appointment would be of a temporary nature to help the housing association board discharge its duties more effectively.

--- Later in debate ---

[Earl Attlee]

My Lords, I am confident that my department will continue to monitor the situation, but we cannot do anything further with this Bill.

[Lord Shipley]

Will it be possible for the evidence that the Minister referred to from the regulator, the Charity Commission and other bodies to be provided in the Library so that we can see exactly what evidence they have supplied to the Government that indicates that legally this is very complicated? Would the Minister agree that it would be good practice for consent to be received where a transfer is being proposed for almshouses? Would he consider and give advice on what other steps could be taken to ensure that consent for transfer from tenants is delivered?

[Earl Attlee]

With regard to the evidence, if I can give the noble Lord some more evidence I will, but I am not certain that I can. I believe there are some difficulties with his second request.

[Earl Attlee]

My Lords, we will do whatever we can to assist a resolution of this problem. We will continue to monitor it, but my particular point is that there is not much more we can do with this Bill.

[Lord Shipley]

My Lords, when I moved Amendment 62, I quoted from the Minister’s letter which said that she was sympathetic to this case, so I am pleased that we seem to have ended on a note of sympathy and understanding of the problem. I think we need to try to find a solution to this. I repeat myself, but I do not think it is tenable for tenants of almshouses to be treated differently from tenants of other social housing or local housing. There is a principle at stake here. There may be legal complexities to deal with in this Bill, but I am very grateful for the assurance from the Minister that we can enter further discussions prior to Third Reading.

[Earl Attlee]

My Lords, I said that we cannot enter further discussions. We cannot use this Bill to solve this problem. I gave no such undertaking.

[Lord Shipley]

I understand the point that the Minister is making—that this Bill may not be the right forum for progressing the issue—but there will nevertheless be discussions about how the issue might be progressed in other ways.

[Earl Attlee]

My Lords, we are happy to continue work to resolve the issue, but not with this Bill.

[Lord Shipley]

I understand that situation. With that confirmation, I beg leave to withdraw the amendment.

Amendment 62 withdrawn.

Localism Bill

Lord Shipley Excerpts

Wednesday 20th July 2011 Lords Chamber

[Lord Shipley]

My Lords, I rise in support of the amendment of the noble Lord, Lord Whitty. Given the range of the amendments that are about to be debated, having the context to them is very important in understanding the strategic problem around housing and homelessness. We have a rising number of households. The noble Lord, Lord Whitty, is absolutely right; we should be building somewhere between 200,000 and 250,000 new homes a year to keep abreast of new household formation. We got half the figure—around 139,000—last year.

Meanwhile, the housing market is volatile. There is a rising number of mortgage repossessions. There is 1 million more people renting their homes now than were renting six years ago, largely because of the economic situation and the difficulty of getting a mortgage. There are now more people wanting to rent than there are vacancies. In some parts of the country, rents are rising much faster than inflation, reducing individual capacity to save. Disposable incomes are declining, which adds to the problem. While short tenancies might be acceptable for many single people, they are not at all good for families where continuity and security matter, or for neighbourhoods where continuity builds social cohesion.

There will be very great pressure on the rented sector over the next few years. It is crucial that we ensure the protection and rights of tenants rather than seeing everything from the perspective of supply. We are not building enough homes, which is a failure of successive Governments over many years. This situation must be addressed urgently. It is the context of my view that we need to have local housing strategies because each part of the country will be different. Unless we understand the problem that we are trying to solve, we will not have the evidence base, making housebuilding programmes, the modernisation of homes and so on more difficult to achieve in the right numbers.

[Lord Kennedy of Southwark]

My Lords, first, I thank the noble Earl, Lord Attlee, for his kind words from the Government Front Bench. They are much appreciated. The Opposition fully support the amendment in the name of my noble friend Lord Whitty. The proposal is strategic and practical. It sets up a context for the debate and other sections of the Bill. It provides both the Government and the local authority with valuable information for assisting the planning for housing need in the future. I hope that the noble Baroness will be able to accept my noble friend’s amendment. If not, I hope that she will feel able to take it away and look at it over summer, maybe in the terms referred to by the noble Lord, Lord Shutt of Greetland, in the previous amendment.

--- Later in debate ---

[Lord Shipley]

My Lords, I shall speak to a number of amendments standing in my name and those of my noble friends on these Benches, and I shall speak first to Amendments 170D and 171A. They would extend from two to five years the period in which the homeless duty on a local authority would recur, and provide for a household accepted as homeless to receive reasonable preference on the local authority’s allocation scheme during the five years, arising from the household’s need for stable housing. Without these amendments some very vulnerable people could face increased vulnerability.

The Government’s housing White Paper last November confirmed their commitment to tackling homelessness and protecting the most vulnerable in society, and confirmed their belief that social housing should continue to be prioritised for the most vulnerable, given that this could be the only way that they would gain access to a secure home. These are people who may have been in care, had a mental illness or disability, been a member of the Armed Forces, or served a custodial sentence. Groups such as these need security and support to set up and manage a home successfully. It is difficult to see why an acceptance that such people are priority homeless should now be so constrained.

The impact of changes to local housing allowance means that households dependent on full or partial housing benefit will be pushed into the cheaper part of the private rented sector without any reasonable preference for a permanent and affordable home. I believe and would suggest that the Government should stick to their commitment in their housing White Paper that the existing reasonable preferences categories should remain unchanged to ensure that social housing is clearly focused on those who need it most. Local authority duties cannot simply be discharged by offering a single short-term contract with a private landlord.

Amendment 171ZA provides a framework for the exercise of the right of review that is presently enjoyed by applicants for social housing. The present statutory scheme for allocation of social housing and the re-cast scheme proposed in Clause 128 contain provisions enabling applicants to seek reviews of adverse decisions on their applications. The problem is that the current Act and the new clause are silent as to the procedure to be followed if an applicant exercises those rights. Our amendment suggests that a fair mechanism for resolving reviews would be as laid out, and essentially replicates the procedural rights enjoyed by homeless applicants who seek reviews of homelessness decisions under the Housing Act 1996. The amendment also reflects basic good practice that some local authorities have already incorporated into their local schemes. The need for structure to be applied to review procedures was recognised by the Government many years ago, and I understand that an ODPM letter to local authorities sent on 11 November 2002 promised further guidance. That guidance is still to arrive and the amendment in my name makes good that omission.

Amendments 171D and 172A restore the requirement that a final offer of accommodation under the homelessness duty must be reasonable for the applicant to accept. In fact, these amendments to Clause 129 simply restore the law to its current position. At present, Section 193(7)(f) of the Housing Act 1996 provides that a housing authority shall not make a final offer of accommodation, including approving an offer of private sector accommodation, to a homeless applicant,

“unless they are satisfied that the accommodation is suitable for the applicant and that it is reasonable for him to accept the offer”.

The requirement that it is reasonable to accept the offer has been removed by Clause 129(9) for no obvious reason and this amendment would restore that condition. A recent case in the Court of Appeal considered that while a flat may have qualified as suitable in terms of size and location, the council concerned should have gone on to consider the wider question of whether it was reasonable for the family to accept it, ruling that “suitability” and “reasonable to accept” are overlapping but different concepts.

This piece of legislation is very important where there are aspects of accommodation, or more likely the surrounding environment, that would not prevent the accommodation itself being objectively considered as suitable but would have a detrimental affect on the applicant. Examples could include the risks of racial harassment or violence by individuals unknown to the applicant, or a risk to the welfare of the applicant where the accommodation offered is in a neighbourhood associated with drug use or dealing and where the applicant is a recovering drug addict. It could include the perceived risk of harassment or violence by individuals known to the applicant, such as a violent ex-partner whose relatives, friends or associates live in the neighbourhood. I hope my amendment is seen as a sensible way forward—to restore the law simply to its current position. It is about making it clear in the Bill what process should be followed.

Amendment 173ZB would create a statutory duty on local authorities to record all approaches they receive from people in housing need, including those who apply for social housing, those who express an interest in applying, those who are considered to be homeless by the local authority and those who consider themselves to be homeless. Requiring local authorities to collect data on all housing or homelessness approaches that they receive would provide a clearer picture of the genuine level of housing need that exists in a local authority area. Such data are essential to inform the localised planning system and the local tenancy strategies introduced by the Localism Bill, particularly as restrictions on social housing waiting lists could reduce the extent to which these lists can provide an indication of housing need.

Amendment 173AA seeks to define the suitability of accommodation secured under homelessness duties; it should be affordable and take into account such matters as distance of the accommodation from employment opportunities, any disruption to the education of children and young persons, the risk to the applicant of isolation, the level of support available to the applicant in the district, such as closeness of families and friends, the availability of medical treatment where appropriate and any caring responsibilities of the applicant in relation to another person.

If local housing authorities are able to discharge their main duty with potentially one offer of private rented accommodation, it becomes much more important that this offer is suitable for the needs of the household. At Third Reading, the Minister, Andrew Stunell, said that he recognised there are some concerns and that he was prepared to consider further the need for additional protections for homeless households placed in the private sector. It is very welcome and I would be pleased to see the Government come forward with concrete proposals to deliver that objective.

It is a question of getting this on to the face of the Bill. At Second Reading, my noble friend the Minister stated that the accommodation crucially must be suitable, which covers a wide gamut of issues including affordability, size, condition, accessibility and location. We need that on the face of the Bill.

Amendment 173ZC is about a household being deemed to be in priority need but intentionally homeless. In this case, the authority must provide not only advice and assistance but suitable accommodation for a period that will give the householders a reasonable chance of finding accommodation for themselves. Amendments 173ZE and 173ZF are self-explanatory, I hope. They relate to extending the period to five years to enable reapplication after a private sector offer and enable people to maintain the right to an offer for a longer period.

Amendment 1738B relates to the Homelessness Code of Guidance 2006, which states at paragraph 8.32:

“where a person applies for accommodation or assistance in obtaining accommodation, and:

(a) the person is an assured shorthold tenant who has received proper notice in accordance with s21 of the Housing Act 1988;

(b) the housing authority is satisfied that the landlord intends to seek possession; and

(c) there would be no defence to an application for a possession order; then it is unlikely to be reasonable for the applicant to continue to occupy the accommodation beyond the date given in the s21 notice”.

There is a major issue here, because the Secretary of State plainly considers that, ordinarily, a tenant in such circumstances—that is, one who has been properly served by a Section 21 notice—should be accepted as homeless by the local housing authority. The problem is that local housing authorities rarely do so, but will accept an application only at the point of eviction, thus causing anxiety to the tenant and his or her family, which could be avoided, and needless incurring of costs.

I realise that I have tabled a number of amendments. I would be very happy for the Minister to consider us talking further about some of these issues over the summer, but they are all exceedingly important in protecting the rights of tenants.

[Lord Rix]

My Lords, I speak to Amendments 171 to 173, which are scattered among other amendments in the group. Amendment 171 is concerned with the allocation of housing. Mencap, of which I am president, hears stories on a daily basis from parents of learning-disabled offspring about how difficult it is to find a suitable home for their son or daughter. That is why many people with a learning disability continue to live with their parents, often into late adult life. Mencap's report some years ago, The Housing Timebomb, highlighted that about 29,000 adults with a learning disability still live with parents who are over 70.

Although the “reasonable preference” groups—which guide local authorities and their decisions as to who should be housed as a priority—highlight the people who need to move on medical and welfare grounds, including disability, people with a learning disability still struggle to be regarded as in urgent need of housing. At that point, living with parents puts them in the position of being in “settled accommodation” and therefore less of a priority in terms of both homelessness and medical reasons.

To resolve that problem, my amendment is aimed to change the “reasonable preference” categories so that anyone who has an assessed housing need in the context of a community care assessment should be included in the “reasonable preference” groups. That would make it clearer to local housing departments that housing need, in the context of someone with a learning disability, has to be seen in a broader sense than is currently the case, and help to improve this unhappy situation.

Amendments 172 and 173 concern the ways in which local authorities discharge the homelessness duty. The Bill proposes that people can be placed in the private rented sector without due regard to the wishes of the homeless applicants themselves. Currently, a homeless applicant can reject an offer by the local authority to move into private rented sector accommodation. My amendment would introduce appropriate safeguards so that if an individual were placed in private rented accommodation, their needs would be properly addressed.

There are many reasons why people may not consider accommodation offers in the private rented sector to be suitable, including insecurity of tenure and, of course, cost. If the provision is enacted, strict safeguards should be in place to ensure that the accommodation which disabled and older people are offered, and have to accept, is appropriate, affordable and provides some security of tenure. That is why Amendment 173 proposes to increase the minimum period of such a tenancy from just 12 months to 60. This will provide the security of tenure that is so important to many people with a learning disability and their parents.

I am also encouraged by the Government’s comments during Report in the House of Commons, in which it was outlined that they would,

“consider further the need for additional protections for homeless households placed in the private rented sector”.

Ministers also said that they would be,

“prepared to consider using those powers for the provision of additional protections on standards of accommodation or other matters”. —[Official Report, Commons, 18/5/11; col. 408.]

I look forward to hearing from the Minister whether the Government have had any further thoughts on this, including the possibility of introducing a national accreditation scheme.

--- Later in debate ---

[Lord Shipley]

My Lords, I shall speak to Amendments 173CE and 173E. I should say that a gremlin has got into the system, and Amendment 173CF is incorrect. I beg permission not to speak to it because it is a mistake.

The purpose of Amendment 173CE is to enable a person to whom the offer of a flexible tenancy is made to request a review of the landlord’s decision as to the length of the term of the tenancy, thus eliminating the restriction that no review can be requested if the offer is within the landlord’s policy as to the length of the term of such tenancies. I shall give an example to explain the problem. A tenant or prospective tenant may want to request a longer period which is permitted by the policy but which has not been offered on the basis of the initial assessment by the local authority before the offer. The longer period being sought could be because of long-term specialised medical treatment needed for a member of the household or to avoid disruption of the education of a child with particular needs. There could be a difference between the authority’s initial assessment of the time required for the tenancy and the tenant’s assessment of the time leading to the need for a review. I do not understand why a local housing authority should not consider representations in relation to the length of a flexible tenancy in a particular case. It would be to the advantage of a tenant or prospective tenant that it should be able to undertake a review.

Amendment 173E is about creating a presumption that flexible tenancies should be renewed on expiry unless good reasons are shown to the contrary. As the legislation stands, the process tenants will have to undergo when their flexible tenancies come to the end of the fixed term is weighted almost entirely in favour of the landlord. The amendment would hope to ensure that, when this process is being undertaken, there is greater protection for tenants, many of whom will be particularly vulnerable toward the end of their tenancy. This could be achieved by requiring a landlord to justify refusing to extend the tenancy rather than expecting the tenant to undergo a potentially complicated reapplication process. This would be preferable, as many tenants might be unaware of what factors are relevant to the authority’s decision and might find it difficult to successfully advocate for renewal of a tenancy or struggle to provide proof of need.

We also need to guard against bureaucratic failure. Bureaucratic failings already cause a great deal of hardship for people on low incomes, such as when mistakes occur in determining housing benefit claims or when registered providers fail to issue an assured tenancy following a successful probation period. No one should face the loss of their home as a result of bureaucratic failing. This amendment would help to prevent this happening. There is also the question of landlord accountability. This amendment would help to improve accountability, as landlords would have to demonstrate greater objectivity and transparency before taking possession of a tenant’s home. The removal of security of tenure will result in a great deal more uncertainty for tenants, as they will become aware of the looming threat of losing their homes toward the end of their fixed-term tenancy. While a presumption in favour of renewal would not remove this huge worry, it would at least ensure that tenants are on a more secure footing and hope to ensure that landlords undertake a thorough process when reviewing tenancies.

In committee in the other place, the Minister Andrew Stunell, said that we expect landlords to discuss housing options with tenants well before the fixed term of their tenancy comes to an end. That we would expect the tenancy to be renewed in many cases needs to be underlined. For those reasons, it is important that this expectation in terms of presumption of renewal of tenancy is written into the Bill. Social housing is for many people the best means of ensuring security and a long-term stable home. For some, it is the first step in enabling them to improve their circumstances. Having people living in a neighbourhood for long periods can build community cohesion and social capital. The amendment will simply help to maintain people in their homes.

[Baroness Doocey]

Speaking to Amendments 173CA and 173CB, I turn to Amendment 173CA. The purpose of this amendment is to increase the minimum length of flexible tenancies in social housing. With a diminishing stock of social housing under increasing pressure, the Government see greater flexibility of tenancies as a better way of managing social housing stock. The amendment would increase the minimum length of a flexible tenancy from two to seven years. It does not oppose the principle of flexibility. Rather, it is an attempt to reconcile the advantages of flexibility with the need of tenants for a reasonable degree of security and stability.

In theory, the Bill would give local authorities and housing associations the flexibility to be able to offer tenancies of varying length in order to best manage their stock. They could still offer inflexible tenancies if they chose; the length of a flexible tenancy could be as short as two years, although we know that the Government believe that a two-year tenancy would be the exception. However, in practice, there is a risk that local authorities and housing associations could make two years the norm. If two years become widespread or commonplace, it would undermine household housing stability.

Until now, social housing has been stable; it is often the first stable accommodation that many vulnerable people have ever experienced. If this stability were lost, it would remove a key benefit of social housing for such people. It would significantly weaken the sustainability of communities. Two years is too short because it would lead to a higher turnover of residents on estates, with the associated problems of poor community cohesion. If we want to achieve mixed communities and well-functioning neighbourhoods, it is important that people—including those in work and with good prospects—are able to put down roots in an area and feel a sense of ownership. Extending the minimum to seven years is not a panacea but it would go some way towards mitigating the problems caused by flexible tenancies.

A two-year limit could act as a serious disincentive to work since tenants would fear that if they find employment and increase their earnings, they might no longer be able to renew their tenancy. A seven-year limit would lessen this fear since finding employment would not have an immediate impact on their tenancy.

The purpose of Amendment 173CB is to ensure that people moving on from one secure tenancy are offered another. At present, tenants in the social rented sector enjoy secure tenancies of unlimited duration. The change to a flexible scheme would apply to new tenants but not existing ones. Leaving aside any objections to flexibility per se, the Bill as drafted includes an ambiguity. It is clear that an existing secure tenant will not have his or her tenancy agreement torn up or amended. It is also clear that a new tenant may be subject to a limited-term tenancy. However, the Bill is unclear on what happens if an existing secure tenant moves to a different property. Therefore, it does not guarantee their security.

The Government are putting measures in place to make it easier for social tenants to transfer to a new property that will better meet their needs, such as the introduction of the national affordable home swap scheme. At the same time, the Government intend to cut housing benefit for social tenants who are underoccupying; that is, those living in a house with more bedrooms than they are deemed to need. Many of the people affected by this cut will move to smaller accommodation, but only if that accommodation is available. The Government are right to encourage an increase in social housing transfers because everyone wins. It will be good for existing tenants who can move to more suitable housing, the homeless because it will free up larger houses and social landlords because they can better allocate their housing stock. However, if the Bill leads to existing secure tenants being granted only flexible tenancies simply because they have made the choice to move to a new property, the effect will be that many, if not most, such tenants will decide to stay put.

Localism Bill

Lord Shipley Excerpts

Thursday 30th June 2011 Lords Chamber

Debate on whether Clause 59 should stand part of the Bill.

[Lord Shipley]

My Lords, I will speak to this clause on behalf of the noble Lord, Lord Tope, and will address some of the principles that stand behind it. In practice, the clause continues a capping regime. Councils will not want to risk losing a referendum because there will be a significant rebilling cost. Clause 59, and Schedules 5 and 6, create a duty for a billing authority to determine, in line with principles set out by the Secretary of State, whether a proposed council tax increase is excessive. Authorities will be required to hold a local referendum on the proposed rise if it is deemed to be excessive.

The difficulty is that it should be for local people to determine whether they find a proposed council tax increase excessive rather than for the Secretary of State to decide what constitutes excessive. Local people should trigger the referendum, not the Secretary of State. Therefore, there is a strong case for saying that amendments to the Bill should be introduced that would limit the Secretary of State's power to determine what constitutes an excessive rate of council tax and would give that power instead to local people under proposals elsewhere in the Bill for holding local referendums so that they can decide what constitutes an excessive rate of council tax.

Secondly, councils, rather than the Secretary of State, ought to be able to decide when a referendum will be held and to decide the arrangements for it. We should also delete powers for the Secretary of State to make non-specific regulations on matters such as the question to be asked in the referendum, the allowable publicity accompanying that referendum and how votes are to be counted. We have already discussed the percentage levels required to trigger a referendum and it seems to me that this is an example of where we do not need to have the Secretary of State interfering with what local people could perfectly well handle for themselves.

There are two issues that I feel concerned about and I have raised them at previous stages of the Bill. When a billing authority is determining whether a council tax proposal is excessive it might be appropriate for a referendum to be held on whether the council tax level and increase proposed is deemed by some to be too small. True localism should mean that local people have the right to hold a referendum on whether the council tax might be raised higher than the level that the Secretary of State deems to be excessive. I do not propose that one should have a higher rate—simply that if you really want to implement localism it should lie within the power of local people to make that decision.

There is a further complication to this. Under the Bill, referendums can be held within electoral areas within a council area. It is inevitable that referendums will be held on issues that might require additional expenditure to be made within that area. It might be unreasonable to expect the whole of the council area to fund the additional increase. The increase could be for a specific local facility that might otherwise close down, such as a swimming pool that people would like to preserve that requires additional cash. At the moment parish councils have certain powers to raise additional money. We could see referendums being held to save local facilities such as the swimming pool where local people might be willing to pay for the facility and would wish a referendum to be held on generating the necessary resource.

This seems to strike at the very heart of localism. Ultimately, if we permit referendums to be held within one or more electoral areas of a council, logically those people should be allowed, as those who have a parish council are allowed, to vote to spend additional money. I speak from my perspective as a member of Newcastle City Council. Half of my ward has a parish council, which has the power to raise additional money, and the other half does not and is not able to raise additional money. That is a complication that will become very important.

The broader issue in terms of Clause 59 is whether it is for the Secretary of State to decide to hold a referendum or whether it is for local people to use the facilities that exist to generate that referendum.

[Lord McKenzie of Luton]

My Lords, we should thank the noble Lord, Lord Shipley, for introducing this clause stand part debate and for his very clear exposition of localism and what it means in terms of council tax. I agree with him that the provisions in the Bill amount to a capping regime. I am sure the Government will argue that local people do determine what is excessive if they support a referendum. That is a very narrow interpretation of the Bill. This is capping by another name.

We also have to acknowledge that successive Governments have reserved the right to limit increases in domestic taxation when they have been judged to be excessive. We certainly did as a Government, and I believe that the Conservative Government did. I am not sure whether the noble Lord, Lord Jenkin, is culpable as well. There are arguments about whether that is important for the overall management of the economy.

When the noble Lord, Lord Greaves, introduced his first amendment in our proceedings, he talked about localism being decisions being taken at the lowest possible level, but he acknowledged that there is a wider dimension that has to be taken into account in some instances. The impact assessment for the Bill—

Localism Bill

Lord Shipley Excerpts

Tuesday 28th June 2011 Lords Chamber

[Lord Shipley]

My Lords, I want to add a word from the perspective of English core cities. The proposals around tax increment financing put by the eight largest English cities to Government three to four years ago have gradually been working their way through a number of committees, particularly in the Treasury. In the past 12 months added impetus has been given to tax increment financing. I hope that what my noble friend Lady Kramer is proposing here does not cause any delay to the move forward with the Government’s proposals because tax increment financing is urgently needed to enable cities, in particular, and all councils to be able to borrow against future business rate income growth. At present local councils have the power to borrow prudentially, but prudential borrowing requires there to be an income stream guaranteed to enable that borrowing to proceed. Tax increment financing enables borrowing to be made against future growth and projections of that business rate income, as my noble friend Lady Kramer rightly pointed out.

These are not separate issues and they can sit happily together but we are looking for some clarity from Government that tax increment financing as a principle will go ahead as speedily as the Deputy Prime Minister announced that it would last year. Local authorities are waiting for the powers to be implemented and it could well be a further 18 months to two years before those powers come forward. They are urgently needed. Otherwise infrastructure funding that requires a capital investment based on borrowing on the markets needs to be progressed. Without it that investment will not take place. I look forward to my noble friend the Minister clarifying the speed with which tax increment financing can be introduced and how then that proposal lies with this proposal in the name of my noble friend Lady Kramer.

[Lord Beecham]

My Lords, the noble Lord, Lord Shipley, is quite right to refer to the support for the principle from the core cities and also, in general, from the Local Government Association. I endorse that. To help me understand the implications of this measure, can the Minister refer back to the point that she raised about this being more acceptable to business ratepayers because they will benefit from the projects that are being financed through this mechanism as opposed to something like Crossrail where they may not have done? This does not necessarily constitute an objection to the proposal, but I wonder whether that is right. The rates are borne by the occupier of business premises. The value effectively goes to the owner and they are not necessarily the same. We have had over many years in local government finance the position where property owners contribute little to the regeneration of cities and the like. The financial burden falls on the tenants through the rents and they also pay the rates. I wonder whether she is not being a little optimistic in assuming that the occupiers of premises that may benefit from these developments will be as enthusiastic as she might suppose, although, as I say, that does not vitiate the validity of the proposal as a means of financing investment.

Localism Bill

Lord Shipley Excerpts

Thursday 23rd June 2011 Lords Chamber

Moved by

[Lord Shipley]

45: Schedule 2, page 198, line 6, at end insert “and shall be chaired by a member of the largest opposition group on the authority”

[Lord Shipley]

My Lords, this group of amendments relates to scrutiny. In my view, scrutiny is best achieved by a committee system. A committee system is better at delivering good decisions than a scrutiny system which scrutinises those decisions after they have been made. In other words, you scrutinise as you go.

This is a probing amendment. As we do not have a voting system for local government in England based on proportional representation, some councils can have very large majorities held by one party. This may not be reflected in the votes that were cast but is very often reflected in the number of seats that are won. Good scrutiny requires constant challenge. Scrutiny committees are proportional in their overall membership but it would be advantageous for them to be chaired by a member of the authority’s largest opposition party.

Members of your Lordships' House are aware that I am a councillor in Newcastle upon Tyne. In 2004, when my party took control of Newcastle City Council, we altered the system to ensure that the Labour opposition chaired all our scrutiny committees. I am pleased to say that this year, when control of Newcastle reverted—temporarily, at least—to the Labour Party, chairmanship of the scrutiny committees passed to the Liberal Democrat opposition. Public scrutiny and public confidence in the system of local government would be improved if scrutiny committees were chaired by opposition councillors. That does not mean that a scrutiny committee has to be proportional in any regard other than the number of seats held by each party. However, public confidence in the system would be improved if the person constructing the agendas was an elected councillor of a party other than the one that was in control of the council. I beg to move.

[Lord True]

My Lords, I understand where the noble Lord is coming from but there are obvious difficulties with the amendment quite apart from whether or not it is tending towards prescription. For example, I recall a not very happy election in 1986 when I was one of three members of my party on our local authority—

--- Later in debate ---

[Baroness Hanham]

I will happily do that and I will lay a copy of the answer in the Library.

[Lord Shipley]

My Lords, before I formally withdraw my amendment, I would like to make two brief points. First, I agree entirely with my noble friend Lord True that in scrutiny there has to be a clear role for back-benchers, particularly those of the controlling party, but there can of course be vice-chairs, and that system works well. Secondly, I hope that the Minister is right that legislation here is unnecessary and will simply bear in mind my amendment should it prove not to be the case. I beg leave to withdraw the amendment.

Amendment 45 withdrawn.

--- Later in debate ---

[Lord Beecham]

My Lords, the amendment touches on the question of transparency and the openness to the public of meetings. It seeks to reflect what I understand to be the present position, which is that meetings are open unless council committees or executives decide to exclude the press and public, usually on grounds of confidentiality. This might be commercial confidentiality or sensitive staff issues and the like. The amendments in my name create a presumption that the meetings will be open to the public unless there are good reasons for not having them as such. Those reasons clearly would have to be enunciated. It is difficult to find a form of words that fully meets the case. The noble Lord, Lord Shipley, will speak to his amendments, which import the term “necessarily”. However, the question then arises of how one defines what is necessary. There is no simple answer, but it is important to have the presumption in the Bill if we can get it, and I look forward to hearing from the Minister in due course.

[Lord Shipley]

My Lords, I will speak to Amendments 53, 54 and 55 in my name. Each is a probing amendment to get confirmation from the Minister that there will be no deterioration in the access of the general public, the press and opposition councillors to meetings and to information. I seek that reassurance because, as the noble Lord, Lord Beecham, says, it is quite difficult to get the right wording. The overriding intention must be that there should be no deterioration in what currently pertains in local government for individuals—the public, the media or other councillors—seeking access to meetings and information. The Bill confers an awful lot of powers on the Secretary of State to make decisions in that area. I understand why that is, but I would be more comfortable if it was absolutely clear to the general public that there will be no diminution in their access to information and meetings.

[Baroness Byford]

Perhaps my noble friend would clarify the position. I would like to see a presumption that the meetings will be open, but obviously under certain circumstances access will be restricted. As things stand, it is a case of either/or; there is no presumption that open meetings will be the norm and that meetings held in private will be exceptional. Perhaps the Minister will comment on that.

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[Lord Shipley]

My Lords, perhaps I may comment briefly on the standards issue, not least because I tabled an amendment yesterday about standards committees that unfortunately has been printed as part of the amendments to the Education Bill. Members of your Lordships’ House will, therefore, not have seen it. I fully understand the predicament that that puts us all in. However, this relates directly to what the noble Lord, Lord Beecham, said. Perhaps I may express some views on the Standards Board and standards committee issue.

For a number of years, I have been deeply concerned about the performance of the Standards Board and that whole standards structure. After a lot of thought about how you might actually make it work better, my amendment proposes a prescriptive way forward that might avoid some of the problems that we have experienced in recent years. We have had problems because the structures of the Standards Board for England and the standards committee under it have worked badly. There have been too many spurious references to it, often followed by detailed press interest in the accusation that has been made. There have been some very poor decisions, many of them reported in the media, and a number have been successfully challenged in the courts. There should not be a structure that ends up with successful challenges in the courts, in a quasi-judicial system, being pursued by local authority standards committees. People’s reputations are at stake here, and we have to do it a bit better.

However, the time is not right for a wholesale change in the standards system, because the general public have a right to expect that a council has a code of conduct, and, in my view, that should not be voluntary. It should be statutory and there has to be a standards committee that can look into any allegations or complaints that the code has not been followed. However, this is quite different from the register of interests and, for example, a failure to declare an interest. Indeed, a potential example was discussed a moment ago.

My solution is simply to propose that we might consider, between now and Report, a provision that a relevant authority should have a standards committee, but that such committees might be established jointly between relevant authorities, which is particularly important for parish councils. That is because the structure of a standards board for an individual parish council is hard to deliver. It would cost a great deal, for one thing. The role of the standards committee is to assess cases brought before it against the code of conduct of that relevant authority, but the membership must have a majority of independent members. They would be appointed against known principles, and have an independent chair. Those councillors who currently serve on such a committee, coming from their own local authority, would no longer do so, because otherwise there would be a real doubt in the mind of the general public as to whether there is any real or perceived bias in a judgment that is reached. I would have other members in a minority who have been elected members of a local authority, I propose for at least four years, but they should not currently be members of a local authority and would not have been a member of the relevant authority to which the committee relates. In other words, you put a barrier between those who make the decision of a standards committee and those whom it is investigating. You would have to have an appeals system. My amendment suggests that the Secretary of State should establish by regulation an appeals system at a national level, and I propose that members would be former chairs of standards committees, all of whom at present are independent.

Maybe we will come back to that issue on the third day but I hope that there may be a way for us to preserve some form of standards committee. Even in this structure, most councils are going to want to do so; otherwise, they do not have a means of investigating a complaint on the voluntary code of conduct. It is a very serious matter because the public perception has to be that everything is being done properly and is above board. So I do not support a voluntary code of conduct and I do think that there is a very strong case for a standards committee for each relevant authority—but possibly combined across several—to be considered.

[Lord Taylor of Holbeach]

My Lords, the coalition has considered the whole issue of standards boards and standards committees. We must recognise that there are different arguments in this case between the Benches opposite and ourselves. Amendment 96A seeks to remove the amendments that the Government are proposing to the Local Government Act 2000, which are needed to remove the requirement for local authorities in England to have standards committees. Of course, this applies only to England.

Rejecting the coalition’s changes to the standards board regime will remove local choice and retain a key aspect of a costly conduct regime which, as my noble friend Lord Shipley has said, has led to vexatious and politically motivated complaints against councillors. However, my noble friend would admit that if we are going to instil a full sense of responsibility in local government, we need to vest in those local authorities the responsibility for the standards of their members. Local authorities may well wish to adopt a voluntary code of conduct for members and co-opted members and determine for themselves what should be in that code; or they may choose to ensure high standards in another way, for example, through a statement of clear principles against which members can be judged by the electorate. The key element is that the choice about how to promote good conduct should be for local authorities to make, rather than for Government to impose on them the requirement for a code of a conduct or standards committees if they do not wish to go down that route.

I know that the noble Lord, Lord Beecham, will disagree with this because he disagrees with the purpose of this amendment but I have to state the position of the coalition, which is quite clear, that this is a matter for local authorities themselves.