Non-Domestic Rating Bill

Debate between Lord Shipley and Earl of Lytton

Report stage
Tuesday 19th September 2023 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, I regret to say that in this amendment I am obliged to refer to a rather contentious matter. As I have made clear, I am not going to divide the House, but a serious question needs to be answered. I tabled the amendment to delete Clause 14 because of my concern that what the Government claim Clause 14 does is at material variance with the wording, as I see it, of the Bill. It is also at serious variance with what I understand to be the current assumptions regarding the, as it were, state and condition of the hereditament for valuation purposes not in terms of its individual condition as to the fabric but where it sits in its economic and practical environment.

As I understand it, the Government claim to be restoring matters to those understandings that prevailed previously, but the proof of the pudding shows that is not so or we would not have this clause before us because it would then be unnecessary. In my view, an earlier measure to remove the status of Covid as a material change of circumstances—which is what this is all about—was legitimate. It was deliberately circumstance specific and affected the whole country and so could rightly be described as a pan-national economic event. But the Government now seek to extend that principle to any change affecting the physical enjoyment of the hereditament as a consequence of what is described as an “economic” matter and that that should be disregarded as a material change of circumstances. In other words, it should not be possible if that change occurs for somebody to challenge their assessment.

I dispute that this approach has ever been the test of a material change of circumstances hitherto. Copious cases—Addis Ltd v Clement (VO) in particular—have clarified this. There is an obvious reason: where a public authority takes steps that deny or degrade the benefits of enjoyment of a hereditament, it is offensive that a tax unadjusted to reflect this fact should continue to be levied. This is not just a modern confection but goes to the heart of fair and just administration, the rule of law, confidence in government and the certainty and security of process that affect investment, productivity, and commitment to medium and long-term partnership. It is an essential part of a social and economic contract—unwritten it may be but there all the same. Any Government would be wise to observe these obvious and potent economic factors in administering the needs of the nation. We are talking about an ancient principle.

The Government make a distinction in relation to an economic matter affecting society at large but then go on to define this as any matter directly or indirectly attributable to a “relevant factor”. In fact, these are not economic matters at all but the fiat of some authority exercising powers that are not of general economic application to the nation at large or a significant part of it. The definition of “relevant factors” is set out at Clause 14(l)(d) in new paragraph 2ZA(3)—near the bottom of page 32 for those noble Lords following this astutely. In effect, it means that any legislation, regulation or advice of any country or public authority or steps to comply with these is to be disregarded in terms of what amounts to a material change of circumstances—so much for being ruled by our own laws. It also does not clarify the status of pronouncements from organisations such as the WHO, the UN or International Monetary Fund. So, in future, if a local authority alters the entire geometry of the use and enjoyment of a business premises through, let us say, planning powers, it will not count as an MCC, regardless of how severe the impacts may be. This provides a perverse incentive to disregard negative effects of sudden policy decisions which, as I say, may be nothing to do with economic choices.

I wonder whether when formulating these measures the Government ever considered the growing mistrust of their handling of the business rates regime generally and the effect, along with others no doubt, on high streets from trader and investor confidence, or ever paused to consider off balance sheet indications in any of these respects. The Government in seeking to differentiate general economic changes from direct physical enjoyment at hereditament level do not seem to be able to make a tidy distinction between the two, so they take a line of least resistance and bundle them together. That is Clause 14.

By way of further explanation, there are of course two poles to consider: first, those matters which affect the economy as a whole to be dealt with on revaluations—there is no dispute about that; we accept that as we accepted it in Covid. Then there are other more rapid and acute physical changes to the hereditament itself. Again, there is no dispute on that because they will continue to be treated as material changes of circumstances. In between, there are those immediate and localised regulatory and other measures affecting an individual property or those in a defined location and not shared with the wider economy of a town or a region.

I wanted some further clarity on this, so I sent some examples of queries to the department. I hope it received those and that, in replying, the Minister may be able to throw some light on them. The first one was where a local authority reduces the hours of operation of certain licensed premises to provide better amenity for nearby residents and as a result business is curtailed— I referred to the conflicts earlier today. Secondly, an important town centre car park is closed due to concerns about the concrete frame and as a result footfall for traders in that part of town declines substantially. Thirdly, a small corner convenience store is affected because the large residential block next door is ordered to be evacuated over fire safety concerns and the occupiers are dispersed into other accommodation elsewhere. Fourthly, an authority in a popular holiday area makes licensing of holiday let premises mandatory but then limits or conditions the licences it issues to reduce the impact on local housing availability and as a result the income to certain operators is significantly affected. Finally, a biosecurity exclusion zone is declared in a defined area due to an animal disease outbreak. The public are advised to stay away and traders in the area suffer a sharp downturn in business. As I understand it, every one of those would be ruled out as being a material change of circumstances by virtue of Clause 14. The only qualification is on the last one. Does the geographical extent of the biosecurity exclusion zone alter the degree to which the effects fall to be disregarded as an MCC or does it make no difference?

Let me give an extreme example of what the effects might be. A metropolitan mayor decides to ban all petrol and diesel sales in his or her area under some statutory or regulatory power or perhaps on the advice of health officials concerned about air pollution, but by virtue of Clause 14—and maybe for up to three years until the next revaluation—petrol filling stations in the area would have to continue paying business rates as if nothing had happened. If that is not what the Government intend, they need to revise Clause 14 because that, on the best authority I know, is what it will do. The best authority I have—Members of this House, particularly learned Members, excepted—is rating counsel Luke Wilcox, who provided me with a note which says

“my main concern with clause 14 as it is currently drafted is that its effects will be much wider than the Government’s stated intention. The Government’s intention appears to be to treat general legislation as part of the general market conditions affecting revaluations, rather than as matters capable of being MCCs”.

He goes on to say that

“the phrase ‘indirectly attributable to’, as it appears in para 2ZA(2)(a), is so wide in its scope that matters affecting an individual property or class of properties, such as a planning or licensing decision, will cease to be MCCs (because they are made under a general legislative provision). Such an effect would appear to be beyond the Government’s stated intention. If such a significant alteration is to be made to the established law of rating, then it should be made following proper deliberation, rather than as an unintended consequence of a provision aimed at a different policy effect”.

In all this, there appears to have been little or no discussion with ratepayers or their professional advisers, nor any wider consultation with that class of stakeholders. It is undoubtedly a major departure from what is known as the “reality principle”—namely, that rating should reflect the real circumstances of the hereditament in assessing it for rating purposes. The Valuation Office Agency’s own rating manual does not use the approach now suggested. Whether it is going to be amended, I do not know—I suppose it will be—but, as it clearly states the situation that has commonly been understood for many years, that rather suggests that the Government’s claim of restoring what they say were the previous understandings is unsupported.

Many will feel that this is getting us towards the realms of no-appeals regulations—in other words, “Let’s not have any appeals at all and dispense with them, and the whole thing can be dealt with through by the arbitrary exercise of power through the Valuation Office Agency”. But that would have profound implications for the rules-based system—something that I have referred to before in relation to several government Bills.

This clause cannot go unchallenged. Although I am not proposing to press the amendment, I think it warrants a detailed comment from the Government as to how they think it will work fairly and equitably in the context of the rating system. I beg to move.

[Lord Shipley (LD)]

My Lords, I support the point of view expressed by the noble Earl, Lord Lytton. He has raised this very issue, I think at Second Reading and certainly in Committee, and I have given him support because I have grave doubts about the definition in the Bill of a “material change of circumstance”.

The noble Earl has given a list of possible examples of where there should be a material change of circumstance because of what happens in the area as a whole—perhaps a planning change or a licensing change undertaken by a local authority. When it comes to the Minister’s reply, it would be extremely helpful if there could be a letter to all of us who have taken part in the debate, but addressed to the noble Earl, Lord Lytton, explaining the Government’s view on each of the examples that the noble Earl has given.

I have another one to add to his list. As it stands, Clause 14 means that material changes of circumstance should relate to physical changes only to a property. That is how I interpret it. However, as the noble Earl has demonstrated, there can be many ways in which that physical property can be impacted upon and have a material change of circumstance because of what somebody else does. My example is that a local authority decides that a bus route will no longer come down one road but will go down a different one. The patronage of the shop—if it is a shop—goes down as a consequence. Is that a “material change of circumstance”? I suggest that it is and that it should qualify. I do not think that Clause 14 can apply only to a physical building. That is my position.

Non-Domestic Rating Bill

Debate between Lord Shipley and Earl of Lytton

Committee stage
Monday 3rd July 2023 Grand Committee

[The Earl of Lytton (CB)]

My Lords, I support the amendments in this group. At one of my meetings with the Minister and her Bill team I was told that it was not HMRC—or they may have said Treasury—practice to produce an impact assessment as such, and I was directed to a series of notes in lieu. But business rates have an impact on business, employment, entrepreneurial activity and the health of our high streets, and have long seemed a substantial tipping point in decisions about taking on premises, where the tax levied is 50% of the determined market rental value. That puts into shade the collective cost of things such as insurance service charges and other occupational outgoings.

There is a basic imbalance here; I have said so on many occasions in the House and elsewhere. Upfront impact assessments and post-legislative review are exactly what is missing here. I agree with the noble Baroness, Lady Pinnock, that small business relief and small business exemptions are almost an admission of the failure of the system we have.

Turning to Amendment 36, tabled by the noble Lord, Lord Thurlow, I totally agree with its underlying principle that the tax base for local government finance needs to be broadened, with proportionately less of a burden falling on what we might call the traditional business rate payer. This is becoming an impediment. What are termed fundamental reviews have been a great deal less fundamental than they ought to have been. The system has been creaking for some time and one should take notice when things start to creak; it usually means that something is wrong. I very much relate to these amendments, and I look forward to the Minister’s comments.

[Lord Shipley (LD)]

My Lords, my name appears on two of the amendments in this group. Underlying the whole group is a major issue: the Treasury now sees business rates as a source of general income to government, but many small businesses see them as a contribution to local services. That has got out of balance.

I strongly support Amendment 36, in the name of the noble Lord, Lord Thurlow, who has just spoken. He talked about the impact of online shopping on small high street outlets and said that there was a public interest case to be made. Indeed, Amendment 29, moved by the noble Baroness, Lady Hayman of Ullock, probes the possibility of reducing the threshold for small business rate relief on high streets. A number of us raised that issue at Second Reading.

A number of issues are raised in this group. I have an amendment on the hospitality sector. It is not clear to me what reason there would be for not having a hospitality sector review, as I propose. It is about assessing the consistency of approach; we have spoken a lot about high streets, but this applies to the hospitality sector as well. There needs to be an assessment of whether there is a consistent approach for setting non-domestic rateable values between hospitality businesses occupying premises of similar size and trading style. I cite public houses, restaurants, live performance theatres and exhibition spaces as examples. This is the kind of thing that government should be doing anyway, but there is a huge policy issue now around what business rates are for and how we make sure that they are being fairly charged.

Levelling-up and Regeneration Bill

Debate between Lord Shipley and Earl of Lytton

Committee stage
Monday 13th March 2023 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, I support Amendment 81, spoken to so eloquently by the noble Baroness, Lady Scott of Needham Market. In doing so, I draw attention to my vice-presidency of the National Association of Local Councils, which I had the privilege of serving as president for many years, and my current joint presidency of the West Sussex Association of Local Councils.

It is regrettable that, notwithstanding the status of neighbourhood plans as a material consideration in local planning structures, principal authorities often seem to be obliged to disregard them, despite having considerable agency in the production of these plans. I refer to the calling of referenda or, as sometimes seems equally likely, delaying of the calling, which I can only assume has sound reasons. It creates great problems, given that there is substantial commitment of time and no small amount of public money to the neighbourhood planning process.

As we move into other areas that will involve multiple local authorities, such as biodiversity net gain and water neutrality, I can see that it is perfectly legitimate for these to be dealt with at what you might call a superior level. But it remains absolutely essential that communities still have a voice, a view and a role in that particular decision-making format. If the Secretary of State’s comments mean anything when he refers to strengthening the role of communities, as I understood him to say some while back, it must be something other than lip service—something other than parishes and town councils being somehow left behind. When I say that neighbourhood plans are being disregarded, I think of the neighbouring parish to the parish in which I live, where precisely this has happened.

It is very important to understand the structure of town and parish councils, as alluded to by the noble Baroness, Lady Scott, with their knowledgeable, highly engaged and often very effective interventions in local planning processes through their structure of county and district associations as well as the individual parishes. They should not be underrated. They have access to resources you would not believe. I have come across parishes in which top planning consultants happen to be residents. These people are highly engaged, highly knowledgeable and should be listened to. Parishes have moved along massively in the past 20 or 30 years. They really are the only structure that represents the community at this level. When you think about it, there is no other authority that extends down to that level of where people really live and do things in their work/life balance. If people feel disregarded, as do many residents in my part of West Sussex, it bodes ill for engagement, cohesion and, ultimately, the efficacy of national policies. I would not want that to go unstated in the context of the Bill.

[Lord Shipley (LD)]

I rise to speak to Amendments 155 and 156 in my name. These are probing amendments because I think it is very important that the Government explain their intentions. Amendment 155 provides that non-constituent members of the combined authority are not able to vote, given their status, and Amendment 156 provides that associate members of a combined authority are not able to vote, given their status. On a previous day in Committee we addressed this issue, in part. However, the Government need to undertake some mature reflection about what is proposed here.

Giving a vote to somebody who is not a full member of a combined authority is unwise. My amendments provide that there should be no vote for anybody who is not a full member of the authority. The principle is that full members are voting members, and voting members are full members, but you cannot have full voting members when they are not full constituent members, as opposed to associate members, of the authority.

The voting structure between counties and districts as explained in the Bill would provide a route for resolving any impasse that might arise if votes were allocated on the basis of population. Of course, a county would have exactly 50% of the votes. If all the district councils voted against the county—one hopes it does not come to that—there would have to be some kind of system for a casting vote. The mayor would seem to be the way forward.

After reflecting on what we have been saying on previous days in Committee, to me it seems that district councils, which are responsible for planning and economic development matters, ought to be full members of a CCA. That seems to me to be the principle. It should not be at the discretion of the CCA, which does not have a district council member, to simply award a vote to that district council member when other district council members may not have a vote because, as the noble Earl, Lord Howe, said on the previous day in Committee, when giving a vote to one non-constituent member or to an associate member, it does not follow that other associate or non-constituent members would have a vote.

So this is a probing amendment. It is complicated; I understand that. When in due course we reach Report, I just hope that the Government will be prepared to examine the structure they have proposed here. I have come to the conclusion that they should permit district councils within a CCA area to become full members. At that point, those full members would have a right to a full vote under their own terms of membership. I hope very much that the Minister will be able to respond to that, so that we can get a better feel of what we need to do on Report to bring in further clarification on this matter.

Fire Safety Bill

Debate between Lord Shipley and Earl of Lytton

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 17th November 2020 Lords Chamber

[Lord Shipley (LD) [V]]

My Lords, the noble Baroness, Lady Neville-Rolfe, has made a number of helpful and very important points. Amendment 6 seeks clarification from the Minister on a number of problems in relation to leaseholders and the impact on the housing market of the current problems with selling properties. I, too, look forward to the Minister’s response, as it would be helpful to us all to have an up-to-date understanding of his thinking.

We shall, of course, address this matter on Amendment 13 as well, as it is central to the future management of high-rise accommodation, or the less high-rise accommodation that nevertheless still suffers from some of the problems of the high-rise blocks. As the noble Baroness said, we need a way forward for the housing market in solving the problems of some leaseholders. I entirely agree with that, and I hope that forthcoming meetings will be able to address those issues.

Amendment 5, moved by the noble Lord, Lord Kennedy of Southwark, is entirely sensible. Of course it is right to consult properly and fully in developing legislation, so I assume that the Minister will be able to confirm this afternoon his entire agreement to this amendment because it is so eminently sensible.

[The Earl of Lytton (CB) [V]]

My Lords, although I certainly agree with the thrust of Amendment 5, it is Amendment 6, in the name of the noble Baroness, Lady Neville-Rolfe, that I really wish to address.

Many of my years in the property profession have been spent in survey inspections, with a spell in estate agency and mortgage valuations and brief periods in block management, and I have spent a good deal of time on the forensic identification of defects. Therefore, I feel reasonably well qualified to support the noble Baroness, and I thank her for raising this important issue, which affects the residential sector. Rightly, she referred to the indirect effect of the Grenfell tragedy. That is a matter on which I have been in constant contact with the Chartered Association of Building Engineers, of which I am a patron and which has been very helpful in identifying various matters in respect of the Bill.

As the noble Baroness said, the effect on the residential market for flats in particular, and over a very broad spectrum by age and type, is now apparent. This has affected security for mortgage lending, exacerbated by the prospect of large and, as the noble Baroness said, unquantified remediation bills. Some sort of game of pass the parcel seems to be in train as to who will end up picking up those bills. It affects buildings insurance cover and premiums, and interim measures such as “waking watch” are racking up huge costs. These and the likely shortfall, as I see it, in the provision for remediation made by the Government—welcome though that is, but nevertheless there is a shortfall as against the widening scope of the buildings that might ultimately be affected—have seriously affected the ability to sell flats. It is not clear that this is in any way confined to high rise, as I am increasingly aware, as one of my children attempts to sell a flat in a four-storey modern and, I believe, conventionally constructed block.

A few days ago, a lady emailed me to say that she is a resident of a sister block to the one in Worcester Park which burned down last year. She is completely stuck with a currently worthless asset and no apparent movement on remediation. The latest Sunday Times carried an article about this, graphically illustrating the issues and defects that have been found to be present in a number of remaining identical buildings that are still standing.

Before this gets yet more problematic and starts affecting potentially a far wider range of properties than at present, the Government need to use their powers and influence to get all the interested parties round a table—constructers, lenders, insurers—and point out, as the noble Baroness said, the reputational as well as economic and social damage that needs to be contained beyond the issue of direct liability and who shoulders that, and require their active co-operation to resolve this in a constructive manner and not leave vulnerable homeowners, to put it bluntly, hung out to dry.

I appreciate the criticism of the EWS1 form, but it came about because of a particular need to do with mortgage lending. It is now being required for a much wider range of purposes, for which it was never intended. Why? Because it was the only tool available. The Government could step into this obvious void and make sure that some other form of certification solution was provided. But they, or somebody else, would have to take responsibility for that, and I realise that that is an issue. Meanwhile, the potential liabilities make it ever less likely that those without specific accreditation to do the necessary inspections will be willing to undertake such work and, indeed, they may not be able to get professional indemnity insurance either.

The Government need to get ahead of the curve here. If these measures are rushed into effect with full force immediately and without additional steps, there will be more serious disruption and collateral damage to come. I suggest there be a phased and managed approach aimed at containing the ill effects, restoring trust and confidence, above all, in the measures being put in place and limiting financial loss while dealing, most importantly, with the most pressing issues where residents’ safety is at the greatest peril. None of this is without risk; nor is the normal “Not my responsibility, guvnor” liability-passing response appropriate in these abnormal times, given the number of national issues we face and the effect on the wider economy.

This means temporary but probably arbitrary cut-offs, probably in height terms—11 metres may be the right figure for blocks of flats—perhaps with certain other definitions, then dealing with those and drawing the net more widely later on and inevitably, as one will, picking up legacy issues from older regulatory sign-offs on the way. Some sort of lower-tier interim certification, which the noble Baroness referred to, perhaps by a non-specialist, would enable low-risk properties to escape the contagion that might otherwise engulf the sector. I wonder if this is what the Minister will propose in Amendment 7. I will listen with great interest to his response.

--- Later in debate ---

[Lord Shipley (LD) [V]]

My Lords, I listened to the Secretary of State on the “Today” programme this morning, in which I heard him say that the cost of removal and remediation of dangerous cladding from residential buildings should be as affordable as possible for lease- holders. This afternoon is an opportunity for the Minister to make clear what this means. I understand that builders and freeholders may have responsibilities in meetings such costs, but where a leaseholder is not a freeholder, why should they have a responsibility to pay out?

The uncertainty for so many leaseholders who are stuck trying to sell their properties or are worried about their possible financial exposure needs swift resolution. The amendment would protect leaseholders who are not freeholders, and tenants, from extra costs, be they single or staggered lump sums, increases in service charges or increases in rents. The responsibility for making safe a building with a fire risk should not lie with the leaseholders or tenants. The amendment would make it clear that it is unreasonable to expect them to be responsible for those costs when they are the ones exposed to risk through no fault of their own. I hope the Minister will agree that this amendment, which would protect leaseholders and tenants, is justified.

[The Earl of Lytton (CB) [V]]

My Lords, this is an enormously complex issue, as I outlined in an earlier amendment. The current legal framework makes liability for the matters that have been referred to by the noble Baroness and the noble Lord a patchwork, and entirely uncertain of outcomes. So significant are the matters at stake that in a normal course of events it may be years before matters are resolved by the courts. We need a quicker fix than that, which is why earlier I suggested that the Government should take a firmer hand in this and not leave it to the industry and markets to sort out. In other words, there is a strong case for government intervention. I welcome this amendment, although not precisely on its own terms, because I think it has some potential flaws. However, certainly the opportunity to debate the issue is absolutely vital.

Tenant Fees Bill

Debate between Lord Shipley and Earl of Lytton

Report stage (Hansard): House of Lords
Tuesday 11th December 2018 Lords Chamber

[Lord Shipley]

My Lords, if I might, I will intervene at this stage to speak to Amendment 43, which is what we are currently talking about. In the flurry of amendments not being moved, no debate took place, but the issue has now been raised by two noble Lords.

My name is attached to the amendment that refers to five weeks, and I think it is the right conclusion. I want to thank the Government for having agreed a change from six weeks to five. At Second Reading and in Committee, we went through every option: from the Scottish model of eight weeks to my probing amendment proposal of four weeks. As I recall, the Government at that stage said the figure would be between the four weeks we requested and the eight weeks that apply in Scotland.

There is a lot of money at stake here for tenants. Having heard from the perspective of landlords, I would like to speak on behalf of tenants. For a large number of poorer people, a change from five to six weeks could make finding that level of deposit a strain. Anything that can be done to minimise that strain is a good thing. The figure was described as being “up to” six weeks, but the fact that it is now five weeks will be of benefit to a large number of tenants. Because it covers the difficulty that, in some months, four weeks may not be a month and many people operate tenancy agreements on a monthly not weekly basis, it is legitimate for the Government to propose that we go to five weeks. I want to express our support for the Government’s decision.

[The Earl of Lytton]

My Lords, I beg to differ slightly from the conclusions of the noble Lord, Lord Shipley, although I well understand that this involves a cash-flow issue for tenants. I pay tribute to the noble Baroness, Lady Gardner, for bringing us back to this set of amendments. The Minister himself defended the Government’s long-standing line that a six-week deposit was fair. However, as the noble Lord, Lord Flight, said, we seem to have moved away from that without apparent pause for breath.

I declare a non-interest here, as I do not charge deposits for tenants and have not done for a number of years due to special personal circumstances. The industry standard has been six weeks for a considerable time. In my part of Sussex, six weeks’ rent represents a figure between £1,200 and £1,800 in general terms. That does not go a long way if, in addition to non-payment of rent—bear in mind that defaults tend to have many heads—the tenant also leaves the property in a damaged condition, including damage to carpeting, kitchen units and electrical wiring.

Given that situation, can the Minister explain why it is now five weeks? If you strip out non-payment of the last month’s rent, under this proposal you are left with a single week’s rent to cover any other form of loss. Does that represent a fair balance? I am not sure that it does.

Tenant Fees Bill

Debate between Lord Shipley and Earl of Lytton

Committee: 1st sitting (Hansard): House of Lords
Tuesday 20th November 2018 Lords Chamber

[Lord Shipley (LD)]

My Lords, I support the noble Lord, Lord Kennedy, in these two amendments, which would help to tighten up the Bill. As he said, paragraph 8 of Schedule 1 is very open-ended, and he referred to a loophole potentially lying within it as it is worded. I think his amendment will tighten it and will do so partly because it is in the interests of the tenant, who may secure a cash saving in the amount they pay for a utility even though they may have to pay a fee to achieve it. I therefore hope the Minister might be willing to look at that carefully. As paragraph 8 of Schedule 1 is currently drafted, it simply refers to the fact that the tenancy agreement may require the payment to be made, but it does not define why it would have to be made. That is why the amendment in the name of the noble Lord, Lord Kennedy, is so helpful.

[The Earl of Lytton]

My Lords, I have great sympathy with this amendment but I would have more were it possible to ensure that utility providers themselves acted reasonably. While I will not name any names, one particular well-known supplier of electricity, with what is generally regarded as an extremely cheap and competitive tariff, has gained for itself an extremely poor reputation because of what happens when one wants to change to another supplier. Indeed, so tortuous are its processes—of which I have had direct experience—that many landlords specify in their agreements that the tenant may not change to that supplier, and with good reason.

I had a situation myself concerning the commercial supply of electricity to an agricultural building. My wife and I were faced with a demand from this company for over £30,000 for a period of some 15 months, when the only thing that happens in this shed is that for a period of about three weeks a series of low-wattage lights are used to assist with lambing, and for a period of about 10 days in another part of the year they are used for a sheep-shearing operation. By no stretch of the imagination could the fee have totalled that amount. When, finally, the company rang up my wife and said, “We’re going to take you to court”, her answer was, “Make my day”. It was not until the matter was referred to its lawyers that it became apparent that there had been a complete muck-up. It had simply not got an initial reading and was trying to steamroller that payment through in the hope that we would crack and pay it. I know that other landlords in the private rented sector are sometimes faced with the same situation.

These people run up the most appalling costs. While I have great sympathy that this should not be laid solely at the door of tenants, it is none the less an occupational hazard that afflicts both parties to this arrangement. That is the only reason why I have a reservation about the amendment in the name of the noble Lord, Lord Kennedy—because there is another dimension to this, where certain suppliers are acting utterly unreasonably and unconscionably.

Tenant Fees Bill

Debate between Lord Shipley and Earl of Lytton

Monday 5th November 2018 Grand Committee

[Lord Shipley]

My Lords, I will briefly express my support for the amendment. It seems to be extremely helpful. Perhaps there could be a discussion about how it would be implemented. I say this because it is one thing for Parliament to pass legislation, but it is another for it to be actually understood in the wider world. For tenants and landlords to understand their rights and responsibilities, it is very important that the publicity is good. A lot of it can be standard wording. It does not have to be originated by every individual. It may need to be amended by individuals, but generally it can be the same. That leads me to remind the Minister of my view that the £500,000 allocated for enforcement—perhaps we will come to that in the next group—is a welcome sum, but probably not enough. Providing the necessary resource for this to work seems to be very important. Ultimately, this should be self-financing. Ensuring that there is the right level of publicity, particularly for tenants, is particularly important.

[The Earl of Lytton]

My Lords, the first part of this amendment is, to put it bluntly, a no-brainer. It is perfectly right and proper that there should be clear and comprehensive information. If I have any reservations, one is a very small item in proposed new subsection (4)(b), which refers to a website. Given that a significant proportion of landlords are individuals with perhaps only one or two properties, they may not have a website. Perhaps a tweak of the wording might be needed there.

On proposed new subsection (6)(a) and (b), there is a duty on the landlord or prospective landlord to,

“have regard to the likely needs and characteristics, in respect of the provision of information, of persons to whom the information in question is to be provided”.

It goes on to refer to the provision of that information,

“otherwise than in the way in which it would normally be provided”.

I scratch my head a bit about this, because I was beginning to try to work out what I, as a landlord in the middle of Sussex, might need to acquaint people with. It seemed to me that one characteristic might be a physical disability and another might be linguistic—those two immediately came to mind. I would be interested if the noble Lord, Lord Kennedy, could actually spell out what he intends from those two provisions. It might be a bit of a hostage to fortune in either providing something unnecessary or having to try to second-guess what the particular characteristics and the method of delivery might need to be in any given instance. That said, in an area where people come from an Asian heritage background, I can see no objection to publishing it in languages other than English. That would be perfectly possible. However, to do it as a generality would be difficult. Therefore, putting this in guidance and providing for what the Secretary of State will do with it might be a hazardous operation.

Housing and Planning Bill

Debate between Lord Shipley and Earl of Lytton

Wednesday 20th April 2016 Lords Chamber

[Lord Shipley (LD)]

My Lords, I support this amendment. Noble Lords may recall that we had two different amendments in Committee. Although they were different, they had a very similar intent. We now have one amendment supported by the National Association of Local Councils and Civic Voice. I hope that the Minister will understand the importance of this, because if we are to encourage groups, parish councils and neighbourhood forums to create neighbourhood plans, they have to feel that the effort being put in is worth while.

As we have heard, neighbourhood planning is growing in strength. However, missing from the statutory powers of those bodies with neighbourhood plans is that right of appeal for a neighbourhood planning body against the granting of a planning permission by a local authority which conflicts with that neighbourhood plan, whether it is in place or well on the way to being approved. Of course, as Amendment 102ZA makes clear, the right of appeal would apply only in relation to housing.

We have heard that this amendment has broad cross-party support. I hope that the Government will understand the need to support it as the power to overrule a neighbourhood plan would be a serious disincentive to all those bodies—up to 9,000, apparently —that are considering introducing neighbourhood plans, given that only a little over 100 have actually been put in place.

The amendment is limited to the powers of a parish council or a neighbourhood forum. As such, I agree entirely with what previous noble Lords have said—namely, that this is a reasonable proposal. If we want to give a boost to neighbourhood planning, it should be supported by the Government.

[The Earl of Lytton]

My Lords, I, too, support this amendment. In doing so, I declare two interests, one of which I have already declared—namely, that I am a practising chartered surveyor. As a matter of course in my work, I advise owners of land with potential development sites, some of them on the edges of rural villages. I also declare my now past status as a former president of the National Association of Local Councils, which strongly supports this amendment.

It seems an entirely incontestable proposition that a neighbourhood plan duly made—and therefore a robust representation of locally expressed views in accordance with the local plan—and which is a true reflection of national policy and the government agenda through that local plan process, should be defendable in the event of the circumstances arising set out in this amendment: namely, the very limited circumstances in which the principal authority does not itself wish to pursue this, in which case the neighbourhood can deal with the matter itself. If the contrary view is to prevail, what is the point of having a process of neighbourhood plan and devolving responsibilities if the neighbourhood cannot take advantage of such a facility—the point made by the noble Lord, Lord Shipley?

Housing and Planning Bill

Debate between Lord Shipley and Earl of Lytton

Thursday 10th March 2016 Lords Chamber

[The Earl of Lytton]

My Lords, perhaps I may just explain that I was reiterating a piece of evidence that came before the Select Committee on the National Policy for the Built Environment. I have forgotten the gentleman’s name, but I thought he was from Lincolnshire; it may be that he was not. He was a representative of one of the smaller housebuilder trade federations and he made it clear that where he came from, they were not yet out of the recession. As I say, I thought it was Lincolnshire, but if it was not and Lincolnshire is all fine and dandy, then I fully accept what the noble Lord, Lord Porter, has said.

[Lord Shipley (LD)]

My Lords, we should be grateful to the noble Lord, Lord Porter, for his contribution because he has clarified his position on the forced sale of high-value council homes, as well as for the distinction that he has drawn. It is particularly helpful and I hope the Minister will pay due attention to it.

The issue here was put very well by the noble Lord, Lord Horam. If there is a requirement on councils to sell off high-value homes, however they are defined—I hope the Minister even today might be in a position to define for us what a high-value home actually is—that should be for new social housing, not to fund the right to buy. I think I have interpreted accurately what the noble Lord said. I noted too the comments of the noble Lord, Lord Best. He said that requiring councils to sell high-value housing is a bad idea because it cannot be righted by switching the burden on to housing associations. I hope I have cited both noble Lords correctly.

The broad thrust is the same: that it is one thing to sell high-value council homes to reinvest in other council properties, but quite another to use that money to fund the right to buy housing association properties. We have hit upon one of the key problems in the debate on this group of amendments—it has taken some time, but it is right that it has because the issues have now come out. This is not about vacant homes; it is about an assumption in government that there is such a thing as surplus council homes. I am afraid that I simply do not believe there are surplus homes, yet I have heard in a number of places the word “surfeit” being used. It is not the case that there is a surfeit or a surplus of homes. It is very important that the Minister does not confuse vacant homes with surplus homes, because local authorities, which have the knowledge of their areas, know whether a vacant home can be re-let.

I will be really clear so that there is no doubt in the Minister’s mind: for these Benches, the forced sale of high-value council homes, reducing the social housing stock as a consequence, is a red-line issue if it is simply to be used to fund the right to buy housing association homes. There has to be a coherent policy that ensures there are enough social rented homes for people in this country to live in. As things stand, the Government’s policy will reduce the number of rented social homes in the places they are needed and it will make things much worse for the 1.6 million people on social housing waiting lists. As we have heard, it will jeopardise new housebuilding because it will erode councils’ ability to borrow. As the Minister has heard from me on several occasions, because larger homes tend to be high-value homes, because they have more bedrooms, their sell-off may well take priority over the sell-off of other homes, so larger families will suffer as a consequence.

I know that the Minister is aware of the research by the Joseph Rowntree Foundation on council bungalow sales. It warned that although such homes are often suited to the elderly or those with special requirements, 15,300 council-owned bungalows could be sold off in England by 2021. I would be grateful if the Minister responded to that. The Joseph Rowntree Foundation is a hugely respected charity and its advice should be taken very seriously. Will the Minister tell us what the Government’s response to that research is? These things really do matter, as does raising the cap for local authorities on housing investment. Again, I do not hear Ministers talking much about this, but it has been a running proposal in your Lordships’ House for several years that that cap should be raised.

The demand is there in the social rented sector for the higher-value properties that the Government will require to be sold whether there is need for them, or whether they are actually vacant. Surely it is for local government to assess its local market needs and the need for social rented housing in its areas. Surely, its position should be protected if it knows that a vacant home is required by somebody on a housing list. Finally, what do the Government think about the overall impact on local government finances? I noted the comments of the noble Baroness, Lady Hollis of Heigham. She is absolutely correct on the capacity of local government actually to fund what some on the other side believe local government is capable of funding.

I repeat: this is, for these Benches, a red-line issue. I hope very much that the Government will think again and very quickly.

Housing and Planning Bill

Debate between Lord Shipley and Earl of Lytton

Tuesday 9th February 2016 Lords Chamber

[The Earl of Lytton (CB)]

I support the noble Baroness and, in doing so, I declare my interests, first as a professional property manager, and—possibly even more significantly—as a private sector landlord. I believe I have a very contented set of tenants, without any of the roguishness that we have heard about.

Leaving aside the absence of a clear due process in the Bill and the safeguards that should go with that, in what I can describe only as this “subcontract” process to local government, putting to one side the non-judicial disposal of a case that might result in the label “rogue”, with lasting stains on character, and parking for one moment the hiatus in terms of the standard of proof referred to by the noble Lord, Lord Beecham, there remains an overriding need for Parliament to retain scrutiny of the process, the safeguards and the standards. At the moment we seem to be short of a commitment on that.

I am also concerned that the whole process is a bit reactive, populist and, if I may say so, potentially discriminatory against a class of person called a landlord or their letting or managing agent. At Second Reading, I advocated—at least, I hope it was interpreted that way—perhaps going beyond that to try to support and nurture best practice, in equal measure carrot and stick. It seems to me that landlords can very easily be pilloried by their feckless tenants in the same way that tenants can clearly be very easily prejudiced by malevolent landlords.

There are probably at least as many undesirable tenants, in numerical total, as there are undesirable landlords. I do not say that in any way to cast aspersions on the tenants. I believe that the vast majority of them, in the same way as landlords, honour their commitments, try to do the best thing and genuinely create something that is growing in popularity. It is an expanding sector. The last thing we need to do is to set about damaging it so that people feel that they are under the cosh and go away. At Second Reading, I referred to the fact that our European neighbours seem to have sorted this out without this continual anti-landlord or anti-tenant adversarial approach in their dealings.

Therefore, we need to look at the whole situation and—if I may put it this way—somehow invert the process. Perhaps having the regulations before us is one step on the way so that we can look at that in detail and examine what the actual process is. At the moment, it would be possible for almost anything to be passed down to local government. As a vice-president of the Local Government Association, I would be slightly fearful, as a local government chief officer, of what might get passed down to me, thank you very much, as a hand-me-down to police this sector.

I support the noble Baroness. The key to this is very much to get these regulations out, and I support the general thrust of her amendment.

[Lord Shipley]

In a sense, everything has been said about this issue, but we must put on the record, for the avoidance of any doubt, that this amendment in the name of the noble Baroness, Lady Gardner of Parkes, is extremely important. As we have heard, had it not been for the manuscript amendments, this would have been the first that we discussed. It brings to the fore the issue of principle about the role of your Lordships’ House.

I agree that the Delegated Powers and Regulatory Reform Committee’s report is one of the most critical—possibly the most critical—that I have read. For that reason, it matters profoundly how the Government react to it. This House must be able to do its job properly. With so much being left to secondary legislation and so much that will not be with us by Report, the Government will have to do a very urgent job.

It has been asserted that perhaps the secondary legislation has not been drafted. It really ought to have been. If it has not been, we should be told. If it has been, and it is in a form that we could see, even if it is a draft of a draft, that would be extremely helpful. I think the Minister understands the strength of feeling in your Lordships’ House about this issue. I sincerely hope that she can respond positively to the amendment moved by the noble Baroness, Lady Gardner of Parkes.

Water Bill

Debate between Lord Shipley and Earl of Lytton

Tuesday 11th February 2014 Lords Chamber

[Lord Shipley]

My Lords, I said earlier this afternoon that I strongly supported the Flood Re scheme. Again, I thank the Association of British Insurers, individual insurance companies, Defra and Ministers, and congratulate them on their achievement, which is a much needed reform that will give comfort to householders at risk.

However, I want to probe in this amendment the issue of the cut-off date of January 2009 and, in particular, those houses bought before the cut-off at the end of 2008 but not built or occupied until 2009 or after. This amendment uses the date later than 2009, which is simply intended to probe the Government’s intentions. I support a cut-off date—there must be one for the scheme to operate effectively—but the question is whether it must be 1 January 2009 or whether it could be later.

The reason why properties have been excluded from Flood Re from January 2009 is that they were excluded from the 2008 statement of principles. However, I read the Defra briefing, which says that,

“2009 is the most appropriate date based on our current understanding of flood risk”.

Does that imply that the understanding might change because of developments since the statement of principles was established in 2008? This doubt is also important because the proposals in the Bill do not take account of surface water flood risk where information was not publicly available until December 2012, or of changing weather patterns that alter our understanding of what “high risk” is.

The essence of this amendment is: given that houses granted planning permission before 2009 but built afterwards would not covered by Flood Re, there is a case for saying that post-2009 households should be allowed to enter Flood Re where flood risk has genuinely changed since 2009 due to changing weather; where developments are affected by surface water but the risk was not taken into account as it was not understood in 2009; or where contracts had been signed before 2009 but the relevant property was not built until 2009 or later. This amendment tries to address those key questions. I very much look forward to hearing the Minister’s reasoning on this in his reply. I beg to move.

[The Earl of Lytton]

My Lords, we have discussed the substance of Amendment 160B already so I do not propose to move it. However, while I am on my feet, I will comment on Amendment 160A and the terms in which the noble Lord, Lord Shipley, moved it. I received a different narrative on this. The circumstances of the post-2009 cut-off, as explained to me, were that that was the time when Planning Policy Statement 25, in relation to construction on flood risk areas, came into being. As the story went, therefore, everybody was on notice that that was an issue, so that was the cut-off point. However, it occurs to me that the noble Lord, Lord Shipley, has raised rather an interesting issue.

It is fair to say that the end of summer 2008 was when the wheels came off the banking system and, with it, the property development system. If anybody had a planning consent that he was hoping to implement in 2008, he would have found that there was no money or funding to implement it—nothing would be forthcoming. Many of these schemes were put on ice. Indeed, there was a government recommendation—I do not know if you can call it an instruction—to the local planning authorities that they should look favourably on extending the three-year life of these. As I am sure noble Lords are aware, detailed planning consent has a three-year life, so it would have run out and would have had to be reapplied for. Due to the circumstances of having to reapply—maybe there are a new lot of regulations and so on—you can run into a whole raft of cost, time and delay.

The idea was that those things should be perpetuated, and with very good reason. They underpinned balance sheets, loans and all sorts of things. If they were to be effectively prejudiced by the loss of a planning consent, so that you had a property with either no verifiable development value or a lower development value, that had repercussions for precisely the sort of reasons I outlined earlier this afternoon in another context. So it is perfectly possible that a planning consent that was negotiated on the basis of rules in 2006 or 2007 would not have got going by the end of 2008 or 2009, and would have had to be preserved. The houses would not have been constructed until some time later, but the circumstances relating to that consent would have related to the antecedent circumstances at the time of granting of planning consent. I can see that there is an issue here.

I am always a bit frightened by development land values anywhere. I am even more frightened when things go wrong and people start reaching for their lawyers. What are they going to start looking at? Will they say, “The house is now constructed, it was built on what might be called an old technology basis pre-2008, and, lo and behold, it has flooded”? If they are excluded, it may have a material effect on the value. Who will they look to for recompense—the local authority or the fact that Planning Policy Statement 25 did not apply, or should have applied in some other form? This makes me think of the time-honoured American superfund arrangements, where most of the money went not to environmental clean-up but into the pockets of lawyers trying to attach liability. I do not wish to see that sort of thing happening here. Some careful thought has to go into the date and where the cut-off should be. I know it is not easy. I am happy to believe that the account of the reasons and circumstances given by the noble Lord, Lord Shipley, is the correct one, but I am slightly surprised that it seems to be a little at variance with the one that I have. I would be very interested to hear what the Minister has to say about this.

Water Bill

Debate between Lord Shipley and Earl of Lytton

Tuesday 11th February 2014 Lords Chamber

[Lord Shipley (LD)]

My Lords, this is a probing amendment on the rights of tenants and the problems that can arise if there is no adequate buildings insurance in place. Reputable landlords will take out insurance as a matter of course. However, there is no compulsion for landlords to do that, and tenants can be particularly vulnerable if their landlords do not take out buildings insurance. They may not be covered for the cost of moving out or for temporary accommodation in the case of flood. Of course, it is understood that tenants must provide their own contents insurance. The amendment does not relate to contents insurance.

The amendment would give tenants the right to know all the facts about an insurance policy on the property that they are renting, including whether there is one at all. The solution to this problem is to make it mandatory for landlords to take up buildings insurance that includes flood risk insurance; to require landlords to tell a tenant if a property is on the register of premises subject to greater flood risk as defined in Clause 61; and to show a copy of the insurance policy to a tenant on request.

I fully understand that landlords will not benefit from the FR scheme. However, landlords pay income tax, and I understand that they would be able to offset the cost of insurance against income tax. I should be grateful for the Minister’s confirmation of that and to know whether, therefore, the Government could support an amendment on Report that protects the rights of tenants, as proposed in this amendment. I beg to move.

[The Earl of Lytton (CB)]

My Lords, I had not intended to make any comment on this, but perhaps I ought to. I have one or two problems with the amendment. First, it appears to refer to any type of property, so it could be residential or non-residential. It appears to cover any type of tenure. The definition of “relevant premises” includes,

“any part of premises occupied”,

which presumably includes the garden. The requirement is for the landlord to hold insurance regardless of risk.

I declare an interest in that I am a landlord of a residential property that is let. It is not itself at risk of flood, but a stream crosses part of the garden. That does not put the property itself at risk, but if it was perceived by an insurer on the basis of the postcode lottery principle that it was somehow at risk and that ratcheted up my insurance premium—which, of course, I should be delighted to cover for all normal risks—I see that there might be a needless requirement to cover for a risk that was not there.

I do not know how that provision sits, because the terminology for “landlord” is wide and the amendment would probably include other properties without any streams in the garden that I might happen to let on a holiday letting, or something like that. I can see that tenants need to be protected in some way, but let us look at what the protection might mean in practice. There is a flooding event; there is insurance cover. Let us say the interior—the inhabitable bit—of the premises is rendered incapable of occupation, not only because of the effect of the flood-water, but also because of the filth and everything else, causing damage to fittings, de-lamination of kitchen units and all the other horrors. It will need a thorough clean-out, with bits replacing, probably a renewed kitchen, and certainly redecoration and drying out. That takes time. The tenant is inevitably going to have to move out. He is going to move to somewhere else. The consequential losses presumably do not cover the loss of the tenants; they only cover the damage to the property. If it needs shoring up then that is a consequential loss.

So with the greatest respect to the noble Lord, Lord Shipley, I am not sure that this amendment achieves what it sets out to do. Maybe I have got hold of the wrong end of the stick, but the landlord’s insurance does not enure for the benefit of the tenant. If you look at a commercial lease, for instance, it normally has a cessor of rent clause which causes the rent to stop being payable at a point where damage occurs beyond a certain level, so the property is no longer fit for occupation. But if it is not reinstated within a certain period of time, the tenant has the option to move out and determine the lease. The tenant, in the mean time, whether it is a business that needs to continue its business occupation, or a tenant in residence who actually needs a roof over his head, is going to have to move, so I am unclear about the mechanics of how this would really work in practice, because I do not see that it protects the tenant.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)]

My Lords, Amendment 161ZA from my noble friend Lord Shipley seeks to make it obligatory for landlords to hold buildings insurance, including cover for flood risk. I can confirm to him, in answer to his question, that the cost of insurance premiums can usually be offset against profits for tax purposes. I am sympathetic to the intention behind this amendment although I am not sure that this Bill is the right vehicle for this debate.

I note that while this amendment refers specifically to flood cover, buildings insurance includes protection against a range of perils including, for example, fire and theft. Although there is no legal requirement for property owners to take out insurance for their properties in the UK, owner-occupiers and landlords generally choose to do so in order to benefit from the financial protection that insurance offers. In addition, and importantly, most mortgage lenders specify buildings cover as a mandatory requirement for providing a mortgage on a property.

The Government agree that it is very sensible for landlords to take out insurance, but are conscious that the decision is a matter of individual choice, based on a commercial decision to protect an investment made in property. We are concerned that making insurance compulsory across the board could create a regulatory burden, which could deter investment in the private rented sector. I strongly encourage tenants always to check with a prospective landlord that appropriate cover is provided for the property.

If I might pause specifically on the issue of support for tenants in the event of a flood, we appreciate the concerns raised recently by the National Flood Forum and others that tenants of properties not covered by insurance might be left homeless following a flood. I note that some insurance policies have an “alternative accommodation” provision, but I would also like to assure noble Lords that, even if this is not the case, tenants do have protection. All local authorities are required to provide accommodation for households who are eligible for assistance, homeless through no fault of their own, and have a priority need for accommodation—into which category flood victims would clearly fall.

As part of its role in promoting flood awareness, the Environment Agency strongly encourages landlords to make a flood plan and to make their tenants aware of what to do in a flood. I also remind noble Lords that all residential contents policies will be eligible for cover through Flood Re, including tenants of rental properties, so long as they are not in properties built after 2009 or in band H or their equivalents. I ask that the amendment be withdrawn.

Local Audit and Accountability Bill [HL]

Debate between Lord Shipley and Earl of Lytton

Monday 15th July 2013 Lords Chamber

[Lord Shipley]

My Lords, I speak in support of Amendment 43, and will be brief. I agree with the noble Lord, Lord Beecham. I think it is bad policy to backdate the definition of an excessive council tax rise so that it includes a levy from April 2013. I understand that in January this year letters were sent out to local authorities suggesting that the Government might take this course of action. I will say two things about that. The first is that it is simply not enough notice. Council tax-setting takes much longer than just a few weeks. There is a requirement that council tax is effectively set by the beginning of March, so that bills can be sent out. In my view, given the lengthy periods of consultation that local authorities are required to undertake, a period of six months would have been more reasonable.

My second reason for objecting to the Bill as it stands is that one should have respect for the law at the time at which the law is applied. I believe that councils and levying authorities abided by the law at the time. As the noble Lord, Lord Beecham, quite rightly pointed out, it is a comparatively small problem. Retrospective change, whether or not there was a warning, seems to me to be wrong in principle, and should therefore be resisted. The noble Lord, Lord Beecham, said that he felt that the Government were overreacting. I concur with that, because I believe that it is an overreaction to backdate in the way the Government propose.

[The Earl of Lytton]

My Lords, since my name is to Amendment 43, I would like to voice my support for the point that has just been made, and was also made by the noble Lord, Lord Beecham, about the undesirability of retrospection. Notwithstanding the comments made by the Minister at a previous stage of the Bill, there is no question in my mind that Clause 39(15) and (16) are, beyond peradventure, retroactive in their effects. Apart from the self-evident difficulties that that will create within the continuum of local government finance, one supposes that there must be some reason why this has been put in the Bill. I would like to inquire what that reason is, because to date we seem to have had reassurance that there is no intention that this should be retrospective. I do not wish to work out how many angels dance on the head of a pin between retrospection and retroactivity, but I prefer the term “retroactive”.

It seems to me that this is almost calculatedly destabilising, and I cannot believe that that was really the intention. It seems to me that there is a necessity for some further words of qualification, so that the clause is targeted at whichever particular issue needs it, and it is not capable of any sort of generic destabilisation of previous years of local government finance settled business, or what should be settled business. I hope the noble Baroness will be able to give an explanation.