James Clappison
Main Page: James Clappison (Conservative - Hertsmere)Prevention of Social Housing Fraud Bill
James Clappison Excerpts
Richard Harrington
My hon. Friend, as usual, makes a considered point. I do not quite know the answer. I do not know why the problem has not been dealt with before. When researching the subject, I noticed that it had been talked about for a long time. Bodies such as the Serious Fraud Office and the National Audit Office have identified the problem, and for years Governments have had it on their mind, but it is one of those small things that slip through the net of legislation.
Mr James Clappison (Hertsmere) (Con)
An important question has been put to my hon. Friend on this point. Is he aware that in a consultation carried out with housing associations, which are obviously very worried about the problem, they identified as one of the main concerns in this area the lack of sufficient deterrent penalties available for people who engage in such activity and thereby enrich themselves?
Richard Harrington
I am aware of the consultation. Having researched the matter, I know that the problem has increased over the years, as my hon. Friend the Member for Bury North (Mr Nuttall) suggested. I hope that there is a general consensus that it is time to do something about it. My hon. Friend the Member for Hertsmere (Mr Clappison) has been in the House since 1992 and so might remember speeches and contributions right hon. and hon. Members have made on the subject. Like my hon. Friend the Member for Bury North, I was quite surprised that it has not been included in legislation by this Government, the previous one, or indeed the one before that. In my humble way, I can simply deal with the problem as it is today.
Clearly there is a problem. This type of sub-letting is something I am sure the public think is a criminal offence. It is an outrage that an estimated 150,000 social housing tenants—50,000 is the most conservative figure, but the National Audit Office’s estimate is 150,000—are illegally sub-letting their properties. Typically, it is done by someone who qualifies for a social tenancy because they have the necessary points in the scoring system. They sign a contract with a social housing provider but then illegally sub-let it to a tenant, who in many cases pays a market rent for the property, and then pockets the difference between that rent and either what they are paying themselves or what is being paid as part of their housing benefit.
That is not simply taking advantage of the situation financially; it also means—in many ways this is a worse aspect—that a family who are on a waiting list and would be entitled to the property cannot occupy it. I know from correspondence with hon. Members across the House that this is a problem in their constituencies; I know of no area where it is not a problem. The shadow Minister, in my discussions with him, explained that he thinks it is a greater problem in the London area, but that is only because properties in London are rented out in the private sector at a much higher rate. I have yet to meet a Member of the House who is not aware of this being a problem in their constituency.
Mr James Clappison (Hertsmere) (Con)
It is a pleasure to follow my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley). I join her in congratulating my hon. Friend the Member for Watford (Richard Harrington) on having selected this topic for his private Member’s Bill and on the way in which he introduced it today, giving the House the benefit of a detailed, coherent and compelling account of the background to the Bill.
My hon. Friend the Member for Watford spoke with characteristic modesty, which is a very attractive trait but does not give an entirely accurate impression in his case. He spoke of leaving a small footnote. Having known him for many years, I would say he is somebody who finds it impossible to leave a small footnote behind him. He also spoke, again with modesty, about his academic legal career. I can tell the House from my own knowledge that that career encompassed at least one very rare achievement. His legal knowledge was no doubt reflected in how he introduced the Bill. Suffice it to say that he has convinced the House—he has certainly convinced me, as a sponsor of the Bill, that it deals with a real problem that is also widespread, although the hon. Member for Derby North (Chris Williamson) and others made the very good point that that is no reflection on the vast majority of social housing tenants, who are decent, honest people to whom it does not occur to carry out an illegal activity such as sub-letting.
It is as well to bear in mind that, as the hon. Gentleman mentioned, the position not only of existing social housing tenants, but of the people who are in many ways the worst victims of such fraudulent activity—those on housing waiting lists, of whom there are a large number in my constituency, whose position I will deal with in a moment. There is a widespread view among housing associations and in the sector that this activity is not sufficiently covered by existing criminal sanctions. Indeed, there seems to be some doubt whether existing criminal law covers it. In those circumstances my hon. Friend is right to introduce the Bill, which makes it a definite criminal offence, avoiding the element of doubt whether the law captures the mischief in question. This is a definite measure aimed specifically at that mischief, and it should leave nobody in doubt about it.
I would like to know whether my hon. Friend the Minister envisages publicising this measure so that people will become aware of it and its deterrent effect on those who might become involved in this activity can be maximised. There is one other point on which I invite my hon. Friend, if he feels able to at this stage. The Bill would introduce two different offences, the first of which is dealt with more seriously than the second. The offence set out in clause 1(2) provides, on summary conviction, for a fine and possibly a prison sentence and, on conviction on indictment, for imprisonment of a term not exceeding two years, whereas the offence set out in clause 1(1) is triable summarily only and does not provide for a sentence of imprisonment. I guess the offence under subsection (2) is dealt with more seriously because it involves dishonesty. I invite my hon. Friend to comment, if he feels able to do so, on what sorts of factors he thinks prosecutors would take into account in deciding whether to bring a charge under subsection (2), rather than subsection (1), when they feel that dishonesty is present.
The impact of the Bill is clear and I hope that it will have a deterrent effect, as my hon. Friend the Member for Watford has envisaged. Certainly everyone in my constituency with whom I have spoken about the Bill thinks that it is a good idea. There is huge pressure on social housing in Hertsmere, as there has been for a long time under Governments of both descriptions. My hon. Friend pointed out that this type of offence is more prevalent in London than elsewhere in the country because of the particular pressure on housing there and the high market rents. The same considerations apply in my constituency. I guess that this offence is taking place in my constituency and hope that the Bill will go someway towards tackling it.
As I mentioned, the people I think of in particular in this regard are those who are in housing need but are on the waiting lists that my local authority and housing association keep, many of whom have families. The local authority and housing association determine those cases on the basis of greatest need, whereas that consideration does not arise in the case of those who are sub-letting their properties. We need to take these needs into account. I saw a case only this week involving a large family with small children in great need—I will say no more about it than that—and there were compelling educational reasons for keeping the family in the locality. I am sure that all Members deal with such cases. It is the people on housing waiting lists waiting for one of these valuable social housing tenancies to come their way whom the Bill will benefit the most, especially as there appears to be a substantial number of such properties that are not getting into the right hands and have been diverted away from social housing, and which are also, by the way, causing significant problem for local authorities.
I think that my hon. Friend’s Bill deals with a real mischief and meets a real need. I think that it is an excellent Bill and am happy to promote it. I congratulate those on the Opposition Front Bench on the attitude they have taken towards the Bill itself, if I may put it like that, and I hope that it proceeds to Committee and receives proper consideration and eventually passes into law.
The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
It is a pleasure to respond to the debate. May I start by warmly congratulating my hon. Friend the Member for Watford (Richard Harrington) on his success in the ballot and on introducing this valuable Bill? It is one that the Government are happy to support, and I am sure that, with support across the Chamber, it will have the fair wind that it deserves. I congratulate him personally, as my hon. Friend the Member for Hertsmere (Mr Clappison) has just done, on the way in which he has brought it forward and put his case. He made a carefully argued, powerful and deeply felt speech, which I think says a great deal about him, because he has sought to deal with this important issue in a serious and constructive manner.
I knew my hon. Friend for a long time before he became a Member, and I, too, know the qualities that he brings to the House. It is easier for some of us than for others to leave a small footprint, but I am sure that he will leave a large footprint in this place and be here a good number of years to ensure that this Bill is by no means his only achievement in the House. It is, however, a very powerful and impressive start, because he hits upon a serious issue.
I shall not dwell on the history, but I observe that the issue was recognised even before the coalition came into office, and I note my hon. Friend’s attempts to engage with a former Minister, the right hon. Member for Wentworth and Dearne (John Healey), who has always known when to be partisan and when not to be in relation to this issue.
The Government have recognised that there is a problem not only by bringing in the consultation, which was discussed prior to the general election, but by increasing grant aid funding to local authorities over four years from £4 million under the previous Administration to £19 million under this one; by setting up a team of experts, based at the Chartered Institute of Housing, to offer free, practical advice to social landlords on how to tackle fraud in their housing stock; and by setting up a framework agreement to help local authorities to use credit reference agencies and data matching more effectively and cheaply.
Practical things are already being done, but real concern remains about abuse, which all of us will have come across in our constituencies and which has been highlighted on the television and in various aspects of the media. In some cases the sums involved are quite egregious, and in others fraud is carried out on what can fairly be described as a professional or near-professional basis. That is the abuse which rightly needs to be tackled. Members on both sides of the House have observed that this is a fraud not only on the public purse, but on the vast majority of social housing and council housing tenants who are honest, and above all on the people on the waiting list, who are done out of the home that is fraudulently let. We are therefore happy to support the Bill.
There are difficulties with the current law—an issue my hon. Friend the Member for Bury North (Mr Nuttall) raised in an intervention. He is not in his place, but I must tell the House that I too was a lawyer. He was an academic lawyer before having a distinguished career in business, and I was a criminal barrister—some people say, “Aren’t they all?” but I did spend 25 years in the criminal courts of this country, so I recognise that despite the successes from time to time when using the existing legislation, there were gaps in its effectiveness. When I was a prosecutor and a defender in such cases, the difficulty seemed to be that neither the offence of obtaining pecuniary advantage by deception nor light fraud offences wholly fit these circumstances, because the deception does not operate upon the mind of the tenant—the illegal sub-tenant in this case—who parts with the money.
So making the activity fit the definition is not easy, and similarly, because the Theft Act 1968 involves the appropriation of property belonging to another, there is a difficulty in this case with the appropriation taking place at one point while the mind, or any element of dishonesty, operates on a different person—and one has to prove the intention permanently to deprive as well. The means of taking forward any such case is therefore slightly convoluted, and that is why everybody on both sides agrees that a tailor-made offence is the surest and safest way to proceed.
On the legal aspects, a point was made about the distinction between indictable and summary-only offences, and about the issues of knowledge as opposed to dishonesty. It is ultimately for the local authority, as the prosecuting authority, to take a decision on this matter. They have access to the general guidelines that the Attorney-General issues for Crown prosecutors, which are well known from Archbold’s “Criminal Pleading, Evidence and Practice”, the standard text in this regard. One would expect the lesser offence to be appropriate where a lesser gain is involved, and there is discretion to consider that. The nature of the behaviour may well affect the degree of dishonesty, and it is sensible to make that distinction. In some situations, a tenant might know that they were in breach of the tenancy agreement. Given that it is pretty standard for any tenancy agreement on which a public body lets out houses to have a clause expressly stating that sub-letting is forbidden without the written consent of the landlord, a tenant who breaches that will often do so knowingly.
In some cases, no money will have been made or the tenant will have moved out and sub-let to a friend rather than handing the keys back. However, that still deprives the social landlord—the local authority—of the ability to let the property to the person who is highest on the waiting list in terms of housing need. That is why this offence can incur a financial penalty. Where a rogue tenant goes in, that may be because the occupier’s own personal circumstances have changed so that they no longer feel in need of the social subsidised property and therefore let it out to make a profit. That is clearly a dishonest activity, and it is right that it should potentially be visited by imprisonment.
Mr Clappison
My hon. Friend is giving the House the benefit of a clear explanation of the difference between the two types of offences and what could be taken into account in determining how to prosecute. Does he agree that in order to avoid people casually letting out tenancies to friends, perhaps without great profit, and to maximise the deterrent effect on those who try to make a large profit by letting out tenancies, it should be made clear to tenants, on taking on the tenancy, that they will be committing a criminal offence and face the penalties in the Bill if they sub-let in the circumstances that it outlines?
Robert Neill
I am grateful to my hon. Friend, who makes a powerful and sensible point about deterrence. We in the Department, together with the Local Government Association, other local authority bodies and the social rented sector, will want to take this forward.
Finally, it is worth pointing out that the Bill includes provision for an unlawful profits order, which strengthens and makes more specific the provision for an order under the Proceeds of Crime Act 2002. That means that someone can not only be fined or, in a bad case, go to prison, but can have the unlawful profit taken from them and returned to the social housing provider, as well as losing their status as an assured tenant. These are powerful sanctions that have not been drawn together before, and that is a great strength of the Bill. I should point out for the benefit of anyone who is anxious about this that an honest person who lets in a lodger will not be caught because in such cases the agreement of the landlord is secured and no difficulty arises.
I hope that that is a proper argument on which the Bill can proceed and that I have made it clear that the Government want to give it a fair wind. It is by no means, of course, the only area where the Government are determined to act to improve the affordable housing situation. We inherited a lamentable record of affordable housing starts, and we have been working hard to improve that through our affordable homes programme, which will provide up to 170,000 new affordable homes by 2015. [Interruption.] Nevertheless, the Bill is a valuable piece of legislation in its own right.