Commercial Rent (Coronavirus) Bill

Lord Fox Excerpts

Committee stage
Thursday 10th February 2022 Grand Committee

[The Earl of Lytton (CB)]

My Lords, far be it from me to delay any part of this important Bill, but I would like to be clear about the Minister’s insertion of “businesses or premises”. There does not necessarily seem to be a direct alignment between the two terms. For instance, is the closure of the business inescapably the product of a prohibition, as opposed to something that is advisory? I refer back to the great debate over whether something was guidance or mandatory. It seems to me that we could be looking at businesses with subsidiary operations and so on. If we are not careful, something that affects one part of a business but not the particular part we are talking about, namely the rent on particular premises, would not necessarily align. I would be grateful if the Minister could clarify what is intended there.

[Lord Fox (LD)]

My Lords, fools rush in where angels fear to tread—I shall try to speak briefly. I welcome the fact that the Minister has been flexible and responded to points raised in the other House. Government Amendment 4 is a really good thing, but I have the same question: is this guidance or a mandatory process for the arbitrators? My understanding is that, if a tenant is able to reach a settlement through this process, that tenant no longer carries the stain of the unpaid element of the arbitration process. That therefore means that this would not stand against their credit rating and I wonder whether the Government have considered how this might not filter through into the credit rating system. As I am sure the Minister knows, the credit rating system tends to make life very difficult if you get on the wrong side of it. Some clarity on that would be really helpful.

[Baroness Blake of Leeds (Lab)]

My Lords, I also extend our thanks to the Minister for his courtesy, as always, and for picking up these—as he made clear—technical issues. We have received numerous representations on the Bill from stakeholders. I was pleased to hear the Government picking up some of the very detailed concerns about liabilities. We recognise Amendments 11 and 12 as positive, reflecting the concerns raised by stakeholders. I shall be interested in hearing the clarifications from the Minister on the points raised by the noble Earl, Lord Lytton, and the noble Lord, Lord Fox, particularly on definitions. The complexity of these areas makes us all try to look at the unintended consequences that could flow from making one change. Sadly, we know the pressures that so many of these businesses and tenants are under and the potential risk to their future liability.

[Lord Fox (LD)]

With apologies to the Minister, I forgot to complete what I was going to ask with respect to government Amendments 11 and 12. Would they in any way change the relationship with former tenants who have unpaid rent when it comes to the process of recovering that rent? That was not clear to me from what the Minister said, probably because it was not the intention of what he was describing. Can he clarify that they would not in any way downgrade the landlord’s ability to pursue unpaid debt from a former tenant?

[Lord Grimstone of Boscobel (Con)]

My Lords, I thank noble Lords for those points. I will answer them as best as I can because there are some technical issues underlying this. I hope noble Lords will not mind if I have to write in amplification of the answers I give.

First, on the point made by the noble Earl, Lord Lytton, the coronavirus regulations imposed mandated closure requirements on either businesses or premises. Sometimes the run two together but they do not necessarily do so. The Bill applies to all such cases where there was a requirement in the coronavirus legislation so one has to look back to that legislation to understand the difference between businesses and premises in it. However, I will write to clarify that further for the noble Earl.

On the question asked by the noble Lord, Lord Fox, the intention is that the arbitral award, which is binding, will substitute itself for the debt that previously existed. On that basis, it should not apply to the credit rating of the person concerned. Having said that, I guess we all have experience, either directly or through colleagues, of where that perhaps has not flowed through to the outcome as it should have done—in which case, the answer, I am sure, is that one must take it up with a credit rating agency. However, if that were to happen, it would be an error that would then have to be corrected.

[Lord Fox (LD)]

In the likely event that the Bill becomes law, might there be some way for the department to inform the credit rating agencies about this process? The last thing a business needs if it is trying to get back up and running is to find that its credit has been shut down. Some pre-emptive action with the key credit rating agencies might help to alleviate the situation.

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[Baroness Blake of Leeds (Lab)]

I am grateful for the contribution that the noble Lord, Lord Fox, has made in this grouping and look forward to the discussions that we will have, recognising the additional amendment in this group.

I again thank the Minister for the attention to detail in representing the representations from stakeholders —importantly, from both tenants and landlords. I thank him, too, for his letter responding to the concerns raised by noble Lords at Second Reading. I just want to make the point about understanding the real pressure that businesses, tenants and landlords are under at the moment. It has been an incredibly difficult winter for many businesses, as we know and, of course, we are in a situation where we face ongoing pressures from the national insurance rise, energy costs and inflationary pressures. It is a time of great uncertainty for many people affected by the Bill before us. We welcome the moves forward as outlined in the Bill, recognising the complexity and the absolute need to get the detail right, but also the time pressures and the fact that the clock has been ticking for many businesses for some time now.

Of course, running through all that, it is essential that stakeholders have confidence in the system. The reason for Amendment 2 is the need to ensure absolutely that bodies under subsection (1) have adequate resources and sufficient numbers of arbitrators. Through this amendment, we seek reassurance with regard to immediate capacity, but I would also like to ask about evidence and what understanding there is of how much work has been done on resourcing the needs and future demands on services for all those involved. It is essential that everyone feels that they have proper access to a fair hearing. I should like the assurance that all due consideration has been given to the proposed nature of the hearings.

I understand that the assumption is that the hearings will be in public and that oral hearings may be desired by the parties involved. Could that have an undue impact on costs? Would they add to the capacity requirements of the arbitrators? Am I right to understand that a document-only approach would allow for a more efficient process? Is that the understanding behind the direction of travel, and would this be seen to keep costs and time lower?

We understand from our discussions at Second Reading that many cases have now moved to be settled. Would we be right in assuming that the outstanding ones may well be more complex, which explains why they are moving forward to seeking arbitration, as laid out? My question remains: has a full assessment been undertaken with regard to the demands of the services of arbitrators? I am sure that the noble Lord, Lord Fox, will expand on the issues around accessibility to the services.

Amendment 3 would increase the transparency of the arbitrator’s decision, which we have emphasised in the debates in the other place—and I refer to the discussions that were held there.

I regard Amendment 5 as positive and, again, is one that we tabled in the other place. We are concerned that the arbitration fees could be the final cost to push landlords and businesses over the edge. Therefore, we consider that the Secretary of State should ensure that fees are capped. As I said at the outset, this is a time when costs are escalating in so many different areas; we would like the absolute assurance that this area has been considered and controlled.

Can we also be assured that arbitration fees and expenses will be proportionate to the arrears that have caused the dispute? High arbitration costs will have a huge impact on businesses that are doing everything they can to emerge from the pressures that they have been facing. The fact that they need to go to arbitration highlights those pressures. Will the Minister expand on the powers that the Secretary of State will have to make regulations specifying limits on the fees and expenses of arbitrators? What circumstances would lead to the Secretary of State becoming involved, and how will affordability be judged?

With regard to Amendment 7, also in my name, can the Minister say more about what, in his view, constitute viable and unviable businesses? Further, could he expand on what guidance will be provided to arbitrators? Do we know how much flexibility they will have? We all recognise the difficulty of defining what constitutes viability or affordability, but this is such an important area that we need to push further to make sure that we have a clearer definition. That is why we seek more answers in this area and to add more depth to some of our previous discussions.

The noble Lord, Lord Fox, has tabled Amendment 7A, and I shall listen with interest—sorry, this is a double use of the word—to the cap on interest. I am interested in the interest on the interest. With those points, I beg to move.

[Lord Fox (LD)]

My Lords, I shall speak to Amendments 3, 5 and 7A in my name, and in support of the other amendments in the group, most of which I countersigned and one that I, mysteriously, did not. I am not sure why, because I agree with it completely. It certainly does not have any lower rating because I failed to sign it.

My three amendments are relatively self-explanatory and I shall be brief, but the Minister should not mistake that brevity for the idea that I do not think they are important. I can speak for longer if necessary. Amendment 3 would ensure that arbitration decisions are easily accessible. The basis for that is that, although we do not have long to get through this process, building up a body of case law, or case decision-making, will be important for consistency. What worries me most is complete inconsistency in how these rulings are made. I think we will come to the last point that the noble Baroness, Lady Blake, made about viability, which is where inconsistency will be most a problem. One starting point is to publish fully and accessibly. It would be better if the Government had their own website which scraped them up and put them all in one place so that people would not have to go to various places but, at the very least, they should be easily available somewhere.

Amendment 5, which has some crossover with parts of Amendment 6, requires the Secretary of State to make regulations specifying limits on arbitration fees. The Minister will see that the word “may” is employed, and I am sure he will tell us that this is a legislative trope and that this is how it is done. That is what I expect. Therefore, it will be sufficient if the Minister stands up at the Dispatch Box and says that such regulation will be brought forward at the earliest opportunity and the word “may” remains in the legislation. That would clearly clarify the Government’s intention as to whether this process will happen.

I apologise for the late arrival of Amendment 7A, and I really appreciate the help of the Public Bill Office and others in drafting it so that it is in scope of the Bill. The aim of this amendment is to put a cap on the level of interest that can be baked into the arbitration. This is important because otherwise it will be a lever used in the negotiation. In other words, the landlord will say, “Yes, I’ll do this deal but I expect interest of X or Y”, and clearly that interest level may not be to the advantage of the tenant. Therefore, putting this in removes that lever from the arbitration process. It knowingly and deliberately moves it so that the negotiation is on different ground. The Minister will have noted that I often speak up against secondary legislation—indeed, we have some coming later—but in this case it seems to me that Amendments 5 and 7A are good examples of what secondary legislation was designed for.

I turn briefly to the amendments in the name of the noble Baroness, Lady Blake. Amendment 2 is a sensible measure to ensure that there are sufficient arbitrators. The Minister has said on occasion that there are sufficient, but to some extent he is relying on the word of the organisations concerned. I think it unlikely that they would say, “No, Minister, we can’t do it”. This amendment forces that assurance process a little harder.

Amendment 6 further supports Amendments 5 and 2, in my view. I thank the Minister for his letter. One element of that was to set out the distribution of potential cases. The question I have is whether the availability matches the potential cases. For example, it seems that there is a concentration of potential cases in the south-east, and it seems likely to me that there is probably a concentration of resources for arbitration in the south-east. But what of the towns where the commercial infrastructure has dwindled and where there are not the people who fit the arbitration photofit that the Minister described? How has the Minister ascertained that those towns, cities and villages, which will need arbitration just as much as the bigger places, will have the supply they need? If they do not have the supply locally, on their doorstep, how will that be supplied otherwise? It is not just whether they are sufficient in the country but whether the footprint of those arbitrators matches the expected need.

Then we come to Amendment 7, the one I did not sign, which is strange because I think it is really important. The questions I asked in the debate before Second Reading were, “What is viability?” and “On what forward data is viability assessed?”. One percentage point on expected interest rates, one or two percentage points different on expected inflation and one percentage point up or down on the RPI are the difference between life and death for a business. When the arbitrator sits down at looks at viability, from where is that arbitrator going to get that data and how can we ensure that the data is consistent? The Treasury and the Bank of England often get it wrong when it comes to forecasting data—with all due respect to the Deputy Chairman’s son, who I believe has the job of making some of that data. The point is that we have to use something. Is it up to the arbitrator to decide which projection for RPI, which interest rate data and which inflation data are to be used? This is the difference.

What does viability mean? Is it wiping your face in the colloquial, is it a 5% return on capital employed or what? What do we mean? How do we make sure that businesses are not shut down that in other places are determined viable? This is a difficult question to answer but it is a crucial point, on which the effectiveness of this legislation will turn.

[The Earl of Lytton (CB)]

My Lords, I shall make a few general comments about this group, which I certainly relate to. The Minister will doubtless have seen the item I sent in the past day or so from the Property Litigation Association, which I copied to a number of other noble Lords, about its concerns over the geometry of the arbitration process. With regard to the number of arbitrations, a matter raised by the noble Baroness, Lady Blake, and the noble Lord, Lord Fox, the final quantum of those willing to participate will not be known until the Bill and any regulations have been finalised, so willingness to participate may well depend on what is set out in them, what happens about any caps and proportionality relating to costs in the arbitration.

On the costs in the arbitration, my limited experience suggests that the process is capable of being gamed with bad behaviours referred to in an email I had from the property industry and brinkmanship as a predetermined tactic. Given that arbitration is not an inherently cheap process in such circumstances, I wonder what safeguards there are against, for instance, a bully-boy multiple having a go at a series of small landlords, a not unheard of situation. Unfortunately, the British Property Federation, which represents larger landlords, does not have data on what the impact is. I will be very interested to know whether there is any data.

I have concerns about arbitrator discretion. As I understand it, under the provisions of Arbitration Act 1996 the parameters of the arbitrator’s decision-making function are that he has to decide on one or other of the two cases before him. He is not in an inquisitorial position to try to fillet out bits of one and insert them in bits of the other, so when it is a question of what interest rate will be applied, it will be a matter of what is presented to him or her as arbitrator. If there is to be some change in this non-inquisitorial function of arbitrators—I am not suggesting that there could or should be—I can see that, if we are talking about the interests of justice rather than the much vaunted justice of Solomon, we might wish to review what is happening.

On the question of arbitration awards, again, my understanding is that these are normally private, not public, occasions. To the extent that it is proposed that the outcomes of those should be relaxed, I should like to know what revised terms, guidance or direction will follow. That might well have an impact—going back to the first point I made—on those who are already trained arbitrators who might wish to participate in this scheme and may regard the matter as a sufficiently aberrant novelty not to want to participate. I see this matter as a somewhat circular approach and would very much like clarification because I want the Bill to work in practice.

[Lord Fox (LD)]

I hope it is order for me to ask if the noble Lord agrees with me that the so-called bully-boy tenants that the Minister described are going about their bullying within the current system? How much more does this system facilitate their ability to bully or otherwise than the current system, given that we have seen high-street multiples hold their landlords to ransom without this legislation? Why would this legislation make it any easier for them to do that?

[The Earl of Lytton (CB)]

My Lords, the noble Lord asked a pertinent question and the short answer goes back to my earlier intervention. The impact on business and on premises are two separate things. Those are being coalesced into what has happened in terms of non-payment of rent and a build-up of arrears. All I would say is that it is just another factor that adds into a range of factors that he rightly points out are already in play. It adds to the complexity.

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[Lord Grimstone of Boscobel (Con)]

Again, I thank noble Lords for their contributions on this group. I thank the noble Baroness, Lady Blake, and the noble Lord, Lord Fox, for their attention to the important issues raised through their amendments. I am grateful for the constructive debate we have had on this, complicated though it is. I have to say to start with that I very much agree with the noble Baroness about the extreme pressure that businesses have been under during this very worrying time. I hope that this Bill will be a small contribution, at least for some, to easing that worry.

Turning first to Amendment 2, I thank the noble Baroness and noble Lords for their consideration of the issue of ensuring adequate arbitrator capacity and administrative support by arbitration bodies. These are key to achieving our aim for disputes to be resolved quickly. As I said before, we have thought it right to adopt a market-based policy approach. This means that approved arbitration bodies, which have expertise in running schemes like this and mounting these things—they will not have run an identical scheme to this one but they will have run similar schemes in the past because it is, in a sense, their core business—will manage their internal capacity processes to perform their functions in the Bill to the required standard.

I believe that this approach of empowering arbitration bodies to manage their internal workflows is the optimal way to ensure that there is enough capacity in the system to deal with the caseload. Not only have my officials been in deep contact with the arbitration bodies about this but I myself held a round table with some of them earlier in the week. I probed them very hard on these matters and, I must say, I got replies that satisfied me as to their ability to cope with this and put the systems in place. In a sense, their very reputation as arbitral bodies depends on them being able to do things like this.

Of course, adopting a more market-based approach does not mean that we are not taking action to engage with the issues of arbitrator capacity and arbitration body resource capability. As I said, we have been engaging extensively and on an ongoing basis with arbitration bodies in relation to these issues, and we will continue to do so. If tweaks have to be made, we will certainly make them.

Let me give a bit more colour to that. The application process for bodies to become approved contains a question on the number of arbitrators listed with the body that would be potentially suitable for the scheme. This is designed to ensure that the arbitration bodies that are approved will be able to list, and therefore appoint, a sufficient number of arbitrators. In any event, simply looking at the number of arbitrators that arbitration bodies can list underrepresents the capacity in the system because it disregards the fact that an arbitrator will be able to take on more than one case at a time.

The noble Lord, Lord Fox, asked, quite properly, about the geographical dispersion of arbitrators. It is very much our intention in the Bill that this is a documents-based process; to that extent, geographical location is less relevant. Also, our belief is that a lot of this will be conducted online by the arbitrators, so the things in this Bill will not necessarily turn on whether there is a local arbitrator on this.

[Lord Fox (LD)]

I thank the Minister for his answer and accept that position, but I think he would also agree that, in order to assess the viability of a particular business correctly, local knowledge is quite helpful. The idea that, at its extreme, you are sat in a village in Herefordshire conversing with someone in Westminster and doing the process, could create confusion.

[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord for that intervention. Of course, in the cases put before the arbitrator, one would expect either the tenant or the landlord themselves to refer to those local issues, but it is of course absolutely open to the arbitrator to call for more information or evidence to deal with that local point. Indeed, it may well be sensible in many cases to appoint an arbitrator who has local knowledge, but I think that the system will adjust and do that as necessary.

The noble Baroness, Lady Blake, asked whether the outstanding cases—we are down to a number in the low thousands now—are, by definition, likely to be the more difficult ones. Some of them are likely to be more difficult but, frankly, quite a proportion of them will involve people who have just been ignoring this topic, hoping that it will go away and something will turn up. Obviously there is something in the noble Baroness’s point, but there is a variety of factors that may be the reason why people have not yet come forward to settle by themselves. Of course, as I have said previously, it is very much our wish that people settle this themselves when they can.

I was asked about viability—and I will come back to it again later. It is difficult to be overly prescriptive about viability. The Bill deliberately does not define viability specifically because—this comes back to the geographical point from the noble Lord, Lord Fox—arbitrators need to make the assessment in the context of each individual business’s circumstances, especially given the variety of businesses that may use the scheme. It is essential that arbitrators do that, and have the flexibility to do that, to achieve a fair outcome. We will produce more statutory guidance for arbitrators on this, but I have confidence because, in a sense, it is their whole business to be able to arbitrate matters—that is, to weigh up the necessary factors and come to a sensible conclusion.

[Lord Fox (LD)]

I appreciate that, and I am pleased that there will be more statutory guidance. It seems to me that the sources of data should not be the topic under discussion during the arbitration process. Can the Minister give us some sense of the basis on which people are making decisions, while at the same time accepting my point that there are local variations in markets and that this element would take out some aspects of what could be, in the words of the noble Earl, Lord Lytton, gamed?

[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord for that intervention. From talking to some of the arbitration bodies, I know that the way they operate is that, when a case like this comes to a body for it to decide on the arbitrator, normally a list of arbitrators is put in front of the parties for them to choose. This is a thoughtful process, as it were. The list of names that the arbitral bodies put before the parties to choose an arbitrator is done rationally. Frankly, one would expect that, if there are locally based arbitrators to do this, they will be the people on the list; the parties may then choose them. I cannot give the noble Lord an absolute guarantee in relation to that but it seems to me that, sensibly, this will be how the system should, and will, operate.

Turning to Amendment 3, I thank the noble Lord, Lord Fox, for his interest in the publication of awards. We absolutely want to ensure that the public can easily access arbitral awards issued under this scheme. That is why Clause 18 already requires arbitrators to publish an award made, together with the reasons for making it. I am sure that, as this scheme rolls out, if we find that this publicity is not reaching the people it needs to, we will take steps to ensure that it does.

We do not believe it is necessary to require approved arbitration bodies to publish decisions as well, although some may well choose to. In addition, we envisage that as part of its function of overseeing an arbitration, an approved arbitration body would ensure that the award is published as required. Frankly, the convenient way to do that would be on the website of the arbitral body. We are in ongoing discussions with arbitration bodies regarding how to ensure that awards are published in an accessible manner for landlords and tenants who are considering making a reference to arbitration.

I think we are in absolutely the same place on the need for this. I hope I have persuaded the noble Lord that this amendment is not necessary and I request that he does not press it.

Turning to Amendment 5, I thank the noble Baroness, Lady Blake, the noble Lord, Lord Fox, and other noble Lords who have spoken for their consideration of the important issue of arbitration fees and the Secretary of State’s power to cap those fees. I assure your Lordships that we also want to ensure that all those who need to access the scheme can do so. That is why, for example, when arbitration bodies seek approval we are specifically asking them what they intend to do to make sure the scheme is affordable for SMEs.

As I have mentioned, the Bill adopts a market-based approach. Approved arbitration bodies, which have expertise in running and costing similar schemes, will have the function of setting fees. It has been made clear that while fees should be set at a level that incentivises arbitrators to act, it is important that the scheme is affordable for all those who need to access it. Capping fees prematurely could reduce the number of arbitrators able to act and in a sense would compound the problem that we are trying to solve. A cap should therefore be imposed only where there is evidence that it is needed. There is presently no such evidence but, if it were to emerge, the Secretary of State is prepared to exercise the power to cap fees.

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[Lord Grimstone of Boscobel (Con)]

My Lords, in moving Amendment 8, I am pleased to speak also to Amendments 9 to Clause 27. Both are in my name. Clause 27 provides a power to apply provisions of the Bill again in order to act swiftly in the event of another wave of coronavirus requiring further mandated closures.

Amendment 9 would ensure that the power can be used for mandated closure after the protected period in the Bill, whether before or after the Bill is passed, and whether or not the closure requirement has ended when regulations are made. Amendments 8 and 9 also clarify the meaning of a closure requirement, and more closely align the drafting with corresponding provisions of Clause 4. We have seen that the Covid landscape can change very quickly; Amendments 8 and 9 are therefore to ensure the power is clear and robust for any new waves. I beg to move.

[Lord Fox (LD)]

My Lords, I shall reserve almost all that I shall say about Clause 27 for the next debate—but it is good, if Clause 27 survives, that its language should be consistent with the other parts of the Bill. However, we shall debate its existence later.

Amendment 8 agreed.

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Debate on whether Clause 27 should be part of the Bill.

[Lord Fox (LD)]

My Lords, Clause 27 would establish the Henry VIII power, which has drawn the ire of the Delegated Powers and Regulatory Reform Committee—so this speech will come as no surprise to the Minister or, indeed, the noble Baroness, Lady Bloomfield, who heard a slightly different version of it earlier this week. Thereby hangs a tale, because this is a consistent practice of the Government in legislating not just for the present but putting in place measures whereby the Bill cannot just be continued or rolled over but rolled over and substantially changed. In this case, Clause 27 gives Ministers very broad discretion to change how the Bill would work in future periods of coronavirus control. It would allow changes of a kind that would give rise to serious policy issues and this ought not to be a matter for secondary legislation.

Turning to the detail, the Bill applies to business closures that took place in two specific periods—11 March 2020 to 18 July 2021, for businesses in England, and 21 March 2020 to 7 August 2021 for businesses in Wales. However, Clause 27 gives the Secretary of State powers to make regulations that allow the Bill to apply to future periods of coronavirus control.

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[Lord Grimstone of Boscobel (Con)]

My Lords, I am grateful to the noble Lord, Lord Fox, and the noble Baroness, Lady Blake, for notification of their intention to oppose the Question that Clause 27 stand part of the Bill, and for highlighting the concerns expressed by the DPRRC. I also listened carefully to the comments of the noble Lord, Lord Thurlow, of course.

As has been stated in both the other House and this House, we have already seen with the omicron variant that the future of the pandemic is uncertain. I believe that the power in Clause 27 is important because it provides the Government with the ability to take a flexible and targeted approach to reapply any or all of the provisions in the Bill to respond to the specific circumstances of any future periods of coronavirus. None of us can predict what will happen. I assure noble Lords that we will of course always exercise this power in accordance with human rights.

Having said that, we are grateful for the report of the Delegated Powers and Regulatory Reform Committee. I acknowledge that it makes some important points, which I will consider carefully as we prepare for Report.

[Lord Fox (LD)]

I am not sure whether I have to withdraw, but I thank the Minister for his comments. We look forward to consulting between Committee and Report. This is important. I cannot speak for the noble Baroness, Lady Blake, but I suspect that we would both consider it necessary to take this forward in the event that the Minister was unable to meet the DPRRC at least most of the way.

Clause 27, as amended, agreed.

Moved by

[Lord Fox]

10: After Clause 27, insert the following new Clause—
“Review of the impact of this Act
(1) Four months after the day on which this Act is passed the Secretary of State must publish a review of the impact of this Act and whether it has provided tenants and landlords with an effective process of arbitration.(2) The review in subsection (1) must make an assessment as to whether awards issued under this Act have been given in a fair and consistent manner.(3) The review must also include an assessment as to whether further guidance should be issued as a result of its findings.(4) The Secretary of State must lay a copy of the review before both Houses of Parliament.”Member’s explanatory statement
This amendment would require the Secretary of State to review the impact of this Act four months after the Act has been passed.

[Lord Fox (LD)]

My Lords, we are on the last group— so soon. The amendment

“would require the Secretary of State to review the impact of this Act four months after the Act has been passed.”

That is unusual because, normally, the review process is one year, or five years, or whatever. However, we need to look at Clause 9, which sets a time limit of six months from when the Act is invoked or enacted for people to submit their process. I may have misunderstood —if so, I hope the Minister can put me right—but, if that is the case and that six months is a serious period, we need to assess the progress of this Bill in time for the Minister to roll it forward; the Bill makes provision for that, as I understand it.

We have talked about availability; the Minister has said that he will keep this under review. We have talked about cost; the Minister has said that he will keep this under review. We have talked about regional distribution and how that works; the Minister has said that he will keep this under review. My amendment would create a process that allows this review to happen formally so that your Lordships’ House and the Commons have time to roll this forward if some of the issues that we have discussed are preventing the process going forward.

I want to say one thing on the subject of fees. It comes back to a point that I ask the Minister to continue to review. As the noble Lord—Lord who? Sorry, Lord Thurlow—pointed out, there are a lot of ancillary costs other than the cost of the arbitration process itself; there is the cost of preparing for it, for example. In the end, this can be a loaded gun that the landlord—or the tenant, depending on which way it goes—can use. In other words, “It’s going to cost you this anyway so you might as well give me that”. I do not think that that is the purpose of this Bill. The Bill’s purpose is not to enrich massively dozens of service industries; it is designed to keep commerce rolling. One thing that must be reviewed, and one reason why we are keen to have this four-month review, is the question of whether the cost of fees is causing unfair settlements to occur. With that, I beg to move.

[Baroness Blake of Leeds (Lab)]

I am pleased to put my name to Amendment 10 and stand here to support it.

Constant reference has been made to monitoring the progress of the matters we have discussed, in particular to assessing the impact on all parties in the spirit of fairness and consistency. I believe that such a review would be welcomed by all parties: landlords, tenants and arbitrators. We must ensure that it is fully understood and clear as to whether the system is well understood, is working well and, most of all, is bringing benefit to those areas where it is needed most.

I would not be persuaded if the argument against this was that it would be onerous or too costly. The cost of failure in an area such as this would be far greater than the cost of keeping a close eye on progress and making sure that adjustments can be made if they are deemed appropriate.

With those few comments, I am pleased to support the amendment.

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[Lord Grimstone of Boscobel (Con)]

My Lords, I rise with some sadness, given that this is the last group. I thought that we were getting into the swing of it this afternoon. I should have hoped for further groups in which noble Lords could have demonstrated their expertise.

Amendment 10 proposes a new clause after Clause 27. I thank the noble Lord, Lord Fox, for his contribution and the noble Baroness, Lady Blake. I am also particularly grateful for the support of the noble Lord, Lord Thurlow.

The Government recognise the importance of appropriately reviewing legislation. I would like to reassure the noble Lord and the noble Baroness that the Bill contains appropriate means of monitoring the arbitration system, which is the essence of the Bill, including the awards made by arbitrators. The period under the Bill for making an application for arbitration is six months, and we anticipate that cases should be resolved as soon as possible thereafter.

The Bill already requires approved arbitration bodies to provide a report to the Secretary of State if requested. This can include details of the progress of arbitrations and the awards made. The Bill also requires arbitrators to publish their awards and reasoning. This will provide transparency and help with consistency of approach. If the need arises, the Secretary of State can also issue updated guidance to arbitrators, for example to clarify or add any points that may arise.

It is neither necessary nor beneficial to require publication of a review within just four months of the Bill being passed. That could slow the arbitration process and the prompt resolution that the whole scheme intends, should parties to arbitration and arbitrators await any findings and any new guidance. I appreciate that the noble Lord and the noble Baroness have proposed this with good intentions, but I ask the noble Lord to withdraw his amendment.

[Lord Fox (LD)]

Turning the telescope around the other way, the reason for specifying four months was the Government specifying six months in Clause 9(2). It seems perverse to have a review that comes after the process has essentially ended. That is the problem. I acknowledge the point made by the noble Lord, Lord Thurlow—I shall always remember his name; “That’ll learn you”, as they say where I am from—and I accept his point that three to four months is too short to review this. Therefore, six months is too short for the cut-off point. In a strange way, the noble Lord, Lord Thurlow, kind of makes my concern clear. If we are to review this, the review needs to come when changes can be made and when significant numbers of potential future cases are better served by the process. Does the Minister agree?

[Lord Grimstone of Boscobel (Con)]

My Lords, I think I will stick by my previous comments. I believe that not just the interests of landlords and tenants but those of the country are best served by getting on with this. Even though I respect the points that the noble Lord made, I stick with my previous comments.

[Lord Fox (LD)]

I thank the Minister for his comments, which I clearly do not agree with. Everybody’s interests are best served by getting on with something as long as what we are getting on with is a good thing. As someone who climbs and rambles, I know that heading off in the wrong direction and keeping walking for a period before starting to assess the direction in which one is walking is not a good idea. What one does when one sets out on a journey is check and check again, and make changes. This amendment would make sure that any trimming that is required to add direction is done in time for it to have a meaningful effect on the outcome of the largest possible number of cases. Having said that three times in three different ways, I beg leave to withdraw the amendment.

Amendment 10 withdrawn.