Holocaust Memorial Bill

Matthew Pennycook Excerpts
Nigel Evans Portrait The Second Deputy Chairman
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I call the shadow Minister.

Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
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Before I begin my brief remarks about the amendments, let me restate the Opposition’s support for the construction of a national Holocaust memorial and learning centre in Victoria Tower Gardens.

Given that this simple three-clause Bill does nothing more than remove pre-existing legislative impediments to the siting of such a memorial and centre in that location and make provision for, and in connection with, expenditure related to its establishment, we have not felt the need to table any amendments to it today. We sincerely hope—not least in view of the amount of time that has now passed since the idea was first proposed in 2015—that the Bill completes its remaining stages and receives Royal Assent as speedily as possible, so that the necessary planning application can be considered.

I turn now to the amendments, starting with new clause 2, which stands in the name of the hon. Member for Cities of London and Westminster (Nickie Aiken). We fully appreciate that, although we are united as a House in our commitment to establish a national Holocaust memorial and a world-class learning centre, there are differing and sincerely held views about the appropriateness of Victoria Tower Gardens as the location for them. In some cases, the objection extends only to the siting of the learning centre in that location; in others, it extends to both the centre and the memorial itself.

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Peter Bottomley Portrait Sir Peter Bottomley
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There are two sides to this issue, one of which people will accept that the hon. Gentleman is speaking about sensibly: we do not make all details about security available to the public. The second is whether the necessary security arrangements will inhibit the use of the park by local residents, children and others. The Government continually give an assurance that that will not be interrupted, but everybody believes that it will be. That is why it is important to debate and, if necessary, vote on new clause 1. I hope the hon. Gentleman will agree with us that the impact on the use of the park is the thing that matters for the purpose of this Bill.

Matthew Pennycook Portrait Matthew Pennycook
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I thank the Father of the House for his intervention. I certainly agree that that is one of many considerations that need to be taken into account when determining the application, but many of the contributions to this debate have raised matters that engage planning considerations, and this Bill does not engage planning considerations, even though it will affect the ability to submit a planning application in future. However, those are matters that should be rightly dealt with by the local authority, and by the Planning Inspectorate if the application were to be called in by the Secretary of State.

I turn lastly to those amendments that concern expenditure relating to the memorial and centre as authorised by clause 1 of the Bill. The Select Committee is right to highlight that the true cost of the project has not been established and to emphasise the need to consider the appropriate use of public money when progressing it. Concerns about expenditure have also been highlighted by the National Audit Office, which has made it clear that there is a risk that the contingency is not enough to cover further cost increases. Perhaps most worryingly, the Government’s own Infrastructure and Projects Authority has red-rated this project. In other words, the Government themselves are clear that—I quote here from the definition associated with a red rating—as things stand,

“successful delivery of the project appears to be unachievable”

and that it may, to quote further from that definition,

“need re-scoping and/or its overall viability reassessed.”

While the Opposition would not support the imposition of expenditure caps as proposed by amendment 1, it is clear to us that the Government need to do more to ensure that the project will deliver value for money and to provide appropriate assurances in that regard, in respect of both capital and recurrent costs. As such, I would welcome a robust assurance from the Minister when he responds that the Government have accurately estimated the cost of the project, will apply proper cost control throughout the construction period and will ensure that running costs are sustainable.

Simon Hoare Portrait The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Simon Hoare)
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Today in this Chamber, we have been united on the welcome return of my hon. Friend the Member for South Thanet (Craig Mackinlay), and the House has been united on security measures on pub licensing for the Euros—probably not the most contentious piece of legislation before the House—and now on this Holocaust Memorial Bill. For all the debate that we have had on the Bill, I am grateful to all right hon. and hon. Friends and Members who have contributed to it.

We have been discussing how, we have been discussing where and we have been discussing when, but the House has never been discussing why. For reasons more than tellingly amplified by my hon. Friend the Member for Brigg and Goole (Andrew Percy), my right hon. and learned Friend the Member for Northampton North (Sir Michael Ellis), my hon. Friend the Member for Harrow East (Bob Blackman) and others, the why is clear and demonstrable. That is a sad fact, but it is. I am grateful to the hon. Member for Greenwich and Woolwich (Matthew Pennycook), who speaks for the Opposition, for his support, as I am to the hon. Member for East Renfrewshire (Kirsten Oswald). I shall reserve my general thanks for the Third Reading debate.

Let me turn to the amendments. I urge my right hon. and hon. Friends and Opposition Members to reject any of the amendments that might be pushed to a vote, for reasons the hon. Member for Greenwich and Woolwich ventilated extremely well. Let me set out why I think that is the case. I might just pause here, if I may, to remark that I think—I am not necessarily an expert on these matters—that this is probably the last substantive piece of innovative business that this Parliament—this 58th Parliament of the realm—will be discussing. It is an honour for me to be taking part in it on behalf of His Majesty’s Government, because it allows me to pay fulsome and personal tribute to three right hon. and hon. Friends on my side who will not be seeking re-election to this place.

My right hon. Friend the Member for Ludlow (Philip Dunne), who I did not know before I came here in 2015, has been a stalwart friend and colleague, and he will be hugely missed across the House, more than he will probably know because he is too modest to even consider that assessment. Likewise, I did not know my hon. Friend the Member for Brigg and Goole, but his wit, his humour and his ability to cheer up any situation have warmed many a moment. Again, he will be missed.

I save for last, but by no means least, my hon. and darling Friend the Member for Cities of London and Westminster (Nickie Aiken). We have known each other since we were 18 or 19, and it was the joy of my life to see her join us here at the 2019 election. She spoke today, in possibly her last contribution on the Floor of the House, in the same way that she has spoken from her maiden speech onwards, with knowledge, passion, clarity and certainty on behalf of all her constituents.

My three retiring colleagues have served their communities well. They have run the race to the finish, and I hope that they enjoy the next chapter of their lives to the full, whatever it offers them.

Education is key to this proposal, to make sure that subsequent generations do not repeat the past. As so many Members, particularly my hon. Friend the Member for Brigg and Goole, have noted, that is why the symbolic juxtaposition of the memorial and learning centre and this place is so important. There is an emotional and romantic intertwining of Parliament, freedom and democracy, and how dimmed those lights were during the period of the Holocaust.

Many have rightly mentioned security, which is a key issue. I suggest to my hon. Friend the Member for Carlisle (John Stevenson) that the hon. Member for Greenwich and Woolwich is right to say that it would not be sensible or prudent to put into the public domain either the security assessment or, indeed, the remedies for what it throws up. It is slightly analogous to having a burglar alarm installed in one’s home and posting the deactivation code on social media, so I will resist that amendment.

My hon. Friend the Member for Carlisle and others have spoken to a key issue. The security and peace of mind of those who work in the centre, of those who visit the centre, of those who merely walk past and, crucially, as my hon. Friend the Member for Cities of London and Westminster and my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) referenced, of those who just use the park as a park is paramount.

The overriding point is that the argument that we cannot have the memorial and learning centre in Victoria Tower Gardens because of security fundamentally undermines a key tenet that supports the proposition. Given the issues surrounding both the Holocaust and the fairly fluid and dynamic situation in the middle east, security will always be an issue for such an institution. Security would be an issue were it to be located at the Imperial War Museum, in the middle of Hyde Park or on the third floor of Harrods. Security will always be an issue, but I entirely take the point, which I echo from the Dispatch Box.

If security concerns, a fear of the mob and a fear of those who seek to disrupt and intimidate suddenly become the trump card that is used to determine where and how we locate such a facility, the mob will have won and we might as well all pack up and go home now, raising the white flag. That is why I think all of us in this House, and particularly the two Front Benches, although we are absolutely concerned about security, are not prepared to bend the knee to bullies, thugs and anti-democratic mob rule.

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Matthew Pennycook Portrait Matthew Pennycook
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I start by thanking the Clerks, the House staff and Library specialists for facilitating our debates on the Bill. I also put on record our thanks to all Members who have contributed to our proceedings at all stages. In particular, I offer our sincere thanks to those who served on the Select Committee for their work in overseeing the Bill’s petitioning period, and all those who made petitions against the Bill. Lastly, I put on record once again the thanks of Labour Members to all those who have been involved in advancing the proposed national memorial to the Holocaust, and Holocaust education more generally over recent years.

There are far too many to name individually, but I must make specific reference to the past and present members of the UK Holocaust Memorial Foundation, including the right hon. Ed Balls and the right hon. Lord Eric Pickles, the Holocaust Memorial Day Trust, the Holocaust Educational Trust and, of course, all the survivors of the Shoah who have not only campaigned for Holocaust education, but personally championed the project, including many who are sadly no longer with us.

Whatever differences might exist about precisely how we do so, we are united as a House in our commitment to remembering and learning from the Holocaust. It is imperative that we continue to educate future generations about what happened, both as a mark of respect to those who were murdered and those who survived, and also as a warning about what happens when antisemitism, prejudice and hatred are allowed to flourish unchecked. A national memorial for remembrance of the Holocaust will stand as a permanent reminder of the horrors of the past, and the need for a democratic citizenry to remain ever vigilant and willing to act when the values that underpin a free and tolerant society are undermined or threatened, as well as encouraging reflection on the implications of those horrors for British government and society.

As was rightly mentioned by several hon. Members in Committee, in the nine years since the idea was first mooted, the case for such a monument and institution has become acute. Not only does anti-Jewish hatred continue to grow, but the remaining survivors of the Holocaust become ever fewer and ever frailer. We owe it to those who remain with us, and to future generations, to complete this vitally important project. With that concern at the forefront of our minds, we wholeheartedly support the passage of the Bill this evening.

Roger Gale Portrait Mr Deputy Speaker (Sir Roger Gale)
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I call the Father of the House.

Chatham Docks Basin 3 Redevelopment

Matthew Pennycook Excerpts
Wednesday 1st May 2024

(2 months, 3 weeks ago)

Westminster Hall
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Kelly Tolhurst Portrait Kelly Tolhurst
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Thank you, Sir Philip.

The dockyard has stood proudly for 457 years as a symbol of Medway’s economic backbone and our local heritage. On the banks of the River Medway, the docks embody the spirit of our community, connecting us to our past while paving the way to our future. Generations of families, including mine, can trace their stories alongside the history of Chatham docks. My mum’s family tells a familiar tale, with ancestors who have worked and served our country from those docks. Growing up in Medway meant always meeting people who shared similar connections—each a demonstration of the impact that the docks have had on generations across our community.

During its heyday, Chatham dockyard was the most important shipbuilding and repair dockyard in the country, contributing more than 500 ships to the Royal Navy and employing more than 10,000 skilled artisans. However, the closure of the Royal Navy Dockyard Chatham 40 years ago marked the end of an era, prompting a transformation that has been nothing short of remarkable.

The dockyard estate was split into three sections, and it has been revitalised into a mix of commercial, residential and leisure spaces. The establishment of Chatham Historic Dockyard Trust has ensured that a piece of our heritage remains accessible to all, serving as a living museum that educates visitors. It has played host to the sets of some of our favourite TV dramas and films.

English Estates took over another section of the old dockyard estate at the time, which is now host to basins 1 and 2 of the complex. Those have been formed into the Chatham Maritime Marina and a water sports facility, respectively, alongside significant retail and commercial office space. The northern section of the parcel is St Mary’s Island, which hosts a development and is now home to more than 5,000 residents.

Today, our focus lies on the third section—the easternmost—which surrounds basin 3 and is designated under Medway Ports Authority. It is a bustling commercial port and manufacturing hub that drives economic growth and offers fantastic opportunities for local businesses and residents. Basin 3 at Chatham docks is unique: it is the only non-tidal enclosed dock in Kent. It is regionally significant, as it plays a critical role in facilitating the transportation of vital materials to London and other regions across the UK in an environmentally sustainable way. Currently, it hosts nearly 20 businesses, and boasts a roster of notable multinational businesses such as ArcelorMittal, Aggregate Industries and European Active Projects Ltd, all of which have established UK bases within the port premises. In turn, they provide a number of high-quality jobs, particularly for local residents; they directly employ 795 people, including 750 full-time equivalent staff, and indirectly support an additional 1,500 jobs through the supply chain network. Those figures translated into a combined turnover of nearly £175 million in 2021.

Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
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Am I right in thinking that ArcelorMittal is the only tenant in basin 3 that has not agreed to relocate?

Kelly Tolhurst Portrait Kelly Tolhurst
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My understanding is that there are other organisations operating within the port facility that want to stay where they are. Some have relocated because they unfortunately did not have another option; their leases meant that they were unable to stay.

The operations at Chatham docks span a diverse range of high-value industries. Materials and goods are brought in via water channels, undergo processing and manufacturing, and are subsequently exported.

Kelly Tolhurst Portrait Kelly Tolhurst
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I think the hon. Gentleman is referring to Skipper (UK) Ltd, which I am still a director of—and which has no customers or interests in Chatham docks or any of the businesses that operate in Chatham docks.

A sometimes overlooked aspect of the incumbent operations at Chatham docks is the strong commitment to nurturing talent. The array of apprenticeship programmes provides excellent avenues towards rewarding careers. In 2020 alone, 16 apprenticeship programmes offered 20 positions per 1,000 jobs, massively surpassing the Medway average of about nine apprenticeships for every 1,000 jobs. The investment in people not only benefits the individuals involved but strengthens the workforce of the entire region, offering high-quality careers that make a real difference.

Importantly, the jobs offered at Chatham docks provide above average wages, raising the median wage in Medway. The average annual earnings were £43,000 in 2023—nearly 9% higher than the Medway median wage. These positions serve as a crucial driver of economic stability, especially in an area where 13.5% of Medway’s workforce earn below two thirds of UK median pay as of 2021. It is clear that Chatham docks are absolutely essential for the local population. In 2019, it was found that 20% of its workers lived in the Chatham docks three-digit postcode—ME1—and 45% across Medway.

The economic significance of the docks extends beyond direct employment and wages: it contributes significantly to the regional economy, accounting for more than 4% of Medway’s gross value added and generating approximately £89 million in GVA annually. In addition to its economic contribution, Chatham docks also plays a vital role in generating tax revenues, which contribute essential funding for local services and infrastructure. The annual tax revenues are estimated to range between £27 million and £36 million, and the annual business rates payments are about £2 million. Those revenues also provide financial resources to support the community.

The main issue at hand, and my reason for calling this debate, is the progress of Peel Waters’ attempt to end the use of Chatham docks as a commercial port, displacing the businesses within it, with the loss of high-quality jobs. Peel Waters has a vision to implement a residential-led, mixed-use development across the site. It has been over a decade since Peel Waters first set its sights on the redevelopment of Chatham docks, and started to redevelop part of the land. Its 2013 application initially boasted that development of Chatham Waters would provide 3,549 permanent jobs once fully developed, or 2,418 net additional jobs, with an associated GVA of around £92.4 million.

The projections suggested a substantial boost to both employment and the local economy. Looking deeper into the plans as time progressed, however, all is not as it seemed. The 2013 planning statement provided a more specific breakdown of the employment that would be delivered. It showed a significant proportion of projections included employment for retail and hospitality. For the projected 764 jobs as part of phase 1, 400 to 450 would be provided at the Asda retail food store, 40 to 50 at the pub and 20 at a coffee shop. I have long championed the hospitality industry, but this would be a stark contrast to the jobs that they would replace from the manufacturing, construction and transport industries.

Matthew Pennycook Portrait Matthew Pennycook
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The right hon. Lady is being generous in giving way, which I appreciate, so that I can better understand the specifics of the case. My understanding is that the local plan has not been updated since 2003. Can she give us her view on why that is the case? Why have previous Medway Council administrations not brought that plan up to date to set out a viable and feasible dock retention policy?

Kelly Tolhurst Portrait Kelly Tolhurst
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I thank the hon. Gentleman for his comments. He is right that Medway Council is out of a local plan. The previous local plan, which is occasionally referred to regarding planning applications, clearly designates Chatham docks as a commercial rather than residential area—hence my campaign, with others across the Medway towns, to demand and ensure that Chatham docks remains a commercial site, rather than a residential-led development.

Peel has also claimed that, on completion, 2,701 jobs will be in office space. Without the density specified, that would pose a risk of under-utilisation of the available area. Independent analysis revealed that in reality we have seen a shortfall in job creation, with around only 200 full-time jobs materialising since the plans were first introduced more than 14 years ago. That represents 26% of phase 1 jobs estimates and 6% of the total jobs promised across the whole of the Chatham Waters development—a far cry from the lofty estimates put forward.

It transpired that in 2019 Peel had desires to redevelop the Chatham docks site into primarily residential areas. The updated plan was led by 3,600 homes and claimed it would support over 2,000 jobs on site. Although the shift towards housing development appeals to Medway Council’s housing targets, it raises concern about the potential impact on existing jobs and industries at the docks.

It has been clear that Medway’s housing targets have been disproportionately affecting my constituency of Rochester and Strood. Over the past 15 years, we have seen delivery of thousands of new homes, with thousands more in the pipeline for my constituency, while sites such as Chatham docks are now at risk due to Medway’s focus on meeting targets. We require a more strategic approach to housing development, focusing on suitable locations with adequate infrastructure.

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Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
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It is a pleasure to serve with you in the Chair, Sir Philip. I congratulate the right hon. Member for Rochester and Strood (Kelly Tolhurst) on securing this important debate. I know that a great many of her constituents value immensely the contribution that Chatham docks has made to Medway over many decades. I recognise that there is a general desire among them for greater clarity on the future of the site as a whole and the jobs linked to it, including, but not confined to, the 18-acre basin 3 plot that is the subject of this debate.

Constrained as I feel I am from delving into the fine detail of what is a live planning application, I will take a step back and place the debate in a wider context. As we all know, previously developed brownfield land is a finite resource and subject to competing demands when it comes to future use. The intense competition for such land in urban areas and the ever-present tension between economic and residential uses that results is precisely why a brownfield-first approach to development, which Government and Opposition agree on in principle, cannot mean a brownfield-only one, and it is why the current plot-by-plot approach to development will never be sufficient to meet total housing need across England. It is precisely because the Opposition recognise that the shortage of employment land is a growing concern that, although we are determined to improve on the Government’s lacklustre record when it comes to brownfield build-out rates, we intend to take a more strategic approach to planning in terms of both green-belt land release and planning for many more large-scale new communities, whether new towns or urban extensions, so that we are better able to sustain housing and employment growth across the country.

As things stand, the Government’s persistent failure to support local communities to accommodate housing growth strategically either by means of the development of major sites in their boundaries or through cross-boundary, strategic growth in co-operation with neighbouring authorities forces local planning authorities to wrestle with competing demands for employment and residential uses on the limited brownfield sites available to them.

Theresa Villiers Portrait Theresa Villiers
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Many of my constituents are really worried about the statement by the Leader of the Opposition that he proposes to ignore the views of local communities in determining what gets built. Will the shadow Minister distance himself from those comments?

Matthew Pennycook Portrait Matthew Pennycook
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We certainly will not ignore the views of residents when it comes to planning proposals. However, it is fair to say—this is partly why I find the yimby/nimby debate incredibly reductive—that there is a core of people in the country who do not want development—

Kelly Tolhurst Portrait Kelly Tolhurst
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Will the hon. Gentleman give way?

Matthew Pennycook Portrait Matthew Pennycook
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I will answer the previous intervention, then I will happily give way.

There is a core of people in the country who do not want development of any kind near them under any circumstances, and we have to take those people on and do so with conviction. There is a much wider group of people who oppose bad development in their constituencies, and we must change the offer of what development means, but that cannot mean that development does not take place. I will address the point on housing targets if it comes up later in the debate.

Kelly Tolhurst Portrait Kelly Tolhurst
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I am grateful to the shadow Minister. However, I would like to pull him up on the point he made about the nimby debate. I want to be clear that this is about the future and jobs. The hon. Gentleman may remember that he wrote to me representing his constituents, who were also concerned about the operations at Chatham docks, because I believe that he has constituents who work there.

Matthew Pennycook Portrait Matthew Pennycook
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I thank the right hon. Lady for that point. I did indeed write to her; it is a small number, but I have a few constituents who work at Chatham docks. As I said in opening my remarks, I very much recognise the existing concerns about the future of the sites and the jobs linked to them. To clarify what I said, I did not condemn nimbys in the debate: I said that we need to move beyond the incredibly reductive debate between yimbys and nimbys. There is a far more nuanced position out there. As I said, there are people who oppose development under any circumstances, and we are clear that we will take them on. There is a wider group of people who oppose bad development, and we must change the offer to them.

Theresa Villiers Portrait Theresa Villiers
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May I respond to one final point?

Matthew Pennycook Portrait Matthew Pennycook
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I will give way one final time.

Theresa Villiers Portrait Theresa Villiers
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I thank the hon. Gentleman. Does he acknowledge that the vast majority of people expressing views about development proposals accept that we need new housing, but we just need the right homes in the right places?

Matthew Pennycook Portrait Matthew Pennycook
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I take issue with the right hon. Lady on the idea—I think that phrase is used too often to obscure what I think is her real position, to be fair to her—that her local authority should be able to plan for less housing than the standard method that the target implies. We take the opposite view; we have a very legitimate difference of opinion here. We do not think that local authorities should be able to plan for under-housing need targets, and that is where the difference comes on the NPPF changes. It is not a question of whether there should be good development. Yes, we must change what the offer of development means, but it cannot be the case, as the right hon. Lady so often advocates, that no development takes place because of the characteristics of a local area or many other attributes that local authorities can now use as a result of the NPPF to come in under target. That is a clear difference of opinion between the Government and the Opposition.

I will return to the argument I was making. Like many other councils across England, Medway Council now confronts a dilemma with this brownfield site as a result of the nature of the housing and planning system over which the Government preside. First, through changes to national planning policy, Ministers have ensured that there is no effective mechanism for sub-regional strategic planning that might enable what is a relatively small unitary authority in Medway to meet housing need in a co-ordinated manner. That could have been done through a joint plan with neighbouring two-tier authorities in north Kent, as the historic south-east regional spatial strategy did with the Kent Thames Gateway.

Secondly, because central Government support has not been forthcoming, the number of viable potential sites within Medway Council’s own boundaries has narrowed. The most pertinent example is the Government’s decision to withdraw from the authority £170 million in housing infrastructure grant funding that would have facilitated the construction of 10,000 homes over 30 years on the Hoo peninsula, despite the Department seemingly not having spent £2.9 billion of the £4.2 billion allocated by the Treasury to that fund. As a result, Medway Council now must determine alone how it meets its housing targets across the sites that remain available and viable. As I said, we take the view that they must meet those targets.

The challenge I put to the right hon. Member for Rochester and Strood, leaving aside the considerations of investment required in the docks to bring it up to a viable operation in the future, is for those who take the position that it should remain a working port to identify the collection of sites across Medway that will ensure the authority can build 29,844 homes—the numbers have been slightly updated since the ones she cited were published—between now and 2040, because that is what it will take to meet housing need in that particular authority.

Medway Council proposes—quite rightly, in our view—to make that determination in a considered manner through the local plan development process. I very much welcome the fact that the present leadership of the authority have restarted the process and are working at pace to complete it. The pattern of indecision and delay that characterised the approach of previous Conservative administrations to planning and development in Medway over two decades was lamentable as, it must be said, is the Government’s record on boosting local plan coverage across England more generally. It is frankly laughable that, despite the extensive range of powers to intervene that Ministers enjoy, the Government are presiding over a local plan-led planning system in which only a third of authorities—and falling—have a plan that is less than five years old, with the number of plans published, submitted and adopted last year the lowest for a decade.

The local plan-making process in Medway is now firmly underway, and I do not think it is for Members in this place to pre-empt its outcome, but it is worth remarking that Medway Council obviously cannot prohibit Peel Waters from submitting a proposal for mixed-use development on the wider Chatham docks site as part of the local plan preparation process, in the same way that the authority cannot force that developer to make the necessary investment that might sustain the docks as a working commercial port. Just as the contents of the developing draft local plan are ultimately a decision for Medway Council itself, considering not only how to meet housing need but how other economic, social and environmental priorities can be addressed, so is the determination of the basin 3 application submitted for the present industrial state to be redeveloped for employment facilities.

As such, while I certainly appreciate that concerns exist about the employment opportunities changing on the site in question, and whether all the sitting tenants will agree to be relocated or compensated, it would not be appropriate for me to comment on the application, just as I know the Minister will not be able to discuss details of the proposal, given the quasi-judicial role of the Secretary of State in the planning system.

To conclude, the case of Chatham docks reinforces our strong belief that we need to make changes to the planning system to ensure that the Government take a more strategic approach to development across the country, thereby enabling local planning authorities to better balance competing priorities regarding brownfield regeneration. It also highlights the pressing need to do more to boost local plan coverage. An up-to-date local plan is the most effective means of influencing where and how development takes place in any given authority area for both the housing and jobs that communities need.

The situation is lamentable, and many of the problems we are discussing stem from the fact that the authority has not updated its plan since 2003. Much of the uncertainty that the constituents of the right hon. Member for Rochester and Strood are feeling about the future of Chatham docks would be significantly abated had previous Medway Council administrations prepared and adopted an up-to-date local plan with a robust and viable proposal for the site—the present administration finally doing so is to be commended. It is the elected members of that authority who are best placed through engagement and consultation with the local community to take decisions on local planning matters, including in due course the basin 3 application.

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Lee Rowley Portrait Lee Rowley
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I am grateful to my right hon. Friend for her question. As she rightly outlines, we made a number of changes to the NPPF, including one to indicate that the character of an area is important to consider within any future local planning. As she will appreciate, local plans often take several years to come through, so we revised the framework a number of months ago. We have been clear that councils should seek to move quicker when they need to. We have asked a number of councils to provide timetables for getting to the endpoint, and we will closely monitor what is happening in the months ahead not just on the point about character, which is important, but on the other changes that we made. We made changes about the potential for local councils to look at alternative methods to assess their needs, the importance of beauty within a system, support for small sites and community-led developments, and greater protections for agricultural land. One of the reasons for the debate today is that, as we all know, the planning system is not perfect, but trying to balance all those individual areas is important.

As a constituency MP who went through an extremely difficult time with local planning a number of years ago—down to the Labour party, which failed our area for many years because it was too unwilling, unable and incompetent to ever put a local plan in place, creating over 1,000 more houses than was necessary—I have seen the pain caused by not doing local plans in a timely manner. I know how important it is to think through the implications that plans have for the local community and the consequences of not making decisions. I appreciate the points made by my right hon. Friends the Members for Chipping Barnet (Theresa Villiers) and for Rochester and Strood.

Before concluding, I will turn to a number of points made during the debate. My right hon. Friend for Rochester and Strood has made a clear case for the position that she and many of her constituents have adopted. I know that she made that case over a number of parliamentary debates before I came into post, and she will continue to make it. We have spoken about the importance of getting planning in Medway into a better place that works for people. As we have just mentioned, the Labour party is now in charge. It owns the situation and it has the choices. It made a series of cases to the electorate a number of months ago, and now it has to work through that.

Matthew Pennycook Portrait Matthew Pennycook
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For the purposes of clarity for anyone watching, will the Minister confirm that when Medway submits its draft local plan, even under the revised NPPF, the standard method is the starting point, and the authority cannot just move away from the standard method number because it feels it is too high? It has to reason why it is moving away from it, and if it does not reason that appropriately and robustly, the plan will fail upon challenge at the examination stage of the process, will it not? So if the authority is going to move away from it, it has to reason how it will meet housing need, even though it is an advisory starting point, and any move away has to be robustly justified. It cannot be because the right hon. Member for Rochester and Strood feels that the targets are too high, as she seems to suggest.

Lee Rowley Portrait Lee Rowley
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I am currently in discussion with Medway. We have sent correspondence to indicate that the authority needs to move, so I will not prejudice the outcome of that. The Labour party in Medway, as it does elsewhere in the country, stood on a particular perspective last year. It won legitimately and it now has to deliver. I hope that it can deliver the commitments and promises that it made to the people of Medway and of Rochester and Strood, knowing full well the frameworks within which the planning system operates, because that is what it promised and should endeavour to do.

I turn to the points made by the hon. Member for Greenwich and Woolwich, for whom I have the greatest respect, and we talk on a regular basis about the many elements of planning—

Matthew Pennycook Portrait Matthew Pennycook
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Far too many.

Lee Rowley Portrait Lee Rowley
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Far too many, as the hon. Gentleman suggests. In doing so, we are definitely aware of each other’s differing positions, and he is right to highlight those. In that spirit, I want to tease out a number of those differing positions, because they demonstrate how, for a party that is so keen to indicate that it is ready for Government, when we look under the bonnet at the actual detail, it is not there, and the plans are not where they need to be for the general election later this year.

The hon. Gentleman talked about the need to make changes to the planning system. He is right; that is why we made changes to the planning system back in December. That is why we have tried to strike that balance and ensure that there is greater control for local authorities, but recognising that we still have to build houses in the right places across the country to support our increasing population. He is right that we need development, but if we look at examples of where Labour is in power, rather than Labour talking, it consistently underdelivers on housing. The Mayor of London has consistently under- delivered on his own targets for a number of years, primarily because of the 500-plus page London plan that furs up, screws up and messes around with people being about to deliver housing in London. That is a great example of where Labour talks the talk but does not walk the walk in ensuring not only that people are protected, but that we build the houses people need. I hope that when people look closely at the planning policies of the major two parties, they will recognise that Labour, when it actually has the opportunity to do things, consistently fails to do what it talks about.

The hon. Gentleman rightly talked about a difference of opinion between ourselves, and he is correct about the sometimes reductive nature of the discussion. I absolutely agree with him and share that view. Where we disagree and differ is that the nuance needs to go over into individual policies, including the NPPF. The NPPF issued in December seeks to inject that nuance, strike that balance and recognise that we have to build more houses, but we have to build them in the right places. It seeks to do the things that my right hon. Friend the Member for Chipping Barnet indicated, such as to talk about the local character of an area and to ensure that alternative processes can be considered for defining housing need or explicitly talking about beauty. Next time the boss of the hon. Member for Greenwich and Woolwich gets the copy and paste out when taking some of our policies and passing them off as their own, but providing no further detail about how they would change them, I hope he will consider that.

Matthew Pennycook Portrait Matthew Pennycook
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Will the Minister give way?

Lee Rowley Portrait Lee Rowley
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I will give way after one more gentle point, if I may. Finally, on the hon. Gentleman’s statement around the approach of the Government on brownfield building, we have been clear over the past few months about the importance of focusing on brownfield. He is right that it is impossible for it to be brownfield only all of the time, forever more with no changes, but what he fails in his otherwise useful remarks to accept is that brownfield often comes with costs. If he is talking about moving even more into wholesale on brownfield than we are doing, encouraging and pushing, the question is, where are his cheques coming from? I am keen to hear from him.

Matthew Pennycook Portrait Matthew Pennycook
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What I would say to the Minister is to first spend the money that is allocated to the Department by the Treasury, which it is failing to do. Leaving aside the point about brownfield, I put to him that he is trying to have it both ways. He says on the one hand that we have to build the houses; on the other, they have to be in the right places and right locations. What is actually happening on the ground in terms of the immediate outcome of the NPPF changes that this Government have driven through is that scores of local planning authorities across the country are revising local plans and revising down housing targets. Just a few weeks ago, South Staffordshire Council reduced its housing numbers by 46% off the back of the revised local plans. The outcome of what the Government have driven through—for all the rhetoric—is policies that will see the numbers of consents and houses built reduced, moving the Government even further away from that target of 300,000 a year that they have not once managed to achieve in 14 years in office.

Philip Davies Portrait Sir Philip Davies (in the Chair)
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Order. I have shown a huge amount of latitude to both Front Benchers about this. I appreciate that it is the local elections tomorrow in many places and that we may well be in a general election year. However, I just remind everybody that this is a debate specifically about Chatham docks basin 3 rather than a ding-dong about who has the best planning policies per se. I think it is appropriate for me to say that. As I say, I think I have given quite enough latitude for discussion of other issues, but if we could get back to the subject of the debate, I would appreciate it.

Rosie Winterton Portrait Madam Deputy Speaker (Dame Rosie Winterton)
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Before I call the shadow Minister, I remind colleagues that if they wish to intervene on a speech, it is important that they have been in the Chamber since the beginning of the speech, just in case the important point they wish to raise has already been addressed. It is also important that they stay for the duration of the speech, in case other colleagues then refer to the important point that they have raised. I clarify that because we may have a longer speech from the shadow Minister, and people may wish to intervene, so I thought it would be helpful to remind colleagues of those rules.

Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
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I rise on behalf of the Opposition to speak to the new clauses and amendments that stand in my name.

It is a pleasure to finally be back in the Chamber to conclude the remaining stages of this important piece of legislation. I say “finally” because as you will know, Madam Deputy Speaker, the Bill left Committee on 28 November last year—almost five months ago. Indeed, such has been the delay in bringing it back to the House that in the intervening 147 days, the Department even managed to complete all the Commons stages of another piece of housing legislation—albeit a distinctly limited and unambitious one—in the form of the Leasehold and Freehold Reform Bill.

The reason for the delay is, of course, an open secret, with the ongoing resistance to the legislation from scores of Government Members—including many with relevant interests, as private renters across the country have certainly noted—and the undignified wrangling between them and Ministers splashed across the papers for months. The damage caused by the discord on the Government Benches has been significant: not only have thousands of additional private renters been put at risk of homelessness as a result of being served a section 21 notice in the months for which the Bill’s remaining stages have been delayed; the sector as a whole has been left in limbo, not knowing whether the Bill will proceed at all and, if it does, what form it will take.

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Richard Graham Portrait Richard Graham (Gloucester) (Con)
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The hon. Member is making an interesting point about uncertainty. I understand where he is coming from, and many of us on this side would very much like to see section 21 abolition implemented as soon as possible. Does he, however, accept that there is another uncertainty, which is that if the court system is not working adequately, the amount of private housing stock available for many of our constituents who need it badly could easily shrink fast, as indeed I believe has happened in Scotland? That would be a much greater risk than not laying out at this stage the precise date at which section 21 abolition will be fully implemented.

Matthew Pennycook Portrait Matthew Pennycook
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I would say two things to the hon. Gentleman, who makes a valid point. First, the Government have had five years, since they first made the commitment to abolish section 21, to get the courts fit for purpose, and they have not done so. Indeed, the timescales for both possession and litigation have remained essentially unchanged since 2019, so there has been no progress in those five years. The actual process of possession proceedings is also probably one of the more efficient aspects of the county court system. We heard extensive evidence in Committee about the fact that the system is essentially working fairly well and is recovering well from covid, and that these changes would not be significant enough to delay the implementation. Even if that were not the case, I would say to him that we should have clarity about precisely what are the improvements the Government think are necessary. Let us have metrics and let us have timelines, and then we can have an open and transparent conversation about precisely what “ready” means. At the moment, we are entirely in the dark.

We will remain in the dark even if Government new clause 30 is incorporated into the Bill, because it will merely require the Lord Chancellor to publish an assessment of the operation of the county court possession order process in England and its enforcement before the extended application date can be set for chapter 1 of part 1 of the Bill. There is no timescale in which that required assessment needs to be published, and there is nothing that specifies the metrics against which the Lord Chancellor would judge the readiness of the court system. There are no corresponding obligations imposed on the Secretary of State, so if a future Lord Chancellor assesses that funding or other specific measures are required to make the courts ready for the new system, there is nothing to compel the Government of the day to implement them. Even if a future Lord Chancellor were to assess that the courts were more than ready, it remains for the Secretary of State to determine whether they wish to make the relevant commencement order, even if clause 116 is amended by Government new clauses 27 and 28.

Robert Neill Portrait Sir Robert Neill
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Like my hon. Friend the Member for Gloucester (Richard Graham), I understand where the hon. Gentleman is coming from, and I do not have a problem with the abolition of section 21 no-fault evictions. However, as a south-east London MP, he will know that the reality is that the county courts face enormous pressure, particularly in our part of the world. I hope that, before hon. Members perhaps criticise the Government too much, they will talk to their own local county courts, because the data is suggesting that, on average, we could be looking at about 55 weeks from the commencement of a possession claim until the decision is made, and on top of that we have the enforcement period. That is not acceptable, and I want it to be quicker, but we need to accept, therefore, as the Association of His Majesty’s District Judges has pointed out—and I have to say to hon. Members that the data the Justice Committee has is the most accurate—that there has been underfunding of the county courts for many years. Frankly, that has been under Governments of both parties, because I can remember when I was in practice and the hon. Gentleman’s party was in government, and there was underfunding of the county courts then as well. We all have to take our share of responsibility for that, rather than making it a matter of party controversy.

Matthew Pennycook Portrait Matthew Pennycook
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I thank the hon. and learned Gentleman for that point. We all want the processes to be quicker—I do not think that is in dispute at all—and they certainly could be made quicker. Landlords need robust grounds for possessions in legitimate circumstances, and they need the system to operate quickly when they do. The question for us today is: should we essentially put the abolition of section 21 on hold until we have reassurance about an undefined amount of improvement and if we do not know when that is going to be delivered?

Feryal Clark Portrait Feryal Clark
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All I have heard is about the importance of ensuring that the courts are functioning quickly enough to enable landlords to evict the tenants they want to evict, but currently renters have just over a month before they are evicted. I had a constituent who lost his son in the most horrific of circumstances—it was in the local papers—whose family was served a section 21 notice. The landlord knew the family had lost a child, but said they had to serve it because the family still had a month and they needed to get them to leave. Where is the protection for renters, and does my hon. Friend agree that kicking abolition of section 21 notices into the long grass means the Government do not care about renters at all?

Matthew Pennycook Portrait Matthew Pennycook
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My hon. Friend is right to highlight the impact on renters, and that is essentially what we are debating. With every month that passes, more private renters are served section 21 notices. Nearly 85,000 of them have been put at risk of homelessness as a result of being served one of those notices, as the Government have delayed the implementation of their commitment. As the Bill is drafted—even with Government new clause 30—Ministers can determine whenever they want to signal to the House that the courts are ready. We have had no assurances on that point, and that is not satisfactory.

In our view, Government new clause 30 is nothing more than a mechanism designed to facilitate the further delay of the complete abolition of section 21 evictions, and we will look to vote against it. With the Government having previously made it clear that there will be a requirement for advance notice of six months before new tenancies are converted, and a minimum of 12 months between that conversion and the transition of existing tenancies—with a proposal that the latter will also be made subject to the assessment required by Government new clause 30—it could be years before renters see section 21 completely abolished, making a complete mockery of the Secretary of State’s recent claim that such notices will be “outlawed” by the next general election.

We know the Government are in no rush to abolish section 21 evictions because they are not laying the groundwork that is necessary for that to happen. Where are the draft prescribed forms for section 8 notices, and where are the proposed amended court forms and civil procedure rules? There is no sign of them, or of any sense of what the regulations required to bring them forward might be. The truth is that Ministers determined long ago, for reasons that are entirely obvious, to essentially kick the can down the road on abolishing section 21 while disingenuously denying it. Although the passage of the Bill will be taken as a signal of abolition before the next general election, private renters outside will know that is not the case, and that implementation has been pushed back, potentially indefinitely.

We believe that hard-pressed renters have waited long enough for the commitment made by the Conservatives over five years ago to be delivered. They require certainty that it will truly be honoured, and section 21 evictions definitively abolished with the passing of this legislation. Our amendment 28 would provide that certainty by ensuring that section 21 of the Housing Act 1988 is repealed on the day that the Bill receives Royal Assent, with saving provisions for any notices served before that date so that they remain valid and of lawful effect. I commend the amendment to the House.

Government new clauses 27, 28 and 30, to which I have made reference, are only three of the 225 Government amendment tabled just before the deadline last week. Before concluding, I will touch briefly on several of the more substantive among them, starting with the small number that will be genuine improvements to the Bill. We are pleased that the Government have responded to our calls to ensure the maintenance of a number of the regulatory obligations that have built up around section 21 notices over the years by tabling Government new clause 14, which gives the Secretary of State the power by regulation to transpose those preconditions and requirements into section 8 eviction notices.

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Anthony Mangnall Portrait Anthony Mangnall
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I thank my hon. Friend for making that point. It is one that I will come on to, in terms of both the impact that the Bill will have on the attractiveness of short-term lets and the bureaucracy and hassle that will arise from this legislation.

From the outset of the Bill’s arrival in Parliament, I have worked to ensure that it strikes the right balance between tenant and landlord—a balance that ensures that the rights of tenants are respected and enshrined in legislation while the rights of landlords, property ownership and contract law are maintained and safeguarded. I believe that a failure to strike that balance would have a disastrous impact on the private rental market in the United Kingdom. Complicating the rental market with onerous requests, bureaucratic measures, additional costs and an inability for people to operate their personal property as they wish would only result in large swathes of the private rented sector throwing up their hands and selling their properties, just as a failure to support tenants would only embolden rogue landlords, diminish standards and increase unfair treatment.

From the start, it has been my mission to find a level playing field that ensures that tenants and landlords can co-operate together in a fair market that has a healthy supply of rental properties, with rights and standards enshrined, costs low and bureaucracy minimal, in a system that respects the rule of law and, perhaps most importantly, has a structure and a court system that is effective and that delivers. All of this has been done because we are in the midst of a supply crisis in the private rented sector, on which we have yet to touch.

On average, 25 prospective tenants inquire about every available rental property, up from eight in 2019, according to Rightmove. Hamptons estimates that between 2016 and the end of 2023, individual landlords sold almost 300,000 more homes than they bought. Last year, the Bank of England warned that demand for rental properties continued to outstrip supply as the number of landlords choosing to exit the market increased. It is therefore vital that responsible landlords have confidence that pragmatic changes are being made to the Bill. Failure to do so would only deepen the crisis.

I have said previously that the failure to have a sensible rental period at the start of a tenancy would likely result in the flourishing of long-term rental properties being used as short-term lets. Given the substantial price difference between short-term lets and long-term lets in constituencies like mine and the constituencies of the hon. Members for North Shropshire (Helen Morgan) and for Westmorland and Lonsdale (Tim Farron), there would be a very real likelihood of people exploiting that loophole.

Landlords incur costs and expenses when entering into a tenancy, and they need the certainty of a minimum period. Many buy-to-let mortgage lenders also require a minimum six-month tenancy agreement when lending to residential landlords. As a result, I tabled amendment 6 with the support of 58 colleagues to ensure that tenants cannot give two months’ notice to leave a property until they have resided in it for four months. I believe that this is in line with the recommendations of the Levelling Up, Housing and Communities Committee. I therefore welcome that the Government have accepted this argument and tabled new clause 15, which mirrors amendment 6. I will therefore not press my amendment.

Matthew Pennycook Portrait Matthew Pennycook
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I wonder whether I can tease out the hon. Gentleman’s reasoning in thinking that the possibility of rental properties being used as short-term lets is so serious. It is an entirely hypothetical problem. Renters who take out a tenancy agreement will have to provide a five-week deposit—they will probably be charged the maximum—and they have to go through a lengthy process to try to get that deposit back. What evidence does he have to suggest that, en masse, tenants will try to game the system in the way he expects?

Anthony Mangnall Portrait Anthony Mangnall
- Hansard - - - Excerpts

With the greatest of respect, I am saying that that is one of the reasons why I fear not having a minimum notice period. My constituency has the highest number of second homes and short-term lets of almost anywhere in the country. There is a significant price differential, and a significant amount of hassle is being heaped on landlords by this Bill, which might push them in that direction. This may be one of the foreseeable consequences. I have raised it on Second Reading and in private conversations with the hon. Gentleman.

New clause 2, on rent repayment orders, would enable local housing authorities to impose financial penalties on certain individuals where they believe that a housing offence has been committed by a body corporate. Last year, the Supreme Court delivered a landmark ruling in which it said that, where a rent-to-rent company takes over the running of a property, it cannot pass its legal liabilities on to the property’s landlord. The Government have amended the Bill to reverse that decision, which will mean that landlords can be fined even in cases where a rent-to-rent company or similar has, without the landlord’s knowledge, been asked by a tenant to illegally sub-let a property. According to data from Direct Line, one in 10 renters admits to sub-letting part of the home in which they live, of whom 48% did not disclose it to their landlord and three quarters did not review their existing lease agreement to determine whether sub-letting was permitted. The amendment would deal with the main concern associated with the use of rent-to-rent companies. It would address the problem of landlords and others who willingly hide behind such companies to let properties while avoiding liability for rent repayment orders, without penalising those who are innocent victims of such companies. I welcome and recognise the fact that the Government have seen sense and tabled their own amendment, mirroring my proposed new clause 2, in the form of proposed Government new clause 34. I therefore withdraw proposed new clause 2.

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Matthew Pennycook Portrait Matthew Pennycook
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Let me start by thanking the Clerks, the House staff and the Library specialists for facilitating our debates on the Bill, along with all the experts and external organisations that have engaged extensively with us on it. I also put on record my thanks to all hon. Members who have contributed to our proceedings at all stages, particularly those who served on the Public Bill Committee. I especially thank my hon. Friends the Members for Weaver Vale (Mike Amesbury), for Westminster North (Ms Buck), for North Tyneside (Mary Glindon), for Mitcham and Morden (Dame Siobhain McDonagh) and for Brighton, Kemptown (Lloyd Russell-Moyle) for their forensic scrutiny of the Bill’s provisions, and the considerable efforts that they have made to strengthen it as a whole.

I offer my sincere thanks to the Minister for the manner in which he has approached our exchanges on this important piece of legislation. In being handed this as his first Bill to take through the House, he has been given an unenviable task, to put it mildly, but he has borne his troubles with good grace. I have very much appreciated the civil way in which he has engaged with me throughout and his efforts, within the severe constraints under which he is no doubt operating, to make a number of small but sensible improvements to the Bill.

Once again, I put on the record the thanks of Labour Members to all those who have campaigned tirelessly—in many cases, over decades—for a reformed private rented sector. I particularly thank all the organisations that have joined Labour over recent months in urging the Government to amend the Bill so that it levels decisively the playing field between landlord and tenant, especially the 20 that make up the Renters Reform Coalition.

Labour has consistently argued that the case for fundamentally reforming the private rented sector is as watertight as they come. A state of affairs in which more than 11 million people in England—not just the young and mobile, but many older people and families with children—live day in, day out with the knowledge that they could be uprooted from their home with little notice and minimal justification, and where a significant minority of them are forced to live in substandard properties for fear that a complaint would lead to an instant retaliatory eviction, is intolerable. The sector should have been transformed a long time ago.

The Bill as introduced was a good starting point for the reform that is necessary, but Ministers could and should have strengthened this legislation, rather than progressively watering it down in a forlorn attempt to appease a minority of malcontents on the Government Benches. As a result of the Government’s unwillingness to face down that minority, the Bill that we send to the other place today is not only far weaker than it need be, but in danger of being fatally compromised.

We will not oppose the passage of the Bill tonight, because it is essential that it progresses, but we hope that the noble Lords address that danger and that over the coming months we can convince the Government to think again and ensure that this long-overdue piece of legislation truly delivers for renters.

Oral Answers to Questions

Matthew Pennycook Excerpts
Monday 22nd April 2024

(3 months ago)

Commons Chamber
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Lindsay Hoyle Portrait Mr Speaker
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I call the shadow Minister.

Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
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Soaring service charges are placing an intolerable financial strain on leaseholders and those with shared ownership across the country. Among the main drivers of the eye-watering demands with which many have been served over recent months are staggering rises in buildings insurance premiums and the passing on of significant costs relating to the functioning of the new building safety regime. Given that many leaseholders are being pushed to the very limits of what they can afford, do the Government now accept that the service charge transparency provisions in the Leasehold and Freehold Reform Bill—and pleading with freeholders to take a temperate approach—are not enough, and that Ministers should explore with urgency what further measures could be included to protect leaseholders better from unreasonable charges and give them more control over their buildings?

Planning Reform

Matthew Pennycook Excerpts
Wednesday 13th March 2024

(4 months, 1 week ago)

Westminster Hall
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.

Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.

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Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
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It is a pleasure to serve with you in the Chair, Mr Betts. I congratulate the right hon. Member for Middlesbrough South and East Cleveland (Sir Simon Clarke) on securing this important debate, and commend him for the characteristic clarity with which he set out his position in opening it.

I would also like to thank the hon. Members for Shrewsbury and Atcham (Daniel Kawczynski), for St Albans (Daisy Cooper), and for Westmorland and Lonsdale (Tim Farron) for their contributions. I did not agree with all their points, for reasons I may come to, but I certainly agree with the need to focus the planning system on prioritising genuinely affordable social rented homes, an issue the right hon. Gentleman knows I have spoken about at length, not least in the many weeks of the Levelling-up and Regeneration Bill Committee stage. I also agree with the importance of properly resourcing individual local planning departments, as was mentioned, which is a huge challenge at present.

I think the right hon. Member for Middlesbrough South and East Cleveland would accept that on most matters there is a profound political gulf between us. Yet, such is the mess that the Government have got themselves into with national planning policy, we have found common cause on a number of specific issues related to it. The most obvious point of agreement between the right hon. Gentleman and Opposition Front Benchers—although not the hon. Member for St Albans, I am sad to say—is on the need for enforceable housing targets.

The right hon. Gentleman recognises, as we do, that to get anywhere near the Government’s target of 300,000 homes a year, let alone the annual level of housing supply that England actually requires, we must have mandatory targets that bite on individual local planning authorities. As a result of the revised NPPF, published on 19 December last year, it is an unassailable fact that we no longer have such targets in England. Although it is correct to say that a small number of the initial proposals in the NPFF consultation were ultimately abandoned—for example, damaging proposed revisions to the tests of soundness—many others were implemented. Those include the softening of land supply and delivery test provisions, the emphasis on locally prepared plans providing for “sufficient housing only”, and the listing of various local characteristics that can now be used to justify a deviation from the standard method for assessing local housing need. As a result, the standard method is now explicitly only an advisory starting point.

The predictable result, as Ministers surely knew would be the case when they made the concessions in question to the so-called planning concern group of Tory Back Benchers in December 2022, is that a growing number of councils with local plans at an advanced stage of development, more often than not in areas of high unmet need, are scrambling to reverse ferret and take advantage of the freedom the revised NPPF provides to plan for less housing than their nominal local targets imply. The Government’s manifesto commitment to 300,000 homes a year thus remains alive, but in name only. It is abandoned in practice but not formally abolished, and no amount of protestations to the contrary by Ministers will alter that fact.

As the right hon. Member for Middlesbrough South and East Cleveland has rightly argued in the past, the decision to overhaul national planning policy in this way was, as he said, “disastrous”. It was, as we know, a decision made not in the national interest, but as a grubby concession to Government Back Benchers who were threatening to derail the Levelling-up and Regeneration Bill. It was nothing less than a woeful abdication of responsibility, and it must be undone. A Labour Government will act decisively and early to ensure that it is undone so that we once again have a planning system geared towards meeting housing need in full—that is absolutely a red line for us.

Where we respectfully part ways with the right hon. Member for Middlesbrough South and East Cleveland is on the issue of whether the post-war discretionary planning system is beyond redemption. As the right hon. Gentleman made clear in his remarks, he firmly believes that it is, and that it should be replaced by a zonal planning system of the kind proposed by the “Planning for the Future” White Paper published in 2020, but eventually abandoned. We might notice a trend here in the face of Back Bench pressure from the Government Benches.

We take a different view; while we do not dispute that after a decade of piecemeal and inept tinkering the planning system the Government are presiding over is faltering on almost all fronts, we believe that introducing an entirely new system is not the answer. Instead, we believe a discrete number of targeted changes to the existing system, coupled with decisive action to ensure that every element of it functions optimally, will ensure we significantly boost housing supply and deliver 1.5 million homes over the course of the next Parliament.

As I do not have an abundance of time, I will give just one example of the kinds of changes we believe are necessary to get Britain building at the scale required. It is a change that I think might solve some of the problems that the hon. Member for St Albans identified in relation to St Albans. There is no way to meet housing need in England without planning for growth on a larger than local scale. However this Government, for reasons I suspect are more ideological than practical, are now presiding over a planning system that lacks any effective sub-regional frameworks for cross-boundary planning.

The limitations of the duty to co-operate were well understood, but it at least imposed a requirement on local authorities to engage constructively, actively and on an ongoing basis to develop strategic planning policies where needed. Its repeal last year through the Levelling-up and Regeneration Act, coupled with the fact that no replacement has been brought forward, leaves us with no meaningful process for planning strategically across boundaries to meet unmet housing need, given the inherent flaws of voluntary spatial development strategies.

Indeed, the Government have now even removed from the NPPF the requirement to help neighbouring authorities accommodate development in instances where they cannot meet their areas’ objectively assessed needs. If we are to overcome housing delivery challenges around towns and cities with tightly drawn administrative boundaries we must have an effective mechanism for cross- boundary strategic planning, and a Labour Government will introduce one.

That is just one example of the kind of planning reform we believe is necessary; others include finally getting serious about boosting local plan coverage. It is appalling that we have a local plan-led system where nearly three quarters of local plans are now not up to date—that cannot be allowed to continue. Another example is reintroducing a strategic approach to green-belt release, rather than the haphazard free-for-all we have had for the past 14 years.

The important point is that we should be focused on bold evolution of the planning system in England, not a complete dismantling of it. Not least because the painstaking creation of an entirely new system, after four years of planning policy turbulence and uncertainty in the wake of the 2020 White Paper, would almost certainly paralyse housing delivery and further exacerbate the sharp decline in house building that is now under way. Reform of the planning system, rather than a revolutionary reconstruction of it, is what is needed, so Labour remains committed to an ambitious yet pragmatic and achievable overhaul of the current system, and much-needed policy certainty and stability once that overhaul is complete.

As much as the right hon. Member for Middlesbrough South and East Cleveland might wish otherwise, it is patently clear that the Government have not only squandered the opportunity to make the planning system work as needed but, in caving in to the demands of their Back Benchers 15 months ago, have actively made things worse, as the planning application statistics released last week make clear. We need a general election so that they can make way for a Labour Government who will do what is necessary to tackle the housing crisis and boost economic growth.

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Felicity Buchan Portrait Felicity Buchan
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We have to acknowledge that a lot of the settlement in the UK in the course of the last two years has been exceptional, whether it is by Hongkongers or Ukrainians. I agree with my hon. Friend on the arithmetic. If we have big levels of inward migration, we need the housing to house the inward migration, so I agree with him on the basis of the arithmetic—absolutely.

Matthew Pennycook Portrait Matthew Pennycook
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I am glad to hear the Minister recommit to the Government’s housing target of 300,000 homes a year. She says that the Government are committed to delivering that. Does it not concern the Minister that in the wake of the changes to the NPPF, councils across England—I think an example would be North Somerset—are using the exceptional circumstances test in the revised NPPF to determine lower housing targets than are defined through the Government’s standard method? That is to say that the NPPF will result in less housing than the standard method implies and that there is no way the Government can now meet their 300,000 homes a year target on that basis. She surely must recognise that.

Felicity Buchan Portrait Felicity Buchan
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We have been very clear that our target is 300,000, but we want local communities to buy into it. It is very much an objective. As my right hon. Friend the Member for Middlesbrough South and East Cleveland has laid out very clearly, we need the new housing, and that is why Government are committed.

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Felicity Buchan Portrait Felicity Buchan
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I think I have been very clear in what I have said about the green belt. The green belt should be protected except for in exceptional circumstances, as has been set out.

Let me make some progress. The Levelling-up and Regeneration Act 2023 will speed up the planning process, delivering a faster and more efficient system, and cut out unnecessary and costly delays. It will ensure that local plans are shorter, more visual and map-based, and built on open and standardised data. They will be concise and focused on locally important matters, with repetition of policies across plans eliminated. New mandatory gateway assessments will reduce the time spent examining plans. To ensure that plans are prepared more quickly and kept up to date on matters including housing supply, there will be a 13-month preparation timeframe and a requirement for councils to commence plan updates every five years.

To respond to the hon. Member for St Albans, I must put it on the record that St Albans has one of the oldest plans in the country. It has been designated. To be honest, I do not know how the Liberal Democrats can stand up and say they have a housing target of 380,000 a year when they object to every single development on the ground. I just do not get it.

Let me move on. We have had quite a lot of talk about nutrient neutrality. I must say that I was hugely disappointed that the Opposition in the House of Lords blocked the Government amendments in the 2023 Act that would have made a targeted and specific change to the law, so that there was absolute clarity that housing development could proceed in areas currently affected by nutrient neutrality. That was done at a cost of 100,000 new homes. It is unacceptable to talk the talk and not to deliver, and the Opposition did not deliver in the House of Lords.

Matthew Pennycook Portrait Matthew Pennycook
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Will the Minister give way?

Felicity Buchan Portrait Felicity Buchan
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No; I have made it quite clear that there are points I want to put on the record.

The Government continue to work to unlock housing in catchments affected by nutrient neutrality. To address pollution at the source, the 2023 Act created a new duty on water companies in designated catchments to ensure that wastewater treatment works serving a population equivalent to over 2,000 meet specified nutrient removal standards. Competent authorities are then required to consider that this standard will be met by the upgrade date for the purposes of habitats regulations assessments, significantly reducing the mitigation burden on development.

We are also boosting the supply of mitigation by making £110 million available through the local nutrient mitigation fund, to help planning authorities in affected areas to deliver tens of thousands more homes before the end of the decade. Funding will be recycled locally until nutrient mitigation is no longer needed, at which point it will be used for measures to help restore the relevant habitat sites. The fund has already allocated £57 million to eight local authorities, and round 2 of the fund opened for expressions of interest last week. The hon. Member for Somerton and Frome (Sarah Dyke), who is no longer in her place, raised nutrient neutrality. I want to make it clear that Somerset was allocated £9.6 million.

Building on the Levelling-up and Regeneration Act, we consulted on a range of proposed changes to national planning policy to support our objective of a planning system that delivers the new homes we need, while taking account of important areas’ assets or local characteristics that should be protected or respected. We have revised the NPPF to be clearer about the importance of planning for homes and other development that our communities need. The revised NPPF provides clearer protection for the green belt, clarity about how future housing supply should be assessed in plans, and certainty on the responsibility of urban authorities to play their full part in meeting housing needs.

We have removed the need to demonstrate a five-year housing land supply requirement where plans are up to date, providing local authorities with yet another strong incentive to agree a local plan, giving communities more of a say on development and allowing more homes to be built. To make sure that we maximise the potential of brownfield sites, we are consulting on strong new measures to boost house building while protecting the green belt. Under those plans, planning authorities are instructed to be more flexible in applying policies that halt house building on previously developed land, permitted development rights are extended, and the planning authorities in England’s 20 largest towns and cities will be subject to a brownfield presumption when they fail to deliver.

The Government are clear that having plans in place is the best way to deliver development in the interests of local communities, and the revised framework creates clear incentives for authorities to get their local plans in place. Alongside that, the Government remain on track to meet our manifesto commitment to deliver 1 million homes over this Parliament. We have announced a £10 billion investment in housing supply since the start of this Parliament, to support bringing forward land for development, creating the infrastructure and enabling the market to deliver the homes that communities need, as well as supporting local authority planning capacity. This includes the £1 billion brownfield infrastructure and land fund, launched in July 2023, that will unlock approximately 65,000 homes and target at least 60% of funding to brownfield land.

I want to give my right hon. Friend the Member for Middlesbrough South and East Cleveland, who secured this debate, time to sum up, so I will close by saying very clearly that the Government are committed to housing delivery and we are on track to modernise the planning system so that we can achieve that housing delivery.

Oral Answers to Questions

Matthew Pennycook Excerpts
Monday 4th March 2024

(4 months, 3 weeks ago)

Commons Chamber
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Lindsay Hoyle Portrait Mr Speaker
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I call the shadow Minister.

Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
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In resisting Labour’s efforts to strengthen the Renters (Reform) Bill, Ministers have repeatedly argued that the legislation as drafted strikes precisely the right balance between the interests of tenants and those of landlords, yet by watering down protections for renters and further delaying the long-overdue abolition of section 21 evictions, the package of draft Government amendments to the Bill that we saw last week will tilt the playing field decisively back towards the landlord interest. Are we to believe that the Government have honestly decided, at the 11th hour, that it is landlords who need more rights and powers, or is this not simply a crude attempt to manage an increasingly fractious Tory party at a shameful cost to hard-pressed private tenants?

Jacob Young Portrait Jacob Young
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The hon. Gentleman, like various Members who have spoken, is a committed campaigner on this issue. I enjoyed our time together in the Public Bill Committee. We need to strike the balance he has just spoken about. That is why we are discussing the Bill with both landlord groups and tenant groups. We are meeting colleagues on the Government Benches and the Labour Benches, and those in the smaller parties, too. We are ensuring that when we bring the Bill back it is in the best possible shape so that it affords protections and security for tenants, but protections, in fairness, for landlords too.

Draft Social Housing (Regulation) Act 2023 (Consequential and Miscellaneous Amendments) Regulations 2024

Matthew Pennycook Excerpts
Monday 4th March 2024

(4 months, 3 weeks ago)

General Committees
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Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
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It is a pleasure to serve with you in the Chair, Mrs Cummins. I rise simply to put it on the record that, in the Opposition’s view, this is a straightforward and entirely uncontentious statutory instrument, and as such, not only do we have no intention of opposing it this evening, but, somewhat uncharacteristically, I have no specific concerns to put to the Minister.

Leasehold Reform and New Homes

Matthew Pennycook Excerpts
Wednesday 28th February 2024

(4 months, 3 weeks ago)

Westminster Hall
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.

Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.

This information is provided by Parallel Parliament and does not comprise part of the offical record

Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
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It is an absolute pleasure to serve with you in the Chair, Mrs Harris, and to follow the hon. Member for Hertford and Stortford (Julie Marson). I am very glad that she mentioned the question of a share of freehold: we pushed for that in Committee, and it is one of several measures necessary to pave the way for the commonhold future that so many of us in the House want to see.

I congratulate the hon. Member for Harborough (Neil O’Brien) on securing this important debate, on opening it as compellingly as he did and on the persuasive argument he made yesterday on Report on the Leasehold and Freehold Reform Bill. He spoke in support of greater ambition in addressing the many inequities of the leasehold system. Although I disagree with his assertion in yesterday’s debate that that Bill is our one chance to end the arcane and discriminatory practices that leaseholders and residential freeholders are at the mercy of, it certainly represents our only chance to do so in this Parliament. On the Labour Benches, we wholeheartedly agree that the Government should go further than the Bill does.

I thank all hon. Members who have contributed to the debate. Those contributions, like yesterday’s debate, highlight that there is widespread support across the House for ambitious leasehold and commonhold reform. Once again, I want to put on record the thanks of those on the Labour Benches to all those who have campaigned tirelessly, often over many decades, for an overhaul of leasehold law. In particular, I thank the leaseholders and residential freeholders who have resolutely refused to accept the inequities of the flawed system they are so often at the mercy of, and who have taken it on themselves to vigorously make the case for change.

In responding to the debate, I do not intend to revisit yesterday’s many principled arguments and exchanges on leasehold reform in general. Instead, I will simply provide some further detailed thoughts on some of the specific issues that have been raised this afternoon, starting with the management of private and mixed-tenure estates. The distinct set of problems faced by residential freeholders on those estates with charges and fees is well known and well understood. The Government have publicly recognised for at least six years that it is a very serious problem, and we welcome their decision to use the Leasehold and Freehold Reform Bill to introduce statutory protections for freehold homeowners that are equivalent to those enjoyed by long leaseholders in respect of service charges.

As the Minister will recall, in Committee we pressed for specific changes to strengthen the new estate management regulatory framework, not least to rectify some of the obvious deficiencies of the existing leasehold regulation regime that it mirrors. We hope that the Government will give them further consideration. In our view, of particular importance is the need for a right-to-manage regime for freeholders on private and mixed-tenure estates. It is not enough merely to give residential freeholders on those estates the right to challenge the reasonableness of charges and to hold estate management companies to account. They should enjoy the right to take over the management functions on their estate, and we believe there is appetite among freehold homeowners to exert more direct control in that way. In yesterday’s debate on Report, the Minister made it clear that the Government understand the strength of feeling on the issue and are considering it further. Will the Minister provide a little more clarity today and tell us whether the Government are seriously considering tabling amendments in the other place to provide parity between residential leaseholders and freeholders when it comes to the right to manage?

As the hon. Member for Harborough rightly argued yesterday, ensuring that residential freeholders on existing private and mixed-tenure estates are better protected is one thing, but reducing the prevalence of the arrangements is another. The Government must act to do the latter, as that is the best way of addressing the root causes of so many of the problems that residential freeholders face. However, we believe it would be wrong simply to force local authorities to adopt such estates without corresponding changes to ensure that the public infrastructure and amenities built on them are built to a determined, adoptable standard, so that financially hard-pressed councils are not forced to repair and maintain poor quality roads and common services at great cost. I would be grateful if the Minister could provide some assurances—we touched on this on Committee—that the Government are actively exploring the mix of legislative and policy changes that will be required to make progress on both of those fronts, adoption and common adoptable standards.

Jim Shannon Portrait Jim Shannon (Strangford) (DUP)
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I apologise that I could not be here when I was supposed to be, Mrs Harris. I was meeting some people from Hong Kong on issues of human rights and freedom. I thank the shadow Minister for letting me intervene. Leasehold reform has been the subject of much discussion, such as in yesterday’s debate in the main Chamber. Does he not agree that there is a real need for urgent leasehold reform? It affects so many of our constituents—from young people, who are starting their lives, to older people, who are trying to downsize. We must make this change, especially at a time when every penny counts for most people, whether they are young or old.

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Matthew Pennycook Portrait Matthew Pennycook
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I thank the hon. Gentleman for that intervention. I was starting to get troubled when I could not see him out of the corner of my eye; I am glad he has attended the debate and made that point. I am sure the hon. Gentleman will know Labour’s position: our concern is that the Bill does not go far enough by any means. It is distinctly unambitious. However, it does make important changes, and we think it is important that it receives Royal Assent before the end of the Parliament. For the reasons he outlined, we want to see it make speedy progress.

Let me turn to the issue of forfeiture, which the hon. Member for Harborough raised in his speech. As hon. Members will know, throughout the passage of the Bill, Labour has made the principled case for abolishing forfeiture and the windfall it provides to freeholders. As I argued in the debate yesterday, forfeiture is a wholly disproportionate and horrifically draconian mechanism for ensuring compliance with a lease agreement. Its continued use, and the chilling effect that results from its mere existence, continues to put landlords in a nearly unassailable position of strength in disputes with leaseholders. That is why it is routinely used by landlords as a first resort when seeking to recover alleged arrears of payments from leaseholders, and why the threat of it is invoked so often to deter leaseholders from disputing any unreasonable costs and defending claims.

Yesterday’s debate reinforced the fact that there is clearly a broad consensus in the House for getting rid of forfeiture. Although Labour is understandably disappointed that the Government resisted our second attempt to achieve that, we welcome the Minister making it clear that the Government are

“working through the detail of the issue”—[Official Report, 27 February 2024; Vol. 746, c. 197.]

and intend to report back to the House shortly. Can I encourage the Minister to do so as quickly as possible, and to provide us with assurances to that effect today? Determining precisely what, if anything, the House will put in place of the existing system of forfeiture is an extremely complicated undertaking. Given that the Government have had years to develop considered proposals in this area, it would be unfortunate if hon. Members were asked to take a view on complex and technical proposals without the time necessary to properly scrutinise them.

As the Minister considers the matter of forfeiture, can I also press him to review the issue of rent charges? I am glad that the Father of the House and, I think, the hon. Member for Harborough mentioned it in their contributions. We must ensure there are no unintended consequences, but in our view there is a cast-iron case for abolishing section 121 of the Law of Property Act 1925 altogether. The remedies provided for by the Act, which amount, in essence, to freehold forfeiture, are a wholly disproportionate and draconian legacy of Victorian-era property law. Through clause 83 of the Bill, the Government are seeking to make palatable methods of enforcing legitimate and reasonable rent charges that are simply not justifiable in any form, and must be removed. I urge the Minister to reconsider the Government’s position on rent charges.

Before I conclude, I will touch briefly on ground rents, which the hon. Member for Hertford and Stortford mentioned. As Labour argued in Committee, over the past two decades, we have seen a system develop that is increasingly focused on generating assets by gouging leaseholders through ground rents that are, in historical terms, high to start with, and that escalate over the term of the lease. Leaseholders who have worked hard to purchase their homes in good faith are being asked to pay ever more money for no clear service in return, and many are experiencing considerable financial distress and difficulty selling their property, all to sustain the income streams of third-party investors. Unregulated ground rents of this nature in existing leases cannot be justified in our view. As I have previously made clear, I personally share the Secretary of State’s preference to cap ground rent at a peppercorn.

Although we do not discount the risks involved in any of the five options outlined in the recent Government consultation, Labour is clear that the Government must act to protect leaseholders from ground rent exploitation, and that, as I said in Committee, they should be courageous in determining which of the consultation proposals should be enacted.

The Minister made it clear in yesterday’s debate that the Government are considering next steps and were moving at speed in doing so. I will not press him this afternoon for any further detail, as I accept he will not be able to say any more today. However, can I press on him again, as I did on forfeiture, the need to share any detailed proposals with the House at the earliest possible stage, particularly given the implications of the range of options consulted on for the Bill that has now been sent to the other place? It will, as the Minister knows, involve the rewriting of several substantive clauses in the Bill, so we need that detail early on. I look forward to his response.

Lee Rowley Portrait The Minister for Housing, Planning and Building Safety (Lee Rowley)
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It is a pleasure to serve under your chairmanship, Mrs Harris. I thank all the Members who have contributed to the debate and those who are listening to it. The fact that we are talking about this issue for the second time in two days shows how important it is. It is clear, as we discussed yesterday, that Members on both sides of the House recognise that this area badly needs attention and reform. Thankfully, the general consensus across the House is that we have to move in that direction, so I hope the Bill, which went to the other place yesterday, will make fast progress there.

To be clear, the Government absolutely acknowledge this issue. We did so on Report yesterday, in Committee, on Second Reading and before that. Hon. Members have made very important points today, and have raised similar issues previously, about the iniquities in the system. They have spoken about the historical problems on the leasehold side and, more recently, but just as iniquitously, on the estate management side. Even those of us who believe that the Government should be very temperate in intervening in markets know it is right that when markets are not working, we should take action to straighten them out and remove the distortions within them. That is exactly why we introduced the Bill and are trying to ensure that it makes progress in the months ahead. We welcome the Opposition’s commitment to getting it on to the statute book at the earliest opportunity.

There are problems within the leasehold part of the discussion. The estate management issues have come into much sharper relief over the past couple of decades, particularly for those of us who have had significant amounts of new building in our areas. We can see, on a day-to-day basis, that a set of issues with individual estates clearly needs to be resolved.

As my hon. Friend the Member for Harborough (Neil O’Brien) and the hon. Member for Selby and Ainsty (Keir Mather) outlined, there is a particular issue with new homes, which I will talk about in a moment. Without rehearsing some of the previous arguments and discussions, I want to read into the record, for about a minute, the real progress that the Bill makes. It is important that the House and the other place do not forget that, as a baseline, we are making the biggest and most significant change to property law in this country in a generation; we absolutely need to acknowledge that.

We are making it cheaper and easier for leaseholders in houses and flats to extend their lease or buy their freehold. That is a significant intervention. We are increasing the standard lease extension term from just 90 years to 990 years, with ground rent reduced to zero. That is an extremely significant intervention. We are removing the requirement for a new leaseholder to have owned their house or flat for two years before they can benefit from these changes. We are changing the thresholds and non-residential limits within properties, and for the first time allowing leaseholders in buildings with up to 50% non-residential floor space to buy their freehold and take over its management.

Yesterday on Report, we added protections on top of the Building Safety Act 2022 to make the purchase and sale of leasehold and freehold estate properties quicker and easier by proving a maximum time and fee for the provision of information. Vitally, we are requiring transparency over leasehold service charges, which hon. Members talked about a moment ago. We are replacing building insurance commissions for managing agents, landlords and freeholders so that we get away from the frankly outrageous situation whereby there is little clarity about what is being paid for, who pays for it and whether there are kickbacks in the background.

We are scrapping the presumption that leaseholders will pay the freeholder’s legal costs when challenging poor practice. That is another absolutely outrageous historical iniquity that needs resolution. We are rightly extending redress schemes to managed estates. I know that some hon. Members would prefer them to be abolished, but it is absolutely right that there is a redress scheme in place.

As hon. Members know, yesterday we banned the creation of new leasehold houses. I do not like to ban anything at all because I think we have banned far too much in the United Kingdom over the past generation, but sadly, I am absolutely convinced of the necessity of a preclusion on leasehold houses, given the horror stories that have been outlined during the passage of the Bill and in the years leading up to it.

Matthew Pennycook Portrait Matthew Pennycook
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Will the Minister give way?

Lee Rowley Portrait Lee Rowley
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I will happily give way to the hon. Gentleman; I hope he is about to agree with me about the necessity of banning only very proportionately.

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Matthew Pennycook Portrait Matthew Pennycook
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I am afraid that I am going to have to disappoint the Minister, because I disagree that the Government banned new leasehold houses yesterday. He did not address this in his wind-up speech yesterday, because he did not have a huge amount of time, but I want him to respond to my concerns about new schedule 2 providing for exemptions that are potentially so wide that they could allow for the creation of significant numbers of new leasehold homes over the coming years. Will the Government review their position on new schedule 2? Are they convinced that it provides for only very limited exceptions in unusual circumstances, as the Minister said yesterday?

Lee Rowley Portrait Lee Rowley
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I am grateful for the hon. Gentleman’s intervention. He and I have an active discussion about this, and possibly a slight difference of opinion about the potential impact of what we introduced. I do not wish to misrepresent him, but I think he accepts that some elements of what we brought forward yesterday, possibly those regarding the National Trust, are not controversial or contentious. There is a question about whether the measures should apply if, historically, organisations, entities or companies have agreements in certain ways. It is clear that this will be swept away; we are effectively discussing whether existing permissions on a particular type of prospectus, other than the small number of things such as the National Trust, should be swept away as well. I am sure that we will continue to talk about that, but we think that this proposition is a major intervention that honours the spirit of banning leasehold houses. Others may take a different view, but the Government’s view is that this is a significant step forward that adheres to the spirit of a ban or preclusion, and that will allow us to move forward.

I have highlighted the progress that has been and is being made, subject to what the other place does. I know, however, that hon. Members are very keen that we go further in certain areas, so I want to spend a few moments going through some of their suggestions. My hon. Friend the Member for Harborough made a powerful speech—again, he is the reason why we are speaking about this matter today, and it is important that we continue to have this conversation. We have heard some of the examples, both named and referred to, of the realities created by the system. No system is perfect—we can never design it such that there will not be some attempt to prang it in some way, shape or form—but large holes in the system have clearly built up and been exploited. Those have resulted in, for instance, the removal of trees from a tree-lined street. Unless there is some other reality behind that, there is absolutely no reason for it to happen. We have to move to a place where that does not occur, and we hope that that will be achieved in part by the changes made by the Bill. We recognise that there are further concerns, and we are considering those, but we all agree that some of the examples mentioned are not where we want to be. I hope that we may be able to say more on that going forward.

As I mentioned briefly yesterday, I also recognise this issue personally. I am not speaking today as a constituency MP, but only in the last month I have been in meetings with constituents who raised concerns about a Persimmon development and the clarity of information about service charges. So in my part of the world, I see issues similar to those raised by hon. Members, including my hon. Friend.

My hon. Friend also raised an important point about GP provision. I have been in this job for only four months, but I recognise the importance of this issue. My hon. Friend the Member for South West Bedfordshire (Andrew Selous) is particularly concerned about that, and I have spoken about it with my hon. Friend the Member for Hertford and Stortford (Julie Marson). It is another clear iniquity. As my hon. Friend the Member for Harborough says, people are doing the right thing, have worked hard all their lives and are buying properties, and although the sales particulars of those properties state that new GP provision will be on or near the site, suddenly that provision disappears into thin air between the point when the ink goes on the contract and the point when they move in, or within a few years.

We have already held a meeting on that issue with my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom), who is a Minister in the Department of Health and Social Care, and we are committed to trying to make further progress. A detailed discussion is needed, because a number of different issues on GP provision need to be unpacked.

First, there is the physical ability to provide bricks—places for people to operate out of—which is obviously the responsibility of the planning system or associated with it. The second issue is whether there could be some provision, but for whatever reason, the configurations, the preferred designs and so on make that cost higher than it otherwise should be. If that is the case, that needs to be looked into again, because there is no reason for making perfect the enemy of the good. Thirdly, we may have the bricks or provisions to provide the bricks, but if we do not have the people to provide the services, it does not help in any instance the people who have been sold the promise in the first place. A number of different issues will need to be unpicked, and I am working with my right hon. Friend from the Department of Health and Social Care on that.

My hon. Friend the Member for Harborough talked passionately and importantly about new homes and the related issues. As he indicated, when someone has done the right thing, it is absolutely incredible and unacceptable that there are the kind of problems that he has highlighted around sewage, snagging and the amount of time people have to take to get their homes up to the standard they thought they were buying in the first place, or to solve the problems they did not think there would be. It is also fair to say that, as MPs, we only hear about the difficult issues, and there are many thousands of homeowners who move into homes on a monthly and annual basis who do not have those issues. That is absolutely great, but we can all see in our postbags that there are significant challenges with regards to new homes. As my hon. Friend indicates, I hope that the new homes ombudsman will make progress, and the New Homes Quality Board is currently seeking to do that.

My hon. Friend the Member for Gravesham (Adam Holloway) is no longer in his place, but he raises an important point about conveyancing. The hon. Member for Selby and Ainsty made a similar point about people being encouraged to use a particular conveyancer, or a particular set of solicitors, and it may be that the output of that process, however it happened, meant they did not get all the information or certain things were not as clear as they could be. That is unacceptable. I recognise that we have to work through that issue. There is a very complicated interaction between standards, regulation and whether people are doing the right thing, even within a regulated industry. I think I should pick that up with my Ministry of Justice colleagues to see whether there is anything that we may be able to take forward.

The hon. Member for Selby and Ainsty made an important and eloquent case relating to some challenges that he and his constituents have experienced. I was campaigning on one of his new estates just a few months ago, possibly for a different candidate. I will make two points. He raised an issue with regards to Harron Homes. I say this not to make any particular point, other than that I had a similar personal and constituency issue with Harron Homes on the Regents Green estate in Grassmoor in my constituency a number of years ago. It took quite a bit of pushing, but in the end, Harron Homes moved and we got hundreds of snags unsnagged. I hope he has similar success on that.

I know the hon. Member’s point was not about seeking advice on how to approach Harron Homes; it was more broadly about the reality that this should not happen in the first place, and he is absolutely right. I hope that some of the work in the Leasehold and Freehold Reform Bill, and some of the things that the New Homes Quality Board is doing on a voluntary basis and the new homes ombudsman will do in the coming years will help to address some of those problems.

My hon. Friend the Member for Worthing West (Sir Peter Bottomley) is not just the Father of the House but the father of many of the innovations and suggestions in the Bill, given how long he has campaigned on this issue. He raised the specific issue of rentcharges, and I would say to him that I am always happy to hold roundtables, but we must make sure they have utility. We are clearly making progress with the Bill, and I hope hon. Members accept that that includes progress on rentcharges. Both I and the Secretary of State continue to be keen to have the discussion around rentcharges to see what might be possible in the future.

It is important to note that there is a complicated interaction, as there always is in such difficult areas of law, between the clear problems we see with rentcharges and the overall structure of how rentcharges are used on a broader basis—rentcharges are, for example, part of the estate management system. That is something we have to try and work through in the round, but I am always happy to talk more and to hold roundtables. We do understand that there continues to be a challenge there.

Rosie Winterton Portrait Madam Deputy Speaker (Dame Rosie Winterton)
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Order. Colleagues will see that a lot of right hon. and hon. Members wish to contribute to this debate, which has to finish at 6 pm. I will want to bring the Minister back for a short time. Another Deputy Speaker is taking over in a moment, but let me advise that those speaking from the Back Benches should be prepared to speak for between six and seven minutes, in order for us to get everybody in. I am afraid that that is because of the pressure on time. I call the shadow Minister.

Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
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I start by declaring an interest: my wife is the joint chief executive of the Law Commission, whose work in this area I intend to reference in my remarks.

I rise to speak to the amendments and new clauses that stand in my name. Before doing so, I would like to put on record my thanks to all those hon. Members who served on the Public Bill Committee for so ably scrutinising the many technical and complex provisions that the Bill contains. There were, as one would expect, differences of opinion and emphasis, but it was also evident that there is a shared recognition that the Bill can and should be improved further, and an unusual degree of cross-party agreement as to some of the ways that might be achieved.

Despite reams of Government amendments tabled in Committee and for our consideration today, this Bill remains a distinctly unambitious piece of legislation. That is a matter of deep regret to those on the Labour Benches, not only because the Government’s paucity of ambition will see exploited leaseholders wait even longer for the current iniquitous leasehold system to be ended, but because it is also manifestly clear that there is widespread support across the House to go much further than this limited Bill does. Responsibility for the fact that the Bill does not contain so many of the commitments that successive Conservative Secretaries of State have made over recent years, not least in relation to the promised widespread introduction of the commonhold tenure, ultimately lies with Ministers. They had the opportunity to bring forward bold leasehold and commonhold reform legislation, and they made a political decision not to do so.

Although the Opposition appreciate the understandable desire of many leaseholders to see this Bill completely revamped so that it lives up to the many weighty promises made by the Government since 2017, we made clear at the outset in Committee that we did not intend to try to persuade Ministers to radically overhaul it by means of the many hundreds of amendments that would be required to implement all the Law Commission’s recommendations on enfranchisement, right to manage and commonhold. That remains our position. Whether this Bill receives Royal Assent or not before this Parliament is dissolved, a Labour Government will have to finish the job of finally bringing the leasehold system to an end by overhauling it to the lasting benefit of leaseholders and reinvigorating commonhold to such an extent that it will ultimately become the default and render leasehold obsolete. I reassure leaseholders across the country that we are absolutely determined to do so.

We recognise, however, that this limited Bill will provide a degree of relief to leasehold and freehold homeowners in England and Wales by giving them some greater rights, powers and protections over their homes. For that reason, we are extremely pleased it will complete its passage today, but we are determined to send to the other place the most robust piece of legislation that we can. That means rectifying the Bill’s remaining flaws and incorporating into it a select number of measures to further empower leaseholders and improve their rights. With that objective in mind, we have tabled a series of amendments and new clauses for consideration today. That they are almost identical to a number of those we discussed at length in Committee is a deliberate choice that reflects not only the importance we place on the changes they seek to secure, but the distinct lack of convincing responses from the Minister in Committee as to why the Government felt they needed to resist them.

Part 1 of the Bill concerns leasehold enfranchisement and extension. In seeking to implement the small subset of reasonable and proportionate Law Commission recommendations, it is almost entirely uncontentious. However, we believe that several provisions in this part are defective. We sought to remedy their deficiencies in Committee and we have tabled a number of amendments in an attempt to do so again.

Amendments 4 and 5 concern arguably the most significant provisions in this part when it comes to ensuring that the process of extending a lease or acquiring a freehold is as cheap as possible for existing leaseholders—namely the proposed new valuation process as provided for in clauses 9 to 11 and schedules 2 and 3. The current valuation method has a number of manifest flaws, and we fully support the new method as proposed in the Bill. However, with the applicable deferment rate becoming the primary driver of price to be paid in enfranchisement or extension claims under the new method, as a result of the abolition of marriage and hope value and the peppercorning of ground rents in the valuation calculation, we believe it is essential that it is set in a way that is fair to leaseholders. While the Government ostensibly agree, there is nothing on the face of the Bill to ensure that that will be the case and we therefore remain convinced that this Government, or a future one, could be lobbied by vested interests to set a deferment rate that will be punitive to leaseholders.

In resisting our efforts to amend the Bill in Committee to guard against such an outcome, the Minister argued that the Secretary of State must have flexibility to make decisions on the rate or rates. We agree; we are not suggesting that we bind the hands of Ministers by prescribing the rate or rates on the face of the Bill, but we do believe that the legislation should be amended to place a clear obligation on the Secretary of State to set a rate or rates with the overriding objective of encouraging leaseholders to acquire their freehold at the lowest possible cost.

Richard Fuller Portrait Richard Fuller
- Hansard - - - Excerpts

The shadow Minister is right that there was a lot of consensus in Committee, so I hope he will not mind me probing him on some of the language he just used about the issue of setting rates. We all want to see what the Government do on deferment and capitalisation rates, but the shadow Minister used the term “punitive to leaseholders”. Does he accept that already embedded in the issues about ground rents and the changes here is a substantial transfer of value from freeholders to leaseholders, that the people who are more likely to suffer from punitive behaviour are those who entered into contracts historically from the freeholder side expecting that those values would be considered, and that it is a public policy decision that will change the value in those contracts?

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

I understand the hon. Gentleman’s point, which he made in Committee as well, if I am not mistaken. We very much think the risk is on the other side of the scale—that is, that a Government would be tempted to set a rate that is damaging to leaseholders as a result of being lobbied by vested interests. While there is a balance to be struck, we think it is right that we put on the face of the Bill that the objective in setting the deferment rate as part of the premium calculation must be to ensure that leaseholders acquire their freehold at the lowest possible cost. Amendments 4 and 5 would ensure that that is the case and I commend them to the House.

Part 2 of the Bill makes changes to other rights of long leaseholders. It contains the four clauses in the Bill that implement Law Commission recommendations on the right to manage, several of which we have sought to improve, as well as clause 21, which makes provision for a new enfranchisement right to extinguish a ground rent without having to extend a lease. We still have absolutely no idea how this clause—or clauses 7 and 8, for that matter—will interact with any proposals that might emerge from the recently closed consultation on restricting ground rents for all existing leases. The Minister must provide further clarification on that; it cannot be right that we could be dealing with such a significant issue when we get to ping-pong stage, in due course.

We very much welcome the intent of clause 21 and schedule 7, which it gives effect to. Even if unamended, they will ensure that some leaseholders can enjoy reduced premiums and secure nominal ground rent ownership of their properties without the need to go through the challenge and expense of repeated lease extensions. However, we remain unconvinced by the Government’s proposed conferral of this new right only on those leaseholders with leases with an unexpired term of more than 150 years. In resisting our attempt to remove the 150-year threshold from the Bill in Committee, the Minister essentially made two arguments. The first was that there is a need to

“put a finger on the scale”

somewhere. In other words, the Government take the view that the new right must be restricted based on lease length. The second argument was that in determining the threshold for restriction, the primary consideration should be which leaseholders are

“unlikely to be interested in, or do not need, a lease extension.”––[Official Report, Leasehold and Freehold Reform Public Bill Committee, 25 January 2024; c. 271.]

We do not believe that either argument is particularly strong.

First, any long lease threshold for the new right is ultimately entirely arbitrary, as evidenced by the fact that the Government chose a different threshold from the one recommended by the Law Commission.

Secondly, there is a principled argument that we should trust leaseholders to make decisions based on what is right for them and their individual circumstances, rather than denying a broad category of leaseholders a new statutory right on the basis that Ministers know best what is in their interest—a viewpoint that we would have assumed those on the Conservative Benches would support.

As I put it to the Minister in Committee, there could be all sorts of reasons why someone with a lease shorter than 150 years might want to buy out only their ground rent, including simply that they are unable to afford the premium required to secure a 990-year lease under clauses 7 and 8. Denying them that right on the grounds that other leaseholders might advertently or inadvertently disadvantage themselves by using the new right to extinguish only their ground rent strikes us as overly paternalistic and misguided.

We remain of the view that there is a strong case for simply deleting the 150-year threshold entirely given that the “remaining years” test that applies is arbitrary and that the most common forms of lease are 90, 99 and 125 years. Amendment 8 would do so, thereby making the new right to replace rent with peppercorn rent available to all existing leaseholders. I commend it to the House.

Part 3 of the Bill contains a wide range of measures relating to the regulation of leasehold. We have tabled several amendments designed to strengthen the provisions in it. Arguably, the most important are amendment 10 and new clause 3, concerning litigation costs. Although we support the aim of scrapping the presumption that leaseholders will pay their freeholders’ legal costs when they have challenged poor practice, we believe that, in merely limiting the ability of landlords to do so, the Government are creating an incentive for freeholders to litigate in a way that is likely to erode the general presumption they are seeking to implement.

As we argued in Committee, a far more sensible approach would be to legislate for a general prohibition on claiming litigation costs from leaseholders, and then to provide for a limited number of defined exceptions to that general rule by means of regulations—for example, in cases in which the landlord is a leasehold-owned company, or in which the costs are, in the opinion of the tribunal, reasonably incurred for the benefit of the leaseholders or the proper management of the building. Taken together, amendment 10 and new clause 3 would provide for that approach by leaving out clause 35 and replacing it with a new clause that provides for a general prohibition on claiming legal costs from tenants, and for a power to specify classes of landlord who will be exempted from it. I commend them to the House.

Mr Deputy Speaker, we want to see a number of other changes made to the Bill to provide leaseholders with better protection in law and to pave the way for a commonhold future. To that end, we have tabled amendments and new clauses to, among other things: abolish the draconian rent charge remedies provided for by section 121 of the Law of Property Act 1925; provide for mandatory residents’ management companies in new blocks of flats; establish a right to manage regime for residential freeholders on private or mixed-use estates; bring forward legislative options to facilitate leaseholders in new blocks of flats being granted an automatic share of freehold; and regulate managing agents.

Of particular importance to us is the need to ensure that the Bill abolishes forfeiture and the windfall it provides to freeholders. As we argued in Committee, forfeiture is a wholly disproportionate and horrifically draconian mechanism for ensuring compliance with a lease agreement. Over the course of nearly a century, this House has taken intermittent steps to tighten the laws of forfeiture, yet its continued use and the chilling effect that results from its mere existence continues to put landlords in a nearly unassailable position of strength in disputes with leaseholders.

The Opposition are not suggesting for a moment that this House abolishes the right of forfeiture in relation to residential long leases and replaces it with nothing. There must be effective means of ensuring compliance with a lease agreement, and we are more than willing to work constructively with the Government to determine what alternative arrangements are needed to deal with breaches of covenant or unpaid arrears. But forfeiture operates to the prejudice of leaseholders; it cannot be justified, and we must use the Bill finally to do away with it. We believe there is broad consensus across the House for grasping the nettle and abolishing forfeiture, and new clause 5 would do so, and—notwithstanding the very positive noises that we heard from the Minister—I urge hon. Members from across the House to support it.

Finally, let me turn to the 100 Government amendments to the Bill that were tabled last week, 29 of which were submitted just before the deadline on Thursday. In doing so, I feel I must put on record once again the Opposition’s intense frustration at this Government’s continued practice of significantly amending legislation as it progresses through the House. The sheer volume and complexity of amendments that this Government now routinely table to their own legislation represents a departure from established practice and one that acts as a serious impediment to hon. Members effectively scrutinising legislation, and increases the risk that Acts of Parliament contain errors that subsequently need to be remedied.

The Government amendments that have been tabled for consideration today fall into three broad categories—namely, shared ownership, building safety and new leasehold houses. I will take each in turn, starting with shared ownership. Although I am increasingly personally of the view that there is a growing case—one that is reinforced by the treatment of shared ownership in the Bill—for primary legislation to address various issues arising from shared ownership as a tenure, Government amendments 24 and 29, which relate to it, are not contentious and we support them.

Leasehold and Freehold Reform Bill (Ninth sitting)

Matthew Pennycook Excerpts
Richard Fuller Portrait Richard Fuller
- Hansard - - - Excerpts

It is a pleasure to serve under your chairmanship, Sir Mark. I remind colleagues that we have moved from the clauses that relate to what was termed the “feudal” system of leasehold to the rather more modern problem of estate management charges, which in large part, although not exclusively, are incurred by those who own their homes. Essentially, the charges have arisen because of issues to do with adoption by local authorities. They are charges for a range of services in what might be termed, but are not necessarily, public areas, and for what might be, but are not necessarily, services or provisions that would normally be provided by a local authority.

It is worth bearing in mind how rapidly the issue of estate management charges has grown. From being essentially non-existent, or at least very rare, I think the charges now cover at least 1 million or 1.5 million homeowners—perhaps the Minister will tell us it is an even higher number. One issue is that we are essentially creating a two-tier society of council tax payers: people who pay council tax once to cover a range of public services, and residents in parts of our country who pay for those services twice—once through their council tax and again through their estate management charges.

The provisions in part 4 deal with a number of changes that seek to improve the rights of those subject to estate management charges and to improve access to redress. I commend a number of my local residents and councillors, most importantly Councillor Jim Weir of Great Denham, as well as 30 of my Conservative colleagues who wrote with me to the Prime Minister and Secretary of State to ask them to include the provisions in the Bill. I am grateful to them for doing so. Most particularly, I thank the former Minister—my hon. Friend the Member for Redditch—and the current Minister for their help and guidance on these matters. The provisions will enable us to make a great amount of progress. However, it is clear—and it was clear from the evidence the Committee received—that there is another path, or at least it is clear that the public also desire to abolish or reduce the current system of estate management charges, rather than improving it and the rights that people have. That is what the amendment seeks to achieve.

At issue is the matter of adoption. In the summary on page 4, paragraph 2 of the Competition and Market Authority report that looks into estate management charges and other issues, it states that

“evidence gathered in our market study to date has shown that, over the last five years or so, amenities on new housing estates that are available for wider public use (ie not for the exclusive use of households on the estate), are increasingly not being adopted by the relevant authority. This appears to be driven by the discretionary nature of adoption, housebuilders’ incentives not to pursue adoption and by local authority concerns about the future ongoing costs of maintaining amenities”.

That gets to the crux of the issue. The decision process for creating estate management charges takes place in a cosy discussion between the developers of new estates and the local authorities, both of which have an interest in ensuring that they are not the ones to carry the cost for a range of communal services. Guess who ends up paying the bill? It is homeowners up and down the country, who have no role in that cosy discussion. I wish to influence that cosy discussion through my amendment.

It is tricky to change the process of adoption, and I think you would consider it out of scope, Sir Mark, if we sought to do so in the Bill. In the evidence session, I heard colleagues talk about some of the risks involved in leaving councils with unadoptable roads and poor-standard infrastructure that the council tax payer has to pay to bring up to standard. No one on the Committee wishes to see that happen. My amendment would not force adoption, then, but essentially take the payer—the householder or homeowner—out of the equation for paying for those costs. It would exclude services or works that would ordinarily be provided by local authorities so that they would not count as costs that could be incurred by estate management charges.

My hope is that the amendment would pour a dose of reality on to developers by saying that they could no longer pass the buck for the costs of poor-standard infrastructure used by the public to homeowners on their estates. They would have to bring them up to standard, and then councils could adopt them.

Matthew Pennycook Portrait Matthew Pennycook (Greenwich and Woolwich) (Lab)
- Hansard - -

It is a pleasure to continue our line-by-line consideration of the Bill with you in the Chair, Sir Mark. I rise to speak to amendment 150, tabled in my name and that of my hon. Friend the Member for Weaver Vale. As we have heard, part 4 of the Bill deals with the regulation of estate management. The hon. Member for North East Bedfordshire provided an extremely comprehensive overview of the problem and its prevalence.

The distinct set of problems faced by residential freeholders on private or mixed-tenure estates that part 4 seeks to address is well known and well understood. Those problems include: excessive or inappropriate charges levied for minimal or even non-existent services; charges imposed for services that should by right be covered by council tax; charges that include costly and arbitrary administration fees; charges hiked without adequate justification; and charges levied when residential freeholders are in the process of selling their property.

In addition to a general lack of clarity and transparency about how estate management charges and fees are arrived at and how they break down—these problems are not dissimilar to those experienced by long leaseholders in respect of service charges—residential freeholders on privately owned and managed estates clearly suffer from inadequate transparency in other unique respects. For example, as I have said in past debates on the subject in the House, it would appear to be fairly common for residential freeholders not to be notified of their future liability for charges early in the conveyancing process; many learn of their exposure only at the point of completion. Even in instances in which residential freeholders are notified about their future liability in good time, many have to confront the fact that their contracts do not specify limits or caps on charges and fees.

There is clearly a distinct problem with management fragmentation on many privately owned estates that have been constructed throughout the country in recent years, with residential freeholders even on relatively new estates frequently having to navigate scores of management companies, each levying fees for services in a way that further exacerbates the general lack of transparency and potential for abuse that they face in respect of charges and fees. Underpinning all those issues of concern is a fundamental absence of adequate regulation or oversight of the practices of estate management companies and the fact that residential freeholders currently do not enjoy statutory rights equivalent to those held by leaseholders.

There has been a broad consensus across the House for some time that residential freeholders on new build private and mixed-tenure estates require greater rights and protections, and the Government have recognised publicly—for at least six years, by my count—that they need to act to address the range of problems that freeholders face. Labour therefore welcomes the Government’s decision to use the Bill to create an entirely new statutory regime for residential freeholders based on leaseholders’ rights and is fully supportive of the intent behind the provisions in this part of the Bill.

Although part 4 sets the broad framework for regulating estate management, much of the detail necessary to bring that framework into force will come via regulations. We take no issue with that, and do not intend to pre-empt the regulations by attempting to prescribe a series of requirements on the face of the Bill. However, we believe that, where possible, we should seek to use part 4 not only to provide greater protection to residential freeholders who live on the estates, but to contribute to a reduction in the prevalence of such arrangements—a point that the hon. Member for North East Bedfordshire was driving at.

Although additional protections of the kind introduced under part 4 will almost certainly still be required, in its “Private management of public amenities on housing estates” working paper, published on 3 November last year, the Competition and Markets Authority stated that

“we consider that reducing the prevalence of private management arrangements would be the most direct route to address the root cause of our emerging concerns”.

The CMA made it clear in that working paper that reducing the prevalence of private management arrangements would require a mix of legislative and policy changes more fundamental than the introduction of regulatory protection, and drew attention to the fact that it would result in a wider set of consequential changes, not least the potential for

“significant impact on local authority finances and resources at a time when local authority funding is already stretched.”

That is why, while we very much sympathise with its intent of ensuring that residential freeholders on private or mixed-tenure estates are not charged for services that should by right be covered by council tax, we have reservations about amendment 145. We are concerned that it will, in effect, force local authorities to adopt public amenities on new housing estates, irrespective of circumstance, or—if compulsion is not the intent of the hon. Member for North East Bedfordshire—would see those amenities degrade and deteriorate as a result of not being maintained by either the private management company or the local authority.

Richard Fuller Portrait Richard Fuller
- Hansard - - - Excerpts

I am grateful to the shadow Minister for his detailed look at my amendment. First, will he explain to the Committee where he sees compulsion on local authorities in the amendment? I cannot see it. Secondly, will he explain why his more material concern about the possibility of items degrading and estate management not doing anything would not be addressed by the strengthening provisions that the Government are putting in the Bill on behalf of homeowners?

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

Under my reading of the hon. Gentleman’s amendment, if it is ensured that services or works that would ordinarily be provided by local authorities are not relevant costs for the purposes of charges in this part, who will pick up the bill? If the local authority is not compelled to adopt the amenities, our concern is that no one will maintain them. To address his point directly, I worry that his amendment would not ensure that the private estate management company picks up the charge. I will come to why I think our amendment is a superior way of addressing this very real problem.

Barry Gardiner Portrait Barry Gardiner (Brent North) (Lab)
- Hansard - - - Excerpts

I am listening carefully to my hon. Friend. It may interest him to know that I was on a private estate in Kingswood at the weekend, for some reason. It soon became apparent that the developer had gone into liquidation and the estate was being run down in a quite dreadful way. As my hon. Friend said, in that situation, the developer itself and the management of the estate had, to all intents and purposes, ceased—residents were very voluble on things not being done—but the local authority had not adopted the road in the first place, and the services were suffering accordingly.

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

We are all driving at the same point. I was very much taken by the CMA’s conclusion that reducing the prevalence of these arrangements requires a combination of the mandatory adoption of amenities and putting in place corresponding common adoptable standards. If we do one without the other, we risk some unintended consequences.

My concern about the amendment tabled by the hon. Member for North East Bedfordshire is that we cannot simply remove from estate charges costs that should in an ideal circumstance be borne by local authorities and then expect the private management company to simply pick them up. I fear that the more likely scenario will be that the amenities are not properly maintained. That is a real concern, and should be for residential freeholders on the estates. As the hon. Member for North East Bedfordshire outlined, there are some good reasons why local authorities are reluctant to adopt public amenities on private or mixed-tenure estates.

Richard Fuller Portrait Richard Fuller
- Hansard - - - Excerpts

I would hate to detain the Committee because we have a lot to go through, but let us understand the economic process here. Initially, the local authority and the developer will work out whether to adopt roads. The developer will then have to decide whether to set up an estate management company, which may or may not deliver facilities and services that would normally be covered by council tax. If the amendment is part of legislation, no property manager in their right mind will accept taking on the responsibility because they will not wish to be liable. Here is the flow of responsibility: one cannot lumber home owners with the cost, the property manager will not be lumbered with the cost for the reasons outlined—it may go bust—so the developer will then have to recognise that there is nowhere for it to turn.

Matthew Pennycook Portrait Matthew Pennycook
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We fundamentally disagree on where the logic chain leads. I do not think that, on the basis of the amendment, the developer will be forced to pick up the costs. It is far more likely that they would build below what would be considered a common adoptable standard and then leave residential freeholders to live with substandard amenities. We could debate this further, but that is my take on the hon. Gentleman’s amendment: it would not force the management companies to do that. That is a real concern.

As I said, there are a variety of reasons why local authorities often do not take on responsibility. The most common one is that the public amenities on new housing estates are not built to a determined, adoptable standard. In those circumstances, one can hardly blame the local authority in question for a reluctance to adopt roads and common services that it will have to repair and maintain a great cost. My central argument is that if we are to reduce the prevalence of these arrangements, we must ensure that we introduce a common adoptable standard for public amenities on estates at the same time as we require mandatory adoption, as the CMA advises.

Eddie Hughes Portrait Eddie Hughes (Walsall North) (Con)
- Hansard - - - Excerpts

It is a pleasure to serve under you, Sir Mark. The civil engineer in me rises to agree with the hon. Gentleman completely; it is slightly embarrassing that we once again find common cause. The point is well made: if a set standard is identified that will be accepted universally by councils as one they would be prepared to adopt, and forced on the developers, the developers will meet that standard, but if they are left with any opportunity to build something substandard, they will always take it and they will frequently try to go further and not even meet the standard that they have prescribed in their own design work. I am sure that all Committee members will have seen examples of that in their constituencies. I again find common cause, and I hope the Minister considers these points.

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

I thank the hon. Gentleman for that intervention; it is a habit that I hope he continues because I think there is common ground here. When it comes to common adoptable standards, Ministers have often put it to me—the Minister no doubt will; previous Ministers have done—that local authorities have the tools they need to drive up the standards of public amenities that are constructed, but there is clearly something going wrong in that they are not ensuring that those standards are in place. As a consequence—not in every instance, but in many—local authorities have good reason to be reluctant to take them on.

We have tabled amendment 150 in an attempt to challenge the Government to consider how they might utilise the regulatory framework introduced by part 4 to drive up the standards of public amenities on the estates in question—that is the other half of the equation that I think we are all agreed we need. Our amendment would ensure that services or works on private or mixed-tenure estates that are required as a result of defects in construction are not relevant costs for the purposes of estate management. I think that, rather than the amendment of the hon. Member for North East Bedfordshire, would be the incentive that developers need to ensure that high standards are in place at the point that they hand the estate over. Ours is consciously a probing amendment and I hope the Minister will understand and appreciate the problem that it attempts to address, as does the hon. Member’s amendment. I look forward to hearing the Minister’s thoughts on it.

Alistair Strathern Portrait Alistair Strathern (Mid Bedfordshire) (Lab)
- Hansard - - - Excerpts

I rise briefly to add my weight to the comments of the shadow Minister, my hon. Friend the Member for Greenwich and Woolwich. I wholeheartedly share the concerns on this issue expressed by my Bedfordshire neighbour, the hon. Member for North East Bedfordshire. I know that, like me, he has received a lot of correspondence from constituents who find themselves with a variety of challenges and exposed by a situation whereby regulation simply has not kept pace with best practice.

As the CMA outlined last year, we have gone from a situation in which it was simply the norm that estates were adopted by the local authority to one in which that is far from the norm. In the last week, I have spoken to residents right across my constituency who have faced incredibly high service charges. Estate management companies are looking for the next frontier for their rent-seeking behaviour, often by charging fees for services that would normally be covered by council tax. Such is the fragmentation on estates, as the shadow Minister set out, that they sometimes even duplicate the fees charged by other management companies on the same estate.

--- Later in debate ---
Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

Amendment 150 was a probing amendment. I take on board the Minister’s statement that the Government are looking at the issue and that they do not believe that this legislation is the appropriate vehicle to deal with it.

If the Minister is willing to respond again, I would like a bit more clarity on precisely why in many cases amenities on estates are not being built to an adoptable standard. I think we all agree that we would like to see such a system. The Minister introduced a different problem, namely circumstances in which residents might not want their amenities adopted; I think that that would be a relatively small number of estates, but we would have to account for them. In general, we want to reduce the prevalence of arrangements and see adoption becoming mandatory in most circumstances.

Will the Minister expand on why the Government think the common amenable standards are not being met across the board? In a previous debate, the then Minister stated:

“The local authority has powers to ensure that developers build and maintain communal facilities to the standards and quality set out in the planning permission.”—[Official Report, 22 January 2019; Vol. 653, c. 132WH.]

Is something going wrong with the standards that most local authorities require at the planning permission stage? Is the section 106 agreement breaking down in some way? What is the reason? That might give us an insight into the solution that the Government have in mind and into why common adoptable standards are not currently the norm.

Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

The hon. Gentleman is absolutely right that there are a variety of scenarios. I am not sure that residents of Fenton Street would not take the opportunity to adopt if they were given the opportunity; it is more about the broader challenges of getting a single coherent answer to a very complicated set of questions that have come about in the past few decades or over a longer period.

The hon. Gentleman raises a valid point about the outcome of the planning system. Everybody, irrespective of party, would want the planning system to work to a point where there are common standards for roads and public spaces. There is an interesting question as to why that is not the case. It is an area that as a Minister I intend to look into in more detail.

The question is whether is it a systemic problem or a matter of individual circumstances, where it is working okay in some areas but not in others. Anecdote leads to bad policy and bad law, but in my experience as a constituency MP it has worked in a number of areas and not in others. That suggests that there is variability and that it is therefore not a systemic issue, but that might be different elsewhere in the country. It is an area that I think we should look at more; I am not sure whether it needs legislation. That is an open question, but it is definitely something that I am keen to understand more.

--- Later in debate ---
Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

Clause 42 introduces new obligations on estate managers where the costs they wish to charge a homeowner exceed an appropriate amount. It mirrors sections 20 and 20ZA of the Landlord and Tenant Act 1985. Subsection (1) places an obligation on estate managers to consult homeowners where the costs for works or services exceed a given threshold. Subsections (2) to (4) confer a power to allow the Secretary of State to determine the appropriate threshold in regulations; the Secretary of State may also determine whether the threshold is to be a total sum or if the costs for individual homeowners exceed an appropriate amount.

Subsections (6) and (7) confer a power on the Secretary of State to set out in regulations the consultation require-ments and the provisions that may be included in the consultation process. Issues that may be in regulations are not exhaustive, but may include matters of relevance, including details of the proposed works, the provision of estimates, and requirements to have regard to homeowner observations and to specify reasons for carrying out the works if they proceed. We recognise that there are occasions where it may not be appropriate or possible for estate managers to consult homeowners—for example, where urgent or emergency works need to be carried out. Subsections (5) and (8) to (10) therefore allow estate managers to seek dispensation from the relevant tribunal of the need to consult. However, should estate managers fail to obtain dispensation or follow the consultation requirements, individual homeowner contributions are capped at the appropriate amount. The Government will engage extensively with stakeholders to determine the appropriate threshold for consultation and what the detail of the consultation arrangements should be. I commend the clause to the Committee.

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

I wish to probe the Minister a little further on the clause. As he said, it introduces requirements for estate managers to consult managed owners if the costs of any works to be charged as an estate management charge exceed an appropriate amount, which will be set out in regulations. Overall, the Government’s aim in this part of the Bill is clearly to introduce statutory protections for residential freeholders equivalent to those enjoyed by long leaseholders with regard to service charges.

If I understood the Minister correctly, he has confirmed that the Government’s intention with the clause is to establish for residential freeholders an equivalent to section 20 of the Landlord and Tenant Act 1985. If that is the intention, can the Minister confirm that the new requirements provided for by the clause will include requiring estate managers to have regard to written observations from residential freeholders on charges in excess of the to-be-determined appropriate amount, and where necessary to justify in writing the reasons why they awarded a contract to a tenderer that neither submitted the lowest estimate nor was nominated by a resident?

Furthermore, if the clause is indeed intended to mirror the operation of the existing section 20 consultation process, I urge the Minister to consider what might be done to address the known deficiencies of the process, including the fact that a leaseholder’s sole means of redress if they take issue with the landlord’s decision is the tribunal, and that there is no statutory meaning of what “have regard to” means in the context of the consultation. While he does so, I encourage him to take the opportunity to overturn, or at least modify, the decision of the Supreme Court in the 2013 Daejan Investments Limited v. Benson case, which has proved so detrimental to the consultation rights of leaseholders. I make this series of points because the Homeowners Rights Network, among others, has questioned the logic of extending to privately managed estates a regime that is not always effective in protecting residential leaseholders from unreasonable charges associated with major works.

Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

The hon. Member for Greenwich and Woolwich encourages me to seek to overturn decisions of the Supreme Court! That could start a whole heap of discussion early on a Tuesday morning, but I will withhold further comment for now.

The hon. Member is absolutely right that clause 42 is intended to mirror section 20 of the 1985 Act. He is correct that the intention is to consider written responses as well; I hope that that reassures him. We will need to go through a consultation process: although we have said that our intention is to mirror section 20 of the 1985 Act to give confidence about the direction of travel, what is appropriate for these individual circumstances will need to be discussed, and I hope that we can pick up that discussion within the consultation.

Question put and agreed to.

Clause 42 accordingly ordered to stand part of the Bill.

Clause 43

Limitation of estate management charges: time limits

--- Later in debate ---
Richard Fuller Portrait Richard Fuller
- Hansard - - - Excerpts

I beg to move amendment 140, in clause 44, page 69, line 6, at end insert—

“(7) The Secretary of State must by regulations provide—

(a) that an estate manager’s litigation costs incurred as a consequence of an application under this section may not be recouped through the estate management charge, except where the tribunal considers it just and equitable for such costs to be so recouped;

(b) for the right of an applicant under this section to claim litigation costs incurred as a consequence of an application under this section from the estate manager, where the tribunal considers it just and equitable in the circumstances.

(8) Regulations under subsection (7) may amend primary legislation.”

This amendment would require the Secretary of State to make regulations preventing estate managers from passing their litigation costs on to residents through the estate management charge, and providing for residents to be able to reclaim their litigation costs from an estate manager.

The amendment, which is in a similar vein to the previous one, is designed to probe the Minister on whether we have got the balance right in the clause to enable effective use of the tribunal by those who would wish to bring a case against estate managers. As we heard when we discussed the clauses on leasehold, one of the biggest concerns that people have is that they will face open-ended litigation costs. In this case, the litigation costs will essentially be cycled back through the estate management charges, and therefore effectively end up being paid by homeowners on the affected estates.

Amendment 140 is designed to prevent that passing on of litigation costs. It also recognises that many homeowners may wish to take action but not have the wherewithal to pay the litigation costs. Paragraph (b) of the amendment therefore enables residents to claim the litigation costs arising from their application. I am interested in the Minister’s view on the balance of litigation in such circumstances—we have spoken about it in relation to other circumstances. I think we all want the tribunal to work, but for that to happen, people must not be put off by the fear that they may face significant direct or indirect litigation costs.

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

I rise to support the amendment. We discussed litigation costs in relation to clause 34; we strongly argued for a general prohibition with very limited exceptions. The hon. Gentleman is right to draw attention to the fact, which applies to part 4 as a whole, that we should not replicate the flaws of the leasehold system in the newer system of estate management charges. Our arguments in relation to the leasehold regime therefore apply equally here, and the hon. Gentleman is right to raise the point.

Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

I will try directly to address the point made by my hon. Friend the Member for North East Bedfordshire, to which we are sympathetic. It is important that litigation costs are not passed on. On the leasehold side, there is clear evidence that that is happening, but the question is whether there is clear evidence of it happening in the area of estate management. From speaking to officials, we do not see that clear evidence at the moment. However, if any members of the Committee or others have such evidence, I would welcome it. If it is happening, I am sure that we would be happy to consider the issue as the Bill progresses.

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Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

Briefly, when we discussed the regulation of service charges in clauses 26 to 30, we made a number of specific arguments about how those clauses might be tightened and strengthened. Can the Minister give us a commitment that if the Government determine to amend those clauses in any way, they will seek to read across the equivalent changes to this part of the Bill or, if they do not think that they apply, to justify where wider deviations between the two regimes are necessary? As I said, we are mirroring broadly the statutory protections in place for long leaseholders here, but where they differ, the Committee would certainly welcome clarification as to why.

Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

I am grateful to the hon. Gentleman for his question. He tempts me into hypotheticals, but I hope that we are demonstrating our willingness to try to work constructively to see where areas can be improved. I must caveat that with clarity that we will not be able to improve every area; of necessity, prioritisations will need to be made. Of course there will be disagreements in this place and elsewhere about what is possible, but we shall see; if there is read-over, we shall see.

Question put and agreed to.

Clause 46 accordingly ordered to stand part of the Bill.

Clause 47

Right to request information

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---
Richard Fuller Portrait Richard Fuller
- Hansard - - - Excerpts

The Minister or shadow Minister will correct me if I am wrong, but I believe we covered issues to do with penalties earlier. The intent of this proposal is to ensure that damages in the leasehold and freehold system are the same. I therefore think I ought to ask leave to withdraw my amendment.

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

Without rehashing the debate on clause 30, I rise briefly to put on record that the Opposition think that the point the amendment is driving at is well made. We need equivalence between the two regimes, but we were concerned, notwithstanding damages versus penalties and all the rest, that the proposed financial penalty is too low to act as a serious deterrent to the type of behaviour that we are trying to do away with.

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Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

My hon. Friend highlights an important point. I think it is better that I write, but in principle, the transparency we seek to bring and the requirement to clearly articulate the charges that have been made, either in the annual report or elsewhere, aim to provide the sunlight that means that it is clear who is paying for what, and, if it is not a reasonable charge, there is a process that can be followed. But I will write to him with more on that, if that is helpful, because we all want to get this right.

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

I rise briefly to support the argument made by the hon. Member for North East Bedfordshire. There is a specific problem on privately managed estates, which I referred to when speaking to clause 41, relating to the fragmentation of multiple estate management companies. I share his concern, which partly speaks to whether the penalties are appropriate in terms of enforcement. On some estates, residential leaseholders will face a situation where, yes, there may be a requirement for an annual report and there may be a degree of transparency, but the onus will be on them to go through six or seven sets of accounts from the different subsidiaries. We need to look at how we can simplify some of the management structures that companies use, which could cause huge amounts of confusion for residential leaseholders, and, as I say, put the onus on them to try to work through different sets of accounts in a way that they might find difficult to do.

Question put and agreed to.

Clause 51 accordingly ordered to stand part of the Bill.

Clause 52 ordered to stand part of the Bill.

Clause 53

Limitation of administration charges

Question proposed, That the clause stand part of the Bill.

Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

I hope that some of the comments I am about to make will reassure my hon. Friend the Member for North East Bedfordshire that we are keen to get this right.

Homeowners on managed estates can be subject to excessive administration charges, with little understanding of what fees they may be liable to pay. Subsection (1) puts a stop to that by introducing a requirement for all administration charges to be reasonable. Subsections (2) and (3) require that an administration charge is payable only if the amount or the description of how the amount is to be calculated has been published on an administration charge schedule for 28 days. Subsection (4) sets out other conditions under which an administration charge is not payable to the estate manager. They include circumstances where the estate manager is charging homeowners on the same estate different amounts for carrying out similar tasks, and therefore prevents them from being charged at different rates. I commend the clause to the Committee.

Question put and agreed to.

Clause 53 accordingly ordered to stand part of the Bill.

Clause 54

Determination of tribunal as to administration charges

Question proposed, That the clause stand part of the Bill.

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Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

Part 5 of the Bill addresses issues relating to rentcharges. Since the Rentcharges Act 1977, the creation of most types of rentcharge has been prohibited. The main class of rentcharge excepted from the general prohibition is known as an estate rentcharge. Estate rentcharges are usually mechanisms for a management company to obtain contributions towards the costs of maintaining communal areas.

Part 4 of the Bill creates new protections for homeowners who pay an estate rentcharge to an estate manager for the provision of estate management services. Clause 58 makes a minor amendment to the Rentcharges Act 1977 to amend the definition of “estate rentcharge” in section 2 of the Act. The effect of the amendment is to ensure that payments may be made to cover improvements to communal areas as well as maintenance and repairs. This ensures that it aligns with the definition of the service charges that leaseholders must pay, and allows estate managers to pass on costs of any improvements to the areas they look after, and will ensure that they meet their legal obligations as well as having sufficient funds to carry out such works. The sums paid for improvement will still be subject to the protections in part 4—for example, the requirement to be reasonable. This is a clarificatory amendment, and I commend clause 58 to the Committee.

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

This is a clarificatory amendment, and we do not take issue with it. I will speak on our concerns about rentcharges in relation to clause 59.

Question put and agreed to.

Clause 58 accordingly ordered to stand part of the Bill.

Clause 59

Regulation of remedies for arrears of rentcharges

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss new clause 4—Remedies for the recovery of annual sums charged on land

“(1) Section 121 of the Law of Property Act 1925 is omitted.

(2) The amendment made by subsection (1) has effect in relation to arrears arising before or after the coming into force of this section.”

This new clause, which is intended to replace clause 59, would remove the provision of existing law which, among other things, allows a rentcharge owner to take possession of a freehold property in instances where a freehold homeowner failed to pay a rentcharge.

Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

An income-supporting rentcharge is an annual sum paid by a freehold homeowner to a third party who normally has no other interest in the property. Under the 1977 Act, no new rentcharges of this type may be created, and all existing ones will be extinguished in 2037. Most income-supporting rentcharges can be for relatively small amounts—typically between £1 and £25 per annum—and the majority of freehold properties affected by these rentcharges are located in the north-west and the south-west of England.

However, a loophole remains. Failure to pay a rentcharge within 40 days of its due date means that, under section 121 of the Law of Property Act 1925, the recipient of the rentcharge may take possession of the subject premises until the arrears and all costs and expenses are paid. The rentcharge owner may alternatively grant a lease of the subject premises to a trustee that the rentcharge owner may set up themselves. The Government believe that that law is unfair and can have a grossly dispro-portionate consequence for a very small amount of money not being paid. This clause seeks to address that and ensure that freeholders cannot be subject to a possession order or the granting of a lease for rentcharge arrears.

Subsection (2) introduces new sections into the 1925 Act. Proposed new section 120B details that no action to recover or require payment of regulated rentcharge arrears may be taken unless notice has been served and the demand for payment complies with the new requirements. Those requirements set out what information the notice must include. The section also sets out that the homeowner does not have to pay the rentcharge owner any administrative fee.

Proposed new section 120C sets out various requirements relating to the serving of notice under proposed new section 120B, aimed at ensuring that freeholders receive the demand of payment at the address of the charged land. Proposed new section 120D confers powers on the Secretary of State to set out in regulations a limit on the amounts payable by landowners, indirectly or directly, in relation to the action of recovering or requiring payment of regulated rentcharge arrears. That provision seeks to avoid abuse of administration costs charged when simply accepting payment of arrears, and the process of removing any restriction on the freehold title at the Land Registry. The charge does not affect the cost that is paid directly to the Land Registry itself.

Clause 59 (3) and (4) to clause 59 seek to disapply rentcharge owners from using the provisions set out in sections 121 and 122 of the 1925 Act. In doing so, they provide additional protection to avoid rentcharge owners rushing to invoke those provisions. The effect of those subsections is to make any action to reclaim arrears using the 1925 Act void retrospectively once the provisions are introduced. Subsection (5) ensures that the provisions of the clause apply to rentcharge arrears that have arisen before and after the changes come into force. Subsection (6) inserts new section 122A into the 1925 Act, which details that an instrument creating a rentcharge, contract or any other arrangement is of no effect to the extent that it makes provision contrary to the provisions in this clause. Clause 59 delivers on a Government commitment to protect freehold homeowners from the disproportionate effects of falling into arrears in the payment of their rentcharge.

I turn to new clause 4, for which I thank the shadow Minister, the hon. Member for Greenwich and Woolwich. It seeks to abolish section 121 of the 1925 Act. The effect of the new clause would be that a failure to pay any form of rentcharge would prevent the owner of the rentcharge from granting a lease on the property, or from taking possession of it until the fee was paid. We are sympathetic to the issue raised by the shadow Minister, and we have recognised that forfeiture is an extreme measure and should only be used as a last resort. Although in practice it is already rarely used, I recognise that the potential consequences may feel disproportionate. That is why we have included clause 59, which disapplies this remedy for income-supporting rentcharges where we know that homeowners pay nominal sums for very little in return.

As with leasehold forfeiture, any changes will require a careful balancing of the rights and responsibilities of interested parties. We are concerned as to what this new clause could mean where a homeowner pays estate rentcharges that are essential for the management of their estate, or any other form of legitimate rentcharge. The Government want to ensure that where they are required to be paid, these charges are paid in a timely manner so that the smooth running of the estate can continue. If estate management companies are unable to recover these sums, there is the potential that the costs will fall to other homeowners or that the upkeep of the estate will worsen. We are keen to understand any unintended consequences before abolishing section 121 of the 1925 Act all together. We need to weigh up the needs of the estate with the stress and uncertainty that we know this law can cause for some homeowners and lenders. We are listening carefully to the arguments, and I am happy to give the hon. Gentleman that commitment. I hope that, with those reassurances, he may consider not moving his new clause.

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

I was slightly surprised, in a welcome way, by the Minister’s response, in that he seemed to indicate that the Government are open to considering the abolition of section 121 of the 1925 Act all together, notwithstanding the need to ensure that there are no unintended consequences, but we are debating clause 59 as it stands, which does not propose that, so I hope to convert the Minister’s sympathy into agreement with our position if I can.

Part 5 of the Bill concerns rentcharges, which in general terms can be understood as an indefinite, periodic payment made in respect of freehold land by the current freeholder to a third party or “rent owner” who has no reversionary interest in the charged land in question. In some cases, the charge relates to the provision of a service; in others it is, in effect, simply a profit stream for the interested third party. All rentcharges, as the Minister made clear, are covered by the Rentcharges Act 1977, which prohibited the creation of new so-called income-only rentcharges and provided that all such rentcharges will be extinguished in 2037.

The 1977 Act does not detail the remedies available to a rentcharge holder whose rentcharge is not paid, although any can simply sue for a money judgment. It is section 121 of the Law of Property Act 1925 that creates two additional remedies for rentcharge non-payment. First, unless excluded by the terms of the rentcharge itself, there is a right for the rentcharge holder to take possession of the charged land in question and retain any income associated with it so long as the money owed, whether demanded or not, is unpaid for 40 days. Secondly, unless prohibited by the terms of the rentcharge, and assuming that the money owed is outstanding for at least 40 days, there is a power to demise the land to a trustee by way of a lease in order to raise the funds necessary to pay the arrears and costs.

In short, the 1925 Act provides for the power to seize freehold houses for non-payment of a rentcharge, even if the arrears are merely a few pounds, and allows the rentcharge holder to retain possession or render it in effect worthless by means of maintaining a 99-year lease over it, even if, as demonstrated by the 2016 case of Roberts v. Lawton, the rentcharge is redeemed or the underlying debt cleared. In our view, the remedies provided for by the 1925 Act are a wholly disproportionate and draconian legacy of Victorian-era property law. As I have said, the 1977 Act prohibited the creation of new rentcharges and provided for existing rentcharges to be abolished in 2037, but 13 years from now is still a long time away and any lease granted prior to the abolition will remain in force. Rentcharges are therefore an area of law in respect of which legislative reform is long overdue, and the need to protect rent payers from what amounts, essentially, to a particularly severe form of freehold forfeiture as a result of the relevant remedies provided for by the 1925 Act is pressing.

With clause 58 having amended the definition of estate rentcharge, clause 59 seeks to provide for revised remedies for arrears by amending the 1925 Act. As the Minister has set out, clause 59, in place of the existing two remedies for rentcharge non-payment under the Act, proposes requiring the third party or rent owner to issue an appropriate demand before they can seek to recover or compel payment, and gives the Secretary of State the power by regulation to limit the amount payable by the freehold homeowner in respect of rentcharge arrears or to provide that no amount is repayable. Although we appreciate that the intent of the clause is to better protect freehold homeowners from the existing disproportionate remedies that are available to rentcharge holders when rentcharges go unpaid, we believe it is an overly complicated and onerous attempt to make more palatable the methods of enforcing rentcharges provided for by the 1925 Act that are simply not justifiable in any form.

No one disputes that there might be a need for legitimate and reasonable rentcharges. Indeed, if and when the Government finally deliver on the pledge to require all new houses in England and Wales to be sold as freehold properties, such charges will become even more important as a means to ensure that freehold houses contribute towards communal estate services. However, the threat of their being enforced by means of the draconian remedies in section 121 of the 1925 Act must, in our view, be removed.

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Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

I am grateful to the hon. Gentleman. He makes a strong case for his arguments. As I have indicated, although I will not accept new clause 4, we do think there is an argument that is reasonable to be had here, while recognising that we need to consider the consequential potential of any change. I am happy to discuss that further with him separately to see whether we can make further progress at a later stage of the Bill.

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

I thank the Minister for that answer. I am tempted to not move the new clause, but I can only deal with the piece of legislation in front of me. What is in front of me is not a placeholder clause that says, “We will review the 1925 Act”; it is a clause that puts in place an amended version of the remedies. We feel so strongly about this point that we will vote against clause stand part, but I will take the Minister up on his offer to discuss a more sensible way of dealing with the types of contraventions that we have discussed.

Question put, That the clause stand part of the Bill.

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Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

Clause 64 makes provision for the commencement of the Bill. The substantive provisions of the Bill will come into force on a day appointed by the Secretary of State by regulation. For a number of policy areas, regulations need to be drafted and laid before Parliament before the provisions in the Bill can commence. Hon. Members should be assured that we are not intending to have any unnecessary delay in implementation, and the Department is working hard to plan and carry out the associated programme of secondary legislation. Subsection (2) sets out that the provisions for section 59, namely the regulation of remedies for rent charge arrears, come into force two days after the Act is passed. I commend the clause to the Committee.

Matthew Pennycook Portrait Matthew Pennycook
- Hansard - -

I have two brief points. On the general commencement provisions, the Minister just made it perfectly clear that there are no firm dates for commencement on all the issues that require regulations. I take on board what he said about not seeking any unnecessary delay, and that is welcome. However, I push him to go slightly further to give us a sense of the timetabling of some of the more important provisions in the Bill, because leaseholders watching our proceedings will want to know when the rights provided for by the Bill can be enjoyed.

I have a point specifically on subsection (2), which specifies that clause 59 comes into force at the end of a period of two months, as I understand it—the Minister said “two days”, and I think it is two months. Given that some of the provisions in clause 59—I am thinking particularly of new subsection 120D(4)—bring the relevant provision into force on First Reading on 27 November 2023, why is there a two-month delay after Royal Assent? Why not bring the measures into force on Royal Assent?

Lee Rowley Portrait Lee Rowley
- Hansard - - - Excerpts

I am grateful to the hon. Gentleman for his questions. Obviously, as he will know, I do not need to push too heavily the point that we need to get the Bill through this place. We are trying to move it as quickly as we possibly can, but the other place may have other ideas, although I hope that it will not. I hope I can provide assurances that we will try to get these things moving as quickly as possible.

On the hon. Gentleman’s specific point about subsection (2), I thank him for correcting me; it is two months. As I understand it—I am happy to go away and review it—there is a relative convention in these instances. However, given the desire and intention of all parties, including the Secretary of State, to move as quickly as possible, we will see whether we can speed it up.

Question put and agreed to.

Clause 64 accordingly ordered to stand part of the Bill.

Clause 65

Short Title

Question proposed, That the clause stand part of the Bill.