HC Deb 09 May 1975 vol 891 cc1810-38
Mr. Tom King

I beg to move Amendment No. 10, in page 3, line 33, leave out paragraph (b) and insert— '(b) a description of the part of the site to be occupied by the occupier sufficient to enable that part to be precisely identified;'. It deals with a small point which was put forward by my hon. Friend the Member for Falmouth and Camborne (Mr. Mudd) in a slightly different form. I have resisted the arguments up to now on the grounds that such provisions were not necessary. The Bill merely referred originally to the description of the part of the site to be occupied". The site owners felt strongly that such a provision would lay down a very clear specification. The point was always made that this was not needed because it was unnecessary for an owner to want to issue a more accurate description.

However, in an endeavour to make the Bill that much clearer it was felt that the provision would be helpful and I am now seeking to include it in response to representations by the National Federation of Site Operators and the National Caravan Council.

11.45 a.m.

Mr. Wellbeloved

The hon. Member for Bridgwater (Mr. King) described this amendment as covering a small point. I believe it is a very substantial point because the working of the Bill— the description of the part of the site to he occupied by the occupier —leaves the whole matter in such a way that difficulties could arise and, indeed, have arisen on these sort of sites. It is essential to have a clearly-defined area understood both by the site operator and the caravan owner as being that part of the site which is maintained.

For example, it is essential that there is a clearly defined area so as to avoid disputes between the resident and the site owner. It must be in the interests of both parties that they should start off knowing precisely their entitlement and the terms of occupation of the site. A clear definition would avoid disputes between residents. I have known of residents complaining that their neighbours have moved their boundaries slightly in an attempt to extend their garden. Such happenings cause bad feelings among people who are already living in relatively close proximity to each other. Such disputes invariably drag in the site owners to adjudicate. All this could be avoided if the area was clearly defined.

There is also the problem where a resident seeks, within the provisions of the clause, to sell ownership of his caravan and residential qualification to another occupier. It is better that both the vendor and the purchaser should be protected by a clear definition.

It was with some dismay that I was unable to be a regular attender at the Standing Committee where I could have and should have made many of these points. However, as my hon. Friend the Under-Secretary will appreciate from his own close connection with his constituency, hon. Members spent a considerable time dealing with the affairs of their constituents. Wednesday morning happens to be my favourite time for making myself available in Erith and Crayford to meet my constituents to discuss matters such as this so that I may make representations on their behalf. I hope that my hon. Friend will accept my explanation of my absence from the Committee and will support the amendment.

Mr. Kaufman

I realise that one of the burdens of being a London Member as distinct from being a provincial Member, as I am, is that one has constituency obligations on week days when the House is sitting and even in the mornings. I fully accept why my hon. Friend was not in the Committee. He has, I am sure, always attempted closely to model his service to his constituency on my service to mine.

Mr. Tom King

The hon. Member for Erith and Crayford (Mr. Wellbeloved) is clearly a very contrary fellow. At the time when almost all hon. Members are in their constituencies, on a Friday, he is in the House, but when other hon. Members are in the House on a Wednesday he is in his constituency. There is some comfort in that for us. If he had been able to be with us I do not think we would have been here now. That is some comfort for the loss then of the contribution which he is making now.

I hope that I did not appear disinterested in the accurate marking out of sites. That is, of course, an important point, and it has many benefits. My concern was expressed from the legal point of view whether it is necessary for the matter to be specifically laid down. There is no question that good site managers and operators will want to meet this requirement. An indication of their concern is given by the number who have approached me on this matter, somehow under the impression that if the provision was not written into the Bill they would not be able clearly to define their sites. Of course they would in no way be excluded from doing so. However, because the amendment is on balance right, I hope the House will accept it.

Amendment agreed to.

Mr. Tom King

I beg to move Amendment No. 11, in page 4, line 8, at end insert 'with the substitution of the words "three years" for the words "five years"'. I am reluctant to say that this is a drafting amendment in case the hon. Member for Erith and Crayford (Mr. Wellbeloved) discovers that it is a major point. However, it is purely consequential. This is the same point about the renewal problem or the curtailing of a person's normal entitlement to five-year and three-year licences. It is based on the provision in the previous clause about the offer of the original agreement for five years.

Amendment agreed to.

Mr. Tom King

I beg to move Amendment No. 12, in page 4, line 9, leave out paragraph (d) and insert— '(d) the annual charge to be made, the intervals at which payment is to be made and provision for reviews of that charge at intervals of twelve months subject to the right of an occupier who has determined the agreement to be repaid by the owner such proportion (if any) of any payment made by him as is attributable to a period after he has ceased to occupy part of the site, any such repayment being apportioned from day to day;'.

Mr. Speaker

With this I understand that it will be convenient to discuss the following Amendments:

No. 31, in page 4, line 10, leave out 'three' and insert 'two'.

No. 32, in page 4, line 12, leave out 'three' and insert 'two'.

Both of these, of course, will fall if Amendment No. 12 is agreed to.

No. 13, in page 4, line 22, leave out paragraph (e).

No. 14, in page 4, line 24, at end insert

'subject to the right of an occupier who has determined the agreement to be repaid by the owner such proportion (if any) of any annual amount paid by him as is attributable to a period after he has ceased to occupy part of the site, any such repayment being apportioned from day to day'.

No. 14 will fall if No. 13 is agreed to.

Mr. King

At last we have a point of substance. This fundamental amendment was the outcome of much discussion in Committee and with representative bodies It concerns the difficult judgment about rents. In the original discussions, the representaive bodies of the site owners felt that at a time of high inflation, when so many costs related to labour and maintenance, there would be considerable difficulties if the rents were reviewed any less frequently than annually. On the other hand, the residents' associations felt that there was an analogy with agricultural rents, since they would be renting the site.

The compromise that we originally designed was to separate the site rent, which was less subject to inflation, from a service and maintenance charge which was most directly affected by inflation, with the site rent reviewed every three years and the maintenance charge annually.

After further consideration it became clear that there were problems involving certain tax aspects of the service charge which might have put an additional burden on the residents, as well as a substantial work load on the site operators. A further complication was that a three-year review for the site rent might put many site owners in a difficult position if they had substantial works to undertake, such as drainage or water facilities. We had to include a loose form of words—something like "except for a material change in circumstances".

Both residents and site owners also represented that the splitting up would mean that many people who had lived on sites for many years—many of them being elderly people—might be confused. On consideration it was felt that the best way to proceed would be to consolidate the charge into a single one again, thus avoiding the tax complications.

Mr. Whitehead

Does the hon. Gentleman not agreed that a great number of tenants, many of them elderly, in precisely the same situation, at the moment face this division between the rents they pay and the service charge which is levied annually, and sometimes varied more frequently than that? It does not seem to cause any great distress in their case.

Mr. King

I have no widespread evidence of that. The evidence that I have had, from the residents as well as the owners, is that this would be a departure, and that it was more common to have rents in a single charge. I am not aware of a substantial practice of splitting the charge in this way.

Mr. Ward

Does the hon. Gentleman accept that some of the most difficult mobile home cases with which I have had to deal among residents in Peterborough have arisen because site owners tend to lump together far too many components in the charges? I have in mind the sort of blanket "development charge" that I have discussed with the hon. Member on other occasions. After a great deal of inquiry and effort I have been able to get a break-down for my site residents, but they did not have this information and it led to a good deal of unnecessary ill-feeling and misunderstanding on their part.

Mr. King

I accept that. At present, rents can be changed at any time, whereas the major step forward in the Bill is to make them renewable no more frequently than annually. There are arguments for extending protection even further, but one knows how often well-meaning intentions in housing and rent matters can backfire. This is another classic risk situation. If we sought to give much longer protection, it might work directly against the interests of the residents.

If the Bill required a site owner to fix rents for three years ahead, how would he calculate his costs in the face of inflation? Would he expect 30 per cent. next year? I am not making a party point, but hon. Members can see that this would be a difficult problem. The Economist says that the rate of inflation at the moment is 25 per cent., with "gusts" of up to 40 per cent. over the next three months. In that situation, if rents were held for too long, site owners would prudently try to cover themselves and estimate too high. When the period ended, residents might then face a substantial "hike". If we stick to annual reviews, one hopes that the site owners will feel more confident about estimating costs and the rise will be less substantial at the end of that period.

The amendment incorporates a couple of other points which have been discussed previously. It was felt that the description "annual charge" might lead people to think that that was what they had to pay yearly. The amendment therefore specifies the intervals at which payment is to be made. It also covers the right of repayment to an occupier of such payments as he may have made for a period after he has ceased to occupy the site.

12 noon

As I have said, I believe that we are coming to a point of substance. I recognise—I think the House will agree with me—that we have discussed these problems frankly. I know that we would all like to see a much longer period of stability and security of knowledge of what a rent will be, but we must recognise the economic situation that exists. Of course, council rents can be increased annually. I do not think that any council would agree to be bound by a two-year or three-year rent review. Indeed, there are accounts of the Secretary of State recognising this problem. I am not making a party political point; all I am saying is that we must recognise the acute financial difficulties that now face local authorities.

It seems unrealistic—especially in a Private Member's Bill—to seek to do something which flies in the face of the present inflationary situation. If we do so we shall save a short victory. We could introduce such a measure, but in all our discussions it has been our concern to strike a balance. We must realise that there is no compulsion on site owners to continue to operate sites. Equally, there is no way in which we can entirely protect residents against the effects of inflation. We must seek to strike a balance that ensures continuity, and greater stability than now exists. The amendment would give a measure of order to a difficult situation, although the period is not as long as one would wish, because of the economic situation.

Mr. Whitehead

In speaking to Amendment No. 12 and Amendment No. 31, which stands in my name, I agree with the hon. Member for Bridgwater (Mr. King) only inasmuch as he has said, with his customary moderation, that this is a point of substance that divides the House. I must tell him at the outset that it is the intention of my hon. Friends and myself to divide the House on this matter if he is not prepared to withdraw Amendment No. 12. All of us wish to see the Bill move forward, and the consequences of taking that course do not need to be overstated.

I am one of those who believe that Clause 3(d) emerged from the Committee—after a prolonged debate, in which I thought my hon. Friend the Under-Secretary of State was extremely flexible and forthcoming—in far better shape than we had been able to envisage earlier. We kept the extremely ingenious principle of the division between rental and service charges. We had written in a very substantial safeguard for the site owner. The safeguard provided that the site owner could apply for a review within the three-year period if he could show that there were measurable improvements not just for the mobile home owner with whom he was negotiating but for the owners in general.

It is true to say that the three-year period which we provided for rent review is no stranger to housing legislation. I remind the hon. Member for Bridgwater that the Conservative Government's Housing Finance Act bound local authorities to a three-year period. Happily, that measure has been aborted, but that was the principle that was built into it.

Mr. Tom King

With respect, with annual increases.

Mr. Whitehead

With annual increases up to the three-year period, yes. But we are not debating the question whether we should have annual increases for three years to bring site rents up to a realistic figure; we are saying that there shall now be, as of right, a minimum and maximum period of one year. I believe that it would be better for the House to retain Clause 3(d), but I wish to help the House to proceed. I hope that the hon. Gentleman will make some concession of substance to those who have made representations to him on this matter. Indeed, I would be prepared, in Amendment No. 31, to see the period for review reduced, but I must point out to the hon. Gentleman that he has reduced the period so markedly that I feel a major point of principle now divides us. We put in a three-year period for review and he has reduced it to a period of one year.

I must apologise to the House for the short time we have had to consider the Bill since it returned from Committee. Only yesterday was it possible to examine the drafting of the Bill. It was therefore necessary to table starred amendments—bearing in mind all the consequential procedures that would follow if Amendment No. 12 were carried—without, perhaps, the necessary felicity in drafting.

I must go in detail through the points that the hon. Gentleman has made. In advancing the amendment he has said that we must take into account the pace of inflation. It is precisely the pace of inflation that leads my hon. Friends and myself to say that there should be rather more pegging than he has envisaged. It is precisely this extraordinary acceleration and leapfrogging of expectations about inflation in the present quite unprecedented situation that makes it necessary to have more pegging than the hon. Gentleman has envisaged or for which he has made provision. If that is not so, why have, in any form of contractural relationship in an inflationary situation, the degree of pegging that is proposed? For example, why not abandon all forms of price tendering in the building trade? Why not say that all forms of contract should be infinitely flexible? If we reduce the period from three years to two years it may be that as the pace of inflation accelerates there will be an irresistible demand for a review every six months.

There are two theories on the psychology of inflation. There is the hon. Gentleman's theory that, in a sense, inflation has to be accepted and that it is necessary to take the pessimistic view that it is getting worse. That theory provides that inflation expectations will get worse and the prospects will become more gloomy, and allowance should be made in the light of those expectations, otherwise the site; owners will themselves, given a two- or three-year review, make the most pessimistic prognostications. Alternatively, there is the optimistic view—

Mr. Tom King

I have heard some of the hon. Gentleman's colleagues make the point that he has just put forward. I do not think that we can make the Bill a major plank against inflationary expectations. That would seem to introduce a major concept into what is really a modest measure, which will affect a limited number of people. What the hon. Gentleman has said about my appearing to take the most pessimistic view is exactly the opposite to reality. It is my concern that people will take the most pessimistic view. The hon. Gentleman must put himself into the position of a site owner who has to pay all his expenses, such as electricity bills and all the other matters that everyone else faces, and yet fix a rent for a two- or three-year period.

What advice would the hon. Gentleman give if a constituent came to him and asked "What will happen in the next two years? What should I do so as fairly to cover the costs of my site, so that I do not have to go out of business because I go bust?" What advice would the hon. Gentleman give when faced with that question? I apologise for the length of my intervention, but I believe that this is an important point. It is against the background that I have outlined that a site owner has to calculate what to add on—and it may be necessary to add on quite a lot—to take account of inflationary expectations which fuel the problem in exactly the way the hon. Gentleman suggests. If we cut the period to a reasonable level people will not have to build in inflationary expectations.

Mr. Whitehead

If encouraged they do. I shall deal with the points raised in the intervention of the hon. Member for Bridgwater (Mr. King) in the reverse order, because, as his intervention was rather lengthy, if I do not deal with them in that order the second and more important will go out of my mind.

The hon. Member asked me what I would do if a site owner asked me rhetorical questions. I would take my stand on paragraphs (a) and (e) of Clause 3—if they are retained. I should be able to tell a site owner that, with the flexibility of the service charges, some of the expenses to which the hon. Gentleman referred would be met on the annual basis. That was the whole point of the device of exquisite purity in the first draft Bill, and it survived the Standing Committee. It was that we should divide the triennial rent review and the annual service charge. Some of the expenses to which he has referred would be covered within the review of the service charges annually or perhaps more frequently.

The hon. Gentleman's first and more general question was why the Bill should be the cornerstone of the anti-inflation policy of our times. That is not what I was saying. Every journey of 1,000 miles must begin with a single step. Every measure that one takes to combat the present rate of inflation has to acknowledge a general good.

Precisely the same argument that I am having with the hon. Gentleman about these expectations I have frequently with trades union leaders in my constituency. They say that surely next year's rate of inflation will be 35 per cent., if it is now 23 per cent., or whatever and that therefore they are justified, whatever the attacks upon them by those who defend the social contract, in building into their demands an additional claim on that basis. From time to time they say that they are surely justified in breaking agreements that they have made annually or, in some cases, bi-annually with their employers before the rate of inflation reaches that level. They are suffering from inflation in the same way as a site owner will in a different context. They have every right to put that view.

Those of us who are trying to slow down the pace of inflation and peg it back must see some stabilising factors built in. We believe that—admittedly in only a small area and for a few thousand people —such a stabilising factor is built in by having the biennial rent review suggested in my Amendment No. 39. It is a concession to the pressure that the site owners have been putting upon the hon. Member. It is midway between the figure that the hon. Member has plucked out of the air —in one year—and the figure that was in the original Bill and that all the sponsors of the Bill agreed—three years. The pace of inflation may have got worse in the few weeks or months since the sponsors met to discuss the Bill, but it has not worsened to such a degree that we should now bring the figure down from three years to one year.

Mr. Hurd

I seek clarification. The hon. Gentleman seems to be developing his argument on the assumption that it would be possible to make annual adjustments to the service charge. I am not sure that it would be possible if the Bill were left in the condition that he likes, that is, if Amendments Nos. 31 and 32 were included but paragraph (e) were retained in its present form. Paragraph (e) provides that one of the points to be covered by the agreement is the annual amount to be paid by the occupier. There is no suggestion that once that agreement had been signed the annual amount could vary. Is the hon. Gentleman not developing his argument on a false premise about the consequences?

12.15 p.m.

Mr. Whitehead

The hon. Gentleman is quite correct. I was running paragraphs (d) and (e) together, but the application for reviews within the statutory period is in paragraph (d), not (e). However, it is true that annual revision of the service charge is possible under the Bill and therefore under paragraph (e) the site owner who was hypothetically prayed in aid by the hon. Member would be able to say, about a certain proportion of the costs that have just been mentioned, that they should be revised and reviewed annually under paragraph (e), if it stands. As a consequence of passing Amendment No. 12, paragraph (e) would fall.

Many of us believe that such a division of charges should be kept in the Bill, and that it is a good and useful device. Indeed, it has suitably encouraging analogies, within the area of private rented accommodation, that make us wish to see the division retained.

My hon. Friend the Member for Peterborough (Mr. Ward) made a very fair point in his intervention, when he said that we should consider how much there should be a distinction of the components of the various charges on these sites. It is extremely useful for the mobile home owner, whose interests I unashamedly plead in the debate, to know precisely what are the components of the charges being levied upon him. The amalgamation of all these charges into one flat-rate figure, annually reviewable, takes that away from him. He no longer knows whether a major increase is justifiable. We laboured hard in Committee, in collaboration with the hon. Member who declared that he spoke for the site owners' federation, to get precisely the same right of extraordinary review upon application built into paragraph (b). That, plus all the other distinctions that remain, after Standing Committee, would be removed from Clause 3 by Amendment No. 12.

I hope that the House will follow the burden of my argument. I have had to develop it at some length. I hope that the House will vote against the amendments.

Mr. Tom King

The hon. Gentleman realises that he is making a major proportion of the fees—I use a generalised word—paid by people on sites liable for the first time to VAT. Does he realise the implication—that he is putting up site rents for everybody by nearly 8 per cent.? He must take that into account, because that will be the impact. One of the effects of consolidating the charge will be to avoid that continuing charge. I did not go into this in detail, but we should appreciate the implications.

The hon. Gentleman said that I had gone from three years to one year. That is not true. I have gone from three years and one year to one year.

Mr. Whitehead

For most mobile home owners the amount of the site rent will be the more substantial part of their payments. The reduction of the period from three years to one year in respect of what is paragraph (d) is much the larger part. Therefore, there is a substantial reduction.

Mr. Tom King

My evidence is that anything up to 75 per cent. could be service charge. One must also recognise that many site operators have a certain discretion about what they allocate to the service charge. The House must recognise that those who wish to exploit this situation will be able to do so to a certain extent, and their actions will be extremely difficult to challenge. It will be in their interests to do so, because there is an annual review on that part that they could swing to the maximum, and that is liable to VAT.

Mr. Whitehead

Yes, I am prepared to accept that the hon. Gentleman has had representations to this effect. It would have to be a lavishly-equipped site, with all the mobile homes drawn up in front of a drive-in cinema and with a bowling alley round the back, as well as many other advantages, to justify a 75 per cent. service charge. On balance, I would adhere to my view.

I accept that VAT at 8 per cent. would be levied on the latter part of the divided sum if we retain the clause in its present form. That point has been strongly put to me since the Committee proceedings. It is a matter that we should have considered in Committee. Because of the speed with which the Bill has come back to the House on Report, it has not been possible for me or any other hon. Members to produce better amendments to take account of that. We are having to start with Amendment No. 12.

Mr. Kaufman

It might be of assistance to the House in discussing these amendments if I were to attempt to clarify the VAT position which the hon. Member for Bridgwater (Mr. King) has mentioned. Our understanding—and we have consulted Her Majesty's Customs and Excise about this, since it is responsible for levying VAT—is that if the charges were split

Mr. Deputy Speaker (Mr. George Thomas)

Order. I am sorry to interrupt the Minister. May I ask whether he is making a speech or intervening?

Mr. Kaufman

I am intervening in the speech of my hon. Friend the Member for Derby, North (Mr. Whitehead) since I thought it might be of assistance of the House if I were to clarify the situation. We understand that the annual charge under Clause 3(d), for the use of the pitch, would certainly be exempt from VAT, whereas the cost levied by site operators for the provision of services could be liable, and, if so, would be taxable at the standard rate or at the zero rate, depending on the services concerned. The straight, combined charge as proposed by the hon. Member for Bridgwater would simply mean that the rent would continue to be exempt but that if any element were found to be attributable to the owner's provision of services the separation of these charges should not in theory change a site operator's VAT liability. Clause 3(d) and (e) would make for the identification of the taxable element and would, therefore, make easier the application of the tax. I hope that I have clarified the situation, since it is important that we should know the exact position.

Mr. Whitehead

I thank my hon. Friend for that reply, which has genuinely lightened our darkness, on the Labour side of the House, at any rate. I regard what he has said as being marginally in support of the case that I have been making. It is a pity that we did not have longer in Committee to debate and develop the point. We are now having to act as brokers for these rival points across the Floor when much more unites us than divides us.

Mr. Wellbeloved

Does my hon. Friend agree that during the passage of the Finance Bill there will be adequate opportunity to debate this VAT issue, which is of vital importance? If it proves to be a substantial point I am sure that the opportunity can be taken to deal with it on that occasion, although from what the Minister has said it does not seem as if that will be necessary.

Mr. Whitehead

I agree with my hon. Friend. If the subdivision to which the Minister has referred were to come about I would be pressing strongly, as I am sure other hon. Members would, for the application of VAT, at the zero rate, to the service charges on site homes. It is only a momentary fracture of our unity, but I have to say that I propose to divide the House against Amendment No. 12 unless the hon. Member withdraws it.

Mr. Hurd

This is a substantial point. I pay tribute to the sincerity with which the hon. Member for Derby, North (Mr. Whitehead) has tackled the problem, even though I do not agree with him. Throughout our discussions we have tried to strike a balance. We are perhaps in danger of getting the balance a little askew. At the moment there is nothing to prevent a site owner from increasing the rent and service charge monthly. There is no protection for the occupant. The protection proposed in the amendments, the fixed charge subject to annual review, is a substantial advance.

We have also tried to provide a secure and reasonable basis on which sites can continue. The danger of proceeding along the lines suggested in good faith by the hon. Member is that at a time of rampant inflation site owners might well despair of ever being able to make sense of their finances. There are site owners—some of us have met them—who are wondering whether it is worth while continuing. They have had their fears aroused by this Bill although I think that, on the whole, we have managed to assuage those fears.

This situation arises as a result of the inflationary position. I was not entirely happy about the explanation given by the hon. Member in reply to my intervention. If the Bill were left in the form he proposes the rent and service charge would be separate. Under his proposal the owner would have the right to require a review of the charge less than two years after the last occasion when the charge was fixed only if he has incurred substantial capital expenditure on the site which benefits the occupant.

This matter was discussed in Committee, and it seems a reasonable arrangement. But there is no similar provision in subsection (e) for a review of the annual amount if inflation races ahead so that the expenses of the owner increase to a point which he did not foresee when the annual amount was specified at the beginning of the agreement. The hon. Gentleman's scheme of things would leave the site owner at the mercy of a rate of inflation which it is impossible to predict.

Mr. Whitehead

Does the hon. Gentleman not agree that in an inflationary situation such as we have at present there has to be some attempt to stem the tide by inserting pegging clauses of this kind into most agreements? That may be painful to some but it is necessary. Otherwise we are conceding at the outset that the battle against inflation is lost.

Mr. Hurd

But we must keep the show on the road. The difficulty about the hon. Gentleman's approach is that it would remove any reasonable confidence among site owners that they could remain in business.

I come to the point about VAT on which the Minister has given his views. It is not realistic to suppose that we shall be able to sort this out in the debate on the Finance Bill, but it seems a little hopeful to assume that we shall command the time or the patience needed to argue this point out in the kind of terms we are discussing now.

Mr. Wellbeloved

Is the hon. Gentleman aware that my experience is that if, on a minor point—and this is such a point, in the context of the Finance Bill —the Chancellor can have demonstrated to him that here is a serious administrative problem which could be overcome without any conflict with a major issue in the Bill, he will take serious cognisance of any representations?

12.30 p.m.

Mr. Hurd

I gain confidence from the confidence of the hon. Member for Erith and Crayford (Mr. Wellbeloved). I hope that he will be right. However, one cannot feel sure about it. I would be much happier if this matter could be buttoned up in the pleasant atmosphere prevailing this morning.

My hon. Friend the Member for Bridgwater (Mr. King) has raised a real difficulty. Having listened to the Under-Secretary, I hope that if there were a single charge, as my hon. Friend proposes, and it were called basically a rent, this matter would not arise. There is a danger that if we adopted the scheme of things suggested by the hon. Member for Derby, North (Mr. Whitehead) we might find that in respect of the service charges provided for under subsection (e), VAT would be attracted at the normal rate of 8 per cent. We should not be blessed by the occupiers, whose interests we are primarily trying to protect, if they suddenly found themselves paying a form of tax which they have not hitherto paid, simply as a result of our endeavours to protect them.

This problem often arises in this kind of legislation. People who try hard to protect a certain section of the population sometimes find that through their well-meaning efforts they have introduced a disadvantage which did not previously exist. This will be a problem if we divide the two forms—the rent and the charge.

As my hon. Friend the Member for Bridgwater has said, we all hope that this is an exceptional period of inflation. If we were still jogging along with a rate of inflation in single figures, no Conservative Members or anyone concerned with the progress of the Bill would hesitate to accept the point advanced by the hon. Member for Derby, North and his amendments. However, we are in a completely uncharted situation and there is a danger that unless site owners feel that they have some kind of protection under the law from inflation and that they have the power to protect themselves, they will take the view that the game is not worth the candle. They will chuck in their hands and these sites will disappear. That danger cannot be dismissed.

It may be impossible to make a suggestion which would meet the fears expressed by the hon. Member and echoed by his hon. Friends while at the same time preserving the point which my hon. Friend was right in advancing. Throughout the Second Reading debate and in Committee the Under-Secretary told us about the comprehensive inquiry that his right hon. Friend the Minister has asked him to conduct. Obviously, in that inquiry there will be a review of the working of the Act. The hon. Gentleman has been very understanding and sympathetic about the working of the Act and about the progress of the Bill but tucked away in the back of his mind has been the thought that if mistakes are made in the Bill they can be picked up later in the comprehensive inquiry and the legislation which will flow from that inquiry. He has been very frank about that.

We hope that by the time the hon. Gentleman has completed that inquiry and come forward with comprehensive legislation, the rate of inflation will have abated and a more normal situation will prevail. There will then be an opportunity for the Minister to correct this legislation. If we were in a state of "normal" inflation it would be perfectly possible for the Minister, when proposing his comprehensive Bill, to amend the provisions of this Bill to take account of a changed situation, in which inflation was less feverish and, therefore, the need to protect the position of site owners was less compelling. I am sure that Conservative Members wholly accept that in those circumstances it would be reasonable for the Minister, when he has his next opportunity—we hope it will not be too long delayed—to amend the Bill in the light of experience.

The acceptance of the suggestion that this point might be covered in future comprehensive legislation might help to allay some of the fears of Labour Members and enable us to make progress on the Bill, because if we get bogged down on this point, the progress of the Bill and its success today may well be at risk.

Mr. Wellbeloved

I echo the sentiments of the hon. Member for Mid-Oxon (Mr. Hurd), that we should not get bogged down in this series of amendments, with the result that the Bill is lost. That is an excellent argument for the hon. Gentleman's trying to persuade his hon. Friend the Member for Bridgwater (Mr. King) to accept the modest compromise amendment of my hon. Friend the Member for Derby, North (Mr. Whitehead).

What surprised me when I was trying to catch up on the proceedings on this amendment in Committee was that the discussions on this part of Clause 3 were spread over two sittings. No amendment was made to it, but there was a general consensus that it should go forward—although, to be fair, the hon. Member for Bridgwater indicated that on Report he might want to pursue the point about the three-year period. At that time neither he nor any other hon. Member brought forward any point in relation to the application of value added tax to the annual charge. It is a little late in the proceedings to introduce, almost out of the blue, a major issue involving the application of a tax of this nature.

I was relieved when my hon. Friend the Under-Secretary intervened in the speech of my hon. Friend the Member for Derby, North to try to clarify the position. The Under-Secretary will not be surprised to learn that I did not fully grasp the impact of what he said, and I hope that he will have an opportunity, while we are discussing this amendment, to spell it out with greater clarity, because what is blindingly apparent to him may not be clear in the minds of people outside. It would be useful if he could give us some clarification when he makes his main speech.

Mr. Kaufman

It was not my intention to intervene in this debate. It may be of assistance if I attempt to clarify more succinctly what I said when I intervened in the speech of my hon. Friend the Member for Derby, North (Mr. Whitehead).

The situation is that the charges are split. The liability for VAT on the service charge would be obvious. Whether it was at a zero rate or another rate would be a different matter. If the charges were consolidated, it would not mean that the service charge was relieved of VAT. What it would mean is that it might be more difficult to distinguish where the impact of VAT should fall.

Mr. Wellbeloved

I am grateful to the Minister. That makes the situation clearer—that the service component of the charge could be subject to VAT whether or not it is part of an inclusive charge. Therefore, the point the hon. Gentleman made about VAT is not quite as valid as we thought because there is a fear of liability whichever way the matter goes.

Mr. King

This is not a new situation. We are not introducing a new rental arrangement. At present, as I understand it, no VAT is charged. That is the point. It is not a question of saying "Oh, yes, that would be equally liable." The Minister has said—although putting the position clearly—that there may be a slight grey area here, but I have no evidence that any VAT is being charged at present. Clearly, it would become more liable to be charged in the new situation.

Mr. Wellbeloved

The hon. Gentleman told my hon. Friend the Member for Derby, North that in pressing his amendment my hon. Friend may have been doing a disservice to the owners of mobile homes. The hon. Gentleman may have done a far worse disservice to them by making it so clear to Her Majesty's Customs and Excise that there is a fruitful area to which it might turn its attention. I only hope that Customs and Excise will forbear the joy of reading his words and thus at least give these people the chance to continue in the happy situation which they enjoyed before the hon. Gentleman's intervention. We shall leave the VAT side, because that can be fairly well dealt with if common sense prevails.

The present time was described by the hon. Member for Bridgwater as a time of high inflation and by his hon. Friend the Member for Mid-Oxon as an excep- tional period of inflation. That is true for both the site owner and the mobile home owner. Our job in Parliament is to try to stem the gravely serious rate of inflation, which we can do in this modest Bill, and to ensure, if there is to be a burden, that the balance is fairly shared between the parties concerned.

We should take into account not only the views adduced by the hon. Member for Bridgwater on behalf of site owners but those adduced by my hon. Friend the Member for Derby, North on behalf of mobile home owners. Amendment No. 31, which substitutes a two-year review period for a three-year one, is a far better-balanced approach and is fairer to both parties than is the hon. Member for Bridgwater's more one-sided attempt to give a greater degree of protection to one party.

The hon. Member for Mid-Oxon rightly expressed the fears held by site operators that their position would be eroded so that the game was no longer worth the candle. He said that they might well cease to operate existing sites, and certainly would have no incentive to expand sites or to start new ones. It would be a tragedy if that happened. Despite all the adverse and often justifiable criticism levelled at site owners, they provide a facility which is in great demand and which meets a national need.

In the light of the excellent arguments put by my hon. Friend the Member for Derby, North and the clarity which my hon. Friend the Under-Secretary of State brought to the VAT considerations, if we could prevail upon the hon. Member for Bridgwater to ask leave to withdraw Amendment No. 12 we might be able to support unanimously the compromise Amendment No. 31, which substitutes a two-year period for a three-year period. By doing that we shall see that justice is done to all parties. If the hon. Member for Bridgwater will respond to that appeal, the Bill can go forward to a jointly enthusiastic Third Reading.

2.45 p.m.

Mr. Tom King

The accusation made at the start by the hon. Member for Erith and Crayford (Mr. Wellbeloved) he compounded yet further. It is difficult to talk about this tax liability, and there was a chance that it might not have attracted too much attention if he had not referred to it further. Unfortunately, although I referred to it obliquely at the start, I was obliged to clarify it, because I felt that it might not have been fully appreciated. Sitting as he does behind the right ear of the Chancellor of the Exchequer, the hon. Gentleman has great confidence in his ability to influence the Chancellor's actions. I hope he is right in that, should any problems arise.

I am in a difficult position, because several of our colleagues are, understandably, not able to be here. If I press the amendment, the opposition of the hon. Member for Derby, North (Mr. Whit-head) could cause the Bill to fall. I accept that there has been only a short period of time between our proceedings in Committee and on Report, but the reasons for that I think are appreciated by hon. Members.

I am sorry that the hon. Member for Erith and Crayford should suggest that I represent site owners and that his hon. Friend for Derby, North represents residents. That has never been the position on either side.

Mr. Wellbeloved

I am sorry if I gave that impression. I think what I said was that the hon. Gentleman rightly reflected the fears of site owners and that my hon. Friend the Member for Derby, North (Mr. Whitehead) represented another point of view. What we should do is join together and try to accept a balanced approach.

Mr. King

With respect, the hon. Gentleman emphasises the point which I suggested he made previously. He may not be aware that Amendment No. 12 has the support of the National Mobile Home Residents' Association. I have discussed it with the association, and the association feels, on balance, that that is the right way to go. In their desire to be helpful to one particular section, hon. Members may find that that section is being disadvantaged.

My concern is to find a balance. The compromise we have is one that prevents the best outcome for all parties. I am in a procedural difficulty because all hon. Members feel that the merits and benefits that exist elsewhere in the Bill must not be lost. There is the possibility of further informal discussion and. perhaps. discussion with representative bodies in which I hope other hon. Members will be able to take part. The other place may be able to consider these matters after we have considered them informally. I therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 31, in page 4, line 10, leave out 'three' and insert 'two'.

No. 32, in page 4, line 12, leave out 'three ' and insert 'two'.— [Mr. Whitehead.]

Mr. Tom King

I beg to move Amendment No. 19, in page 4, line 44, leave out 'proper reinstatement' and insert 'reinstatement either in the same position or in a position which is reasonably equivalent to that from which it has been moved'. This amendment seeks to cover a point made by my hon. Friend the Member for Falmouth and Camborne (Mr. Mudd) that "proper reinstatement" might in certain circumstances be taken to mean that the mobile home had to he replaced on exactly the same site from which it had been moved. We seek to give added emphasis to the requirement in the Bill that these matters should he more accurately defined. There could be circumstances where, because of substantial site works necessary for a road realignment, or matters outside a site owner's control, it was impossible to guarantee exact replacement on the same pitch from which the mobile home had been moved. It was felt that the amendment would clairfy the situation.

Amendment agreed to.

Mr. Tom King

I beg to move Amendment No. 22, in page 5, line 11, at end insert 'and all sums due to the owner under the agreement have been paid'. The addition of the words set out in the amendment seek to clarify the provision as to the right of resale, and I hope that they will prove acceptable to the House.

Amendment agreed to.

Mr. Whitehead

I beg to move Amendment No. 33, in page 5, line 14, leave out 'may' and insert 'shall'.

The purpose of the amendment is to lay a small additional obligation on the site owner under Clause 3(k) by seeking to insert the word "shall", which will give the provision more imperative overtones than does the word "may". In short, we seek to "beef up" the agreements which will be prescribed in the clause. Almost all the other provisions in respect of agreements between site owners and mobile home owners are carefully laid out in Clause 2(2). However, there is in paragraph (k) of this clause an area of flexibility which perhaps might favour the unscrupulous site owner who did not wish to have his proper obligations under-written in the lease he offered. We believe that the amount of discount should be prescribed in the lease.

There was discussion in Committee when my hon. Friend the Member for Renfrewshire, West (Mr. Buchan), in my unavoidable absence, moved an amendment in my name which would have prescribed a discount in the various resale procedures amounting to 15 per cent. That amendment was withdrawn, on the ground that it was impracticable to put a flat discount figure in the Bill.

Later in the Bill there is provision to give power to the Secretary of State to prescribe what may or may not be fair discount provisions. If this amendment were made it would lay on the site owner the duty to include within the provisions of the lease a prescribed discount—in other words, a figure of discount which would be binding on both. It is imperative that the mobile home owner should know precisely what form of arrangement is to obtain in matters of resale.

When most people undertake the substantial investment of buying a mobile home and go to live on a site, the last things in their minds are the provisions relating to the resale situation. All of us, at some stage in our working lives, are wished a long and happy retirement. Behind that bland phrase is the assumption that we shall continue to carry on ad infinitum, but few people, particularly the elderly give much thought to what will happen to the mobile home if one married partner dies and if, in those conditions of distress, the other has to enter into resale arrangements.

For those reasons, we wish to protect such people by specifying some form of agreed maximum discount. We knew that that part of the agreement would be buried in small print, and therefore we felt that we should provide a rather stiffer obligation on the site owner to lay down in the original agreement the prescribed form of discount.

Mr. Hurd

I am a little puzzled by the purpose of the amendment. I follow the general point and I agree that this is one of the most important parts of the Bill. It is at the point of resale of mobile homes that much of the abuse, difficulty and distress now arises. However, I am not sure that the amendment strengthens the Bill. In the Bill as it stands a discount may be prescribed. In circumstances where a discount is not prescribed in the agreement, the earlier part of the clause operates—namely, that the occupier has first to offer the mobile home to the owner at a fair market price.

In circumstances in which there is no reference to a discount in the agreement, it is clear from the Bill that the fair market price provision operates and the situation is less fair to the owner and more favourable to the occupier than it would otherwise be. Therefore, it is in the interests of the site owner that the discount should be written into the agreement, and I am sure that he will find it necessary to do so. The amendment appears to provide for a course which no doubt the site owner will wish to take in any case.

The Bill provides that if no discount is written into an agreement, the fair market price prevails. That situation is more favourable to the site owner, and I am not sure that such protection is required in the circumstances.

1.0 p.m.

Mr. Ward

I support the amendment because it will be necessary for standard forms of agreement between site owners and residents to contain a reference to a discount. A blank space will be left on the form and it will be open to the parties to the agreement to write in "O" or a figure. The amendment provides that this will appear on the form.

I am surprised that this point was missed in our earlier discussions, because the National Caravan Council and National Federation of Site Operators issued a statement saying that where there is to be a sale on the pitch, either by the caravan owner, with the park owner having the right to approve the purchaser, or through the agency of the park owner, in either case a commission is to be paid to the park owner at a rate of "X" per cent., which is to be stated in the agreement when it is originally entered into.

I would have thought that that was in the minds of the site owners from an early date in the discussions which led to the preparation of the Bill. The point seems to have been missed. I am glad that the matter has been raised again. I hope that the amendment will be adopted.

Mr. Kaufman

I confirm that the argument put forward by the hon. Member for Mid-Oxon (Mr. Hurd) is accurate.

The House knows that I am an exponent of consensus politics. I there fore refrain from making any remarks with a flavour of asperity in them. I am obliged to my Civil Service advisers for a sharper comment on the amendment than I would dream of making. They have advised me that the amendment would achieve nothing and that there is no point in it.

I hope that my hon. Friend the Member for Derby, North (Mr. Whitehead) will accept the argument of the hon. Member for Mid-Oxon, which is to the point. Both my hon. Friend and my hon. Friend the Member for Peterborough (Mr. Ward) seem to take the view that this amendment would strengthen the duty of the site owner to include the rate of discount or commission in the agreement offered. It would not achieve that effect. Since this is a provision to protect the site owner, who will be the person offering the terms of the agreement, we can expect him to specify a rate or rates in the draft agreement. If he fails to do so, he is entitled to neither discount nor commission on resale. This amendment is therefore unnecessary and there is no point in including it in the Bill.

I know that my hon. Friend is flushed with power and realises that he is the master of all he surveys, and of the fate of this Bill. I therefore hope that he will not over-use the power which, in his hands, is generally safe, and will ask leave to withdraw the amendment.

Mr. Tom King

I do not agree that the amendment has no point. It does have a point, which is that a rate of commission would be required. The hon. Member for Peterborough (Mr. Ward) made the point that a nil rate of commission could be specified. However, I do not think that that is correct in the circumstances.

This is the point. The site owner is entitled to commission and the rate should be prescribed in the amendment, although I accept that that is not the universal practice.

Mr. Whitehead

Will the hon. Gentleman inform us of situations in which no commission is charged upon resale?

Mr. King

I have received representations and communications from people to the effect that sometimes they do not need to pay commission on resale, although it appears that in general they do. I am perhaps becoming rather involved. There is no objection to the principle. However, if commission is payable it must be stated in the agreement. We believe that the wording of the Bill achieves that. The word "shall" means that commission will have to be provided for in every agreement. We would obviously not want that situation.

Mr. Whitehead

The Minister has softened the righteous wrath of the civil servants who, in their careful and antiseptic prose, are telling the Minister's hon. Friend that he is an idiot. That is often the burden of Civil Service advice.

It was said that I would be strengthening the position of the site owner, and that, just as much as each man kills the thing he loves, I would destroy the point I endeavour to make. That would be true if it could be shown that the site owner did not in some circumstances charge a commission, or if there were no cause for concern about the level of commission paid in the past.

In view of the assurances given, and mindful of the need for the Bill to make progress, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Kaufman

I beg to move Amendment No. 35, in page 5, line 18, leave out paragraph (iii) and insert: (iii) notwithstanding that such offer has not been accepted by the owner within fourteen days, the occupier shall not sell the mobile home at a price which is lower than that so offered without re-offering the mobile home to the owner at that price for acceptance within forty-eight hours; and' This amendment has the same purpose as that tabled by the hon. Member for Bodmin (Mr. Hicks) in Committee, but which he withdrew on the assurance I gave that a technically better amendment would he substituted.

This is a technical amendment. It is designed to clarify the conditions on which the occupier can sell his mobile home on site. If the owner declines to exercise his option to buy in the first instance at a fair market price from the occupier, the occupier shall be allowed to sell it to someone else at that price or at a higher price. If, however, he proposes to sell at a lower price than that originally offered to the site owner, that is if this lower price shows that the original price was above market price, he must re-offer to the owner at this new price. The owner then has 48 hours in which to accept such a re-offer. If he refuses, the occupier is then free to sell at that new price, or higher, to a third party. This process repeats itself in that each time the occupier proposes to lower his price further than that at which the mobile home was last offered to the owner, he is obliged to give the owner a further chance to purchase. And on each occasion the owner has 48 hours in which to accept. All transactions between the occupier and either the owner or a third party will allow the owner the discount or commission to be set out in the agreement between the owner and the occupier concerned.

Amendment agreed to.

Mr. Tom King

I beg to move Amendment No. 23, in page 5, line 30, leave out 'prescribed' and insert 'provided for'.

This is a small technical alteration. It is suggested that the word "prescribed" can carry a ministerial connotation. It is used in connection with ministerial orders at another place in the Bill. It was suggested that it would be more suitable to use the words "provided for".

I do not think that this is a major point of substance.

Amendment agreed to.

Back to
Forward to