ESTATE AGENCY WORK

HC Deb 05 May 1978 vol 949 cc631-72

11.6 a.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I beg to move Amendment No. 1, in page 1, line 12, leave out from "property" to end of line 19.

Mr. Speaker

With this we may take the following amendments: No. 2, in page 2, leave out lines 1 to 4.

No. 4, in line 14, leave out subsection (3).

No. 5, in page 2, leave out lines 16 and 17.

No. 6, in page 2, leave out lines 25 to 29.

Mr. Ridley

The Bill has all the defects of a thoroughly fussy and offensive measure. I do not believe that it is right that we should lay legislation of this sort upon the citizens of Britain. It is to seek to ameliorate the Bill's effect that I table these and other amendments. If we are not careful, it will be impossible to do any business of the sort to which the Bill refers.

I much object to the structure of the Bill. The first few clauses define a group of persons and there are the ominous words "things done". Those words occur in many places in Clause 1. It is not clear what the offence is until we get towards the end of the Bill. First, we isolate. the victims, secondly, we refer darkly to all the things that they may have done or will do, and thirdly, we come to some glimmering of what these dreadful things are towards the end of the Bill. It seems that we have to tackle the Bill the wrong way round. We should first consider what the evil is and then, perhaps, consider who those are who may be committing evil rather than taking the opposite approach that is adopted by the Bill. It inhibits our debates that we have to deal with these matters in the way presented by the Bill.

In coming to Amendment No. 1 we have to consider what class of person it is who may be guilty of these heinous crimes. We are defining them without having considered the crimes. I notice in Clause 1(1)(c) that there is included in the definition of estate agents a person who effects the introduction to that person of a third person who wishes to acquire or, as the case may be, dispose of an interest in residential property". That statement could mean anything. If I give a couple of friends a drink one evening and in the course of casual conversation one says "I wish to dispose of my house" and the other says "I wish to acquire a house. May I go to see it?" I have effected an introduction between those two persons, albeit unwittingly and albeit without profit or reward. It seems that that is not the right way to define estate agents. Nowhere is there the qualification that the person who effects these introductions does so for reward or profit. He is merely put in the position of being the innocent victim of the Bill by a chance introduction or meeting.

Within families this sort of thing happens a great deal. It may be that father reaches retirement age and decides to give up his house because his children have grown up and left home. He says to one of his sons "Why don't I move into the bungalow in the garden and you, with the large family, might like to take over my house?" Transactions take place between the father and the son at arm's length. But still someone has introduced those persons to each other and somewhere involved in the family will be someone classified as an estate agent for the purposes of this Bill. That seems to be quite wrong.

We have this strange expression at the end of subsection (1)(c): and also to things done by him after affecting such an introduction for the purpose of securing the disposal or, as th case may be, the acquisition of that interest". I ask the sponsor what that phrase means. It is so widely drawn that it could mean almost anything. Which things are done after the effecting of an introduction which necessarily bring someone within the scope of the Bill? Such loose drafting is quite wrong. In any case, all these words are superfluous because we can perfectly easily define a person in business as an estate agent without including people who make introductions. If we are to include such people, we ought to specify introductions made for profit, as a trade, and not chance introductions. The hon. Member for Southampton, Test (Mr. Gould) would be wise to accept this amendment without hesitation. He owes the House an explanation as to how these words ever got into the Bill.

Amendment No. 4 seeks to leave out subsection (3) of Clause 1. Here we have an exemption from the definition of estate agency work for any public or quasi-public authority involved in housing. These are such things as local authorities, the Housing Corporation, the Northern Ireland Housing Executive or any registered housing association. I want to register a strong objection that there should be a separate law for the private sector and that it should be treated as if its motives were always bad, as if it could not be trusted to do anything at all but must be supervised by detailed and fussy legislation of this sort. The suggestion is that anyone who can put up a bureaucratic coat of arms over his door is automatically totally well behaved and runs no chance of committing any of the offences set out in the Bill.

This concept is creeping into our housing legislation in many ways. It is an extraordinary thing that the housing associations are not subject to the Rent Acts. It will be a great comfort to an evicted tenant to know that he has been evicted because his landlord was a public landlord. Presumably when such a land- lord evicts a person or puts up the rent, in Rachman-like fashion, he behaves in the national interest. If a private landlord does something like that, he is not so behaving.

In dealing with local authorities one often comes across instances of them using their powers to put up rents, to evict, and to discipline their tenants in a way which would be impossible for a private landlord under the present law governing rented accommodation. In this Bill we have the astonishing suggestion that local authorities and housing associations should be exempt from its provisions. Whatever is the evil which the Bill seeks to stop I shall look forward at some stage to hearing why it is that such evil cannot be committed by State authorities, who can be excepted from this legislation. I do not know when we shall reach that stage in our proceedings on this Bill. It may not be today but in a week or two. It would be quite wrong for me to seek to explore this point now.

The principle involved here is utterly wrong. If there are evils against which the Bill seeks to guard, if there are wrongdoings from which it seeks to protect people, they are just as likely to be committed by these State bodies as by any other. It is an indictment of the Bill that for some reason these offences are so difficult to define and so incapable of being coped with by public authorities of this sort that they have to be excepted from the Bill's provisions.

It seems that the target of the Bill is rather unreal. If it was a real target it would be necessary to include within its scope the State authorities of this sort. It clearly is not a real target because the hon. Gentleman seeks to exempt these authorities. That seems to be a major defect in the Bill and I very much hope that my hon. Friends will help me to remove this subsection. I do not seek in any way to extend the scope of the Bill. I say merely that it is intolerable that there should be one law for the private sector and another for the public sector. If there is an attempt to deal with an evil it should apply to all those who are in this business.

Amendment No. 6 seeks to leave out Clause 1(4)(a) and deals with the question of solicitors. Here I declare a remote interest, which I think has no bear- ing on what I have to say, in that I am a director of a life assurance company which has done some conveyancing work. It could be represented that there was a conflict of interest between my commercial activities and those of solicitors. I do not believe that that is relevant to the argument I wish to put forward.

My argument is that solicitors should not be exempted from the provisions of the Bill just because they are solicitors. If they engage in the trade of estate agency, and many solicitors do, they should be included because presumably they are just as liable to pursue the malpractices complained of as anyone else. It is possible that a solicitor will be the main person involved in effecting introductions, in accordance with my first amendment. It seems strange that just because they are solicitors they should be exempted from the operation of the Bill.

I shall be interested to hear from the hon. Gentleman the reason for this provision. Is it that solicitors have come to him and said that they would not allow the further passage of the Bill if they were included within its provisions? Has he been subjected to lobbying? Has there been some pressure of this sort put upon him? Why is it thought that because solicitors are solicitors they should be exempted? I should have thought that a high proportion of the estate agency business carried out in this country was carried out by solicitors, either acting in their capacity as solicitors or in a secondary capacity, doing business on the side, perfectly legally. There is no reason why solicitors should not be employees of estate agents. A number of estate agents employ solicitors to deal with conveyancing and legal problems which arise in the course of business and this trend will grow. I do not see why we should make this specific exception in favour of solicitors.

I am trying to tidy up the categories of people to which the legislation is to apply. I would have found it much easier if we had been able to discuss what it was they were doing wrong before deciding that they must not do it. The Bill is drafted in a most peculiar way. I hope that my hon. Friends will support me in these three points that I have picked at random. I note that my hon. Friends the Members for Faversham (Mr. Moate) and Romford (Mr. Neubert) have two further amendments included in this group. They probably have found two equally sound, if not sounder, points. It seems a pity that at this stage in the Bill we need to ask these fundamental questions. I should have thought that the Bill could be drafted in such a form that it would be unnecessary to raise these points at this time.

I find much to complain of in the Bill, and I look forward to going through every clause with great care. It seems to me to be necessary to do that in a Bill of this sort.

Mr. Roger Moate (Faversham)

I should like to refer to the other amendments grouped with Amendment No. 1. Two of them have been tabled in my name. But before doing so I should like to follow up some of the remarks of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley).

I agree with my hon. Friend that this is the moment at which, quite appropriately, to consider some of the fundamentals of the Bill. The group of amendments raises some fundamental questions. I am not sure that I go the whole way with my hon. Friend in describing the Bill as a totally fussy and unnecessary piece of legislation. Although it would have been desirable to have the evils specified, and to have had examples before us, so that we could consider how best to deal with them, nevertheless I think that there is a prima facie case for dealing with certain offences about which we have a general understanding.

There is a general feeling—not backed up by evidence in the debates—that there have been offences committed by people practising estate agency work, particularly in our larger city areas. People have suffered from lost deposits and from what many of us would call fraudulent activity. There is a prima facie case for dealing with that sort of activity, but the Bill goes much further than dealing with those relatively specific offences.

There was an opportunity in Committee for the promoter of the Bill to remove some of the unnecessary parts of it, but he did not do so. We are faced, therefore, with a rather mixed up Bill which seeks to do a variety of things in a very mixed up sort of way. It is a curate's egg of a Bill: it is good in parts and bad in parts. When we have to take the curate's egg in one go, it provides a rather indigestible and basically undesirable meal. I am very worried, frankly, about the form in which it has come to the House on Report.

The oddity is that we are dealing with what is called an Estate Agents Bill, but there is no definition of estate agents in the Bill. The Bill does not seek to deal with all estate agency work but only residential work, and it does not seek to cover all persons dealing with estate agency.

Mr. Speaker

I do not want to interrupt the hon. Member for Faversham (Mr. Moate) unnecessarily, but his remarks were beginning to sound very much like a speech on Second Reading. Will he deal with the amendments, of which we have plenty to occupy our time today?

Mr. Moate

I was just at that moment, Mr. Speaker, about to refer to the strange principle with which we are dealing in this group of amendments—the specific exclusion of a number of people who are dealing with estate agency work. My earlier remarks were intended to preface that point.

We are faced, as I was saying, with an odd Bill, and the amendments which have been tabled by my hon. Friend and myself, and by other hon. Members, might go some way towards tidying it up.

At least they give the promoter an opportunity to explain the logic of some of the exclusions.

My hon. Friend's amendment seeks to delete the unnecessary blanket appendage to the description of the business activities of people transacting estate agency work. The words that he seeks to delete include the words and also to things done by him after effecting such an introduction for the purpose of securing the disposal or, as the case may be, the acquisition of that interest. Why do we need those words? At the beginning of the clause we have the statement that This Act has effect with respect to things done by any person—

1. (a) in the course of a business…; and
2. (b) pursuant to instructions given by or on behalf of any other person."

All activities pursuant to the original introduction are surely covered already. I am worried when I find these little throw-away lines added to the Bill just in case the draftsmen have omitted something or forgotten to think of it in the first place. It is a safety net for the draftsmen, so that subsequently the Director General of Fair Trading or the Secretary of State can bring in other activities which they had not thought of in the first place. Legislation should be more specific than that. We are entitled to an explanation of the reason that these words were deemed necessary.

Amendment No. 2 seeks to delete lines 1 to 4 on page 2. This would have the effect of including the activities of insurance brokers if they engage in estate agency work. As the Bill stands, it states that for the purposes of the Act anything done in the course of insurance brokerage by a person who is for the time being registered under section 2, or enrolled under section 4, of the Insurance Brokers (Registration) Act 1977". shall not be included.

Why should that be so? Why should an insurance broker, if he engages in estate agency work, not be included within the terms and conditions of the Bill? We have had no explanation of this during any of the earlier proceedings. When we examine it, it is seen to be rather an odd principle.

It is even more odd when we recall that in Committee we had a discussion about the relevance of the provision to bankers. There had been some representations that bankers and bank managers felt that it was unfair that their activities in estate agency, to the extent that they engaged in them, should be included in the Bill. They accepted that they sometimes make introductions and assist clients with the buying or selling of properties. It could happen on a fairly casual basis, and there might or might not be remuneration in it, but essentially they were to be included.

When we examined the matter in Committee, the hon. Member for Enfield, North (Mr. Davies) said that if these people were indeed engaging in the buying and selling of houses, and assisting in such transactions, they should be covered by the Bill, and on that basis he refused to consider any amendments on the point. He said—perhaps with a certain logic—that if a banker engages in estate agency work, he should come within the terms of the Bill.

Let us apply that logic to insurance brokers. I do not know whether insurance brokers engage in estate agency work. I suspect that it is a fairly modest activity if it exists at all, at the present time but that is not the point. We are laying down statute law and must provide for these possibilities. We must also provide for the possibility that once the rules are tightened up, other people will seek loopholes. If one of those loopholes happens to be insurance broking, clearly that is a matter for consideration. Why, therefore, do we have this exclusion? Probably very little estate agency work is done by insurance brokers, but it could happen.

Mr. Ridley

My hon. Friend is on a very sound point here. It is perfectly possible for anyone who wishes to get round the provisions of the Bill to make himself into any of the things which are exempt. He can make himself into a solicitor without much trouble. He can certainly make himself into a housing association without any trouble. Both would be ways of getting round the Bill. This shows how defective in its drafting the Bill is at the moment.

Mr. Moate

I agree with my hon. Friend that it is very defectively drafted. Much of this flows from the confusion of principle of philosophy that is fundamental to the Bill.

Frankly, I think that my hon. Friend has missed some of the worst developments in legislation in the last year or two. The fussy legislation to which he referred has moved on, and it is now not that easy to set up as an insurance broker. That process has been regulated and restricted under the Insurance Brokers (Registration) Act 1977. I have glanced again at the Act, and there is no reason why estate agency work done by insurance brokers should not be included within the terms of the Estate Agents Bill.

11.30 a.m.

Mr. David Hunt (Wirral)

Will my hon. Friend explain why under the Insurance Brokers (Registration) Act, as I understand it, a person cannot call himself an insurance broker unless he comes within the provisions of that Act and complies with the regulations controlling his conduct, and yet, as I understand it, under this Bill a person can still call himself an estate agent but because by definition he is not included automatically in the Bill unless he does estate agency work, the mere fact that he calls his business that of an estate agent will not necessarily bring him within the Bill's provisions?

Mr. Moate

My hon. Friend has put his finger on a difficulty. The difference, of course, is that the Insurance Brokers (Regisration) Act was quite clear in its intent. It was restrictive, it sought registration, and it was clear in its intention. It was totally wrong, but it was clear. This Bill is not clear in its intention. It is wrong in parts and totally muddled.

Mr. Tim Sainsbury (Hove)

When my hon. Friend said that the Act was wrong and that it sought registration, did he mean that he did not think that registration was the right answer? If one considers the architectural profession, architects do not have to be members of the Royal Institute of British Architects but they may not call themselves architects and practise as architects unless they are registered with the United Kingdom Register of Architects. Would it not be better if we had a similar situation with regard to estate agents so that a person could not call himself an estate agent unless he had been registered with a central registry even though he was a member of the Royal Institution, for example?

Mr. Moate

I must be careful to relate these matters to the exclusion of insurance brokers from the definition of "estate agency". But I think that my hon. Friend's intervention is germane to the question of who we should allow to practice estate agency work. The analogy which I prefer to draw is with accountants. Anyone may call himself an accountant and practise as an accountant, but he may not call himself a chartered accountant. That is the less restrictive approach.

We could have a licensing provision. By definition, presumably, that would exclude insurance brokers who had not applied for licences and met the necessary conditions. However, the hon. Member for Enfield, North has made it clear time and time again that his Bill it not intended to license estate agents. He describes it as a consumer protection measure, and he has made the point that he is not seeking to control entry into the estate agency profession. However, that is a matter for a later debate.

If the hon. Member for Enfield, North insists that bankers should be controlled when they engage in property transactions of this kind, why should not insurance brokers be controlled? I can only conclude that he believes that registration under the Insurance Brokers (Registration) Act would provide the necessary protection to the public. But that requires some examination. As I say, I suspect that very few insurance brokers engage in estate agency work. Therefore, any code of conduct drawn up by the British Insurance Brokers Association would not include estate agency work. I suspect that it would not even exclude estate agency work because probably it has never been thought of.

Further, I suspect that any compensation arrangements and there are provisions for compensation arrangements in the Insurance Brokers (Registration) Act—would not apply to losses incurred to members of the public through estate agency work. So I suspect that there is no compensation provision in the Insurance Brokers (Registration) Act for estate agency activities, and it would be very surprising if there were.

The hon. Member for Enfield, North may say that there is professional indemnity cover as a compulsory feature of the registration of insurance brokers. But that would not apply to estate agency work, because I do not believe that any insurer on a professional indemnity policy would regard estate agency activities as being within the terms and conditions of normal professional indemnity insurance for insurance brokers. So why are insurance brokers excluded?

The oddity is that we do not know when insurance brokers are to be registered, so that if by chance this Bill became an Act before registration became effective, there would be a definite gap. That would need some explaining.

But other people can still carry on in insurance work, though they cannot call themselves brokers. They can be insurance agents or insurance consultants. It is odd that the hon. Member for Enfield, North is saying that registered insurance brokers can be estate agents but that insurance consultants and insurance agents cannot be estate agents. This is a most confused and illogical state of affairs, and at the very least we are owed a considerable explanation from the hon. Member if we are to understand why we have this exclusion.

I suppose that I should have declared an interest, since I am an insurance broker. However, I do not see my interest being affected one way or the other by the inclusion or exclusion of this clause. We are seeking tidiness in the legislation. It is in a bit of a mess, and the inclusion of this provision makes it even messier.

That is the case, which needs some answer, with regard to Amendment No. 2.

I turn now to the other fundamentally important group of amendments relating to this other quite wrongheaded exclusion of the work of local authorities, the Housing Corporation, housing associations and the Northern Ireland Housing Executive. Why are we seeking to give this advantage to local authorities if they decide to go into estate agency work? It would be an advantage. It is fair to say that many estate agency bodies have welcomed the broad terms of this Bill. However, I think that they would be rather upset if this measure went on the statute book and, in two or three years, we found that for example the Greater London Council was more Labour controlled than it is today.

Mr. Sainsbury

That is most unlikely.

Mr. Moate

I hope that my hon. Friend is right. I think that it was the hon. Member for Battersea, South (Mr. Perry) who suggested in Committee that this provision was intended to meet a situation which might arise in 50 years. However, we have to provide for the possibility. I have not seen the document, but I was told that in its manifesto last year the Greater London Labour Party claimed it intended, if it won control of the GLC, to go into the buying and selling of houses. It appeared as a manifesto commitment. I think that my hon. Friend the Member for Hove (Mr. Sainsbury) will agree that, unlikely though a Labour victory might be in the foreseeable future, we do not want to put legislation on the statute book giving it an opportunity to implement more Socialism in its activities and put private enterprise at an even greater disadvantage. That is what this clause would do as it is worded at present, because local authorities would be at a considerable advantage.

Even without Clause 21, which seeks to regulate, control and lay down minimum standards, the Bill requires individual estate agents to a spend a great deal of money. They will have to take out bonds. They will have to spend more money on accountancy procedures, and so on. But that provision will not apply to local authorities. So immediately every council, including the GLC, will have the advantage of not having to spend all this money to set up all this machinery.

Why should not the local authorities be covered? Are they such saints that they do not commit any misdemeanours, or is it simply based on the presumption that if they do anything wrong the ratepayer will pick up the bill? That seems to be the underlying philosophy. Apparently the idea is that the public purse will do for local authorities what individual estate agents have to do from their own resources. That is fundamentally wrong.

That is the case against the local authorities, and I feel that that is one exclusion which should be deleted from the clause.

I am equally concerned about the activities of the Housing Corporation and the housing associations. Very often we find housing associations becoming very ambitious. The money which is now going into the Housing Corporation is on a very considerable scale. I understand that about £400 million is going into the acquisition or building of property throughout the United Kingdom. The Housing Corporation is becoming a very powerful organisation.

Mr. Sainsbury

Is my hon. Friend aware that there is legislation awaiting further consideration by the House which will enable the Housing Corporation to guarantee loans up to a total of £500 million? This gives another indication of the scale of the operations.

Mr. Moate

That emphasises the growing strength of the Housing Corporation. That might or might not be a matter to be applauded. However, in housing terms the Housing Corporation is gaining a very powerful place in British society. It could be that it might decide to buy and sell property. It might have such a substantial interest in a certain locality that it will buy and sell. Estate agents locally might be rather upset about the fact that the local housing association would be able to do that without any constraints upon it at all. That is another unfair advantage of the public sector over the private sector. How can that be justified? I do not believe that it can be.

I hope that the promoter of the Bill, the hon. Member for Enfield, North, will accept this point. I am not sure whether it is his Bill or the Minister's Bill because so much of this Friday legislation is Government legislation in a pretty thin disguise. I hope that whoever it is who is responsible for the Bill will accept that these exclusions are unreasonable.

Before leaving the question of public authorities I should point out that we have also had a number of private Bills—Socialist measures—from local authorities seeking power to deal in estate agency activity. That means that the threat is real. This clause has been drafted to allow public authorities to deal in estate agency work. That is totally unjustified, and I hope that the hon. Member will agree to remove it from the Bill.

There is one other fundamentally important group that has been excluded from the provisions of the Bill—solicitors. We had some exchanges in Committee about the principle of the inclusion or exclusion of solicitors. We trespass here on the fundamental principles of the legislation. But it will be seen by the outside world that estate agents will be constrained in the way they conduct their business, while solicitors will be able to carry on estate agency work without any constraints.

No doubt the hon. Member will argue, as he has done before, that practising solicitors are covered by compensation funds and other rules. That is all right as far as it goes. I suggest that this legislation goes much further than that. If, at a later stage, he plans to control entry into the profession, to lay down minimum standards of experience and qualifications, that will not apply to solicitors. Despite this they will be free to carry on estate agency work.

Also we must consider the powers of the Director General of Fair Trading which go beyond the question of bonding and insurance, and even beyond accountancy questions. He has the power to prevent what he would describe as "undesirable activities" generally. But would a solicitor, who is excluded from the provisions of the Bill be subject to these powers? All through our discussions on this matter we have been talking about only a few individuals, and therefore we have to dream up examples of rogues and rascals. Thus, we must dream up the example of a rogue solicitor in a particular area who decides to go into the property business in a big way. Can the Director General, under this Bill, bring any action against that man and prevent him from dealing in estate agency, even if that man had got his bond and has a separate clients' account for all deposit moneys received? I submit that the exclusion of solicitors means that that man is free to carry on estate agency work. That is not fair.

Mr. Ridley

Suppose the rogue solicitor had been convicted of an offence involving fraud, dishonesty, violence or sex or race discrimination in the course of estate agency work, presumably he could carry on as if none of those heinous crimes had been committed?

Mr. Moate

I suspect that the answer given by the promoter of the Bill would be that the professional requirements placed upon the solicitor by the Law Society would catch up with him. But would these be as effective, and would they bite in the same way as the provisions of this Bill? I do not know. Would the Law Society act as quickly as the Director General, if a solicitor committed a misdemeanour related to sex or race discrimination in the course of estate agency work? The fact remains that he would be excluded from the Bill's provisions in that respect, and I cannot see any justice in that.

11.45 a.m.

Indeed, as evidence that the whole of the estate agency world feels that this is wrong, we have had a whole series of representations. I do not necessarily agree with everything that we have heard from all the institutions, but in this respect there can be no denying their general views. We have heard from the Incorpor- ated Society of Valuers and Auctioneers which says: The proposed exemption for solicitors is unjustified and should be deleted on the grounds that the current rules of professional practice of those concerned, as prescribed by the Law Society, do not afford the degree of protection which is available in terms of the draft Bill. That is the view of one very influential and important society.

Then we have the view of the Corporation of Estate Agents which says: it is manifestly unfair to exempt privileged groups from the application of the law. Solicitors and local authorities are, or frequently can be, in competition with estate agents for business. They should be subject to the same controls as estate agents". That is another important and influential body which supports our case.

Then we have the view of the Royal Institution of Chartered Surveyors which says: It is the Institution's recommendation that Clause 1(4)(a) should be deleted. The Institution gives its reasons. These are just a few of the views of those bodies that endorse our claim that solicitors should be included in the Bill's provisions. There are others as well.

I have no wish to apply more rules and regulations to other people who are engaged peripherally in activities that are not fundamental to their normal business. We do not want to put more bureaucratic conditions on the professions—on bankers, solicitors and others. But we must be fair about it. The public are entitled to be assured that estate agency work generally is covered, no matter who transacts it.

If the promoter of the Bill does not intend to include a definition of estate agents, if he does not intend to license and control estate agents—and I go along with him in that—at least he should satisfy the public that estate agency work is covered generally. If he would stick to that proposition, without all these exclusions, he would have a better Act on the statute book.

All he need do is create certain offences which, if committed by any individual practising estate agency work, are subject to action in the court. If he will not do that he will find himself with a mix up between licensing and non-licensing, between some sorts of estate agency work and not others. I feel very strongly that all these amendments should be accepted by the hon. Member for Enfield, North. At least we look forward to hearing his explanations.

Mr. David Hunt

I rise to speak to the amendments which relate specifically to the way in which the Bill will apply to the industry upon which it seeks to impose controls. I do so against the general background of very strong feelings that I, many of my hon. Friends and many people outside have that the House should not seek to legislate in specific areas and enter new fields of legislation until there has been the fullest possible consultation.

It is a fact that this place still produces too many bad laws. We have far too much legislation. Therefore we must be very rigorous in scrutinising any new area of proposed law. This is one such area.

Mr. Sainsbury

To save my repeating the point, will my hon. Friend not agree that, however well intentioned we may be, we produce too much legislation? It is rather difficult for hon. Members when we have 37 pages—as in this case—that are meant to deal with simple matters. When Bills are too long and the actual text turns into so many pages it is much more difficult to see how the legislation will impinge on people's lives.

Mr. Hunt

I completely agree with my hon. Friend's comments. I shall want to return to that matter, because much of the Bill seeks to enact legislation by cross-reference. Indeed, many measures are referred to in the Bill which one has to have to hand when trying to understand what the Bill seeks to do. Surely this is one of the greatest hallmarks of bad legislation. One has in mind in particular the Rent Acts, because it is necessary to understand and comprehend a whole series of Acts before one can appreciate what the legislation is trying to achieve.

I was about to say that I refer to this matter with some trepidation because in the last Session I proposed a Private Member's Bill which became known as the minibus Act. I seized on an area there where the law had changed and suddenly many voluntary organisations found themselves subject to an area of law to which they had not previously been subject, and I took them out of it.

This Bill seeks to bring into the area of law a whole new range of people—namely, those doing estate agency work. Because of that, it is important to get the definitions right. I agree with my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) that one of the great defects in the Bill is that there is no definition of an estate agent. Indeed, that is what the amendment is about. Someone can still set up in business with a sign outside saying "Estate Agent", yet escape all the provisions of the Bill. The definition of those who are included is not as an estate agent but as doing estate agency work. The trouble in taking that kind of definition is that there is in the public mind a reputation established by estate agents, and there is some dispute as to what that means.

The Bill seeks to set out a definition. But I can see a whole area of work—I declare my interest as a solicitor—which the Bill intends to encompass but does not encompass because of the difficulties of definition. I should be drawn much closer to believing in and supporting the Bill were it to name, by reference to the words "estate agent", the area of activity which it seeks to encompass.

Amendment No. 1 seeks to delete paragraph (c) and the last part of Clause 1. I should like, first, to speak to the special circumstances of that amendment. The Bill seeks merely to enter into the arena of private transactions between members of the public—I shall come back to that when I deal with the other amendments—and to exclude certain other bodies, local authorities and professions. The Bill is restricted to things done by any person … for the purpose of, or with a view to, effecting the introduction to that person of a third peson who wishes to acquire or, as the case may be, dispose of an interest in residential property". We then come to a form of words about which I should like some explanation from the promoter of the Bill, because, as soon as I see "things" in a Bill, it immediately crosses my mind that the parliamentary draftsman was at a very low ebb when he tried to pick out words to put in the Bill. To say "things done" is reaching the depths of definition. When, as a solicitor, I see "things" in a Bill, I am immediately put on inquiry as to what it seeks to do.

I am not satisfied with the words which follow, because the clause goes on: and also to things done by him after effecting such an introduction for the purpose of securing the disposal or, as the case may be, the acquisition of that interest. It is not clear why those words are put in. Referring back to the first line, again there is the dreadful phrase: This Act has effect with respect to things done by any person". One immediately realises that there has been a crisis of definition in the Bill, which my hon. Friend the Member for Cirencester and Tewkesbury has highlighted by this amendment.

Mr. Sainsbury

My hon. Friend is on to an extremely good point. But, bearing in mind that on Sundays we are concerned with things undone as well as with things done, should not the Bill say "with respect to things done or things left undone?".

Mr. Hunt

The act of commission probably pales into insignificance in this area as does the act of omission. My hon. Friend is absolutely right. Consumers expect things to be done, but often they are not done. I think that perhaps we should be addressing ourselves more to the consumer area than to any other area. We should view this Bill as a consumer measure. Indeed, in Committee, the promoter of the Bill, in response to an extremely constructive amendment tabled by my hon. Friend the Member for Faversham (Mr. Moate), said: In response to his amendment—which I understand to be a probing amendment about the extent of the Bill—I must emphasise that this is not an estate agency control or licensing measure, but a consumer protection measure, concerned with the activity of the purchase and selling of property."—[Official Report, Standing Committee C, 26th April 1978; c. 5.] It is clear that this is a consumer protection measure.

Therefore, I turn my mind—and I am inclined to support the amendment because of this—to other Acts of Parliament which seek to protect the consumer, in particular the Consumer Credit Act 1974. I believe that many of the powers which the Bill now seeks to enact and to give to the Minister and to the Director General of Fair Trading are already contained in that Act. I have carefully gone through the reports of the Committee stage and the Act itself. I submit that, by Orders in Council, it could easily be extended to cover the area which the Bill seeks to cover by utilising well-established legislation. The Minister is shaking his head. Of course, he knows a tremendous amount about this matter, because he has had briefs, but if he could enlighten me—

The Minister of State, Department of Prices and Consumer Protection (Mr. John Fraser)

I know a good deal about the Consumer Credit Act, because I have to administer it.

Mr. Hunt

The hon. Gentleman very carefully avoided answering my question, as Ministers do from time to time. I hope that someone will be able to answer it later. The Minister said that he understood the Consumer Credit Act. I congratulate him, because he must be one of the few people in the country who does understand it.

Mr. Fraser

Not for long periods of time.

Mr. Hunt

The hon. Gentleman must not be modest. If he does understand it—perhaps there are people who will suddenly pass notes to him to explain this matter—will he explain where in the Act there is a provision which restricts him from exercising control over estate agents who receive money as deposit and, therefore, credit from their clients?

Mr. Fraser

The Consumer Act controls those who provide and introduce credit. It does not apply the controls to those who receive the credit. That is the reason.

Mr. Hunt

The Consumer Credit Act refers specifically to transactions. It does not exclude the deposit of credit. It specifically refers to the provision of credit, but it does not exclude the deposit of credit.

Mr. Fraser

If the hon. Member wished to pursue that line he would have to license everyone who wanted to buy a house and had to pay a deposit as someone who provided credit to the estate agent. That is a ludicrous proposition.

12 noon.

Mr. Hunt

To disregard something because it is, in the Government's view, a ludicrous proposition would be to exclude most of their own legislation. There is an area of this Act which could refer specifically to estate agents who receive deposits. The Minister's point is not well taken. I am willing to enter into a dialogue with him on this subject, reluctant as he might be to enter into discussions on this complex area of legilation.

It is right that we should exhaust all possibilities before a major Bill is introduced to restrict the application of the Act. That applies particularly to this amendment. It would not be necessary to restrict the application of the Act were it not for the fact that already so much law could apply.

I understand that the part which my hon. Friend seeks to delete by the amendment would mean that Clause 1 would have a wide application, but no wider than it would be at the moment. After the amendment had been accepted, Clause 1 would read This Act has effect with respect to things done by any person—

1. (a) in the course of a business (including a business in which he is employed); and
2. (b) pursuant to instructions given by or on behalf of any other person who wishes to dispose of or acquire an interest in residential property."

It would include those public bodies to which I shall return later.

I should like to hear from the promoter why he feels that it is necessary to introduce paragraph (c) and the last three lines of the clause which do not add anything. If Clause 1, line 1, refers to things done by any person", why does one have to add the words at the end of the clause? The promoter might say that paragraphs (a), (b) and (c) restrict the words in line 1 and that therefore it is necessary to come back to them again, further to extend them. But that is not right because the Bill has effect with respect to has effect, to things done by any person". If one takes out paragraph (c), which is what my hon. Friend wishes to do, one does not take out the essence of the definition. This is what is complicating Clause 1. It would be helpful if the promoter explained his reasoning.

I understand that the whole purpose of Clause 1, and, indeed, of the Bill, is to protect the consumer from those estate agents from whom he needs protection because some offence has been committed or is proposed. If that is so, and deposits which have been left with an estate agent have been retained by him contrary to the law, there are other recourses already open to that consumer.

One of my constituents experienced a case such as this. It did involve not an estate agent but someone called an insurance credit and mortgage broker, who has now changed his name to a credit and mortgage broker and therefore does not come within insurance broker legislation. My constituent had left a deposit of £50 with the firm. He came to me and I immediately went, not just to the Minister—although that would have been enough—but to the Director General of Fair Trading. He instituted an inquiry and caused the return of that deposit.

We are dealing with a fringe activity. The profession of estate agency in this country has not needed control. It conducts its affairs properly, above the law and directly in the interests of the consumer. It protects the consumer. I shall return to a slight addendum to that later.

The Bill seeks to impose on the profession a discipline which it already accepts and for which there is no need. Adequate legislation, adequate penalties and adequate procedures already exist for controlling the recreant person who often does not call himself an estate agent but whose only objective is to take deposits. I can now see clearly the logic behind the amendment.

I return to the question of consumer protection. If this amendment were passed, it would enable us, as further amendments show, to extend the Bill to an area where it is probably needed. But we should not do that without further consultation.

Mr. Sainsbury

We are considering a group of amendments. Is my hon. Friend referring to all of them, some of them, or one of them?

Mr. Hunt

I am still referring to Amendment No. 1. I have yet to deal with Amendments Nos. 2, 4, 5 and 6.

The consumer needs protection against gazumping. Such protection might be provided if the amendment were passed. Already there are signs that estate agents are faced with an impossible situation which is not of their own making but a result of inadequate Government policies. Too many people are chasing too few houses as a direct result of the Government's land legislation. The supply of land has been restricted and many people are trying to buy their first home. They find that they put in an offer to an individual and then that individual does not honour what they believe to be a perfectly good contract. The contract is imperfect under Section 46(1) of the Law of Property Act 1925, because there is no memorandum in writing. This type of gazumping is a growing evil. Surely the public need protection against it. There is no adequate protection at present.

If Amendment No. 1 were passed, one would be able to consider the matter. But we should not do this now. What is wrong with the Bill is that it introduces new law without adequate consultation.

I received a letter this morning from an estate agent in my constituency. He said that he could see that parts of the Bill had merit, but he found, as I do, that the provisions are to be found in other Acts and that therefore they are unnecessary. He complained about the lack of consultation. He said that until he heard about it in the Press recently he knew nothing about it. Obviously he has not been paying full attention to the Press because reports appeared on Second Reading and when the Bill was introduced. The estate agent said that he had not realised that there was to be such a Bill. No meetings had been held in his area to discuss it. He felt that there had been inadequate consultation.

From the experience that I gained from the Private Member's Bill which I piloted through the House, I know that consultation is onerous, expensive and difficult.

Mr. Vivian Bendall (Ilford, North)

Is my hon. Friend aware that the promoter of the Bill has had no consultations with any of the professional bodies concerned?

Mr. Hunt

I ask the promoter of the Bill to intervene. This is such an important matter that I should like to address myself to it. Perhaps the hon. Member would like to tell me what consultations he has had.

Mr. Bryan Davies (Enfield, North)

I could scarcely resist such a welcome invitation. It is hardly possible for me to have consulted every estate agent in the country, and I have no doubt that Conservative Members have estate agent constituents who feel that they have not been directly consulted. But that is in the nature of this kind of exercise when a large group of people is involved. I can assure the hon. Member, however, that the three major national bodies concerned with estate agency have been involved in close consultation. Each of them has separately written to all hon. Members indicating not only the degree of consultation but support for the broad principles of the Bill. I think I can therefore reassure the hon. Member on that cardinal point.

Mr. Hunt

It is indeed cardinal. As I understand what the hon. Member said, however, he has not had sufficient time to engage in the sort of consultations that every promoter of a Bill should engage in. The aim must be to ensure that the professional bodies are not only notified but are notified in time so that they may then engage in consultations with the profession. There is no doubt that this Bill sprang out of the air for estate agents and they have not had time to consult, particularly about the very important Clause 1.

The hon. Member has not answered that point. He may have consulted the professional bodies, but I presume that could not have happened more than a comparatively short time ago, certainly after the beginning of the Session. Since the Bill involves such a complex area of law and seeks to break new ground, I should like to be reassured by the hon. Member that he has had consultation particularly about Clause 1 which the amendment seeks to restrict. Perhaps consultations on the clause would have caused him to realise that the definition, which I have described as a crisis of definition, would have enabled him to deal with the point far more adequately than he has.

Mr. Bendall

Is my hon. Friend aware that, although consultations have taken place, it appears that the Royal Institute of Chartered Surveyors and the Incorporated Society of Valuers and Auctioneers, which represent a most important part of the profession, have not been consulted?

Mr. Hunt

I hope that the hon. Member for Enfield, North (Mr. Davies) will reassure us on that aspect. He said that three professional bodies had been consulted, but he did not name them. It would greatly help us if we could know which they were before we decided on the amendment. We could then decide whether the necessary consultations had been held.

I described this situation as a crisis of definition. It is vital when one is introducing a Bill to cover a new area of law that one should know all the facts well in advance in order to be able to deal with the points that arise. Clause 1 determines the scope of the Bill, which is why it is so crucially imporant.

Mr. John Lee (Birmingham, Hands-worth)

I am not anxious to prolong the hon. Member's dissertation but may I make a suggestion? If the definition were so condensed as to make the provision for disposal of any interest in land as defined by the Law of Property Act 1925, would that not at any rate mitigate, if not eliminate, the crisis of definition which seems to be exciting him so much?

Mr. Hunt

I am most grateful for the hon. Member's support in seeking to promote the amendment, but for all the wrong reasons.

Mr. Moate

Would not the sensible proposition that has just been advanced drive a coach and horses through Clause 1, which is the point made by my hon. Friend?

Mr. Hunt

That is correct. I am most grateful to hon. Members for setting out so clearly the panorama behind this debate. When one is dealing with a new measure of this type, it is important to know exactly what its effect will be. The Bill will move on to another place, and that is one of the factors that gives me confidence. The scope and definition set out in Clause 1 may well receive greater scrutiny there. I hope that our debate today will enable those outside who have a particular view about Clause 1 to react and to make their views known. It is most important that we should take them into account.

I turn now to the question of solicitors. Being one myself, I notice that one of the least publicised facts about the profession is the code of practice under which it operates. I do not think that there is a more restrictive code, or one more calculated to produce the best for the consumer. Therefore, I regret to say that I have to disagree with my hon. Friend about the inclusion of solicitors in the Bill. My reasoning iswholly—

Mr. Moate

Yes, quite holy.

12.15 p.m.

Mr. Hunt

My reasoning is wholly consistent with the argument that I put forward before because, as I said then, it is unnecessary to introduce legislation to areas where protection already exists.

Mr. Ridley

Did I overhear my hon. Friend wrongly say "things done by solicitors"?

Mr. Hunt

I wish that I could answer that point.

I find that the consumer has greater protection under the law in his dealings with solicitors or barristers than with anyone else. There are already safeguards. The promoter of the Bill is therefore right to seize on the point about clients' money. Clients' money is the foundation of the practice under which solicitors operate. That money is sacrosanct and belongs to the client and can never be merged.

I realise that the hon. Member's main objective behind the Bill is to introduce the same state of affairs into estate agency. However, this matter should be dealt with by voluntary regulation. Those in the profession to whom I have spoken feel that they must introduce that voluntary code which the hon. Member is seeking to embrace within a statutory definition. That statutory definition will probably do more damage to feelings within the profession than would a code of voluntary practice.

The trouble is that when an hon. Member draws a high number in the Ballot his emphasis must be on producing legislation. He does not then seek to consult in a particular area with a view to winning acceptance of a voluntary code. Our procedure imposes a demand on an hon. Member to find an area of law that he can change. That is a matter for another debate, but it is nevertheless a defect in our existing system.

Mr. Moate

Before my hon. Friend leaves the question of the inclusion or exclusion of solicitors, will he answer a fundamental question? I accept what he said about the codes of conduct to which the members of the legal profession are subject. They would cover many of the aspects of consumer protection that are provided for in the Bill. Will he, however, look ahead to Clause 21 which deals with standards of competence and which contains powers to limit those who may or may not practise estate agency? The clause could lay down minimum standards of entry into the profession. If that became law, would not estate agents have the right to feel aggrieved that similar restraints did not apply to members of the legal profession?

Mr. Hunt

I am not sure whether I am allowed to look forward to Clause 21.

Mr. Speaker

Order. That confirms my view. I was doubtful, but I am not now.

Mr. Hunt

A large number of amendments have been tabled and I would like to speak on all of them. However, I shall not have time to deal with them all in as much detail as I should like.

As to whether solicitors should be included in the Bill, I am very much against statutory intrusion into the area of professional life, in particular as expressed in the Bill. Therefore, I could hardly logically be in favour of including solicitors, thereby extending the tentacles of the Bill into an area which does not need the regulation which I would like to see, on a voluntary basis but which the Bill seeks to impose on a statutory basis.

I was asked by a constituent about the standard of practice, conduct and discipline in the legal profession in Northern Ireland. The constituent had had a lot of problems with a Northern Ireland solicitor. Fortunately, I was able to discover in the Library the Solicitors (Northern Ireland) Order 1976, Statutory Instrument No. 582. I am satisfied that this exclusion should remain for the Northern Ireland solicitors. It is clear from the order, which was made on 12th April 1976, that Northern Ireland solicitors are subject to the same sort of discipline and professional standards which apply to the profession in England and Wales. Therefore, I see no necessity to include solicitors in Norern Ierland.

I want to mention local authorities. I find definitions difficult in the Bill, but this one I find particularly difficult. Clause 1(3) says: The reference in subsection (1)(a) above to a business does not include the activities of— (a) a local authority within the meaning of the Consumer Credit Act 1974; What is the reason for the words within the meaning of the Consumer Credit Act 1974"? If the activities of a local authority are included, why is there a need to define a local authority? If it is necessary to define a local authority, such a definition could be contained within the definition section of the Bill. Above all, why do we need to define a local authority within the terms of the Consumer Credit Act 1974? I found that difficult to understand, so I looked immediately at the Act to find out the definition of a local authority. Section 189 says: 'local authority', in relation to England and Wales, means the Greater London Council, a county council, a London borough council, a district council, the Common Council of the City of London, or the Council of the Isles of Scilly, and in relation to Scotland, means a regional, islands or district council, and, in relation to Northern Ireland, means a district council. If there were not the words within the meaning of the Consumer Credit Act 1974 and the Bill merely referred to "local authority", I would know exactly what that meant. It would, after yesterday, mean every authority controlled by the Conservative Party—but that is a different point.

Why include: the Consumer Credit Act 1974 in what must be a most out-of-date definition? If we are seeking to enact good law in this place I should like an explanation from the hon. Member for Enfield, North—if we are to be convinced that we should leave in subsection (3)—of why he seeks to define "local authority" by reference to the Consumer Credit Act 1974. Why does he not seek to define "local authority" by reference to the Local Government Act or any Act of that nature? Has he some intention to include the Council of the Isles of Scilly or the Common Council of the City of London?

If we are to have this legislation, which needs considerable revision—which I hope it will receive if not today next Friday, the Friday after or the Friday after that—and we are to have a Bill of which we can be proud and one which seeks to introduce the additional necessary matters which must be regulated by statute, why does it not apply to local authorities? There is a strong argument that it should.

What does the Bill seek to do? It seeks to control the money that is placed by individuals in the hands of a third party with a background of a property transaction. There are many instances in which local authorities may receive deposits or negotiate with a sitting tenant or the owner of a house in a clearance area or in an area where there is to be a major road. Why should not the consumer have protection in those circumstances? I am not allowed to look forward, as you wisely pointed out, Mr. Speaker, to two clauses that impose regulations about conduct. However, when one considers what should or should not be included in the Bill, it is important that the conduct of a local authority should be regulated if the Bill seeks to control conduct that the promoter feels needs to be controlled.

There are many instances of the sort of defects which the promoter of the Bill had in mind on Second Reading. I have read carefully through the reports of that debate and I can understand his reasons. One can envisage similar reasons for extending this measure to local authorities. It is not clear to me why local authorities should be excluded.

Perhaps the hon. Member for Enfield, North will respond by saying that similar protection already exists under another Act of Parliament. With so many Acts going through this place, I trust he will forgive me if there is such an enactment of which I am unaware. I have tried to make a careful study of the ways in which local authorities and their actions are already subject to some sort of code of practice, regulation or legislative safeguard, and I cannot find anywhere the sort of safeguards that he wishes to give to the public in the Bill as to the activities of a local authority.

On the other hand, one finds many examples in the reports of debates in the House of a local authority being accused of having offended a consumer directly and having encroached on or taken away the rights of a property owner, in particular where it is alleged that the district valuer has valued a property at a figure lower than anybody professionally competent would have done. There are many examples in my constituency, in Birkenhead, of valuations of property that can now be seen, with hindsight, to have been far too low.

There are instances around the country of people feeling aggrieved because they have not been dealt with by a local authority acting within the area of property transactions as they should have been dealt with. Therefore, why does the hon. Gentleman seek to exclude local authorities when by including them he would probably be acting in the interests of what he believes to be the consumer? It would give real consumer protection. If such protection is to be given in the Bill, why is it not to be extended to local authorities?

12.30 p.m.

I feel as strongly as my hon. Friends about the exclusions of the Housing Corporation, the Northern Ireland Housing Executive, and registered housing associations. Why should persons doing estate work in housing associations be excluded? I am sure that they would say that they follow the highest possible standards, so what is the objection to including them in a Bill to meet standards to which they already conform? What is the additional onerous element in the Bill from which the promoter wishes to protect housing associations?

If the promoter concedes that there are onerous elements—and my hon. Friends and I have explained why we believe the safeguards to be onerous—he starts to undermine the case for the Bill. The promoter must give a detailed explanation of why he feels that registered housing associations should be excluded.

It may be that, as with local authorities, there is some legislation of which I am not aware that imposes safeguards of this sort. The constitution of housing associations may lay down standards of practice and penalties to be imposed in relation to retaining credit. However, if that is the case, the idea of extending the Bill to estate agency work as defined at present is undermined by any admission made in that respect.

We may not get such an admission from the promoter in this debate, but I hope that he has listened carefully to what I have said and will try to justify Clause 1 and the case against the other amendments if he opposes them.

Mr. Sainsbury

As this is the first time that I have spoken on the Bill, I declare an interest as a member of the Royal Institution of Chartered Surveyors. To avoid any doubt or misapprehension about my professional competence, I should point out that I am a non-professional associate of the institution—the equivalent of an honorary member. According to the Monopolies and Mergers Commission report in 1975, there were 13,129 fellows and 23,765 professional associates of the institution. I would not claim their degree of competence or the experience of my hon. Friends the Members for Birmingham, Stechford (Mr. MacKay) and Ilford, North (Mr. Bendall), but I claim some involvement with that important institution and some knowledge of the industry.

I suppose that we should all declare an interest as persons who have acquired and probably will acquire interest in residential property as defined in the Bill. Therefore we are the beneficiaries or otherwise of the legislation.

The third interest that I should declare is that I am happy to say that the communications I have received from the president of the National Association of Estate Agents comes from his office in the heart of my constituency in Church Road, Hove.

I wish to concentrate on Amendment No. 5. Most hon. Members must be aware of the long and somewhat dismal record of municipal enterprise. Indeed, it would be better to call it municipal lack of enterprise on many occasions, and it should not be surprising that when local authorities try to adopt an entrepreneurial or professional role, they find themselves ill-suited to it. The staff of local authorities are not chosen or trained to carry out such functions and the members who give so generously of their time and skill in the conduct of the affairs of local authorities are not elected on the basis of their skill to act as estate agents, restaurateurs or to operate municipal fish shops or other activities. Therefore, it is not surprising that, generally, those who have failed to benefit from these activities have been the consumers on the one side and the ratepayers on the other.

The Bill is concerned with improving consumer protection, and while we are always anxious to do that, we must ensure that the proposed improvements are not counter-productive by restricting what can be done for consumers.

There seems to be no reason for not extending to the person acquiring interest in residential property the same protection when dealing with local authorities as when he is dealing with estate agents. If a local authority were so unwise as to set up a municipal estate agency—and we know that a number of Labour controlled councils have sought powers to do this, and to waste ratepayers' money—why should persons dealing with that agency not be entitled to the same protection as those dealing with other estate agents, particularly on such matters as interest on deposits and declaration of interests?

There is nothing to prevent a Labour-controlled local authority—though fortunately there are not so many now—operating a municipal estate agency under the name of Smith, Brown and Black. The unsuspecting purchaser would not be aware that lurking behind that pseudonym was the district council. If he were buying or selling property with the alleged assistance of this firm of estate agents, he might find that the purchaser or vendor was the local authority or someone associated with it. In all fairness, local authorities should be included in the Bill if they indulge in these activities.

I hope that we shall make progress with the Bill. It is a well-intentioned piece of consumer protection, but I hope that the promoter will expedite progress by giving an indication whether he is prepared to accept some of the more important amendments.

Mr. Moate

The question of the exclusion of local authorities raises important matters that the promoter must deal with. We know that if a member of the public suffers a loss as a result of actions of the employee of an estate agent, he will be protected by the compensation fund or the guarantee fund. Are we similarly assured that if the employee of a local authority or housing association estate agency causes a loss to a member of the public, he will still be protected? The exclusion of the Housing Corporation, housing associations or local authorities would exclude their employees, who might commit some of these offences. Would the public be protected?

Mr. Sainsbury

That is a good additional point. All these points show that Amendment No. 5 at least should be accepted.

Amendment No. 4 is wider, since it would exclude the whole of Clause 3 and bring within the legislation the Housing Corporation, the Northern Ireland Housing Executive and registered housing associations. The same arguments apply to them as to local authorities. I have fewer reservations about the Housing Corporation or registered housing associations acting as estate agents—although that activity is ill-defined—than about local authorities. I cannot express a view about the Northern Ireland Housing Executive, but I take it that it is the equavalent of the Housing Corporation or a registered housing association or both.

Mr. Moate

I have no greater knowledge of the subject than my hon. Friend, but am I not right in thinking that the Executive undertakes most of the housing functions of a United Kingdom local authority?

Mr. Sainsbury

I am sure that my hon. Friend is right. In that case, perhaps an amendment should have dealt specifically with that subject, because it should fall under Amendment No. 5. The consumer is entitled to the same protection in respect of the Housing Corporation and housing associations. The importance of that protection is increased by current housing association schemes—rightly promoted by the Housing Corporation—for equity sharing or leasehold participation, which amount to 50–50 ownership. A re- gistered housing association develops property for sale, but instead of conventionally selling the whole property to the purchaser, the scheme is designed to facilitate the first step on the ladder of home ownership. The purchaser buys less than a 100 per cent. interest—normally perhaps 50 per cent.—and rents the other half of his home.

These schemes have many attractions. The purchaser can later buy the other half. The Housing Corporation can guarantee loans to facilitate the original purchase. We have not seen that happen, but it is possible. If these bodies are getting more fully into the sale of property—particularly to first-time buyers—the protection of the Bill should be extended to that area.

Amendment No. 2 relates to insurance brokers. I agree with what has been said and will vote for the amendment unless the promoter can relieve our minds. Amendment No. 3 has not yet been properly discussed.

Mr. Deputy Speaker (Mr. Oscar Murton)

Amendment No. 3 is not selected.

Mr. Sainsbury

Then I shall not direct my thoughts to that.

I am worried by what has been said about Amendment No. 1. The Bill proposes consumer protection. I am concerned whether Amendment No. 1 might not damage that intention. This is a mixed bunch of amendments. While some are designed to improve consumer protection, Amendment No. 1 seems to go the other way. I am particularly in favour of Amendment No. 5 and of Amendment No. 4. Amendment No. 2 seems worthwhile but Amendment No. 1 gives me some reservations. Perhaps the promoter will be able to put our minds at rest.

12.45 p.m.

Mr. Michael Neubert (Romford)

I wish to speak to Amendment No. 5, which seeks to remove the exemption of local authorities. In undermining their privileged position, I might be thought to be showing hostility, but on the morrow of the local elections, and believing, subject to confirmation, that all 19 seats in my constituency were secured by Conservative candidates, I know that the sound of "local authorities" is sweet in my ears. Since I am the vice president of the Association of Municipal Authorities—a body, as from this morning, Conservative-controlled—it might be thought that in this case I am not doing them proper service. That is not so. The number of local authorities likely to do estate agency work under the Bill's definition is very small. But this poses more than one threat.

We can deal only with local authorities. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) was apprehensive about someone turning himself into a solicitor or a housing association and escaping the provisions of another clause. However, I am sure that he would not fear that someone could turn himself into a local authority. We are dealing only with such institutions as are already well known and which come within the Consumer Credit Act 1974.

It is legitimate to question whether local authorities which have the potential to engage in these activities should be excluded. I doubt it, when other legislation provides the same safeguards in other areas as this Bill seeks to create. We know of the intention of local authorities from time to time to engage in enterprise well outside the generally understood conception of the activities in which a local authority should engage on behalf of its resident ratepapers. For example, the West Midlands Bill sought vast ranging opportunities of engaging in municipal enterprise impinging on many private enterprise activities, including, one would think, potentially the operation of estate agencies.

This amendment has been tabled to counter those threats, for it is clear that local authorities, with their very special privileges, could in these circumstances be in competition with private enterprise and have an unfair advantage. As public institutions, local authorities obviously have advantages not given to ordinary estate agents. Local authorities have the benefit of public funds in inexhaustible supply. By that I mean that subject only to elections every four years, they can levy extra money from the ratepayers to meet their ends. Local authorities have the privilege of their prestige as public bodies. They have the opportunity to cross-subsidise costs. In these and other ways they could be in unfair competition with others legitimately earning their livelihood as estate agents in private enterprise.

It may be thought that as public institutions the reputation of local authorities is so high that there is no possibility of any breach of the standards that the Bill seeks to confer upon the profession of estate agency. That may well be so in many cases. It may well be that the integrity of local government and public service in Britain is well respected, for good reason.

However, from time to time there have been examples of even public institutions, acting on behalf of—in this case—their residents, breaching the standards imposed by the Bill. For example, local authorities might trespass in areas such as discrimination which are thought to be sensitive. Who is to know whether within housing departments there is the opportunity for discrimination either on grounds of sex or of race? Whether or not one agrees with the provisions of the Bill, it is possible that in the administration of a housing department such discrimination is exercised. If local authorities were to move into estate agency work, they might show the same inclinations.

Only today it has been shown that the Department of Health and Social Security has failed to meet the legitimate claim of war pensioners for compensation. Apparently this was done deliberately in the full knowledge that it was wrong. Yet it was done in the name of public service by public servants. So, although we may have a very high regard for our public service, we cannot believe it to be right in what is does in all circumstances. The amendment therefore seeks to remove the exemption of local authorities.

My hon. Friends have sought to go further. I would not go so far as to exclude the other bodies set out in subsection (3), but there is clearly a temptation for anybody involved in housing, by the acquisition of expertise and all the facilities available to him, to think it wise to extend his activities into estate agency work. The average local authority is engaged in the construction of houses, in the letting of property, and in the assigning of property. From time to time local authorities acquire property already built in the private market. Some authorities—probably more as from today—actually seek to sell the properties in their ownership, but generally the policy is to sell them to sitting tenants.

It is only a short step from those activities to engaging full time in the practice of buying and selling residential property. Often local authorities, according to their political persuasion, will seek to do this. It is proper to question whether they should be within the provisions of the Bill. The amendment has that purpose.

Mr. Bryan Davies

I respond, first, to the major point made by the hon. Member for Wirral (Mr. Hunt).

I assure the House that, despite the enormous difficulties in satisfying everybody whose interests are affected by measures of this kind, the most serious and intensive efforts have been made to engage in consultation with the representative institutions. All the major bodies concerned have made contributions and submitted documents. One is always left with those who are practising but who are not members of any representative body. One's only response to that difficulty is that which is normally taken in the House, namely, to gauge the public interest and to identify the measures we propose to put forward in that light. I can assure the hon. Member that there has not been a lack of consultation on the Bill.

I do not entirely accept the hon. Member's chiding that I did not relinquish my place in the Ballot in favour of a rather more consultative role for this year. I imagine that the hon. Gentleman, like myself, spends a great deal of time in a consultative role. It is not often that we are privileged to participate in a premier position in introducing legislation ourselves. I do not recall that he chose to turn down the opportunity he had to introduce a measure last year, a measure which I had the great pleasure of supporting. I am sure that he then engaged in the processes of consultation in the same way as I have sought to do.

Tory Members have identified the difficulties that arise with any measure of this kind but have disagreed amongst themselves about how the difficulties can be resolved. The hon. Member for Wirral has said that there is a crisis of definition. That is a perennial problem for law makers. I recognise that the definition of the activity of estate agency is critical to the Bill.

These amendments question the exclusion of certain categories from the provisions of the Bill. The main thrust of the measure as a consumer protection measure is to include all who engage in this activity and whose services the public may engage, thereby becoming vulnerable as prospective house buyers or house sellers. The exclusions are few and are carefully delineated. They are included only if adequate protection for the public already exists.

This is not a licensing measure for estate agencies and therefore the Bill does not deal with the problem of those who practise the work of estate agency but do not call themselves estate agents. Anyone who practises estate agency is caught by the Bill with the exception of the exclusions set out in Clause 1.

The hon. Member for Hove (Mr. Sainsbury) raised a qualification about the efficacy of Amendment No. 1. I think he is correct that, if Amendment No. 1 were to be accepted, we should greatly broaden the range of activity of the Bill because we would not be concerned solely with the agency work or the introduction of buyer and seller. We would also potentially include other activities associated with house purchase—for example, conveyancing. I do not know whether some Conservative Members are in favour of fresh legislation on conveyancing. It would probably be recognised by some Conservative Members that that would not be an entirely desirable measure, although I detect strong pressures on the Government Benches. I do not think that it could be included in the framework of the Bill, which as a Private Member's Bill must necessarily have limited aims.

1.0 p.m.

Mr. David Hunt

I was trying to suggest to the hon. Gentleman that it would have been far better if he had introduced a Law of Property (Amendment) Bill rather than the Estate Agents Bill.

Mr. Davies

I accept that there is a range of other measures that I could have introduced for the benefit of the public. I am not quite sure how that argument squares with the suggestion that I should not be introducing any measure that increases the amount of legislation. I assure Conservative Members that Amendment No. 1 would greatly widen the scope of the Bill. As the clause stands, we are concerned with the central activity of estate agency that causes the public concern, namely, the purchasing and selling of houses.

Mr. Moate

The hon. Gentleman has made a couple of assertions about Amendment No. 1 that require substantiation. He says that if accepted it would widen the scope of the Bill, yet as things stand it would seem that by deletion we would be narrowing its scope. Secondly, the hon. Gentleman said that conveyancing would be included. I hope that the hon. Gentleman will substantiate his claim. Why does he say that?

Mr. Davies

I did not say that the amendment specified conveyancing. The amendment would take out the restrictive parts of Clause 1 that define the activity to be controlled. Potentially we would have a measure with greater breadth in terms of the activity with which it would be connected.

As for the categories that Conservative hon. Members have raised and whether they should be entitled to exemption, we did, when dealing with the terms of Amendment No. 6—namely, the proposed exemption of solicitors—have an extensive debate in Committee. I am sure that we all want to guarantee adequate protection to the public. The hon. Member for Wirral indicated that he had noted the extensive debate in Committee. He expressed the view that in practice the Law Society's provisions dealing with solicitors are sufficient and broadly similar to the provisions set out in the Bill. In fact, in some respects the Law Society's provisions are rather sharper in their control functions than the provisions set out in the Bill. Because of that, I consider it accurate and right to exempt solicitors from the measure.

I am not trying to create a privileged sector but I am mindful that the House is concerned that legislation should be as accurate and as limited as is necessary to effect its purpose. In terms of consumer protection, I consider that solicitors are suitably controlled by their own professional body. That has been recognised by some Conservative Members.

I turn next to Amendment No. 2, which is concerned with insurance brokers. The hon. Member for Faversham (Mr. Moate) identified the area of insurance brokerage as his particular worry. He said that where insurance brokers are not engaged in the activity covered by the 1977 Act it may be that their insurance would not extend to the area concerned with estate agency. As they are not engaged in the activity covered by the 1977 Act, I consider that they would fall within the provisions of the Bill. It is where their activities are already governed by existing legislation that they are exempted under Clause 1.

Mr. Bendall

Will the hon. Gentleman explain in what category an agent will fall who collects money for a building society? There are agents who collect a great deal of money for building societies which they hand over to the societies. It seems from the terms of the Bill and from our discussion that there is no protection in that area. I should declare an interest. I am an estate agent.

Mr. Davies

I can reassure the hon. Gentleman. He will recognise that the Bill is concerned with estate agents who act in a certain capacity in introducing buyers to sellers. I am aware that estate agents carry out other activities. As there are others who may fail within the terms of the Bill because they carry out those activities, when estate agents are carrying out activities that do not fall within the Bill are not related to the definition in Clause 1 we are not seeking to control those activities.

Mr. Bendall

The hon. Gentleman has said repeatedly that this is a consumer protection Bill. If that is so, we should try to achieve the consumer's protection. Given the terms of reference of the Bill, we are achieving only part protection.

Mr. Davies

I have a feeling that the problem of definition could be endless. I want to promote consumer protection. I am sure that that is the aim of everyone. I am seeking to identify that there is a limited range of consumer protection for the buying and selling of houses that can be attempted within the scope of one fairly modest Bill, although it has 33 clauses and two schedules. The activity that the hon. Member for Ilford, North is identifying at this fairly late stage is something that would require a rather more ambitious measure. As I am being counselled by other Opposition Members somewhat to restrict my activity, it seems that it is necessary to strike a balance when deciding what can be achieved in this area.

Mr. Moate

I raise a technical point that is of some significance when dealing with insurance brokerage. The hon. Gentleman is relying on the fact that the definition of insurance brokerage would presumably exclude any extensive estate agency activities, and that if an insurance agency he would, therefore, come within the provisions of the Bill. I suggest that that might not be so.

There is no definition of insurance brokerage within the Insurance Brokers (Registration) Act 1977. There is an EEC definition but there is no definition within the Act. That was quite deliberate. It is possible for an insurance broker to regard himself as doing estate agency work peripheral to his business, and he could so include it. The fact that the hon. Gentleman refers to the Insurance Brokers (Registration) Act rather than to insurance broking, which includes other activities such as consultancy work and insurance agency work, and regards the Act as the controlling factor implies that anyone registered under the Act could practise estate agency. I suggest that he may not be completely right and that it is something that should be examined again if the Bill were to proceed further.

Mr. Davies

I listen to the hon. Gentleman's representations with great care on these matters as we know him to be knowledgeable in them. I think that I take him along with me in the other reservation that has been raised in considering the amendment, then the hon. Member for Wirral referred to the problems of deposits. The hon. Member for Faversham will know—I am sure that on reflection the hon. Member for Wirral will recognise that this is so—that deposits do not come within the framework of credit under the Consumer Credit Act 1974. The taking of deposits is an entirely different concept.

I turn now to Amendment No. 5, standing in the name of the hon. Member for Romford (Mr. Neubert), which has been spoken to constructively by a number of Conservative Members. I am moved to accept the points that have been made. Obviously, I had considered that local authorities were highly unlikely to engage in the malpractices identified as potential triggers which would alert the Director General of Fair Trading. I do not think that any hon. Member would consider it likely that local authorities would engage in such malpractices. Nevertheless, I accept the point made so persuasively that perhaps it is appropriate that local authorities should be under the same degree of control in this area of activity as other engaged in estate agency.

On that basis, I contend that Amendments Nos. 1, 2, 4 and 6 should be rejected by the House but that Amendment No. 5 might well commend itself to hon. Members.

Amendment negatived.

Amendment made: No. 5, in page 2, leave out lines 16 and 17.—[Mr. Neubert.]