HC Deb 05 May 1978 vol 949 cc686-701
Mr. Moate

I beg to move Amendment No. 9, in page 3, line 39, leave out 'the Director is satisfied that'.

Mr. Speaker

With this amendment, it will be convenient to discuss Amendment No. 12, in page 4, leave out lines 4 to 7.

Mr. Moate

My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) has had to leave temporarily However, he expressed the hope that I might move the amendment for him. I do so, albeit somewhat inadequately compared with the way in which he would have moved it.

The amendment concerns a relatively small but important point which requires some clarification. Indeed, perhaps the amendment is acceptable because, as the Bill stands, these words would seem to be unnecessary.

Clause 3 gives the Director General of Fair Trading power to make an order prohibiting unfit people from doing estate agency work. That, broadly, is the intention of the clause. The Director General is obviously restricted in the way in which he exercises that power, and clearly we should be concerned that he is properly restricted.

One of the circumstances in which he can exercise that power is where an individual has been convicted of an offence involving fraud or other dishonesty or violence". The clause then goes on to refer to "any other offence" which might have been committed which would give grounds for an order by the Director General. So far so good. These are clearly specified circumstances. But why do we have the words: the Director is satisfied that that person— (a) has been convicted"? Why are we giving any element of discretion to the Director General of Fair Trading with regard to a conviction? Either there is conviction or there is not. Surely it is enough to say that this power shall not be exercisable unless that person has been convicted of an offence. To say that the Director needs to be satisfied that an offence has been committed, with regard to clear convictions, is totally unnecessary and that phraseology could come out.

If we try to find out why that wording is in the clause, we have to look further, and we come to areas which we shall be considering in later groupings, so I shall not pursue them at length now. For example, we come to the committing of racial or sex discrimination in the course of estate agency work". It concerns me very much that the Director General simply needs to be satisfied that the estate agent has committed racial or sex discrimination in the course of estate agency work. That should be a matter of fact which can be tested in some other way. Surely it cannot be right to leave it to the Director to satisfy himself that such discrimination has occurred. The inclusion of the words the Director is satisfied that is, I should have thought, totally unnecessary and in some respects could be positively damaging. It is a simple matter. I hope that we may have a clear answer, explanation or acceptance of the proposition that these words be deleted.

Amendment No. 12 proposes to leave out another of these wide-ranging powers that have been inserted—the extra clause to cover any loopholes which perhaps the draftsman has not thought about.

Subsection (1) (d) reads: in the course of estate agency work has engaged in any practice which has been declared by order of the Secretary of State to be undesirable. That kind of provision concerns me very much. Admittedly, the order would in future be subject to the affirmative procedure. Both Houses would have the opportunity to consider such an order and, in theory, to reject it. But in practice, as opposed to theory, we know how difficult it is to get such orders taken on the Floor of the House and to consider them at any length. We cannot amend such orders once they are before the House. Very few affirmative orders are withdrawn or negated. I am glad that the Minister of State had experience recently of having to withdraw some orders in face of House of Commons and public opposition. But, generally speaking, that is not the case. Therefore, it is not much of a safeguard. Yet we are suggesting that in future the Secretary of State can declare other practices to be undesirable.

Surely we now know what these undesirable practices are. We are dealing with specific offences. The promoter of the Bill has tried to prescribe certain offences and the means of dealing with them—the deposit powers, bonding and so on. Therefore, why must we have this blanket additional power that in future the Secretary of State may declare any other activities as being undesirable.

I can think of examples in relation to estate agency such as misdescriptions of properties, and so on. But are not such matters covered by other statutes—the Trade Description Act, and so on? The Minister shakes his head. I suggest that it is important to specify what we are trying to prevent. If we can specify such matters, why not specify them in the Bill now rather than leave it in this vague form? We should try to be specific rather than vague. This is a vague proposition. It is undesirable to leave it in this form. The House is entitled to an explanation.

2 p.m.

Mr. John Fraser

I am grateful to the hon. Member for Faversham (Mr. Moate) for his brevity. I make an appeal to him and he understands why I hope that we can make some progress on the Bill so that it can be considered by another place.

The hon. Member talked about the Secretary of State having the power by order to declare certain practices undesirable. I understand his anxiety about the Secretary of State exercising an arbitary categorisation of undesirable practices. That power is limited by the obligation to consult. It might be best to give an example of what might happen if a practice were considered to be against the interests of consumers and if it were agreed by the profession that a particular practice should be outlawed.

The exercise of that power would not be dissimilar from, for example, the Law Society saying that ambulance chasing by solicitors was undesirable. The estate agents and consumers might at some time in the future decide that a practice which is not a breach of the criminal law is nevertheless something which should not be practised by a reputable estate agent. I am hypothesising.

Let us suppose that somebody engages in the practice of soliciting recently bereaved widows with a view to selling their property within a short time of death. That could cause a great deal of upset. That might be the type of practice which, after consultation and agreement with consumers and estate agents, might be enshrined in a code of practice. It might be agreed that that is not the type of thing that any reputable estate agent should do.

Given that that type of practice would be involved and given that any agreement would follow consultation and scrutiny by the House, it is fairly reasonable way of dealing with practices which we cannot anticipate but which could arise. In essence the situation is not dissimilar from the powers in the Fair Trading Act under the consumer protection advisory committee procedure which specifies those practices which might be against the economic interests of the consumer which can be prescribed in future but which are not illegal now.

The hon. Member also raised the issue of the Director General satisfying himself that the events have taken place. I make it clear that the Director General can make no judgment about whether racial tary of State exercising an arbitrary cateor sexual discrimination has been practised. That is delimited by Schedule 7 of the Bill. There must have been a finding by a court or industrial tribunal or a non-discrimination notice against which there has been no appeal. Those events must have taken place in the same way as a conviction in a court. The Director General has to satisfy himself that there has been a conviction or find-

The Director General has to investigate and come to a judgment after giving the estate agent a chance to make representations. The right to make those representations set out. He must listen to the representations and pleas which are put to him before he comes to an opinion. If, in the opinion of the estate agent, he comes to the wrong conclusion, there is an appeal of a judicial nature. It is not to a court but it is subject to the control of the Council on Tribunals. Without the word "satisfy" a nonsense would be made of trying to make a judgment on the general fitness of the estate agent. This is really the converse of not having any form of licensing.

This strikes a fair balance. There is adequate protection against any practice being proscribed arbitrarily or capriciously by the Secretary of State. I hope that my remarks reassure the House.

Mr. Moate

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Neubert

I beg to move Amendment No. 13, in page 4 leave out lines 8 and 9.

Mr. Speaker

With this we may discuss the following amendments: No. 14, in page 4 line 8 after 'has', insert 'been adjudged by an Industrial Tribunal or a court of law to have'. No. 27, in clause 5, page 6, line 39 leave out subsection (5).

No. 32, in clause 9 page 11, line 1 leave out subsection (6).

No. 64, in page 33, line 1 leave out Schedule 1.

Mr. Neubert

The amendment involves a feature of the Bill to which many people have taken exception. I do not mean only hon. Members, although that would be important enough, but I include those professional bodies who would otherwise give unqualified support to the Bill and wish to see it enacted without delay. I put the matter in perspective. We must recognise that the Bill introduces a concept of negative licensing by which estate agents are not subject to bureaucratic control and registration and all that that entails but are required to fulfil certain standards of practice and, in Clause 21, minimum standards of competence.

In seeking that strengthened self-regulation estate agents are following in the path of many other professions, notably medicine and the law, and more recently, credit and insurance brokers. The Bill seeks to regulate the profession with its agreement as expressed by its professional institutions at one remove. To do that it requires certain sanctions. Those sanctions are conferred on the Director General of Fair Trading, who is given considerable powers under the Bill. The principal penalty—which is severe—is the loss of livelihood. The estate agent will be banned from continuing his work if he breaches certain standards or commits certain offences.

Not all of those offences, which cover a wide range, are directly relevant to estate agency as a business activity. The clause goes wide in other subsections. Not only does it include offences of a criminal nature, such as fraud and other dishonesty or violence, but it makes allowance for any other offence as defined by the Secretary of State. It allows for offences against the Bill itself, which is logical. Finally, it gives the Secretary of State the opportunity to declare that certain practices are undesirable.

The catchment of the clause is extensive. It includes—and this is its most objectionable feature—that if an estate agent is found guilty and convicted of racial or sexual discrimination, in addition to the normal penalties provided under current legislation, he will be subject to a further penalty—the loss of his livelihood. It is that to which estate agents and their institutions naturally take exception.

It is also objectionable on three counts. Whatever the merits of the race and sex discrimination legislation and whatever attitude one takes to it—and I have a marked lack of enthusiasm—it cannot be right that certain people should be singled out for a particularly severe penalty under those provisions. What is the justification for it?

Objections are made because, first, it provides for a duplication of the law which, if not stopped, will develop and increase the complexity and abundance of legislation. This tendency is one of the most frequent and familiar grounds for complaint by the public and professions. If we provide in every subsequent Bill for offences which are already the subject of the parent Act to be the subject of further penalty in different areas of our everyday life, where will it end? If that happens every Bill concerning consumer protection or the regulation of professions to ensure higher standards could include such a provision even if the Acts in question are recent. The Sex Discrimination Act became law in 1975 and the Race Relations Act in 1976. Yet here we are being asked to add a further layer of legislative provision to penalise those who are guilty of offences of this nature.

The second main objective must be that the Bill provides a form of double jeopardy for estate agents. They are at risk not only in their everyday lives, just as everyone else is, within the terms of those Acts, for any offence that they might commit through discriminating on grounds of sex or race, but in their work as estate agents where they risk incurring the steep penalty of losing their jobs and their ability to work.

That puts them at a disadvantage with other professions because, although it may be argued that the other professions are subject to similar limitations on their practices, those limitations are contained within voluntary codes of self regulation. It is different in the case of solicitors and medicine where, quite rightly, critical conditions are imposed upon practitioners, but they are at least self-imposed penalties. The Bill provides an unwelcome innovation in that the law will provide such penalties for estate agents.

My third objection is that this practice in one way diverts the House of Commons from the true intent, purpose and extent of legislation to which it is asked to give its support. By that I mean that when considering the 1975 and 7976 Acts the House of Commons took them at their face value as offering an offence in certain circumstances against people either in their business or other lives. If it had been known then that further layers of penalty would be made there might not have been support for those original Bills. It is worth considering whether if subsequently these Acts are to be built into much more formidable legislative monuments to this principle, we could find ourselves holding back legislation for fear of what it would bring in its trail. Here, no more than two or three years after the original legislation, we have further turns of the screw.

For those three principal objections I continue to resist the idea that the estate agents should be subject to this special penalty. If the sponsor of the Bill were to seek to withdraw that provision he would have the gratitude of myself and of the estate agents, many of whom have been consulting him and have made the point to him directly.

Mr. Barney Hayhoe (Brentford and Isleworth)

My hon. Friend the Member for Romford (Mr. Neubert) has made a formidable case on the questions of double jeopardy and of individuals or a profession being subject to a new series of penalties under the Bill, and it deserves careful consideration. Like, I am sure, the vast majority of hon. Members, I abhor discrimination on racial or sexual grounds. Nevertheless, I feel that this provision deserves to be looked at more carefully.

I wish to deal principally with my amendment, Amendment No. 14. which is of a more limited nature. A constituent who is a leading member of the profession, who is actively engaged in estate agency and is a former president of one of the professional bodies and an office holder in some of the others has written to me on a point of concern about the clause.

2.15 p.m.

He suggests that a firm against whom a complaint of, for example, racial discriminational had been made might inadvertently fail to attend the hearing before the Commission for Racial Equality when the complaint was being heard. The Commission could then form a view that an offence had been committed. Through failing inadvertently to turn up to defend the action the defendant could find subsequently that a non-discrimination notice had been issued against it. That not being wholly understood, the end result on a quite minor matter might be the loss of livelihood for the individuals concerned.

It would obviously be wrong—and I am sure it is not the sponsor's intention—that the Bill should contain a power which, as my constituent has said, would give the ability to put a man out of business because somebody has formed the opinion that he has committed an offence". I am sure that that is not intended, but that might be how the Bill would operate. I hope that either the sponsor or the Minister will examine this point, because it surely must be important, even if an acceptable answer is given on the substantial points of concern advanced by my hon. Friend the Member for Rom-ford, that the clause should be drawn tightly enough to prevent unfairness and injustice in the way that I have suggested. I hope that we may have an undertaking that this matter will be looked at in the other place and a clarification made if necessary.

Mr. Andrew Mackay (Birmingham, Stechford)

I wish to declare an interest as a practising estate agent and builder. I have given the Bill general support throughout its stages, but I have considerable reservations about this clause. For that reason I wish to associate myself with the amendment moved by my hon. Friend the Member for Romford (Mr. Neubert). What does such a provision have to do with estate agency? On the whole this is a good Bill which will help the consumer and respectable and far-sighted estate agents. I am anxious that it should gain all credit outside this place and should be fully accepted. But this is the clause to which so many members of the profession and other observers have strongly objected.

Sex and race discrimination are just two of many crimes, so why have they been specified in the clause? I hope I am not being too churlish when I say that it appears to some of us that these might be the pet interests of the sponsor of the Bill and his colleagues. We can see no justification for their inclusion when other crimes are omitted.

If individuals break the law in these respects they will be brought before the courts and appropriate penalties imposed if the defendants are found guilty. I am not sure that in a just society people should have to pay twice for a crime, particularly when the second penalty is deprivation of livelihood. If the hon. Member for Enfield, North (Mr. Davies) is not happy with the punishment set out in the original Acts, he should seek to increase that punishment, not in a Private Member's Bill which will then impose further burdens on somebody who has already paid his debt to society.

I was taken with what my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) said about an estate agent being reported to either the Commission for Racial Equality or the Equal Opportunities Commission, often not realising that he should attend and then being found guilty without having been present.

There are often many reasons for selling property to somebody. It is not always because he has offered the highest price. On many occasions one rejects an offer from somebody who is offering more in favour of somebody offering slightly less who can complete the transaction faster. Alternatively, if a person does not have a property to sell, he may be preferred to someone who offers more money. Somebody who has a property to sell may have problems and delays. An estate agent may accept the offer of somebody of greater financial standing who will have a better chance of raising the finance for a mortgage. All those factors have to be taken into account.

When we say to somebody that we cannot accept his offer and the person is a single lady or a member of an ethnic minority group, occasionally he or she will say that the reason for our accepting the offer is that that person is female or coloured. Nothing could be further from the truth. Any self-respecting estate agent discriminates only against one person, and that is the bad purchaser in favour of the good purchaser. I cannot imagine there being estate agents who are worried about the colour of a person's skin or his or her sex. Estate agents are interested in getting the best possible price as quickly as possible for their clients—and their commission and fees therefrom.

Therefore, it is easy to become enmeshed in race relations legislation and the equal opportunities legislation when one is an estate agent without discrimina- tings, but acting only in the best interests of one's client. I ask the hon. Member for Enfield, North to reconsider whether the clause is necessary. I do not necessarily ask him to withdraw it now, because I never hope for too much. However, will be perhaps give it further consideration when the Bill goes to another place? Will he take into account the genuine concern on this side of the House and in the profession, not of people who are racialists or male chauvinist pigs but of people who wish his Bill well and those who are practising estate agents who want to be able to act in the best interests of their clients without undue Government legislative interference?

Mr. Bryan Davies

We had a debate on this issue in Committee. I am grateful for the opportunity today of meeting some points expressed by Conservative Members.

I stress that the intention of the clause is not to punish the estate agent for the second time, deliberately to create double jeopardy or to single him out as a person who ought to suffer twice. The intention is to ensure that the major thrust of the Bill is sustained in terms of a genuine form of consumer protection.

Conservative Members will note two extremely important points about race and sex discrimination. First, the Director General can begin to act—and then he does not act automatically to punish an estate agent—to consider the man's fitness to pursue a practice only after a finding has been arrived at by a properly constituted body. In other words, the Director General is not the person who defines whether the initial offence has been committed. Surely, in our society now we should recognise that the concepts of racial and sexual equality should be sustained adequately in the crucial area of the purchase and selling of property.

Mr. Sainsbury

It seems to me that nobody who has spoken in the debate has disagreed with the need to sustain the campaign against racial and sexual discrimination. However, as my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) pointed out, we have legislation on the statute book to do just that. If a shopkeeper refuses to serve somebody because of race or sex and is prosecuted for that—quite rightly—and is found guilty, he can go back and open the shop again the next day and carry on trading. Why should the estate agent be treated differently?

Mr. Davies

The hon. Gentleman has anticipated the second point that I was hoping to make in order to sustain the main burden of my argument. The buying and selling of property is of greater substance and import to society than that of a shopkeeper who is concerned with the buying and selling of goods. The consequences of the transaction in the selling of property—this is why consumer protection is necessary—are fundamental to the nature of our society.

Hon. Members on both sides of the House favour the development of owner-occupation. It is an important development in our society which helps substantially to determine social relations. Conservative Members ought to express great sympathy with the concept in the crucial area of the transfer of property. Racial or sexual discrimination can, and sometimes do, produce more detrimental effects on the health of our society than do more orthodox and trivial transactions.

Mr. Neubert

Does the hon. Gentleman not agree that his point was foreseen at the time of the passing of the original Acts and was the ground for the introduction of those Acts? Why are we now to duplicate the point?

Mr. Davies

One should recognise how racial or sexual prejudice can emerge and be translated into action. An advantage in this part of the clause, which would ensure that estate agents did not practise discrimination, is that estate agents will be better able to resist the pressure that is often acknowledge to come from certain sections of the public that they should act in an unfair and discriminatory way. The estate agent has a responsibility to his client, the relationship is one of trust and the estate agent acts as the agent of the seller, and in meeting that professional obligation, he may be subjected by his client to the kind of pressure which society as a whole and we, as legislators, regard as unhealthy. Within the framework of the clause, estate agents will be better equipped to resist such unfair pressure.

2.30 p.m.

Mr. MacKay

Is the hon. Gentleman suggesting that existing punishments for contravening race relations and equal opportunities legislation are not a sufficient deterrent to stop the estate agents contravening those Acts?

Does he not think that the fact that an estate agent can be brought before the courts is sufficient for him to tell a client who tries to bring undue pressure to bear—and this sort of pressure is occasionally put upon an estate agent—that if he did as the client asked, he would be brought before the courts? In such circumstances, I have always said that a client cannot expect me to break the law and that has always been enough to enable me to act correctly.

Mr. Davies

I am sure that the hon. Gentleman would be able to resist such pressure with ease, but I am sure that he recognises that, from time to time, estate agents come under intense pressure. In consultations about the Bill, it has been put to me on a number of occasions that the difficulty is not that estate agents would act in a discriminatory way but that they have an obligation to clients who can sometimes make it a particularly difficult obligation to fulfil. The Bill gives estate agents a greater capacity to resist the development of discrimination in an area of housing where we want to see discrimination ended. That is the basis of the clause.

I recognise the point made by the hon. Member for Brentford and Isleworth (Mr. Hayhoe) and if the consequences could be as he suggests, that would be quite unsatisfactory. If he will withdraw his amendment, I undertake to look at the point again to see whether this problem can be met.

Mr. Moate

I am disappointed with the hon. Gentleman's reply. When he started his speech, I thought that he was about to acknowledge the force of the arguments and that he would accept the amendments. He said that he would go a long way to meeting the various points that had been made, but he did not.

The hon. Gentleman gave a helpful answer to my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe), but that was on a technical point. I should have thought that it was elementary that someone should be adjudged by an industrial tribunal or a court of law to have committed racial discrimination. That is not much of a concession, though it is welcome for what it is.

The fundamental arguments have not been met. The hon. Gentleman should have tried a little harder to meet the general proposition that an individual should not have to pay twice for the same offence. Sometimes people do have to pay twice, but we do not legislate to achieve that end. If a person is found guilty of sexual or racial discrimination, no doubt his business and reputation will suffer, but it is not for Parliament to lay down a second penalty.

The hon. Gentleman argued that such discrimination is a more serious offence than dealing in groceries—

Mr. Sainsbury

It is not an offence to deal in groceries.

Mr. Moate

I see that I have said quite the wrong thing to my hon. Friend the Member for Hove (Mr. Sainsbury). I am not sure that I should even try to correct it, but I hope that my hon. Friend understands what I meant.

Clearly, misdemeanours by estate agents could have more serious implications for the victim than the offence in the sale of goods from a small shop, but if there are graduations of seriousness of crime surely that has been taken care of in the original legislation or can be dealt with in the courts. It does not warrant a second attack on the very livelihood of the estate agent who will presumably already have suffered some penalty under the original Act. The hon. Member for Enfield, North (Mr. Davies) has not begun to make out a case for including an extra penalty.

But it goes further than that. The discrimination Acts have such an uncertain effect on our society and are such experimental measures that to impose these, of all Acts, as the basis of a second layer of penalties is totally wrong. Estate agents are vulnerable to accusations of sexual or racial discrimination and they have some reason to be afraid of the extra power given in the Bill to the Director General of Fair Trading.

The danger is that, instead of protecting the consumer against serious frauds by a tiny minority of estate agents, we shall create such a range of offences that we would give the opportunity to every petty complainant to bring pressure to bear on estate agents, to take more and more accusations to the Director General, and to pester legitimate agents with a series of trivial complaints. Indeed, the threat of such complaints could bully an estate agent into accepting a contract that he may not deem to be correct.

We are opening the dor to thousands of complaints, while not necessarily protecting the consumer. The hon. Member for Enfield, North suggested that the Bill would give an estate agent greater power to resist undue pressure from his client. I presume he is referring to a client who is racially discriminatory and tells an agent that his house should not be sold to a member of another racial group. The answer to that is that there are already statutes to give the estate agent protection. If he is being bullied in that way, he should tell the client that he is prevented from doing what the client wishes because of the Race Relations Act. If the hon. Member believes that the penalties are not adequate, he should direct his attention to the original Acts and not try to deal with the matter in this Bill.

I am sure that the hon. Gentleman understands the strength of feeling on this subject. Almost every estate agent and most professional bodies and hon. Members have asked for this provision to be taken out, yet he is reluctant to do so and has given no convincing arguments for retaining it. Every hon. Member who has spoken has said that he wants to see sexual and racial equality as a general practice, but the provisions in the Bill would exacerbate the problems unnecessarily and would alienate the people whom the hon. Gentleman is most keen to support. I do not know why he is taking such an obdurate attitude.

Estate agents are in a difficult position. For example, a lady may wish to purchase a property, but the estate agent may feel that she is less likely than another, a male, purchaser to get a mortgage. That might be no reflection upon her status with a building society; it might simply mean that the other person had higher earnings or some other legitimate commercial consideration. The estate agent would be in some difficulty if she, or equally a man, could allege unfair discrimination. But her power would be even greater if she could threaten that he would lose his livelihood.

Mr. Brian Davies

Only if the finding of the appropriate body was definitive.

Mr. Moate

One accepts that the process might not result in a conviction, but would not anyone go to great lengths to avoid being taken to these tribunals? Most people would give in long before that.

The same problem arises with racial discrimination. Even their firmest supporters believe that these two Acts have not worked very effectively. Perhaps one cannot expect that in so short a time. Most prosecutions have been on trivial matters and have not brought the legislation into great repute. There are areas of human opinion and patterns of behaviour which have taken root over many years.

I am not saying that these attempts to legislate were wrong, but they are still experimental. To impose further penalties is wrong. The hon. Gentleman could have met the views of the House and outside opinion. He would not undermine these powers because they exist elsewhere. It is unfortunate that he has refused to do so. That reflects on his desire to carry the legislation through in a non-controversial way. One still hopes that he will change his mind, but one is not encouraged.

Amendment negatived.

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