HL Deb 13 October 2004 vol 665 cc273-315

3.15 p.m.

The Minister of State, Office of the Deputy Prime Minister (Lord Rooker)

My Lords. I beg to move that the Report be now received.

Moved, That the Report be now received.—(Lord Rooker.)

Lord Hanningfield

My Lords, I beg leave of the House to protest at the amendments that we have received today at Report stage—10 pages of detailed amendments. I know that some of them are in response to issues that we raised earlier, but for us to receive them only this morning in order to discuss them this afternoon is quite unacceptable. We have been trying to do what we can about them today, but it is impossible for us to deal with them this afternoon. I hope that the Minister will reconsider his attitude to these amendments at this stage.

Baroness Maddock

My Lords, I associate myself with the comments of the noble Lord. I recognise that the Government tabled these amendments in response to discussions in Committee and to amendments we have tabled. But given that, and given the discussions that have gone on in between—between outside bodies, ourselves and the Government—it was very discourteous not to tell us yesterday that these were being tabled. I hope that the Minister can think again about whether we should discuss them today.

Lord Rooker

My Lords, can I in the most friendly and comradely spirit possible tell the House a story? The amendments have nothing to do with discussions in Committee—although in some ways they could be connected.

I set a deadline for government amendments being tabled for Report stage of 4 October. I said that nothing else would be tabled after 4 October because the Opposition are not getting enough time to consider amendments. The only amendments that were tabled after that date were minor and technical, for which I set a deadline of 6 October.

Last week I resisted blandishments from around Whitehall—from No. 10, the Cabinet Office, the Home Office and ODPM—and I flatly refused to have my name used to table any government amendments of any kind on this issue. That was it, I said—the deadline has gone; we set it in order to have a decent discussion.

The only reason that this group of government amendments was tabled on Monday evening and published on Tuesday evening was in response to the opposition amendments tabled on the "no rent payable" issue—a shorthand term for this part of the Bill. It was in response to the fact that the Opposition had tabled amendments. If the Opposition had not tabled any amendments, I can assure the House that there would have been no government amendments. because I flatly refused to introduce new business. The only reason that the government amendments were tabled was that, following discussions between my officials and officials representing the two Opposition Front Benches, we had sight of their amendments before the Public Bill Office did. I am just telling the House a story. I am telling it as a story because I understand the annoyance, but we have to get the facts right.

It was only because we knew what was being tabled by the Opposition that I was prepared to say that the Government could table amendments only to opposition amendments. If there are no opposition amendments, I said, then we do not do anything. So it was as a result of the Opposition tabling amendments on the "no rent payable" issue and discussions between the advisers to the opposition parties and my own officials that the Government tabled these amendments. Otherwise we would not have tabled them: I can assure the House of that. That would have been the end of the matter. The Government would have had to settle for the Bill as it was. I do not know what might happen at Third Reading as that is too far ahead.

I regret that the amendments have appeared. They are starred. If we were in another place, where we have proper orders of business—sorry, they have proper orders of business: a slip of the tongue—starred amendments would not be called by the Speaker. If everybody wants to take all the "no rent payable" stuff away today—fine. But it would not make sense to debate the opposition "no rent payable" amendments, because my response to them is the government package. I am not going to debate that. It does not make sense to have that debate.

If we can achieve agreement between now and Third Reading, we are prepared to make amendments to achieve agreement. There is no difference between the Government, the Liberal Democrats and the Conservatives on this. The package is almost agreed, and that was the point of exercise. I am very grateful for that. As I said, if the Liberal Democrats and the Conservatives had not tabled their amendments, the Government would not have had the chance to table their package of amendments in lieu. I had said that there was a deadline and we were going to keep to that. I felt that too much new material had gone into the Bill at the last minute in Committee and that it was not fair on the Opposition. That is the story and where we are.

I hope we can make good progress on the Bill today. I would be quite happy if all of this was taken away as a package, but I cannot say what might happen on Third Reading. I cannot guarantee that this issue will be settled on Third Reading because I do not deal with the timetable. This is a big part of the Bill, but there is agreement on it. It is not as though there is disagreement between us on the substance.

I am happy to leave it there. As I said, the government amendments would not have been tabled were it not for the opposition amendments. They were tabled after discussions between officials on both sides.

Lord Hanningfield

My Lords, the Minister's comments are extraordinary. Whenever we table our amendments three days before a Bill's various stages, as we are required to do, will the Government table amendments to those amendments? Is that what he is suggesting? We tabled amendments to a Bill that the Government proposed, but the Minister said that he tabled his amendments because of our amendments.

I can say categorically that there have been no discussions at all with anyone supporting the Conservative Front Bench. Those supporting us knew nothing about these amendments until the middle of this morning. So what the Minister said about talking to us is not true.

Lord Rooker

I repeat, my Lords: my officials had sight of the amendments tabled by the Opposition parties before those amendments went to the Public Bill Office and were published. We knew what was being tabled. That is why we continued the legalistic work on preparing our amendments for tabling. That is the only reason why they were tabled; the matter was otherwise on ice. The final bits and pieces that were put together by parliamentary counsel and the lawyers were proceeded with on the basis that we knew that the two Opposition parties were tabling relevant groups of amendments. Those are the facts.

I watched what was happening last week but was concerned about only one point—that there should be no new government amendments. The only concession was that, if the Opposition were going to raise the "no rent payable" issue and we got a package that we thought was agreeable, it might make sense to bring the package forward. Let us be absolutely clear that such a package is good for the tenants and good for the landlords. I cannot be accountable on this. I am simply repeating the fact that my officials had lots of discussions in the Friday-Monday period and into the middle of last week to find out what was going to happen.

Noble Lords opposite can shake their heads. I am not saying that they were deeply involved. I was not deeply involved. I was simply on the receiving end of the possible results of discussions. The bottom line is that the government amendments on this package were not going to be tabled at all. This issue was not going to be reraised, and we would have had to live with the Bill, inadequate as it is, simply because the 4 October deadline had been missed due to various protracted discussions in Whitehall. Once the deadline had been missed, I said, "That's it. We are not doing it".

Lord Roper

My Lords, I do not want to prolong this too long. Problems sometimes occur in our first week back because we were not here the previous week when some of the conversations that might have taken place did not occur. However, this situation was extremely unfortunate. If this type of situation arises in future, I hope the Minister will at least inform the Opposition parties when such amendments have been tabled on the eve of their debate. It would have been possible to do that by e-mail or in other ways. If that had happened we would have a much easier situation than the rather tense one we face. I believe everyone is working towards the same objective. I hope that, today or in the future, we will find the right way to solve this. There really was an unfortunate lack of communication.

Report received.

Clause 3 [Local housing authorities to review housing conditions in their districts]:

Lord Rooker moved Amendment No. 1:

Page 4, leave out line 2 and insert—

"(iv) Chapters 1 and 2 of Part 4 (management orders);"

The noble Lord said: My Lords, grouped with Amendment No. 1 is a substantial group of government amendments that were tabled by 6 October. I make no point about that because these are not major amendments. The amendments are split into about six groups. I shall briefly outline the substance of each group. It will not delay the House very long.

Amendments Nos. 1 to 37, 78, 218, 224, 226 and 237 provide that where reference is made to interim or final management orders under Part 4, that reference is amended to include all management orders under Chapters 1 and 2 of Part 4. In effect, the references are amended to include empty dwelling management orders. This group of amendments is consequential on the introduction into Part 4 of empty dwelling management orders. We introduced those in Committee.

Amendments Nos. 47, 51, 52, 80, 81, 225, 227 and 228 provide that where a reference was previously to interim or final management orders under Part 4, the reference is amended to include only management orders made under Chapter 1 of Part 4. In effect, the references are amended so as to exclude empty dwelling management orders.

Amendments Nos. 88, 94 and 139 replace the existing interpretation provisions in Clause 97(5) and (6) and Clause 105(6) with a new interpretation provision sited at the end of Part 4. The effect is that the new interpretation provision applies to the whole of Part 4.

Amendments Nos. 140, 141 and 142 update the index of expressions within Part 4.

Amendments Nos. 80, 93, 95, 114 to 148, 137, 143, 144, 108 and 104 introduce new provisions in respect of the right of third parties in connection with interim and final management orders. Almost identical provisions are already in the Bill in connection with empty dwelling management orders. The amendments provide that where a third party has an estate or interest in the property and can exercise those rights—for example, to restrict the number or types of persons who can occupy the house or, in the case of a mortgagee, prohibiting letting—those rights do not apply when an order is in force.

The amendments also provide that a person whose rights have been disapplied may make a claim for compensation to the local authority in respect of that loss. If the claim, or the amount of compensation, cannot be agreed with the local authority that person can refer the matter to a residential property tribunal for determination of the issue.

On Amendment No. 107, Clause 118 is concerned with revocation of final management orders and is drafted in the same form as Clause 108, which deals with the revocation of interim management orders. However, the word "other" that appears in subsection (4)(b) of Clause 108 is missing from the corresponding provision in Clause 118. This amendment rectifies the omission.

Amendment No. 138 is intended to address an issue raised by the noble Lord, Lord Hanningfield, during our debate in Committee on 13 September, with regard to empty dwelling management orders. The noble Lord asked whether we would give further consideration to the legal complexities that might apply where an EDMO is proposed in respect of a leasehold dwelling and whether, in fact, given those complexities, the power ought to be confined to freehold interests only. The issue is equally relevant to the operation of interim and final management orders under Chapter 1 of Part 4.

We consider that it is essential that these powers apply to dwellings that are subject to leases. Indeed, if they did not, it would provide a significant loophole for owners who wanted to be obstructive. They would simply have to enter into a sub-lease with a person who had no intention of occupying the dwelling to put the dwelling out of the scope of the Bill. The amendment provides for regulations to be made by the appropriate national authority to supplement the provisions of Chapters 1 and 2 of Part 4 where a local housing authority is treated as a long leaseholder under a management order.

3.30 p.m.

The intention of the management order is that the local housing authority takes over the management functions of the property but leaves the ownership in the hands of the original owner. That owner is still able to dispose of his interest in the property or indeed to mortgage it. In the case of a property held on a long lease, it may not always be apparent whether a particular function relates to management or ownership. Some situations might arise where there is a mixture of both.

The new provision in the amendment will permit regulations to be made by the appropriate national authority to clarify who must act or who is entitled to do what in such cases. The delegated power is limited as it permits only the making of provisions supplemental to Chapters 1 and 2 of Part 4. It does not extend to overriding any provision in the Bill or any other enactment. The new clause sets out examples of how the power may be exercised; for example, to identify the rights and liabilities of the local authority, the original leaseholder and other persons having an estate or interest in the property. I beg to move.

On Question, amendment agreed to.

Clause 4 [Inspections by local housing authorities to see whether category 1 or 2 hazards exist]:

Baroness Hanham moved Amendment No. 2:

Page 4, line 34, at end insert— (c) a group of not less than ten electors registered on the electoral roll within that parish or district.

The noble Baroness said: My Lords, the amendment is short, simple and clear. We hope that, unlike the last time, the Minister will have a change of mind and accept it. Unlike the previous amendment on the issue, Amendment No. 2 now specifies the number of individuals within a particular parish or district that would have to come together to register an official complaint about the condition of a local property.

I readily admit that we are never going to get the exact number perfect. However, we believe that 10 or slightly more individuals is a suitable figure to have a shared concern that should be investigated by the relevant housing authority. In specifying the number of individuals required in that context we are placing a safeguard against individuals bearing grudges who could make repeated complaints.

We should surely encourage local people to become more involved in their neighbourhoods, including involvement with the state of local housing. What better way to do that than by giving them an avenue to raise legitimate concerns, albeit that they will not be able to do so on their own but will have to obtain the support of other people who live nearby? I beg to move.

Lord Bassam of Brighton

My Lords, we debated this issue before in Committee. Our arguments against it are substantially the same, but I can of course see the point at which the noble Baroness is trying to arrive. It was one of the subjects that my noble friend Lord Rooker addressed in his follow-up letters to colleagues after the Committee sittings.

We had a thorough debate on the clause's operation in Committee and it would not be right for me to repeat all the points that were made then. To summarise, Clause 4 replaces Section 606 of the Housing Act 1985—legislation passed during the noble Baroness's party's time in government. That section places a duty on the proper officer of a local authority to make a report to the authority if he considers that a dwelling house or an HMO is unfit for human habitation or that an area should be dealt with as a clearance area.

It also requires the proper officer to inspect the property or area in response to a complaint from a justice of the peace or a parish or community council that the property is unfit or that the area should be cleared. Government amendments in another place reduced the prominence the clause appeared to give to complaints made through justices and parish and community councils, which the noble Baroness will recognise are in the minority. It gives more emphasis to the day-to-day responsibility of authorities to determine whether an inspection is necessary, both in response to complaints and as a follow-up to their reviews of housing conditions in their area.

Subsection (1) now requires a local authority to consider whether to inspect a property in its area or to establish whether there is a category 1 or category 2 hazard. That duty can arise either from the review of housing conditions under Clause 3 or for any other reason. The designation as official in subsection (3) of complaints by a justice or a parish or community council is certainly not intended to denigrate the importance of other complaints of the kind that local authorities receive directly in the ordinary conduct of business.

We think that Clause 4 strikes a reasonable balance between the need for a tenant to have access to someone to complain to and the need for an authority to conduct its business efficiently and effectively. Amendment No. 2 would add 10 electors from the electoral roll to those who can make an official complaint. The attempt to make official complaints from other sources does not help us any more than the previous attempt to amend the clause.

I am sure that the noble Baroness will not object to my using the same arguments that we set out in our correspondence on 11 October dealing with a number of points made in Committee. One of those was that a tenant who is aggrieved by an authority's failure to act on a complaint need only find the nearest justice of the peace to ensure that the complaints are dealt with and an inspection undertaken. It may be impossible and may not be appropriate to engage 10 or any other number of registered voters that could be proposed in a complaint relating to the living conditions in an individual dwelling.

In seeking to protect local authorities from an abuse of the process the noble Baroness may inadvertently ensure that those with genuine grievances who need to have their complaint made, heard and recognised, may make things so much more complex in terms of the time and effort required that it will have a serious and perhaps adverse impact on the point of the aggrieved person. I hope that she will feel able to withdraw her amendment.

Baroness Hanham

My Lords, I thank the Minister for his reply. I am of course aware of the extensive and detailed responses we received. The amendment seeks precisely to support a tenant aggrieved by the local authority's failure to act. We are talking about a local authority that will not move and has done nothing, where there is still a requirement to give an extra oomph to what it is going to do. The amendment would not rule out a tenant being able to go to a justice of the peace, nor would it rule out the parish or community council making a complaint. It would add an extra limb, which is that if a small number of people also supported that view it would be termed an official complaint.

I do not understand the Government's obduracy. We all want to ensure that local authorities inspect properties that are deficient and causing problems. It is unfortunate that the Minister will not accept the amendment, but in the light of his obduracy I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 3:

Page 5, line 9, at end insert— (8) The authority must make available to any interested parties upon request, written or verbal, any report made to them under subsection (6)(b).

The noble Baroness said: My Lords, in moving the amendment I shall speak also to Amendments Nos. 39 and 40. We are trying to bring greater transparency to the process of a local authority making a demolition order and establishing whether a category 1 or 2 hazard exists in a property. Those are serious steps that local authorities can take. Some of their decisions may be controversial. We therefore have a duty to ensure that as many people as possible are aware of what is happening within a neighbourhood and of the decisions being taken by the local authority.

In Committee the noble Lord, Lord Bassam, commented that he understood the intent behind the group of amendments and was slightly sympathetic towards them. I hope he is in as good a mood today as he was then, as I hope to convince him of the worth of including these amendments in the Bill.

The Minister asked us a number of questions, such as who was an interested party and how a local authority was to determine that. The short answer to that is anyone who has an interest. Why is there a need to define such a person? Surely if people make the effort to contact a local authority to ask for this information they could, indeed, be deemed to be interested parties.

This is specialist detailed information. It is highly unlikely that an authority would be inundated with hundreds of requests for the latest copy of the council's decisions in regard to demolition orders. The Minister's bedtime reading may well be in such areas but I assure him that that is unlikely to be the case for the rest of the community.

The Minister also thought that there was a vagueness about the oral request and the way in which such a request was logged and made clear in the local authority. However, there can be no vagueness in that regard. If you call into your local town hall and speak to someone in person, or pick up the phone to the council, give your name, details and make a complaint, there is no vagueness. Local authorities receive requests for planning applications and other material all the time and therefore it cannot be beyond them to deal with this matter.

I suspect that the Minister has not been swayed by my commonsense approach. However, he mentioned in Committee that it would be difficult to stop people obtaining this information under the Freedom of Information Act. Therefore, if he can give me a definite assurance that such decisions and information are, indeed, covered under that Act I shall be satisfied and not press the amendments further today. I beg to move.

Lord Bassam of Brighton

My Lords, the noble Baroness asked whether I was in a good mood today. I am in a good mood but if she keeps saying that I am obdurate, I am not so sure that I shall stay so happy. I am feeling very generous but I am afraid that my generous spirit does not necessarily extend to agreeing to these amendments. As the noble Baroness said, the amendments are identical to those tabled in Committee. I am afraid that our arguments against them are also substantially the same. We covered the matter in the detailed correspondence that was circulated. We had a thorough debate on the issue in Committee and I do not want to repeat everything that was said then.

However, the noble Baroness is right to draw our attention to the issue of freedom of information. I believe that I argued in Committee that the Freedom of Information Act 2000 ought to be the conduit for the release of information by central and local government, and I stick by that point. The Act provides a right of access to recorded information held by local authorities although, of course, it creates some exemptions from the duty to disclose information in certain cases. Obviously I cannot be specific as without the details of a particular case in front of me it would be wrong of me to say whether or not a request for a copy of a report by an inspector carried out under Clause 4 would be exempt. I do not want to speculate about that. The matter would depend very much on the circumstances although my general feeling is that in most cases the information probably would not be exempt. It certainly would not be if it conformed with the legislation and the Data Protection Act 1998. The measure will probably go some way to provide the necessary rights to access information that is held by local authorities. I believe that we can agree that local authorities have a good record of being open and sharing information with members of the public.

The other important point here is that we are talking about a relatively small number of official complaints that we expect to be made under Clause 4. The circumstances under which the terms of the amendment would be likely to be used would probably be very limited indeed. Therefore, we believe that the amendment is unnecessary. Clearance declarations must follow the very careful procedures that are set out in Section 289 of the 1985 Act, which require very careful consideration before a clearance order is confirmed. Authorities will need to be open about their intentions should they subsequently decide that they want to confirm a clearance declaration.

I do not see that there is likely to be an information deficit here. Local authorities have a good track record. The public will have access to information rights under the Freedom of Information Act 2000. I believe that in nearly all circumstances there will be little difficulty in members of the public gaining access to the kind of information that an inspector might provide. I hope that with those reassuring words, and certainly given the spirit of what we are trying to achieve through the Freedom of Information Act and the Data Protection Act, the noble Baroness will not press the amendments.

3.45 p.m.

Baroness Hanham

My Lords, I thank the Minister for his reply. We shall have to hope that the Freedom of Information Act is applicable to the circumstances that I have described. Like the Minister I do not think that the number of people seeking this information will be enormous. However, it is very likely that those who do seek this information will be entitled to have it.

I noticed that the Minister did not refer to an error in the previous version of the Bill which I believe has now been corrected. I believe that there was a misprint under subsection (6) of the clause. I understand that that matter is now covered in subsection (2). I am sure that the Minister will want that to be recorded in Hansard. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [Category I hazards: general duty to take enforcement action]:

[Amendments Nos. 4 and 5 not moved.]

Clause 7 [Category 2 hazards: powers to take enforcement action]:

[Amendments Nos. 6 and 7 not moved.]

Clause 8 [Reasons for decision to take enforcement action]:

Lord Hanningfield moved Amendment No. 8:

Page 7, line 29, at end insert—

"( ) Where the enforcement action relates to a category 2 hazard the statement prepared under subsection (2) must include a statement of why the authority has decided that it considers it necessary to take any action rather than taking no action at all."

The noble Lord said: My Lords, due to the potentially different situations that could fall within the scope of category 2 hazards, it is important that environmental health officers identify why it is necessary to take some kind of action in the first place.

Currently, Clause 8 requires the authority to explain why it has decided to take a particular course of action. The purpose of the proposed new subsection would be to ensure that the authority explained why it was taking action in the first place as well as then going on to explain the course of action it considers to be most appropriate. Again, it is important that resources are not concentrated on trivial matters. The need to explain why it is necessary to take action in the first place will lead to better decision-making. It will also enable the recipient of the notice to decide whether it is appropriate to appeal. The notice should explain why the action needs to be taken. The current wording of Clause 8 has not addressed this particular aspect. I beg to move.

Lord Rooker

My Lords, I say to the noble Baroness, Lady Hanham, that I had a really interesting reply to Amendments Nos. 4 and 6.

Clause 8 was added by a government amendment in Committee. It was added in direct response to the Joint Committee on Human Rights. It requires a local authority to give reasons to a person on whom a notice is served for the choice of a particular course of action rather than another under Clauses 5 or 7.

Amendment No. 8 would require that when enforcement action relates to a category 2 hazard the statement prepared under subsection (2) of the clause must include a statement on why the authorities decided to take action rather than taking no action at all. Such an amendment is unnecessary. Clause 8 already covers category 2 hazards. An improvement notice must give details of the hazard. Under Clause 8, it follows that a reason for the action is an explanation of why any kind of action was necessary. Otherwise, the authority would use its discretion not to act in the first place.

That sounds a bit convoluted, but the clause, which is thoroughly justifiable, is a direct result of the work of the Joint Committee of both Houses. The amendment is not necessary to do the job that the noble Lord thinks is required, so I hope that it will not be pursued.

Lord Hanningfield

My Lords, I thank the noble Lord for that answer. Obviously, I was pleased that the amendment was added by the Government in response to the Joint Committee's report. I have to accept what the Minister said. I was only trying to improve the Government's amendment, but if the matter is covered by this latest amendment, I must accept it. I beg leave to withdraw the amendment.

Amendment, by leave. withdrawn.

Clause 9 [Guidance about inspections and enforcement action]:

Lord Hanningfield moved Amendment No. 9:

Page 7, line 40, at end insert—

  1. "(e) the new qualifications and training required by Environmental Health Officers to undertake these functions,
  2. (f) the nature and expenditure of time required so that these functions may be considered to have been properly fulfilled,
  3. (g) the circumstances in which they may be required to compensate landlords for costs incurred in the carrying out of their functions,
  4. (h) their functions in relation to fire safety legislation and in particular consideration he given to the installation of automatic fire sprinklers in HMOs."

The noble Lord said: My Lords, Part 1 of the Bill introduces the health and safety rating system involving an assessment of residential accommodation, and sets out the options to enforce compliance. It allows for guidance to deal with enforcement decisions, which will be issued either by the Secretary of State or the Welsh National Assembly.

The purpose of the amendments is to set out in the guidance the matters that should be considered when any decision is taken, whether in relation to setting enforcement action or appeals. It is vital to take into account the age and character of a property, as one cannot easily bring all properties up to modern standards.

There are similar problems with listed buildings, when a balance has to be drawn between historical features of the building and the cost of any work, which it is important to ensure is not unreasonable. If it is excessive, it will be passed on in higher rents. A similar amendment was tabled in Committee, when the Minister said that guidance would be an appropriate way forward. The amendment results from the Minister's comments.

Amendment No. 46 is similar to Amendment No. 10. Throughout, the Government have maintained that they want to ensure a light touch in regulation—particularly on licensing of houses in multiple occupation. However, that is not stated anywhere in the Bill. On the contrary, the Bill provides for what could be a very heavy-handed approach, which is unnecessary in many cases.

Implementation of the Bill is in the hands of local authorities. The Government have acknowledged throughout that the private rented sector consists mainly of very small businesses. With the buy-to-let boom, a majority of landlords own fewer than three properties. There is therefore a considerable risk of disinvestment if heavy burdens are placed on small landlords. It is vital to recognise that many HMOs provide relatively low-cost affordable housing. Those will be lost to the market if over-the-top requirements are imposed.

The amendment is intended to emphasise the matters that the authorities should consider when making decisions relating to HMO licensing under Part 2 of the Bill. It sets out the factors that should be considered when any decision is made, whether in setting standards or imposing conditions.

It is vital to take into account the age and character of a property, otherwise we shall have new wine in old bottles. We cannot easily bring Victorian and Edwardian properties up to modern standards. Similarly, there are problems in dealing with listed buildings when, as I said, a balance has to be drawn against the historical features of the building.

By accepting the amendment, the Government would go some way to reassuring landlords that light touch regulation will become a reality. I beg to move.

Lord Rooker

My Lords, I shall deal with Amendments Nos. 9, 10 and 46 in that order, and separately. Amendment No. 9 is identical to the one tabled in Committee by the noble Lord. I appreciate that his concerns continue. The arguments against the amendment are substantially the same. Fears continue about the housing health and safety rating system and how it will operate. I shall try to allay those fears again as I have obviously not succeeded in Committee.

Clause 9 enables the appropriate national authority to give guidance to local housing authorities on the exercise of their functions under Part 1. That guidance will be about how properties are to be assessed using the new rating system and how authorities may act by using the enforcement options provided under Part 1.

Amendment No. 9 would add to the topics on which guidance may be given. I understand the desire to give a high profile to fire safety. I would certainly agree to that as it should be considered one of the important matters to which authorities must have regard. It is very important, as are all the other 28 hazards, should they be present to a serious degree.

We answered many of the points raised by the noble Lord in Committee, which I shall summarise again without going into great detail. First, I refer to the qualifications for environmental health officers. The new housing health and safety rating system is a change in approach, but it is still essentially an enforcement tool. It is not the first time that there has been a change to this kind of checking on properties, so environmental health officers are well versed and trained in swapping from one system to another. I hope that this system will be a vastly superior tool compared with the one that it replaces.

Environmental health officers are already well trained in risk assessment methods and can cope with the rating system in principle and practice. We therefore do not see a need for a new qualification, and have no evidence that the profession is asking for one. We accept the need for training to ensure that environmental health officers are familiar with the new system. They certainly need briefing and training in far more detail than Ministers receive. I remember being taken through the new process some considerable time ago. Even my refresher was before the draft Bill was published. I fully accept that professionals on the job will need to be trained, and we shall ensure that there is adequate training and will fund the start-up of such training.

The amendment envisages that guidance can advise in every case on how long an inspection could or should take. Inspections are likely to differ considerably. A Part 1 function as regards a category 1 hazard will have been fulfilled once the authority has carried out an inspection under the regulations to be prescribed under Clause 2, and has then taken appropriate action required under Clause 5.

New subsection (1)(g), which would be inserted by the amendment, does not make it clear in what circumstances authorities may need to compensate landlords. Landlords will have the right to appeal against improvement notices and prohibition orders, and compensation may be an outcome of an appeal. But compensation should be dealt with on appeal, when the expertise of the residential property tribunal will be available. We do not believe that compensation is a matter for Clause 9 guidance.

Advice on fire safety, as well as the advice on cold and damp, full structural problems and all the other problems that can arise will appear in the technical guidance to be given under Clause 9. The rating system is a form of risk assessment, which the new technique is all about. However, it is clear that houses in multiple occupation are likely to contain higher risks in relation to fire safety. There should be adequate means of escape from fire from all parts of a house in multiple occupation. Fire precautions and fire-fighting equipment will be required. The guidance under Clause 9 will deal with that and will be as comprehensive in its treatment of fire as the other hazards. It is also worth remembering that housing authorities will need to consult the fire authority over fire safety action. We believe that the legislation already contains sufficient references to fire safety.

The purpose of Amendment No.10 is to add further topics that the appropriate national authority may—not must—include in the guidance under Clause 9. I explained that the guidance under Clause 9 will fall into two categories: guidance about the way in which properties are to be inspected; and the way in which hazards are to be assessed using the new rating system. I shall not try to argue that authorities should consider at least some of the topics in the amendment, but we do not think that it is necessary to provide for those separately. If some were listed, that would seem to imply that others not mentioned were unimportant, whereas of course that might not be the case.

4 p.m.

Some of the items listed in the amendment are obviously not ones that can be dealt with in detail in broad guidance. For example, the nature and extent of works carried out will depend on the hazard. The effect of an improvement notice under Clause 1 I must be to remove a category 1 hazard, although it could of course go beyond that. What will it take to remove a hazard from cold in a particular property? It will be for the authority to decide how that hazard could be mitigated and therefore the extent and nature of the cost of the works. If no one has the resources and the remedial work cannot be started, the authority will have to consider a prohibition order. All those issues can be included where there is something useful to say in the guidance.

We have consulted on the draft enforcement guidance and we shall work through that in consultation with the key stakeholders to ensure that the guidance is as helpful as possible. Clearly, for example, we need to say something about listed buildings. But we think that to write some items on the face of the Bill is to invite additions on every single topic until we end up with something that looks like an index to the guidance itself. That would be going too far, but I am confident—and I hope that the noble Lord will take it from me—that we can cover these issues in the guidance.

I turn to Amendment No. 46. I fully accept that an amendment along the same lines was tabled in Committee in relation to general functions under Parts 1, 2, 3 and 4 and, indeed, Part 7. I agree with the spirit of the amendment. It is common sense that local authorities should have regard to the matters listed in items (a) to (f) in the amendment in exercising their houses in multiple occupation functions.

During our debate on HMO licensing, we sensed that both sides of the House trusted, and indeed had to trust, the local authorities to do things properly and to exercise their discretion in an appropriate way. We have no reason to believe that a reasonable local authority will not take into consideration the matters listed, but we think that it is a step too far to put them on the face of the Bill as a statutory duty.

The primary function of a local authority under Part 2 is to ensure that a licensed house is suitable for the number of occupants for which it is licensed, although it should take account of the age of the building or the costs likely to be incurred in requiring works to be carried out. We do not think that an authority should follow sets of principles that might thwart it in carrying out its primary function. On the other hand, what can be required may already be limited by statute, such as where listed building consent may be required.

We do not think that the amendment is necessary as, in most cases, local authorities will take account of matters such as those listed in the amendment. If, in a few cases, they fail to do so, the licence holder will have recourse to appeal against that decision. Therefore, a heavy-handed, unreasonable local authority cannot come along and put onerous conditions on property owners because there will be a perfectly reasonable appeal system in which people will have confidence. The noble Lord may want to come back to this point at Third Reading, although I sincerely hope that he does not.

We are confident that these issues will be covered, but if we start filling the Bill with too much detail, we shall end up wanting to put in even more. I hear myself saying things that I used to criticise Ministers for saying years ago when I was in Opposition in relation to similar amendments. It is so true, but I can well see the damage that would be done to the Bill if we put in some things and left out others, which people would then think were not important. That would send the wrong signals.

Lord Hanningfield

My Lords, I thank the Minister for that detailed reply. As he will acknowledge, I was trying to be helpful by tabling these amendments. Local authorities have to implement most of this area of the Bill and, as I know them pretty well, I think that they will do it well.

I was pleased to hear the Minister say that there will be some finance for training. I do not know how that will be provided but it will be important as many of the measures will be implemented by very small local authorities which sometimes have very few resources. They may well need extra finance and support in order to do so.

The Minister said many times that the whole matter is relative to guidance. I hope that between now and Third Reading he will be able to help us a little by writing to us and amplifying the matter. He mentioned that we may want to return to the issue at Third Reading. If it is not clarified a little more between now and Third Reading, we may have to do that. I totally accept that one does not want to put all that detail on the face of the Bill, but we want to make the Bill work well, particularly from a local authority point of view. I heard what the Minister said and I hope that it will be possible to amplify matters for us a little more in writing between now and Third Reading.

Lord Rooker

My Lords, whatever we have available, I shall be happy to share with noble Lords and noble Baronesses opposite.

Lord Hanningfield

My Lords, I thank the Minister for that and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 10 not moved.]

Lord Hanningfield moved Amendment No. 11:

Page 8, line 3, leave out "before" and insert "in seeking an affirmative resolution of"

The noble Lord said: My Lords, Amendment No. 11 would ensure that any guidance issued under this clause in regard to inspections or enforcement was properly scrutinised by both Houses of Parliament rather than simply published by the Government. In Committee, the Minister commented that he was willing to go away and have a look at this amendment to consider its merits. I hope that today he is able to give us a positive answer.

Given the encompassing nature of Clause 9 and the power that the appropriate national authority would have under its terms, I feel it is important that Parliament has an opportunity to consider any further guidance that is to be published. I believe that is a sensible and democratic way forward. I beg to move.

Lord Bassam of Brighton

My Lords, indeed, we did agree to think again about this matter, but I am afraid that we have come to the same conclusion that we drew previously. The guidance to which the noble Lord referred will deal essentially with technical matters and, of course, the enforcement options available. It is right that we should debate these issues energetically. We believe that we have the balance about right with the guidance being subject to the negative resolution procedure. That should not preclude Parliament giving active consideration to the issues covered by the guidance and it should ensure that those issues are dealt with properly and soundly.

We consider that the quality of the guidance is essential to the proper operation of Part 1 of the Bill, and I can give the noble Lord the assurance that we shall consult extensively on that matter because we want to ensure that we get it right. However, at this stage, we are not persuaded that it is necessary for the guidance to be subject to the affirmative resolution. I am not aware that the Delegated Powers and Regulatory Reform Committee has encouraged us to think again about this matter. By and large, we stick very largely to the committee's advice and guidance on these matters, and it did not draw out this issue for our attention. We think that we have this about right.

However—I want to make this clear to the noble Lord—we think that the consultation will be very important and we look forward to receiving comments, particularly from the Local Government Association and the professionals involved.

Lord Hanningfield

My Lords, I thank the Minister for that reply, although I am disappointed that the Government have obviously not been able to look at the matter again, as they said they would in Committee.

It is good to hear that there are to be extensive consultations. In discussing which areas of guidance it is important should be on the face of the Bill and which should not, we return to our debates on previous amendments and discussions on when things probably do not need to be on the face of the Bill or to be scrutinised by Parliament. Between now and Third Reading, we must assess what we consider to be the really important issues.

As I said at the previous stage, I hope that the Government will also give some thought to the matter in order that we can work together to achieve a balance before Third Reading. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 [Improvement notices relating to category I hazards: duty of authority to serve notice]:

Lord Rooker moved Amendments Nos. 12 and 13:

Page 9, line 9, leave out "interim or final".

Page 9, line 10, after "under" insert "Chapter 1 or 2 of".

On Question, amendments agreed to.

Clause 12 [Improvement notices relating to category 2 hazards: power of authority to serve notice]:

Lord Rooker moved Amendments Nos. 14 and 15:

Page 10, line 11, leave out "interim or final".

Page 10, line 12, after "under" insert "Chapter 1 or 2 of".

On Question, amendments agreed to.

Clause 14 [Suspension of improvement notices]:

Lord Hanningfield moved Amendment No. 16:

Page 11. line 28, at end insert—

"(6) An improvement notice shall be suspended where the occupier of the premises impedes or obstructs a landlord from complying with the notice.

(7) Such suspension shall continue until the tenant allows the necessary work to proceed unimpeded or the landlord requires vacant possession.

(8) An improvement notice shall be suspended where following the service of the notice, the landlord has put in hand measures to cause the property to revert to single household occupancy."

The noble Lord said: My Lords, Amendments Nos. 16 and 17 attempt to clarify the status of improvement notices should the property revert from multiple to single occupation. That is to ensure that if a notice were issued to complete improvement work, but the state of the property were to change in the interim—should the property change hands or, as is more specific to the amendment, should a landlord cease to rent out the property and decide to change it to single occupancy—the authority could issue a fresh notice that was applicable to the property under its new status and the status of the original improvement notice would be revised.

Amendment No. 17 is designed to clarify the position of landlords who are faced with obstructive or unco-operative tenants. Under our amendment, the landlord would not be liable for incomplete work or, being unable to undertake any of the work in the notice, if he was prevented from doing so by the tenants.

We believe that these are important amendments so we are tabling them again. The Minister commented in Committee that he had some sympathy with them, but was reluctant to commit himself in full. I would ask him: do they not highlight a genuine area of possible concern? Amendment No. 16 clearly picks out a weakness in the Government's argument where one has a hazard of an obstructive tenant, in effect, prohibiting work on a category 1 hazard to go ahead.

The Minister also commented that it was in the hands of the local authority to decide whether an improvement notice should be revoked if a property reverts back to single occupancy. I am afraid that to us that seems a little hit and miss. I am all for local discretion, but we might be faced with a differing application of this understanding from one local authority to the next. Surely, we need something on the face of the Bill that would make it clear what was required of an authority were such a scenario to arise.

I hope that the Minister can give us some more positive news on these amendments today, or at least ask his officials to have another look at them before Third Reading. I beg to move.

Lord Bassam of Brighton

My Lords, as the noble Lord said, these amendments have been debated before. Clause 14 provides for the suspension of an improvement notice made under either Clause 11 or Clause 12 at the discretion of the local authority until a time or the occurrence of an event specified in the notice. Under subsection (2), the time specified may coincide with a change of occupancy. Subsection (3) provides that a specified event may be a breach of an undertaking made by the owner or landlord. Those examples do not prevent other times or events being set out.

We certainly accept that there are some concerns and that those valid concerns fuel this amendment, but we cannot rule out that a tenant may fail to co-operate with the landlord in carrying out remedial work required under an improvement notice. That said, we remain unconvinced that we need a specific provision which relieves the person on whom an improvement notice is served of the responsibility for complying with it, even if he is obstructed in carrying out the necessary remedial works.

It cannot be in anyone's interests that enforcement action, on which the local authorities will have embarked for a very good reason, should simply be deferred because the person on whom the notice is served has run into some difficulty. While Clause 29 makes it an offence to fail to comply with an improvement notice that has come into operation, it is of course a defence in any proceedings that the person on whom the notice was served had a reasonable excuse for failing to comply with it.

In my view, this provision strikes the right balance. We need to bear in mind that the improvement notice has been served in order to deal with a hazard from which people in most cases occupying these premises need some form of protection. Normally, that would be a very serious situation indeed. We do not believe that the first of the two amendments would work very well.

Clause 16 imposes duties and powers on the local authority in relation to the revocation of an improvement notice. An improvement notice must be revoked where the local authority is satisfied that the requirements of the notice have been complied with. In the case of a notice served in response to a category 1 hazard, the authority may revoke a notice only if' it is satisfied that there are special circumstances making revocation appropriate.

In the case of a notice served in response to a category 1 hazard in a house in multiple occupation, the local authority may come to the view that reversion of the premises to single household occupancy amounts to special circumstances. But I suggest to the noble Lord that this is a matter that the authority should be free to decide. After all, we hear much from the noble Lord about local authorities being free to make their own decisions. We believe that this is one of those circumstances. It does not follow that reversion has eliminated the hazard, of course, or made it less severe. That would depend on the hazard itself and where on the premises the hazard occurs.

I accept that in the generality of cases risks from fire are greater in HMOs than in single household premises. Therefore, the kind of fire precautions required in an HMO might no longer be appropriate, but other equally dangerous hazards may remain, irrespective of the type of property. For that reason I cannot agree that local authorities' discretion should be removed from them entirely when a property reverts. We believe that such decisions are best left closest to where they need to be made and in the hands of the local authorities. I hope that, having heard that, the noble Lord will withdraw the amendment.

4.15 p.m.

Lord Hanningfield

My Lords, I thank the Minister for that reply. It is somewhat similar to that given in Committee and not as helpful as one may have hoped for, particularly in the case of a house reverting to single occupancy, which would change the situation. There should be some clarity on that situation. I shall consider further whether to pursue the matter at the next stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 [Revocation and variation of improvement notices]:

[Amendment No. 17 not moved.]

Clause 20 [Prohibition orders relating to category 1 hazards: duty of authority to make order]:

Lord Rooker moved Amendments Nos. 18 and 19:

Page 14, line 7, leave out "interim or final".

Page 14, line 8, after "under" insert "Chapter 1 or 2 of".

On Question, amendments agreed to.

Clause 21 [Prohibition orders relating to category 2 hazards: power of authority to make order]:

Lord Rooker moved Amendments Nos. 20 and 21:

Page 14, line 44, leave out "interim or final".

Page 14, line 45, after "under" insert "Chapter 1 or 2 of".

On Question, amendments agreed to.

Clause 24 [Operation of prohibition orders]:

[Amendment No. 22 not moved.]

Clause 28 [Hazard awareness notices relating to category 1 hazards: duty of authority to serve notice]:

Lord Rooker moved Amendments Nos. 23 and 24:

Page 18, line 27, leave out "interim or final".

Page 18, line 28, after "under" insert "Chapter 1 or 2 of".

On Question, amendments agreed to.

Clause 29 [Hazard awareness notices relating to category 2 hazards: power of authority to serve notice]:

Lord Rooker moved Amendments Nos. 25 and 26:

Page 19, line 37, leave out "interim or final".

Page 19, line 38, after "under" insert "Chapter 1 or 2 of".

On Question, amendments agreed to.

Clause 35 [Power of court to order occupier or owner to allow action to be taken on premises]:

Baroness Hanham moved Amendment No. 27:

Page 22, line 22, after "court" insert "or county court"

The noble Baroness said: My Lords, the purpose of Amendments Nos. 27, 28 and 29 is to give the county courts consent order current jurisdiction with magistrates' courts, to make orders to allow action to be taken on the premises. Obtaining access or facilities to carry out works can cause difficulties to owners served with notices. Experience has shown that some tenants are not willing to allow work to be done.

The advantage of an application to the county court is that the county court can make an order, breach of which is punishable as an offence. It can make a mandatory order which can be enforced by a fine and/or imprisonment, so it becomes a criminal matter. Very usefully, that can include the power to suspend a committal order. The judge can allow the tenant in such a situation time to comply with the sanction of imprisonment in default. That can be a useful means of dealing with someone who is particularly recalcitrant when it comes to allowing work to be done. I beg to move.

Lord Rooker

My Lords, I may be able to satisfy the noble Baroness by pointing out to her that the magistrates' court orders can be dealt with in exactly the same way as county court orders. Section 63(3) of the Magistrates' Courts Act 1980 states: Where any person disobeys an order of a magistrates' court … to do anything other than the payment of money or to abstain from doing anything the court may—

  1. (a) order him to pay a sum not exceeding £50 for every day during which he is in default or a sum not exceeding £5,000; or
  2. (b) commit him to custody until he has remedied his default or for a period not exceeding 2 months".
Section 17 of the Contempt of Court Act 1981 allows that power to be exercised either by the court's own motion or by an order on complaint. I believe that that covers the point made by the noble Baroness.

Baroness Hanham

My Lords, I am grateful to the Minister for that reply. It is most helpful to have that on the record. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 28 and 29 not moved.]

Clause 36 [Power of court to authorise action by one owner on behalf of another]:

Baroness Hanham moved Amendment No. 30:

Page 23, line 39, at end insert— (7) When making an order under this section the court may make provision for the recovery of any costs reasonably incurred by the applicant in carrying out the required action.

The noble Baroness said: My Lords, I can be quite brief. Where action is required to be carried out and the applicant has to go to court, he may well incur expense which would otherwise fall upon the person who is the subject of the order.

The purpose of this amendment is to give the court power to allow the applicant to recover the reasonable costs. Otherwise, the person who is the subject of the order may be relieved of costs. Instead, in the absence of this provision, the applicant has to meet the costs without being able to recover them.

I hope that the Minister will have the same snappy and helpful reply to this amendment as he had for the last one. I beg to move.

Lord Rooker

My Lords, indeed I have to use only one sentence of the speaking notes. I do not believe that the amendment is necessary because the courts have inherent power to award costs.

Baroness Hanham

My Lords, I thank the Minister for his reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 39 [Effect of Part 4 enforcement action and redevelopment proposals]:

Lord Rooker moved Amendments Nos. 31 and 32:

Page 24, line 33, leave out "an interim or final management order under" and insert "a management order under Chapter 1 or 2 of"

Page 24, line 36, leave out "interim or final"

On Question, amendments agreed to.

Clause 40 [Emergency remedial action]:

Lord Rooker moved Amendment No. 33:

Page 25, line 19, leave out "interim or final management order is in force under" and insert "management order is in force under Chapter 1 or 2 of".

On Question, amendment agreed to.

Baroness Hanham moved Amendment No. 34:

Page 26, line 10, leave out from beginning to "the" in line 11 and insert "No later than the day when the authority start taking emergency remedial action (or, if that is not possible) as soon after that day as is possible"

The noble Baroness said: My Lords, the amendment brings the procedure for service of notices in relation to the emergency remedial action in line with that for emergency prohibition orders under Clause 43(3)(4).

While there is an obligation to give notice to occupiers at the moment, the duty to notify others, particularly the owner, is to do so within the period of seven days after the works start. If the occupiers are to be notified at the time the work is done, so should the owner. Otherwise, the owner will be ignorant of what is happening. Indeed, the owner may have commissioned work in the mean time, be faced with questions from the occupiers and, if he has not been served with the notice, may be totally ignorant of what is going on.

I believe that if at all possible the owner should be told before the work starts and, in any event, as quickly as possible after the works have started. The proposed amendment is intended to provide for this to be done. I beg to move.

Lord Rooker

My Lords, Clause 40 enables a local authority to take emergency remedial action to deal with a category 1 hazard that presents an imminent risk of serious harm to the occupiers of residential premises. Such action may be taken in these exceptional circumstances without prior notice to the owners of the property, but Clause 40(7) requires the authority to serve notice on them afterwards, within seven days from the date on which they started to take the emergency action.

The amendment would require an authority to serve such notice no later than the day on which it started to take action or, if that is not possible, as soon after that day as possible.

I recognise the rationale for the amendment is that it would bring the procedures into line with those which an authority must follow when making an emergency prohibition order under Clause 43. However, we believe that the situations are different. In the latter case, the urgency is to have the use of property prohibited in the interests of health or safety. It is therefore essential for the owner or landlord to know of the situation as a matter of urgency, in order that he can do what is necessary to put the prohibition into effect.

In the case of the emergency remedial action to which this amendment relates, the top priority is for the local authority to do the necessary work itself, for which Clause 40 provides.

Notifying the owner or the landlord is of course essential, but it is not the top priority. As I have said, the top priority is to get the job done. The authority should not be distracted from that task by the need to prepare the kinds of documents necessary to support the ordinary, non-emergency kind of remedial action. This is not shortcutting. The nature of the two emergencies is somewhat different, and that is the reason why there is a different procedure in the Bill.

Baroness Hanham

My Lords, I hear what the Minister says. I am bound to say that, if an authority is notifying one person, in this day and age—when you can duplicate, run off and print notices at will from a computer—it is very odd that they cannot notify the owner at the same time. That is probably taking the situation too far. However, I thank the Minister for his reply and, for today, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 41 [Notice of emergency remedial action]:

Baroness Hanham moved Amendment No. 35:

Page 26, line 42, at end insert— (f) the reason why the authority consider it necessary to take emergency remedial action

The noble Baroness said: My Lords, we believe it is important that the local authority spells out why it is taking emergency remedial action. It needs to justify why the ordinary improvement notice procedure is not appropriate.

The authority could run up considerable costs, without the landlord having a prior right to appeal to the residential property tribunal. A statement of reasons is required to accompany an improvement notice. No such provision has been made in the case of emergency action, where surely it is more important that the landlord should be told why the authority is taking this step. I beg to move.

Lord Rooker

My Lords, I think that I can satisfy the noble Baroness that the amendment is unnecessary, for reasons which I will explain.

As I said earlier, Clause 8 was introduced into the Bill in the light of the concerns expressed by the Joint Committee on Human Rights. It requires local authorities to prepare a statement of the reasons for their decision to take one of the kinds of enforcement actions available to them. A copy of that statement must accompany every improvement notice, copy of a notice, or copy of a prohibition order which is served under the provisions of the Bill.

I can confirm that notices of emergency remedial action are regarded as improvement notices for this purpose, by virtue of Clause 8(5). For the sake of completeness, the requirement also extends to emergency prohibition orders. The matter is therefore well covered.

Baroness Hanham

My Lords, I thank the Minister for that very helpful reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 43 [Emergency prohibition orders]:

Lord Rooker moved Amendment No. 36:

Page 27, line 45, leave out "interim or final management order is in force under" and insert "management order is in force under Chapter 1 or 2 of".

On Question, amendment agreed to.

Clause 46 [Demolition orders]:

Lord Rooker moved Amendment No. 37:

Page 30, line 38, leave out "an interim or final management order under" and insert "a management order under Chapter 1 or 2 of".

On Question, amendment agreed to.

Baroness Hanham moved Amendment No. 38:

Page 31, line 12, leave out "in certain circumstances" and insert "as specified by the appropriate national authority"

The noble Baroness said: My Lords, the amendment would require the appropriate national authority to specify the circumstances in which compensation paid following the making of the demolition order may be repaid.

The noble Minister commented in Committee that this was an area covered by the 1985 Act and was a job for the Lands Tribunal, and consequently was loath to get involved. I can understand such a sentiment: however, I must press the Minister on this issue. Does he not see that there is a potential problem with leaving such a vague and bland assurance on what is actually quite an important matter? I beg to move.

Lord Rooker

My Lords, I believe that the amendment is unnecessary because the point is covered.

Where a local authority has a duty to take the most appropriate enforcement action under Clause 5 in relation to a category 1 hazard in residential premises, making a demolition order is one of the courses of action available to it, unless the premises are subject to a management order under Part 4.

The amendment would require the appropriate national authority to specify the circumstances in which compensation, paid following the making of a demolition order, may be repaid.

The amendment would conflict with Section 5(84)(a) of the Housing Act 1985, which was inserted by paragraph 30 of Schedule 15 to the Bill and makes detailed provision for repayments and requires disputes to be referred to the land tribunals. That is why the amendment is unnecessary—it is covered elsewhere.

4.30 p.m.

Baroness Hanham

My Lords, I am tempted to say, "of course". I thank the Minister for drawing our attention to that matter, which will be recorded in Hansard. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 39 not moved.]

Clause 47 [Clearance areas]:

[Amendment No. 40 not moved.]

Clause 49 [Power to charge for certain enforcement action]:

Lord Hanningfield moved Amendment No. 41:

Page 33. line 38, at end insert—

The noble Lord said: My Lords, Amendment No. 41 gives a free-standing right to appeal against the amount of any charge imposed by the local authority in connection with the service of an improvement notice and other orders. At the moment the residential property tribunal has authority to interfere with the charge only if it upholds the appeal against the notice, and so on. The recipient of a notice may consider the amount of the charge excessive. This is often a contentious matter between landlords and local authorities. Therefore, there needs to be a simple means of appealing against such charges. None is provided for at present. Although the Government have a power to prescribe maximum charges a high figure may be fixed. The amount of work undertaken by the authority may not justify the charge which it is seeking to impose, so there should be a way for the recipient to challenge that without having to challenge the underlying notice. I beg to move.

Lord Rooker

My Lords, I recognise that owners and landlords will wish to object to a local authority charge that they think is unreasonable. It is natural and I fully accept that. However, Clause 49 makes it clear that such charges must be reasonable and, as an additional safeguard, they must not exceed such an amount as the appropriate national authority may specify by order. The current order covering this matter sets a ceiling of £300. We have taken no decision on any future ceiling, but we would certainly expect to consult on any future order. We have to strike a balance. On the one hand, local authorities should not levy excessive charges; on the other hand, it is legitimate for them to seek to recover the reasonable cost of making privately rented properties healthy and safe, rather than increase the burden on council tax payers generally.

There has not been a case made for creating what would be another category of appeals to the residential property tribunal, which will already have much to do under the Bill. The proper approach to this matter is through the ordinary checks and balances that apply to local authorities. There is a limit there now and if we seek to change the limit we will certainly consult on any new regulations. The current situation is not that onerous.

Lord Hanningfield

My Lords, I thank the noble Lord for that answer. I am disappointed that he would not agree to the suggestion of a further resource for landlords to appeal. I accept that the charges may not be unreasonable at the moment, but they could be in future. I shall have to reconsider the matter, but meanwhile I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 51 [Repeal of power to improve existing enforcement procedures]:

[Amendment No. 42 not moved.]

Clause 55 [Licensing of HMOs to which this Part applies]:

Baroness Maddock moved Amendment No. 43:

Page 37, line 10, at end insert— ( ) any HMO in the authority's district of 3 storeys or above,

The noble Baroness said: My Lords, this somewhat contentious issue is about how wide we draw the definition of a house in multiple occupation. We noted the Government's intention to set the threshold for the mandatory licensing scheme in secondary legislation, so we do not expect the Government to accept the amendment. It is a probing amendment which will give us an opportunity to debate further why many of us believe that we should have a wider, more inclusive definition of which types of properties should be included in the licensing schemes.

So far Ministers have indicated their intention that the accompanying regulations will require only HMOs with three or more storeys and five or more occupants to be licensed. The Office of the Deputy Prime Minister itself estimates that this will cover only about 120,000 HMOs—about 19 per cent of the 638,000 HMOs that are estimated to be in England. A key concern of many organisations is that the proposed threshold will leave thousands of vulnerable tenants in unidentified and hazardous HMOs because they will fall outside the scope of those considered thus far by the Government. At the very least, all HMOs with three or more storeys should be licensed.

There is good evidence for that. In particular, the 1996 Entec report on fire risk identified all three-storey HMOs as high risk, regardless of occupancy levels. I discussed this in 1996 in another place in a previous Housing Bill. Local authorities have discretionary powers to extend licensing to three storey HMOs with fewer than five occupants, but that will not be sufficient to protect tenants. It will not be that easy to apply for extended areas for additional licensing of HMOs. Even if that does happen, the Minister will have to approve it and it will be limited to a five-year period.

It will be a lengthy process in which local authorities will have to consult all the interested parties on the need for additional licensing of HMOs. Landlords are likely to be the main respondents, so the process may be protracted. The tenants in such buildings are possibly one of the groups that are hardest to reach in a consultation. That process would have to be repeated once every five years and would be onerous. What if there was a future Secretary of State who was not quite as generous as the current Secretary of State? That person would be able to reject any such schemes.

I know that the Government will say that their own proposals are the answer, but it is not a simple answer and is not satisfactory. I know that the Local Government Association is keen to see the scope widened in the definition and has suggested to me a wider amendment than this.

I have put two other amendments in this group. Amendment No. 44 is designed to reduce the time period by which local authorities must have satisfied themselves that there is no Part 1 function to be exercised. Local councils need to take action against seriously unsatisfactory living conditions—category 1 hazards—as well as poor management. I have mentioned the vulnerability of the client group occupying HMOs and the LGA, which represents local authorities who will be involved, believes that the five year time frame is too long. In Committee I moved an even shorter period—one year. I am now changing that to three years, but five years is a long time to leave serious hazards in place. I hope that the Minister will look favourably at that.

Amendment No. 76 refers to the extension of selective licensing. It allows local authorities a third set of general conditions enabling them to apply to extend the circumstances for selective licensing. I know the Government will say that this is another way to extend their proposed category of HMOs.

Under the Local Government Act 2000, local authorities have a duty to promote the well-being of their communities. We believe the current provisions in the Bill are too limited, as they will not allow local authorities the opportunity to exercise that duty in its widest sense. We have said at the previous stage, and outside this Bill, that low demand and problems arising from anti-social behaviour are circumstances where selective licensing could prove a very useful tool for local authorities trying to ensure the private rented sector is effectively managed. If the Government were to accept a third set of conditions, we believe that such circumstances could include areas that have a large amount of seasonal holiday letting, or student accommodation.

The NUS is also concerned about the possible definition of an HMO. I mentioned in Committee that I used to represent a ward that had a lot of student accommodation. Very little of it was three-storey, but, by golly, they were houses in multiple occupation, and they certainly needed licensing. The local authority would find it difficult to do so if it had to go through this cumbersome process every five years.

We have pulled back a bit. We are now asking for all houses of three storeys to be included in the definition, and we have pulled back on other things. However, concerns on this issue have been expressed by Shelter, which has experience of vulnerable clients who live in this sort of accommodation; from the NUS; and from the Local Government Association, which represents the authorities who will have to carry out the legislation we are discussing. I hope we can hear from the Minister today that, when the regulations are brought out, the points raised by myself and many others will have been listened to. I beg to move.

4.45 p.m.

Lord Bassam of Brighton

My Lords, I am grateful to the noble Baroness for reiterating the case she has made so energetically at earlier stages of the Bill, and for saying essentially that these are probing amendments. It is important for us to go over this issue one more time, and I hope the noble Baroness will not mind if I spend a little time doing exactly that. I want to offer her some reassurance, and also ensure that the Government's position is clearly understood.

If we were to accept Amendment No. 43, it would extend the scope of licensing to include all HMOs of three storeys, rather than restricting the mandatory requirement to those occupied by five or more persons, forming at least two households. We had already debated this when the noble Baroness moved Amendment No. 58 in Committee. The Government are aware that the risk of injury or death from fire in a three-storey HMO is higher than that in smaller HMOs, or indeed a house of a similar size in single occupation. We have made that clear from the outset. That is why the starting point for mandatory licences has been pitched at three storeys—which includes basements and attics—in residential use. The amendment fails to recognise that the number of occupants in the house is also a factor in determining the risk of fire occurring. Conversely, the risk is diminished where a building is occupied by only two, three or four people.

The Government do not believe in undue regulation, and I said last time that we need to draw a line somewhere. We estimate that between 100,000 and 120,000 HMOs would be subject to the mandatory licensing scheme if we set the scope at those occupied by five or more people. The truth is, however, that we cannot be precise, because the data on this are, as I am sure we can all accept, rather patchy. If we were simply to say that licensing must apply to all HMOs—which is, I think, ultimately where the noble Baroness is coming from—this would have a significant impact on local authority resources. It would involve bringing in thousands of extra properties into the compulsory licensing regime unnecessarily, placing additional unwanted, unwarranted and unhelpful burdens not just on local authorities, but also on landlords. That could lead to landlords leaving the market or even being discouraged from entering it, which would be highly undesirable and not in anyone's interests.

That said, local authorities can impose licensing on three-storey houses not within the scope of the mandatory regime if they identify problems with the management of the properties. The noble Baroness referred to her time on Southampton council and her experience with students. I am familiar with exactly those sorts of problems, and I have little doubt that local authorities, when confronted with them, will address them appropriately—and, where required, outside the mandatory regime.

Our mind is not closed on the scope of mandatory licence arrangements, but we want to tread cautiously, to ensure that the regime is properly targeted in the first instance. We have undertaken to carry out a review of licensing within three years of it coming into force, and that is probably about the right timescale. If the review proves that we need to change the scope of licensing, then we have the powers to do so through regulation, which is why it is important that this matter should be reserved for secondary legislation. We need to see how the regime works before extending, or indeed reducing, its scope.

Amendment No. 44 provides that the requirement as currently drafted in Clause 55(6)(b)—that a local authority must satisfy itself that there are no Part 1 functions to be exercised by it within five years—is reduced to three years. Perhaps there has been some misunderstanding over this provision, and it should be clarified.

The provision places a statutory duty on local authorities to ensure they discharge the functions in relation to a licensed HMO as soon as reasonably practicable, and, in every case, within five years. This is a new and significant change in how a local authority must deal with defects in high-risk HMOs within its area. Under the existing law there is no requirement for an authority to do anything about housing conditions—it simply has a general power to act. Under this provision, the authority must act, which those of us in particular who have been involved in housing action must welcome. I certainly would have welcomed this power as a local authority chair of housing, or as a leader of an authority where there were a lot of HMOs.

Having said that, we need to be more realistic about how the authority can discharge the function, and within what time limits. For a start, the local authority need not necessarily carry out an inspection at all. The duty can be discharged if the authority is satisfied on the basis of evidence available to it, such as a report from a surveyor or previous inspector, or information supplied by a landlord in connection with the application for a licence. In those circumstances the duty could be discharged within a matter of days or even weeks.

However, I accept that many authorities will discharge their duty by means of an inspection. We expect local authorities to prioritise their inspection regimes based on the information available to them, and their knowledge—or perhaps the lack of it—of the property concerned. An authority would want to inspect the highest risk properties first and possibly leave those HMOs that have recently been inspected and given a clean bill of health until the end.

The crucial point is that the provision does not allow a local authority to wait up to five years to discharge its functions—it must do so as soon as is practicable. Five years is a maximum, not the norm. It would be perfectly possible to set a time limit of 12 months, as the original Committee amendment sought, or three years, as this amendment suggests. But there are real and practical difficulties. Local authorities with a large number of licensable HMOs would have to divert other resources to discharge the function in a shorter period, perhaps even putting people at risk. This means that they would be unable to deal with real problems relating to health and safety in other rented accommodation.

The Government think that five years, therefore, is appropriate as the latest time within which the functions can be discharged, since it relates to the normal period for the licence and ensures that within that time, all licensable HMOs in England and Wales are given a clean bill of health as well as being free from hazards which require enforcement under Part 1. Of course, in an ideal world, all properties would be free of hazards from day one, but we do not live in an ideal world—we have to deal with what is there.

If an authority is confident that with existing resources it can inspect all licensable HMOs in 12 months or three years, it will be perfectly free to do so. But for the reasons given, the Government are not persuaded that it is appropriate to require them to comply with a shorter time frame. I hope that the noble Baroness feels able to withdraw her amendments.

Amendment No. 76 relates to Clause 78, which provides that a local housing authority may designate all or part of their district as subject to selective licensing where two conditions are met—if it is, or is likely to become, an area of low housing demand or it has a significant and persistent problem with anti-social behaviour, to which the inaction of private landlords is a contributory factor. In either case, the local housing authority must believe that the designation, together with other measures, will help lead to an improvement in the social or economic conditions of the area.

Clause 78(7) allows the appropriate national authority to specify other criteria for making a selective licensing scheme to deal with other housing challenges where licensing could bring about positive benefits. Clause 78(8) confirms that additional criteria may be related to more general protection of private rented sector tenants.

Amendment No. 76 would add a third set of grounds for a local authority to seek to designate an area for selective licensing. These additional grounds would be problems arising from ineffective management of privately rented properties in the area. Selective licensing is intended to be a targeted measure, and this amendment would effectively subvert that aim. Quite frankly, the amendment is so broad that it would allow local authorities to seek to introduce selective licensing of the whole of the private rented sector in their area, a result that is contrary to what we are trying to achieve with these provisions.

That said, it is perhaps worth reiterating that Clause 78(7) allows the appropriate national authority to add to the grounds for selective licensing in the future. Furthermore, we have made a commitment to review the operation of selective licensing within three years of its implementation. So there is a clear timetable in place for examining whether there are additional problems for which selective licensing could prove a useful tool.

I hope that those comments satisfy the noble Baroness. I do not think that the measures she suggests are right or proportionate but that they would lead to unwelcome and overbearing burdens on the local authority. For that reason, they could become unworkable and subvert what I think is generally agreed to be an appropriate way of dealing with problems in the houses in multiple occupation sector and measures which the local authorities and the Local Government Association have, in broad terms, signed up to and supported with some enthusiasm.

Baroness Maddock

My Lords, I thank the noble Lord for that full reply. It is important to say that all the measures that I have proposed are being asked for by local authorities. Not for the first time, I welcome the fact that there is a timescale for reviewing how this will proceed and that some of the points we have made here and at previous stages of the Bill will be considered.

I think that the proposed threshold for mandatory licensing of only large houses in multiple occupation—those with three or more storeys and five or more occupants—is over-cautious and inadequate, but the Government have put their case. I believe that there will be considerable risk to people in these properties from fire. I certainly hope that if this proves the case even before three years are up, the Government will revisit the issue.

I have already suggested periods in which it is reasonable for landlords to take action—three years, five years and one year. I am quite clear that three years is a reasonable time in which to deal with a category one hazard, and I think that local authorities are as well, so I am very disappointed that the Government have not moved on that issue. We are talking about severe hazards.

Amendment No. 76 would give local authorities the very discretion that the Government have been saying they have given them in legislation for a number of years. We have welcomed that legislation. This is what is so frustrating for local authorities. With one hand we give them discretion and powers to do things, but when we see the detail of some Bills we decide that we will not give them those powers after all. Given that the Government have been cautious in how wide the scope is for bringing in licensing of houses in multiple occupation, to draw so tightly the other areas to which local authorities can extend is not helpful. However, I welcome the fact that the Government will review this in three years' time.

These are important issues. I think that the Government realise that, and all we can hope is that as they draw up the regulations, our words ring in their ears. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 44 not moved.]

Clause 56 [Designation of areas subject to additional licensing]:

Lord Hanningfield moved Amendment No. 45:

Page 38, line 10, after "designation" insert "including publicising its intent both electronically, outside the relevant property or properties and in the local media"

The noble Lord said: My Lords, we discussed this matter at some length in Committee. Amendment No. 45 would place on an authority a duty to make public as wide as possible its decision to extend the licensing scheme to a certain property.

We have just had a debate about local discretion for local authorities. As the Minister knows, I am much in favour of giving local authorities additional powers. In fact, I fight the whole time for the Government to give my own authority more power. However, on this issue it is important that we put in place a specific and understood mechanism by which a local authority should be able to inform local people of its decision. As drafted, the Bill provides that local authorities should take "reasonable steps". We on these Benches do not feel that that is sufficient. What exactly is meant by "reasonable steps"? I beg to move.

Lord Bassam of Brighton

My Lords, Clause 56 permits individual local housing authorities to extend licensing beyond the scope of mandatory licensing by designating part or all of its areas subject to additional licensing for specified descriptions of HMOs. Before making a designation, the local authority must consider that a significant proportion of HMOs of that description is giving rise to or is likely to give rise to problems to occupants or members of the public because of poor management of that stock.

As we have said in the past, it is important that regulation is targeted at properties where the worst problems exist. Often these sorts of properties may well be concentrated in a particular area, such as areas with a high number of properties let to students. Such properties often have two storeys and are occupied by four people. They fall outside the type of property that is subject to mandatory licensing.

5 p.m.

Amendment No. 45 would require a local housing authority, in addition to consulting those likely to be affected by an additional licensing designation, to publicise the intent of the designation electronically outside the relevant properties and in the local media. We debated this proposal in Committee, for both additional HMO licensing and selective licensing. I appreciate the point that the noble Lord, Lord Hanningfield, has made—indeed, I have some expressed sympathy with it—but I am going to disappoint him by saying that I am unconvinced that amending the provision in the manner suggested would be of benefit.

I shall briefly put the case for the status quo. There is nothing to be gained by prescribing to local authorities the methods that they must use to disseminate information concerning consultations on licensing schemes. I would be rather surprised if a local authority chose not to use any of the three forms of publicity that are specified in the amendment, but I would trust that the authority in question knew its own business well enough and was able to decide how best to contact the relevant parties. After all, Clause 56(3)(a) provides that local housing authorities should take reasonable steps to consult those likely to be affected by the designation. Authorities will know that any failure to take their consultation requirements seriously could provoke a judicial review. Moreover, the appropriate national authority will need to be satisfied that effective consultation has taken place before it will confirm an additional licensing scheme.

The noble Lord, Lord Hanningfield, the noble Baronesses, Lady Hanham, Lady Hamwee, and Lady Maddock, and I have a great deal of local government experience between us. I was thinking of adding it all together and telling everybody how much experience we have, but I have declined from that act of mathematics. Suffice it to say that we have bags of local government experience and we all know how important consultation is. We know that local authorities are very imaginative in consulting with communities in different ways, by which I mean interested communities, at which the clause is aimed.

We should trust them to do exactly that. I am grateful for the amendment that the noble Lord, Lord Hanningfield, has brought forward. We have had some useful discussion about it. I hope that local authorities will exercise their imagination and ensure that those who need to know, know, and that they can understand with some ease and clarity the information that gets to them. The amendment does not necessarily represent the right way to go about achieving that. It is not something that one can so easily prescribe in primary legislation, but the issue remains important.

Lord Hanningfield

My Lords, I thank the Minister for his answer. He has obviously accepted our point that consultation and publicity need to be very wide. As I said earlier, a great deal of the consultation is going to be implemented by very, very small district councils, which have neither the resources nor, sometimes, the capacity to do it. Recent surveys of local government have shown that some of them lack the ability to do it. I know of one or two district councils which are unable to cope with their responsibilities at the moment. I accept that the larger authorities have the mechanisms in place, but it would have helped to make clear to those very small authorities the way forward. However, I accept what the Minister has said.

Lord Greaves

My Lords, I am not sure what the noble Lord means by "very, very small" authorities. I know that he is a county man and that he may consider many districts to be very small, but does he not accept that many small authorities are better at consulting and are closer in touch with their public than some of the very big ones?

Lord Hanningfield

My Lords, I said "very small" authorities. I am in the process of helping one or two very small authorities deal with the complexities of modern-day legislation. There are some very good small local authorities, but there are some very small ones which lack capacity and need advice and support in meeting the requirements of some modern legislation. Some advice in the Bill might help them. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 46 not moved.]

Clause 61 [Requirement for HMOs to be licensed]:

Lord Rooker moved Amendment No. 47:

Page 40, line 28, at end insert "Chapter 1 of".

On Question, amendment agreed to.

Clause 62 [Temporary exemption from licensing requirement]:

Lord Hanningfield moved Amendment No. 48:

Page 41, line 18, at end insert—

"(2A) An owner of a property in the process of selling that property shall be entitled to a temporary exemption up to a maximum of three months, and the subsequent owner shall be entitled to a similar temporary exemption period in which to make the necessary preparations to obtain a license, if a license is required under the terms of the Act."

The noble Lord said: My Lords, in moving the amendment, I shall speak also to Amendment No. 69. An amendment that was similar to Amendment No. 48 was discussed in Committee. I am pleased to inform the Minister that we have returned with a slightly revised version and I know that he will be hard pressed not to accept it today.

On that note of optimism, perhaps I may take a moment to explain our important yet subtle change. We can all agree that the licensing requirement could unfairly penalise people who are in the process of selling their property and who, for one reason or another, have failed to obtain the necessary licence. The Minister said in Committee that although he had some sympathy with individuals in such circumstances, he was loath to accept our initial amendment as it opened a possible loophole; that is, an individual who claimed continuously and fraudulently to be in the process of selling the house in order to avoid the necessity of obtaining a licence. That loophole has now been closed. Amendment No. 48 would place a time-frame of three months on the process. I am aware that selling a house may take considerably longer than that and I recognise the weakness of specifying an amount of time. Such an arbitrary figure is never going to deal with all circumstances, but it represents a genuine, if imperfect, attempt to address the issue in question.

Amendment No. 69 would allow people who are in the process of selling a property to use that as a defence for not having a licence. Some people who are buying a property and who are not fully familiar with their licensing obligations may well be caught out. A suitable and reasonable period of time should be allowed for them to be made aware of the requirements placed on them. If the Minister cannot give us a positive answer today—although I hope that he can—perhaps he will consider asking his officials to have another look the matter before Third Reading. I beg to move.

Lord Rooker

My Lords, in some ways, we are divided by a point of principle. A similar amendment was proposed in Committee. This amendment proposes a time limit of three months. That is an improvement on the amendment proposed in Committee. I understand the concerns of the noble Lord, Lord Hanningfield, but we cannot support him.

Buying and selling property is not like buying a can of beans from a supermarket. If a landlord is taking steps to ensure that a house in multiple occupation ceases to be licensable under Part 2, he can apply for a temporary exemption under Clause 62, whether or not tenants are still in the house. The local authority will grant an exemption if it is satisfied that the property is genuinely no longer going to need a licence; for example, if it is going to be sold with vacant possession.

However, it is not appropriate that persons should be able to evade licensing provisions because they are in the process of selling a property with sitting tenants. If no steps are being taken to ensure that the property should cease to be licensable, and selling a property is not such a step, it must remain subject to the licensing regime. Why should the tenants, who otherwise receive licensing protection, not receive it simply because the landlord has decided to sell the property?

As to the position of a person buying a house in multiple occupation, we are not convinced that the three-month exemption period is necessary or desirable before he is required even to apply for a licence. If someone is buying a house in multiple occupation with sitting tenants, the buyer, as part of the buying process, should be sorting out what needs to be done; that is, the licensing arrangements. That is part of the process that any reasonable person would have to go through. It should not come as a shock to the buyer to find out on the day that he owns the property that he now owns a house in multiple occupation that requires a licence. If it gets to that stage, it is a pretty sorry state of affairs.

If he is buying a property with vacant possession, he is not in a different position from that of any other owner of a large empty property. If he intends to let it out as a house in multiple occupation, he should apply for the licence before admitting occupiers into the house. There is a straightforward case here. I appreciate that the period has come down to three months but if it were three weeks, I would probably take exactly the same view. It is not acceptable.

Amendment No. 69 would provide that an absolute defence to any offence of being in control of or managing a house in multiple occupation would be that the owner was in the process of selling the property. In response to Amendment No. 48, I said that the Government cannot support the notion that an owner ought to have an automatic exemption from licensing simply because he is selling his property. It therefore follows that the Government cannot support Amendment No. 69 either. In effect, it would remove criminal liability for operating or managing a house in multiple occupation in those circumstances.

I regret to say that this is the first time this afternoon that a point of principle lies between us. From a practical point of view, I think that it would not be right to have this type of provision in the Bill. In terms of the protecting of tenants, people who are buying and selling houses in multiple occupation ought to be aware of what they are doing.

Lord Hanningfield

My Lords, I note what the Minister has said. We certainly did not want to create any loopholes or give any opportunity for fraudulent use of this amendment. The Minister will know that I often put forward amendments setting out the concerns of the industry, which people have put forward and about which they have lobbied us, about the buying and selling of properties. As we have already discussed, at one point 4 million properties were bought and sold in this country every year. Many of those involved this type of property. Therefore, one does not want to put too many handicaps in the way of buying and selling properties. That is why these amendments have been put forward. I have heard what the Minister has said today and, if people think that it is appropriate, I may come back for a further look at this issue at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 49:

Page 41, line 43, insert at end—

"(e) the need to make an application for a licence under this part unless an appeal is made or in the event of an appeal being refused and that otherwise he could be guilty of an offence."

The noble Lord said: My Lords, if a local authority decides not to serve a temporary exemption notice, then, in the absence of an appeal, if the property continues to be occupied as an HMO, at the end of the period allowed for the appeal the landlord will immediately be guilty of a criminal offence. Therefore, the landlord needs to be warned of the necessity of making an application for an HMO licence before the period expires unless an appeal is to be made. Similarly, in the event of an appeal being refused again, the landlord needs to be aware of the need to apply for a licence.

Once an application is made, the landlord will be protected while the application is being processed but, in the absence of such an application, the landlord is laying himself open to a fine of up to £20,000 and possibly other sanctions as well. The landlord should be told of this and the amendment would ensure that this was done. I beg to move.

Lord Rooker

My Lords, I shall be brief. In effect, we do not think that what is proposed is unreasonable but we do not think that the detailed signposting should appear on the face of the Bill. It could be included in the prescribed information accompanying applications for temporary exemption notices. That would be a way round that. We do not think that what is proposed is unreasonable but the Bill is not the place to do it.

Lord Hanningfield

My Lords, I thank the Minister, who has agreed with us. We will find ways of making it certain. It is very important that this information is made available and that people are aware of what their liabilities might be. I thank the Minister for that reply and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 63 [Applications for licences]:

Baroness Hanham moved Amendment No. 50:

Page 42, line 27, leave out "maximum"

The noble Baroness said: My Lords, the appropriate national authority under the Bill will prescribe the maximum fee payable for a licence. We are concerned that this will cause confusion. We believe that the Government or the National Assembly for Wales should set out in guidance what local authorities should charge so that we do not have people paying substantially different fees in different districts. In Committee, the Minister said that he was discussing the costs of running the licensing scheme with the Local Government Association. I wonder whether he is able to give us any indication of how those discussions have progressed and whether he can tell the House the estimate that he has put on the costs of each individual licence.

I do not think that the amount of work is going to differ very much in different areas. Therefore, the cost should not vary very much in different areas. The Minister also commented that, were these two amendments to be accepted, it would mean that a national fee would have to be assessed at the upper end of what would be considered to be viable. But we do not believe that that is the situation either, bearing in mind that the costs in each local authority are going to be approximately the same. We believe that there should be some sort of national understanding and that that would be welcomed by local authorities and by the licensees who will have to apply for the licences. We believe that this would ensure stability and understanding of the costs of licensing throughout the country. I beg to move.

5.15 p.m.

Lord Rooker

My Lords, at this point I cannot give the noble Baroness any idea of the fees but I shall explain in a positive way why I cannot do that. As she said, Amendment No. 50 would enable the appropriate national authority to specify the actual fee to be charged or the way that those fees are calculated instead of simply being able to specify a maximum fee. We do not think that the change would be that great in practice. But I understand that the noble Baroness is looking for a balance between local discretion on fees and some assurance that the fees will be set fairly and will reflect the true costs of licensing, provided that it is carried out efficiently. We do not dissent from that. We want the fees to be seen to be fair to landlords and to local council tax payers.

We have taken the view that the Bill gives us the ability to achieve that. We have had discussions with the Local Government Association and others about how best to specify the appropriate level and how to calculate it. At the moment, it would be fair to say that no simple solution has emerged. However, we are shortly to consult on this formally and will make no decision until we have heard what all the key stakeholders think is practical and reasonable. There will be a consultation on this issue. Specifying a maximum fee level nationally is simple in concept but difficult in practice, if we want to reflect variations in costs and local circumstances. The consultation will give us information about whether or not there is wide variation. The noble Baroness has taken the point that in some ways there probably will not be such a wide variation.

We are uncomfortable with the possibility of all the authorities turning the maximum into the norm, irrespective of variations. Specifying a method of calculating a maximum fee level may be more promising in that it allows fees to reflect the factors that vary between areas and authorities, such as the number of houses in multiple occupation, the number of houses in poor condition, or the number of landlords that are already known to the authority through membership of an accreditation scheme, for example. Some of the issues will make it easier for one authority as opposed to another so we need to provide greater clarity regarding the position on fees and the way they should be determined. There is no doubt that that is required. We hope that the consultation will produce that.

Amendment No. 79 more or less enables the appropriate national authority to specify the actual fees to be charged. In the light of the fact that we have gone over this ground, I ask the noble Baroness not to press her amendment. There will be consultation and we will ensure that when it begins the noble Baroness and other parties in the House are fully informed of what is happening at the time so that they can put their five penn'orth in. Obviously, we want the views of the stakeholders. It may turn out that there is not a massive variation and therefore we would not want an excessively complicated system. It is quite clear from our early discussions with the LGA that we do not have a simple formula at the moment. I think that the best thing to do is to consult the industry.

Baroness Hanham

My Lords, the Minister's reply was about as woolly as I expected, under the circumstances. The problem about setting the maximum fee is laid out in his reply. We do not actually know what the situation is. If we have to consult now, when the legislation is printed as it is, it may well be that the answer is not that there should be the maximum fee, but that it should be laid down in guidance, which is precisely what my amendment suggests. I am surprised that the Minister has not said, "Well, that is fine, because with this consultation we accept that there is going to be a difficulty".

I hear what the Minister says. I am not sure when the consultation will take place, but clearly it is without the timescale of the Bill. I probably need to see whether we could come back with a better amendment which would be acceptable to the Government, in the light of what the Minister has said. I do not believe that we are terribly far apart on this matter, but we are in danger of perhaps leaving some considerable confusion in the minds of local authorities as to what they can charge—although presumably, after consultation, guidance would be issued.

I thank the Minister for his reply and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rooker moved Amendments Nos. 51 and 52:

Page 42, line 35, after "under" insert "Chapter 1 of".

Page 42, line 37, leave out "Part" and insert "Chapter".

On Question, amendments agreed to.

Clause 64 [Grant or refusal of licence]:

Baroness Hanham moved Amendment No. 53:

Page 42, line 40, leave out "may" and insert "shall"

The noble Baroness said: My Lords, we return to the question of provisional licensing. As the Bill is drafted, it requires local authorities to grant or refuse licences for houses in multiple occupation. When applications for houses in multiple occupation licences are made, local authorities will have five years to satisfy themselves that there are no Part l functions that ought to be exercised, although licence applications should be dealt with within six weeks. As a result, there appears to be a presumption that local authorities will grant licences without an inspection of the property, as they will identify health and safety hazards as the landlord's responsibility, which can be dealt with under Part 1 during the licensing period. Local authorities cannot, we believe, be satisfied that a house meets prescribed standards without inspection.

We have had quite a lot of discussion on what resources will be required to deal with all the inspections. The demands on resources will be substantial if local authorities must try to inspect every licensable house in multiple occupation before granting a licence. It is likely, therefore, that the system will grind to a halt and fall into disrepute as a result. It would not therefore achieve the goal of securing the protection of those living in the so-called higher risk properties.

The prime responsibility for ensuring that the health and safety of occupants of such properties is not put at risk as a result of housing conditions, either physical or as a result of management failures, lies with the owner or licence holder. Therefore, within the licensing system, there should be a provision that does not rely wholly on policing and inspection by local authorities or on inadequate information provided in licence applications.

A system of provisional licences could meet those concerns. They could be issued when the landlord supplies evidence not only that there are in place satisfactory management arrangements but that in all respects a house is reasonably safe, including no unacceptable hazards under Part 1. We believe that the provisional licensing arrangements would be better than leaving a situation in which some houses have no licence arrangements at all for very considerable lengths of time before they are inspected. For that reason, we strongly believe that provisional licences should be introduced on that basis. I beg to move.

Lord Rooker

My Lords, Amendment No. 53 is intended to ensure that a local authority, on receiving the application for a licence, is under a positive obligation either to grant or refuse the licence. Our view is that in practice the replacement of "may" with "shall" will have no appreciable difference in the exercise of the authority's duty, although that would not normally be the case in a Bill in which one is dealing with "may" and "shall".

If a local authority is satisfied that the requirements of Clauses 63, 64 and 65 have been met, it would be required to exercise its discretion in favour of the applicant and grant a licence. If it was not satisfied of those matters, it would have to refuse the licence. There is no other course of action for a local authority beyond receiving an application for a licence. Nor is it open to a local authority not to act by failing to determine the application. The only reasonable course of action for a local authority would be to exercise one of the prescribed options. Clause 55(5) imposes a positive duty on local authorities, to ensure that all applications for licences and other issues falling to be determined by them … are determined within a reasonable time". We acknowledge the amendment, but it would not make any difference in reality whether the wording was "may" or "shall". If I accepted it, it would result in a discrepancy between the provisions of Part 2 and the comparable provisions of Part 3. It would be unhelpful for a different formulation to be adopted in Clauses 64 and 86, when the same considerations apply.

I shall give the game away in the sense that we are happy to have another look at the matter to see whether the suggested wording would make the legislation clear. As I have said, there is no appreciable difference in using one word or the other. So why not change it? On the other hand, one might argue, why not leave it? If we did change it, however, we would have to change it in more than one place in the Bill. I shall take the matter away and consider whether we should stick with what we have or whether we can make the Bill even clearer. But that would mean amending the other clauses so that we have consistency in the Bill.

The noble Baroness did not really go into detail on the other amendments, but I am happy to do so. Amendment No. 55 would provide that a local housing authority may, subject to conditions, grant a provisional licence in circumstances where the local housing authority has not inspected the house and there is no possibility of an inspection being carried out before the granting of a licence. The amendment is intended to ensure that a local authority need not grant a full licence for a house in multiple occupation when there is the possibility that it does not comply with health and safety conditions in Part 1.

With due respect, however, the amendment confuses Parts 1 and 2 of the Bill. The mandatory licensing provisions in the Bill are intended to improve management and amenity standards in houses of multiple occupation; they are not intended to be a certification of compliance with Part 1. The licensing process does, however, facilitate better targeting of inspections by ensuring that local authorities have key pieces of information that allow them to target the highest risk houses in multiple occupation under the new housing health and safety rating system.

The licensing system requires local authorities to consider health and safety implications in high risk properties as soon as practicable and within a maximum period of five years. Local authorities know the properties in their areas and can decide how best to carry out the duty at the earliest opportunity within that five years. The licence application process provides local authorities with the tools to gather sufficient information to allow them to assess and prioritise the risks within a licensable house in multiple occupation.

The amendment is well intentioned, but it does not achieve anything that is not already possible under the Bill. It is already open to a local authority to categorise a licence as provisional, if it feels that that is appropriate. The provisions of the Bill are sufficiently flexible to enable that, and the local authority as appropriate may decide the duration of the licence. The amendment would add another level of complexity in the form of a new set of provisions in regulations. In that sense, what is sought can already be achieved under the Bill. I hope that after what I said on the earlier amendment, the noble Baroness will not pursue the matter.

Baroness Hanham

My Lords, I thank the Minister for his reply. I am sorry that I slightly confused him by not saying how many amendments I was speaking to. I am also grateful, but slightly puzzled, by his assurance about the provisional licences, because I have not seen anything that gives the local authority that power, but if the assurance is that it can issue a provisional licence if necessary, that seems to meet our point. So, with that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 54 and 55 not moved.]

5.30 p.m.

Clause 66 [Tests for fitness etc. and satisfactory management arrangements]:

Baroness Hanham moved Amendment No. 56:

Page 44, line 40, leave out "and funding arrangements"

The noble Baroness said: My Lords, before local authorities can grant an HMO licence, the housing authority has to be satisfied regarding the management arrangements for the property. One of the specific requirements is to take into account the landlord's funding arrangements. Presumably, that concerns the landlord's ability financially to support any work that has to be done, mortgaging and all the other financial aspects of owning a property. As we stressed in Committee, we do not believe that that is a proper thing for the local authority to be doing. The amendment would remove the specific requirement to consider the funding arrangements in each and every case.

They may be cases where a local authority has justifiable concerns about the financial arrangements of a licence holder and whether he will be able to meet his obligations, but these are likely to be relatively few. The Government do not appear to have appreciated the burden that will be placed on local authorities, as well as landlords and managers, of having to investigate the funding arrangements of a property owner.

Local authorities have limited experience of interpreting private sector accounts and probably none in relation to landlords who are small businessmen and women. Their experience is limited to one-off contracts, such as for building works. By and large, they are not accountants taking into account people's financial position. Such a provision will also work to the detriment of new entrants, because such landlords will have no financial track record.

The financial assessment for a landlord should be left to the financial institution funding the borrowing on a property. If that institution is not convinced of the landlord's financial position, no money will be forthcoming. I beg to move.

Lord Bassam of Brighton

My Lords, I continue to be rather puzzled, because the noble Baroness has bags of experience in local government, as has the noble Lord, Lord Hanningfield, but I find the way that they describe the expertise within local authorities to be very strange. In my recollection of my local authority, even when we were a district-level authority with district-level powers, we could understand funding arrangements and financial matters in the private sector. Indeed, the local authority worked with the private sector in many instances and had to undertake difficult financial decisions based on advice provided from within the local authority.

So I cannot accept that the local authority sector does not have the expertise with which the noble Baroness charges it with lacking. Indeed, I should be very worried if it did not have that expertise available, because it would be unable to undertake the daily judgment that it has to in a whole range of service activities. It is important that it has that capacity and that it can call up that information, because standards will deteriorate if a manager does not have the money to carry out his obligations. That is why it is essential that local authorities must be satisfied that adequate funding arrangements are in place, or available, before they grant a licence. The suggestion that they do not have such expertise is untenable. Big and complex projects are before local authorities all the time.

It is also incorrect to suggest that environmental health officers will be administering licensing schemes on their own. They will of course have a central, critical role, but other functions relating to the licensing process will be dealt with by other staff: maybe administrators, managers, people with some form of building control expertise—who knows what they will have to bring up to ensure that the licensing process works? I do not see why they cannot relate carefully and clearly to those staff at the local authority with accountancy and fiscal investigative skills, because those staff certainly exist. No doubt the authority will give the functions to those people within its staff who have the ability to understand and analyse financial matters.

So the amendment is misconceived. If the noble Baroness is trying to create a case for a new local authority burden, she is somewhat wide of the mark. Perhaps she ought to go back to her local authority to ask it whether it feels that it could carry out this sort of work. I should be very surprised if it were to say, "Oh no, we cannot. We do not have that knowledge or expertise within the authority", because I believe that it does.

Baroness Hanham

My Lords, I hear the Minister's reply and I thank him for it. I think that the essence of this is that there will be a large additional burden placed on local authorities, because I do not believe that all environmental health officers, who will be carrying out licensing, will have the expertise to deal with examination of accounts, of mortgage arrangements and of other funding arrangements for the ownership of property. Of course they can call on the local authority's finance department, which will understand them, but why should it have to scrutinise every licensee for his funding ability? The provision is an unnecessary addition, but, for today's purposes, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 57:

After Clause 66, insert the following new clause—