Lords Sitting of 9 September 2004

Preamble
The House met at eleven of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of St Edmundsbury and Ipswich.

Clean Coal Technology
Lord Ezraasked Her Majesty's Government:
What progress has been made in setting up demonstrator plants for clean coal technology as envisaged in the energy White Paper of February 2003.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, in line with the energy White Paper's statement on support for cleaner coal technologies, I am pleased to report that the cleaner coal technology programme's fourth call is currently considering a proposal from the industry for a design and costing study for retrofitting supercritical boiler technology to an existing coal-fired power plant, which would serve to demonstrate this advance in clean coal technology. It is envisaged that a contract for government support for this study will be agreed later this year.
Lord Ezra: My Lords, I thank the noble Lord for his reply. Does he not agree that this issue has now become more important in view of the perturbation in the oil market, which is spreading to the gas market, and could last for some time? In this situation, with our abundant coal reserves, should we not be giving greater priority to clean coal technology projects rather than continuing to engage in repeated consultations, one of which has just been announced? Is not the time-scale of 2020, set in the latest consultation document, likely to deter industrial participation, whereas in the United States and Canada, such participation is being encouraged by joint funding arrangements?
Lord Sainsbury of Turville: My Lords, I agree that we should continue to give emphasis to this issue, as we have done. We made it clear in the energy White Paper that we would support R&D for cleaner coal technologies, and we are doing that. The consultation on the carbon abatement technology strategy is simply the next phase of the cleaner coal technology programme and takes that forward when the cleaner coal technology programme comes to an end.
Earl Attlee: My Lords, when does the Minister expect the supercritical boiler technology to be in operation?
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Does not the lack of a demonstration plant adversely affect the possibility of exporting this technology to China and India?
Lord Sainsbury of Turville: My Lords, we are in discussions with Mitsui Babcock Engineering, and I cannot say more about the negotiations. However, as I said, we hope to have a contract in place for this study. Because this is only a design and costing study, it will be necessary for a generator to want to go ahead with this project. That will depend on there being a customer for the technology. We are supporting this because it would be very helpful in promoting a UK transfer of technology in this area to countries such as China.
Baroness Miller of Chilthorne Domer: My Lords, my noble friend mentioned that the time-scale with which the department seems content is very long. Does the Minister not appreciate that there is huge export potential here, given that China, as the noble Earl, Lord Attlee, mentioned, has vast stocks of dirty coal, and that clean coal technology could also help in the fight against global warming?
Lord Sainsbury of Turville: My Lords, as I said, this is clearly the thinking behind our support for this project. Even before the White Paper, we supported cleaner coal technology with R&D. We will continue to do so because of the very real opportunities in places such as China where they have a lot of coal and will be using it extensively in the future to make use of this technology.

Food Labelling Regulations
11.10 a.m.
Viscount Falkland Viscount Falkland asked Her Majesty's Government:
Whether current food labelling regulations are adequate in view of current concerns about fat, salt and sugar content in foods.
The Parliamentary Under-Secretary of State, Department of Health (Lord Warner): My Lords, no. Current rules on nutrition labelling require only that the quantity of fat, salt or sugar is declared if a nutrition claim, such as low fat, is made. The Government already recommend that the labels of all pre-packaged foods should carry full nutrition information, including levels of fat, salt and sugar, irrespective of whether nutrition claims are made. Many manufacturers and retailers already follow this advice.
Future plans for food labelling will be set out in the White Paper on improving people's health, due for publication this autumn. We support and welcome the forthcoming EC proposal to improve nutrition labelling so that consumers are able to make better informed choices about the food that they buy. Meanwhile, the Food Standards Agency is developing a system of signposting foods high in fat, salt and sugar, and healthier choices, which can be used in retail and

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catering outlets so that consumers can make healthier choices. Research to consumer test different signposting systems has been commissioned.
Viscount Falkland: My Lords, I thank the Minister for that quite lengthy and comprehensive Answer. I declare a personal interest, as one of the many people who has developed what is known as late-onset diabetes. It is common in this country, particularly among older people and many immigrant groups. It is crucial for us to avoid foods with added sugar. We spend a lot of time—many of us with failing eyesight—looking at labels to see whether the sugar levels are satisfactory. The same probably applies to people who need to avoid salt and fat. Is there not an argument for colour coding to be more widely used? Could the Government impress it upon the food industry that developing some form of colour coding would help people to avoid what is dangerous for them?
Lord Warner: My Lords, I sympathise with the noble Lord on his condition. Such conditions are why we are working with the industry to produce the signposting system that I mentioned in my Answer. That system would take account of whether there were high, medium or low provisions of particular items in food. The Food Standards Agency will undertake surveys to consider the most appropriate way in which to get a signposting system to operate which is most convenient to consumers.
Baroness Oppenheim-Barnes: My Lords, I have been putting this same Question for the past eight years, and this is one of the least satisfactory Answers that I have heard. It is an absolutely ludicrous situation, when there is a perfectly acceptable system of nutrition labelling, in which the print and the size is exactly uniform, so that comparisons can be made. It is a complete waste of time for the Food Standards Agency to keep bleating on about salt, sugar or anything else, until a satisfactory and clearly comprehensible food labelling system is imposed by law.
Lord Warner: My Lords, I am sorry that the noble Baroness is not as satisfied as the questioner was with the thoroughness of my reply, because I thought that she might have been satisfied that we were making progress, and that that was a tribute to her persistence in this area. Already 80 per cent of pre-packaged foods carry some nutrition information, although that does not always include food, saturated fat and sugar. We do need to improve the system, but we also need to have a system which consumers understand and support.
Lord Chan: My Lords, would the Minister not agree that in labelling food, not only should the words and contents of the label be clear to those reading them, but also there should be, for children's food in particular, clear guidelines as to the amounts that are safe or not
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safe? What is given to children early on will affect them in later life—so I ask the noble Lord if he would ensure that that takes place.
Lord Warner: My Lords, the noble Lord is quite right, which is why we shall say much more about food labelling in the White Paper, as I have said. We are also concerned about food promotions in relation to children's diets, which is why we are making progress on that area. More will be said on that in the White Paper.
Lord Rea: My Lords, I was very pleased to hear my noble friend announce the work that the Food Standards Agency is doing on the signposting system of labelling foods, which is sometimes called the "traffic light system". Is he aware that the Coronary Prevention Group, with which I have been associated for many years, nearly 20 years ago proposed a very workable system of traffic light signalling of the high, medium and low contents of the various nutrients? If such a system is agreed, how long will it remain a voluntary code, and for how long will the Government remain patient in seeing whether the industry follows that voluntary code before making it compulsory?
Lord Warner: My Lords, the Government have continued to develop a good, constructive relationship with industry, and progress has been made. My noble friend is right in saying that we need a signposting system. As I said, we are conducting through the Food Standards Agency more research on the best form of that sign-posting system. I am afraid that he will have to wait and see how dirigiste we may or may not be, when the White Paper arrives.
Baroness Miller of Chilthorne Domer: My Lords, what does the Minister think of soft drinks labels that loudly proclaim "no added sugar", which suggests that they are healthy and natural, although they in fact contain large quantities of artificial sweeteners, such as aspartame, which I believe that many in the medical establishment feel are implicated in health and behavioural problems in children?
Lord Warner: My Lords, I suppose the short answer is "not a lot". That is why we want to ensure that labelling is improved, so that the contents of the package, bottle or container are accurately represented.
Lord Harrison: My Lords, is my noble friend aware that one of the major supermarket stores has this summer introduced a colour-coding system—I believe that it is Tesco? Would he undertake to consult that store on its experience of helping customers to choose the appropriate food?
Lord Warner: My Lords, good work has been done by a number of those in the retail industry, including the Co-op, in identifying foods. We should pay tribute to

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the way in which many of the supermarkets have taken on board very successfully the "five a day" message on fruit and vegetables.
Lord Rotherwick: My Lords, do any other European countries have a signposting system for food which is enforced by legislation?
Lord Warner: My Lords, it was with reference to that point that I said in my Answer that we supported the EU work on a new directive on labelling, which will be introduced. That will pull together the threads on practice throughout Europe, with regard to producing a new directive.
Lord Dubs: My Lords, what my noble friend has said is welcome and represents real progress. However, does he agree that it is not only the percentage content of salt or sugar in a particular food that matters; what also matters is the total amount of that food that gets eaten? If one eats a large amount of low-sugar food, one ends up eating a lot of sugar. Does my noble friend agree that, in parallel with the labelling process, we also need more education and information, so that people are aware of the total amount of whatever they are consuming, and what the limits really are?
Lord Warner: My Lords, my noble friend is quite right; we need to ensure that there is a balanced diet and that people are adopting it. We need labelling systems to help them to achieve that end. I am sure that the White Paper will say a little more about public education in terms of diet, exercise and other such issues.
The Countess of Mar: My Lords, following on the question of the noble Lord, Lord Dubs, I first declare my interest as a specialist cheese maker. May I express my gratitude to the Food Standards Agency which, having started from the premise that cheese because it is high in fat and salt is bad for you, has now conceded that small amounts of cheese are very good for you?
Lord Warner: My Lords, the temptation to give a cheesy reply is extremely great.

Immigrants: Treatment
11.20 a.m.
Lord Juddasked Her Majesty's Government:
What arrangements are in place to ensure that the treatment of immigrants and would-be immigrants, including during deportation, is humane and respectful of their dignity.
The Minister of State, Home Office (Baroness Scotland of Asthal): My Lords, high standards of courtesy and professionalism are required of Immigration and Nationality Directorate (IND) and Immigration Service members and others acting on behalf of the service, including detention and escort contractors' staff.
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Guidance and training are systematically provided in all aspects of applicant care such as compliance with the Human Rights Act 1998 and the Race Relations (Amendment) Acts. Complaints about staff conduct are investigated under a formal complaint procedure monitored by the independent IND complaints audit committee.
Lord Judd: My Lords, while thanking my noble friend for that reply, does she agree that while a firm, fair and clear immigration policy is obviously essential, there is a contradiction in the age of moving towards a global market that there is no free movement of labour? In this context will there not always continue to be tensions and great anguish as people seek to improve their and their families' well-being? Must we not resist the appalling approach and hype in some of the media which make it very difficult for those working in the front line of immigration policy? Is it not essential to ensure that all those in the front line are supported in every way in the front line in ensuring that the aspirations spelt out by my noble friend are in fact carried through into practice with every single would-be immigrant?
Baroness Scotland of Asthal: My Lords, I absolutely agree with my noble friend. Those working in the front line have an incredibly difficult and often stressful job. They strive to do it in the best way they can. Any support that we can give is important together with a more supportive approach from some of our media colleagues who do not always show the sensitivity that we would most wish to see.
Lord Dholakia: My Lords, is the Minister satisfied with the existing machinery for dealing with complaints against immigration officers, whose powers in terms of arrest are similar to those of police officers? Does she consider that bodies such as the independent Police Complaints Commission are more appropriate to supervise serious allegations against the Immigration Service?
Baroness Scotland of Asthal: My Lords, the noble Lord is right to emphasise the importance of taking complaints seriously. We believe that the formal complaints procedure, which is currently monitored by the complaints audit committee, is an appropriate, robust, independent process. We are satisfied that that seems to meet our current needs.
Baroness Masham of Ilton: My Lords, what is the present situation with those immigrants who are found to be suffering from HIV or tuberculosis?
Baroness Scotland of Asthal: My Lords, that is wide of the Question on the Order Paper. I shall certainly be very happy to write to the noble Baroness in greater

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detail. Perhaps it suffices to say today that those sensitivities are very much taken into account when dealing with the concerns arising out of any application.
Lord Clinton-Davis: My Lords, does my noble friend agree that the press has not behaved impeccably on this issue? What result has accrued regarding complaints about the behaviour of the press?
Baroness Scotland of Asthal: My Lords, I cannot tell the noble Lord the number of complaints that have been made in this regard but he is right to say that often people have been rather taken aback by the intemperate way in which some of these issues have been reported. Responsible, critical reporting is always welcome and should be encouraged.
Lord Alton of Liverpool: My Lords, did not the deaths of the Chinese cockle pickers in Morecambe Bay underline the dangers in which immigrants can be placed if they come here as illegal workers? Reverting to the question that the noble Lord, Lord Judd, put to the Minister, is not there a lot to be said for trying to devise some form of green card system along the lines of that used in the United States so that we can give people the opportunity to work legally in this country and thereby receive the kind of protection to which they are entitled?
Baroness Scotland of Asthal: My Lords, the noble Lord will know that we have done as much as we can to encourage that. The new rules that we have brought in to enable people to come here lawfully to work in a number of areas have reduced the number of illegal workers who feel that that is the only route. By making the system robust and fair we are sending a very clear message. I endorse what the noble Lord said about the tragedy that the Morecambe Bay type of incident highlights. This matter is not just about ourselves but about the poor people who come here and are abused.
Baroness Anelay of St Johns: My Lords, following on the Minister's answer to the noble Lord, what evidence does she have to back up a claim that the number of illegal workers has been reduced as a result of government policy when the Home Secretary himself made it clear that he does not know how many people are in this country illegally at the moment?
Baroness Scotland of Asthal: My Lords, what we have is based upon the figures that we had before. We are monitoring them. Our clear aspiration is that if, as I said earlier, we generate greater avenues for legitimate entry, that should suppress the need for those people who properly wish to come to this country and make a valuable contribution to seek illicit means of doing so. We have been very clear that we do not have a closed
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door. We have a need for workers to come and assist us to build our country to make it as strong as possible. We do not encourage those people to come here illicitly.
Baroness Trumpington: My Lords, while applauding the Question that we are discussing, are gangmasters included in any legislation for the benefit of workers such as the Chinese cockle pickers?
Baroness Scotland of Asthal: My Lords, we have now passed legislation. I believe that we passed it in July.
Lord McNally: My Lords, does the Minister agree that one of the problems about the media-inspired hysteria referred to by the noble Lord, Lord Judd, is the influence not on the front-line workers but on their political masters who then have knee-jerk reactions? Would it not be better to look at the Canadian system of having an agency responsible that is somewhat more independent of day-to-day political control?
Baroness Scotland of Asthal: My Lords, of course I hear what the noble Lord says in relation to that. That debate has been ongoing and I am confident that it will continue.
Lord Brooke of Sutton Mandeville: My Lords, I know that this is an Alice in Wonderland question but if the Home Secretary was not able to say how many illegal workers there are in the country now, how did the Government know—I refer to the reply which the Minister gave to my noble fried Lady Anelay—of the previous figures?
Baroness Scotland of Asthal: My Lords, we can only know those we have identified. It would be impossible to know those we have not found.
The Earl of Sandwich: My Lords, does the Minister agree that there are immigrants and asylum seekers in detention or in removal centres who really are not aware of the reasons why they are detained? Does she agree that the form stating those written reasons is still inadequate and needs to be improved?
Baroness Scotland of Asthal: My Lords, of course I hear what the noble Earl says in relation to that but I can certainly assure him that everything has been done within the procedure to make sure that there is a clear understanding as to the reason for detention, and that advice and support are made available. I assure him that we shall continue to do all we can to make sure that information is available to those people who need it.

Public Servants: Business Appointment Rules
11.29 a.m.
Lord Goodhart Lord Goodhart asked Her Majesty's Government:
Why they are reviewing the business appointment rules for public servants.
Lord Bassam of Brighton: My Lords, the rules were last reviewed in 1996. The Government therefore feel that a review would be timely to ensure that the rules remain compatible with a public service that is keen to ensure greater interchange with the private and other sectors, which is essential for effective delivery in today's public service.
Perhaps it would be appropriate to place on record the Government's appreciation of the excellent work undertaken by the Advisory Committee on Business Appointments, of which the noble and learned Lord, Lord Mayhew of Twysden, is chairman, and the noble and learned Lord, Lord Morris of Aberavon, and the noble Lords, Lord Maclennan of Rogart and Lord Wilson of Tillyorn, are notable members.
Lord Goodhart: My Lords, yesterday a survey commissioned by the Committee on Standards in Public Life was published which reported that only 37 per cent of members of the public trusted senior civil servants and only 24 per cent trusted Ministers. Against that background do the Government realise that the relatively modest restrictions imposed by the Advisory Committee on Business Appointments on civil servants and Ministers moving to the private sector are necessary, both to prevent sleaze and to prevent trust falling even lower? If there is to be any change, it should be, as the committee recommends in its sixth report, towards greater stringency.
Lord Bassam of Brighton: My Lords, it is right that we review the rules from time to time. No doubt that will be one of the issues that are looked at in the review. The probity issue is important and the noble Lord is right to highlight the importance of retaining public trust and confidence. I am almost tempted to ask how many people trust Liberal Democrats, but perhaps that would be unfair across the Dispatch Box.
Lord Sheldon: My Lords, will my noble friend acknowledge the problems regarding civil servants' relations with business and that in the decisions that they make their independence may be at risk, not least in the light of their possible post-Civil Service career? This is a real danger that needs to be taken seriously.
Lord Bassam of Brighton: My Lords, the noble Lord is quite right to draw attention to the importance of that issue and I am sure that Sir Patrick Brown, with his extensive experience of the public service and the private sector, will be willing to draw on the experience of others in putting together his report—and focus on exactly that sort of issue.
Lord Cope of Berkeley: My Lords, in the face of increasing politicisation, would not one measure to improve the trust of the public in the Civil Service be a Civil Service Bill, such as has been proposed by the
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Public Administration Committee in another place, has been placed before another place by my honourable friend Oliver Heald, has been supported by the Deputy Prime Minister but has been left on the shelf by the Government?
Lord Bassam of Brighton: My Lords, this is not a matter that has been left on the shelf, as the noble Lord is well aware. We are committed to publishing a draft Bill for consultation during the current parliamentary Session. I have no doubt that that will happen.
Baroness Williams of Crosby: My Lords, perhaps I may declare an interest as a former member of the Advisory Committee on Business Appointments and draw attention to the work that is involved in deciding the length of time that should elapse before a very senior civil servant can take up an appointment, usually a very senior appointment, in the private sector. While I was a member of the committee that period of time began to shrink and has continued to shrink. I accept the Minister's comments on the importance of an interchange between the public and private sectors, but that is less important than the integrity of the public sector. Will the Minister ensure that the new rules do not further weaken one of the most important pillars of the integrity and honesty of our Civil Service, a value we should not put at risk at any time?
Lord Bassam of Brighton: My Lords, the Government are on record many times in making plain their belief, their confidence and trust in the public service. We do not wish to see anything happen that would undermine that in any way, shape or form. I am not sure that I agree with the noble Baroness's observation on the shortening of the period between leaving the public service and taking up appointments in the private sector. We should applaud the work that the committee undertakes and we have the utmost confidence in the members of that committee and the advice that they give, particularly to Ministers and civil servants.
Lord Armstrong of Ilminster: My Lords, perhaps I may declare an interest as having once been the victim, if that is the correct word, of the rules on business appointments. I can assure the House that six months is a very long time between one's retirement and moving into an appointment outside. It is extraordinary how quickly one becomes completely out of date in terms of what one knows about what happens in government and in terms of contacts. I take the point made by the noble Lord, Lord Sheldon. Would it be possible to say that for any civil servant whose card has been marked by a business employer before his retirement the period of delay while he has to wait to take up that appointment should be as long as possible?
Lord Bassam of Brighton: My Lords, I applaud the noble Lord's observation. I am sure that it is one on which Sir Patrick will draw in conducting his review. In a sense it is an appeal to the whole House; if noble Lords

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have evidence that they wish to draw to Sir Patrick's attention, I am sure that he will be happy to learn of their experiences.

Housing Bill
11.36 a.m.
The Minister of State, Office of the Deputy Prime Minister (Lord Rooker): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Rooker.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Schedule 11 [Buildings which are not HMOs (except in Part 1)]:
On Question, Whether Schedule 11 shall be agreed to?
Baroness Maddock: It was agreed last time that we had discussed this matter enough and I have nothing else to add today, unless the Minister has something to say.
Schedule 11 agreed to.
Clause 220 [HMOs: certain converted blocks of flats]:
[Amendment No. 65 not moved.]
Clause 220 agreed to.
Clause 221 [HMOs: persons not forming a single household]:
Lord Rooker Lord Rooker moved Amendment No. 65C:
Page 167, leave out lines 4 to 7 and insert—

"(b) one of them is a relative of the other, or

(c) one of them is a relative of one member of a couple and the other is a relative of the other member of the couple.

(4) For those purposes—

(a) a "couple" means two persons who are married to each other or otherwise fall within subsection (3)(a);

(aa) "relative" means parent, grandparent, child, grandchild, brother, sister, uncle, aunt, nephew or niece;"

The noble Lord said: I beg noble Lords' pardon for the short delay as my notes have had to be changed due to changes in the selections. In order for a building to be regarded as being in multiple occupation, it must be occupied by persons who do not form a single household. In other words, there need to be at least two households occupying the building. Clause 221 provides that unless persons form part of the same family or are in a relationship with one another, as prescribed in regulations—for example, carers—those persons will not be regarded as a single household. For example, a group of unrelated students or young professionals sharing a house will not constitute a multiple household. Members of the same family living together will be regarded as a single household. The family definition is in subsection(3).
Government Amendment No.65C is intended to clarify that as regards unmarried partners. A relation of one of the couples is also treated as a relation of the other partner for the purpose of defining a family in subsection (3). In effect, the amendment is intended to clear up an anomaly in subsection (3) as currently drafted, which, it could be argued, discriminates in its treatment of unmarried couples and their family relations. That would be very unfair. I beg to move.
Baroness Hanham: I thank the Minister for his description of the amendment. It looks about as opaque as a closed window. If that is the Minister's understanding of the amendment, we go along with it.
On Question, amendment agreed to.
Clause 221, as amended, agreed to.
Clause 222 agreed to.
Clause 55 [Designation of areas subject to additional licensing]:
Baroness Hanham Baroness Hanham moved Amendment No. 66:
Page 37, line 9, leave out "persons" and insert "both tenants and landlords"
The noble Baroness said: Clause 55 creates discretion for local authorities to apply additional licensing when they deem it appropriate. The clause makes specific reference to issues that may arise when a house in multiple occupation is being managed "sufficiently ineffectively"—a lovely way of using English—as to cause a range of problems for those who occupy the HMO or for members of the public.
By its very nature, additional licensing is contentious. Landlords will be mindful of the fact that Parliament is giving local authorities a significant power. Although the Bill describes the circumstances in which they might exercise that power in broad terms, it is important that the Government be more specific when the Bill is implemented.
With that in mind, Amendment No. 66 attempts to bring a greater degree of clarity to those individuals that a local authority must consult before making a decision to extend licensing. As it stands, the authority has only a requirement to take reasonable steps to consult "persons" who are likely to be affected. We believe that that is too vague for comfort. Our amendment would stipulate that the authority must attempt to consult both landlords and tenants before going ahead with an extension to its licensing regime.
Amendment No. 67 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 believe that this is a sensible and practical way forward allowing for the widest possible number of people to see the steps that the authority has decided on.
There are two further amendments in this group, Amendments Nos. 69 and 110. Clause 78 would in effect place on an authority the duty to show both to the appropriate national authority and to the authority's own local electorate that the powers that it had decided to use to extend the use of selective licensing of HMOs was in the best interests of all in tackling the problems it had so identified.
In effect this is a safeguard measure that would make an authority think twice before it was able to use the powers of extending selective licensing. For whatever reasons, we would be concerned that an authority with these new powers could in effect decide to extend the licensing regime to any property if it so wished. Perhaps the Minister can give us some reassurance that these powers would not be open to abuse. Under this amendment the local authority would have to show both upwards and downwards that its intended action was indeed merited. I beg to move.
Baroness Maddock: My Amendment No. 68 is grouped with the amendment now moved. It refers specifically to local authorities being sure that they are taking a strategic approach to homelessness when designating further areas of houses with multiple occupation to be licensed. Therefore, I support what the noble Baroness has just said because I believe that that will help it to happen. It is important that everyone knows what is going on when this provision comes into effect, particularly the tenants, and that the local authority is mindful of what may happen to tenants if it goes ahead and designates. That does not mean that we on these Benches are not in favour of licensing. The Minister knows that that is not so. It is right that we have as many safeguards as we possibly can to ensure that we are not creating unnecessary homelessness.
11.45 a.m.
Lord Rooker: I believe that I shall be able to satisfy the noble Baronesses. Clause 55 allows a local authority to designate part or all of its area as subject to additional HMO licensing for specified descriptions of houses in multiple occupation. This means that a local authority will have discretion to extend the scope of HMO licensing to HMOs which fall outside the scope of mandatory licensing.
The clause also requires the local authority to consult persons likely to be affected by the designation and most certainly to take account of any representations received before making a designation.
Amendment No. 66 proposes that local authorities consult "both tenants and landlords". In practice the amendment would actually restrict those persons to be consulted. Although landlords and tenants are obviously the people who will generally be most affected by a proposal to extend licensing, they are not the only people whose views matter. Mismanagement of houses in multiple occupation can also have a significant effect on other people such as other local residents.
It is for that reason that we require consultation with all people who would have a relevant interest in an additional licensing designation, which includes landlords and tenants in the proposed designated area. However, to prescribe narrowly the groups that should be consulted, as the amendment does, would deny local authorities the flexibility to tailor their consultation to the particular circumstances. Therefore, I hope that that particular amendment will not be pursued.
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Amendment No. 67 would require a local housing authority, in addition to consulting those likely to be affected by designation, to publicise the intent of the designation electronically outside the relevant properties and in the local media.
As currently drafted, the Bill provides that local authorities should take "reasonable steps" to consult those likely to be affected by the designation. We are confident that all local authorities over many years, particularly recently, have developed methods of consultation which are most appropriate for their particular areas. Not all areas are the same. Therefore, we do not believe that it is necessary to specify the forms that the consultation should take. We would rather leave it to the local authorities.
It is perfectly possible that the methods of publicity proposed by the amendment such as notices and electronic means, would be among those employed by various authorities. We believe that the matter should be left to the local authority based on local circumstances and the authority's own procedures and to the relevant groups with which consultation has taken place in order to find the best way to deal with the matter.
Another problem with prescribing the form of the consultation, as suggested in the amendment, is the danger that it could have the effect of limiting the consultation to those methods alone. There are always opportunities for local authorities to use their discretion. Innovative methods are very important. We shall be doing more about that as regards other legislation which has passed through the House such as the planning Bill.
I give some advance warning. All that I say as regards Amendment No. 69 applies to Amendment 110. I shall not repeat myself. Clause 56 sets out further requirements that a local authority must meet when making designations for additional licensing. They are, first, to ensure that licensing fits with the local authority's overall housing strategy: secondly, to seek to adopt licensing as part of a co-ordinated approach to deal with wider issues such as homelessness, anti-social behaviour and empty properties; thirdly, to consider whether there are other courses of action that could be used to deal effectively with the problems identified, and, fourthly, to decide whether additional licensing will, on its own or in conjunction with other policies, make a significant contribution to dealing with the particular problems from which the area is suffering.
Amendment No. 69 would require that in making designations for additional licensing, the local housing authority must be able to provide evidence to the relevant national authority and the local population to show that the designation is necessary to sort out the problems identified in the designated area. As drafted, the Bill provides that in making designations for additional licensing, the local housing authority must consider that the designation would significantly assist it in dealing with the problems identified.
Clause 55 requires the local authority to carry out a public consultation with those likely to be affected by the designation, such as local residents, landlords and

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tenants, before making the designation. As part of that process, the authority will need to demonstrate why it considers it necessary to create the scheme by identifying the problems it is intended to address and why alternative measures are not available or would be less effective in tackling those problems. The designations require either general approval or confirmation from the appropriate national authority before they come in to force.
The approval process is not about second-guessing the local authority's reasons for making the decision. We in Whitehall do not know the particular housing market conditions in great detail. The local authority is best placed to know—much better than any national authority. The approval system is concerned with ensuring that the local authority has carried out the requirements imposed on it through the legislation before making the designation. One of those requirements is to consult on the proposed designation and give local people an opportunity to make representations. So the process is about demonstrating to the appropriate national authority not the need for the designation but that it has gone through a proper, constructive consultation process.
Amendment No. 68 would require that in considering designations for additional licensing, local authorities must ensure that they adopt a co-ordinated approach to homelessness and the provision of advice and assistance to those likely to be affected by the designation. The Bill already provides that, where a local housing authority identifies a problem and wants to make a designation for additional licence in its area, it must seek to adopt a co-ordinated approach to deal with the wider issues, such as homelessness. Local authorities are already under a duty under the Housing Act 1996 to provide advice and assistance for those who are homeless.
We would expect local authorities to use the additional houses in multiple occupation licensing only where it was the most appropriate tool and where there was a problem with a particular category of HMOs. However, we are committed to providing as much flexibility to local authorities as possible on the issue and do not agree that it is necessary to include the requirement provided in the amendment, because the clause already expressly requires local housing authorities to consider the impact of additional licensing on homelessness. I hope that that satisfies the noble Baroness.
As I said, the issues raised by Amendment No. 110 are identical to those covered by Amendment No. 69, so what I have said covers them.
Baroness Hamwee: On Amendments Nos. 69 and 110, can the Minister confirm that the normal rules of reasonableness—the Wednesbury reasonableness—
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apply? Having asked that, perhaps I may ask the noble Baroness whether she is seeking something stronger than that normal reasonableness.
Baroness Hanham: Perhaps I should just say that the answer is no, from my point of view.
Lord Rooker: And I will just say that the answer is yes, from my point of view.
Baroness Hanham: I thank the Minister for his extensive response. I think it was helpful to table Amendment No. 66, because the Minister's response clarified the fact that the intention is to ensure that "persons" goes wider than tenants and landlords. By inserting "tenants and landlords", we really wanted a definition of "persons", but I see that it would be really helpful if people in an adjoining property who were complaining, perhaps, were included in that as well. I think that the Minister confirmed that that is the situation, so I am content with his response.
On designation and the inclusion of publicity by electronic and other relevant means, as far as I can see it is still for the local authority to decide how it undertakes the publication of the designation. However, again, this is a brutal provision giving wide powers and it would seem sensible that it would use at least electronic means of passing on the information and the local media. If it then wants do that in other ways, it can. At least we should lay down a baseline; it would be unfortunate if we cannot at least establish that that will be the situation.
I hear what the Minister says in response to the other two amendments, but I return to the point that the Bill provides reasonably draconian measures for extending licensing and the more that it can be demonstrated that they are taken against the background of authority that has been explained and understood, the better. I thank the Minister for his reply. He has answered Amendment No. 66 to my satisfaction; I beg leave to withdraw it but do not promise not to return to the other three.
Amendment, by leave, withdrawn.
[Amendment No. 67 not moved.]
On Question, Whether Clause 55 shall stand part of the Bill?
Baroness Maddock: We do not actually oppose the clause, but it is difficult to make general comments unless we speak to the Question. This is an important part of the Bill—the Government have also said that—because we have had disagreements about what should be designated as a house in multiple occupation. Unlike the noble Baroness, I worry that there are too many hoops through which to go for local authorities when they are trying to deal with difficult areas. I used to represent an area in the City of Southampton next to the university with a lot of houses in multiple occupation. They had been three-bedroom, two-storey 1930s family houses and created all sorts of problems. If we had been able to designate the area, we may have been able to deal with some of the more difficult problems. With those few comments, I shall not oppose the clause.
Clause 55 agreed to.
Clause 56 [Designations under section 55: further considerations]:
[Amendments Nos. 68 and 69 not moved.]
Lord Rooker Lord Rooker moved Amendment No. 69A:
Page 37, line 44, leave out "locality" and insert "vicinity"
The noble Lord said: Before I speak to the amendment, I want to go back for a moment to my first, inadequate speech on government Amendment No. 65C. It took me a while to rise to my feet and when I did, I had the wrong note, or an old version. I made a statement which, reading it now, I am surprised was not contradicted by the experts sitting opposite. I said that a house comprising unrelated students or professionals would not constitute a house in multiple occupation. I was wrong in saying that; it would indeed constitute a house in multiple occupation. I hope that that saves the need for any letters on that.
I turn to the amendment and with it will speak to government Amendment No. 131A. Clause 56(5) provides a definition of what amounts to anti-social behaviour for the purposes of the Bill. This definition refers to the conduct of occupiers of premises that might constitute nuisance or annoyance in an area surrounding the property, which is referred to as "locality".
Clause 98 provides that the appropriate national authority can prescribe a special interim management order to be made where it relates to protecting the health, safety or welfare of the occupants or others around the premises, which is also referred to as "locality" in that clause.
Elsewhere in the Bill, in particular in Part 4 relating to management orders, the word "vicinity" rather than "locality" is used. These technical amendments have therefore been tabled to ensure consistency in the Bill where the provisions relate to matters affecting persons not residing in the property.
While as a lay person I might argue that locality and vicinity would generally be held to mean the same thing—part of the neighbourhood—apparently there is a subtle difference in definition according to the dictionary. If two different words with a similar meaning are used in a Bill they can be applied and interpreted differently. All that will do is to make loads of money for lawyers in a very unjustifiable way.
Noon
It is amazing how such things occur. The Government have opted for "vicinity", since it is defined as "surrounding area"—that is, of the property—as opposed to the locality, which is wider in its meaning and refers to the area per se. I beg to move.
Baroness Hanham: I thank the Minister for making that change. It may seem arcane, but the description he has given places it finely in focus.
Lord Brooke of Sutton Mandeville: I rise to comment on the Minister's opening remarks. He reminds your
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Lordships' House of the occasion when the great Winston Churchill read—I think, to a party conference rather than to the House of Commons—the same page of his speech twice. At the conclusion of his second rendering he said that the members might be surprised by what he had just done, but he thought it was so important a passage that he really should read it out twice.
It is a compliment to the Minister that when he says something that we should have picked up as nonsense, such is our respect for him as the fount of conventional wisdom that we automatically assume that he is right.
On Question, amendment agreed to.
Clause 56, as amended, agreed to.
Clauses 57 to 59 agreed to.
Clause 60 [Requirement for HMOs to be licensed]:
Baroness Maddock Baroness Maddock moved Amendment No. 70:
Page 39, line 29, at end insert ", or
(c) it is exempt from licensing under section (Exemption where landlord is a member of an approved accreditation scheme)"
The noble Baroness said: Amendments Nos. 70 and 73 are grouped together. Amendment No. 73 is a proposed new clause. The purpose of the amendments is to exempt some properties that are already in existing accreditation schemes from the need to obtain a licence.
Under the amendments, a house in multiple occupation would be exempt if the person managing or having control of that property were already a member of an approved accreditation scheme. Local authorities would approve accreditation schemes operating within their area for those purposes so long as they complied with the requirements laid down by the appropriate national authority. The regulations would set out the criteria for deciding when accreditation schemes could be approved and when approval could be withdrawn. The exemption has to be claimed by giving notice to the local housing authority. It will cease if the person concerned is no longer a member of an approved accreditation scheme.
Many voluntary accreditation schemes have been established throughout the country in conjunction with local authorities. The Residential Landlords Association is promoting its own accreditation scheme. There is a national accreditation network with many local authorities involved. The accreditation movement has developed quickly over the past five years or so and plays a significant part in the private rented sector. We know that accreditation improves standards and increases the competence of landlords, particularly as a result of training. The amendment would cover all types of rented property.
The Government have indicated that the main purpose of licensing houses in multiple occupation is, first, to identify properties; secondly, to ensure that those involved in managing houses in multiple occupation are fit and proper people; and thirdly, to ensure the proper management of those properties.
Accreditation and my proposed amendment achieve all those objectives. As the exemption has to be claimed, local authorities will be notified about the existence of

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houses in multiple occupation. People are concerned about how they will find out where they all are. Applicants would be vetted and there could be disciplinary measures to ensure that those who break the rules are dealt with, but accreditation schemes have shown that they can ensure good standards of management and good management practice.
We are not discussing Scotland, but the Scottish experience is helpful. In the first year of licensing there, it was shown that responsible landlords applied for licences. That is true for accreditation schemes in this country.
I want to see proper control of rented properties and proper standards, particularly in houses in multiple occupation, but we do not want to create unnecessary amounts of bureaucracy and to put aside the good work that landlords have already carried out. These provisions will not work unless there is a partnership between those who rent in the private sector and the Government. One of the reasons the Government gave for limiting the definition of a house in multiple occupation is that they are concerned about numbers. Local authorities are going to have difficulty in setting up a new bureaucracy.
Finally, why do away with an existing bureaucracy that is achieving many of the things that we want? I hope that, even if the Minister does not like the wording of my amendments, he will take away the principle and ensure that we use what is already there to help us achieve our aims. I beg to move.
Lord Best: I rise to speak in support of the amendment. I spoke rather harshly about the measures for licensing houses in multiple occupation earlier because only one-fifth of those properties are covered due to the restrictions on the number of people and the height of buildings. We all know that there are appalling conditions in some of the remaining four-fifths of properties.
However, in relation to this amendment, I take a much softer line and feel sympathetic to those landlords who genuinely want to be part of the good landlord practice that is apparent in many regards in the sector by joining an accreditation scheme. Accreditation schemes are doing quite well. I agree with the noble Baroness, Lady Maddock, that they are taking off, but they still represent a tiny proportion of private landlords.
They are an extremely good way of bringing together the landlords in an area and better educating them, helping those who want to do the right thing to do so. I met two landlords in north London recently who had a good deal of trouble in speaking English. They were, however, keen not to be breaking the law and to be doing the right thing as responsible landlords. They need to be part of a club in which they will receive training and support from colleagues in an area.
It would be a huge incentive for people to be part of an accreditation scheme—which at the moment looks rather bureaucratic to many landlords, who may ask why they should want to be a part of it—if tied to membership was an exemption from at least some of the
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restrictions placed on landlords by being licensed in their HMO holdings. I have heard from the National Federation of Residential Landlords, which is very approving of such a measure and is trying to get its members to become involved with others and with the local authority in many areas. They believe that this would be a boost to accreditation schemes, and I am sure that it would. I have seen the work in Newcastle of a wonderful woman, Maggie Drury, who works with private landlords to better educate and train them. The amendment supports the good guys and sends out a message that we will not come down like a ton of bricks with all the licensing regulations if a landlord is among those trying to do better, so I support it.
Lord Borrie: I wish to indicate a measure of support for the amendment, particularly on the lines along which the noble Lord, Lord Best, has spoken. Later today we shall discuss the complexities of the provisions dealing with the licensing scheme that the Bill introduces. I will probably express my concern about the great task that local authorities will have in initiating and putting through an effective licensing scheme which fulfils all the objectives in the Bill. It will be a formidable task.
The amendment tabled by the noble Baroness, Lady Maddock, seems designed to provide an exemption, not to make it easy for some landlords or those in some parts of the country to avoid an effective licensing scheme, but to play a part in the massive job that lies ahead in achieving effective control of homes in multiple occupation.
Lord Bassam of Brighton: I have listened with great interest to the comments made in support of the amendments and can certainly acknowledge the sincerity and warmth with which the amendments have been supported. However, we need to take a hard practical look at the amendments and the way in which they might operate. For that reason, I wish to start by setting the context.
Clause 60 provides that every HMO to which this part applies must be licensed unless it is under a temporary exemption notice or subject to an interim management order or final management order. It requires that local housing authorities take reasonable steps to ensure that applications for licences are made on behalf of all relevant HMOs in their area. It explains that a licence limits the occupations of an HMO to a maximum number of people or households. Subsection (5) also provides that the appropriate national authority may make regulations setting out how licensing provisions apply in the case of certain converted blocks of flats.
Amendment No. 70 amends subsection (1) of Clause 60 to provide that a house is exempt from the requirement to have a licence if the person managing or having control of it is a member of an approved accreditation scheme. The detail of that exemption is set out in Amendment No. 73, which inserts a new clause. The proposal is that regulations would provide for the approval and withdrawal of accreditation schemes and introduce criteria for the local authority to use in

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determining whether to approve a scheme. The amendment provides that a person managing or in control would have to notify the local authority in order for this exemption to apply. It also provides that if at any time the person ceased to be a member of an approved accreditation scheme, this exemption would cease to apply.
It is only right to say that the Government applaud the accreditation movement, the way in which local authorities, landlord associations and organisations have developed the schemes and the growth of interest in the voluntary nature of such schemes. The schemes exist for a diverse array of properties in the private rented sector, which is very diverse, and I have no doubt that they will continue to be effective for properties unaffected by the licensing provisions in the Bill.
I must also emphasis that the Government believe that such schemes are ultimately insufficient to improve standards for the HMOs targeted in the Bill for mandatory or additional licensing. That is why the HMO licensing provisions have been introduced. As the noble Lord, Lord Rooker, and I have said from the Dispatch Box, we must tackle the worst problems in the sector with an appropriate level of regulation—the worst problems being most commonly with the larger HMOs with the greatest number of occupants. But we also propose to introduce management regulations that will apply to all HMOs, something on which we will consult later this year.
12.15 p.m.
One of the most important distinctions between accreditation and mandatory/additional licensing is that the latter is about licensing a landlord or manager—where a manager acting on behalf of a landlord is the most appropriate person—in respect of a specific property. This is with the principal objective of ensuring that management standards and licence conditions appropriate to that particular property are strictly adhered to. The usual accreditation route would simply not be sophisticated enough in this respect. It would not provide anything like the required level of regulation on a property-by-property basis.
It is important to point out that provisions for new accreditation schemes in respect of properties already targeted by the Bill would serve no useful purpose. At best, they could end up duplicating, and at worst, falling short of the provisions already in the Bill. To end up with a patchwork of accreditation exemptions and mandatory licences would probably add to the bureaucratic burden about which the noble Baroness, Lady Maddock, is rightly concerned. We want a bureaucracy-free system. In reading through the exemption and the way in which it might operate, I can see that it would add to and perhaps extend the bureaucracy that we want to keep to a minimum to make the scheme effective.
I understand and sympathise with the approach being adopted, but ultimately we need a universal scheme targeted at the worst properties first, rather than offering what might end up a patchwork system that is ill suited to dealing with the worst properties.
Baroness Maddock: I thank the Minister for his very full answer, and other Members of the Committee for their support for this approach.
I agree with the Government: obviously, we want to deal with the worst properties first. I suppose, to a certain extent, the Government have limited the number of properties that will be covered because the definition of what constitutes a house in multiple occupation is so limited. I would have liked to hear a little more commitment from the Government to enabling landlords and local authorities to work together and not doing away with all the good work that has been done. I hear what the Minister says, but I did not get from him the feeling that they believed that there was something useful that they could take on board in this legislation. I ask the Minister and his department to look again and see whether there is some way of avoiding throwing away all the good work that can help us to achieve what we all want. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 60 agreed to.
Clause 61 [Temporary exemption from licensing requirement]:
Baroness Hanham Baroness Hanham moved Amendment No. 71:
Page 40, line 16, at end insert "including reversion to single occupancy status"
The noble Baroness said: This simple amendment would ensure that if an owner or landlord sought to return a house in multiple occupation to a single-occupancy dwelling, a licence would be unnecessary. I recognise that most local authorities have planning policies which resist the changing back of houses in multiple occupation to single-family ownership, but it happens from time to time. It would be sensible to include this small opt-out clause to ensure that a lot of bureaucracy did not result from the sale of a property being moved back legitimately into single-family ownership. I beg to move.
Lord Bassam of Brighton: I am always a bit wary about simple amendments. If I explain Clause 61 to the noble Baroness, I hope that she will agree that it is workable and fit for the purpose that she seeks through her amendment.
The amendment seeks to clarify that an application can be made for a temporary exemption from the requirement to license the property where the manager of the property notifies the local authority of their intention to convert.
The amendment is unnecessary because Clause 61 already gives local housing authorities sufficient power in such circumstances. However, when a manager notifies the local housing authority of the intention to convert the property so that it will have single occupancy status and the authority is satisfied that steps

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have been taken to achieve this, we would expect—and this is the important point—that the housing authority would consider granting an exemption notice in those circumstances.
Clause 61 has been drafted with the intention of giving a wide discretion to local housing authorities to serve temporary exemption notices; it should not include specific instances where a temporary exemption should be granted in any event by a local housing authority.
I confirm that Clause 61(1) covers the situation that is described in Amendment No. 71, so it does what the noble Baroness is trying to do with her amendment. I hope that this explanation will assist the noble Baroness,
Baroness Hanham: It assists greatly and clarifies the position.
I hope that planning authorities and housing authorities speak to each other, because in some cases this is a planning matter before it becomes a housing matter and so it would have to be moved between the two. In the light of the Minister's comments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hanham Baroness Hanham moved Amendment No. 72:
Page 40, line 18, at end insert—
"( ) An owner of a property in the process of selling that property shall be entitled to a temporary exemption until it has been sold, and the subsequent owner shall be entitled to a similar temporary exemption in which to make the necessary preparations to obtain a licence, if a licence is required under the terms of the Act."
The noble Baroness said: This is a not dissimilar matter and I expect that I may get a similar reply from the Minister.
We all recognise that the housing market is an evolving environment. It includes first-time buyers, people moving from one property to the next and properties moving in and out of the rented sector and the licensing regime. It is important that we make provision for properties in transition and ensure that landlords or freeholders who are either buying or selling properties are not unnecessarily penalised under the Bill.
As with the last amendment—which has now been nicely explained—I hope that this is a sensible amendment that would make provision for landlords to have an appropriate exemption in the case of selling or buying a property.
Amendment No. 97 works in conjunction with the lead amendment. It would allow being in the process of selling a property to be a defence for not having a licence. Some people who are buying a property and are not fully familiar with their obligations on licensing could be caught out. A suitable and reasonable period
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should be allowed so that they can be made aware of the particular requirements demanded of them. I beg to move.
Lord Bassam of Brighton: I explained in part the effect and impact of Clause 61. It provides that a person managing unlicensed property can notify the local housing authority of their intention to take particular steps to ensure that the property is no longer required to be licensed—for example, if he or she intends to sell it or convert it to single occupancy status.
The local housing authority can, if it wishes, serve on that person a temporary exemption notice which is valid for three months. That notice is renewable for a further three months if the housing authority considers that there are exceptional circumstances that justify serving a second notice. No more than two temporary exemption notices may be served.
The problem with the amendment is that it is too wide. It is conditional upon the property being sold and is consequently for an indefinite period.
This amendment was tabled and debated in another place and the Minster pointed out at that stage that the amendment would allow a potential loophole to the legislation. It could give rise to situations where unscrupulous landlords who want to avoid licensing their property could simply put their property on the market indefinitely and ensure that it was never sold. Landlords could also use the exemption to delay obtaining a licence by claiming that the property was in the process of being sold. I am sure that the noble Baroness does not intend that to be the case, but the creation of that loophole would be a consequence of the amendment.
The objective behind the amendment can be met by use of the temporary exemption notice procedure. This is valid for a period of three months and can be renewed for a further three months when a person genuinely intends to sell the property with vacant possession.
Temporary exemption is only available where genuine steps are being taken. A property transaction with tenants in situ is not in itself evidence that such action is being undertaken. When a property is transferred there should be sufficient time during the sale process for the prospective owner to take steps to obtain a licence. Clause 71(4) provides that they will not be committing an offence of operating without a licence if they have made an application for a licence which is yet to be determined or which is still subject to appeal.
If an application for temporary exemption is refused by the authority, an appeal against that decision can be made to a residential property tribunal.
Amendment No. 97 would provide that in proceedings against a person for an offence of managing an unlicensed property, it should be a defence that the owner of the property is in the process of selling it at the time that the requirement for a licence is issued. The fact that a person is in the process of selling a property is not necessarily conclusive evidence that it is no longer a house in multiple occupation or that the seller is taking serious steps to ensure that it will cease to be one and will not therefore be subject to licensing.

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Why should tenants lose the protection that is given to them under licensing simply because of a proposed change of landlord?
As I commented in relation to an earlier amendment in the same vein, the proposal would create a potentially large loophole that would allow people to avoid licensing. Landlords could claim that they are in the process of selling without ever having a serious intent to do so.
Having explained the background and pointed out the deficiencies of the amendment—although I can see the import of these matters—I hope that the noble Baroness will see the problems that it would create and withdraw it.
Baroness Hanham: I can confirm that I will withdraw the amendment today, but I cannot confirm that I will not come back to it. The Minister has demonstrated to my satisfaction that this amendment is flawed because of the potential loophole that he suggests.
There are ways in which that loophole could be addressed within the amendment by giving a time scale. It is important that people who seek to sell property in a bond fide manner with or without tenants—who may or may not at that stage have had to seek a licence or been licensed—are not then encumbered with the problem of registration and being licensed at the time when they are also trying to sell.
I hear what the Minister says. I am less satisfied with his reply about this aspect on this amendment than I was on the previous one regarding the implications on Section 61. The Minister has produced evidence of an area that we have not addressed correctly and I think it is likely that we will return to this at a later stage. I thank the Minister for his reply and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 61 agreed to.
[Amendment No. 73 not moved.]
12.30 p.m.
Clause 62 [Applications for licences]:
Baroness Hanham Baroness Hanham moved Amendment No. 74:
Page 41, line 27, leave out "maximum"
The noble Baroness said: Under the Bill, authorities will prescribe the maximum fee payable for a licence. That could cause confusion, for example, where an owner has a number of houses in multiple occupation in areas that are administered by different authorities. The amendments suggest 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 someone paying substantially different fees in different areas and not understanding why.
While we favour local discretion on fees and other such charges, there is very real concern among landlords about the costs of such schemes contained within the Bill. Therefore, we seek to leave out the word "maximum". I beg to move.
Lord Rooker: I regret that my answer will be a little longer than that short speech because the matter is more
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complicated than the noble Baroness would have us think. As she said, Clause 62 provides that in making an application for a licence a local authority may require the payment of a fee. Currently, we are having discussions on that issue. We are making good progress with the Local Government Association on the costs of running licensing schemes. The maximum fee will be set through secondary legislation. Of course, we will consult on that in due course.
Amendment No. 74 would remove from local authorities the discretion to set their own licensing fees. In effect, it would require a fixed fee to be imposed across all local authorities. I shall seek to explain why that would not be a good idea. First, I want to make it clear to those people who would be affected that the Government are committed to ensuring that the costs of licensing to landlords are kept to a minimum. There is no question about that. We also wish the licensing regime to be self-financing through the revenue received. That of course is also important.
There is a case for a common approach between authorities. The noble Baroness made a point about landlords with properties in more than one authority, but there is a case for local discretion. The average cost of running schemes will vary in the country from authority to authority, and local fees should reflect that.
A flat rate national fee, as suggested by the amendment, would inevitably have to be set at the upper end of what would be considered to be viable. That would mean many local authorities making a profit on running the scheme. We are not in favour of that and do not want that to happen. We seek to avoid local authorities making a profit from running the scheme. Therefore, if a local authority has a lower cost base and can recover its costs, it can charge a lower fee.
Of course, local authorities might want to set lower fees in certain circumstances; for example, to landlords who are part of an accreditation scheme where, by definition, the cost of running things should be a lot less. That is inevitable. In some ways, it is almost a financial advantage for landlords to join such a scheme. That approach would reward good landlords who are part of such schemes.
Effectively, I would make the same points in relation to Amendment No. 113. It is seductive to suggest having one fee nationally in order to take account of the one example given by the noble Baroness; that is, landlords with properties in more than one authority. Here is a case for making local authorities accountable for the service that they are providing; for getting the costs of the scheme recovered by the fees; for keeping the fees as low as possible; and for using the discretion to reward landlords who, for example, are part of accreditation schemes. The cost of doing business with them will inevitably be less, which would be an incentive to keep fees lower. The alternative is local authorities making a profit, which we do not want to happen.
Baroness Hanham: I thank the Minister for that reply. The setting of a maximum fee seems to do almost everything that the Minister has described as being unfeasible or incorrect. In most authorities, the amount

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of work that has to be done for registration and licensing will be fairly similar. The only difference will be the costs in London where there are probably slightly higher salary scales. But in reality the costs ought to be fairly uniform across the base. For the Government to give an indication in guidance what those fees should be would be helpful. Although the Minister talked about local authorities not making profits, there might be a sort of leapfrogging of local authorities looking over their shoulders and saying, "Well, actually, they are charging so and so. Why do we not put it up as there is no limit?".
Here, there is an element of trying to ensure that those fees are reasonably constant and that there is not a great discrepancy between local authorities. The Minister is obviously not moved by my very short speech. I shall consider his reply. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 62 agreed to.
Clause 63 [Grant or refusal of licence]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 75:
Page 41, line 42, at end insert ", or
(c) grant a provisional licence in the circumstances set out in subsection (6)"
The noble Lord said: The Housing Bill as currently drafted requires local authorities to grant or refuse licences for houses in multiple occupation. The authority may grant a licence if it is satisfied that the house is reasonably suitable for occupation for the maximum number of households or persons set out in the application; that the proposed licence holder is fit and proper; that the proposed manager is either the person having control or is an employee or agent of the person having control; that any proposed manager is fit and proper; and that the proposed management arrangements are satisfactory.
Where applications for HMO licences are made local authorities will have five years to satisfy themselves that there are no Part 1 functions that ought to be exercised, although licence applications should be dealt with within six weeks.
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 that are the landlord's responsibility and can be dealt with under Part 1 during the licence periods.
There are faults with that approach, which could lead to the following range of practical problems. Local authorities will be reluctant to issue full licences without inspection. The granting of a licence implies to tenants and landlords that the house is wholly satisfactory, therefore giving a false sense of security. No local authority will be willing to take the chance of a fatal fire occurring in a "licensed HMO" that has not been inspected, or that might contain other serious hazards.
Few, if any, local authorities know where all the licensable HMOs in their areas are, despite the duty on fire safety contained in the 1997 fire safety order. For many authorities there will be relatively few HMOs that
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have been inspected recently, prior to the licensing provisions coming into force. Local authorities cannot be satisfied that a house meets prescribed standards without inspection.
The demands on resources however will be substantial if local authorities try to inspect every licensable HMO before grant of licence. It is likely that the system will grind to a halt and thereby fall into disrepute. It would not therefore achieve the goal of securing the protection of those living in the so-called "higher risk" HMOs.
The primary responsibility for ensuring that the health and safety of the occupants of HMOs is not put at risk as the result of the housing conditions—either physical or the result of management failures—lies with the owner or licence holder. Therefore, within the licensing system there should be 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 and be issued where the landlord supplies evidence not only that there are in place satisfactory management arrangements but also that in all respects the house is reasonably safe, including no unacceptable hazards under Part 1. That is what Amendment No. 78 attempts to achieve in introducing such a provisional system. In effect, Amendment No. 75 would allow that to happen. I beg to move.
Baroness Maddock: My name is attached to Amendment No. 75. I wonder whether, with the leave of the Committee, I can put the groupings back and group Amendment No. 79 with Amendments Nos. 75 and 78, because Amendments Nos. 75 and 79 are virtually the same.
Lord Rooker: This is why I am gob smacked with the running of this place and the shambles that we are in. All three amendments were grouped together, and this morning they were degrouped. My staff worked until midnight, and from six o'clock this morning, reorganising all the files because of the degrouping.
It so happens that I was going to make the same speech in answer to the new two groups because the three amendments were grouped together in one speech. There was no separation.
The noble Baroness says that she wants them put back together again. Why separate them in the first place, causing untold extra hours for Civil Service staff? I shall have to register a complaint about it. I am happy to go along with what the noble Baroness wants to do because it is obviously convenient. But why degroup in the first place?
Baroness Maddock: I was unaware of how the degrouping happened. It had nothing to do with me.
Lord Rooker: Who is in charge of this place? The Government are not.
Baroness Maddock: I arrived at 10.30 a.m. and it had been changed, I am not sure how it happened, but for the convenience of the Committee, I think we agree on what we should do.

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All the amendments have been brought to our attention by the Chartered Institute of Environmental Health Officers. Environmental health officers are concerned about how they will operate and whether they will do so satisfactorily. I do not have a great deal to add to what the noble Lord has said, but I hope that the Minister will look favourably at the issues behind the amendment, which is about ensuring that the system works effectively and smoothly. In a sense, it is in line with other amendments in that we are trying to use what is already happening, and trying not to recreate new things to deal with the same problems.
I look forward to hearing what the Minister has to say, and I certainly do not want him to have to say it twice.
Lord Borrie: For many years I was the licensing authority under the Consumer Credit Act 1974, covering lenders, credit brokers, credit reference agencies, debt collectors, and so on. I am conscious of the work involved in making such a scheme a reality in terms of effectiveness and perceived effectiveness. Any licence issued by a responsible body tends to give the licensee a stamp of approval. If a licence issued by a respectable public authority is given without adequate inquiry, or without the adequate inspection of premises, which we are discussing today, it may suggest fitness of the property for various purposes, fitness of the landlord, fitness of management arrangements, and so on, which is unreal.
Local authorities must introduce timely procedures so that there are not too many bureaucratic delays. Will that mean that some licences are awarded although they are not justified in the terms of the fitness required under the Bill?
I have the consultation document published only a couple of months ago from the Office of the Deputy Prime Minster, which deals with licensing in the private rented sector. On page 7, there is a convenient executive summary of the consultation document. It uses words that are a little stronger than those used in the Bill, but it suggests what the Government believe. It states:
"Licensing will ensure that relevant landlords are fit and proper persons or if they are not that they employ agents who are. It will also ensure that the standards of tenancy relations management and property management employed by a landlord or agent are adequate."
There must be a great deal of anxiety and doubt among those of us both inside and outside the House who are concerned with the problems of multiple-occupation housing and whether the licensing proposals that we are now discussing will be as effective as they ought to be.
12.45 p.m.
Lord Rooker: I accept the thrust of what has been said, not least the remarks of my noble friend Lord Borrie. We are not in an ideal world, but I hope that I can give a satisfactory explanation as to why we would ask the Committee to reject the amendments. There are two further stages, so we may be able to explore matters further on the basis of what I say now.
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Clause 63 sets out the matters about which a local housing authority must decide before it can grant a licence. Those include the suitability of the house for multiple occupation, that the proposed licence holder or manager is a fit and proper person, and that the proposed management arrangements are satisfactory.
Clause 66 provides that a local housing authority may include conditions in licences, for example, to require facilities and equipment in good working order to be made available to meet prescribed standards for multiple occupation under Clause 64, or that necessary works are carried out within prescribed periods.
I shall give an example of what I mean, as I came across one last week. There is a house in multiple occupation in the city of Birmingham. I think that five students occupy the house, and the landlord is getting an enormous sum of money every month. They have joint facilities. I have not been inside the house, but each student has his own CD, computer, hairdryer, Uncle Tom Cobbleigh and all, with all the plugs that we can imagine. I said, "Lots of two-pin plugs?", and they said, "Yeah, lots of three-pin plugs as well".
When they are all in the house, they keep having to go to the circuit breaker because the switches keep tripping. Those are obviously not suitable facilities for five people using lots of electrical equipment as individuals. That is an example of equipment which is in good working order because they obviously need another ring main in the property.
Such conditions will be in addition to those laid out in Schedule 4 as mandatory conditions, covering specific things such as gas safety certificates and smoke alarms. A local housing authority is required as a general rule to address health and safety issues through its Part 1 functions, and not by means of the licensing conditions. This is where there is a split between the Government's approach and the amendments—between Part 1 and Part 2.
The local authority may impose conditions relating to the installation or maintenance of facilities or equipment as part of the licence.
Clause 54(5)(c) requires local authorities to satisfy themselves, as soon as is reasonably practicable, but at the latest within the period of five years, beginning with the date of the application for the licence, that no Part 1 functions ought to be exercised in respect of houses in multiple occupation for which applications have been made.
That will mean that category 1 hazards are progressively eliminated from houses in multiple occupation and, in the case of the highest-risk properties, prioritisation will ensure this happens at the earliest opportunity.
A local authority can satisfy itself through an inspection, or based on relevant previous knowledge of a property, that no action is needed to tackle health and safety problems on premises for which licence applications are made. If, following an inspection, a category 1 hazard is found, the local authority has a duty to act. If a category 2 hazard is found, the local authority has discretion to act.

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Taking them together, Amendments Nos. 75, 78 and 79 provide that a local housing authority may grant only a provisional licence in circumstances when the local housing authority has not inspected the house, and there is no possibility of an inspection being carried out before the granting of the licence. They would do this on the strength of written evidence supplied by the applicant.
We want local authorities to consider health and safety implications in high-risk properties as soon as practicable, and we do not want licensing to be delayed or made unnecessarily complicated because of this. We want a fully comprehensive licensing scheme in place as soon as possible. Not only will that improve management standards, it will ensure that the highest risk HMOs and their landlords are clearly identified as soon as possible for targeting under the provisions of Part 1 of the housing health safety and rating system.
The Bill places a duty on all local authorities to assess the housing conditions of all licensable houses in multiple occupation within five years. This is a brand new requirement since, under the existing legislation, authorities are not under any duty to assess HMOs, although they have the powers to do so. I hope, therefore, that noble Lords will agree that this is a positive obligation for the benefit of tenants which is intended to eradicate the worst hazards in the shortest possible time.
However, the Government recognise that the duty does place an additional burden on local authorities, and it is essential that they are able to plan and prioritise their workload around a sensible timeframe, dealing with the highest risk properties first. Local authorities know the properties in their area and can decide how best to carry out this duty at the earliest opportunity, and well within the maximum of five years. We do not think that central government are in a position better to judge the circumstances in individual local authority areas.
Due to the concentration of houses in multiple occupation in certain areas, it is important to bear in mind that some local authorities may not have the resources to inspect all HMOs subject to licensing within the first few years, and we would not wish to add to the burdens of all local authorities by imposing a whole new set of additional provisions and regulations for provisional licences. We are confident that the pressure on local authorities, not least from tenants and their representatives once this legislation is put on the statute book, will be to achieve the shortest possible time-scale and an adequate system.
I should make the point that, in an ideal world, all properties would be properly managed and free of hazards, but we know that we do not live in such an ideal world. We want to be able to make sure that the highest risk properties are targeted first. It cannot be done overnight. Were we to pass legislation for that, the public would think we were barmy because they know that we could not do it. The resources would not
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be available and it would be impossible. Therefore we have a phased time-scale but, notwithstanding that, one that deals with the highest risk properties first.
That is what we expect local authorities to do. We do not expect them to waste time doing the easiest properties first because they can then chalk up bigger numbers. We want to deal with the safety of tenants and ensuring that we get good management. However, we do not think that a regime of provisional licences would do anything to speed up the process. In fact, it might even slow things down.
I realise that there is a split between us on this. On behalf of the Government, I shall respond by saying that this is a practical matter. In an ideal world all these things would be linked together, but taking a practical approach and making sure that local authorities can target, and be seen to be targeting, the highest risk properties, is important. We are not able to accept these amendments, but no doubt we shall return to this matter at a later stage.
Baroness Maddock: I thank the Minister for his good and full answer. He understands the problems we are trying to deal with here, and what he has said for the record is quite helpful, in particular in guidance for local authorities. However, as he said, it is likely that when we have considered his remarks and again consulted those who work at the chalk face, we may well return to this matter to see whether we can come up with something a little more practical that the Government could go along with.
Lord Hanningfield: I too thank the Minister for that reply, but I do not think that he gave me an adequate answer to why there could not be a system of provisional licensing built into the scheme. No one wants to make the scheme more complicated or bureaucratic, but there could be a stage at which provisional licences are issued. That would not stop other measures to make certain that authorities tackle the most important and hazardous properties first.
As I said earlier, local authorities will be reluctant to grant licences without some form of inspection. We know that even now local authorities have problems in dealing with enforcement processes—just under the simple procedures now in place. At the moment, local authorities are looking for reductions of up to 20,000 staff as a result of the Gershon proposals for management, but here we are imposing new burdens. We must find systems to make the process work more productively.
I echo the comments of the noble Baroness by saying that I shall withdraw the amendment for today, although we shall certainly return to it. However, during the intervening period I hope that the Government will think again about how we can reassure some of those who are unhappy about the present scheme without introducing a provisional

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licence scheme. If they do so, I hope that we can consider these matters again at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hanningfield Lord Hanningfield moved Amendment No. 76:
Page 42, line 2, leave out "may" and insert "shall"
The noble Lord said: The purpose of Amendment No. 76 is to make it mandatory for a local housing authority to issue an HMO licence provided that the criteria set out in Clause 63(3) are met. Those criteria are that the house is suitable for occupation by a certain number of persons or households; that the proposed licence holder is a fit and proper person; that the proposed manager of the HMO is a person having control of the house, or an agent or employee of that person—and that he or she is also a fit and proper person; and that the proposed management arrangements are satisfactory—very much as we discussed during the last amendment.
As currently drafted, Clause 63(2) stipulates that if a local authority is satisfied with these specified methods, it may grant a licence. The use of the word "may" introduces a discretion. My amendment would substitute "shall" for "may", so that there would be a duty on the authority to grant a licence once it was satisfied that the specified criteria mentioned above had been met. Otherwise, there is a possibility that local housing authorities could take other matters into account which are not set out in the Bill, which could vary from authority to authority. That would be unfair to the applicants for licences, who would not know the full criteria they have to meet. They may discover that they satisfy one local authority, but not meet the criteria for another. All this will create uncertainty, inconsistency and confusion.
A Bill of this kind ought to set out in full the detailed requirements which have to be complied with. Once those have been met, a licence should automatically follow. In any case, a wide variety of issues already have to be considered before a licence is granted. Subsequent sections of the Bill elaborate on the various criteria and introduce further wide discretions. For example, as the Bill stands, if a house meets the prescribed criteria as regards suitability for occupation, Clause 63(3) gives local authorities the discretion to determine that the property is still not suitable. Under the fit and proper person test, while various issues such as criminal convictions are addressed, these procedures are not exhaustive.
There are restrictions in Clause 66 relating to the licensing conditions, although there is nothing on the face of the Bill to prevent the local authority refusing the licence in the first place for reasons unconnected with the criteria laid down in Clause 63(3). Although there is a right of appeal, landlords should not have to rely on that. It can be costly and time-consuming, and the outcome is uncertain.
Finally, Amendment No. 77 would allow the relevant national authority rather than the local authority to decide on the number of occupants who
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could reasonably reside in a particular household, thus achieving conformity and a standardised playing field across the country. I beg to move.
Lord Rooker: This may be arcane, but I have a good and brief reply to Amendment No. 76 which I am tempted to stick to. The clause is an example of standard drafting of statutory duty. If it will give the noble Lord some comfort, I should like to provide him with the assurance that the amendment would not affect the exercise of local authorities' discretion. If need be, I can explain in detail the background, but in effect it would not make any difference to use "shall" rather than "may" simply because once the criteria laid down in Clauses 63, 64 and 65 have been met, the local authority is basically duty-bound to issue the licence. The amendment would not make any difference.
Amendment No. 77 is slightly different in that it provides for the appropriate national authority rather than the local housing authority to specify the maximum number of households or persons who can occupy a house. There are several problems with this amendment. First, it would remove all discretion from the local housing authority to set a maximum number of households or persons for each individual property in the area. This is when it is precisely the local housing authority which is best placed to carry out this function. Central government in Whitehall is certainly not the best place to carry out that function.
The amendment also goes against the spirit of the licensing provisions elsewhere in the Bill, which are designed to provide local housing authorities with the powers they need to enable them to drive up standards of living accommodation in their area.
Secondly, by definition, the amendment would mean that the appropriate national authority would have to set the maximum number of occupants per living accommodation at a level which is achievable on a national scale. As a consequence, there would be no scope for providing for a greater amount of living accommodation per occupant in those areas of the country where higher standards can be reasonably expected and are achievable.
Thirdly, I must emphasise that the appropriate national authority is already responsible for setting national minimum standards of amenity in secondary legislation—which, incidentally, we shall be consulting on later this year. Such minimum amenity standards can include the occupant to living space ratio that the local housing authorities would, in turn, be able to use when it comes to setting the maximum number of occupants for each property.
It is also worth pointing out that under the existing provisions, licence applicants can appeal to a residential property tribunal against the terms of a licence if they consider them to be unreasonable. This would include terms relating to the maximum number of occupants. So it is not as if, by not having a national maximum number of occupants to living space ratio, the local housing authorities will be setting out the maximum numbers of occupants in licences which are unreasonable without there being any check, as there is a right of appeal in those circumstances.

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The intention of the Bill as a whole is to drive up standards in the private rented sector. We think that the amendment would do the exact opposite and drive down standards in some areas of the country. Therefore, I hope that it will not be pursued.
1 p.m.
Lord Hanningfield: I thank the Minister for his reply. With regard to "may" or "shall", I shall look at his answer and give it some further thought before the next stage. I accept that the Government believe that licences would have to be granted if the requirements were met.
The Minister's reply to Amendment No. 77 was much longer and more detailed. I note what he said and will reflect on it to see whether we need to take this matter further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 77 to 79 not moved.]
Clause 63 agreed to.
Clause 64 [Tests as to suitability for multiple occupation]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 80:
Page 42, line 34, leave out subsection (2).
The noble Lord said: This amendment would leave out Clause 64(2). It is intended that there will be nationally prescribed standards to decide whether a property would be suitable for occupation by a certain number of persons or households. It is anticipated that these standards will deal with issues such as suitability of rooms and the amenities and facilities provided—the number of toilets and bathrooms, and so on. Under Clause 64(2), the local housing authority is given a discretion to decide that the house is still not suitable, even though it may comply with the nationally prescribed standards.
This kind of provision leads to the potential for anomalies between local authorities with similar types of housing—there was a similar issue in the previous amendment. It also allows for gold-plating, allowing authorities to require unnecessarily high standards.
HMOs provide much needed accommodation, primarily aimed at the cheaper end of the market. Imposition of extra requirements will lead to increased costs, driving up rents, making this kind of accommodation less affordable. If national requirements are imposed, then there is a prospect of landlords converting HMO accommodation into self-contained flats which will not automatically require an HMO licence. These flats will then either be sold off or rented out, but at higher rents, causing further loss of affordable accommodation. This has already happened on a large scale, especially in London. That trend could be accelerated.
National prescribed standards will provide for the decent basic requirement. There is no need to give local authorities power to elaborate on these. There will be no firm criteria which landlords can work to because
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local authorities could consider a house not suitable even though the landlord has met the national standards. I beg to move.
Lord Rooker: Clause 64 provides that the appropriate national authority may, by regulation, prescribe national minimum standards of amenities or facilities which must be available to render a house in multiple occupation reasonably suitable for the number of occupants. Subsection (4) sets out the matters that may be prescribed in the regulations. These include the adequacy of number, type and quality of bathrooms, toilets, washing, cooking and other facilities. The Government intend to consult on these prescribed standards before laying the statutory instrument before the House.
Subsection (2), which is the subject of the amendment, provides that before determining that a property is reasonably suitable for occupation by a particular maximum number of households or persons, a local authority may take into consideration more than the prescribed standards for occupation. A person who has been refused a licence or is aggrieved by a condition imposed in the licence because it does not conform, or it is required to conform, to local standards, will, as I said earlier, have the right of appeal to the residential property tribunal against that decision.
Amendment No. 80, which would remove subsection (2), would remove any discretion from a local authority not to grant a licence where it may require a licensing standard higher than those prescribed by the national regulations. As I have said before, the intention of the Bill as a whole is to drive up standards in the private rented sector. We think that the effect of the amendment would, like the previous proposal, be to drive down standards in some parts of the country.
The amendment would make the regulations the maximum standard on which a local authority could insist, rather than a minimum national provision. In some areas of the country, the general standard may be somewhat higher than in the hardest pressed areas. Obviously, the appropriate national authority, in setting the minimum standards to be achieved nationally, will have to organise and pitch those standards at a level which is realistically achievable in all areas. There is no reason for this to drag down standards in areas of the country where higher standards are reasonably expected.
We want to make it clear, however, that if a local authority wished to impose standards above those which were nationally prescribed, those standards must be reasonable and, in particular, relate to the suitability of the house for multiple occupation. Authorities cannot do things willy-nilly or on a hunch. It would therefore not be appropriate for a local authority to require the taps in the bathroom to be gold-plated, for example. Surely no local authority in its right mind would require taps to be gold-plated. I am sure that even in the well heeled local authority of Kensington and Chelsea, houses of multiple occupation do not have gold-plated taps. In other

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words, local authorities must act reasonably, even where they want to set standards which are higher than those nationally prescribed.
It is entirely appropriate that local authorities should be able to set those standards, having regard to the housing stock and conditions in their area. While it is essential that there are prescribed national minimum standards, it is not the role of central government to dictate standards to be applied in every case uniformly across the country, as the prevailing market will vary from town to town and region to region.
Subsection (2) will allow the local authority to take into consideration additional factors. Local authorities are operating in a much more sensible way than they have done for years. I am slightly surprised that the leader of one of our great and esteemed local authorities should have come forward with an amendment that would remove discretion from local authorities. If they act reasonably, it is perfectly right that they should have the powers in subsection (2).
Lord Hanningfield: I thank the noble Lord for that reply. Obviously, I very much believe in local discussion. We drafted the amendment because we were worried that in some areas we could deprive the market of affordable housing because people might prescribe conditions that were too elaborate, therefore taking the houses out of the renting market. However, the Minister has answered my point, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hanningfield Lord Hanningfield moved Amendment No. 81:
Page 42, line 38, after second "standards" insert "relating only to health and safety"
The noble Lord said: Amendments Nos. 81 and 82 define more precisely the tests as to the suitability for multiple occupation. They identify health and safety considerations, which are at the heart of the purpose of Parts 1 and 2, at the very core of the clause.
Amendment No. 81 would require that the standards prescribed under the clause relate only to health and safety standards. The clause at present is intended to deal only with standards of facilities and equipment. We strongly believe that health and safety considerations must be at the forefront of such considerations, and should not be downgraded in our perception of such matters. We are probing to see how much the Government share our belief.
Amendment No. 82 returns us to the subject of fire, as it specifically adds the standard of susceptibility to fire hazards to subsection (4), by providing for fire safety standards to be prescribed. That matter also relates to the Part 1 health and safety regime. As was mentioned in another place, there is proper consideration of washbasins, showers and bathrooms, areas of food storage, preparation and cooking, and laundry facilities and so on, but there is no mention of the safety equipment that might reasonably be expected in an HMO to deal with a fire hazard. I hope
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that the Minister can provide us with a better reassurance, as provided during the Committee stage in another place. I beg to move.
Lord Rooker: This is another case in which matters relating to Part 1 are being transposed to Part 2. However, I am not being critical in that regard, because the Bill is long and complicated. I have a good example with which I can, I hope, satisfy the noble Lord.
Clause 64 is intended to deal with standards of facilities and equipment. It is about requiring certain minimum standards of acceptable living accommodation in multiply occupied houses in the 21st century, rather than whether the multiple occupation is injurious or dangerous in itself to health and safety, because that is covered by Part 1.
Clause 64(4)(b), which is right at the top of page 43 of the Bill, allows for standards to be prescribed,
"as to the number, type and quality of other facilities or equipment which should be available in particular circumstances".
It is our considered view, for example, that that could cover fire safety equipment, so we do not see the need for fire safety standards to be prescribed in that sense. This is a matter anyway for Part 1, and the health and safety regime, but the amendment is unnecessary because, according to the advice that I have, subsection (4)(b) could cover fire equipment.
Lord Hanningfield: If it could, why are the Government against mentioning it in the Bill? It is obviously an important part of the process.
Lord Rooker: Because we are dealing with Part 2 of the Bill, not Part 1. That is the dilemma that we face. I understand why there is an attempt to use matters relating to health and safety in this part of the Bill, because we are dealing with houses in multiple occupation. We all understand why we are coming forward with the proposals in the first place: it is not just about good management of the property. There are other matters relating to health and safety, but we believe that they are covered in the detail in Part 1.
I shall go back and check on the matter, because the advice that I have is that the provisions could cover fire equipment. What I need to know is that it does cover fire equipment, so I shall seek further advice and drop the noble Lord a note between courses.
Lord Hanningfield: I thank the Minister, particularly for the last part of his reply, and hope that he can clarify the situation for us before the next stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 82 not moved.]
Clause 64 agreed to.
Clause 65 [Tests for fitness etc. and satisfactory management arrangements]:
Baroness Hanham Baroness Hanham moved Amendment No. 83:
Page 43, line 7, at end insert—
"( ) On application for a licence, "P" will be required to make a full disclosure of any recorded convictions on the sex offenders register to the licensing authority.
( ) Before the local authority awards a licence it will required to validate both the identity of "P" and information supplied by "P" with the national sex offenders register.
( ) Every HMO manager within an authority's area of jurisdiction will be required to report to that licensing authority any sexual offence conviction gained since the award of an HMO manager's registration.
( ) Every year, local authorities will be required to check the names of all HMO managers within the area of their jurisdiction against the sex offenders register."
The noble Baroness said: This amendment, or something very similar, was moved in the other place, and the Minister there gave a commitment to consider the issue. That is why we are bringing it back at this stage—to see whether by any chance consideration has already been given to it.
At present the Bill does not set out anything to do with sex offences with regard to a manager's fitness to manage a house in multiple occupation, although such crimes could possibly be included under the general heading of "violence". That is not specific, and under most circumstances these days the category is written out as a separate entity. We all know that people who have responsibility for houses in multiple occupation may have vulnerable people in their properties. We are therefore probing again the Minister to explain why such offences were not included in the list of subjects in the Bill.
Amendment No. 83 sets out some of the grounds on which an authority must pay regard to the question of whether a person is fit and proper to hold a licence, were they to have a previous sexual conviction or were they to be registered on the national sex offenders register. They would not be automatically barred, but the fact should be taken into account in deciding whether to grant a licence.
Amendment No. 115 is a related amendment, and would introduce a similar requirement with regard to tests for fitness to cover the later clauses on selective licensing or other residential accommodation. I hope that the Minister has a response that will indicate that the matter has been considered in the interim between the two stages in the other place and here. I beg to move.
Lord Rooker: Clause 65(2)(a) does of course refer expressly to the Sexual Offences Act 2003. An amendment was made to that Act following the debate in the other place.
Clause 65 sets out, among other matters, the evidence that the local authority must consider when addressing the question of whether a person is a fit and proper person to be a licence-holder or manager of a house. That includes whether the person has committed an offence involving fraud, dishonesty, violence or drugs. Following debate in the other place, offences listed in Schedule 3 of the Sexual Offences Act 2003, which attract notification requirements, were
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also added to the list. To that extent, I believe that we have met the thrust of the noble Baroness's amendment.
Amendment No. 83 would specifically require a person to disclose recorded convictions on the sex offenders register to an application for a licence to act as an HMO manager, as well as requiring the local authority to verify such information. In addition, the third subsection of the amendment would require HMO managers to inform the licensing authority should they be convicted of a sexual offence since their registration as an HMO manager. The fourth subsection of the amendment would require local authorities to check the names of all HMO managers in their area, annually, against the sex offenders register.
The exact same amendment was tabled by the Opposition and debated in the other place, at which time the Minister said that we would consider the issues raised. As a result, we introduced amendments to the Bill that added offences listed in Schedule 3 to the Sexual Offences Act 2003 to the list of evidence within Clause 65(2). I hope that that satisfies the noble Baroness.
Baroness Hanham: I apologise to the Minister as I had not noticed that the Sexual Offences Act was included in subsection (2). The Minister's reply satisfied me as regards the inclusion of the measure as a result of the considerations in the other place. I thank him for drawing attention to that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hanham Baroness Hanham moved Amendment No. 84:
Page 43, line 40, leave out "and funding arrangements"
The noble Baroness said: Before it can grant an HMO licence the local 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. The amendment would remove this specific requirement to consider funding arrangements in each and every case.
Before granting an HMO licence the authority must be satisfied that the proposed licence holder and the proposed manager, if different, are fit and proper persons. While there is an indicative list of matters that the local authority must consider, this is not exhaustive and there is no reason why the financial position of the proposed licence holder or manager should not be considered as part of this test if there were circumstances making this appropriate in a particular case.
There may be cases where a local authority has justifiable concerns for financial reasons that a licence holder will not be able to meet his obligations. However, these are likely to be reasonably rare. The Government do not appear to have appreciated the heavy burden that is going to be placed on local authorities as well as on landlords and managers. The licensing system will be administered by

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environmental health officers. Environmental health officers have, in most cases, little experience of financial matters. Is it proposed by the Government that environmental health officers should vet landlords' accounts? Is it intended that bank references should be taken up? Anyone who deals with bank references knows that they are written in code. Environmental health officers will not necessarily have the experience to vet accounts or council references.
Local authorities have limited experience of interpreting private sector accounts and probably none at all in relation to landlords who are small businessmen and women. Their experience is limited to one-off contracts. A provision of this kind 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 institutions funding the borrowing on a property. If they are not convinced of the landlord's financial position, there will be no money forthcoming. The automatic requirement to consider the financial circumstances of the applicant is unnecessary and bureaucratic. It will require considerable resources of an entirely new kind not possessed at present by local housing authorities. I beg to move.
Lord Bassam of Brighton: Clause 65 sets out the matters to which a local authority must have regard in determining whether the conditions in Clause 63 are met for it to grant a licence. One of the matters it must consider in deciding whether the management arrangements for an HMO are satisfactory is that funding arrangements are suitable. As the noble Baroness clearly explained, Amendment No. 84 seeks to remove that requirement in subsection (6)(c).
We take a contrary view. We take the firm view that it is necessary to ensure that funding arrangements are suitable as that goes very much to the heart of adequate, effective and responsible property management. Clearly, standards of management or repair will seriously deteriorate if a manager does not have the money, or access to that money, to carry out his obligations. I am sure that the noble Baroness would agree that being a landlord is not simply about collecting rents and making profits; it imposes important obligations on that person to ensure that the property is well maintained, well managed and entirely suitable for the number of residents for whom it provides housing and shelter. We take the view that it is therefore quite proper that under a licensing scheme the local authority should be satisfied that the manager of the property has, or has access to, sufficient funds to carry out those obligations.
The noble Baroness prayed in aid of her argument that local authorities have limited experience in looking at business finance and that environmental health officers might lack the relevant expertise. My experience as a local authority leader was that on many occasions my local authority had to consider the financial arrangements for developments and for businesses taking over council leases and properties and so on. I should be very surprised if the noble
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Baroness's local authority did not have access to that kind of expertise within its financial management and other sectors. Local authorities are highly complex business organisations themselves and therefore well understand the importance of dealing with people who have the means to run and effectively manage the properties that we are discussing. Therefore, I do not find that a convincing or compelling argument. If this provision is not in the Bill, it will potentially lead to a situation in which local authorities are invited to grant licences to people who frankly do not have the means to run or manage effectively property in their control and ownership. We do not believe that the amendment has merit. I hope that, on reflection, the noble Baroness will withdraw the amendment today and not bring it back on a future occasion.
Baroness Hanham: I thank the Minister for his reply. The whole question of whether a local authority has adequate resources to deal with all the matters that will have to be considered under the fitness test is something that we have not dealt with in very great detail. As my amendment suggests, environmental health officers will require a wide variety of experience. In view of what the Minister said, funding will clearly constitute part of that; namely, an ability to look at and certify accounts, or, indeed, to transfer that to someone else.
I hear what the Minister says. I thank him for his reply and, for the moment at least, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 65 agreed to.
Lord Rooker: I beg to move that the House be resumed. In moving this Motion, perhaps I may suggest that the Committee stage begins again not before 2.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

School Inspections
1.28 p.m.
Lord Dearing rose to ask Her Majesty's Government what changes are desirable to schools' inspections so that they make the best possible contribution to the quality, effectiveness and well-being of education.
The noble Lord said: My Lords, some months ago I suggested that we might have a discussion about what changes are desirable to schools inspections so that they can make the best contribution to the quality, effectiveness and well-being of education.
I begin by welcoming the noble Lord, Lord Filkin, to his new appointment. We shall do our best to assist him regarding the conclusions to which he should arrive!
Since I tabled the Question much has happened. In particular, the Government published in June their proposals for A New Relationship with Schools and a month later their Five Year Strategy for Children and Learners.
I want to relate my remarks to what is being proposed. I begin by referring back to what I understand is the statutory basis for inspection set out in the 1996 Act; that is, educational standards, what is achieved in education, leadership and management and spiritual, moral, social and cultural development. I propose that to those final four qualities is added the word "physical". I do so partly against the background that in the five-year strategy the Government place particular emphasis on the health of people in schools. The five-year strategy states:
"In particular our aim is that every school should be a healthy school, giving good teaching and advice about nutrition and exercise, backed up by its school lunches, by PE and sporting activities".
It commits itself to tackling the growing problem of obesity among our young people. All this is,
"supported by a policy to increase the time spent on quality PE and Sport, to two hours a week, and there is reference to an investment of £1 billion across Government by 2006 on PE, School Sport and Cub Links".
On Tuesday, I read a main, front-page article in the Daily Telegraph about a study by academics at the University of Dundee of the health of 150 teenagers in that city. The finding was that one fifth of those young people had early signs of heart disease. I welcome the emphasis that the Government are giving to the issue of health. I request them to consider adding physical development to spiritual, moral, social and cultural development.
Having made that suggestion, I must welcome in broad terms the Government's intention to reduce the "run-up to the wicket" period of great hard work in preparing for inspections and the greater involvement of HMI, although I could, perhaps, wish it to be even greater than is proposed. I also welcome the intention to cut down the time taken for inspections, as long as that will produce reliable inspection reports.
It is here that I have a question. As I understand the February publication, the proposal is that inspections should be twice as frequent as at present but much shorter. Indeed, the man- or woman-hours put into inspection will be one quarter of what they are at present. That is very material. I know that the noble Baroness, Lady Perry of Southwark, if she were present, would want to urge the importance of mature, individual and collective professional judgment by the inspectors and ask whether there would be time for that. If Chris Woodhead were here, he might repeat a warning that he gave to the inspectorate when he was in the chair that inspection must be free of firmly held orthodoxies about the way to do things. Will there be time for inspectors doing such quick inspections to size up an approach to teaching that is not their preferred approach?
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I invited two chief education officers to give their impression of the reliability of inspections at present, with the longer commitment of time. I shall read their words. One wrote:
"We have suffered in the past from some of our best schools failing and some of our weakest being given a sound report".
The other wrote:
"I have known schools that probably should have been in serious weakness or special measures which escaped it, and conversely ones where to put them under was harsh and where I was as sure as I could be that a different team would have come to a different outcome".
As I understand the strategy document, there will be a lot of change in schools in the next few years—good changes—that will increase the ambit of the inspectorate and the challenge facing it. I welcome the intention—indeed, the practice—of piloting the changes before introducing them, but, given what is proposed in the five-year strategy, I wonder how reliable a guide they will be to what we will need in the future. That is my first point, and I pose it as a question. It is well intended but seriously meant.
My second point is about schools, parents, children and society having a fair deal. I can think of no other profession that is so vulnerable to inspection and public reporting of the outcomes. That has always been a worry for schools because their reputation is on the line. The Government's wider proposals for schools will make it easier for successful schools to expand and get a decision within 12 weeks. However, if an inspection report giving the thumbs-down is published, it will be not only the reputation of the teachers that may be on the line but the future of the school.
The intention is that, when the inspectors report, having completed their visitation, they will, within one day, give the school a draft of the report. That seems good, but will there be time, in that brief period, for the governors to make an input? Will there be time for the inspectors to give mature, professional, individual and collective judgment, before getting committed? It is asking a great deal of the system to expect it to move so quickly.
There is so much at risk. The report will be published in three weeks, and that will not be the end of it. There will be a school profile in which the school is required to set out the main inspection findings. It will be written in a way that is readable and understandable to parents, so that it is on the record for people.
It is important that further thought be given to providing time for the governors and for mature reflection on the inspection, before something is published. I know that there can be an appeal to an adjudicator on the way in which the inspection has been conducted, but, by then, the damage will be done. The adjudication comes later. As I understand it, the adjudicator cannot look at the judgments that have been made by the inspectors.
I turn to the judgments. As I understand it, that has been a no-go area: the inspectors see what they see and report it as they see it. But such judgments are difficult,

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and the inspections will be quick. There is, as I have argued, so much at stake for the school. If the governors have the support of the chief education officer in the view that a report is seriously flawed and if there is other external evidence—from SATS, say—it should be possible, in circumstances in which there is independent expert corroboration, for a second look to be taken before publication.
I want to welcome the approach, and I want to urge that physical development be added to the spiritual, moral, social and cultural development of children. I have a worry that the time proposed for the new inspections will be inadequate for the job, and I want a procedure to enable proper consideration of the school's input before publication.
1.38 p.m.
Lord Sutherland of Houndwood: My Lords, in the absence of the scheduled second speaker, I rise to present my speech.
The Earl of Listowel: My Lords, I withdrew my name from the speakers list last night and informed the Government Whips' Office. I noticed that there were a great many people with more expertise speaking on the subject this afternoon, and I wanted to allow them more time to speak.
Lord Sutherland of Houndwood: My Lords, I thank the noble Earl for that; it increases the running time from six to seven minutes.
I thank the noble Lord, Lord Dearing, for introducing the debate with his characteristic sharpness and specificity. I welcome the Minister to his new responsibilities and wish him well. A senior civil servant whom I knew once said that the only lobby that he thought more fractious than the education lobby was the arts lobby. Perhaps the Minister can draw some consolation from the fact that that is not included in his current brief.
I begin with a declaration of interest: I was the first HMCI under the new regime that introduced the system that is now, rightly, being rethought and amended. In 1992, when the new system was set up, there were three founding principles. It is important to re-emphasise them because they should be retained, whatever the particular changes introduced. The first was that inspections of schools should be regular. We discovered that some schools had not been inspected for 20 years. The responsibility for inspection was split between national and local sources and a number of schools reported never having seen an inspection team. That was the reason for insisting that there should be regular inspections, perhaps initially on a five or six-year cycle.
The second principle was that the inspection should be independent because there was clearly a confusion of roles among a number of those who were involved in inspection. Perhaps I may put it colloquially—they found themselves as both referees and coaches and it is difficult to combine those two roles: going to a school to inspect what is happening and at the same time
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providing the friendly local support that the well-oiled inspector often did. It is important the inspections are independent, whatever form that may take and it has taken a variety of forms.
The third principle was that the report should be published. That was as equally contentious as the others, but the intention, properly, was that the parents, school boards and the local communities should be aware of the manner of schools operating in their neighbourhoods. I hope that those three principles—regularity, independence and published reports—will be retained through change.
Ofsted was created and I confess that I invented the term, for which some have never forgiven me. Indeed one wag suggested that it should be called "Instead". It was deliberate that it had a new title to indicate that it was a new type of business. The context was not simply the formal creation of an independent inspectorate that would be a non-ministerial government department, but that it would sit alongside a national curriculum, of which the noble Lord, Lord Dearing, knows much and over which he spilt many drops of blood; and national testing alongside the national curriculum. That was a three-pronged approach that, I would argue, over the course of time led to significant improvements in schools over the past 10 years.
Of course times change and it was always envisaged that there should be development in the inspection process from day one. We were entering an area that was almost an unknown quantity. What would we find in 26,000 schools across the country? The intention was to build up a knowledge of what was happening and a database. In the light of that we could perhaps develop new systems in due course.
Ten years on all schools have been inspected more than once. Databases of reports have been built up. There is 10 years of learning and experience of how to do that and, indeed, of how to play the game, which is one of the dangers. All of that provides reason for change and development. But the change and development can be informed by that 10 years' experience and by the database that is there. Inspection teams who go into schools now, compared with, say, 1994 or 1995, have significant factual data available about the performance of those schools. On that basis, inspections ought to be different.
I re-emphasise that the changes proposed will not involve a change of the principles: regularity, independence and publication. But I welcome the new pilots in principle and in general, with the intent to reduce burdens on schools and the focus perhaps on specific issues in the light of the knowledge that we now have. I conclude by making one or two specific suggestions that I hope that the Minister will be able to take away and discuss with his colleagues.
First, I support the noble Lord, Lord Dearing, in that the mechanisms of appeal should be strengthened. A report now ought to be well-honed, built on a database and ought to be specifically looking for the issues that that knowledge of past inspections could bring to the inspection team. That leaves room for some element of appeal.

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One measure that we took that was not well publicised but that I commend as a possible way ahead for the pilot studies was that in the first 100 new-style inspections under the new framework we had external monitoring carried out by a completely independent body. Predictably in those days it was Coopers. That 100 inspection report was useful and interesting ammunition for the HMIs who were working on how to develop the new framework. It also meant that one did not go ahead simply on the basis of innuendo, hint or, perhaps, the suggestion that the inspection teams had not been up to their job. So I suggest that an external monitoring of pilots might pay real dividends. If necessary there should be re-inspection by HMIs after the report is in and published. The timescale is such that that should be fairly quick. Re-inspection ought to be strengthened.
Finally, there should be a greater focus on outcomes. The system has been process-focused. Outcomes are the final judgment of whether a school is doing well. There are different ways of doing that. There is not a single orthodoxy on how to run a school, primary or secondary. I much commend the notion of self-evaluation as central. It gives schools a role. Self-knowledge, as Socrates reminded us, is the beginning of wisdom and, indeed, of good management.
1.45 p.m.
Lord Tombs: My Lords, I join the noble Lord, Lord Sutherland, in thanking the noble Lord, Lord Dearing, for introducing this important debate and welcome the Minister to his new bed of nails, which we will try to make blunt.
Schools inspections can make an important contribution to the standards of education. Unfortunately, that has not always been the case and increased demands on inspectors have too often resulted in inconsistent judgments. Schools have come to view inspections as a lottery in which the capability of the lead inspector settles the odds and the rules are constantly changing. This, coupled with the long period of notice for inspections, has produced a febrile atmosphere in which over-preparation can present an unrepresentative picture to the inspectors and a huge additional workload for the staff. Happily, this is now changing for the better and I should like to pay tribute to the present chief HMI, David Bell, for his willingness to promote a widespread consultation and to seek to improve its efficacy as a result of that consultation.
The two main changes resulting from this process are generally welcome but, inevitably, they risk creating further difficulties. My object today is to identify those difficulties and to seek to suggest ways in which they could be managed. First, the proposal to shorten the notice period for inspections will do much to reduce the over-preparation to which I have referred. That will be welcomed by the staff and, no doubt, the pupils. But more warts will show and the inspectors will have to adjust their methods
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accordingly. Any shortcomings on the part of inspectors will be magnified by the necessarily increased reliance on their judgment.
More potentially difficult is the proposal to shorten the inspections. This will also increase the judgmental importance of the inspections and will therefore rely heavily on the experience of the inspectors. The proposal to have an HMI as lead inspector for every inspection is presented as a contribution to meeting that challenge. But the notion that Her Majesty's Inspectors are invariably superior in experience and judgment to registered inspectors is questionable. The plain and unsurprising fact is that neither constituency is perfect and it is on that fact that I want further to examine the problem and to suggest some ways of dealing with it.
There is a pressing need to ensure that the experience of all inspectors is adequate to the task they face. This requires that they should have practical and recent experience of the type of school under inspection, notably whether it is primary or secondary but also its social environment. Experience at senior management level is, or should be, a sine qua non. To some extent this calls for good management of existing inspectors by matching their experience to the task. But good management also calls for regular updating of that experience, perhaps by secondment to schools and regular audit of the experience and capability of inspectors. This should be seen, not as an intrusive process but as a means of helping inspectors in their important but difficult task.
I now turn to the category of "special measures" which is used to categorise schools which are seen as "failing" and which often results in the replacement of the head teacher. We should note that the "failing" head often goes on to rescue another school in the same "failing" category while a "superhuman" head comes in to perform the same transformation at the first school. We should also note that the decision to place a school in special measures is often preceded by one or more satisfactory inspections to the understandable astonishment of staff and governors.
The placing of a school in special measures is a draconian step, attracting opprobrium in the educational establishment and in the sensation-loving press, and imposing a massive additional workload and stress on the management team. It should not be undertaken lightly and, in my submission, the ensuing recovery process has not been properly examined or validated.
"Special measures" is a simplistic and unsatisfactory process which is attracting growing criticism in the educational world and urgently demands critical examination. In most cases, it involves schools in areas of great social deprivation where inspectors require a depth of understanding which is not always evident.
The need for constructive support of teachers should be intrinsic to the inspection process and the steps already taken will contribute to that. But the need for better training and audit of inspectors remains to be addressed and the penal aspect of the system, of which "special measures" remains an

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important and undesirable example, must be replaced by a constructive and supportive role for teachers, especially those coping with the special difficulties of deprived areas.
Without doubt, some schools are genuinely failing but, even then, it is very doubtful whether publicly pillorying them is the best way to obtain improvements. In special measures, the workload rises to meet supervision requirements, new staff are difficult to attract, newly qualified teachers cannot be appointed without specific permission and good staff leave to further their careers. How much better that could be handled in a supportive environment. But when "special measures" rests on a dubious inspection report, how much more damage can result. Steady, if slow, progress is interrupted or even reversed by the extra demands on staff. Morale is seriously damaged by a feeling of unfairness and victimisation. Nervous breakdowns can and do result and both staff and pupils suffer.
I make two pleas to the Government regarding special measures. First, commission an independent review of those schools placed in special measures over the past five years to examine the validity of the inspection recommendation and the methodology of the recovery. Secondly, abandon the public declaration of "special measures" with the general and indiscriminate opprobrium which results and concentrate instead on constructive measures to the benefit of staff and, most importantly, pupils.
1.52 p.m.
Baroness Sharp of Guildford: My Lords, I, too, thank the noble Lord, Lord Dearing, for introducing an interesting and timely debate. I also want to congratulate the new Minister on his appointment. We shall miss his predecessor, but I am sure that we shall enjoy having the noble Lord, Lord Filkin, as Minister.
Next Monday, I shall be spending the day at a local primary school as a governor of that school. We shall be working our way through a new school plan, taking account of an inspection which concluded at the end of the summer term. It was completed under the third framework of Ofsted's old rules. It was the third cycle of inspection, which indicates that since 1992 this was the third full inspection of the school. The inspectors were there for a week, which is not a short inspection framework, and they found some problems in the school. The inspectors were critical in some senses but praising in others, as frequently happens.
It illustrates well the developments that have taken place in the Ofsted framework since the early days of 1992. The noble Lord, Lord Sutherland, emphasises the change that took place and the difficulties which the HMI found in its dual role of both inspector and coach. Perhaps in the early days too much emphasis was placed on the role of independent inspector. On some occasions, we saw the process of inspection, public reporting and naming and shaming producing the kind of results referred to by the noble Lord, Lord Tombs. Schools which failed found themselves at the bottom of a pit and it was difficult for them to dig themselves out.
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However, we should acknowledge the considerable degree to which, during the past 13 years, the processes within Ofsted have changed considerably. The process I shall be going through on Monday, which will involve both parents and pupils giving their views, puts the emphasis on self-evaluation on the part of the schools. The criticism is there, but it is constructive and ways forward are pointed out. Central to it is the school improvement plan and self-evaluation in relation to the central core.
That illustrates the shift in particular towards self-evaluation, and that aspect is taken up in the new Government proposals. As the noble Lord, Lord Sutherland, pointed out, there is now a data base and many schools do not now need a long inspection. They are not causes for concern and in most cases it is appropriate that the inspection ensures that the self-evaluation processes are in place. In that sense, I greatly welcome the change.
No one has yet referred to a large volume, which landed on my desk at the beginning of the Recess, entitled Improvement Through Inspection. It deals with the impact of Ofsted's work and comes from the Institute of Education. It is interesting and contains masses of information about Ofsted. The work was done independently by the institute, but it is published by Ofsted. It is self-congratulatory in many senses but it is a timely volume.
Perhaps I may quote two paragraphs from the report. First a head teacher of a school in "special measures" wrote, contrary to the tone adopted by the noble Lord, Lord Tombs, of,
"the privilege of being able to look retrospectively on a process that has undoubtedly led to a transformation in the quality of education we are providing for our students. If this is the outcome of a regular inspection process, supported by rigorous monitoring and evaluation, then it is a process to commend to others".
The general conclusion of the report was that,
"Ofsted has been recognised by the Government as having fulfilled its statutory functions to the letter. Through assessing the effectiveness of past and current practice, this evaluation finds that Ofsted has made a substantial contribution to the improvement of the education system and—to a variable extent, alongside other powerful factors—to education providers".
So far, so good. What might we see in terms of improvement? The Liberal Democrats thoroughly endorse the move to self-evaluation. Indeed, we go one step further. We would like to see in schools the development of the new Ofsted framework into one of total quality management, together with shorter inspections and only longer ones where necessary. The emphasis should be on self-evaluation and on being able to recognise what you want to achieve. That comes from total quality management.
Like the noble Lord, Lord Sutherland, we feel that mechanisms for appeal should be strengthened. We also feel that the whole framework is too driven by targets. We are worried about that and we make no bones about it. Education is about questioning, creativity and learning how to learn. One of the dangers that creeps into the inspection framework is that achievement outcomes are measured against the targets that are set. In schools which fail to meet the

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targets, the wider framework is not recognised within the inspection framework. We should be looking at a total quality framework.
There are two other issues I wish to raise where I do not believe that the current inspection framework meets the requirements. I do not know what the answers are, but more work is required. The first is special educational needs. We have chosen an agenda of inclusiveness, which is fine. But schools have a very high proportion of children with special educational needs. They do fail to meet targets and have difficulties. That is not fully recognised within the inspection framework. We need to look at it and make sure that we are taking necessary account of the inclusion agenda and how best to meet special educational needs.
The other area, which is linked to some extent but different, is that of ethnic minorities. Last week a report was published by the London Development Agency into the performance of Afro-Caribbean boys in London. It shows that the schools have failed them time and again. It is necessary to see whether we are picking this up within the inspection framework and to think hard whether that framework is considering the needs of ethnic minorities within our schools.
Those are some of the ways forward. But generally speaking, I believe, and I believe that my party does also, that the inspection framework in this country has moved in the right direction. We would like to see it carried further. We endorse the moves that have been made.
2.1 p.m.
Baroness Seccombe: My Lords, first I would like to congratulate the noble Lord, Lord Filkin, on his new appointment. He has a hard act to follow because his predecessor was a dedicated, good humoured Minister, respected on all sides of the House. However, I look forward to meeting the noble Lord over the Dispatch Box and I wish him well. I, like others, thank the noble Lord, Lord Dearing, for initiating this debate.
There has been growing criticism of Ofsted since 2000 and in the light of the media articles on the July report before the summer Recess, it is indeed a timely Question. It enables us to take stock of the situation as it now stands.
While some organisations have cautiously welcomed the shift in direction, Ofsted has signalled in its most recent consultation document that many of the original concerns still remain at issue. A "Let's wait and see" attitude seems to prevail throughout the education sector, while they wonder whether this "Step in the right direction" will be followed through in September 2005.
The Secondary Heads Association, among others, remains disappointed that the inspection system appears to be extravagant, expensive and simply not good value for money. There are particular concerns regarding the cost of contracting out inspectors and of
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Ofsted as a whole. As some of your Lordships will be aware, the James review of taxpayer value identified savings for the education sector of £5.7 billion.
One of the main prongs of the review is the streamlining of Ofsted's inspection regime. With 2,400 full time and over 6,000 part-time inspectors, the James review recommends that by lightening Ofsted's touch and by enforcing a more focused regime, 800 posts could be released saving around £100 million. Would the Minister agree with me that it is crucial that this money goes to the front line in schools to help teachers and not to the employment of an excess of bureaucrats?
Heavy criticism has been levelled at the administration of the inspections by the school community. Filling in forms takes up the time of teachers and school administrators, placing pressure on the time that they have to spend with their students. For an average secondary school an inspection will require a whole week in which 12 inspectors are involved, plus 10 weeks of paperwork which precedes it. After all this time and effort, they are just presented with a judgment, which is often considered to be over-reliant on performance indicators, which inspectors could have found out without even entering the school.
Indeed, the process has been described by Mr Ward of the Secondary Heads Association as "unscientific". He was one of the many to challenge the Ofsted Improvement Through Inspection report in July, highlighting that the improvements in schools are made by the efforts of those who work in them, not by visiting inspectors.
Even Ofsted's chief inspector, David Bell, has questioned some of the judgments made by inspectors as a sharp rise in the number of schools failing inspections was reported in July. Education is not simply about grades achieved in exams; it is about the sound, well rounded physical and mental health and development of an individual within his or her peer group. Can the Minister inform the House what steps are being taken to address the perception that inspections are predominantly based on indicators such as grades? Can he assure the House that Ofsted inspectors will be encouraged to be positive and more helpful in their judgments and not the intimidating individuals many teachers still claim that they are?
Having said that, I must make it clear that we do support inspections and believe that they are certainly a necessary part of the process of transparency and accountability in the school system. Schools that are failing should be monitored and dealt with. We on these Benches believe that there should be non-notice inspections for schools at risk of failure. However, good schools should not be held back and continually interrupted by confrontational, intrusive and burdensome inspections. These simply restrain a school's right to choose how it is run, how it works successfully, and the right to educate our children. We need to allow good schools a free rein and to make them answerable to parents and not to Whitehall.
Ofsted was set up to act as a safeguard against poor education. It was a champion of standards, but I fear that it is being distracted from its core purposes. A case

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in point is the increasing amount of political correctness that can be found within Ofsted. This political correctness runs contrary to its original ethos of focusing on standards, particularly in the case of its new responsibilities for inspecting nursery education.
For example, I understand that inspectors are asked to ensure that in nurseries,
"the material and images used and displayed in the setting are accurate and non-stereotypical".
Such guidance led to one inspector making a negative report against a nursery school because,
"no resources [are] available that reflect the cultural background of children".
Similarly, an inspector has to read 52 pages of guidance on judging nursery schools before he or she reaches the section on,
"How well are the children taught?".
I have raced through some of the anxieties which, despite consultation, still linger. Therefore, I hope that the Minister can give me some assurances that the Government have listened so that schools, teachers and the taxpayer can have complete confidence in the system and that of course inspections make the very best contribution to the quality, effectiveness and well-being of education.
2.8 p.m.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Lord Filkin): My Lords, I am delighted to have the opportunity to respond to this first debate on my new brief. What better opportunity than a debate led by the noble Lord, Lord Dearing, who is primus inter pares. There is no one greater than him on these issues. I am also grateful for the welcome that has been granted. I am very sorry to be leaving my good friend the Lord Chancellor, but I am very glad to be joining my old friend Charles Clarke, the Secretary of State for Education and Skills. There are always compensations in the process.
We know that inspection matters and we know why. It is about helping to deliver better outcomes for children. That is its purpose. The challenge to an inspectoral system is whether it delivers more gain than it costs in terms of the input process. That is the central issue at heart before us. Is it the best way of achieving improvement?
The noble Lord, Lord Sutherland, set out very clearly and impressively where we have reached in the past 12 years. There is hardly a voice of dissent about the importance of what Ofsted has achieved over those 12 years. He was commendably reflective of the fact that we have made achievements, which is an argument for change rather than for the status quo. I will explore that conundrum later. I assure the noble Lord that the three principles he articulated so clearly in his speech will and must be retained in the future.
First, I shall say a few words about the context within which the new inspection proposal sits. It is the context of a new relationship with schools. We set out our proposals in June or July this year. The Government wanted to have a new, more mature
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relationship with schools based on intelligent accountability and a simplified process for dialogue and interchange between the Government and schools; and recognition that the majority of schools have the maturity to use a less involved process and clearer lines of dialogue.
Without going into great detail, we shall be radically simplifying demands on schools by trying to have a single form of conversation with them about their development priorities. We all know how the process of government works: they keep adding on bits and after a while there are 15 bits that could be made down to one.
The process will have at its heart self-evaluation, to which I shall return in a minute. We will rationalise funding support and there will be a single plan based on a school's self-evaluation as to how it will move forward. It is important to cut bureaucracy—amen to that, with the noble Baroness, Lady Seccombe—and to recognise that there has to be proportionality in the Government's interventions and efficiency in our dialogue with the schools sector. We are passionate about that, which is an important part of improvement in schools and supporting schools to improve themselves.
Let us turn to the key issues of a new inspection system. The exam question set by the noble Lord, Lord Dearing, asked the Government directly what changes are desirable to schools' inspections so that they make the best possible contribution. It would be churlish of me not to try to answer it even in the limited time available to me.
The noble Baroness, Lady Sharp, and other noble Lords marked that it starts from the recognition that improvement is more likely to be effective if it starts from a position of ownership by the body that is to be improved. That says something different about the methodology: that an inspectorate does not simply come in and give a score of 55 per cent—although that has its use—but we are trying to move to a situation where, as the noble Baroness put it, the inspectorate is considering the self-evaluation process the school has gone through and whether it has accurately owned both its achievements and the challenges facing it to go further and faster to improve outcomes for the children.
That is in a sense part of a bigger journey about inspectorates generally in Government recognising that it is not about giving a number or score but trying to reinforce ownership of improvement in itself. Fundamental to making the new system work is trying to build on the ownership and therefore the self-evaluation by the schools themselves. Therefore the process starts from the school itself setting out what it thinks are its strengths and weaknesses and, equally important, what it intends to do about them. I shall not labour that point, although perhaps it is important to do so.
From that we construct the new mechanism of the system, but because we are sitting on a foundation of a statement that I hope is systematic and thoughtful,

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and in which there is some formality with self-evaluation, we can then move to a system with shorter, sharper and more frequent inspections. We all know how institutions can change in a period of six years—I would be so bold as to say that quite a bit has changed since 1997. To think that a school cannot change for better or worse in a period of six years is rash and therefore in principle three-yearly inspection periods should offer much greater benefit. We have to do that at the same time by reducing the burden on schools through that process.
There was a good deal of support in the consultation and in the House for reduced notice and for greater involvement of Her Majesty's inspectors. Shorter reports are better in principle. This is a classic area: a short report, if it is well written and based on sound judgments, is likely to have more impact than a longer one. That is a challenge to inspectorates; I think that Rousseau said something about it—it is difficult to do so.
Having said that, there will be no separate action plan. Actions from inspection will be taken forward as part of the school's own development plan—a bit of rationalisation and common sense. There will be less bureaucracy in the process. To address the challenge made by the noble Baroness, Lady Seccombe, Her Majesty's Chief Inspector aims by 2008 to have cut by 20 per cent the cost of the inspection process. That aim is set out clearly; there will be substantial benefits in cost reduction from the process.
We are not rushing into this. Although we want to move forward rapidly, Ofsted's consultation had remarkably high and positive responses to almost all its measures, which was pleasing and interesting. We are trialling the proposals both before and after the summer, as noble Lords are aware. I agree with the noble Lord, Lord Sutherland, that one needs some process for monitoring such pilots and therefore the pilot inspectors are being supported by quality assurance HMIs as part of trying to ensure that the piloting process is as strong as one can make it.
A number of speakers, including the noble Lord, Lord Dearing, raised the reliability of the judgments. They were right to do so, because for good reason the conclusions from an inspectorate process impact on reputation and all sorts of things. For the reason we touched on before, we want the body reported on to own the conclusion as well as the input. We do not want a situation where it feels that what has been done is unfair and therefore there is a resistance to owning the actions that flow from it.
Therefore it is fundamental to the continued ownership of the will to self-improve that people feel that there has been a fair process and outcome, rather than people feeling that they have to spend a lot of time on further argument or denial. The debate is therefore not about whether that is an important part of the process to ensure that there is reliability of judgment but to ensure that we get it right without creating burdens.
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In part we think that the short notice period will mean that there is less opportunity for too much lipstick to be applied, which is good—if that is not a sexist remark; I hope that it is not. However, it requires some moderation in recognising that we may see the occasional wart, as was signalled. It is important that one is mature about that in one's judgments.
HMI will conduct a large number of inspections and it will have access to sophisticated performance data, as will the school. The noble Lord, Lord Sutherland, signalled that we can partly make those changes because we have 12 years' experience of both inspections and performance data, which inform the performance of the schools in many if not all of their functions. Without those 12 years we could not now be making the move in this direction.
We also hope that, because it starts with self-evaluation and, I hope, self-knowledge, the inspector is not coming in from Mars; but that the inspectorate considers the self-diagnosis and self-evaluation of the school, so the debate is around that issue. That does not guarantee reliability and quality of judgment, but it says that the process should help to make them more likely. Time will not allow me to say more about quality of judgment, but if there are further points to make perhaps the House will put up with a letter from me.
I turn to the parallel issue, which is challenge and appeal. There is an important question about injustice in terms of ensuring that mistakes are not made and that a school has an opportunity to say, "We don't think you have got it quite right"; or something more robust if that is what is felt.
Under the current system schools can and do challenge judgments. If Ofsted decides that an inspection report is not sound and the inspectorate agrees, the report may be amended or republished. We hope that in future there will be fewer challenges to inspection judgments as much of the evidence base will have been supplied by the school. Schools will be more heavily involved in the inspection itself and therefore nothing in the report, if it has been done well, should come as a substantial shock.
One of the benefits of the new arrangements is that, as HMSI rather than registered inspectors will be responsible for inspection reports, Ofsted will be able to amend any report, including those written by contracted inspectors, whereas current law does not allow that unless they agree.
There is no external appeals process; we do not feel that it is automatically the right solution. One is mindful of the importance of a process that leaves a sense of ownership of the result. We are mindful of the consequences for schools of wrong judgments without there being an effective appeals mechanism. Therefore, we will give further thought to how a complaints system can be made to work effectively without the need for some ghastly mechanistic rote system. The gap between the draft and the publication, which the noble Lord, Lord Dearing, mentioned, is an element of the challenge in making the system workable.

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The noble Lord, Lord Dearing, is absolutely right that inspections form part of the contribution that a good education system should make to the physical health and well-being of a child. As a society we are clearer on that than we were 10 or 15 years ago. There will be a statutory imperative for school inspections to cover well-being, including physical well-being.
The noble Baroness, Lady Sharp, mentioned special educational needs. There will be a different framework for special schools. Maintained schools will have special guidance on picking up on vulnerable children. Perhaps it would be of interest to her if I wrote to her in more detail on the matter.
As the noble Baroness, Lady Seccombe, rightly said, at times one must arrive unannounced, in all sorts of contexts, for good reason. That is now possible and it will happen in the future, as it should.
We are in a process that, we hope, will lead to the implementation of the new system from September 2005. It could well require legislation; therefore we can say nothing on the matter now. But I may well have the further opportunity of gaining from the advice and experience of the House in this respect on a Bill. I look forward to that very much.
I conclude by outlining what we hope the provisions will lead to. They will be part of a coherent package of reform for schools: a less involved, lighter touch and a more mature relationship. It will integrate inspection firmly with school improvement cycles, because that is what inspection is about; it is part of the total picture. We hope that there will be less bureaucracy and cost for both the school and the inspectorate. We hope that, when we reflect on how to evaluate the approach—a challenge in itself—we find that it has led to significant improvement in the confidence of the system, the capacity for self-learning and as a consequence the educational improvement of children, for whom we are all concerned.
I thank the noble Lord, Lord Dearing, for the debate, and look forward to working with him and many other Members of the House on this agenda.
Baroness Andrews: My Lords, I beg to move that the House do adjourn during pleasure until 2.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 2.23 to 2.30 p.m.]

Housing Bill
2.30 p.m.
House again in Committee.
Baroness Hanham Baroness Hanham moved Amendment No. 85:
After Clause 65, insert the following new clause—

FITNESS CERTIFICATES
(1) A person who proposes to apply for a licence in respect of an HMO within the area of a local housing authority or who proposes to become the manager of one or more houses within the
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area of a local housing authority may apply to that authority for a certificate that he is a fit and proper person for the purposes of section 65.
(2) The provisions of sections 62(2) to (7) and 65(1) to (3) shall apply in the case of an application for a certificate under this section.
(3) Local housing authorities shall grant a certificate if they are satisfied that the applicant is a fit and proper person for the purposes of section 63(3)(b)(i) and (d) and, in determining any subsequent application by the holder of the certificate in relation to an HMO licence, the holder of the certificate shall be treated as having satisfied the authority in relation to those matters unless proceedings are pending for the revocation of the certificate.
(4) Any certificate shall remain in force for the period of 10 years from the date of its grant unless revoked in the meantime but without prejudice to the right of the holder of the certificate to apply for a further certificate on the expiration of an earlier certificate.
(5) For the purposes of this section the following provisions of this Act shall apply—

(a) section 69(1) (other than paragraph (c));

(b) section 69(2)(a) and (b);

(c) section 69(7), (8) and (9) (omitting the words "or a relevant person" in subsection (9));

(d) paragraphs 22 to 25 and 29 in Part 2 of Schedule 5,

(except that references to "the relevant person" shall be omitted).
(6) The provisions of Part 3 in Schedule 5 (appeals against licence decisions) shall also apply to decisions in respect of a refusal to grant a certificate or the revocation of a certificate (except that any reference to "a relevant person shall' be omitted for these purposes)."
The noble Baroness said: Under this Bill, houses in multiple occupation and selected licences will be issued on an individual house-by-house basis. Each time the local council has to consider among other things whether the licence holder and the manager of the properties are fit and proper persons. That is a matter that we dealt with extensively before lunch.
The purpose of the proposed clause is to improve and simplify the system. It would enable a prospective licence holder or manager of more than one property in a local authority area to apply to the authority for an individual certificate of fitness for the purpose of licensing. The authority would then only need to investigate that particular person once. If found to be a fit and proper person, a certificate would be issued to that person. He could then rely on the certificate each time he applied to the authority for a licence for a house, so there would be no need for the authority to investigate the position time and time again.
A certificate of fitness once granted would last for 10 years, unless it was revoked for good reason in the mean time. There would be a right of appeal against the refusal of a certificate. Once the 10-year period was up, the person concerned could reapply and be reconsidered.
The Government estimate that 120,000 houses in multiple occupation licences are going to be required as a result of this legislation. We are aware of cases where the same landlord might have to apply at least 150 times for an HMO licence. It would make the process much simpler if that person could just apply the once to obtain a certificate of fitness.
A certificate would also assist when a property is sold. The seller may prefer to sell the property to someone who he knows already holds a certificate of fitness. That would assist the conveyancing process. Someone wanting to invest could obtain the certificate in advance.
This proposed procedure would allow application forms for licences to be simplified. Such a system of certificates would save a lot of work for all concerned, particularly local authorities, as they would only need to investigate any applicant who holds a certificate once. In the absence of a certificate procedure, each time an applicant completes an application form he or she will have to provide the same information over and over again.
A similar system has recently been introduced for liquor licensing, where designated supervisors have to hold a personal certificate of fitness in addition to the licence held by the individual premises. I beg to move.
Baroness Maddock: Amendment No. 86 is virtually the same as Amendment No.85. With the leave of the House, we have agreed among ourselves to debate them together.
The only difference between these two amendments is that I considered that allowing the certificate of fitness to go unchecked for 10 years was too long and I suggested that it should be five years.
This is an important point. Can the Minister clarify how the system will work? I cannot imagine that the Government meant that somebody who already has a certificate that says they are a fit and proper person has to go through the process every time. It may be that this is unnecessary as it is not going to happen. But if it does, we need to deal with this matter. As the noble Baroness said, a rule similar to the one that we are trying to put on the face of the Bill operates in liquor licensing.
I will listen to the Minister with interest. The amendment is intended to be helpful. Bureaucratic operation should not be repeated time and again. Can the Minister assure us that that will not happen, either through the agreement to an amendment like this one or through government guidance on how they envisage the licensing system operating? I speak to both amendments in that spirit.
Lord Borrie: I do not know whether these amendments are desirable but they raise an important matter. The wish to simplify the application process stems from a good motive.
If the Minister is disinclined to support the amendments and if he accepts the point made by the noble Baroness, Lady Hanham, that there is a burden of approximately 120,000 licences, can he reassure us that the licensing process will not take so long that the
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fundamental objectives of this part of the Bill—to control the lack of safety and other deficiencies in houses in multiple occupation—will be defeated?
Lord Bassam of Brighton: I understand the thinking behind the amendment. Cutting down on duplication and bureaucracy is worthwhile.
I will speak to both amendments as it makes sense to deal with them together. But they would not eliminate the need for separate licence applications on different properties.
Over time, it must be right that as regards every application for a licence a local authority should consider afresh whether or not the applicant remains a fit and proper person. Over time, circumstances change, new information becomes available and the ways in which properties are managed change. The presentation of a certificate valid for 10 years, unless revoked, would not provide that assurance without further checking.
We have thought carefully about this matter. The local authority will obviously need to be aware of the previous decisions that it has made about the fitness of those that it has licensed. In our consultation on selective licensing published on 16 July, we addressed this matter directly. We are dealing with the point raised by the noble Baroness, Lady Maddock, by consulting on whether landlords of several properties could provide information about themselves once in relation to all of their properties, rather than filling in these details on separate forms for each property.
We are also inviting views about the practical implications of this for the local authorities. We do not anticipate that local authorities will need or want to duplicate all of their inquiries on the fit and proper test. If it has recently found that a landlord is a fit and proper person to manage 26 Acacia Avenue, then he will obviously be a fit and proper person to manage 27 Acacia Avenue—unless there is evidence to the contrary. I cannot envisage circumstance in which that would happen if the applications were made at the same point.
The Bill enables us, by virtue of secondary legislation, to specify both the form and content of the application form used in licence applications. This should enable central and local government to have the scope to devise something that is practicable and workable, that tackles the understandable and proper concern raised by the amendment.
The amendment is not necessary. Clause 65 sets out the appropriate basis for local authorities to decide on the fitness of landlords or their agents. Clause 62(5) does that for HMO licensing and Clause 84(5) does it for selective licensing. That provides sufficient scope for regulations about the making of applications to address the issues that have been raised by the two noble Baronesses who have contributed and supported by my noble friend Lord Borrie. I hope that those

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words reassure them and will encourage their friends in local government to respond to the consultation that we published in July.
Baroness Hanham: We will certainly encourage people to respond to the consultation. It is absolutely a sine qua non that a person should not have to keep on applying for licences. It seems to make a nonsense of the whole process, particularly at the outset when people will have to apply for licences for every property that they own.
There must be a system whereby people can be signed off for one property in respect of all the properties that they own. I am not sure that this should not be in the Bill. The trouble with legislation and secondary legislation is that so much—
Baroness Maddock: Perhaps I may clarify with the noble Baroness that what we are trying to achieve is not about applying for the licensing of the properties, but about individuals and their fitness certificate. I am a little confused because I would not want to be associated with that. I accept what the Minister said. My sense of meaning is that we are concerned with the fitness certificate for the person and not the property: I want to make clear that I agree with the person but not the property.
Lord Bassam of Brighton: My understanding is as the noble Baroness, Lady Maddock, has said.
Baroness Hanham: I have been causing confusion. I am talking about the person, but the person will still have to be licensed. I hear the Minister's reply, which is moderately reassuring. But we need to look at it and will watch the consultation process with interest. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 86 not moved.]
Clause 66 [Licence conditions]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 87:
Page 44, line 1, leave out "local housing" and insert "appropriate national"
The noble Lord said: This is a simple probing amendment that is designed to press the Minister for a little more detail about what he envisages would be the additional conditions that a local authority considers appropriate in this case. Again, what assurance can he provide that any additional conditions will not be excessive, unduly bureaucratic and costly on the landlord? That goes back to a previous amendment and comments on "gold-plated taps".
If the Minister can provide us with the assurances that we are seeking we will be happy not to press the issue any further. I beg to move.
Lord Bassam of Brighton: As the noble Lord explained, Amendment No. 87 would take away local authority discretion to set appropriate licence conditions and, as such, it is a probing amendment.
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We appreciate the need for some standard conditions that would be necessary in all HMOs to ensure the same level of protection for the occupants up to a point, which we are trying to achieve by licensing those properties.
That is why we have made the conditions listed in Schedule 4 mandatory for all licensable HMOs. However, we are also aware that housing situations will not be the same in all local authority areas. It is therefore important that the local housing authorities are encouraged to introduce some additional conditions that could assist them in dealing with the problems in their area. One could, for example, compare Kensington and Chelsea with Christchurch, Brighton, Basildon or wherever. They will not be the same in every local authority. It may be important for the local authority to apply some additional conditions.
Clause 66(1) would allow a local authority to take a proactive stance to set out additional standards of management for HMOs in their area. We are not seeking to allow local authorities to impose unreasonable licence conditions. The Bill lists a set of illustrative conditions that can be imposed, which has the effect of limiting the type of conditions that could be imposed. Any conditions imposed by the local housing authority must, of course, be reasonably required. The reasonableness test will obviously apply, but only to the narrow focus of issues related to the management, the use and the occupation of the house, its contents and conditions. In my recollection, certainly there are particular problems peculiar to local areas. I have no doubt that the conditional flexibility that this provision would enable will assist local authorities in targeting those HMOs that perhaps are in the worst condition and help to raise standards in the locality.
If a licence holder does not agree that a particular condition is appropriate or that the scope is reasonable, he or she can appeal against the local authority decision to a residential property tribunal, which we have discussed a little in the past. Of course, that tribunal would be able to come to a reasonable view having listened to the concerns of all the parties.
We are not seeking to impose or enable local authorities to be unreasonable. They will have to behave in a way that is consistent and practicable in the circumstances. We see this as a useful measure that will enable us to have a core approach, but with some necessary add-ons where they will be of benefit to both the landlord and the tenant in raising standards. That is how we see this working.
Lord Hanningfield: I thank the Minister for that reply. Obviously, it is in line with some of the other replies regarding the discretion that local authorities might have. We will examine those replies to determine whether we need to take the matter further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 66 agreed to.
Schedule 4 [Licences under Parts 2 and 3: mandatory conditions]:
Baroness Maddock Baroness Maddock moved Amendment No. 87A:
Page 189, line 38, after "house" insert "a minimum fixed term agreement and"
The noble Baroness said: Amendment No. 87A would amend paragraph 1(5) of Schedule 4. This issue has been raised with me by people involved in housing law. It concerns the type of agreement that a tenant will obtain and the duration of the tenancy. I understand that, currently, the Law Commission is looking at how agreements on lettings work and a standard agreement for all lettings.
Perhaps I may develop that point further in relation to the Housing Bill. At present, in effect, an assured shorthold tenant is given security of tenure of at least six months. A court cannot make a possession to take effect earlier than six months from the commencement of the tenancy. Almost entirely, the occupiers of HMOs—to whom this provision relates—are assured shorthold tenancies. The Court of Appeal has recently recognised that an assured shorthold tenancy is the normal form of tenure in the private sector.
It is possible that that security will cease following recommendations from the Law Commission, which were suggested on 5 November 2003 in its interim report No. 284, Renting Homes: Status and Security at paragraph 1.8. We are still awaiting the final report and Bill. As I said earlier, the Law Commission is recommending the application of a standard agreement for lettings.
We accept that for those who live in houses in multiple occupation, the greater proportion of the occupiers tend to be some of the most vulnerable in society. Obviously the purpose of introducing the licensing scheme is to protect such people. At the moment no minimum period is suggested for a tenancy agreement. Possibly the Government think that that would be too prescriptive but nevertheless, those properties provide homes for occupiers who would benefit from a minimum period stated, so that the occupier knows that for that period at least the landlord is committed to continue the agreement to occupy.
It may be that the Government understand that this is in the offing, and they may know that they can deal with it when it happens. I raise it as a legitimate issue, given that we are making new legislation. I beg to move.
Lord Bassam of Brighton: I am grateful to the noble Baroness for explaining her amendment in some detail. I hope that I can offer some reassurance.
Most tenancies in the private rented sector are granted as assured shorthold tenancies. Those granted before 28 February 1997 must have a minimum initial period of six months; those granted after that date need have no minimum duration.
However, the courts cannot grant orders of possession on the "no fault" ground to take effect within the first six months of any assured shorthold
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tenancy. Tenants who comply with the conditions of their tenancy have, in every case, a right to stay in the property for a minimum period of six months.
Imposing a requirement on landlords to grant an initial fixed term period of unspecified duration would not confer any additional rights on tenants.
The effect of the amendment, if accepted, could actually be to the detriment of tenants who wanted to give up their tenancy before the initial fixed term period had expired. They would be contractually obliged to pay rent for whatever the fixed term of the tenancy was.
I understand the sentiment behind the amendment—and understand it even better, having heard what the noble Baroness said about the Law Commission report on renting. We certainly agree that tenants should have a clear idea of the terms on which they occupy their home. We agree that it should include details of any fixed term period at the outset. But, we are not clear that passing this amendment would assist in meeting this objective. We shall, of course, reflect carefully on what the Law Commission finally reports. As things are, we think that we have covered the point raised by the noble Baroness.
Baroness Maddock: I am grateful to the Minister for that explanation. Not being an expert on housing law, I think that I shall have to consult further. The Minister's reply was helpful, and at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 88 not moved.]
Schedule 4 agreed to.
Clause 67 [Licences: general requirements and duration]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 89:
Page 45, line 11, leave out "That period must not end more than" and insert "The licence period shall end"
The noble Lord said: As the Bill stands, the maximum length of time that a licence can stand is five years. This probing amendment is designed to test what the Government see as the likely period of a licence. The local authority may want to issue licences for property that changes hands or changes its status. It is important to know precisely what the Government intend during the period in which the licence applies because of the possibility of rapid change in type and status of various kinds of property. I beg to move.
Lord Bassam of Brighton: Clause 67(1) provides that a licence must not relate to more than one house in multiple occupation. A licence is valid for a period that is specified in it, but for not more than five years, although it may be brought to an end earlier if there is non-compliance with a provision of the licence.
A licence is non-transferable, and upon the death of a licence holder, a three-month temporary exemption would automatically be granted.

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The amendment provides that a licence must be granted for a period of five years in all cases. In practice, we expect the vast majority of licences to be granted for five years, not least because that will minimise the administrative burden on local authorities. If a licensee did not agree with a decision to grant a licence for a shorter period, he could appeal against that decision and a local authority would have to explain why a shorter period was appropriate. However, we want to allow flexibility and allow the authority to use its discretion where it is right to do so.
We think that flexibility may sometimes be advantageous. For example, if a local authority knew that an additional licensing designation would end on a particular date, it could grant licences which would run to that date and it would not have to go to the trouble of revoking each licence individually.
I am not sure that the amendment is terribly helpful, and hope that, having heard what I have said, the noble Lord will feel able to withdraw it. The issue of flexibility is important and may well benefit not just the tenant but the landlord as well, and make for an easier application of the licensing regime.
Lord Hanningfield: As I said, it was a probing amendment. I thank the Minister for his reply. We all want flexibility as long as bureaucracy is not increased. I shall read what the Minister has said in detail, but in the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hanningfield Lord Hanningfield moved Amendment No. 90:
Page 45, line 11, leave out "5" and insert "10"
The noble Lord said: The Bill currently states that an HMO licence should continue in force for not more than five years, as we have just discussed.
The Government estimate that 120,000 properties will be subject to compulsory licensing. The industry believes that this is a gross underestimate and considers that the figure will be closer to 300,000. Even using the Government's estimate, a massive effort will be required to meet the requirement for mandatory licensing of HMOs, and local authorities do not have the resources available to deal with the number of inspections required.
One large northern city has estimated that it will take more than five years to process all relevant accommodation, by which time they will be starting the process of renewing licences. With a backlog likely, it would be sensible to issue a licence for 10 years, not five, as the Bill proposes.
With all the other safeguards in the Bill relevant to the condition of a property, there are sufficient safeguards to provide for any significant deterioration in the standard of the accommodation, and so allowing for a longer gap between full assessments. If it considers it appropriate, there is nothing to stop a local authority inspecting more often to ensure compliance.
We have just talked about flexibility. There is a power to vary licences at any time. There is also power to revoke the licence in the case of a problem property,
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as the Minister has just said. The management regulations will also apply. HHSRS assessments can be carried out at any time.
Extending the period will remove pressure on local authorities, save them time and taxpayers' money, while removing a burden from landlords. Too frequent renewals mean that local authorities will require extra staff to process such applications when the Chancellor of the Exchequer, as I said earlier, wants to cut considerable numbers of those employed in the public sector.
Further, too frequent renewals seem to be fee driven. Again, it is simply a cost that will be passed on to tenants in the long run. A longer licence will also reduce the incidences of licence renewal assessments being made within a short time of assessments being made when a property changes ownership. Given the degree of turnover in rented properties, it is likely that a majority will change hands within 10 years, so causing most to be re-assessed at some time within the period of a 10-year licence. Ten years provides a sensible time frame in which to operate a renewal system. In many other areas, such as fire certificates for commercial premises, there are no time limits at all. Why, therefore, is it necessary in the case of licensed HMOs to impose such an unnecessarily short maximum duration for licences? I beg to move.
3 p.m.
Lord Borrie: I agree with a number of the points made by the noble Lord, Lord Hanningfield. I have already expressed my concern today about the efficacy of the licensing system and the ability or inability of local authorities up and down the country to perform this huge task. The noble Lord, Lord Hanningfield, has said that many local authorities question whether the total number of licences will be as few as 120,000 because it may be very much higher, in which case the burden on local authorities will be greater.
I am more concerned that the licensing requirement is effective and follows adequate inspection of premises and inquiries into the landlord or manager to ensure that they are fit persons than with the length of the term of the licence. However, the noble Lord, Lord Hanningfield, has made some important points about that issue. We need a reassurance from the Minister regarding the effectiveness of the local authority licensing operation being proposed in the Bill. If the Government wish to keep to a renewal of these licences every five years, they also need to satisfy us that at the end of that term local authorities will not still be dealing with the backlog of the first applications.
I do not personally support the amendment for what it says, but it does give the Minister an opportunity to give reassurances about this fundamental part of the Bill. I hope that my noble friend will be able to do so.
Lord Rooker: This is another occasion on which a seductive argument is being used because it is coming from both sides of the Committee. However, I would say at the outset that it just shows what is the position in this country: we do not know how many houses are

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in multiple occupation. We do not know how many fit the criteria of housing more than five people and being of three storeys and above. The figure just referred to by the noble Lord is something between 120,000 and 300,000. If nothing else, that justifies what we are proposing in the Bill.
While I may be corrected—it is always dodgy to use examples—the noble Lord, Lord Hanningfield, cited the example of the fire certificate. That is not a good example because they are being phased out. During the passage of one of the fire Bills it was proposed that we move over to the risk management of buildings. The notion that a certificate pinned up means that a building is safe, thus giving people a false impression, is being phased out.
However, I am quite prepared to admit that there is no open and shut case in opting for five years; there is nothing brilliant about that number. However, I think that 10 years is unreasonable. We would be happy to look at figures around a period of five years, but the idea of the certificate is to ensure that local housing authorities know what is going on in their area regarding houses in multiple occupation. Leaving it for a decade would be far too long because that would undermine the purpose of granting the licence in the first place.
I do not know the northern town referred to by the noble Lord, although I did note that he mentioned a "town" rather than a "city" whose councillors claim that they will not be able to deal with all the relevant houses in the five-year period. All I can say in response is that there must be something wrong with the administration in that town. Local authorities will be expected to prioritise the inspection of their houses in multiple occupation. I find it astonishing to think that a local authority run by professionals and good councillors could not get its business affairs organised to the extent that it could not do that.
I say that bearing in mind that there will be no extra costs. The fee structure will pay for the process, so there is no excuse about extra resources. It is true that planning and training must take place, but we really want to see local authorities keep in touch on the ground with regard to what happens with houses in multiple occupation. Having an overly long period in which to review the licences would undermine that process.
I have a standard line here which states:
"I think that the Government have pitched the maximum duration of licences about right".
I cringe in reading it out. However, I started by pointing out that, while a five-year period is not perfect, 10 years is unreasonable for local authorities to keep in touch with what is happening with HMOs in their areas.
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We shall certainly consider whether the term should be six years or seven years, but we are clear that 10 years is way too long. Given that the maximum duration of a Parliament is five years, I do not see why that length of time should not fit the bill here as well.
Lord Hanningfield: I thank the Minister for that reply, and for acknowledging that there could well be a problem. I agree with him that the fact that we do not know how many houses are in multiple occupation is a pretty terrible state of affairs. If the estimate varies between 150,000 and 300,000, obviously it will take a lot longer and be far more work for local authorities if they have to inspect 300,000 properties.
I was pleased to hear that there might be some flexibility in the term. As I said earlier, many authorities have trouble recruiting enforcement officers for planning purposes. These are somewhat similar inspection jobs. In particular in some cities in the south-east and parts of the London area, local authorities will not be able to recruit enough people. Even with training and so forth, there are simply not enough people. Many authorities will face problems getting the process off the ground.
While I would consider possibly moving down from a period of 10 years, I think that the Government need to consider the term again so that the whole process does not grind to a halt because people cannot cope with it. With those remarks, I hope that between now and the next stage the Government will think further on this. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hanningfield Lord Hanningfield moved Amendment No. 91:
Page 45, line 17, leave out "not"
The noble Lord said: As the Bill stands, HMO licences and selected licences are not transferable. A separate amendment proposes to delete Clause 67(6) which currently provides that licences are not transferable. These remarks also relate to that amendment.
Each time a property is sold, the existing licence holder will have to apply for the licence to be revoked and the proposed licence holder will have to apply afresh. The result is that each time the local authority will have to reconsider the property. It may want to change the standards or impose fresh conditions. That is despite the fact that these matters can be looked at every five years when the licence has to be renewed, although as a result of our last discussion that period may become more flexible. If there were a system of transferring licences, the local authority would need to look only at the issue of whether the licence holder and the manager, if different, are fit and proper persons and whether the management arrangements are satisfactory. It would not have to look at property-specific issues. This would also narrow the uncertainty from the perspective of both buyers and sellers.
You could have a situation where a property had been assessed for a licence just a few months before it was sold, but the local authority would have to

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undertake a new assessment. Landlords could be forgiven for thinking that this is a system which enables a new fee to be charged all over again.
The Government's avowed intention is to simplify the conveyancing procedure, such as Part 5 of this Bill relating to home information packs. However, the inability to transfer a HMO/selective licence has the opposite effect. Virtually all property requiring an HMO/selective licence will be bought with borrowed money. ODPM representatives have suggested that all the buyer needs to do in order to secure a loan is to apply for a licence. However, our discussions with lenders indicate that they will be willing to release funds for the purchase only once the buyer has actually been granted his licence. Merely applying will not be enough. Lenders view the certificate as an essential part of the title, and without the buyer having a licence in place, the title will not be regarded as good and marketable.
The Government have indicated that the old licence will remain in force to cover the person requiring the property until he is granted a licence, but the seller will not want to be responsible for a property he no longer owns. In any case, applications will have to be made to a local authority for a licence, and this will slow down the conveyancing process. I have just mentioned the difficulties regarding the recruitment of staff in some places.
The more the local authority has to consider, the longer it will take. Different local authorities will take different times. In the first five years, local authorities will have to inspect many houses for the HHSRS assessment, a point made on an earlier amendment. What priority will they be able to give to applications made by buyers? The more that the local authority has to consider when the buyer applies, the longer and more uncertain the process will be.
Conditional contracts will become the norm for the sale of properties which require a licence. This already happens with public houses and other businesses which require licences. If there is a risk that the local housing authority will require higher standards or change the conditions, then the process of negotiation of a conditional contract will be that much more tortuous and lengthy. For example, who will meet the cost of carrying out any works, the buyer or the seller? What is to happen if the buyer does not like the new condition that is imposed? To what extent does the buyer have to act reasonably in deciding whether he rejects a new condition? These are all matters with which conveyancers will have to grapple. On the other hand, if the only issues to be dealt with are personal to the buyer, negotiating the conditional contract would be much more straightforward.
A transfer system would enable a reduced fee to be charged to reflect the simpler processes, thus reducing conveyancing costs. Conveyancing costs would also be reduced if the terms of the condition of contract could be simplified by excluding property-specific topics. Otherwise, conveyancing will be slowed down even more. Finally, Amendments Nos. 91 and 122 are
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consequential to this new clause, removing the stipulation in the Bill that licences cannot be transferred. I beg to move.
Lord Rooker: Amendment No. 93—the substantive amendment, as the noble Lord said—is a new clause which provides that transfers may take place either with the agreement of the licence holder or when there is a change of circumstances, and that the transfer takes effect at the time that it is made. The same provisions would apply to licence transfers as apply in respect of applications for licences, including appeals to a tribunal against refusal of a transfer. The only exception is that it provides that on transferring a licence the local authority does not have to satisfy itself as to the maximum number of households or persons appropriate for the property in question.
Apart from the exception I have mentioned, the processes and considerations involved in respect of licence transfers are almost identical to those set out in the Bill for licence applications. So we do not think that there is a lot of point in setting up such a process. It would be just as much work for the new licence holder and the local housing authority but, at the end of it, the new licence holder would not have a five-year licence. He would only have whatever was left on the old licence.
I want to reassure the noble Lord that it is our intention that the application forms will enable applicants for licences to highlight relevant information that would not change with the licence holder. This will include such information as the maximum number of households or whether a licence applicant or manager has already passed a "fit and proper" test with respect to a different property. Therefore, there would be no need for a local authority to check the information again.
Twice now, the noble Lord has used the term "fee-driven". This cannot be fee-driven. This is not like the allegation about speed cameras.
Lord Hanningfield: We do not want it to be fee-driven—I am speaking for the landlords, not my local authority interest—but some landlords fear that it might be fee-driven to get income. I notice that the Minister said he did not want that to happen. We do not want that to happen either.
Lord Rooker: It cannot be fee-driven. There is no profit for local authorities to be made out of this. They can charge only for the cost of running the system. There is no interest in building up a bureaucratic system. It is not fee-driven. It is important that we send the right messages out to the industry, which is providing housing for millions of people in this country. It is a valuable commodity and a valuable service. The vast majority in the industry do a really good job and will welcome what we are doing.
The other amendments are consequential and I do not think that they need comment. We will debate another amendment that would allow transfers to

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existing licence holders so we have not finished this part of the debate. For the reasons I have given, we do not think that the amendment serves much purpose.
Lord Hanningfield: I thank the Minister for his reply. I am pleased to hear him say that the majority of the people in the industry are very responsible and provide a very valuable service, as we all agree. A lot of the amendments that we are tabling are promoted by the industry, which is concerned about the legislation. It supports the legislation but is concerned about its operation, as are local authorities. So the two sides are concerned, as I am sure the Minister will acknowledge. Most of the amendments that we are tabling are from one side or the other. They are not politically inspired amendments, they are inspired by people who want to make certain that the legislation works. I heard what the Minister said about that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.15 p.m.
Baroness Maddock Baroness Maddock moved Amendment No. 92:
Page 45, line 17, at end insert "except where that person is a current licence holder for one or more properties in the same local housing authority.
( ) In such cases he shall only have to satisfy the local housing authority in respect of matters outlined in section 63(3)(e) to have the licence transferred to him."
The noble Baroness said: As the Minister has just said, this is the same debate as we had on the previous amendment. The idea is to explore with the Government whether there are ways of transferring in limited circumstances. This is a probing suggestion. All afternoon, and this morning, we have been trying to see whether we can assist in the way this will operate. As the noble Lord, Lord Hanningfield, said, it is landlords who have been trying to assist by putting forward things that would assist them.
I do not pretend that this is a perfect amendment, or that it would be entirely satisfactory, but I hope that the Minister can explore how we can find ways of reasonably transferring licences. There are questions around the buying and selling of properties and mortgage lenders are concerned about how this might work out. The Government have looked at that quite carefully and have made comments on it. I look forward to what the Minister says on the general issue. I beg to move.
Lord Rooker: I take Amendment No. 92 in the spirit in which the noble Baroness has moved it. Clause 67(1) provides that a licence must not relate to more than one house in multi-occupation and that the licence is valid for the specified period, which may not be more than five years according to the Bill, although it can be revoked and finished earlier. Clause 67(6) provides that licences are not transferable. Under Clause 67(7), on the death of a licence holder the licence ceases to be in force. However, Clause 67(8) provides for a three-month temporary exemption to be granted automatically, as if one had been granted under Clause
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67(2). Without this provision, the personal representatives of the deceased licence holder could inadvertently be guilty of running an HMO without a licence. The exemption can be renewed for another three months at the request of the personal representative.
Amendment No. 92 provides that the licences are transferable in certain circumstances. They are that the applicant is a person who is already a licence holder for one or more properties in the same local housing authority area and that the proposed manager of the house is either the person having control of the house or a person who is an agent or employee of the person having control of the house. It seems an eminently sensible, rational proposal that I cannot accept today. I am not saying that we will even take it away, but it does seem to be a reasonable proposal as the person is already operating in the area and is already a "fit and proper" person.
However, we come back to the issue of not knowing as much about HMOs as we should. First, we do not know how many there are. Not knowing is the real problem. One of the aims of the licensing scheme is to ensure the good management of a particular property before a licence can be granted. That means that the landlord or the proposed manager needs to be fit and proper with no relevant convictions. Suitable management arrangements must be in place for that property. We are not working on the assumption that, just because an applicant is a licence holder of the authority in relation to property A, property B, which they own and run, is run to the same management standards. It is too risky to make that assumption. They may have various sizes of HMO; they may have a licence to run a very small HMO, but, as a sideline, they may also have a couple of larger ones where the management issues are wholly different from the one for which they have the original licence. Therefore, we need to be able to check each property regarding the licence.
The argument is quite reasonable and rational—there is a fit and proper person carrying out this business in a local authority. But there is so much that we do not know about the industry that we need to tread very carefully when it comes to size. The amendment would do away with the check to ensure that, where employed, the manager of the house was a fit and proper person or that the management arrangements were suitable. The same information with regard to criminal convictions would apply. The real nub of the argument is whether the management arrangements would be relevant to and suitable for the property.
As I said, it is our intention that application forms will be designed in such a way as to enable applicants for licences to highlight all the relevant information to the authority so that they can be fast-tracked where necessary. Such relevant information would include whether the licence applicant or, indeed, the manager, where employed, had already passed the proper test with respect to a different property. The aim is to make sure that the application process for a potential new licence holder and the local authority is as

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uncomplicated as possible. There is no purpose in having loads of extra forms and red tape slowing down the system. Where possible, we want to avoid having the local authority carry out the same checks again, because that does not make sense.
That said, we are only at Committee stage. That applies equally to what the noble Lord, Lord Hanningfield, said. There will be a rather longer gap between Committee and Report. My right honourable friend Keith Hill is a very listening Minister—that is, assuming that he is still Housing Minister as I speak. I once made a joke at a conference and I was rung up the day after.
We are very practical about this; we genuinely want to work with the industry and will be more than happy to listen to its views and read submissions after what has been said in Committee on this group of amendments. We want this to work.
Baroness Maddock: I thank the Minister very much for his full explanation and sympathetic tone. We on these Benches hope that he is not shifted around and that he will take the Housing Bill through to completion.
I will look carefully at what the Minister has said and consult with others. There may be something that we can do to ensure that, in certain circumstances, it may be possible to have some form of transfer of licence. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 67 agreed to.
[Amendment No. 93 not moved.]
Baroness Hanham Baroness Hanham moved Amendment No. 94:
After Clause 67, insert the following new clause—
"HMO LICENCES: BREACH OF CONDITIONS
(1) A local housing authority may, if any of the conditions of the licence is not complied with, serve a notice (in this Act referred to as "a breach of condition notice") on the licence holder requiring him to secure compliance with the conditions as are specified in the notice.
(2) A breach of condition notice shall specify the steps which the authority consider ought to be taken to secure compliance with the conditions specified in the notice.
(3) The period allowed for compliance with the notice is such period of not less than 28 days from the date of service of the notice specified in the notice but this period may be extended by the authority.
(4) If at any time after the end of the period allowed for compliance with the notice—

(a) any of the conditions specified in the notice is not complied with, and

(b) the steps specified in the notice have not been taken the licence holder shall be guilty of an offence.

(5) It shall be a defence for a person charged with an offence under subsection (4) to prove—

(a) that he took all reasonable measures to comply with the conditions specified in the notice, or

(b) that he had reasonable excuse for failing to comply with the notice.

(6) The person who is guilty under subsection (4) shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(7) The provisions of Part 3 of Schedule 1 shall apply to a notice served under this section as if it were an improvement notice (omitting paragraphs 12, 13, 17 and 18)."
The noble Baroness said: This is quite a big group of amendments, of which Amendments Nos. 94 and 95 are in my name. Amendment No. 95 is slightly akin to one tabled by the Government, so I hope that we will be able to agree to that without trouble.
Let me start with Amendment No. 94. On selective licensing for houses of multiple occupation, the whole thrust of the Bill is to criminalise in the event of noncompliance. The other sanction for breach of licence is revocation. This is draconian and ought to be reserved for serious cases or those where there have been repeated infringements. Instead, a breach of condition notice is suggested as an intermediate step which a local authority can adopt in less serious cases. That is the general thrust of this new clause.
A breach of the condition notice would allow the local housing authority to set out the breaches complained of and the steps required of the landlord to comply with the notice. The landlord would have 28 days in which to comply. Non-compliance with a notice would be a criminal offence, attracting an appropriate fine. There would be provision for a defence of reasonable excuse, where the landlord could demonstrate that he had taken all reasonable measures to comply with the notice and/or that he had a reasonable excuse for failing to comply with all the conditions. This would enable a stern warning to be sent to the landlord without the need to go immediately to the extreme step of revoking the licence or instituting criminal proceedings. In most cases, it would ensure compliance without the need to go any further.
The amendment would allow local authorities to fire a warning shot, and is another weapon in their armoury. It would also avoid criminalising landlords at the outset. It would save both local authorities and landlords costs and, by not having such a heavy-handed approach, would help foster good relations between housing associations and landlords.
There are many other examples in existing legislation such as an improvement notice under the Health and Safety at Work etc. Act 1974 and for breach of conditions of planning permissions.
Amendment No. 95 deals with the failure of a serious or repeated nature. The Bill does not lay down any criteria for a local authority to consider revocation or breach of a licence condition. There is therefore the possibility that a trivial breach could result in action to revoke the licence. It must be recognised that landlords are vulnerable to baseless complaints by disgruntled tenants.
The purpose of the amendment is to make it clear that a licence can be revoked only if the failure to comply with a condition is of a serious nature. Alternatively, there must have been repeated breaches.
The revocation of a licence is a serious remedy. The licence holder will have to find someone else who is suitable and willing to undertake the responsibilities and who is acceptable to the local authority.

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Alternatively, an interim management order can be made under which the local authority will take over the property. Revocation could have other consequences for a licence holder, such as the inability to raise mortgage finance or to obtain insurance cover. It is important that the remedy of revocation should be a last resort and reserved only for serious or repeated breaches.
The amendment also sets out a yardstick for residential property tribunals when dealing with appeals against revocation orders. Otherwise, there is no guidance for them in the Bill, as far as we can see, as to the standard by which they should judge appeals against a revocation of an HMO licence.
The Minister may well argue, as he has done today, that what we seek is inherent in the Bill, but there is no guarantee that this is the case. It is important to set the height of the hurdle over which the local authority must jump before a licence can be revoked. I beg to move.
Lord Rooker: Although these words are not in my notes, I hope that the noble Baroness will accept that the revocation of a licence by a local authority would indeed be a last resort. It definitely is not the first port of call. Let me make that abundantly clear at the outset.
I shall speak to Amendments Nos. 94 and 95 before dealing with the government amendments. Amendment No. 94 would enable a local housing authority to serve a breach of condition notice on a licence holder who fails to comply with any of the licence conditions. The notice would require the licence holder to comply with the conditions specified in the notice.
The effect of the amendment would be to create an extra step in the process for dealing with breach of licence conditions in order that a person does not find himself or herself in inadvertent breach of a licence condition and is, without warning, served a summons by the local housing authority.
I assure the noble Baroness and other colleagues that we would expect the local housing authority, like all public authorities, to act reasonably in this regard. We would expect the authority to alert the licence holders of their potential breach and to give them reasonable time to remedy the situation. I want to make that point absolutely clear.
Most local authorities—I am not sure why it is not all—are signed up to the enforcement concordat, which sets out the principles of good enforcement. They underline the role that enforcement authorities have in advising and assisting with compliance, rather than simply prosecuting for non-compliance. I make that absolutely clear: it is not a first resort but a last resort. The licence conditions will be set out clearly in licences, so that it will be near impossible for any licence holder to claim ignorance of what the conditions are.
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A breach of licence conditions can be a serious offence, sometimes requiring immediate rectification, which the amendment would prohibit. Therefore, local authorities should have the flexibility to deal with the breach, as is appropriate to the circumstances of the case. Normally, we would expect the local authority to give a landlord reasonable opportunity to remedy the breach before embarking on prosecution.
Allowing the approach suggested by the amendment would mean the licence holder who was in breach of his conditions of licence would continue to operate the property without adequate protection for the residents, while the whole process of notification appeal goes on. That point is probably worth considering for future stages.
Amendment No. 95 would amend Clause 69 so that only a serious breach of licence conditions, or repeated breaches, are grounds for revoking a licence. I am happy to say that we fully accept the logic of the amendment and have tabled our own amendment, Amendment No. 94A, which will meet those intentions.
That brings me on to government amendments, Amendments Nos. 94A, 95A, 122A and 123A. Amendment No. 94A provides that in deciding whether to revoke a licence because of breach of condition in accordance with the provisions in Clause 69, the local authority must consider the seriousness of the breach or whether it constitutes a repeated breach of conditions. As I said when speaking to Amendment No. 95, I expect that local authorities will by and large act reasonably when deciding the grounds on which to revoke a licence. I am happy to clarify that they must in all circumstances take such action only when the breach is serious or constitutes a repeated breach of conditions.
Amendment No. 95A provides that in deciding whether to revoke a licence because either the licence holder or some other person engaged in the management of an HMO is no longer a fit and proper person, the local housing authority must apply the same test as it would for determining whether it would have refused to grant that person a licence. It is a technical amendment to put beyond doubt that the same criteria must apply in determining both questions. As currently drafted, a local authority could impose a different test in revoking the licence from that which it must apply in refusing to grant one.
Amendment No. 122A is identical in its application to the revocation of a Part 3 licence. Amendment No. 123A is identical to Amendment No. 95A but applies to the "fit and proper person" test for selective licensing under Part 3. In due course, I shall move those amendments on behalf of the Government.
3.30 p.m.
Baroness Hanham: I thank the Minister for more or less accepting Amendment No. 95; the government amendment says near enough what we were saying, so that is fine.
However, I am disappointed with the Minister's reply to the breach of notice and the possibility of having an interim stage on a breach of condition.

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There are, I am sure, innumerable occasions in the management of property when it would be perfectly feasible to allow time for something to be done. I understand the Minister's remark that something might be so serious that only an immediate revocation would be a suitable answer. But it is a serious step—both the breach of conditions of the licence and the need for the local authority to step in with summonses and criminal actions.
I want to read what the Minister has said, because I still believe that there is a need for something like our amendment to give some leeway to landlords, managers and local authorities, so that they are not pitted at each other's throats early on. That might very well happen in a situation—but with a breach of condition notice they could quietly feel their way through the process.
Lord Rooker: I am only planting the point in the noble Baroness's mind—and no doubt her advisers will read what I have said—but if she is thinking of coming back with a variation on her amendment, she needs to take account of the circumstances of the tenants during the period in question.
Baroness Hanham: But of course. We are not arguing political differences in this matter; we are simply raising practical issues. There are times when people are perfectly well protected by action that does not need to take place quite so quickly. I shall make sure the noble Lord's point is taken into account. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 68 agreed to.
Clause 69 [Revocation of licences]:
Lord Rooker Lord Rooker moved Amendment No. 94A:
Page 46, line 44, leave out from "has" to end and insert "committed a serious breach of a condition of the licence or repeated breaches of such a condition;"
On Question, amendment agreed to.
[Amendment No. 95 not moved.]
Lord Rooker Lord Rooker moved Amendment No: 95A:
Page 47, line 3, at end insert—
"Section 65(1) applies in relation to paragraph (b) or (c) above as it applies in relation to section 63(3)(b) or (d)."
On Question, amendment agreed to.
Clause 69, as amended, agreed to.
Clause 70 agreed to.
Schedule 5 [Licences under Parts 2 and 3: procedure and appeals]:
Baroness Maddock Baroness Maddock moved Amendment No. 95B:
Page 192, line 32, after "interest" insert "or has a tenancy or licence"
The noble Baroness said: In moving Amendment No. 95B, I wish to speak to Amendments Nos. 95C to 95E.
The purpose of Amendments Nos. 95B and 95C is to give those who are in actual occupation in the house in multiple occupation, or a Part 3 house, the opportunity to make representations on the terms of the licence, authorising occupation that the local authority proposes to grant to an applicant for a licence under Clauses 62(3) and 84(5). That can be achieved by extending the definition of "relevant person" in paragraph 13 of the schedule, as it is the relevant person on whom the local authority must serve the notice prior to granting or refusing a licence, as well as the terms of the licence granted or the reason why refused.
On the assumption that there will be occupiers of the house in multiple occupation, or a Part 3 house in some cases, it is right in principle that they should have the opportunity to make representation on the terms that will affect them, and that they should be aware of those terms when they are granted, particularly in the event of any infringement. Moreover, the exclusion of any tenant under a lease with an unexpired term of three years or less is far too restrictive. The effect of the current proposed exclusion would not be satisfactory.
The purpose of Amendments Nos. 95D and 95E is to enable those who are in actual occupation of a house in multiple occupation or a Part 3 house to appeal to the residential property tribunal on the grant or refusal to grant a licence by a local authority, or the grant or refusal of any terms of a licence—and similarly in respect of any variations or revocations of a licence already granted. This amendment is consequential on the others that I am proposing. If I seriously thought that the Government would accept the amendments, I would attempt to insert similar amendments in other parts of the Bill.
I hope that the Minister recognises that I am attempting to ensure that we pay due attention to the tenancies of tenants who own their own properties. The Government may think that the present position is satisfactory. These are probing amendments. I beg to move.
Lord Rooker: Basically, I have a bucket of cold water for these amendments for reasons that I shall explain. The noble Baroness puts her case in moderate and reasonable terms and her argument is seductive as regards tenants having a role with respect to the matter that we are discussing. However, we are not dealing with the same situation as that regarding the landlord for reasons that I shall try to explain.
The effect of the group of amendments would be to give the occupiers of licensable properties the same notification and appeal rights as owners of licensable properties. It would also give them the same rights as owners in their ability to appeal licensing decisions to the residential property tribunal. The amendments would require a local authority to notify such persons before and after a licensing decision and to consider any representations they might make on licensing decisions affecting the property in which they reside. Occupants would have the right of appeal to a residential property tribunal against the licensing decision by a local housing authority. We do not agree

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that such rights should be granted to occupants who do not have a long-term stake in the property. It is the Government's view that such tenants do not have sufficient ongoing interest in a property to merit influence on the outcome of the licensing process either by representation or through the avenue of appeal that these amendments would provide.
Nor does the licensing scheme have comparable implications for occupants as for landlords other than that occupants could expect to see an improvement in poorly managed properties. We hope that they will see an improvement overall in the sense of bringing in licensing in the first place.
The decision of a local authority to refuse a licence to a landlord or a decision by the residential property tribunal to overturn a decision to grant an appeal could have very significant implications for the landlord while quite probably having much less impact on the occupier of the property in question. Similarly, if an interim management order and/or a final management order were made on a property, this could have implications for a landlord long after the tenant has moved on.
Extending the obligation to identify all the occupants, provide notice of a licensing decision and consider representations from all relevant parties to all occupants could prove an exceptionally onerous burden on some local authorities without providing any commensurable benefits. I have talked about the scheme being effectively ring-fenced in the sense that the licence will pay for the process. That would add considerably to the costs but I did not see any indication in the amendment that the occupants would share the cost of that part of the process.
In relation to the right to appeal a licensing decision, there is a significant risk that the amendments, if enacted, could cause considerable delay. If every occupant of an HMO were to choose to appeal various aspects of a licensing decision, that could lead to the effective implementation of the whole regime being unduly delayed.
It is also worth noting the comparatively limited security of tenants with an unexpired lease of three years or less. To allow them involvement in the appeals process could leave them exposed to the threat of retaliatory action from landlords if they did not appeal on the landlord's behalf against the decision by the local authority. There is a bit of "legal speak" there but I have read it out word for word. The measure would appear to put the occupants at risk in those particular circumstances.
We believe that the proposed amendments would represent a significant and, indeed, an unjustified departure from the scope of rights provided elsewhere in the Bill to occupants. That is why I say that I have a bucket of cold water for this group of amendments but the whole thrust of the Bill is very pro the industry and good landlords and it is certainly pro tenants. I hope that for the reasons I have stated the noble Baroness will not press the amendments which I believe she said were probing.
3.45 p.m.
Baroness Maddock: I thank the Minister for a very clear bucket of cold water, if I may say so. I thank him for the detail with which he responded. I take very much on board the point that he made about long-term interests. I particularly take the point about problems regarding possible harassment of tenants. As I say, this is a probing amendment. However, I still believe that if you are a tenant and all kinds of management issues and licensing are being discussed over your head, you need to know something about what is going on. I shall read carefully what the Minister said and decide whether there is something that needs to be considered further. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 95C to 95E not moved.]
Schedule 5 agreed to.
Clause 71 [Offences in relation to licensing of HMOs]:
Baroness Hanham Baroness Hanham moved Amendment No. 96:
Page 48, line 14, after "permits" insert "knowingly"
The noble Baroness said: The HMO parts of the Bill relating to overcrowding will be unworkable. Most tenants request double rooms and this could result in occasional guests staying a night, or in a guest staying on a regular basis or someone staying a few days at a time. Are these people to be classed as occupants? How is the landlord meant to know they are there and how is he meant to police this?
To try to address this problem we have tabled two amendments. The first seeks to insert the word "knowingly" in front of the word "permits" and the second seeks to define the expression "occupation". The purpose of the first amendment is to make it clear that the landlord must have knowledge of the offence before it is committed. Under this proposal a landlord can be guilty only if he knows that the numbers allowed under the licence have been exceeded. If the wider meaning of "permits" is intended, which lays an onus on landlords to take reasonable steps to avoid overcrowding taking place, this has far-reaching consequences for both landlords and tenants/ occupiers of licensed houses in multiple occupation. The Act will become a snoopers' charter compelling landlords to intrude into the private lives of their tenants. Otherwise, the landlord is at risk of criminal prosecution with a substantial fine of up to £20,000 and even revocation of his licence if he does not do so. Clearly, if a landlord knows that the number of occupants exceeds the permitted number or ignores clear signs, he should be guilty of the offence. This amendment still provides for that.
The change in definition of HMO to bring shared houses within the scope of the legislation means that we are dealing with a wholly different situation from the traditional HMO where the landlord retains control of the common parts. With a shared house, possession of the whole property is given over to the tenants. Tenants expect privacy. They do not expect landlords constantly to inquire what is happening in their property.
If "permit" is given the wider meaning, landlords will have to visit their properties at nights and at weekends. There would be little point in going during normal hours on weekdays as the occupants will be out at work or studying.
The second amendment to this clause is intended to clarify the expression "occupation" so that the offence will be committed only where occupation is on the basis of only or main residence. Under Clause 217(2)(c), in determining whether a house needs to be licensed as an HMO, the test is that it is the "only or main residence". That is extended by Clause 222 to include residence in a building when undertaking full-time education or if the building is occupied as a refuge. The amendment would ensure that there is consistency of treatment.
Clause 71 refers to "occupation" without elaboration, which suggests that temporary residence could suffice for a landlord to be convicted of the offence as it stands. It is often the case that boyfriends or girlfriends regularly stay over. A landlord may let to five people an HMO in which all the rooms have double beds supplied by the landlord or are double rooms. Usually, nowadays, that is demanded by tenants. What happens if, on occasion, all the extra beds are occupied by guests? Alternatively, what if one room is occupied regularly—perhaps two or three nights a week—unbeknown to the landlord? Does the fact that he has provided double rooms make him guilty of permitting the offence of overcrowding?
The amendment would make it clear that the offence occurs only if the property is permanently occupied in excess of the permitted number. We should not criminalise transient arrangements. I beg to move.
Lord Bassam of Brighton: Amendment No. 96 would provide that a person having control of or managing—for convenience, I shall refer to him as the landlord—can be guilty of committing an offence under subsection (2), if he or she knowingly permits another person to occupy the property, so as to cause the house to be occupied by more persons than are permitted by the licence. I shall come to the question of the meaning of "occupation" when I address Amendment No. 99, but it is worth saying that, in the context of this amendment, "occupation" does not include a temporary stay that is beyond the control of the landlord; the clause is about occupying under a licence or tenancy.
The noble Baroness, Lady Hanham, gave full effect to her understanding of her amendment. I fully appreciate the concerns that she expressed, but I am not entirely convinced that the amendment is necessary. For a start, the person who permits the over-occupation must be the landlord himself.
I shall explain how we see the system working. It is a vital part of the licensing regime that landlords take some responsibility for the properties that they manage. I am sure that the noble Baroness will appreciate that, having, as leader of a council, been a landlord herself. Although the role is rather different, it is certainly the case that landlords in such
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circumstances ought to know rather basic matters such as who is living in the property, as it is fundamental to good management.
The concern has been that a landlord could be held to have permitted over-occupation unknowingly, through the actions of a tenant. It has been suggested that, in some other statutory contexts, permitting something to happen includes a failure to take steps to stop that thing happening. I reject the notion that, to make this part of the Bill effective, there must be a "snooper's charter" for the landlord. The Government must be as clear as we can about how we expect the provision to operate in the context of the Bill. A landlord would clearly be held to have "permitted" occupation by another person, if he or she granted him a tenancy or a licence and accepted payment of rent or licence fee from that person. A landlord would clearly be held to have "permitted" occupation by another person, if he explicitly gave permission to existing tenants to bring in any additional persons to live in the house. A landlord would not have "permitted" occupation by another person, if that occupation arose out of circumstances beyond his control and was in breach of a term in the tenancy agreement forbidding the existing tenants from permitting new occupation to arise. I hope that the distinction between being permitted and not permitted is clear in that interpretation of that part of the Bill.
Amendment No. 99, which works with Amendment No. 96, would insert a definition of "occupy" into the clause. The amendment is unnecessary. "Occupier" and related expressions are defined in Clause 224, and it is clear that it means occupation as a residence, not any less significant form of occupation. Moreover, subsections (2)(c) and (4)(d) of Clause 217 provide that a building is an HMO—unless an HMO declaration scheme is in force—only if it is occupied by persons as their only or main residence.
I understand the point made by the noble Baroness, and I see some force in her proposition. However, we are clear about what we see as being permitted and not permitted and about what we see as an occupier, who must occupy the premises as their only or main residence, not as a sort of overstayer, as the noble Baroness suggested in moving the amendment. I hope that the noble Baroness will feel able to withdraw the amendment.
Baroness Hanham: As with one or two other explanations, I am still not entirely happy with the Minister's response. If overcrowding is found in the premises, it is a serious offence. Although it may arise spuriously through people having guests in the premises, I do not sign up to the idea that the landlord would not find himself with serious problems if somebody were called in. Environmental health officers might come round on a Saturday night because there was a great deal of noise coming from a building and discover that there were 25 or 26 people in a house that was not meant to contain more than 13. They will set about finding out how it is that that number of people is staying in the property, which is clearly overcrowded and is causing other problems. I

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can see the landlord having difficulty sorting that out and explaining that he did not know that so many people were in the property.
I heard the Minister's explanation, and I am not totally happy that it covers the matter. We need to make sure that other people are content with the Minister's reply. As we shall discuss this with regard to another amendment, this offence carries a huge criminal penalty for a landlord found to be in breach. It is extremely important that the clauses are correct and watertight. I thank the Minister for his reply and, for today, I shall withdraw the amendment, although we shall probably return to the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 97 not moved.]
Baroness Hanham Baroness Hanham moved Amendment No. 98:
Page 48, line 36, leave out "£20,000" and insert "level 5 on the standard scale"
The noble Baroness said: I said that we would return to the issue of the level of penalty; this amendment relates to that issue. Under the Bill, the maximum fine for a landlord in breach of a licence because of overcrowding is £20,000. That is an excessive amount for such an offence. The fine should instead be at level 5, which is £5,000. In the magistrates' court, fines of up to £20,000 are reserved for the most serious offences, and it is not considered that this offence falls into that category.
The Minister may argue that, as a house in multiple occupation will be licensed for a specific number, there is in effect no licence at all, if the number is exceeded, so that the breach ought to carry the same fine as if there were no licence. That ignores the fact that HMO licensing is not just about numbers. It is also about the fitness of the manager and the management arrangements. Breaching one aspect of the licence is less serious than having no licence at all. A breach of a condition of a licence attracts a level 5 fine. Exceeding the permitted number should be treated in the same way. I beg to move.
Baroness Hamwee: We do not agree with the amount of fine, as presented by the noble Baroness, but could the Minister direct us to any provision for uprating the fine because the value of money does not remain the same, one assumes, for the life of the Bill?
4 p.m.
Lord Bassam of Brighton: The noble Baroness explained her amendment with her usual clarity, but we take a different view. Running an HMO without a licence when one is required is, or can be in certain circumstances, a very serious offence which can lead to considerable problems and can be quite dangerous. Running an HMO with a licence but in contravention of its fundamental terms is tantamount to running one without a licence. The Government believe that the penalty should be sufficiently substantial to deter landlords from evading the licensing requirements.
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The penalty should outweigh potential benefits that the landlord might gain by illegally avoiding licensing. That is why it is important that the maximum fine is pitched at this substantial level. The exceptional level of the maximum fine for the main licensing offences is intended to demonstrate the seriousness with which the Government are treating the new compulsory licensing regimes and set it apart from the other housing offences which are pitched at a fine on level 5.
That is our clear position. The noble Baroness, Lady Hamwee, asked me about uprating. Clause 215 relates to the,
"Power to up-rate fines for certain offences".
So it answers that point.
Baroness Hanham: In that case, the previous amendment is crucial so that we establish whether the offence relates to knowingly permitting overcrowding or overcrowding that happens by accident. I declare an interest as a magistrate. The number of times that magistrates impose a fine of £20,000 is very small. Most of the serious cases that come to magistrates' courts do not attract a fine of that amount. So the fine would be a draconian outcome for a serious problem.
I would be the first to acknowledge that there are and have been known to be serious breaches of overcrowding. I have known of student hostels where people have been packed in and the number of bunk beds was well in excess of what should be there. So I acknowledge that overcrowding does happen. At the very least there should be a fine of up to £20,000, but it would be very serious if it was set at £20,000. We will look at the amendment again and the Minister's reply. For the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 99 not moved.]
Clause 71 agreed to.
Clause 72 [Further sanctions relating to unlicensed HMOs]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 100:
Page 49, line 33, at end insert—
"(6) On the application of the person who would be entitled to enforce payment of any rent or licence fee, but for the provisions of subsection (2) or from whom the same are recoverable under subsection (3), the Court may, if satisfied that such person acted reasonably or it is otherwise just and equitable to do so, make an order dispensing with the sanction provided for by this section and directing that the rent or licence fee shall be payable notwithstanding the provisions of subsection (2) (and notwithstanding any rule of law prohibiting the enforcement of a contract which is illegal)."
The noble Lord said: Clause 72 provides a sanction where an HMO required to be licensed is not licensed. Under this clause the landlord cannot recover his rent or licence fee for any period during which he is committing the criminal offence under Clause 71. Where a tenant has already paid the rent he can then claim it back from his landlord. The purpose of this amendment is to allow the court to grant relief from the sanction of non-recoverability. The court would be entitled to do this being satisfied that the landlord had acted reasonably or if it was just and equitable.
A number of situations can be envisaged where it might be unfair that the landlord has to forgo his rent. The landlord may be given misleading advice from a local authority official stating that no licence is needed when in fact one is required. It could be uncertain whether a property needs a licence at all. For example, a woman may own a house with her husband in London but work in Leeds. During the week she lives with her parents in Leeds where she lived before she was married and returns home every Friday night to her house in London. The house in London is a four-bedroom, three-storey house which, during the week, the woman's husband shares with three of his old university friends who now work in London but who disperse to various parts of the country at weekends to their parents' or girlfriends' houses. They pay rent. This example is based on a real life case. Is the London property to be treated as requiring an HMO licence? If one of the friends falls out can he claim his rent back if there is no HMO licence? The initial uncertainty as to whether a licence is needed at all shows how important it is that there is some discretion to waive this harsh sanction.
Under common law, rent is not recoverable if a contract is illegal and it is the view of the ODPM that the provisions of Clause 72 mirror the common law rule. The amendment makes clear that the courts' dispensing power expressly overrides that common law rule as well. I beg to move.
Lord Bassam of Brighton: The amendment seeks to allow a court, upon the application of a person to whom the sanction in subsection (2) of Clause 72 applies, to order the dispensation of that sanction if the court considers that the person has acted reasonably, it is otherwise just and equitable to do so and that this order can be made notwithstanding any rule of law that an illegal contract cannot be enforced. I will explain the general effect of Clause 72 in more detail when we move to debate its stand part, so, with the leave of the Committee, I shall address my remarks specifically to this amendment.
The amendment is a sanction for not having the necessary licence in place and it must operate as such. It provides that the court can order dispensation of the order if the person has acted reasonably. However, it misses the point that the sanction arises because a criminal offence under Clause 71(1) has been commissioned, but that it is a defence to a charge that the person had a reasonable excuse for having control of or managing the house under the provisions in Clause 71(5). If he or she has an excuse then no offence is committed and consequently the sanction does not apply.
I hope that the Committee would agree that the notion that a person can have a reasonable excuse for committing a criminal offence for which he or she has been found guilty is not sustainable. That is, in effect, what the amendment proposes to achieve. We cannot possibly support that and on reflection the noble Lord
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would also find it hard to support that. For that reason I hope that the noble Lord will withdraw his amendment.
Lord Hanningfield: The point was that for some inadvertent reason, some people might not receive rent or will lose out. No one was sanctioning anyone committing a criminal offence. However, there could be a situation in which people suffer and the court would be able to allow the payment of rent. I was not trying to sanction criminal activity, but was trying to point out anomalous circumstances in which people could lose out. Therefore there should be a chance for them to benefit by that. The noble Lord misunderstood my suggestion as sanctioning a criminal offence. I was not trying to do that. I was trying to illustrate a situation in which someone might get hurt.
Lord Bassam of Brighton: The noble Lord needs to understand the impact of his proposal. I can see where he is coming from, but the situation will not occur often in the circumstances he describes. However, I believe that if you are putting forward an amendment, you need to understand and work through its other implications.
Lord Hanningfield: I understand that and I thank the Minister. We will read his answer carefully to see whether we can take the problem forward in the future. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 72 shall stand part of the Bill?
Baroness Maddock: We want to press the Government further on the effect the provision will have on the tenants rather than the landlords. Shelter is concerned, as are the Office of the Deputy Prime Minister, some tenants' rights groups and the Local Government Association. Many people believe that the no-rent-payable sanction against unlicensed landlords could lead to the eviction of tenants. Although the principle that tenants should legally be able to withhold rent if their landlord is operating without a licence seems attractive, it does not take account of the reality faced by tenants on low incomes with no security of tenure who are unable to enforce their housing rights without risking eviction.
Tenants with an assured short-hold tenancy will simply face eviction by their landlord if they attempt to enforce a provision not to pay rent on unlicensed properties. In practice, many tenants will choose not to risk losing their homes and may continue to pay the landlord. If council housing benefit is withdrawn, and if they cannot pay their rent in any other way, there is a risk of them being homeless.
We believe that it would be better to penalise a landlord by fining him so as to avoid the possibility of the tenants losing their homes. I hope that if the Minister is not minded to look at that, he can address

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the concerns, many of which were rehearsed in the debate in another place, and convince us that this is a better way to legislate. I beg to move.
Lord Bassam of Brighton: I am grateful to the noble Baroness for explaining her objection to the clause in such clear terms. Clause 72 provides for sanctions in relation to unlicensed HMOs. The clause provides that if an HMO is required to be licensed but is not, then the person controlling or managing the HMO is guilty of an offence and no rent is payable by occupiers and no charge can be made in lieu of rent.
It is vital that we guarantee that the occupiers of unlawfully licensed HMOs do not suffer because their landlord has committed a criminal offence in failing to obtain a licence. Therefore, Clause 72(4) preserves the existence and validity of relevant tenancies. In other words, an occupier's security of tenure is not affected by this provision and nothing in it affects the terms of occupancy, other than payment of rent.
Equally, it is crucial to ensure that persons letting properties which are required by law to be licensed, but who fail to apply for a licence, should not be able to profit from their disregard of the law by receiving rents. Bad landlords should not be able to benefit from their criminality by continuing to take money through the housing benefit system. This clause means that they will not. That is its purpose.
While we are strongly wedded to the principles embodied in the clause, the practicalities involved in enforcing these provisions are far from simple, and the noble Baroness has given us a fair example. That point is well made and we have listened to the concerns. Indeed, she gave us chapter and verse on the organisations which are concerned. We appreciate their responses to this clause. We shall continue to give consideration to the issues and review the clause.
There are alternative measures which may be available to achieve the objectives which the clause is intended to reach. Officials are at present consulting relevant stakeholders on the issues. The best we can say today is that while we are convinced that we have the principles right, it is only right for us to give some further thought to the matter and report back at a later stage of the Bill. At present we should retain the clause and further consider the issues in concert with the LGA, Shelter and the other organisations which have expressed understandable concern about a potential spin-off from the clause.
4.15 p.m.
Baroness Maddock: I thank the Minister for that reply. It would be helpful if the issue were investigated a little further. I can see the problem for a tenant. We are here finding it difficult to get to grips with the legal side of the matter. But for a vulnerable tenant, the landlord may tell him, although he should not, that he is seeking eviction. It may be that there is some way in which we can ensure that the tenant has something which makes him or her feel secure in this situation.
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That may be the answer. I ask the Government to look at that. Meanwhile, I am happy for the clause to stand part of the Bill.
Clause 72 agreed to.
Clauses 73 to 75 agreed to.
Clause 76 [Licensing of houses to which this Part applies]:
Lord Rooker Lord Rooker moved Amendment No. 101:
Page 52, leave out lines 8 and 9 and insert "a tenancy or licence to be an exempt tenancy or licence—

(a) if it falls within any description of tenancy or licence specified in the order: or

(b) in any other circumstances so specified."

The noble Lord said: Clause 76 provides local housing authorities with the power to operate selective licensing of rented housing in an area designated by the local housing authority under Clause 77 for the purpose of selective licensing.
The Bill provides that all private rented property within a designated area will be required to have a licence, unless it falls within one of the exemptions. The first category of exemption is for properties managed by registered social landlords. The second category of exemption is for properties which will be specified in an order made by the appropriate national authority. This would include properties managed by local authorities themselves. We have it in mind to include in such an order the kinds of arrangements which are currently exempted from statutory protection under the Housing Act 1988, such as business tenancies, holiday lets and so on.
Government Amendment No. 101 would extend the order-making power of the appropriate national authority to enable it to prescribe situations in which tenancies or licences are exempt. The amendment is a small technical change to ensure that there is sufficient flexibility to specify all the circumstances in which it is right to exclude the requirement to have a licence. For example, it might be thought appropriate to exclude properties which are subject to a demolition order from the requirement to be licensed under Part 3. We believe that it is doubtful whether it would be possible to exclude such categories as,
"descriptions of tenancies or licences",
as the Bill currently provides.
Government Amendment No. 112 is a technical amendment aimed at ensuring that a property that should be licensed under Part 2, but is not licensed or temporarily exempted, can never fall within the requirement to be licensed under Part 3. With the unamended provisions, a house in multiple occupation that was required to be licensed under Part 2, but that was not licensed or temporarily exempted, would fall within the bounds of a selective licensing scheme in force in its area. In these circumstances a person operating such an HMO would be guilty of committing an offence under Part 3 as well as Part 2. We do not want this double jeopardy situation to occur. The amendment is to put this beyond any doubt.
Clause 88 makes provision for the general requirements and duration of Part 3 licences. The clause provides that licences granted to properties subject to selective licensing are valid for a maximum of five years and can relate to only one property. Licences are also non-transferable and a three-month temporary exemption notice is automatically granted on the death on the licence holder.
Subsection (3) provides that a licence would be in force for the period specified in the licence up to the maximum of five years unless it is revoked or on the death of the licence holder. As I said, Amendment No. 121 is technical, to put beyond doubt that a Part 3 licence can be terminated only in one of the three ways to which I have just referred. We do not want any other situation to arise where a licence ends automatically. In practice, we would expect a local authority to revoke a Part 3 licence at the point that it grants a Part 2 licence. It is just safer in our view that that is not an automatic consequence of a property becoming liable to be licensed under Part 2. Therefore, I beg to move.
Baroness Hanham: As with others, these amendments have crept upon us abruptly since the end of the Recess. I therefore do not feel entirely confident to deal with them today so, if necessary, we shall return to them on Report. They sound pretty bland, but we may need to look at them. As the Minister knows, a flurry of amendments has come in during the last few days of the Recess and I am sure that he will not expect us to be able to respond to all of them today.
Lord Rooker: No, that would be quite unreasonable. Although, as the noble Baroness says, they are bland and a couple of them are technical, I will make sure that, if we need to go beyond what I have said in Hansard, we will provide a separate note on these late government amendments that have been tabled in Committee, so that at least there is something more on the record for colleagues before we reach Report.
On Question, amendment agreed to.
[Amendment No. 102 not moved.]
Baroness Hanham Baroness Hanham moved Amendment No. 103:
Page 52, leave out line 16 and insert "timescale specified by the appropriate national authority"
The noble Baroness said: There are four amendments: Amendments Nos. 103, 106, 108 and 116. They are all designed to ensure consistency in the application of the provisions in regard to selective licensing of HMOs. We are concerned that without them we are in danger of having a piecemeal and fragmented system—we discussed that earlier on. Although we are firm believers in the powers of local discretion and decision-making, it appears that without a greater lead and guidance from the appropriate national authority, local authorities, and consequently local people, will find it difficult to understand what could be a confusing and complex system.
Amendment No. 103 and the other amendments are designed to ensure that the Bill is effective and that local authorities are not placed in a position where they cannot implement its provisions, but can carry out their responsibilities in a way that they can properly handle. I beg to move.
Lord Rooker: I must say that the noble Baroness moved and spoke to her amendments incredibly succinctly. Although I have flicked through all my folders during the past few days, especially yesterday, you cannot really cut things down unless you have the detail. I should like to cut my response to fit the speech, but I do not feel that I can do that because I am not close enough to the subject. I shall therefore deal with the amendments in turn.
Amendment No. 103 would amend Clause 76(5)(b) in order to require the appropriate national authority to specify the time limit by which applications for licences must be processed by local authorities. The amendment revives an issue that I understand was debated in another place with reference to the processing of licences under Parts 2 and 3.
It would not be right or appropriate for the national authority to fix rigid time limits within which licence applications must be determined. Local authorities should certainly aim to determine such matters within a few weeks of application. However, there are circumstances in which they may need to take longer. For example, in determining whether to grant a licence, it might take time to determine whether a landlord is a fit and proper person under Clause 86 and whether he or she is the most suitable person to hold the licence. The authority may want to consider whether it wants to include specific licence conditions in the case of certain landlords.
Amendment No. 106 appears to be a probing amendment designed to provoke discussion on the scope of selective licensing and how we intend to use the order-making power in Clause 77(7). The provision allows that the appropriate national authority may by order add to the two general sets of conditions specified in the clause and so enable selective licensing to be extended beyond areas of low housing demand or areas where there is a significant level of anti-social behaviour.
I am aware that many local authorities believe that they should be allowed total freedom to impose selective licensing wherever they feel that it is necessary. However, we are extremely keen that selective licensing is a tool to be properly targeted and used only where the worst problems exist. As may be known, our original plan for selective licensing was to confine it to areas of low demand—effectively parts of the Midlands and the north-east and north-west. It has now been allowed nationwide, but not at the behest of local authorities. We do not wish to license the entire private sector, because that would be unjustified—I want to make that absolutely clear.
The current Part 3 provisions strike the right balance by limiting the scope of selective licensing to the specific problems of low demand and anti-social

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behaviour. We do not therefore at this stage intend to use the power under Clause 77(7) to broaden the remit of selective licensing. However, we will review how selective licensing is working in practice.
Amendment No. 108 would amendment Clause 77(9)(a) so that the appropriate national authority would specify the process by which consultation on selective licensing proposals should take place. The amendment was previously tabled in debate in another place. We resisted it then, as we do now, because we do not believe that it is necessary or desirable to micromanage every element of the licensing procedure.
We have to let—what is the phrase?—freedoms and flexibilities reign in local government. We have had a bonfire of controls and regulations in local government. Town halls up and down the country now have massive freedom to be fully accountable to their electorates; more than ever before. We have released them from financial burdens and ringfencing. We have to trust local government to be able to be reasonable and sensible.
Amendment No. 116 seeks to remove subsection (6)(c), which provides that the local authority must be satisfied that the management arrangements for the property are suitable; for example, can the manager or someone else be contacted in an emergency and does the licence-holder have sufficient funds to carry out repairs? Instead, the amendment would include a new provision that the authority must consider guidance on fitness of management arrangements as supplied by the appropriate national authority.
So the amendment's aim appears to be to require the national authority to produce guidance on acceptable management standards for licensed properties in the private rented sector. We do not intend to issue such guidance for the good reason that what constitutes "suitable" will vary depending on the type and condition of the stock, its location and the occupiers' requirements. We have to trust to good governance and the industry's good common sense in that regard.
Baroness Hanham: I thank the Minister. Freedoms and flexibilities are obviously the buzzwords of Government. I am sure that local government—certainly the upper levels—is beginning to appreciate what that means. I am probably the last to argue that national government should lay down all the rules, but at some stage there needs to be consistency. The only way that such consistency can be managed is by guidance from the top as to what is meant. That is the basis of the four amendments: to try to ensure that one local authority and another operate in more or less the same way; so that landlords with properties in more than one borough covered by more than one local authority know the rules.
We may need to return to the matter, as I am not sure that the Minister is absorbing what I am saying in my reply, so for the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.30 p.m.
Baroness Hanham Baroness Hanham moved Amendment No. 104:
Page 52, line 16, at end insert—
"(6) Whatever the arrangements of management, it is the manager who shall be ultimately responsible for a house under this Part possessing a valid licence."
The noble Baroness said: I shall see whether I can engage the Ministers with my enthusiasm in moving this amendment because not much attention was paid to my final comments on the previous one.
Amendments Nos. 104 and 114 raise the interesting issue in regard to the owner of a property and his responsibility under this part of the Bill. The issue was debated in the other place at some length. However, noble Lords deserve the opportunity to pass comment on the relationship between landlord and manager in regard to this part and to probe the Government further on what could remain an area of some doubt.
The amendments would require that applications for licences be made by the manager of a house. We are concerned that, as the Bill stands, the owner rather than his agent—many owners employ some agent to manage property—remains responsible for licensing. Our amendments are designed to target accurately the responsibilities by requiring that applications for licences be made by the manager of a house. We recognise that the manager could be the owner, but equally they could be different people.
Of course the owner should quite rightly take ultimate responsibility for a property. However, practical experience of the relationship between manager and owner suggests that it would be unacceptable for us to let managing agencies off the hook by saying that they are not responsible for any of the matters dealt with in this part of the legislation when they are rewarded for running the affairs of the landlord. Additionally, does the Minister envisage possible problems were an owner to be out of the country for long periods or indeed non-resident in the United Kingdom? Both Ministers will know that there have been innumerable problems regarding absentee owners. I beg to move.
Lord Bassam of Brighton: I must confess that I am slightly perplexed as regards the true purport of Amendment No. 104. I am not sure whether the noble Baroness seeks to impose a duty on a manager to obtain a licence, or whether the amendment is intended to ensure that ultimately the manager is responsible for the management of the property, irrespective of the identity of the licence holder. I am not sure what the noble Baroness seeks to do in this probative amendment. I can certainly understand the issue that she is trying to get to the root of: to ensure that someone is responsible for the property and its licensing if absentee owners deploy a management agency to act in their stead. Perhaps the noble Baroness would like to explain the matter further.
Baroness Hanham: As I said, the amendments would in effect require that applications for licences would be made by the manager of a house. I added that I

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perfectly foresaw that the owner could be the manager of the house as the only person involved. Where the owner passes responsibility to someone else that other person should be the registered licence holder.
Lord Bassam of Brighton: That is helpful, because the buck must stop with the licence holder. Under the scheme as it is the local authority will know beyond doubt who to look to if any problems arise: the licence holder. They might seek to avoid their responsibilities if they could contend that some other person bore ultimate responsibility for the management of the house. That is why I think that the amendment does not work. She may wish to think about that point further.
Amendment No. 114 would replace the requirement that the local authority is satisfied with the managing arrangements in place with the requirement that the local authority is satisfied that the manager has ultimate responsibility for the management of the property in question.
If the intention is to make managers alone responsible for securing licences for properties, one problem that would arise is that it is not uncommon in areas of low demand for there to be no effective manager of the property. The landlord, as the noble Baroness knows, may live many miles away or even abroad, rarely if ever visiting, and simply collecting rent through the housing benefits system. That can easily he done through direct debits and so on.
In these circumstances, it is right that the owner should be required to make the application for a licence. There are other situations in which it might be appropriate for the owner of a property, rather than the manager, to apply for a licence—for example, if the manager has failed to make an application, or when the owner is new, or is in the process of changing the management arrangements for the property.
However, if the intention is to make the manager the completely responsible operator for the property, regardless of whether the landlord is also involved in the management, then that would be contrary to the overall aim of the licensing regime. For example, in many properties the manager is also the tenant, and while he may technically have some responsibility, the landlord is the person who is ultimately responsible and should be treated as such. The amendment does not take such circumstances into account.
Removing subsection (3)(d) from Clause 85—as this amendment would—would not give us any advantage. When deciding whether or not to grant a licence to an applicant, it is imperative that a local authority can require that the proposed management arrangements are satisfactory. There is no point having a manager who is fit and proper but who, for example, is frequently abroad.
I sympathise with the intention behind the amendments. The intention is that there should be an effective set of management arrangements and clearly-defined responsibilities in all licensed properties.
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I hope that I have satisfied the noble Baroness that the licensing regime will deliver that outcome. In that sense, there must be a commonality of agreement between us. Ultimately the responsibility will lie with the licence holder.
I see where the noble Baroness is coming from. I invite her to study what I have said carefully, because in the end the way in which we envisage the licensing regime working probably covers her concerns. I see the importance of the issue that she raises.
Baroness Hanham: I will do as the Minister advises and study what he has said and the implications of that carefully.
We need to look into what happens about managing agents when the property is licensed to an owner who, within the terms of the licence, passes that responsibility to a managing agent; and whether managing agents need to have some form of licensing as well, if they are going to be responsible for the expanded nature of houses in multiple occupation. I thank the Minister for his reply. It is possible that we will return to this matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 76, as amended, agreed to.
Clause 77 [Designation of selective licensing areas]:
[Amendment No. 105 had been withdrawn from the Marshalled List.]
[Amendment No. 106 not moved.]
Baroness Maddock Baroness Maddock moved Amendment No. 107:
Page 53, line 16, at end insert—
"( ) The third set of general conditions are that the area is experiencing a significant proportion of private sector lettings that have been managed sufficiently ineffectively as to give rise, or likely to give rise, to one or more particular problem either for those occupying the privately let property or for members of the public."
The noble Baroness said: I rise to move Amendment No. 107. This is an amendment to Clause 77 and it puts in a third set of general conditions that can exist in an area in order to designate it as a licensed area. It is supported, in particular, by the Local Government Association and the Chartered Institute of Environmental Health. The amendment extends the circumstances in which a local authority can designate an area for selective licensing.
In addition to low demand and problems arising from anti-social behaviour, there are other circumstances where selective licensing could prove to be a powerful tool for local authorities seeking to address and effectively manage the private rented sector in their areas. We have already touched on some of those areas in Committee. Such circumstances could include areas where perhaps there is a large amount of seasonal holiday letting or student accommodation, which is where local authorities should be allowed to use such a tool when trying to set up licensing in a selected residential area.
The Chartered Institute of Environmental Health supports the proposals for the introduction of selective licensing. But it believes that some of the details are unduly restrictive; that the option should be more widely available; and that local authorities should not have to demonstrate that areas in which they propose licensing be introduced are likely to become areas of low demand or experience anti-social behaviour. The CIEH says that it understands the Government's thinking, but that the restrictions will tie local authorities' hands too tightly and will mean that the Government are much less likely to achieve their objectives. That is something with which I can agree.
We have heard a great deal about placing trust in local authorities. In exchanges on other amendments, the Minister has been fulsome in saying that local authorities should have a certain amount of freedom. Practitioners on the ground and those who run local authorities would like to have wider scope. That is what this amendment seeks to achieve. I hope that the Minister will look on it favourably. I beg to move.
Lord Bassam of Brighton: I am grateful to the noble Baroness for explaining her amendment, which is a very respectable amendment with some very respectable backing. It would be unfair of me if I did not say that, given my previous employment and my contacts at the Chartered Institute of Environmental Health.
The amendment adds a further ground for designating an area for selective licensing; namely, that poor management in the private rented sector is causing or likely to cause particular problems for tenants and others. Selective licensing is all about minimising the impact that poor management can have on the wider community. But, as with all regulation, it should be used in a proportionate and, probably, focused manner. It is a tool that must be properly targeted and used only where the worst problems exist. I think the noble Baroness would agree with that.
As we have previously made clear, the current provisions of Part 3 strike the right balance by limiting the scope of selective licensing to the specific problems of low demand and anti-social behaviour. They are sufficiently serious issues that warrant the interference in the operation of the housing market for which such licensing will provide. We are aware that some local authorities would like to licence all rented properties.
The amendment would offer much broader grounds on which to designate an area for licensing. It could lead to a situation where its use is somewhat indiscriminate. In turn, that could have a serious impact on the viability of the private rented sector, which, as we all now acknowledge, is a key component of the housing market.
However, while I do not believe that the case has been made for broadening the remit of selective licensing, which is why I do not think that the amendment would be necessarily beneficial, that is not to say that the issues from which the amendment arises
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will not arise in the future and that, at some point, licensing might be a valuable tool. That is why in Clause 77(7) we have provided for the appropriate national authority to add to the specified conditions for designation and so enable selective licensing to be used to deal with additional challenges in the private rented sector. As we have made clear, if Amendment No. 242 is passed, this process will be subject to affirmative resolution. It is not just a sensible amendment, but one with a sensible train of thought behind it, and with a very practical impact. We do not think that it is appropriate to use it in the way suggested by the noble Baroness, but we see merit in the argument, which is why the provision is subject to the affirmative resolution procedure.
4.45 p.m.
Baroness Maddock: I thank the Minister for that—in many ways—positive reply. Would it be appropriate if we were to set a time scale for the Government to return to this issue to see whether they can put into practice Clause 77(7), which is the fall-back position?
The Minister and I both know how difficult it is to find time to get things through the House. If we say when making legislation that after a certain time there should be a review, perhaps something will happen. If we get representations, we would be in a stronger position to find time for legislation to proceed. I make that helpful suggestion to all concerned. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 108 not moved.]
Baroness Hanham Baroness Hanham moved Amendment No. 109:
Page 53, line 29, at end insert "; and
"(c) publicise its intent both electronically and in the local media."
The noble Baroness said: With Amendment No. 109, we are simply attempting to expand the channels whereby a decision made by a local authority as to the licensing of an area can be transmitted to the widest possible audience.
It seems to me that were an area to be so designated it would have possible consequences, not just for those individuals within the area itself but for those on its boundaries and in close proximity. This strikes at the heart of our amendment. It could be argued that such designation, given perhaps a misunderstanding of its intent, could possibly have an impact on, say, house prices. Those people, therefore, should, quite rightly, have the opportunity to be aware of such decisions.
The amendment would place on a local authority the responsibility to publicise its intent both electronically and in the local media. The Minister is fond of saying that no one reads the council notices in the local press—I have some sympathy with that, and perhaps there is an element of truth in it—but I should have thought it relatively easy for such information to

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be displayed on the local authority's website. I am confident that most local authorities now have websites.
Lord Bassam of Brighton: The noble Baroness tempts me to say that she has almost made my argument for me.
The amendment would require a local housing authority, in addition to consulting those likely to be affected by a designation, to publicise the intent of the designation electronically and in the local media. It is almost identical to an amendment debated on Clause 55, and for the same reasons as were given then, I would suggest that the noble Baroness withdraws it.
As drafted, the Bill provides that local housing authorities should take "reasonable steps" to consult those likely to be affected by designation. I am confident that all local authorities have, over many years, developed sophisticated methods of consultation that are the most appropriate for their particular areas. We think, therefore, that it is not necessary to specify the forms that this consultation should take, but would rather leave it to local authorities' discretion. I often hear the noble Lord, Lord Hanningfied, and the noble Baronesses, Lady Hanham, Lady Hamwee and Lady Maddock, arguing that we should maximise discretion to local authorities, that they are best left to determine what they do as to the procedure and content of the consultation, and that we should give them freedom and flexibility. That is exactly what we think should happen here. What works in one local authority as regards consultation may not necessarily be the most effective way of doing it in another.
It is perfectly possible that the methods of publicity proposed in this amendment would be among those deployed by any given authority, but I maintain that those with local knowledge are probably best placed to know what form of consultation has proved effective in the past and what might work in the future. I should also say that another problem with prescribing forms of consultation as suggested in the amendment is the danger that that could have the unintended side-effect of limiting a consultation exercise to those methods alone, which would not be particularly beneficial.
For those reasons, and on the basis of our previous arguments, I suggest that the noble Baroness withdraws the amendment.
Baroness Hanham: I thank the Minister for his reply, which was not totally unexpected. It is entirely in line with the answer he gave before. I too shall make the same response: I shall read most carefully his comments both on that and on the previous amendment. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 77 agreed to.
Clause 78 [Designations under section 77: further considerations]:
[Amendment No. 110 not moved.]
Clause 78 agreed to.
Clauses 79 and 80 agreed to.
Clause 81 [Duration, review and revocation of designations]:
Baroness Hanham Baroness Hanham moved Amendment No. 111:
Page 55, line 21, leave out "from time to time" and insert "on a yearly basis"
The noble Baroness said: This short amendment has been tabled to draw attention to an unhappy phrase which has crept into legislation; that is: "from time to time". The phrase is a consistent failure and ought to be resisted if at all possible.
My question to the Minister is therefore short and to the point: what exactly does the phrase "from time to time" mean in terms of this legislation? Does it mean 10 years, five years, two weeks or one week? This is a shorthand phrase and I do not think that it should be used in legislation.
We have therefore put in a defined time-frame of one year on any designation that a local authority makes in this regard, which seems a sensible and practical approach and certainly gives far more definition than is available under the present terms of the Bill. I beg to move.
Lord Rooker: Clause 81 requires that a designation for selective licensing can last a maximum of five years. Clause 81(3) obliges local authorities, from time to time, to review the designation. In some ways, having to go for selective licensing shows that there is a real problem with the area and I would hope that well within five years the selective licensing would not be justified because it may well have been based on issues related to anti-social behaviour. Such licensing must be kept under constant review. I suspect that the phrase "from time to time" is the legal version of that.
Following any such review, a local authority may revoke designations if the scheme is not achieving its aims. On revocation of a designation, the local authority must publish notice of the revocation in such a manner as is prescribed by regulations under Clause 81(6). The clause is designed to ensure that the designation of selective licensing remains in force only for as long as it is needed. It is not intended to be for the foreseeable future.
The amendment would require selective licensing schemes to be reviewed annually. However, as I have said, selective licensing is a highly targeted measure. That is why, before it is allowed, a local authority has to make a very robust case in order to use it. The idea is that it has to be successful within five years. While we want to see that success, we do not want to impose rigid time limits. It may be that the scheme can be withdrawn after less than a year or at another suitable time, taking into account what is going on in the community. We need that flexibility.
It is not intended to last for ever, to be used as a tool for housing management, or as part and parcel of the normal running of a local authority's functions. It is intended to be used in a highly targeted fashion, not to last for longer than five years and, it is hoped, a lot less than that.
Baroness Hamwee: The Minister did not make the point, which was made a few minutes ago, about the desirability of local authorities running things within the framework of the Bill as they see fit for their own areas. When the noble Baroness was speaking, it occurred to me that she might feel less suspicious of this if a phrase such as "kept under review" were used. Although just before the Recess the Minister paid me the compliment of saying that I am not one of the lawyers, from my experience the terms are more or less equivalent. I hope that that might reassure the noble Baroness.
Lord Rooker: I did not use all my note, but there is a lovely sentence that states:
"I believe that local authorities can be trusted to carry out these reviews in a timely manner without needing to be told when to do so".
I really mean that. We must trust local government.
Baroness Hanham: That is becoming a wonderful mantra. It gets trotted out on every occasion. "From time to time" does not seem to be at all the same as keeping under review. Keeping under review is a permanent action. Although my amendment did not say so, I think that keeping under review is rather better. I bow to our resident legal expert but I still think that "from time to time" has much the same meaning but it does not seem to be quite so determined. I am grateful to the Minister for his helpful explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 81 agreed to.
Clause 82 [Requirement for Part 3 houses to be licensed]:
Lord Rooker Lord Rooker moved Amendment No. 112:
Page 55, leave out lines 33 and 34 and insert—
"(a) it is an HMO to which Part 2 applies (see section 54(2)), or"
On Question, amendment agreed to.
Clause 82, as amended, agreed to.
Clause 83 agreed to.
Clause 84 [Applications for licences]:
[Amendment No. 113 not moved.]
Clause 84 agreed to.
Clause 85 [Grant or refusal of licence]:
[Amendment No. 114 not moved.]
Clause 85 agreed to.
Clause 86 [Tests for fitness etc. and satisfactory management arrangements]:
[Amendments Nos. 115 and 116 not moved.]
Clause 86 agreed to.
Clause 87 [Licence conditions]:
Lord Rooker Lord Rooker moved Amendment No. 117:
Page 59, line 18, leave out from "regulating" to end of line 20 and insert "the management, use or occupation of the house concerned."
The noble Lord said: This group of government amendments, Amendments Nos. 117, 118 and 120 clarify the proposed rules regarding licensing conditions under Part 3. It appears that certain local authorities in England, probably a very small minority, thought that they could unilaterally use selective licensing to impose any conditions they wished to regulate the condition and state of properties under the provisions in Clause 87(1)(b) as unamended. Amendment No. 117 puts it beyond doubt that they cannot. This amendment makes it clear that licence conditions under Clause 87(1)(b) must relate to the management and occupation of the house concerned.
New subsection (2A), inserted by Amendment No. 118, provides that this would not prevent local authorities imposing licence conditions in relation to any requirements made in regulations by the appropriate national authority concerning facilities and equipment at the house. While the Government have no present intention of introducing such regulations in England, the National Assembly for Wales is likely to do so in Wales. I beg to move.
On Question, amendment agreed to.
5 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 117A:
Page 59, line 25, leave out paragraph (b).
The noble Lord said: I rise to raise a possibly small matter but I should be grateful for the Minister's observations on its implications. I have no interests to declare, other than that which has been displayed by the Minister, his colleagues and many other noble Lords. That is that the conditions in which people live, whether in private or council property or in anything in between, are very important and are gradually creeping up the scale of interest.
At one time, as the Minister and I well know, housing was one of those topics that was high on the list when our constituents came to see us. Although housing still needs careful attention, I am convinced that the private rented sector has vastly improved in its attitudes from the time when it caused a great deal of distress and led to the scandals of bad landlords. Those times are, by and large, behind us.
I am intrigued by the situation under this clause. We are talking about the licensing conditions that can be applied. Subsection (2)(b) refers to,
"conditions requiring the taking of such steps as are reasonably practicable to prevent or reduce anti-social behaviour by persons occupying or visiting the house".
This is a practical problem. In Edmonton and Tottenham, we have a very good private landlord, Limelight Properties. I have discussed this matter with them over many years. Mr and Mrs Papadopoulos drew my attention to precisely how one can take action to intervene when a visitor behaves in an anti-social manner. We know that good landlords will have procedures in place to ensure that they have good

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tenants, and good tenants are, of course, in the vast majority. But I have seen photographic evidence of people who at one time were good tenants doing terrible things to properties which are not theirs.
The purpose of the amendment is to invite the Minister to say precisely how one can deal with such a situation. Someone in a block of flats could be subject to terrible anti-social behaviour, such as drunkenness, noisiness and rudeness. In that case, how does one comply with the legislation? Does the aggrieved tenant get in touch with the landlord and say, "You had better hurry down here and sort this out because you have a responsibility to do that"?
I should be grateful if the Minister could spend a little time spelling out the practicalities for the good landlords—the vast majority, as far as I am concerned—who not only run a good business but act in a socially responsible way. I beg to move.
Baroness Hamwee: As I understand it, the noble Lord is arguing in favour of deleting the paragraph on the basis that he wants it retained. This has made me read the provision more carefully, and for that I am grateful.
The condition that is the subject of the provision is to require,
"the taking of such steps as are reasonably practicable to prevent or reduce anti-social behaviour"
by occupants and visitors. Steps may be reasonably practicable but not reasonable. In other words, they could be unreasonably required and would still fall within the provision because they were practicable.
I am sorry to bring this point up at the last minute, but I have only just thought of the distinction. I am coming at this from a completely different point of view from that of the noble Lord, Lord Graham. If the Minister can comment, I should be grateful.
Lord Rooker: In the same way that not all landlords are good landlords, although it is only a small minority who are not, not all tenants are little angels—a minority are not. However, my noble friend has raised legitimate questions, and I hope that I have a sufficiently robust and clear response.
Clause 87 is almost the exact counterpart to Clause 56. There are certain conditions that a local authority must include in every licence. The local authority can decide to include other conditions in addition to these. Clause 87(2) sets out the sort of conditions that a local authority may decide to include in a licence if "appropriate in the circumstances". It is not an exhaustive list. Clause 87 (3) requires that certain conditions must be included in every licence, and these are in Schedule 4. In the case of selective licensing, paragraph 2 of Schedule 4 provides for an additional mandatory licensing condition.
For licences issued under Part 3, the landlord will be required to demand references from persons who wish to occupy the house. That condition has been included because we expect selective licensing to be used to
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encourage landlords to take more responsibility for the behaviour of their tenants and the impact on the surrounding community.
Amendment No. 117A would remove subsection (2)(b), which is the suggested licence condition relating to,
"taking of such steps as are reasonably practicable to prevent or reduce antisocial behaviour by persons occupying or visiting the house".
The list in Clause 87(2) is not an exhaustive one.
I begin by reiterating that we are determined that selective licensing be used as a targeted measure for dealing with specific problems in the private rented sector. Therefore it will be only a very small proportion of landlords, in areas where the particular problems justify intervening in the operation of the housing market, who will be subject to licensing.
There are only two grounds for setting up a selective licensing scheme: low demand and anti-social behaviour. I suspect that there will not be much of an issue of low demand in the London boroughs. I am not saying that it does not occur, but not on the scale that it is prevalent in the north of the country. In that regard, London does not know what the rest of the world is like.
As for anti-social behaviour, the local housing authority must consider that such behaviour is of a significant and persistent nature and that the inaction of private landlords is a contributory factor to its continuing. In these circumstances, when communities are being blighted by the actions of irresponsible tenants while some landlords turn a blind eye, we do not believe that it is unreasonable to require that private landlords take some degree of responsibility for the tenants to whom they choose to let their property.
The key words here are "some degree of responsibility". Landlords should not be their tenants' keepers, but neither is it right that they should wash their hands entirely of the behaviour of those people whom they choose to take on as tenants. As I am sure that noble Lords are aware, this issue was the subject of considerable debate in another place, which is hardly surprising, as Members of Parliament will be very much on the receiving end of complaints about this—as my noble friend was when he was in the of her place. Then, as now, our position was that we do not expect local authorities to impose conditions that would require landlords to seek to run their tenants' lives.
Landlords should be asked only to do what is reasonable and what a good landlord would do. That is why the clause refers to,
"such steps as are reasonably practicable".
For example, it could not be considered unduly onerous to oblige landlords in areas subject to selective licensing to respond to complaints from neighbours and, if necessary, make it clear to the tenant that their behaviour is unreasonable. If that has no effect, there is always the threat of eviction.

787
A condition placed upon a landlord need not relate only to how he manages his relationship with the tenant. Local authorities have powers to act against anti-social behaviour through ASBOs and other measures. But it is difficult if landlords do not choose to co-operate with authorities—for instance, by informing them about problem tenants or giving evidence in legal proceedings.
As I have previously made clear, if a landlord believes that any condition in his licence is inequitable or unnecessarily burdensome he can appeal to the residential property tribunal to have the terms of his licence amended.
That is a considered response. It is not couched in language that responds to the complaints that some tenants have whose lives are blighted by anti-social behaviour. This issue is not being dealt with at the moment. These things go on and people turn a blind eye. That must stop. That is why we are introducing the possibility of selective licensing in a targeted area of private sector landlords. As I say, this does not include the public sector where those responsibilities already apply. We do not want private sector landlords to be their tenants' keeper or run their lives but they must take some responsibility. At the end of the day, sanctions can be imposed. With selective licensing the licence can be removed or revoked and the landlord then has a serious problem because he cannot collect rent. The measure will apply to those landlords who are not prepared to be good neighbours in the sense of ensuring that their property is inhabited by tenants who are good neighbours. Those are the people we are targeting.
As I said to my noble friend, the list is not exhaustive. However, I have given some examples of the kind of anti-social behaviour on which authorities may wish to take action.
Lord Graham of Edmonton: I have gained a great deal from this short debate. I am sure that the Minister was happy to spell out in some detail the Government's thinking. No one who knows good landlords believes that they turn a blind eye to patently anti-social behaviour. That does not happen with good landlords. The good landlord knows where to seek redress and knows his rights. He can, of course, threaten a tenant with eviction if either visitors or the tenant himself turn out to be bad neighbours to those around them.
I am very grateful to the Minister for disabusing some of the fears that I had regarding the impact of the Bill and this clause on others. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Rooker Lord Rooker moved Amendment No. 118:
Page 59, line 27, at end insert—"
(2A) A licence may also include—"
On Question, amendment agreed to.
Lord Hanningfield Lord Hanningfield moved Amendment No. 119:
Page 59, line 37, at end insert—
"( ) conditions regarding equipment necessary to limit the susceptibility to fire hazards"
The noble Lord said: This is a simple amendment that would impose an additional condition for the licensing of accommodation under this section: namely, to have due regard to those devices that would help to reduce the risk of fire.
The number of deaths and injuries through fire has dropped in recent years. However, that figure is still too high. Therefore, the installation of smoke alarms and fire resistant furniture would seem a sensible provision. I suspect that such accommodation that is designed to be caught under this part of the Bill is likely to have such devices. The Minister may be able to reassure me that such an amendment is unnecessary and that there is nothing to stop a local authority from insisting on such devices already under this or another part of the Bill. I hope that that is indeed the case. I beg to move.
Lord Rooker: I believe that I can satisfy the noble Lord. Clause 87(3) refers to Schedule 4 which sets out the mandatory conditions for licences issued under Part 2 (HMOs) and Part 3 (for selective licensing). In identifying the mandatory conditions for both Part 2 and Part 3 licences, we have considered what is necessary to ensure the safety of the tenants. So, the following conditions will apply: producing a gas safety certificate every 12 months (if gas is supplied); keeping electrical appliances and furniture in a safe condition and supplying a declaration about their safety to the local authority if requested; keeping smoke alarms in proper working order; and supplying a declaration about the condition and position of these smoke alarms to the local authority if requested.
For licences issued under Part 3, the landlord will also be required to demand references from persons who wish to occupy the house, although there is no requirement on prospective tenants to supply such a reference. The appropriate national authority can amend Schedule 4 through secondary legislation.
5.15 p.m.
Clause 87(4) provides that the local authority is required as a general rule to address health and safety issues through the housing health and safety rating system under Part 1 and not by means of licence conditions. However, the local authority may impose conditions that relate to the installation or maintenance of facilities or equipment.
Amendment No. 119 would add a new potential licence condition concerning fire safety equipment. If regulations are made under the provisions to prescribe standards for facilities and equipment, they would include,
"equipment necessary to limit the susceptibility to fire hazards".

789
To that extent, the amendment is not required. In other words, we are confident that the definitions that we have used would cover the point raised by the noble Lord about susceptibility to fire hazards in such properties.
Lord Hanningfield: I thank the Minister for that detailed reply. It seemed to cover the points that I made, but we will examine it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Rooker Lord Rooker moved Amendment No. 120:
Page 59, line 46, after "imposing" insert "(in accordance with subsection (2A))"
On Question, amendment agreed to.
Clause 87, as amended, agreed to.
Clause 88 [Licences: general requirements and duration]:
Lord Rooker Lord Rooker moved Amendment No. 121:
Page 60, line 28, at end insert "or becomes an HMO to which Part 2 applies (see section 54(2))"
On Question, amendment agreed to.
[Amendment No. 122 not moved.]
Clause 88, as amended, agreed to.
Clause 89 agreed to.
Clause 90 [Revocation of licences]:
Lord Rooker Lord Rooker moved Amendment No. 122A:
Page 61, line 38, leave out from "has" to end and insert "committed a serious breach of a condition of the licence or repeated breaches of such a condition;"
On Question, amendment agreed to.
Lord Hanningfield Lord Hanningfield moved Amendment No. 123:
Page 61, line 43, at end insert ": and
( ) where the licence holder is deemed to have committed a serious criminal offence"
The noble Lord said: Amendment No. 123 would give a local authority the power to revoke the licence of a landlord who committed a serious criminal offence. The issue was debated in Committee in another place, but there appeared to be some doubt and confusion about it. We should clarify things today.
I accept that, as the Bill stands, a local authority can decide whether a licence holder is a fit and proper person and that it would be hard to see how someone who had committed an offence could be considered a fit and proper person. However, it is possible for a landlord to be a fit and proper landlord in one place and a bad one in another. The Minister used exactly those words in one of our earlier discussions. Furthermore, given the high level of discretion that the Bill affords local authorities, it is possible for different local authorities to take a different view of what constitutes fit and proper conduct.
We seek an assurance from the Minister not only that a person would be excluded from holding a licence were he to commit a serious criminal offence but that there is sufficient scope to ensure consistency of approach on a national basis. I beg to move.
Lord Rooker: Amendment No. 123 would include an additional condition that a licence could be revoked if the licence holder were deemed to have committed a serious criminal offence.
In an area subject to selective licensing, it is important that local authorities can revoke licences if there is poor management of a property, so that bad landlords or agents can be replaced. Our objective is to drive such people out, if they do not get their act together. We want the bad landlords driven out of business. I make that absolutely clear. It has taken a long time for this legislation to be introduced, and we are very serious about it. It will be used in a highly selective and targeted way.
Clause 90(2) provides that a local housing authority can revoke a licence granted if it has reason to believe that the licence holder or the manager of the property is no longer fit and proper. If a licence holder has committed a serious criminal offence that would normally be sufficient evidence that they were no longer fit and proper and we would expect the local housing authority to revoke their licence.
While I understand that the amendment might be intended to establish consistency across different authorities, we are not persuaded of the benefits of prescribing at that level of detail. Our position is to allow local authorities as much flexibility as possible in dealing with these matters while providing the appeal system for those who feel that they have been treated unreasonably. Therefore, while we understand and support the reasoning behind the amendment, the Bill already contains provisions to take care of such concerns.
Lord Hanningfield: The Minister himself said during an earlier discussion that the landlord could be good in one place and pretty terrible in another. If that landlord is terrible in another place should a third local authority have some consideration for the fact that he is good in the first authority? That is one of the purposes behind the amendment, to try to ensure that bad landlords are dealt with. We all wish to get rid of bad landlords. If they are bad in one place, although they are good in another place perhaps the third local authority should take some notice of the fact that they are bad in the first place.
Lord Rooker: If my memory is correct, the example that I raised at the time concerned someone who was managing or owned different properties in different authorities. Some properties might be smaller than others and, therefore, the management issues would be different. Clearly if the person was not a fit and proper person in one authority it would be highly unlikely that they would be deemed a fit and proper person in another authority. That would be irrespective of the nature of the different properties they ran. I was

791
drawing a distinction that just because a person owning properties in more than one authority had a licence, and the property management was OK in one authority, that would not mean that it was OK in the other. The matter would have to be tied to the property. When it is tied to the person, however, regarding the matter of checking the licence, if they are not fit and proper in one authority it is highly unlikely that they would be in another. If they commit offences, that is bound to be known about from one authority to another. The matter is covered by the legislation.
Lord Hanningfield: I thank the Minister for clarifying that point. Perhaps he could undertake to ensure that the issue is covered. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Rooker Lord Rooker moved Amendment No. 123A:
Page 61, line 43, at end insert—
"Section 86(1) applies in relation to paragraph (b) or (c) above as it applies in relation to section 85(3)(a) or (c)."
On Question, amendment agreed to.
Clause 90, as amended, agreed to.
Clause 91 agreed to.
Clause 92 [Offences in relation to licensing of houses under this Part]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 124:
Page 63, line 16, at end insert—
"( ) A lender who has taken possession of an HMO that should be licensed but is found not to be so, would not be guilty of an offence in relation to licensing of houses under this Part."
The noble Lord said: The amendment seeks to exempt a lender who has taken possession of a property requiring to be licensed, but not licensed, from committing the offence, so that they would not be liable to the £20,000 fine. Amendment No. 126 would exempt such a lender from the provision that no rent or charge is payable by the occupiers of the property and that no charge can be made in lieu of rent during the period. Finally, Amendment No. 125, as we discussed in an earlier part of the Bill, would reduce the level of fine for a person not in possession of a licence.
We were slightly disappointed by the response that the Minister, Keith Hill, gave to these amendments in the other place and by tabling them again we hope that the Government have had an opportunity possibly to rethink their approach to the legitimate concerns expressed by many mortgage lenders in the area. The Minister in the other place commented that he believed a lender generally would take possession of an empty property, thus precluding the need for a licence, and that there would be nothing then from stopping the lender from applying for a licence if he chose subsequently to let the property.
However, I believe that the Minister was speaking in general terms. His comments may well reflect the case for the majority of repossessed properties; however, the Government do not seem to have an answer for instances where properties are repossessed with
792
occupants, yet without a licence. As the Bill stands the lender would still be facing a significant fine. These are the genuine concerns of people who have discussed the matter with us.
I hope that the Minister can provide us with a more satisfactory answer today. I beg to move.
Lord Bassam of Brighton: I understand the noble Lord's reasoning behind the amendment and can see that it is aimed at ensuring that mortgage lenders who need to repossess properties are not inadvertently caught by the provisions and subjected to the heavy penalties that non-compliance rightly attracts.
However, a lender taking repossession of a property which would fall within the scope of licensing would be likely to be seeking to obtain vacant possession of the property in any event. If the property is vacant, there will be no requirement for it to be licensed.
During any period when a lender has taken possession of a property and is taking steps to remove the occupiers, it would be possible to apply for a temporary exemption notice and the local housing authority would be able to grant such a notice. In fact, one could argue that it would be unreasonable if they did not, given the circumstances.
However, if the lender has no lawful way of removing the occupiers of the repossessed property, or if it decided to keep the property as a rented accommodation which would require a licence, we would expect it to obtain a licence in the same way as all other managers of licensable property.
I do not envisage that there should be any difficulty in reputable lenders being granted a licence and I would expect that they should easily be able to satisfy the licensing criteria. And I ought to point out the unwanted potential of the amendment for opening up a huge loophole in the legislation if any persons or companies, irrespective of how big, small or disreputable, could be exempted from the licensing provisions merely because someone to whom they had loaned money had defaulted on the loan.
I hope that the noble Lord is satisfied that there are provisions in the Bill to safeguard the interests of lenders and I would urge him to withdraw Amendments Nos. 124 and 126.
As regards Amendment No. 125, I believe that we have more than adequately made the case for the provision. Even though the amendment has been cleverly attached to those relating to lenders, I see no merit in it and it would be inconsistent with our earlier position.
Lord Hanningfield: I thank the Minister for his reply. I agree that we do not want to create loopholes in the legislation so that people can find ways around obtaining licences. However, lenders have legitimate concerns—large and local lenders—who do not necessarily want to become owners of multiple-occupation houses. They are in business merely to lend money on property.

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I will examine the Minister's reply, which I think was clearer than that given in another place. I hope that it will provide assurances to the people who are concerned. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 125 not moved.]
Clause 92 agreed to.
Clause 93 [Further sanctions relating to unlicensed Part 3 houses]:
[Amendment No. 126 not moved.]
Clause 93 agreed to.
Clauses 94 to 96 agreed to.
Clause 97 [Making of interim management orders]:
Baroness Hanham Baroness Hanham moved Amendment No. 127:
Page 66, line 41, at end insert ", and
(c) on an application by the authority to a residential property tribunal, the tribunal by order authorises them to make such an order; and the authority may make such an order despite any pending appeal against the order of the tribunal (but this is without prejudice to any order that may be made on the disposal of any such appeal)"
The noble Baroness said: Amendments Nos. 127 and 128 are to ensure that all interim management orders require the prior authorisation of the residential property tribunal. An interim management order is a severe remedy under which the local authority takes over management and control of a property. The local housing authority is under a duty to make an interim management order if a house in multiple occupation is not licensed and it considers either that there is no reasonable prospect of it being licensed in the near future or that the health and safety condition is satisfied. An interim management order must also be made where it has revoked the licence and it considers either that on the revocation coming into force there is no reasonable possibility of the house being licensed in the near future or again the health and safety condition will be satisfied.
There is a right of appeal against an interim management order, but only after the event. By then the local authority will have taken over the property and if it transpires that the order has been made unjustly, the damage will have been long since done.
Experience has shown that it can take up to six months for the decision of the property tribunal to be known. As an interim management order lasts for only 12 months, by then it would be half-way through its life. By the time an appeal has been dealt with a lender may well have repossessed the property. Although the local authority does have to pay over the income it does not have to do so straight away. An owner therefore may be unable to afford the mortgage repayments.
The absence of due process raises possible issues as to the contravention of Article 6(1) and Article 1 Protocol 1 of the European Convention on Human Rights. Under Article 1 of Protocol 1, every person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to conditions provided for by law and for the general principles of
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international law. It is, however, provided that this does not in any way impair the right of the state to impose such laws as it thinks necessary to control the use of property in accordance with general interest.
The European Court of Human Rights has held that the way in which contracting states procedurally interfere with property rights may well be relevant to determine whether in substance their actions conform to Article 1 Protocol 1. Under Article 6(1), in the determination of his civil rights and obligations, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.
It is our contention that the European convention rights could well be infringed because the right of appeal arises only after the event and there is at the moment no prior procedure for obtaining authorisation. The length of time to deal with an appeal is also of concern and it is important that there is prior consideration before an independent tribunal.
If a property tribunal authorisation is required in advance in one category of case, why not in others? There could be issues which could well arise between the landlord and the authority as to whether there are prospects of the property being licensed in the near future. Issues could also arise as to whether the health and safety condition is fulfilled. These are matters where the landlord should be able to make representations to the property tribunal before any order is made. I beg to move.
5.30 p.m.
Lord Bassam of Brighton: I was very interested and intrigued by the human rights argument that the noble Baroness, Lady Hanham, expounded on this matter. It is the first time that we have had that particular train of thought brought to your Lordships' House on the Bill, as far as I can recall.
It might help if I go carefully through the clause and what it does and does not do and give a full explanation because it may well allay some of the concerns and suspicions which have prompted the thinking behind the amendment.
Clause 97 sets out the circumstances in which a local authority has a duty to make an interim management order and those in which an authority has a discretion to do so. If a property can be licensed under Parts 2 or 3, it must either have a licence or be subject to a management order unless it has been temporarily exempted. We would rather that properties were licensed than subject to a interim management order.
However, that will not always be possible; for instance, if no fit and proper person can be found to manage a property. Because the welfare of the tenant is paramount the Bill obliges local housing authorities to take over the management of such properties using interim management orders. The clause also provides a discretion for a local housing authority to apply to a tribunal to make an interim management order for other properties which cannot be licensed HMOs or to make a special interim management order under Clause 98.

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Amendment No. 127 would require the approval of a tribunal prior to an authority making an interim management order in respect of a house which is required to be licensed under Part 2 or 3, but is not licensed and where the authority considers that there is either no reasonable prospect of it being licensed in the near future or the health and safety condition in Section 99 is satisfied.
The Bill presently requires the approval of a tribunal for discretionary interim management orders such as special IMOs under Clause 98 and IMOs for non-licensable HMOs. That recognises that an IMO is a significant imposition on a landlord's rights. The requirement for approval by a tribunal is an appropriate safeguard where an authority is exercising its discretion to make an IMO. However, in regard to licensable HMOs no discretion is being exercised.
A decision will already have been taken at the time the licensing requirement was introduced that that particular type of property must be subject to some form of management control. If the amendment were passed a residential property tribunal would effectively be seeing whether it agreed with the decision of the local authority not to grant a licence. That is more properly dealt with as an appeal.
It is important to recognise that if a landlord disagrees with the local authority's decision to make an IMO, he or she can appeal against that decision to the tribunal. The tribunal has wide powers in those circumstances and can confirm the order with or without amendments to the terms or revoke it and order that a licence should be granted or a temporary exemption notice issued, so it has considerable discretion. But I have to ask why an appeal hearing should have to take place if the landlord does not dispute the making of the order that would, in effect, be the requirement imposed by the amendment.
Management orders need to be a genuine option for local authorities and therefore as unbureaucratic as possible, unlike the current control orders which some authorities find too cumbersome. In some cases it might be essential to the health and safety of the occupiers of licensable properties, or to people living nearby that effective management controls should be put in place rapidly, not some weeks or months later or even further down the line after a tribunal has considered the issue.
It should be remembered that interim management orders are intended to be short-term orders during which a local authority will take steps to sort out the long-term management of the property. No final management order can come into force until any appeal against it has been finally resolved. So no landlord will face a long term loss of management control without the opportunity to have the tribunal consider the case and go through the process about which the noble Baroness was concerned.
I hope I have given the noble Baroness sufficient assurance that adequate safeguards are in place to ensure that management orders are made only when it is appropriate to make them. And I hope that the noble
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Baroness will agree that it would be impractical to insert an authorisation stage before the making of an interim management order in the case of properties required to have a licence.
Amendment No. 128 begs us to make the same range of arguments as the previous amendment, so it would be unfair on the Committee for me to rehearse them again. I recognise the import of the issue raised by the noble Baroness, but the way in which we envisage the process working will not only limit the bureaucratisation but be clearer and provide for proper due process and redress where appropriate.
Baroness Hanham: I thank the Minister for his clear explanation of how he sees the provision working. The problem as we see it is that the original decision to seek an interim management order may be for only 12 months, but it has clear implications for the owner or manager of the property. The trouble is that if an appeal process is undertaken, as I have said, it will be well into the time of the interim management order before an appeal can be made and ages before the result comes out.
Perhaps we need to try to speed up how the property tribunal makes its decisions. It is not an uncomplicated area. I would like to look again at what the Minister said; we will probably return to the issue at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 128 not moved.]
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 129:
Page 67, line 16, at end insert ", either in the terms of a draft order submitted by them or in those terms as varied by the tribunal"
The noble Lord said: Amendment No. 129 amends Clause 97(4) to allow a residential property tribunal considering an application for the making of an interim management order for a house in multiple occupation that is not subject to a mandatory licence to rule upon the terms of the management order at the same time as deciding on the validity of the application. The tribunal can choose to approve the application and the draft order as submitted or it may approve the application but amend the order as it sees fit; for example, after hearing representations from the landlord or manager.
Amendment No. 130 makes the same change to Clause 97(7) in respect of a residential property tribunal considering an application for the making of a special interim management order. Amendment No. 156 is a technical amendment that would provide that the 28-day time limit for appeals would begin from the date specified in the notice served under paragraph 7(5) of Schedule 6. The other amendments are largely technical and relate to tribunals. I beg to move.
Baroness Hanham: I shall not comment on these amendments, but I wish to refer to the group starting with government Amendment No. 138, the group led by government Amendment 154A, and the

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government amendments, starting with Amendment No. 151, attached within another group. All those amendments were tabled over the Recess. We have not had a chance to consider them; they appeared suddenly on the agenda papers. It has been impossible for us either to produce amendments or to take advice on them. The absence of response to these amendments now does not mean that there will be no response subsequently. Major issues are being included in the Bill, well on the way through, that have not been considered in the other place and that will require considerable scrutiny by the House in due course. I assume that we will not go beyond Amendment No. 163 today; otherwise, we would reach another chunk of new clauses that we have not had the chance to consider.
Lord Bassam of Brighton: This group is not overly complicated and probably should not disturb the noble Baroness too much, but we recognise and respect her point. We understand that the noble Baroness may feel that she must come back on those issues at a later stage. We do not intend to go beyond Amendment No. 163 today. I am grateful to all those who have ensured that we make rapid progress on this part of the Bill today.
On Question, amendment agreed to.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 130:
Page 67, line 33, at end insert ", either in the terms of a draft order submitted by them or in those terms as varied by the tribunal"
On Question, amendment agreed to.
Baroness Hanham Baroness Hanham moved Amendment No. 131:
Page 67, line 40, leave out subsection (8).
The noble Baroness said: This probing amendment was tabled in another place, but it is important that a suitable explanation is also provided in this House. Clause 97 is not particularly easy to follow; for instance, the idea of a person having an interest in a house or in part of a house needs to be clarified. What is an interest in "part of the house"? Is it shared ownership, for example? How do we define it? I would be grateful if the Minister would be kind enough to explain. I beg to move.
Lord Rooker: I reiterate what my noble friend said in response to the noble Baroness's points about the late government amendments. We agree that we are putting into the Bill substantial new material that was not discussed in the other place. It is all good stuff, and it will still be scrutinised. There is always the danger, when everybody agrees that new provisions are all good stuff, that they will not be scrutinised properly. That is why we ended up with the disaster of the way in which the Child Support Agency was set up initially. Everyone thought that it was a good idea, so Parliament failed in its job of scrutinising. We fully expect proper scrutiny and debates on Report. We have no problem about that at all.
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I also hope that I can give a satisfactory explanation to the point that the noble Baroness made about Amendment No.131.
5.45 p.m.
Where an interim management order is made, the local authority can incur expenditure on such things as repairs to the house which will be reimbursed from rental income. It may not be necessary or appropriate for this to extend to the landlord's own accommodation. For example, a landlord may occupy a self-contained basement flat. It may be reasonable for the authority to exclude that flat from the interim management order so that it does not have to carry out repairs or do other things at the landlord's expense. The landlord would have the discretion to determine how money which would otherwise be deducted from his rental income is spent on the repair of the area in which he privately resides.
In other circumstances it might be necessary to include the landlord's accommodation in the order, where, for example, he shares facilities with the tenants such as a bathroom or kitchen, or if he was behaving in an anti-social manner, or was harassing the tenants. Inclusion in the order in those circumstances would make it far more practical for the local authority to be able to take effective legal action against him, which might include, for example, seeking authority from a court to exclude him from the property.
But, of course, if the landlord is aggrieved by any decision to include or exclude his personal accommodation from the order, he will have a right of appeal against that decision to the residential property tribunal.
I have given a couple of examples of how properties are split to the noble Baroness. That is fairly normal in properties in urban areas.
Baroness Hanham: Can I ask for a further example? There are houses in multiple occupation—or which will now be deemed to be in multiple occupation as a result of the Bill—where there may be two self-contained flats and some higher floors that are single dwellings. Would the self-contained part not be considered because it would not come under the legislation? But would individual accommodation associated with it be what this clause refers to?
Lord Rooker: I will have to take advice on that matter. It is a practical question and a practical example. The self-contained area might be excluded, but I need to be reinforced with advice on that point.
The noble Baroness asked what is meant by an interest in part of a house. This could be an interest in a flat. Shared ownership of a house or flat would also fall within this definition. Under a shared ownership arrangement there would be an interest in the property.
Baroness Hanham: I thank the Minister for his reply. It will be helpful to tease out some more examples of this sometime.

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The Bill expands what the term "houses in multiple occupation" relates to. Some further explanation of this matter would be helpful, either earlier in the Bill or at this point. We will come back to this matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 97 shall stand part of the Bill?
Baroness Maddock: Many of the issues that I wished to raise about Clause 97 have been discussed at some length. I will look carefully at what has been said and at this stage I am happy for the clause to remain part of the Bill.
Clause 97, as amended, agreed to.
Clause 98 [Special interim management orders]:
Lord Rooker Lord Rooker moved Amendment No. 131A:
Page 68, line 22, leave out "locality" and insert "vicinity"
On Question, amendment agreed to.
[Amendment No. 132 had been withdrawn from the Marshalled List.]
Clause 98, as amended, agreed to.
Clause 99 [The health and safety condition]:
Baroness Maddock Baroness Maddock moved Amendment No. 133:
Page 69, line 7, at end insert—
"( ) A local housing authority must have regard to any breach of the duty of care owed to the person occupying the house under section (Duty of care for those having control or managing a HMO)."
The noble Baroness said: Perhaps I may point out that for some reason, yet again, this amendment is in the wrong order on the list. We must do better next time. Amendment No. 133 applies to the health and safety condition currently provided for in Clause 99. It reiterates the obligation on local housing authorities to have regard to any breaches of duty of care when considering making an interim management order.
Over the years, this issue has been discussed. It began in 1983 when the late Jim Marshall MP introduced a houses in multiple occupation Bill to Parliament. In 1999, the Government consulted on the licensing of HMOs. The Office of the Deputy Prime Minister—I am sure that it was not called that in 1999—said that it had concluded that powers under housing legislation to deal with multiple-occupancy problems were necessary in parallel with the licensing scheme, which it spelt out a bit more carefully.
In July 2003, in the draft housing Bill, the Office of the Deputy Prime Minister Select Committee recommended that,
"landlords should be given a duty of care to maintain their properties to certain standards and conditions to protect the health and safety of occupiers. The Government should consider how the enforcement regime can be framed to give effect to such duty".
In November 2003, in its response to that recommendation, the ODPM argued that,
"there are already legislative provisions that impose positive obligations on landlords to maintain their properties to certain standards. These include section 11 of the Landlord and Tenant
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Act 1985, which implies a repairing obligation on landlords in most short leases. This is reinforced by section 4 of the Defective Premises Act 1972, which imposes a duty on any landlord who has a repairing obligation to take care that nobody is harmed by a relevant defect that should have been repaired. Additionally, detailed provisions as to how managers of licensed property should act in caring for their tenants will be set out in an approved code of practice or prescribed in management regulations".
While that can be of benefit, this legislation does not impose positive obligations on landlords generally to ensure the health and safety of tenants. The issue was not debated during the Bill's Commons stages. But in a response to a parliamentary Question tabled on 13 July 2004, the Housing Minister, Keith Hill, stated that:
"The Government decided not to introduce an additional provision relating to the duty of care on owners of houses in multiple occupation (HMOs) because such a duty already exists in law and will be complemented by the provisions in the Housing Bill currently before Parliament".—[Official Report, Commons, 13/7/04; col. 1084W.]
He again reiterated the various Acts to which I referred earlier.
We, and others, are concerned that this provision is not as strong as we would like it to be. Given all the discussion that there has been, we would urge the Government to make the duty clear in the Bill. It should be made absolutely clear in this very important Bill and we should not just rely on other legislation. I beg to move.
Baroness Hanham Baroness Hanham had given notice of her intention to move Amendment No. 134.
Page 69, line 8, leave out "threat" and insert "written termination of a tenancy agreement where its perceived intention is"
The noble Baroness said: Amendment No. 134 is grouped with Amendment No. 133, although it is not entirely on the same lines. When this issue was debated in the other place the Planning Minister gave an assurance to look again at the matter. We are therefore tabling the amendment to determine whether the Government have managed to have an opportunity to have a rethink.
Clause 89(3) appears to be making it an offence for a landlord to seek eviction or threaten to seek eviction in such circumstances. A landlord must not have his rights of possession taken away. There is concern among landlords that the use of the word "threat" may imply a reduction in a landlord's proper rights to deal with tenants. Being "threatened with eviction" is a term widely used and may not necessarily imply that the landlord has acted improperly in any way. Being "threatened with violence" may also be a term widely used, but it has a very different meaning. Our amendment would restrike the balance, but in a way that is helpful to the purpose of the clause. I beg to move.
Lord Bassam of Brighton: These two amendments sit rather uneasily together, but I shall try to deal with each in turn. Perhaps it is worth reflecting on what Clause 99 does. It sets out very well the health and safety condition test that must be satisfied before a

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discretionary interim management order can be made. The condition is satisfied if it is necessary to make the order to protect the health, safety or welfare of the occupants of a house, or other persons living in, or with an owner's interest in, property in the vicinity of the house.
Amendment No. 133 would insert a new subsection in Clause 99 requiring that when considering whether the health and safety condition is satisfied, a local housing authority must have regard to any breach of the duty of care owed to an occupant under the new clause proposed by Amendment No. 174. That amendment proposed that HMO landlords should have such a duty of care. It was resisted as we felt that it was rather too vague and that it would be inappropriate to impose criminal sanctions when civil ones existed. I understand that it was withdrawn for that reason.
The health and safety condition already requires local housing authorities to consider the health, safety and welfare of occupants, or those living nearby. It is hard to see what requiring consideration of a breach of duty, as set out originally, adds. Breaches of Section 4 of the Defective Premises Act 1972 would be more relevant. As a housing adviser in the past, we used to use that section in our law centre practice to considerable effect.
I now turn to the second amendment, which was tabled by the noble Baroness, Lady Hanham. Amendment No. 134 seeks to amend Clause 99(3) which begins:
A threat to evict persons occupying a house … to avoid the house being required to be licensed".
The amended clause would read:
"A written termination of a tenancy agreement where its perceived intention is"—
and continue—
"to evict persons occupying a house … to avoid the house being required to be licensed".
That is not appropriate, as a "threat" can be made in various guises, such as orally, by withholding services, or by other forms of harassment. The amendment would prevent the local authority acting unless the landlord obliged by putting his "threat" in writing.
The amendment would narrow the effect of subsection (3) by narrowing the circumstances in which the health and safety condition is activated. A threat of eviction may lead to a tenant seeking new accommodation just as surely as any written notice. While the use of the powers in Clause 97 will be exceptional, it is our intention that they should also apply to landlords who may not be scrupulous in using written legal forms to evict tenants.
Clearly there is a judgment to be made as to the nature of a threat. I fear that the amendment does not remove the need for a judgment to be made. That is because it requires that one should go behind the issuing of a written notice and gauge what its intention might be.
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In our view the amendment considers only one aspect of what a threat of eviction might amount to. It is too limiting. It is not the case that every decision to evict a tenant automatically triggers the health and safety condition and the making of a management order. All that this provision does is to make it possible for a local authority to take account of a threat to evict in its overall consideration of whether the health and safety condition is met.
If a written notice is served, and the perceived intention is to evict solely in order to avoid licensing, that may be one of the factors that would tend to encourage a local authority to determine that the health and safety condition is met. Of course, any decision by the local authority to make an interim management order can be challenged at the residential property tribunal, as I explained earlier.
I hope that this gives sufficient comfort that the rights of landlords will not be adversely affected by the provision as drafted. For those reasons, I hope that the noble Baroness will withdraw her amendment.
6 p.m.
Baroness Maddock: I thank the Minister for his reply. It was slightly disappointing, given that this issue has been around for a long time. Various people think that the Government have perhaps not been as strong as they said they would be. At this stage, however, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hanham: I have already spoken to this amendment, and the Minister has replied to it, so I shall respond briefly.
Clause 99(3) intimates that a landlord has been using improper means—I understand that there have been plenty of those. It is then a question of the interpretation of those who are threatening eviction because that is as if the words were quoted, not on the basis of an improper threat having been made; rather, there was a proper threat to evict. How that is untangled will ensure that everyone knows what a threat to evict means. However, I hear the Minister's response to my amendment.
[Amendment No. 134 not moved.]
[Amendment No. 135 had been withdrawn from the Marshalled List.]
Clause 99 agreed to.
Clauses 100 and 101 agreed to.
Clause 102 [General effect of interim management orders]:
Baroness Hanham Baroness Hanham: moved Amendment No. 136:
Page 71, line 27, at beginning insert "only"
The noble Baroness said: Amendments Nos. 136, 137 and 145 are designed to ensure that the interests of landlords are suitably acknowledged and protected by the relevant authorities when it comes to the enforcement of interim management orders. The amendments would amend subsection (3)(b) and the equivalent provision in Clause 110 in relation to final

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management orders. Amendment No. 137 amends subsection (3)(b) so that the local authority would have the right to do something only in relation to the management of the property if it,
"ensures the immediate health, safety and welfare of the occupants".
In short, these amendments seek to ensure that if a local authority takes possession of a house through a final or interim management order, it should make only the changes that are absolutely necessary to ensure the safety and welfare of the occupants. It should not be at the liberty of the authority to make all manner of changes, even though they may be regarded as improvements, over and above what is necessary because that would be at the landlord's expense.
There is in addition the issue of a standardised approach, or rather the lack of one, across the country that may well arise through this clause. Some authorities might want to take more action than others unless the wording of the Bill makes it clear that the actions they take should be directly related to the reasons for their initial involvement. The purpose of these amendments is to make that clear and slightly to reduce the flexibility and freedom of this particular aspect. I beg to move.
Baroness Hamwee: Perhaps I may ask a question on the back of this group of amendments. Although it is not directly on the point, it may provide a brief opportunity for thought rather than my asking it on the debate on whether the clause should stand part.
Clause 102(3)(a) deals, in parenthesis, with the rights of existing occupiers—referring to those rights which are preserved. What is the position of a potential occupier, by which I do not mean just anyone, but someone who has signed an agreement to occupy perhaps the following week and is expecting to do so? While one wants to protect the health and safety of that person, they could nevertheless be very much thrown by the loss of accommodation. Am I correct in thinking that Clause 117 covers the position of someone in that situation? Perhaps I should have turned my head through a 180 degree arc in asking that.
Lord Rooker: It is a fair question asked quite clearly. No doubt an answer will wing its way to the noble Baroness, Lady Hamwee.
I turn to Amendment No. 136. I think that I can reassure the noble Baroness, Lady Hanham, that the power contained in the subsection she seeks to amend is relatively limited. It is a power that will allow the local authority to manage the property effectively. It does not dispossess the owner of all his rights. Indeed, the powers of local authorities are very clearly limited by subsections (4) and (5) preventing, for example, the local authority allowing further occupation without the owner's consent, or disposing of the property. I appreciate that the noble Baroness is looking for reassurance on this.
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Amendment No. 137 would further amend the provision on the interim management orders so that the local authority would be able to take action in relation to management of the property to ensure the immediate health, safety and welfare only of the occupants. Such a narrow approach would prevent action being taken once an interim management order had been made for the protection of people in the surrounding area. While we welcome the noble Baroness's desire to see the interests of the occupants protected, we think that it is important that bad management can be addressed and the interests of people in the wider community protected. But we take the point. It is absolutely clear.
This is the message that we want to give. It is important that local authorities do not see the making of an interim management order as giving them a green light to act as if they owned the property for all time. I believe that there are already adequate safeguards to protect against this. First, the authority is under a duty to sort out the long-term management of the house as soon as practicable. It will hardly fulfil this obligation if it is embarking on an extensive programme of unnecessary works. Secondly, and most importantly, the landlord can appeal to the residential property tribunal against any unreasonable expenditure incurred. If the local authority were to attempt to take unreasonable actions under the interim management order, it would find itself landed with the bill for doing so. I hope that the general thrust of that reassures the noble Baroness.
Regarding Clause 102(3)(a), which is about the rights of existing occupiers, and the question of whether the rights of a potential occupier, someone who has signed an agreement to occupy next week, are protected, they could be protected if the local authority agrees to serve a notice under Clause 117. The potential occupier would have no right to insist but we will look further into this before the next stage of the Bill.
Baroness Hanham: I thank the Minister for that reply, which is more reassuring than I expected. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 137 not moved.]
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 138:
Page 72, line 3, leave out paragraph (a).
The noble Lord said: This is a highly technical group of amendments that amend Part 4 of the Bill to make sure that it fits more conveniently with the law relating to the registration of land. The amendments are minor and technical and they are brought forward to clarify the legal status of tenancies granted by local housing authorities under management orders that they make under this part of the Bill.
When a local housing authority makes a management order under Part 4, one of the powers it acquires is the ability to create what appear to be tenancies and licences. However, because under a

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management order a local housing authority does not acquire an interest or estate—that is, ownership—in the property, it cannot grant a legal tenancy. Leases and licences granted by a local housing authority are better thought of as being quasi-leases. This might give rise to some problems if the Land Registry ever becomes involved—if, for instance, a person attempts to register a quasi-lease or purchases a property and claims that the Land Register is defective because it fails to include a quasi-lease on its register.
The main purpose of these amendments is to provide that, except in certain specified circumstances, a tenancy granted by a local housing authority under its powers in a management order is regarded as a legal lease, binding on any future owner of the property and, in appropriate circumstances, registerable at the local Land Registry. This will not give powers to local housing authorities to create legal leases, but any lease they do create must be treated as if it were such a lease.
This group of amendments also covers two other related issues. It is intended to allow local housing authorities to seek the entry of a restriction in the Land Registry in respect of a property subject to a management order. This would address a potential mischief, namely an attempt by a landlord to register a lease that, by virtue of the management order, he was not entitled to grant because under the land registration rules, if registered, such a lease would be both legal and binding.
The other issue is purely technical and is to confirm that any charge on a property is a legal charge, capable of registration at the Land Registry, and also a local land charge in relation to any monies that might be owed. The remaining amendments in this group are largely tidying up amendments consequent on the new provisions introduced by the principal amendments. I hope that that rather short explanation of a large number of amendments gives a clue to noble Lords opposite and that they find the amendments that we have tabled rather easier to swallow, even though they have been put down rather late. I beg to move.
Baroness Hanham: I reiterate that we are not swallowing the amendments. We are complaining that we have not seen them before, and we will probably respond to them on Report.
On Question, amendment agreed to.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 139:
Page 72, line 19, at end insert—
"( ) The authority may apply to the Chief Land Registrar for the entry of an appropriate restriction in the register of title in respect of such an order."
On Question, amendment agreed to.
Clause 102, as amended, agreed to.
Lord Rooker Lord Rooker moved Amendment No. 140:
After Clause 102, insert the following new clause—
"GENERAL EFFECT OF INTERIM MANAGEMENT ORDERS: LEASES AND LICENCES GRANTED BY AUTHORITY
(1) This section applies in relation to any interest or right created by the authority under section 102(3)(c).
(2) For the purposes of any enactment or rule of law—

(a) any interest created by the authority under section 102(3)(c)(i) is to be treated as if it were a legal lease, and

(b) any right created by the authority under section 102(3)(c)(ii) is to be treated as if it were a licence to occupy granted by the legal owner of the premises,

despite the fact that the authority have no legal estate in the premises (see section 102(5)(a)).
(3) Any enactment or rule of law relating to landlords and tenants or leases accordingly applies in relation to any interest created by the authority under section 102(3)(c)(i) as if the authority were the legal owner of the premises.
(4) References to leases and licences—

(a) in this Part, and

(b) in any other enactment,

accordingly include (where the context permits) interests and rights created by the authority under section 102(3)(c).
(5) The preceding provisions of this section have effect subject to—

(a) section 116(5) to (7), and

(b) any provision to the contrary contained in an order made by the appropriate national authority.

(6) In section 102(5)(b) the reference to leasing does not include the creation of interests under section 102(3)(c)(i).
(7) In this section—
"enactment" has the meaning given by section 102(10);
"legal lease" means a term of years absolute (within section 1(1)(b) of the Law of Property Act 1925 (c. 20))."
On Question, amendment agreed to.
Clause 103 [General effect of interim management orders: immediate landlords, mortgagees etc.]:
Lord Rooker Lord Rooker moved Amendment No. 141:
Page 72, line 35, leave out "interest or right created" and insert "leases or licences granted"
On Question, amendment agreed to.
Clause 103, as amended, agreed to.
Clause 104 [Financial arrangements while order is in force]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 142:
Page 73, line 35, leave out from "made" to end of line 36 and insert "as soon as is practically possible after deductions to meet relevant expenditure are made"
The noble Lord said: Amendments Nos. 142, 150 and 163 relate to the balance that is struck between the rights of landlords and the protection of vulnerable tenants and residents around the relevant properties. Again, we are seeking to achieve a balance in respect of the rights of landlords.
Amendment No. 142 removes part of Clause 104(4)(b) that gives the local housing authority the power, as it sees appropriate, to return moneys to landlords under interim management orders and adds the words,
"as soon as is practically possible after deductions to meet relevant expenditure are made".
We feel that the amendments are necessary to prevent local authorities having unfettered freedom to withhold payments. At present, no guidance is given about how they should proceed in such matters. Indeed, as the Bill stands, there is nothing to tell a local

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housing authority about when it should make the relevant net payments back to the landlord. I beg to move.
Lord Rooker: I want to be helpful, but I am not clear about this. The noble Lord mentioned Amendment No. 163 as being in the same group as Amendments Nos. 142 and 150. They are not grouped together on my list.
Lord Hanningfield: They are on ours.
Lord Rooker: This list is a mess today—we have government amendments that are not government amendments and the order is wrong. I am quite happy to deal with Amendment No. 163, by the way, now that I have located it, but it is not in the same group.
Lord Hanningfield: It is on the new revised list.
Lord Rooker: Yes, but I have not had one of those.
Amendment No. 142 would require the local authority to make payments to the relevant landlord as soon as practically possible after the relevant expenditure has been incurred. We wholly agree with noble Lords opposite that local authorities should be diligent in making these payments, and that they should be made at the relevant intervals. But we are also conscious that an interim management order is in force because there were problems with the landlord's former management of the property.
These orders are very short term—they can last for only up to one year—but in many cases will be for a much shorter period. They enable the local authority to put in place satisfactory management arrangements. The local authority is under a duty to pay any surplus revenue to the landlord at the end of the order if it does not proceed to make a final management order under Clause 110(2).
Clause 104(4) gives the local authority the flexibility to make payments to the landlord earlier than at the end of the order, if it considers it appropriate to do so. Obviously, we would expect it to do so. We fully accept the intention behind the amendment that landlords are treated fairly. In no way do we want landlords to be treated unfairly.
Amendment No. 150 would limit the discretion of the local authority and require it to make payment to the relevant landlord after the relevant expenditure has been incurred. We agree, again, that it should be diligent in making these payments.
6.15 p.m.
A management scheme must be agreed by a landlord before it can come into effect, or else determined by the Residential Property Tribunal on appeal. If the landlord is not satisfied with the proposed arrangements for the payment of surpluses, he already has a powerful method by which to challenge that.
The difficulty with this amendment, as with Amendment No. 142, is that it would remove the flexibility of local authorities to deal with any rent that they recover in the most appropriate manner. The landlord does have the right of appeal.
Clause 120(2) provides that, on termination of the interim management order, the surplus is to be repaid to the relevant landlord. Amendment No. 163 would remove the local authority's discretion to apportion payments when there are two or more landlords in such properties as it sees fit. In most cases, when they are joint owners of property, one would expect that they would be able to sort out between themselves who was entitled to what money. In the very rare cases when there is a dispute, someone needs to be able to resolve it, and we would argue that permitting the local authority to exercise its discretion is the best way around the problem. Disgruntled owners will have the ability to change any wrongful exercise of that discretion.
Government Amendment No. 151 is a technical amendment, which replaces an incorrect reference in other subsections of the Bill. Government Amendments Nos. 152 to 154 are technical changes to the provisions, setting out what authorities have to do with the money that they hold when a management order comes to an end. Essentially, if no further management order is made, the authority has to return the money to the landlord.
Government Amendment No. 155 provides that the exclusion will not apply when the issue is one of payment of surplus rent. Landlords will have the right to appeal against the frequency of payments of surplus rent and the rates of interest thereon in all circumstances in which an interim management order is in place. We are trying to be fair to landlords.
Government Amendment No. 165 amends Clause 120 by inserting new subsection (5A) to provide that if, at the end of either an interim or a final management order, a new final management order is made, the way in which any money held by local authorities is to be treated will be determined by the management scheme within the final management order. The amendment has been introduced to allow balances of income or deficit to be carried forward to a second or subsequent final management order. Landlords retain the right of appeal against the contents of a management scheme.
Lord Hanningfield: I thank the Minister for his reply. As I said at the beginning, I was trying to strike a balance between the rights of the landlords, the local authority position and the tenants. We shall examine his answers, for which I thank him, in detail. If we need to take them forward, we shall do so at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 104 agreed to.
Clauses 105 to 107 agreed to.
Clause 108 [Operation of final management orders]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 143:
Page 76, line 36, leave out "5" and insert "3"
The noble Lord said: Amendment No. 143 is simple enough, in seeking to reduce from five years to three years the time that is required to bring a house into proper management on a long-term basis. We would be grateful if the Minister could explain why the period of five years was picked. He might also tell us what checks the department will place on local authorities that drag their feet in dealing with such matters inefficiently or less than effectively. I beg to move.
Lord Rooker: That is a fair question. After the cooperation that has been given today, my following comment sounds almost cheap but I point out that the five years is a maximum period. Subsection (4) provides for an end date of anything up to but not beyond the five years. I now come to my cheap point. A maximum period of five years is consistent with the period allowed under the Housing Act 1985 for "control orders" where a local authority steps in to manage HMOs. In other words, we are carrying over the good works of the previous Tory government. The works that we carry over are always good, of course. I want to make it absolutely clear that the five years is a maximum period.
I also want to emphasise that the Bill provides that the local housing authority has to consult the landlord and other relevant persons on the terms of the final management order. These terms include the start and end date. Then the local housing authority has to consider any representations before issuing a final management order. At that stage the Bill also provides that if they so wish the landlord and/or other relevant persons can appeal to a residential property tribunal against the terms of the final management order. It is absolutely clear that an independent tribunal will adjudicate in the case of a grievance.
As I say, the five years is a maximum period, and there is a precedent.
Lord Hanningfield: I thank the Minister for that reply. Obviously. I shall have to agree with it if it was a Conservative government's idea to have a five-year period. I take the point that that is the maximum. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 108 agreed to.
Clause 109 agreed to.
Clause 110 [General effect of final management orders]:
Lord Rooker Lord Rooker moved Amendment No. 144:
Page 78, line 8, leave out "occupiers preserved by section 116(2))" and insert "and other occupiers preserved by section 116(2) and (4A))"
On Question, amendment agreed to.
[Amendment No. 145 not moved.]
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 146:
Page 78, line 39, leave out paragraph (a).
On Question, amendment agreed to.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 147:
Page 79, line 8, at end insert—
"( ) The authority may apply to the Chief Land Registrar for the entry of an appropriate restriction in the register in respect of such an order."
On Question, amendment agreed to.
Clause 110, as amended, agreed to.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 148:
After Clause 110, insert the following new clause—
"GENERAL EFFECT OF FINAL MANAGEMENT ORDERS: LEASES AND LICENCES GRANTED BY AUTHORITY
(1) This section applies in relation to any interest or right created by the authority under section 110(3)(c).
(2) For the purposes of any enactment or rule of law—

(a) any interest created by the authority under section 110(3)(c)(i) is to be treated as if it were a legal lease, and

(b) any right created by the authority under section 110(3)(c)(ii) is to be treated as if it were a licence to occupy granted by the legal owner of the premises,

despite the fact that the authority have no legal estate in the premises (see section 110(5)(a)).
(3) Any enactment or rule of law relating to landlords and tenants or leases accordingly applies in relation to any interest created by the authority under section 110(3)(c)(i) as if the authority were the legal owner of the premises.
(4) References to leases and licences—

(a) in this Part, and

(b) in any other enactment,

accordingly include (where the context permits) interests and rights created by the authority under section 110(3)(c).
(5) The preceding provisions of this section have effect subject to

(a) section 116(5) to (7), and

(b) any provision to the contrary contained in an order made by the appropriate national authority.

(6) In section 110(5)(b) the reference to leasing does not include the creation of interests under section 110(3)(c)(i).
(7) In this section—
"enactment" has the meaning given by section 110(10);
"legal lease" means a term of years absolute (within section 1(1)(b) of the Law of Property Act 1925 (c. 20))."
On Question, amendment agreed to.
Clause 111 [General effect of final management orders: immediate landlords, mortgagees etc.]:
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 149:
Page 79, leave out line 24 and insert "leases or licences granted by them under section 102(3)(c) or 110(3)(c),"
On Question, amendment agreed to.
Clause 111, as amended, agreed to.
Clause 112 [Management scheme and accounts]: [Amendment No. 150 not moved.]
Lord Rooker Lord Rooker moved Amendment No. 151:
Page 80, line 30, leave out "(4)(c) and (d)" and insert "(4)(d) and (e)"
On Question, amendment agreed to.
Lord Rooker Lord Rooker moved Amendments Nos. 152 to 154:
Page 80, line 32, leave out "is not to apply in respect of an interim" and insert "or (4) is not to apply in relation to an interim or (as the case may be) final"
Page 80, line 34, after "balance" insert "or amount"
Page 80, line 37, leave out paragraph (d) and insert—
"(d) that section 120(3) or (5) is not to apply in relation to an interim or (as the case may be) final management order that immediately preceded the final management order ("the order"), and that instead the authority intend to use rent or other payments collected during the currency of the order to reimburse the authority in respect of any deficit or amount such as is mentioned in that subsection;"
On Question, amendments agreed to.
Clause 112, as amended, agreed to.
Lord Rooker Lord Rooker moved Amendment No. 154A:
After Clause 112, insert the following new clause—
"ENFORCEMENT OF MANAGEMENT SCHEME BY RELEVANT LANDLORD
(1) A relevant landlord may apply to a residential property tribunal for an order requiring the local housing authority to manage the whole or part of a house in accordance with the management scheme contained in a final management order made in respect of the house.
(2) On such an application the tribunal may, if it considers it appropriate to do so, make an order—

(a) requiring the local housing authority to manage the whole or part of the house in accordance with the management scheme, or

(b) revoking the final management order as from a date specified in the tribunal's order.

(3) An order under subsection (2) may—

(a) specify the steps which the authority are to take to manage the whole or part of the house in accordance with the management scheme,

(b) include provision varying the final management scheme,

(c) require the payment of money to a relevant landlord by way of damages.

(4) In this section "relevant landlord" has the same meaning as in section 112."
The noble Lord said: This is a new clause after Clause 112 enabling an application to be made by a relevant landlord to the residential property tribunal for an order enforcement of a management scheme made under Clause 112. Clause 112 provides that, when a local housing authority makes a final management order, the order must contain a management scheme.
The relevant landlord can appeal to a residential property tribunal against the provisions in a management scheme, and the scheme will not come into effect until any such appeal is resolved. That means that the landlord and the local authority must reach agreement on the contents of the scheme or have the matter settled by the residential property tribunal.
The current draft of the Bill provides for no mechanism for the enforcement of the agreed scheme. For example, although the parties could have agreed that the local housing authority would collect a certain
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amount of rent a year, it might collect significantly less than that because it has not promptly re-let rooms after they became vacant. The relevant landlord has no right to challenge such a breach of the scheme. The Government recognise that and other breaches. Undertaking works that are not agreed and are unnecessary could lead to a significant shortfall in the landlord's projected income, and he or she should be able to seek an order requiring a local housing authority to comply with the management scheme and to seek damages for loss of income. Amendment No. 154A provides that the landlord may apply to the tribunal.
Amendments Nos. 168 and 169 are technical amendments. Amendment No. 168 will amend Clause 121(3), making it clear that the provision applies to liability in respect of things done before the termination date. Amendment No. 169 is a technical amendment to subsection (6).
Amendments Nos. 169A and 169B are technical amendments. Amendment No. 169A will amend Clause 121(7) to correct a typographical error. Amendment No. 169B will add a new subsection to Clause 121, making it clear that its provisions apply to instruments—deeds, for example—as well as to agreements. The amendment is being made for the avoidance of doubt. I beg to move.
On Question, amendment agreed to.
Clauses 113 to 115 agreed to.
Schedule 6 [Management orders: procedure and appeals]:
Lord Rooker Lord Rooker moved Amendment No. 155:
Page 203, line 9, leave out "This" and insert "Except to the extent that an appeal may be made in accordance with sub-paragraphs (3) and (4), sub-paragraph (1)"
On Question, amendment agreed to.
Lord Rooker Lord Rooker moved Amendment No. 156:
Page 203, line 32, leave out "7(2)" and insert "7(5)"
On Question, amendment agreed to.
Schedule 6, as amended, agreed to.
Clause 116 [Effect of management orders: occupiers]:
Lord Rooker Lord Rooker moved Amendment No. 157:
Page 82, line 35, leave out subsection (1) and insert—
"(1) This section applies to existing and new occupiers of a house in relation to which an interim or final management order is in force.
(1A) In this section—
"existing occupier" means a person who, at the time when the order comes into force, either—

(a) (in the case of an HMO or a Part 3 house) is occupying part of the house and does not have an estate or interest in the whole of the house, or

(b) (in the case of a Part 3 house) is occupying the whole of the house,

but is not a new occupier within subsection (4A);
"new occupier" means a person who, at a time when the order is in force, is occupying the whole or part of the house under a lease or licence granted under section 102(3)(c) or 110(3)(c)."
On Question, amendment agreed to.
Lord Rooker Lord Rooker moved Amendments Nos. 158 and 159:
Page 83, line 14, at end insert—
"(4A) Section 110 does not affect the rights or liabilities of a new occupier who, in the case of a final management order, is occupying the whole or part of the house at the time when the order comes into force."
Page 83, line 26, leave out "section 102(6) or 110(6) or this section" and insert "this Part"
On Question, amendments agreed to.
Clause 116, as amended, agreed to.
Clause 117 agreed to.
Clause 118 [Effect of management orders: furniture]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 160:
Page 85, line 4, leave out subsection (1).
The noble Lord said: With the amendment, we are attempting to bring a degree of clarity and understanding to this part of the Bill.
My understanding is that, as the Bill stands, on the granting of an interim or final management order, all property in the house in question is transferred to the local authority, with the exception of the occupant's property. I would welcome an explanation by the Minister of what that would mean in practice and why the Government have decided to go down what appears to be a rather outdated and regressive route. Is this an English version of the poindings and warrant sales that the Scottish Executive decided to abolish a couple of years ago?
What would happen if furniture that did not belong to the occupant were seized and subsequently sold by the local authority? I am thinking in this case of rented furniture; or, indeed, such is the definition of furniture in the clause that it includes TVs or DVD players. The company in question would surely have a legal right of redress in respect of its seized goods.
Finally, Amendment No. 161 attempts to shed a little more light on what the Government considers to be furniture. I have just mentioned some of the problems of having such a weak definition. Would that
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include white or electrical goods, for example? As the paragraph stands, it is written so loosely that virtually anything could be included. I beg to move.
Lord Rooker: I hope that I can satisfy the noble Lord. I have a brief response, but I hope that it will fit the bill. Clause 118 is concerned with the effect of a management order on furniture which is provided under a tenancy or occupancy agreement while the order is in force. Effectively, it provides that a local authority takes over the ownership of the furniture in the property so that it can continue to be used by occupiers.
The amendment proposes to delete subsection (1). That would make the clause unworkable and that is why it is a probing amendment. The subsection sets out the circumstances in which the clause applies. Amendment No. 161 seeks to qualify "other" with "specified" in respect of the articles in subsection (7). An "article" could be one of a number of numerous things which are provided under a tenancy but which are not conventional furniture or fittings, such as cutlery, works of art, books, candles and telephones, to name but a few examples. We think the word "other" is more appropriate in this context. It is not necessary to give anyone the power to specify what constitutes an article. There would normally be an inventory of furniture available—and it is in everyone's interests that there should be—which would specify the articles that are provided under the tenancy. There should be clarity about the matter. We could return to this matter, but I hope that I have made the point. There is furniture and there are other articles of which I have given some examples.
Lord Hanningfield: Again, I thank the Minister for his reply. We shall look at his answer to see if it covers the points I was making. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 161 not moved.]
Clause 118 agreed to.
Clause 119 agreed to.
Lord Bassam of Brighton: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at twenty seven minutes before seven o'clock.