Tenancy Deposit Scheme

HC Deb 15 October 2003 vol 411 cc99-121WH

2 pm

Mr. Andrew Love (Edmonton)

A viable national tenancy deposit scheme is critical for the one in 10 of all households—accounting for approximately 2.2 million people—that are in the private rented sector, which is characterised by relatively poor conditions. The most recent survey shows that in one in five houses in multiple occupation people are living in dire circumstances, and many of those are young people under the age of 30. The sector is also characterised by an appallingly low standard of management and highly fragmented ownership of properties, with most landlords owning no more than a couple of properties and very few belonging to the professional associations that can help to drive up standards.

Comprehensive action is needed to deal with the problems in the sector, and that must include a tenancy deposit scheme. Research shows that 70 per cent. of all private tenants pay a deposit to secure a home, and for assured shorthold tenants that figure rises to more than 80 per cent. The deposit is usually around one month's rent, and the national average is just over £500. However, according to the survey of English housing, one in five tenants whose tenancies ended in recent years were unhappy that their deposit was unreasonably withheld. Half of all tenants whose deposit was withheld were not given a satisfactory reason.

That is a significant problem and must be addressed. It is compounded by the fact that research also shows that it impacts disproportionately on the less well off. The National Association of Citizens Advice Bureaux carried out research and believes that about half of private tenants believe that they have had a deposit unreasonably withheld. Of those, around two thirds lose either all or part of the deposit, which many of them simply cannot afford to lose.

According to Shelter, Tens of thousands of people lose out to this scam or rent rip off and are often forced into crippling debt to pay the next deposit. A few face the even more extreme outcome of becoming homeless". Work by organisations such as Shelter suggest that many of those who have difficulties, face homelessness and lose their deposit find that if they try to regain that deposit through the available legal remedies, proceedings in the small claims court are expensive, take time and are often subject to delay. They also often prove unsatisfactory. Middlesex university wrote to me about tenancy deposits and the experience of its students, as follows: It is daunting, time consuming and expensive to those on a low income. Every penny counts for a student and so the idea of spending money to try and get their entitlements back is very off-putting.

Mrs. Anne Campbell (Cambridge)

I congratulate my hon. Friend on securing this important debate. More than 7,000 students at Anglia Polytechnic university, in my area, seek accommodation in the private sector each year, and I hope that my hon. Friend will agree that unreturned deposits are a real problem for students, who are often about to start off on their careers with little money, and do not wish to hang around after they have finished their courses. It is particularly difficult for students to fight when deposits are not returned.

Mr. Love

That is undoubtedly the case. Students, many of whom live on low incomes, are particularly badly affected by the loss of a deposit because it makes life so much more difficult when they move on to further accommodation.

As a result of the experiences of students and others in the private rented sector, the Government introduced a voluntary tenancy deposit scheme in 2000. I congratulate them on that. The scheme was primarily aimed at dealing with two issues. First, it was intended to ensure that deposits were held safely and were distributed to the tenant or the landlord, depending on the circumstances. Secondly, the scheme was intended to set up some form of independent arbitration machinery that would decide whether the deposit should be returned to the tenant or to the landlord.

Mr. Kelvin Hopkins (Luton, North)

Is it not the case that the well behaved landlords have participated in the voluntary scheme and the bad landlords have avoided it?

Mr. Love

There is some evidence to suggest that—but the real problem is that most landlords have not taken part. Only a small section of landlords have been involved. I suspect that my hon. Friend is right and that that section already comply with good practice.

Mr. Eric Pickles (Brentwood and Ongar)

Is the hon. Gentleman as disappointed as I am to learn that only a quarter of letting agents belong to professional bodies? Having considered the pilot scheme, he expressed his disappointment at the relatively small number of organisations that have joined. How long does he feel the pilot scheme should continue before a definitive decision is taken on whether to develop it nationally?

Mr. Love

As the hon. Gentleman will know, the pilot scheme was adapted to make it more attractive. That is especially true of the insurance option. Moneys that should have been due were not taken, and bureaucracy was reduced to a minimum. Even with those additional features, the scheme did not manage to attract many outside the organisations of landlords and agents to join. One of the lessons is that in such a fragmented market, it is extremely difficult to reach out with a voluntary scheme. That is one of the reasons why many people present believe that we need to move to a statutory base and ensure that all landlords come into the system in some way or another.

Ms Oona King (Bethnal Green and Bow)

I have received many representations from constituents on this point, which is why I strongly support the introduction of a statutory scheme for the tenancy deposit. Does my hon. Friend agree that, given the urgency of the issue and the scarcity of parliamentary time, the draft Housing Bill that is to come before Parliament soon would present the Government with the best and swiftest way of dealing with the problem?

Mr. Love

I agree with my hon. Friend. I will deal with that point in detail later.

The aim of the pilot scheme was to test two things: first, whether a voluntary scheme could be self-financing, and, secondly, whether legislation was necessary to ensure the compliance of everyone involved in the private rented sector. Sadly, the response of agents and landlords proved disappointing. Even when we made the scheme more attractive to them and less onerous in terms of bureaucracy, there was a slow take-up. As a result of that—and, I suspect of some frustration—the Minister with responsibility at the time, the present Lord Chancellor, said in February 2002 that there wass a strong case for legislation".—[Official Report, House of Lords, 13 February 2002; Vol. 631, c. 1090.] Let us consider the experience in other countries, including Commonwealth countries such as Canada and Australia. Admittedly, circumstances are different from those in this country, but experience shows that a statutory tenancy deposit scheme can deliver fairness between landlord and tenant at a reasonable cost and can be self-financing. That is what the Government intended to happen.

What of the case for such a scheme in the United Kingdom? The evaluation of the pilot scheme drew several conclusions. First, it suggested that the fear of the deposit being withheld was much greater than the abuse of the system. I was mystified as to how it reached that conclusion, given the experiences in my constituency.

One of my constituents, Mrs. X, a lone parent with two children, was an assured shorthold tenant who paid £1,600 to her landlord, £800 in advance rent and £800 as a deposit. The landlord started possession proceedings in August 2002. During the court proceedings to evict her, she mentioned that she was concerned about the fate of her deposit, and the local council contacted the landlord to ask him when he was likely to return it.

Following a further intervention in January this year, the landlord would not confirm how much of the deposit he was willing to return. In February, he had still failed to return anything, and the local council pursued him on behalf of the tenant and suggested that she take up legal remedies. In June she started proceedings in the small claims division because she was so unhappy and wanted to get her money back. Today she is still waiting, and nothing has been done to return her deposit. Such experiences lead independent advocacy services, voluntary housing groups and local authorities to believe that we need the statutory backing of a national tenancy deposit scheme to ensure that there is justice and fairness not only for the tenant but, in certain circumstances, for the landlord.

The evaluation's second recommendation stated that the consultation was evenly balanced. Tenants were strongly in favour of a national statutory scheme while landlords, who felt that the present system worked reasonably well, were not minded to support one. Examined superficially, that seems all right—as far as it goes. A more careful examination, however, reveals that the scheme's opponents were overwhelmingly from the landlord sector and that other organisations did not oppose it. Indeed, most of the organisations that submitted views—the National Association of Citizens Advice Bureaux, the National Consumer Council, Shelter and other housing organisations, and local authorities, which are all involved with the issue—overwhelmingly supported such a scheme. I must therefore ask the Minister this question: should the landlords, who appear to be the only sector opposed to a scheme, be able to veto its introduction?

It has been suggested that such a scheme would not be good value for money. In June 2002, the winding up of the voluntary scheme was announced in a ministerial statement, which suggested that the scheme's benefits in deposits returned to tenants would be about £20 million, while its estimated costs would be £19 million. The wording of the evaluation was finely balanced, and although almost everyone accepts that the estimate of the rent that would be returned to tenants was fairly accurate, the estimate of the cost of the adjudication system was based on a flawed assumption. The evaluation calculated that the 127,000 tenants who expressed a grievance would all have gone to appeal, but we know from the experience of the systems that are already up and running in Australia and Canada that only 2 to 3 per cent. of completed tenancies end up at the appeal stage. Indeed, only 1.5 per cent. of completed tenancies in the pilot ended up on appeal. It is not credible to assume that the 20 per cent. who complained would all end up going to appeal.Furthermore, no estimate has been made of the savings that would arise from not using the small claims court for that purpose.

Importantly, evidence from abroad suggests that a tenancy deposit scheme deters people from bad practice in the private rented sector. That is a strong feature, and would make a significant difference. As a result, the £19 million figure is undoubtedly inaccurate and should be much lower.

Additionally, with a custodial scheme in which deposits were handled independently, the interest from the £790 million to £800 million in deposits held nationally at any time, which would amount to about £30 million, would pay for a self-financing scheme. I was pleased to read that, the Office of the Deputy Prime Minister was reviewing the cost element, and I ask the Minister to update us on how far it has got in estimating the benefits and costs of introducing such a scheme.

It was recently suggested that a tenancy deposit scheme would more appropriately be dealt with as part of the Lord Chancellor's review of tenure reform. I disagree with that for several reasons. I am not a lawyer and I do not know the intricacies of tenure reform, but one concern is that compulsory written tenancy agreements do not, and cannot, ensure fairness and equity for the tenant. The agreements do not address how the tenant's money should be held, give them confidence that it will be returned, or address how disputes should be resolved. Under the scheme, taking court action would remain the only remedy.

The present barriers to small claims court action would continue to exist in the future. Those barriers are the costs, especially for people on very low incomes, the delays, which are inherent in the system, and the doubt about whether the agreement could be adequately enforced to the satisfaction of the person who had lost their deposit.

As has been said, there is likely to be a lengthy consultation on tenure reform, with no guarantee that at the end of consultatic n, parliamentary time will be made available. We know from past experience that waiting for time to become available can cause significant delay.

By way of contrast, as several Members have stated, the draft Housing Bill has already been discussed in Parliament. The Select Committee on the Office of the Deputy Prime Minister: Housing, Planning and Local Government comprehensively examined the Bill and made several recommendations, which included its support for the inclusion of a tenancy deposit scheme. It is also important to tap into the experience that we have gained from the voluntary scheme. It has several features which, if taken into account, would make a national scheme so much better.

If we were to include the tenancy deposit scheme in the new Housing Bill, which we hope will be introduced in the next Session, the Bill would be more comprehensive. It would be ready for immediate enactment, so people in the private renting sector would not face further delays, problems, complications and difficulties. The scheme would fit in with the other provisions in the Bill to address all the problems faced in that sector.

There would be no need for further consultation, although I accept that there could be pre-legislative srcutiny. When the Leader of the House came before the Select Committee on the Office of the Deputy Prime Minister: Housing, Planning and Local Government, he said that that might be the case. The scheme would not only protect tenants from the worst conditions, but protect their money, so that they would get a fair deal on their tenancy deposits. Overall, that would promote better value for money and more affordable accommodation. One of the greatest difficulties faced by my constituents is that without a deposit, they can access only the worst of the private rented sector. If they can protect their deposit, they are likely to get better quality accommodation.

I hope that the Housing Bill will encourage and stimulate more institutional investment in the private rented sector, which is the most important factor for the future. That would do two things. First, it would reverse the decline in the private rented sector. During the last 50 or 100 years it has decreased from accounting for more than half of all dwellings in this country to covering only 10 per cent. today. Secondly, and more importantly, at a time when we know that there is not enough social housing on the market to address our problems, it may be able to make a significant contribution to the supply of accommodation at reasonably affordable costs. We should be looking towards that, but if we are going to achieve that institutional investment, a tenancy deposit scheme along the lines that have been outlined many times by many people—is absolutely essential to give trust and confidence to the tenant and the reputable landlord, and to the institutional investors that will make such a difference in the sector.

Several hon. Members

rose—

Mr. Deputy Speaker (Mr. Frank Cook)

Order. It may be advantageous if I remind all ho n. Members that it is customary to commence the winding-up speeches 30 minutes before the conclusion of the debate. I see that, although only two hon. Members have given prior notice of their intention to intervene, four are seeking to catch my eye now. I appeal to all hon. Members present, when making their contributions or accepting or responding to interventions, to bear in mind the fact that we need to move to the winding-up speeches at 3 o'clock.

2.21 pm

Vera Baird (Redcar)

I congratulate my hon. Friend the Member for Edmonton (Mr. Love) on securing a debate on this issue, which is of the highest importance to a relatively poor and excluded sector of society, and finds strong echoes in Redcar and Cleveland, where my constituency is located. There are about 3,500 privately rented tenancies there, and deposits and bonds are anywhere between £50 for a bedsitter and about £400 for a house. Although he accepts that landlords have to safeguard their properties from damage and obtain recompense if it occurs, it is the view of the Teesside Homeless Action Group's organiser Francis Owens that deposits have now become a "perk" for unsrcupulous landlords. He desrcibes the problem of non-return of deposits in Redcar and Cleveland as pretty bad, and he hears of cases of deposits and bonds being withheld almost weekly.

Typically, a person is asked to leave a property because housing benefit is not paid on time and the deposit is held to replace the lost rent, but when the benefit is made up, it is rarely returned to the tenant. The landlord will claim damage has been done to the property or furnishings, despite protests from the tenant. Often the damage was there, although not necessarily noted by the tenant, when the tenant moved in. People moving in and out of substandard property will often be paying out of their bond or deposit for "damage" that has been paid for by several previous tenants in exactly the same way.

If people are evicted or asked to leave before their tenancy is up, landlords frequently keep the deposit as compensation for their trouble. Some landlords simply do not return it. Francis Owens told me of one person he is chasing—and has been chasing for several weeks—who will not return a deposit to a couple who are now homeless. That person will not even reply to letters.

It is quite clear that, exactly as my hon. Friend has said, most people who lose their deposits just give up. The local authority, although it has power to act in cases of illegal eviction and has some protective powers to deal with cases of harassment by landlords, has very limited powers to intervene over the loss of deposits, so tenants have recourse only to the courts, and they frequently do not want to go to the small claims court.

We are talking about relatively poor people, whose first language is often not English, and who will not necessarily know how to go to law, or have any confidence in doing so. There is much research that shows that it is the relatively socially excluded who do not enforce their rights, but that is obviously going to be the case. I can say, as many cannot quite say quite so strongly, that the image of the justice system—full of middle-class people with funny clothes talking in-crowd language and using procedure that immobilises those not in the know—is not a friendly, welcoming, sympathetic one to people who feel that they have been wronged.

Let us be practical: the small claims court costs money. It costs at least £50 to recover a deposit. If the landlord does not respond, the process becomes wearisome. If he does answer and appears, that involves a daunting face-to-face experience—and if people get a judgment they have to pay even more to enforce it if the landlord does not pay up. Mostly, tenants just give up. That is a pity, is it not?

That example demonstrates the wickedness of stealing from the poor. It is not only that they cannot afford to enforce their rights, which is partly our fault as legislators, but they adjust more and more to going without things that they need for their well-being. Such situations disempower the already disempowered, so that they become even more like inert sitting ducks for the next exploiter or, as Francis Owens, with his feet more on the ground, puts it more specifically, they become used to being pushed around by landlords and just give up.

At present there is no tenant deposit scheme in Redcar and Cleveland, although an organisation called Junction was involved with a bond guarantee scheme until last spring. By guaranteeing a deposit, the scheme allowed landlords to let dwellings without charging one. It cost some £30,000 a year. It checked out tenants and supported them in being good tenants, so that the landlord rarely had a legitimate claim for holding the deposit back. It is believed that that scheme helped hundreds of vulnerable people find somewhere to live.

The housing strategy manager at Redcar and Cleveland, Roger Kay, to whom I am indebted, tells me that the termination of shorthold tenancies in the private sector is the third most common cause of homelessness in my local authority area, and accounted for 11 per cent. of cases last year. He feels that for many of those households, the requirement for deposits acts as a barrier to accessing further private rental accommodation. The local voluntary scheme, like the national one, struggled to attract private landlords. Partly because of a shortage of funds, it was wound up, reflecting very much the experience of the Government's national tenancy deposit scheme.

I support what has been suggested. It is likely that landlords who voluntarily join such schemes are those with higher management standards anyway. It is plain from my local experience and from the Government's national experience that there is every argument for a national scheme of that kind, which should be mandatory.

Such a scheme would be multi-faceted. There would have to be an independent deposit holder to protect tenants against landlord abuse. Shelter says that £790 million of tenants' money is held by landlords nationwide. As has already been said, between 30 and 50 per cent. of tenants experience difficulty in getting their money back. The scheme would also guarantee landlords' rights. It would have to have a mediation arm to deal with disputes, thereby taking them out of the courts. That would be better for poorer, disempowered people. It is also part of the aim of the new Department for Constitutional Affairs to take disputes out of the courts.

The second facet is that such a scheme would be part of a homelessness strategy. It would provide a guarantee to a landlord for those who do not have deposit moneys and would be able to assist in the prevention of homelessness by enabling those on low incomes to get into private rented accommodation.

It seems that the Government have seen the potential benefits of the scheme, because they have had a voluntary one. They have also seen the prospects for righting those wrongs, and have seen such a scheme as part of their policy for wider social inclusion of relatively powerless groups that are now exploited. However, the national voluntary scheme has not worked, and it seems that the voluntary scheme in Redcar and Cleveland is not capable of working, either. Frankly, it is hard to come up with disinterested arguments for not having a mandatory scheme and for not adding it to the next Housing Bill. I, too, suggest that delay while tenure is reformed is not justifiable; that is almost beside the point, and the issue is critical for many people.

The question of cost has been rehearsed. I would hope that deposits earning interest subject to a liquidity ratio could cover many of the revenue costs once such a scheme is established.' congratulate my hon. Friend the Member for Edmonton on raising the issue, and on behalf of private tenants and those who are trying to tackle homelessness in Redcar and Cleveland, I urge the Government to add a scheme to the next Housing Bill.

2.29 pm

Geraint Davies (Croydon, Central)

I, too, congratulate my hon. Friend the Member for Edmonton (Mr. Love), on raising this important issue. I thank the National Association of Citizens Advice Bureaux and Shelter for pushing the issue forward. I have a long-standing interest in tenancy deposit schemes. Before becoming an MP, I was leader of Croydon council and at one point chaired the London boroughs housing committee. I also thank Lord Falconer for keeping the pilot scheme going and for saying that there is a strong case for legislation.

We have had a voluntary scheme but, predictably, it has not been very successful because the people who have volunteered to be in it are the good landlords, not the rogue landlords who are ripping off something like one in five tenants in Britain. This is a massive issue. There are 2.2 million tenants, of whom 70 per cent. pay deposits, and it is estimated that between one fifth and half of those people are ripped off. If the deposits being held total something like £790 million, that money, placed in a separate bank account at the current Bank of England base rate, would generate some £32 million— far in excess of anyone's estimate, even the Government's overestimate, of the costs of running such a scheme.

We are talking about protecting the weakest and poorest, often the fast-moving tenants who can be exploited by powerful landlords who simply sit on their hands and avoid the legal system and small claims court, which is already massively overburdened and clogged up with people taking up disputes. Many people give up, for reasons that have already been outlined, so landlords are in a strong position. The Government must live up to their pledge of five years ago and act.

The scheme that we are discussing would be cost-effective. The Government have suggested that the costs and benefits are evenly balanced but in fact they are not.

They assume that the costs would be in the order of £19 million, but that presupposes that all disputes—namely, the 20 per cent. that are known of—would go to an adjudicator and each adjudication would cost about £150. In fact, where we have seen tenancy deposit schemes working in real life, particularly in Australia and New Zealand, the take-up rate of disputes is between 2 and 3 per cent., so the estimated cost would be more like £2.4 million—against, as 1 have said, a revenue stream of more than £30 million. Other benefits have already been estimated by the Office of the Deputy Prime Minister: £20 million in savings from court costs. and so on. The scheme would be an opportunity for fundraising to provide extra services to make the quality of the private sector market better for landlords and tenants. It would not be an opportunity for losing money, unless there were gross mismanagement.

Looking at the legislative timing, I would suggest, as have others, that we should take advantage of the forthcoming Housing Bill, partly because it is at the tail end of the pilot and largely because the whole aim of that Bill is to raise standards in the private sector, so it is uniquely appropriate. It has already been made clear by my right hon. Friend the Leader of the House in his interviews with the Select Committee that the inclusion of such a scheme in the Housing Bill would not jeopardise that Bill. I therefore urge the Minister to consider including it.

The alternative being considered, which I think would cause uncertainty and prevarication, is to introduce the scheme in the Law Commission's report, which is refocused on something quite different: simplicity and transparency. The consultation on the Law Commission's report already runs to two volumes and 300 proposals. This important scheme could be lost in all that. We need to grasp the nettle and get on with the job of protecting the millions of people who are under threat.

The consultation that has taken place was said to be evenly balanced, but if we take out the groups with a vested interest—those who let, landlords and others who make a profit—the overwhelming impact of the consultation is that there should be a statutory scheme and that we should make progress on that. The Government should take decisive action now to protect weak consumers in an imperfect market and to improve the market, rather than prevaricating, which would lead to the abuse of thousands more people by unsrcupulous landlords. This Government are best when they are boldest, and they said five years ago that they would deal with the problem of tenants being ripped off. I urge my hon. Friend the Minister to advance in that spirit.

2.35 pm

Ross Cranston (Dudley, North)

I, too, congratulate my hon. Friend the Member for Edmonton (Mr. Love) on having initiated this debate on a national problem. It is acute in certain parts of the country, and bears particularly on those on low incomes. The presence of a significant number of my hon. Friends shows the weight of support for a compulsory measure, and I am sure that my hon. Friend the Minister will report that.

My hon. Friends have already desrcibed the problem that we face, and I shall not go over it again. I have not had a huge number of constituency cases, but there has been a trickle, some of them involving students who are going to other parts of the country. As my hon. Friend the Member for Cambridge (Mrs. Campbell) said, those people will not stay in London, but will return to the west midlands and will not bring cases before the small claims courts.

I want to raise three issues. The first is that of access to justice. My hon. and learned Friend the Member for Redcar (Vera Baird) referred to the problems, delays and disincentives associated with bringing a case in the small claims courts. People have to know that that is an avenue. In Dudley, there has until recently been a problem with housing. There is no law centre, and people have not had housing advice. There is access to advice about welfare, law and family matters, but the regional office of the Legal Services Commission has identified a gap in relation to housing. People have to get advice before they can bring a case. The citizens advice bureau does sterling work in Dudley, but people have to and it in order to access its advice.

Then there is the problem of bringing a case before the small claims court. To those of us who have some association with the law, that might seem to be relatively easy, but for the ordinary person it is far too complicated. In addition, a fee has to be paid. It might be recoverable— the district judge can order that the fee is recovered if he finds in a person's favour—but, as my hon. and learned Friend the Member said, even if someone is successful, they have to pay another fee for enforcement. That is why there is a problem; tenants who are ripped off do not pursue their legal remedies.

The second point I would make about the need for the scheme touches on the argument put by my hon. Friend the Member for Croydon, Central (Geraint Davies). He pointed out that one has to take into account the change in behaviour that the introduction of a compulsory scheme would bring about. The Government's calculations of cost were made on the basis that there would be no change in behaviour; and that there would still be the same number of disputes about deposits in future. That is not so. When new systems are introduced, people change their behaviour. The evidence—my hon. Friend the Member for Edmonton referred to the issue in the Australian context—is that disputes run at 2 to 3 per cent. of tenancies. Therefore, there will be far fewer disputes than there are now.

There is also the possibility of raising income on the basis of the amounts deposited. My hon. Friend the Member for Croydon, Central argued very effectively for that. That used to be done in other parts of the world, and it is unfortunate that we never took that path in this country with respect to funding legal aid. In other jurisdictions, the client accounts of solicitors are used to generate money for legal aid schemes. However, what I am desrcibing is a parallel system enabling the use of deposited money to generate income to support the administration of the scheme.

Experience in other jurisdictions, such as New South Wales, is that the amount generated from the deposited moneys is sufficient not only to cover the administration of the scheme but to provide effective housing advice services: the surplus can be used to assist tenants in other ways. I am not persuaded by the Government figures that have been presented in the past. I understand that they are to be reworked.

My third point is that we should consider not only the operation of the pilot scheme but experience elsewhere. My hon. Friend the Member for Edmonton talked about the pilot scheme and I will not go over that ground. However, the experience in Canada, New Zealand and the Australian states shows that such schemes can run.

Interestingly, some years ago the Department collected information on the operation of schemes elsewhere. Some jurisdictions set an obligation for the return of deposits. However, we are not talking about that. In some jurisdictions, the tenants' deposits must be put into separate trust schemes. However, we are talking about a centralised scheme. In places with centralised schemes, such as New South Wales, the number of disputes declines. Landlords compromise in disputes, even when tenants complain to the boards, and there is widespread—almost universal—support for the scheme. Landlords come on side; the good ones see that there are advantages to them and some of the bad ones are driven out.

Mrs. Campbell

Does my hon. and learned Friend agree that, because of the fear and suspicion surrounding many tenancy agreements, tenants often withhold the last month of their rent before they leave, because they are concerned that the landlord may not return their deposit? That may mean that landlords do not receive the money that they need to make good the damage and to repair the property. The schemes are in everyone's interest, to increase confidence in the system.

Ross Cranston

My hon. Friend is right. Such schemes have advantages for everyone. Landlords benefit in the long run. As I mentioned, in other jurisdictions such as Australia and the one Canadian province with a compulsory custodial scheme, real estate agencies and landlords' associations widely accept the need for these schemes. In New South Wales, the scheme has led to a valuable introduction of new technology, giving landlords the opportunity for direct viewing of the rental bond records for properties managed by their agency. My hon. Friend the Minister might want to take note of that, with reference to advancing e-government.

I wholeheartedly support the introduction of a compulsory centralised scheme. I acknowledge the problems of drawing analogies with much smaller jurisdictions such as New South Wales, New Zealand or the Canadian provinces. We have a much larger jurisdiction and many more properties to cover. Perhaps the scheme will have to be introduced on a regional basis, and it may have to be phased. If that were the case, I would want the west midlands to be considered at the top of the tree for the introduction of a compulsory scheme.

2.44 pm

Mr. Kelvin Hopkins (Luton, North)

I congratulate my hon. Friend the Member for Edmonton (Mr. Love) on securing this important debate. I agree with what he has said, and with the additional supportive comments made by other hon. Members. I will try to make some different points about the landlord-tenant relationship, which historically has been fraught.

In the past, bad landlords were, as we all know, the scourge of many poor families. It was necessary for Governments to intervene to regulate the market and to provide alternative housing to overcome the problem. That was perhaps a contributory factor to the formation of our own party. We have a duty to ensure that the poorest people, who often live in private rented property, continue to be protected and supported.

There have been different waves of liberalisation and regulation in housing as political fashions have changed and Governments from different political parties have come and gone. In the 1950s—perhaps that is a little before most people's time, but I certainly remember it—there was a period when the Conservative Government liberalised renting, after the stricter controls of the war and post-war eras. That led directly to what became known as Rachmanism and the terrorising of tenants by bad landlords. Subsequently, the 1960s Labour Government introduced legislation to regulate private renting, and tenants had more protection.

We have to remember that Governments have a duty to protect tenants from exploitation. Even though the problem is perhaps riot as big as in the past, it is still significant. Unfortunately, liberalisation gives the whip hand to landlords. The relationship between landlord and tenant will always be difficult, because there is a direct and sharp conflict of interests, and that is often very personal.

The Government have apparently prayed in aid the idea that there is not sufficient parliamentary time for such legislation. I am afraid that I have heard that excuse so often in the past on so many issues that I think it is rather thin, especially when a simple section could be added to a current Bill to overcome the problem. Indeed, a short new Bill could be introduced. I do not think that it would be difficult, and it might even have support among Opposition parties.

Resistance to regulation has unfortunately become the modern zeitgeist: the ideological spirit of our times. We are at a turning point. The ideology of deregulation and liberalisation is wearing thin. People are looking for a more interventionist approach by Government. I welcome that as a traditional democratic socialist; I think that Government's role is to intervene in a market, to ensure that it does not have damaging effects on the less well-off in particular.

Unfortunately some people hold to the 19th-century dogma that laissez faire—leaving the economy to itself as far as one can—benefits people, and that interfering with the market will distort it and reduce the benefits it can bring. I think that that is mistaken and wrong and so do many others, particularly when it comes to essential areas of life such as housing. Not long ago, John Kenneth Galbraith said, as others have said before, that at least a third of the population of developed societies needs Government intervention to ensure that those people have decent housing conditions. The market will not provide for them; either they should have houses provided for them or the market should be strictly regulated to ensure that they have decent housing conditions and are fairly treated by landlords, whoever they may be.

In the past our party in particular, and other parties too, built millions of council houses. Many millions of families have had decent lives only because of the building of council houses. We need legislation on the issue, and we need it now. It is vital, and voluntarism clearly still does not work.

The reality of many private landlords is that they too are poor. They are not wealthy exploiters, but poor people who perhaps have only one or two houses and, to a large extent, live on that income. They might be elderly people whose modest pensions are supplemented by rent from a private property. They are concerned about such sums of money, which may be significant to them, although they appear small to some people. Some poor landlords may be hard pressed to hold on to deposits and may spend them as part of their income. When it comes to paying them back, they may not have them to hand. That is the real world. We are not talking about big companies, but about poor people who perhaps have one house to rent that they may have inherited from a relative. That is a factor to bear in mind: we want to help those landlords as well as their tenants.

I have read the briefings from the CAB and Shelter, and the costs are usually tiny sums of money, which many local authorities would not even blink at. The difference between cost and income might be £1 million across the whole economy. The sums are infinitesimal in relation to our total economy, so the cost argument is not great. If a small cost were incurred by the landlord, no doubt he or she might increase the rent slightly to cover that cost. That will not be a big disincentive to the landlord or the tenant, as it would only be a small sum. If the new regulation were a disincentive to some landlords, we should look beyond that to try to ensure that their property stays in housing use in the rented sector, or is bought and municipalised by the local authority and used to house tenants on the long waiting lists in constituencies such as my own.

I was an enthusiastic supporter of municipalisation in the 1970s, which was something of a golden age in house building. Millions of houses were built in that era, including some by my local authority. I only wish that we could build as many houses now as we did then and municipalise some, particularly those that are in bad condition because their poor, private landlords have not kept them up to srcatch, and have not repaired or renovated them. When houses are municipalised, the local authority can bring them up to standard. They are often good sound houses with a long life ahead of them if they are looked after, which local authorities should be in a good position to do. Some might suggest that housing associations should do that, but I believe that local authorities should do so, as they are democratically accountable.

Many issues arise from this debate. Housing is obviously still in desperately short supply. We want to encourage as much housing as possible to be presented to the market for rent by less well-off people. Supporting poor landlords with a bit more regulation and support, or perhaps through local authority involvement, would help them and their tenants. I strongly commend the proposals made today by my hon. Friend the Member for Edmonton, and I hope that the Government will act soon.

2.53 pm

Matthew Green (Ludlow)

I congratulate the hon. Member for Edmonton (Mr. Love) on securing the debate. With the possible exception of the Minister, I expect that everyone will be singing from the same songsheet.

It is clearly a national problem, which will not go despite the introduction of some voluntary schemes. It affects all constituencies, both urban and rural, particularly those with students. Every constituency in the country will have tenants who have been ripped off—to put it simply—due to the way in which the deposit system works.

I do not want to go over the same ground, but we have heard about the scale of the problem five times: there are some 2.2 million tenancies, and some £790 million held in deposits. Why do such problems arise? Often there are disputes—genuine or not—over cleaning costs and whether deterioration can be attributed to reasonable wear and tear. There are cases in which the deposit is withheld at the end of the tenancy without a reason being given, or where cheques are issued and then stopped. We heard about the difficulty of pursuing a landlord in the small claims court. Sometimes the landlord simply never pays, or gives no indication that he will pay or that he believes that he should pay, and the tenant fails to get any answer out of him. These problems are commonly experienced and are regularly reported to MPs, to the CABs and to organisations such as Shelter.

Hon. Members have spoken today about the Government's reasons why the scheme should not be included in the Housing Bill. We have heard excellent explanations of why all their arguments are deeply flawed. I hope that the Minister will not repeat those arguments. Roughly surmised, they are that the tenancy deposit scheme should not be included in the Housing Bill because it will not be cost-effective. Some very strong arguments have been advanced about why that is completely fallacious. I welcome the fact that the Office of the Deputy Prime Minister is considering the possibility of reworking its costings, given that they have been so clearly shown to be inaccurate.

Another Government argument is that the scheme lacks sufficient support. I believe there to be widespread support for it from members of all parties. There is certainly support for it among any organisations dealing with tenants. As we heard, some 50 per cent. of organisations representing landlords support it. It is only the other 50 per cent. of organisations representing landlords that have not supported the idea of a national scheme. Far from a lack of support for the scheme, there is a lack of support for not implementing it.

It has also been argued that there is insufficient parliamentary time, but only a couple of clauses would be needed to include the scheme in the Housing Bill. I hope to serve on the Committee that will consider the Bill, and I assure the Minister that we will seek to move through our deliberations at some pace to ensure that time can be made to accommodate any extra new clauses. I hope that the Conservative spokesman agrees so that we can deal with it in the Bill. The argument that there is insufficient parliamentary time is incorrect.

The final Government argument is that the protection of tenancy deposits is better addressed by the Law Commission's forthcoming proposals on tenure reform. The worrying word is "forthcoming", because the legislation that might result from the Law Commission's work could be a very long way off and tenants will lose out in the interim. It may be that the end of the commission's deliberations, the Bills that it proposes are not even suitable vehicles for dealing with the issue. That is an argument for saying, "Let's put it on the shelf and hope that it goes away."

The hon. and learned Member for Dudley, North (Ross Cranston) and the hon. Member for Cambridge (Mrs. Campbell) touched on the fact that the scheme is in the interests of landlords. There are two reasons for that. First, as has already been explained, landlords often find that tenants, especially those who are a little more clued up than others, simply withhold their last month's rent. Consequently, if damage has been done, the landlord seeks to chase the tenant to recover the money through the small claims court, which they fail to do. The landlord is therefore the loser.

Secondly, some tenants have so little expectation of their deposit being returned that they do not look after the property as well as they might if they believed that they might get the deposit back. That may affect student areas more, but certainly I know of cases where that has happened. The deposit ceases to have any effect because they assume that they are not going to get it back, so they might as well not look after the property. Greater damage is therefore done to the property than would otherwise be the case, so a national scheme would work in the interests of landlords, not just tenants.

I shall be intrigued to listen to Minister; perhaps she will show a welcome change of heart and give an announcement that the proposal will be in the Bill after all. I struggle to see how the Minister can justify not including the idea in the housing Bill, but if she does not do so, we shall bring forward the appropriate clauses. That way, the Minister will have to justify in debates on the Bill why the scheme should not be introduced.

3 pm

Mr. Eric Pickles (Brentwood and Ongar)

I congratulate the hon. Member for Edmonton (Mr. Love) on his success in raising this important issue. I am also grateful to the hon. Member for Luton, North (Mr. Hopkins), because for one dreadful moment I thought that I was in consensus hell. No one had said anything that I disagreed with, so I am pleased that the Chamber has at least retained some degree of normality.

The hon. Member for Edmonton was right to say that the problem relates to a relatively small number of landlords, particularly those with a relatively small number of properties. I, like many others, am disturbed and disappointed to learn of the number of tenants who hand over their keys at the end of their tenancies to find their damage deposits withheld for no real reason.

Hon. Members have picked their favourite state in Australia to show how the proposed system runs, but I shall leave New South Wales to one side and commend to the Chamber the system that operates in Queensland, which has a very small number of disputes and seems to function within a light regulatory framework.

It behoves the House to recognise that the report that the National Association of Citizens Advice Bureaux and Shelter issued and the figures that it contains are a matter of dispute, particularly as no one has said anything to the contrary. In order to understand the problem fully, we cannot ignore the Small Landlords Association, the secretary of which suggests that the National Association of Citizens Advice Bureaux's report is misleading and verges on the irresponsible. The association cites a recently conducted professional survey that shows that only 5 per cent. of private tenants said that the relationship with their landlord was bad. Moreover, that example concerned only a particular type of tenant, so the incidence of dissatisfaction seemed very high.

The association made the point, which we would do well to listen to, that a massive, unwieldy quango would be necessary to administer such deposits, where there is only a minor problem. Therefore, before we take a decision to move further on to something, we must be clear that it will not create another problem.

Almost in contradiction to that point, however, I note that the chairman of the Small Landlords Association, a Mr. David Salusbury, has proposed some degree of regulation in a letter to a number of periodicals. He suggested to the Government that provision for redress could be included in tenancy agreements whereby aggrieved tenants could pursue a claim against their landlord with an independent adjudicator. Such a body would have the authority to require the landlord to lodge an appropriate sum pending resolution c f the dispute. I suspect that that would work extremely well for reasonable landlords. We must bear in mind that those entering into such agreements will not necessarily be on an equal level; they may not be in a position to negotiate a tenancy agreement or to have a clause inserted stating a particular amount. However, it is precisely that kind of tenant whom we seek to protect.

Deposits are required for several reasons. They are necessary to assess the, financial standing of prospective tenants, and to ensure that tenants understand the value and importance of the property. They are necessary because the landlord needs protection against tenants doing damage beyond fair wear and tear. Lastly, they are necessary to cover possible arrears of rent.

The Small Landlords' Association has taken great pains to say that deposits are to cover only damage that goes beyond normal wear and tear at the end of a tenancy; it says that it is important that tenants should know that such deductions would be the norm. The association says that it is relatively easy for a tenant to make a claim against a landlord through the small claims court, but I thought that the arguments put by the hon. and learned Member for Redcar (Vera Baird) were very persuasive. I may not have had experience of the small claims court, but I understand the system, and I know that those who have pursued cases through the small claims court, as many of my constituents have done, know just how hard it is to get a judgment. Indeed, many such people do not have the necessary financial resources to put a case together.

I appreciate and understand the Government's reluctance to introduce further regulation. Much depends on the facts And on the size of the problem, so I hope that the Minister will be in a position to put it right—and I intend to ensure that she has adequate time to respond to the debate.

We are concerned about the Shelter report, which suggested that a fifth of private tenants believe that a part of their deposits had been unreasonably withheld. Particularly worrying, given the strains on student finance, is the fact that as many as 35,000 students face that problem at the end of term. My right hon. Friend the Member for Haltemprice and Howden (David Davis), the shadow Deputy Prime Minister, said on the publication of the report

Shelter's report shows that some abuses are little more than legalised theft. Conservatives will consider any intelligent and light regulatory regime and will examine Shelter's report in detail. We would want to ensure that the majority of landlords and letting agents who are doing the right thing are not burdened with red-tape. As I suggested in an intervention on the hon. Member for Edmonton, we know that the pilot schemes have been anything but a success. It was inevitable that those landlords who are good and reasonable, and who, as my right hon. Friend said, wanted to do the right thing, have had no problem in joining the scheme. However, the landlords who have not joined the scheme are those whom we wanted to change their attitude and their practice.

Common practice in other jurisdictions is different, most notably in Germany. There, deposits cannot equal more than three months' rent, they must be held in special accounts and generally returned with interest within one year after the end of the tenancy. Similar regulations apply in France, where deposits are limited to between two and three months' rent and are returned within two months of the tenant handing back the keys. A rather different approach is taken in Belgium, with an end-of-tenancy cost being guaranteed by the country—landlords are not allow to hold deposits. We have heard also of schemes in Canada and Australia, and I am very taken by the Queensland model, which lays down a clear way of dealing with disputes.

Mr. Love

Given that the pilot scheme clearly showed that the vast majority of landlords were reluctant to be involved in a voluntary scheme, and given the significant abuse of tenants' deposits, despite the publicity raised by the voluntary scheme, is there any alternative to a national statutory scheme that would work for landlord and tenant?

Mr. Pickles

If such a scheme exists, I am not aware of it. However, we are beginning to move down that path. The hon. Gentleman may understand the reluctance of the Conservative party to commit itself to further regulation. However, Members on the Opposition Front Bench will doubtless be aware of such cases in their constituencies. In truth, they are not entirely unaware of such cases in relation to those whom we employ. The nature of this place and working for a political party means that young people tend to be here at the beginning of their career, and I am aware of a number of cases where a lot of effort and intellectual muscle had to be put into getting their deposits returned.

Geraint Davies

For clarity and for the record, will the hon. Gentleman make clear whether he is in favour of a mandatory national tenancy deposit scheme, to be applied through the Housing Bill?

Mr. Pickles

I was dancing delicately on the end of a skewer.

Geraint Davies

That is what I thought.

Mr. Pickles

I realise that the hon. Gentleman wanted to give the skewer a thorough jerk in order to see me well and truly impaled. I hope that he will allow me to dance a little longer.

My party is in the process of looking into the detail. I was about to mention some of our research. However, to be frank, we are moving close to the hon. Gentleman's position. We want to ensure that the Government do not introduce a regulatory regime that will use a sledgehammer to crack a nut. We want the regime to be light and reasonable; we want it to be timely and we want it to ensure that it has no detrimental effects on the amount of property that is available in the private rented sector. I hope that the hon. Gentleman will not push me.

Mr. Love

We on the Government side of the House sympathise with the hon. Gentleman's dilemma. The Government tried the voluntary scheme approach to avoid the concerns that he expresses, but if he is concerned about the national deposit scheme it would help if he indicated where those concerns lie—and what alternatives might be available that would act in a similar way but without the onerous bureaucratic burden that concerns him.

Mr. Pickles

I suppose that I should refer the hon. Gentleman to the reply that I gave earlier. If there are other schemes available, I am not aware of them.

I do not think that I shall give details of the Queensland system, because I want the Minister to have time to reply to the debate.[Interruption.]The hon. Gentleman would miss a rare treat.

It behoves the Government to give us a clear indication of what they believe the true figures are. I shall be interested in what the Minister has to say. If the Government say that it is a question of parliamentary time, I can understand that, but who controls parliamentary time? The Government control it. The Government lay down the guillotines. If they want to include the matter in the Housing Bill, the official Opposition have no objection.

3.15 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Yvette Cooper)

I, too, congratulate my hon. Friend the Member for Edmonton (Mr. Love) on securing the debate and choosing to discuss the tenancy deposit scheme. This debate follows from a debate that took place on 4 December last year, and concerns an issue that many hon. Members feel strongly about.

Hon. Members have set out the difficulties that many of their constituents have faced. Those constituents have been exploited and ripped off, or have had frustrating experiences with deposits going missing or being unfairly withheld. My hon. Friend the Member for Edmonton desrcibed the experiences of Mrs. X in his constituency, and my hon. Friend the Member for Cambridge (Mrs. Campbell) referred to the difficulties experienced by students. My hon. and learned Friends the Members for Dudley, North (Ross Cranston) and for Redcar (Vera Baird) pointed out clearly that often the most vulnerable tenants are highly unlikely to pursue their claims in court and, no matter how great the injustice done to them. are unlikely to get the remedy to which they are entitled.

There are different estimates of the extent of the problem. Previously, in the consultation documents, we used the figure of 20 per cent. of tenants being involved in disputes over deposits. It is clear that this is not simply a problem for tenants. It is also a problem for the private rented sector as a whole and for landlords, as the hon. Members for Ludlow (Matthew Green) and for Brentwood and Ongar (Mr. Pickles) pointed out. My hon. Friend the Member for Luton, North (Mr. Hopkins) was right to argue that we need proper safeguards for tenants, and we also need to consider the wider relationship between tenants and landlords. However, I disagree with his claim that the interests of landlords and tenants will always be in tension. Both landlords and tenants have a long-term interest in the future of the private rented sector and in having a proper, professional, reputable private rented sector, so they would have interests in common.

This issue tarnishes the image of the private rented sector at a time when it is widely recognised that the sector may have a much bigger role to play in achieving housing targets, providing housing and addressing problems of homelessness, particularly in high-demand areas. That idea was raised as part of the London housing strategy, which was published just a couple of months ago. The sector provides needed flexibility in the housing market. For example, it responds to the needs of the growing student population, those who need to be mobile and those who are not in a position to buy their own homes. The sector is increasingly seen as an important resource by local authorities dealing with the needs of the homeless. Resolving the issue and addressing concerns about unfairly withheld tenant deposits is in the interests of tenants and landlords across the country and has wider repercussions affecting our ability to tackle homelessness and housing demand.

As hon. Members have said, we have tried voluntary pilots, alongside considerable research and information gathering. The pilots were set up in March 2000 and were managed by the independent housing ombudsman with Government funding for their costs. The pilots had the two elements that my hon. Friend the Member for Edmonton identified. First, they needed a way to keep the deposit safe. Two ways were tried: a custodial and an insured option. Secondly, there was independent adjudication, in this case by the independent housing ombudsman.

The scheme told us some useful things about mechanisms by which deposits can be safeguarded and ways to deal with disputes. However, it also showed that, even with all the costs being met by the Government, only a minority of the most professional landlords were likely to participate. The pilot clearly offered no prospect of a national scheme that was voluntary and self-financing. We should be clear about that. The failure of the pilot schemes powerfully makes the case that legislation is needed.

Last year, we launched a consultation paper on options for the way forward, including looking at the Australian and Belgian schemes and a series of other models. There was a wide range of responses to that consultation. Some opposed action altogether. We will publish the results in due course. Many hon. Members have mentioned the different costs and benefits. There have been different views on the costs and benefits of such a programme, and we are looking at that further. The cost and benefit analysis produced for the consultation showed quite a close balance between the costs and the benefits. Hon. Members have raised concerns about that, as have other organisations. We are looking further at those issues.

The Select Committee has now recommended that the measure be included in the Housing Bill. Many hon. Members have made that point, including my hon. Friend the Member for Croydon, Central (Geraint Davies). My right hon. Friend the Minister for Housing and Planning will respond to the Select Committee shortly. We have said that we want to consider the scheme as part of the Law Commission's review of tenancy. My hon. Friend the Member for Edmonton raised some concerns about that approach, so I shall explain a little further why we think that it would be valuable.

The Law Commission is due to publish proposals later this month, particularly on written tenancy agreements. My hon. Friend rightly said that written tenancy agreements do not themselves solve tenancy deposit problems. That is clear, but we think that it would be helpful to examine the issues together. The problem of written tenancy agreements is significant. Many tenancies have no written agreement; there is nothing more than the rent book to establish entitlement. There is a strong case for compulsory written tenancy agreements. The Law Commission is expected to recommend that tenants' rights, including security and rights of repair, should by law be contained in the agreement in compulsory terms.

If we go down that route, which the Law Commission is expected to recommend, it may be possible to consider the tenancy deposit scheme in parallel. One approach that we have been exploring in the Department is the possible introduction of compulsory terms in the written agreements to say that any deposit must be held in a scheme. That could allow all kinds of different schemes, provided by different organisations, perhaps on the condition that they are Government-accredited or approved, and that they address the two issues that my hon. Friend raised—safeguarding the deposit for the tenant and allowing independent adjudication in disputes. Again, the use of the independent housing ombudsman might be one approach. That would link the structure of the scheme quite closely with the written tenancy agreement, so we have been keen to explore those issues together to see if that is a workable way forward. Obviously, with such an approach, a series of matters would have to be explored and discussed with stakeholders.

I recognise that all Members are interested in including provisions in the draft Housing Bill. They will know that the Government always have to take into account a range of considerations, including how quickly we can develop good, effective legislation, and issues of parliamentary time. I noticed the suggestion of the hon. Member for Brentwood and Ongar regarding Government control of parliamentary time—but my experience is that the length of time we spend debating particular issues often has an awful lot to do with the decisions of Her Majesty's Opposition, so obviously it would be helpful to know his view on the issues, and the length of time he thinks is needed to discuss them.

I should also say that we have seen Shelter's proposed draft clauses on the mai ter. Shelter has campaigned on the issue, and drafted clauses relating to it. We are looking carefully at the matter, but there are some difficulties with the approach taken in the draft clauses proposed by Shelter that we will consider further. The hon. Member for Ludlow suggested that we would only need a couple of clauses, but I would be very cautious about such a claim; in fact, those proposals would mean putting an immense amount into secondary legislation.

Very often in Parliament we discuss concerns about how much is put in secondary legislation and the effect of that on the opportunities for proper parliamentary srcutiny. We have to be careful about the balance of what is in primary legislation and what is in secondary legislation. srcutiny in this area is very important. As a result, I would caution hon. Members about the logistics of achieving immediate legislation that is also good legislation.

I take very seriously the points that hon. Members have made. We will respond to the Select Committee and its recommendations shortly, and we are also looking forward to considering the Law Commission's relatively imminent proposals. As my hon. Friend the Member for Luton, North pointed out, it will be important to consider that in the context of the wider relationship between tenant and landlord. I was interested in the point made by the hon. Member for Brentwood and Ongar about the recognition by many landlords' groups of the importance of the issue.

Mr. Love

Will my hon. Friend also take into account the consensus that seems to be developing throughout the House, and the good will that exists towards finding a way forward that suits both landlord and tenant?

Yvette Cooper

I certainly will. I have listened very carefully to the points made by hon. Members from all parties today, which I take very seriously indeed. I want to assure hon. Members of the Government's concern about the issue, and our recognition of the important points that have been made this afternoon.

Geraint Davies

Is my hon. Friend reassured by the unanimity in this Room that the discussions on the Housing Bill will be rapid and effective so that we can move forward quickly, even given the points that she made about the Law Commission? There is a real opportunity to get a result quickly.

Yvette Cooper

As I have said, I recognise the wide range of support on this issue, and we all agree that there is a problem that must be resolved. We also agree that a voluntary approach does not work.

Matthew Green

Will the Minister confirm that the Law Commission is unlikely to report in time for any proposed legislation emerging from that to be announced in the next Queen's Speech? Conceivably, then, we are looking at the legislative year following that. Any Bill following that report may become law in about two years' time, whereas the draft Housing Bill offers an opportunity to deal with the issue in a matter of months.

Yvette Cooper

I recognise hon. Members' concern about that. The Law Commission will make proposals this month. Detailed legislation will then be drawn up, which does take further time. The hon. Gentleman will recognise that I cannot make commitments about the Queen's Speech in any respect; that is the way in which the parliamentary system works. I would again caution Members who think that the matter can be dealt with swiftly. We shall of course consider all the points made by hon. Members and respond carefully to the Select Committee. I assure hon. Members that we are concerned about the issue. The failure of the pilots has shown a strong need for legislation, but we must ensure that we get it right and that it is effective. That is not always possible within as swift a timetable as we would all like.