Tenancy Money (Hansard, 16 June 2003)

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

Last November we consulted on options for safeguarding tenancy moneys to address concerns that an appreciable number of tenants were losing out and the image of the private rented sector as a whole was suffering.

The consultation paper followed two years of government funding of a pilot tenancy deposit scheme. It reflected the evidence that a voluntary scheme was not an effective option. Take-up of the pilot had been poor and so were the prospects of a self-financing voluntary national scheme. So, we sought views on the case for compulsory measures.

The consultation paper indicated that there is not a robust basis for legislating to compel the protection of tenancy moneys in third party schemes. It showed that with costs of £19 million per annum and benefits of £20 million per annum, the case for so legislating was finely balanced. I have to say that the responses to the consultation were equally inconclusive.

Nevertheless, the Government are committed to addressing the case for legislation alongside consideration of proposals that the Law Commission plans to publish by this autumn, particularly with regard to written tenancy agreements. That seems an appropriate context in which to address the safeguarding of tenancy money.

We have learnt some useful lessons from government funding of the voluntary pilot tenancy deposit scheme—not least that there was no prospect of it becoming a self-financing voluntary scheme with a substantial membership. Therefore, so far as government funding is concerned it will have to be wound up. Nevertheless the Government would be more than happy to endorse self-financing voluntary schemes in advance of legislative proposals.

We will publish detailed proposals and a full response to the consultation later in the year, in the light of what the Law Commission publishes.