HL Deb 20 October 2004 vol 665 cc823-31

The Secretary of State shall undertake a piloting exercise of home information packs lasting not less than two years and shall publish a full analysis of it."

The noble Lord said: My Lords, I wish to speak to this amendment on behalf of my noble friends. The Government have implicitly accepted that hitherto there has been a serious lack of sufficient research and evidence to underpin this massive change in transacting properties. The 11 October dossier, if I can so refer to the Minister's helpful cache of papers that he circulated on that date—I shall not call it a "dodgy dossier"; it was helpful—showed clearly that, although there have been lots of bits of research, there is a serious lack of major in-depth research of some of the issues upon which, let us face it, the whole Bill is posited.

In 2000–01, the Suffolk and North Essex Law Society conducted in-depth research among all its members. I gave the results to the noble Lord, Lord Whitty, when he was responsible for the Bill that fell prior to the previous election. I shall make it my job to give the noble Lords, Lord Rooker and Lord Bassam, a copy of it now, because it still seems the most current and in-depth work done on the issue. In summary, the outcome of the long exercise was that the solicitors in the frontline have serious concerns about some of the assumptions underlying the Bill. I refer, for example, to the upfront costs—the Minister was talking yesterday about around £600; to the impact on the number of properties coming forward for sale, questioning the 15 per cent figure that the Minister produced; and to information on the real causes of breakdown of transaction, an issue that underlies all the legislation. The whole House is grateful for the open-mindedness that Ministers have expressed on this crucial aspect of the Bill over the past couple of days. We will return to what was said by the noble Lord, Lord Rooker, last night at cols. 708 and 710 of Hansard.

I would like briefly to justify this amendment, which deals with the pilot. In the first place, the timing seems to have one serious defect. I do not expect a studied response now, as Ministers will want to consider the matter. Everything is fine up to the end of 2006: there is a half-year in which to set things out, consult widely and get the scheme up and running in principle. The six-month trial concludes at the end of 2006. Yesterday the Minister said that he hoped that the national compulsory scheme would be launched in January or, at the latest, April. I am worried that, if that dry run is as fulsome and effective as the House wants it to be, evaluating it will take time. Getting in the results and making a proper, considered and studied evaluation could take three months, especially as some of the key stakeholders will need to be consulted on the results that the Government draw from the exercise.

The Government will then need to begin the very difficult exercise of deciding what changes by secondary legislation they want to make to take advantage of the dry run—there is no point in doing it unless that is the outcome. I do not doubt the sincerity of what the noble Lord, Lord Rooker, has said today, but the proof of the efficacy of the dry run will be in the amendments that the Government bring forward. I ask the Minister to reiterate what today was a more open-minded approach than last night regarding the crucial last phase and its timing. Even if it takes nine months to do it properly, the importance and stretch of the scheme is so great that we ought to do it.

6.15 p.m.

The amendment is headed "Piloting exercise"; it is also a pilot amendment, as we will need to consider the Minister's response and decide whether to table a more fully fleshed amendment at Third Reading. There should be a compulsory dry run in one part of the United Kingdom. It is an odd pilot that is comparable with the scheme that will be imposed nationally except in the most striking particular: the compulsoriness. The odd thing is that the dry run that the Minister talks about rather conforms to our view that the scheme should be voluntary, as the pilot will be voluntary. There is an innate paradox about having a voluntary pilot when we are to have a compulsory scheme.

The Minister will forgive me if I say that I was not too impressed by what he said on the issue. He said: The industry is running the scheme". We do not like that. We do not like the thought that HBOS and Countrywide are running the scheme. They may be bona fide, decent businesses but they should not be running the scheme. He added: A lot of investment is required. I gave a figure for one particular firm"— I think that that was HBOS or Countrywide— Our difficulty with having a compulsory pilot is that the necessary training to bring in the accreditation for the inspectors needs to be fairly substantial". I accept that, but we have at least 18 months before the pilot starts. I do not believe that it is beyond the wit of government to arrange for one county to be in a position to have a compulsory scheme with the necessary training and accreditation by then. Finally, the Minister said: People will not invest on that national scale just for a pilot".—[Official Report, 19/10/04: col. 710.] If the Government are committed to going national and compulsory—by then, the Act would be in force—and if they are open-minded and genuine in saying that as a result of the pilot they will make amendments, I do not think that whoever the Minister was talking about will be in any doubt that the exercise is just a pilot or a prelude to a national scheme. I am sorry to have laboured the point, but we believe that the way in which the dry run is set up and its aftermath put to the test all our concerns about the Bill. As we have already said, we want the Bill to succeed.

I do not ask the Minister to respond to my final question immediately. It seems that a lot of unease about just how the scheme will work could be resolved if the Government were prepared to set up a working group to advise them on setting up, running and evaluating the dry run. Far from being anything for the Government to worry about, it would strengthen and legitimise the exercise. With those thoughts, I look forward to hearing what the Minister and others say. I beg to move.

The Earl of Caithness

My Lords, I support the noble Lord, Lord Phillips. He said that it was not beyond the wit of government to get a county to do a proper dry run in advance of legislation. I thoroughly support him on that. If the legislation is on the statute book, regardless of whether some estate agents and lawyers dislike it, they will implement it because that is their job.

The Minister told us yesterday, as reported at col. 695 of Hansard, that HBOS and Countrywide support the home information packs because it is to their commercial advantage so to do. They will be very keen to do a dry run because during that period they will iron out any difficulties, giving them a commercial advantage over other practices not operating within the county that is the subject of the project proposed by the noble Lord, Lord Phillips. If that works, they will stand to gain hugely on a national basis. If what we are talking about is helping mortgage-lenders, solicitors and estate agents to make money, they will be very keen to take part in a dry run.

Lord Rooker

My Lords, perhaps I may say at the outset that the intentions of the amendment generate a good deal of sympathy among Ministers, both in this House and in the other place. I do not deny that it would be incredibly helpful if we could carry out the envisaged pilot on a county or regional basis in a way that would demonstrate the effectiveness or, indeed, the lack of effectiveness of our proposals. It would he helpful to do it on a 100 per cent basis because that is how it will have to work.

Last year, Keith Hill, the Minister of State for Housing and Planning, reviewed with the industry and consumer representatives a whole range of options for piloting home information packs. It is not as though we have not discussed going down that road. The Select Committee in the other place suggested that there should be a pilot testing before home information packs are introduced nationally. The conclusion, which I should stress was the unanimous view of the industry, was that voluntary local pilots simply could not replicate the compulsory national scheme.

We discussed that in some detail with representatives from the Law Society, the Royal Institution of Chartered Surveyors, the National Association of Estate Agents, the Council of Mortgage Lenders, the Council for Licensed Conveyancers and the Consumers' Association. It was their unanimous view that the introduction of home information packs was best carried out across England and Wales from a single date and that this was one of those issues where a "big bang" approach was the best option.

I am not knocking this idea. But I am still of the view that I expressed last night that everyone would have to play ball, including buyers, sellers and so on. There are a number of reasons for that. The Consumers' Association kept reminding my ministerial colleagues that the home information packs will generate a change in culture. There is no question about that. Therefore, it would be difficult to do that on a local pilot.

Another more practical issue arising as far as the industry is concerned is that many if not most or all lenders have national systems for processing mortgages. They will not operate two systems—one for the pilot area and another for the rest of the country. From what I understand, they simply will not undertake what would be from their point of view substantial investment adapting their valuation processes to incorporate home condition reports for a pilot.

Similarly, the employment, training and regulation of the home inspectors has to be organised on a national basis. Of course, that requires some major investment, which will not happen for a pilot.

There is another practical issue that it would be useful to test during the dry run. More than 60 per cent of dwellings are in chains, which is part of the problem in this country. Chains of transactions will extend beyond local and even regional boundaries. I have not used this argument and I would not accept it in the department as an argument for not doing a pilot. When I was the day-to-day Minister before Keith Hill on this issue, I made it clear that that was not the argument.Wherever boundaries are drawn on a pilot, there will always be people crossing them.

The more practical issues relating to the regulation of employment, the lenders and the financial arrangements are against us doing a pilot. As I say, transactions will go over boundaries, but that would not be the main argument. However, even in a long chain, a single property dropping out of the chain would completely destroy that aspect of the pilot. There is a problem because of the chains involved, which is why, in our view, it has to be compulsory.

However, no one is arguing that it means that piloting is a waste of time. It still has a very important role in testing the mechanics and obtaining people's views. Recently, we used piloting to good effect with the technical and consumer testing of the latest format for the home condition report. So there is work going on on that basis, but not in terms of piloting the whole system.

We are not inventing the wheel. We are learning from the ever-growing number of home information pack initiatives springing up around the country. There is a growth in this issue on a voluntary basis. Of course, we can learn from that experience. So we fully recognise that a "big bang" introduction in England and Wales carries risks.

The management board of the ODPM has discussed this from a management point of view. This is one of those issues on which members of the board have got to keep their eye on the ball, from the Permanent Secretary downwards. If it is a big success, the whole team will share the credit. If it is a failure, we Ministers will carry the can. That is our responsibility. There will be no sharing of blame.

But the management board knows that this carries significant risks. As I have said before, there are 40,000 properties marketed every week: that carries significant risks. Therefore, we have to get it right. That is why we will not introduce it until we are satisfied that we can do it.

Our programme management arrangements, which will involve all the key players, are designed to deal with those risks and to minimise them. We intend to lay the regulations prescribing the contents of the home information packs towards the end of next summer, which is some time from now. We will have about 18 months in which to develop and test the systems and procedures.

We are planning the dry run of the packs in 2006, which will test the full home information pack process. We are confident that it will pave the way for a successful introduction from 2007. We think that the dry run is the best means of testing the packs. I can assure your Lordships that if problems are highlighted that would put at risk the successful implementation, we will lose no time in introducing the necessary regulations. We will also monitor the position closely.

When I met a large group of officials earlier today to discuss aspects of this, I said—this is for the record—that everything we say here in this Chamber, whether it is said by my noble friend Lord Bassam or myself, or the Ministers in the other place, which is recorded in Hansard, has got to be carried out by our successor Ministers and officials on the dates outlined. As I have just said, we are talking about a four-year programme for monitoring post-introduction from 2007. I have spoken about monitoring for 18 months to two years after that, so we are talking about 2008–09.

I will give way in a minute. We are but transient holders of office, but we are affecting people's lives with what we are saying. We will make it absolutely clear that our commitments—some are in Hansard; they will not necessarily all be in the regulations, but we will obviously bring forward the regulations—have to be carried through because it is on that basis that we are taking the legislation through Parliament. Now, if the noble Lord, Lord Hanningfield, wants to have his little joke, I will give way.

Lord Hanningfield

My Lords, I hope that the Minister will not hold Conservative Ministers responsible after the next general election when they would be implementing it.

Lord Rooker

My Lords, I certainly am. Parliament will have passed the legislation. It will be being carried through. The Conservatives would have a duty to carry it through to the best of their ability, if that is the case, unless, of course, legislation is passed to pull the plug. That would be their decision. One Parliament cannot bind another. I fully accept that. I make no bones about that. I am not saying that it does.

The fact is that what has been planned here, by definition, will span more than one Parliament. That is obvious because I have talked about 2007 and an assessment 18 months to two years after that. Woe betide anyone who interferes and upsets people at the rate of 40,000 families a week. As I say, this is a high-risk strategy, so these issues have to be taken fully into account.

I hope that having put enough heads on the block, in that sense, the noble Baroness will not pursue her amendment.

6.30 p.m.

Baroness Hamwee

My Lords, this was intended to be a compulsory pilot. I make that point now because, even though almost everything the Minister said would apply in the case of a compulsory pilot rather than a voluntary one, he was talking about voluntary pilots. He may want to add something.

Lord Rooker

My Lords, I do not. We are planning, in effect, a voluntary pilot. The noble Lord, Lord Phillips, said that it was a paradox that he was calling for something to be done on a compulsory basis to test what they wanted to be done voluntarily. This is because of the chains. If the Liberal Democrats get nothing else out of the debate on Part 5, they will have accepted that, because of the chains, if it is to work it will have to be done on a compulsory basis. That is why they have put forward a compulsory pilot for a voluntary system. Only the Liberal Democrats could argue that. I leave the noble Baroness to defend it.

Baroness Hamwee

My Lords, I have to. When I suggested a number of amendments to my noble friend I said that we would be teased about some of them being inconsistent. We can put up with that because we want to explore the different ways of approaching the issue. Although we have been laughing about it, it is a serious point. We were trying to explore an alternative way of making sure that ultimately we get a system that works properly. I shall now leave it to my noble friend.

Lord Phillips of Sudbury

My Lords, it is worth repeating that on these Benches—I do not think it is any different on any other Benches—we believe that if we are going to have this scheme we need to make it work as well as it can. That is common ground.

I am grateful to the Minister for his long response to the amendment. His excuse for not having a compulsory pilot in one region or county was that the big boys did not want to gear up because they would have to change all their systems if there was a compulsory pilot in, say, Northamptonshire. I think that is a summary of what he said. That points to a completely failed pilot. If they are not going to change their systems in order to accommodate the new regime, they will not do so for a voluntary scheme. We will then have the worst of all worlds. We will have a bum pilot on the basis of which we will reach bum conclusions.

Lord Rooker

My Lords, that is why we need Parliament to put the regulations in place before the dry run. In other words, the legislation is already there; what is not there is the start date. Everything else is in place.

I expect the big boys to have changed their financial systems for the dry run; that is part of the planning process for the next 18 months. However, because we would not have the legal authority, we cannot force the buyers and sellers to be 100 per cent compliant. It is to be hoped that, with the co-operation of the estate agents and all the professionals involved, we will encourage as many buyers and sellers as possible—or, in this case, as many sellers as possible.

That is why I said last night that if we could find an area in which all the estate agents and everyone else involved would say, "In this area we want to market only properties for this dry run, to test it out for everyone's benefit", that would be fine—but it would have to be on a voluntary basis.

Business will change its procedures provided Parliament has put the regulations in place, which we will have done. We will not have given the final blast on the horn to start, which will come on a date in 2007.

Lord Phillips of Sudbury

My Lords, this is becoming a discussion. I should like to talk to the Minister about the issue after today because I believe that there is still a contradiction. The Minister is saying that Parliament will put the regulations in place. We will then have a voluntary scheme, but the big boys will not want to gear up and change their systems and so on. On that basis, they simply will not operate the voluntary scheme.

Lord Rooker

My Lords, they have said they will.

Lord Phillips of Sudbury

My Lords, if they have said they will, why the heck can we not have a voluntary scheme in one county? To say that Parliament cannot require that as part of a pilot is not true. We could decide that the Minister should have the power through regulation or statutory instrument to nominate a particular area as an area within which there will be a compulsory pilot. That would leave the rest of the nation with a voluntary pilot—so it would not disturb what the Government are contemplating—and give us the precious advantage of having one part of the country where you are not guessing what the difference will be when you sound the second horn and the whole thing becomes compulsory. I do not think it is undoable.

However, we are not going to satisfy each other on this issue across the Chamber. Accordingly, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 168 [Interpretation of Part 5]:

[Amendment No. 178 not moved.]

Clause 169 [Index of defined expressions: Part 5]:

[Amendment No. 179 not moved.]

Clause 176 [Repayment of discount: periods and amounts applicable]:

[Amendment No. 179A not moved.]

[Amendment No. 179B not moved.]

Clause 179 [Right of first refusal for landlord etc]:

[Amendment No. 179C not moved.]

Clause 180 [Information to help tenants decide whether to exercise right to buy etc.]:

Lord Hanningfield moved Amendment No. 179D:

Page 131, line 35, after "tenants," insert— including an initial one-off delivery of it to all existing secure tenants.

The noble Lord said: My Lords, it is time we moved on. Amendments Nos. 179D and 179E would simply bring greater clarity and transparency to the process of informing a tenant of his or her rights under the right to buy.

It would appear sensible that a tenant on completion of a tenancy agreement be provided with such information, as is the intent of Amendment No. 179D. Amendment No. 179E would furthermore ensure that there was a one-off delivery of such information to all existing tenants.

The Minister commented in Committee that his department was consulting on how landlords could most effectively inform their tenants about the right-to-buy scheme. He then went on to mention that the thoughts of his department were along the lines of the amendments we had tabled. That is why we are tabling them again today, in the hope and expectation that he will accept them. I beg to move.

Lord Rooker

My Lords, Clause 180 supplements the existing duty placed on landlords by Section 104 of the Housing Act 1985 to provide information about the terms of their secure tenancies and the landlord's repair obligation. It also places a duty to provide information in respect of right to buy. Clause 180 also requires landlords to supply information to tenants on the responsibilities and consequences of being a homeowner. The aim is to help them to decide whether to exercise their right to buy.

The Secretary of State and the National Assembly for Wales have consulted separately on what information should be provided and when. The vast majority of responses supported the proposal.

The amendment was also tabled in Committee. It would specify that the information must be provided at certain specified times to secure tenants. However, it would pre-empt the power given to the Secretary of State by new Section 121B of the Housing Act 1985, which is inserted by Clause 180(1). This allows the Secretary of State to provide in an order when the information shall be published and supplied by landlords. The power will be exercised in respect of Wales by the National Assembly for Wales, and a power was taken so that different provision could be made in respect of each jurisdiction.

As I said to the noble Lord in Committee, the Secretary of State's proposals for England are similar to those in the amendment. In consulting stakeholders we stated that we envisaged specifying that landlords must provide the specified information to their existing tenants as soon as is reasonably practicable after Clause 180 comes into effect; to all new secure tenants as soon as they take up their tenancy; and, thereafter, once every five years or whenever substantive changes are made to, for example, the right-to-buy scheme, the home buying and selling process or the regime for service charges payable by leaseholders.

We are currently considering the responses to our consultation paper, but I can assure the noble Lord that we do not envisage that the final details will differ significantly from those envisaged in the consultation. I hope the noble Lord finds that response helpful.

Lord Hanningfield

I thank the noble Lord for that response. Although he did not accept the amendment, the effect of what he said will implement what I was suggesting. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 179E not moved.]

Lord Avebury moved Amendment No. 180:

After Clause 186, insert the following new clause—